0000912057-01-533341.txt : 20011009
0000912057-01-533341.hdr.sgml : 20011009
ACCESSION NUMBER: 0000912057-01-533341
CONFORMED SUBMISSION TYPE: S-4/A
PUBLIC DOCUMENT COUNT: 7
FILED AS OF DATE: 20010925
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: TERADYNE INC
CENTRAL INDEX KEY: 0000097210
STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825]
IRS NUMBER: 042272148
STATE OF INCORPORATION: MA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: S-4/A
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-68728
FILM NUMBER: 1743928
BUSINESS ADDRESS:
STREET 1: 321 HARRISON AVE
STREET 2: MAIL STOP H93
CITY: BOSTON
STATE: MA
ZIP: 02118
BUSINESS PHONE: 6174822700
MAIL ADDRESS:
STREET 1: 321 HARRISON AVENUE
STREET 2: H93
CITY: BOSTON
STATE: MA
ZIP: 02118
S-4/A
1
a2059472zs-4a.txt
S-4/A
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 2001
REGISTRATION NO. 333-68728
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TERADYNE, INC.
(Exact Name of Registrant as Specified in Its Charter)
MASSACHUSETTS 3825 04-2272148
(State or Other Jurisdiction (Primary Standard Industrial (IRS Employer
of Classification Code Number) Identification No.)
Incorporation or Organization)
321 HARRISON AVENUE, BOSTON, MA 02118
(617) 482-2700
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
THOMAS S. GRILK
VICE PRESIDENT AND GENERAL COUNSEL
TERADYNE, INC.
321 HARRISON AVENUE
BOSTON, MA 02118
(617) 482-2700
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
------------------------
COPY TO:
Kevin M. Barry, Esq. Constantine Alexander, Esq.
Testa, Hurwitz & Thibeault, LLP James E. Dawson, Esq.
125 High Street Nutter, McClennen & Fish, LLP
Boston, Massachusetts 02110 One International Place
(617) 248-7000 Boston, Massachusetts 02110
(617) 439-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At the
effective time of the merger of a wholly-owned subsidiary of the Registrant with
and into GenRad, Inc., which shall occur as soon as practicable after the
effective date of this Registration Statement and the satisfaction of all
conditions to the closing of the merger.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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PROSPECTUS
OF TERADYNE, INC.
AND
PROXY STATEMENT
FOR A
SPECIAL MEETING OF SHAREHOLDERS
OF GENRAD, INC.
[TERADYNE, INC. LOGO] [GENRAD, INC. LOGO]
To the shareholders of GenRad:
The board of directors of GenRad, Inc. has approved a merger agreement which
provides for the acquisition of GenRad by Teradyne, Inc. We are seeking your
vote on this important transaction.
If the merger is completed, GenRad shareholders will receive 0.1733 of a
share of Teradyne common stock for each share of GenRad common stock that they
own. Teradyne shareholders will continue to own their existing shares after the
merger. Teradyne common stock is traded on the New York Stock Exchange under the
symbol "TER."
We cannot complete the merger unless GenRad shareholders approve the merger
agreement. Approval of the merger agreement requires the affirmative vote of the
holders of two-thirds of the outstanding shares of GenRad common stock. YOUR
VOTE IS VERY IMPORTANT. There will be a special meeting of GenRad shareholders
held for the purpose of voting on the merger agreement. Whether or not you plan
to attend the special meeting, please take the time to vote on the proposal to
approve the merger agreement by completing and mailing the enclosed proxy card
to us. THE GENRAD BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
THE APPROVAL OF THE MERGER AGREEMENT. Teradyne shareholders are not being asked
to vote on the merger agreement because their approval is not required.
The special meeting of GenRad shareholders will be held on Friday,
October 26, 2001 at GenRad's executive offices, 7 Technology Park Drive,
Westford, MA 01886 at 11:00 a.m., EDT.
SHAREHOLDERS ARE URGED TO READ THE DETAILED INFORMATION ABOUT THE MERGER
CONTAINED IN THIS PROXY STATEMENT - PROSPECTUS, INCLUDING THOSE MATTERS
DISCUSSED IN "RISK FACTORS" BEGINNING ON PAGE 13.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED THE SHARES TO BE ISSUED IN THE MERGER AND
DESCRIBED IN THIS PROXY STATEMENT - PROSPECTUS OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROXY STATEMENT - PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This proxy statement - prospectus is dated September 25, 2001 and was first
mailed to GenRad's shareholders on or about September 25, 2001.
Robert M. Dutkowsky
Chairman, President and Chief Executive Officer
GenRad, Inc.
GENRAD, INC.
7 Technology Park Drive
Westford, Massachusetts 01886
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 26, 2001
A special meeting of shareholders of GenRad, Inc. will be held at the
company's principal executive offices at 7 Technology Park Drive, Westford,
Massachusetts on Friday, October 26, 2001 at 11:00 a.m. EDT.
The special meeting will be held to consider and act upon a proposal to
approve the Agreement and Plan of Merger dated as of August 1, 2001 among
GenRad, Teradyne, Inc. and Radio Acquisition Corp., a wholly-owned subsidiary of
Teradyne that will merge into GenRad. Teradyne proposes to acquire GenRad by
exchanging shares of Teradyne common stock for all of the outstanding shares of
GenRad common stock, as more fully described in the attached proxy
statement - prospectus. A copy of the merger agreement is included in the proxy
statement - prospectus as Appendix A.
Approval of the merger agreement requires the affirmative vote of the
holders of two-thirds of the outstanding shares of GenRad common stock. The
GenRad board of directors has fixed the close of business on September 19, 2001
as the record date for the determination of GenRad shareholders who will be
entitled to notice of and to vote at the special meeting.
YOUR PROXY VOTE IS VERY IMPORTANT. Whether or not you plan to attend the
special meeting, you are requested to vote, date and sign the enclosed proxy and
promptly return it in the enclosed postage-paid envelope at your earliest
convenience prior to the special meeting.
THE GENRAD BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE MERGER AGREEMENT.
If the action proposed is approved by the GenRad shareholders at the special
meeting and effected by GenRad and Teradyne, any GenRad shareholder:
- who files with GenRad, before the taking of the vote on the approval of
the merger agreement, a written objection to the proposed action stating
that he intends to demand payment for his shares if the action is taken,
and
- whose shares are not voted in favor of the action,
has or may have the right to demand in writing from GenRad, within 20 days after
the date GenRad mails to him a notice that the merger has become effective,
payment for his shares and an appraisal of the value thereof. GenRad and any
dissenting shareholder shall have the rights and duties and shall follow the
procedure set forth in sections 85 to 98, inclusive, of the Massachusetts
Business Corporation Law, a copy of which is attached as Appendix B to the
accompanying proxy statement - prospectus.
By Order of the Board of Directors,
Walter A. Shephard, Clerk
Westford, Massachusetts September 25, 2001
TABLE OF CONTENTS
PAGE
--------
SUMMARY..................................................... 3
The Companies............................................. 3
Merger Transaction........................................ 3
What Holders of GenRad Common Stock Will Receive.......... 3
Material Federal Income Tax Consequences of the Merger.... 4
Appraisal Rights.......................................... 4
Teradyne's Reasons for the Merger......................... 4
GenRad's Reasons for the Merger........................... 4
Recommendation to GenRad Shareholders..................... 5
Vote Required to Approve the Merger Agreement............. 5
Risk Factors.............................................. 5
Interests of Certain Persons in the Merger................ 5
Required Regulatory Approvals............................. 5
Accounting Treatment...................................... 5
Conditions to the Completion of the Merger................ 6
Termination of the Merger Agreement....................... 6
Termination Fee........................................... 7
Forward-Looking Statements in this Proxy
Statement-Prospectus.................................... 7
Selected Financial Data of Teradyne and GenRad............ 8
Selected Historical and Pro Forma Comparative Per Share
Data.................................................... 11
Market Price Information.................................. 12
RISK FACTORS................................................ 13
GENRAD SPECIAL MEETING...................................... 20
Date, Time and Place...................................... 20
Record Date and Voting Rights............................. 20
Quorum and Voting of Proxies.............................. 20
Revoking Proxies.......................................... 20
Solicitation Expenses..................................... 21
Shareholder Vote Required................................. 21
Recommendation of GenRad Board............................ 21
Appraisal Rights.......................................... 21
THE MERGER.................................................. 22
General................................................... 22
Background of the Merger.................................. 22
Recommendation of the GenRad Board........................ 26
GenRad's Reasons for the Merger........................... 26
Teradyne's Reasons for the Merger......................... 28
Opinion of GenRad's Financial Advisor..................... 29
Interests of Certain Persons in the Merger; Differing
Interests............................................... 36
Employees of GenRad after the Merger...................... 38
Required Regulatory Approvals............................. 38
Accounting Treatment...................................... 38
Appraisal Rights.......................................... 38
How to Surrender and Receive the Merger Consideration in
Exchange for GenRad Common Stock........................ 40
Resales by Affiliates of GenRad........................... 41
i
PAGE
--------
THE MERGER AGREEMENT........................................ 42
Effect of the Merger...................................... 42
Exchange of Shares........................................ 42
Exchange of Stock Certificates............................ 43
Representations and Warranties............................ 44
Certain Covenants......................................... 44
No Other Negotiations..................................... 46
Conditions to Completion of the Merger.................... 47
Termination of the Merger Agreement....................... 49
Termination Fee; Reimbursement of Expenses................ 50
Amendment and Waiver...................................... 50
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.................... 51
Tax Consequences of the Merger............................ 51
Cash Received in Lieu of a Fractional Share of Teradyne
Common Stock............................................ 52
Backup Withholding........................................ 52
If the Merger Were Not Treated as a Reorganization........ 52
TRADING PRICE OF TERADYNE AND GENRAD COMMON STOCK........... 54
COMPARISON OF THE RIGHTS OF THE HOLDERS OF TERADYNE
COMMON STOCK AND HOLDERS OF GENRAD COMMON STOCK........... 55
Authorized Capital Stock.................................. 55
Description of Teradyne Common Stock...................... 55
TERADYNE.................................................... 58
GENRAD...................................................... 60
BENEFICIAL SHAREHOLDERS OF GENRAD........................... 61
LEGAL MATTERS............................................... 63
EXPERTS..................................................... 63
OTHER MATTERS............................................... 63
WHERE YOU CAN FIND MORE INFORMATION......................... 63
Teradyne SEC Filings...................................... 64
GenRad SEC Filings........................................ 64
APPENDIX A--Agreement and Plan of Merger.................... A-1
APPENDIX B--Massachusetts General Laws Relating to Appraisal
Rights.................................................... B-1
APPENDIX C--Opinion of William Blair & Company, L.L.C....... C-1
ii
ANSWERS TO FREQUENTLY ASKED QUESTIONS ABOUT THE MERGER
Q: WHAT DO I NEED TO DO NOW?
A: Just mail your completed and signed proxy card in the enclosed return
envelope as soon as possible so that your shares may be represented at the
special meeting. To assure that your vote is obtained, please give your
proxy as instructed on your proxy card even if you currently plan to attend
the meeting in person.
Q: WHAT SHOULD I DO IF I WANT TO CHANGE MY VOTE?
A: Just send in a later-dated signed proxy card to GenRad's Clerk before the
special meeting or attend the special meeting in person and vote. Please
note, however, that attendance at the special meeting will not alone
constitute a revocation of your proxy. You also may revoke your proxy by
sending a notice of revocation to GenRad's Clerk at the address designated
on this page under "Who Can Help Answer Your Questions."
Q: MY SHARES ARE HELD IN MY BROKER'S NAME. WILL MY BROKER VOTE MY SHARES FOR ME?
A: A broker generally can't exercise authority to vote on the merger agreement
on your behalf unless you have a special arrangement. As a result, your
broker will vote your shares only if you provide instructions on how to
vote. You should follow the directions provided by your broker regarding how
to instruct your broker to vote your shares.
Q: WHAT WILL HAPPEN IF I DON'T VOTE?
A: The failure to vote has the same effect as a vote against the approval of the
merger agreement.
Q: DO I NEED TO SEND IN MY STOCK CERTIFICATES AT THIS TIME?
A: No. If the merger is completed, Fleet National Bank, the exchange agent, will
send GenRad shareholders written instructions for exchanging their share
certificates.
WHO CAN HELP ANSWER YOUR QUESTIONS?
If you have questions about the merger, you should contact:
GenRad, Inc.
7 Technology Park Drive
Westford, Massachusetts 01886
Attention: Walter A. Shephard, Clerk
Telephone: (978) 589-7440
SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROXY
STATEMENT - PROSPECTUS. THIS SUMMARY MAY NOT CONTAIN ALL THE INFORMATION THAT IS
IMPORTANT TO YOU. FOR A MORE COMPLETE UNDERSTANDING OF THE PROPOSED MERGER, YOU
SHOULD READ CAREFULLY THIS ENTIRE PROXY STATEMENT - PROSPECTUS AS WELL AS THE
OTHER DOCUMENTS TO WHICH WE REFER. IN ADDITION, FOR INFORMATION ON GENRAD'S AND
TERADYNE'S FILINGS WITH THE SEC, SEE "WHERE YOU CAN FIND MORE INFORMATION" ON
PAGE 63.
THE COMPANIES (SEE PAGES 58-60)
TERADYNE, INC.
321 Harrison Avenue
Boston, Massachusetts 02118
(617) 482-2700
Teradyne is a leading supplier of automatic test equipment and high performance
interconnection products and total systems integration services. Teradyne's
automatic test products are used by manufacturers of semiconductors, circuit
assemblies and voice and broadband telephone networks. Teradyne's
high-technology components and electronic manufacturing services are used by
manufacturers of communications and computing systems central to building
networking infrastructure.
Teradyne was founded in 1960 and is incorporated in Massachusetts.
GENRAD, INC.
7 Technology Drive
Westford, Massachusetts 01886
(978) 589-7000
GenRad is a global leader of electronics manufacturing productivity solutions
for:
- contract and original equipment manufacturers of handheld and wireless
devices, personal computers and business servers;
- DSL and other broadband switching and routing technologies; and
- other devices integral to emerging internet e-commerce markets.
GenRad also applies its technologies to development of diagnostic solutions for
the automotive and general transportation industry.
GenRad operates on a worldwide basis and maintains facilities primarily in the
United States, western Europe and southeast Asia.
GenRad was founded in 1915 and is incorporated in Massachusetts.
RADIO ACQUISITION CORP.
321 Harrison Avenue
Boston, Massachusetts 02118
(617) 482-2700
Radio Acquisition Corp. is a Massachusetts corporation recently organized by
Teradyne for the purpose of completing the merger.
MERGER TRANSACTION (SEE PAGE 42)
The merger agreement provides that Teradyne will acquire GenRad and all of the
outstanding shares of GenRad common stock in exchange for shares of Teradyne
common stock. No fractional shares of Teradyne common stock will be issued as a
result of the merger. You will receive cash for any fractional shares you may
hold as a result of the exchange.
The acquisition will be accomplished through the merger of Radio Acquisition
Corp., a wholly-owned subsidiary of Teradyne, into GenRad.
Upon completion of the merger, GenRad shareholders who do not exercise their
right of appraisal will become shareholders of Teradyne.
The merger agreement is attached to this proxy statement - prospectus as
Appendix A. You are encouraged to read the merger agreement, as it is the legal
document that governs the merger.
WHAT HOLDERS OF GENRAD COMMON STOCK WILL RECEIVE (SEE PAGE 42)
If the merger is completed, GenRad shareholders will have the right to receive
0.1733 of a share of Teradyne common stock in exchange for each share of GenRad
common
3
stock that they own. No fractional shares of Teradyne common stock will be
issued. Instead, GenRad shareholders will receive a check in payment for any
fractional shares based on the average closing sale prices of Teradyne common
stock for the 10 trading days immediately preceding the day the merger is
completed. GenRad shareholders will not receive interest on any cash payments
received in the merger.
As a result of the merger, based on the outstanding shares of Teradyne common
stock as of September 19, 2001, GenRad shareholders will own approximately 2.7%
of outstanding Teradyne common stock.
GenRad shareholders should not send in their stock certificates until instructed
to do so after the merger is completed.
The shares of Teradyne common stock issued in connection with the merger will be
listed on the New York Stock Exchange under the ticker symbol "TER."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (SEE PAGE 51)
The merger is intended to qualify as a tax-free reorganization for federal
income tax purposes.
The material tax consequences to GenRad shareholders if the merger qualifies as
a tax-free reorganization are:
- GenRad shareholders will not have taxable gain or loss on the exchange of
GenRad common stock for Teradyne common stock in the merger except with
respect to cash received for fractional shares;
- the aggregate tax basis of Teradyne common stock received by GenRad
shareholders in the merger (including any fractional shares of Teradyne
common stock for which cash is received) generally will be the same as the
aggregate tax basis of the GenRad common stock exchanged in the merger;
- GenRad shareholders who exercise appraisal rights and receive solely cash
in exchange for their GenRad common stock will generally be subject to tax
on an amount equal to the difference between the cash received and the
adjusted tax basis of their surrendered GenRad common stock; and
- the holding period of the Teradyne common stock that a GenRad shareholder
receives in the merger generally will include the holding period of the
GenRad common stock exchanged for the Teradyne common stock.
APPRAISAL RIGHTS (SEE PAGE 38)
GenRad shareholders are entitled under Massachusetts law to appraisal rights in
connection with the merger. To exercise appraisal rights, a GenRad shareholder
must satisfy the following criteria:
- provide written notice to GenRad before the taking of the vote of the
shareholders on the merger agreement stating his or her intention to
exercise appraisal rights;
- vote against approval of the merger agreement or abstain from voting; and
- comply with other procedures as are required by Sections 85 to 98,
inclusive, of the Massachusetts Business Corporation Law.
A copy of those sections of Massachusetts law are attached to this proxy
statement - prospectus as Appendix B.
TERADYNE'S REASONS FOR THE MERGER (SEE PAGE 28)
Teradyne's board of directors believes the combination of its assembly test
division with GenRad will strengthen Teradyne's product offerings, expand its
global presence and enable Teradyne to compete more effectively in the assembly
test and inspection markets.
GENRAD'S REASONS FOR THE MERGER (SEE PAGE 26)
In reaching its conclusions and recommendation to the GenRad shareholders, the
GenRad board considered a number of factors, including, among others:
4
- GenRad's current financial condition, relationship with its lenders and
its financial resources;
- the economic conditions in the markets in which GenRad operates;
- the financial and other terms of the merger agreement;
- the opportunity offered by a merger with Teradyne, including the premium
offered by Teradyne over GenRad's pre-announcement market price;
- the opinion of William Blair & Company, L.L.C. dated August 1, 2001 to the
GenRad board to the effect that as of that date and based upon and subject
to the matters described in their opinion, the exchange ratio specified in
the merger agreement was fair, from a financial point of view, to GenRad's
shareholders; and
- the lack of realistic possible alternatives to a merger with Teradyne.
RECOMMENDATION TO GENRAD SHAREHOLDERS (SEE PAGE 21)
The GenRad board recommends that you vote "for" the approval of the merger
agreement.
VOTE REQUIRED TO APPROVE THE MERGER AGREEMENT (SEE PAGES 20 AND 21)
The affirmative vote of the holders of two-thirds of the outstanding shares of
GenRad common stock is required to approve the merger agreement.
GenRad directors, executive officers and their affiliates beneficially own,
together, 0.7% of the outstanding shares of GenRad common stock entitled to vote
at the special meeting.
No vote of the Teradyne shareholders is required.
RISK FACTORS (SEE PAGE 13)
You are encouraged to consider the risk factors described elsewhere in this
proxy statement - prospectus in deciding whether to vote in favor of the
proposal to approve the merger agreement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (SEE PAGE 36)
Six of GenRad's officers, in addition to GenRad's Chairman, President and Chief
Executive Officer, are parties to severance agreements and other arrangements
that provide them with interests in the merger that are different from, or in
addition to, the interests of GenRad shareholders as a whole. More specifically,
these executive officers of GenRad have severance and change of control
agreements which will provide these officers with severance payments if their
employment is terminated under certain circumstances following the merger.
As a condition to Teradyne's entering into the merger agreement, Mr. Dutkowsky
has agreed at the effective time of the merger to terminate his employment and
severance agreement with GenRad, but he will be receiving certain other
consideration in connection with his employment with Teradyne following the
merger.
Upon shareholder approval of the merger agreement, the vesting of all of
GenRad's outstanding, unvested stock options, including those held by its
directors and executive officers, will accelerate, and the repurchase rights and
other restrictions relating to options held by Mr. Dutkowsky and outstanding
restricted stock under GenRad's 1994 Director Restricted Stock Plan will
terminate.
REQUIRED REGULATORY APPROVALS (SEE PAGE 38)
Teradyne and GenRad may not complete the merger until the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired or been
terminated by the Department of Justice and the Federal Trade Commission. The
30-day waiting period expired on September 12, 2001. Teradyne and GenRad are
also subject to similar antitrust notification and waiting period laws in other
countries in which they do business.
5
ACCOUNTING TREATMENT (SEE PAGE 38)
Teradyne will treat the merger as a purchase for accounting and financial
reporting purposes, which means that Teradyne will include GenRad's operating
results in its financial statements only from the date of its acquisition of
GenRad.
CONDITIONS TO THE COMPLETION OF THE MERGER
(SEE PAGE 47)
Each of Teradyne's and GenRad's obligation to close the merger are subject to
several conditions, including:
- GenRad's shareholders approving the merger agreement;
- the expiration or termination of the waiting period applicable to the
merger under the Hart-Scott-Rodino Act;
- the absence of restraining orders, injunctions or other orders restraining
or prohibiting the merger;
- the representations and warranties of the other party shall be true and
correct in all material respects and each party shall have performed its
obligations under the merger agreement in all material respects;
- the shares of Teradyne common stock to be issued in connection with the
merger shall have been authorized for listing on the New York Stock
Exchange; and
- the execution by GenRad's Chairman, President and Chief Executive Officer,
Robert M. Dutkowsky, of a termination agreement providing for the
termination of his employment and severance agreements.
In addition, Teradyne's obligation to close the merger is subject to:
- GenRad having obtained all material consents, approvals, authorizations
and orders of governmental entities and third parties to the merger;
- the absence of pending litigation by any governmental entity or any other
person or threatened by any governmental entity seeking to challenge or
restrain the merger or seeking to prohibit or limit Teradyne's ownership
of GenRad's assets, business or common stock; and
- none of the banks who are parties to GenRad's credit facility having
initiated foreclosing proceedings upon any collateral in which they have a
security interest, exercised any right of set-off or exercised any other
similar remedy against or affecting GenRad's business or operations.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 49)
GenRad and Teradyne may agree at any time prior to the day the articles of
merger are filed with the Secretary of the Commonwealth of Massachusetts to
terminate the merger agreement, even if the GenRad shareholders have approved
the merger agreement.
Also, Teradyne or GenRad may terminate the merger agreement if:
- a governmental authority issues a nonappealable final order, decree or
ruling prohibiting the merger;
- the other party materially breaches any representation, warranty, covenant
or other agreement in the merger agreement and such breach cannot be cured
or the breaching party is not taking commercially reasonable steps to
correct such breach;
- the merger is not completed by May 1, 2002; or
- the merger agreement fails to receive the approval of the GenRad
shareholders at the special meeting.
Teradyne may terminate the merger agreement if:
- GenRad's board withdraws or modifies its approval or recommendation of the
merger;
- GenRad fails to promptly mail this proxy statement - prospectus after the
Teradyne registration statement is declared effective;
6
- GenRad recommends an acquisition proposal from a third party; or
- GenRad fails to recommend the rejection of a tender offer or exchange
offer by a third party for more than 10% of the outstanding shares of
GenRad common stock.
GenRad may also terminate the merger agreement if:
- GenRad's board, based on advice of outside legal counsel, determines in
good faith that the failure to terminate the merger agreement would be
inconsistent with its fiduciary duties to GenRad shareholders.
TERMINATION FEE (SEE PAGE 50)
GenRad must pay Teradyne a termination fee of $10,000,000 if:
- the merger agreement is terminated by Teradyne because GenRad's board
failed to recommend, withdrew its approval or recommendation of the
merger, or approved, endorsed or recommended an acquisition proposal from
another party;
- the merger agreement is terminated by GenRad because, in connection with
an acquisition proposal from a third party, GenRad's board, based on
advice of outside legal counsel, determines in good faith that the failure
to terminate the merger agreement would be inconsistent with its fiduciary
duties to GenRad's shareholders; or
- the merger agreement is terminated in certain circumstances and, prior to
such termination, a third party becomes or states its intention to become
the beneficial owner of 10% of GenRad's outstanding common stock.
In the event the termination fee is paid, GenRad must also reimburse Teradyne
for all its reasonable out-of-pocket costs incurred in connection with the
merger agreement up to a maximum of $750,000.
If the merger agreement is terminated by either Teradyne or GenRad because the
other party breached the merger agreement, the breaching party must reimburse
the non-breaching party for actual and reasonable out-of-pocket expenses
incurred in connection with the merger agreement.
FORWARD-LOOKING STATEMENTS IN THIS PROXY STATEMENT - PROSPECTUS
This proxy statement - prospectus contains forward-looking statements within the
"safe harbor" provisions of the Private Securities Litigation Reform Act of 1995
with respect to Teradyne's and GenRad's financial condition, results of
operations and business and the expected impact of the merger on Teradyne's
financial performance. Words such as "anticipates," "expects," "intends,"
"plans," "believes," "seeks," "estimates" and similar expressions indicate
forward-looking statements, including those relating to the proposed merger.
These forward-looking statements are not guarantees of future performance and
are subject to risks and uncertainties that could cause actual results to differ
materially from the results contemplated by the forward-looking statements.
In evaluating the merger, you should carefully consider the discussion of risks
and uncertainties in the section entitled "Risk Factors" beginning on page 13.
You are cautioned not to place undue reliance on the forward-looking statements
contained in this proxy statement - prospectus, which reflect the views of
Teradyne's or GenRad's management only as of the date of this proxy statement -
prospectus. Neither Teradyne nor GenRad undertakes any obligation to update
these statements or publicly release the results of any revisions to the
forward-looking statements that they may make to reflect events or circumstances
after the date of this proxy statement - prospectus or to reflect the occurrence
of unanticipated events.
7
SELECTED FINANCIAL DATA OF TERADYNE AND GENRAD
The following information is being provided to assist you in analyzing the
financial aspects of the merger. The selected financial information for Teradyne
for the six months ended July 1, 2001 and July 2, 2000 was derived from the
unaudited consolidated financial statements included in Teradyne's quarterly
report on Form 10-Q for the quarterly period ended July 1, 2001. The data
presented for Teradyne for the six months ended July 1, 2001 and July 2, 2000
are unaudited and, in the opinion of Teradyne's management, include all
adjustments, consisting of normal recurring adjustments, necessary for the fair
presentation of such data. Teradyne's results for the six months ended July 1,
2001 are not necessarily indicative of the results to be expected for the fiscal
year ending December 31, 2001. The selected financial information for Teradyne
for the fiscal years ended December 31, 2000, 1999, 1998, 1997 and 1996 was
derived from the audited consolidated financial statements included in
Teradyne's annual report filed on Form 10-K for the fiscal years ended
December 31, 2000, 1999, 1998, 1997 and 1996.
The selected financial information for GenRad for the six months ended
June 30, 2001 and July 1, 2000 was derived from the unaudited consolidated
financial statements included in GenRad's quarterly report on Form 10-Q/A for
the quarterly period ended June 30, 2001. The data presented for GenRad for the
six months ended June 30, 2001 and July 1, 2000 are unaudited and, in the
opinion of GenRad's management, include all adjustments, consisting of normal
recurring adjustments, necessary for the fair presentation of such data.
GenRad's results for the six months ended June 30, 2001 are not necessarily
indicative of the results to be expected for the fiscal year ending
December 29, 2001. The selected financial information for GenRad for the fiscal
years ended December 30, 2000, January 1, 2000, January 2, 1999, January 3, 1998
and December 28, 1996 was derived from the audited consolidated financial
statements included in GenRad's annual report filed on Form 10-K for the fiscal
years ended December 30, 2000, January 1, 2000, January 2, 1999, January 3, 1998
and December 28, 1996. GenRad's annual report on Form 10-K for the fiscal year
ended December 30, 2000 was amended on August 30, 2001 to include an explanatory
paragraph in the report of GenRad's independent accountants relating to GenRad's
ability to continue as a going concern as described in Note 13 to the
consolidated financial statements.
The information should be read in conjunction with the historical financial
statements and related notes contained in the annual, quarterly and other
reports filed by Teradyne and GenRad with the SEC. See "Where You Can Find More
Information" on page 63.
8
SELECTED FINANCIAL DATA OF TERADYNE
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,*
----------------------- --------------------------------------------------------------
7/01/01 7/02/00 2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales.................. $ 971,012 $1,362,816 $3,043,946 $1,790,912 $1,489,151 $1,266,274 $1,171,615
Income before cumulative
effect of change in
accounting principle..... 13,778 222,294 517,754 191,694 102,117 127,608 93,574
Income before cumulative
effect of change in
accounting principle per
common share -- basic.... 0.08 1.29 2.99 1.12 0.61 0.76 0.56
Income before cumulative
effect of change in
accounting principle per
common share --
diluted.................. 0.08 1.23 2.86 1.07 0.59 0.74 0.55
Cash dividends per share... -- -- -- -- -- -- --
CONSOLIDATED BALANCE
SHEET DATA:
(End of Period)
Total assets............... 2,090,776 2,032,436 2,355,868 1,568,213 1,312,814 1,251,674 1,096,816
Long-term obligations...... 7,957 8,729 8,352 8,948 13,200 13,141 15,650
--------------------------
* Note: Pro forma amounts for the periods beginning before January 1, 2000
have not been presented as the effect of the change in accounting principle
could not be reasonably determined. See "Note C: Change in Accounting
Principle" in notes to Teradyne's consolidated financial statements included
in Teradyne's annual report on Form 10-K for the year ended December 31,
2000 for further information.
9
SELECTED FINANCIAL DATA OF GENRAD
SIX MONTHS ENDED YEAR ENDED
----------------------- ---------------------------------------------------------
6/30/01(A) 7/01/00(B) 12/30/00(C) 1/01/00 1/02/99(D) 1/03/98 12/28/96
---------- ---------- ----------- -------- ---------- -------- --------
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Total revenue..................... $ 116,930 $153,697 $341,655 $301,948 $ 224,789 $236,761 $183,545
Net income (loss)................. (110,087) 17,047 21,647 47,494 (9,068) 41,295 27,335
Net income (loss) per share:
Basic........................... (3.86) 0.61 0.77 1.66 (0.32) 1.54 1.22
Diluted......................... (3.86) 0.60 0.75 1.60 (0.32) 1.43 1.11
Cash dividends per share.......... -- -- -- -- -- -- --
CONSOLIDATED BALANCE SHEET DATA:
(End of Period)
Total assets...................... 244,931 366,552 369,605 248,639 208,225 178,957 115,765
Long-term debt, including current
portion......................... 85,564 105,602 93,640 6,006 8,487 10,953 146
--------------------------
(a) Net income (loss) and net income (loss) per share includes the effect of
charges related to an impairment of goodwill and other long-lived assets
totaling $28.2 million, income tax expense of $28.6 million including a 100%
valuation allowance against net deferred tax assets and a restructuring
charge totaling $3.1 million.
(b) Net income (loss) and net income (loss) per share includes the effect of
restructuring charges of $1.6 million and charges related to acquired
in-process research and development totaling $0.5 million.
(c) Net income (loss) and net income (loss) per share includes the effect of
charges related to acquired in-process research and development totaling
$0.5 million and restructuring and other charges totaling $1.3 million.
(d) Net income (loss) and net income (loss) per share includes the effect of
charges related to acquired in-process research and development totaling
approximately $10.1 million, impairment losses totaling approximately
$4.9 million, restructuring charges totaling approximately $8.8 million and
other charges totaling approximately $7.7 million.
10
SELECTED HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
The following table shows unaudited comparative per share data for Teradyne
and GenRad, using the purchase method of accounting. The information should be
read in conjunction with the historical financial statements and related notes
contained in the annual, quarterly and other reports filed by Teradyne and
GenRad with the SEC. See "Where You Can Find More Information" on page 63.
Neither Teradyne nor GenRad paid any cash dividends during fiscal 2000 or
the first six months of fiscal 2001.
HISTORICAL PRO FORMA
------------------- ------------------------
COMBINED GENRAD
TERADYNE GENRAD COMPANY EQUIVALENT(3)
-------- -------- -------- -------------
Per Common Share:
BASIC EARNINGS
Six months ended July 1, 2001(1)
Income (loss) from continuing operations per
share............................................. $ 0.08 $(3.86) $(0.54) $(0.09)
Year ended December 31, 2000(2)
Income (loss) from continuing operations per
share............................................. 2.99 0.77 3.03 0.53
DILUTED EARNINGS
Six months ended July 1, 2001(1)
Income (loss) from continuing operations per
share............................................. 0.08 (3.86) (0.54) (0.09)
Year ended December 31, 2000(2)
Income (loss) from continuing operations per
share............................................. 2.86 0.75 2.90 0.50
BOOK VALUE
As of July 1, 2001(1)................................. 10.15 3.06 10.36 1.80
As of December 31, 2000(2)............................ 9.89 7.04 10.75 1.86
------------------------
(1) Information provided for GenRad is as of GenRad's fiscal period ended
June 30, 2001.
(2) Information provided for GenRad is as of GenRad's fiscal year ended
December 30, 2000.
(3) The GenRad and Teradyne unaudited pro forma combined income (loss) and book
value per common share are based on GenRad's shareholders receiving 0.1733
of a share of Teradyne common stock for each share of GenRad common stock
held. That exchange ratio corresponds to a Teradyne per share price of
$35.10, which was the closing price per share on the New York Stock Exchange
on August 1, 2001, the last trading day prior to the public announcement of
the merger agreement. GenRad equivalent pro forma amounts are computed by
multiplying the pro forma combined company amounts by the exchange ratio of
0.1733.
11
MARKET PRICE INFORMATION
Teradyne common stock and GenRad common stock are listed and traded
principally on the New York Stock Exchange under the symbols "TER" and "GEN",
respectively.
The following table sets forth the closing sales price for shares of common
stock of each of Teradyne and GenRad as reported on the NYSE on August 1, 2001,
the last business day preceding the public announcement of the proposed merger,
and on September 19, 2001, which was the last practicable date prior to the
mailing of this proxy statement - prospectus. The table also sets forth the
value of the Teradyne common stock that a GenRad shareholder would have received
for one share of GenRad common stock, assuming that the merger had taken place
on that date at the exchange ratio of 0.1733 of a share of Teradyne common stock
for each share of GenRad common stock in the merger. These numbers have been
calculated by multiplying the exchange ratio of 0.1733 by the closing price per
share of Teradyne common stock on those dates. The actual value of the shares of
Teradyne common stock a GenRad shareholder will receive on the effective date of
the merger may be higher or lower than the prices per share listed below.
CLOSING PRICE CLOSING PRICE VALUE OF
OF OF TERADYNE
TERADYNE GENRAD COMMON STOCK
COMMON STOCK COMMON STOCK TO BE RECEIVED
------------- ------------- --------------
August 1, 2001....................................... $35.10 $4.00 $6.08
September 19, 2001(1)................................ $24.12 $3.90 $4.18
------------------------
(1) The third trading day after the September 11, 2001 terrorist attacks on the
United States.
12
RISK FACTORS
THE FOLLOWING RISKS SHOULD BE CONSIDERED BY GENRAD'S SHAREHOLDERS IN
DECIDING WHETHER TO VOTE IN FAVOR OF APPROVAL OF THE MERGER AGREEMENT. IN
ADDITION, WE STRONGLY URGE YOU TO CONSIDER THE ITEMS DISCLOSED ELSEWHERE IN THIS
PROXY STATEMENT - PROSPECTUS AND IN THE DOCUMENTS INCORPORATED BY REFERENCE IN
THIS PROXY STATEMENT - PROSPECTUS.
This proxy statement - prospectus contains forward-looking statements within
the meaning of section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Actual results could differ materially from
those projected in the forward-looking statement as a result of the risk factors
set forth below and elsewhere in this proxy statement - prospectus. The
following factors should be considered carefully by holders of GenRad common
stock in evaluating whether to approve the merger agreement and merger. These
factors should be considered together with the other information included or
incorporated by reference in this proxy statement - prospectus.
RISKS RELATED TO THE MERGER AND THE MERGER PROCESS
THE VALUE OF THE TERADYNE STOCK TO BE RECEIVED BY GENRAD SHAREHOLDERS WILL
FLUCTUATE WITH THE TERADYNE STOCK PRICE, AND THE DOLLAR VALUE OF TERADYNE COMMON
STOCK RECEIVED IN THE MERGER MAY INCREASE OR DECREASE AFTER GENRAD SHAREHOLDERS
SUBMIT THEIR PROXIES.
As a result of the merger, each share of GenRad common stock will be
exchanged for 0.1733 of a share of Teradyne common stock. There will be no
adjustment for changes in the market price of either GenRad common stock or
Teradyne common stock. In addition, neither GenRad nor Teradyne may terminate
the merger agreement or "walk away" from the merger or, in the case of GenRad,
resolicit the vote of its shareholders solely because of changes in the general
industry, economic or capital market conditions in which either company competes
that affects GenRad or Teradyne in a manner that is not disproportionate to the
manner in which such conditions affect comparable companies in the same
industries or markets. Accordingly, the dollar value of Teradyne common stock
that GenRad shareholders will receive upon the completion of the merger will
depend on the market value of Teradyne common stock when the merger is completed
and may decrease from the date you submit your proxy. The share price of
Teradyne common stock is by nature subject to the general price fluctuations in
the market for publicly traded equity securities and has experienced volatility.
We urge you to obtain recent market quotations for Teradyne common stock and
GenRad common stock. Teradyne cannot predict or give any assurances as to the
market price of Teradyne common stock at any time before or after the completion
of the merger.
GENRAD'S EXECUTIVE OFFICERS AND DIRECTORS HAVE INTERESTS DIFFERENT THAN THOSE OF
GENRAD'S SHAREHOLDERS THAT MAY HAVE INFLUENCED THEIR RECOMMENDATION OF THE
APPROVAL OF THE MERGER AGREEMENT.
The directors and executive officers of GenRad participate in arrangements
and have continuing indemnification against liabilities that provide them with
interests in the merger that are different from, or in addition to, those of the
GenRad shareholders. The executive officers of GenRad have outstanding options
to purchase an aggregate of 1,387,033 shares of GenRad common stock, all of
which have exercise prices that exceed the market value of GenRad common stock
as of September 19, 2001. Of such options, 344,748 remain unvested. Upon the
approval of the merger agreement by the GenRad shareholders, all of these
options will become fully exercisable. In addition, the non-employee members of
the GenRad board of directors hold an aggregate of 85,998 shares of restricted
GenRad common stock, of which 21,492 shares are subject to GenRad's right to
repurchase. Upon the approval of the merger agreement by the GenRad
shareholders, GenRad's right to repurchase this restricted stock will terminate.
Mr. Dutkowsky, GenRad's Chairman, President and Chief Executive Officer, has
agreed that effective upon the merger, he will terminate his employment
agreement with GenRad and all rights
13
granted to Mr. Dutkowsky under the employment agreement shall be null and void,
including the right to receive a change of control severance payment of
$1.5 million. Notwithstanding the termination of his employment agreement,
Mr. Dutkowsky will retain his existing options to purchase GenRad common stock,
which are all currently exercisable. GenRad maintains a repurchase right with
respect to a majority of the shares of GenRad common stock that would be issued
upon exercise of those options, which right will terminate upon shareholder
approval of the merger agreement. Upon the completion of the merger, the options
will become exercisable for Teradyne common stock in accordance with the merger
agreement. In addition, upon and subject to the completion of the merger, GenRad
will make a payment of $375,000 to Mr. Dutkowsky as a bonus based upon his job
performance during fiscal 2000, which had not been made earlier in the year
because of GenRad's financial condition. Teradyne has agreed to grant
Mr. Dutkowsky options to purchase 86,650 shares of Teradyne common stock at an
exercise price equal to the fair market value of Teradyne common stock on the
date of grant with the options to vest in accordance with Teradyne's standard
vesting provisions. In addition, Teradyne has agreed to grant Mr. Dutkowsky
options to purchase 100,000 shares of Teradyne common stock at an exercise price
equal to the fair market value of the common stock on the date of grant with the
option to vest 20% on the date of grant and an additional 20% to vest on each
six-month anniversary of the date of grant. Finally, Teradyne has agreed that
Mr. Dutkowsky's annual base salary will be $334,286 with a variable compensation
factor of 150%. His current base salary at GenRad is $500,000, with a bonus
opportunity of up to $500,000. Mr. Dutkowsky will not have an employment
agreement with Teradyne.
In addition to Mr. Dutkowsky, six executive officers of GenRad are parties
to severance agreements with GenRad under which they will be entitled to
severance payments if they are terminated without cause or terminate their
employment with good reason after the merger, with the amount of the severance
payments dependent on the date of termination.
Finally, Teradyne has agreed that it and the surviving corporation in the
merger will indemnify each person who is or has been at any time prior to the
closing of the merger eligible for indemnification under the organizational
documents of GenRad and its subsidiaries against liabilities arising out of such
person's services as an officer, director or employee of GenRad. Teradyne will
also cause the surviving corporation to maintain officers' and directors'
liability insurance to cover any such liabilities for the next six years subject
to certain price limitations.
