-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NhffGC8G5OPGKyFlpUD40XD9tfqfZZuCSGgtBWJwRRfFUZTwM46nUG9lN4aNxABE Mf50UykKrlU7nUDTaQDInA== 0000950135-98-005545.txt : 19981028 0000950135-98-005545.hdr.sgml : 19981028 ACCESSION NUMBER: 0000950135-98-005545 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19981027 SROS: NYSE GROUP MEMBERS: EG&G INC GROUP MEMBERS: LIGHTHOUSE WESTON CORP. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LUMEN TECHNOLOGIES INC CENTRAL INDEX KEY: 0001008114 STANDARD INDUSTRIAL CLASSIFICATION: METAL FORGING & STAMPINGS [3460] IRS NUMBER: 133868804 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-45839 FILM NUMBER: 98731088 BUSINESS ADDRESS: STREET 1: 555 THEODORE FREMD AVE CITY: RYE STATE: NY ZIP: 10580 BUSINESS PHONE: 9149679400 MAIL ADDRESS: STREET 1: 555 THEODORE FREMD AVENUE CITY: RYE STATE: NY ZIP: 10580 FORMER COMPANY: FORMER CONFORMED NAME: BEC GROUP INC DATE OF NAME CHANGE: 19960216 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LUMEN TECHNOLOGIES INC CENTRAL INDEX KEY: 0001008114 STANDARD INDUSTRIAL CLASSIFICATION: METAL FORGING & STAMPINGS [3460] IRS NUMBER: 133868804 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-45839 FILM NUMBER: 98731089 BUSINESS ADDRESS: STREET 1: 555 THEODORE FREMD AVE CITY: RYE STATE: NY ZIP: 10580 BUSINESS PHONE: 9149679400 MAIL ADDRESS: STREET 1: 555 THEODORE FREMD AVENUE CITY: RYE STATE: NY ZIP: 10580 FORMER COMPANY: FORMER CONFORMED NAME: BEC GROUP INC DATE OF NAME CHANGE: 19960216 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: EG&G INC CENTRAL INDEX KEY: 0000031791 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 042052042 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 45 WILLIAM ST CITY: WELLESLEY STATE: MA ZIP: 02181-4078 BUSINESS PHONE: 7812375100 MAIL ADDRESS: STREET 1: 45 WILLIAM ST CITY: WELLESLEY STATE: MA ZIP: 02181 FORMER COMPANY: FORMER CONFORMED NAME: EDGERTON GERMESHAUSEN & GRIER INC DATE OF NAME CHANGE: 19670626 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: EG&G INC CENTRAL INDEX KEY: 0000031791 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 042052042 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 45 WILLIAM ST CITY: WELLESLEY STATE: MA ZIP: 02181-4078 BUSINESS PHONE: 7812375100 MAIL ADDRESS: STREET 1: 45 WILLIAM ST CITY: WELLESLEY STATE: MA ZIP: 02181 FORMER COMPANY: FORMER CONFORMED NAME: EDGERTON GERMESHAUSEN & GRIER INC DATE OF NAME CHANGE: 19670626 SC 14D1 1 LUMEN TECHNOLOGIES, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------------------- Schedule 14D-1 Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities and Exchange Act of 1934 and Schedule 13D Under the Securities Exchange Act of 1934 --------------------------------------- LUMEN TECHNOLOGIES, INC. --------------------------------------- (Name of Subject Company) EG&G, INC. LIGHTHOUSE WESTON CORP. --------------------------------------- (Bidders) Common Stock, Par Value $0.01 Per Share --------------------------------------- (Title of Class of Securities) 550242 10 1 --------------------------------------- (CUSIP Number of Class of Securities) Murray Gross, Esq. Senior Vice President, General Counsel and Clerk EG&G, Inc. 45 William Street Wellesley, Massachusetts 02481 (781) 237-5100 Copy to: David E. Redlick, Esq. Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 (617) 526-6000 - -------------------------------------------------------------------------------- (Names, Addresses, and Telephone Numbers of Persons Authorized to Receive Notices and Communications on Behalf of Bidders) --------------------------------------- 2 CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- Transaction Valuation: $194,337,186* Amount of Filing Fee $38,867.44** - -------------------------------------------------------------------------------- * For purposes of calculating fee only. This amount assumes the purchase of 25,075,766 shares of common stock of Lumen Technologies, Inc. (the "Shares"), at a price per Share of $7.75 in cash. Such number of Shares represents all of the Shares outstanding as of October 21, 1998, plus the number of Shares issuable upon the exercise of all outstanding options and the outstanding principal amount of all convertible notes. ** The amount of the filing fee, calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934, as amended, equals 1/50 of one percent of the Transaction Valuation. [ ] Check box if any part of the fee is offset by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount Previously Paid: None Form or Registration Number: Not applicable Filing Party: Not applicable Date Filed: Not applicable (Continued on following page(s)) (Page 1 of 9 Pages) 3 - ---------------------- ---------------------- CUSIP No. 550242 10 1 SCHEDULE 14D-1/13D Page 2 of 9 Pages - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON EG&G, INC. IRS No. 04-2052042 - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS WC, BK, OO - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Commonwealth of Massachusetts - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER 0 NUMBER OF --------------------------------------------------------- SHARES 8. SHARED VOTING POWER BENEFICIALLY OWNED BY 2,896,022(1) EACH --------------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH: 0 --------------------------------------------------------- 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,896,022(1) - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.2% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- (1) Represents the maximum number of Shares that are subject to the Stockholders' Agreement described in this Schedule 14D-1/13D and consists of 1,143,684 Shares outstanding on October 21, 1998 (including up to 150,000 Shares held by one of the Management Stockholders (as defined herein) in a representative capacity, which Shares are not subject to the Stockholders' Agreement) and 1,752,338 Shares subject to stock options outstanding on October 21, 1998. Pursuant to the Stockholders' Agreement, the Purchaser has been granted an irrevocable proxy to vote such Shares (other than up to 150,000 Shares held by one of the Management Stockholders in a representative capacity) in favor of the Merger described herein. 4 - ---------------------- ---------------------- CUSIP No. 550242 10 1 SCHEDULE 14D-1/13D Page 3 of 9 Pages - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON LIGHTHOUSE WESTON CORP. IRS No. 04-3438030 - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION State of Delaware - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER 0 NUMBER OF --------------------------------------------------------- SHARES 8. SHARED VOTING POWER BENEFICIALLY OWNED BY 2,896,022(1) EACH --------------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH: 0 --------------------------------------------------------- 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,896,022(1) - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.2% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- (1) Represents the maximum number of Shares that are subject to the Stockholders' Agreement described in this Schedule 14D-1/13D and consists of 1,143,684 Shares outstanding on October 21, 1998 (including up to 150,000 Shares held by one of the Management Stockholders in a representative capacity, which Shares are not subject to the Stockholders' Agreement) and 1,752,338 Shares subject to stock options outstanding on October 21, 1998. Pursuant to the Stockholders' Agreement, the Purchaser has been granted an irrevocable proxy to vote such Shares (other than up to 150,000 Shares held by one of the Management Stockholders in a representative capacity) in favor of the Merger described herein. 5 This Statement relates to a tender offer by Lighthouse Weston Corp. (the "Purchaser), a Delaware corporation and a wholly owned subsidiary of EG&G, Inc., a Massachusetts corporation ("Parent"), to purchase all outstanding shares of common stock, par value $0.01 per share (the "Shares"), of Lumen Technologies, Inc., a Delaware corporation (the "Company"), at a price of $7.75 per share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase (the "Offer to Purchase") and in the related Letter of Transmittal (which together with any amendments or supplements thereto, collectively constitute the "Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. Item 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Lumen Technologies, Inc., a Delaware corporation, which has its principal executive offices at 555 Theodore Fremd Avenue, Rye, NY 10580. (b) This Schedule 14D-1 relates to the offer by the Purchaser to purchase all outstanding Shares at a price of $7.75 per Share, net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal. Information concerning the number of outstanding Shares is set forth in the "Introduction" of the Offer to Purchase and is incorporated herein by reference. (c) Information concerning the principal market in which the Shares are traded and the high and low sales prices of Shares for each quarterly period during the past two years during which the Shares were publicly traded is set forth in Section 6 ("Price Range of the Shares; Dividends") of the Offer to Purchase and is incorporated herein by reference. Item 2. IDENTITY AND BACKGROUND. (a)-(d) and (g) This Schedule 14D-1 is being filed by the Purchaser and the Parent. The Purchaser is a wholly owned subsidiary of Parent. Information concerning the principal business and the address of the principal offices of the Parent and Purchaser is set forth in Section 8 ("Certain Information Concerning the Parent and Purchaser") of the Offer to Purchase and is incorporated herein by reference. The names, business addresses, present principal occupations or employment, material occupations, positions, offices or employments during the last five years and citizenship of the directors and executive officers of the Parent and Purchaser are set forth in Schedule I to the Offer to Purchase and are incorporated herein by reference. (e) and (f) The information set forth in Section 8 ("Certain Information concerning the Parent and Purchaser") of the Offer to Purchase is incorporated herein by reference. During the last five years, neither the Purchaser nor the Parent, nor, to the best knowledge of Page 4 of 9 Pages 6 the Purchaser or the Parent, any of the persons listed in Schedule I to the Offer to Purchase, (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such law. Item 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) and (b) The information set forth in Section 10 ("Background of the Offer; Contacts with the Company;") and Section 11 ("Purpose of the Offer; The Merger Agreement; The Stockholders' Agreement; Plans for the Company After the Merger; SEC Regulations; Appraisal Rights") of the Offer to Purchase is incorporated herein by reference. Item 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS. (a) and (b) The information set forth in Section 9 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. Item 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(e) The information set forth in Section 11 ("Purpose of the Offer; The Merger Agreement; The Stockholders' Agreement; Plans for the Company After the Merger; SEC Regulations; Appraisal Rights) of the Offer to Purchase is incorporated herein by reference. (f) and (g) The information set forth in Section 12 ("Certain Effects of the Offer on the Market for the Shares; NYSE Listing; Exchange Act Registration; Margin Regulations") of the Offer to Purchase is incorporated herein by reference. Item 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) and (b) The information set forth in "Introduction", Section 8 ("Certain Information Concerning the Parent and Purchaser"), Section 11 ("Purpose of the Offer; The Merger Agreement; The Stockholders' Agreement; Plans for the Company After the Merger; SEC Regulations; Appraisal Rights") and Schedule I of the Offer to Purchase is incorporated herein by reference. Page 5 of 9 Pages 7 Item 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in "Introduction", Section 8 ("Certain Information Concerning the Parent and Purchaser"), Section 10 ("Background of the Offer; Contacts with the Company") and Section 11 ("Purpose of the Offer; The Merger Agreement; The Stockholders' Agreement; Plans for the Company After the Merger; SEC Regulations; Appraisal Rights") of the Offer to Purchase is incorporated herein by reference. Item 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in "Introduction" and in Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. Item 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 8 ("Certain Information Concerning the Parent and Purchaser") of the Offer to Purchase is incorporated herein by reference. The incorporation by reference herein of the above-referenced financial information does not constitute an admission that such information is material to a decision by a stockholder of the Company whether to sell, tender or hold Shares being sought pursuant to the Offer. Item 10. ADDITIONAL INFORMATION. (a) The information set forth in Section 11 ("Purpose of the Offer; The Merger Agreement; The Stockholders' Agreement; Plans for the Company After the Merger; SEC Regulations; Appraisal Rights") of the Offer to Purchase is incorporated herein by reference. (b) and (c) The information set forth in Section 14 ("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 12 ("Certain Effects of the Offer on the Market for Share; NYSE Listing; Exchange Act Registration; Margin Regulations") of the Offer to Purchase is incorporated herein by reference. (e) None. Page 6 of 9 Pages 8 (f) The information set forth in the Offer to Purchase, the Letter of Transmittal, the Agreement and Plan of Merger dated as of October 21, 1998, among the Purchaser, Parent and the Company and the Stockholders' Agreement dated as of October 21, 1998 among the Parent and certain stockholders of the Company, copies of which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and (c)(2), respectively, is incorporated herein by reference. Item 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Summary Advertisement as published October 27, 1998. (a)(8) Text of Joint Press Release as published October 21, 1998, issued by the Company and Parent. (a)(9) Text of Press Release as published October 27, 1998, issued by the Parent. *(b)(1) Termination, Replacement and Restatement Agreement dated as of March 6, 1998, among the Parent, the Lenders listed therein and the Chase Manhattan Bank (as successor to Chemical Bank) as Administrative Agent. **(b)(2) 364-Day Competitive Advance and Revolving Credit Agreement dated as of March 21, 1994, among the Parent, the Lenders named therein and Chase Manhattan Bank (as successor to Chemical Bank) as Administrative Agent, as amended. **(b)(3) Five-Year Competitive Advance and Revolving Credit Agreement dated as of March 21, 1994, among the Parent, the Lenders named therein and Chase Manhattan Bank (as successor to Chemical Bank) as Administrative Agent, as amended. (c)(1) Agreement and Plan of Merger dated as of October 21, 1998, among Parent, the Purchaser and the Company. (c)(2) Stockholders' Agreement dated as of October 21, 1998, among Parent and certain stockholders of the Company. (c)(3) Confidentiality Agreement dated as of June 9, 1998 between the Company and the Parent. (d) None. (e) Not applicable. (f) None. - -------------- * Incorporated by reference to the Parent's Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-5075). ** Agreement and Amendments No. 1 and 2, incorporated by reference to the Parent's Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 1-5075); Amendment No. 3, incorporated by reference to the Parent's Annual Report on Form 10-K for the year ended December 29, 1996 (File No. 1-5075). Page 7 of 9 Pages 9 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. Dated: October 27, 1998 EG&G, INC. By: /s/ Angelo D. Castellana ---------------------------- Name: Angelo D. Castellana Title: Senior Vice President LIGHTHOUSE WESTON CORP. By: /s/ Daniel T. Heaney ---------------------------- Name: Daniel T. Heaney Title: Treasurer Page 8 of 9 Pages 10 INDEX OF EXHIBITS Number Exhibit Name - ------ ------------ (a)(1) Offer to Purchase. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Summary Advertisement as published October 27, 1998. (a)(8) Text of Joint Press Release dated October 21, 1998, issued by the Company and Parent. (a)(9) Text of Press Release dated October 27, 1998, issued by the Parent. *(b)(1) Termination, Replacement and Restatement Agreement dated as of March 6, 1998, among the Parent, the Lenders listed therein and the Chase Manhattan Bank (as successor to Chemical Bank) as Administrative Agent. **(b)(2) 364-Day Competitive Advance and Revolving Credit agreement dated as of March 21, 1994, among the Parent, the Lenders named therein and Chase Manhattan Bank (as successor to Chemical Bank) as Administrative Agent, as amended. **(b)(3) Five-Year Competitive Advance and Revolving Credit Facility dated as of March 21, 1994, among the Parent, the Lenders listed therein and Chase Manhattan Bank (as successor to Chemical Bank) as Administrative Agent, as amended. (c)(1) Agreement and Plan of Merger dated as of October 21, 1998, among Parent, the Purchaser and the Company. (c)(2) Stockholders' Agreement dated as of October 21, 1998, among Parent and certain stockholders of the Company. (c)(3) Confidentiality Agreement dated as of June 9, 1998 between the Parent and the Company. (d) None. (e) Not applicable. (f) None. - ------------------ * Incorporated by reference to the Parent's Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-5075). ** Agreement and Amendments Number 1 and 2, incorporated by reference to the Parent's Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 1-5075); Amendment Number 3, incorporated by reference to the Parent's Annual Report on Form 10-K for the year ended December 26, 1996 (File No. 1-5075). Page 9 of 9 Pages EX-99.(A)(1) 2 OFFER TO PURCHASE 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LUMEN TECHNOLOGIES, INC. AT $7.75 NET PER SHARE BY LIGHTHOUSE WESTON CORP. A WHOLLY OWNED SUBSIDIARY OF EG&G, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, NOVEMBER 24, 1998, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES OF LUMEN TECHNOLOGIES, INC. (THE "COMPANY") WHICH CONSTITUTES AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY-DILUTED BASIS (AS DEFINED HEREIN) AND (2) ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER REFERRED TO HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED AND FOUND ADVISABLE THE MERGER AGREEMENT REFERRED TO HEREIN, THE OFFER AND THE MERGER AND RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. ------------------------ IMPORTANT Any stockholder desiring to tender all or any portion of such stockholder's Shares (as defined herein), should either (1) complete and sign the Letter of Transmittal (or a facsimile thereof) in accordance with the Instructions in the Letter of Transmittal, have such stockholder's signature thereon guaranteed if required by the Instructions to the Letter of Transmittal, mail or deliver the Letter of Transmittal (or a manually signed facsimile), or, in the case of a book-entry transfer effected pursuant to the procedure set forth in Section 3, an Agent's Message (as defined herein), and any other required documents to the Depositary (as defined herein), and either deliver the certificates representing such Shares to the Depositary along with the Letter of Transmittal (or a manually signed facsimile) or deliver such Shares pursuant to the procedures for book-entry transfer set forth in Section 3 or (2) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. Any stockholder having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such stockholder desires to tender such Shares. A stockholder who desires to tender Shares and whose certificates representing such Shares are not immediately available, or who cannot comply in a timely manner with the procedures for book-entry transfer, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal or other tender offer materials may be directed to the Information Agent at its address and telephone numbers set forth on the back cover of this Offer to Purchase. Stockholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. October 27, 1998 2 TABLE OF CONTENTS
PAGE ---- INTRODUCTION................................................ 1 THE TENDER OFFER............................................ 3 1. Terms of the Offer; Expiration Date.................... 3 2. Acceptance for Payment and Payment for Shares.......... 4 3. Procedures for Accepting the Offer and Tendering Shares................................................. 6 4. Withdrawal Rights...................................... 8 5. Certain Federal Income Tax Consequences................ 9 6. Price Range of the Shares; Dividends................... 10 7. Certain Information Concerning the Company............. 10 8. Certain Information Concerning the Parent and the Purchaser.............................................. 13 9. Source and Amount of Funds............................. 15 10. Background of the Offer; Contacts with the Company..... 16 11. Purpose of the Offer; The Merger Agreement; The Stockholders' Agreement; Plans for the Company After the Merger; SEC Regulations; Appraisal Rights.......... 18 12. Certain Effects of the Offer on the Market for Shares; NYSE Listing; Exchange Act Registration; Margin Regulations............................................ 30 13. Certain Conditions of the Offer........................ 31 14. Certain Legal Matters; Regulatory Approvals............ 33 15. Dividends and Distributions............................ 35 16. Fees and Expenses...................................... 35 17. Miscellaneous.......................................... 36
SCHEDULE I Members of the Boards of Directors and Executive Officers of the Parent and the Purchaser 3 To the Holders of Common Stock of LUMEN TECHNOLOGIES, INC.: INTRODUCTION Lighthouse Weston Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of EG&G, Inc., a Massachusetts corporation (the "Parent"), hereby offers to purchase all outstanding shares of common stock, par value $0.01 per share (the "Shares"), of Lumen Technologies, Inc., a Delaware corporation (the "Company"), at a purchase price of $7.75 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments or supplements hereto or thereto, collectively constitute the "Offer"). The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of October 21, 1998 (the "Merger Agreement"), by and among the Parent, the Purchaser and the Company. The Merger Agreement provides, among other things, for the making of the Offer, and further provides that, following the consummation of the Offer and the satisfaction of the other conditions set forth in the Merger Agreement (but in no event prior to January 11, 1999, unless so requested by the Parent) and in accordance with the relevant provisions of the Delaware General Corporation Law (the "Delaware Law"), the Purchaser will be merged with and into the Company (the "Merger"), the Company will be the surviving corporation (the "Surviving Corporation") and the Surviving Corporation will be a wholly owned subsidiary of the Parent. Upon the effective time of the Merger (the "Effective Time"), each outstanding Share (other than Shares held by the Parent, the Purchaser or the Company or any direct or indirect subsidiary of the Parent, the Purchaser or the Company, and Shares held by stockholders, if any, who are entitled to and perfect their appraisal rights under Section 262 of the Delaware Law) will be cancelled and converted into the right to receive $7.75 per Share in cash, or any higher price that may be paid per Share in the Offer, without interest thereon (the "Merger Consideration"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED AND FOUND ADVISABLE THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES WHICH CONSTITUTES AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY-DILUTED BASIS, AS DEFINED HEREIN (THE "MINIMUM CONDITION") AND (2) ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTION 13. The Company has advised the Purchaser that Raymond James & Associates, Inc., external investment banker to the Company (the "Company Investment Banker"), has delivered to the Company's Board of Directors its written opinion dated October 21, 1998, that on the basis of and subject to the matters set forth therein, the cash consideration per Share to be received by the holders of Shares (other than the Parent and its affiliates) in exchange for Shares pursuant to the Offer and the Merger is fair, from a financial point of view, to the Company and its stockholders (the "Fairness Opinion"). The Company has delivered to the Purchaser a copy of the Fairness Opinion, together with the Company Investment Banker's written consent to the inclusion of or reference to the Fairness Opinion in the Tender Offer Statement on Schedule 14D-1 ("Schedule 14D-1") filed by the Purchaser and the Parent with the Securities and Exchange Commission (the "Commission" or the "SEC") in connection with the Offer (including this Offer to Purchase, the Letter of Transmittal and the other exhibits to the Schedule 14D-1), the Schedule 14D-9 filed by the Company with the Commission in connection with the Offer and any proxy or information statement (the "Proxy Statement") that may be delivered to the stockholders of the Company in connection with any vote of stockholders required with respect to the Merger. 1 4 The Company has filed with the Commission the Schedule 14D-9, which is being mailed to stockholders of the Company concurrently herewith. The Company has advised the Purchaser that, as of October 21, 1998, there were (i) 20,209,606 Shares issued and outstanding (net of 501,000 treasury Shares), (ii) 3,613,325 Shares reserved for issuance pursuant to options outstanding under the Company's option plans, (iii) 1,252,835 Shares reserved for issuance upon conversion, at the conversion price of $9.89 per share, of the outstanding principal under the Company's 8% Convertible Notes due 2002 (the "Convertible Notes") and (iv) no other Shares reserved for issuance for any purpose. For purposes of calculating the Minimum Condition, the term "fully diluted basis" includes Shares reserved for issuance pursuant to options outstanding under the Company's option plans (except to the extent such Shares would, following exercise, be subject to the Stockholders' Agreement (described below)), but excludes Shares reserved for issuance with respect to the Convertible Notes. See Section 13. Based upon 22,070,593 Shares outstanding on a fully-diluted basis as of October 21, 1998, 11,035,297 Shares must be tendered in order to satisfy the Minimum Condition. The Parent and the Purchaser have entered into a Stockholders' Agreement with certain officers and directors of the Company (the "Management Stockholders"), with respect to 993,684 Shares outstanding as of the date of the Merger Agreement and beneficially owned by the Management Stockholders and an additional 1,752,338 Shares subject to options held by the Management Stockholders. The Shares subject to the Stockholders' Agreement represent between 4.5% (assuming the Management Stockholders do not exercise any of their options) and 11.5% (assuming the Management Stockholders exercise all of their options) of the Fully Diluted Shares (as defined herein). Pursuant to the Stockholders' Agreement, the Management Stockholders have agreed to tender all their outstanding Shares pursuant to the Offer, to vote all their outstanding Shares in favor of the Merger and not to transfer such Shares without the Parent's consent and have granted the Purchaser a proxy to vote such Shares in favor of the Merger. The Company has represented to the Parent and the Purchaser that, in addition to the obligations of the Management Stockholders pursuant to the Stockholders' Agreement, each member of the Company's Board of Directors and each executive officer of the Company has advised the Company that his current intention is to tender all Shares, if any, beneficially owned by him pursuant to the Offer, other than those individuals, if any, for whom the tender of such Shares (the "Section 16 Shares") would cause them to incur liability under the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As to the Section 16 Shares, if any, the Company has represented to the Parent and the Purchaser that each such director and executive officer has advised the Company that it is his current intention to vote such Shares in favor of the Merger. The consummation of the Merger is subject to the satisfaction or waiver of certain conditions, including the approval and adoption of the Merger Agreement by the requisite vote or consent of the stockholders of the Company, if required by the Delaware Law. Under the Delaware Law, if the Purchaser acquires at least a majority of the outstanding Shares, the Purchaser would have sufficient voting power to approve and adopt the Merger Agreement, and consummate the Merger without the vote or consent of any other stockholder. In addition, under the Delaware Law, if the Purchaser acquires at least 90% of the outstanding Shares, the Purchaser would have the power to approve and adopt the Merger Agreement, and consummate the Merger, without a vote of the Company's stockholders. In either event, the Purchaser intends to take all necessary and appropriate action to cause the Merger to become effective as soon as reasonably practicable after the consummation of the Offer (but in no event prior to January 11, 1999, unless so requested by the Parent). THE PURCHASER IS NOT SOLICITING STOCKHOLDER PROXIES, AND THIS OFFER DOES NOT CONSTITUTE SUCH A SOLICITATION. ANY SOLICITATION BY THE PURCHASER OR THE COMPANY OF PROXIES OR CONSENTS FROM THE COMPANY'S STOCKHOLDERS WILL NOT COMMENCE UNTIL, IF REQUIRED UNDER THE COMMISSION'S PROXY RULES, PROXY MATERIALS ARE FILED WITH THE COMMISSION AND FURNISHED TO STOCKHOLDERS. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes with respect to the purchase by the Purchaser of Shares pursuant to the Offer. The Purchaser will pay all fees and expenses of BankBoston, N.A., which is acting as the Depository (the "Depositary"), and Kissel-Blake, which is acting as the Information Agent (the "Information Agent"), incurred in connection with the Offer. See Section 16. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 2 5 THE TENDER OFFER 1. TERMS OF THE OFFER; EXPIRATION DATE Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and pay for all Shares validly tendered prior to the Expiration Date (as defined below) and not properly withdrawn as provided in Section 4. The term "Expiration Date" means 12:00 midnight, New York City time, on Tuesday, November 24, 1998, unless and until the Purchaser, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), shall have extended the period during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Subject to the applicable rules and regulations of the Commission, the Purchaser expressly reserves the right, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), at any time and from time to time, and regardless of whether or not any of the events set forth in Section 13 of this Offer to Purchase shall have occurred, to extend the period during which the Offer is open and thereby delay acceptance for payment of, and payment for, any Shares, by giving oral or written notice of such extension to the Depositary. There can be no assurance that the Purchaser will exercise its right to extend the Offer (other than as may be required by law). During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the rights of a tendering stockholder to withdraw such stockholder's Shares. See Section 4. Subject to the applicable rules and regulations of the Commission, the Purchaser also expressly reserves the right, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), at any time and from time to time, to (i) delay acceptance for payment of or, regardless of whether the Shares were theretofore accepted for payment, payment for, any Shares pending receipt of any regulatory approvals specified in Section 14, (ii) terminate the Offer and not accept for payment (or pay for) any Shares if any of the conditions referred to in Section 13 has not been satisfied or upon the occurrence and during the continuance of any of the events specified in Section 13, and (iii) waive any condition or amend the Offer in any respect, in each case, by giving oral or written notice of such delay, termination, waiver or amendment to the Depositary and by making a public announcement thereof. The Merger Agreement provides that, without the consent of the Company, the Purchaser shall not amend or waive the Minimum Condition, reduce the maximum number of Shares to be purchased, reduce the price to be paid per Share pursuant to the Offer, change the form of consideration to be paid in the Offer, impose conditions to the Offer in addition to those set forth in Section 13, or amend any other material term of the Offer in a manner adverse to the holders of the Shares. The Merger Agreement further provides that, notwithstanding the foregoing, the Purchaser may, in its sole discretion, (A) extend the Offer if at the scheduled or any extended expiration date of the Offer any of the conditions set forth in Section 13 (including the Minimum Condition) shall not be satisfied or waived, until such time as such conditions are satisfied or waived, and (B) extend the Offer for any period required by any rule, regulation, interpretation or position of the Commission or the staff thereof applicable to the Offer; provided, however, that, without the Company's written consent, the Purchaser may not extend the expiration date of the Offer to a date later than 11:59 p.m. on December 31, 1998. The Purchaser acknowledges (x) that Rule 14e-1(c) under the Exchange Act requires the Purchaser to pay the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer and (y) that the Purchaser may not delay acceptance for payment of, or payment for (except as provided in clause (i) of the first sentence of this paragraph), any Shares upon the occurrence of any of the conditions specified in Section 13 without extending the period during which the Offer is open. If the Minimum Condition or any other condition specified in Section 13 is not fulfilled by the Expiration Date, the Purchaser reserves the right (but shall not be obligated) to (i) decline to purchase any of the Shares tendered, return all tendered Shares to tendering stockholders and terminate the Offer, (ii) subject to the terms and conditions of the Merger Agreement, extend the Offer and retain all tendered Shares until the expiration of the Offer, as extended, subject to the terms and conditions of the Offer (including any rights of stockholders to withdraw their Shares), or (iii) subject to the terms and conditions of the Merger Agreement, 3 6 waive or reduce the condition and, subject to complying with applicable rules and regulations of the Commission, accept for payment and purchase all Shares validly tendered. Any extension, termination, or amendment of the Offer will be followed by a public announcement thereof, such announcement, in the case of an extension, to be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which the Purchaser may choose to make any public announcement, except as provided by applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act, which require that material changes be promptly disseminated to holders of Shares), the Purchaser will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. If, in accordance with the terms and conditions of the Merger Agreement, the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer, or waives a material condition of the Offer, the Purchaser will disseminate additional tender offer materials (including by public announcement as set forth above) and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer, other than a change in price, a change in percentage of securities sought or a change in any dealer's soliciting fee, will depend upon the facts and circumstances, including the relative materiality of the changes. With respect to a change in price or, subject to certain limitations, a change in the percentage of securities sought or a change in any dealer's soliciting fee, a minimum ten business day period from the day of such change is generally required to allow for adequate dissemination to stockholders. Accordingly, if, prior to the Expiration Date, the Purchaser decreases the number of Shares being sought, increases the consideration offered pursuant to the Offer or adds a dealer's soliciting fee, and if the Offer is scheduled to expire at any time earlier than the period ending on the tenth business day from the date that notice of such increase, decrease or addition is first published, sent or given to stockholders, the Offer will be extended at least until the expiration of such ten business day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or a federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. The Company has provided the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal and, if required, other relevant material will be mailed to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will purchase by accepting for payment, and will pay for, all Shares validly tendered prior to the Expiration Date and not properly withdrawn (including Shares validly tendered and not withdrawn during any extension of the Offer, if the Offer is extended, subject to the terms and conditions of such extension), promptly after the later of (i) the Expiration Date and (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable to the Purchaser's purchase of Shares pursuant to the Offer. In addition, subject to complying with Rule 14e-1 under the Exchange Act, the Purchaser expressly reserves the right, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), to delay the acceptance for payment of, or payment for, Shares in order to comply, in whole or in part, with any other applicable law. On October 22, 1998, the Parent filed with the Federal Trade Commission (the "FTC") and the Antitrust Division of the Department of Justice (the "Antitrust Division") a Premerger Notification and Report Form under the HSR Act with respect to the Offer. Accordingly, it is anticipated that the waiting 4 7 period under the HSR Act applicable to the Offer will expire at 11:59 p.m., New York City time, on November 6, 1998. However, prior to the expiration or termination of the waiting period, the FTC or the Antitrust Division may extend the waiting period applicable to the Offer by requesting additional information from the Parent. If such a request is made, the waiting period applicable to the Offer will expire on the tenth calendar day after the date of substantial compliance by the Parent with such request. Thereafter, the waiting period may only be extended by court order or with the agreement of the Parent. The waiting period under the HSR Act may be terminated by the FTC and the Antitrust Division prior to its expiration. The Parent has requested early termination of the waiting period applicable to the Offer, although there can be no assurance that this request will be granted. See Section 14 for additional information regarding the HSR Act. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates evidencing Shares ("Share Certificates") or timely confirmation of a book-entry transfer of such Shares ("Book-Entry Confirmation") into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined below) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. Accordingly, payment may be made to tendering stockholders at different times if delivery of the Shares and other required documents occurs at different times. The term "Agent's Message" means a message transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares which are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn if, as and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares so accepted for payment pursuant to the Offer will be made by deposit of the aggregate purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting such payment to stockholders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR DELAY IN MAKING SUCH PAYMENT. Upon the deposit of funds with the Depositary for the purpose of making payment to validly tendering stockholders, the Purchaser's obligation to make such payment shall be satisfied and such tendering stockholders must thereafter look solely to the Depositary for payment of the amounts owed to them by reason of the acceptance for payment of Shares pursuant to the Offer. If any tendered Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason, or if Share Certificates are submitted for more Shares than are tendered, Share Certificates evidencing Shares not purchased or not tendered will be returned, without expense to the tendering stockholder (or, in the case of Shares tendered by book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedures for book-entry transfer set forth in Section 3, such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), as soon as practicable following expiration or termination of the Offer. If, prior to the Expiration Date, the Purchaser increases the consideration to be paid per Share, the Purchaser will pay such increased consideration for all Shares purchased pursuant to the Offer, whether or not such Shares have been tendered or purchased prior to such increase in consideration. Subject to the terms and conditions of the Merger Agreement, the Parent and the Purchaser reserve the right to transfer or assign, in whole or in part from time to time, to one or more of their affiliates, the right to purchase the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Parent or the Purchaser of their respective obligations under the Offer, nor will any such transfer or 5 8 assignment in any way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES General. Except as set forth below, in order for Shares to be validly tendered pursuant to the Offer, the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, and either (i) Share Certificates evidencing tendered Shares must be received by the Depositary at such address or such Shares must be tendered pursuant to the procedures for book-entry transfer set forth below (and a Book-Entry Confirmation must be received by the Depositary), in each case prior to the Expiration Date, or (ii) the guaranteed delivery procedures set forth below must be complied with. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering stockholders, by execution of the Letter of Transmittal (or facsimile thereof) waive any right to receive any notice of the acceptance of their Shares for payment. THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE SOLE OPTION AND RISK OF EACH TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Book-Entry Transfer. The Depositary will make a request to establish an account with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message, and any other documents required by the Letter of Transmittal, must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date in order for such Shares to be validly tendered pursuant to the Offer, or the tendering stockholder must comply with the guaranteed delivery procedures described below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. Signature Guarantees. Signatures on all Letters of Transmittal must be guaranteed by a firm that is a commercial bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program, the Stock Exchanges' Medallion Program or the New York Stock Exchange, Inc. ("NYSE") Medallion Signature Program (an "Eligible Institution"), unless the Shares tendered thereby are tendered (i) by a registered holder of Shares who has not completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If the Share Certificates are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or Share Certificates for unpurchased Shares are to be returned, to a person other than the registered holder(s), then the tendered Share Certificates must be endorsed or accompanied by appropriate stock powers signed exactly as the name(s) of the registered holder(s) appear on the Share Certificates with the signature(s) on such Share Certificates or stock powers guaranteed by an 6 9 Eligible Institution as provided above and in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's Share Certificates are not immediately available or time will not permit all of the required documents to reach the Depositary prior to the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, such Shares may nevertheless be tendered, provided that all of the following conditions are satisfied: (a) such tender is made by or through an Eligible Institution; (b) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Purchaser herewith, is received by the Depositary, as provided below, prior to the Expiration Date; and (c) the Share Certificates (or a Book-Entry Confirmation) for all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees or in the case of a book-entry transfer, an Agent's Message and any other documents required by the Letter of Transmittal are received by the Depositary within three NYSE trading days after the date of execution of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of Share Certificates therefor (or Book-Entry Confirmation of the transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility), a properly completed and duly executed Letter of Transmittal (or facsimile thereof), together with any required signature guarantees or, in the case of a book-entry transfer, an Agent's Message, and any other documents required by the Letter of Transmittal. Accordingly, payment might not be made to all tendering stockholders at the same time, and will depend upon when Share Certificates or Book-Entry Confirmations of such Shares are received by the Depositary. Backup Federal Income Tax Withholding. Under the U.S. federal income tax laws, the Depositary may, under certain circumstances, be required to withhold 31% of the amount of any payments made to certain stockholders pursuant to the Offer. To prevent such backup federal income tax withholding with respect to payments made to certain stockholders of the purchase price of Shares purchased pursuant to the Offer, each such stockholder must provide the Depositary with such stockholder's correct taxpayer identification number and certify that such stockholder is not subject to backup federal income tax withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. See Instruction 9 of the Letter of Transmittal. Appointment as Proxy. By executing the Letter of Transmittal, a tendering stockholder irrevocably constitutes and appoints designees of the Purchaser as the stockholder's attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution with respect to any Shares tendered thereby (and with respect to any and all other Shares or other securities issued or issuable in respect of such Shares on or after October 21, 1998). All such powers of attorney and proxies shall be considered irrevocable and coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, the Purchaser accepts such Shares for payment and deposits the purchase price therefor with the Depositary. Upon such deposit, all prior powers of attorney and proxies given by such stockholder at any time with respect to such Shares (and other Shares and securities issued or issuable in respect of such Shares on or after October 21, 1998) will, without further action, be revoked, and no subsequent powers of attorney or proxies may be given nor any subsequent written consents executed by such stockholder (and, if given or executed, will not be deemed effective). Upon such deposit by the Purchaser, the designees of the Purchaser will, with respect to such Shares and other securities, be empowered to exercise all voting and other rights of such stockholder as they in their sole discretion may deem proper at any annual or 7 10 special meeting of the Company's stockholders, or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's payment for such Shares, the Purchaser must be able to exercise full voting and other rights of a record and beneficial holder, including, without limitation, voting at any meeting of stockholders or by written consent in lieu of any such meeting. Determination of Validity. All questions as to the validity, form, eligibility (including the time of receipt) and acceptance for payment of any tendered Shares pursuant to any of the procedures described above will be determined by the Purchaser, in its sole discretion, which determination will be final and binding on all parties. The Purchaser reserves the absolute right to reject any and all tenders of any particular Shares determined by it not to be in appropriate form or the acceptance of or payment for which may, in the opinion of its counsel, be unlawful. The Purchaser also reserves the absolute right to waive any of the conditions of the Offer (subject to the terms and conditions of the Merger Agreement) or any defect or irregularities in the tender of any particular Shares, whether or not similar defects or irregularities are waived in the case of any other Shares. The Purchaser's interpretations of the terms and conditions of the Offer (including the Letter of Transmittal and Instructions thereto) will be final and binding. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Parent, the Purchaser, any of their respective affiliates or assigns, the Information Agent, the Depositary or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. THE PURCHASER'S ACCEPTANCE FOR PAYMENT OF SHARES TENDERED PURSUANT TO THE OFFER WILL CONSTITUTE A BINDING AGREEMENT BETWEEN THE TENDERING STOCKHOLDER AND THE PURCHASER UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE OFFER. 4. WITHDRAWAL RIGHTS Except as otherwise provided in this Section 4, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment as provided herein, may also be withdrawn at any time after December 25, 1998. If the Purchaser extends the Offer, is delayed in, or delays, its acceptance for payment or payment for Shares or is unable to accept for payment or pay for Shares for any reason, then, without prejudice to the Purchaser's other rights under the Offer, tendered Shares may nevertheless be retained by the Depositary, on behalf of the Purchaser, and may not be withdrawn except to the extent tendering stockholders are entitled to and duly exercise withdrawal rights as described in this Section 4. Any such delay will be accompanied by an extension of the Offer to the extent required by law. In order for a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of the Shares to be withdrawn, if different from that of the person who tendered such Shares. If Share Certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the tendering stockholder must also submit the serial numbers shown on such Share Certificates to the Depositary and the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer, as set forth in Section 3, any notice of withdrawal must specify the number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and must otherwise comply with the procedure of the Book-Entry Transfer Facility. Withdrawals may not be revoked and any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered at any time prior to the Expiration Date by following one of the procedures described in Section 3. 8 11 All questions as to the form and validity (including the time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding on all parties. None of the Parent, the Purchaser, any of their respective affiliates or assigns, the Information Agent, the Depositary or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a summary of the material U.S. federal income tax consequences of the Offer and the Merger to the holders of Shares. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), applicable treasury regulations thereunder, judicial decisions and current administrative rulings. The discussion does not address all aspects of U.S. federal income taxation that may be relevant to particular taxpayers in light of their personal investment circumstances or to taxpayers subject to special treatment under the Code (for example, dealers in securities, financial institutions, insurance companies, foreign corporations, individuals who are not citizens or residents of the United States and holders whose Shares were acquired pursuant to the exercise of employee stock options or in other compensatory transactions) and does not address any aspect of state, local, foreign or other taxation. For federal income tax purposes, a tendering stockholder will generally recognize gain or loss equal to the difference between the amount of cash received by the stockholder pursuant to the Offer (or pursuant to the Merger) and the aggregate tax basis in the Shares tendered by the stockholder and purchased pursuant to the Offer (or cancelled pursuant to the Merger). Gain or loss will be calculated separately for each block of Shares tendered and purchased pursuant to the Offer (or cancelled pursuant to the Merger). If Shares are held by a stockholder as capital assets, gain or loss recognized by the stockholder will be capital gain or loss, which will be long-term capital gain or loss if the stockholder's holding period for the Shares exceeds one year. Long-term capital gains recognized by an individual stockholder will generally be taxed at a maximum federal marginal tax rate of 20%, and long-term capital gains recognized by a corporate stockholder will be taxed at a maximum federal marginal tax rate of 35%. A stockholder (other than corporations and certain foreign individuals) that tenders Shares may be subject to 31% backup withholding unless the stockholder provides the stockholder's social security or other taxpayer identification number ("TIN") and certifies that such number is correct or properly certifies that the stockholder is awaiting a TIN and certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules. A stockholder that does not furnish the stockholder's correct TIN or that does not otherwise establish a basis for an exemption from backup withholding may be subject to a penalty imposed by the Internal Revenue Service. Each stockholder should complete and sign the substitute Form W-9 included as part of the Letter of Transmittal so as to provide the information and certification necessary to avoid backup withholding. If backup withholding applies to a stockholder, the Depositary is required to withhold 31% from payments to such stockholder. Backup withholding is not an additional tax. Any amount withheld from a payment to a stockholder is allowable as a credit against such stockholder's federal income tax liability, provided that the required information is provided to the Internal Revenue Service. EACH HOLDER OF SHARES IS URGED TO CONSULT SUCH HOLDER'S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS. 9 12 6. PRICE RANGE OF THE SHARES; DIVIDENDS The Shares are listed and traded on the NYSE under the symbol "LNM". Until March 12, 1998, the Company's Common Stock was listed under the symbol "EYE". The following table sets forth the high and low sales prices per Share on the NYSE, as reported in publicly available sources for each of the periods indicated.