For the above reasons, the directors and executive officers of GenRad could
be more likely to recommend approval of the merger agreement and to vote their
GenRad shares in favor of the merger agreement than if they did not hold these
interests. GenRad shareholders should consider these interests when evaluating
the recommendation of the GenRad board to vote in favor of the merger agreement.
See "The Merger--Interests of Certain Persons in the Merger; Differing
Interests" on page 36.
FAILURE TO COMPLETE THE MERGER, AS WELL AS THE MERGER PROCESS ITSELF, COULD
NEGATIVELY IMPACT GENRAD'S STOCK PRICE AND FUTURE BUSINESS AND OPERATIONS.
GenRad is severely capital constrained. Unless it can obtain additional
financing, GenRad's ability to operate and its viability as a business
enterprise are in jeopardy. On August 30, 2001, GenRad's annual report on
Form 10-K for the fiscal year ended December 30, 2000 was amended to include an
explanatory paragraph in the report of GenRad's independent accountants relating
to GenRad's ability to continue as a going concern as described in Note 13 to
the consolidated financial statements. GenRad will likely not be in compliance
with financial covenants of GenRad's credit facility on September 28, 2001 and
will need to seek a waiver from the banks that provide the credit facility. In
the past, GenRad has obtained waivers from these banks for similar covenant
defaults. In fact, these banks have agreed in principal to grant an additional
waiver through November 2, 2001. However, there can be no assurance that the
banks will grant any additional waivers. If GenRad is in default
14
under the financial covenants on September 28, 2001 (or November 2, 2001, if the
additional waiver is executed) and the banks do not waive the default, the banks
may demand immediate payment of the full outstanding balance under the credit
facility and prohibit new borrowings under the revolving line of credit. Without
the revolving line of credit, GenRad would then have no ability to satisfy the
demand for payment or to fund operations. GenRad currently has no plans to
obtain additional financing. If any of the banks that provide the credit
facility initiate foreclosure proceedings upon any collateral in which they have
a security interest, exercise any right of set-off or exercise any other similar
remedy against or affecting GenRad's business, Teradyne could refuse to proceed
with the merger. In addition, even if the banks were willing to waive defaults
of the financial covenants and provide GenRad with additional financing,
GenRad's ability to incur additional debt is subject to limitations in the
merger agreement.
If the merger is not completed for any reason, GenRad will be subject to a
number of additional material risks, including the following:
- GenRad may be required under limited circumstances to pay Teradyne a
termination fee of up to $10,000,000 and reimburse Teradyne for reasonable
out-of-pocket expenses incurred in connection with the merger agreement,
the merger and expenses incurred to collect that fee;
- the price of GenRad common stock may decline to the extent that the
current market price of GenRad common stock reflects a market assumption
that the merger will be completed; and
- costs incurred by GenRad related to the merger, such as legal and
accounting fees and a portion of financial advisor fees, must be paid even
if the merger is not completed.
Further, if the merger is terminated and GenRad's board of directors
determines to seek another merger or business combination, there can be no
assurance that it will be able to find a partner willing to pay an equivalent or
more attractive price than the price to be paid in the merger.
GenRad customers, in response to the announcement of the merger, may delay
or defer decisions concerning GenRad. Any delay or deferral in those decisions
by GenRad customers could have a material adverse effect on GenRad's business,
regardless of whether the merger is ultimately completed. Similarly, current and
prospective GenRad employees may experience uncertainty about their future roles
with Teradyne until Teradyne's strategies with regard to GenRad are announced or
executed. This may adversely affect GenRad's ability to attract and retain key
management, sales, marketing and technical personnel.
While the merger agreement is in effect and subject to very narrowly defined
exceptions, GenRad is prohibited from soliciting, initiating or encouraging or
entering into certain extraordinary transactions, such as a merger, sale of
assets or other business combination, with any party other than Teradyne. This
limitation could also adversely affect GenRad. GenRad may, and intends to,
subject to certain limitations, proceed with the sale of its Diagnostic
Solutions line of business. The sale of this line of business may divert the
attention of GenRad management and other key personnel and perhaps contribute to
the failure of the merger to occur.
THE MERGER MAY GO FORWARD EVEN THOUGH MATERIAL ADVERSE CHANGES RESULT FROM THE
ANNOUNCEMENT OF THE MERGER, INDUSTRY-WIDE CHANGES AND OTHER CAUSES.
In general, either party can refuse to complete the merger if there is a
material adverse change affecting the other party between now and the closing.
Certain types of changes will not prevent the merger from going forward, even if
they would have a material adverse effect on Teradyne or GenRad. Industry-wide
changes, changes affecting the economy as a whole, changes resulting from the
announcement of the merger and any act or omission to act by GenRad taken with
the consent of Teradyne will not allow either party to refuse to proceed with
the merger. If adverse changes occur but Teradyne and GenRad must still complete
the merger, Teradyne's stock price may suffer. This in turn
15
may reduce the value of the merger to GenRad shareholders. While GenRad might
seek to renegotiate the merger in these circumstances, there can be no assurance
that GenRad would in fact do so or that GenRad would be successful.
RISKS RELATED TO TERADYNE'S BUSINESS
TERADYNE'S BUSINESS IS IMPACTED BY THE SLOWDOWN IN ECONOMIES WORLDWIDE.
Teradyne's business has been negatively impacted by the slowdown in the
economies of the United States, Asia and elsewhere that began in the second half
of 2000. The uncertainty regarding the growth rate of the worldwide economies
has caused companies to reduce capital investment. These cutbacks have been
particularly severe in the electronics and semiconductor industry which Teradyne
serves. Teradyne cannot predict if or when the growth rate of worldwide
economies will rebound or whether the growth rate of its business will rebound
when the worldwide economies begin to grow. While Teradyne's diverse business
may allow it to perform better than some companies in periods of economic
decline, the effects of the economic decline are being felt across all of
Teradyne's business segments and have significantly slowed customer orders.
TERADYNE'S BUSINESS IS DEPENDENT ON THE CURRENT AND ANTICIPATED MARKET FOR
ELECTRONICS.
Teradyne's business and results of operations depend in significant part
upon capital expenditures of manufacturers of semiconductors and other
electronics, which in turn depend upon the current and anticipated market demand
for those products. Historically, the electronic and semiconductor industry has
been highly cyclical with recurring periods of over-supply, which often have had
a severe negative effect on demand for test equipment, including systems
manufactured and marketed by Teradyne. Teradyne believes that the markets for
newer generations of electronic products such as those that Teradyne
manufactures and markets will also be subject to similar fluctuations. Teradyne
is dependent on the timing of customer orders and the deferral or cancellation
of previous customer orders could have an adverse effect on its results of
operations. New orders for the six months ended July 1, 2001 declined by
approximately $903.1 million as compared to the six months ended December 31,
2000. Teradyne cannot assure you that the downward trend in new orders will turn
around in the future or that any increase in sales or new orders for a calendar
quarter will be sustained in subsequent quarters. In addition, any factor
adversely affecting the electronics industry or particular segments within the
electronics industry may adversely affect Teradyne's business, financial
condition and operating results.
TERADYNE HAS TAKEN AND EXPECTS TO CONTINUE TO TAKE MEASURES TO ADDRESS THE
RECENT SLOWDOWN IN THE MARKET FOR ITS PRODUCTS WHICH COULD HAVE LONG-TERM
EFFECTS ON TERADYNE'S BUSINESS.
Teradyne has taken and may take additional measures to address the recent
slowdown in the market for its products. In particular, Teradyne has reduced its
workforce, frozen hiring, delayed salary increases, reduced senior managers'
pay, implemented furloughs, and reduced its planned capital expenditures and
expense budgets. These measures have reduced expenses in the face of decreased
revenues due to decreased or cancelled customer orders. Notwithstanding these
measures, Teradyne still recorded a loss of $0.23 per share for the quarter
ended July 1, 2001. Likewise, GenRad has taken and plans to take similar
measures to reduce expenses. Each measure Teradyne or GenRad have taken and any
additional measures taken in the future to contain expenditures could have
long-term effects on Teradyne's business by reducing its pool of technical
talent, decreasing or slowing improvements in its products, and making it more
difficult for Teradyne to respond to customers or competitors.
16
TERADYNE'S BUSINESS MAY BE ADVERSELY IMPACTED BY ACQUISITIONS WHICH MAY AFFECT
ITS ABILITY TO MANAGE AND MAINTAIN ITS BUSINESS.
Since Teradyne's inception, it has acquired a number of businesses. In the
future, Teradyne may undertake additional acquisitions of businesses that
complement its existing operations. Such past or future acquisitions could
involve a number of risks, including:
- the possibility that one or more such acquisitions may not close due to
closing conditions in the acquisition agreements, the inability to obtain
regulatory approval, or the inability to meet conditions imposed for
government or court approvals for the transaction;
- the diversion of the attention of management and other key personnel;
- the inability to effectively integrate an acquired business into
Teradyne's culture, product and service delivery methodology and other
standards, controls, procedures and policies;
- the inability to retain the management, key personnel and other employees
of an acquired business;
- the inability to retain the customers of an acquired business;
- the possibility that Teradyne's reputation will be affected by customer
satisfaction problems of an acquired business;
- potential known or unknown liabilities associated with an acquired
business, including but not limited to regulatory, environmental and tax
liabilities;
- the amortization of acquired identifiable intangibles, which may adversely
affect Teradyne's reported results of operations; and
- litigation which has or which may arise in the future in connection with
such acquisitions.
For example, in connection with Teradyne's acquisition of each of Herco
Technology Corp., a California company, and Perception Laminates, Inc., a
California company, a complaint was filed in the Superior Court in San Diego
County, California, on September 5, 2001 naming as defendants Teradyne and two
of its executive officers. The complaint alleges, among other things, that the
sale of Teradyne common stock violated certain California securities statutes
and common law, and that Teradyne breached certain contractual obligations in
the agreement relating to the acquisition. The complaint seeks unspecified
damages, including compensatory, consequential and punitive damages, and
recovery of reasonable attorney fees and costs. In addition to the foregoing,
any acquired business could significantly underperform relative to Teradyne's
expectations.
The merger with GenRad includes the assumption of GenRad's debt, the
aggregate amount of which is subject to certain limitations under the merger
agreement. Teradyne will be required to pay off or refinance this debt. There
can be no guarantee that Teradyne will be able to refinance this debt on
favorable terms, if at all. If Teradyne is required to pay off the debt, its
liquidity position will further erode at a time when it is incurring losses.
In addition, GenRad is attempting to sell its Diagnostic Solutions line of
business which has experienced recent losses. If GenRad is unable to sell this
line of business prior to the completion of the merger, Teradyne may be required
to spend significant management time operating the non-core business unit and
managing a potential divestiture. Further, there can be no guarantee that the
Diagnostic Solutions line of business will break-even or operate at a profit in
the near future, if at all. Any losses from the Diagnostic Solutions line of
business will have a negative impact on Teradyne's operating results.
17
TERADYNE'S BUSINESS MAY BE ADVERSELY IMPACTED BY DIVESTITURES OF LINES OF
BUSINESS WHICH MAY AFFECT ITS ABILITY TO MANAGE AND MAINTAIN ITS BUSINESS.
Since Teradyne's inception, it has divested itself of certain lines of
business. In the future, Teradyne may undertake additional such divestitures.
Such past or future divestitures could involve a number of risks, including:
- the diversion of the attention of management and other key personnel;
- disruptions and other effects caused by the divestiture of a line of
business on Teradyne's culture, product and service delivery methodology
and other standards, controls, procedures and policies;
- customer satisfaction problems caused by the loss of a divested line of
business; and
- the decreased diversification of Teradyne's product lines caused by the
divestiture of a line of business may make Teradyne's operating results
subject to increased market fluctuations.
In addition, any divested line of business could significantly outperform
relative to Teradyne's expectations.
IF TERADYNE IS UNABLE TO PROTECT ITS INTELLECTUAL PROPERTY, TERADYNE MAY LOSE A
VALUABLE ASSET OR MAY INCUR COSTLY LITIGATION TO PROTECT ITS RIGHTS.
Teradyne's products incorporate technology that it protects in several ways,
including patents, copyrights and trade secrets. While Teradyne believes that
its patents, copyrights and trade secrets have value in general, no single one
is in itself essential. At times, Teradyne has been notified that it may be in
violation of patents held by others. An assertion of patent infringement against
Teradyne, if successful, could have a material adverse effect on its ability to
sell its products, or could require a lengthy and expensive defense which could
adversely affect its operating results.
IF TERADYNE FAILS TO DEVELOP NEW TECHNOLOGIES TO ADAPT TO ITS CUSTOMERS' NEEDS
AND IF ITS CUSTOMERS FAIL TO ACCEPT ITS NEW PRODUCTS, TERADYNE'S REVENUES WILL
BE ADVERSELY AFFECTED.
Teradyne believes that its technological position depends primarily on the
technical competence and creative ability of its engineers. Teradyne's
development of new technologies, commercialization of those technologies into
products, and market acceptance and customer demand for those products is
critical to its success. Successful product development and introduction depends
upon a number of factors, including:
- new product selection;
- development of competitive products by competitors;
- timely and efficient completion of product design;
- timely and efficient implementation of manufacturing; and
- assembly processes and product performance at customer locations.
INTENSE COMPETITION IN TERADYNE'S INDUSTRY MAY AFFECT ITS REVENUES.
Teradyne faces substantial competition throughout the world in each of its
operating segments. Some of these competitors also have substantial financial
and other resources to pursue engineering, manufacturing, marketing and
distribution of their products. Teradyne also faces competition from internal
suppliers at several of its customers. Some of Teradyne's competitors have
introduced or announced new products with certain performance characteristics
which may be considered equal or superior to those Teradyne currently offers.
Teradyne expects its competitors to continue to improve the performance of their
current products and to introduce new products or new technologies that provide
18
improved cost of ownership and performance characteristics. New product
introductions by competitors could cause a decline in sales or loss of market
acceptance of Teradyne's products. Moreover, increased competitive pressure
could lead to intensified price based competition, which could materially
adversely affect Teradyne's business, financial condition and results of
operations.
TERADYNE IS SUBJECT TO RISKS OF OPERATING INTERNATIONALLY.
Teradyne derives a significant portion of its total revenue from customers
outside the United States. Teradyne's international sales are subject to
significant risks and difficulties, including:
- unexpected changes in legal and regulatory requirements and in policy
changes affecting its markets;
- changes in tariffs and exchange rates;
- political and economic instability and acts of terrorism;
- difficulties in accounts receivable collection;
- difficulties in staffing and managing international operations; and
- potentially adverse tax consequences.
TERADYNE'S OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY.
Teradyne's quarterly and annual operating results are affected by a wide
variety of factors that could materially adversely affect revenues and
profitability, including:
- competitive pressures on selling prices;
- the timing of customer orders and the deferral or cancellation of orders
previously received;
- write-offs of excess and obsolete inventory;
- changes in product mix;
- Teradyne's ability to introduce new products and technologies on a timely
basis;
- the introduction of products and technologies by Teradyne's competitors;
- market acceptance of Teradyne's and its competitors' products;
- fulfilling backlog on a timely basis;
- reliance on sole suppliers;
- potential retrofit costs;
- the level of orders received which can be shipped in a quarter; and
- the timing of investments in engineering and development.
In particular, Teradyne will introduce a significant number of new, complex test
systems in 2001 and there can be no assurance that Teradyne will not experience
delays in shipment of such products or that such products will achieve customer
acceptance. As a result of the foregoing and other factors, Teradyne has and may
continue to experience material fluctuations in future operating results on a
quarterly or annual basis which could materially and adversely affect its
business, financial condition, operating results and stock price.
19
GENRAD SPECIAL MEETING
This proxy statement - prospectus is being furnished to you in connection
with the solicitation of proxies by the GenRad board of directors for use at the
GenRad special meeting. At the GenRad special meeting, you will be asked to
consider and vote upon a proposal to approve the merger agreement under which
shares of Teradyne common stock will be exchanged for all of the outstanding
shares of GenRad common stock, all as summarized in this proxy
statement - prospectus and as more fully described in the merger agreement.
DATE, TIME AND PLACE
The GenRad special meeting will be held on at 7 Technology Park Drive,
Westford, Massachusetts 01886, on Friday, October 26, 2001, at 11:00 a.m. EDT.
RECORD DATE AND VOTING RIGHTS
The GenRad board has fixed September 19, 2001 as the record date for the
determination of shareholders entitled to notice of and to vote at the GenRad
special meeting. Only the holders of GenRad common stock are entitled to vote at
the special meeting. As of September 19, 2001, there were 28,554,934 shares of
GenRad common stock outstanding held by approximately 2,622 holders of record.
Each holder of record of shares of GenRad common stock on the record date is
entitled to cast one vote per share, in person or by proxy, at the GenRad
special meeting.
As of September 19, 2001, GenRad directors and executive officers had the
right to vote 209,613 shares of GenRad common stock, or approximately 0.7% of
the shares of GenRad common stock outstanding on that date. See "Beneficial
Shareholders of GenRad" on page 61.
QUORUM AND VOTING OF PROXIES
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of GenRad common stock entitled to vote is necessary to
constitute a quorum at the GenRad special meeting. Shareholders present at the
meeting in person or by proxy voting or abstaining from voting on any issue will
be counted as present for purposes of constituting a quorum. Abstentions will
have the same effect as votes against the proposal. Votes that are broker
non-votes will have the same effect as a vote against the proposal. (Broker
non-votes occur when brokers or nominees holding stock in "street name" indicate
on proxies that they do not have discretionary authority to vote the shares on a
particular matter.)
All shares which are entitled to vote and are represented at the GenRad
special meeting by properly executed proxies received before or at the GenRad
special meeting, and not revoked, will be voted at the GenRad special meeting in
accordance with the instructions indicated on the proxies. IF NO INSTRUCTIONS
ARE INDICATED, SUCH PROXIES WILL BE VOTED "FOR" APPROVAL OF THE MERGER
AGREEMENT.
REVOKING PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked or superseded
by any of the following actions:
- filing a written notice of revocation bearing a later date than the proxy
with the Clerk of GenRad (Walter A. Shephard) at or before the taking of
the vote at the GenRad special meeting;
- duly executing a later dated proxy relating to the same shares and
delivering it to the Clerk of GenRad (Walter A. Shephard) before the
taking of the vote at the GenRad special meeting; or
20
- attending the GenRad special meeting and voting in person. GenRad
shareholders should note, however, that merely attending the special
meeting in person without casting a vote at the meeting will not alone
constitute a revocation of a proxy.
SOLICITATION EXPENSES
GenRad will pay all expenses of this solicitation, including the entire cost
of preparing, assembling, printing and mailing this proxy statement, the
enclosed proxy and any additional material which may be furnished to
shareholders. Further solicitation of proxies may be made by telephone or other
communication. Brokers, custodians and fiduciaries in whose names common stock
is held will be requested to forward proxy soliciting material to the beneficial
owners of such common stock and GenRad will reimburse them for this service.
GenRad has retained MacKenzie Partners, Inc. as proxy solicitor to aid in the
solicitation of proxies at an estimated cost of $12,500. Directors, officers and
employees of GenRad will also solicit proxies in person or by telephone,
telegram, facsimile transmission or other means of communication. GenRad will
not pay these individuals for their solicitation activity but will reimburse
them for their reasonable out-of-pocket expenses.
SHAREHOLDER VOTE REQUIRED
Under Massachusetts Business Corporation Law, the approval of the merger
agreement requires the affirmative vote of the holders of two-thirds of the
outstanding shares of GenRad common stock.
RECOMMENDATION OF GENRAD BOARD
THE GENRAD BOARD HAS APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO APPROVE THE MERGER AGREEMENT. See
"The Merger--Interests of Certain Persons in the Merger; Differing Interests" on
page 36 for a discussion of interests of GenRad's directors and executive
officers in the merger that may be different from your own.
APPRAISAL RIGHTS
If the merger is completed, holders of GenRad common stock who previously
elected to object to the approval of the merger agreement may be entitled to
have their shares appraised and purchased in accordance with Section 85 ET SEQ.
of the Massachusetts Business Corporation Law.
IN ORDER FOR A GENRAD SHAREHOLDER TO EXERCISE APPRAISAL RIGHTS, A NOTICE OF
THAT SHAREHOLDER'S INTENTION TO EXERCISE HIS OR HER APPRAISAL RIGHTS AS PROVIDED
UNDER MASSACHUSETTS LAW MUST BE GIVEN BY THAT SHAREHOLDER AND RECEIVED BY GENRAD
BEFORE THE VOTE IS TAKEN BY THE GENRAD SHAREHOLDERS AT THE SPECIAL MEETING TO
APPROVE THE MERGER AGREEMENT, AND THAT SHAREHOLDER MUST VOTE AGAINST THE
APPROVAL OF THE MERGER AGREEMENT OR ABSTAIN FROM VOTING, AND OTHERWISE COMPLY
WITH THOSE PROCEDURES REQUIRED BY MASSACHUSETTS LAW, AS MORE FULLY DESCRIBED IN
"THE MERGER--APPRAISAL RIGHTS" ON PAGE 38. FAILURE TO SEND NOTICE, TO VOTE
AGAINST THE APPROVAL OF THE MERGER AGREEMENT OR ABSTAIN FROM VOTING, OR TO
FOLLOW THE OTHER PROCEDURES WILL CONSTITUTE A WAIVER OF THE SHAREHOLDER'S
APPRAISAL RIGHTS. SEE APPENDIX B TO THIS PROXY STATEMENT - PROSPECTUS FOR A COPY
OF THE APPLICABLE SECTIONS OF MASSACHUSETTS LAW RELATING TO APPRAISAL RIGHTS AND
THE PROCEDURES THAT MUST BE FOLLOWED TO PERFECT APPRAISAL RIGHTS.
21
THE MERGER
GENERAL
We believe that this summary, together with the section of this proxy
statement - prospectus entitled "The Merger Agreement" on page 42, describes all
material terms of the merger and the merger agreement. We recommend, however,
that you read carefully the complete text of the merger agreement and other
information that may be important to you. The merger agreement is attached to
this proxy statement - prospectus as Appendix A and is incorporated by reference
into this proxy statement - prospectus.
BACKGROUND OF THE MERGER
As of March 31, 2001, GenRad was not in compliance with the financial
covenants contained in its $125.0 million credit facility. This was not the
first time GenRad had failed to comply with these covenants. The credit
facility, which was provided by a syndicate of banks led by Fleet National Bank,
as agent bank, was composed of a term loan of up to $75.0 million to be used for
acquisitions and a revolving line of credit of $50.0 million to be used for
general working capital purposes. The term portion of the credit facility was
being amortized on a quarterly basis with the final payment originally due
March 31, 2004. On March 31, 2001, $60.0 million was outstanding under the term
portion of the credit facility and $32.3 million was outstanding under the
revolving line of credit.
GenRad's financial covenant non-compliance in the first quarter was
primarily caused by its disappointing results of operations for the quarter,
including the results of certain acquired operations, the purchase price for
which had been borrowed under the credit facility. For the first quarter of
2001, GenRad reported a net loss of $12.0 million, compared to net income of
$18.1 million for the same quarter of the previous year. GenRad's poor results
were mainly due to a precipitous drop in demand for its products primarily as a
result, in management's judgment, of the slowing economy and the performance of
certain acquired operations. On April 18, 2001, the credit facility was amended
through May 15, 2001 so as to waive through that date any failure to comply with
financial covenants as of March 31, 2001.
In April 2001, in discussions with the banks, it became clear that the banks
expected GenRad to repay the credit facility as soon as possible and that their
willingness to grant waivers of the financial covenant defaults depended on
GenRad's willingness to promptly pursue ways to repay the credit facility.
GenRad's relationship with its banks was discussed at a regular meeting of
GenRad's board of directors held at the company's headquarters on April 20,
2001. The GenRad board discussed a range of measures to deal with the
deteriorating situation with GenRad's banks and to enhance shareholder value
including cost-cutting measures, global partnerships, improving the development
and distribution of GenRad's products, sales of certain businesses of GenRad,
and a sale of the entire company.
GenRad's board of directors held a special meeting by conference telephone
on May 1, 2001 to receive an update from management concerning the situation
with the banks. At that meeting, the board concurred with management that the
corporation had to raise additional capital or pursue other alternatives to
enhance shareholder value. Various alternatives were discussed. In view of
GenRad's current debt and prevailing market conditions, it was acknowledged that
the company could not obtain additional bank debt, refinance its existing bank
debt or raise capital through the sale of straight equity. Management reported
that it had several discussions with an investment banking firm regarding a sale
of convertible notes.
At a meeting of the GenRad board at the company's headquarters on May 9,
2001, management provided a further update on GenRad's strategic alternatives,
including potential financing alternatives such as the sale of convertible
notes. The board decided not to pursue the financing because of the uncertain
prospects that the financing could be concluded successfully, the high cost of
such a financing
22
and the potential significant dilution that GenRad's stockholders would suffer
from the financing. The board instructed management to continue to pursue all
feasible alternatives.
On May 10, 2001, GenRad informed Fleet, as agent bank, that it would not be
pursuing a convertible note financing. The credit facility banks were displeased
with this news and, as a result, as of May 15, 2001, agreed to waive GenRad's
financial covenant defaults as of March 31, 2001 only through June 15, 2001. By
this date, GenRad was to inform the banks how and when GenRad proposed to repay
them. In connection with the waiver, the banks reduced GenRad's availability
under the revolving line of credit from $50.0 million to $38.0 million. Fleet
also informed GenRad that it had moved GenRad's loan to Fleet's workout group
and that it expected many of the other banks in the credit facility syndicate
would do likewise.
The GenRad board of directors continued to monitor the situation through
meetings held in person or by conference telephone on May 21 and May 30, 2001.
At these meetings, Mr. Dutkowsky reported that two companies with whom GenRad
had been having discussions concerning global marketing partnerships had now
raised the possibility of a merger. One of these companies suggested a possible
acquisition of GenRad. The other company raised the possibility of merging
certain of that company's operations with GenRad in return for a substantial
equity position in GenRad. In addition, a potential purchaser of GenRad's
Diagnostics Solutions line of business had also suggested the possibility of
acquiring GenRad as a whole. Consequently, at the May 30, 2001 meeting, GenRad's
board of directors authorized the retention of William Blair & Company, L.L.C.
to assist management in considering these possibilities and other alternatives
concerning a sale of the company. Through May 31, 2001, although GenRad had
signed confidentiality agreements with the three parties and had engaged in
preliminary merger discussions, no formal due diligence had been conducted.
As further discussed under "Teradyne's Reasons for the Merger," Teradyne had
been seeking ways to broaden the product offerings of its assembly test
division. Teradyne believed GenRad's financial difficulties presented a possible
opportunity for Teradyne to expand and strengthen its competitive position in
this market. As a result, on June 8, 2001, Teradyne approached GenRad about the
possibility of acquiring the company. The two parties began initial exploratory
discussions concerning a possible merger.
On June 12, 2001 GenRad's board of directors met by conference telephone to
receive an update on management's ongoing discussions with GenRad's banks and
the status of initiatives to enhance shareholder value. At the meeting,
Mr. Dutkowsky reported that one party had submitted a non-binding indication of
interest concerning the merger of one of its subsidiaries into GenRad. In that
proposed merger, GenRad would have been the surviving corporation, and the
interested party would have acquired a substantial interest in GenRad. The board
directed management and William Blair to continue to pursue all viable
opportunities.
During late May and early June 2001, through a series of meetings with Fleet
and the other credit facility syndicate banks, GenRad and William Blair updated
the banks about its progress in arranging a possible merger or other strategic
transaction as well as GenRad's operating results and cash flow situation.
GenRad reported to the banks that there was little likelihood that it would be
in compliance with the financial covenants under the credit facility as of
June 30, 2001.
On June 15, 2001, GenRad obtained a waiver from its credit facility banks of
defaults under existing financial covenants through September 28, 2001, subject
to certain conditions. These conditions involved the payment to the banks of
$483,000 and GenRad's agreement to pay the banks an additional fee of $483,000
on September 20, 2001 if the banks had not been repaid by that date. The waiver
also was conditioned upon GenRad's revenues being at least $53.6 million for the
quarter ending June 30, 2001, which GenRad did achieve. As of June 15, 2001, the
banks increased the interest rate applicable to the credit facility line by two
percentage points. To provide an incentive for GenRad to enter into a merger
transaction that would result in the repayment of the credit facility, the banks
agreed to
23
increase the maximum availability of the revolving line of credit to
$40.0 million from July 31, 2001 through August 5, 2001 and to $43.0 million
from August 5, 2001 through September 28, 2001, provided that GenRad achieved
certain benchmarks.
On June 25, 2001, Teradyne entered into a confidentiality agreement with
GenRad concerning Teradyne's due diligence review of the company. Beginning on
June 25, Teradyne's management, accountants and legal counsel undertook a due
diligence review of GenRad. In July 2001, Teradyne reached an agreement with
Goldman Sachs to act as Teradyne's financial advisor in a possible transaction
with GenRad.
By early July 2001, two of the three parties, other than Teradyne, that had
indicated an interest in a merger with GenRad had conducted varying degrees of
initial due diligence, held discussions with GenRad management and retained
financial advisors, but declined to proceed further. The potential purchaser of
the Diagnostics Solutions line of business had preliminary discussions with
management concerning a merger, but did not engage in any due diligence beyond
that of Diagnostics Solutions. Also in early July, GenRad was approached by a
fourth party (in addition to Teradyne) which expressed an interest in a
potential business combination and stated that it had retained a financial
advisor. Discussions with this interested party, however, did not proceed to
execution of a confidentiality agreement or commencement of due diligence.
On July 10, 2001, Teradyne provided GenRad with an initial proposal to
acquire the company at a valuation of $6.00 to $7.00 per GenRad share, subject
to Teradyne's completion of due diligence and GenRad agreeing to a two-week
exclusivity arrangement. On July 10, 2001, GenRad's closing stock price was
$5.84. At the direction of management, William Blair informed the parties that
had previously expressed an interest in GenRad and retained financial advisors
concerning a merger that the company was going to enter into an exclusivity
agreement with an unnamed third party (Teradyne), and that, if still interested,
they should provide GenRad with a proposal relating to a business combination.
None of those parties provided GenRad or William Blair with a proposal.
At a meeting of the GenRad board held at GenRad's headquarters on July 20,
2001 at which William Blair was present, the board and management discussed the
financial condition of the company and the disappointing second quarter results
of operations, the adverse market conditions facing GenRad and the other
participants in its industry, and the limited availability of cash to fund
operations. The board also considered GenRad's situation with its credit
facility banks, including the fact that the company likely would not be in
compliance with financial covenants under the credit facility on September 28,
2001, the resulting need to seek an additional waiver from the banks, and the
uncertainty that an additional waiver could be obtained if the company had not
made substantial progress toward a transaction that would result in repayment of
the credit facility. The board also considered the fact that if GenRad was in
default under the financial covenants on September 28, 2001 and the banks did
not waive the default, the banks could demand immediate payment of the full
outstanding balance under the new line and prohibit new borrowings under the
revolving line of credit. Without the revolving line of credit, GenRad would
then have no ability to satisfy the demand for payment or fund operations. The
board recognized that the company had no prospects for repaying the credit
facility other than through a merger transaction. Based upon Teradyne's initial
proposal, the absence of any competing proposals and GenRad's current prospects,
the board authorized management to enter into up to a two-week exclusivity
agreement with Teradyne. Effective July 20, 2001, GenRad entered into an
exclusivity agreement with Teradyne, expiring on July 30, 2001. On July 20, the
closing price for a share of GenRad common stock was $4.79.
During the week of July 23, 2001, Teradyne, GenRad and their legal and
financial advisors continued the detailed business, legal and accounting due
diligence process. Over this period, Teradyne and GenRad management conducted
negotiations concerning a definitive merger agreement and met collectively and
independently via telephone with representatives of Goldman Sachs and William
Blair and their other advisors. On July 23, 2001, legal counsel for Teradyne
delivered a draft merger
24
agreement (without pricing information) and a draft option agreement to legal
counsel to GenRad, and negotiation of the agreement commenced.
During the week of July 23, 2001, GenRad received inquiries from one other
interested party as well as the potential acquiror of the Diagnostic Solutions
line of business. Each was informed that GenRad was unable to enter into any
discussions.
On July 27, 2001, Teradyne presented GenRad management with a proposal to
acquire GenRad using a stock for stock exchange with a fixed exchange ratio;
this ratio would value GenRad common stock at $5.55 per share. On July 27, 2001,
the closing price for a share of GenRad common stock was $4.25. The proposal
included a 5% termination fee, assumed to be calculated on enterprise value, and
GenRad granting to Teradyne an option to purchase up to 19.9% of the company's
outstanding common stock that would be exercisable in circumstances where a
third party made a bid for the company which exceeded that of Teradyne. In
addition, the proposal required, as a condition to closing the acquisition, the
resolution of certain employee retention and bonus related matters.
The GenRad board met by conference telephone on Friday evening, July 27,
2001, to discuss this proposal and after discussion and deliberation authorized
management, William Blair and GenRad's legal counsel to negotiate with Teradyne
for: an increased price per share for GenRad common stock; the implementation of
a price collar, which would protect GenRad from a decline in the value of
Teradyne common stock but afford Teradyne protection if its stock price
increased above a certain amount; the elimination of the stock option as a
condition to signing the merger agreement; and the elimination of the
termination of employment agreements as a condition to closing the merger. The
board instructed William Blair and counsel to report the results of their
efforts at a meeting of the board to be held by conference telephone on Sunday
evening, July 29, 2001.
At a meeting of the board held on July 29, 2001, William Blair reported that
Teradyne had increased its proposal to $5.70 per share, reduced the termination
fee to $10 million, or approximately 4 percent of enterprise value, and
clarified that the final exchange ratio would be calculated based upon a
five-day average of Teradyne's closing price ending on July 31, 2001. Legal
counsel reported that discussion regarding Mr. Dutkowsky's employment
arrangements and other employee retention and bonus related matters continued to
be discussed by Teradyne and GenRad management. William Blair also reported that
Teradyne refused to change its position concerning a collar arrangement or the
stock option. The board instructed management, William Blair and GenRad's legal
counsel to continue to negotiate with Teradyne for an increased price per share
for GenRad common stock, the inclusion of a price collar and the removal of the
stock option.
GenRad's board met on Monday, July 30, 2001, at GenRad's headquarters. At
the meeting, William Blair reported that Teradyne had increased its proposal to
$5.75 per share, but refused to provide the collar protection requested by the
GenRad board or eliminate the stock option requirement. William Blair provided
the board with its preliminary financial analysis of the merger, and GenRad's
legal counsel reviewed in detail a current draft of the merger agreement.
Following the presentations, the board instructed William Blair and legal
counsel to continue negotiations concerning the removal of the stock option. The
board scheduled a telephonic meeting to be held at 11:00 a.m. on Wednesday,
August 1, 2001 to receive a further update. Also on July 30, 2001, Teradyne and
GenRad management, together with representatives of Goldman Sachs and William
Blair, met via teleconference to discuss business, legal and financial diligence
issues of Teradyne.
Discussions between Teradyne's and GenRad's management regarding price, the
option agreement and employee retention and bonus issues continued throughout
the day on August 1, 2001. At 11:00 a.m. on August 1, the GenRad board met by
conference telephone to receive William Blair's final presentation concerning
its financial analysis of the transaction and to receive William Blair's opinion
as to the fairness of the merger to GenRad's shareholders from a financial point
of view. At that meeting, the board was informed that the final proposed
exchange ratio for the merger was 0.1733 of a
25
share of Teradyne common stock for each share of GenRad common stock. Based upon
the closing price of Teradyne common stock on July 31, 2001, such ratio was the
equivalent of approximately $5.89 per share of GenRad common stock. GenRad's
closing price on July 31, 2001 was $4.05.
The GenRad board also was informed by legal counsel and Mr. Dutkowsky that
Teradyne had requested, as a condition to signing the merger agreement, that
among other retention and bonus related matters, Mr. Dutkowsky agree to
terminate his employment agreement with GenRad and agree to new terms of
employment with Teradyne to be effective upon the closing of the merger.
Mr. Dutkowsky's employment agreement with GenRad provided benefits if his
employment with Teradyne were terminated (in certain instances) following the
closing of the merger. See "The Merger--Interests of Certain Persons in the
Merger; Differing Interests" on page 36. In addition, GenRad's legal counsel
informed the board that Teradyne had agreed to eliminate the stock option from
the transaction. The board instructed Mr. Dutkowsky to contact Teradyne to
continue negotiations concerning the termination of his employment and severance
arrangements and retention and bonus matters relating to other employees of the
Company. The board agreed to reconvene at 4:00 p.m. that day to further evaluate
the status of negotiations.
At 4:00 p.m. that afternoon, the GenRad board met and received a status
report from Mr. Dutkowsky concerning negotiations with Teradyne. The GenRad
board then appointed two members of the Compensation Committee, Ed Zschau and
William S. Antle III, to contact Teradyne to discuss Teradyne's position with
regard to Mr. Dutkowsky. The board agreed to reconvene at 6:00 p.m. that evening
to further evaluate the status of negotiations.
At 6:00 p.m., Mr. Zschau reported that he and Mr. Antle had discussed the
matter with Teradyne's management and that as a condition to the signing of the
merger agreement, Teradyne required Mr. Dutkowsky to agree to terminate his
employment and severance arrangements with GenRad prior to closing. At GenRad's
request, Teradyne agreed that it would not object if the GenRad board wished to
pay to Mr. Dutkowsky a bonus of $375,000 based on performance during fiscal 2000
that the board had previously considered paying Mr. Dutkowsky earlier in the
year, but had elected not to pay in light of GenRad's deteriorating financial
condition. After discussion, the board agreed to the condition. Then, the GenRad
board unanimously approved the merger agreement and resolved to recommend that
GenRad's shareholders approve the merger agreement. The merger agreement was
executed after the close of business on August 1, 2001. The closing price of
GenRad common stock on August 1, 2001 was $4.00.
On August 2, 2001, before the opening of trading on the New York Stock
Exchange, GenRad issued a press release announcing the execution of the merger
agreement.
RECOMMENDATION OF THE GENRAD BOARD
THE GENRAD BOARD UNANIMOUSLY RECOMMENDS THAT THE MERGER AGREEMENT BE
APPROVED BY THE SHAREHOLDERS OF GENRAD.
GENRAD'S REASONS FOR THE MERGER
In reaching its conclusions and recommendation described above, the GenRad
board considered a number of factors, including without limitation, the
following material factors:
- the familiarity of the GenRad board with the business, results of
operations, properties, financial condition and resources, competitive
position and prospects of GenRad; and the nature of the circuit board test
market and the economic conditions in the markets in which GenRad
operates;
- GenRad's relationship with its credit facility banks and its recent
history of needing to obtain waivers for noncompliance with financial
covenants under its credit facility, including the most
26
recent waiver of defaults under existing financial covenants through
September 28, 2001; and the prospects of complying at any time in the
foreseeable future with such financial covenants or otherwise satisfying
the company's obligations under the credit facility or obtaining
replacement or additional financing;
- the possible alternatives to the merger, including the likelihood of a
transaction with an entity other than Teradyne that could benefit GenRad's
shareholders, and the unlikely ability of GenRad to continue as an
independent entity and the risks associated with doing so;
- the financial and other terms and conditions of the merger and the merger
agreement;
- the market price of GenRad common stock and the potential for GenRad
shareholders to receive a premium over the closing price of GenRad common
stock on August 1, 2001, the last trading day prior to the public
announcement of the merger. If on the date the merger is completed, the
closing price for shares of Teradyne common stock is the same as it was on
August 1, 2001, GenRad shareholders will receive a premium in excess of
52% over the closing price of GenRad common stock on that date;
- the opinion, dated August 1, 2001, to the GenRad board, of William Blair
to the effect that, as of that date and based upon and subject to the
matters described in such opinion, the exchange ratio specified in the
merger agreement was fair, from a financial point of view, to the GenRad
shareholders (other than Teradyne and its affiliates);
THE FULL TEXT OF WILLIAM BLAIR'S WRITTEN OPINION, WHICH SETS FORTH THE
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITATIONS
ON THE REVIEW UNDERTAKEN BY WILLIAM BLAIR, IS ATTACHED AS APPENDIX C AND
IS INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT - PROSPECTUS. IN
ADDITION, THE OPINION IS DISCUSSED IN MORE DETAIL BELOW UNDER THE CAPTION
"THE MERGER--OPINION OF GENRAD'S FINANCIAL ADVISOR" ON PAGE 29. GENRAD
SHAREHOLDERS ARE URGED TO READ THE OPINION OF WILLIAM BLAIR CAREFULLY IN
ITS ENTIRETY.
- the board's belief that there are only customary and relatively limited
conditions to the obligations of Teradyne to complete the merger pursuant
to the terms of the merger agreement;
- the board's belief that the terms of the merger agreement should not
unduly discourage other third parties from making bona fide proposals
subsequent to signing the merger agreement;
- the fact that the merger agreement, which prohibits GenRad, its
subsidiaries and their respective officers, directors, employees,
representatives or agents from soliciting, initiating or encouraging any
acquisition proposal or participating in any discussion regarding any
acquisition proposal, does permit GenRad to furnish information to, and
participate in negotiations with, any person that makes an unsolicited
bona fide acquisition proposal, provided the board concludes in good
faith, based on advice of GenRad's outside counsel, that such action is
required in order to satisfy it's fiduciary duties to the GenRad
shareholders under applicable law; and
- the fact that in the event that the board decides to accept an acquisition
proposal from a third party, the board may terminate the merger agreement
and pay Teradyne a termination fee of $10,000,000, exclusive of fees and
expenses. The GenRad board did not believe that such termination provision
would be a significant deterrent to a higher offer by a third party
interested in acquiring GenRad.