HIGH LOW -------- -------- Year Ended December 31, 1996: Second Quarter (May 3, 1996 through June 30, 1996)........ $7.75(1) $4.00(1) Third Quarter............................................. $5.75 $3.63 Fourth Quarter............................................ $5.25 $4.00 Year Ended December 31, 1997: First Quarter............................................. $6.13 $4.94 Second Quarter............................................ $5.38 $4.25 Third Quarter............................................. $4.63 $4.25 Fourth Quarter............................................ $5.13 $4.25 Year Ending December 31, 1998: First Quarter............................................. $9.25 $5.75 Second Quarter............................................ $9.625 $7.75 Third Quarter............................................. $8.875 $4.875 Fourth Quarter (through October 26, 1998)................. $7.50 $3.875
- --------------- (1) The Company's common stock commenced trading publicly on May 3, 1996. The Company has advised the Purchaser that, as of October 23, 1998, there were 509 holders of record of the Shares and in excess of 5,000 beneficial owners of the Shares. On October 21, 1998, the last full trading day prior to the public announcement of the execution of the Merger Agreement and of the Purchaser's intention to commence the Offer, the closing sale price per Share, as reported on the NYSE, was $6.00. On October 26, 1998, the last full trading day prior to the commencement of the Offer, the closing sale price per Share, as reported on the NYSE, was $7.50. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. The Company has advised the Purchaser that the Company has never declared or paid any cash dividends in respect of the Shares, and has agreed in the Merger Agreement that prior to the Merger it will not declare, set aside for payment or pay any dividends. On March 11, 1998, in connection with the Company's spin-off of its subsidiary, Bolle, Inc. ("Bolle"), the Company's stockholders received one share of Bolle common stock for every three shares of the Company's Common Stock held by such stockholder at the time of the spin-off. 7. CERTAIN INFORMATION CONCERNING THE COMPANY Except as otherwise set forth herein, the information concerning the Company set forth in this Section 7 and elsewhere in this Offer to Purchase has been furnished by the Company or has been taken from, or is based upon, publicly available documents on file with the Commission and other public sources. Stockholders are urged to review the publicly available information concerning the Company before acting on the Offer. Although neither the Parent nor the Purchaser has any knowledge of any facts that would indicate that any statements contained herein which are based on such documents are untrue, neither the Parent nor the Purchaser takes any responsibility for the accuracy or completeness of the information concerning the 10 13 Company furnished by the Company or contained in such documents or herein or for any failure by the Company to disclose events which may have occurred and which may have affected or may affect the significance or accuracy of any such information but that are unknown to the Parent or the Purchaser. General. The Company, a Delaware corporation, is a developer, manufacturer and marketer of specialty light sources and related products for markets requiring advanced optical technologies. The Company's products are used in a variety of applications, including high-intensity illumination systems and mini-systems that incorporate lamps, optics and electronic systems. The Company's products are found in the medical, industrial, aerospace, scientific, entertainment, semiconductor and military industries. The Company was the surviving corporation of the March 1998 merger of the BEC Group, Inc. and ILC Technology Inc. ("ILC"). The Company operates through two primary divisions: ORC Technologies and ILC Technology. The principal executive offices of the Company are located at 555 Theodore Fremd Avenue, Rye, New York 10580. The Company is subject to the disclosure requirements of the Exchange Act and in accordance therewith is required to file reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. In addition, the Company has filed a statement on Schedule 14D-9 regarding its recommendation to the Company's stockholders with respect to the Offer. Such reports, proxy statements, Schedule 14D-9 and other information are available for inspection at the Commission's public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549 and should also be available for inspection at the regional offices of the Commission located at Seven World Trade Center, 13th floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also be obtained at prescribed rates from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains an internet site (http://www.sec.gov) that contains reports, proxy statements and other information, including the Schedule 14D-9, regarding the Company. In addition, certain material filed by the Company may also be available for inspection at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, 10005. Financial Information. Set forth below is certain selected consolidated financial information with respect to the Company and its subsidiaries excerpted or derived from the audited consolidated financial statements contained in the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 1997, and the unaudited financial statements contained in the Company's Quarterly Report on Form 10-Q for the quarter and six months ended June 30, 1998 (collectively, the "Company Reports"). All share and per share information has been restated to give effect to reverse stock splits effected May 3, 1996 and March 11, 1998. More comprehensive financial information is included in the Company Reports and in other documents filed by the Company with the Commission from time to time (which may be inspected or obtained in the manner set forth above), and the following financial information is qualified in its entirety by reference to the Company Reports and other documents and all of the financial information (including any related notes) contained therein or incorporated therein by reference. 11 14 LUMEN TECHNOLOGIES, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION(1) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED SIX MONTHS ENDED DECEMBER 31, JUNE 30, ------------------- ------------------- 1997 1996 1998 1997 -------- ------- -------- ------- STATEMENT OF OPERATIONS INFORMATION: Net sales....................................... $ 48,128 $42,574 $ 68,929 $23,164 Cost of sales................................... 30,603 25,676 47,677 14,855 -------- ------- -------- ------- Gross profit................................. 17,525 16,898 23,308 8,978 Selling, general and administrative expenses.... 10,905 10,020 15,061 5,056 Special charges and spinoff expenses............ 9,571 -- 16,704 -- Interest expense................................ 3,458 2,942 2,604 1,705 Other expense (income).......................... (1,102) (1,378) 86 (740) -------- ------- -------- ------- Income (loss) from continuing operations before income taxes........................ (5,307) 5,314 (11,147) 2,957 Provision for (benefit from) income taxes....... (1,656) 1,870 463 926 Minority interests.............................. -- -- 115 -- -------- ------- -------- ------- Income (loss) from continuing operations........ (3,651) 3,444 (11,725) 2,031 Income (loss) from discontinued operations(2)... (1,282) 79,312 (685) 18 -------- ------- -------- ------- Net income (loss)............................... $ (4,933) $82,756 $(12,411) $ 2,049 ======== ======= ======== ======= PER SHARE INFORMATION: Basic earnings (loss) per share: From continuing operations................... $ (0.44) $ 0.40 $ (0.73) $ 0.23 From discontinued operations................. (0.15) 9.29 (0.04) -- -------- ------- -------- ------- $ (0.59) $ 9.69 $ (0.77) $ 0.23 ======== ======= ======== ======= Diluted earnings (loss) per share: From continuing operations................... $ (0.44) $ 0.40 $ (0.73) $ 0.23 From discontinued operations................. (0.15) 9.22 (0.04) -- -------- ------- -------- ------- $ (0.59) $ 9.62 $ (0.77) $ 0.23 ======== ======= ======== ======= BALANCE SHEET INFORMATION: Working capital................................. $ 34,337 $ 2,385 $ 2,534 $ 3,982 Total assets.................................... 119,689 75,071 150,854 79,255 Long-term debt.................................. 31,349 3,597 8,404 3,482 Convertible subordinated debt................... 23,742 21,922 14,944 22,941 Other long term liabilities..................... 8,307 10,754 7,570 9,656 Mandatorily redeemable preferred stock.......... 9,294 -- -- -- Stockholders' equity............................ $ 3,163 $ 7,604 $ 31,882 $ 9,802
- --------------- (1) Reflects the actual historical financial results of the Company for the indicated periods. These financial results should be read in conjunction with the Company's financial statements and related notes set forth in the Company Reports. The Company acquired ILC on March 12, 1998. The acquisition was accounted for as a purchase in accordance with APB No. 16 and accordingly, the results of operations of ILC are included in the Company's financial results from March 12, 1998. Additionally, as of January 1, 1998, the Company increased its effective common stock ownership of Voltarc Technologies Inc. ("Voltarc") to 50%. Accordingly, the Company has consolidated the results of operations and balance sheet of Voltarc from that date. The Voltarc investment was previously accounted for on the equity method. (2) Discontinued operations reflect the results of (a) Bolle, which was spunoff to the Company's stockholders on March 11, 1998, (b) the subsidiaries of the Company comprising the Company's Foster Grant Group, which was sold by the Company on December 12, 1996, and (c) the Omega Group, the wholesale optical laboratory business of the Company's predecessor, and Orcolite, the lens manufacturing business of the Company's predecessor, which were sold by the Company on May 3, 1996. 12 15 On October 26, 1998, the Company issued a press release summarizing the Company's financial results for the third quarter and the nine months ended September 30, 1998. In the press release, the Company reported: (i) for the third quarter ended September 30, 1998, net sales of $37.0 million, compared to 1997 net sales of $12.1 million; operating profit of $3.5 million, compared to 1997 operating profit of $1.0 million; and net income from continuing operations of $2.3 million, or $0.11 per share, compared to $0.7 million, or $0.08 per share, in 1997; and (ii) for the nine months ended September 30, 1998, net sales of $105.9 million, compared to 1997 net sales of $35.2 million; and net loss of $10.1 million, or $(0.57) per share, compared to net income of $3.1 million, or $0.35 per share, in 1997. The Company also noted in the press release that period to period results were not comparable due to transactions undertaken by Lumen during 1998 and that the results for the nine months ended September 30, 1998 reflected nonrecurring, non-cash charges of $16.7 million related to the merger and spin-off recorded in the first quarter of 1998. During the course of discussions between the Parent and the Company that led to the execution of the Merger Agreement (see Section 10), the Parent had access to certain non-public business and financial information about the Company. As part of this information, the Parent had access to a statement of operations for 1998, 1999 and 2000, which, for periods after 1998, was based on a numerical extrapolation of the Company's pro forma results for 1997. The Company has advised the Parent that such extrapolated statement of operations, which indicated net sales for 1998 and 1999 of $153.5 million and $175.4 million, respectively, net income for 1998 and 1999 of $7.7 million and $11.6 million, respectively, and further increases in net sales and net income for 2000, was based, for periods after 1998, on a numerical extrapolation of the Company's pro forma results for 1997 and was not based on any detailed forecast of the Company for such future periods, or on any consideration of trends, changes in market conditions, or any other relevant factors. The Company has advised the Parent that the Company does not as a matter of course make public any forecasts or projections as to future performance or earnings, and the information set forth in the preceding paragraph is included in the Offer to Purchase only because Parent had access to such information. The financial information set forth in the preceding paragraph was not prepared with a view to public disclosure or compliance with published guidelines of the Commission or the guidelines established by the American Institute of Certified Public Accountants regarding projections and forecasts. None of the Purchaser, the Parent or the Company assumes any responsibility for the validity, reasonableness, accuracy or completeness of the financial information in the preceding paragraph, and the Company has made no representation to the Parent or the Purchaser regarding the financial information described in the preceding paragraph. While presented with numerical specificity, this information is subject to significant uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of the Company. There can be no assurance that the results set forth in the preceding paragraph will be realized, and actual results may vary materially and adversely from those shown. The inclusion of this forward-looking information should not be regarded as fact or an indication that the Parent, the Purchaser, the Company or anyone who received this information considered it a reliable predictor of future results, and this information should not be relied on as such. 8. CERTAIN INFORMATION CONCERNING THE PARENT AND THE PURCHASER The Parent. The Parent, a Massachusetts corporation, is a diversified technology company that provides optoelectronic, mechanical and electromechanical components and instruments to manufacturers and end-user customers in aerospace, automotive, environmental, industrial, medical, photography, security and other markets. The Company also delivers technical and managerial support services to governmental and industrial customers. The Parent's common stock is traded on the NYSE under the symbol "EGG". The principal executive offices of the Parent are located at 45 William Street, Wellesley, Massachusetts 02481. The Parent is subject to the disclosure requirements of the Exchange Act and in accordance therewith is required to file reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Such reports, proxy statements and other information are available for 13 16 inspection and copying at prescribed rates at the offices of the Commission and the NYSE as set forth in Section 7 and are also available through the Commission's internet site (http://www.sec.gov). The Purchaser. The Purchaser, a Delaware corporation and a wholly owned subsidiary of the Parent, was incorporated on October 19, 1998, solely for purposes of the transactions contemplated by the Merger Agreement. It is not anticipated that, prior to the consummation of the Offer, the Purchaser will have any significant assets or liabilities (other than those arising under the Merger Agreement or otherwise in connection with the Offer or the Merger) or engage in any activities other than those incidental to its formation and capitalization and the Offer and the Merger. No meaningful financial information concerning the Purchaser is available. The principal executive offices of the Purchaser are located at 45 William Street, Wellesley, Massachusetts 02481. Directors and Executive Officers. The name, business address, principal occupation, five-year employment history and citizenship of each of the directors and executive officers of the Parent and the Purchaser are set forth in Schedule I hereto. Certain Transactions. Except for the Merger Agreement and the Stockholders' Agreement and as otherwise set forth in this Offer to Purchase, none of the Parent, the Purchaser nor, to the best knowledge of the Parent or the Purchaser, any of the persons listed in Schedule I to this Offer to Purchase, nor any associate or majority-owned subsidiary of any of the foregoing, beneficially owns or has a right to acquire, directly or indirectly, any Shares and none of the Parent, the Purchaser nor, to the best knowledge of the Parent or the Purchaser, any of the persons or entities referred to above, nor any of the respective executive officers, directors or subsidiaries of any of the foregoing, has effected any transaction in the Shares during the past 60 days. As of October 26, 1998, neither the Purchaser nor the Parent beneficially owned any Shares. Except as provided in the Merger Agreement and the Stockholders' Agreement and as otherwise set forth in this Offer to Purchase, none of the Purchaser, the Parent, nor, to the best knowledge of the Purchaser or the Parent, any of the persons listed on Schedule I hereto, has any contract, arrangement, understanding or relationship with any other person with respect to any Shares or other securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of any such Shares or other securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase (particularly the section entitled "Background of the Offer; Contacts with the Company"), since January 1, 1995, there have been no contacts, negotiations or transactions between the Parent, the Purchaser, any subsidiary of the Parent or the Purchaser or, to the best knowledge of the Parent or the Purchaser, any of the persons listed on Schedule I hereto, on the one hand, and the Company or any of its officers, directors or affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets. Except as set forth in this Offer to Purchase, none of the Purchaser, the Parent, nor, to the best knowledge of the Purchaser or the Parent, any of the persons listed on Schedule I hereto has, since January 1, 1995, had any business relationships or transactions with the Company or any of its executive officers, directors or affiliates that would require disclosure herein under the rules and regulations of the Commission applicable to the Offer. Financial Information. Set forth below is certain selected consolidated financial information with respect to the Parent and its subsidiaries excerpted or derived from the audited consolidated financial statements contained in the Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and the unaudited financial statements contained in the Parent's Quarterly Report on Form 10-Q for the quarter and six months ended June 30, 1998 (collectively, the "Parent Reports"). More comprehensive financial information is included in the Parent Reports and in other documents filed by the Parent with the Commission (which may be inspected and copies thereof obtained at the offices of the Commission as set forth in Section 7), and the following financial information is qualified in its entirety by reference to such reports and other documents and all of the financial information and related notes contained therein or incorporated therein by reference. 14 17 EG&G, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
YEARS ENDED SIX MONTHS ENDED ------------------------------------------- ----------------------------- DEC 28, 1997 DEC 29, 1996 DEC 31, 1995 JUNE 28, 1998 JUNE 29, 1997 ------------ ------------ ------------ ------------- ------------- STATEMENT OF OPERATIONS INFORMATION: Sales........................... $1,460,805 $1,427,252 $1,419,578 $712,218 $715,678 Operating income from continuing operations................... 59,598(1) 87,630 82,673 100,721(2) 6,321(1) Income (loss) from continuing operations................... 30,645(1) 54,480 54,304 66,097(2) (3,822)(1) Income from discontinued operations, net of income taxes........................ 3,047 5,676 13,736 -- 2,003 Net income (loss)............... $ 33,692(1) $ 60,156 $ 68,040 $ 66,097(2) $ (1,819)(1) PER SHARE INFORMATION: Basic earnings (loss) per share: From continuing operations...... $ 0.67(1) $ 1.15 $ 1.05 $ 1.45(2) $ (0.08)(1) From discontinued operations.... 0.07 0.12 0.27 -- 0.04 ---------- ---------- ---------- -------- -------- Net income (loss)............... $ 0.74(1) $ 1.27 $ 1.32 $ 1.45(2) $ (0.04)(1) ========== ========== ========== ======== ======== Diluted earnings (loss) per share: From continuing operations...... $ 0.67(1) $ 1.15 $ 1.05 $ 1.43(2) $ (0.08)(1) From discontinued operations.... 0.07 0.12 0.27 -- 0.04 ---------- ---------- ---------- -------- -------- Net income (loss)............... 0.74(1) $ 1.27 $ 1.32 $ 1.43(2) $ (0.04)(1) ========== ========== ========== ======== ======== BALANCE SHEET INFORMATION: Working capital................. $ 202,571 $ 194,915 $ 218,235 $247,905 $202,571 Total assets.................... 832,103 822,900 803,915 925,825 832,103 Short-term debt................. 46,167 21,499 5,275 17 46,167 Long-term debt.................. 114,863 115,104 115,222 114,860 114,863 Long-term liabilities........... 103,237 82,894 71,296 100,578 103,237 Stockholders' equity............ $ 328,388 $ 365,106 $ 366,946 $390,449 $328,388 OTHER INFORMATION: Cash dividends per common share........................ $ 0.56 $ 0.56 $ 0.56 $ 0.28 $ 0.28
- --------------- (1) Included an asset impairment charge of $28.2 million, $23.5 million after-tax ($0.51 earnings per share). (2) Included restructuring charges of $54.5 million, $39.5 million after-tax ($0.87 earnings per share); an asset impairment charge of $7.4 million, $4.4 million after-tax ($0.10 earnings per share); and gains on dispositions of $125.8 million, $87.8 million after-tax ($1.93 earnings per share). On October 21, 1998, the Parent issued a press release summarizing the Parent's financial results for the third quarter and nine months ended September 27, 1998. For the third quarter, the Parent reported sales of $343.5 million and net income of $14.6 million, or $0.32 per diluted share. For the first nine months of 1998, the Parent reported sales of $1,055.7 million and net income of $81.5 million, or $1.77 per diluted share. 9. SOURCE AND AMOUNT OF FUNDS The total amount of funds required by the Purchaser to purchase 23,822,931 Shares pursuant to the Offer (which represents all issued and outstanding Shares and all Shares issuable upon the exercise of outstanding 15 18 options, but excludes any Shares issuable upon conversion of the Convertible Notes), and to pay related fees and expenses is estimated to be approximately $185.5 million. The Purchaser will obtain such funds from the Parent. The Parent intends to obtain such funds from its available corporate funds, from the issuance of commercial paper and from borrowings under its existing bank financing facilities. The Parent may also enter into one or more new bank facilities and use proceeds from such facilities to obtain the funds required to purchase Shares pursuant to the Offer. The obtaining of financing is not a condition to the Offer or the Merger. The Parent has two existing revolving credit agreements. Under the Company's 364-Day Competitive Advance and Revolving Credit Facility Agreement dated as of March 6, 1998, among the Parent, the Borrowing Subsidiaries (as defined therein), the Lenders listed therein and Chase Manhattan Bank, the Company may borrow up to $100 million. This facility requires a commitment fee of six basis points and provides that any indebtedness outstanding under the facility bears interest at a rate equal to 25 basis points over LIBOR. Advances under this facility mature in March 1999. Under the Company's Five-Year Competitive Advance and Revolving Credit Facility Agreement dated as of March 21, 1994, as amended, among the Parent, Lenders listed therein and Chase Manhattan Bank as Administrative Agent the Company may borrow up to $100 million. This facility requires a commitment fee of eight basis points and provides that any indebtedness outstanding under the facility bears interest at a rate equal to 25 basis points over LIBOR. This facility expires in March 2002. Both facilities are unsecured and contain a number of non-financial and financial covenants. As of October 26, 1998, the Parent had no indebtedness outstanding under either facility. It is anticipated that the indebtedness incurred by the Parent in connection with the Offer and the Merger will be repaid from funds generated internally by the Parent and its subsidiaries (including, after the Merger, if consummated, funds generated by the Surviving Corporation and its subsidiaries) and through other sources which may include the proceeds of future bank financings, the public or private sale of debt or equity securities or a combination thereof. No decisions have been made, however, concerning the method the Parent will employ to repay such indebtedness. Such decisions, when made, will be based on the Parent's review from time to time of the advisability of particular actions, as well as on prevailing interest rates and financial and other economic conditions. 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY Over the past few years, representatives of the Parent and the Company have had informal contacts at trade shows and lighting industry events. At the beginning of May, 1998, Angelo D. Castellana, Senior Vice President of the Parent, called Martin E. Franklin, Chairman of the Board of Directors of the Company. During their conversation the parties acknowledged their mutual interest to continue discussions regarding possible strategic opportunities between the Parent and the Company. On May 5, 1998, Messrs. Castellana and Franklin had dinner, at which they continued to discuss a variety of strategic opportunities, including alternatives involving the Company and the Parent's Optoelectronics Business Unit. They agreed to meet the following day at the Company's headquarters in Rye, New York, to continue discussions. On May 6, 1998, Mr. Castellana met with Mr. Franklin and Ian Ashken, Chief Financial Officer of the Company, at the Company's offices in Rye, New York. No formal proposals regarding any business combination transaction were made, but the parties agreed that Mr. Franklin should meet with Gregory Summe, the newly appointed President and Chief Operating Officer of the Parent at a mutually convenient date and site in the near future. On June 8, 1998, Mr. Franklin had dinner with Messrs. Summe and Castellana in Boston, Massachusetts, where Mr. Summe outlined the Parent's strategy for its Optoelectronic Business Unit and Mr. Summe advised Mr. Franklin that the Parent was interested in augmenting its Optoelectronic Business Unit. Mr. Summe asked Mr. Franklin if he would consider a possible combination of the Company with the Parent's Optoelectronic Business Unit. Mr. Franklin advised that the Company would consider such a possibility. 16 19 On June 9, 1998, the parties executed a mutual confidentiality agreement and agreed to exchange information. However, very limited information was exchanged and there were no substantive contacts between the companies during the summer of 1998. In early September, 1998, Mr. Castellana called Mr. Franklin to schedule a further meeting. On September 9, 1998, Mr. Castellana and Stephen P. DeFalco, the Parent's Vice President of Strategic Planning and Business Development, met at the Company's offices with Messrs. Franklin and Ashken and with Richard Capra, the Company's Chief Executive Officer, at which they reviewed the Company's summary financial data and business strategy. At the end of the meeting, Mr. Castellana advised Mr. Franklin that the Parent would review the information and get back to him. On September 14, 1998, Mr. Summe called Mr. Franklin in the United Kingdom to express the Parent's interest in proposing an acquisition transaction. The possible structure and pricing of such an acquisition were not determined; however, Mr. Franklin agreed on behalf of the Company to consider such a possibility and to arrange for the Parent's representatives to visit the Company sites upon Mr. Franklin's return to the United States. On September 29 and October 1, 1998, representatives of the Parent visited the facilities of the Company's U.S. business operations. On October 7, 1998, Messrs. Franklin and Ashken met with members of the Parent's management at the Parent's headquarters. Following a general discussion of the strategic fit of the two companies, Mr. Summe expressed the Parent's interest in making an all cash offer for the Company in a price range of $7.50-$8.00 per share; however, no formal proposal was made. On October 9, 1998, Mr. Summe called Mr. Franklin and expressed the Parent's willingness to make an all cash offer for all outstanding shares of the Company at a price of $7.75 per share, subject to, among other things, satisfactory completion of the Parent's due diligence investigation and entering into a mutually satisfactory merger agreement. Mr. Franklin stated that such price was within the range of valuation that he was willing to present to the Company's Board. Mr. Franklin agreed to authorize the Parent to commence its due diligence investigation at the Company's headquarters. On October 12, 1998, representatives of the Parent, including its internal and outside counsel, and tax and accounting advisors, commenced their due diligence review of the Company. On October 15, 1998, the Parent's counsel delivered a first draft of the proposed Merger Agreement to the Company and its counsel. During the next week, the Parent and the Company and their respective counsel proceeded with intensive negotiations of the terms of the Merger Agreement and Messrs. Franklin and Ashken, on behalf of themselves and Mr. Capra and George B. Clairmont, a director of the Company, discussed the terms of a Stockholders' Agreement requested by the Parent. On October 20, 1998, Mr. Summe called Mr. Franklin to confirm that $7.75 per Share was the highest price the Parent could offer for the Company. Mr. Franklin stated that he would present the offer to the Company's Board for its consideration at its meeting which was scheduled for the next day, subject to Raymond James confirming that such price was fair to the Company and its stockholders (other than the Parent and its affiliates) from a financial point of view. Representatives of the Parent, the Company, and the stockholder parties to the Stockholders' Agreement, continued to negotiate the definitive terms of the Merger Agreement and the Stockholders' Agreement, which were finalized on October 21, 1998. On October 21, 1998, the Board of Directors of the Parent held a meeting at which they approved the Merger Agreement and the transactions contemplated thereby. In the evening on October 21, 1998, the Merger Agreement and the Stockholders' Agreement were executed and delivered by the parties thereto. Shortly thereafter, the Parent and the Company jointly announced that the Merger Agreement had been signed and Purchaser's intention to commence the Offer. On October 27, 1998, the Purchaser commenced the Offer. 17 20 11. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDERS' AGREEMENT; PLANS FOR THE COMPANY AFTER THE MERGER; SEC REGULATIONS; APPRAISAL RIGHTS PURPOSE OF THE OFFER The purpose of the Offer is to enable the Parent, through its wholly owned subsidiary, to acquire control of, and the entire equity interest in, the Company. Following the Offer, the Purchaser and the Parent intend to acquire any remaining equity interests in the Company not acquired in the Offer by consummating the Merger. The purpose of the Merger is to effect a business combination of the Purchaser and the Company. Following (i) the completion of the Offer, (ii) approval of the Merger by the respective stockholders of the Company and the Purchaser, to the extent necessary under the Delaware Law, and (iii) the satisfaction of the other conditions described in the Merger Agreement, the Company and the Purchaser intend to consummate the Merger; provided, however, that without the consent of the Parent, the Merger will not be consummated prior to January 11, 1999. The acquisition of the entire equity interest in the Company is structured as a cash tender offer followed by a merger in order to expedite the opportunity for the Parent and the Purchaser to obtain a controlling interest in the Company. THE MERGER AGREEMENT The following is a summary of the Merger Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 and is incorporated herein by reference. This summary does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement. Capitalized terms used herein and not otherwise defined have the same meaning as in the Merger Agreement. The Offer The Merger Agreement provides for the commencement of the Offer within five business days of the public announcement of the Purchaser's intention to make the Offer. The obligation of the Purchaser to accept for payment any Shares tendered is subject to the satisfaction of certain conditions (including the Minimum Condition) which are described in Section 13. Approval of the Merger The Delaware Law requires, among other things, that the adoption of any plan of merger or consolidation of the Company must be approved and found advisable by the Board of Directors and generally by the holders of a majority of the Company's outstanding voting securities. The Board of Directors of the Company has approved the Offer, the Merger and the Merger Agreement, and the transactions contemplated thereby, and, solely for the purpose of satisfying the requirements of Section 203 of the Delaware Law, the Stockholders' Agreement and the transactions contemplated thereby; consequently, the only additional action of the Company that may be necessary to effect the Merger is approval by the Company's stockholders if the "short-form" merger procedure described below is not available. Under the Delaware Law, the affirmative vote of holders of a majority of the outstanding Shares (including any Shares owned by the Purchaser) is required to approve the Merger. Such approval may be obtained by written consent in lieu of a stockholders' meeting. If the Purchaser acquires, through the Offer or otherwise, voting power with respect to at least a majority of the outstanding shares, it would have sufficient voting power to effect the Merger without the vote of any other stockholder of the Company. The Delaware Law also provides that if a parent company owns at least 90% of each class of stock of a subsidiary, the parent company can effect a short-form merger with that subsidiary without the action of any of the other stockholders of the subsidiary. Accordingly, if, as a result of the Offer or otherwise, the Purchaser acquires or controls the voting power of at least 90% of the outstanding Shares, the Purchaser could, and intends to, effect the Merger without prior notice to, or any action by, any other stockholder of the Company. 18 21 The Merger The Merger Agreement provides that as soon as practicable after the satisfaction or waiver of certain conditions set forth in the Merger Agreement (but in no event prior to January 11, 1999, unless so requested by the Parent), subject to the terms and conditions thereof and in accordance with the Delaware Law, the Purchaser shall be merged with and into the Company, the separate existence of the Purchaser shall cease and the Company shall continue as the Surviving Corporation. Upon the Effective Time of the Merger, (i) each Share issued and outstanding immediately prior to the Effective Time (other than Shares held by the Parent, the Purchaser or the Company or any direct or indirect subsidiary of the Parent, the Purchaser or the Company and Shares held by stockholders, if any, who are entitled to and who perfect their appraisal rights (See "Appraisal Rights") under Section 262 of the Delaware Law) will be cancelled and extinguished and be converted into and represent the right to receive the Merger Consideration and (ii) each outstanding share of the Purchaser's capital stock issued and outstanding immediately prior to the Effective Date shall be converted into and become one validly issued, fully paid and nonassessable share of the same class of capital stock of the Surviving Corporation. As a result of the Merger, the Company will become a wholly owned subsidiary of the Parent. The Merger Agreement provides that the Certificate of Incorporation and By-Laws of the Purchaser as in effect immediately prior to the Effective Time will become the Certificate of Incorporation and By-Laws of the Surviving Corporation until thereafter amended as provided under the Delaware Law except that the name of the Surviving Corporation will be "Lumen Technologies, Inc." and the indemnification provisions set forth in the Certificate of Incorporation and By-laws of the Surviving Corporation shall be restated to conform to the indemnification provisions set forth in the Certificate of Incorporation and Bylaws, respectively, of the Company. In addition, under the Merger Agreement, the directors of the Purchaser immediately prior to the Effective Time will be the initial directors of the Surviving Corporation following the Merger, and the officers of the Company immediately prior to the Effective Time will be the initial officers of the Surviving Corporation following the Merger, in each case until their successors are elected and qualified. Designation of Directors The Merger Agreement provides that, promptly upon the acceptance for payment of and payment by the Purchaser for any Shares pursuant to the Offer, and from time to time thereafter as Shares are accepted for payment and paid for by the Purchaser, the Purchaser shall be entitled to designate such number of the Company's directors, rounded to the nearest whole number, as will give the Purchaser representation on the Company's Board of Directors equal to the greater of (i) a majority and (ii) the product of the total number of the Company's directors (after giving effect to the directors elected in accordance with this procedure) multiplied by the percentage that such number of Shares so accepted for payment and paid for by the Purchaser bears to the number of Shares outstanding, and the Company shall, at such time, take such actions as are necessary to cause the Purchaser's designees to be so elected or appointed, including increasing the size of the Company's Board of Directors or using its best efforts to secure the resignations of incumbent directors or both; provided, however, that, notwithstanding the Purchaser's right to designate certain of the Company's directors as described above, until the Effective Time, the Company's directors shall include at least three directors who were directors on the date of the Merger Agreement (the "Independent Directors"); provided, further, that, if the number of Independent Directors shall be reduced below three for any reason whatsoever, any remaining Independent Director shall be entitled to designate a person to fill such vacancies and such person shall be deemed to be an Independent Director or, if no Independent Directors then remain, the other directors shall designate three persons to fill such vacancies who shall not be designees, stockholders, directors, officers, employees or affiliates of the Parent or the Purchaser, and such persons shall be deemed to be Independent Directors. Notwithstanding anything in the Merger Agreement to the contrary, subject to the terms of the Company's Certificate of Incorporation and Bylaws, in the event that the Purchaser's designees are appointed or elected as the Company's directors, after the acceptance for payment of Shares pursuant to the Offer and prior to the Effective Time, the affirmative vote of a majority (or, if there are only one or two Independent Directors, the single or unanimous vote, as the case may be) of the Independent Directors (who shall act as an 19 22 independent committee of the Board of Directors for this purpose) shall be required, and alone shall be sufficient, to (i) amend or terminate the Merger Agreement by the Company, (ii) exercise or waive any of the Company's rights or remedies under the Merger Agreement, (iii) extend the time for performance of the Parent's and the Purchaser's respective obligations under the Merger Agreement, or (iv) approve any other action by the Company that the Independent Directors reasonably determine would materially adversely affect the interests of the stockholders of the Company (other than the Parent, the Purchaser and their affiliates) with respect to the transactions contemplated by the Merger Agreement. Representations and Warranties The Merger Agreement contains certain customary representations and warranties of the parties. The Company has made representations and warranties to the Parent and the Purchaser regarding, among other things: (i) the Company's organization and qualification; (ii) the Company's subsidiaries; (iii) the Company's capitalization; (iv) the Company's authority to enter into and perform its obligations under the Merger Agreement; (v) the compliance of the transactions contemplated by the Merger Agreement with the Company's or its subsidiaries' Certificate of Incorporation and ByLaws, certain agreements and applicable laws; (vi) the accuracy and completeness of the Company's Exchange Act filings with the Commission and any written information provided by or on behalf of the Company which is included in the Schedule 14D-1 or the Offer Documents; (vii) the absence of undisclosed liabilities; (viii) the absence of certain specified changes, including in the condition (financial or other), results of operations, stockholders' equity, business, assets, properties, liabilities, capitalization or operations of the Company and its subsidiaries since September 30, 1998; (ix) certain matters relating to the Company's contracts; (x) transactions with affiliates of the Company; (xi) employee benefits matters; (xii) properties and liens; (xiii) environmental matters; (xiv) tax matters; (xv) compliance with laws; (xvi) intellectual property matters; (xvii) litigation; (xviii) the right of the Company to prepay its outstanding indebtedness; (xix) the vote required to approve the Merger; (xx) "Year 2000" compliance; (xxi) insurance matters; (xxii) the cessation of discussions or negotiations with other persons regarding an Acquisition Proposal; and (xxiii) brokerage fees or commissions. The Parent and the Purchaser have made representations and warranties to the Company regarding, among other things: (i) the Parent's and the Purchaser's organization and qualification; (ii) the Parent's and the Purchaser's authority to enter into and perform their respective obligations under the Merger Agreement; (iii) the compliance of the transactions contemplated by the Merger Agreement with the Parent's and the Purchaser's respective charters or by-laws, certain agreements and applicable laws; (iv) the accuracy and completeness of the documents filed by the Parent and the Purchaser with the Commission in connection with the Offer and of information provided to the Company for inclusion in the Schedule 14D-9; (v) the interim operations of the Purchaser; (vi) the availability of funds necessary to purchase the Shares; and (vii) brokerage fees or commissions. The representations and warranties contained in the Merger Agreement shall expire with, and be terminated and extinguished upon, consummation of the Merger. Conditions to the Merger The obligations of each of the Purchaser, the Parent and the Company to consummate the Merger are subject to the fulfillment, at or prior to the Effective Time, of each of the following conditions: (i) the Parent or the Purchaser shall have made, or caused to be made, the Offer on the terms and conditions set forth in the Merger Agreement and shall have purchased, or caused to be purchased, all Shares validly tendered and not withdrawn pursuant to the Offer; (ii) the Merger Agreement and the Merger shall have been approved and adopted by the requisite vote or consent of the stockholders of the Company, if any, required by the Delaware Law and the Company's Certificate of Incorporation; (iii) any waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated; and 20 23 (iv) no preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by any Governmental Entity, nor any statute, rule, regulation or executive order promulgated or enacted by any Governmental Entity shall be in effect, which would make the acquisition or holding by the Parent or its subsidiaries of the Shares or shares of common stock of the Surviving Corporation illegal or otherwise prevent the consummation of the Merger. In addition, the obligation of the Purchaser and the Parent to consummate the Merger is subject to the further condition that at or prior to the Effective Time, all governmental and third-party consents and approvals required to be obtained by the Company to consummate the Merger shall have been obtained, except for (a) consents required under the Company's credit facility with NationsBank, National Association as in effect on the date of the Merger Agreement and (b) such consents and approvals where the failure to obtain such consent or approval would not have a Material Adverse Effect. Acquisition Proposals The Company has agreed in the Merger Agreement that it shall not, and shall not authorize or permit any of its subsidiaries, or any of its or their officers, directors, employees, representatives, agents or affiliates, including any investment banker, attorney or accountant retained by the Company or any of its subsidiaries, to, directly or indirectly, (i) solicit, initiate or encourage (including by way of furnishing information), or take any other action to facilitate, any inquiries or the making of any proposal or offer that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal or (ii) enter into, maintain, continue or otherwise participate in any discussions or negotiations regarding any Acquisition Proposal with any person, entity or group other than the Parent, the Purchaser or their respective direct or indirect subsidiaries or affiliates (a "Third Party"). Notwithstanding the foregoing, the Company, its subsidiaries, and their respective officers, directors, employees, representatives, agents and affiliates, including any investment banker, attorney or accountant retained by the Company or any of its subsidiaries, may (i), in the case of a Qualified Acquisition Proposal only, furnish or cause to be furnished information concerning the Company's business, properties or assets to a Third Party (subject to such Third Party executing a confidentiality agreement on terms no less favorable to the Company than those in the confidentiality agreement previously entered into by the Parent and the Company), (ii) in the case of a Qualified Acquisition Proposal only, enter into, participate in, conduct or engage in discussions or negotiations with such Third Party, (iii) to the extent that the Board of Directors of the Company is required by its fiduciary duties, as advised by counsel, take any position with respect to an Acquisition Proposal in accordance with Rules 14a-9 and 14e-2 promulgated under the Exchange Act, and (iv) in the case of a Qualified Acquisition Proposal only and only prior to the acceptance for payment of that number of Shares tendered pursuant to the Offer sufficient to satisfy the Minimum Condition and in compliance with the provisions of the Merger Agreement, enter into an agreement to consummate a Qualified Acquisition Proposal. "Acquisition Proposal" means an inquiry, offer or proposal regarding any of the following (other than the transactions contemplated by the Merger Agreement) involving the Company or its subsidiaries: (i) any merger, reorganization, consolidation, share exchange, recapitalization, business combination, liquidation, dissolution or other similar transaction involving, or any sale, lease, exchange, mortgage, pledge, transfer or other disposition of, all or any significant portion of the assets or 25% or more of the equity securities of, the Company or any of its subsidiaries, in a single transaction or series of related transactions; (ii) any tender offer or exchange offer for 25% or more of the outstanding shares of capital stock of the Company or the filing of a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), in connection therewith; or (iii) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. "Qualified Acquisition Proposal" means an unsolicited, bona fide, written Acquisition Proposal made by a Third Party that the Board of Directors of the Company determines in its good faith judgment to be more favorable to the Company's stockholders than the Offer and the Merger (based on the opinion, with only customary qualifications, of the Company's independent financial advisor that the value of the consideration to the Company's stockholders provided for in such proposal exceeds the value of the consideration to the Company's stockholders provided for in the Merger Agreement by the Offer and the Merger) and for which 21 24 financing, to the extent required, is then committed or which, in the good faith judgment of the Board of Directors of the Company (based on the advice of the Company's independent financial advisor), is reasonably capable of being obtained by such Third Party and which Acquisition Proposal, in the good faith judgment of the Board of Directors of the Company, is likely to be consummated. Such provisions do not prohibit the Company from making such disclosure to stockholders that, in the judgment of the Board of Directors of the Company, as advised by counsel, may be required by law or necessary to discharge any fiduciary duty imposed thereby. Pursuant to the Merger Agreement, the Company must immediately notify the Parent of, and disclose to the Parent all details of, (i) any Acquisition Proposal it receives, (ii) any written indications that any person is interested in making an Acquisition Proposal or (iii) the initiation and status of discussions or negotiations relating to any Acquisition Proposal (it being understood that pursuant to the Merger Agreement any Acquisition Proposal must be a Qualified Acquisition Proposal). In the event that the Company furnishes any nonpublic information to any party other than the Parent, it shall simultaneously provide the Parent with copies of or access to all such information. In addition, the Company may not enter into any agreement with any Third Party in connection with a Qualified Acquisition Proposal unless (i) at least three business days prior thereto the Company shall have provided the Parent and the Purchaser a copy of the Qualified Acquisition Proposal, (ii) within such three business day period, the Parent and the Purchaser do not make an offer which, in the good faith judgment of the Board of Directors of the Company (based on the advice of the Company's independent financial advisor) is at least as favorable to the Company's stockholders as such Acquisition Proposal, (iii) the Company shall have terminated the Merger Agreement in accordance with its terms and (iv) prior thereto the Company shall have paid the fees specified in the Merger Agreement, and shall have deposited $500,000 in trust with a Qualified Commercial Bank for the payment of the expenses specified in the Merger Agreement. Conduct of Business Pursuant to the Merger Agreement, the Company has agreed that, except as otherwise expressly contemplated thereby, prior to the Effective Time: (a) the business of the Company and it subsidiaries shall in all material respects be conducted only in, and the Company and its subsidiaries shall not take any material action except in, the ordinary course of business and consistent with past practice, and the Company and its subsidiaries shall use all reasonable efforts, consistent with past practice, to maintain and preserve its and each subsidiary's business organization, assets, employees and advantageous business relationships and (b) the Company shall not, and shall not permit any of its subsidiaries to, directly or indirectly do any of the following: (i) other than dividends and distributions by a direct or indirect wholly owned subsidiary of the Company to its parent: (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or other property) in respect of, any of its capital stock; (B) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution of shares of its capital stock; or (C) purchase, redeem or otherwise acquire any shares of its capital stock or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities, other than the payment to holders of Company Options outstanding as of the date of the Merger Agreement of an amount equal to the difference between the price per Share to be paid in the Offer and the exercise price of such Company Options in exchange for the cancellation or termination of such Company Options; (ii) issue, deliver, sell, pledge or otherwise dispose of or encumber, any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than the issuance of Shares upon the exercise of Company Options or conversion of Convertible Notes outstanding as of the date of the Merger Agreement); (iii) amend its Certificate of Incorporation or Bylaws or other comparable charter or organizational documents; 22 25 (iv) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing a substantial portion of the assets or any stock of, or by any other manner, any business or any corporation, partnership, joint venture, limited liability company, association or other business organization or division thereof or (B) any assets that are material, in the aggregate, to the Company and its subsidiaries, taken as a whole, except purchases of inventory in the ordinary course of business consistent with past practice; (v) except in the ordinary course of business and consistent with past practice, sell, lease, license, pledge or otherwise dispose of or encumber any assets of the Company or any of its subsidiaries (including any indebtedness owed to them or any claims held by them); (vi) whether or not in the ordinary course of business or consistent with past practice, sell or dispose of any assets material to the Company and its subsidiaries, taken as a whole (including any accounts, leases, contracts or intellectual property or any assets or stock of any subsidiary, but excluding the sale of products in the ordinary course of business consistent with past practice); (vii) except as permitted by the Merger Agreement, enter into an agreement with respect to any merger, consolidation, liquidation or business combination, or any acquisition or disposition of all or substantially all of the assets or securities of the Company; (viii) incur or suffer to exist any indebtedness for borrowed money other than Permitted Indebtedness, or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any of its subsidiaries, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, or (B) make any loans, advances (other than to employees of the Company in the ordinary course of business) or capital contributions to, or investments in, any other person other than between the Company and its subsidiaries or any of them; (ix) make or agree to make any new capital expenditures or expenditures not already in process on the date of the Merger Agreement with respect to property, plant or equipment in excess of $150,000 in the aggregate for the Company and its subsidiaries, taken as a whole; (x) make any change in accounting methods, principles or practices, except insofar as may have been required by a change in generally accepted accounting principles or, except as so required, change any assumption underlying, or method of calculating, any bad debt, contingency or other reserve; (xi) pay, discharge, settle or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Commission Filings or the September 30 Financial Information or incurred thereafter in the ordinary course of business consistent with past practice, or waive any material benefits of, or agree to modify in any material respect, any material confidentiality, standstill or similar agreements to which the Company or any of its subsidiaries is a party; (xii) except in the ordinary course of business, materially modify, amend or terminate any material contract or agreement to which the Company or any of its subsidiaries is party, or knowingly waive, release or assign any material rights or claims; (xiii) other than in the ordinary course of business consistent with past practice, enter into any material contracts or agreements relating to the distribution, sale or marketing by third parties of the products of, or products licensed by, the Company or any of its subsidiaries; (xiv) except as required to comply with applicable law or agreements, plans or arrangements existing on the date of the Merger Agreement and except as set forth on the Disclosure Schedules attached to the Merger Agreement, (A) adopt, enter into, terminate or amend any written employment agreement or any oral employment agreement that is not terminable by the Company or any subsidiary without any penalty, on notice of thirty days or less, or any benefit plan for the benefit or welfare of any current or 23 26 former director, officer or employee, (B) increase in any material respect the compensation or fringe benefits of, or pay any bonus to, any director, officer or key employee, (C) pay any material benefit not provided for under any benefit plan or employment or other compensation arrangement, other than the payment of bonuses following the date of the Merger Agreement to employees (other than officers and directors of the Company or any subsidiary) in the ordinary course of business and of a nature and in amounts consistent with past practice, (D) grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or benefit plan (including the grant of stock options, stock appreciation rights, stock based or stock related awards, performance units or restricted stock, or the removal of existing restrictions in any benefit plans or agreements or awards made thereunder), or (E) take any action other than in the ordinary course of business consistent with past practice to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract or arrangement or benefit plan; (xv) make any tax election or, except in the ordinary course of business consistent with past practice, settle or compromise any federal, state, local or foreign tax liability; (xvi) issue any options or commence any offering of Shares pursuant to the Company's employee stock purchase plan; or (xvii) authorize, commit or agree, in writing or otherwise, to take any of the foregoing actions. Indemnification and Insurance Through the third anniversary of the Effective Time, the Parent will maintain in effect for the benefit of the directors and officers of the Company as of the date of the Merger Agreement, directors' and officers' liability insurance policies with coverages and other terms substantially as favorable to such directors and officers as is in effect on the date of the Merger Agreement. In no event, however, will the Parent be required to expend more than an amount per year equal to 150% of the current annual premium paid by the Company as of the date of the Merger Agreement for such insurance coverage. The Parent and the Purchaser have agreed in the Merger Agreement that all rights to indemnification, limitation of liability, exculpation, advancement of expenses and any and all similar rights existing on the date of the Merger Agreement in favor of present or former employees, agents, directors or officers of the Company and its subsidiaries as provided in their respective charter or bylaws (each as in effect on the date of the Merger Agreement) shall survive the Offer and the Merger and shall continue in full force and effect for a period of six years from the Effective Time; provided, however, that in the event any claim or claims are asserted or made within such six year period, all rights to indemnification in respect to any such claim or claims shall continue until the disposition of such claims. The Merger Agreement also provides that the Company shall, to the fullest extent permitted under applicable law and regardless of whether the Merger becomes effective, indemnify and hold harmless, and, after the Effective Time, the Surviving Corporation shall, to the fullest extent permitted under applicable law, indemnify and hold harmless, each present and former director, officer, employee, fiduciary and agent of the Company and each Subsidiary and their respective heirs, executors, administrators, personal representatives or assigns (collectively, the "Indemnified Parties") against all costs and expenses (including attorneys' fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, criminal, administrative or investigative (a "Proceeding"), arising out of or pertaining to any action or omission in their capacity as an officer, director, employee, fiduciary or agent, whether occurring before or after the Effective Time, to the same extent as provided in the Company's Certificate of Incorporation or By-laws as in effect on the date of the Merger Agreement, in each case for a period of six years after the date of the Merger Agreement. In the event that any claim for indemnification is asserted or made within such six-year period, all rights to indemnification in respect of such claim shall continue until the disposition of such claim. 24 27 Each Indemnified Party shall give written notice to the Company or the Surviving Corporation, as the case may be (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any Proceeding resulting therefrom; provided, that counsel for the Indemnifying Party, who shall conduct the defense of such Proceeding, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld, conditioned or delayed); and, provided, further, that the failure of any Indemnified Party to give notice as provided in the Merger Agreement shall not relieve the Indemnifying Party of its obligations under the Merger Agreement unless and to the extent that the Indemnifying Party is adversely affected by such failure. The Indemnified Party may participate in such defense at such party's expense; provided, however, that the Indemnifying Party shall pay such expense if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between the Indemnified Party and any other party represented by such counsel in such Proceeding. In the event that the Indemnifying Party does not assume the defense pursuant to the terms of the Merger Agreement of any Proceeding of which the Indemnifying Party receives notice, any expenses incurred by the Indemnified Party in defending such Proceeding shall be paid by the Indemnifying Party in advance of the final disposition of such matter, provided, however, that the payment of such expenses incurred by the Indemnified Party in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of the Indemnified Party to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnified Party is not entitled to be indemnified by the Indemnifying Party in accordance with the Merger Agreement. The Indemnified Party shall cooperate with the Indemnifying Party and provide access to all documents necessary or beneficial to the defense of any Proceeding. Neither the Company nor the Surviving Corporation shall be liable for any settlement of any Proceeding effected without its written consent. The Merger Agreement also provides that if the Company or the Surviving Corporation or any of their respective successors or assigns consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, then, and in each such case, the Parent will either guarantee the indemnification obligations described above or will make or cause to be made proper provision so that the successors and assigns of the Company or the Surviving Corporation, as the case may be, assume the indemnification obligations described above. Fees and Expenses The Merger Agreement provides that, except as otherwise provided in the Merger Agreement, each party thereto shall bear all of the fees and expenses incurred by it in connection with the negotiation and performance of the Merger Agreement and no party to the Merger Agreement may recover any such fees and expenses from another party upon termination of the Merger Agreement. If, however, (i) the Company's Board of Directors, whether or not in the exercise of its fiduciary or other legal duties, either (A) shall have failed to approve or recommend, or shall have withdrawn or adversely modified or taken a public position materially inconsistent with its approval or recommendation of, the Offer, the Merger or the Merger Agreement and the Parent shall have elected to terminate the Merger Agreement as a result thereof, or (B) take any action (other than as expressly permitted under the terms of the Merger Agreement) with respect to any Qualified Acquisition Proposal other than to recommend rejection of the Qualified Acquisition Proposal (including taking a position of neutrality or failing to take any position within ten business days after the making or commencement of a Qualified Acquisition Proposal); or (ii) prior to the final expiration of the Offer, an Acquisition Proposal shall have become publicly known and the Merger Agreement is terminated (other than as a result of a material breach of the Merger Agreement by the Parent or the Purchaser) and, within 12 months after such termination, (A) the Company enters into a merger or other agreement that contemplates the consummation of an Acquisition Proposal at a price equal to or greater than the aggregate consideration payable for Shares pursuant to the Offer and the Merger or (B) the holders of Shares become entitled to receive consideration per Share greater than the Merger Consideration in a transaction or series of transactions in connection with an Acquisition Proposal or (iii) the Company elects to terminate the Merger Agreement in order to enter into an agreement with a Third Party to consummate a 25 28 Qualified Acquisition Proposal, then, in each such case, the Company shall pay the Parent $7,450,000 in cash and an amount equal to the reasonable out-of-pocket expenses incurred by the Parent and the Purchaser in connection with the evaluation, negotiation, implementation and consummation of the transactions contemplated by the Merger Agreement (including fees and expenses of legal counsel, solicitors, accountants, printers and financial advisors and investment bankers); provided, however, that, in no event shall the amount of such expenses exceed $500,000. The Company is also required to reimburse the Parent for up to $500,000 in expenses in certain circumstances if the Parent terminates the Merger Agreement because of a failure by the Company to perform in any respect any of its material obligations under the Merger Agreement. Termination The Merger Agreement may be terminated at any time prior to the Effective Time (whether prior to or after approval by the stockholders of the Company), as follows: (a) by the mutual written consent of the Boards of Directors of the Parent and the Company; or (b) by the Company: (i) if neither the Parent nor any of its subsidiaries or affiliates shall have (A) publicly announced its intention to make the Offer no later than the first business day following the date of the Merger Agreement or (B) commenced the Offer within five business days of such announcement unless such failure to commence is due to a material breach of the Merger Agreement by the Company; or (ii) if, in the absence of any material breach of the Merger Agreement by the Company, (A) the Offer shall have been terminated or the Purchaser shall have allowed the Offer to expire without the purchase of such number of Shares thereunder as satisfies the Minimum Condition; or (B) neither the Parent nor any of its subsidiaries or affiliates shall have paid for all Shares validly tendered pursuant to the Offer and not withdrawn within 60 days after the commencement of the Offer; or (iii) if the Effective Time shall not have occurred on or before March 31, 1999 due to a failure of any of the conditions to the obligation of the Company to effect the Merger set forth in the Merger Agreement; or (iv) if, prior to the purchase of any Shares pursuant to the Offer, the Parent or the Purchaser fails to perform any of their respective obligations under the Merger Agreement and such failure or nonperformance materially impairs the Parent's and the Purchaser's ability to consummate the Offer or the Merger; or (v) if the Company has, in accordance with the terms of the Merger Agreement, entered into an agreement with a Third Party to consummate a Qualified Acquisition Proposal; or (vi) if there shall have been a breach of any material representation and warranty of the Purchaser or the Parent set forth in the Merger Agreement prior to the expiration or termination of the Offer, which breach is not cured within five days following written notice thereof by the Company to the Purchaser and the Parent; or (c) by the Parent: (i) if, due to an occurrence that would result in a failure to satisfy any of the conditions to the Offer described in the Merger Agreement, the Parent or any of its subsidiaries or affiliates shall have (A) failed to commence the Offer within five business days of the date on which the Purchaser's intention to make the Offer is publicly announced; (B) terminated the Offer without the purchase of any Shares thereunder; or (C) failed to pay for Shares pursuant to the Offer within 60 days after the commencement of the Offer; or (ii) if the Effective Time shall not have occurred on or before March 31, 1999 due to a failure of any of the conditions to the obligations of the Parent and the Purchaser to effect the Merger set forth in the Merger Agreement otherwise than as a result of a material breach or default by the Parent or Purchaser under the Merger Agreement; or 26 29 (iii) if the Company's Board of Directors, whether or not in the exercise of their fiduciary or other legal duties, either (A) shall have failed to approve or recommend, or shall have withdrawn or adversely modified or taken a public position materially inconsistent with its approval or recommendation of, the Offer, the Merger or the Merger Agreement or (B) takes any action (other than as expressly permitted under the Merger Agreement) with respect to any Qualified Acquisition Proposal other than to recommend rejection of the Qualified Acquisition Proposal (including taking a position of neutrality or failing to take any position within 10 business days after the making or commencement of a Qualified Acquisition Proposal); or (iv) if, prior to the purchase of any Shares pursuant to the Offer, the Company fails to perform in any respect any of its material obligations under the Merger Agreement, which failure to perform (other than a failure to perform an obligation described under the heading "Acquisition Proposals," as to which there will be no cure period) is not cured within five days following notice thereof by the Parent to the Company; or (d) by either the Company or the Parent, if any Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the acceptance for payment of, or payment for, Shares pursuant to the Offer or the Merger and such order, decree or ruling or other action shall have become final and nonappealable; provided, however, that the party seeking to terminate the Merger Agreement pursuant to this provision shall have performed its obligations under the Merger Agreement to use reasonable efforts to avoid such event. Amendment Subject to the amendment provision described above under "-- Designation of Directors," the Merger Agreement may not be amended except by action of the Boards of Directors of each of the parties to the Merger Agreement, set forth in an instrument in writing signed on behalf of each of the parties; provided, however, that if the Merger Agreement and the Merger are subject to stockholder approval, then after such approval, no amendment shall be made which by law requires further approval by such stockholders without obtaining such further approval. Waiver At any time prior to the Effective Time, whether before or after any meeting of the stockholders of the Company to vote on the Merger, any party to the Merger Agreement, subject to the waiver provisions described above under "-- Designation of Directors," by action taken by its Board of Directors, subject to the provisions of the Merger Agreement, may (i) extend the time for the performance of any of the obligations or other acts of any other party to the Merger Agreement or (ii) waive compliance with any of the agreements of any other party or with any conditions to its own obligations, provided, however, that if the Merger Agreement and the Merger are subject to stockholder approval then, after such approval, no waiver shall be made which by law requires further approval by such stockholders without obtaining such further approval. Any agreement on the part of a party to the Merger Agreement to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party by a duly authorized officer. Guarantee Pursuant to the Merger Agreement, the Parent has unconditionally and irrevocably guaranteed the Purchaser's obligations under the Merger Agreement and has agreed to be liable for any breach of the Merger Agreement by the Purchaser. Treatment of Options Pursuant to terms of the Merger Agreement, as of the Effective Time, the Parent shall assume the Option Plan and the obligations of the Company thereunder and all of the Company Options which are then outstanding shall be assumed by the Parent. Immediately after the Effective Time, each Company Option shall constitute an option to acquire, on the same terms and conditions as were applicable to Company Option 27 30 immediately prior to the Effective Time, such number of shares of common stock, par value $1.00 per share, of the Parent (the "Parent Common Stock") as is equal to the number of Shares subject to such Company Option immediately prior to the Effective Time multiplied by a fraction, the numerator of which is the Merger Consideration and the denominator of which is the average closing price of the Parent Common Stock on the NYSE, as reported in The Wall Street Journal (or if not so reported in another authoritative source), for the ten trading days ending on the date of the expiration of the Offer (with any fraction resulting from such multiplication to be rounded down to the nearest whole number). The exercise price per share of each such assumed Company Option shall be equal to the per share exercise price of such Company Option immediately prior to the Effective Time multiplied by a fraction, the numerator of which is the average closing price of the Parent Common Stock on the NYSE, as reported in The Wall Street Journal (or if not so reported in another authoritative source), for the ten trading days ending on the date of the expiration of the Offer and the denominator of which is the Merger Consideration (with any fraction resulting from such multiplication to be rounded up to the nearest whole cent). Except as otherwise provided in the Merger Agreement, the term, exercisability, vesting schedule, status and all of the other terms of the Company Options shall otherwise remain unchanged. As soon as practicable after the Effective Time, the Parent shall, with respect to all shares of Parent Common Stock subject to such Company Options, (i) either (x) file a Registration Statement on Form S-8 (or any successor form) under the Securities Act or (y) file any necessary amendments to the Company's previously filed Registration Statements on Form S-8 in order that the Parent will be deemed a "successor registrant" thereunder, and, in either event, shall use all reasonable efforts to maintain the effectiveness of such registration statement for so long as such Company Options remain outstanding, and (ii) take all actions necessary to have such shares of Parent Common Stock approved for listing on the NYSE, subject to official notice of issuance. Notwithstanding the foregoing, pursuant to the terms of the Merger Agreement and the Option Plan, the Compensation Committee of the Board of Directors has resolved to vest all Company Options upon the closing of the Offer and to cash out the Company Options of holders requesting the Company to do so. Holders of Company Options who request that such Company Options be cashed out shall be paid an amount equal to the difference between the price per Share to be paid in the Offer and the exercise price and such Company Options shall thereupon be cancelled. Such payment shall be made within one business day of the closing of the Offer. Other Obligations The Merger Agreement provides for the Parent to cause the Company to pay, in accordance with their respective terms, certain bonuses under the Company's bonus plan for 1998, accrued vacation pay and other benefits to certain employees of the Company, including Messrs. Franklin and Ashken. In addition, the Merger Agreement provides that the Parent shall cause the Company to make severance payments in the amount of $530,000 and $424,000 to each of Messrs. Franklin and Ashken, respectively, in accordance with the terms of their respective employment agreements. The Parent has also agreed to continue paying all premiums on split dollar life insurance policies for the benefit of Messrs. Franklin and Ashken for the remainder of the terms of such policies. THE STOCKHOLDERS' AGREEMENT The following is a summary of the Stockholders' Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 and is incorporated herein by reference. This summary does not purport to be complete and is qualified in its entirety by reference to the Stockholders' Agreement. The Parent and the Purchaser have entered into the Stockholders' Agreement, dated as of October 21, 1998 with Martin E. Franklin, Ian G.H. Ashken, Richard D. Capra and George B. Clairmont (the "Management Stockholders") with respect to 993,684 Shares outstanding as of the date of the Merger Agreement and beneficially owned by the Management Stockholders and an additional 1,752,338 Shares subject to options held by the Management Stockholders. Pursuant to the Stockholders' Agreement, each of 28 31 the Management Stockholders agreed: (i) to validly tender, and not to withdraw, pursuant to and in accordance with the terms of the Offer, (x) within five business days after the commencement of the Offer, all Shares owned by such Management Stockholder as of the date of the Stockholders' Agreement, and (y) prior to the scheduled expiration of the Offer, any additional Shares acquired after the date of the Stockholders' Agreement by such Management Stockholder; (ii) to vote all Shares that such Management Stockholder is entitled to vote to approve and adopt the Merger Agreement, the Merger and all agreements related to the Merger and any actions related thereto; (iii) not to vote in favor of any Acquisition Proposal, reorganization, recapitalization, liquidation or winding up of the Company or any other extraordinary transaction involving the Company, or any corporate actions the consummation of which would frustrate the purposes, or prevent or delay the consummation, of the transactions contemplated by the Merger Agreement; (iv) revoke any and all previous proxies granted with respect to such Management Stockholder's Shares, and to appoint the Purchaser as such Management Stockholder's attorney-in-fact and proxy to vote the Shares in such manner and upon such matters as the Purchaser shall, in the Purchaser's sole discretion, deem proper; (v) not to grant any proxies or enter into any voting trust or other arrangement with respect to the voting of any Shares; and (vi) not to sell, assign, transfer, encumber or otherwise dispose of any Shares, or enter into any contract, option or other arrangement or understanding with respect to the sale, assignment, transfer, encumbrance or other disposition of, any Shares, except for transfers by gift of options to purchase Shares to any charitable organization, with the prior written consent of the Purchaser. The proxy grant pursuant to the Stockholders' Agreement shall be revoked upon termination of the Stockholders' Agreement in accordance with its terms. The Stockholders' Agreement, and the Management Stockholders' obligations thereunder, shall expire on the first to occur of (i) the Effective Time or (ii) the termination of the Merger Agreement in accordance with its terms. In addition, the Stockholders' Agreement may be terminated by the Purchaser and the Parent upon written notice to the Management Stockholders. PLANS FOR THE COMPANY AFTER THE MERGER Except as described in this Offer to Purchase, based on its current knowledge of the Company, the Purchaser has no present plans or proposals which relate to or would result in any extraordinary corporate transaction, such as a merger, reorganization, liquidation, or sale or transfer of a material amount of assets involving the Company or any of its subsidiaries, or any material changes in the Company's capitalization, dividend policy, corporate structure or business or the composition of its board of directors or management. However, the Purchaser is continuing its review of the Company and its assets, corporate structure, capitalization, operations, properties, policies, management and personnel. After the completion of such review (subject to the provisions of the Merger Agreement), the Purchaser may propose or develop alternative plans or proposals, including mergers, transfers of a material amount of assets or other transactions or changes of the nature described above. The Purchaser reserves the right, subject to the terms and conditions of the Merger Agreement, to effect any such plans and proposals. The consummation of the Offer will constitute a "change of control" with respect to the Convertible Notes. As a result, the Company may be required to offer to repurchase the Convertible Notes from all holders thereof at a purchase price of 101% of outstanding principal plus accrued and unpaid interest. As of September 30, 1998, approximately $15 million principal amount of Convertible Notes was outstanding. In addition, as a result of the consummation of the Offer, all amounts outstanding under the Company's credit facility with NationsBank, National Association may become due and payable. As of September 30, 1998, approximately $53 million was outstanding under such credit facility. If an extension of this facility is not negotiated, the Parent expects that the Company will refinance the indebtedness with a new loan facility. SEC REGULATIONS The SEC has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions. The Purchaser believes that Rule 13e-3 will not be applicable to the Merger if it is consummated within one year after expiration or termination of the Offer and the price paid in the Merger is not less than the price paid to purchase shares pursuant to the Offer. However, if the Purchaser is deemed to have acquired control of the Company pursuant to the Offer and if the Merger is consummated more than one year after 29 32 completion of the Offer or an alternative acquisition transaction is effected whereby stockholders of the Company receive consideration less than that paid pursuant to the Offer, in either case at a time when the Shares are still registered under the Exchange Act, the Purchaser may be required to comply with Rule 13e-3. If applicable, Rule 13e-3 would require, among other things, that certain financial information concerning the Company and certain information relating to the fairness of the Merger and the consideration offered to minority stockholders be filed with the SEC and distributed to minority stockholders prior to the consummation of the Merger. APPRAISAL RIGHTS Company stockholders do not have appraisal rights as a result of the Offer. However, in connection with the Merger, Company stockholders have the right to demand an appraisal of the fair value of their Shares in accordance with the provisions of Section 262 of the Delaware Law ("Section 262"), which sets forth the rights and obligations of Company stockholders demanding an appraisal and the procedures to be followed. Failure to follow any Section 262 procedures may result in termination or waiver of appraisal rights under Section 262. Any Company stockholder who desires to exercise his appraisal rights in connection with the Merger should review carefully Section 262 and is urged to consult his legal advisor before electing or attempting to exercise such rights. Stockholders considering seeking appraisal in connection with the Merger should bear in mind that the fair value of their Shares determined under Section 262 could be more, the same, or less than the Merger Consideration. 12. CERTAIN EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; NYSE LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS Possible Effect of the Offer on the Market for Shares. The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and is likely to reduce the number of holders of Shares. This could adversely affect the liquidity and market value of the remaining Shares held by the public. NYSE Listing. Upon consummation of the Offer, the Shares may no longer meet the standards for continued listing on the NYSE. According to the NYSE's published guidelines, the NYSE would consider delisting the Shares if, among other things, the number of publicly held Shares falls below 600,000, the number of holders of Shares falls below 400 or the aggregate market value of such publicly held Shares falls below $8,000,000. Shares held directly or indirectly by an officer or director of the Company, or their immediate families, or by a beneficial owner of more than 10% of the Shares will ordinarily not be considered as being publicly held for purposes of these standards. In the event the Shares are no longer listed or traded on the NYSE, it is possible that the Shares would trade on another securities exchange or in the over-the-counter market and that price quotations would be reported by such exchanges, through the Nasdaq Stock Market or other sources. However, the extent of the public market for the Shares and the availability of such quotations would depend upon the number of holders and/or the aggregate market value of such Shares remaining at such time, the interest in maintaining a market in such Shares on the part of securities firms, the possible termination of registration of such Shares under the Exchange Act, as described herein, and other factors. Exchange Act Registration. The Shares are currently registered under the Exchange Act. The purchase of Shares pursuant to the Offer or following consummation of the Offer may result in the Shares becoming eligible for deregistration under the Exchange Act. Registration of the Shares may be terminated upon application of the Company to the Commission if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders of the Shares. The termination of the registration of the Shares under the Exchange Act, assuming there are no other securities of the Company subject to registration, would substantially reduce the information required to be furnished by the Company to holders of the Shares and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy or information statement pursuant to Sections 14(a) and 14(c) and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" 30 33 transactions, no longer applicable to the Shares. Furthermore, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of the securities pursuant to Rule 144 under the Securities Act. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities". The Purchaser presently intends to seek to cause the Company to terminate the registration of the Shares under the Exchange Act as soon after the consummation of the Offer or Merger as the requirements for termination of registration are met. Margin Regulations. The Shares are currently "margin securities" under the rules of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such Shares for the purpose of buying, carrying or trading in securities ("purpose loans"). Depending upon factors such as the number of record holders of the Shares and the number and market value of publicly held Shares, following the purchase of Shares pursuant to this Offer or following consummation of the Merger, the Shares might no longer constitute "margin securities" for purposes of the Federal Reserve Board's margin regulations and therefore could no longer be used as collateral for purpose loans made by brokers. In addition, if registration of the Shares under the Exchange Act were terminated, the Shares would no longer constitute "margin securities." 13. CERTAIN CONDITIONS OF THE OFFER Notwithstanding any other provisions of the Offer or the Merger Agreement, the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act, to pay for any Shares tendered pursuant to the Offer unless the number of Shares tendered and not withdrawn not later than the date and time of expiration of the Offer, shall equal at least a majority of the Fully Diluted Shares (as defined below). For purposes of the Merger Agreement: "Fully Diluted Shares" means all outstanding securities entitled generally to vote in the election of directors of the Company after giving effect to the exercise or conversion of all options, rights and securities exercisable or convertible into such voting securities (other than (i) the exercise of Company Options that are exercisable for Shares that would, following such exercise, be subject to the Stockholders' Agreement and (ii) conversion of the Convertible Notes). Furthermore, notwithstanding any other provisions of the Offer or the Merger Agreement, the Purchaser shall not be required to accept for payment or, subject as aforesaid, to pay for any Shares tendered pursuant to the Offer unless all applicable waiting periods under the HSR Act shall have expired or been terminated. Furthermore, notwithstanding any other provisions of the Offer or the Merger Agreement, the Purchaser shall not be required to accept for payment or, subject to the previous provisions, to pay for any Shares not accepted for payment or paid for, and may terminate the Offer if, at any time on or after the date of the Merger Agreement and before the acceptance of such Shares for payment or the payment therefor, any of the following conditions exists: (a) the Purchaser is not entitled to vote its Shares for the Merger; or (b) except for matters (i) which are attributable to the announcement or performance of the Merger Agreement and the transactions contemplated thereby or (ii) which generally affect the economy or the industry in which the Company is engaged, any change shall have occurred in the condition (financial or other), results of operations, stockholders' equity, business, assets, properties, liabilities or capitalization of the Company and its subsidiaries which has resulted in a Material Adverse Effect; or (c) there shall have been instituted or pending before any Governmental Entity any action, proceeding, application, claim or counterclaim or any judgement, order or injunction sought or any other action taken by any Governmental Entity or by any person who has made an Acquisition Proposal, which (i) challenges the acquisition by the Parent or the Purchaser (or any other affiliate of the Parent) of any Shares pursuant to the Offer, the Merger or the Stockholders' Agreement, restrains, prohibits or materially delays the making or consummation of the Offer or the Merger or the transactions contemplated by the Merger Agreement or the Stockholders' Agreement, prohibits the performance of any of the contracts or other arrangements entered into by the Parent or the Purchaser (or any other affiliates of the Parent) in connection with the acquisition of 31 34 the Company, seeks to obtain any material amount of damages, or otherwise directly or indirectly materially adversely affects the Offer or the Merger or the transactions contemplated by the Merger Agreement or the Stockholders' Agreement, (ii) seeks to prohibit or limit materially the ownership or operation by the Company, the Parent or the Purchaser (or any other affiliate of the Parent) of all or any material portion of the business or assets of the Company and its subsidiaries taken as a whole or of the Parent and its affiliates, or to compel the Company, the Parent or the Purchaser (or any other affiliate of the Parent) to dispose of or to hold separate all or any material portion of the business or assets of the Parent or any of its affiliates or of the Company or any of its subsidiaries as a result of the transactions contemplated by the Merger Agreement, (iii) seeks to impose any material limitation on the ability of the Company, the Parent or the Purchaser (or any other affiliate of the Parent) to conduct the Company's or any subsidiary's business or own such assets, (iv) seeks to impose or confirm any material limitation on the ability of the Parent or the Purchaser (or any other affiliate of the Parent) to acquire or hold, or to exercise full rights of ownership of, any Shares, including the right to vote such Shares on all matters properly presented to the stockholders of the Company, (v) seeks to require divestiture by the Purchaser or any of its affiliates of all or any of the Shares, or (vi) otherwise has resulted in or has a substantial likelihood of resulting in, a Material Adverse Effect; or (d) there shall have been entered or issued any preliminary or permanent judgement, order, decree, ruling or injunction or any other action taken by any Governmental Entity, whether on its own initiative or the initiative of any other person, which (i) restrains, prohibits or materially delays the making or consummation of the Offer or the Merger or the transactions contemplated by the Merger Agreement or the Stockholders' Agreement, prohibits the performance of any of the contracts or other arrangements entered into by the Parent or the Purchaser (or any other affiliates of the Parent) in connection with the acquisition of the Company or otherwise directly or indirectly materially adversely effects the Offer or the Merger or the transactions contemplated by the Merger Agreement or the Stockholders' Agreement, (ii) prohibits or limits materially the ownership or operation by the Company, the Parent or the Purchaser (or any other affiliate of the Parent) of all or any material portion of the business or assets of the Company and its subsidiaries taken as a whole or of the Parent and its affiliates, or compels the Company, the Parent or the Purchaser (or any other affiliate of the Parent) to dispose of or to hold separate all or any material portion of the business or assets of the Parent or any of its affiliates or of the Company or any of its subsidiaries as a result of the transactions contemplated by the Merger Agreement, (iii) imposes any material limitation on the ability of the Company, the Parent or the Purchaser (or any other affiliate of the Parent) to conduct the Company's or any subsidiary's business or own such assets, (iv) imposes or confirms any material limitation on the ability of the Parent or the Purchaser (or any other affiliate of the Parent) to acquire or hold, or to exercise full rights of ownership of, any Shares, including the right to vote such Shares on all matters properly presented to the stockholders of the Company, (v) requires divestiture by the Purchaser of any of its affiliates of all or any of the Shares, or (vi) otherwise has resulted in, or has a substantial likelihood of resulting in, a Material Adverse Effect; or (e) there shall be any statute, rule or regulation enacted, promulgated, entered, enforced or deemed applicable to the Offer, the Merger, the Merger Agreement or the Stockholders' Agreement, or any other action shall have been taken by any Government Entity, other than the routine application to the Offer, the Merger or the transactions contemplated by the Stockholders' Agreement of waiting periods under the HSR Act that results in, directly or indirectly, any of the consequences referred to in clauses (i) through (vi) of paragraph (c) above; or (f) the Company shall have failed to perform any material obligation or to comply with any material agreement or covenant of the Company to be performed or complied with by it under the Merger Agreement within five days following written notice of such failure by the Parent to the Company; or (g) (i) the Board of Directors of the Company or any committee thereof shall have (A) withdrawn or modified in a manner adverse to the Parent or the Purchaser its approval or recommendation of the Offer, the Merger, the Merger Agreement or the Stockholders' Agreement or (B) approved or recommended any Acquisition Proposal, (ii) the Company shall have entered into, or publicly announced its intention to enter into, any agreement with respect to any Acquisition Proposal or (iii) the Board of Directors of the Company or any committee thereof shall have resolved to do any of the foregoing; or 32 35 (h) any of the representations and warranties of the Company set forth in the Merger Agreement that are qualified as to materiality shall have been breached or not be true and correct in any respect or any such representations and warranties that are not so qualified shall have been breached or not be true and correct in any material respect, in each case at the date of the Merger Agreement (except to the extent that any such representation or warranty refers specifically to another date, in which case such representation or warranty shall be true and correct as of such other date); or (i) except as to matters which are attributable to the announcement or performance of the Merger Agreement and the transactions contemplated thereby, any of the representations and warranties of the Company set forth in the Merger Agreement that are qualified as to having or resulting in a Material Adverse Effect shall have been breached or not be true and correct in any respect or any such representations and warranties that are not so qualified shall have been breached or not be true and correct and the effect of such breach or failure to be true or correct shall be that the matter shall have a Material Adverse Effect, in each case at the scheduled or extended expiration of the Offer (except to the extent that any such representation or warranty refers specifically to another date, in which case such representation or warranty shall be true and correct as of such other date); or (j) the Merger Agreement shall have been terminated in accordance with its terms. The foregoing conditions are for the sole benefit of the Parent and the Purchaser (and the other affiliates of the Parent) and may be asserted by the Parent and the Purchaser (and the other affiliates of the Parent) regardless of the circumstances giving rise to any such condition and may be waived by the Parent or the Purchaser, in whole or in part, at any time and from time to time, in their sole discretion. The failure by the Parent or the Purchaser at any time to exercise any of the foregoing rights will not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts and circumstances and each such right will be deemed an ongoing right that may be asserted at any time and from time to time. 14. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS General. Based on a review of publicly available Commission filings by the Company and other publicly available information concerning the Company and representations of the Company in the Merger Agreement, except as described below, neither the Parent nor the Purchaser is aware of any license or regulatory permit that appears to be material to the business of the Company and its subsidiaries that might be adversely affected by the Purchaser's acquisition of Shares as contemplated herein. Except as described in this Section 14, neither the Parent nor the Purchaser is aware of any other material filing, approval or other action by any federal or state governmental or administrative authority that would be required for the acquisition of Shares by the Purchaser as contemplated herein. Should any such other approval or action be required, it is currently contemplated that such approval or other action would be sought. Except as described below under "Antitrust", there is, however, no present intention to delay the purchase of Shares tendered pursuant to the Offer pending the outcome of any such other approval or action. There can be no assurance that any such other approval or action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the Purchaser's or the Company's business in the event that such other approvals were not obtained or such other actions were not taken. The Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions, including conditions relating to the legal matters discussed in this Section 14. See Section 13. Antitrust. Under the HSR Act and the rules promulgated thereunder by the FTC, certain acquisition transactions may not be consummated unless certain information has been furnished to the FTC and the Antitrust Division and certain waiting period requirements have been satisfied. The acquisition of Shares pursuant to the Offer is subject to such requirements. See Section 2. On October 22, 1998, the Parent filed with the Antitrust Division and the FTC a Premerger Notification and Report Form, in connection with the purchase of Shares pursuant to the Offer. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer may not be consummated until 33 36 the expiration of a 15-calendar day waiting period following the filing by the Parent. Accordingly, it is anticipated that the waiting period under the HSR Act applicable to the Offer will expire at 11:59 p.m., Eastern time, on November 6, 1998, unless such waiting period is earlier terminated by the FTC or the Antitrust Division or extended by a request from the FTC or the Antitrust Division for additional information or documentary material prior to the expiration of the waiting period. Pursuant to the HSR Act, the Parent has requested early termination of the waiting period applicable to the Offer. There can be no assurance, however, that the 15-day HSR Act waiting period will be terminated early. If either the FTC or the Antitrust Division were to request additional information or documentary material from the Parent, the waiting period would expire at 11:59 p.m., Eastern time, on the tenth calendar day after the date of substantial compliance by the Parent with such request. Thereafter, the waiting period could be extended again only by court order or with the consent of the Parent. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the Offer may, at the discretion of the Parent, subject to the terms and conditions of the Merger Agreement, be extended and, in any event, the purchase of and payment for Shares will be deferred until the applicable waiting period expires or is terminated. Unless the Offer is extended, any extension of the waiting period will not give rise to any additional withdrawal rights. See Section 4. Although the Company is required to file certain information and documentary material with the Antitrust Division and the FTC in connection with the Offer, neither the Company's failure to make such filings nor a request from the Antitrust Division or the FTC for additional information or documentary material made to the Company will extend the waiting period applicable to the Offer. The FTC and the Antitrust Division as well as state antitrust enforcement agencies frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisition of Shares pursuant to the Offer and the Merger. At any time before or after the Purchaser's acquisition of Shares pursuant to the Offer, any such agency could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the acquisition of Shares pursuant to the Offer or the Merger or seeking divestiture of Shares acquired by the Purchaser or divestiture of substantial assets of the Parent, the Company or their respective subsidiaries. Private parties may also bring legal action under federal and state antitrust laws under certain circumstances. If any such action by the FTC, the Antitrust Division or certain other persons should be instituted or pending, the Parent may extend, terminate or amend the Offer. See Section 13. There can be no assurance that a challenge to the Offer on antitrust grounds will not be made or if such challenge is made that the result will be favorable. Based upon an examination of information available to it relating to the businesses in which the Parent and its subsidiaries and the Company and its subsidiaries are engaged, the Parent and the Purchaser believe that consummation of the Offer and the Merger will not violate the antitrust laws. The Purchaser will not accept for payment any Shares tendered pursuant to the Offer unless and until the waiting period requirements imposed by the HSR Act with respect to the Offer have been satisfied. State Takeover Statutes. Section 203 of the Delaware Law prohibits business combination transactions involving a Delaware corporation (such as the Company) and an "interested stockholder" (defined generally as any person that directly or indirectly beneficially owns 15% or more of the outstanding voting stock of the subject corporation) for three years following the date such person became an interested stockholder, unless special requirements are met or certain exceptions apply, including that prior to such date the board of directors of the subject corporation approved either the business combination or the transaction which resulted in such person being an interested stockholder. In the Merger Agreement, the Company has represented that the provisions of Section 203 are not applicable to the Offer or the Merger or the transactions contemplated by the Stockholders' Agreement. A number of other states have adopted laws and regulations applicable to attempts to acquire securities of corporations which are incorporated, or have substantial assets, stockholders, principal executive offices or principal places of business, or whose business operations otherwise have substantial economic effects, in such 34 37 states. In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover Statute, which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana may, as a matter of corporate law, and, in particular, with respect to those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without the prior approval of the remaining stockholders. The state law before the Supreme Court was by its terms applicable only to corporations that had a substantial number of stockholders in the state and were incorporated there. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted takeover laws. The Purchaser does not know whether any of these laws will, by their terms, apply to the Offer and has not necessarily complied with any such laws. Should any person seek to apply any state takeover law, the Purchaser will take such action as then appears desirable, which may include challenging the validity or applicability of any such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover laws is applicable to the Offer and the Merger, and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer, the Purchaser might be required to file certain information with, or receive approvals from, the relevant state authorities. In addition, if enjoined, the Purchaser might be unable to accept for payment any Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer. In such case, the Purchaser may not be obligated to accept for payment any Shares tendered. See Section 13. 15. DIVIDENDS AND DISTRIBUTIONS If, on or after October 21, 1998, the Company should declare or pay any dividend or other distribution (including, without limitation, the issuance of additional Shares pursuant to stock dividend or stock split or the issuance of rights for the purchase of any securities) with respect to the Shares that is payable or distributable to stockholders of record on a date occurring prior to the transfer to the name of the Purchaser or its nominees or transferees on the Company's stock transfer records of the Shares purchased pursuant to the Offer, then, without prejudice to the Purchaser's rights described in Section 13, (i) the purchase price per Share payable by the Purchaser pursuant to the Offer will be reduced in the amount of any such cash dividend or distribution, and (ii) the whole of any non-cash dividend or distribution (including, without limitation, additional Shares or rights as aforesaid) will be required to be remitted promptly and transferred by each tendering stockholder to the Depositary for the account of the Purchaser accompanied by appropriate documentation of transfer and pending such remittance or appropriate assurance thereof, the Purchaser will be entitled to all rights and privileges as owner of any such non-cash dividend, distribution or right, and may withhold the entire purchase price or deduct from the purchase price the amount of value of such non-cash dividend, distribution or right, as determined by the Purchaser in its sole discretion. If, on or after October 21, 1998, the Company should split the Shares or combine or otherwise change the Shares or its capitalization, then, without prejudice to the Purchaser's rights described in Section 13, appropriate adjustments to reflect such split, combination or change may be made by the Purchaser in the purchase price and other terms of the Offer, including, without limitation, the number or type of securities offered to be purchased. 16. FEES AND EXPENSES The Purchaser has retained Kissel-Blake to act as the Information Agent and BankBoston, N.A. to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telecopy, telegraph and personal interview and may request brokers, dealers, commercial banks, trust companies and other nominees to forward the Offer material to beneficial owners. Each of the Information Agent and the Depositary will receive reasonable and customary compensation for its services and will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection with the Offer, including certain liabilities under U.S. federal securities laws. 35 38 The Purchaser will not pay any fees or commissions to any broker or dealer or any other person for soliciting tenders of Shares pursuant to the Offer (other than to the Information Agent). Brokers, dealers, commercial banks, trust companies and other nominees will, upon request, be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding materials to their customers. 17. MISCELLANEOUS The Offer is being made solely by this Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. The Purchaser has filed with the Commission a Schedule 14D-1 together with exhibits, pursuant to Rule 14d-3 promulgated by the Commission under the Exchange Act, furnishing certain additional information with respect to the Offer. Such statement and any amendments thereto, including exhibits, may be examined and copies may be obtained at the same places and in the same manner as set forth with respect to information about the Company in Section 7 (except that such statement and amendments may not be available in the regional offices of the Commission). NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF THE PARENT OR THE PURCHASER NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED. LIGHTHOUSE WESTON CORP. October 27, 1998 36 39 SCHEDULE I MEMBERS OF THE BOARDS OF DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT AND THE PURCHASER 1. THE PARENT The name, business address, position with the Parent, present principal occupation or employment and five-year employment history of each of the directors and executive officers of the Parent, together with the names, principal businesses and addresses of any corporations or other organizations in which such principal occupations are conducted, are set forth below. Unless otherwise indicated, each occupation set forth refers to the Parent, each individual is a United States citizen and each individual's business address is 45 William Street, Wellesley, Massachusetts 02481. No director or executive officer of the Parent beneficially owns any Shares (or rights to acquire Shares).