The discussion of the information and factors considered and given weight by
the GenRad board is not intended to be exhaustive. The board did not quantify or
otherwise assign relative weights to the specific factors considered in reaching
its determination.
There can be no assurance that the strategic goals of the merger will be
achieved by Teradyne. The past performance of Teradyne common stock is not
necessarily indicative of future performance. See "Risk Factors" on page 13 and
"Trading Price of Teradyne and GenRad Common Stock" on page 54.
27
TERADYNE'S REASONS FOR THE MERGER
On July 31, 2001, Teradyne's board of directors concluded that the merger is
in the best interests of Teradyne and unanimously approved the merger with
GenRad. In reaching its decision, the Teradyne board of directors considered a
number of factors, including:
- Teradyne's board of directors and management had determined that Teradyne
should broaden the product offerings of its assembly test division in
order to compete more effectively;
- Teradyne's product offerings after the merger will include a broad range
of sophisticated circuit board test, inspection and software products;
- Teradyne's global presence in Europe and Asia among large electronics
manufacturing services companies and original equipment manufacturers in
the assembly inspection and test markets will be strengthened as a result
of the merger;
- the prospects of Teradyne's assembly test division without the acquisition
of GenRad;
- the potential for other parties to acquire GenRad and become competitors;
- the consideration to be received by GenRad's shareholders in the merger
and the relationship between the current and historical market values of
Teradyne common stock and GenRad common stock and a comparison of
comparable transactions;
- the current financial market conditions and historical market prices,
volatility and trading information with respect to the Teradyne common
stock and the GenRad common stock; and
- reports from management, legal and financial advisors as to the results of
the due diligence investigation of GenRad.
Teradyne's board also considered the terms of the merger agreement, including
the representations, warranties, covenants, provisions relating to termination
fees and provisions relating to GenRad's ability to conduct its business prior
to the completion of the merger.
In addition, the Teradyne board of directors identified a number of
potential negative factors, including:
- the risk that the slowdown in the economy, particular the electronics
industry, will continue to worsen, resulting in losses greater than the
projected losses of each of Teradyne and GenRad;
- the risk that Teradyne will not be able to retain key GenRad employees;
- the need for GenRad to achieve significant cost reductions in order for
Teradyne to realize the potential benefits of the merger and to become
profitable;
- the risk that GenRad will be unable to sell its Diagnostics Solutions line
of business on reasonable terms;
- the risk that the banks that are parties to GenRad's senior credit
facility will not grant another waiver to GenRad on September 28, 2001 in
connection with any noncompliance with the terms of the credit facility
agreement, or that the banks will initiate foreclosure proceedings upon
collateral in which they have a security interest, exercise any rights of
set-off or any other similar remedy;
- the risk that GenRad will have to incur further debt prior to the merger
in excess of its projections;
- the substantial costs and financial statement charges to be incurred in
connection with the merger, including the integration of the businesses
and transaction expenses relating to the merger; and
28
- other risks described in the section of this proxy statement - prospectus
entitled "Risk Factors" beginning on page 13.
Teradyne's board of directors concluded that, on balance, the potential
benefits to Teradyne and its shareholders of the merger outweighed the risks
associated with the merger. The discussion of the information and factors
considered by Teradyne's board of directors is not intended to be exhaustive. In
view of the variety of factors considered in connection with its evaluation of
the merger, Teradyne's board of directors did not find it practicable to, and
did not quantify or otherwise assign relative weight to, the specific factors
considered in reaching its determination. Instead, Teradyne's board conducted an
overall analysis of the factors described above, including summaries of
discussions of Teradyne's management with Teradyne's legal, financial and
accounting advisors. In considering the factors described above, individual
members of the Teradyne board of directors may have given different weights to
different factors.
OPINION OF GENRAD'S FINANCIAL ADVISOR
GenRad retained William Blair & Company, L.L.C., to act as its financial
advisor in connection with a possible strategic transaction. In connection with
that engagement, GenRad asked William Blair to render an opinion as to whether
the exchange ratio set forth in the merger agreement was fair to GenRad
shareholders, from a financial point of view. On August 1, 2001, William Blair
delivered an oral opinion, later confirmed in writing as of that date, to
GenRad's board of directors that, as of that date and based upon and subject to
the assumptions and qualifications stated in its opinion, the exchange ratio was
fair to GenRad shareholders from a financial point of view.
THE FULL TEXT OF WILLIAM BLAIR'S WRITTEN OPINION, DATED AUGUST 1, 2001, IS
ATTACHED TO THIS PROXY STATEMENT - PROSPECTUS AS APPENDIX C AND IS INCORPORATED
HEREIN BY REFERENCE. YOU SHOULD READ THE ENTIRE OPINION CAREFULLY TO LEARN ABOUT
THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITS OF THE
SCOPE OF WILLIAM BLAIR'S REVIEW IN RENDERING ITS OPINION. THE FOLLOWING SUMMARY
OF WILLIAM BLAIR'S OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF THE OPINION. WILLIAM BLAIR'S OPINION WAS ADDRESSED TO GENRAD'S BOARD FOR
THE PURPOSE OF ITS EVALUATION OF THE MERGER AND IS NOT A RECOMMENDATION TO ANY
GENRAD SHAREHOLDER AS TO HOW TO VOTE ON THE MERGER PROPOSAL.
In connection with its opinion, William Blair, among other things:
- reviewed certain publicly available financial statements and other
business and financial information of GenRad and Teradyne;
- reviewed certain internal financial statements of GenRad and other
historical financial and operating data concerning GenRad and Teradyne
prepared by the management of GenRad and Teradyne;
- reviewed certain financial forecasts and other forward-looking financial
information for GenRad provided by the management of GenRad;
- reviewed certain financial forecasts and other forward-looking financial
information for Teradyne;
- held discussions with the management of GenRad and Teradyne concerning the
business prospects and outlook of each;
- reviewed the stock price and trading history of the common stock of GenRad
and Teradyne;
- compared the financial performance and the prices and trading activity of
the common stock of GenRad and Teradyne with that of other publicly traded
companies that it believed were comparable;
29
- compared the financial terms of the merger with the financial terms of
other publicly disclosed transactions that it deemed relevant;
- compared information regarding acquisition premiums for public companies
over trading market prices prior to the announcement of an acquisition or
merger transaction of relevant size;
- prepared a discounted cash flow analysis of GenRad and Teradyne;
- participated in discussions with representatives of GenRad and its legal
advisors;
- reviewed certain potential pro forma effects of the merger;
- made such other studies and inquiries, and took into account such other
matters, as it deemed relevant, including its assessment of general
economic, market and monetary conditions as of the date of its opinion;
and
- reviewed the financial terms and conditions set forth in a draft of the
merger agreement dated August 1, 2001.
In William Blair's review and analysis, and in arriving at its opinion, it
assumed and relied upon the accuracy and completeness of all of the financial
and other information provided to it, including information furnished to it
orally or otherwise discussed with it by the management of GenRad and Teradyne,
or that was publicly available, and it did not attempt to verify, nor did it
assume responsibility for verifying, any of such information. William Blair
relied upon the assurances of the management of GenRad and Teradyne that neither
was aware of any facts that would make such information forwarded by such party
inaccurate or misleading. William Blair did not include any cost savings,
operating synergies or other projected benefits that might result from the
merger in its analysis. Furthermore, William Blair did not obtain or make, or
assume any responsibility for obtaining or making, any independent evaluation or
appraisal of the properties, assets or liabilities, contingent or otherwise, of
GenRad or Teradyne, nor was it furnished with any such evaluation or appraisal.
With respect to the financial forecasts and projections, including estimates
from published equity research reports, and the assumptions and bases therefore,
for GenRad and Teradyne that William Blair reviewed, it assumed that such
forecasts and projections were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the future financial condition
and performance of GenRad and Teradyne, and William Blair further assumed that
such projections and forecasts would be realized in the amounts and in the time
periods then estimated. William Blair assumed that the merger would be
consummated upon the terms set forth in the draft merger agreement without
material alteration thereof. In addition, William Blair assumed that the
historical financial statements of GenRad and Teradyne reviewed by it had been
prepared and fairly presented in accordance with U.S. generally accepted
accounting principles consistently applied.
William Blair also took into account, among other things:
- that GenRad has experienced and is expected to continue to experience in
the near future operating losses and GenRad's ability to execute its
business plan is, and will continue to be, dependent on its receipt of
external financing for working capital and other corporate purposes;
- in each of GenRad's last two fiscal quarters GenRad has not been in
compliance with certain financial covenants made to its lenders;
- GenRad currently is operating pursuant to a waiver from its lenders that
expires on September 28, 2001;
- given GenRad's current operating results, absent the merger or other
similar transaction, there is a reasonable probability that GenRad's banks
will not waive noncompliance under GenRad's credit facility beyond
September 28, 2001, and GenRad will not have access to future borrowings
under such agreements in such instance;
30
- GenRad has advised William Blair that without access to such borrowings,
GenRad would encounter difficulty funding its day-to-day operations and
its ability to continue its business as currently conducted would be
impaired;
- GenRad anticipates difficulty in securing acceptable alternative financing
given the current credit markets and GenRad's financial condition;
- GenRad has approached and has held discussions with certain other third
parties to solicit indications of interest in a possible merger with
GenRad, and Teradyne was the only third party to submit a firm offer to
GenRad with respect to such a transaction;
- given GenRad's current operating results and the possible liquidity
constraints on GenRad, GenRad may have limited time and ability to pursue
additional alternatives to the merger; and
- the merger represents a readily available transaction to GenRad that
provides shareholders of GenRad an opportunity to realize value for their
shares prior to any further loss in value attributable to continued
operating losses or noncompliance under GenRad's lending agreements and
any resulting adverse effect on GenRad's liquidity.
The fairness opinion was based upon market, economic and other conditions as
in effect on, and information made available to William Blair as of, the date of
such opinion. The opinion noted that subsequent developments might affect the
conclusion expressed in such opinion and that William Blair disclaimed any
undertaking or obligation to advise any person of any change in any matter
affecting the opinion which might come or be brought to its attention after the
date of such opinion. The opinion is limited to the fairness, from a financial
point of view and as of the date of such opinion, of the exchange ratio. William
Blair did not express any opinion as to the value of any other agreement or
arrangement entered into in connection with the merger or any tax or other
consequences that might result from the merger. The opinion did not address the
relative merits of the merger and the other business strategies that GenRad's
board of directors had considered or might be considering, nor did it address
the decision of GenRad's board of directors thereof to proceed with the merger.
The following discussion summarizes the material financial analyses William
Blair performed in arriving at its opinion. William Blair presented the results
of these analyses to the board of directors on August 1, 2001.
In its presentation to the board of directors of GenRad, William Blair noted
that in connection with its engagement, William Blair held discussions with
multiple third parties to solicit indications of interest in a possible
acquisition of the GenRad. William Blair also noted that Teradyne's proposal was
a fixed exchange ratio, stock for stock transaction and required no financing
contingency.
William Blair calculated the implied merger price per share reflected by the
terms of the merger to be $5.89 for each share of GenRad common stock. The
implied merger price per share was obtained by multiplying the exchange ratio of
0.1733 by the closing price per share of Teradyne common stock of $33.98 on
July 31, 2001.
STOCK PRICE ANALYSIS
William Blair examined the history of the trading prices and volume for the
common stock of GenRad and Teradyne and the relationship between movements of
such common stock and movements in common stock of certain publicly held
companies William Blair believed to be comparable to GenRad and Teradyne.
ANALYSIS OF CERTAIN PUBLICLY TRADED COMPANIES COMPARABLE TO GENRAD
William Blair reviewed and compared certain GenRad financial information to
corresponding financial information, ratios and public market multiples for
publicly traded companies that it believed were comparable to GenRad. These
publicly traded companies included ADE Corporation, Axsys Technologies, Inc.,
Camtek Ltd., Cyberoptics Corporation, inTEST Corporation, Keithley
31
Instruments, Inc., Lecroy Corporation, Micro Component Technology, Inc., PRI
Automation, Inc., Robotic Vision Systems, Inc. and Therma Wave, Inc. William
Blair selected these companies because they are the publicly traded companies
whose operations William Blair deemed most comparable to GenRad. Although
William Blair compared the trading multiples of the selected companies at the
date of William Blair's opinion to the implied merger multiples of GenRad, none
of the selected companies is identical to GenRad.
Among the information William Blair considered were revenue, earnings before
interest and taxes (EBIT), earnings before interest, taxes, depreciation and
amortization (EBITDA), net income, earnings per share, gross profit margins,
EBIT margins and net income margins, growth in revenues and net income, return
on assets and equity, market capitalization and capital structure. The multiples
and ratios for the comparable companies were based on the most recent publicly
available financial information and on consensus earnings per share estimates
for 2001 and 2002 and were based on the closing share prices as of July 31,
2001.
Information regarding the multiples implied by the terms of the merger
compared to the multiples derived from William Blair's analysis of selected
comparable companies are set forth in the following table. LTM refers to the
latest twelve months. The ratio of Enterprise Value to GenRad's LTM EBIT, the
ratio of Equity Value to GenRad's LTM Net Income and the ratios of Price to
GenRad's Estimated 2001 and 2002 Earnings Per Share are not meaningful because
of negative operating results.
SELECTED COMPARABLE
COMPANIES
GENRAD IMPLIED --------------------------------
MULTIPLE MERGER MULTIPLES RANGE MEDIAN
-------- ---------------- --------------------- --------
Enterprise Value to LTM Revenues..................... 0.82x 0.40x - 1.82x 1.00x
Enterprise Value to LTM Gross Profit................. 2.3x 1.0x - 3.7x 2.5x
Enterprise Value to LTM EBIT......................... not meaningful 4.7x - 23.0x 7.1x
Enterprise Value to LTM EBITDA....................... 17.3x 3.7x - 28.0x 7.3x
Equity Value to LTM Net Income....................... not meaningful 8.0x - 29.7x 9.8x
Price to estimated 2001 Earnings Per Share........... not meaningful 14.1x - 41.3x 22.8x
Price to estimated 2002 Earnings Per Share........... not meaningful 8.3 - 55.5x 16.1x
The implied merger price was in each case, where meaningful, within the
range implied by the comparable publicly traded company analysis.
ANALYSIS OF CERTAIN PUBLICLY TRADED COMPANIES COMPARABLE TO TERADYNE
William Blair reviewed and compared certain Teradyne financial information
to corresponding financial information, ratios and public market multiples for
publicly traded companies that it believed were comparable to Teradyne. These
publicly traded companies included Agilent Technologies, Inc., Amkor
Technology, Inc., Applied Materials, Inc., Credence Systems Corporation,
KLA-Tencor Corporation, LAM Research Corporation, LTX Corporation, National
Instruments Corporation, Novellus Systems, Inc., Orbotech Ltd.,
Tektronix, Inc., Sanmina Corporation and Veeco Instruments, Inc. William Blair
selected these companies because they are the publicly traded companies whose
operations William Blair deemed most comparable to Teradyne. Although William
Blair compared the trading multiples of the selected companies at the date of
William Blair's opinion to the trading multiples of Teradyne, none of the
selected companies is identical to Teradyne.
Among the information William Blair considered were revenue, earnings before
interest and taxes (EBIT), earnings before interest, taxes, depreciation and
amortization (EBITDA), net income, earnings per share, gross profit margins,
EBIT margins and net income margins, growth in revenues and net income, return
on assets and equity, market capitalization and capital structure. The multiples
and ratios for the comparable companies and Teradyne were based on the most
recent publicly available
32
financial information and on consensus earnings per share estimates for 2001 and
2002 and were based on the closing share prices as of July 31, 2001.
Information regarding Teradyne's multiples compared to the multiples derived
from William Blair's analysis of selected comparable companies are set forth in
the following table. The ratio of Price to Teradyne's Estimated 2001 Earnings
Per Share is not meaningful because of negative operating results and the ratio
of Price to Teradyne's Estimated 2002 Earnings Per Share is not meaningful
because of operating results that are only slightly positive.
SELECTED COMPARABLE
COMPANIES
TERADYNE TRADING --------------------------------
MULTIPLE MULTIPLES RANGE MEDIAN
-------- ---------------- --------------------- --------
Enterprise Value to LTM Revenues....................... 2.18x 1.11x - 4.52x 1.98x
Enterprise Value to LTM Gross Profit................... 5.5x 2.3x - 8.0x 4.8x
Enterprise Value to LTM EBIT........................... 13.1x 6.8x - 21.1x 12.2x
Enterprise Value to LTM EBITDA......................... 10.4x 5.1x - 17.4x 8.9x
Equity Value to LTM Net Income......................... 18.3x 11.1x - 51.3x 19.3x
Price to estimated 2001 Earnings Per Share............. not meaningful 20.6x - 46.9x 36.7x
Price to estimated 2002 Earnings Per Share............. not meaningful 16.1x - 49.7x 30.4x
Teradyne's trading multiples, where meaningful, were within the range implied by
the comparable publicly traded company analysis.
COMPARABLE ACQUISITIONS ANALYSIS
William Blair performed an analysis of selected recent merger or acquisition
transactions. The selected transactions were chosen based on William Blair's
judgment that they were generally comparable, in whole or in part, to the
proposed transaction. In total, William Blair examined eight transactions that
were closed between January 1, 1999 and July 31, 2001. The selected transactions
were not intended to be representative of the entire range of possible
transactions in the industry. Although William Blair compared the transaction
multiples of these companies to the implied merger multiples of GenRad, none of
the selected companies is identical to GenRad. The transactions were (acquired
company/acquiror):
- General Scanning, Inc./ Lumonics, Inc.
- Perkin-Elmer (Analytical Instruments Division)/EG&G Inc.
- Instron Corporation/Kirtland Capital Partners
- Moore Products Company/ Siemens Energy & Automation
- TSI Incorporated/JJF Acquisition Corporation
- Cherry Corporation/CABO Acquisition Corporation
- Cerprobe Corporation/Kulicke and Soffa Industries
- Applied Science & Technology, Inc./MKS Instruments, Inc.
William Blair reviewed the consideration paid in such transactions in terms
of the enterprise value of such transactions as a multiple of revenues, EBIT and
EBITDA for the latest twelve months prior to the announcement of such
transactions. Additionally, William Blair reviewed the consideration paid in
such transactions in terms of price paid for the common stock in such
transactions as a multiple of net income for the latest twelve months prior to
announcement of such transactions.
33
Information regarding the multiples implied by the terms of the merger
compared to the acquisition multiples from William Blair's analysis is set forth
in the following table. The ratio of Enterprise Value to GenRad's LTM EBIT and
the ratio of Equity Value to GenRad's LTM Net Income are not meaningful because
of negative operating results.
COMPARABLE ACQUISITIONS
GENRAD IMPLIED --------------------------------
MULTIPLE MERGER MULTIPLES RANGE MEDIAN
-------- ---------------- --------------------- --------
Enterprise Value to LTM Revenues....................... 0.82x 0.46x - 1.92x 0.89x
Enterprise Value to LTM Gross Profit................... 2.3x 1.0x - 4.5x 2.6x
Enterprise Value to LTM EBIT........................... not meaningful 7.4x - 23.1x 11.2x
Enterprise Value to LTM EBITDA......................... 17.3x 5.4x - 17.4x 7.9x
Equity Value to LTM Net Income......................... not meaningful 12.6x - 45.8x 17.3x
The implied merger price in each case, where meaningful, was within the
range implied by this comparable acquisitions analysis.
PREMIUM ANALYSIS
In addition to evaluating multiples paid in transactions, William Blair
considered, for 538 public company transactions announced between January 1,
1998 and July 31, 2001 whose enterprise value ranged from $100 million to
$400 million, the acquisition premiums over each company's stock price one day
and one week prior to the announcement of a transaction. This analysis was based
on the closing price of GenRad common stock of $4.05 on July 31, 2001 and $4.66
on July 25, 2001. This premium analysis conducted by William Blair indicated the
following:
RELEVANT PUBLIC TRANSACTIONS
GENRAD IMPLIED -----------------------------------
MERGER PREMIUM RANGE MEDIAN
-------------- ------------------------ --------
One Day........................................... 45.4% (36.0%) - 200.4% 28.0%
One Week.......................................... 26.4% (47.4%) - 217.4% 33.9%
The implied merger price fell within the range of values implied by the
premium analysis.
DISCOUNTED CASH FLOW ANALYSIS FOR GENRAD
Using a discounted cash flow analysis, William Blair estimated the net
present value of the free cash flows that GenRad could produce on a stand-alone
basis over a five-year period from 2002 to 2006. Free cash flows means EBIT
after taxes plus depreciation and amortization less capital expenditures and
working capital changes. In estimating these cash flows, William Blair used the
financial projections provided by GenRad management. In calculating the terminal
value, William Blair assumed multiples of enterprise value to EBITDA ranging
from 7.0 to 9.0, which multiples William Blair believed to be appropriate for
such an analysis. The annual and terminal free cash flows were discounted at
rates between 18.0% to 22.0% to determine a net present value of the enterprise
value of GenRad. The discounted cash flow analysis conducted by William Blair
indicated a per share value of GenRad of $3.95 to $6.48.
The implied merger price fell within the range of values implied by the
discounted cash flow analysis.
DISCOUNTED CASH FLOW ANALYSIS FOR TERADYNE
Using a discounted cash flow analysis, William Blair estimated the net
present value of the free cash flows that Teradyne could produce on a
stand-alone basis over a five-year period from 2002 to 2006. In estimating these
cash flows William Blair used projected results for 2002 through 2006, which
were discussed with Teradyne management. These projections included a
conservative case and an optimistic case. In calculating the terminal value,
William Blair assumed multiples of enterprise value to EBITDA ranging from 11.0
to 13.0, which multiples William Blair believed to be appropriate for such
34
an analysis. The annual and terminal free cash flows were discounted at rates
between 18.0% to 22.0% to determine a net present value of the enterprise value
of Teradyne. The discounted cash flow analysis conducted by William Blair
indicated a value of $21.17 to $28.88 per share for the conservative case and
$35.63 to $48.22 per share for the optimistic case for Teradyne.
The closing price of Teradyne common stock on July 31, 2001 was $33.98 which
was within the range of the discounted cash flow analysis conducted by William
Blair.
PRO FORMA MERGER ANALYSIS
William Blair also performed pro forma analyses of the financial impact of
the merger. Using the earnings forecast for GenRad provided by management and
the consensus estimates of Teradyne's earnings based on published equity
research reports, William Blair compared the earnings per share of the Teradyne
common stock on a stand-alone basis to the earnings per share of the common
stock of the surviving corporation on a pro forma basis. William Blair assumed
the merger would be accounted for using purchase accounting. Based on an
analysis of the merger using the consensus estimates of the published equity
research reports, the impact of the proposed transaction is dilutive to Teradyne
by $0.06 in calendar year 2002 and $0.03 in calendar year 2003 without the
benefit of any operating synergies.
GENERAL
This summary is not a complete description of the analysis performed by
William Blair but contains all material elements of the analysis. The
preparation of a fairness opinion involves determinations as to the most
appropriate and relevant methods of financial analysis and the application of
these methods to the particular circumstances. Therefore, such an opinion is not
readily susceptible to summary description. The preparation of a fairness
opinion does not involve a mathematical evaluation or weighing of the results of
the individual analyses performed, but requires William Blair to exercise its
professional judgment, based on its experience and expertise in considering a
wide variety of analyses taken as a whole. Each of the analyses conducted by
William Blair was carried out in order to provide a different perspective on the
merger and add to the total mix of information available. William Blair did not
form a conclusion as to whether any individual analysis, considered in
isolation, supported or failed to support an opinion as to fairness. Rather, in
reaching its conclusion, William Blair considered the results of the analyses in
light of each other and ultimately reached its opinion based on the results of
all analyses taken as a whole. William Blair did not place particular reliance
or weight on any particular analysis, but instead concluded its analyses, taken
as a whole, supported its determination. Accordingly, notwithstanding the
separate factors summarized above, William Blair believes that its analyses must
be considered as a whole and that selecting portions of its analyses and the
factors considered by it, without considering all analyses and factors, may
create an incomplete view of the evaluation process underlying its opinion. No
company or transaction used in the above analyses as a comparison is directly
comparable to GenRad or Teradyne or the contemplated transaction. In performing
its analyses, William Blair made numerous assumptions with respect to industry
performance, business and economic conditions and other matters. The analyses
performed by William Blair are not necessarily indicative of future actual
values and future results, which may be significantly more or less favorable
than suggested by such analyses.
William Blair is a nationally recognized firm and, as part of its investment
banking activities, is regularly engaged in the valuation of businesses and
their securities in connection with merger transactions and other types of
strategic combinations and acquisitions. In the ordinary course of its business,
William Blair and its affiliates may trade shares of the common stock of GenRad
or Teradyne for their own accounts and for the accounts of their customers and
accordingly may hold a long or short position in these securities.
The board of directors of GenRad selected William Blair as a result of its
expertise in similar merger and acquisition transactions and its knowledge of
GenRad.
35
GenRad agreed to pay William Blair a fee equal to $3,000,000. A significant
portion of that fee is contingent upon completion of the merger. $500,000 of
this fee was payable after William Blair advised the board of directors as to
the fairness, from a financial point of view, of the exchange ratio. Also,
GenRad agreed to indemnify William Blair and its affiliates against certain
liabilities, including liabilities arising under applicable securities laws and
its out-of-pocket expenses.
William Blair was not retained as an advisor or agent to GenRad's
shareholders or any other person other than as an advisor to the board of
directors of GenRad. The board of directors of GenRad and Teradyne determined
the merger consideration in arms'-length negotiations in which William Blair
advised the board of directors of GenRad. The board of directors of GenRad did
not impose any restrictions or limitations upon William Blair with respect to
the investigations made or the procedures that William Blair followed in
rendering its opinion.
INTERESTS OF CERTAIN PERSONS IN THE MERGER; DIFFERING INTERESTS
When considering the GenRad board's recommendation that the GenRad
shareholders vote in favor of the merger agreement, GenRad shareholders should
be aware of the following agreements and other arrangements that provide GenRad
directors and executive officers with interests in the merger that are different
from, or in addition to, the interests of GenRad shareholders as a whole.
SEVERANCE AND CHANGE IN CONTROL AGREEMENTS. GenRad has severance agreements
with each of James L. Ficaro, Vice President Functional Solutions; Lori B.
Hannay, Vice President, Global Human Resources; Ronald W. Lindell, Vice
President Process Solutions; Peter R. Miles, Vice President Diagnostic
Solutions; Brian C. Quirk, Vice President Global Technology; and Walter A.
Shephard, Vice President, CFO Global Finance and Business Operations. Generally,
each severance agreement provides that in the event of a change in control of
GenRad, if within three years of the date of the change in control, (i) GenRad
terminates the officer's employment without cause, (ii) the officer dies or
becomes disabled; or (iii) the officer terminates his employment with GenRad for
good reason, then GenRad will pay to the officer, a lump-sum cash amount equal
to two hundred percent of the sum of (a) the officer's base salary and (b) an
amount equal to the bonus earned by the officer for the prior fiscal year. In
addition, GenRad will pay to the officer the pro-rata portion of the officer's
target bonus for the year of termination and will continue to provide benefits
to the officer for a period of three years from the date of termination.
Moreover, all options to purchase GenRad common stock held by the officer will
become immediately exercisable. All of the options held by these officers,
however, have exercise prices that exceed the market value of GenRad common
stock as of September 19, 2001. The payments and benefits to which each officer
will be entitled under each severance agreement may be reduced, however, in
certain circumstances to the extent necessary to prevent the officer from
becoming liable for the excise tax levied on certain "excess parachute payments"
under Section 4999 of the Internal Revenue Code of 1986. Each severance
agreement imposes certain confidentiality obligations on the officer. The
severance agreements of Messrs. Quirk and Shephard and Ms. Hannay also grant
those officers indemnification rights. Shareholder approval of the merger
agreement will constitute a change in control for purposes of these agreements.
EMPLOYMENT AGREEMENT WITH ROBERT M. DUTKOWSKY. As a condition to Teradyne's
decision to enter into the merger agreement, Robert M. Dutkowsky, GenRad's
Chairman, President and Chief Executive Officer, has agreed with Teradyne that
he will terminate his employment agreement with GenRad at the effective time of
the merger and will forego any change in control bonus or other severance
benefits afforded to him under the agreement. Mr. Dutkowsky's employment
agreement with GenRad provides that in the event of a change of control of
GenRad, so long as Mr. Dutkowsky remains employed by GenRad for six months
thereafter, he shall have the right during the successive six-month period to
terminate his employment and to receive a lump-sum cash payment equal to three
times the sum of his annual salary at the time of the change of control and his
average bonus for the two prior fiscal years (or for the prior fiscal year if
two fiscal years have not elapsed). He is also entitled to receive this payment
if he terminates his employment for good reason within six months after the
36
change of control or, during this period, if GenRad terminates his employment
other than for cause or if he died or became disabled. Furthermore, under the
circumstances in which he is entitled to receive the lump-sum cash payment, any
right to repurchase shares acquired upon exercise of stock options terminates
and Mr. Dutkowsky's fringe benefits continue for three years or until he becomes
entitled to receive a comparable benefit from a new employer. The agreement also
contains a covenant not to compete.
Mr. Dutkowsky's agreement with Teradyne concerning the termination of his
GenRad employment agreement provides that such termination will not affect in
any way the terms of his existing GenRad options or the vesting thereof, meaning
that the options will remain fully vested and the repurchase right will
terminate upon shareholder approval of the merger agreement. In addition,
effective upon the closing of the merger, Mr. Dutkowsky will be required to
enter into a non-competition and non-solicitation agreement with Teradyne, which
would commence upon any termination of his employment with Teradyne.
In agreeing to terminate his employment agreement upon the effective time of
the merger, Mr. Dutkowsky will be giving up his current base salary under his
GenRad employment agreement of $500,000 and his annual bonus opportunity of up
to $500,000. In addition, he will be foregoing his right to receive a change of
control bonus in the amount of $1.5 million. Upon the closing of the merger,
Teradyne has agreed to grant to Mr. Dutkowsky an option to purchase 86,650
shares of Teradyne common stock with an exercise price equal to the fair market
value of Teradyne common stock on the closing date of the merger, 20% of which
options shall be vested as of the date of grant and the remainder of which shall
vest in accordance with Teradyne's standard vesting provisions. In addition,
Teradyne will also grant Mr. Dutkowsky an option to purchase 100,000 shares of
Teradyne common stock with the same exercise price, but vesting cumulatively at
the rate of 20% on the closing date of the merger and 20% on each six-month
anniversary of the closing date. Upon his employment with Teradyne,
Mr. Dutkowsky will have an annual base salary of $334,286 with a variable
compensation factor of 150%. Mr. Dutkowsky will not have an employment agreement
with Teradyne.
GenRad's board has awarded Mr. Dutkowsky a $375,000 bonus payable upon
completion of the merger in consideration of his performance in fiscal 2000. The
GenRad board did not award the bonus to Mr. Dutkowsky earlier because of
GenRad's financial condition.
HOLDERS OF STOCK OPTIONS AND RESTRICTED STOCK. The executive officers of
GenRad have outstanding options to purchase an aggregate of 1,387,033 shares of
GenRad common stock, all of which have exercise prices that exceed the market
value of GenRad common stock as of September 19, 2001. Of such options 344,748
remain unvested. Upon the approval of the merger agreement by the GenRad
shareholders, all of these options will become fully exercisable. In addition,
the non-employee members of the GenRad board of directors hold an aggregate of
85,998 shares of restricted GenRad common stock, of which 21,492 shares are
subject to GenRad's right to repurchase. Upon the approval of the merger
agreement by the GenRad shareholders, GenRad's right to repurchase this
restricted stock will terminate.
INDEMNIFICATION AND INSURANCE. Under the merger agreement, following the
closing of the merger, Teradyne has agreed that it and the surviving corporation
in the merger will indemnify and hold harmless each of the current and former
directors, executive officers and employees eligible for indemnification by
GenRad and its subsidiaries for any acts and omissions prior to the completion
of the merger to the extent authorized and permitted under the articles of
organization and by-laws (or other comparable organizational documents) of
GenRad or its applicable subsidiary. See "The Merger Agreement--Certain
Covenants" on page 44.
Teradyne has also agreed, under the merger agreement, that it and the
surviving corporation will provide liability insurance to those directors' and
officers' currently covered by GenRad's liability insurance policy for a period
of six years after the closing. The terms of such policy will be comparable
37
to those currently in effect, provided that the surviving corporation will not
be required to spend more than 150% of the current annual premium paid by GenRad
for such coverage.
EMPLOYEES OF GENRAD AFTER THE MERGER
By virtue of the merger, the employees of GenRad immediately prior to the
merger will become employees of a wholly-owned subsidiary of Teradyne after the
merger.
Teradyne has agreed to include GenRad employees in its employee benefits
plans, on the same basis and terms that Teradyne employees participate, within
two years after the merger is completed. Prior to the date that GenRad employees
are included in Teradyne's employee benefit plans, Teradyne intends to maintain
in effect, on terms not materially less favorable than those offered by GenRad,
all of GenRad's employee benefit plans other than GenRad's stock option and
stock purchase plans. Teradyne intends that GenRad employees be eligible to
participate in its stock option and stock purchase plans on the same basis and
terms as Teradyne's employees immediately upon the completion of the merger.
Teradyne has reserved the right, however, to terminate or modify the terms
of any GenRad plan if the cost of maintaining the plan has increased by a
material amount or if maintaining the plan conflicts with Teradyne's overall
compensation policies then in effect. GenRad employees will not be eligible to
participate in Teradyne's defined benefit pension plan as it is frozen to new
accruals.
REQUIRED REGULATORY APPROVALS
The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 with respect to the merger expired on September 12, 2001. Similar waiting
periods under the antitrust laws of certain other countries however, have yet to
expire or be terminated.
ACCOUNTING TREATMENT
Teradyne will account for the acquisition of GenRad under the purchase
method of accounting in accordance with generally accepted accounting
principles. The purchase price will be allocated among GenRad's consolidated
assets and liabilities based on their estimated fair values. The excess of the
purchase price over the fair value of GenRad's assets and liabilities will be
allocated to goodwill in Teradyne's consolidated financial statements. This
goodwill will not be amortized but will be tested for impairment on a periodic
basis.
APPRAISAL RIGHTS
The following is a summary of Sections 85 through 98 of the Massachusetts
Business Corporation Law, which sets forth the procedures for GenRad
shareholders to object to the proposal to approve the merger agreement and
demand statutory appraisal rights. The full text of Sections 85 through 98 is
attached as Appendix B. Failure to follow those provisions exactly could result
in the loss of your appraisal rights. See "Material Federal Income Tax
Consequences" on page 51 for a discussion of the tax consequences of exercising
appraisal rights.
GenRad shareholders who desire to exercise their appraisal rights must
satisfy each of the applicable conditions of Sections 85 through 98. A written
objection to the proposed merger agreement which states that the shareholder
intends to demand payment for his, her or its shares must be filed with GenRad
before the vote on the proposal relating to the merger agreement is taken. This
written demand for appraisal must be in addition to and separate from any proxy
vote abstaining from or voting against the merger agreement. Voting against,
abstaining from voting or failing to vote with respect to the merger agreement
alone will not constitute a demand for appraisal for purposes of Massachusetts
law.
GenRad shareholders electing to exercise their appraisal rights must not
vote for approval of the merger agreement. If a shareholder returns a signed
proxy but does not specify a vote against approval
38
of the merger agreement or a direction to abstain, the proxy will be voted "FOR"
the merger agreement, which will have the effect of waiving that shareholder's
appraisal rights.
A demand for appraisal must reasonably inform GenRad of the identity of the
GenRad shareholder and that the GenRad shareholder intends to demand the
appraisal of his, her or its shares. Accordingly, a demand for appraisal must be
executed by or for the GenRad shareholder of record, fully and correctly, as
that shareholder's name appears on the certificate evidencing the dissenting
shares. If the dissenting shares are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, the demand must be executed by or
for the fiduciary. If the dissenting shares are owned of record by or for more
than one person, as in a joint tenancy or tenancy in common, the demand must be
executed by or for all joint owners. An authorizing agent, including an agent
for two or more joint owners, may execute the demand for appraisal for a
shareholder of record; however, the agent must identify the record owner and
expressly disclose the fact that, in exercising the demand, he, she or it is
acting as agent for the record owner.
A GenRad shareholder who elects to exercise appraisal rights should deliver
his, her or its written demand to Walter A. Shephard, Clerk, GenRad, Inc., 7
Technology Park Drive, Westford, Massachusetts 01886 prior to the vote
concerning approval of the merger agreement taken at the special meeting. The
written demand for appraisal should specify the shareholder's name and mailing
address, that the GenRad shareholder objects to the proposal regarding the
merger agreement and that he, she or it is demanding appraisal of his, her or
its shares of GenRad common stock.
Within 10 days after the merger becomes effective, GenRad must notify by
registered or certified mail each shareholder who has satisfied the requirements
for demanding appraisal that the merger has become effective. The notice from
GenRad will not create any rights in its recipient to demand payment for his,
her or its shares of GenRad common stock.
If, within 20 days after the date GenRad mails the notice, any shareholder
to whom GenRad was required to give notice demands in writing payment from
GenRad for his, her or its shares of GenRad common stock, GenRad shall pay to
such objecting shareholder the fair value of his, her or its GenRad common stock
within 30 days after the expiration of the period during which such demand may
be made. These written demands may be filed with GenRad c/o Teradyne, Inc., 321
Harrison Avenue, Boston, Massachusetts 02118, attention George W. Chamillard. If
during this 30-day period GenRad and the objecting shareholder are unable to
agree as to the value of the GenRad common stock, either party may, within four
months after the expiration of the 30-day period, demand a determination of the
value of the shares of GenRad common stock of all such objecting shareholders by
filing a bill in equity in the superior court in Middlesex County.
Any objecting shareholder who decides to file a bill in equity must do so on
his, her or its own behalf and on behalf of all other objecting shareholders who
have demanded payment for their shares and with whom GenRad has not reached an
agreement as to the value thereof. Service of the bill must be made upon GenRad
by subpoena with a copy of the bill attached. GenRad will file with its answer a
duly verified list of all other objecting shareholders and the objecting
shareholders will then be deemed to have been added as parties to the bill.
GenRad will then give notice in the form, and returnable on the date, ordered by
the court to each objecting shareholder by registered or certified mail to the
last known address as shown in the records of GenRad and by publication or
otherwise as the court may order.
After a hearing, the court shall enter a decree determining the fair value
of the GenRad common stock owned by the objecting shareholders who have become
entitled to the valuation of and payment for their shares and shall order GenRad
to make payment, together with interest, if any, to the objecting shareholders
entitled thereto upon the transfer by them of the certificates representing
their shares of GenRad common stock if certificated or uncertificated, upon
receipt of an instruction to transfer such stock to GenRad. The value of such
shares shall be determined as of the day preceding
39
the date of the shareholder vote approving the merger agreement and shall be
exclusive of any element of value arising from the expectation or accomplishment
of the merger.
The costs associated with the bill in equity, exclusive of fees of counsel
and experts retained by any party, shall be taxed upon the parties to the bill
as the court deems equitable. All costs associated with giving notice to
shareholders, however, shall be borne by GenRad. Interest shall be paid on any
award from the date of the vote approving the merger agreement and the court
may, upon application of any party, determine the amount of interest to be paid.
Any objecting shareholder who has demanded payment for his, her or its GenRad
common stock shall not thereafter be entitled to notice of any shareholders'
meeting, to vote such stock for any purpose or to receive any dividends or
distributions on the stock (except dividends or distributions payable to
shareholders of record as of a date prior to the date of the vote approving the
merger agreement) unless:
- a bill in equity to determine the fair value of the GenRad common stock is
not filed within the statutory time period;
- a bill in equity, if filed, has been dismissed as to such shareholder; or
- such shareholder has, with the written approval of GenRad, delivered a
written withdrawal of his or her objections and an acceptance of such
corporate action.
The enforcement by an objecting shareholder of his, her or its right to
receive payment for his, her or its shares in this manner shall be an exclusive
remedy except that the shareholder may still bring or maintain an appropriate
proceeding to obtain relief on the ground that the corporate action giving rise
to such right will be or is illegal or fraudulent as to him, her or it.
HOW TO SURRENDER AND RECEIVE THE MERGER CONSIDERATION IN EXCHANGE FOR GENRAD
COMMON STOCK
Teradyne will appoint Fleet National Bank to act as exchange and paying
agent in the merger. Before the merger, Teradyne will deposit certificates
representing Teradyne common stock with Fleet National Bank, which immediately
before the merger represent the number of shares of Teradyne common stock
required to be issued in exchange for the outstanding shares of GenRad common
stock, together with sufficient cash to make payments for fractional shares of
Teradyne common stock.
Promptly after the merger, Teradyne will cause Fleet National Bank to mail
to each holder of a certificate or certificates which before the merger
represented outstanding shares of GenRad common stock, materials which will
specify that delivery will be effected, and risk of loss and title to the
certificates representing shares of GenRad common stock will pass, only upon
proper delivery of these certificates to Fleet National Bank. Instructions for
use in surrendering the GenRad share certificates in exchange for the merger
consideration will also be included. After the merger, each holder of shares of
GenRad common stock, other than shares to be canceled or dissenting shares, will
surrender their GenRad share certificates to Fleet National Bank and will
receive in exchange the merger consideration. GenRad shareholders will also
receive, upon surrender of their GenRad share certificates, cash for any
fractional share of Teradyne common stock without interest. Teradyne will not be
obligated to deliver the Teradyne common stock until a GenRad shareholder
surrenders its GenRad share certificate. The GenRad share certificate
surrendered will be duly endorsed as Fleet National Bank may reasonably require.