NAME POSITION WITH THE PARENT ---- ------------------------ John M. Kucharski.............................. Chief Executive Officer and Director Gregory L. Summe............................... President, Chief Operating Officer and Director John F. Alexander, II.......................... Senior Vice President and Chief Financial Officer Murray Gross................................... Senior Vice President, General Counsel and Clerk Angelo D. Castellana........................... Senior Vice President Richard F. Walsh............................... Senior Vice President of Human Resources Robert A. Barrett.............................. Vice President Stephen DeFalco................................ Vice President of Strategic Planning and Business Development Hansford T. Johnson............................ Vice President Rabbe I. Klemets............................... Vice President Deborah S. Lorenz.............................. Vice President, Investor Relations/Corporate Communications Daniel T. Heaney............................... Treasurer Gregory Perry.................................. Controller Tamara J. Erickson............................. Director John B. Gray................................... Director Kent F. Hansen................................. Director John F. Keane.................................. Director Nicholas A. Lopardo............................ Director Great E. Marshall.............................. Director Michael C. Ruettgers........................... Director John Larkin Thompson........................... Director G. Robert Tod.................................. Director
Mr. Kucharski serves as Chairman of the Board and Chief Executive Officer of the Parent, positions which he has held since 1988. He is also a Director of Nashua Corporation, a publicly-traded marketer of specialty imaging products and services, New England Electric System, a public utility holding company, and State Street Boston Corporation. Mr. Summe joined the Parent in 1998 as President and Chief Operating Officer. Prior to 1998, Mr. Summe served in a variety of positions at Allied Signal, Inc., ("Allied Signal"), an advance technology and manufacturing company, including President of the Automotive Products Group from 1997 to 1998, President of the Aerospace Engines Group from 1995 to 1997 and President of the General Aviation Avionics Group from 1993 to 1995. 37 40 Mr. Alexander serves as Senior Vice President and Chief Financial Officer of the Parent, positions he has held since 1996. From 1991 to 1996, Mr. Alexander served as corporate controller to the Parent, a title which he retained when he was promoted to Vice President in 1995. Mr. Gross serves as Senior Vice President of the Parent, a position he has held since 1996 and as General Counsel and Clerk of the Parent, positions he has held since 1990. Mr. Castellana serves as Senior Vice President of the Parent, serving as principal executive in the Office of the Chief Operating Officer, a position he has held since 1997. From 1991 to 1997, he served as a Vice President of the Parent. Mr. Walsh serves as Senior Vice President of Human Resources of the Parent, a position he has held since July 1998. From 1989 to 1998, he served as Senior Vice President of Human Resources of ABB Inc., an international engineering company. Mr. Barrett serves as Vice President of the Parent and President of EG&G Engineered Products, positions he has held since January 1997 and May 1998, respectively. From 1990 to 1997, he served as President and General Manager of EG&G Pressure Sciences, Inc. Mr. DeFalco serves as Vice President of Strategic Planning and Business Development of the Parent, a position he has held since September 1998. From 1997 to 1998, he served as Vice President of Strategic Planning for Carrier Corporation, a manufacturer of heating, refrigeration and ventilation equipment. Prior to 1997, he served as Director of Strategic Planning for United Technologies, a provider of high technology products and support services, from 1996 to 1997 and as Senior Engagement Manager for McKinsey & Co, a consulting company, from 1988 to 1996. Mr. Johnson serves as Vice President of the Parent and President of the Technical Services Strategic Business Unit of the Parent, positions he has held since 1998. Prior to 1998, he served as Chief Operating Officer of the Credit Union National Association from 1997 to 1998, as Chairman, President and Chief Executive Officer of the Greater Kelly Development Corporation from 1995 to 1997, and as Vice Chairman of the Board of Directors of USAA Capital Corporation from 1993 to 1995. Mr. Klemets is Vice President of the Parent and President of EG&G Life Sciences, positions he has held since May 1998. From 1991 to 1998, he served as Managing Director of Wallace Oy, a subsidiary of the Parent. Mr. Klemets is a citizen of Finland. Ms. Lorenz is Vice President responsible for Investor Relations and Corporate Communications, a position she has held since 1990. Mr. Heaney serves as Treasurer of the Parent, a position which he has held since 1995. Prior to 1995, he served as Director of Economic Value Added Implementation of the Parent from 1994 to 1995 and Controller of Technical Services Group of the Parent from 1990 to 1994. Mr. Perry serves as Controller of the Parent, a position which he has held since September 1998. From 1997 to 1998, he served as Chief Financial Officer of Allied Signal's Automotive Products Group and as Chief Financial Officer of Allied Signal's Fram and Autolite Units. Prior to 1997, he served as Vice President, Finance of GE Medical Systems Europe from 1994 to 1997, and served as Manager in charge of Business Development for GE Motors from 1991 to 1994. Ms. Erickson has acted as an independent management consultant since 1997. From 1996 to 1997, she served as Managing Director of P.A. Consulting Group, a management and technology consulting company. From 1977 to 1996 she served as a Senior Vice President of Arthur D. Little, Inc., a consulting company. She is also a Director of Allergan, Inc. a maker of eyecare and skin care products. Her address is 886 Carlisle Street, Carlisle, MA 01741. Mr. Gray most recently served as President of Dennison Manufacturing Company, a manufacturer of office products, a position he held from 1986 until his retirement in 1991. He also serves as a Director of the Liberty Mutual Insurance Companies, Liberty Financial Co., the Stackpole Corporation, the New England 38 41 Shelter for Homeless Veterans and Executive Service Corps of New England. His principal business address is 888 Worcester Street, Wellesley, MA 02482. Dr. Hansen serves as a Professor of Nuclear Engineering at the Massachusetts Institute of Technology, a position he has held since 1961. His principal business address is MIT Energy Lab (E-40-391), 1 Amherst Street, Cambridge, MA 02139. Mr. Keane serves as President and Chief Executive Officer of Keane Inc., a computer software corporation, a position he has held since 1965. He is a also a member of the Board of Directors of the Center for Quality Management. His principal business address is Ten City Square, Charlestown, MA 02129. Mr. Lopardo serves as Chairman and Chief Executive Officer of State Street Global Advisors, an investment management group. He has held both of these positions since 1988. His principal business address is Two International Place, Boston, MA 02110. Ms. Marshall serves as Principal and Founder of The Marshall Plan, a financial investment company, positions she has held since its founding in 1988. Her principal business address is 747 Main Street, Suite 121, Concord, MA 01742. Mr. Ruettgers serves as President and Chief Executive Officer and Director of EMC Corporation, an information retrieval and storage company, a position he has held since 1992. His principal business address is 35 Parkwood Drive, Hopkinton, MA 01798. Mr. Thompson is of Counsel to Nutter, McClennen & Fish, a Boston, Massachusetts law firm, a position he has held since 1992. His principal business address is One International Place, Boston, MA 02110-2699. Mr. Tod most recently served as President and Chief Operating Officer and Director of the CML Group, Inc., a publicly held specialty marketing company, a position he has held since 1969. His principal address is P.O. Box 860, Wolfeboro, NH 03894. 2. THE PURCHASER The name, business address, position with the Purchaser, present principal occupation or employment and five-year employment history of each of the directors and executive officers of the Purchaser, together with the names, principal businesses and addresses of any corporations or other organizations in which such principal occupations are conducted, are set forth below. Unless otherwise indicated, each occupation set forth refers to the Parent, each individual is a United States citizen and each individual's business address is 45 William Street, Wellesley, Massachusetts 02481. No director or executive officer of the Purchaser beneficially owns any Shares (or rights to acquire Shares).
NAME POSITION WITH THE PURCHASER - ---- --------------------------- John F. Alexander, II.................................... Director Angelo D. Castellana..................................... President Daniel T. Heaney......................................... Treasurer Philip Ayers............................................. Secretary
Mr. Ayers serves as Assistant General Counsel of the Parent, a position he has held since 1995. From 1993 to 1995, he served as Managing Attorney for the Parent. See Section 1 of this Schedule I for information concerning Messrs. Alexander, Castellana and Heaney. 39 42 (This page intentionally left blank) 43 (This page intentionally left blank) 44 Manually signed facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates evidencing Shares and any other required documents should be sent or delivered by each stockholder or his broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below: BANKBOSTON, N.A. By Hand: STARS SECURITIES TRANSFER AND REPORTING SERVICES, INC. c/o Boston EquiServe L.P. One Exchange Plaza 55 Broadway, 3rd Floor New York, NY 10006 By Mail: By Facsimile Transmission: Overnight Courier: BANK OF BOSTON (781) 575-2232 BANK OF BOSTON Corporate Reorganization (781) 575-2233 Attn: Corporate Reorganization P.O. Box 8029 150 Royall Street Boston, MA 02266-8029 Canton, MA 02021
Confirm by Telephone (800) 730-4001 Questions and requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal or other tender offer materials may be directed to the Information Agent at its address and telephone numbers set forth below. Stockholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: [KISSEL BLAKE LOGO] 110 Wall Street New York, New York 10005 Banks and Brokers, Please Call: (212) 344-6733 ALL OTHERS CALL TOLL-FREE: (800) 554-7733 EX-99.(A)(2) 3 LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF LUMEN TECHNOLOGIES, INC. PURSUANT TO THE OFFER TO PURCHASE DATED OCTOBER 27, 1998 BY LIGHTHOUSE WESTON CORP. A WHOLLY OWNED SUBSIDIARY OF EG&G, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, NOVEMBER 24, 1998, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: BANKBOSTON, N.A. By Hand: STARS SECURITIES TRANSFER AND REPORTING SERVICES, INC. c/o Boston EquiServe L.P. One Exchange Plaza 55 Broadway, 3rd Floor New York, NY 10006 By Mail: By Facsimile Transmission: Overnight Courier: BANK OF BOSTON (781) 575-2232 BANK OF BOSTON Corporate Reorganization (781) 575-2233 Attn: Corporate Reorganization P.O. Box 8029 150 Royall Street Boston, MA 02266-8029 Canton, MA 02021
Confirm by Telephone: (800) 730-4001 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by holders of Shares (as defined below) either if certificates evidencing Shares ("Share Certificates") are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery of Shares is to be made by book-entry transfer into the account of BankBoston, N.A., as Depositary (the "Depositary"), at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3 of the Offer to Purchase dated October 27, 1998 (the "Offer to Purchase"). Stockholders who tender Shares by book-entry transfer are referred to herein as "Book-Entry Stockholders". Stockholders whose Share Certificates are not immediately available or who cannot deliver their Share Certificates and all other documents required hereby to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or who cannot complete the procedures for delivery by book-entry transfer on a timely basis, may tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. 2 - -------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED - -------------------------------------------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY). ON SHARE CERTIFICATE(S)) SEE INSTRUCTION 3. - -------------------------------------------------------------------------------------------------------------------- TOTAL NUMBER OF SHARES REPRESENTED BY NUMBER SHARE CERTIFICATE SHARE OF SHARES NUMBER(S)* CERTIFICATE(S)* TENDERED** -------------------------------------------------------- -------------------------------------------------------- -------------------------------------------------------- -------------------------------------------------------- -------------------------------------------------------- TOTAL SHARES ...................... - -------------------------------------------------------------------------------------------------------------------- * Need not be completed by Book-Entry Stockholders. ** Unless otherwise indicated, all Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered. See Instruction 4. IF ANY OF THE SHARE CERTIFICATES THAT YOU OWN HAVE BEEN LOST OR DESTROYED, SEE INSTRUCTION 11. - --------------------------------------------------------------------------------------------------------------------
3 [ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution: The Depository Trust Company Account Number: Transaction Code Number: [ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING (PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY): Name(s) of Registered Holder(s): Window Ticket Number (if any): Date of Execution of Notice of Guaranteed Delivery: Name of Institution that Guaranteed Delivery: [ ] Check box if delivered by Book-Entry Transfer to the Book-Entry Transfer Facility: The Depository Trust Company Account Number: Transaction Code Number: NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. 4 Ladies and Gentlemen: The undersigned hereby tenders to Lighthouse Weston Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of EG&G, Inc., a Massachusetts corporation, the above-described shares of common stock, par value $0.01 per share (the "Shares"), of Lumen Technologies, Inc., a Delaware corporation (the "Company"), pursuant to the Purchaser's offer to purchase all the outstanding Shares at a price of $7.75 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and in this Letter of Transmittal (which, together with any amendments or supplements thereto or hereto, collectively constitute the "Offer"), receipt of each of which is hereby acknowledged. The undersigned understands that the Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates, the right to purchase all or any portion of the Shares tendered pursuant to the Offer. Subject to, and effective upon, acceptance for payment of the Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer, including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all of the Shares that are being tendered hereby and any and all dividends and distributions (including, without limitation, distributions of additional Shares or rights declared, paid or issued with respect to the tendered Shares on or after October 21, 1998, collectively, "Distributions"), and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and any Distributions with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) deliver such Share Certificates and any Distributions, or transfer ownership of such Shares and any Distributions on the account books maintained by the Book-Entry Transfer Facility, together in either case with appropriate evidences of transfer and authenticity, to, or upon the order of, the Purchaser, upon receipt by the Depositary, as the undersigned's agent, of the purchase price, (b) present such Shares and any Distributions for transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of record and beneficial ownership of such Shares and any Distributions, all in accordance with the terms and subject to the conditions of the Offer. The undersigned hereby irrevocably appoints Angelo D. Castellana, Daniel T. Heaney and Philip Ayers in their respective capacities as officers of the Purchaser, and any individuals who shall hereafter succeed to any such office of the Purchaser, and each of them and any other designees of the Purchaser, as attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to the full extent of the undersigned's rights with respect to the Shares tendered by the undersigned and accepted for payment and paid for by the Purchaser and any Distributions. This power of attorney and proxy shall be considered irrevocable and coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, the Purchaser accepts such Shares for payment and deposits the purchase price therefor with the Depositary. Upon such deposit, all prior powers of attorney and proxies given by the undersigned at any time with respect to such Shares and any Distributions will, without further action, be revoked, and no subsequent powers of attorney or proxies may be given nor any subsequent written consents executed by the undersigned (and, if given or executed, will not be deemed effective). Upon such deposit by the Purchaser, the designees of the Purchaser will, with respect to such Shares and any Distributions, be empowered to exercise all voting and other rights of the undersigned as they in their sole discretion may deem proper at any annual or special meeting of the Company's stockholders, or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's payment for such Shares, the Purchaser must be able to exercise full voting rights and other rights of a record and beneficial owner with respect to such Shares and any Distributions, including, without limitation, voting at any meeting of stockholders or by written consent in lieu of any such meeting. The undersigned hereby represents and warrants that (a) the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and any Distributions and (b) when the Shares and any Distributions are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title to the Shares and any Distributions, free and clear of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claim. The undersigned, upon request, shall execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby and any Distributions. In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Purchaser any Distribution in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer; and, pending such remittance or appropriate assurance thereof, the Purchaser shall be, subject 5 to applicable law, entitled to all rights and privileges as record and beneficial owner of any such Distribution and may withhold the entire purchase price of Shares tendered hereby or deduct from the purchase price the amount or value of any such Distribution, as determined by the Purchaser in its sole discretion. No authority herein conferred or agreed to be conferred shall be affected by, and all authority herein conferred or agreed to be conferred shall survive, the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as otherwise provided in the Offer to Purchase, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date (as defined in the Offer to Purchase) and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after December 25, 1998. See Section 4 of the Offer to Purchase. The undersigned understands that tenders of Shares pursuant to any of the procedures described in Section 3 of the Offer to Purchase and in the Instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer. The Purchaser's acceptance of such Shares for payment will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions set forth in the Offer. The undersigned understands that the Offer is conditioned upon, among other things set forth in the Merger Agreement (as defined in the Offer to Purchase), there being validly tendered and not withdrawn prior to the expiration of the Offer that number of Shares which constitutes at least a majority of the Shares outstanding on a fully-diluted basis (as defined in the Offer to Purchase). The undersigned understands that, under certain circumstances set forth in the Offer to Purchase, the Purchaser may terminate or amend the Offer or may not be required to accept for payment any of the Shares tendered herewith. Unless otherwise indicated herein under "Special Payment Instructions", please issue the check for the purchase price of all Shares accepted for payment and issue or return any Share Certificate(s) for Shares not tendered or not purchased in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered". Similarly, unless otherwise indicated herein under "Special Delivery Instructions", please mail the check for the purchase price of all Shares accepted for payment and return any Share Certificate(s) for Shares not tendered or not purchased (and accompanying documents, as appropriate) to the address of the registered holder(s) appearing under "Description of Shares Tendered". In the event that both the "Special Delivery Instructions" and the "Special Payment Instructions" boxes are completed, please issue the check for the purchase price of all Shares accepted for payment and return any Share Certificate(s) for Shares not tendered or not purchased in the name(s) of, and deliver such check and return such Share Certificate(s) to, the person(s) so indicated. Please credit any Shares tendered herewith by book-entry transfer that are not purchased by crediting the account at the Book-Entry Transfer Facility designated above. The undersigned recognizes that the Purchaser has no obligation pursuant to the "Special Payment Instructions" to transfer any Shares from the name(s) of the registered holder(s) thereof if the Purchaser does not accept for payment any of the Shares tendered hereby. 6 ------------------------------------------------------------ SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if Share Certificate(s) evidencing Shares not tendered or not purchased or the check for the purchase price of Shares accepted for payment are to be issued in the name of someone other than the undersigned. Issue: [ ] check [ ] certificates to: Name: ---------------------------------------------------- (PLEASE PRINT) Address: -------------------------------------------------- ------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------ (TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE) ------------------------------------------------------------ ------------------------------------------------------------ SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if Share Certificate(s) evidencing Shares not tendered or not purchased or the check for the purchase price of Shares accepted for payment are to be sent to someone other than the undersigned or to the undersigned at an address other than that shown above. Mail: [ ] check [ ] certificates to: Name: ---------------------------------------------------- (PLEASE PRINT) Address: -------------------------------------------------- ------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------ 7 - -------------------------------------------------------------------------------- IMPORTANT SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE X -------------------------------------------------------------------------- X -------------------------------------------------------------------------- Signature(s) of Holder(s) Dated: ------------------------------------------, 1998. (Must be signed by the registered holder(s) exactly as name(s) appear(s) on Share Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following information. See Instruction 5.) Name(s): -------------------------------------------------------------------- -------------------------------------------------------------------- (Please Print) Capacity (Full Title): -------------------------------------------------------------------------- Address: --------------------------------------------------------------------- --------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone Number: -------------------------------------------------------------------------- Tax Identification or Social Security No.: - -------------------------------------------------------------------------------- GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature: -------------------------------------------------------------------------- Name(s): -------------------------------------------------------------------------- (Please Print) Title: -------------------------------------------------------------------------- Name of Firm: -------------------------------------------------------------------------- (Please Print) Address: --------------------------------------------------------------------- --------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone Number: -------------------------------------------------------------------------- Dated: ------------------------------------------, 1998. - -------------------------------------------------------------------------------- 8 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) of Shares (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Share(s)) tendered herewith, unless such holder(s) has (have) completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions", or (b) if such Share(s) are tendered for the account of a firm which is a commercial bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program, the Stock Exchanges' Medallion Program or the New York Stock Exchange, Inc. Medallion Signature Program (each of the foregoing being referred to as an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of Transmittal is to be completed by stockholders either if Share Certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if delivery of Shares is to be made by book-entry transfer pursuant to the procedures set forth in Section 3 of the Offer to Purchase. In order for Shares to be validly tendered pursuant to the Offer, this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the front cover hereof prior to the Expiration Date and either (i) Share Certificates evidencing tendered Shares must be received by the Depositary at such address or such Shares must be tendered by book-entry transfer and a timely confirmation of such book-entry transfer (a "Book-Entry Confirmation") must be received by the Depositary, in each case prior to the Expiration Date or (ii) the guaranteed delivery procedures described in the following sentence must be complied with. Stockholders whose Share Certificates are not immediately available or who cannot deliver their Share Certificates and all other required documents to reach the Depositary prior to the Expiration Date or who cannot complete the procedure for delivery by book-entry transfer on a timely basis may tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, must be received by the Depositary prior to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry Confirmation) evidencing all tendered Shares, in proper form for transfer, together with this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three New York Stock Exchange, Inc. ("NYSE") trading days after the date of execution of such Notice of Guaranteed Delivery. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE SOLE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted. All tendering stockholders, by execution of this Letter of Transmittal (or a facsimile hereof), waive any right to receive any notice of the acceptance of their Shares for payment. If Share Certificates are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the Share Certificate numbers, the number of Shares and any other required information should be listed on a separate signed schedule attached hereto and referenced in the box entitled "Description of Shares Tendered". 9 4. PARTIAL TENDERS. (Not Applicable to Book-Entry Stockholders.) If fewer than all the Shares evidenced by any Share Certificate submitted to the Depositary herewith are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered". In such cases, new Share Certificate(s) evidencing the Shares that were evidenced by the Share Certificate(s) delivered to the Depositary herewith, but which were not tendered hereby, will be sent to the registered holder(s) shown above, unless otherwise provided in the box entitled "Special Delivery Instructions", as soon as practicable after the expiration or termination of the Offer. All Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Share Certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the tendered Shares are registered in the names of different holders, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of Share Certificates. If this Letter of Transmittal or any Share Certificates or stock powers is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Purchaser of such person's authority so to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and tendered hereby, no endorsements of Share Certificates or separate stock powers are required, unless payment is to be made to, or Share Certificates evidencing Shares not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), in which case, the Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers signed exactly as the name(s) of the registered holder(s) appear(s) on such Share Certificate(s). Signatures on such Share Certificate(s) or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Share Certificate(s) listed and tendered hereby, the Share Certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on such Share Certificate(s). Signature(s) on such Share Certificate(s) and stock powers must be guaranteed by an Eligible Institution. 6. TRANSFER TAXES. Except as set forth in this Instruction 6, the Purchaser will pay or cause to be paid any transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price of Shares accepted for payment is to be made to, or if Share Certificate(s) evidencing Shares not tendered or not purchased are to be issued in the name of, any person other than the registered holder(s), or if tendered Share Certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, then the amount of any transfer taxes (whether imposed on the registered holder(s) or such person or otherwise) payable on account of the transfer to such other person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or an exemption therefrom, is submitted. EXCEPT AS SET FORTH IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATE(S) TENDERED HEREBY. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase price of Shares accepted for payment is to be issued in the name of, or Share Certificate(s) evidencing Shares not tendered or not purchased are to be issued or returned to, a person other than the signer of this Letter of Transmittal or if a check or such Share Certificate(s) are to be returned to a person other than the signer of this Letter of Transmittal or to an address of the signer other than that shown in this Letter of Transmittal, the appropriate boxes on this Letter of Transmittal must be completed. 8. WAIVER OF CONDITIONS. Subject to the terms of the Merger Agreement, the conditions of the Offer may be waived by the Purchaser, in whole or in part, at any time and from time to time in its sole discretion. 10 9. SUBSTITUTE FORM W-9. Under U.S. federal income tax law, a stockholder whose tendered Shares are purchased is required to provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") (e.g., social security number or employer identification number) on Substitute Form W-9 below and to certify whether such stockholder is subject to backup withholding of federal income tax. If a tendering stockholder has been notified by the Internal Revenue Service (the "IRS") that such stockholder is subject to backup withholding, such stockholder must cross out item 2 of the Certification box (Part 2) of the Substitute Form W-9, unless such stockholder has since been notified by the IRS that such stockholder is no longer subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering stockholder to 31% federal income tax withholding on the payment of the purchase price of all Shares purchased from the stockholder. If the Depositary is not provided with the correct TIN, the IRS may subject the stockholder or other payee to a $50 penalty. Certain stockholders are not subject to these backup withholding and reporting requirements. Exempt recipients, such as corporations, are also requested to provide their TIN and check the "Exempt" box in Part 3. Foreign individuals or entities must submit a Form W-8, signed under penalties of perjury, attesting to their foreign status. A Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. IF BACKUP WITHHOLDING APPLIES, THE DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO THE STOCKHOLDER OR OTHER PAYEE. BACKUP WITHHOLDING IS NOT AN ADDITIONAL TAX. RATHER, THE TAX LIABILITY OF PERSONS SUBJECT TO BACKUP WITHHOLDING WILL BE REDUCED BY THE AMOUNT OF TAX WITHHELD. IF WITHHOLDING RESULTS IN AN OVERPAYMENT OF TAXES, A REFUND MAY BE OBTAINED FROM THE IRS. The "Awaiting TIN" box in Part 3 of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the "Awaiting TIN" box in Part 3 is checked, the stockholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. If the "Awaiting TIN" box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Depositary will withhold 31% of all payments made unless a properly certified TIN is provided to the Depositary within 60 days. The stockholder is required to give the Depositary the TIN of the record owner of the Shares or of the last transferee appearing on the transfers attached to, or endorsed on, the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 10. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance may be directed to the Information Agent at its address and telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and all other tender offer materials may be obtained from the Information Agent or from brokers, dealers, commercial banks, trust companies or other nominee at the Purchaser's expense. 11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Share Certificate has been lost, destroyed or stolen, the stockholder should promptly notify Kissel-Blake, which is acting as the Information Agent. The stockholder will then be instructed as to the steps that must be taken in order to replace such Share Certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen Share Certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY COMPLETED AND DULY EXECUTED, OR, IF APPROPRIATE, AN AGENT'S MESSAGE, TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS, OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE. 11 PAYER'S NAME: BANKBOSTON, N.A. - -------------------------------------------------------------------------------------------------------------------------------- SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX SOCIAL SECURITY NUMBER OR FORM W-9 AT THE RIGHT AND CERTIFY BY SIGNING AND EMPLOYER IDENTIFICATION NUMBER DATING BELOW: --------------------------------------- (If awaiting TIN, write "Applied For") --------------------------------------------------------------------------------------- DEPARTMENT OF THE TREASURY, PART 2 -- Certification -- Under penalties of perjury, I certify that: INTERNAL REVENUE SERVICE (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. CERTIFICATION INSTRUCTIONS -- You must cross out Item (2) above if you have been PAYER'S REQUEST FOR TAXPAYER notified by the IRS that you are currently subject to backup withholding because of IDENTIFICATION NUMBER ("TIN") underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such Item (2). --------------------------------------------------------------------------------------- SIGN HERE PART 3 -- SIGNATURE ------------------------------ Awaiting TIN [ ] DATE-------------------------------- , 1998 Exempt [ ] - --------------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE "AWAITING TIN" BOX IN PART 3 OF SUBSTITUTE FROM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me, and either (1) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer Identification Number, 31% of all reportable payments made to me may be withheld until I provide a Taxpayer Identification Number with required certifications, which should be provided within 60 days. SIGNATURE: - --------------------------------------------- DATED: - --------------------------------------------- , 1998 The Information Agent for the Offer is: [Kissel Blake LOGO] 110 Wall Street New York, New York 10005 Banks and Brokers, Please Call: (212) 344-6733 ALL OTHERS CALL TOLL-FREE: (800) 554-7733 October 27, 1998 EX-99.(A)(3) 4 NOTICE OF GUARANTEED DELIVERY 1 NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF LUMEN TECHNOLOGIES, INC. As set forth in Section 3 of the Offer to Purchase described below, this Notice of Guaranteed Delivery or one substantially in the form hereof must be used to tender shares of common stock, par value $0.01 per share (the "Shares"), of Lumen Technologies, Inc., a Delaware corporation (the "Company"), pursuant to the Offer (as defined below) if certificates evidencing Shares are not immediately available or the certificates evidencing Shares and all other required documents cannot be delivered to BankBoston, N.A. (the "Depositary") prior to the Expiration Date (as defined in the Offer to Purchase), or if the procedures for delivery by book-entry transfer cannot be completed on a timely basis. This instrument may be delivered by hand or transmitted by facsimile transmission, overnight courier or mail to the Depositary. The Depositary for the Offer is: BANKBOSTON, N.A. By Hand: STARS SECURITIES TRANSFER AND REPORTING SERVICES, INC. c/o Boston EquiServe L.P. One Exchange Plaza 55 Broadway, 3rd Floor New York, NY 10006 By Mail: By Facsimile Transmission: Overnight Courier: BANK OF BOSTON (781) 575-2232 BANK OF BOSTON Corporate Reorganization (781) 575-2233 Attn: Corporate Reorganization P.O. Box 8029 150 Royall Street Boston, MA 02266-8029 Canton, MA 02021
Confirm by Telephone: (800) 730-4001 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution (as defined in the Offer to Purchase) under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box in the Letter of Transmittal. 2 Ladies and Gentlemen: The undersigned hereby tenders to Lighthouse Weston Corp., a Delaware corporation and a wholly owned subsidiary of EG&G, Inc., a Massachusetts corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 27, 1998 (the "Offer to Purchase") and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares indicated below pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Signature(s): Name(s) of Record Holders: Please Type or Print Number of Shares: Share Certificate Number(s) (if available): Dated , 1998 Address: Zip Code Area Code and Tel. Number: [ ] Check here if Shares will be tendered by book-entry transfer The Depository Trust Company Account Number: THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED 3 GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEES) The undersigned, a firm which is a commercial bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program, the Stock Exchanges' Medallion Program or the New York Stock Exchange, Inc. Medallion Signature Program, hereby guarantees to either deliver to the Depositary certificates evidencing all the Shares tendered hereby, in proper form for transfer, or to deliver such Shares pursuant to the procedure for book-entry transfer into the Depositary's account at The Depository Trust Company, together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry transfer, and any other required documents, all within three New York Stock Exchange trading days after the date hereof. - ----------------------------------------------- ----------------------------------------------- Name of Firm Authorized Signature - ----------------------------------------------- ----------------------------------------------- Address Name - ----------------------------------------------- ----------------------------------------------- Zip Code Title Dated: ,1998 - ----------------------------------------------- ------------------------------------- Area Code and Telephone Number
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.(A)(4) 5 LETTER TO BROKERS, DEALERS 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LUMEN TECHNOLOGIES, INC. AT $7.75 NET PER SHARE BY LIGHTHOUSE WESTON CORP. A WHOLLY OWNED SUBSIDIARY OF EG&G, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, NOVEMBER 24, 1998, UNLESS THE OFFER IS EXTENDED. To Brokers, Dealers, Commercial Banks, October 27, 1998 Trust Companies and Other Nominees: Enclosed for your consideration is an Offer to Purchase dated October 27, 1998 (the "Offer to Purchase") and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") in connection with the offer by Lighthouse Weston Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of EG&G, Inc., a Massachusetts corporation (the "Parent"), to purchase all the outstanding shares of common stock, par value $0.01 per share (the "Shares"), of Lumen Technologies, Inc., a Delaware corporation (the "Company"), at a purchase price of $7.75 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions of the Offer. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS DESCRIBED IN THE OFFER TO PURCHASE, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES WHICH CONSTITUTES AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY-DILUTED BASIS (AS DEFINED IN THE OFFER TO PURCHASE). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS CONTAINED IN THE OFFER TO PURCHASE. Enclosed for your information and for forwarding to your clients for whose accounts you hold Shares registered in your name or in the name of your nominees are copies of the following documents: 1. The Offer to Purchase dated October 27, 1998. 2. The Letter of Transmittal to tender Shares (for your use and for the information of your clients). 3. A letter to the stockholders of the Company from Martin E. Franklin, Chairman of the Board of Directors of the Company, together with the Company's Solicitation/Recommendation Statement on Schedule 14D-9. 4. The Notice of Guaranteed Delivery for Shares (to be used to accept the Offer if certificates evidencing Shares ("Share Certificates") are not immediately available or if such Share Certificates and all other required documents cannot be delivered to BankBoston, N.A. (the "Depositary") prior to the Expiration Date or if the procedures for book-entry transfer cannot be completed on a timely basis). 5. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominees, with space provided for obtaining such clients' instructions with regard to the Offer. 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 7. A return envelope addressed to the Depositary. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, NOVEMBER 24, 1998, UNLESS THE OFFER IS EXTENDED. 2 In order for Shares to be validly tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry delivery of Shares, and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase prior to the Expiration Date and either (i) Share Certificates evidencing tendered Shares must be received by the Depositary at one of such addresses or such Shares must be tendered by book-entry transfer and a timely confirmation of such book-entry transfer (a "Book-Entry Confirmation") must be received by the Depositary, in each case prior to the Expiration Date, all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's Share Certificates are not immediately available or such stockholder cannot deliver the Share Certificates and all other required documents to reach the Depositary prior to the Expiration Date, or such stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. No fees or commissions will be paid to brokers, dealers or any other persons (other than to Kissel-Blake (the "Information Agent"), as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. The Purchaser will pay or cause to be paid any transfer taxes payable on the purchase of Shares by the Purchaser pursuant to the Offer, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Questions and requests for assistance or for additional copies of the enclosed materials may be directed to the Information Agent, at its address and telephone numbers set forth on the back cover of the Offer to Purchase. Very truly yours, LIGHTHOUSE WESTON CORP. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE PARENT, THE PURCHASER, THE COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. EX-99.(A)(5) 6 LETTER TO CLIENTS 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LUMEN TECHNOLOGIES, INC. AT $7.75 NET PER SHARE BY LIGHTHOUSE WESTON CORP. A WHOLLY OWNED SUBSIDIARY OF EG&G, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, NOVEMBER 24, 1998, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration are an Offer to Purchase dated October 27, 1998 (the "Offer to Purchase") and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") relating to an offer by Lighthouse Weston Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of EG&G, Inc., a Massachusetts corporation (the "Parent"), to purchase all the outstanding shares of common stock, par value $0.01 per share (the "Shares"), of Lumen Technologies, Inc., a Delaware corporation (the "Company"), at a purchase price of $7.75 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer. Also enclosed is a letter to stockholders of the Company from Martin E. Franklin, Chairman of the Board of Directors of the Company, together with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by the Company. We are the holder of record of Shares held by us for your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to have us tender on your behalf any or all of the Shares held by us for your account, pursuant to the terms and subject to the conditions set forth in the Offer. Your attention is directed to the following: 1. The tender price is $7.75 per Share, net to the seller in cash, without interest thereon. 2. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Tuesday, November 24, 1998, unless the Offer is extended. 3. The Board of Directors of the Company has unanimously determined that the Offer and the Merger referred to in the Offer to Purchase are fair to, and in the best interests of, the stockholders of the Company, has approved and found advisable the Merger Agreement, the Offer and the Merger and recommends that the stockholders of the Company accept the Offer and tender their Shares to the Purchaser pursuant to the Offer. 4. The Offer is made for all of the outstanding Shares. 5. The Offer is conditioned upon, among other things described in the Offer to Purchase, there being validly tendered and not withdrawn prior to the expiration of the Offer that number of Shares which constitutes at least a majority of the outstanding Shares on a fully-diluted basis (as defined in the Offer to Purchase). The Offer is also subject to certain other terms and conditions contained in the Offer to Purchase. 6. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. 2 7. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by BankBoston, N.A. (the "Depositary") of (i) certificates evidencing Shares or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined in Section 2 of the Offer to Purchase) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. The Offer is being made solely by the Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. If you wish to have us tender any or all of the Shares held by us for your account, please instruct us by completing, executing and returning to us the instruction form contained in this letter. If you authorize a tender of your Shares, all such Shares will be tendered unless otherwise specified in such instruction form. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LUMEN TECHNOLOGIES, INC. The undersigned acknowledge(s) receipt of your letter enclosing the Offer to Purchase dated October 27, 1998 (the "Offer to Purchase") and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") pursuant to an offer by Lighthouse Weston Corp., a Delaware corporation and a wholly owned subsidiary of EG&G, Inc., a Massachusetts corporation, to purchase all the outstanding shares of common stock, par value $0.01 per share (the "Shares"), of Lumen Technologies, Inc., a Delaware corporation. This will instruct you to tender the number of Shares indicated below (or, if no number is indicated below, all Shares) that are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Shares to be Tendered*: Shares Dated: , 1998 SIGN HERE Signature(s): Please type or print name(s): Address: Area Code and Telephone Number: Tax Identification or Social Security Number: - --------------- * Unless otherwise indicated, it will be assumed that all of the Shares held by us for your account are to be tendered. EX-99.(A)(6) 7 GUIDELINES FOR CERTIFICATION ON SUBSTITUTE FORM W9 1 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER -- Social Security Numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer Identification Numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the type of number to give the payer. - --------------------------------------------------------------- ---------------------------------------------------------------
GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - -------------------------------------------------------------- GIVE THE EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - -------------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals (joint The actual owner of the account) account or, if combined funds, the first individual on the account(A) 3. Husband and wife (joint The actual owner of the account) account or, if joint funds, the first individual on the account(A) 4. Custodian account of a minor The minor(B) (Uniform Gift to Minors Act) 5. Adult and minor (joint account) The adult or, if the minor is the only contributor, the minor(A) 6. Account in the name of guardian The ward, minor, or or committee for a designated incompetent person(C) ward, minor, or incompetent person 7. a. The usual revocable savings The grantor-trustee(A) trust account (grantor is also trustee) b. So-called trust account that The actual owner(A) is not a legal or valid trust under State law 8. Sole proprietorship account The owner(D) 9. A valid trust, estate, or Legal entity (Do not pension trust furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(E) 10. Corporate account The corporation 11. Religious, charitable, or The organization educational organization account 12. Partnership account held in the The partnership name of the business 13. Association, club, or other The organization tax-exempt organization 14. A broker or registered nominee The broker or nominee 15. Account with the Department of The public entity Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments
- --------------------------------------------------------------- --------------------------------------------------------------- (A) List first and circle the name of the person whose number you furnish. (B) Circle the minor's name and furnish the minor's social security number. (C) Circle the ward, minor's or incompetent person's name and furnish such person's social security number. (D) Show the name of the owner. (E) List first and circle the name of the legal trust, estate, or pension trust. NOTE:If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING 1. Payees specifically exempted from backup withholding on ALL payments include the following: - - A corporation. - - A financial institution. - - An organization exempt from tax under Section 501(a), or an individual retirement plan or a custodial account under Section 403(b)(7). - - The United States or any agency or instrumentality thereof, a State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - - An international organization or any agency or instrumentality thereof. - - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - - A real estate investment trust. - - A common trust fund operated by a bank under Section 584(a). - - An exempt charitable remainder trust, or a non-exempt trust described in Section 4947(a)(1). - - An entity registered at all times under the Investment Company Act of 1940. - - A foreign central bank of issue. 2. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - - Payments to nonresident aliens subject to withholding under Section 1441. - - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - - Payments of patronage dividends where the amount received is not paid in money. - - Payments made by certain foreign organizations. - - Payments made to a nominee. 3. Payments of interest not generally subject to backup withholding including the following: - - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - - Payments of tax-exempt interest (including exempt interest dividends under Section 852). - - Payments described in Section 6049(b)(5) to nonresi- dent aliens. - - Payments on tax-free covenant bonds under Section 1451. - - Payments made by certain foreign organizations. - - Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. Certain payments other than interest, dividends, and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under Sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICE. Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of tax returns. Payers must be given the numbers whether or not recipients are required to file a tax return. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to include any portion of an includable payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an under-payment attributable to that failure unless there is clear and convincing evidence to the contrary. (3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.(A)(7) 8 SUMMARY ADVERTISEMENT AS PUBLISHED OCTOBER 27,1998 1 Exhibit (a)(7) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is being made solely by the Offer to Purchase dated October 27, 1998 and the related Letter of Transmittal (and any amendments or supplements thereto) and is being made to all holders of Shares. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LUMEN TECHNOLOGIES, INC. AT $7.75 NET PER SHARE BY LIGHTHOUSE WESTON CORP. A WHOLLY OWNED SUBSIDIARY OF EG&G, INC. Lighthouse Weston Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of EG&G, Inc., a Massachusetts corporation (the "Parent"), is offering to purchase all the outstanding shares of common stock, par value $0.01 per share (the "Shares"), of Lumen Technologies, Inc., a Delaware corporation (the "Company"), at a purchase price of $7.75 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 27, 1998 (the "Offer to Purchase") and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). ------------------------------------------------------------------ THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, NOVEMBER 24, 1998, UNLESS THE OFFER IS EXTENDED. ------------------------------------------------------------------ The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of October 21, 1998 (the "Merger Agreement"), by and among the Parent, the Purchaser and the Company, pursuant to which, following the consummation of the Offer and the satisfaction of the other conditions set forth in the Merger Agreement (but not prior to January 11, 1999, unless requested otherwise by the Parent) and in accordance with the relevant provisions of the Delaware General Corporation Law (the "Delaware Law"), the Purchaser will be merged with and into the Company (the "Merger"). Upon the effective time of the Merger, each outstanding Share (other than Shares held by the Parent, the Purchaser or the Company or any direct or indirect subsidiary of the Parent, the Purchaser or the 2 Company, and Shares held by stockholders, if any, who are entitled to and perfect their appraisal rights under Delaware Law) will be cancelled and converted into the right to receive $7.75 per Share in cash, without interest. The Merger Agreement is more fully described in the Offer to Purchase. The purpose of the Offer is to enable the Parent, through its wholly owned subsidiary, to acquire control of, and the entire equity interest in, the Company. The Parent and the Purchaser have entered into a Stockholders' Agreement with certain officers and directors of the Company (the "Management Stockholders"), with respect to 993,684 Shares outstanding as of the date of the Merger Agreement and beneficially owned by the Management Stockholders and an additional 1,752,338 Shares subject to options held by the Management Stockholders. The Shares subject to the Stockholders' Agreement represent between 4.5% (assuming the Management Stockholders do not exercise any of their options) and 11.5% (assuming the Management Stockholders do not exercise any of their options) of the Shares on a fully diluted basis (as defined in the Offer to Purchase). Pursuant to the Stockholders' Agreement, the Stockholders have agreed to tender all their outstanding Shares pursuant to the Offer, to vote all their outstanding Shares in favor of the Merger and not to transfer such Shares without the Parent's consent and have granted the Purchaser a proxy to vote such Shares in favor of the Merger. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES WHICH CONSTITUTES AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY-DILUTED BASIS (AS DEFINED IN THE OFFER TO PURCHASE). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS CONTAINED IN THE OFFER TO PURCHASE. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED AND FOUND ADVISABLE THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn if, as and when the Purchaser gives oral or written notice to BankBoston, N.A. (the "Depositary") of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares so accepted for payment pursuant to the Offer will be made by deposit of the aggregate purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting such payment to stockholders whose Shares have been accepted for payment. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates evidencing Shares ("Share Certificates") or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined in Section 2 of the Offer to Purchase) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. The term "Expiration Date" means 12:00 midnight, New York City time, on Tuesday, November 24, 1998, unless and until the Purchaser, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), shall have extended the period during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Subject to the applicable rules and regulations of the Securities and Exchange Commission, the Purchaser expressly reserves the right, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), at any time and from time to time, and regardless of whether or not any of the events set forth in Section 13 of the Offer to Purchase shall have occurred, (i) to extend the period during which the Offer is open and thereby delay acceptance for payment of, or payment for, any Shares, by giving oral or written notice of such extension to the Depositary and (ii) to amend the Offer in any other respect by giving oral or written notice of such amendment to the Depositary. There can be no assurance that the Purchaser will exercise its right to extend the Offer. Any such extension will be followed by a public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the rights of a tendering stockholder to withdraw such stockholder's Shares. 3 Except as otherwise provided in Section 4 of the Offer to Purchase, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment pursuant to the Offer, may also be withdrawn at any time after December 25, 1998. In order for a withdrawal to be effective, a written, or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of the Shares to be withdrawn, if different from that of the person who tendered such Shares. If Share Certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the tendering stockholder must also submit the serial numbers shown on such Share Certificates to the Depositary and the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to Purchase), unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer, as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and must otherwise comply with the procedures of the Book-Entry Transfer Facility. Withdrawals may not be revoked and any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered at any time prior to the Expiration Date by following one of the procedures described in Section 3 of the Offer to Purchase. All questions as to the form and validity (including the time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. The Company has provided the Purchaser with the Company's stockholders list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase, the related Letter of Transmittal and, if required, other relevant material will be mailed to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's stockholders list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance or for additional copies of the Offer to Purchase, the Letter of Transmittal and all other tender offer materials may be directed to the Information Agent as set forth below, and copies will be furnished promptly at the Purchaser's expense. No fees or commissions will be paid to brokers, dealers or any other persons (other than the Information Agent) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: KISSEL-BLAKE A Division of Shareholder Communications Corporation 110 Wall Street New York, New York 10005 Banks and Brokers, Please Call: (212) 344-6733 ALL OTHERS CALL TOLL-FREE: (800) 554-7733 October 27, 1998 EX-99.(A)(8) 9 TEXT OF JOINT PRESS RELEASE 1 Exhibit (a)(8) [EG&G LETTERHEAD] FOR IMMEDIATE RELEASE - --------------------- 21 October 1998 EG&G AND LUMEN TECHNOLOGIES ANNOUNCE ACQUISITION ------------------------------------------------ $250M DEAL BROADENS EG&G'S SPECIALTY LIGHTING PRODUCT OFFERING -------------------------------------------------------------- WELLESLEY, MASS ... EG&G, Inc (NYSE: EGG) and Lumen Technologies, Inc. (NYSE: LNM), Rye, New York, jointly announced today that they have entered into a definitive agreement for EG&G to acquire Lumen, a maker of high-technology specialty light sources for approximately $250 million in cash and assmed debt. The acquisition has been approved by the Boards of both companies. Under the agreement, a wholly owned subsidiary of EG&G will commence a tender offer to purchase all outstanding shares of Lumen common stock for $7.75 per share in cash. The offer will be conditioned upon the tender of at least a majority of the Lumen common shares outstanding and certain other conditions. Following consummation of the offer, EG&G's subsidiary will be merged with Lumen and any remaining shares of Lumen common stock will be converted into the right to receive $7.75 per share. As a result of this acquisition, Lumen will add a product line that includes high-intensity specialty discharge lamps for medical fiberoptic illumination, cinema projection and stage and studio lighting to EG&G's Optoelectronics product offerings. EG&G products include specialty flashlamps, as well as flashtubes used every year in more than 100 million single use cameras. Together, the companies will be positioned to serve a diverse customer base in high-growth, specialty light-source markets. Lumen had pro forma 1997 sales of $138.4 million and pro forma six month 1998 sales of $77 million. Lumen has an employee base of 1,140 and operations in California, Connecticut, the United Kingdom and Italy. EG&G Chairman and CEO John M. Kucharski said: "The acquisition of Lumen Technologies reinforces and complements EG&G's positioning strategy. It provides a broading vehicle for EG&G's technology to move up the optoelectronics value chain." "Lumen Technologies is a strong strategic fit for EG&G and will complement our Optoelectronics' product mix," explained Gregory L. Summe, EG&G President and COO. "Our combined manufacturing, selling, distribution and R&D expertise will greatly improve our ability to serve our customers. "This is a win-win situation," Summe continued. "We gain a company renowned for developing state-of-the-art lamps and related products used for medical and projection applications and we gain access to leading suppliers of medical fiberoptic systems. Lumen benefits from our low-cost manufacturing facilities and the opportunity to work with suppliers for the major components of lamps and related systems. We expect this acquisition to be slightly accretive to 1999 earnings per share." -more- 2 EG&G AND LUMEN TECHNOLOGIES ANNOUNCE ACQUISITION PAGE 2 OF 2 Lumen Technologies Chairman Martin E. Franklin said: "EG&G and Lumen Technologies are a perfect fit. Through this combination, Lumen will have the capacity to generate faster growth than it could as an independent company. EG&G is acquiring a company with industry-leading management and technology. We wish EG&G every success." The 51-year history of EG&G started with high-technology application of light. EG&G founder Harold "Doc" Edgerton commercialized the use of the stroboscopic light for engineering analyses and built the Company from there. Today, the EG&G Optoelectronic Strategic Business Unit designs and manufactures optical sensors ranging from simple photocells to sophisticated imaging systems, light sources that include flashlamps and laser diodes, and complex devices for secure pyrotechnic arming and triggering. Micromachined sensors and amorphous silicon detectors are part of the EG&G product line. FORWARD-LOOKING INFORMATION This press release contains a number of "forward-looking statements", including statements about the expected consummation of EG&G's acquisition of Lumen, the future benefits EG&G expects to derive as a result of this acquisition and the effect of the acquisition on 1999 earnings. There are a number of important factors that could cause actual events or results to differ materially from those expected or indicated by such statements. These factors include, without limitation, and the risk that the acquisition may not be consummated, EG&G's success in integrating Lumen into its own operations, and the risk that anticipated benefits of acquisitions may not occur or may be delayed or reduced in their realization. EG&G, Inc. is a global technology company that provides complete systems, as well as products to medical, aerospace, semiconductor, photographic and other industries. It delivers skilled support services to government and industrial customers. Based in Wellesley, Massachusetts, EG&G has annual sales of $1.4 billion and about 12,000 employees worldwide. ### For further information: EG&G Lumen Technologies - ---- ------------------ Financial Inquiries Deborah S. Lorenz Martin E. Franklin, Chairman Vice President (914) 976-9400 Investor Relations and Corporate Communications (781) 431-4306 Media Martin A. Reynolds Manager of Corporate Communications (781) 431-4282 EX-99.(A)(9) 10 TEXT OF PRESS RELEASE DATED OCTOBER 27, 1998 1 FOR IMMEDIATE RELEASE Exhibit (a)(9) 27 October 1998 EG&G ANNOUNCES TENDER OFFER FOR LUMEN TECHNOLOGIES WELLESLEY, MASSACHUSETTS....EG&G, Inc. (NYSE:EGG) announced today that it has commenced a cash tender offer for all of the outstanding shares of common stock of Lumen Technologies, Inc. (NYSE:LNM), Rye, New York, at $7.75 per share. The tender offer is being made pursuant to a previously announced merger agreement between EG&G and Lumen Technologies. The offer is conditioned upon, among other things, the tender of at least a majority of the shares of common stock outstanding on a fully-diluted basis (as defined in the merger agreement), and the expiration or earlier termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The offer and withdrawal rights are scheduled to expire at 12:00 midnight, New York City time, on Tuesday, November 24, 1998, unless the offer is extended in accordance with the terms of the merger agreement. Kissel-Blake is acting as the Information Agent in connection with the offer. Lumen has a product line that includes high-intensity specialty discharge lamps for medical fiberoptic illumination, cinema projection and stage and studio lighting. EG&G, Inc. is a global technology company that provides complete systems, as well as products to medical, aerospace, semiconductor, photographic and other industries. It delivers skilled support services to government and industrial customers. Based in Wellesley, Massachusetts, EG&G has annual sales of $1.4 billion and about 12,000 employees worldwide. This press release is neither an offer to purchase nor a solicitation of an offer to sell securities. The tender offer is made only through the Offer to Purchase and the related Letter of Transmittal, which is being mailed to stockholders today. Additional copies of such documents can be obtained by contacting the Information Agent at 1-800-554-7733. ### For further information contact: Deborah S. Lorenz, EG&G, Inc. Tel (781) 431-4306 EX-99.(C)(1) 11 AGREEMENT AND PLAN OF MERGER 1 Exhibit (c)(1) AGREEMENT AND PLAN OF MERGER by and among EG&G, INC. LIGHTHOUSE WESTON CORP. and LUMEN TECHNOLOGIES, INC. Dated as of October 21, 1998 2 TABLE OF CONTENTS ARTICLE 1 THE OFFER.................................................................. 2 1.1 The Offer............................................................ 2 1.2 Company Action....................................................... 4 1.3 Directors............................................................ 6 ARTICLE 2 THE MERGER................................................................. 7 2.1 The Merger........................................................... 7 2.2 Effect of the Merger................................................. 7 2.3 Consummation of the Merger........................................... 7 2.4 Certificate of Incorporation; By-Laws; Directors and Officers........ 8 2.5 Conversion of Securities; Payment of Merger Consideration............ 8 2.6 Exchange of Certificates............................................. 9 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE PURCHASER........................................... 11 3.1 Organization and Qualification...................................... 11 3.2 Authority........................................................... 12 3.3 Compliance.......................................................... 12 3.4 Information Provided................................................ 13 3.5 Interim Operations of the Purchaser................................. 13 3.6 Financing........................................................... 13 3.7 Brokers............................................................. 13 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................. 13 4.1 Organization and Qualification...................................... 14 4.2 Subsidiaries........................................................ 14 4.3 Capitalization...................................................... 15 4.4 Authority........................................................... 17 4.5 Compliance.......................................................... 17 4.6 Commission Filings; Financial Statements; Information Provided...... 18 4.7 No Undisclosed Liabilities.......................................... 19 4.8 Changes............................................................. 19 4.9 Contracts........................................................... 19 4.10 Transactions with Affiliates........................................ 20 4.11 Employee Benefits and Contracts..................................... 20 4.12 Properties and Liens................................................ 22 4.13 Environmental Matters............................................... 22 -ii- 3 4.14 Taxes............................................................... 24 4.15 Compliance with Laws; Permits....................................... 27 4.16 Intellectual Property............................................... 27 4.17 Litigation.......................................................... 27 4.18 Prepayment of Indebtedness.......................................... 27 4.19 Voting Requirements................................................. 28 4.20 Year 2000 Compliance................................................ 28 4.21 Insurance........................................................... 29 4.22 No Existing Discussion.............................................. 29 4.23 Brokers............................................................. 29 ARTICLE 5 CONDUCT OF BUSINESS....................................................... 29 5.1 Conduct Prior to Effective Time..................................... 29 ARTICLE 6 ADDITIONAL AGREEMENTS..................................................... 33 6.1 Company Stockholder Approval; Preparation of Proxy Statement........ 33 6.2 Disposition of the Shares........................................... 34 6.3 Fees and Expenses................................................... 34 6.4 Additional Agreements............................................... 35 6.5 No Solicitation..................................................... 36 6.6 Notification of Certain Matters..................................... 38 6.7 Access to Information............................................... 39 6.8 Indemnification and Insurance....................................... 40 6.9 Filings and Other Matters........................................... 41 6.10 Fair Price Structure................................................ 42 6.11 Parent Guaranty..................................................... 42 6.12 Company Options..................................................... 42 6.13 Certain Payments.................................................... 43 ARTICLE 7 CONDITIONS................................................................ 44 7.1 Conditions to Obligation of Each Party to Effect the Merger......... 44 7.2 Conditions to the Parent's and the Purchaser's Obligation to Effect the Merger................................................... 44 ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER......................................... 44 8.1 Termination......................................................... 44 8.2 Effect of Termination............................................... 46 8.3 Amendment........................................................... 46 8.4 Waiver.............................................................. 47 -iii- 4 ARTICLE 9 GENERAL PROVISIONS........................................................ 47 9.1 Publicity........................................................... 47 9.2 Notices............................................................. 47 9.3 Interpretation...................................................... 48 9.4 Representations and Warranties; etc................................. 49 9.5 Miscellaneous....................................................... 49 9.6 Validity............................................................ 50 9.7 Counterparts. ..................................................... 50 9.8 Severability........................................................ 50 ANNEX I CONDITIONS OF THE OFFER................................................... 1 -iv- 5 TABLE OF DEFINED TERMS Acquisition Proposal 6.5(a) Affiliated Group 4.14(a) Affiliated Period 4.14(a) Agreement Preamble business day 9.3 Certificate of Merger 2.3 Certificates 2.6(a) CERCLA 4.13(a) Code 1.1(e) Company Preamble Company Options 4.3(a) Company's Directors 1.2(a) Commission 1.1(b) Commission Filings 4.6(a) Convertible Notes 4.3(a) Delaware Law 1.2(a) Disclosure Schedule 4 Dissenting Shares 2.5(b) Effective Time 2.3 Environmental Law 4.13(a) Environmental Permits 4.13(e) ERISA 4.11(b) ESPP 4.3(a) Exchange Act 1.1(a) Fairness Opinion 1.2(c) Financial Advisor 1.2(c) Fully Diluted Shares Annex I Governmental Entity 4.13(a) Hart-Scott-Rodino Act 3.3(b) ILC Merger Agreement 1.3(c) Indemnified Parties 6.8 Indemnifying Party 6.8 Independent Directors 1.3(a) Insurance Policies 4.21 Intellectual Property 4.16 Liens 4.12(b) Material Adverse Effect 4.1 Materials of Environmental Concern 4.13(b) Merger Background Merger Consideration 2.5(a) Minimum Condition Annex I Offer Background -v- 6 Offer Documents 1.1(c) Option Plan 4.3(a) Parent Preamble Parent Common Stock 6.12(a) Payment Agent 2.6(a) Payment Fund 2.6(a) Permitted Indebtedness 5.1 Preferred Stock 4.3(a) Proceeding 6.8(b) Proxy Statement 6.1(b) Purchaser Preamble Qualified Acquisition Proposal 6.5(a) Qualified Commercial Bank 2.6(b) Schedule 14D-1 1.1(c) Schedule 14D-9 1.2(b) Section 16 Shares 1.2(d) Securities Act 4.3(c) September 30 Financial Information 4.6(c) Shares Background Stockholders' Agreement Background Stockholders Meeting 6.1(a) Subsidiary; Subsidiaries 4.2(a) Surviving Corporation 2.1 Tax Returns 4.14(a) Taxes 4.14(a) Third Party 6.5(a) Trigger Event 6.3(e) Year 2000 Compliant 4.20 -vi- 7 AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of October 21, 1998, is by and among EG&G, Inc., a corporation organized under the laws of the Commonwealth of Massachusetts (the "Parent"), Lighthouse Weston Corp., a corporation organized under the laws of the State of Delaware and a wholly owned subsidiary of the Parent (the "Purchaser"), and Lumen Technologies, Inc., a corporation organized under the laws of the State of Delaware (the "Company"). BACKGROUND A. The respective Boards of Directors of the Parent, the Purchaser and the Company have duly approved and found advisable this Agreement and the acquisition of the Company by the Parent and the Purchaser pursuant to the terms and conditions of this Agreement. B. In furtherance of such acquisition, it is proposed that the Purchaser will make a tender offer (the "Offer") to purchase all of the issued and outstanding shares of Common Stock, $0.01 par value per share, of the Company (the "Shares"), at a price of $7.75 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in this Agreement. C. The Board of Directors of the Company unanimously has determined that the Offer is fair to, and in the best interests of, the Company's stockholders and has duly approved the Offer and unanimously resolved to recommend its acceptance by the holders of Shares. D. The respective Boards of Directors of the Parent, the Purchaser and the Company have each duly approved the merger of the Purchaser and the Company on the terms and subject to the conditions of this Agreement (the "Merger") following consummation of the Offer and the Boards of Directors of the Company and the Purchaser have each, by unanimous vote, duly resolved to recommend approval of the Merger by their respective stockholders. E. In connection with such acquisition, the Parent and the Purchaser have entered into a Stockholders' Agreement dated of even date herewith (the "Stockholders' Agreement") with certain stockholders of the Company. F. The respective Boards of Directors of the Parent, the Purchaser and the Company have each duly approved all of the other transactions contemplated by this Agreement, including without limitation, for the purposes of satisfying the requirements of Section 203 of the Delaware General Corporation Law, the Stockholders' Agreement. -1- 8 NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Parent, the Purchaser and the Company hereby agree as follows: ARTICLE 1 THE OFFER 1.1 THE OFFER. (a) Provided that this Agreement shall not have been terminated in accordance with Section 8.1 hereof and nothing shall have occurred and be continuing that would result in a failure to satisfy any of the conditions set forth in ANNEX I hereto, the Purchaser shall (i) no later than the business day following the date of this Agreement, publicly announce its intention to make the Offer and (ii) within five business days of such announcement, commence (within the meaning of Rule 14d-2(a) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), the Offer for all Shares, subject to the conditions set forth in ANNEX I, at a price of $7.75 per Share, net to the seller in cash, without interest thereon. Subject to the conditions set forth in ANNEX I, the Purchaser shall accept for payment, and pay for, all shares validly tendered and not withdrawn pursuant to the Offer that the Purchaser becomes obligated to accept for payment, and pay for, pursuant to the Offer as soon as practicable after the expiration of the Offer and in no event later than five business days after the expiration of the Offer. (b) The Offer shall be made by means of the Offer Documents (as defined below), which shall not contain any condition not set forth in ANNEX I hereto and shall be open for a period of not less than 20 business days. The Purchaser expressly reserves the right, subject to compliance with the Exchange Act, to modify the terms of the Offer, except that, without the consent of the Company, the Purchaser shall not amend or waive the Minimum Condition (as defined in ANNEX I hereto), reduce the maximum number of Shares to be purchased, reduce the price to be paid per Share pursuant to the Offer, change the form of consideration to be paid in the Offer, impose conditions to the Offer in addition to those set forth in ANNEX I, or amend any other material term of the Offer in a manner adverse to the holders of the Shares. Notwithstanding the foregoing, the Purchaser may, in its sole discretion, (A) extend the Offer if at the scheduled or any extended expiration date of the Offer any of the conditions set forth on ANNEX I (including the Minimum Condition) shall not be satisfied or waived, until such time as such conditions are satisfied or waived, and (B) extend the Offer for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the "Commission") or the staff thereof applicable to the Offer; provided, however, that, without the Company's written consent, the Purchaser may not extend the expiration date of the Offer pursuant to this sentence to a date later than 11:59 p.m. on December 31, 1998. -2- 9 (c) On the date of commencement of the Offer, the Parent and the Purchaser shall file with the Commission a Tender Offer Statement on Schedule 14D-1 (together with all amendments and supplements thereto, the "Schedule 14D-1") with respect to the Offer that will contain an offer to purchase and the related letter of transmittal (which documents, together with any supplements or amendments thereto, are referred to herein collectively as the "Offer Documents") and shall promptly mail the Offer Documents to the Company's stockholders. The Parent and the Purchaser agree that the Offer Documents shall comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder, and the Offer Documents, on the date first filed with the Commission and on the date first published, sent or given to the Company's stockholders, shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation or warranty is made by the Parent or the Purchaser with respect to written information supplied by the Company or any of its stockholders specifically for inclusion or incorporation by reference in the Offer Documents. The Parent, the Purchaser and the Company each agrees promptly to correct any written information provided by it for use in the Schedule 14D-1 or the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect, and the Parent and the Purchaser further agree to take all steps necessary to amend or supplement the Schedule 14D-1 and, as applicable, the Offer Documents and to cause the Schedule 14D-1 as so amended and supplemented to be filed with the Commission and the Offer Documents as so amended and supplemented to be disseminated to holders of Shares, in each case as and to the extent required by applicable securities laws. The Company and its counsel shall be given reasonable opportunity to review and comment upon the Offer Documents prior to their filing with the Commission or dissemination to the stockholders of the Company. The Parent and the Purchaser shall provide the Company and its counsel with a copy of any written comments or telephonic notification of any verbal comments the Parent or the Purchaser may receive from the Commission or its staff with respect to the Offer promptly after the receipt thereof and shall provide the Company and its counsel with a copy of any written responses thereto and telephonic notification of any verbal responses thereto of the Parent or the Purchaser or their counsel. (d) The Parent shall provide or cause to be provided to the Purchaser on a timely basis the funds necessary to purchase any and all Shares that the Purchaser becomes obligated to purchase pursuant to the Offer. (e) The Purchaser shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to the Offer such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the "Code"), or under any applicable law. -3- 10 1.2 COMPANY ACTION. (a) The Company hereby approves of and consents to the Offer and represents and warrants that the Board of Directors of the Company (the "Company's Directors"), at a meeting duly called and held, (i) has duly adopted and approved, by unanimous vote, (A) the Offer, the Merger and this Agreement, and the transactions contemplated hereby and thereby, and (B) solely for the purpose of satisfying the requirements of Section 203 of the Delaware Law, the Stockholders' Agreement and the transactions contemplated thereby; (ii) has determined that each of the transactions contemplated by this Agreement, including the Offer and the Merger are fair to and in the best interests of the stockholders of the Company; and (iii) after consideration of its fiduciary duties under applicable laws, has resolved to recommend acceptance of the Offer by holders of Shares and to recommend adoption and approval of the Merger pursuant to the Delaware General Corporation Law (the "Delaware Law") by holders of Shares (if stockholder approval of the Merger is required by the Delaware Law). (b) The Company agrees to file with the Commission, contemporaneously with the commencement of the Offer, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, the "Schedule 14D-9") and to disseminate the Schedule 14D-9, to the extent required by Rule 14d-9 promulgated under the Exchange Act and any other applicable laws, to the stockholders of the Company no later than the date on which the Purchaser mails the Offer Documents to such stockholders. Except and to the extent otherwise permitted pursuant to Section 6.5 below, the Offer Documents and the Schedule 14D-9 shall contain the recommendation of the Company's Directors that the holders of Shares accept the Offer, and the Company hereby consents to the inclusion in the Offer Documents of such recommendation. The Company agrees that the Schedule 14D-9 shall comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder and the Schedule 14D-9, on the date first filed with the Commission and on the date first published, sent or given to the Company's stockholders, shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation or warranty is made by the Company with respect to written information supplied by the Parent or the Purchaser specifically for inclusion or incorporation by reference in the Schedule 14D-9. The Company, the Parent and the Purchaser each agrees promptly to correct any written information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect, and the Company further agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed with the Commission and disseminated to the Company's stockholders, in each case as and to the extent required by applicable securities laws. The Parent and its counsel shall be given reasonable opportunity to review and comment upon the Schedule 14D-9 prior to its filing with the Commission or dissemination to stockholders of the Company. The Company shall provide the Parent and its counsel with a copy of any written comments or telephonic -4- 11 notification of any verbal comments the Company may receive from the Commission or its staff with respect to the Offer promptly after the receipt thereof and shall provide the Parent and its counsel with a copy of any written responses thereto and telephonic notification of any verbal responses thereto of the Company or its counsel. (c) The Company has received the written opinion of Raymond James & Associates, Inc. (the "Financial Advisor"), that, on the basis of and subject to the assumptions set forth therein, the cash consideration of $7.75 per Share to be received by holders of Shares pursuant to the Offer and the Merger is fair to the holders of Shares from a financial point of view (the "Fairness Opinion"). The Company has delivered to the Parent and the Purchaser a copy of the Fairness Opinion, together with the Financial Advisor's written consent to the inclusion of or reference to the Fairness Opinion in the Schedule 14D-1, the Offer Documents, the Schedule 14D-9 and the Proxy Statement (as defined in Section 6.1). (d) The Company represents that each member of the Company's Board of Directors and each executive officer of the Company has advised the Company that his current intention is to tender all Shares, if any, beneficially owned by him pursuant to the Offer, other than those individuals, if any, for whom the tender of such Shares would cause them to incur liability under the provisions of Section 16(b) of the Exchange Act (the "Section 16 Shares"). As to Section 16 Shares, the Company represents that each executive officer and director holding Section 16 Shares, if any, has advised the Company that it is his current intention to vote such Shares in favor of the Merger. (e) In connection with the Offer and the Merger, the Company will promptly furnish to the Purchaser or its designee mailing labels containing the names and addresses of the record holders of the Shares as of a recent date and of those persons becoming record holders subsequent to such date and, to the extent known, a list of the beneficial owners of the Shares as of a recent date, together with copies of all security position listings and all other computer files and other information in the Company's possession or control regarding the beneficial owners' ownership of the Shares, and shall furnish to the Purchaser such information and assistance (including updated lists and information) as it may reasonably request for the purpose of communicating the Offer to the Company's stockholders. From and after the date of this Agreement, all such information concerning the Company's record and, to the extent known, beneficial holders shall be made available to the Purchaser. Subject to the requirements of applicable laws and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer and the Merger, the Parent and the Purchaser shall, until consummation of the Offer, hold in confidence the information contained in any of such labels and lists, shall use such information only in connection with the Offer and the Merger and, if this Agreement shall be terminated in accordance with Section 8.1, shall deliver to the Company all copies of such information then in their possession or under their control. -5- 12 1.3 DIRECTORS. (a) Promptly upon the acceptance for payment of and payment by the Purchaser for any Shares pursuant to the Offer, and from time to time thereafter as Shares are accepted for payment and paid for by the Purchaser, the Purchaser shall be entitled to designate such number of the Company's Directors, rounded to the nearest whole number, as will give the Purchaser representation on the Company's Board of Directors equal to at least that number of directors which equals the greater of (i) a majority and (ii) the product of the total number of the Company's Directors (after giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that such number of Shares so accepted for payment and paid for by the Purchaser bears to the number of Shares outstanding, and the Company shall, upon the written request of the Purchaser, at such time, promptly take such actions as are necessary to cause the Purchaser's designees to be so elected or appointed, including without limitation increasing the size of the Company's Board of Directors or using its best efforts to secure the resignations of incumbent directors or both; PROVIDED, HOWEVER, that, notwithstanding the Purchaser's right to designate certain of the Company's Directors, until the Effective Time (as defined in Section 2.3), the Company's Directors shall include at least three directors who are directors on the date hereof (the "Independent Directors"); provided further, that, if the number of Independent Directors shall be reduced below three for any reason whatsoever, any remaining Independent Directors shall be entitled to designate a person to fill such vacancies and such person shall be deemed to be an Independent Director for purposes of this Agreement or, if no Independent Directors then remain, the other directors shall designate three persons to fill such vacancies who shall not be designees, stockholders, directors, officers, employees or affiliates of the Parent or the Purchaser, and such persons shall be deemed to be Independent Directors for purposes of this Agreement. Subject to applicable laws, the Company shall take all action necessary to effect the election of directors as provided in this Section 1.3(a), including mailing to its stockholders the information required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder as part of the Schedule 14D-9. The Parent and the Purchaser shall supply to the Company and be solely responsible for any information with respect to them and their designees required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. (b) Notwithstanding anything in this Agreement to the contrary, subject to the terms of the Company's Certificate of Incorporation and By-laws, in the event that the Purchaser's designees are appointed or elected as Company Directors, after the acceptance for payment of Shares pursuant to the Offer and prior to the Effective Time, the affirmative vote of a majority (or, if there is only one or two Independent Directors, the single or unanimous vote, as the case may be) of the Independent Directors (who shall act as an independent committee of the Board of Directors for this purpose) shall be required, and alone shall be sufficient, to (i) amend or terminate this Agreement by the Company, (ii) exercise or waive any of the Company's rights or remedies hereunder, (iii) extend the time for performance of the Parent's and the Purchaser's respective obligations hereunder, or (iv) approve any other action by the Company that the Independent Directors reasonably determine would materially -6- 13 adversely affect the interests of the stockholders of the Company (other than the Parent, the Purchaser and their affiliates) with respect to the transactions contemplated hereby. The Board of Directors shall not delegate any matter set forth in this Section 1.3(b) to any committee of the Board. (c) The Company hereby represents and warrants that the Company's Directors, at a meeting duly called and held, has by unanimous vote, acknowledging that such vote will be relied upon by the Parent and the Purchaser in connection with the transactions contemplated hereby and, to the extent permitted by applicable law, shall therefore be irrevocable and not subject to amendment, repeal or modification, resolved in accordance with Section 5.13 of the Agreement and Plan of Merger dated as of October 30, 1997, among the Company, BILC Acquisition Corp, and ILC Technology Inc. (the "ILC Merger Agreement"), that (i) prior to the Effective Time any of the Company's Directors elected on behalf of the Purchaser pursuant to paragraph (a) above shall constitute "Company Nominees" and "BEC Nominees" (as such terms are defined in the ILC Merger Agreement) and (ii) from and after the Effective Time, all of the Company's Directors nominated or designated for election by the Parent or the Purchaser shall constitute "Company Nominees" and "BEC Nominees" pursuant to Section 5.13 of the ILC Merger Agreement. ARTICLE 2 THE MERGER 2.1 THE MERGER. At the Effective Time (as defined in Section 2.3), in accordance with this Agreement and the Delaware Law, the Purchaser shall be merged with and into the Company, the separate existence of the Purchaser shall cease and the Company shall continue as the surviving corporation of the Merger. The Company is hereinafter sometimes referred to as the "Surviving Corporation." At the election of the Parent, any direct or indirect wholly owned subsidiary of the Parent organized under the laws of a state of the United States may be substituted for the Purchaser as a constituent corporation in the Merger for purposes of this Section 2.1. In such event, the parties agree to execute an appropriate amendment to this Agreement in order to reflect the foregoing. 2.2 EFFECT OF THE MERGER. At the Effective Time, the Surviving Corporation shall continue its corporate existence under the laws of the State of Delaware and the Merger shall have the effects set forth in Section 259 of the Delaware Law. 2.3 CONSUMMATION OF THE MERGER. As soon as is practicable after the satisfaction or waiver of the conditions set forth in Article 7 hereof, but not prior to January 11, 1999 unless requested otherwise by the Parent, the parties hereto will cause the Merger to be consummated by delivering to the Secretary of State of the State of Delaware a certificate of merger or a certificate of ownership and merger (the "Certificate of Merger") in such form or forms as may be required by, and executed and acknowledged in accordance with, the relevant provisions of the Delaware Law, and shall make all other filings and recordings -7- 14 required by the Delaware Law in connection with the Merger. The Merger shall become effective at the time that the Secretary of State of the State of Delaware files the Certificate of Merger in accordance with the relevant provisions of the Delaware Law (or at such later time, which shall be as soon as reasonably practicable, specified as the effective time in the Certificate of Merger). The term "Effective Time" shall mean the date and time of the filing of the Certificate of Merger by the Secretary of State of the State of Delaware (or such later time, which shall be as soon as reasonably practicable, as may be specified in the Certificate of Merger). 2.4 CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS. The Certificate of Incorporation and By-laws of the Purchaser as in effect immediately prior to the Effective Time shall be the Certificate of Incorporation and By-laws of the Surviving Corporation until thereafter amended as provided under the Delaware Law, provided that at the Effective Time (a) Article I of the Certificate of Incorporation of the Surviving Corporation shall be amended to read as follows: "The name of the corporation is LUMEN TECHNOLOGIES, INC.", (b) the indemnification provisions set forth in the Certificate of Incorporation and By-laws of the Surviving Corporation shall be restated to conform to the indemnification provisions set forth in the Certificate of Incorporation and By-laws, respectively, of the Company, and (c) the title of the By-laws of the Surviving Corporation shall be amended to read as follows: "By-laws LUMEN TECHNOLOGIES, INC." The directors of the Purchaser immediately prior to the Effective Time will be the initial directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time will be the initial officers of the Surviving Corporation, in each case until their successors are elected and qualified. 2.5 CONVERSION OF SECURITIES; PAYMENT OF MERGER CONSIDERATION. (a) At the Effective Time, by virtue of the Merger and without any action on the part of the Purchaser, the Company, the Surviving Corporation or the holder of any of the following securities: (i) subject to Section 2.5(b), each Share issued and outstanding immediately prior to the Effective Time (other than Shares to be cancelled pursuant to clause (ii) below and any Dissenting Shares (as defined in Section 2.5(b))) shall be cancelled and extinguished and be converted into and become a right to receive $7.75 net in cash per Share (or any such higher price per Share as may be paid in the Offer) without any interest thereon (the "Merger Consideration"); (ii) each Share that is owned immediately prior to the Effective Time by the Parent, the Purchaser or the Company or any direct or indirect subsidiary of the Parent, the Purchaser or the Company, including all Shares held by the Company as "treasury stock," shall be cancelled and retired, and no payment shall be made with respect thereto; and -8- 15 (iii) each share of the Purchaser's capital stock issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of the same class of capital stock of the Surviving Corporation. (b) (i) If, pursuant to the Delaware Law, an affirmative vote of the Company's stockholders is required to approve the Merger, then notwithstanding Section 2.5(a), Shares outstanding immediately prior to the Effective Time and held by a holder who, acting in accordance with Section 262 of the Delaware Law, (A) prior to the meeting at which the Company's stockholders vote to approve the Merger, has delivered to the Company written notice of such holder's intention to demand payment of the fair value of his Shares if the Merger is effectuated and (B) has not voted in favor of the Merger or consented thereto in writing ("Dissenting Shares"), shall not be converted into a right to receive the Merger Consideration, unless such holder withdraws or otherwise loses his right to demand payment for his Shares. If after the Effective Time such holder withdraws or loses his right to demand payment for his Shares, such Shares shall be treated as if they had been converted as of the Effective Time into the right to receive the Merger Consideration payable in respect of such Shares pursuant to Section 2.5(a)(i). (ii) If, after consummation of the Offer, the Purchaser is not required under the Delaware Law to obtain the consent of the other stockholders of the Company in order to effect the Merger and effects the Merger without holding a meeting of the stockholders, then, after consummating the Merger, the Purchaser will provide notice, as required by the Delaware Law, that it has consummated the Merger and that stockholders are entitled to exercise their dissenters' rights. Shares of any stockholders who thereafter fail to perfect or preserve their dissenter's rights under the Delaware Law will be treated as if such Shares had been converted as of the Effective Time into the right to receive the Merger Consideration payable in respect of such Shares pursuant to Section 2.5(a)(i). (iii) The Company shall give the Parent and the Purchaser prompt notice of any demands for payment, or notices of intent to demand payment, received by the Company with respect to Shares, and the Parent and the Purchaser shall have the right to participate in and direct all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of the Parent and the Purchaser or as otherwise required by law, make any payment with respect to, or settle, or offer to settle, any such demands. 