Neither Teradyne nor Fleet National Bank will be liable to any former GenRad
shareholder for any amount properly delivered to a public official under
applicable abandoned property, escheat or similar laws.
Each GenRad shareholder who would otherwise have been entitled to receive a
fraction of a share of Teradyne common stock will receive cash without interest
rounded to the nearest whole cent in an amount equal to such fractional part of
a share of GenRad common stock multiplied by the market value of one share of
Teradyne common stock. The market value of one share of Teradyne common stock
will be the average of the closing prices for Teradyne common stock on the New
York Stock Exchange for the ten trading days immediately preceding the date of
the merger. No GenRad
40
shareholder will be entitled to dividends, voting rights, or any other rights as
a shareholder of Teradyne with respect to any fractional shares.
Teradyne or Fleet National Bank will be entitled to deduct and withhold from
the merger consideration such amounts as it is required to deduct and withhold
with respect to the Internal Revenue Code of 1986 or any provision of state,
local or foreign tax law. See "Material Federal Income Tax Consequences" on
page 51.
Until the GenRad share certificates are surrendered after the merger,
holders of such certificates or receipts will earn but will not be paid
dividends or other distributions declared after the merger on Teradyne common
stock into which their shares have been converted. When such certificates or
receipts are surrendered, any unpaid dividends or other distributions will be
paid, without interest. After the merger, there will be no transfers on the
stock transfer books of GenRad of shares of GenRad common stock outstanding
immediately before the merger. If the GenRad share certificates are presented
after the merger, they will be canceled and exchanged for the relevant
certificate representing the applicable shares of Teradyne common stock as well
as cash representing fractional shares of Teradyne common stock.
If a GenRad share certificate has been lost, stolen or destroyed, Fleet
National Bank will issue the merger consideration on receipt of appropriate
evidence as to its loss, theft or destruction and appropriate evidence as to its
ownership by the claimant. Teradyne may, in its discretion, require the claimant
to post bond as indemnity against any claim that may be made against Teradyne or
Fleet National Bank with respect to the certificate.
Teradyne shareholders will not be required to exchange certificates
representing their shares of Teradyne common stock or otherwise take any action
as a result of the completion of the merger.
RESALES BY AFFILIATES OF GENRAD
The Teradyne common stock offered by this proxy statement - prospectus has
been registered under the Securities Act of 1933, but affiliates of GenRad may
not sell the shares of Teradyne common stock offered by this proxy statement -
prospectus except pursuant to an effective registration statement under the
Securities Act covering such shares or in compliance with Rule 145 promulgated
under the Securities Act or another applicable exemption from the registration
requirements of the Securities Act. An affiliate of GenRad is a person who
controls, is controlled by or is under common control with GenRad. GenRad's
board and executive officers may be deemed to be affiliates of GenRad.
Rule 145 generally permits affiliates of acquired companies to sell their
shares of common stock immediately following the acquisition in compliance with
certain volume limitations and manner of sale requirements.
Specifically, sales by such affiliates during any three-month period cannot
exceed the greater of:
- 1% of all of the shares of Teradyne common stock outstanding, and
- the average weekly reported volume of trading of Teradyne common stock on
the New York Stock Exchange during the four calendar weeks preceding the
proposed sale.
Sales by such affiliates also may be made only in a broker's transaction or
transactions directly with a market maker.
These restrictions will cease to apply under most other circumstances if the
affiliate has held the shares of Teradyne common stock offered by this proxy
statement - prospectus for at least one year, provided that the person or entity
is not then an affiliate of Teradyne. INDIVIDUALS WHO ARE NOT AFFILIATES OF
GENRAD WILL NOT BE SUBJECT TO RESALE RESTRICTIONS UNDER RULE 145 AND MAY RESELL
THE SHARES OF TERADYNE COMMON STOCK OFFERED BY THIS PROXY STATEMENT - PROSPECTUS
IMMEDIATELY FOLLOWING THE MERGER WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT.
41
THE MERGER AGREEMENT
THE FOLLOWING IS A BRIEF SUMMARY OF THE MATERIAL PROVISIONS OF THE MERGER
AGREEMENT A COPY OF WHICH IS ATTACHED AS APPENDIX A TO THIS PROXY STATEMENT -
PROSPECTUS AND IS INCORPORATED BY REFERENCE INTO THIS SUMMARY. THE SUMMARY IS
NOT COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER
AGREEMENT. TERADYNE AND GENRAD URGE ALL SHAREHOLDERS OF GENRAD TO READ THE
MERGER AGREEMENT IN ITS ENTIRETY FOR A MORE COMPLETE DESCRIPTION OF THE TERMS
AND CONDITIONS OF THE MERGER.
EFFECT OF THE MERGER
Following the approval of the merger agreement by the shareholders of GenRad
and the satisfaction or waiver of the other conditions to the merger, Radio
Acquisition Corp., a wholly-owned subsidiary of Teradyne will be merged into
GenRad. GenRad will survive the merger as a wholly-owned subsidiary of Teradyne.
If all conditions to the merger are satisfied or waived, the merger will become
effective at the time of the filing by the constituent corporations of a duly
executed articles of merger with the Secretary of the Commonwealth of
Massachusetts, or at any later time as Teradyne and GenRad shall agree and
specify in the articles of merger. The merger agreement provides that the
articles of organization of Radio Acquisition Corp., as in effect immediately
prior to the effective time, will be the articles of organization of the
surviving corporation. The merger agreement also provides that the by-laws of
Radio Acquisition Corp. as in effect immediately prior to the effective time
will be the by-laws of the surviving corporation. The directors of Radio
Acquisition Corp. immediately prior to the completion of the merger will become
the directors of the surviving corporation, to hold office in accordance with
the by-laws of the surviving corporation. Each share of Radio Acquisition Corp.
common stock issued and outstanding immediately prior to the merger will be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock of the surviving corporation.
EXCHANGE OF SHARES
TREATMENT OF GENRAD COMMON STOCK. At the effective time of the merger, each
issued and outstanding share of GenRad common stock other than shares held by
GenRad, Teradyne or Radio Acquisition Corp. will be converted into the right to
receive a number of shares of Teradyne common stock equal to the exchange ratio.
The exchange ratio is 0.1733. At the effective time of the merger, all shares of
GenRad common stock will no longer be outstanding and will automatically be
canceled and retired and will cease to exist, and each holder of a certificate
which immediately prior to the effective time represented any shares of GenRad
common stock will cease to have any rights as to these shares, except the right
to receive shares of Teradyne common stock and any cash instead of fractional
shares of Teradyne common stock. In addition, GenRad's right to repurchase an
aggregate of 29,994 shares of GenRad restricted common stock will terminate upon
the approval of the merger agreement by the GenRad Shareholders.
Based on the exchange ratio of 0.1733 and the 28,554,934 shares of GenRad
common stock issued and outstanding as of September 19, 2001, and assuming no
GenRad shareholder pursues and perfects his, her or its appraisal rights,
approximately 4,948,570 shares of Teradyne common stock, or approximately 2.7%
of Teradyne common stock on September 19, 2001, will be issued to the holders of
GenRad common stock in the merger. The actual number of shares of Teradyne
common stock issued may differ because fractional shares of Teradyne common
stock will not be issued and the number of shares of GenRad common stock
outstanding at the closing may differ.
TREATMENT OF GENRAD STOCK OPTIONS. GenRad's stock option plans provide for
the acceleration of each unvested option to purchase shares of GenRad common
stock issued and outstanding under the stock option plans upon the approval of
the GenRad shareholders of a change in control of GenRad like the merger. At the
effective time of the merger, each unexpired and unexercised outstanding
42
option to purchase shares of GenRad common stock, whether vested or unvested,
previously granted by GenRad will be assumed by Teradyne and converted into
options to purchase shares of Teradyne common stock upon substantially the same
terms and conditions. The number of shares of Teradyne common stock subject to
the assumed GenRad stock options will equal the number of shares of the GenRad
common stock issuable under the original stock options multiplied by the
exchange ratio. Based on the exchange ratio of 0.1733 and options to purchase
6,736,312 shares of GenRad common stock outstanding as of September 19, 2001,
the GenRad options assumed by Teradyne will represent the right, in the
aggregate, to purchase up to approximately 1,167,402 shares of Teradyne common
stock. The exercise price per share of Teradyne common stock under the assumed
GenRad stock options will equal the exercise price per share of the GenRad
common stock under the original stock options divided by the exchange ratio.
FRACTIONAL SHARES. Teradyne will not issue any fractional shares of
Teradyne common stock in the merger. Instead, each holder of shares of GenRad
common stock exchanged in the merger who would otherwise have been entitled to
receive a fraction of a share of Teradyne common stock will be entitled to
receive cash (without interest) in an amount equal to the product of the
fractional part of Teradyne common stock multiplied by the average closing sales
price of Teradyne common stock over the ten trading days ended on the last
trading day prior to the effective time of the merger.
EXCHANGE OF STOCK CERTIFICATES
SURRENDER OF SHARES OF GENRAD STOCK; STOCK TRANSFER BOOKS. As soon as
reasonably practicable following the effective time of the merger, Fleet
National Bank, the exchange agent, will mail a notice and letter of transmittal
to each record holder of certificates representing GenRad common stock advising
the holders of the effectiveness of the merger and the instructions for
surrendering the certificates for Teradyne common stock and payment of cash in
lieu of fractional shares. After the effective time, holders of certificates who
properly surrender their certificates in accordance with the instructions in the
notice will receive certificates representing the number of shares of Teradyne
common stock, cash in lieu of any fractional shares of Teradyne common stock and
any dividends or distributions to which they are entitled. The surrendered
certificates will be cancelled.
NO FURTHER REGISTRATION OR TRANSFER OF GENRAD COMMON STOCK. At the
effective time of the merger, the stock transfer books of GenRad will be closed
and there will be no further transfers of shares of GenRad common stock on the
records of GenRad or exercises of any options or other rights to acquire GenRad
stock for shares of GenRad common stock. After the effective time of the merger,
the holders of GenRad common stock certificates will cease to have any rights
with respect to their shares of GenRad common stock except as otherwise provided
for in the merger agreement or by applicable law.
DIVIDENDS AND DISTRIBUTIONS. No dividends or other distributions declared
or made on or after the effective time of the merger with respect to shares of
Teradyne common stock will be paid to the holder of any unsurrendered GenRad
certificate with respect to the shares of Teradyne common stock that the holder
is entitled to receive until the holder surrenders the GenRad certificate as
provided above and provides customary representations and certifications as are
requested in the transmittal form sent to each holder. Upon surrender of the
certificates, Teradyne will pay to the person in whose name the GenRad
certificates representing the shares of Teradyne common stock will be issued,
without interest, any dividends or distributions with respect to the shares of
Teradyne common stock which have a record date on or after the closing date of
the merger and have become payable between the effective time of the merger and
the time of surrender.
LOST CERTIFICATES. If any certificates representing shares of GenRad common
stock or instruments representing GenRad options are lost, stolen or destroyed,
the GenRad shareholder or option holder must provide an appropriate affidavit of
that fact. Teradyne may require the owner of the lost, stolen or destroyed
GenRad certificate or instrument to deliver a bond as indemnity against any
claim that may
43
be made against Teradyne with respect to the GenRad certificate or instrument
alleged to have been lost, stolen or destroyed.
HOLDERS OF GENRAD COMMON STOCK SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE A LETTER OF TRANSMITTAL FROM FLEET NATIONAL BANK.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties of Teradyne,
GenRad and Radio Acquisition Corp. These relate to:
- their organization, standing and power;
- their capitalization;
- their authorization, execution and delivery of, and the enforceability of,
the merger agreement and related matters;
- compliance with laws and the absence of conflicts, violations and defaults
under their corporate charters and by-laws, other agreements and
documents;
- the accuracy and completeness of documents and reports filed with the SEC;
- required consents and approvals of governmental authorities;
- litigation;
- the absence of certain changes and events;
- absence of undisclosed liabilities;
- brokers and finders; and
- the required votes to approve the merger agreement and the merger.
GenRad has also represented and warranted as to:
- its subsidiaries and the ownership of such subsidiaries;
- its intellectual property;
- its leases;
- its personal and real property;
- its contracts and debt instruments;
- labor matters and employee benefit plans;
- taxes;
- environmental matters;
- its receipt of a fairness opinion from its financial advisor; and
- the applicability of Massachusetts takeover statutes to the merger.
Teradyne has also represented and warranted as to the validity of the shares
of its common stock to be issued in connection with the merger.
CERTAIN COVENANTS
CONDUCT OF BUSINESS PRIOR TO THE MERGER. GenRad has agreed that it will
carry on its business in the ordinary course in substantially the same manner as
previously conducted, except as set forth in the
44
merger agreement. GenRad has agreed that, with the exception of certain matters
upon which the parties have already agreed, neither GenRad nor any of its
subsidiaries shall, without the prior written consent of Teradyne:
- issue, sell, pledge or otherwise encumber any shares of capital stock,
options, warrants or other securities, except in connection with the
exercise of options issued and outstanding as of the date of the merger
agreement;
- purchase, redeem or acquire any shares of its capital stock or any other
securities;
- accelerate the vesting or otherwise modify the terms of any outstanding
option or warrant;
- effect a stock split or declare or pay any dividends or other distribution
on shares of its capital stock other than dividends or distribution of a
wholly-owned subsidiary;
- amend its charter or by-laws;
- with certain exceptions, enter into any material commitment or
transaction;
- incur or assume indebtedness, guarantee the obligations of any other
person or entity, terminate or seek a waiver with respect to any existing
agreement evidencing indebtedness, or issue or sell any debt securities or
other rights to acquire any debt securities of GenRad or make any loans or
investments in any other person or entity except for intercompany
indebtedness;
- acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the stock or assets of, any person or
entity;
- sell, lease, license, mortgage, encumber or otherwise dispose of any
assets or property other than sales of inventory and receivables in the
ordinary course of business;
- acquire or agree to acquire any assets other than inventory in the
ordinary course of business, or make or agree to make any capital
expenditures which, individually or in the aggregate, exceed the amount
budgeted in the annual capital expenditures budget previously provided to
Teradyne;
- pay, discharge or satisfy any claims or obligations except for such
liabilities or obligations made in the ordinary course of business, or
waive, release, grant or transfer any material right or modify or change
in any material respect any existing material agreement, other than in the
ordinary course of business;
- adopt a plan of liquidation or resolutions providing for or authorizing a
liquidation, merger, consolidation or reorganization;
- enter into or amend any collective bargaining agreement;
- change any material accounting principle, except as required by generally
accepted accounting principles;
- subject to certain limitations, settle or compromise any litigation;
- engage in any transaction with, or enter into any agreement or
understanding with, any affiliate that would be required to be disclosed
in GenRad's SEC filings;
- transfer any rights to its intellectual property other than in the
ordinary course of business;
- make any tax election or settle or compromise any material federal, state,
local or foreign tax liability;
- enter into, adopt or amend any employee benefit plan or employment or
severance arrangement or increase the compensation or fringe benefits of,
or materially modify the employment terms
45
of, its directors, officers or employees generally, or pay any benefit not
required by any existing employee benefit plan; or
- enter into or amend any agreement pursuant to which any party is granted
exclusive rights.
Teradyne and GenRad have agreed, on behalf of themselves and their
respective subsidiaries, that neither will knowingly take or fail to take any
action that would cause or constitute a breach of any of its representations and
warranties in the merger agreement. In addition, each has agreed to use its
reasonable best efforts to take all actions and to do all things necessary,
proper or advisable to complete the merger and the related transactions.
DIRECTOR AND OFFICER INDEMNIFICATION. Teradyne has agreed to indemnify each
person who, prior to the effective time of the merger, was eligible for
indemnification under the charter or by-laws of GenRad or its subsidiaries
against all losses, claims, damages, costs, expenses, liabilities or judgments,
or amounts paid in settlement based in whole or in part on or arising in whole
or in part out of the fact that such person is or was a director, officer or
employee of GenRad and pertaining to any matter existing or occurring at or
prior to the effective time of the merger. In each case, indemnification
provided by Teradyne will be to the extent each of GenRad or its subsidiaries
would have been permitted under its articles of organization and by-laws (or
comparable organizational documents) to provide such indemnification. In
addition, Teradyne has agreed to indemnify such persons for losses, claims,
damages, costs, expenses, liabilities or judgments, or amounts paid in
settlement based in whole or in part on, or arising in whole or in part out of,
or pertaining to the merger agreement and the related transactions. In addition,
Teradyne has agreed to maintain in effect, for six years following the effective
time of the merger, for the current directors and officers of GenRad any
policies of directors' and officers' liability insurance maintained by GenRad
immediately prior to the effective time of the merger. However, Teradyne shall
only be required to pay a maximum of 150% of the annual premium paid by GenRad
for directors' and officers' liability insurance on the date of the merger
agreement.
THIRD-PARTY APPROVALS. Teradyne and GenRad have agreed to use their
reasonable best efforts to obtain all consents, make all filings with
governmental entities, and deliver all documents which are necessary to be
obtained by them to complete the merger.
NEW YORK STOCK EXCHANGE. Teradyne has agreed to use its reasonable efforts
to cause the shares of Teradyne common stock to be issued to the GenRad
shareholders to be listed for quotation on the New York Stock Exchange.
NO OTHER NEGOTIATIONS
So long as the merger agreement is in effect, GenRad has agreed not to take,
nor authorize or permit any of its officers, directors, agents, representatives,
advisors or subsidiaries to take, any of the following actions directly or
indirectly:
- solicit, initiate, knowingly encourage or knowingly facilitate the
submission of inquiries, proposals or offers of any Transaction Proposal,
as that term is defined below on page 47;
- enter into or participate in any discussions or negotiations regarding any
Transaction Proposal;
- furnish any other person any information with respect to GenRad's
business, properties or assets; or
- otherwise cooperate in any way with, or knowingly assist or participate
in, facilitate or encourage any effort or attempt in the making of a
Transaction Proposal.
46
In connection with an unsolicited bona fide Transaction Proposal, GenRad
may:
- furnish information to the third party who made a bona fide Transaction
Proposal as long as the information furnished is subject to a
confidentiality agreement no less favorable to GenRad than the
confidentiality agreement between Teradyne and GenRad;
- engage in discussions or negotiations with the third party who made the
bona fide Transaction Proposal;
- following receipt of a bona fide Transaction Proposal, take and disclose
to the GenRad shareholders a position contemplated by Rule 14d-9 or
Rule 14e-2(a) under the Securities Exchange Act of 1934;
- following receipt of a bona fide Transaction Proposal, fail to make or
withdraw or modify its recommendation to the GenRad shareholders that they
approve the merger agreement and the merger; or
- take any action required to be taken by GenRad in connection with a
non-appealable, final order by a court of competent jurisdiction.
However, the GenRad board may only take the actions listed above if it
concludes in good faith based on the advise of outside legal counsel that such
action is required in order to satisfy the board's fiduciary duties to the
GenRad shareholders under applicable law. The GenRad board of directors must
give Teradyne at least two business days notice prior to taking any of the
actions listed above. In addition, to the extent consistent with its fiduciary
duties, the GenRad board of directors must continue to advise Teradyne after
taking such action and, if the board has received a Transaction Proposal, then
GenRad must promptly inform Teradyne of the terms and conditions of such
proposal and the identity of the person making it.
A Transaction Proposal means:
- any acquisition or purchase of 10% or more of the consolidated assets of
GenRad and its subsidiaries or of over 10% of any class of equity
securities of GenRad or any of its subsidiaries;
- any tender offer, including a self tender offer, or exchange offer that if
completed would result in any person or group beneficially owning 10% or
more of any class of equity securities of GenRad or any of its
subsidiaries;
- any merger, consolidation, business combination, sale of substantially all
assets, recapitalization, liquidation, dissolution or similar transaction
involving GenRad or any of its subsidiaries whose assets, individually or
in the aggregate, constitute more than 10% of the consolidated assets of
GenRad, other than the transactions contemplated by the merger agreement;
or
- any other transaction the completion of which would or could reasonably be
expected to impede, interfere with, prevent or materially delay the
merger.
CONDITIONS TO COMPLETION OF THE MERGER
Teradyne's and GenRad's obligations to complete the merger are subject to
the satisfaction or waiver of the following conditions:
- the approval of the merger agreement by the GenRad shareholders;
- the expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976;
- no restraining order, injunctions or other order issued by any court or
other legal restraint preventing the completion of the merger;
47
- the registration statement registering the shares of Teradyne common stock
to be issued in the merger shall have been declared effective by the SEC;
- the shares of Teradyne common stock issuable to the GenRad shareholders
shall have been approved for quotation on the New York Stock Exchange; and
- Mr. Dutkowsky shall have terminated his employment and severance agreement
with GenRad.
In addition, the obligations of Teradyne and Radio Acquisition Corp. to
effect the merger are subject to the satisfaction or waiver of the following
conditions:
- the representations and warranties of GenRad in the merger agreement,
disregarding any limitation as to materiality, must be true and correct,
except to the extent that the inaccuracy of any representation or warranty
relates to a representation or warranty specifically limited to an earlier
date or would not result in any material adverse effect on GenRad, and
Teradyne shall have received a certificate signed by officers of GenRad to
such effect;
- GenRad will have performed all agreements and covenants required to be
performed under the merger agreement at or prior to the effective time of
the merger, and Teradyne shall have received a certificate signed by
officers of GenRad to such effect;
- all licenses, permits, consents, approvals, authorizations, qualifications
and orders of governmental authorities and other third parties as are
necessary in connection with the transaction contemplated by the merger
agreement have been obtained, except where the failure to obtain them
would not have a material adverse effect on GenRad;
- no action, suit or proceeding shall be pending by any governmental entity
or person, or threatened by any governmental entity seeking to challenge
or restrain the merger or seeking material damages, or prohibit or limit
Teradyne's ownership or operation of all or any portion of GenRad's
business or assets, or impose limits on Teradyne's exercise of full rights
of ownership of the shares of the surviving corporation; and
- no bank who is a party to GenRad's credit facility agreement has initiated
proceedings to take possession of or foreclose upon any collateral in
which it has a security interest or exercise any right of set-off or
exercised any other similar remedy.
In general, "material adverse change" or "material adverse effect" means,
when used in connection with either GenRad or Teradyne, any change, effect,
event or occurrence that either individually or in the aggregate with all other
such changes, effects, events and occurrences is materially adverse to the
business, properties, financial condition or results of operations of GenRad or
Teradyne, as applicable. Material adverse change and material adverse effect do
not include changes, effects or results directly relating to:
- the public announcement of the merger agreement or acts contemplated by
the merger agreement;
- a change in laws and regulations or interpretations of laws or regulations
by courts or governmental authorities;
- a change in generally accepted accounting principles or regulatory
accounting principles;
- a change arising or resulting from general industry, economic or capital
market conditions or conditions in the relevant markets that do not
disproportionately affect GenRad or Teradyne;
- any expenses reasonably incurred by GenRad in connection with the merger
agreement and the merger; or
48
- any change relating to GenRad's financial results for the quarter ended
June 30, 2001 as disclosed to Teradyne prior to the date of the merger
agreement.
In addition, the obligation of GenRad to effect the merger is subject to the
satisfaction or waiver of the following conditions:
- the representations and warranties of Teradyne and Radio Acquisition Corp.
in the merger agreement, disregarding any limitation as to materiality,
must be true and correct, except to the extent that the inaccuracy of any
representation or warranty relates to a representation or warranty
specifically limited to an earlier date or would not result in a material
adverse effect on Teradyne, and GenRad shall have received a certificate
signed by officers of Teradyne to such effect; and
- Teradyne and Radio Acquisition Corp. shall have performed all agreements
and covenants required to be performed under the merger agreement at or
prior to the effective time of the merger, and GenRad shall have received
a certificate signed by officers of Teradyne to such effect.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at any time prior to closing the
merger:
1. by mutual written consent of Teradyne and GenRad;
2. by either party if a governmental authority has issued an order, decree
or ruling or taken any other action that is final and non-appealable,
permanently enjoining, restraining or prohibiting the merger;
3. by either party if the merger is not completed by May 1, 2002, except
that the right to terminate the merger agreement under this provision is
not available to any party who has failed to perform in any material
respect its obligations under the merger agreement which were required to
be performed;
4. by either party if the merger agreement is not approved by the GenRad
shareholders;
5. by Teradyne if the GenRad board (i) withdraws, modifies or amends its
approval or recommendation of the merger agreement to the GenRad
shareholders in any manner that is adverse to Teradyne; (ii) fails to
promptly mail this proxy statement-prospectus to its shareholders or to
include its recommendation to the GenRad shareholders to approve the
merger agreement, (iii) recommends any transaction other that the merger
with Teradyne, (iv) resolves to do any of the foregoing or (v) fails to
recommend rejection of any tender offer or exchange offer for more than
10% of the outstanding GenRad common stock at the time of the filing of
the Schedule 14d-9 with the SEC;
6. by GenRad, if the GenRad board of directors concludes in good faith,
based on advice of outside legal counsel, that in order to satisfy its
fiduciary duties to GenRad shareholders it must withdraw or modify its
recommendation to GenRad shareholders to approve the merger agreement;
7. by Teradyne if GenRad is in breach of any representation, warranty,
covenant or agreement contained in the merger agreement or if any
representation or warranty becomes untrue, provided that if the
inaccuracy of any representation or warranty is curable by the exercise
of commercially reasonable efforts, Teradyne cannot terminate the merger
agreement within fifteen days of the time the representation or warranty
became untrue if GenRad is exercising commercially reasonable efforts to
cure; or
49
8. by GenRad if Teradyne is in breach of any representation, warranty,
covenant or agreement contained in the merger agreement or if any
representation or warranty becomes untrue, provided that if the
inaccuracy of any representation or warranty is curable by the exercise
of commercially reasonable efforts, GenRad cannot terminate the merger
agreement within fifteen days of the time the representation or warranty
became untrue if Teradyne is exercising commercially reasonable efforts
to cure.
TERMINATION FEE; REIMBURSEMENT OF EXPENSES
If Teradyne terminates the merger agreement because of the reasons set forth
in (5) or (6) above, then GenRad shall pay Teradyne a $10 million termination
fee.
GenRad must also pay Teradyne a $10 million termination fee if the merger
agreement is terminated because of the reasons set forth in (3), (4) or
(7) above, and prior to the termination of the merger agreement, a third-party
shall have:
- become the beneficial owner of 10% of the outstanding shares of GenRad
common stock, or
- made, proposed, communicated or disclosed in a public manner its bona fide
intention to make a Transaction Proposal and on or before August 1, 2002,
GenRad closes a transaction or enters into a definitive agreement with any
third-party that would otherwise qualify as a Transaction Proposal, other
than a transaction in which GenRad issues equity-related securities or
debt-related securities having a right to vote in an aggregate amount of
less than 50% of GenRad's outstanding capital stock for the sole purpose
of financing its business operations.
In the event that a termination fee is payable, GenRad must reimburse
Teradyne for all reasonable out-of-pocket fees and expenses up to a maximum of
$750,000 incurred in connection with the merger agreement and the related
transactions. In addition, in the event that the merger agreement is terminated
by Teradyne as set forth in (7) above, GenRad shall reimburse Teradyne for all
reasonable out-of-pocket fees and expenses incurred in connection with the
merger agreement and the related transactions.
In the event that the merger agreement is terminated by GenRad as set forth
in (8) above, Teradyne shall reimburse GenRad for all reasonable out-of-pocket
fees and expenses incurred in connection with the merger agreement and the
related transactions.
Teradyne has also agreed to pay all fees in connection with any filing under
the Hart-Scott-Rodino Antitrust Improvements Act but if this agreement is
terminated, then GenRad shall reimburse Teradyne for 50% of all such fees.
EXCEPT AS DESCRIBED ABOVE, WHETHER OR NOT THE MERGER IS COMPLETED, ALL FEES,
COSTS AND EXPENSES INCURRED IN CONNECTION WITH THE MERGER AND THE MERGER
AGREEMENT WILL BE PAID BY THE PARTY INCURRING THE EXPENSES.
AMENDMENT AND WAIVER
Generally, the boards of directors of Teradyne and GenRad may amend the
merger agreement at any time prior to the effective time. However, after the
shareholders of GenRad approve the merger agreement, Teradyne and GenRad will
not make any amendment to the merger agreement that by the Massachusetts
Business Corporation Law would require further approval of GenRad shareholders
without obtaining their approval. Amendments must be in writing and signed by
all parties.
50
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following summary of the material federal income tax consequences of the
merger to GenRad shareholders who hold shares of GenRad common stock as capital
assets deals only with holders who are citizens or residents of the United
States, domestic corporations or shareholders otherwise subject to United States
federal income tax on a net income basis in respect of shares of GenRad common
stock. This summary may not apply to certain classes of taxpayers, including,
without limitation, insurance companies, tax-exempt organizations, financial
institutions, dealers in stock and securities, persons who acquired or acquire
shares of GenRad common stock pursuant to the exercise of employee stock options
or otherwise as compensation, and persons who hold shares of GenRad common stock
in hedging transactions or as part of a straddle or conversion transaction. In
addition, the summary does not address state, local or foreign tax consequences
of the merger. Consequently, each shareholder of GenRad is urged to consult his
or her own tax advisor as to the specific tax consequences of the Merger to him
or her.
This summary is based on current law. Future legislative, judicial or
administrative changes or interpretations, which may be retroactive, could alter
or modify the statements set forth in this summary. This summary also is based
upon assumptions and representations made by Teradyne and GenRad, which
representations have been relied upon by counsel and are assumed to be true,
correct and complete. Teradyne and GenRad do not intend to request any rulings
from the Internal Revenue Service as to the U.S. federal income tax consequences
of the merger.
TAX CONSEQUENCES OF THE MERGER
Subject to the qualifications below, Nutter, McClennen & Fish, LLP will
provide an opinion that:
- the merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986; and
- each of Teradyne, Radio Acquisition Corp. and GenRad will be parties to
that reorganization within the meaning of Section 368(b) of the Internal
Revenue Code of 1986.
Such opinion will be based in part upon assumptions and representations
contained in letters received from Teradyne, Radio Acquisition Corp. and GenRad,
which representations Nutter, McClennen & Fish, LLP will assume to be true,
correct and complete. The tax opinion will not be binding on the IRS or the
courts, either of which could take a contrary position, and there can be no
assurance that the IRS will not contest the conclusions expressed in the
opinions.
If the merger qualifies as a tax-free reorganization, the following material
federal income tax consequences will occur:
- GenRad shareholders will not have taxable gain or loss on the exchange of
GenRad common stock for Teradyne common stock in the merger except with
respect to cash received for fractional shares;
- the aggregate tax basis of Teradyne common stock received by GenRad
shareholders in the merger (including any fractional share of Teradyne
common stock for which cash is received) will be the same as the aggregate
tax basis of the GenRad common stock exchanged in the merger;
- the holding period of the Teradyne common stock that a GenRad shareholder
receives in the merger generally will include the holding period of the
GenRad common stock exchanged for the Teradyne common stock; and
- if a GenRad shareholder exercises appraisal rights and receives solely
cash in exchange for such shareholder's GenRad common stock, such cash
will generally be treated as a distribution in redemption of such
shareholder's GenRad common stock. Where such shareholder owns no Teradyne
common stock, either directly or by reason of certain attribution rules
set forth in the Code, such shareholder should recognize gain or loss
measured by the difference between the
51
amount of cash received and the adjusted tax basis of the GenRad common
stock surrendered. This treatment could, but would not necessarily, differ
if a GenRad shareholder owns, directly or by attribution, any shares of
Teradyne. Different tax consequences will apply to interest, if any,
received by a shareholder exercising appraisal rights.
If Teradyne, as a result of any GenRad shareholders exercising their
appraisal rights, is treated as paying cash for any shares of GenRad common
stock received in the merger, GenRad, after its acquisition by Teradyne, must
continue to hold substantially all of the assets it held before the transaction
in order for the transaction to be afforded tax-free treatment. The IRS issued
guidance this year in Revenue Ruling 2001-25, I.R.B. 2001-22 (May 7, 2001)
indicating that an acquiring corporation will hold "substantially all" of the
properties of a target corporation even though it sells a portion of its
historic assets to unrelated parties for cash immediately before or after the
target corporation transfers its assets to the acquiring corporation, provided
that the cash proceeds from the sale are held by the acquiring corporation along
with the target's other properties. GenRad may sell the capital stock or the
assets of certain subsidiaries each relating to GenRad's Diagnostic Solutions
line of business. The cash proceeds from the potential sale may be used to pay
down existing GenRad debt rather than remaining with GenRad. The factual
distinctions of the transaction from the facts presented in Revenue Ruling
2001-25 should not be significant enough to jeopardize the tax-free nature of
the transaction. Accordingly, the sale of assets, if it occurs, should not
adversely affect the tax-free nature of the transaction.
CASH RECEIVED IN LIEU OF A FRACTIONAL SHARE OF TERADYNE COMMON STOCK
A GenRad shareholder who receives cash in lieu of a fractional share of
Teradyne common stock will be treated as having received the fractional share
pursuant to the merger and then as having exchanged the fractional share for
cash in a redemption by Teradyne. As a result, a GenRad shareholder will
generally recognize gain or loss equal to the difference between the amount of
cash received and the portion of the basis of the shares of Teradyne common
stock allocable to his or her fractional interest. This gain or loss will
generally be capital gain or loss, and will be long-term capital gain or loss
if, as of the date of the exchange, the holding period for such fractional share
is more than one year.
BACKUP WITHHOLDING
Payments of Teradyne common stock and cash to a GenRad shareholder may be
subject to backup withholding at a rate of 30.5 percent. However, backup
withholding will not apply to a GenRad shareholder who either (i) furnishes a
correct taxpayer identification number and certifies that he or she is not
subject to backup withholding by completing the requisite forms that will be
included as part of the letter of transmittal, or (ii) otherwise proves to
Teradyne and its exchange agent that the GenRad shareholder is exempt from
backup withholding.
IF THE MERGER WERE NOT TREATED AS A REORGANIZATION
If the merger were not treated as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, GenRad shareholders would
be treated as if they had sold their GenRad common stock in a taxable
transaction. In such event, each GenRad shareholder would be required to
recognize all of his or her realized gain or loss with respect to the
disposition of his or her GenRad common stock measured by the difference between
the GenRad shareholder's basis in those shares and the fair market value, as of
the date the merger becomes effective, of the Teradyne common stock received in
exchange therefor. In such event, a GenRad shareholder's aggregate basis in the
Teradyne common stock so received would equal its fair market value as of the
effective date of the merger, and the GenRad shareholder's holding period for
such Teradyne common stock would begin the day after the merger.
52
THE FOREGOING DISCUSSION IS INTENDED TO PROVIDE ONLY A SUMMARY OF THE
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. IT IS NOT INTENDED TO BE
A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. AS DESCRIBED ABOVE, THIS DISCUSSION DOES NOT ADDRESS
CERTAIN CATEGORIES OF SHAREHOLDERS, NOR DOES IT ADDRESS STATE, LOCAL OR FOREIGN
TAX CONSEQUENCES. IN ADDITION, THIS DISCUSSION DOES NOT ADDRESS TAX CONSEQUENCES
THAT MAY VARY WITH, OR ARE CONTINGENT UPON, INDIVIDUAL CIRCUMSTANCES. GENRAD
SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS TO DETERMINE THEIR
PARTICULAR UNITED STATES FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR OTHER TAX
CONSEQUENCES RESULTING FROM THE MERGER, IN LIGHT OF THEIR INDIVIDUAL
CIRCUMSTANCES.
53
TRADING PRICE OF TERADYNE AND GENRAD COMMON STOCK
Shares of Teradyne common stock and shares of GenRad common stock are
currently traded on the NYSE under the symbols "TER" and "GEN," respectively. As
of September 19, 2001, there were approximately 2,296 Teradyne shareholders of
record and approximately 2,622 GenRad shareholders of record.
The following table provides the last reported sales prices per share of
Teradyne common stock and GenRad common stock traded on the NYSE on August 1,
2001, the last trading day before announcement of the merger agreement, and on
September 19, 2001, the latest practicable date before the printing of this
proxy statement - prospectus. The table also sets forth the value of the
Teradyne shares, based upon the closing price per share of Teradyne common stock
on the NYSE, that a GenRad shareholder would have received for one GenRad share,
assuming that the merger had taken place on that date at the exchange ratio of
0.1733 of a share of Teradyne common stock for each share of GenRad common
stock. These numbers have been calculated by multiplying the exchange ratio of
0.1733 by the closing price per share of Teradyne common stock on those dates.
The actual value of the Teradyne common shares a GenRad shareholder will receive
on the effective date of the merger may be higher or lower than the prices per
share listed below.
VALUE OF
CLOSING PRICE CLOSING PRICE TERADYNE
OF TERADYNE OF GENRAD COMMON STOCK
COMMON STOCK COMMON STOCK RECEIVED
--------------- --------------- ---------------
August 1, 2001....................................... $ 35.10 $ 4.00 $ 6.08
September 19, 2001(1)................................ $ 24.12 $ 3.90 $ 4.18
The following table provides the high and low sales prices for Teradyne
common stock and GenRad common stock as quoted by the NYSE. Neither Teradyne nor
GenRad has paid any dividends.
TERADYNE GENRAD
--------------------------------- ---------------------------------
YEAR LOW HIGH LOW HIGH
---- --------------- --------------- --------------- ---------------
Fiscal years ended December 31, 1999 and January 1, 2000,
respectively:
First quarter.......................................... $ 21.13 $ 32.50 $ 14.13 $ 21.94
Second quarter......................................... 23.38 36.00 14.00 22.38
Third quarter.......................................... 32.00 41.88 17.31 22.13
Fourth quarter......................................... 29.50 66.00 15.50 19.94
Fiscal years ended December 31, 2000 and December 30,
2000, respectively:
First quarter.......................................... $ 54.88 $ 94.94 $ 12.38 $ 16.63
Second quarter......................................... 65.00 115.44 7.06 13.06
Third quarter.......................................... 34.94 81.00 7.88 11.31
Fourth quarter......................................... 23.00 41.63 9.06 12.19
Fiscal years ending December 31, 2001 and December 29,
2001, respectively:
First quarter.......................................... $ 29.05 $ 44.05 $ 7.60 $ 13.70
Second quarter......................................... 26.25 47.20 5.22 8.15
Third quarter through September 19, 2001(1)............ 22.28 37.45 3.60 6.15
------------------------
(1) The third trading day after the September 11, 2001 terrorist attacks on the
United States.
Shareholders are advised to obtain current market quotations of Teradyne
common stock and GenRad common stock. We cannot predict what the market price of
Teradyne common stock and GenRad common stock will be at or after the completion
of the merger. The market price of Teradyne common stock and GenRad common stock
will fluctuate between the date of this proxy statement - prospectus, the date
of the GenRad special meeting and the date on which the merger is completed and
afterwards.
54
COMPARISON OF THE RIGHTS OF HOLDERS OF TERADYNE COMMON STOCK AND HOLDERS OF
GENRAD COMMON STOCK
Teradyne and GenRad are both Massachusetts corporations and the rights of
each company's shareholders are governed by each company's respective articles
of organization and by-laws as well as the Massachusetts Business Corporation
Law. Assuming approval of the merger agreement by the shareholders of GenRad, at
the effective time of the merger, the holders of GenRad common stock will become
holders of Teradyne common stock. The rights of GenRad's shareholders following
the merger will be governed by Teradyne's articles of organization and by-laws.
The following is a summary of the material differences between the rights of
the holders of Teradyne common stock and GenRad common stock. Because both
Teradyne and GenRad are Massachusetts corporations, these differences arise
principally from differences in the provisions of Teradyne's and GenRad's
respective articles of organization and by-laws.
The following summary does not purport to be a complete statement of the
rights of Teradyne shareholders as compared with the rights of GenRad's
shareholders. Further, the following summary does not purport to be a complete
description of the specific provisions referred to in this section. In addition,
the identification of specific differences is not meant to indicate that other
equally or more significant differences do not exist. This summary is qualified
in its entirety by reference to the governing corporate instruments of Teradyne
and GenRad to which shareholders are referred.
AUTHORIZED CAPITAL STOCK
The authorized capital stock of Teradyne as of the date of this proxy
statement - prospectus and on the date of the merger will consist of
1,000,000,000 shares of Teradyne common stock. The authorized capital stock of
GenRad as of the date of this proxy statement - prospectus consists of
60,000,000 shares of GenRad common stock.
DESCRIPTION OF TERADYNE COMMON STOCK
Holders of Teradyne common stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders. Since holders of
Teradyne common stock do not have cumulative voting rights, the holders of more
than 50% of our common stock can elect all the directors if they so choose.
Holders of Teradyne common stock are entitled to receive ratably dividends, if
any, as may be declared by the Teradyne board of directors out of funds legally
available for payment of dividends. Upon the liquidation, dissolution or winding
up of Teradyne, holders of Teradyne common stock are entitled to receive ratably
the net assets of Teradyne available after the payment of all debts and other
liabilities of Teradyne. Holders of Teradyne common stock have no preemptive,
subscription, redemption or conversion rights, nor are they entitled to the
benefit of any sinking fund.
GenRad does not have a shareholder rights plan or similar protective
structure in place with respect to potential business combinations. On
November 16, 2000, the Teradyne board of directors declared a dividend of one
right for each outstanding share of Teradyne common stock outstanding on
November 27, 2000 to the stockholders of record on that date. Each right
entitled the registered holder to purchase from Teradyne one share of Teradyne
common stock at a price of $540.00 per share, subject to adjustment. The
description and terms of the rights are set forth in a rights agreement between
Teradyne and Fleet National Bank and are evidenced by a common stock certificate
with a copy of the summary of the rights.
The rights will be exercisable on the earlier to occur of:
- a public announcement that a person or group of affiliated or associated
persons, known as an acquiring person, has acquired beneficial ownership
of 20% or more of the outstanding shares of Teradyne common stock; or
55
- 10 business days (or such later date as may be determined by action of the
Teradyne board of directors prior to such time as any person becomes an
acquiring person) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or group of
20%, or more of such outstanding shares of Teradyne common stock.
Prior to the earlier of either of the two dates set forth above, sometimes
referred to as the distribution date, the rights are not exercisable. Until the
rights are exercised, the holder of the right will have no rights as a
shareholder of Teradyne, including but not limited to the right to receive
dividends.
The rights agreement provides that, until exercised, redeemed or their
expiration, the rights will be transferred with and only with the Teradyne
common stock. Further, until the rights are exercised, redeemed or their
expiration, certificates for Teradyne common stock issued after November 27,
2000 or upon transfer or new issuance of shares of Teradyne common stock will
contain a notation incorporating the rights agreement by reference. All
certificates outstanding on November 27, 2000 for Teradyne common stock
surrendered for transfer prior to the exercise, redemption or expiration of the
rights, even without a notation or a copy of the summary of the rights being
attached thereto, will also constitute the transfer of the rights associated
with each share of Teradyne common stock.
The rights will expire on November 27, 2010, unless extended or unless the
rights are earlier redeemed by Teradyne, in each case, as described below.
The purchase price payable, and the number of shares of Teradyne common
stock or other securities or property issuable upon exercise of the rights are
subject to adjustment from time to time to prevent dilution:
- in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the shares of Teradyne common stock;
- upon the grant to holders of shares of Teradyne common stock of certain
rights or warrants to subscribe for or purchase shares of Teradyne common
stock at a price, or securities convertible into shares of Teradyne common
stock with a conversion price, less than the then current market price of
the shares of Teradyne common stock; or
- upon the distribution to holders of shares of Teradyne common stock of
evidences of indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings or dividends payable
in shares of Teradyne common stock) or of subscription rights or warrants
(other than those referred to above).
From and after the date any person becomes an acquiring person, if the
rights are or were at any time on or after the earlier of (x) the date of such
event and (y) the distribution date acquired or beneficially owned by an
acquiring person or an associate or affiliate of an acquiring person, such
rights shall become void, and any holder of such rights shall thereafter have no
right to exercise such rights.
In the event that, at any time after a person becomes an acquiring person,
Teradyne is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, proper
provision will be made so that each holder of a right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the right. In the event that any person becomes an acquiring
person, proper provision shall be made so that each holder of a right, other
than the rights beneficially owned by the acquiring person and its affiliates
and associates (which will thereafter be void), will thereafter have the right
to receive upon exercise that number of shares of Teradyne common stock having a
market value of two times the exercise price of the right. If Teradyne does not
have sufficient shares of Teradyne common stock to satisfy such obligation to
issue shares of Teradyne
56
common stock, or if the Teradyne board of directors so elects, Teradyne will
deliver upon payment of the exercise price of a right an amount of cash or
securities equivalent in value to the shares of Teradyne common stock issuable
upon exercise of a right. However, if Teradyne fails to meet such obligation
within 30 days following the later of (x) the first occurrence of an event
triggering the right to purchase shares of Teradyne common stock and (y) the
date on which Teradyne's right to redeem the common share purchase rights
expires, Teradyne must deliver, upon exercise of a right but without requiring
payment of the exercise price then in effect, shares of Teradyne common stock
(to the extent available) and cash equal in value to the difference between the
value of the shares of Teradyne common stock otherwise issuable upon the
exercise of a right and the exercise price then in effect. The Teradyne board of
directors may extend the 30-day period described above for up to an additional
90 days to permit the taking of action that may be necessary to authorize
sufficient additional shares of Teradyne common stock to permit the issuance of
shares of Teradyne common stock upon the exercise in full of the rights.
At any time after any person becomes an acquiring person and prior to the
acquisition by any person or group of a majority of the outstanding shares of
Teradyne common stock, the Teradyne board of directors may exchange the rights
(other than rights owned by such person or group which have become void), in
whole or in part, at an exchange ratio of one share of Teradyne common stock per
right (subject to adjustment).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment of at least 1% in
such purchase price. No fractional shares of Teradyne common stock will be
issued and in lieu thereof, an adjustment in cash will be made based on the
market price of the shares of Teradyne common stock on the last trading day
prior to the date of exercise.
At any time prior to the time any person becomes an acquiring person, the
Teradyne board of directors may redeem the rights in whole, but not in part, at
a price equal to $0.001 per right. The redemption of the rights may be made
effective at such time, on such basis and with such conditions as the Teradyne
board of directors in its sole discretion may establish. Immediately upon any
redemption of the rights, the right to exercise the rights will terminate and
the only right of the holders of rights will be to receive the redemption price.
The terms of the rights may be amended by the Teradyne board of directors
without the consent of the holders of the rights, except that from and after
such time as any person becomes an acquiring person no such amendment may
adversely affect the interests of the holders of the rights (other than the
acquiring person and its affiliates and associates).
57
TERADYNE
Teradyne designs, manufactures, markets and services test and inspection
systems and related software, as well as backplanes and connectors. Teradyne
currently has four principal product lines:
- semiconductor test systems;
- connection systems;
- circuit-board test and inspection systems; and
- broadband test systems.
SEMICONDUCTOR TEST SYSTEMS. Teradyne produces semiconductor test systems
for use by electronic component manufacturers in the design and testing of a
wide variety of semiconductor products, including logic, memory, mixed signal
and "system on a chip" integrated circuits. Semiconductor test systems are sold
to semiconductor manufacturers and subcontractors to the semiconductor industry.
Semiconductor manufacturers use Teradyne's semiconductor test systems to:
- measure product performance;
- improve product quality;
- shorten time to market;
- enhance manufacturability;
- minimize labor costs; and
- increase production yields.
CONNECTION SYSTEMS. Teradyne's connection systems include backplane
assemblies, connectors and electro-mechanical systems integration for customers
in the telecom, data networking, storage and server industries. A backplane is
an assembly into which printed circuit boards are inserted that provides for the
interconnection of electrical signals between the circuit boards and the other
elements of the system. Connection systems provide design and applications
engineering along with manufacturing for a total interconnect solution for
Teradyne's customers. Connection systems product technology can be found in
diverse products such as Internet routers, computer servers, mass data storage
and telecom switches.
CIRCUIT-BOARD TEST AND INSPECTION SYSTEMS. Electronic equipment
manufacturers use Teradyne's circuit-board test and inspection systems for the
design, inspection and testing of circuit boards and other assemblies. Teradyne
also sells circuit-board test and inspection systems to customers across most
sectors of the electronics industry and to companies in other industries that
use electronic devices in high volume. Similar to semiconductor test systems,
Teradyne's customers use their systems and related software to increase product
performance, to improve product quality, to shorten time to market, to enhance
manufacturability, to minimize labor costs, and to increase production yields.
BROADBAND TEST SYSTEMS. Broadband test systems are used by the
communications industry for Internet testing, customer care and voice network
maintenance. Broadband test systems perform qualification testing for digital
subscriber line, or DSL, services, assist customer care centers in isolating
network service problems, and perform integrated surveillance and maintenance
for voice networks.
LEGAL PROCEEDINGS
On September 5, 2001, a complaint was filed in the Superior Court in San
Diego County, California, naming as defendants Teradyne and two of its executive
officers. The complaint alleges, among other things, that the sale of Teradyne
common stock in connection with Teradyne's acquisition
58
of each of Herco Technology Corp., a California company, and Perception
Laminates, Inc., a California company, violated certain California securities
statutes and common law, and that Teradyne breached certain contractual
obligations in the agreement relating to the acquisition. The complaint seeks
unspecified damages, including compensatory, consequential and punitive damages,
and recovery of reasonable attorney fees and costs. Teradyne disputes the claims
and believes they are without merit, and intends to defend vigorously against
the lawsuit.
Teradyne is a Massachusetts corporation. Its principal executive offices are
located at 321 Harrison Avenue, Boston, Massachusetts, and its telephone number
is (617) 482-2700.
59
GENRAD
GenRad is a global leader of electronics manufacturing productivity
solutions for contract and original equipment manufacturers of handheld and
wireless devices, personal computers and business servers, DSL and other
broadband switching and routing technologies, and other devices integral to
emerging internet e-commerce markets. GenRad also applies its technologies to
development of diagnostic solutions for the automotive and general
transportation industry.
GenRad operates on a worldwide basis and maintains facilities primarily in
the United States, western Europe and southeast Asia. It has 37 offices in 22
countries and employs approximately 1,300 people.
GenRad is comprised of four lines of business bringing to market integrated
hardware, software and service solutions that empower always-on services and
un-interruptible business applications:
- process solutions;
- functional solutions;
- diagnostic solutions; and
- support and services.
PROCESS SOLUTIONS. GenRad's process solutions business segment focuses on
in-circuit test, x-ray test and re-work solutions as well as plant and line
management solutions for electronics product manufacturers. Process solutions
provides printed circuit board manufacturers with a completely integrated
solution to optimize their product development process from design through
manufacturing. GenRad also offers multiple tester platforms including a
fixtureless flying prober and manufacturing defect analyzer for complex printed
circuit boards. GenRad's inspection systems provide verification of solder joint
quality, component and assembly failure analysis, repair verification and
Statistical Process Control data, for monitoring and optimizing the
manufacturing process.
FUNCTIONAL SOLUTIONS. GenRad's functional solutions business segment
focuses on functional test platforms for manufacturers of telecommunications,
computers and automotive electronics. Testing the hardware that drives the
internet, GenRad's functional solutions provide the test platform for
technologies like xDSL, cable modems, optical switches and a wide range of
network routers, bridges and switches.
DIAGNOSTIC SOLUTIONS. GenRad is the leading global supplier of diagnostic
and information solutions, specializing in the support of complex electronically
controlled vehicles throughout their lifecycle from design through manufacturing
to service. Through our vision of tying design, manufacturing and service
together, our solutions turn data into knowledge throughout the supply chain.
The GenRad diagnostic solutions segment provides software and hardware solutions
for automotive and transportation original equipment manufacturers, and
independent service providers. GenRad intends to sell its diagnostic solutions
line of business prior to the completion of the merger with Teradyne. There can
be no guarantee that GenRad will be able to complete the sale prior to the
merger, if at all.
SUPPORT AND SERVICES. GenRad's support and services business segment
focuses on maintenance programs, on-site and remote support, programming and
training to help customers optimize their GenRad hardware and software
solutions. GenRad support and services are designed to keep GenRad hardware and
software solutions running at peak efficiency and minimizing down time. GenRad
service engineers are trained to assist customers in getting the most out of
their GenRad production assurance solutions.
GenRad is a Massachusetts corporation. Its principal executive offices are
located at 7 Technology Park Drive, Westford, Massachusetts 01886, and its
telephone number is (978) 589-7000.
60
BENEFICIAL SHAREHOLDERS OF GENRAD
The following table sets forth information as of September 19, 2001
concerning (i) each director of GenRad, (ii) the individuals who have served as
executive officers of GenRad since the beginning of fiscal 2000, (iii) all
current executive officers and directors of GenRad as a group, and (iv) each
person who is known by GenRad to be the beneficial owner of more than five
percent of the GenRad common stock as of such date. The information presented
details each person's ownership of GenRad common stock and what their respective
ownership of Teradyne common stock would be if the merger is completed, assuming
the person does not otherwise beneficially own shares of Teradyne common stock.
This information has been furnished by the persons listed in the table. Except
as indicated in the footnotes below, the persons named in this table have sole
investment and voting power with respect to the shares beneficially owned by
them.
TERADYNE SHARES OWNED
GENRAD SHARES OWNED AFTER THE MERGER
-------------------------------- ------------------------------
PERCENT OF PERCENT OF
SHARES OUTSTANDING SHARES OUTSTANDING
BENEFICIALLY SHARES BENEFICIALLY SHARES
NAME OF BENEFICIAL OWNER OWNED(1) OWNED(14) OWNED OWNED(14)
------------------------ ------------ ----------- ------------ ---------------
State of Wisconsin Board of Investment...... 2,872,000(2) 10.06% 497,717 *
P.O. Box 7842
Madison, Wisconsin 53707
Daruma Asset Management..................... 2,517,900(3) 8.82% 436,352 *
Mariko O. Gordon
60 East 42nd Street, Suite 1111
New York, NY 10165
The TCW Group, Inc.......................... 1,564,182(4) 5.48% 271,072 *
Robert Day
865 South Figueroa Street
Los Angeles, California 90017
Robert M. Dutkowsky......................... 532,000(5) 1.83% 92,195 *
William S. Antle III........................ 71,583(6)(7) * 12,405 *
Russell A. Gullotti......................... 33,168(6)(7) * 5,748 *
Lowell B. Hawkinson......................... 48,583(6)(7) * 8,419 *
William G. Scheerer......................... 34,583(6)(7) * 5,993 *
Adriana Stadecker........................... 28,083(6)(7) * 4,866 *
Ed Zschau................................... 25,083(6)(7) * 4,346 *
Lori B. Hannay.............................. 161,518(8) * 27,991 *
Ronald W. Lindell........................... 30,747(9) * 5,328 *
Brian Quirk................................. 106,667(10) * 18,485 *
Walter A. Shephard.......................... 132,228(11) * 22,915 *
James F. Lyons.............................. 870,500(12) 2.97% 150,857 *
All Executive Officers and Directors as a
Group (13 Persons)........................ 1,326,898(13) 4.47% 229,946 *
------------------------
* Less than 1%.
(1) The number of shares beneficially owned is determined under rules
promulgated by the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under
61
SEC rules, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire within 60 days of
September 19, 2001 through the exercise of any stock option, warrant or
other right. The inclusion herein of such shares, however, does not
constitute an admission that the named shareholder has a direct or indirect
pecuniary interest in such shares.
(2) The information reported is based on a Schedule 13G/A, dated May 10, 2001,
filed with the SEC by the State of Wisconsin Investment Board.
(3) The information reported is based on a Schedule 13G, dated February 6, 2001,
filed with the SEC by Daruma Asset Management, Inc. and Mariko O. Gordon.
Daruma Asset Management is an investment advisor and Ms. Gordon is its
principal shareholder.
(4) The information reported is based on a Schedule 13G, dated February 14,
2001, filed with the SEC by The TCW Group, Inc. and Robert Day. Robert Day
may be deemed a control person of TCW.
(5) Amount shown includes options to purchase 500,000 shares of GenRad common
stock.
(6) Includes options to purchase 12,500 shares of GenRad common stock for each
of Ms. Stadecker and Messrs. Antle, Gullotti, Hawkinson, Scheerer and
Mr. Zschau.
(7) Includes 2,500 shares of restricted stock issued on August 31, 1999, 2,500
shares of restricted stock issued on August 31, 2000 and 1,083 shares of
restricted stock issued on August 31, 2001 to each of Ms. Stadecker and
Messrs. Antle, Gullotti, Hawkinson, Scheerer and Zschau. These shares may
not be transferred prior to the earlier to occur of (i) the first, second
and third anniversaries of the respective dates of grant, each with respect
to one-third of the shares, (ii) the resignation of the director from the
GenRad board of directors with the consent of the majority of the members of
the board, or the death or disability of the director, or (iii) a change of
control of GenRad.
(8) Amount shown includes options to purchase 161,500 shares of GenRad common
stock, but does not include options to purchase 30,000 shares of GenRad
common stock that will become exercisable upon shareholder approval of the
merger agreement.
(9) Amount shown includes options to purchase 29,167 shares of GenRad common
stock, but does not include options to purchase 70,833 shares of GenRad
common stock that will become exercisable upon shareholder approval of the
merger agreement.
(10) Amount shown is comprised solely of options to purchase shares of GenRad
common stock, but does not include options to purchase 83,333 shares of
GenRad common stock that will become exercisable upon shareholder approval
of the merger agreement.
(11) Amount shown includes options to purchase 122,467 shares of GenRad common
stock, but does not include options to purchase 94,333 shares of GenRad
common stock that will become exercisable upon shareholder approval of the
merger agreement.
(12) Share ownership data as of March 14, 2001. Mr. Lyons resigned from GenRad
on April 9, 2000. Amount includes options to purchase 737,500 shares of
GenRad common stock, but does not include options to purchase 112,500 shares
of GenRad common stock that will become exercisable upon shareholder
approval of the merger agreement.
(13) Amount shown includes options to purchase 122,484 shares of GenRad common
stock, but does not include options to purchase 66,249 shares of GenRad
common stock that will become exercisable upon shareholder approval of the
merger agreement.
(14) Percentages are based upon 28,554,934 shares of GenRad common stock
outstanding and 176,039,515 shares of Teradyne common stock outstanding on
September 19, 2001.
62
LEGAL MATTERS
The validity of the shares of Teradyne common stock to be issued in
connection with the merger has been passed upon by Testa, Hurwitz & Thibeault,
LLP of Boston, Massachusetts. Tax matters have been passed upon for GenRad by
Nutter, McClennen & Fish, LLP of Boston, Massachusetts.
EXPERTS
The consolidated financial statements of Teradyne, Inc. incorporated in this
proxy-statement-prospectus by reference to Teradyne's annual report on
Form 10-K for the year ended December 31, 2000 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of GenRad, Inc. incorporated in this
proxy statement - prospectus by reference to GenRad's annual report on
Form 10-K/A for the fiscal year ended December 30, 2000 have been so
incorporated in reliance on the report (which contains an explanatory paragraph
relating to GenRad, Inc.'s ability to continue as a going concern as described
in Note 13 to the financial statements) of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting. A representative of PricewaterhouseCoopers LLP will be
at the GenRad special meeting to answer questions from GenRad shareholders and
will be given an opportunity to make a statement, if so desired.
OTHER MATTERS
The GenRad board is not aware of any other matters to be presented at the
GenRad special meeting. If any additional matters are properly presented, the
persons named in the proxy will have discretion, to the extent permitted by
applicable law, to vote in accordance with their own judgment on these matters.
WHERE YOU CAN FIND MORE INFORMATION
Teradyne and GenRad file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information that either company files with the SEC
at the SEC's public reference room in Washington, D.C. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Each of
Teradyne's and GenRad's SEC filings are also available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at "http://www.sec.gov." In addition, Teradyne common stock and GenRad common
stock are listed on the New York Stock Exchange and similar information
concerning Teradyne and GenRad can be inspected and copied at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, NY 10005.
Teradyne has filed a registration statement on Form S-4 to register with the
SEC the Teradyne common stock to be issued to the GenRad shareholders in the
merger. This proxy statement - prospectus is a part of that registration
statement and constitutes a prospectus of Teradyne in addition to being a proxy
statement of GenRad for the special shareholders' meeting. As allowed by SEC
rules, this proxy statement - prospectus does not contain all the information
you can find in the registration statement or the exhibits to the registration
statement.
The SEC allows Teradyne and GenRad to "incorporate by reference" information
into this proxy statement - prospectus, which means that Teradyne and GenRad can
disclose important information to you by referring you to another document filed
separately with the SEC. This information incorporated by reference is deemed to
be part of this proxy statement - prospectus, except for any information
superceded by information in this proxy statement - prospectus. This proxy
statement - prospectus incorporates by reference the documents named below that
we have previously filed with the SEC.
63
Those documents contain important information about Teradyne's and GenRad's
businesses, financial conditions and operating results.
TERADYNE SEC FILINGS
- Annual Report on Form 10-K for the year ended December 31, 2000.
- Quarterly Reports on Form 10-Q for the quarters ended April 1, 2001 and
July 1, 2001.
- Definitive Proxy Statement on Schedule 14A, filed on April 18, 2001.
GENRAD SEC FILINGS
- Annual Report on Form 10-K and 10-K/A for the year ended December 30,
2000.
- Quarterly Report on Form 10-Q for the quarter ended March 31, 2001.
- Quarterly Report on Form 10-Q and Form 10-Q/A for the quarter ended
June 30, 2001.
- Current Reports on Form 8-K, filed on June 19, 2001 and August 2, 2001.
- Definitive Proxy Statement on Schedule 14A, filed on April 6, 2001.
- The description of GenRad's common stock contained in GenRad's
registration statement on Form S-3 (File No. 333-93701).
Teradyne and GenRad are also incorporating by reference additional documents
that Teradyne and GenRad will file with the SEC between the date of this proxy
statement - prospectus and the date of the GenRad special shareholders' meeting.
Teradyne has supplied all information contained or incorporated by reference
in this proxy statement - prospectus relating to Teradyne, and GenRad has
supplied all information contained in this proxy statement - prospectus relating
to GenRad.
Documents incorporated by reference are available from Teradyne and GenRad
without charge, excluding all exhibits unless Teradyne and GenRad have
specifically incorporated by reference an exhibit in this proxy
statement - prospectus. Shareholders may obtain documents incorporated by
reference in this proxy statement - prospectus by requesting them in writing or
by telephone from the appropriate company at the following addresses:
Teradyne, Inc. GenRad, Inc.
321 Harrison Avenue 7 Technology Park Drive
Boston, Massachusetts 02118 Westford, Massachusetts 01886
Attention: Investor Relations Attention: Walter A. Shephard
Telephone: (617) 422-2425 Telephone: (978) 589-7440
If you would like to request documents from Teradyne, please do so by
October 15, 2001 to receive them before the GenRad special shareholders'
meeting.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT - PROSPECTUS TO VOTE ON THE PROPOSAL TO
APPROVE THE MERGER AGREEMENT. NEITHER TERADYNE NOR GENRAD HAS AUTHORIZED ANYONE
TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM THAT WHICH IS CONTAINED
IN THIS PROXY STATEMENT - PROSPECTUS. THIS PROXY STATEMENT - PROSPECTUS IS DATED
SEPTEMBER 25, 2001. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROXY STATEMENT - PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THIS DATE,
AND NEITHER THE MAILING OF THIS PROXY STATEMENT - PROSPECTUS TO SHAREHOLDERS NOR
THE ISSUANCE OF TERADYNE COMMON STOCK IN THE MERGER SHALL CREATE ANY IMPLICATION
TO THE CONTRARY.
64
APPENDIX A
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 1, 2001
AMONG
TERADYNE, INC.
RADIO ACQUISITION CORP.
AND
GENRAD, INC.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
--------
ARTICLE I The Merger....................................... A-1
SECTION 1.01. THE MERGER................................. A-1
SECTION 1.02. CLOSING.................................... A-1
SECTION 1.03. EFFECTIVE TIME OF THE MERGER............... A-1
SECTION 1.04. EFFECTS OF THE MERGER...................... A-2
SECTION 1.05. ARTICLES OF ORGANIZATION; BY-LAWS;
PURPOSES................................................ A-2
SECTION 1.06. DIRECTORS.................................. A-2
SECTION 1.07. OFFICERS................................... A-2
ARTICLE II Effect of the Merger on the Capital Stock of the
Constituent Corporations.................................. A-2
SECTION 2.01. EFFECT ON CAPITAL STOCK.................... A-2
SECTION 2.02. EXCHANGE OF CERTIFICATES................... A-3
SECTION 2.03. TREATMENT OF OPTIONS....................... A-5
SECTION 2.04. DISSENTING SHARES.......................... A-6
ARTICLE III Representations and Warranties................. A-6
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY................................................. A-6
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF PARENT
AND SUB................................................. A-17
ARTICLE IV Covenants Relating to Conduct of Business Prior
to Merger................................................. A-20
SECTION 4.01. CONDUCT OF BUSINESS BY THE COMPANY......... A-20
ARTICLE V Additional Agreements............................ A-23
SECTION 5.01. PREPARATION OF FORM S-4 AND PROXY
STATEMENT; SHAREHOLDER MEETING.......................... A-23
SECTION 5.02. ACCESS TO INFORMATION; CONFIDENTIALITY..... A-24
SECTION 5.03. REASONABLE BEST EFFORTS.................... A-24
SECTION 5.04. INDEMNIFICATION............................ A-25
SECTION 5.05. PUBLIC ANNOUNCEMENTS....................... A-25
SECTION 5.06. NO SOLICITATION............................ A-26
SECTION 5.07. STOCK EXCHANGE LISTING..................... A-27
SECTION 5.08. LETTERS OF THE COMPANY'S ACCOUNTANTS....... A-27
SECTION 5.09. LETTERS OF PARENT'S ACCOUNTANTS............ A-27
SECTION 5.10. EMPLOYEE BENEFIT PLANS..................... A-27
SECTION 5.11. COMPANY SENIOR CREDIT FACILITY............. A-28
SECTION 5.12. INFORMATION SUPPLIED....................... A-28
ARTICLE VI Conditions Precedent............................ A-28
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO
EFFECT THE MERGER....................................... A-28
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF PARENT AND
SUB..................................................... A-29
SECTION 6.03. CONDITIONS TO OBLIGATION OF THE COMPANY.... A-29
ARTICLE VII Termination, Amendment, and Waiver............. A-30
SECTION 7.01. TERMINATION................................ A-30
SECTION 7.02. EFFECT OF TERMINATION...................... A-31
SECTION 7.03. AMENDMENT.................................. A-31
SECTION 7.04. EXTENSION; WAIVER.......................... A-31
SECTION 7.05. PROCEDURE FOR TERMINATION, AMENDMENT,
EXTENSION, OR WAIVER.................................... A-31
i
PAGE
--------
ARTICLE VIII General Provisions............................ A-32
SECTION 8.01. NONSURVIVAL OF REPRESENTATION AND
WARRANTIES.............................................. A-32
SECTION 8.02. FEES AND EXPENSES.......................... A-32
SECTION 8.03. NOTICES.................................... A-33
SECTION 8.04. DEFINITIONS................................ A-33
SECTION 8.05. INTERPRETATION............................. A-35
SECTION 8.06. COUNTERPARTS............................... A-35
SECTION 8.07. ENTIRE AGREEMENT; NO THIRD-PARTY
BENEFICIARIES........................................... A-35
SECTION 8.08. GOVERNING LAW.............................. A-36
SECTION 8.09. ASSIGNMENT................................. A-36
SECTION 8.10. ENFORCEMENT................................ A-36
ii
AGREEMENT AND PLAN OF MERGER, dated as of August 1, 2001, among
Teradyne, Inc., a Massachusetts corporation ("PARENT"), Radio Acquisition Corp.,
a Massachusetts corporation and a direct wholly owned subsidiary of Parent
("SUB"), and GenRad, Inc., a Massachusetts corporation (the "COMPANY").
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have determined that the merger of Sub with and into the Company (the "MERGER"),
upon the terms and subject to the conditions set forth in this Agreement, would
be fair and in the best interests of their respective shareholders;
WHEREAS, such Boards of Directors have approved the Merger, pursuant to
which each share of common stock, par value $1.00 per share, of the Company (the
"COMPANY COMMON STOCK", other than shares owned, directly or indirectly, by the
Company or any subsidiary (as defined in Section 8.04) of the Company or by
Parent, Sub or any other subsidiary of Parent, will be converted into the right
to receive the Merger Consideration (as defined in Section 2.01(c));
WHEREAS, the Merger and this Agreement require the vote of two-thirds of the
outstanding shares of the Company Common Stock for the approval thereof (the
"COMPANY SHAREHOLDER APPROVAL");
WHEREAS, Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE");
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Massachusetts Business
Corporation Law ("MASSACHUSETTS LAW"), Sub shall be merged with and into the
Company at the Effective Time of the Merger (as defined below). Upon the
Effective Time of the Merger, the separate existence of Sub shall cease, and the
Company shall continue as the surviving corporation.
SECTION 1.02. CLOSING. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 7.01, and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "CLOSING") will take place
at 10:00 a.m. on the second business day after satisfaction of the conditions
set forth in Section 6.01 (or as soon as practicable thereafter following
satisfaction or waiver of the conditions set forth in Sections 6.02 and 6.03)
(the "CLOSING DATE"), at the offices of Testa, Hurwitz & Thibeault, LLP, 125
High Street, Boston, Massachusetts 02110, unless another date, time or place is
agreed to in writing by the parties hereto.
SECTION 1.03. EFFECTIVE TIME OF THE MERGER. Upon the Closing, the parties
shall file with the Secretary of State of the Commonwealth of Massachusetts a
certificate of merger (the "ARTICLES OF MERGER") executed in accordance with the
relevant provisions of Massachusetts Law and shall make all other filings or
recordings required under Massachusetts Law. The Merger shall become effective
at such time as the Articles of Merger is duly filed with the Secretary of the
Commonwealth of Massachusetts, or at such other time as is permissible in
accordance with Massachusetts Law and as
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Sub and the Company shall agree should be specified in the Articles of Merger
(the time the Merger becomes effective being the "EFFECTIVE TIME OF THE
MERGER").
SECTION 1.04. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the applicable provisions of Massachusetts Law. As used herein,
"SURVIVING CORPORATION" shall mean and refer to the Company, at and after the
Effective Time of the Merger, as the surviving corporation in the Merger.
SECTION 1.05. ARTICLES OF ORGANIZATION; BY-LAWS; PURPOSES. (a) At the
Effective Time of the Merger, and without any further action on the part of the
Company or Sub, the articles of organization of Sub as in effect at the
Effective Time of the Merger, shall be the articles of organization of the
Surviving Corporation until thereafter amended as provided therein or by
applicable law.
(b) At the Effective Time of the Merger, and without any further action on
the part of the Company or Sub, the By-Laws of Sub as in effect at the Effective
Time of the Merger shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
(c) The purposes of the Surviving Corporation shall be the purposes set
forth in the articles of organization of Sub in effect immediately prior to the
Effective Time of the Merger.
(d) The capitalization of the Surviving Corporation shall be as set forth in
the articles of organization of Sub in effect immediately prior to the Effective
Time of the Merger.
SECTION 1.06. DIRECTORS. The directors of Sub at the Effective Time of the
Merger shall be the directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
SECTION 1.07. OFFICERS. The officers of Sub at the Effective Time of the
Merger shall be the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected or appointed and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS
SECTION 2.01. EFFECT ON CAPITAL STOCK. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the
Company, Sub, or any holder of any shares of Company Common Stock or any shares
of capital stock of Sub:
(a) COMMON STOCK OF SUB. Each share of common stock of Sub issued and
outstanding immediately prior to the Effective Time of the Merger shall be
converted into one share of the common stock, par value $0.01 per share, of the
Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED COMPANY COMMON
STOCK. Each share of Company Common Stock that is owned by the Company or by
any subsidiary of the Company, and each share of Company Common Stock that is
owned by Parent, Sub or any other subsidiary of Parent shall automatically be
cancelled and retired and shall cease to exist, and no cash, Parent Common Stock
(as defined Section 2.01(c)) or other consideration shall be delivered or
deliverable in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Each issued and outstanding share
of Company Common Stock (other than shares cancelled pursuant to Section 2.01(b)
and any Dissenting Shares (as defined in and to the extent provided in
Section 2.04)) shall be converted into the right to receive 0.1733 shares (the
"EXCHANGE RATIO") of Common Stock, par value $0.125 per share, of Parent (the
"MERGER CONSIDERATION").
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(d) CANCELLATION AND RETIREMENT OF COMPANY COMMON STOCK. As of the
Effective Time of the Merger, all shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such shares of
Company Common Stock (collectively, the "CERTIFICATES") shall, to the extent
such Certificate represents such shares, cease to have any rights with respect
thereto, except the right to receive the Merger Consideration (and cash in lieu
of fractional shares of Common Stock, par value $0.125 per share, of Parent (the
"PARENT COMMON STOCK")) to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.02.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. As of the
Effective Time of the Merger, Parent shall enter into an agreement with such
bank or trust company as may be designated by Parent (the "EXCHANGE AGENT")
which shall provide that Parent shall deposit with the Exchange Agent, for the
benefit of the holders of Certificates, for exchange in accordance with this
Article II, certificates representing the shares of Parent Common Stock (such
shares of Parent Common Stock, together with any dividends or distributions with
respect thereto with a record date after the Effective Time of the Merger, and
any cash payable in lieu of any fractional shares of Parent Common Stock being
hereinafter referred to as the "EXCHANGE FUND") issuable pursuant to
Section 2.01 in exchange for outstanding shares of Company Common Stock.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time of the Merger, the Exchange Agent shall mail to each holder of
record of Certificates immediately prior to the Effective Time of the Merger
whose shares were converted into shares of Parent Common Stock pursuant to
Section 2.01, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass
only upon delivery of the Certificates to the Exchange Agent, and which shall be
in such form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate for cancellation (or indemnity reasonably
satisfactory to Parent and the Exchange Agent, if any of such Certificates are
lost, stolen or destroyed) to the Exchange Agent together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of Parent Common Stock which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of this
Article II (after taking into account all shares of Company Common Stock then
held by such holder), and the Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of shares of Company Common
Stock which is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock may
be issued to a transferee if the Certificate is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.02, subject to the provisions of
Section 2.04, each Certificate shall be deemed at any time after the Effective
Time of the Merger to represent only the Parent Common Stock into which the
shares of Company Common Stock represented by such Certificate have been
converted as provided in this Article II and the right to receive upon such
surrender cash in lieu of any fractional shares of Parent Common Stock as
contemplated by this Section 2.02.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions with respect to Parent Common Stock with a record date after
the Effective Time of the Merger shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.02(e) until the surrender of such
Certificate in accordance with this Article II. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificate representing the whole shares of Parent
Common Stock issued in
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exchange therefor without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of any fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.02(e) and the
amount of any dividends or other distributions with a record date after the
Effective Time of the Merger theretofore paid (but withheld pursuant to the
immediately preceding sentence) with respect to such whole shares of Parent
Common Stock, and (ii) at the appropriate payment date, the amount of any
dividends or other distributions with a record date after the Effective Time of
the Merger and a payment date subsequent to such surrender payable with respect
to such whole shares of Parent Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued upon conversion of shares of Company Common Stock in
accordance with the terms hereof, and all cash paid pursuant to Sections 2.02(c)
and 2.02(e), shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding prior
to the Effective Time of the Merger. If, after the Effective Time of the Merger,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article II.
(e) NO FRACTIONAL SHARES. (i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a shareholder of Parent. In lieu
of such issuance of fractional shares, Parent shall pay each holder of
Certificates an amount in cash equal to the product obtained by multiplying
(a) the fractional share interest to which such holder (after taking into
account all shares of Company Common Stock held immediately prior to the
Effective Time of the Merger by such holder) would otherwise be entitled by
(b) the average of the closing sale prices for a share of Parent Common Stock on
the New York Stock Exchange ("NYSE") Composite Transaction Tape for the ten
trading days immediately preceding the date of the Effective Time of the Merger.
(ii) As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Certificates with respect to any fractional
share interests, the Exchange Agent shall make available such amounts to such
holders of Certificates, subject to and in accordance with the terms of
Section 2.02(c).
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
deposited with the Exchange Agent pursuant to this Section 2.02 which remains
undistributed to the holders of the Certificates six months after the Effective
Time of the Merger shall be delivered to the Parent, upon demand, and any
holders of Certificates who have not theretofore complied with this Article II
shall thereafter look only to the Parent and only as general creditors thereof
for payment of their claim for Parent Common Stock, cash in lieu of fractional
shares of Parent Common Stock and any dividends or distributions with respect to
Parent Common Stock to which such holders may be entitled.
(g) NO LIABILITY. None of Parent, Sub, the Company or the Exchange Agent
shall be liable to any person in respect of any shares of Parent Common Stock
(or dividends or distributions with respect thereto) or cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificates shall not have been
surrendered prior to three years after the Effective Time of the Merger, or
immediately prior to such earlier date on which any Merger Consideration, any
cash in lieu of fractional shares of Parent Common Stock or any dividends or
distributions with respect to Parent Common Stock would otherwise escheat to or
become the property of any Governmental Entity (as defined in Section 3.01(d)),
any such Merger Consideration or cash shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
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(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Parent on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(i) ADJUSTMENT PROVISIONS. In the event Parent changes (or establishes a
record date for changing) the number of shares of Parent Common Stock issued and
outstanding prior to the Effective Time of the Merger as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Parent Common Stock and the record date therefor shall be prior
to the Effective Time of the Merger, the Exchange Ratio shall be proportionately
adjusted. If, between the date hereof and the Effective Time of the Merger,
Parent shall merge, be acquired or consolidate with, by or into any other
corporation (a "BUSINESS COMBINATION") and the terms thereof shall provide that
Parent Common Stock shall be converted into or exchanged for the shares of any
other corporation or entity, then provision shall be made as part of the terms
of such Business Combination so that shareholders of the Company who would be
entitled to receive shares of Parent Common Stock pursuant to this Agreement
shall be entitled to receive, in lieu of each share of Parent Common Stock
issuable to such shareholders as provided herein, the same kind and amount of
securities or assets as shall be distributable upon such Business Combination
with respect to one share of Parent Common Stock (provided that nothing herein
shall be construed so as to release the acquiring entity in any such Business
Combination from its obligations under this Agreement as the successor to
Parent).
SECTION 2.03. TREATMENT OF OPTIONS. (a) At the Effective Time of the
Merger, each outstanding option to purchase Company Common Stock (a "COMPANY
STOCK OPTION") issued pursuant to the Company's 1991 Equity Incentive Plan, as
amended, 1991 Directors' Plan, as amended, 1994 Director Restricted Plan, as
amended, 1997 Non-Qualified Employee Stock Option Plan, as amended, 2001
Directors Stock Option Plan and Non-Statutory Stock Option Agreement by and
between Robert M. Dutkowsky and the Company dated April 24, 2000 (collectively,
the "COMPANY STOCK PLANS"), whether vested or unvested, shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Company Stock Option, the same number of shares of Parent
Common Stock as the holder of such Company Stock Option would have been entitled
to receive pursuant to the Merger had such holder exercised such option in full
immediately prior to the Effective Time of the Merger, at a price per share
equal to (y) the aggregate exercise price for the shares of Company Common Stock
otherwise purchasable pursuant to such Company Stock Option divided by (z) the
number of full shares of Parent Common Stock deemed purchasable pursuant to such
Company Stock Option; PROVIDED, HOWEVER, that in the case of any option to which
Section 421 of the Code applies by reason of its qualification under
Section 422 of the Code ("INCENTIVE STOCK OPTIONS"), the option price, the
number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in order to comply
with Section 424(a) of the Code.
(b) As soon as practicable after the Effective Time of the Merger, Parent
shall deliver to the holders of Company Stock Options appropriate notices
setting forth such holders' rights pursuant to the Company Stock Plans and the
agreements evidencing the grants of such Company Stock Options shall continue in
effect on the same terms and conditions (subject to adjustments required by this
Section 2.03 after giving effect to the Merger and the provisions set forth
above). If necessary, Parent shall comply with the terms of the Company Stock
Plans and ensure, to the extent required by, and subject to the provisions of,
the Company Stock Plans, that Company Stock Options that qualified as incentive
stock options prior to the Effective Time of the Merger continue to qualify as
incentive stock options after the Effective Time of the Merger.
(c) 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 Company Stock Options. As soon as practicable after the Effective Time of the
Merger, Parent shall file a registration statement on Form S-8 (or any successor
or other appropriate forms), or another appropriate form, with respect to the
shares of Parent Common Stock subject to such options and shall use its
reasonable best efforts to
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maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding. With respect
to those individuals who subsequent to the Merger will be subject to the
reporting requirements under Section 16(a) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), where applicable, Parent shall administer
the Company Stock Plans in a manner that complies with Rule 16b-3 promulgated
under the Exchange Act to the extent the Company Stock Plans complied with such
rule prior to the Merger.
(d) The Company shall terminate the Company Employee Stock Purchase Plan
(the "COMPANY ESPP") at or prior to the Closing Date.
SECTION 2.04. DISSENTING SHARES. (a) Notwithstanding any provision of this
Agreement to the contrary, the shares of any holder of Company Common Stock who
has demanded and perfected appraisal rights of such shares in accordance with
Massachusetts Law and who, as of the Effective Time, has not effectively
withdrawn or lost such appraisal rights ("DISSENTING SHARES"), shall not be
converted into or represent a right to receive Parent Common Stock pursuant to
Section 2.01(c), but the holder thereof shall only be entitled to such rights as
are granted by Massachusetts Law.
(b) Notwithstanding the foregoing, if any holder of shares of Company Common
Stock who demands appraisal of such shares under Massachusetts Law shall
effectively withdraw the right to appraisal, then, as of the later of the
Effective Time of the Merger and the occurrence of such event, such holder's
shares shall automatically be converted into and represent only the right to
receive Parent Common Stock, without interest thereon, upon surrender of the
Certificate representing such shares as provided in Section 2.01(c).
(c) The Company shall give Parent (i) prompt notice of any written demands
for appraisal of any shares of Company Common Stock, withdrawals of such
demands, and any other instruments served pursuant to Massachusetts Law and
received by the Company which relate to any such demand for appraisal and
(ii) the opportunity to participate in all negotiations and proceedings which
take place prior to the Effective Time of the Merger with respect to demands for
appraisal under Massachusetts Law. The Company shall not, except with the prior
written consent of Parent or as may be required by applicable law, voluntarily
make any payment with respect to any demands for appraisal of the Company Common
Stock or offer to settle or settle any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
forth in the disclosure schedule (referencing the same section as this
Agreement) delivered by the Company to Parent and Sub at the time of execution
of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"), the Company represents
and warrants to Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the Company and
each of its Subsidiaries (as defined in Section 3.01(b)) is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of the Company and each of
its Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction (domestic or foreign) in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) would not have a
Material Adverse Effect (as defined in Section 8.04) with respect to the
Company. The Company has delivered complete and correct copies of the Restated
Articles of Organization, as amended (the "Articles of Organization"), and
By-laws, as amended (the "By-laws"), of the Company as currently in effect. The
Company has made available to Parent and Sub complete and correct copies of the
certificates of incorporation and
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by-laws (or other organizational documents) of each of its Subsidiaries, in each
case as amended to the date of this Agreement.