2.6 EXCHANGE OF CERTIFICATES. (a) Upon the Effective Time, a bank or trust company to be designated by the Parent (the "Payment Agent") shall act as payment agent in effecting the exchange, for the Merger Consideration multiplied by the number of Shares formerly represented thereby, of certificates (the "Certificates") that, prior to the Effective Time, represented Shares entitled to payment pursuant to Section 2.5(a)(i). Upon the Effective Time, the Parent shall, or shall -9- 16 cause the Purchaser to, deposit with the Payment Agent in trust for the benefit of the holders of Certificates, as needed to pay for surrendered Shares as provided in this Section 2.6, within such time as is necessary for the Payment Agent to make the requisite payments for Shares, immediately available funds in an aggregate amount (the "Payment Fund") equal to the product of the Merger Consideration multiplied by the number of Shares entitled to payment pursuant to Section 2.5(a)(i). Promptly after the Effective Time, the Parent or the Purchaser shall cause to be mailed to each record holder of Certificates that immediately prior to the Effective Time represented Shares a form of letter of transmittal and instructions for use in surrendering such Certificates and receiving the Merger Consideration therefor. Upon the surrender of each such Certificate together with a duly completed and executed letter of transmittal, the Payment Agent shall promptly pay the holder of such Certificate the Merger Consideration multiplied by the number of Shares formerly represented by such Certificate, without any interest thereon, in exchange therefor, and such Certificate shall forthwith be cancelled. Until so surrendered and exchanged, each such Certificate (other than Certificates representing Shares held by the Parent, the Purchaser or the Company or any direct or indirect subsidiary of the Parent, the Purchaser or the Company or Dissenting Shares) shall represent solely the right to receive the Merger Consideration multiplied by the number of Shares represented by such Certificate, without any interest thereon. If any cash is to be paid to a person other than the holder in whose name the Certificate representing Shares surrendered in exchange therefor is registered, it shall be a condition to such payment that the person requesting such payment shall pay to the Payment Agent any transfer or other taxes required by reason of the payment of such cash to a person other than the registered holder of the Certificate surrendered, or such person shall establish to the satisfaction of the Payment Agent that such tax has been paid or is not applicable. Notwithstanding the foregoing, neither the Payment Agent nor any party hereto shall be liable to a holder of Shares for any Merger Consideration delivered to a public official pursuant to applicable abandoned property, escheat and similar laws. (b) To the extent not immediately required for payment for surrendered Shares as provided in Section 2.6(a), the Payment Fund shall be invested by the Payment Agent, as directed by the Parent (so long as such directions do not impair the rights of holders of Shares or the ability of the Payment Agent to timely pay the Merger Consideration), in direct obligations of the United States of America, obligations for which the full faith and credit of the United States of America is pledged to provide for the payment of principal and interest, commercial paper rated of the highest quality by Moody's Investors Services, Inc. or Standard & Poor's Corporation, or certificates of deposit issued by a commercial bank having at least $300,000,000 in assets (a "Qualified Commercial Bank"); and any net earnings with respect thereto shall be paid to the Parent as and when requested by the Parent. (c) The Payment Agent shall, pursuant to irrevocable instructions, make the payments referred to in Section 2.5(a)(i) out of the Payment Fund. Promptly following the date that is six months after the date of the Effective Time, the Payment Agent shall deliver to the Parent all cash, certificates and other documents in its possession relating to the -10- 17 transactions described in this Agreement, and the Payment Agent's duties shall terminate. Thereafter, each holder of a Certificate formerly representing a Share may surrender such Certificate to the Surviving Corporation or the Parent and (subject to applicable abandoned property, escheat and similar laws) receive in exchange therefor the Merger Consideration, without any interest thereon, but shall have no greater rights against the Surviving Corporation or the Parent than may be accorded to general creditors of the Surviving Corporation or the Parent under applicable law. (d) After the Effective Time, there shall be no transfers on the stock transfer books of the Surviving Corporation of any Shares. If, after the Effective Time, Certificates formerly representing Shares are presented to the Surviving Corporation or the Payment Agent, they shall be cancelled and exchanged for the Merger Consideration, as provided in this Article 2, subject to applicable law in the case of Dissenting Shares. (e) From and after the Effective Time, holders of Certificates theretofore evidencing Shares shall cease to have any rights as stockholders of the Company, except as provided herein or by law. (f) In the event any Certificate evidencing Shares shall have been lost, stolen or destroyed, the Paying Agent shall pay to such holder the Merger Consideration required pursuant to Section 2.5(a)(i), in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof with such assurances as the Parent, in its discretion and as a condition precedent to the payment of the Merger Consideration, may reasonably require of the holder of such lost, stolen or destroyed Certificates. (g) The Parent and the Surviving Corporation shall be entitled to deduct and withhold from the Merger Consideration otherwise payable pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or under any applicable law. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE PURCHASER The Parent and the Purchaser each represents and warrants to the Company as follows: 3.1 ORGANIZATION AND QUALIFICATION. Each of the Parent and the Purchaser is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and has all requisite corporate power and authority to carry on its business as it is now being conducted. Each of the Parent and the Purchaser is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned or leased or the nature of its activities makes such qualification necessary, except for failures to be so qualified or in good standing which would not, in the -11- 18 aggregate, materially impair the ability of the Parent or the Purchaser to perform its obligations hereunder. 3.2 AUTHORITY. Each of the Parent and the Purchaser has all requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Parent and the Purchaser and the consummation by the Parent and the Purchaser of the transactions contemplated hereby have been duly authorized by the respective Boards of Directors of the Parent and the Purchaser and by the Parent as the sole stockholder of the Purchaser and no other corporate proceedings on the part of the Parent or the Purchaser are necessary to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Parent and the Purchaser and, assuming this Agreement constitutes a valid and binding obligation of the other parties hereto, constitutes a valid and binding obligation of each of them, enforceable against each of them in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting the enforceability of creditors' rights generally and to the effect of general principles of equity which may limit the availability of remedies (whether in a proceeding at law or in equity). 3.3 COMPLIANCE. (a) Neither the execution and delivery of this Agreement by the Parent and the Purchaser, nor the consummation by them of the transactions contemplated hereby, nor compliance by them with any of the provisions hereof will (i) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance or payment required by, or result in a right of termination or acceleration under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Parent or the Purchaser or any other direct or indirect subsidiary of the Parent under, any of the terms, conditions or provisions of (x) the charter documents or by-laws of the Parent or the Purchaser or any other direct or indirect subsidiary of the Parent or (y) any note, bond, mortgage, indenture, deed of trust, license, lease, distribution agreement, joint venture agreement or any other agreement or instrument or obligation to which the Parent or the Purchaser or any other direct or indirect subsidiary of the Parent is a party, or to which any of them, or any of their respective properties or assets, may be subject, or (ii) subject to compliance with the statutes and regulations referred to in the next paragraph, violate any judgment, ruling, order, writ, injunction, decree, statute, rule or regulation applicable to the Parent or the Purchaser or any other direct or indirect subsidiary of the Parent or any of their respective properties or assets; except, in the case of each of clause (i) and (ii) above, for such violations, conflicts, breaches, defaults, terminations, accelerations or creations of liens, security interests, charges or encumbrances that, in the aggregate, would not materially impair the ability of the Parent and the Purchaser to perform their obligations hereunder. -12- 19 (b) Other than in connection with or in compliance with the provisions of the Delaware Law, the Exchange Act, the "takeover" or "blue sky" laws of various states and the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations thereunder (the "Hart-Scott-Rodino Act"), and except for any notices, filings, authorizations, consents or approvals which are required because of the regulatory status of the Company and its Subsidiaries (as defined in Section 4.2) or facts specifically pertaining to them, no notice to, filing with, or authorization, consent or approval of, any domestic or foreign public body or authority is necessary for the consummation by the Parent or the Purchaser of the transactions contemplated by this Agreement, unless the failure to give such notices, make such filings, or obtain such authorizations, consents or approvals would not, in the aggregate, materially impair the ability of the Parent and the Purchaser to perform their obligations hereunder. 3.4 INFORMATION PROVIDED. Any written information provided by or on behalf of the Parent or the Purchaser for inclusion in the Schedule 14D-9 (including the Schedule 14f that is a part thereof), on the date the Schedule 14D-9 is filed with the Commission, and on the date the Schedule 14D-9 is first published, sent or given to stockholders of the Company, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 3.5 INTERIM OPERATIONS OF THE PURCHASER. The Purchaser was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, has not engaged in any other business activities and has conducted its operations only as contemplated hereby. 3.6 FINANCING. At the expiration of the Offer and at the Effective Time, the Parent and the Purchaser will have available all the funds necessary to purchase all the Shares pursuant to the Offer and the Merger and to pay all fees and expenses payable by the Parent or the Purchaser related to the transactions contemplated by this Agreement. 3.7 BROKERS. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Offer or the Merger based upon arrangements made by or on behalf of the Parent, the Purchaser or any of their respective subsidiaries or affiliates. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth on the Disclosure Schedule previously delivered by the Company to the Parent (the "Disclosure Schedule"), the Company represents and warrants to the Parent and the Purchaser as follows: -13- 20 4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as it is now being conducted. The Company is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned or leased or the nature of its activities makes such qualification necessary, except for failures to be so qualified or in good standing that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" means a material adverse effect on the condition (financial or other), results of operations, stockholders' equity, business, assets, properties, liabilities, capitalization or operations of the Company and its Subsidiaries taken as a whole or prevents or materially interferes with the ability of the Company to perform its obligations hereunder or to consummate the transactions contemplated by this Agreement. Copies of the Certificate of Incorporation and By-Laws of the Company have heretofore been delivered to the Parent and such copies are accurate and complete. The Company's original Certificate of Incorporation contains a provision expressly electing not to be governed by Section 203 of the Delaware Law and such election is in full force and effect such that Section 203 of the Delaware Law is inapplicable to any of the transactions contemplated by this Agreement. The resolution of the Company's Directors referred to in Section 1.3(c) is in full force and effect and has not been amended or modified. 4.2 SUBSIDIARIES. (a) The only direct or indirect subsidiaries of the Company (each a "Subsidiary" and collectively, the "Subsidiaries") are those listed in the Disclosure Schedule. (b) Each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to carry on its business as it is now being conducted. Each Subsidiary is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned or leased or the nature of its activities makes such qualification necessary, except for failures to be so qualified or in good standing that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. Copies of the charter documents and by-laws of each Subsidiary have heretofore been made available to the Parent and such copies are accurate and complete. (c) Except for directors' qualifying shares, if any (all of which the Company has the power to cause to be transferred for no or nominal consideration to the Purchaser or the Purchaser's designee), the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock in each of the Subsidiaries, there are no irrevocable proxies with respect to such shares, and no securities of any of the Subsidiaries are or may become required to be issued by reason of any options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or -14- 21 rights convertible into or exchangeable for, shares of any capital stock of any Subsidiary, and there are no contracts, commitments, understandings or arrangements by which any Subsidiary is bound to issue additional shares or purchase shares of its capital stock or securities convertible into or exchangeable for such shares. All of such shares so owned by the Company are validly issued, fully paid and nonassessable and are owned by the Company free and clear of any claim, lien, encumbrance or agreement of any kind with respect thereto. (d) Except for the Subsidiaries, the Company does not directly or indirectly own any equity or similar or other interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar or other interest in, any other corporation, partnership, joint venture, limited liability company or other business association or entity, other than any interests with an individual value of less than $250,000 and an aggregate value of less than $1,000,000 and which do not require any future payments or impose any other liabilities or obligations on the part of the Company or any of its Subsidiaries. 4.3 CAPITALIZATION. (a) The authorized capital stock of the Company consists of 50,000,000 shares of Common Stock, $.01 par value, and 500,000 shares of Preferred Stock, $1.00 par value (the "Preferred Stock"), of which 10,000 shares of Preferred Stock are designated as Series A Preferred Stock and 490,000 shares are undesignated. As of the date of this Agreement (except in the case of clause (iii) below, which is stated as of the day prior to the date of this Agreement): (i) 20,710,606 Shares are issued and 20,209,606 Shares are issued and outstanding; (ii) 501,000 Shares are held in the treasury of the Company; (iii) 3,613,325 Shares are reserved for issuance pursuant to outstanding Options (the "Company Options") heretofore granted under the Company's Amended and Restated 1996 Stock Incentive Plan (the "Option Plan"); (iv) no Shares are reserved for issuance in connection with the Company's 1996 Employee Stock Purchase Plan (the "ESPP"); (v) 1,252,835 Shares are reserved for issuance upon conversion, at the conversion price of $9.89 per share, of the Company's 8% Convertible Notes due 2002 (the "Convertible Notes") (calculated based on the outstanding principal under the Convertible Notes and the Conversion Price in effect as of the date of this Agreement) and $2,774,285 is the accrued interest payable under the Convertible Notes; and -15- 22 (vi) no shares of Preferred Stock are issued and outstanding. (b) All outstanding Shares are, and all Shares which may be issued will be, when issued in accordance with the terms of the agreements, plans or other documents governing their issuance, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Delaware Law, the Certificate of Incorporation or the By-laws of the Company or any contract, agreement, arrangement of understanding to which the Company is a party or otherwise bound. (c) Except as set forth above in this Section 4.3, there are no other shares of capital stock or other securities of the Company outstanding and no other outstanding options, warrants, rights to subscribe to (including any preemptive rights), calls or commitments of any character whatsoever to which the Company is a party or may be bound requiring the issuance, transfer or sale of any shares of capital stock or other securities of the Company or any securities or rights convertible into or exchangeable or exercisable for any such shares or securities, and there are no contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of its capital stock or options, warrants or rights to purchase or acquire any additional shares of its capital stock or securities convertible into or exchangeable or exercisable for any such shares. As of the date of this Agreement, no awards are outstanding under the Option Plans other than the Company Options listed on the Disclosure Schedule, no options are outstanding under the ESPP and no other stock appreciation rights, phantom stock, performance based rights or similar such equity rights or obligations were outstanding. The Disclosure Schedule sets forth with respect to each Company Option, the name of the option holder, the exercise price, the date of grant, vesting schedule and expiration date and with respect to the Option Plan, the number of Shares or Company Options reserved for issuance or grant and actually issued or granted under the Option Plan and the weighted average exercise price of all Company Options outstanding under the Option Plan as of the date hereof. Copies of the Option Plan, the ESPP and the Indenture governing the Convertible Notes (including the form of Convertible Notes) have heretofore been made available to the Parent and such copies are accurate and complete. (d) There are no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries. Neither the Company nor any of it Subsidiaries is a party to any voting agreement with respect to the voting of any of its securities. To the best of the Company's knowledge, none of the Shares is subject to any voting trust, transfer restrictions or other similar arrangements, except for vesting arrangements pursuant to agreements with the Company or restrictions on transfer imposed by the Securities Act of 1933, as amended (the "Securities Act"), and state securities laws. -16- 23 4.4 AUTHORITY. The Company has all requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by the Company's Directors and, except for the approval and adoption of this Agreement by the holders of a majority of the Shares (if required under the Delaware Law), no other corporate proceedings on the part of the Company are necessary to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming this Agreement constitutes a valid and binding obligation of the other parties hereto, constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting the enforceability of creditors' rights generally and to the effect of general principles of equity which may limit the availability of remedies (whether in a proceeding at law or in equity). 4.5 COMPLIANCE. (a) Neither the execution and delivery of this Agreement by the Company, nor the consummation by the Company of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof will (i) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance or payment required by, or result in a right of termination or acceleration under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries under, any of the terms, conditions or provisions of (x) the charter documents or by-laws of the Company or any of its Subsidiaries, or (y) any note, bond, mortgage, indenture, deed of trust, license, lease, distribution agreement, joint venture agreement or any other agreement or instrument or obligation to which the Company or any of its Subsidiaries is a party, or to which any of them or any of their respective properties or assets, may be subject, or (ii) subject to compliance with the statutes and regulations referred to in the next paragraph, violate any judgment, ruling, order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any of its Subsidiaries or any of their respective properties or assets; except, in the case of each of clauses (i)(y) and (ii) above, for such violations, conflicts, breaches, defaults, terminations, accelerations or creations of liens, security interests, charges or encumbrances that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. (b) Other than in connection with or in compliance with the provisions of the Delaware Law, the Exchange Act, the "takeover" or "blue sky" laws of various states and the Hart-Scott-Rodino Act, no notice to, filing with, or authorization, consent or approval of, any domestic or foreign public body or authority is necessary for the consummation by the Company of the transactions contemplated by this Agreement, unless the failure to give such -17- 24 notices, make such filings, or obtain such authorizations, consents or approvals, in the aggregate, has not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. 4.6 COMMISSION FILINGS; FINANCIAL STATEMENTS; INFORMATION PROVIDED. (a) The Company has filed with the Commission all required reports, schedules, forms, proxy and information statements, registration statements and other documents (including exhibits) required to be filed by it since February 14, 1996 (the "Commission Filings"). The Commission Filings, all of which were filed on a timely basis, (i) complied, in all material respects, with the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations thereunder, (ii) did not at the time they were filed contain any untrue statement of material fact, and (iii) did not at the time they were filed omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. (b) Each of the audited consolidated financial statements and unaudited interim consolidated financial statements (including any related notes or schedules) included in the Commission Filings complied as to form in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto, was prepared in accordance with generally accepted accounting principles applied on a consistent basis, except as may be indicated therein or in the notes or schedules thereto, and fairly present, in all material respects, the consolidated financial position of the Company and its Subsidiaries as at the dates thereof and the consolidated results of their operations and cash flows for the periods then ended, subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments and the absence of complete notes. (c) The unaudited consolidated financial information with respect to the quarter ended September 30, 1998 (including any related notes or schedules) (the "September 30 Financial Information") included in the Disclosure Schedule was prepared in accordance with generally accepted accounting principles applied on a consistent basis, except as may be indicated therein or in the notes or schedules thereto, and fairly presents, in all material respects, the consolidated financial position of the Company and its Subsidiaries as at the dates thereof and the consolidated results of their operations and cash flows for the periods then ended, subject to normal year-end audit adjustments and the absence of complete notes. (d) Any written information provided by or on behalf of the Company which is included in the Schedule 14D-1 or the Offer Documents, on the date the Schedule 14D-1 is filed with the Commission and on the date the Offer Documents are first published, sent or given to Stockholders of the Company, as the case may be, will comply in all material respects with the provisions of applicable securities laws and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or -18- 25 necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 4.7 NO UNDISCLOSED LIABILITIES. Except as specifically and individually disclosed in the Commission Filings, the Disclosure Schedule or the September 30 Financial Information, neither the Company nor any Subsidiary has any liabilities or obligations of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, except for (a) liabilities and obligations incurred in the ordinary course of business consistent with past practice since September 30, 1998, and (b) liabilities and obligations that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. 4.8 CHANGES. Except as expressly contemplated by this Agreement, set forth in the Commission Filings or reflected in the September 30 Financial Information, since September 30, 1998, the Company and the Subsidiaries have conducted their respective businesses only in the ordinary and usual course consistent with past practice, and none of the following has occurred: (a) any adverse change in the condition (financial or other), results of operations, stockholders' equity, business, assets, properties, liabilities, capitalization or operations of the Company and its Subsidiaries, that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect, except as to matters which are attributable to the announcement or performance of this Agreement and the transactions contemplated hereby; (b) any damage, destruction or loss, whether or not covered by insurance, that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect; (c) any reevaluation by the Company or any of its Subsidiaries of any of their respective assets, including writing down the value of inventory or writing off notes or accounts receivables other than in the ordinary course of business consistent with past practice, that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect; (d) any action or event listed in Section 5.1; or (e) any agreement by the Company to do any of the things described in the preceding clauses (a) through (d) other than as expressly contemplated or provided for herein. 4.9 CONTRACTS. (a) Except as identified on the exhibit indices of the Commission Filings, there are no contracts or agreements that are material contracts (as defined in Item 601(b)(10) of Regulation S-K) with respect to the Company and its Subsidiaries. Neither the Company -19- 26 nor any of its Subsidiaries is in violation of or in default under (nor does there exist any condition which, upon the passage of time or the giving of notice or both, would cause such a violation of or default under) any material lease, permit, concession, franchise, license or any other contract or agreement to which it is a party or by which it or any of its properties or assets is bound, except for violations or defaults that, in the aggregate, have not resulted in, or could not reasonably be expected to result in, a Material Adverse Effect. (b) Section 4.9(b) of the Disclosure Schedule sets forth a complete list of each contract or agreement to which the Company or any Subsidiary is a party or bound (A) with any affiliate of the Company (other than any Subsidiary which is a direct or indirect wholly owned subsidiary of the Company), other than any agreements which are or have been fully performed and under which neither the Company nor any Subsidiary has any continuing liability or obligation, or (B) that includes any non-competition or similar provision imposing any restrictions or undertakings on the Company or any Subsidiary, other than any non-competition or similar provision relating solely to the eye wear and/or lens grinding business. Copies of all the agreements, contracts and arrangements set forth in Section 4.9(b) of the Disclosure Schedule have heretofore been made available to the Parent and such copies are accurate and complete. 4.10 TRANSACTIONS WITH AFFILIATES. Except as set forth in the Commission Filings, since December 28, 1995, neither the Company nor any of its Subsidiaries has entered into any transaction with any director, officer or other affiliate of the Company or any Subsidiary or any transaction which would be subject to disclosure pursuant to Item 404 of Regulation S-K. 4.11 EMPLOYEE BENEFITS AND CONTRACTS. Except as set forth in Schedule 4.11(b) of the Disclosure Schedule: (a) Neither the Company nor any ERISA Affiliate maintains or contributes to, or has any material obligation under, any Employee Benefit Plans other than those identified on Schedule 4.11(b) of the Disclosure Schedule. For the purposes of this Section 4.11, "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute and all rules and regulations promulgated thereunder; "ERISA Affiliate," as applied to the Company, means any person or trade or business which is a member of a group which is under common control with the Company, who together with the Company, is treated as a single employer within the meaning of Section 414(b) and (c) of the Code; and "Employee Benefit Plan" means any employee benefit plan within the meaning of Section 3(3) of ERISA which (a) is maintained for employees of the Company or has been assumed by the Company in connection with any acquisition or any of its ERISA Affiliates or (b) has at any time since October 16, 1992 been maintained for the employees of the Company or any current or former ERISA Affiliate. (b) The Company and each ERISA Affiliate is in compliance with all applicable provisions of ERISA and the regulations and published interpretations thereunder -20- 27 and in compliance with all Foreign Benefit Laws with respect to all Employee Benefit Plans, except for failures to comply that in the aggregate have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect and except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the Code. No material liability has been incurred by the Company or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan. For the purposes of this Section 4.11, "Foreign Benefit Law" means any applicable statute, law, ordinance, code, rule, regulation, order or decree of any foreign nation or any province, state, territory, protectorate or other political subdivision thereof regulating, relating to, or imposing liability or standards of conduct concerning, any Employee Benefit Plan. (c) Neither the Company nor any affiliate is a party to any collective bargaining agreement. Neither the Company nor any affiliate has ever (i) maintained an Employee Benefit Plan subject to Section 412 of the Code or Title IV of ERISA, or (ii) had an obligation to contribute to a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA. (d) Neither the Company nor any ERISA Affiliate has engaged in a nonexempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code. (e) There are no unfunded obligations under any Employee Benefit Plan of the Company or any affiliate providing benefits after termination of employment to any employee or former employee, including but not limited to retiree health coverage and deferred compensation but excluding continuation of health coverage required to be continued under Section 4980(B) of the Code. Each Employee Benefit Plan of the Company, any Subsidiary or any of their respective affiliates may be amended or terminated by the Company, such Subsidiary or such affiliate without the consent or approval of any other person and without any termination fees, market value adjustments, surrender charges or other costs. There is no employment agreement, Employee Benefit Plan, stock option plan, stock appreciation right plan, restricted stock plan, stock purchase plan, or severance benefit plan of the Company or any affiliate, any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated by the occurrence of any of the transactions contemplated by this Agreement or the benefits under which will be due as a result of or calculated on the basis of the transactions contemplated by this Agreement. -21- 28 (f) No material proceeding, claim, lawsuit and/or investigation exists or to the best knowledge of the Company after due inquiry, is threatened concerning or involving any Employee Benefit Plan. 4.12 PROPERTIES AND LIENS. (a) All real property owned or leased by the Company or any Subsidiary is listed on the Disclosure Schedule, other than real property with a cost or fair market value of less than $10,000. (b) Each of the Company and its Subsidiaries has good and valid title to, or valid leasehold interests in or valid rights to, all of its material tangible properties and assets (personal and real) reflected in the balance sheet for the period ended September 30, 1998 included in the September 30 Financial Information, except for such as have been disposed of in the ordinary course of business since September 30, 1998. All such material tangible assets and properties, other than assets and properties in which the Company or any Subsidiary has a leasehold interest, are free and clear of all mortgages, security interests, pledges, liens and encumbrances ("Liens"), except for Liens that, in the aggregate, do not materially interfere with the ability of the Company and its Subsidiaries to conduct their business as currently conducted and have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. (c) Each of the Company and each Subsidiary has complied in all material respects with the term of all material leases for real or personal property to which it is a party, and all such leases are in full force and effect. Each of the Company and each Subsidiary enjoys peaceful and undisturbed possession under all such material leases, except for failures to do so that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. (d) The properties and assets of the Company and its Subsidiaries, taken as a whole, are free from material defects, have been maintained in accordance with normal industry practice, are in good operating condition and repair (subject to normal wear and tear) and are suitable for the purposes for which they are presently used. 4.13 ENVIRONMENTAL MATTERS. (a) The Company and the Subsidiaries are in compliance with and have complied with all applicable Environmental Laws (as defined below), except for failures to comply that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. There is no pending or, to the best knowledge of the Company, threatened civil or criminal litigation, written notice of violation, formal administrative proceedings or investigations, inquiries or information requests by any court, arbitration tribunal, administrative agency or commission or other governmental or regulatory authority or agency, domestic, foreign or supranational (a "Governmental Entity"), relating to -22- 29 any Environmental Law involving the Company or any of its Subsidiaries the adverse resolution of which would, either singularly or in the aggregate, result in, or could reasonably be expected to result in, a Material Adverse Effect. For purposes of this Agreement, "Environmental Law" means any foreign, federal, state, local or supranational law, statute, rule or regulation or the common law relating to the environment or occupational health and safety, including without limitation, any statute, regulation or order pertaining to (i) treatment, storage, disposal, generation or transportation of industrial, toxic or hazardous substances or solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil contamination; (iv) the release or threatened release into the environment of industrial, toxic or hazardous substances, or solid or hazardous waste, including emissions, discharges, injections, spills, escapes or dumping of pollutants, contaminants or chemicals; (v) the protection of wild life, marine sanctuaries and wetlands, including all endangered and threatened species; (vi) underground and other storage tanks or vessels, abandoned, disposed or discarded barrels, containers and other closed receptacles; (vii) health and safety of employees and the public; and (viii) manufacture, processing, use, distribution, treatment, storage, disposal, transportation or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or oil or petroleum products or solid or hazardous waste. As used in this Section 4.13, the terms "release" and "environment" shall have the meaning set forth in the federal Comprehensive Environmental Compensation, Liability and Response Act of 1980 ("CERCLA"). As used above, the phrase "investigation, inquiry or information request" includes, but is not limited to, any Notice of Responsibility or Section 104(e) Information Request issued pursuant to CERCLA or to any similar state law addressing the investigation and/or remediation of any environmental contamination. (b) There have been no releases of any Materials of Environmental Concern (as defined below) into the environment by the Company or any of its Subsidiaries, or, to the best knowledge of the Company, by any other party at any parcel of real property or any facility formerly or currently owned, operated or controlled by the Company or any of its Subsidiaries that, in the aggregate, have resulted in, or could reasonably be expected to result in, a Material Adverse Effect. With respect to any such releases of Materials of Environmental Concern, the Company has given all notices required to be given by the Company or any of its Subsidiaries to Governmental Entities. The Company has no actual knowledge of any releases of Materials of Environmental Concern at parcels of real property or facilities other than those owned, operated or controlled by the Company or any of its Subsidiaries that, in the aggregate, have, or could reasonably be expected to have, a material impact on the real property or facilities owned, operated or controlled by the Company or any of its Subsidiaries or that have resulted in, or could reasonably be expected to result in, a Material Adverse Effect. For purposes of this Agreement, "Materials of Environmental Concern" means any chemicals, pollutants or contaminants, hazardous substances (as such term is defined under CERCLA), solid wastes and hazardous wastes (as such terms are defined under the federal Resources Conservation and Recovery Act), toxic materials, oil or petroleum and petroleum products, or any other material subject to regulation under any Environmental Law. -23- 30 (c) Set forth in the Disclosure Schedule is a list of all material environmental reports, investigations and audits conducted by or on behalf of the Company or any of its Subsidiaries or, to the best knowledge of the Company, conducted by or on behalf of a third party (whether done at the initiative of the Company or directed by a Governmental Entity or other third party) issued or conducted during the past five years relating to premises currently owned or operated by the Company or any of its Subsidiaries. Copies of each such report, or the results of each such investigation or audit, have heretofore been made available to the Parent and such copies are accurate and complete, except that the Company makes no representation as to the accuracy or completeness of any reports prepared by or for third parties. (d) To the best knowledge of the Company, there is no material environmental liability of any solid or hazardous waste transporter or treatment, storage or disposal facility that has been utilized by the Company or any of its Subsidiaries, which have resulted in, or could reasonably be expected to result in, either singularly or in the aggregate, a Material Adverse Effect. (e) The Company and the Subsidiaries have all requisite licenses, permits, certificates, permits-by-rule and approvals under the Environmental Laws from Governmental Entities necessary to conduct its business and operate its assets (collectively, the "Environmental Permits"), except for such licenses, permits, certificates, permits-by-rule and approvals the absence of which, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. No Environmental Permit will cease to be effective as a result of the consummation of transactions contemplated by this Agreement. The Environmental Permits do not contain restrictions, limitations or other terms or conditions that will restrict the ability of the Surviving Corporation to continue to operate its business subsequent to the Effective Time in substantially the same manner as it is currently being operated. (f) To the best knowledge of the Company, neither the Company nor any of its Subsidiaries have assumed any liability, responsibility, commitment or obligation under any Environmental Law arising in any way from the existence or operation of any company, organization or entity that is or was a predecessor to the Company or any of its Subsidiaries, which liability, responsibility, commitment or obligation has resulted in, or could reasonably be expected to result in, a Material Adverse Effect. 4.14 TAXES. (a) Except as set forth in Section 4.14(a) of the Disclosure Schedule, each of the Company and the Subsidiaries has filed all Tax Returns (as defined below) that it was required to file, and all such Tax Returns were complete and accurate in all material respects. Except as set forth in Section 4.14(a) of the Disclosure Schedule, neither the Company nor any Subsidiary is or has ever been a member of a group of corporations with which it has filed (or been required to file) consolidated, combined or unitary Tax Returns, other than a -24- 31 group of which only the Company and the Subsidiaries are or were members. To the best knowledge of the Company, each group of corporations with which the Company or any Subsidiary has filed (or was required to file) consolidated, combined, unitary or similar Tax Returns (an "Affiliated Group") has filed all material Tax Returns that it was required to file with respect to any period in which the Company or a Subsidiary was a member of such Affiliated Group (an "Affiliated Period"), and all such Tax Returns were complete and accurate in all material respects. Each of the Company and the Subsidiaries has paid on a timely basis all Taxes (as defined below) that were shown to be due and payable on such Tax Returns and, to the best knowledge of the Company, each Affiliated Group has paid all Taxes that were shown to be due and payable on such Tax Returns with respect to all such Tax Returns filed for Affiliated Periods, except in either case for failures to pay Taxes that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. The unpaid Taxes of the Company and the Subsidiaries for Tax periods through September 30, 1998 do not exceed the accruals and reserves for Taxes (excluding any assets, accruals, and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the balance sheet as of September 30, 1998 referred to in Section 4.6(c) of this Agreement and included in the Disclosure Schedule. All Taxes that the Company or any Subsidiary is or was required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper taxing authority, except for failures to withhold, collect or pay that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. For purposes of this Agreement, "Taxes" means all taxes, charges, fees, levies or other similar assessments or liabilities, including without limitation income, gross receipts, ad valorem, premium, value-added, excise, real property, personal property, sales, use, transfer, withholding, employment, payroll and franchise taxes imposed by the United States of America or any state, local or foreign government, or any agency thereof, or other political subdivision of the United States or any such government, and any interest, fines, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any such tax. For purposes of this Agreement, "Tax Returns" means all reports, returns, declarations, statements or other information required to be supplied to a taxing authority in connection with Taxes. (b) The Company has made available to the Buyer complete and accurate copies of all federal income Tax Returns filed by, and examination reports and statements of deficiencies assessed against or agreed to by, the Company or any Subsidiary since December 28, 1995. Except as set forth in Section 4.14(b) of the Disclosure Schedule, the federal income Tax Returns of the Company and each Subsidiary have been audited by the Internal Revenue Service or are closed by the applicable statute of limitations for all taxable years through the taxable year specified in the Disclosure Schedule. The Company has made available to the Buyer complete and accurate copies of all other Tax Returns of the Company and the Subsidiaries together with all related examination reports and statements of deficiency for all periods from and after December 28, 1995. Except as set forth in Section 4.14(b) of the Disclosure Schedule, no examination or audit of any Tax Return of the Company or any Subsidiary by any taxing authority is currently in progress or, to the best knowledge of the -25- 32 Company, threatened or contemplated, except in either case for matters that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. Neither the Company nor any Subsidiary has been informed by any taxing authority that the taxing authority believes that the Company or Subsidiary was required to file any Tax Return that was not filed, except for matters that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. Neither the Company nor any Subsidiary has waived any statute of limitations with respect to Taxes or agreed to an extension of time with respect to a Tax assessment or deficiency, except for any waivers and extensions that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. (c) Except as set forth in Section 4.14(c) of the Disclosure Schedule, neither the Company nor any Subsidiary: (i) is a "consenting corporation" within the meaning of Section 341(f) of the Code, and none of the assets of the Company or the Subsidiaries are subject to an election under Section 341(f) of the Code; (ii) has 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; or (iii) has any actual or potential liability for any Taxes of any person (other than the Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of federal, state, local, or foreign law), or as a transferee or successor, by contract, or otherwise. (d) None of the assets of the Company or any Subsidiary: (i) is property that is required to be treated as being owned by any other person pursuant to the provisions of former Section 168(f)(8) of the Code; (ii) is "tax-exempt use property" within the meaning of Section 168(h) of the Code; or (iii) directly or indirectly secures any debt the interest on which is tax exempt under Section 103(a) of the Code. (e) Neither the Company nor any Subsidiary has undergone, or will undergo as a result of the transactions contemplated by this Agreement, a change in its method of accounting resulting in an adjustment to its taxable income pursuant to Section 481(a) of the Code. (f) Except as set forth in Section 4.14(f) of the Disclosure Schedule, no state or federal "net operating loss" of the Company determined as of the Effective Time is subject to limitation on its use pursuant to Section 382 of the Code or comparable provisions of state law as a result of any "ownership change" within the meaning of Section 382(g) of the Code occurring prior to the Effective Time. (g) Except as set forth in Section 4.14(g) of the Disclosure Schedule, there are no liens for Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company or any Subsidiary. -26- 33 (h) Except as set forth in Section 4.14(h) of the Disclosure Schedule, neither the Company nor any Subsidiary is a party to or bound by any Tax indemnity, Tax sharing or Tax allocation agreement. 4.15 COMPLIANCE WITH LAWS; PERMITS. Neither the Company nor any Subsidiary (a) is in violation of, or has violated, any applicable provisions of any laws, statutes, ordinances or regulations or (b) has received any notice from any Governmental Entity or any other person that either the Company or any Subsidiary is in violation of, or has violated, any applicable provisions of any laws, statutes, ordinances or regulations, except for violations that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. The Company and each of its Subsidiaries have all permits, licenses and franchises from Governmental Entities required to conduct their businesses as now being conducted or as presently contemplated to be conducted, except for such permits, licenses and franchises the absence of which, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. 4.16 INTELLECTUAL PROPERTY. The Company, or a Subsidiary, has exclusive ownership of or rights to use each patent, patent application, copyright (whether or not registered), copyright application, trademark (whether or not registered), trademark application, trade name, service mark, and other trade secret or proprietary intellectual property (collectively, "Intellectual Property") owned by or used in and material to the business of the Company and the Subsidiaries, taken as a whole. The Disclosure Schedule sets forth a description of all patents, trademarks and copyrights and applications therefor owned by or licensed to the Company or any Subsidiary that are material to the conduct of the business of the Company and the Subsidiaries, taken as a whole, as now operated. None of the previous or current development, manufacture, marketing or distribution of products or services of or by the Company or any Subsidiary infringes the right of any other person, except for any such infringements that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. To the best knowledge of the Company, no other person is infringing the rights of the Company or any Subsidiary in any such Intellectual Property, except for any such infringements that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. 