(b) SUBSIDIARIES. The only direct or indirect subsidiaries (as defined in
Section 8.04) of the Company (other than any subsidiary of the Company that does
not constitute a "Significant Subsidiary" within the meaning of Rule 1-02 of
Regulation S-X of the Securities and Exchange Commission (the "SEC")) are those
listed in Section 3.01(b) of the Company Disclosure Schedule (the
"SUBSIDIARIES"). All of the outstanding shares of capital stock of each
subsidiary of the Company have been validly issued and are fully paid and
nonassessable and, except as disclosed in Section 3.01(b) of the Company
Disclosure Schedule, are owned (of record and beneficially) by the Company, by
another wholly owned subsidiary of the Company or by the Company and another
such wholly owned subsidiary, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
except for permitted liens (as defined below) (collectively, "LIENS"). Except
for the ownership interests set forth in Section 3.01(b) of the Company
Disclosure Schedule, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation, partnership,
business association, joint venture or other entity.
(c) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 60,000,000 shares of Company Common Stock, par value $1.00 per
share. As of the close of business on July 31, 2001, there were: (i) 28,552,465
shares of Company Common Stock issued and outstanding; (ii) 1,883,569 shares of
Company Common Stock held in the treasury of the Company; (iii) 1,226,350 shares
of Company Common Stock Options available for grant pursuant to the Company
Stock Plans and 1,226,350 shares of Company Common Stock reserved for issuance
pursuant to the Company Stock Plans, and (iv) 3,048 shares of Company Common
Stock reserved for issuance pursuant to the Company ESPP. Except as set forth
above, as of the close of business on July 31, 2001, there were no shares of
capital stock or other equity securities of the Company issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Company Stock Plans will
be, when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. All securities issued by the Company were
issued in compliance in all material respects with all applicable federal and
state securities laws and all applicable rules and regulations promulgated
thereunder. There are no outstanding bonds, debentures, notes or other
indebtedness or debt securities of the Company that have the right to vote (or
that are convertible into, or exchangeable for, securities having the right to
vote) on any matters on which shareholders of the Company may vote
(collectively, "VOTING DEBT"). Except as set forth above, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company or any
of its subsidiaries is a party or by which any of them is bound obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity or
voting securities of the Company or of any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, grant, extend, accelerate the
vesting of or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations, commitments, understandings or arrangements of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire or
make any payment in respect of any shares of capital stock of the Company or any
of its subsidiaries. To the knowledge of the Company, there are no irrevocable
proxies with respect to shares of capital stock of the Company or any subsidiary
of the Company. Except as set forth in Section 3.01(c) of the Company Disclosure
Schedule, there are no agreements or arrangements pursuant to which the Company
is or could be required to register shares of Company Common Stock or other
agreements or arrangements with or, to the knowledge of the Company, among any
securityholders of the Company with respect to securities of the Company.
Since December 31, 2000, the Company has not (A) issued or permitted to be
issued any shares of capital stock, or securities exercisable for or convertible
into shares of capital stock, of the Company or any of its subsidiaries, other
than pursuant to any employee stock options issued prior to the date
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hereof under the Company Stock Plans; (B) repurchased, redeemed or otherwise
acquired, directly or indirectly through one or more subsidiaries, any shares of
capital stock of the Company or any of its subsidiaries or (C) declared, set
aside, made or paid to the shareholders of the Company dividends or other
distributions on the outstanding shares of capital stock of the Company.
(d) AUTHORITY; NONCONTRAVENTION. The Company has the requisite corporate
power and authority to enter into this Agreement and, subject to the Company
Shareholder Approval in the case of the Agreement, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject, in the case of this Agreement, to the
Company Shareholder Approval. This Agreement has been duly executed and
delivered by the Company and (assuming due authorization, execution and delivery
by Parent and Sub) constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing. Except
as set forth in Section 3.01(d) of the Company Disclosure Schedule, the
execution and delivery of this Agreement does not, and the consummation by the
Company of the transactions contemplated by this Agreement and compliance by the
Company with the provisions hereof and thereof will not, conflict with, or
result in any breach or violation of, or any default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of, or a "put" right with respect to any obligation
under, or to a loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of the Company or any of its
subsidiaries under, (i) the Articles of Organization, as amended, or By-laws, of
the Company or the comparable charter or organizational documents of any of its
subsidiaries, (ii) any loan or credit agreement, note, note purchase agreement,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of its
subsidiaries or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule, regulation or
arbitration award applicable to the Company or any of its subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, breaches, violations, defaults, rights, losses or
Liens that individually or in the aggregate would not have a Material Adverse
Effect with respect to the Company or prevent or materially delay the ability of
the Company to consummate the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, or notice to, any federal, state or local government or any court,
administrative agency or commission or other governmental authority or agency,
domestic or foreign (a "GOVERNMENTAL ENTITY"), is required by or with respect to
the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby or the performance by the Company of its
obligations hereunder, except for (i) such filings as may be required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT")
and the filing of applications by the Company pursuant to antitrust or similar
laws in such foreign jurisdictions as necessary, (ii) the filing with the SEC
and the NYSE of (A) a proxy statement relating to the Company Shareholder
Approval (such proxy statement as amended or supplemented from time to time, the
"PROXY STATEMENT") and (B) such reports under the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated
hereby, (iii) the filing of the Articles of Merger with the Secretary of State
of the Commonwealth of Massachusetts and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
and (iv) such other consents, approvals, orders, authorizations, registrations,
declarations, filings or notices the failure of which to make or obtain,
individually or in the aggregate, could not reasonably be expected to
(x) prevent or materially delay consummation of the
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Merger or the other transactions contemplated hereby or performance of the
Company's obligations hereunder or (y) have a Material Adverse Effect with
respect to the Company.
(e) SEC DOCUMENTS; UNDISCLOSED LIABILITIES. The Company has filed with the
SEC all reports, schedules, forms, statements and other documents required
pursuant to the Securities Act of 1933, as amended (the "Securities Act") and
the Exchange Act since January 1, 1998 (collectively, and in each case including
all exhibits and schedules thereto and documents incorporated by reference
therein, the "SEC DOCUMENTS"). As of their respective dates, the SEC Documents
(other than the SEC Financial Statements (as defined below)) comply in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents
(including any and all financial statements included therein) as of such dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any SEC Document
has been revised or superseded by a later filed SEC Document, none of the SEC
Documents (including any and all financial statements included therein) contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in all
SEC Documents filed since January 1, 1998 (the "SEC FINANCIAL STATEMENTS")
comply as to form in all material respects with applicable published accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited consolidated quarterly statements,
as permitted by Form 10-Q of the SEC), applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited quarterly statements, to normal recurring year-end audit adjustments).
Except as disclosed in Section 3.01(e) of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles to be recognized or
disclosed on a consolidated balance sheet of the Company and its subsidiaries or
in the notes thereto, except (i) liabilities reflected in the consolidated
balance sheet of the Company as of March 31, 2001 (the "2001 BALANCE SHEET") and
(ii) liabilities incurred since March 31, 2001 in the ordinary course of
business consistent with past practice.
(f) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company in writing for inclusion or incorporation by reference
in (i) the registration statement on Form S-4 to be filed with the SEC by Parent
in connection with the issuance of Parent Common Stock in the Merger (the
"FORM S-4") will, at the time the Form S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Proxy Statement will, at the date
it is first mailed to the Company's shareholders or at the time of the
Shareholders Meeting (as defined in Section 5.01(c)), 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 the
light of the circumstances under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder, except
that no representation is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied in writing by
Parent or Sub specifically for inclusion or incorporation by reference therein.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
Section 3.01(g) of the Company Disclosure Schedule, since March 31, 2001 there
is not and has not been: (i) any Material Adverse
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Change (as defined in Section 8.04) with respect to the Company; (ii) any
condition, event or occurrence which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or give rise to a
Material Adverse Change with respect to the Company; (iii) any condition, event
or occurrence which, individually or in the aggregate, could reasonably be
expected to prevent or materially delay the ability of the Company to consummate
the transactions contemplated by this Agreement or perform its obligations
hereunder.
(h) LITIGATION; LABOR MATTERS; COMPLIANCE WITH LAWS. (i) Except as
disclosed in Section 3.01(h) of the Company Disclosure Schedule, there is
(1) no suit, action, claim, charge, arbitration, investigation or proceeding
pending before a Governmental Entity, and (2) to the knowledge of the Company,
no suit, claim, charge, action, arbitration, investigation or proceeding
threatened against or investigation pending with respect to the Company or any
of its subsidiaries that, individually or in the aggregate, would have a
Material Adverse Effect with respect to the Company or prevent or materially
delay the ability of the Company to consummate the transactions contemplated by
this Agreement or to perform its obligations hereunder, nor is there any
judgment, decree, citation, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company or any of its subsidiaries which,
individually or in the aggregate, has or could reasonably be expected to have,
any such effect.
(ii) Except as disclosed in Section 3.01(h)(ii) of the Company Disclosure
Schedule, (1) neither the Company nor any of its subsidiaries is a party to, or
bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization; (2) to the knowledge of
the Company, neither the Company nor any of its subsidiaries is the subject of
any strike, grievance or other proceeding asserting that it or any subsidiary
has committed an unfair labor practice or seeking to compel it to bargain with
any labor organization as to wages or conditions of employment; (3) there is no
strike, work stoppage or other labor dispute involving it or any of its
subsidiaries pending or, to its knowledge, threatened; (4) no grievance is
pending or, to the knowledge of the Company, threatened against the Company or
any of its subsidiaries which, individually or in the aggregate, would have a
Material Adverse Effect with respect to the Company; (5) to the knowledge of the
Company, the Company and each subsidiary is in compliance with all applicable
laws (domestic and foreign), agreements, contracts and policies relating to
employment, employment practices, wages, hours, immigration matters and terms
and conditions of employment except for failures so to comply, if any, that,
individually or in the aggregate, would not have a Material Adverse Effect with
respect to the Company; (6) the Company has paid in full to all employees of the
Company and its subsidiaries all wages, salaries, commissions, bonuses, benefits
and other compensation due and payable to such employees under any policy,
practice, agreement, plan, program, statue or other law except for failures, if
any, that, individually or in the aggregate, would not have a Material Adverse
Effect with respect to the Company; (7) the Company is not liable for any
severance pay or other payments to any employee or former employee arising from
the termination of employment under any benefit or severance policy, practice,
agreement, plan, or program of the Company, nor to the knowledge of the Company
will the Company have any liability which exists or arises, or may be deemed to
exist or arise, under any applicable law or otherwise, as a result of or in
connection with the transactions contemplated hereunder or as a result of the
termination by the Company of any persons employed by the Company or any of its
subsidiaries on or prior to the Effective Time of the Merger; and (8) the
Company is in compliance with its obligations pursuant to the Worker Adjustment
and Retraining Notification Act of 1988 ("WARN") and any similar state or local
laws, and all other employee notification and bargaining obligations arising
under any collective bargaining agreement, statute or otherwise.
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(iii) The Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities which
are material to the operation of the businesses of the Company and its
subsidiaries, taken as a whole (the "COMPANY PERMITS"). The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply, individually or in the aggregate, would not have
a Material Adverse Effect with respect to the Company. Except as disclosed in
Section 3.01(h)(iii) of the Company Disclosure Schedule, the businesses of the
Company and its subsidiaries are not being conducted in violation of any law
(domestic or foreign), ordinance or regulation of any Governmental Entity,
except for possible violations which, individually or in the aggregate, do not
and would not have a Material Adverse Effect with respect to the Company.
(i) EMPLOYEE BENEFIT PLANS. (i) Section 3.01(i) of the Company Disclosure
Schedule contains a true and complete list of each "employee benefit plan"
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") (including, without limitation, multiemployer
plans within the meaning of Section 3(37) of ERISA)), stock purchase, stock
option, severance, employment, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred compensation and all other employee
benefit plans, agreements, programs, policies or other arrangements relating to
employment, benefits or entitlements, whether or not subject to ERISA (including
any funding mechanism therefor now in effect or required in the future as a
result of the transactions contemplated by this Agreement or other activities
taken by the Company on or prior to the date of the Agreement), sponsored by the
Company, one of its subsidiaries or any other entity such as a co-employer,
whether formal or informal, oral or written, legally binding or not under which
any employee or former employee of the Company or any of its subsidiaries has
any present or future right to benefits based on such employee's employment with
the Company or one of its subsidiaries and under which the Company or any of its
subsidiaries has any present or future liability, except such plans, agreements,
programs, policies or arrangements which, individually or in the aggregate,
would not impose more than an immaterial cost to the Company. All such plans,
agreements, programs, policies and arrangements are herein collectively referred
to as the "COMPANY PLANS".
(ii) With respect to each Company Plan, the Company has delivered to Parent
a current, accurate and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable, (A) any related
trust agreement, annuity contact or other funding instrument; (B) the most
recent determination letter issued by the U.S. Internal Revenue Service ("IRS");
(C) any summary plan description and other material written communications (or a
description of any material oral communications) by the Company to its employees
concerning the extent of the benefits provided under a Company Plan; and
(D) for the three most recent years (I) the Form 5500 and attached schedules;
(II) audited financial statements; (III) actuarial valuation reports; and
(IV) attorney's response to an auditor's request for information.
(iii) Except as disclosed in Section 3.01(i) of the Company Disclosure
Schedule: (A) each Company Plan has been established and administered in
accordance with its terms, and in compliance with the applicable provisions of
ERISA, the Code and other applicable laws, rules and regulations (including the
applicable laws, rules and regulations of foreign jurisdiction), in each case,
in all material respects; (B) each Company Plan which is intended to be
qualified within the meaning of Code Section 401(a) is so qualified and has
received a favorable determination letter as to its qualification and, to the
Company's knowledge, nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification; (C) with respect to any
Company Plan, no actions, suits or claims (other than routine claims for
benefits in the ordinary course) are pending or, to the best knowledge of the
Company, threatened; (D) to the Company's knowledge, no facts or circumstances
exist which could give rise to any such actions, suits or claims and the Company
will promptly notify Parent in writing of any pending claims or, to the
knowledge of the Company, any threatened claims arising between the date hereof
and the Effective Time of the Merger; (E) neither the Company nor,
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to the Company's knowledge, any other party has engaged in a prohibited
transaction, as such term is defined under Code Section 4975 or ERISA
Section 406, which would subject the Company or Parent or its subsidiaries to
any material taxes, penalties or other liabilities under the Code or ERISA;
(F) no event has occurred and no condition exists that can reasonably be
expected to subject the Company, either directly or by reason of its
relationship to any member of its "CONTROLLED GROUP" (defined as any
organization which is deemed to be a single employer with the Company within the
meaning of Code Sections 414(b), (c), (m) or (o) or ERISA Section 4001), to any
material tax, fine or penalty imposed by ERISA, the Code or other applicable
laws, rules and regulations (including the applicable laws, rules and
regulations of any foreign jurisdiction), (F) all contributions and payments
accrued under each Company Plan, determined in accordance with prior funding and
accrual practices, as of the Effective Time of the Merger have been or will be
timely paid or made prior thereto and adequate reserves have been provided for
in the Company's SEC Financial Statements for any premiums (or portions thereof)
and for all benefits attributable to service on or prior to the Effective Time
of the Merger; (G) for each Company Plan with respect to which a Form 5500 has
been filed, no material change has occurred with respect to the matters covered
by the most recent Form 5500 since the date thereof; and (H) no Company Plan
provides for an increase in the rate of contribution, benefit accrual or vesting
of benefits on or after the date of this Agreement.
(iv) Except as disclosed in Section 3.01(i) of the Company Disclosure
Schedule: (A) no Company Plan nor any "pension plan" (as defined in ERISA
Section 3 (2)) maintained or contributed to by any member of the Company's
Controlled Group has incurred any "accumulated funding deficiency" as such term
is defined in ERISA Section 302 and Code Section 412 (whether or not waived);
(B) no event or condition exists which could be deemed a reportable event within
the meaning of ERISA Section 4043 which could result in a liability to the
Company or any member of its Controlled Group and no condition exists which
could subject the Company or any member of its Controlled Group to a fine under
ERISA Section 4071; (C) as of the Effective Time of the Merger, the Company and
all members of its Controlled Group have made all required premium payments when
due to the Pension Benefit Guaranty Corporation; (D) neither the Company nor any
member of its Controlled Group is subject to any liability to the PBGC for any
plan termination occurring on or prior to the Effective Time of the Merger;
(E) no amendment has occurred which has required or could require the Company or
any member of its Controlled Group to provide security pursuant to Code
Section 401(a)(29); and (F) neither the Company nor any member of its Controlled
Group has engaged in a transaction which could subject it to liability under
ERISA Section 4069.
(v) Except as disclosed in Section 3.01(i) of the Company Disclosure
Schedule with respect to each of the Company Plans which is not a multiemployer
plan within the meaning of Section 4001(a)(3) of ERISA but is subject to Title
IV of ERISA (or a substantially similar provision of a foreign jurisdiction), as
of the Effective Time of the Merger, except as disclosed in Section 3.01(i) of
the Company Disclosure Schedule, the assets of each such Company Plan are at
least equal in value to the present value of all accrued benefits (vested and
unvested) of the participants in such Company Plan on a termination basis using
the assumptions established by the PBGC as in effect on the most recent
Valuation Date.
(vi) Except as disclosed in Section 3.01(i) of the Company Disclosure
Schedule (such disclosures to indicate the amount of any expected liability)
with respect to any multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) to which the Company or any member of its
Controlled Group has any liability or contributes (or has at any time
contributed or had an obligation to contribute): (A) the Company and each member
of its Controlled Group has or will have, as of the Effective Time of the
Merger, made all contributions to each such multiemployer plan required by the
terms of such multiemployer plan or any collective bargaining agreement;
(B) neither the Company nor any member of its Controlled Group has incurred any
material withdrawal liability under Title IV of ERISA or would be subject to
such liability if, as of the Effective Time of the Merger, the Company or
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any member of its Controlled Group were to engage in complete withdrawal (as
defined in ERISA Section 4203) or partial withdrawal (as defined in ERISA
Section 4205) from any such multiemployer plan; (C) no such multiemployer plan
is in reorganization or insolvent (as those terms are defined in ERISA Sections
4241 and 4245, respectively); and (D) neither the Company nor any member of its
Controlled Group has engaged in a transaction which could subject it to
liability under ERISA Section 4212(c).
(vii) (A) Each Company Plan which is intended to meet the requirements for
tax-favored treatment under Subchapter B of Chapter 1 of Subtitle A of the Code
meets such requirements; and (B) the Company has received a favorable
determination from the Internal Revenue Service with respect to any trust
intended to be qualified within the meaning of Code Section 501(c)(9).
(viii) Section 3.01(i)(viii) of the Company Disclosure Schedule sets forth,
on a plan by plan basis, the present value of accrued benefits to present or
former employees of the Company under each unfunded Company Plan that provides
for deferred compensation or supplemental retirement benefits.
(ix) Except as set forth in Section 3.01(i)(ix) of the Company Disclosure
Schedule, no Company Plan exists which could result in the payment to any
Company employee of any money or other property or rights or accelerate or
provide any other rights or benefits to any Company employee as a result of the
transaction contemplated by this Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Code section 280G.
(j) TAXES. Except as disclosed in Section 3.01(j) of the Company
Disclosure Schedule: (i) the Company and each of its subsidiaries, and any
affiliated consolidated, combined, unitary or aggregate group of which the
Company or any of its subsidiaries is or has been a member have timely filed all
Tax Returns required to be filed and such Tax Returns are complete and correct
in all material respects, have paid all Taxes required to be paid, whether or
not shown as being due on such Tax Returns, and have provided adequate reserves
in their financial statements for any Taxes that have not been paid; (ii) each
of the Company and its Subsidiaries has withheld and paid all Taxes and
maintained all records required to have been withheld, paid and maintained in
connection with amounts paid or owing to any employee, independent contractor,
creditor, shareholder or other third party; (iii) the charges, accruals and
reserves for Taxes reflected on the books of the Company and its subsidiaries
are adequate to cover the Tax liabilities accruing or payable by the Company and
its subsidiaries in respect of periods prior to the date hereof (including
interest and penalties, if any, thereon and Taxes being contested); (iv) no
material claim for unpaid Taxes has become a lien against the property of the
Company or any of its subsidiaries (other than with respect to Taxes not yet due
and payable) or is being asserted against the Company or any of its
subsidiaries; (v) no audit or other proceeding with respect to any Taxes due
from or with respect to the Company or any of its subsidiaries or any Tax Return
filed by or with respect to the Company or any of its subsidiaries is pending,
threatened or being conducted by any governmental or Tax authority; (vi) no
extension or waiver of the statute of limitations on the assessment of any Taxes
has been granted by the Company or any of its subsidiaries or is currently in
effect; (vii) none of the Company or any of its subsidiaries is doing business
or engaged in a trade or business in any jurisdiction in which it has not filed
all required material Tax Returns; (viii) neither the Company nor any of its
subsidiaries is subject to liability for Taxes of any Person (other than the
Company or its subsidiaries), including, without limitation, liability arising
from the application of Treasury Regulation section 1.1502-6 or any analogous
provision of state, local or foreign law, or as a transferee or successor, by
contract, or otherwise; (ix) neither the Company nor its subsidiaries is or has
been a party to any Tax allocation or sharing agreement with any person which is
not currently a member of the affiliated group of which the Company is currently
a member; (x) no consent under Section 341(f) of the Code has been filed with
respect to the Company or any of its subsidiaries; (xi) neither the Company nor
any of its Subsidiaries is a party to any agreement, contract, arrangement or
plan that has resulted or would result, separately or in the aggregate, in the
payment of (a) any "excess parachute payments" within the meaning of
Section 280G
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of the Code (without regard to the exceptions set forth in Sections 280G(b)(4)
and 280G(b)(5) of the Code) or (b) any amount for which a deduction would be
disallowed or deferred under Section 162 or Section 404 of the Code; (xii) none
of the Company Common Stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code; and (xiii) neither the Company nor
any of its Subsidiaries has been either a "distributing corporation" or a
"controlled corporation" (within the meaning of Section 355(a)(1)(A) of the
Code) in any distribution of stock intended to qualify for tax-free treatment
under the Code. As used herein, "TAXES" shall mean all taxes of any kind,
including, without limitation, those on or measured by or referred to as income,
gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, estimated, stamp,
occupation, premium, value added, property or windfall profits taxes, customs,
duties or similar fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any governmental authority, domestic or foreign. As used herein, "TAX
RETURN" shall mean any return, report or statement required to be filed with any
governmental authority with respect to Taxes.
(k) PROPERTIES. Except as disclosed in Section 3.01(k) of the Company
Disclosure Schedule, the Company or one of its subsidiaries (i) has good and
marketable title to all the properties and assets (A) reflected in the 2001
Balance Sheet as being owned by the Company or one of its subsidiaries (other
than any such properties or assets sold or disposed of since such date in the
ordinary course of business consistent with past practice) or (B) acquired after
March 31, 2001 which are material to the Company's business on a consolidated
basis, free and clear of all Liens. The Company has good and valid leasehold
interests in all real property leases, subleases and occupancy agreements to
which the Company is a party (the "LEASES") and is in sole possession of the
properties purported to be leased thereunder. Each Lease is in full force and
effect and constitutes a legal, valid and binding obligation of, and is legally
enforceable against, the respective parties thereto. There is no uncured breach
or default exists on the part of landlord under any of the Leases, and the
Company has no knowledge of breach or default or any event, condition or state
of facts, which with the giving of notice or the passage of time, or both, would
constitute a breach or default under the Lease by the Company. Except as
disclosed in Section 3.01(h), there is no suit, action, arbitration or other
proceeding with respect to the Leases or the premises leased under the Leases.
The Company has not received notice and does not otherwise have knowledge of any
pending, threatened or contemplated condemnation proceeding affecting any
premises owned or leased by the Company or any of its subsidiaries or any part
thereof or of any sale or other disposition of any such owned or leased premises
or any part thereof in lieu of condemnation. The real property leased to the
Company under the Leases encompasses all real property used by the Company, and
the Company owns no real property and does not have any options to purchase real
property. The landlord under each of the Company's material Leases has performed
all initial improvements required to be performed by it under such lease and all
tenant improvements allowances have been paid to the Company as tenant under
such Leases. All insurance required to be maintained by the Company under each
of the Leases is in full force and effect.
(l) ENVIRONMENTAL MATTERS. Except as set forth on the Company Disclosure
Schedule or as could not be reasonably expected to result in any liability under
Environmental Laws (as defined in Section 8.04) to the Company or any of its
subsidiaries which, individually or in the aggregate, would have a Material
Adverse Effect with respect to the Company:
(i) the Company and its subsidiaries hold and are in compliance with all
Environmental Permits (as defined in Section 8.04), and the Company and its
subsidiaries are, and have been, otherwise in compliance with all Environmental
Laws and, to the knowledge of the Company, there are no conditions that might
prevent or interfere with such compliance in the future;
(ii) neither the Company nor any of its subsidiaries has received any
Environmental Claim, and to the knowledge of the Company there is no threatened
Environmental Claim;
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(iii) neither the Company nor any of its subsidiaries has entered into any
consent decree, order or agreement under any Environmental Law;
(iv) there are no (A) underground storage tanks, (B) polychlorinated
biphenyls, (C) friable asbestos or asbestos-containing materials, (D) sumps,
(E) surface impoundments, (F) landfills, or (G) sewers or septic systems present
at any facility currently owned, leased, operated or otherwise used by the
Company or any of its subsidiaries that could reasonably be expected to give
rise to liability of the Company or any of its subsidiaries under any
Environmental Laws;
(v) there are no past (including, without limitation, with respect to assets
or businesses formerly owned, leased or operated by the Company or any of its
subsidiaries) or present actions, activities, events, conditions or
circumstances, including without limitation the release, threatened release,
emission, discharge, generation, treatment, storage or disposal of Hazardous
Materials, that could reasonably be expected to give rise to liability of the
Company or any of its subsidiaries under any Environmental Laws;
(vi) no modification, revocation, reissuance, alteration, transfer, or
amendment of the Environmental Permits, or any review by, or approval of, any
third party of the Environmental Permits is required in connection with the
execution or delivery of this Agreement or the consummation of the transactions
contemplated hereby or the continuation of the business of the Company or its
subsidiaries following such consummation;
(vii) Hazardous Materials (as defined in Section 8.04) have not been
generated, transported, treated, stored, disposed of, arranged to be disposed
of, released or threatened to be released at, on, from or under any of the
properties or facilities currently owned, leased or otherwise used by the
Company or any of its subsidiaries, in violation of or so as could result in
liability under, any Environmental Laws; and
(viii) neither the Company nor any of its subsidiaries has contractually
assumed any liabilities or obligations under any Environmental Laws.
(m) CONTRACTS; DEBT INSTRUMENTS. (i) Neither the Company nor any of its
subsidiaries is, or has received any notice or has any knowledge that any other
party is, in default in any respect under any contract, agreement, commitment,
arrangement, lease, policy or other instrument to which it or any of its
subsidiaries is a party or by which it or any such subsidiary is bound, except
for those defaults which would not, either individually or in the aggregate,
have a Material Adverse Effect with respect to the Company; and, to the
knowledge of the Company, there has not occurred any event that with the lapse
of time or the giving of notice or both would constitute such a default.
(ii) The Company has made available to Parent (x) true and correct copies of
all loan or credit agreements, notes, bonds, mortgages, indentures and other
agreements and instruments pursuant to which any indebtedness (as defined in
Section 8.04) of the Company or any of its subsidiaries is outstanding and
(y) accurate information regarding the respective principal amounts currently
outstanding thereunder.
(iii) Except as set forth in Section 3.01(m) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is party to or bound
by any agreement which, pursuant to the requirements of Form 10-K under the
Exchange Act, would be required to be filed as an exhibit to an Annual Report on
Form 10-K of the Company except (A) agreements included or incorporated by
reference as exhibits to the Company's Annual Report on Form 10-K for the fiscal
year ended December 30, 2000 and (B) agreements entered into after the date of
this Agreement in compliance with Section 4.01 hereof.
(n) BROKERS. No broker, investment banker, financial advisor or other
person, other than William Blair & Company, LLC ("WILLIAM BLAIR"), the fees and
expenses of which will be paid by the Company
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(pursuant to fee agreements, copies of which have been provided to Parent) is
entitled to any broker's finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company agrees
to indemnify Parent and Sub and to hold Parent and Sub harmless from and against
any and all claims, liabilities or obligations with respect to any other fee,
commission or expense asserted by any person on the basis of any act or
statement alleged to have been made by the Company or its affiliates.
(o) OPINION OF FINANCIAL ADVISOR. The Company has received the opinion of
William Blair, dated the date of this Agreement, to the effect that, as of such
date, the Merger Consideration is fair to the Company's shareholders from a
financial point of view, a signed copy of which opinion has been or will be
delivered to Parent and Sub. The Company has obtained the consent of William
Blair to the reproduction and inclusion of such opinion in full in any Proxy
Statement, provided that William Blair and its counsel have had a reasonable
opportunity to review the same before any submission or distribution thereof.
(p) BOARD RECOMMENDATION; STATE ANTITAKEOVER LAW. The Board of Directors
of the Company, at a meeting duly called and held, has by unanimous vote of
those directors present (i) approved this Agreement and the Merger and has taken
all actions necessary on the part of the Company to render the restrictions on
take-over bids and business combinations contained in Sections 110C and 110F of
the Massachusetts Law inapplicable to this Agreement and the Merger and
(ii) resolved to recommend that the holders of the shares of Company Common
Stock approve this Agreement and the transactions contemplated herein, including
the merger.
(q) REQUIRED COMPANY VOTE. The Company Shareholder Approval, being the
affirmative vote of two-thirds of the outstanding shares of the Company Common
Stock, is the only vote of the holders of any class or series of the Company's
securities necessary to approve this Agreement, the Merger and the other
transactions contemplated hereby.
(r) INTELLECTUAL PROPERTY. (i) Section 3.01(r)(i) of the Company
Disclosure Schedule sets forth all Intellectual Property (as defined in
Section 8.04), owned by the Company or its subsidiaries, which is registered or
filed with, or has been submitted to, any Governmental Entity, and all
Intellectual Property licensed from third parties by the Company or any of its
subsidiaries, and the nature of the Company's or its subsidiaries' rights
therein.
(ii) The Company and its subsidiaries own or have the right to use all
Intellectual Property necessary for the Company and its subsidiaries to conduct
their business as it is currently conducted and consistent with past practice.
(iii) Except as set forth on Section 3.01(r)(iii) of the Company Disclosure
Schedule: (1) all of the Intellectual Property used by the Company or any of its
subsidiaries is subsisting and unexpired, free of all Liens, has not been
abandoned and, to the knowledge of the Company, does not infringe the
intellectual property rights of any third party; (2) none of the Intellectual
Property used by the Company or any of its subsidiaries is the subject of any
license, security interest or other agreement to which the Company is a party
granting rights therein to any third party; (3) no judgment, decree, injunction,
rule or order has been rendered by any U.S. federal or state or foreign
Governmental Entity which would limit, cancel or question the validity of, or
the Company's or its subsidiaries' rights in and to any Intellectual Property in
any respect that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect with respect to the Company; (4) the
Company has not received notice of any pending or threatened suit, action or
proceeding that seeks to limit, cancel or question the validity of, or the
Company's or its subsidiaries' rights in and to any Intellectual Property,
which, if adversely determined, could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect with respect to the
Company; and (5) the Company and its subsidiaries take reasonable steps to
protect, maintain and safeguard their Intellectual Property,
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including any Intellectual Property for which improper or unauthorized
disclosure would impair its value or validity, and have executed appropriate
agreements and made appropriate filings and registrations in connection with the
foregoing.
(s) Except as set forth in the Company SEC Documents or by virtue of the
Merger, no event has occurred that would be required to be reported by the
Company as a Certain Relationship or Related Transaction pursuant to item 404 of
Regulation S-K promulgated by the SEC.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Except as
set forth in the disclosure schedule (referencing the same section as this
Agreement) delivered by the Parent and Sub to the Company at the time of
execution of this Agreement (the "PARENT DISCLOSURE SCHEDULE"), Parent and Sub
represent and warrant to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent, Sub and
each of Parent's "significant subsidiaries" (within the meaning of Rule 1-02 of
Regulation S-X of the SEC) (collectively, the "PARENT SUBSIDIARIES") is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate power and
authority to carry on its business as now being conducted. Each of Parent, Sub
and each of the Parent Subsidiaries is duly qualified or licensed to do business
and is in good standing in each jurisdiction (domestic or foreign) in which the
nature of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the aggregate) would
not have a Material Adverse Effect with respect to Parent. Parent has made
available to the Company complete and correct copies of its articles of
incorporation and by-laws and the articles of organization and by-laws of Sub.
(b) CAPITAL STRUCTURE. As of the date of this Agreement, the authorized
capital stock of Parent consists of 1,000,000,000 shares of Parent Common Stock.
As of the close of business on July 30, 2001, there were: (i) 175,810,109 shares
of Parent Common Stock issued and outstanding; (ii) 25,360,824 shares of Parent
Common Stock held in the treasury of Parent; (iii) 6,166,970 shares of Parent
Common Stock reserved for issuance upon exercise of options available for grant
pursuant to Parent's stock option plans and Parent's employee stock purchase
plans (collectively, the "PARENT STOCK PLANS"); (iv) 20,207,363 shares of Parent
Common Stock issuable upon exercise of awarded but unexercised stock options..
Except as set forth above, as of the close of business on July 30, 2001 there
were no shares of capital stock or other equity securities of Parent issued,
reserved for issuance or outstanding. All outstanding shares of capital stock of
Parent are, and all shares which may be issued as described above will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. The shares of Parent Common Stock to be issued in
connection with the Merger will, when issued, be duly authorized, validly
issued, fully paid and nonassessable. As of the Effective Time of the Merger,
the Board of Directors of the Parent shall have reserved for issuance upon
exercise of options available for grant pursuant to the Company Stock Plans a
number of shares of Parent Common Stock equal to the number of shares of Company
Common Stock subject to Company Stock Options granted under the Company Stock
Plans multiplied by the Exchange Ratio. There is no outstanding Voting Debt of
Parent. Except as set forth above and as set forth in the Rights Agreement,
dated as of November 17, 2000, between Parent and the First National Bank of
Boston, there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Parent is a party or by which it is bound obligating Parent to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity or voting securities of Parent or obligating Parent to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. There are no
outstanding contractual obligations, commitments, understandings or arrangements
of Parent to repurchase, redeem or otherwise acquire or make any payment in
respect of any shares of capital stock of Parent.
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As of the date hereof, the authorized capital stock of Sub consists of 1,000
shares of common stock, par value $.01 per share, 100 of which have been validly
issued, are fully paid and nonassessable and are owned by Parent, free and clear
of any Lien, and as of the Closing Date, all the issued and outstanding shares
of the common stock of Sub will be owned by Parent free and clear of any Lien.
(c) AUTHORITY; NONCONTRAVENTION. Parent and Sub have all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Sub and the consummation by Parent and Sub of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub. This Agreement has been duly executed and
delivered by each of Parent and Sub, as applicable, and (assuming due
authorization, execution and delivery by the Company) constitute valid and
binding obligations of Parent and Sub, as applicable, enforceable against them
in accordance with their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing. The execution and delivery of this Agreement
does not, and the consummation by Parent and Sub of the transactions
contemplated by this Agreement and compliance by Sub with the provisions of this
Agreement will not, conflict with, or result in any breach or violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of, or a "put" right
with respect to any obligation under, or to a loss of a material benefit under,
or result in the creation of any Lien upon any of the properties or assets of
Parent, Sub or any of Parent's other subsidiaries under, (i) the articles of
organization or by-law of Parent, Sub or such other subsidiary, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Parent, Sub,
such other subsidiaries or any of their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule,
regulation or arbitration award applicable to Parent, Sub any of Parent's other
subsidiaries or their respective properties or assets, other than, in the case
of clauses (ii) and (iii), any such conflicts, breaches, violations, defaults,
rights, losses or Liens that individually or in the aggregate would not have a
Material Adverse Effect with respect to Parent or prevent or materially delay
the ability of Parent and Sub to consummate the transactions contemplated by
this Agreement or perform their respective obligations hereunder. No consent,
approval, order or authorization of, or registration, declaration or filing
with, or notice to, any Governmental Entity is required by or with respect to
Parent or Sub in connection with the execution and delivery of this Agreement by
Parent and Sub or the consummation by Parent and Sub of any of the transactions
contemplated hereby, except for (i) such filings may be required under the HSR
Act and the filing of applications by the Parent and Sub pursuant to antitrust
or similar laws in such foreign jurisdictions as necessary, (ii) the filing with
the SEC and the NYSE of (A) the Form S-4 and (B) such reports under the Exchange
Act as may be required in connection with this Agreement and the transactions
contemplated hereby, (iii) the filing of the Articles of Merger with the
Secretary of State of the Commonwealth of Massachusetts and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (iv) such other consents, approvals, orders,
authorizations, registrations, declarations, filings or notices as may be
required under the "takeover" or "blue sky" laws of various states and (v) such
other consents, approvals, orders, authorizations, registrations, declarations,
filings or notices the failure of which to make or obtain, individually or in
the aggregate, could not reasonably be expected to (x) prevent or materially
delay consummation of the merger or the other transactions contemplated hereby
or performance of Parent's and Sub's obligations hereunder or (y) have a
Material Adverse Effect with respect to Parent.
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(d) PARENT SEC DOCUMENTS; UNDISCLOSED LIABILITIES. Parent has filed with
the SEC all reports, schedules, forms, statements and other documents required
pursuant to the Securities Act and the Exchange Act since January 1, 1998
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "PARENT SEC DOCUMENTS"). Except
as set forth in Section 3.02(d) of the PARENT DISCLOSURE SCHEDULE (other than
the Parent SEC Financial Statements (as defined below)), as of their respective
dates, the Parent SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Parent SEC Documents, and none of the Parent SEC Documents (including any and
all financial statements included therein) as of such dates contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Except as
set forth in Section 3.02(d) of the Parent Disclosure Schedule, except to the
extent that information contained in any Parent SEC Document has been revised or
superseded by a later filed Parent SEC Document, none of the Parent SEC
Documents (including any and all financial statements included therein) contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The consolidated financial statements of Parent included in all
Parent SEC Documents filed since January 1, 1998 (the "PARENT SEC FINANCIAL
STATEMENTS") comply as to form in all material respects with applicable
published accounting requirements and the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited consolidated
quarterly statements, as permitted by Form 10-Q of the SEC), applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of Parent
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited quarterly statements, to normal recurring year-end
audit adjustments). Except as disclosed in Section 3.02(d) of the Parent
Disclosure Schedule, neither Parent nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by generally accepted accounting principles to be
recognized or disclosed on a consolidated balance sheet of Parent and its
subsidiaries or in the notes thereto, except (i) liabilities reflected in the
audited consolidated balance sheet of the Parent as of March 31, 2001 and
(ii) liabilities incurred since March 31, 2001, in the ordinary course of
business consistent with past practice.
(e) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Parent or Sub in writing for inclusion or incorporation by reference
in (i) the Form S-4 will, at the time the Form S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Proxy Statement will, at the date
it is first mailed to the Company's shareholders or at the time of the
Shareholders meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. The Form S-4 will comply as to form in all material respects
with the requirements of the Securities Act and the rules and regulations
promulgated thereunder, except that no representation is made by Parent or Sub
with respect to statements made or incorporated by reference therein based on
information supplied in writing by the Company specifically for inclusion or
incorporation by reference therein.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
Section 3.02(f) of the Parent Disclosure Schedule, since March 31, 2001, there
is not and has not been: (i) any Material Adverse Change with respect to Parent;
(ii) any condition, event or occurrence which, individually or in the aggregate,
would have a Material Adverse Effect or give rise to a Material Adverse Change
with respect to Parent; (iii) any condition, event or occurrence which,
individually or in the aggregate, could
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reasonably be expected to prevent or materially delay the ability of Parent and
Sub to consummate the transactions contemplated by this Agreement or perform its
obligations hereunder. On the date of this Agreement, Parent is not engaged in
any discussions nor does it have any intention to engage in a transaction that
would qualify as a Transaction Proposal (as defined in Section 5.06 below) were
such definition to apply to Parent.
(g) LITIGATION; COMPLIANCE WITH LAWS. (i) Except as disclosed in
Section 3.02(g) of the Parent Disclosure Schedule, there is (1) no suit, action,
arbitration or proceeding pending before a Governmental Entity, and (2) to the
knowledge of Parent, no suit, action, arbitration or proceeding threatened
against or investigation pending with respect to Parent or any of its
subsidiaries that, individually or in the aggregate, would have a Material
Adverse Effect with respect to Parent or prevent or materially delay the ability
of Parent and Sub to consummate the transactions contemplated by this Agreement
or to perform their obligations hereunder, nor is there any judgment, decree,
citation, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Parent or any of its subsidiaries which, individually or in
the aggregate, has or could reasonably be expected to have, any such effect.
(ii) Except as disclosed in Section 3.02(g)(ii) of the Parent Disclosure
Schedule, the businesses of Parent and its subsidiaries are not being conducted
in violation of any law (domestic or foreign), ordinance or regulation of any
Governmental Entity, except for possible violations which, individually or in
the aggregate, do not and would not have a Material Adverse Effect with respect
to Parent.
(h) INTERIM OPERATIONS OF SUB. Sub was formed on July 30, 2001 solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
(i) REQUIRED VOTE. This Agreement has been approved by Parent, as the sole
shareholder of Sub. No other vote of holders of any class or series of
securities of Parent or Sub is necessary to approve this Agreement, the Merger
and the transactions contemplated hereby.
(j) TAX MATTERS. As of the date hereof, neither Parent nor any of its
subsidiaries has taken any action that could reasonably be expected to cause the
Merger to fail to qualify as a "reorganization" within the meaning of
Section 368 of the Code.
(k) BROKERS. No broker, investment banker, financial advisor or other
person, other than Goldman Sachs ("GOLDMAN SACHS"), the fees and expenses of
which will be paid by the Parent, is entitled to any broker's finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent. Parent agrees to indemnify the Company and to hold the
Company harmless from and against any and all claims, liabilities or obligations
with respect to any other fee, commission or expense asserted by any person on
the basis of any act or statement alleged to have been made by Parent or its
affiliates.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
SECTION 4.01. CONDUCT OF BUSINESS BY THE COMPANY.
(a) During the period from the date of this Agreement to the Effective Time
of the Merger (except as otherwise expressly contemplated by the terms of this
Agreement, agreed to in writing by Parent, or as set forth on Section 4.01 of
the Company Disclosure Schedule), the Company shall, and shall cause its
subsidiaries to, act and carry on their respective businesses in the ordinary
course of business consistent with past practice and use its and their
respective reasonable best efforts to preserve substantially intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
supplies, licensors, licensees,
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advertisers, distributors and others having significant business dealings with
them. Without limiting the generality of the foregoing, during the period from
the date of this Agreement to the Effective Time of the Merger, except as
otherwise expressly contemplated by the terms of this Agreement, agreed to in
writing by Parent, or as set forth on Section 4.01 of the Company Disclosure
Schedule, the Company shall not, and shall not permit any of its subsidiaries
to:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by a direct or indirect wholly-owned domestic subsidiary
of the Company to its parent, (y) split, combine or reclassify any capital
stock of the Company or any subsidiary or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for shares
of capital stock of the Company or any subsidiary, or (z) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or any of
its subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) authorize for issuance, issue, deliver, sell, pledge or otherwise
encumber any such shares of its capital stock or the capital stock of any of
its subsidiaries, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any shares, voting
securities or convertible securities or any other securities or equity
equivalents (including without limitation stock appreciation rights), other
than the issuance of Company Common Stock upon the exercise of Company Stock
Options awarded but unexercised on the date of this Agreement in accordance
with their present terms;
(iii) amend the Articles of Organization, By-laws or other comparable
charter or organizational documents of the Company or any subsidiary;
(iv) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the stock or assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets, except
sales of inventory and receivables in the ordinary course of business
consistent with past practice;
(vi) (A) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person or amend, terminate or seek a waiver with
respect to any existing agreement of the Company evidencing indebtedness of
the Company, 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 to any arrangement having the economic effect of any of the
foregoing, except for intercompany indebtedness between the Company and its
wholly-owned subsidiaries or between such wholly-owned subsidiaries, or
(B) make any loans, advances or capital contributions to, or investments in,
any other person, other than to the Company or any direct or indirect
wholly-owned subsidiary of the Company;
(vii) acquire or agree to acquire any assets, other than inventory in
the ordinary course of business consistent with past practice, or make or
agree to make any capital expenditures except capital expenditures which,
individually or in the aggregate, do not exceed the amount budgeted therefor
in the Company's applicable annual capital expenditures budgets previously
provided to Parent;
(viii) pay, discharge or satisfy any claims (including claims of
shareholders), liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment, discharge or
satisfaction of (x) liabilities or obligations in the ordinary course of
business
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consistent with past practice or in accordance with their terms as in effect
on the date hereof or (y) claims settled or compromised to the extent
permitted by Section 4.01(a)(xii), or waive, release, grant, or transfer any
rights of material value or modify or change in any material respect any
existing material license, lease, contract or other document, other than in
the ordinary course of business consistent with past practice;
(ix) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(x) enter into or amend any collective bargaining agreement;
(xi) change any material accounting principle used by it, except as
required by generally accepted accounting principles;
(xii) settle or compromise any litigation (whether or not commenced
prior to the date of this Agreement), other than settlements or compromises
of litigation that do not provide for injunctive or similar relief and where
the amount paid (after giving effect to insurance proceeds actually
received) in settlement or compromise does not exceed $250,000, provided
that the aggregate amount paid in connection with the settlement or
compromise of all such litigation matters shall not exceed $500,000;
(xiii) engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any of the
Company's affiliates (other than subsidiaries of the Company), including,
without limitation, any transactions, agreements, arrangements or
understandings with any affiliate or other Person covered under Item 404 of
SEC Regulation S-K that would be required to be disclosed under such Item
404, other than such transactions of the same general nature, scope and
magnitude as are disclosed in the Company SEC Documents;
(xiv) transfer to any person or entity any rights to its Intellectual
Property other than in the ordinary course of business consistent with past
practice;
(xv) enter into or amend any agreement pursuant to which any other party
is granted exclusive marketing or other exclusive rights of any type or
scope with respect to any of its products or technology; or
(xvi) authorize, or commit or agree to take, any of the foregoing
actions.
(xvii) except in the ordinary course of business and consistent with
past practice, make any tax election or settle or compromise any material
federal, state, local or foreign tax liability.
(b) CHANGES IN EMPLOYMENT ARRANGEMENTS. Except as otherwise agreed to in
writing by Parent, or as set forth on Section 4.01 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries shall adopt or amend
(except as may be required by law) any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, employment or other
employment benefit plan, agreement, trust, fund or other arrangement for the
benefit or welfare of any employee, director or former director or employee or
increase the compensation or fringe benefits of any director, employee or former
director or employee or pay any benefit not required by any existing plan,
arrangement or agreement.
(c) SEVERANCE. Neither the Company nor any of its subsidiaries shall grant
any new or modified severance or termination arrangement or increase or
accelerate any benefits payable under its severance or termination pay policies
in effect on the date hereof.
(d) WARN. Neither the Company nor any of its subsidiaries shall effectuate
a "plant closing" or "mass layoff," as those terms are defined in WARN,
affecting in whole or in part any site of employment, facility, operating unit
or employee of the Company or any subsidiary, without notifying
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Sub or its affiliates in advance and without complying with the notice
requirements and other provisions of WARN and any similar state or local law.
(e) TAX-FREE REORGANIZATION TREATMENT. Neither Company nor Parent shall,
and shall not permit any of their respective subsidiaries to, intentionally take
or cause to be taken any action not otherwise consistent with the transactions
contemplated by this Agreement which would reasonably be expected to disqualify
the Merger as a "reorganization" within the meaning of Section 368(a) of the
Code.
(f) OTHER ACTIONS. Neither the Company nor Parent shall, or shall permit
any of its subsidiaries to, intentionally take any action that would, or
reasonably might be expected to, result in any of its representations and
warranties set forth in this Agreement being or becoming untrue in any material
respect, or in any of the conditions to the Merger set forth in Article VI not
being satisfied; provided that the Company and its Board of Directors shall not
be required to take or be prohibited from taking any action to the extent that
such action is not required to be taken or is permitted, as applicable, pursuant
to Section 5.06 of this Agreement. The Company and Parent shall promptly advise
the other party orally and in writing of (i) any representation or warranty
becoming untrue in any material respect, (ii) the failure by such party to
comply with any covenant, condition or agreement hereunder and (iii) any event
which could reasonably be expected to cause the conditions set forth in
Article VI not being satisfied; PROVIDED, HOWEVER, that no such notice shall
affect the representations, warranties, covenants and agreement of the parties
or the conditions to their obligations hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PREPARATION OF FORM S-4 AND PROXY STATEMENT; SHAREHOLDER
MEETING. (a) Promptly following the date of this Agreement, the Company shall
prepare the Proxy Statement, and Parent shall prepare and file with the SEC the
Form S-4, in which the Proxy Statement will be included. Each party will notify
the other party promptly upon the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff or any government officials for
amendments or supplements to the Form S-4, the Proxy Statement, or for any other
filing or for additional information and will supply the other party with copies
of all correspondence between such party or any of its representatives, on the
one hand, and the SEC, or its staff or any other government officials, on the
other hand, with respect to the Form S-4, the Proxy Statement, the Merger or any
other filing. If the SEC requires a Tax opinion in connection with the filing of
the Form S-4, Company shall cause Nutter, McClennen & Fish, LLP, counsel to
Company, to provide such opinion in the form required by the SEC. The issuance
of such opinion shall be conditioned upon the receipt by Nutter, McClennen &
Fish, LLP, of customary representation letters from each of Company, Parent and
Sub in a form previously agreed to by the parties. Parent and the Company shall
each use its reasonable best efforts to have the Form S-4 declared effective
under the Securities Act as promptly as practicable after such filing. The
Company will use its reasonable best efforts to cause the Proxy Statement to be
mailed to the Company's shareholders as promptly as practicable after the
Form S-4 is declared effective under the Securities Act. Parent shall also take
any action (other than qualifying to do business in any state in which it is not
now so qualified or filing a general consent to service of process) required to
be taken under any applicable state securities laws in connection with the
registration and qualification of the Parent Common Stock to be issued in the
Merger, and the Company shall furnish all information relating to the Company
and its shareholders as may be reasonably requested in connection with any such
action.
(b) Until such time as the Board of Directors of the Company takes any of
the actions with respect to a Transaction Proposal permitted pursuant to
Section 5.06 of this Agreement, all mailings to the Company's shareholders in
connection with the Merger, including the Proxy Statement, shall be subject to
the prior review, comment and approval of Parent (such approval not to be
unreasonably withheld or delayed).
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(c) The Company will, as promptly as practicable following the date of this
Agreement and in consultation with Parent, duly call, give notice of, convene
and hold a meeting of its shareholders (the "SHAREHOLDERS MEETING") for the
purpose of approving this Agreement and the transactions contemplated by this
Agreement to the extent required by Massachusetts Law. The Company will, through
its Board of Directors, recommend to its shareholders approval of the foregoing
matters, as set forth in Section 3.01(p); PROVIDED, HOWEVER, that the Board of
Directors of the Company may fail to make or withdraw or modify such
recommendation, but only to the extent that the Board of Directors of the
Company shall have concluded in good faith on the basis of advice from outside
counsel that such action is required in order to satisfy its fiduciary duties to
the shareholders of the Company under applicable law. Any such recommendation,
together with a copy of the opinion referred to in Section 3.01(o) shall be
included in the Proxy Statement. The Company will use its reasonable best
efforts to hold such meeting as soon as practicable after the Form S-4 shall
have been declared effective.
SECTION 5.02. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) Each of the
Company and Parent shall, and shall cause its subsidiaries, officers, employees,
counsel, financial advisors and other representatives to, afford to the other
party and its representatives reasonable access during normal business hours,
during the period prior to the Effective Time of the Merger to its properties,
books, contracts, commitments, personnel and records, and, during such period,
each of the Company and Parent shall, and shall cause its subsidiaries,
officers, employees and representatives to, furnish promptly to the other
documents filed by it during such period pursuant to the requirements of Federal
or state securities laws and (ii) all other information concerning its business,
properties, financial condition, operations and personnel as such other party
may from time to time reasonably request. Each of the Company and Parent will
hold, and will cause its respective directors, officers, employees, accountants,
counsel, financial advisors and other representatives and affiliates to hold,
any nonpublic information in confidence to the extent required by, and in
accordance with, the provisions of the confidentiality agreement, dated
June 25, 2001 between Parent and the Company (the "CONFIDENTIALITY AGREEMENT").
(b) No investigation pursuant to this Section 5.02 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION 5.03. REASONABLE BEST EFFORTS. (a) Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including (i) obtaining all consents, approvals, waivers, licenses,
permits or authorizations as are required to be obtained (or, which if not
obtained, would result in an event of default, termination or acceleration of
any agreement or any put right under any agreement) under any applicable law or
regulation or from any Governmental Entities or third parties in connection with
the transactions contemplated by this Agreement, (ii) defending any lawsuits or
other proceedings challenging this Agreement and (iii) accepting and delivering
additional instruments necessary to consummate the transaction contemplated by
this Agreement and (iv) satisfying the conditions to closing set forth under
Article VI hereof.
(b) In furtherance of the foregoing, Parent and the Company agree to file
with the Antitrust Division of the United States Department of Justice and the
Federal Trade Commission a Notification and Report Form in accordance with the
notification requirements of the HSR Act, and to use their reasonable best
efforts to achieve the prompt termination or expiration of the waiting period or
any extension thereof provided for under the HSR Act as a prerequisite to the
consummation of the transactions provided for herein. Nothing in this paragraph
shall be construed as requiring any party to this Agreement or its affiliates to
(i) sell or otherwise dispose of any of its assets or voting securities
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other than as otherwise contemplated by this Agreement or (ii) take any action
which either would result in a Material Adverse Change in any such party.
SECTION 5.04. INDEMNIFICATION. (a) From and after the Effective Time of
the Merger, Parent and the Surviving Corporation shall each indemnify, defend
and hold harmless each person who is now, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time of the Merger eligible
for indemnification pursuant to the Articles of Organization and By-laws (or
comparable organizational documents) of the Company and its subsidiaries (the
"INDEMNIFIED PARTIES") against (i) all losses, claims, damages, costs, expenses,
liabilities or judgments, or amounts that are paid in settlement of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of the Company, pertaining to
any matter existing or occurring at or prior to the Effective Time of the
Merger, whether asserted or claimed prior to, or at or after, the Effective Time
of the merger ("INDEMNIFIED LIABILITIES") and (ii) all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement or the transaction contemplated hereby, in each
case to the extent the Company or its subsidiaries would have been permitted
under its Articles of Organization and By-laws (or comparable organizational
documents) to indemnify such person. In the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Parties (whether
arising before or after the Effective Time of the Merger), (i) any counsel
retained by the Indemnified Parties for any period after the Effective Time of
the Merger shall be reasonably satisfactory to the Parent; (ii) after the
Effective Time of the Merger, the Parent or Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; and (iii) after the Effective Time
of the Merger, the Parent and Surviving Corporation will cooperate in the
defense of any such matter, provided that neither the Parent not the Surviving
Corporation shall be liable for any settlement of any claim effected without its
written consent, which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 5.04, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify the Parent and the Surviving Corporation (but the failure so to notify
the Surviving Corporation shall not relieve it from any liability which it may
have under this Section 5.04 except to the extent such failure materially
prejudices the Parent and Surviving Corporation), and shall deliver to the
Surviving Corporation the undertaking, if any, required by Section 67 of Chapter
156B of the Massachusetts Law. The Parent and the Surviving Corporation shall be
liable for the fees and expenses hereunder with respect to only one law firm to
represent the Indemnified Parties as a group with respect to each such matter
unless there is, under applicable standards of professional conduct, a conflict
between the positions of any two or more Indemnified Parties that would preclude
or render inadvisable joint or multiple representation of such parties.
(b) The Surviving Corporation shall maintain in effect for six years from
the Effective Time of the Merger directors' and officers' liability insurance
coverage covering persons who are directors and officers of the Company on the
date of this Agreement, with respect to matters occurring prior to the Effective
Time of the Merger, and containing terms and conditions which are not less
advantageous to such persons that the policies of the Company in effect on the
date hereof (the "COMPANY INSURANCE"); PROVIDED that the Surviving Corporation
shall not be required to spend in excess of 150% of the annual premium for the
Company Insurance paid by the Company as of the date of this Agreement (the
"CURRENT PREMIUM"); PROVIDED, FURTHER, that if the Surviving Corporation would
be required to spend in excess of 150% of the Current Premium to obtain
insurance having terms not less advantageous than the Company Insurance, the
Surviving Corporation will be required to spend up to such amount to maintain or
procure as much insurance coverage as can be procured for such premium.
SECTION 5.05. PUBLIC ANNOUNCEMENTS. Neither Parent and Sub, on the one
hand, nor the Company, on the other hand, will issue any press release or public
statement with respect to the transactions contemplated by this Agreement,
including the Merger, without the other party's prior
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consent (such consent not to be unreasonably withheld or delayed), except as may
be required by applicable law, court process or by obligations pursuant to any
agreement with any securities exchange or quotation system on which securities
of the disclosing party are listed or quoted. In addition to the foregoing,
Parent, Sub and the Company will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any such press
release or other public statements with respect to such transactions. The
parties agree that the initial press release or releases to be issued with
respect to the transactions contemplated by this Agreement shall be mutually
agreed upon prior to the issuance thereof.
SECTION 5.06. NO SOLICITATION. Neither the Company nor any of its
subsidiaries shall (whether directly or indirectly through advisors, agents or
other intermediaries), nor shall the Company or any of its subsidiaries
authorize or permit any of its or their officers, directors, agents,
representatives, advisors or subsidiaries to, (a) solicit, initiate or take any
action knowingly to facilitate the submission of inquiries, proposals or offers
from any person (other than Sub or Parent) relating to (i) any acquisition or
purchase of 10% or more of the consolidated assets of the Company and its
subsidiaries or of over 10% of any class of equity securities of the Company or
any of its subsidiaries, (ii) any tender offer (including a self tender offer)
or exchange offer that if consummated would result in any Person (as defined in
Section 8.02) beneficially owning 10% or more of any class of equity securities
of the Company or any of its subsidiaries, (iii) any merger, consolidation,
business combination, sale of substantially all assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its subsidiaries whose assets, individually or in the aggregate, constitute more
than 10% of the consolidated assets of the Company other than the transactions
contemplated by this Agreement, or (iv) any other transaction the consummation
of which would or could reasonably be expected to impede, interfere with,
prevent or materially delay the Merger (collectively, "TRANSACTION PROPOSALS"),
or agree to or endorse any Transaction Proposal, or (b) enter into or
participate in any discussions or negotiations regarding any of the forgoing, or
furnish to any other person any information with respect to its business,
properties or assets or any of the foregoing, or otherwise cooperate in any way
with, or knowingly assist or participate in, facilitate or encourage, any effort
or attempt by any other person (other than Sub or Parent) to do or seek any of
the foregoing; PROVIDED, HOWEVER, that the foregoing shall not prohibit the
Company (either directly or indirectly through advisors, agents or other
intermediaries) from (i) furnishing information pursuant to an appropriate
confidentiality letter (which letter shall not be less favorable to the Company
in any material respect than the Confidentiality Agreement between the Company
and Parent, and a copy of which shall be provided for informational purposes
only to Parent) concerning the Company and its businesses, properties or assets
to a third party who has made a bona fide Transaction Proposal, (ii) engaging in
discussions or negotiations with such a third party who has made a bona fide
Transaction Proposal, (iii) following receipt of a bona fide Transaction
Proposal, taking and disclosing to its shareholders a position contemplated by
Rule 14d-9 or Rule 14e-2(a) under the Exchange Act or otherwise making
disclosure to its shareholders, (iv) following receipt of a bona fide
Transaction Proposal, failing to make or withdrawing or modifying its
recommendation referred to in Section 3.01(p), and/or (v) taking any action
required to be taken by the Company pursuant to a non-appealable, final order by
any court of competent jurisdiction, but in each case referred to in the
foregoing clauses (i) through (iv) only to the extent that the Board of
Directors of the Company shall have concluded in good faith on the basis of
advice from outside counsel that such action is required in order to satisfy its
fiduciary duties to the shareholders of the Company under applicable law;
PROVIDED, FURTHER, that the Board of Directors of the Company shall not take any
of the foregoing actions referred to in clauses (i) through (iv) until after
prompt advance notice to Parent (which notice shall in no event be given less
than two (2) business day prior to furnishing such information or entering into
such discussions) with respect to such action and that such Board of Directors
shall, to the extent consistent with its fiduciary duties, continue to advise
Parent after taking such action and, in addition, if the Board of Directors of
the Company receives a Transaction Proposal, then the Company shall promptly
inform Parent of the terms and conditions of such proposal and the identity of
the person making it. The Company will immediately cease and cause
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its advisors, agents and other intermediaries to cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and shall use its reasonable best efforts
to cause any such parties in possession of confidential information about the
Company that was furnished by or on behalf of the Company to return or destroy
all such information in the possession of any such party or in the possession of
any agent or advisor of any such party. Notwithstanding anything to the contrary
contained in this Agreement, nothing herein shall be construed to prohibit or
restrict in any way the Company's ability to negotiate (and consummate) the sale
of its Advanced Diagnostics Solutions division and all subsidiaries and assets
associated therewith consistent with Section 4.01 of the Company Disclosure
Schedule.
SECTION 5.07. STOCK EXCHANGE LISTING. Parent shall use all reasonable
efforts to cause the shares of Parent Common Stock to be issued in the Merger
and the shares of Parent Common Stock to be reserved for issuance upon exercise
of Company Stock Options to be approved for listing on the NYSE, subject to
official notice of issuance.
SECTION 5.08. LETTERS OF THE COMPANY'S ACCOUNTANTS. The Company shall use
its reasonable best efforts to cause to be delivered to Parent a letter of
PricewaterhouseCoopers LLP, the Company's independent public accountants, dated
a date within two business days before the Form S-4 shall become effective and a
letter of PricewaterhouseCoopers LLP dated a date within two business days
before the Closing Date, each addressed to Parent, for letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
SECTION 5.09. LETTERS OF PARENT'S ACCOUNTANTS. Parent shall use its
reasonable best efforts to cause to be delivered to the Company a letter of
PricewaterhouseCoopers LLP, Parent's independent public accountants, dated a
date within two business days before the Form S-4 shall become effective and a
letter of PricewaterhouseCoopers LLP dated a date within two business days
before the Closing Date, each addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
SECTION 5.10. EMPLOYEE BENEFIT PLANS. Parent intends to include Company
employees in Parent's welfare plans (within the meaning of Section 3(1) of
ERISA) and fringe benefit plans (the "Parent Plans") on the same basis and terms
as Parent employees not later than two years following the Effective Time and,
in any event, with respect to particular welfare plans of Parent, upon the
termination of the equivalent Company welfare plans; and until such time of
inclusion, Parent intends to cause the Surviving Corporation to maintain in
effect, on terms not materially less favorable to employees of the Company as
were in effect at the Effective Time of the Merger, all Company Plans which are
welfare plans or fringe benefits, other than employer stock option or stock
purchase plans. With respect to employees of the Company or its subsidiaries who
remain as employees of Parent or any of its subsidiaries, Parent shall take into
account for purposes of eligibility and vesting under such Parent Plans the
service of such employees with the Company or any subsidiary thereof as if such
service were with Parent or its subsidiaries, to the same extent to which such
service would have been credited under the applicable Parent plan and to the
extent not prohibited under such Parent Plan and consistent with Parent's
policies. In addition, from and after the Effective Time of the Merger, Parent
intends that Company employees be eligible to participate in Parent's stock
option and stock purchase plans on the same basis and terms as Parent employees
are eligible to participate in such plans. Notwithstanding the foregoing, Parent
may at any time terminate or modify the terms of any such Company Plans if the
cost of maintaining any such Company Plan has increased by a material amount or
if, in the good faith judgment of Parent, continuing to maintain any such
Company Plan conflicts in any material respect with Parent's overall
compensation policies then in effect. Nothing in this Section 5.10 will require
that Parent permit Company employees to participate in its defined benefit
pension plan, which Company and Parent understand is frozen to new accruals.
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SECTION 5.11. COMPANY SENIOR CREDIT FACILITY. On or before the fifth
business day following the Closing Date, Parent shall, or shall cause the
Surviving Corporation to, satisfy the Company's outstanding obligations under
the Revolving Credit and Term Loan Agreement dated as of March 24, 2000, as
amended to date, with Fleet National Bank et al (the "Credit Facility
Agreement"); provided, however, that in no event shall Parent's obligation
hereunder exceed the sum of (a) with respect to the term loans outstanding under
the Credit Facility Agreement, an aggregate amount not to exceed the amount
included in the 2001 Balance Sheet less any scheduled payments made prior to the
Closing Date as set forth on Schedule 5.11 and (b) with respect to the revolving
credit facility under the Credit Facility Agreement, an aggregate amount not to
exceed the amount set forth on Section 4.01 of the Company Disclosure Schedule.
SECTION 5.12. INFORMATION SUPPLIED. The Company shall use its best efforts
to provide to Parent no later than September 3, 2001 all information reasonably
requested by Parent for Parent to determine (i) whether any payment resulting
from any agreement, contract, plan or other arrangement (separately or in the
aggregate) to which either the Company or any of its subsidiaries is a party
would be an "excess parachute payment" within the meaning of Section 280G of the
Code (without regard to the exceptions set forth in Sections 280G(b)(4) and
280G(b)(5) of the Code) as a result of any of the transactions contemplated by
this Agreement, and (ii) the amount of such excess parachute payments, if any.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) COMPANY SHAREHOLDER APPROVAL. The Company Shareholder Approval shall
have been obtained.
(b) HSR ACT. The waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; PROVIDED, HOWEVER, that the
parties hereto shall use their best efforts to have any such injunction, order,
restraint or prohibition vacated.
(d) FORM S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order, and any material "blue sky" and other state securities
laws applicable to the registration and qualification of the Parent Common Stock
issuable or required to be reserved for issuance pursuant to this Agreement
shall have been complied with.
(e) STOCK EXCHANGE LISTING. The shares of Parent Common Stock issuable to
Company shareholders pursuant to this Agreement and such other shares of Parent
Common Stock required to be reserved for issuance in connection with the Merger
shall have been authorized for listing on the NYSE upon official notice of
issuance.
(f) TERMINATION OF EMPLOYMENT AND SEVERANCE AGREEMENT. The Chief Executive
Officer of the Company shall have entered into a termination agreement providing
for the termination of his employment and/or severance agreements with the
Company.
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SECTION 6.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The obligations
of Parent and Sub to effect the Merger are further subject to the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company set forth in this Agreement shall be true and correct in each case
as of the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality" or "Material Adverse Effect" set forth
therein) would not individually or in the aggregate have a Material Adverse
Effect. Parent shall have received a certificate dated as of the Closing Date
signed on behalf of the Company by the chief executive officer, the president,
and the chief financial officer of the Company to the effect set forth in this
paragraph.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date. Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer, the president, and the chief financial officer of the Company to the
effect set forth in this paragraph.
(c) CONSENTS, ETC. Parent and Sub shall have received evidence, in form
and substance reasonably satisfactory to it, that such licenses, permits,
consents, approvals, authorizations, qualifications, and orders of governmental
authorities and other third parties as are necessary in connection with the
transactions contemplated hereby have been obtained, except where the failure to
obtain such licenses, permits, consents, approvals, authorizations,
qualifications, and orders would not, individually or in the aggregate with all
other failures, have a Material Adverse Effect with respect to the Company.
(d) NO LITIGATION. There shall not be pending by any Governmental Entity
or any other person or solely with respect to any Governmental Entity,
threatened y any suit, action, or proceeding, (i) challenging or seeking to
restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement or seeking to obtain from the
Company, Parent, Sub, or any of their affiliates any damages that are material
in relation to the Company and its subsidiaries taken as a whole; (ii) seeking
to prohibit or limit the ownership or operation by the Company, Parent, or any
of their respective subsidiaries of any material portion of the business or
assets of the Company and its subsidiaries taken as a whole or to dispose of or
hold separate any material portion of the business or assets of the Company and
its subsidiaries taken as a whole, as a result of the Merger or any of the other
transactions contemplated by this Agreement; (iii) seeking to impose limitations
on the ability of Parent to acquire or hold, or exercise full rights of
ownership of, any shares of the common stock of the Surviving Corporation,
including, without limitation, the right to vote such common stock on all
matters properly presented to the shareholders of the Surviving Corporation; or
(iv) seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect the business or operations of the Company
and its subsidiaries taken as a whole.
(e) LOAN AGREEMENT. The banks who are parties to the Credit Facility
Agreement shall not, following a default, either now or hereafter existing, have
initiated proceedings to take possession of (within the meaning of the
applicable Uniform Commercial Code) or foreclose upon any collateral in which
they have a security interest under the Credit Facility Agreement or exercised
any right of "set-off" or exercised any other similar remedy against or with
respect to any property or asset of the Company.
SECTION 6.03. CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of
the Company to effect the Merger is further subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Parent and Sub set forth in this Agreement shall be true and correct, in each
case as of the date of this Agreement and
A-29
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date,
except where the failure of such representations and warranties to be so true
and correct (without giving effect to any limitation as to "materiality" or
"material adverse effect" set forth therein) would not individually or in the
aggregate have a Material Adverse Effect with respect to Parent. The Company
shall have received a certificate signed on behalf of Parent and Sub by an
authorized officer of Parent and Sub to the effect set forth in this paragraph.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent and Sub shall
have performed in all material respects all obligations required to be performed
by each of them under this Agreement at or prior to the Closing Date. The
Company shall have received a certificate signed on behalf of Parent and Sub by
an authorized officer of Parent and Sub to the effect set forth in this
paragraph.
ARTICLE VII
TERMINATION, AMENDMENT, AND WAIVER
SECTION 7.01. TERMINATION. This Agreement may be terminated and abandoned
at any time prior to the Effective Time of the Merger, whether before or after
the Company Shareholder Approval:
(a) by mutual written consent of Parent and the Company; or
(b) by either Parent or the Company if any Governmental Entity shall have
issued an order, decree, or ruling or taken any other action permanently
enjoining, restraining, or otherwise prohibiting the Merger and such order,
decree, ruling, or other action shall have become final and nonappealable; or
(c) by either Parent or the Company if the Merger shall not have been
consummated on or before May 1, 2002 (other than due to the failure of the party
seeking to terminate this Agreement to perform in any material respect its
obligations under this Agreement required to be performed at or prior to the
Effective Time of the Merger); or
(d) by either Parent or the Company if at the duly held meeting of the
shareholders of the Company (including any adjournment thereof) held for the
purpose of voting on this Agreement, the holders of two-thirds of the
outstanding shares of Company Common Stock shall not have approved this
Agreement; or
(e) by Parent, if the Company or its Board of Directors shall have
(1) withdrawn, modified, or amended in any respect adverse to Parent its
approval or recommendation of this Agreement or any of the transactions
contemplated herein; (2) failed as promptly as reasonably practicable after the
Form S-4 is declared effective to mail the Proxy Statement to its shareholders
or failed to include in such statement such recommendation; (3) recommended any
Transaction Proposal from a person other than Parent or any of its affiliates;
(4) resolved to do any of the foregoing; or (5) in response to the commencement
of any tender offer or exchange offer for more than 10% of the outstanding
shares of Company Common Stock, not recommended rejection of such tender offer
or exchange offer at the time of filing of the requisite Schedule 14d-9 with the
SEC; or
(f) by the Company, if, pursuant to and in compliance with Section 5.06
hereof, the Board of Directors of the Company concludes in good faith, based on
advice from outside counsel, that in order to satisfy its fiduciary duties to
the shareholders of the Company under the Massachusetts Law, the Board of
Directors must not make or must withdraw or modify its recommendation referred
to in Section 3.01(p), and the Board of Directors does not make or withdraws or
modifies such recommendation.
(g) by Parent, upon a breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Section 6.02(a) or
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Section 6.02(b) (other than with respect to the delivery of the officers'
certificates required thereunder) would not be satisfied at the time of such
breach or as of the time such representation or warranty shall have become
untrue; provided that if such inaccuracy in the Company's representations and
warranties or breach by the Company is curable by the Company through the
exercise of its commercially reasonable efforts within fifteen (15) days of the
time such representation or warranty shall have become untrue or such breach,
the Parent may not terminate this Agreement under this Section 7.01(g) during
such fifteen-day period provided Company continues to exercise such commercially
reasonable efforts.
(h) by the Company, upon a breach of any representation, warranty, covenant
or agreement on the part of the Parent or Sub set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, in either
case such that the conditions set forth in Section 6.03(a) or Section 6.03(b)
(other than with respect to the delivery of the officers' certificates required
thereunder) would not be satisfied at the time of such breach or as of the time
such representation or warranty shall have become untrue; provided that if such
inaccuracy in the Parent's representations and warranties or breach by the
Parent is curable by the Parent through the exercise of its commercially
reasonable efforts within fifteen (15) days of the time such representation or
warranty shall have become untrue or such breach, the Company may not terminate
this Agreement under this Section 7.01(h) during such fifteen-day period
provided Parent continues to exercise such commercially reasonable effort.
SECTION 7.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub, or the Company, other than the
provisions of Section 3.01(n), Section 3.02(k), the last sentence of
Section 5.02(a), this Section 7.02, Section 8.02, and Section 8.07. Nothing
contained in this Section shall relieve any party for any breach of the
representations, warranties, covenants, or agreements set forth in this
Agreement or the Confidentiality Agreement.
SECTION 7.03. AMENDMENT. This Agreement may be amended by the parties at
any time before or after any required approval of matters presented in
connection with the Merger by the shareholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such shareholders without the further approval
of such shareholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
SECTION 7.04. EXTENSION; WAIVER. At any time prior to the Effective Time
of the Merger, the parties may (a) extend the time for the performance of any of
the obligations or other acts of the other parties; (b) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement; or (c) subject to the provisions
of Section 7.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 7.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION, OR
WAIVER. A termination of this Agreement pursuant to Section 7.01, an amendment
of this Agreement pursuant to Section 7.03 or an extension or waiver pursuant to
Section 7.04 shall, in order to be effective, require in the case of Parent,
Sub, or the Company, action by its Board of Directors or a duly-authorized
designee of its Board of Directors.
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ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. NONSURVIVAL OF REPRESENTATION AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time of the Merger and
all such representations and warranties will be extinguished on consummation of
the Merger and neither the Company, the Parent, Sub, or any officer, director or
employee or shareholder of any of them shall be under any liability whatsoever
with respect to any such representation or warranty after such time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after Effective Time of the Merger.
SECTION 8.02. FEES AND EXPENSES. (a) (i) If this Agreement shall have been
terminated in accordance with its terms (except pursuant to Sections 7.01(a),
7.01(b) or 7.01(h) and either of the following shall have occurred: (A) prior to
such termination, any corporation (including the Company or any of its
subsidiaries or affiliates), partnership, person, other entity or "group" (as
referred to in Section 13(d)(3) of the Exchange Act) (collectively, "PERSONS")
other than Parent or any of its affiliates or any Person who is a member of such
a group with the Parent or its affiliates shall have become the beneficial owner
of 10% of the outstanding shares of Company Common Stock; or (B) (x) prior to
such termination, any Person, shall have made, or proposed, communicated or
disclosed in a manner which is or otherwise becomes public (including being
known by shareholders of the Company owning of record or beneficially in the
aggregate 10% or more of the outstanding shares of Company Common Stock) a bona
fide intention to make a Transaction Proposal (including by making such a
Transaction Proposal) and (y) on or prior to August 1, 2002, the Company either
consummates with a Person a transaction the proposal of which would otherwise
qualify as a Transaction Proposal under Section 5.06 or enters into a definitive
agreement with a Person with respect to a transaction the proposal of which
would otherwise qualify as a Transaction Proposal under Section 5.06 (whether or
not such Person is the Person referred to in clause (x) above) other than a
transaction pursuant to which the Company or any of its affiliates issue
equity-related securities or Voting Debt to a Person in an aggregate amount of
less than 50% of the outstanding capital stock of the Company on the date hereof
for the sole purpose of financing its business operations; or
(ii) if this Agreement is terminated pursuant to Section 7.01(e) or
Section 7.01(f);
then the Company shall, (1) in the case of clauses (a)(i)(A) and (a)(ii) above,
promptly, but in no event later than one business day after the termination of
this Agreement and (2) in the case of clause (a)(i)(B) above, promptly, but in
no event later than one business day after an event specified in subclause
(y) thereof shall have occurred, pay Parent a fee of ten million dollars
($10,000,000) in cash, which amount shall be payable in same day funds. No
termination of this Agreement shall affect any payment of fees or expenses due
and payable pursuant to this Agreement.
(b) In addition to the other provisions of this Section 8.02, in the event
(i) a fee is or becomes payable pursuant to Section 8.02(a) hereof or (ii) this
Agreement is terminated pursuant to Section 7.01(g) hereof, the Company agrees
promptly, but in no event later than two business days following written notice
thereof, together with related bills or receipts, to reimburse Parent and Sub
for all reasonable out-of-pocket costs, fees and expenses incurred in connection
with this Agreement and the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements of investment bankers and
counsel and the expenses of litigation incurred in connection with collecting
the fee pursuant to paragraph (a) of this Section as a result of any breach by
the Company of its obligations under this Section 8.02; provided, however, that
in the event the Company is obligated to reimburse Parent pursuant to
(b)(i) hereof, the Company's obligation to reimburse Parent for all reasonable
out-of-pocket costs, fees and expenses shall not exceed an aggregate of
$750,000.
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(c) In the event this Agreement is terminated pursuant to Section 7.01(h)
hereof, the Parent agrees promptly, but in no event later than two business days
following written notice thereof, together with related bills or receipts, to
reimburse the Company for all reasonable out-of-pocket costs, fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, the reasonable fees and disbursements of
investment bankers and counsel.
(d) Except as provided otherwise in paragraph (a), (b) and (c) above, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, except that the cost of filing, printing and distributing the Proxy
Statement and the Form S-4 shall be borne equally by Parent and the Company.
Notwithstanding anything else in this Agreement, Parent shall pay all fees
relating to any filing required to be made in connection with the Merger under
the HSR Act or reasonably required to be made in connection with the Merger
under any similar law in any foreign jurisdiction; provided, however, that in
the event this Agreement is terminated pursuant to the terms of this Agreement,
the Company shall reimburse Parent for an aggregate of fifty percent (50%) of
all such fees paid no later than two business days following such termination.
SECTION 8.03. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Teradyne, Inc.
321 Harrison Avenue
Boston, MA 02010
Attention: George W. Chamillard
Telecopier No.: (617) 422-2290
with a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Kevin M. Barry, Esq.
(b) if to the Company, to
GenRad, Inc.
7 Technology Park
Westford, MA 01886
Attention:: Robert Dutkowsky
Telecopier No.: (978) 589-7007
with copies to:
Nutter, McClennen & Fish, LLP
One International Place
Boston, MA 02110-2699
Attention: James E. Dawson, Esq.
SECTION 8.04. DEFINITIONS. For purposes of this Agreement:
(a) an "AFFILIATE" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
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(b) "ENVIRONMENTAL CLAIM" means any written or oral notice, claims, demand,
action, suit, complaint, proceeding or other communication by any person
alleging liability or potential liability (including without limitation
liability or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damage, personal
injury, fines or penalties) arising out of, relating to, based on or resulting
from (A) the presence, discharge, emission, release or threatened release of any
Hazardous Materials at any location, whether or not owned, leased or operated by
the Company or any of its subsidiaries or (B) circumstances forming the basis of
any violation or alleged violation of any Environmental Law or Environmental
Permit or (C) otherwise relating to obligations or liabilities under any
Environmental Laws;
(c) "ENVIRONMENTAL PERMITS" means all permits, licenses, registrations and
other governmental authorizations required under Environmental Laws for the
Company and its subsidiaries to conduct their operations and businesses on the
date hereof and consistent with past practices;
(d) "ENVIRONMENTAL LAWS" means all applicable federal, state and local
statutes, rules, regulations, ordinances, orders, decrees and common law
relating in any manner to contamination, pollution or protection of the
environment, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act, the Solid Waste Disposal Act, the
Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Occupational Safety and Health Act, the Emergency Planning and
Community-Right-to-Know Act, the Safe Drinking Water Act, all as amended, and
similar state laws;
(e) "HAZARDOUS MATERIALS" means all hazardous or toxic substances, wastes,
materials or chemicals, petroleum (including crude oil or any fraction thereof)
and petroleum products, friable asbestos and asbestos-containing materials,
pollutants, contaminants and all other materials, and substances regulated
pursuant to, or that could reasonably be expected to provide the basis of
liability under, any Environmental Law;
(f) "INDEBTEDNESS" means, with respect to any person, without duplication,
(A) all obligations of such person for borrowed money, (B) all obligations of
such person evidenced by bonds, debentures, notes or similar instruments,
(C) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such person, (D) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course of
such person's business), (E) all capitalized lease obligations of such person,
(F) all obligations of others secured by any Lien on property or assets owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (G) all obligations of such person under interest rate or currency
hedging transactions (valued at the termination value thereof), (H) all letters
of credit issued for the account of such person and (I) all guarantees and
arrangements having the economic effect of a guarantee of such person of any
indebtedness of any other person;
(g) "INTELLECTUAL PROPERTY" means all rights, privileges and priorities
provided under federal, state, foreign and multinational law relating to
intellectual property, including without limitation all (i)(a) inventions,
discoveries, processes, formulae, designs, methods, techniques, procedures,
concepts, developments, technology, new and useful improvements thereof and
know-how relating thereto, whether or not patented or eligible for patent
protection; (b) copyrights and copyrightable works, including computer
applications, programs, software, databases and related items (except for
off-the-shelf commercial software); (c) trademarks, service marks, trade names,
brand names, corporate names, logos and trade dress, the goodwill of any
business symbolized thereby, and all common-law rights relating thereto;
(d) trade secrets and other confidential information; and (ii) all
registrations, applications, recordings, and licenses or other similar
agreements related to the foregoing;
(h) "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means, when used
in connection with the Company or Parent, any change, effect, event or
occurrence that either individually or in the
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aggregate with all other such changes, effects, events and occurrences is
materially adverse to the business, properties, financial condition or results
of operations of the Company or Parent, as the case may be, and its subsidiaries
taken as a whole, provided that (i) with respect to Section 3.01(g)(i) and
(ii) hereof, shall exclude any material adverse change in the Company's results
of operations for any fiscal period prior to the Closing Date that is directly
attributable to a disruption in the conduct of the Company's business arising
from the transactions contemplated by this Agreement or the public announcement
thereof and (ii) with respect to Section 3.02(f)(i) and (ii) hereof, shall
exclude any material adverse change in Parent's results of operations for any
fiscal period prior to the Closing Date that is directly attributable to a
disruption in the conduct of Parent's business arising from the transactions
contemplated by this Agreement or the public announcement thereof; and PROVIDED
, FURTHER, that Material Adverse Effect and Material Adverse Change shall not be
deemed to include the impact of (a) any change in laws and regulations or
interpretations thereof by courts or governmental authorities generally
applicable to the Company and Parent, (b) any change in generally accepted
accounting principles or regulatory accounting principles generally applicable
to the Company and Parent, (c) any change arising or resulting from general
industry, economic or capital market conditions or conditions in markets
relevant to the Company or Parent, as applicable, that affects Parent or the
Company, as applicable (or the markets in which Parent or the Company, as
applicable, compete) in a manner not disproportionate to the manner in which
such conditions affect comparable companies in the industries or markets in
which Company or Parent, as applicable, compete, (d) any act or omission of the
Company (or any of its subsidiaries) taken with the prior written consent of
Parent, (e) the expenses reasonably incurred by the Company in entering into
this Agreement and consummating the transactions contemplated by this Agreement
and the expenses associated with the termination of any Company Plan as and to
the extent contemplated herein (f) the Company's results for the quarter ended
June 30, 2001 provided such results do not differ materially from the results
disclosed to Parent as of the date hereof or (g) the matters set forth on
Schedule 4.01 of the Company Disclosure Schedule.