4.17 LITIGATION. There are no actions, suits, proceedings or investigations pending or, to the best knowledge of the Company, threatened against the Company or any of its Subsidiaries, nor is the Company or any of its Subsidiaries subject to any order, judgment, writ, injunction or decree, except in either case for matters that, in the aggregate, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. 4.18 PREPAYMENT OF INDEBTEDNESS. All of the outstanding indebtedness (whether secured or unsecured) for borrowed money of the Company and each of its Subsidiaries may be prepaid by the Company or its Subsidiaries without the consent or approval of, or prior notice to, any other person, and without payment of any premium or penalty. -27- 34 4.19 VOTING REQUIREMENTS. The affirmative vote of the holders of a majority of the outstanding Shares is the only vote of the holders of any class or series of the Company's capital stock or other securities necessary to approve the Merger. There are no bonds, debentures, notes or other indebtedness 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. 4.20 YEAR 2000 COMPLIANCE. (a) All of (i) the Company's internal systems that are material to the business or operations of the Company, including, without limitation, computer hardware systems, software applications and embedded systems, and (ii) the software, hardware, firmware and other technology which constitute part of the products and services manufactured, marketed or sold by the Company or licensed by the Company to third parties are Year 2000 Compliant (as defined below), except in either case for any failures to be Year 2000 Compliant that in the aggregate have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect. The Company is not aware of any failure to be Year 2000 Compliant of any third-party system that is material to the business or operations of the Company, including without limitation any system belonging to any of the Company's suppliers, service providers or customers. (b) For purposes of this Agreement, "Year 2000 Compliant" means that the applicable system or item: (i) will accurately receive, record, store, provide, recognize and process all date and time data from, during, into and between the twentieth and twenty-first centuries, the years 1999 and 2000 and all leap years; (ii) will accurately perform all date-dependent calculations and operations (including, without limitation, mathematical operations, sorting, comparing and reporting) from, during, into and between the twentieth and twenty-first centuries, the years 1999 and 2000 and all leap years; and (iii) will not malfunction, cease to function or provide invalid or incorrect results as a result of (x) the change of years from 1999 to 2000, (y) date data, including date data which represents or references different centuries, different dates during 1999 and 2000, or more than one century or (z) the occurrence of any particular date; in each case without human intervention, other than original data entry; provided, in each case, that all applications, hardware and other systems used in conjunction with such system -28- 35 or item which are not owned or licensed by the Company correctly exchange date data with or provide data to such system or item. 4.21 INSURANCE. The Company maintains insurance policies (the "INSURANCE POLICIES") against all risks of a character and, to the Company's best knowledge, in such amounts as are usually insured against by similarly situated companies in the same or similar businesses. Each Insurance Policy is in full force and effect and is valid, outstanding and enforceable, and all premiums due thereon have been paid in full. To the Company's best knowledge, none of the Insurance Policies that are material to the business of the Company and its Subsidiaries taken as a whole will terminate or lapse (or be affected in any other materially adverse manner) by reason of the transactions contemplated by this Agreement. The Company and its Subsidiaries have complied in all material respects with the provisions of each Insurance Policy under which it is the insured party. Since January 1, 1996, no insurer under any Insurance Policy that is material to the business of the Company and its Subsidiaries taken as a whole has, in writing, canceled or generally disclaimed liability under any such policy or indicated any intent to do so or not to renew any such policy. All material claims under the Insurance Policies have been filed in a timely fashion. 4.22 NO EXISTING DISCUSSION. As of the date hereof, the Company has ceased any and all discussions or negotiations with any other party with respect to an Acquisition Proposal (as defined in Section 6.5). 4.23 BROKERS. No broker, finder or investment banker other than the Financial Advisor is entitled to any brokerage, finder's or other fee or commission in connection with the Offer or the Merger based upon arrangements made by or on behalf of the Company or any of its Subsidiaries or affiliates. The Company has provided to the Parent a true and complete copy of its entire agreement with the Financial Advisor. ARTICLE 5 CONDUCT OF BUSINESS 5.1 CONDUCT PRIOR TO EFFECTIVE TIME. Except as a result of entering into or as expressly contemplated by this Agreement or any Disclosure Schedule relating to this Article 5, the Company covenants and agrees that, unless the Parent shall otherwise agree in writing, prior to the Effective Time, the business of the Company and its Subsidiaries shall in all material respects be conducted only in, and the Company and its Subsidiaries shall not take any material action except in, the ordinary course of business and consistent with past practice, and the Company shall use all reasonable efforts, consistent with past practice, to maintain and preserve its and each Subsidiary's business organization, assets, employees and advantageous business relationships. Without limiting the generality of the foregoing, during the period from the date of this Agreement until the Effective Time, except as a result of entering into or as expressly contemplated by this Agreement or any Disclosure Schedule -29- 36 relating to this Article 5, the Company shall not, and not permit any of its Subsidiaries to, directly or indirectly, do any of the following: (i) other than dividends and distributions by a direct or indirect wholly owned subsidiary of the Company to its parent: (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or other property) in respect of, any of its capital stock; (B) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution of shares of its capital stock; or (C) purchase, redeem or otherwise acquire any shares of its capital stock or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities, other than the payment to holders of Company Options outstanding on the date hereof of an amount equal to the difference between the price per Share to be paid in the Offer and the exercise price of such Company Option in exchange for the cancellation or termination of such Company Option; (ii) issue, deliver, sell, pledge or otherwise dispose of or encumber any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than the issuance of Shares upon the exercise of Company Options or conversion of Convertible Notes outstanding on the date of this Agreement in accordance with their present terms); (iii) amend its Certificate of Incorporation or By-laws or other comparable charter or organizational documents; (iv) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing a substantial portion of the assets or any stock of, or by any other manner, any business or any corporation, partnership, joint venture, limited liability company, association or other business organization or division thereof or (B) any assets that are material, in the aggregate, to the Company and the Subsidiaries, taken as a whole, except purchases of inventory in the ordinary course of business consistent with past practice; (v) except in the ordinary course of business and consistent with past practice, sell, lease, license, pledge or otherwise dispose of or encumber any assets of the Company or of any of its Subsidiaries (including any indebtedness owned to them or any claims held by them); (vi) whether or not in the ordinary course of business or consistent with past practice, sell or dispose of any assets material to the Company and its Subsidiaries, taken as a whole (including any accounts, leases, contracts or -30- 37 intellectual property or any assets or the stock of any Subsidiaries, but excluding the sale of products in the ordinary course of business consistent with past practice); (vii) except as permitted by Section 6.5, enter into an agreement with respect to any merger, consolidation, liquidation or business combination, or any acquisition or disposition of all or substantially all of the assets or securities of the Company; (viii) (A) incur or suffer to exist any indebtedness for borrowed money, other than Permitted Indebtedness (as defined below), or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, or (B) make any loans, advances (other than to employees of the Company in the ordinary course of business) or capital contributions to, or investments in, any other person other than between the Company and its Subsidiaries or any of them. For purposes of this Section 5.1, "Permitted Indebtedness" means (I) indebtedness for borrowed money that existed as of September 30, 1998 as reflected on the balance sheet included in the September 30, 1998 Financial Information, (II) indebtedness for borrowed money of not more than $2,000,000 incurred thereafter in the ordinary course of business and consistent with past practice under loan agreements in existence as of September 30, 1998, and (III) indebtedness for borrowed money in an amount not exceeding the total amount paid to the holders of Company Options as payment for the cancellation or termination of such Company Options as described in Section 5.1(i)(C); (ix) make or agree to make any new capital expenditures or expenditures not already in process on the date of this Agreement with respect to property, plant or equipment in excess of $150,000 in the aggregate for the Company and the Subsidiaries, taken as a whole; (x) make any change in accounting methods, principles or practices, except insofar as may have been required by a change in generally accepted accounting principles or, except as so required, change any assumption underlying, or method of calculating, any bad debt, contingency or other reserve; (xi) pay, discharge, settle or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of -31- 38 business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Commission Filings or the September 30 Financial Information or incurred thereafter in the ordinary course of business consistent with past practice, or waive any material benefits of, or agree to modify in any material respect, any material confidentiality, standstill or similar agreements to which the Company or any of its Subsidiaries is a party; (xii) except in the ordinary course of business, materially modify, amend or terminate any material contract or agreement to which the Company or any of its Subsidiaries is party, or knowingly waive, release or assign any material rights or claims; (xiii) other than in the ordinary course of business consistent with past practice, enter into any material contracts or agreements relating to the distribution, sale or marketing by third parties of the products of, or products licensed by, the Company or any of its Subsidiaries; (xiv) except as required to comply with applicable law or agreements, plans or arrangements existing on the date hereof or except as set forth in Section 5.1(xiv) of the Disclosure Schedule, (A) adopt, enter into, terminate or amend any written employment agreement, or any oral employment agreement that is not terminable by the Company or any Subsidiary without any penalty on notice of 30 days or less, or any benefit plan for the benefit or welfare of any current or former director, officer or employee, (B) increase in any material respect the compensation or fringe benefits of, or pay any bonus to, any director, officer or key employee, (C) pay any material benefit not provided for under any benefit plan or employment or other compensation arrangement, other than the payment of bonuses following the date of this Agreement to employees (other than officers and directors of the Company or any Subsidiary) in the ordinary course of business and of a nature and in amounts consistent with past practice, (D) grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or benefit plan (including the grant of stock options, stock appreciation rights, stock based or stock related awards, performance units or restricted stock, or the removal of existing restrictions in any benefit plans or agreements or awards made thereunder), or (E) take any action other than in the ordinary course of business consistent with past practice to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract or arrangement or benefit plan; -32- 39 (xv) make any tax election or, except in the ordinary course of business consistent with past practice, settle or compromise any federal, state, local or foreign tax liability; (xvi) issue any options or commence any offering of Shares pursuant to the ESPP; or (xvii) authorize, commit or agree, in writing or otherwise, to take any of the foregoing actions. ARTICLE 6 ADDITIONAL AGREEMENTS 6.1 COMPANY STOCKHOLDER APPROVAL; PREPARATION OF PROXY STATEMENT. (a) If approval of the Merger by the stockholders of the Company is required under Delaware Law in order to consummate the Merger, the Company will, as soon as practicable following the acceptance for payment of, and payment for, Shares by the Purchaser pursuant to and subject to the conditions of the Offer (coordinating the timing thereof with the Parent), duly call, give notice of, convene and hold a special or annual meeting of its stockholders (the "Stockholders Meeting") for the purpose of obtaining stockholder approval of this Agreement, the Merger and the transactions contemplated hereby. Except and to the extent otherwise permitted pursuant to Section 6.5, the Company will, through its Board of Directors, recommend to its stockholders that they approve the Merger. Notwithstanding the foregoing, if the Purchaser or any other subsidiary of the Parent shall acquire at least 90% of the outstanding Shares, the parties shall, at the request of the Parent, take all necessary and appropriate action to cause the Merger to become effective as soon as practicable (but in no event earlier than January 11, 1999, unless otherwise requested by the Parent) after the expiration of the Offer without a stockholders meeting in accordance with Section 253 of the DGCL. The Parent and the Purchaser shall vote or cause to be voted any Shares beneficially owned by them in favor of this Agreement, the Merger and the transactions contemplated hereby. (b) If approval of the Merger by the stockholders of the Company is required under Delaware Law in order to consummate the Merger, the Company will, at the Parent's request, as soon as practicable following the expiration of the Offer, prepare and file a preliminary proxy or information statement (the "Proxy Statement") with the Commission in accordance with the Exchange Act and any other applicable laws, and will use its best efforts to respond to any comments of the Commission or its staff and to cause the Proxy Statement to be mailed to the Company's stockholders as promptly as practicable after responding to all such comments to the satisfaction of the Commission or its staff. The Company will notify the Parent promptly of the receipt of any comments from the Commission or its staff and of any request by the Commission or its staff for amendments or supplements to the Proxy Statement or for additional information and will supply the Parent with copies of all -33- 40 correspondence between the Company or any of its representatives, on the one hand, and the Commission or its staff, on the other hand, with respect to the Proxy Statement or the Merger. If at any time prior to the Stockholders Meeting there shall occur any event that should be set forth in an amendment or supplement to the Proxy Statement, the Company will promptly prepare and mail to its stockholders and file with the Commission such an amendment or supplement. The Company will not mail any Proxy Statement, or any amendment or supplement thereto, to the Company's stockholders unless it has first obtained the consent of the Parent to such mailing, which consent will not be unreasonably withheld. 6.2 DISPOSITION OF THE SHARES. The Parent and the Purchaser shall not, and they shall cause their direct and indirect subsidiaries not to, sell, transfer, assign, encumber or otherwise dispose of the Shares beneficially owned by the Parent, the Purchaser or their respective direct or indirect subsidiaries, as of the date of this Agreement, or acquired pursuant to the Offer or otherwise prior to the meeting of the Company's stockholders, if any is required, pursuant to which the Shares are voted with respect to the Merger, this Agreement and the transactions contemplated hereby; provided, however, that this Section 6.2 shall not apply to the sale, transfer, assignment, encumbrance or other disposition of any or all of such Shares in transactions involving solely the Parent, the Purchaser and/or one or more of their direct or indirect subsidiaries or in connection with any Qualified Acquisition Proposal (as defined in Section 6.5). 6.3 FEES AND EXPENSES. (a) Except as otherwise provided in this Section 6.3, each party shall bear all of the fees and expenses incurred by it in connection with the negotiation and performance of this Agreement, and neither party may recover any such fees and expenses from the other party upon any termination of this Agreement. (b) The Company shall immediately pay to the Parent $7,450,000 in cash if: (i) the Trigger Event specified in Section 6.3(e)(i) shall have occurred, and the Parent shall have elected to terminate this Agreement pursuant to Section 8.1(c)(iii); or (ii) the Trigger Event specified in Section 6.3(e)(ii) shall have occurred; or (iii) the Company shall have elected to terminate this Agreement pursuant to Section 8.1(b)(v). (c) In addition to any payment provided for above in this Section 6.3, if (x) any of the events specified in Section 6.3(b)(i), (ii) or (iii) shall have occurred or (y) the Parent terminates this Agreement pursuant to Section 8.1(c)(iv), then, the Company shall -34- 41 immediately pay to the Parent an amount equal to the reasonable out-of-pocket expenses incurred by the Parent and the Purchaser in connection with the evaluation, negotiation, implementation and consummation of the transactions contemplated by this Agreement (including fees and expenses of legal counsel, solicitors, accountants, printers and financial advisors and investment bankers); PROVIDED, HOWEVER, that, in no event shall the amount payable by the Company pursuant to this Section 6.3(c) exceed $500,000. The Purchaser and the Parent shall promptly provide the Company with invoices or other reasonable evidence of such expenses upon written request by the Company, and the Parent shall forthwith return any portion of expenses reimbursed by the Company as to which such invoices or other evidence are not provided. (d) Nothing contained in this Section 6.3 shall relieve the Company of its obligation (except and to the extent otherwise permitted pursuant to Section 6.5 below) to recommend that the Company's stockholders accept and approve the Offer and the Merger. The provisions contained in this Section 6.3 shall survive any termination of this Agreement. (e) As used in this Agreement, the term "Trigger Event" shall mean any of the following events: (i) the Company's Directors, whether or not in the exercise of their fiduciary or other legal duties, either (A) shall have failed to approve or recommend, or shall have withdrawn or adversely modified or taken a public position materially inconsistent with its approval or recommendation of, the Offer, the Merger or this Agreement or (B) take any action (other than as expressly permitted under clauses (i) and (ii) of the second sentence of Section 6.5(a)) with respect to any Qualified Acquisition Proposal other than to recommend rejection of the Qualified Acquisition Proposal (including taking a position of neutrality or failing to take any position within 10 business days after the making or commencement of a Qualified Acquisition Proposal); or (ii) prior to the final expiration of the Offer, an Acquisition Proposal shall have become publicly known and this Agreement is terminated (other than as a result of a material breach of this Agreement by the Parent or the Purchaser) and, within 12 months after such termination, (A) the Company enters into a merger or other agreement that contemplates the consummation of an Acquisition Proposal at a price equal to or greater than the aggregate consideration payable for Shares pursuant to the Offer and the Merger or (B) the holders of Shares become entitled to receive consideration per Share greater than the Merger Consideration in a transaction or series of transactions in connection with an Acquisition Proposal. 6.4 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to -35- 42 consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, and to cooperate with each of the other parties hereto in connection with the foregoing, including using all reasonable efforts: (A) to obtain all necessary waivers, consents and approvals from other parties to loan agreements, leases and other contracts; (B) to obtain all necessary consents, approvals and authorizations as are required to be obtained under any federal, state or foreign laws or regulations; (C) to lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated hereby; (D) to effect all necessary registrations and filings, including filings under the Hart- Scott-Rodino Act and submissions of information requested by governmental authorities; and (E) to fulfill all conditions to this Agreement. Each of the Company, the Parent and the Purchaser further covenants and agrees that, prior to the exercise by the Parent or the Purchaser of the right to terminate the Offer under paragraphs (c) or (d) of ANNEX I hereto, each of the Company, the Parent and the Purchaser shall use all reasonable efforts (which shall not be construed to require the payment of any money to a third party or the divestiture of or requirement to hold separate (through a trust or otherwise) any business or assets) to prevent, with respect to a threatened or pending preliminary or permanent injunction or other order, decree or ruling or statute, rule, regulation or executive order specified in such paragraphs, the entry, enactment or promulgation thereof, as the case may be. For purposes of the foregoing, the obligation of the Parent and the Purchaser to use "all reasonable efforts" to obtain waivers, consents and approvals to loan agreements, leases and other contracts shall not include any obligation to agree to a modification of the terms of such documents, except as expressly contemplated hereby or to make any guaranty or monetary payment in consideration of such waiver, consent or approval. 6.5 NO SOLICITATION. (a) The Company shall not, and shall not authorize or permit any of its Subsidiaries, or any of its or their officers, directors, employees, representatives, agents or affiliates, including any investment banker, attorney or accountant retained by the Company or any of its Subsidiaries, to, directly or indirectly, (i) solicit, initiate or encourage (including by way of furnishing information), or take any other action to facilitate, any inquiries or the making of any proposal or offer that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal (as defined below) or (ii) enter into, maintain, continue or otherwise participate in any discussions or negotiations regarding any Acquisition Proposal with any person, entity or group other than the Parent, the Purchaser or their respective direct or indirect subsidiaries or affiliates (a "Third Party"). Notwithstanding the foregoing, the Company, its Subsidiaries, and their respective officers, directors, employees, representatives, agents and affiliates, including any investment banker, attorney or accountant retained by the Company or any of its Subsidiaries, may (i), in the case of a Qualified Acquisition Proposal (as defined below) only, furnish or cause to be furnished information concerning the Company's business, properties or assets to a Third Party (subject to such Third Party executing a confidentiality agreement on terms no less favorable to the Company than those in the confidentiality agreement previously entered into by the Parent and the Company), (ii), in the case of a Qualified Acquisition Proposal only, enter into, participate in, conduct or -36- 43 engage in discussions or negotiations with such Third Party, (iii) to the extent that the Board of Directors of the Company is required by its fiduciary duties, as advised by counsel, take any position with respect to an Acquisition Proposal in accordance with Rules 14a-9 and 14e-2 promulgated under the Exchange Act, and (iv) may, in the case of a Qualified Acquisition Proposal only and only prior to the acceptance for payment of that number of Shares tendered pursuant to the Offer sufficient to satisfy the Minimum Condition and in compliance with the provisions of this Section 6.5 (including Section 6.5(c)), enter into an agreement to consummate a Qualified Acquisition Proposal. For purposes of this Agreement, "Acquisition Proposal" means an inquiry, offer or proposal regarding any of the following (other than the transactions contemplated by this Agreement) involving the Company or its Subsidiaries: (i) any merger, reorganization, consolidation, share exchange, recapitalization, business combination, liquidation, dissolution, or other similar transaction involving, or, any sale, lease, exchange, mortgage, pledge, transfer or other disposition of, all or any significant portion of the assets or 25% or more of the equity securities of, the Company or any of its Subsidiaries, in a single transaction or series of related transactions; (ii) any tender offer or exchange offer for 25% or more of the outstanding shares of capital stock of the Company or the filing of a registration statement under the Securities Act in connection therewith; or (iii) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. For purposes of this Agreement, "Qualified Acquisition Proposal" means an unsolicited, bona fide, written Acquisition Proposal made by a Third Party that the Board of Directors of the Company determines in its good faith judgment to be more favorable to the Company's stockholders than the Offer and the Merger (based on the opinion, with only customary qualifications, of the Company's independent financial advisor that the value of the consideration to the Company's stockholders provided for in such proposal exceeds the value of the consideration to the Company's stockholders provided for in this Agreement by the Offer and the Merger) and for which financing, to the extent required, is then committed or which, in the good faith judgment of the Board of Directors of the Company (based on the advice of the Company's independent financial advisor), is reasonably capable of being obtained by such Third Party and which Acquisition Proposal, in the good faith judgment of the Board of Directors of the Company, is likely to be consummated. Nothing contained herein shall be construed to prohibit the Company from making such disclosure to stockholders that, in the judgment of the Board of Directors of the Company, as advised by counsel, may be required by law or necessary to discharge any fiduciary duty imposed thereby. (b) The Company will immediately notify the Parent of, and will disclose to the Parent all details of, (i) any Acquisition Proposal it receives, (ii) any written indications that any person is interested in making an Acquisition Proposal or (iii) the initiation and status of discussions or negotiations relating to any Acquisition Proposal (it being understood that pursuant to Section 6.3, any such Acquisition Proposal must be a Qualified Acquisition Proposal). In the event that the Company furnishes any nonpublic information to any party other than the Parent, it shall simultaneously provide the Parent with copies of or access to all such information. Nothing in this paragraph (b) shall be construed as interfering with the -37- 44 Company's obligations to its stockholders under Rule 14e-2 promulgated under the Exchange Act. (c) Notwithstanding any other provision in this Agreement, the Company may not enter into any agreement with any Third Party in connection with a Qualified Acquisition Proposal unless (i) at least three business day prior thereto the Company shall have provided the Parent and the Purchaser a copy of the Qualified Acquisition Proposal, (ii) within such three business day period, the Parent and the Purchaser do not make an offer which, in the good faith judgment of the Board of Directors of the Company (based on the advice of the Company's independent financial advisor) is at least as favorable to the Company's stockholders as such Acquisition Proposal, (iii) the Company shall have terminated this Agreement pursuant to Section 8.1(b)(v) below, and (iv) prior thereto the Company shall have paid the fees specified in Section 6.3(b) and shall have deposited $500,000 in trust with a Qualified Commercial Bank for the payment of the expenses specified in Section 6.3(c). (d) The Company will use reasonable efforts to have all copies of all nonpublic information it or its officers, directors, employees, representatives or affiliates have distributed on or prior to the date of this Agreement to other potential purchasers returned to the Company as soon as possible. 6.6 NOTIFICATION OF CERTAIN MATTERS. (a) The Company shall give prompt notice to the Parent, of (i) any representation or warranty made by the Company contained in this Agreement that is qualified as to materiality becoming untrue or inaccurate in any respect or any such representation or warranty that is not so qualified becoming untrue or inaccurate in any material respect, or (ii) the failure by the Company to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall be deemed to cure any breach or otherwise affect the representations or warranties of the Company or the conditions to the obligations of the parties hereunder. (b) Without limiting the foregoing, the Company shall, within 24 hours after it has notice of any of the following, notify the Parent of: (i) any notice or other communication from any person alleging that the consent of such person is or may be required in connection with the transactions contemplated by this Agreement; (ii) any notice or other communication from any Governmental Entity in connection with the transactions contemplated by this Agreement; and -38- 45 (iii) any actions, suits, claims, investigations or proceedings commenced or, to the best of its knowledge, threatened against, relating to or involving or otherwise affecting the Company or any Subsidiary which, if pending on the date of this Agreement would have been required to have been disclosed pursuant to this Agreement or which relate to the consummation of the transaction contemplated hereby. (c) The Parent shall give prompt notice to the Company of (i) any representation or warranty made by the Parent or the Purchaser contained in this Agreement that is qualified as to materiality becoming untrue or inaccurate in any respect or any such representation or warranty that is not so qualified becoming untrue or inaccurate in any material respect, or (ii) the failure by the Parent or the Purchaser to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by them under this Agreement; provided, however, that no such notification shall be deemed to cure any breach or otherwise affect the representations or warranties of the Parent or the Purchaser or the conditions to the obligations of the parties hereunder. 6.7 ACCESS TO INFORMATION. Except as restricted under applicable law and the restrictions noted below, the Company shall, and shall cause its Subsidiaries, and the Company's and such Subsidiaries' respective officers, directors, employees and agents to, afford to the Parent and to the officers, employees, representatives and agents of the Parent (including attorneys, accountants and environmental consultants) reasonable access at reasonable times, from the date hereof to the Effective Time, to the Company's and any Subsidiary's officers, employees, agents, facilities, properties, books, records and contracts, and shall furnish the Parent all relevant financial, operating and other data and information as the Parent, through its officers, employees or agents, may reasonably request, except for information (other than information subject to disclosure to the Parent or the Purchaser pursuant to Section 6.5) received or held by the Company pursuant to a confidentiality agreement with a third party which confidentiality agreement would be breached by such disclosure. Without limiting the generality of the foregoing, the parties expressly agree that such access will include full cooperation with the Parent in connection with any environmental investigation to be undertaken by the Parent. All such investigations and access shall be conducted in a manner as not to interfere unreasonably with the business operations of the Company. All access to personnel and facilities of the Company or any Subsidiary prior to the closing of the Offer shall be made only with the prior written consent of the Chairman of the Board or the Chief Financial Officer, which consent shall not be unreasonably withheld or delayed. In addition, the Company agrees to cooperate, as reasonably requested, in connection with filings by the Parent or the Purchaser (or any affiliate of the Parent or the Purchaser) with the Commission (including registration statements), including, without limitation, obtaining financial information and related accountants' consents for inclusion in the Parent's or the Purchaser's (or any of their affiliates') Commission filings. Without limiting the generality of the foregoing, the Company shall use its best efforts to secure for the Company access to and copies of the workpapers of its independent public accountants. -39- 46 6.8 INDEMNIFICATION AND INSURANCE. (a) The Parent and the Purchaser agree that all rights to indemnification, advancement of expenses, exculpation, limitation of liability and any and all similar rights now existing in favor of the present or former employees, agents, directors or officers of the Company and its Subsidiaries (the "Indemnified Parties"), as provided in their respective charters or by-laws in effect on the date hereof, shall survive the Offer and the Merger and shall continue in full force and effect for a period of six years from the Effective Time and shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect adversely the rights thereunder of individuals who at any time prior to the Effective Time were directors, officers, employees or agents of the Company, unless such modification shall be required by law; PROVIDED, HOWEVER, that in the event any claim or claims are asserted or made within such six-year period, all rights to indemnification in respect to any such claim or claims shall continue until the disposition of any and all such claims. (b) Subject to the terms and conditions of this Section 6.8, the Company shall, to the fullest extent permitted under applicable law and regardless of whether the Merger becomes effective, indemnify and hold harmless, and, after the Effective Time, the Surviving Corporation shall, to the fullest extent permitted under applicable law, indemnify and hold harmless, each present and former director, officer, employee, fiduciary and agent of the Company and each Subsidiary and their respective heirs, executors, administrators, personal representatives or assigns (collectively, the "Indemnified Parties") against all costs and expenses (including attorneys' fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, criminal, administrative or investigative (a "Proceeding"), arising out of or pertaining to any action or omission in their capacity as an officer, director, employee, fiduciary or agent, whether occurring before or after the Effective Time, to the same extent as provided in the Company's Certificate of Incorporation or By-laws as in effect on the date hereof, in each case for a period of six years after the date hereof. In the event that any claim for indemnification is asserted or made within such six-year period, all rights to indemnification in respect of such claim shall continue until the disposition of such claim. (c) Each Indemnified Party shall give written notice to the Company or the Surviving Corporation, as the case may be (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any Proceeding resulting therefrom; provided, that counsel for the Indemnifying Party, who shall conduct the defense of such Proceeding, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld, conditioned or delayed); and, provided, further, that the failure of any Indemnified Party to given notice as provided herein shall not relieve the Indemnifying Party of its obligations under Section 6.8(b) unless and to the extent that the Indemnifying Party is adversely affected by such failure. The Indemnified Party may participate in such defense at -40- 47 such party's expense; provided, however, that the Indemnifying Party shall pay such expense if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between the Indemnified Party and any other party represented by such counsel in such proceeding. In the event that the Indemnifying Party does not assume the defense pursuant to this paragraph (c) of any Proceeding of which the Indemnifying Party receives notice as provided herein, any expenses incurred by the Indemnified Party in defending such Proceeding shall be paid by the Indemnifying Party in advance of the final disposition of such matter, provided, however, that the payment of such expenses incurred by the Indemnified Party in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of the Indemnified Party to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnified Party is not entitled to be indemnified by the Indemnifying Party in accordance with this Section 6.8. The Indemnified Party shall cooperate with the Indemnifying Party and provide access to all documents necessary or beneficial to the defense of any Proceeding. Neither the Company nor the Surviving Corporation shall be liable for any settlement of any Proceeding effected without its written consent. (d) In the event the Company or the Surviving Corporation or any of their respective successors or assigns consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, then, and in each such case, the Parent will either guaranty the indemnification obligations referred to in this Section 6.8 or will make or cause to be made proper provision so that the successors and assigns of the Company or the Surviving Corporation, as the case may be, assume the indemnification obligations described herein for the benefit of the Indemnified Parties. (e) The provisions of this Section 6.8 are (i) intended to be for the benefit of, and will be enforceable by, each of the Indemnified Parties and (ii) in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have by contract or otherwise. (f) The Parent shall maintain in effect for three years from the date of the Effective Time, if available, directors' and officers' liability insurance policies covering the directors and officers of the Company as of the date hereof, with coverages and other terms substantially as favorable to such directors and officers as is currently in effect; PROVIDED, HOWEVER, that the Parent shall not be required to spend more than an amount per year equal to 150% of the current annual premium paid by the Company as of the date hereof for such insurance; and provided, further, that if the premium for such coverage exceeds such amount, the Parent shall purchase a policy with the greatest coverage available for such 150% of the annual premium. 6.9 FILINGS AND OTHER MATTERS. The Company shall confer with the Parent on a regular and frequent basis as reasonably requested by the Parent concerning operational -41- 48 matters and promptly advise the Parent orally and in writing of any change or event having, or which, insofar as reasonably can be foreseen, could have, a Material Adverse Effect. The Company shall promptly provide to the Parent (or its counsel) copies of all filings made by the Company with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. 6.10 FAIR PRICE STRUCTURE. If any "fair price" or "control share acquisition" or "anti-takeover" statute, or other similar statute or regulation or any state "blue sky" statute shall become applicable to the transactions contemplated hereby or by the Stockholders' Agreement, the Company and the members or the Board of Directors of the Company shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby and thereby may be consummated as promptly as practicable on the terms contemplated hereby and thereby, and otherwise act to minimize the effects of such statute or regulation on the transactions contemplated hereby or thereby. 6.11 PARENT GUARANTY. The Parent hereby unconditionally and irrevocably guarantees the Purchaser's obligations under this Agreement and agrees to be liable for any breach of this Agreement by the Purchaser. The guaranty described in this Section 6.11 is a guaranty of payment and not of collection. 6.12 COMPANY OPTIONS. (a) As of the Effective Time, the Parent shall assume the Option Plan and the obligations of the Company thereunder and all of the Company Options which are then outstanding shall be assumed by the Parent. Immediately after the Effective Time, each such Company Option shall be deemed to constitute an option to acquire, on the same terms and conditions as were applicable under such Company Option immediately prior to the Effective Time, such number of shares of common stock, par value $1.00 per share, of the Parent (the "Parent Common Stock") as is equal to the number of Shares subject to such Company Option immediately prior to the Effective Time multiplied by a fraction, the numerator of which is the Merger Consideration and the denominator of which is the average closing price of the Parent Common Stock on the New York Stock Exchange, as reported in The Wall Street Journal (or if not so reported in another authoritative source), for the ten trading days ending on the date of the expiration of the Offer (with any fraction resulting from such multiplication to be rounded down to the nearest whole number). The exercise price per share of each such assumed Company Option shall be equal to the per share exercise price of such Company Option immediately prior to the Effective Time multiplied by a fraction, the numerator of which is the average closing price of the Parent Common Stock on the New York Stock Exchange, as reported in The Wall Street Journal (or if not so reported in another authoritative source), for the ten trading days ending on the date of the expiration of the Offer and the denominator of which is the Merger Consideration (with any fraction resulting from such multiplication to be rounded up to the nearest whole cent). Except as otherwise provided in this Section 6.12, the term, exercisability, vesting schedule, status as an "incentive stock option" under Section 422 of the Code and all of the other terms of the Company -42- 49 Options shall otherwise remain unchanged. This Section 6.12 is intended to meet the requirements of Section 424(a) of the Code and shall be interpreted consistent with such intent. (b) As soon as practicable after the Effective Time, the Parent shall deliver to each holder of an outstanding Company Option an appropriate notice setting forth such holder's rights pursuant to such Company Options, as amended by this Section 6.12, and the agreements evidencing such Company Options shall continue in effect on the same terms and conditions (subject to the amendments provided for in this Section 6.12 and such notice). (c) The Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of the Company Options assumed in accordance with this Section 6.12. As soon as practicable after the Effective Time, the Parent shall, with respect to all shares of Parent Common Stock subject to such Options, (i) either (x) file a Registration Statement on Form S-8 (or any successor form) under the Securities Act or (y) file any necessary amendments to the Company's previously filed Registration Statements on Form S-8 in order that the Parent will be deemed a "successor registrant" thereunder, and, in either event, shall use all reasonable efforts to maintain the effectiveness of such registration statement for so long as such Company Options remain outstanding, and (ii) take all actions necessary to have such shares of Parent Common Stock approved for listing on the New York Stock Exchange, subject to official notice of issuance. Notwithstanding any other term of this Agreement, after the Effective Time, no assumed Company Option may be exercised until such registration statement has become effective and such approval has been obtained. (d) The Company shall take all necessary actions pursuant to the Option Plan and the agreements evidencing the Company Options to provide for the assumption of the Company Options in accordance with this Section 6.12. 6.13 CERTAIN PAYMENTS. The Parent shall cause the Company to pay, in accordance with their respective terms, all bonuses, severance payments, accrued vacation pay and all other payments expressly set forth in Section 6.13 of the Disclosure Schedule to the persons set forth on such Disclosure Schedule who will be terminated as of the closing of the Offer, within one business day following payment and acceptance of the Shares in the Offer (except as otherwise specifically set forth in Section 6.13 of the Disclosure Schedule, which shall be paid in accordance therewith). The Company hereby represents and warrants that, upon receipt of the payments listed in Section 6.13 of the Disclosure Schedule, neither the Company nor any Subsidiary will have any further obligation to any of the individuals listed in Section 6.13 other than (a) pursuant to Company Options held by such individuals as set forth in Section 4.3 of the Disclosure Schedule or (b) as otherwise expressly provided for or disclosed in this Agreement or the Disclosure Schedule. -43- 50 ARTICLE 7 CONDITIONS 7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The respective obligations of each party to effect the Merger shall be subject to the fulfillment or waiver by all parties at or prior to the Effective Time of each of the following conditions: (a) The Parent or the Purchaser shall have made, or caused to be made, the Offer on the terms and conditions set forth therein and shall have purchased, or caused to be purchased, all Shares validly tendered and not withdrawn pursuant to the Offer; (b) this Agreement and the Merger shall have been approved and adopted by the requisite vote or consent of the stockholders of the Company, if any, required by the Delaware Law and the Company's Certificate of Incorporation; (c) any waiting period (and any extension thereof) applicable to the consummation of the Merger under the Hart-Scott-Rodino Act shall have expired or been terminated; and (d) no preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by any Governmental Entity, nor any statute, rule, regulation or executive order promulgated or enacted by any Governmental Entity, shall be in effect, which would make the acquisition or holding by the Parent or its subsidiaries of the Shares or shares of common stock of the Surviving Corporation illegal or otherwise prevent the consummation of the Merger. 7.2 CONDITIONS TO THE PARENT'S AND THE PURCHASER'S OBLIGATION TO EFFECT THE MERGER. The obligation of the Parent and the Purchaser to consummate the Merger shall be further subject to the condition that, at or prior to the Effective Time, all governmental and third-party consents and approvals required to be obtained by the Company to consummate the Merger shall have been obtained, except for (a) consents required under the Company's credit facility with NationsBank, National Association as in effect on the date of this Agreement and (b) such consents and approvals where the failure to obtain such consent or approval would not have a Material Adverse Effect. ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER 8.1 TERMINATION. This Agreement may be terminated at any time prior to the Effective Time, whether prior to or after approval by the stockholders of the Company, as follows: -44- 51 (a) Subject to Section 1.3, by mutual written consent of the Boards of Directors of the Parent and the Company; or (b) By the Company: (i) if neither the Parent nor any of its subsidiaries or affiliates shall have (A) publicly announced its intention to make the Offer no later than the first business day following the date of this Agreement or (B) commenced the Offer within five business days of such announcement unless such failure to commence the Offer is due to the material breach of this Agreement by the Company; or (ii) if, in the absence of any material breach of this Agreement by the Company, (A) the Offer shall have been terminated or the Purchaser shall have allowed the Offer to expire without the purchase of such number of Shares thereunder as satisfies the Minimum Condition (as defined in ANNEX I hereto); or (B) neither the Parent nor any of its subsidiaries or affiliates shall have paid for all Shares validly tendered pursuant to the Offer and not withdrawn within 60 days after the commencement of the Offer; or (iii) if the Effective Time shall not have occurred on or before March 31, 1999 due to a failure of any of the conditions to the obligation of the Company to effect the Merger set forth in Section 7.1; or (iv) if, prior to the purchase of any Shares pursuant to the Offer, the Parent or the Purchaser fails to perform any of their respective obligations under this Agreement and such failure or nonperformance materially impairs the Parent's and the Purchaser's ability to consummate the Offer or the Merger; or (v) if the Company has, in accordance with the terms of Section 6.5 above, entered into an agreement with a Third Party to consummate a Qualified Acquisition Proposal; or (vi) if there shall have been a breach of any material representation and warranty of the Purchaser or the Parent set forth herein prior to expiration or termination of the Offer, which breach is not cured within five days following written notice thereof by the Company to the Purchaser and the Parent. (c) By the Parent: (i) if, due to an occurrence that would result in a failure to satisfy any of the conditions set forth in ANNEX I hereto, the Parent or any of its -45- 52 subsidiaries or affiliates shall have (A) failed to commence the Offer within five business days of the date on which the Purchaser's intention to make the Offer is publicly announced; (B) terminated the Offer without the purchase of any Shares thereunder; or (C) failed to pay for Shares pursuant to the Offer within 60 days after the commencement of the Offer; or (ii) if the Effective Time shall not have occurred on or before March 31, 1999 due to a failure of any of the conditions to the obligations of the Parent and the Purchaser to effect the Merger set forth in Sections 7.1 and 7.2 otherwise than as a result of a material breach or default by the Parent or the Purchaser hereunder; or (iii) if a Trigger Event specified in Section 6.3(e)(i) occurs; or (iv) if, prior to the purchase of any Shares pursuant to the Offer, the Company fails to perform in any respect any of its material obligations under this Agreement, which failure to perform (other than a failure to perform an obligation set forth in Section 6.5, as to which there shall be no cure period) is not cured within five days following written notice thereof by the Parent to the Company. (d) By either the Company or the Parent, if any Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the acceptance for payment of, or payment for, Shares pursuant to the Offer or the Merger and such order, decree or ruling or other action shall have become final and nonappealable; provided, however, that the party seeking to terminate this Agreement pursuant to this provision shall have performed its obligations under Section 6.4. (e) Notwithstanding any other provision of this Agreement, the termination of this Agreement by the Company pursuant to Section 8.1(b)(v) above shall be of no force or effect unless prior thereto the Company shall have complied with Section 6.5(c) above. 8.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement as provided in Section 8.1, all obligations and agreements of the parties set forth in this Agreement shall forthwith terminate and be of no further force or effect, and there shall be no liability on the part of the Parent, the Purchaser or the Company hereunder, except as set forth in Section 6.3 or Section 9.4; provided that the foregoing shall not relieve any party for liability for damages actually incurred as a result of any breach of this Agreement. 8.3 AMENDMENT. This Agreement may not be amended except, subject to Section 1.3, by action of the Board of Directors of each of the parties hereto set forth in an instrument in writing signed on behalf of each of the parties hereto; provided, however, that if this Agreement and the Merger are subject to stockholder approval then, after such approval, -46- 53 no amendment shall be made which by law requires further approval by such stockholders without obtaining such further approval. 8.4 WAIVER. At any time prior to the Effective Time, whether before or after any special meeting of the stockholders of the Company to vote on the Merger, any party hereto, subject to Section 1.3, by action taken by its Board of Directors, may (i) extend the time for the performance of any of the obligations or other acts of any other party hereto or (ii) waive compliance with any of the agreements of any other party or with any conditions to its own obligations; provided, however, that if this Agreement and the Merger are subject to stockholder approval then, after such approval, no waiver shall be made which by law requires further approval by such stockholders without obtaining such further approval. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party by a duly authorized officer. For purposes of this Section 8.4, the Parent and the Purchaser shall be considered to be one party. ARTICLE 9 GENERAL PROVISIONS 9.1 PUBLICITY. The Parent and the Purchaser, on the one hand, and the Company, on the other hand, will consult with each other before issuing, and provide each other with a reasonable opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated by this Agreement, including the Offer and the Merger, and shall not issue, or permit any of their respective subsidiaries to issue, any such press release or make any such public statement prior to such consultation, except as may be required by applicable law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system, in which case the party making such release will use reasonable efforts to obtain comments from the other party before issuance of such release or statement. The parties agree that the initial press release to be issued with respect to the transactions contemplated by this Agreement shall be in the form heretofore agreed to by the parties. 9.2 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been fully given if (i) delivered personally, (ii) sent by certified or registered mail, return receipt requested, (iii) sent by overnight courier for delivery on the next business day or (iv) sent by confirmed telecopy, provided that a confirmation copy of all such telecopied materials is thereafter sent within 24 hours in the manner described in clauses (i), (ii) or (iii), to the parties at the following addresses or at such other addresses as shall be -47- 54 specified by the parties by like notice: (a) If to the Parent or the Purchaser: EG&G, Inc. 45 William Street Wellesley, Massachusetts 02181 Attention: General Counsel Telecopy No.: 781-431-4115 with a copy to: Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 Attention: David E. Redlick, Esq. Telecopy No.: 617-526-5000 (b) If to the Company: Lumen Technologies, Inc. 555 Theodore Fremd Avenue Suite B302 Rye, New York 10580 Attention: President Telecopy No.: 914-967-9405 with a copy to: Kane Kessler, P.C. 1350 Avenue of the Americas New York, New York 10019 Attention: Robert L. Lawrence, Esq. Telecopy No.: 212-245-3009 Notices provided in accordance with this Section 9.2 shall be deemed delivered (i) on the date of personal delivery, (ii) four business days after deposit in the mail, (iii) one business day after delivery to an overnight courier, or (iv) on the date of confirmation of the telecopy transmission, as the case may be. 9.3 INTERPRETATION. When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or a Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this -48- 55 Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, including ANNEX I, they shall be deemed to be followed by the words "without limitation". As used in this Agreement, including ANNEX I, the term "subsidiary" of any person means another person whether foreign or domestic, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first person. For avoidance of doubt, the parties acknowledge that Voltarc Technologies, Inc. is a Subsidiary of the Company. As used in this Agreement, including ANNEX I, the term "affiliate" of any person means any person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person. For purposes of this Agreement, the Company shall not be deemed to be an affiliate or subsidiary of the Purchaser or the Parent. Inclusion of information in the Disclosure Schedule does not constitute an admission or acknowledgment of the materiality of such information. For purposes of this Agreement, "business day" shall have the meaning set forth in Rule 14d-1(c)(6) of the Exchange Act. 9.4 REPRESENTATIONS AND WARRANTIES; ETC. The respective representations and warranties of the Company, the Parent and the Purchaser contained herein shall expire with, and be terminated and extinguished upon, the Effective Time. This Section 9.4 shall have no effect upon any other obligation of the parties hereto, which by their terms contemplate performance after the Effective Time. If this Agreement shall terminate after acceptance for payment by the Purchaser of Shares pursuant to the Offer, but prior to the Effective Time, the agreements of the parties contained in Sections 6.3, 6.8, 6.11 and 6.13 shall also survive the termination of this Agreement. 9.5 MISCELLANEOUS. This Agreement together with the Confidentiality Agreement between the Parent and the Company dated June 9, 1998 constitutes the entire agreement and supersedes all other prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement (i) except as provided in Sections 6.8, 6.11 and 6.13 is not intended to confer upon any other person any rights or remedies hereunder, create any agreement of employment with any person or otherwise create any third-party beneficiary hereto; (ii) shall not be assigned, except that the Purchaser may assign its rights and obligations to one or more direct or indirect wholly owned subsidiaries of the Parent which in a written instrument shall make all the representations and warranties of the Purchaser set forth herein and shall agree to assume all of the Purchaser's obligations hereunder and be bound by all of the terms and conditions of this Agreement; provided, however, that no such assignment shall relieve the Parent or the Purchaser of its obligations hereunder; and (iii) shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of Delaware, without giving effect to the principles of conflict of laws thereof. -49- 56 9.6 VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect. 9.7 COUNTERPARTS. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 9.8 SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement may be consummated as originally contemplated to the fullest extent possible. [Remainder of page intentionally left blank.] -50- 57 IN WITNESS WHEREOF, the Parent, the Purchaser and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. EG&G, INC. By: /s/ Gregory L. Summe --------------------------------------- Name: Gregory L. Summe Title: President and Chief Operating Officer LIGHTHOUSE WESTON CORP. By: /s/ Daniel T. Heaney --------------------------------------- Name: Daniel T. Heaney Title: Treasurer LUMEN TECHNOLOGIES, INC. By: /s/ Martin Franklin --------------------------------------- Name: Martin E. Franklin Title: Chairman Of The Board -51- 58 ANNEX I CONDITIONS OF THE OFFER Notwithstanding any other provisions of the Offer or this Agreement, the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act, to pay for any Shares tendered pursuant to the Offer unless the number of Shares tendered and not withdrawn not later than the date and time of expiration of the Offer, shall equal at least a majority of the Fully Diluted Shares (as defined below) (such number of Shares, the "Minimum Condition"). For purposes of this Agreement: "Fully Diluted Shares" shall mean all outstanding securities entitled generally to vote in the election of directors of the Company after giving effect to the exercise or conversion of all options, rights and securities exercisable or convertible into such voting securities (other than (i) the exercise of Company Options that are exercisable for Shares that would, following such exercise, be subject to the Stockholders' Agreement and (ii) conversion of the Convertible Notes). Furthermore, notwithstanding any other provisions of the Offer or this Agreement, the Purchaser shall not be required to accept for payment or, subject as aforesaid, to pay for any Shares tendered pursuant to the Offer unless all applicable waiting periods under the Hart-Scott- Rodino Act shall have expired or been terminated. Furthermore, notwithstanding any other provisions of the Offer or this Agreement, the Purchaser shall not be required to accept for payment or, subject as aforesaid, to pay for any Shares not theretofore accepted for payment or paid for, and may terminate the Offer if, at any time on or after the date of this Agreement and before the acceptance of such Shares for payment or the payment therefor, any of the following conditions exists: (a) the Purchaser is not entitled to vote its Shares for the Merger; or (b) except for matters (i) which are attributable to the announcement or performance of this Agreement and the transactions contemplated hereby or (ii) which generally affect the economy or the industry in which the Company is engaged, any change shall have occurred in the condition (financial or other), results of operations, stockholders' equity, business, assets, properties, liabilities or capitalization of the Company and its Subsidiaries which has resulted in a Material Adverse Effect; or (c) there shall have been instituted or pending before any Governmental Entity any action, proceeding, application, claim or counterclaim or any judgement, order or injunction sought or any other action taken by any Governmental Entity or by any person who has made an Acquisition Proposal, which (i) challenges the acquisition by the Parent or the Purchaser (or any other affiliate of the Parent) of any Shares pursuant to the Offer, the Merger or the Stockholders' Agreement, restrains, prohibits or materially delays the making or A-1 59 consummation of the Offer or the Merger or the transactions contemplated by the Agreement or the Stockholders' Agreement, prohibits the performance of any of the contracts or other arrangements entered into by the Parent or the Purchaser (or any other affiliates of the Parent) in connection with the acquisition of the Company, seeks to obtain any material amount of damages, or otherwise directly or indirectly materially adversely affects the Offer or the Merger or the transactions contemplated by the Agreement or the Stockholders' Agreement, (ii) seeks to prohibit or limit materially the ownership or operation by the Company, the Parent or the Purchaser (or any other affiliate of the Parent) of all or any material portion of the business or assets of the Company and its Subsidiaries taken as a whole or of the Parent and its affiliates, or to compel the Company, the Parent or the Purchaser (or any other affiliate of the Parent) to dispose of or to hold separate all or any material portion of the business or assets of the Parent or any of its affiliates or of the Company or any of its Subsidiaries as a result of the transactions contemplated by the Agreement, (iii) seeks to impose any material limitation on the ability of the Company, the Parent, the Purchaser (or any other affiliate of the Parent) to conduct the Company's or any Subsidiary's business or own such assets, (iv) seeks to impose or confirm any material limitation on the ability of the Parent or the Purchaser (or any other affiliate of the Parent) to acquire or hold, or to exercise full rights of ownership of, any Shares, including the right to vote such Shares on all matters properly presented to the stockholders of the Company, (v) seeks to require divestiture by the Purchaser or any of its affiliates of all or any of the Shares, or (vi) otherwise has resulted in, or has a substantial likelihood of resulting in, a Material Adverse Effect; or (d) there shall have been entered or issued any preliminary or permanent judgement, order, decree, ruling or injunction or any other action taken by any Governmental Entity, whether on its own initiative or the initiative of any other person, which (i) restrains, prohibits or materially delays the making or consummation of the Offer or the Merger or the transactions contemplated by the Agreement or the Stockholders' Agreement, prohibits the performance of any of the contracts or other arrangements entered into by the Parent or the Purchaser (or any other affiliates of the Parent) in connection with the acquisition of the Company or otherwise directly or indirectly materially adversely affects the Offer or the Merger or the transactions contemplated by the Agreement or the Stockholders' Agreement, (ii) prohibits or limits materially the ownership or operation by the Company, the Parent or the Purchaser (or any other affiliate of the Parent) of all or any material portion of the business or assets of the Company and its Subsidiaries taken as a whole or of the Parent and its affiliates, or compels the Company, the Parent or the Purchaser (or any other affiliate of the Parent) to dispose of or to hold separate all or any material portion of the business or assets of the Parent or any of its affiliates or of the Company or any of its Subsidiaries as a result of the transactions contemplated by the Agreement, (iii) imposes any material limitation on the ability of the Company, the Parent, the Purchaser (or any other affiliate of the Parent) to conduct the Company's or any Subsidiary's business or own such assets, (iv) imposes or confirms any material limitation on the ability of the Parent or the Purchaser (or any other affiliate of the Parent) to acquire or hold, or to exercise full rights of ownership of, any Shares, including the right to vote such Shares on all matters properly presented to the stockholders of the Company, (v) requires divestiture by the Purchaser or any of its affiliates A-2 60 of all or any of the Shares, or (vi) otherwise has resulted in, or has a substantial likelihood of resulting in, a Material Adverse Effect; or (e) there shall be any statute, rule or regulation enacted, promulgated, entered, enforced or deemed applicable to the Offer, the Merger, the Agreement or the Stockholders' Agreement, or any other action shall have been taken by any Government Entity, other than the routine application to the Offer, the Merger or the transactions contemplated by the Stockholders' Agreement of waiting periods under the Hart-Scott-Rodino Act that results in, directly or indirectly, any of the consequences referred to in clauses (i) through (vi) of paragraph (c) above; or (f) the Company shall have failed to perform any material obligation or to comply with any material agreement or covenant of the Company to be performed or complied with by it under this Agreement within five days following written notice of such failure by the Parent to the Company; or (g) (i) the Board of Directors of the Company or any committee thereof shall have (A) withdrawn or modified in a manner adverse to the Parent or the Purchaser its approval or recommendation of the Offer, the Merger, this Agreement or the Stockholders' Agreement or (B) approved or recommended any Acquisition Proposal, (ii) the Company shall have entered into, or publicly announced its intention to enter into, any agreement with respect to any Acquisition Proposal or (iii) the Board of Directors of the Company or any committee thereof shall have resolved to do any of the foregoing; or (h) any of the representations and warranties of the Company set forth in this Agreement that are qualified as to materiality shall have been breached or not be true and correct in any respect or any such representations and warranties that are not so qualified shall have been breached or not be true and correct in any material respect, in each case at the date of the Agreement (except to the extent that any such representation or warranty refers specifically to another date, in which case such representation or warranty shall be true and correct as of such other date); or (i) except as to matters which are attributable to the announcement or performance of this Agreement and the transactions contemplated hereby, any of the representations and warranties of the Company set forth in this Agreement that are qualified as to having or resulting in a Material Adverse Effect shall have been breached or not be true and correct in any respect or any such representations and warranties that are not so qualified shall have been breached or not be true and correct and the effect of such breach or failure to be true or correct shall be that the matter shall have a Material Adverse Effect, in each case at the scheduled or extended expiration of the Offer (except to the extent that any such representation or warranty refers specifically to another date, in which case such representation or warranty shall be true and correct as of such other date); or (j) this Agreement shall have been terminated in accordance with its terms. A-3 61 The foregoing conditions are for the sole benefit of the Parent and the Purchaser (and the other affiliates of the Parent) and may be asserted by the Parent and the Purchaser (and the other affiliates of the Parent) regardless of the circumstances giving rise to any such condition and may be waived by the Parent or the Purchaser, in whole or in part, at any time and from time to time, in their sole discretion. The failure by the Parent or the Purchaser at any time to exercise any of the foregoing rights will not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts and circumstances and each such right will be deemed an ongoing right that may be asserted at any time and from time to time. Terms used in this ANNEX I but not defined herein shall have the meanings assigned to such terms in the Agreement of which this ANNEX I is a part. A-4 EX-99.(C)(2) 12 STOCKHOLDER'S AGREEMENT DATED OCTOBER 21, 1998 1 Exhibit (c)(2) STOCKHOLDERS' AGREEMENT THIS STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of October 21, 1998, is made by and among EG&G, Inc., a Massachusetts corporation (the "Parent"), Lighthouse Weston Corp., a Delaware corporation and a wholly owned subsidiary of the Parent (the "Purchaser"), and the holders (the "Stockholders") of the shares of Common Stock, $0.01 par value (the "Shares"), of Lumen Technologies, Inc., a Delaware corporation (the "Company"), listed on SCHEDULE A hereto. WHEREAS, concurrently herewith, the Parent, the Purchaser and the Company are entering into an Agreement and Plan of Merger (as it may be amended from time to time in the future in accordance with its terms, the "Merger Agreement"), pursuant to which the Purchaser agrees to make a tender offer (the "Offer") for all of the Shares at $7.75 per share, net to the seller in cash, to be followed by the merger of the Purchaser with and into the Company (the "Merger"), with the Company being the entity surviving the Merger and becoming a wholly owned subsidiary of the Parent; and WHEREAS, in order to induce the Parent and the Purchaser to enter into the Merger Agreement, the Parent and the Purchaser have requested the Stockholders, and the Stockholders have agreed, to enter into this Agreement; NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I AGREEMENT TO TENDER Section 1.1 TENDER OF SHARES. Each Stockholder hereby agrees to validly tender, and not to withdraw, pursuant to and in accordance with the terms of the Offer, (i) within five business days after the commencement of the Offer, all Shares owned by such Stockholder as of the execution and delivery of this Agreement (as indicated on SCHEDULE A hereto) and, (ii) prior to the scheduled expiration of the Offer, any additional Shares hereafter acquired by such Stockholder (whether by purchase, exercise of options or otherwise). Section 1.2 PROCEDURE FOR TENDERING. Within the time periods specified in Section 1.1, the Stockholder shall deliver to the depositary designated in the Offer (i) a duly completed and signed letter of transmittal with respect to the Shares required to be tendered pursuant to Section 1.1, (ii) certificates representing such Shares and (iii) all other documents or instruments required to be delivered pursuant to the terms of the Offer. 2 Section 1.3 PAYMENT OF OFFER PRICE. The parties agree that each Stockholder will, for all Shares tendered in the Offer and accepted for payment and paid for by the Purchaser, receive the same per share consideration paid to other stockholders of the Company who have tendered Shares into the Offer. ARTICLE II VOTING AGREEMENT; IRREVOCABLE GRANT OF PROXY Section 2.1 VOTING AGREEMENT. Each Stockholder hereby agrees to vote all Shares that such Stockholder is entitled to vote at the time of any vote to approve and adopt the Merger Agreement, the Merger and all agreements related to the Merger and any actions related thereto at any meeting of the stockholders of the Company, and at any adjournment thereof (or by written consent in lieu of a meeting), at which such Merger Agreement and other related agreements (or any amended version thereof), or such other actions, are submitted for the consideration and vote of the stockholders of the Company. Each Stockholder hereby agrees that it will not vote (or give a written consent with respect to) any Shares in favor of the approval of any (i) Acquisition Proposal, (ii) reorganization, recapitalization, liquidation or winding up of the Company or any other extraordinary transaction involving the Company, (iii) corporate action the consummation of which would frustrate the purposes, or prevent or delay the consummation, of the transactions contemplated by the Merger Agreement, or (iv) other matter relating to, or in connection with, any of the foregoing matters. Section 2.2 IRREVOCABLE PROXY. Each Stockholder hereby revokes any and all previous proxies granted with respect to such Stockholder's Shares. Each Stockholder hereby grants a proxy appointing the Purchaser as such Stockholder's attorney-in-fact and proxy, with full power of substitution, for and in such Stockholder's name, to vote, express consent or dissent, or otherwise to utilize such voting power in such manner and upon such matters as the Purchaser or its proxy or substitute shall, in the Purchaser's sole discretion, deem proper with respect to such Stockholder's Shares. The proxy granted by each Stockholder pursuant to this Section 2.2 is irrevocable and is granted in consideration of the Purchaser's entering into this Agreement and the Merger Agreement and incurring certain related fees and expenses. The proxy grant by each Stockholder shall be revoked upon termination of this Agreement in accordance with its terms. At the Purchaser's request, each Stockholder shall perform such further acts and execute such further documents as may reasonably be required to vest in the Purchaser the sole power to vote the Shares during the term of the proxy granted herein. -2- 3 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS Each of the Stockholders severally represents and warrants to the Purchaser that: Section 3.1 VALID TITLE. Such Stockholder is the sole, true, lawful beneficial owner of such Stockholder's Shares with no restrictions on such Stockholder's voting rights or rights of disposition pertaining thereto, other than restrictions imposed under applicable securities laws. None of such Stockholder's Shares is subject to any voting trust or other agreement or arrangement with respect to the voting of such Shares. Section 3.2 NON-CONTRAVENTION. The execution, delivery and performance by such Stockholder of this Agreement and the consummation of the transactions contemplated hereby (i) are within such Stockholder's powers, have been duly authorized by all necessary action (including any consultation, approval or other action by or with any other person), (ii) require no action by or in respect of, or filing with, any governmental body, agency, official or authority (except as required under Section 16 of the Exchange Act), and (iii) do not and will not contravene or constitute a default under, or give rise to a right of termination, cancellation or acceleration of any right or obligation of such Stockholder or to a loss of any benefit of such Stockholder under, any statute, rule or regulation applicable to such Stockholder, or injunction, order, decree, or other instrument binding on such Stockholder or result in the imposition of any lien on any asset of such Stockholder. Section 3.3 BINDING EFFECT. This Agreement has been duly executed and delivered by such Stockholder and is the valid and binding agreement of such Stockholder, enforceable against such Stockholder in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights generally and except as may be limited by general principles of equity which may limit the availability of remedies (whether in a proceeding at law or in equity). If this Agreement is being executed in a representative or fiduciary capacity, the person signing this Agreement has full power and authority to enter into and perform such Agreement. Section 3.4 TOTAL SHARES. The number of Shares set forth on SCHEDULE A hereto are the only Shares legally or beneficially owned by such Stockholder and, except as set forth on SCHEDULE A or Section 4.3 of the Disclosure Schedule, such Stockholder owns no options to purchase or rights to subscribe for or otherwise acquire any securities of the Company and has no other interest in or voting rights with respect to any securities of the Company. -3- 4 Section 3.5 FINDER'S FEES. No investment banker, broker or finder is entitled to a commission or fee from the Company in respect of this Agreement based upon any arrangement or agreement made by or on behalf of such Stockholder. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE PARENT Each of the Purchaser and the Parent represents and warrants to each of the Stockholders that the Purchaser and the Parent has all requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution, delivery and performance by each of the Purchaser and the Parent of this Agreement and the consummation by the Purchaser and the Parent of the transactions contemplated hereby have been duly authorized by the Board of Directors of each of the Purchaser and the Parent, and no other corporate action on the part of the Purchaser or the Parent is necessary to authorize the execution, delivery or performance by the Purchaser and the Parent of this Agreement and the consummation by the Purchaser and the Parent of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Purchaser and the Parent and is a valid and binding agreement of the Purchaser and the Parent, enforceable against each of them in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights generally and except as may be limited by general principles of equity which may limit the availability of remedies (whether in a proceeding at law or in equity). ARTICLE V COVENANTS OF THE STOCKHOLDERS Each of the Stockholders hereby covenants and agrees that: Section 5.1 NO PROXIES FOR OR ENCUMBRANCES ON STOCKHOLDER SHARES. Except as provided in this Agreement, such Stockholder shall not, during the term of this Agreement, without the prior written consent of the Purchaser, directly or indirectly, (i) grant any proxies or enter into any voting trust or other agreement or arrangement with respect to the voting of any Shares or (ii) except for any transfer by gift of options to acquire Shares by the Stockholder to any charitable organization made with the prior written consent of the Purchaser, sell, assign, transfer, encumber or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to the direct or indirect sale, assignment, transfer, encumbrance or other disposition of, any Shares. Such Stockholder shall not seek or solicit any such sale, assignment, transfer, encumbrance or other disposition or any -4- 5 such contract, option or other arrangement or assignment or understanding and agrees to notify the Purchaser promptly and to provide all details required by the Purchaser if such Stockholder shall be approached or solicited, directly or indirectly, by any person with respect to any of the foregoing. Section 5.2 CONDUCT OF STOCKHOLDERS. Such Stockholder will not (i) take, agree or commit to take any action that would make any representation and warranty of such Stockholder hereunder inaccurate in any respect as of any time prior to the termination of this Agreement or (ii) omit, or agree or commit to omit, to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time. ARTICLE VI MISCELLANEOUS Section 6.1 EXPENSES. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. Section 6.2 FURTHER ASSURANCES. Except as otherwise provided in the Merger Agreement, the Stockholders will each execute and deliver or cause to be executed and delivered all further documents and instruments and use their respective best efforts to secure such consents and take all such further action as may be reasonably necessary in order to consummate the transactions contemplated hereby or to enable the Purchaser and any assignee to exercise and enjoy all benefits and rights of the Stockholders with respect to the Stockholder Shares. Section 6.3 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws and regulations and which may be required under any agreements, contracts, commitments, instruments, understandings, arrangements or restrictions of any kind to which such party is a party or by which such party is governed or bound, to consummate and make effective the transactions contemplated by this Agreement. Section 6.4 SPECIFIC PERFORMANCE. The parties hereto agree that the Purchaser may be irreparably damaged if for any reason any Stockholder failed to perform any of its obligations under this Agreement, and that the Purchaser would not have any adequate remedy at law for money damages in such event. Accordingly, the Purchaser shall be entitled to specific performance and injunctive and other equitable relief to enforce the performance of this Agreement by each Stockholder. This provision is without prejudice to any other rights that the Purchaser may have -5- 6 against any Stockholder for any failure to perform its obligations under this Agreement. Section 6.5 NOTICES. All notices, requests, claims, demands and other communications hereunder shall be deemed to have been duly given when delivered in person, by telecopy, or by registered or certified mail (postage prepaid, return receipt requested) or by reputable overnight courier: if to the Parent or the Purchaser, at its address set forth below its signature hereto; and if to a Stockholder, to such Stockholder at his address set forth on SCHEDULE A hereto. Section 6.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties contained in this Agreement shall survive delivery of and payment for the Stockholder Shares. Section 6.7 AMENDMENTS; TERMINATION; EXPIRATION. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by the parties hereto. This Agreement may be terminated by the Parent and the Purchaser upon written notice to the Stockholders. This Agreement and the Stockholder's obligations hereunder shall expire on the first to occur of (a) the Effective Time and (b) the termination of the Merger Agreement in accordance with its terms. Section 6.8 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that Purchaser may assign its rights and obligations to any affiliate of Purchaser and provided, further, that no Stockholder may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the Purchaser. Section 6.9 GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the law of the State of Delaware without given effect to the principles of conflicts of laws thereof. Section 6.10 COUNTERPARTS. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instruments. Section 6.11 PARENT GUARANTY. Parent hereby unconditionally guarantees the Purchaser's obligations under this Agreement and agrees to be liable for any breach of this Agreement by the Purchaser or any permitted assignee of the Purchaser. Section 6.12 HEADINGS. The headings and captions used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. -6- 7 Section 6.13 OBLIGATIONS SEPARATE. The obligations of the Stockholders hereunder are several and not joint. Section 6.14 DEFINED TERMS. Capitalized terms used in this Agreement and not otherwise defined shall have the meaning given to such terms in the Merger Agreement. Section 6.15 BENEFICIALLY OWNED SHARES. To the extent that any Stockholder is the beneficial owner, but not the record owner, of any Shares subject to this Agreement, such Stockholder shall take any and all action necessary to cause the record owner of such Shares to satisfy each of the Stockholder's obligations hereunder with respect to such Shares. Section 6.16 CERTAIN PAYMENTS. Each of Martin E. Franklin and Ian G.H. Ashken, severally and not jointly, acknowledges and agrees that, upon his receipt of the payments listed in Section 6.13 of the Disclosure Schedule as being payable to him, neither the Company nor any Subsidiary will have any further obligation to such Stockholder other than (a) pursuant to Company Options held by such Stockholder as set forth in Section 4.3 of the Disclosure Schedule or (b) as otherwise expressly provided for or disclosed in the Merger Agreement or the Disclosure Schedule. [Remainder of page intentionally left blank.] -7- 8 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. PARENT: EG&G, INC. By: /s/ Gregory L. Summe ----------------------------------- Name: Gregory L. Summe Title: President and Chief Operating Officer Address: 45 William Street Wellesley, MA 02181 copy to: Hale and Dorr LLP 60 State Street Boston, MA 02109 Attn: David E. Redlick, Esq. PURCHASER: LIGHTHOUSE WESTON CORP. By: /s/ Daniel T. Heaney ----------------------------------- Name: Daniel T. Heaney Title: Treasurer Address: 45 William Street Wellesley, MA 02181 STOCKHOLDERS: /s/ Martin Franklin --------------------------------------- Martin E. Franklin /s/ Ian Ashken --------------------------------------- Ian G.H. Ashken /s/ Richard D. Capra --------------------------------------- Richard D. Capra /s/ George B. Clairmont --------------------------------------- George B. Clairmont -8- 9 SCHEDULE A Stockholder Name and Address Number of Shares - ---------------------------- ---------------- Martin E. Franklin 647,807 62 Rye Ridge Road Harrison, New York 10528 Ian G.H. Ashken 100,000 22 Blue Water Hill Westport, Connecticut 06880 Richard D. Capra 3,750 5764 Diamond Point Circle El Paso, TX 79912 George B. Clairmont 392,127* 1172 Park Avenue Apartment 2A New York, New York 10028 - ---------- * Includes Shares held by Mr. Clairmont in a representative capacity, which Mr. Clairmont represents is no more than 150,000 Shares (which Shares are not subject to this Agreement). -9- EX-99.(C)(3) 13 CONFIDENTIALITY AGREEMENT 1 Exhibit (c)(3) [LUMEN TECHNOLOGIES, INC. LETTERHEAD] June 9, 1998 EG&G, Inc. 45 Williams Street Wellesley, MA 02181 Attn: Angelo Castalana Re: Reciprocal Confidentiality Agreement Dear Mr. Castalana: In connection with the consideration by Lumen (as defined below) and EGG (as defined below) of a possible transaction (the "Transaction") involving Lumen and EGG, Lumen and EGG will each provide the other with confidential information. In consideration of the mutual covenants contained in this agreement, each party agrees as follows: 1. Definitions (a) "Confidential Information" means all information (whether written, oral or in any other form and whether prepared by the Disclosing Party, any of its representatives or otherwise), other than Exempt Information, which is provided by the Disclosing Party or any of its representatives to the Recipient or any of its representatives before the end of the Disclosure Period in connection with the Recipient's consideration of a possible Transaction. For purposes of this agreement, Confidential Information also includes all summaries, notes, studies, interpretations or other materials prepared by the Recipient or any of its Permitted Users (as defined below) that contain or are based upon, in whole or in part, any of the information referred to in the preceding sentence (the "Notes"). (b) "Disclosure Period" means the period beginning on the date hereof and ending on the first anniversary of the date of this letter, provided that the 1 2 Disclosure Period may be terminated earlier by mutual agreement of the parties or upon the written request of either party. (c) "EXEMPT INFORMATION" means information which (i) the Recipient can prove or document it possessed on a non-confidential basis before the Disclosing Party disclosed it to the Recipient under this agreement and where the provider of such information to the Recipient was not known by the Recipient to be subject to any confidentiality obligation to any person with respect to such information, (ii) is or becomes generally available to the public other than as a result of disclosure by the Recipient or any of its Permitted Users in violation of this agreement; or (iii) the Recipient obtains from a third party on a non-confidential basis (to the Recipient's knowledge) that did not obtain the information directly or indirectly from the Disclosing Party and was not known by the Recipient to be subject to any confidentiality obligation to any person with respect to such information. (d) "PERMITTED USE" means the evaluation of possible Transaction between Lumen and EGG. (e) "PERMITTED USER" means an individual who (i) is a director, officer, employee, agent, advisor or consultant of or to the Recipient or any of its Affiliates; (ii) has agreed to be bound by the terms of this agreement as if he or she were a "RECIPIENT" hereunder and a party hereto; and (iii) has a need to know the Confidential Information in connection with the Permitted Use. In addition, with respect to Confidential Information that the Disclosing Party believes is unusually sensitive due to commercial, legal or other factors, as a condition to the Disclosing Party's provision of such information to the Recipient, the Disclosing Party and the Recipient will mutually agree upon a limited number of specific individuals to receive such information on behalf of the Recipient, and, with respect to such information (and related Notes), only such specified individuals shall be Permitted Users. (f) "EGG" means EG&G, Inc. and its Affiliates. (g) "LUMEN" means Lumen Technologies, Inc. and its Affiliates. (h) "AFFILIATES" means, with respect to each party, the legal entities that control, are controlled by, or are under common control with such party. (i) "RECIPIENT" means the party to which (or to the representatives of which) Confidential Information is disclosed by the other party. (j) "DISCLOSING PARTY" means the party which discloses (or on whose behalf information is disclosed) Confidential Information to the other party. 2 3 2. Treatment of Confidential Information (a) The Recipient will treat Confidential Information as confidential and proprietary, and the Recipient will safeguard its confidential and proprietary nature with at least the same degree of care as the Recipient treats its own confidential or proprietary information. In addition, the Recipient will comply with the other provisions of this agreement and take or abstain from taking various actions as herein set forth. (b) The Recipient and its Permitted Users may use, copy and make extracts of Confidential Information, or otherwise use, make and copy Notes, only in connection with the Permitted Use, and for no other purpose. Without limiting the generality of the foregoing, the Recipient and its Permitted Users shall not use Confidential Information to divert or attempt to divert any business of the Disclosing Party. (c) The Recipient will not disclose Confidential Information to, or permit it to be accessed by, any person except Permitted Users who have a need to know it in connection with the Permitted Use. The Disclosing Party may waive the restrictions of this paragraph 2(c) on a case-by-case basis to provide for specific disclosures to specific third parties. The waiver must be in writing signed by an officer of the Disclosing Party. The Recipient will ensure that each of its Permitted Users complies fully with the provisions of this agreement. (d) Neither party will disclose that discussions between the parties are taking place concerning a possible Transaction, or any aspect of, or any other matter relating to, such discussions, to any third party without the other's prior written consent; provided, that, after consultation with the other party (to the extent such consultation is reasonably practicable), each party may disclose such information to the extent required by law or by agreement with a national securities exchange, in the opinion of such party's legal counsel. (e) At the end of the Disclosure Period, or earlier if the Disclosing Party so requests, the Recipient will (i) promptly return to the Disclosing Party all Confidential Information provided by or on behalf of the Disclosing Party to the Recipient (or any of its Permitted Users) and all Notes (including, without limitation, all Notes created or prepared by its Permitted Users) and, except as set forth in paragraph 2(f), the Recipient will destroy all copies of Confidential Information and all copies of all Notes then in the Recipient's possession or under the Recipient's control (including, without 3 4 limitation, all copies and Notes provided to, or made by, any Permitted User) and (ii) provide the Disclosing Party with a written statement of an officer of the Recipient indication that the Recipient has complied with the requirements of this paragraph 2(e). (f) Notwithstanding paragraph 2(e), the Recipient's outside counsel may retain a single copy of Confidential Information and Notes for the sole purpose of ascertaining the Recipient's ongoing rights and responsibilities respecting such information. (g) In the event that the Recipient or any of its Permitted Users becomes legally compelled pursuant to judicial or administrative subpoena or process of other legal obligation to disclose any Confidential Information supplied to it or any of its Permitted Users or any Notes, the Recipient (or such Permitted User) shall provide the Disclosing Party with prompt notice of any such subpoena, process or obligation, so that the Disclosing Party may seek an appropriate protective order and/or waive the Recipient's compliance with the provisions of this agreement. If in the absence of a protective order or the receipt of a waiver hereunder, the Recipient or such Permitted User is nonetheless, in the opinion of its legal counsel, compelled to disclose any such Confidential Information or else stand liable for contempt or suffer other censure or penalty, notwithstanding any other provision of this agreement to the contrary, the Recipient or such Permitted User may disclose only that portion of the Confidential Information that, in the opinion of its legal counsel, it is legally required to disclose without liability hereunder. 3. Other Matters (a) Each party represents and warrants to the other that it has the legal power and authority to enter into and perform under this agreement and that such performance (including, without limitation, the delivery of Confidential Information hereunder) will not violate the rights, or require the consent, of any third party. (b) Neither this agreement, nor either party's performance under it, nor any other written or oral agreement or expression with respect to a possible Transaction, will (i) transfer to the Recipient, or create in the Recipient, any proprietary right, title, interest or claim in or to any Confidential Information; (ii) obligate either party to enter into any other agreement or impose any legal obligation on Lumen or EGG with respect to any Transaction (it being understood that no such obligations will arise unless and until a definitive agreement with respect to a Transaction is approved by Lumen and EGG and executed and delivered by such parties); or (iii) prohibit either party from entering into any other agreement if the 4 5 execution and performance of such agreement would not violate such party's obligations hereunder. (c) Subject to the earlier termination of obligations under this agreement, the Recipient's obligations under this agreement shall terminate automatically on the third (3rd) anniversary of the date of this agreement. (d) This agreement sets forth the parties' entire understanding about its subject matter and supersedes any other agreement or understanding, whether verbal or in writing, between the parties about its subject matter. Neither party can assign, amend, waive or terminate any part of this agreement except by writing signed by both parties. (e) This agreement shall be governed by, and construed and enforced in accordance with, the law of the State of New York, excluding its conflict of law rules. (f) Lumen and EGG acknowledge that certain information may not be provided to the other party unless and until the parties are engaged in more definitive discussions concerning the Transaction, it being understood that, as set forth in paragraph 3(b), neither party is obligated to pursue any such discussions or Transaction. Each party acknowledges that, except as specifically proved herein, neither party has made any promise to the other, express or implied, upon which either is entitled to rely in any way, and, except as specifically provided herein, the parties specifically waive and disclaim any reliance, dependence or action based on any written or verbal statement or promise made by either party to the other. Without limiting the generality of the foregoing, it is understood that none of Lumen, EGG or any of their Permitted Users (i) has made any representation or warranty, express or implied, with respect to the accuracy or completeness of the Confidential Information or any statement, fact, estimate, projection, assumption or other information contained therein or (ii) will have any liability whatsoever to any other person relating to or resulting from the use of any Confidential Information or any errors therein or omissions therefrom. (g) Each of Lumen and EGG agrees that neither it nor any of its Affiliates will solicit to employ any officers or employees employed in any of the current business of the other party and its Affiliates with whom the soliciting party or any of its representatives has had contact or who were otherwise identified to the soliciting party or any of its representatives during the period of its evaluation of a possible Transaction for a period of two (2) years following any termination of this agreement, except through general solicitations (through employee search firms or otherwise) not targeted to officers or employees of the other party or its Affiliates, it being understood that responding to unsolicited indications of interest from such 5 6 officers or employees will not be deemed solicitation for purposes of this paragraph 3(g). (h) Each of Lumen and EGG acknowledge that they are aware of the securities laws of the United States relating to the use of material, non-public information. (i) The parties agree that money damages would not be sufficient remedy for any breach of this agreement by either party, and that in addition to all other remedies each party shall be entitled to specific performance and injunctive or other equitable relief as a remedy for any such breach by the other. Each party further agrees to waive, and to use its best efforts to cause its Permitted Users to waive, any requirement for the securing or posting of any bond in connection with such remedy. In the event of litigation relating to this agreement, if a court of competent jurisdiction determines that either party or any of its Permitted Users has breached this agreement, the breaching party shall be liable and pay to the other party the reasonable legal fees incurred by the other party in connection with such litigation. If the foregoing terms are acceptable, please return the enclosed copy of this agreement signed by a duly authorized officer. Very truly yours, LUMEN TECHNOLOGIES, INC. By: /s/ Martin E. Franklin ------------------------ Signature Name: Martin E. Franklin Title: Chairman ACKNOWLEDGED AND AGREED: E,G&G, Inc. By: /s/ Angelo D. Castellana ------------------------------ Signature Name: Angelo D. Castellana Title: Senior Vice President 6 -----END PRIVACY-ENHANCED MESSAGE-----