(i) "PERMITTED LIEN" means statutory Liens securing payments not yet due and
such Liens as do not materially affect the use of the properties or assets
subject thereto or affected thereby or otherwise materially impair business
operations at such properties.
(j) "PERSON" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity;
(k) a "SUBSIDIARY" of any person means another person, 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.
SECTION 8.05. INTERPRETATION. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or Schedule to, 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
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 8.06. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties. The delivery of a signature page
of this Agreement by one party to the other via facsimile transmission shall
constitute the execution and delivery of this Agreement by the transmitting
party.
SECTION 8.07. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the other agreements referred to herein constitute the entire
agreement, and supersede all prior agreements and
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understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement. This Agreement, other than Section 5.04, is
not intended to confer upon any person other than the parties any rights or
remedies.
SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS.
SECTION 8.09. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, insure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 8.10. ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
TERADYNE, INC.
By: /s/ GEORGE W. CHAMILLARD
-----------------------------------------
Name: George W. Chamillard
Title: Chief Executive Officer, President
and Chairman
By: /s/ STUART M. OSATTIN
-----------------------------------------
Name: Stuart M. Osattin
Title: Vice President and Treasurer
RADIO ACQUISITION CORP.
By: /s/ GEORGE W. CHAMILLARD
-----------------------------------------
Name: George W. Chamillard
Title: President
By: /s/ STUART M. OSATTIN
-----------------------------------------
Name: Stuart M. Osattin
Title: Vice President and Treasurer
GENRAD, INC.
By: /s/ ROBERT M. DUTKOWSKY
-----------------------------------------
Name: Robert M. Dutkowsky
Title: Chairman, President and
Chief Executive Officer
By: /s/ WALTER A. SHEPHARD
-----------------------------------------
Name: Walter A. Shephard
Title: Chief Financial Officer
A-37
APPENDIX B
MASSACHUSETTS GENERAL LAWS RELATING TO APPRAISAL RIGHTS
C. 156B SECTION 85. DISSENTING STOCKHOLDER; RIGHT TO DEMAND PAYMENT FOR STOCK;
EXCEPTION
A stockholder in any corporation organized under the laws of Massachusetts
which shall have duly voted to consolidate or merge with another corporation or
corporations under the provisions of sections seventy-eight or seventy-nine who
objects to such consolidation or merger may demand payment for his stock from
the resulting or surviving corporation and an appraisal in accordance with the
provisions of sections eighty-six to ninety-eight, inclusive, and such
stockholder and the resulting or surviving corporation shall have the rights and
duties and follow the procedure set forth in those sections. This section shall
not apply to the holders of any shares of stock of a constituent corporation
surviving a merger if, as permitted by subsection (c) of section seventy-eight,
the merger did not require for its approval a vote of the stockholders of the
surviving corporation.
C. 156B SECTION 86. SECTIONS APPLICABLE TO APPRAISAL; PREREQUISITES
If a corporation proposes to take a corporate action as to which any section
of this chapter provides that a stockholder who objects to such action shall
have the right to demand payment for his shares and an appraisal thereof,
sections eighty-seven to ninety-eight, inclusive, shall apply except as
otherwise specifically provided in any section of this chapter. Except as
provided in sections eighty-two and eighty-three, no stockholder shall have such
right unless (1) he files with the corporation before the taking of the vote of
the shareholders on such corporate action, written objection to the proposed
action stating that he intends to demand payment for his shares if the action is
taken and (2) his shares are not voted in favor of the proposed action.
C. 156B SECTION 87. STATEMENT OF RIGHTS OF OBJECTING STOCKHOLDERS IN NOTICE OF
MEETING; FORM
The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the corporation
before the taking of the vote on the approval of such action, written objection
to the proposed action stating that he intends to demand payment for his shares
if the action is taken and (2) whose shares are not voted in favor of such
action has or may have the right to demand in writing from the corporation (or,
in the case of a consolidation or merger, the name of the resulting or surviving
corporation shall be inserted), within twenty days after the date of mailing to
him of notice in writing that the corporate action has become effective, payment
for his shares and an appraisal of the value thereof. Such corporation and any
such stockholder shall in such cases have the rights and duties and shall follow
the procedure set forth in sections 88 to 98, inclusive, of chapter 156B of the
General Laws of Massachusetts."
C. 156B SECTION 88. NOTICE OF EFFECTIVENESS OF ACTION OBJECTED TO
The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became
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effective, notify each stockholder who filed a written objection meeting the
requirements of section eighty-six and whose shares were not voted in favor of
the approval of such action, that the action approved at the meeting of the
corporation of which he is a stockholder has become effective. The giving of
such notice shall not be deemed to create any rights in any stockholder
receiving the same to demand payment for his stock. The notice shall be sent by
registered or certified mail, addressed to the stockholder at his last known
address as it appears in the records of the corporation.
C. 156B SECTION 89. DEMAND FOR PAYMENT; TIME FOR PAYMENT
If within twenty days after the date of mailing of a notice under subsection
(e) of section eighty-two, subsection (f) of section eighty-three, or section
eighty-eight, any stockholder to whom the corporation was required to give such
notice shall demand in writing from the corporation taking such action, or in
the case of a consolidation or merger from the resulting or surviving
corporation, payment for his stock, the corporation upon which such demand is
made shall pay to him the fair value of his stock within thirty days after the
expiration of the period during which such demand may be made.
C. 156B SECTION 90. DEMAND FOR DETERMINATION OF VALUE; BILL IN EQUITY; VENUE
If during the period of thirty days provided for in section eighty-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county where
the corporation in which such objecting stockholder held stock had or has its
principal office in the commonwealth.
C. 156B SECTION 91. PARTIES TO SUIT TO DETERMINE VALUE; SERVICE
If the bill is filed by the corporation, it shall name as parties respondent
all stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof. If the bill is
filed by a stockholder, he shall bring the bill in his own behalf and in behalf
of all other stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof, and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
C. 156B SECTION 92. DECREE DETERMINING VALUE AND ORDERING PAYMENT; VALUATION
DATE
After hearing the court shall enter a decree determining the fair value of
the stock of those stockholders who have become entitled to the valuation of and
payment for their shares, and shall order the corporation to make payment of
such value, together with interest, if any, as hereinafter provided, to the
stockholders entitled thereto upon the transfer by them to the corporation of
the certificates representing such stock if certificated or, if uncertificated,
upon receipt of an instruction transferring such stock to the corporation. For
this purpose, the value of the shares shall be determined
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as of the day preceding the date of the vote approving the proposed corporate
action and shall be exclusive of any element of value arising from the
expectation or accomplishment of the proposed corporate action.
C. 156B SECTION 93. REFERENCE TO SPECIAL MASTER
The court in its discretion may refer the bill or any question arising
thereunder to a special master to hear the parties, make findings and report the
same to the court, all in accordance with the usual practice in suits in equity
in the superior court.
C. 156B SECTION 94. NOTATION ON STOCK CERTIFICATES OF PENDENCY OF BILL
On motion the court may order stockholder parties to the bill to submit
their certificates of stock to the corporation for the notation thereon of the
pendency of the bill, and may order the corporation to note such pendency in its
records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
C. 156B SECTION 95. COSTS; INTEREST
The costs of the bill, including the reasonable compensation and expenses of
any master appointed by the court, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to the bill, or any of them, in such manner as appears to be
equitable, except that all costs of giving notice to stockholders as provided in
this chapter shall be paid by the corporation. Interest shall be paid upon any
award from the date of the vote approving the proposed corporate action, and the
court may on application of any interested party determine the amount of
interest to be paid in the case of any stockholder.
C. 156B SECTION 96. DIVIDENDS AND VOTING RIGHTS AFTER DEMAND FOR PAYMENT
Any stockholder who has demanded payment for his stock as provided in this
chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation, or in
the case of a consolidation or merger, the resulting or surviving
corporation, deliver to it a written withdrawal of his objections to and an
acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
C. 156B SECTION 97. STATUS OF SHARES PAID FOR
The shares of the corporation paid for by the corporation pursuant to the
provisions of this chapter shall have the status of treasury stock, or in the
case of a consolidation or merger the shares or the securities of the resulting
or surviving corporation into which the shares of such objecting stockholder
would have been converted had he not objected to such consolidation or merger
shall have the status of treasury stock or securities.
C. 156B SECTION 98. EXCLUSIVE REMEDY; EXCEPTION
The enforcement by a stockholder of his right to receive payment for his
shares in the manner provided in this chapter shall be an exclusive remedy
except that this chapter shall not exclude the right of such stockholder to
bring or maintain an appropriate proceeding to obtain relief on the ground that
such corporate action will be or is illegal or fraudulent as to him.
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APPENDIX C
August 1, 2001
Board of Directors
Genrad, Inc.
7 Technology Park Drive
Westford, Massachusetts 01886
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the outstanding shares of common stock (other than
Teradyne, Inc.) (collectively the "Stockholders") of Genrad, Inc. (the
"Company") of the Exchange Ratio (as defined below) specified in the Agreement
and Plan of Merger dated as of August 1, 2001 (the "Merger Agreement"), a draft
of which has been furnished to us, by and among Teradyne, Inc., Radio
Acquisition Corporation, a wholly-owned subsidiary of Teradyne, Inc. ("Merger
Sub"), and the Company. Pursuant to the terms of and subject to the conditions
set forth in the Merger Agreement, the Merger Sub will be merged with and into
Company (the "Merger") and each share of common stock of the Company, $1.00 par
value per share, will be converted into 0.1733 shares (the "Exchange Ratio") of
Teradyne, Inc. common stock, $0.125 par value per share.
In connection with our review of the proposed Merger and the preparation of
our opinion herein, we have examined: (a) the draft Merger Agreement furnished
to us; (b) certain audited historical financial statements of the Company and of
Teradyne, Inc. for the three years ended December 31, 2000; (c) the unaudited
financial statements of the Company and of Teradyne, Inc. for the six months
ended June 30, 2001; (d) certain internal business, operating and financial
information and forecasts of the Company and Teradyne, Inc. (the "Forecasts"),
provided by the senior management of the Company and Teradyne, Inc.,
respectively; (e) information regarding the strategic, financial and operational
benefits anticipated from the Merger prepared by the senior management of
Genrad, Inc. after consultation with Teradyne, Inc.; (f) the pro forma impact of
the Merger on the earnings per share of Teradyne, Inc. based on estimates of
senior management of the Company and on consensus published equity research
estimates of Teradyne, Inc.; (g) information regarding publicly available
financial terms of certain other business combinations we deemed relevant;
(h) the financial position and operating results of the Company and
Teradyne, Inc. compared with those of certain other publicly traded companies we
deemed relevant; (i) current and historical market prices and trading volumes of
the common stock of the Company and Teradyne, Inc.; and (j) certain other
publicly available information on the Company and Teradyne, Inc. We have also
held discussions with members of the senior management of the Company and
Teradyne, Inc. to discuss the foregoing, have considered other matters which we
have deemed relevant to our inquiry and have taken into account such accepted
financial and investment banking procedures and considerations as we have deemed
relevant. In preparing our opinion, we also took into account, among other
things, that (1) the Company has experienced and is expected to continue to
experience in the near future operating losses and the Company's ability to
execute its business plan is, and will continue to be, dependent on its receipt
of external financing for working capital and other corporate purposes; (2) in
each of the Company's last two fiscal quarters the Company has not been in
compliance with certain financial covenants made to its lenders; (3) the Company
currently is operating pursuant to a waiver from its lenders that expires on
September 28, 2001; (4) given the Company's current operating results, absent
the Merger or other similar transaction there is a reasonable probability that
the Company's lenders will not waive noncompliance under the Company's lending
agreements beyond September 28, 2001 and the Company will not have access to
future borrowings under such agreements in such instance; (5) the Company has
C-1
advised us that without access to such borrowings the Company would encounter
difficulty funding its day-to-day operations and its ability to continue its
business as currently conducted would be impaired; (6) the Company anticipates
difficulty in securing acceptable alternative financing given the current credit
markets and the Company's financial condition; (7) the Company has approached
and has held discussions with certain other third parties to solicit indications
of interest in a possible merger with the Company, and Teradyne, Inc. was the
only third party to submit a firm offer to the Company with respect to such a
transaction; (8) given the Company's current operating results and the possible
liquidity constraints on the Company, the Company may have limited time and
ability to pursue additional alternatives to the Merger; and (9) the Merger
represents a readily available transaction to the Company that provides
shareholders of the Company an opportunity to realize value for their shares
prior to any further loss in value attributable to continued operating losses or
noncompliance under the Company's lending agreements and any resulting adverse
effect on the Company's liquidity.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all the information examined
by or otherwise reviewed or discussed with us for purposes of this opinion
including without limitation the Forecasts provided by senior management. We did
not include any cost savings, operating synergies or other projected combined
benefits that might result from the Merger in this analysis. We have not made or
obtained an independent valuation or appraisal of the assets, liabilities or
solvency of the Company or Teradyne, Inc. or the combined company resulting from
the Merger. We have been advised by the senior management of the Company and
Teradyne, Inc. that the Forecasts examined by us have been reasonably prepared
on bases reflecting the best currently available estimates and judgments of the
senior management of the Company and Teradyne, Inc., as the case may be. In that
regard, we have assumed, with your consent, that (i) the Forecasts will be
achieved and realized in the amounts and at the times contemplated thereby and
(ii) all material assets and liabilities (contingent or otherwise) of the
Company and Teradyne, Inc. are as set forth in their respective financial
statements or other information made available to us. We express no opinion with
respect to the Forecasts or the estimates and judgments on which they are based.
Our opinion herein is based upon economic, market, financial and other
conditions existing on, and other information disclosed to us as of, the date of
this letter. It should be understood that, although subsequent developments may
affect this opinion, we do not have any obligation to update, revise or reaffirm
this opinion. We have relied as to all legal matters on advice of counsel to the
Company, and have assumed that the Merger Agreement will be executed in the form
furnished to us and that the Merger will be consummated on the terms described
in such Merger Agreement, without any waiver of any material terms or conditions
by the Company. With your consent, we held discussions with several third
parties, besides Teradyne, Inc., about a potential merger with the Company, but
no such third party has expressed a firm interest in consummating a transaction
that would either enable the Company to fund its ongoing operations and offer a
reasonable opportunity to achieve the Company's objectives or maximize the value
of the Company shareholders' ownership in the Company.
William Blair & Company has been engaged in the investment banking business
since 1935. We continually undertake the valuation of investment securities in
connection with public offerings, private placements, business combinations,
estate and gift tax valuations and similar transactions. In the ordinary course
of our business, we may from time to time trade the securities of the Company or
Teradyne, Inc. for our own account and for the accounts of customers, and
accordingly may at any time hold a long or short position in such securities. We
have acted as the investment banker to the Company in connection with the Merger
and will receive a fee from the Company for our services, a significant portion
of which is contingent upon consummation of the Merger. In addition, the Company
has agreed to indemnify us against certain liabilities arising out of our
engagement.
We are expressing no opinion herein as to the price at which the common
stock of the Company and Teradyne, Inc. will trade at any future time or as to
the effect of the Merger on the trading price
C-2
of the common stock of the Company or Teradyne, Inc. Such trading price may be
affected by a number of factors, including but not limited to (i) dispositions
of the common stock of Teradyne, Inc. by stockholders within a short period of
time after the effective date of the Merger, (ii) changes in prevailing interest
rates and other factors which generally influence the price of securities,
(iii) adverse changes in the current capital market, generally, and/or in the
sectors of which either the Company or Teradyne, Inc. are a part, specifically
(iv) the occurrence of adverse changes in the financial condition, business,
assets, results of operations or prospects of the Company or of Teradyne, Inc.
or in their respective product markets, (v) any necessary actions by or
restrictions of federal, state or other governmental agencies or regulatory
authorities, and (vi) timely completion of the Merger on terms and conditions
that are acceptable to all parties at interest.
Our investment banking services and our opinion were provided for the use
and benefit of the Board of Directors of the Company in connection with its
consideration of the transaction contemplated by the Merger Agreement. Our
opinion is limited to the fairness, from a financial point of view, to the
Stockholders of the Company of the Exchange Ratio in connection with the Merger,
and we do not address the merits of the underlying decision by the Company to
engage in the Merger and this opinion does not constitute a recommendation to
any Stockholder as to how such Stockholder should vote with respect to the
proposed Merger. It is understood that this letter may not be disclosed or
otherwise referred to without prior written consent, except that the opinion may
be included in its entirety in a proxy statement mailed to the Stockholders by
the Company with respect to the Merger.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of the date hereof, the Exchange Ratio is fair, from a
financial point of view, to the Stockholders, other than Teradyne, Inc.
Very truly yours,
/s/ WILLIAM BLAIR & COMPANY, L.L.C.
WILLIAM BLAIR & COMPANY, L.L.C.
C-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 67 of the Massachusetts Business Corporation Law provides that a
corporation may indemnify its directors and officers to the extent specified in
or authorized by (i) the articles of organization, (ii) the by-laws adopted by
the shareholders, or (iii) a vote adopted by the holders of a majority of the
shares of stock entitled to vote on the election of directors. In all instances,
the extent to which a corporation provides indemnification to its directors and
officers under Section 67 is optional. Teradyne's Amended and Restated By-laws
provide that each director and officer shall be indemnified by Teradyne against
liabilities and expenses in connection with any legal proceeding to which such
officer or director may become a party by reason of being or having been an
officer or director, provided that such officer or director acted in good faith
in the reasonable belief that his or her action was in the best interest of
Teradyne. Reference is made to Teradyne's Amended and Restated By-laws filed as
Exhibit 3.3 to its Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (File No. 001-06462).
Teradyne maintains directors and officers liability insurance for the
benefit of its directors and its officers.
II-1
ITEM 21. EXHIBITS.
EXHIBIT NO. DESCRIPTION SEC DOCUMENT REFERENCE
----------- ---------------------------------------- ----------------------------------------
2.1 Agreement and Plan of Merger among the Included as Appendix A to the Proxy
Registrant, Radio Acquisition Corp. and Statement-Prospectus.
GenRad, Inc., dated August 1, 2001
3.1 Restated Articles of Organization of the Exhibit 3.1 to the Registrant's Annual
Registrant, as amended Report on Form 10-K for the fiscal year
ended December 31, 1997.
3.2 Amendment, dated May 23, 1996, to Exhibit 3.2 to the Registrant's Annual
Restated Articles of Organization of the Report on Form 10-K for the fiscal year
Registrant, as amended ended December 31, 1996.
3.3 Amended and Restated Bylaws of the Exhibit 3.3 to the Registrant's Annual
Registrant Report on Form 10-K for the fiscal year
ended December 31, 1996.
3.4 Amendment dated March 25, 2000, to Exhibit 3.1 to the Registrant's
Restated Articles of Organization of the Quarterly Report on Form 10-Q for the
Registrant, as amended quarter ended July 2, 2000.
4.1 Rights Agreement between the Registrant Exhibit 4.1 to the Registrant's Form 8-K
and Fleet National Bank dated as of filed November 20, 2000.
November 17, 2000
5.1 Opinion of Testa, Hurwitz & Thibeault, Filed Herewith.
LLP
8.1 Tax Opinion of Nutter, McClennen & Fish, Filed Herewith.
LLP
10.1 Teradyne, Inc. Supplemental Executive Exhibit 10.4 to the Registrant's Annual
Retirement Plan Report on Form 10-K for the fiscal year
ended December 31, 1997.
10.2 1991 Employee Stock Option Plan, as Exhibit 4.2 to the Registrant's
amended Registration Statement on Form S-8
(Registration Statement No. 333-07177).
10.3 Amendment to 1991 Stock Plan dated March Exhibit 10.3 to the Registrant's Annual
9, 2001 Report on Form 10-K for the fiscal year
ended December 31, 2000.
10.4 Megatest Corporation 1990 Stock Option Exhibit 4.1 to the Registrant's
Plan Registration Statement on Form S-8
(Registration Statement No. 333-64683).
10.5 Megatest Corporation Director Stock Exhibit 4.2 to the Registrant's
Option Plan Registration Statement on Form S-8
(Registration Statement No. 333-64683).
10.6 1996 Employee Stock Purchase Plan Exhibit 4.1 to the Registrant's
Registration Statement on Form S-8
(Registration Statement No. 333-07177).
10.7 Master Lease Agreement between Megatest Exhibit 10.10 to the Registrant's Annual
and General Electric Capital Corporation Report on Form 10-K for the fiscal year
dated August 10, 1995 ended December 31, 1995.
10.8 Loan and Security Agreement between Exhibit 10.11 to the Registrant's Annual
Megatest and the CIT Group/Equipment Report on Form 10-K for the fiscal year
Financing, Inc. dated August 14, 1995 ended December 31, 1995.
II-2
EXHIBIT NO. DESCRIPTION SEC DOCUMENT REFERENCE
----------- ---------------------------------------- ----------------------------------------
10.9 Deed of Trust, Financing Statement, Exhibit 10.12 to the Registrant's Annual
Security Agreement and Fixture Filing Report on Form 10-K for the fiscal year
between Megatest and the Sun Life ended December 31, 1995.
Assurance Company of Canada (U.S.) dated
August 25, 1995
10.10 1997 Employee Stock Option Plan Exhibit 10.14 to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1996.
10.11 Letter Agreement dated January 24, 1997 Exhibit 10.15 to the Registrant's Annual
between the Registrant and Executive Report on Form 10-K for the fiscal year
Officer ended December 31, 1996.
10.12 1996 Non-Employee Director Stock Option Exhibit 10.15 to the Registrant's Annual
Plan Report on Form 10-K for the fiscal year
ended December 31, 1996.
10.13 Amendment to 1996 Non-Employee Director Exhibit 10.13 to the Registrant's Annual
Option Plan dated January 18, 2001 Report on Form 10-K for the fiscal year
ended December 31, 2000.
10.14 Letter Agreement dated June 1, 1997 Exhibit 10.15 to the Registrant's Annual
between the Registrant and Member of Report on Form 10-K for the fiscal year
Board ended December 31, 1997.
10.15 Letter Agreement dated June 1, 1997 Exhibit 10.16 to the Registrant's Annual
between the Registrant and Member of Report on Form 10-K for the fiscal year
Board ended December 31, 1997.
10.16 1997 Employee Stock Option Plan, as Exhibit 10.01 to the Registrant's
amended Quarterly Report on Form 10-Q for the
quarter ended July 1, 2001.
10.17 Side letter between the Registrant and Previously Filed.
Robert M. Dutkowsky, dated August 1,
2001
21.1 Subsidiaries of the Registrant Previously Filed.
23.1 Consent of PricewaterhouseCoopers LLP Filed Herewith.
23.2 Consent of PricewaterhouseCoopers LLP Filed Herewith.
23.3 Consent of Testa, Hurwitz & Thibeault, Filed Herewith.
LLP (Included in Exhibit 5.1)
23.4 Consent of Nutter, McClennen & Fish, LLP Filed Herewith.
(Included in Exhibit 8.1)
23.5 Consent of William Blair & Company, Included as Appendix C to the Proxy
L.L.C. (Included in Exhibit 99.1) Statement-Prospectus.
24.1 Power of attorney (included on signature Previously Filed.
page)
99.1 Opinion of William Blair & Company, Included as Appendix C to the Proxy
L.L.C. Statement-Prospectus.
99.2 Form of Proxy to be used in soliciting Filed Herewith.
shareholders of GenRad, Inc.
99.3 Form of Notice to participants of the Filed Herewith.
GenRad, Inc. Choice Investment Plan.
II-3
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where appropriate, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes as follows: that prior to any
public offering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The undersigned registrant undertakes that every prospectus (i) that is
filed pursuant to the paragraph immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused Amendment No. 1 to this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Boston and Commonwealth of Massachusetts on September 24, 2001.
TERADYNE, INC.
By: /s/ GREGORY R. BEECHER
-----------------------------------------
Gregory R. Beecher
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE(S) DATE
--------- -------- ----
Chief Executive Officer,
* President and Chairman
------------------------------------------- (Principal Executive September 24, 2001
George W. Chamillard Officer)
Vice President and
/s/ GREGORY R. BEECHER Chief Financial Officer
------------------------------------------- (Principal Financial September 24, 2001
Gregory R. Beecher Officer)
*
------------------------------------------- Controller (Principal September 24, 2001
Richard MacDonald Accounting Officer)
*
------------------------------------------- Director September 24, 2001
James W. Bagley
*
------------------------------------------- Director September 24, 2001
Albert Carnesale
*
------------------------------------------- Director September 24, 2001
Daniel S. Gregory
*
------------------------------------------- Director September 24, 2001
Dwight H. Hibbard
II-5
SIGNATURE TITLE(S) DATE
--------- -------- ----
*
------------------------------------------- Director September 24, 2001
John P. Mulroney
*
------------------------------------------- Director September 24, 2001
Vincent M. O'Reilly
*
------------------------------------------- Director September 24, 2001
Richard J. Testa
*
------------------------------------------- Director September 24, 2001
Roy A. Vallee
*
------------------------------------------- Director September 24, 2001
Patricia S. Wolpert
*By: /s/ GREGORY R. BEECHER September 24, 2001
--------------------------------------
Gregory R. Beecher
ATTORNEY-IN-FACT
II-6
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION SEC DOCUMENT REFERENCE
----------- ---------------------------------------- ----------------------------------------
2.1 Agreement and Plan of Merger among the Included as Appendix A to the Proxy
Registrant, Radio Acquisition Corp. and Statement-Prospectus.
GenRad, Inc., dated August 1, 2001
3.1 Restated Articles of Organization of the Exhibit 3.1 to the Registrant's Annual
Registrant, as amended Report on Form 10-K for the fiscal year
ended December 31, 1997.
3.2 Amendment, dated May 23, 1996, to Exhibit 3.2 to the Registrant's Annual
Restated Articles of Organization of the Report on Form 10-K for the fiscal year
Registrant, as amended ended December 31, 1996.
3.3 Amended and Restated Bylaws of the Exhibit 3.3 to the Registrant's Annual
Registrant Report on Form 10-K for the fiscal year
ended December 31, 1996.
3.4 Amendment dated March 25, 2000, to Exhibit 3.1 to the Registrant's
Restated Articles of Organization of the Quarterly Report on Form 10-Q for the
Registrant, as amended quarter ended July 2, 2000.
4.1 Rights Agreement between the Registrant Exhibit 4.1 to the Registrant's Form 8-K
and Fleet National Bank dated as of filed November 20, 2000.
November 17, 2000
5.1 Opinion of Testa, Hurwitz & Thibeault, Filed Herewith.
LLP
8.1 Tax Opinion of Nutter, McClennen & Fish, Filed Herewith.
LLP
10.1 Teradyne, Inc. Supplemental Executive Exhibit 10.4 to the Registrant's Annual
Retirement Plan Report on Form 10-K for the fiscal year
ended December 31, 1997.
10.2 1991 Employee Stock Option Plan, as Exhibit 4.2 to the Registrant's
amended Registration Statement on Form S-8
(Registration Statement No. 333-07177).
10.3 Amendment to 1991 Stock Plan dated March Exhibit 10.3 to the Registrant's Annual
9, 2001 Report on Form 10-K for the fiscal year
ended December 31, 2000.
10.4 Megatest Corporation 1990 Stock Option Exhibit 4.1 to the Registrant's
Plan Registration Statement on Form S-8
(Registration Statement No. 333-64683).
10.5 Megatest Corporation Director Stock Exhibit 4.2 to the Registrant's
Option Plan Registration Statement on Form S-8
(Registration Statement No. 333-64683).
10.6 1996 Employee Stock Purchase Plan Exhibit 4.1 to the Registrant's
Registration Statement on Form S-8
(Registration Statement No. 333-07177).
10.7 Master Lease Agreement between Megatest Exhibit 10.10 to the Registrant's Annual
and General Electric Capital Corporation Report on Form 10-K for the fiscal year
dated August 10, 1995 ended December 31, 1995.
10.8 Loan and Security Agreement between Exhibit 10.11 to the Registrant's Annual
Megatest and the CIT Group/Equipment Report on Form 10-K for the fiscal year
Financing, Inc. dated August 14, 1995 ended December 31, 1995.
10.9 Deed of Trust, Financing Statement, Exhibit 10.12 to the Registrant's Annual
Security Agreement and Fixture Filing Report on Form 10-K for the fiscal year
between Megatest and the Sun Life ended December 31, 1995.
Assurance Company of Canada (U.S.) dated
August 25, 1995
EXHIBIT NO. DESCRIPTION SEC DOCUMENT REFERENCE
----------- ---------------------------------------- ----------------------------------------
10.10 1997 Employee Stock Option Plan Exhibit 10.14 to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1996.
10.11 Letter Agreement dated January 24, 1997 Exhibit 10.15 to the Registrant's Annual
between the Registrant and Executive Report on Form 10-K for the fiscal year
Officer ended December 31, 1996.
10.12 1996 Non-Employee Director Stock Option Exhibit 10.15 to the Registrant's Annual
Plan Report on Form 10-K for the fiscal year
ended December 31, 1996.
10.13 Amendment to 1996 Non-Employee Director Exhibit 10.13 to the Registrant's Annual
Option Plan dated January 18, 2001 Report on Form 10-K for the fiscal year
ended December 31, 2000.
10.14 Letter Agreement dated June 1, 1997 Exhibit 10.15 to the Registrant's Annual
between the Registrant and Member of Report on Form 10-K for the fiscal year
Board ended December 31, 1997.
10.15 Letter Agreement dated June 1, 1997 Exhibit 10.16 to the Registrant's Annual
between the Registrant and Member of Report on Form 10-K for the fiscal year
Board ended December 31, 1997.
10.16 1997 Employee Stock Option Plan, as Exhibit 10.01 to the Registrant's
amended Quarterly Report on Form 10-Q for the
quarter ended July 1, 2001.
10.17 Side letter between the Registrant and Previously Filed.
Robert M. Dutkowsky, dated August 1,
2001
21.1 Subsidiaries of the Registrant Previously Filed.
23.1 Consent of PricewaterhouseCoopers LLP Filed Herewith.
23.2 Consent of PricewaterhouseCoopers LLP Filed Herewith.
23.3 Consent of Testa, Hurwitz & Thibeault, Filed Herewith.
LLP (Included in Exhibit 5.1)
23.4 Consent of Nutter, McClennen & Fish, LLP Filed Herewith.
(Included in Exhibit 8.1)
23.5 Consent of William Blair & Company, Included as Appendix C to the Proxy
L.L.C. (Included in Exhibit 99.1) Statement-Prospectus.
24.1 Power of attorney (included on signature Previously Filed.
page)
99.1 Opinion of William Blair & Company, Included as Appendix C to the Proxy
L.L.C. Statement-Prospectus.
99.2 Form of Proxy to be used in soliciting Filed Herewith.
shareholders of GenRad, Inc.
99.3 Form of Notice to participants of the Filed Herewith.
GenRad, Inc. Choice Investment Plan.
EX-5.1
3
a2059472zex-5_1.txt
EXHIBIT 5.1
Exhibit 5.1
September 21, 2001
Teradyne, Inc.
321 Harrison Avenue
Boston, MA 02118
RE: Registration Statement on Form S-4
Ladies and Gentlemen:
This opinion relates to an aggregate of up to 5,003,386 shares (the
"Shares") of common stock, par value $0.125 per share, of Teradyne, Inc. (the
"Company"), which are issuable pursuant to the Agreement and Plan of Merger,
dated as of August 1, 2001, by and among the Company, Radio Acquisition Corp., a
wholly owned subsidiary of the Company, and GenRad, Inc. (the "Merger
Agreement") and which are to be registered pursuant to a Registration Statement
on Form S-4 as filed with the Securities and Exchange Commission on August 30,
2001, as amended (the "Registration Statement").
Based upon such investigation as we have deemed necessary, we are of
the opinion that when the Shares to be issued by the Company pursuant to the
Merger Agreement have been issued in accordance with the terms described in the
Merger Agreement, such Shares will have been validly issued and will be fully
paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm in the related
prospectus under the caption "Legal Matters."
Very truly yours,
/s/ TESTA, HURWITZ & THIBEAULT, LLP
TESTA, HURWITZ & THIBEAULT, LLP
EX-8.1
4
a2059472zex-8_1.txt
EXHIBIT 8.1
Exhibit 8.1
NUTTER, McCLENNEN & FISH, LLP
ATTORNEYS AT LAW
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2699
TELEPHONE: 617 439-2000 FACSIMILE: 617 310-9000
CAPE COD OFFICE - HYANNIS, MASSACHUSETTS
September 24, 2001
GenRad, Inc.
Board of Directors
7 Technology Park
Westford, MA 01886
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as counsel to GenRad, Inc., a Massachusetts corporation
("GenRad") in connection with the proposed merger (the "Merger") of Radio
Acquisition Corp., a Massachusetts corporation ("Radio Acquisition")
wholly-owned by Teradyne, Inc., a Massachusetts corporation ("Teradyne"), into
GenRad pursuant to the Agreement and Plan of Merger, dated as of August 1, 2001,
by and among Teradyne, Radio Acquisition, and GenRad (the "Agreement"). The
terms of the Agreement are described in the proxy statement-prospectus that is a
part of the Registration Statement on Form S-4 (the "Registration Statement") to
be filed with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933 (the "Act"). The terms of the Agreement, which are
set forth in the proxy statement-prospectus of the Registration Statement, are
incorporated herein by reference. Capitalized terms used in this letter and not
otherwise defined herein have the meaning assigned to such terms in the
Agreement.
You have requested our opinion regarding the anticipated material
United States federal income tax consequences of the Merger. The opinion set
forth in this letter is based on relevant provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury Regulations thereunder
(including proposed and temporary Treasury Regulations) and interpretations of
the foregoing as expressed in court decisions, administrative determinations
(including established ruling positions of the Internal Revenue Service), and
the legislative history as of the date hereof. There can be no assurance that
these authorities will not be subject to future legislative, judicial or
administrative changes that could affect the accuracy of the conclusions stated
herein. These changes in applicable law could be retroactive in effect. By
rendering this opinion, we undertake no responsibility to advise you of any such
change or to update the conclusions contained in this opinion.
In rendering our opinion we have examined such records, documents and
other materials as we considered necessary or appropriate as a basis for such
opinion, including the Agreement
(including all amendments made through the date hereof), the Registration
Statement, and such other documents and information provided by Teradyne, Radio
Acquisition and GenRad as we deemed relevant to our opinion.
Teradyne, Radio Acquisition and GenRad each have provided us with a
letter, executed by a duly appointed officer, respectively, setting forth
certain representations relating to the Merger and the manner in which Teradyne,
Radio Acquisition and GenRad have been owned and operated prior to the Merger,
and will be owned and operated after the Merger. We also have relied on the
statements in the Registration Statement and other documents relating to the
Merger (collectively with the Registration Statement and the Agreement, the
"Documents") regarding the operation and ownership of Teradyne, Radio
Acquisition and GenRad. We have neither independently investigated nor verified
such representations or statements, and we assume that such representations and
statements are true, correct and complete and that all representations made "to
the best of the knowledge and belief" of any person or party or with similar
qualification are and will be true, correct and complete as if made without such
qualification and that no action will occur from the date hereof until the
Merger that is inconsistent with such representations.
We have assumed for the purposes of this opinion that: (1) the Merger
contemplated by the Documents will be consummated in accordance with the
Documents and as described in the Registration Statement (including satisfaction
of all covenants and conditions therein without amendment or waiver thereof);
(2) Teradyne, Radio Acquisition, GenRad and any affiliated entities, have
operated and will operate in accordance with their governing documents and
applicable laws; and (3) no payments to dissenting shareholders under Section
2.04 of the Agreement will be made by Teradyne, nor will Teradyne reimburse
GenRad for any payments made under such section.
We also have assumed in rendering the opinion set forth herein: (1) the
genuineness of all signatures on documents we have examined; (2) the
authenticity of all documents submitted to us as originals; (3) the conformity
to the original documents of all documents submitted to us as copies; (4) the
conformity of final documents to all documents submitted to us as drafts; (5)
the authority and capacity of the individual or individuals who executed any
such documents on behalf of any person; (6) the accuracy and completeness of all
records made available to us; (7) the factual accuracy of all representations,
warranties and other statements made by all parties; and (8) the continued
accuracy of all documents, certificates, warranties and covenants on which we
have relied in rendering the opinion set forth below and that were given or
dated earlier than the date of this letter, insofar as relevant to the opinion
set forth herein, from such earlier date through and including the date of this
letter.
Our opinion addresses the matters set forth above under U.S. federal
income tax law only, and no opinion is expressed under the provisions of any
foreign, state, or local tax law. We express no opinion concerning any tax
consequences except as expressly set forth in the Registration Statement under
the heading "MATERIAL FEDERAL INCOME TAX CONSEQUENCES."
Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that under current United States federal income
tax law, the discussion set forth in the
-2-
Registration Statement under the heading "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES," to the extent it constitutes summaries of legal matters or legal
conclusions, is a fair and accurate summary of the material United States
federal income tax consequences of the Merger.
This opinion is expressed as of the date hereof. In the event any one of
the facts, representations or assumptions upon which we have relied to issue
this opinion is incorrect, our opinion might be affected adversely and may not
be relied upon. In addition, there can be no assurances that the Internal
Revenue Service will not assert contrary positions.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not hereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Commission promulgated thereunder,
nor do we admit that we are experts with respect to any part of the Registration
Statement within the meaning of the term "expert" as used in the Act or the
rules and regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ NUTTER, McCLENNEN & FISH, LLP
NUTTER, McCLENNEN & FISH, LLP
-3-
EX-23.1
5
a2057452zex-23_1.txt
EXHIBIT 23.1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in Amendment No. 1 to
this Registration Statement on Form S-4 of Teradyne, Inc. of our report dated
January 15, 2001 relating to the financial statements and financial statement
schedule, which appears in Teradyne, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 2000. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
September 21, 2001
EX-23.2
6
a2057452zex-23_2.txt
EXHIBIT 23.2
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Amendment No. 1
to this Registration Statement on Form S-4 of Teradyne, Inc. of our report dated
February 8, 2001, except for Note 13, for which the date is August 30, 2001,
relating to the financial statements, which appears in GenRad, Inc.'s Annual
Report on Form 10-K/A for the year ended December 30, 2000. We also consent to
the incorporation by reference of our report dated March 30, 2001 relating to
the financial statement schedule, which appears in such Annual Report on
Form 10-K/A. We also consent to the reference to us under the heading "Experts"
in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
September 24, 2001
EX-99.2
7
a2059472zex-99_2.txt
EXHIBIT 99.2
Exhibit 99.2
PLEASE MARK VOTES
/X/ AS IN THIS EXAMPLE.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" THE PROPOSAL SET FORTH BELOW.
1. For approval of the Agreement and Plan of FOR AGAINST ABSTAIN
Merger dated as of August 1, 2001 among / / / / / /
Teradyne, Inc., Radio Acquisition Corp.
and GenRad, Inc.
MARK HERE FOR ADDRESS CHANGE / /
AND NOTE AT LEFT
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
-----------------------------------------------
-----------------------------------------------
SIGNATURE(S) DATE
--------------------------------------------------------------------------------
PROXY
GENRAD, INC.
7 Technology Park Drive, Westford, MA 01886
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS,
WHICH RECOMMENDS APPROVAL OF THE PROPOSAL CONTAINED HEREIN
The undersigned appoints Walter A. Shephard and Lori B. Hannay, and each of them
as proxies of the undersigned with full power of substitution to vote as
designated herein all shares of common stock which the undersigned would be
entitled to vote if personally present at the Special Meeting of Shareholders of
GenRad, Inc. to be held on Friday, October 26, 2001 at 11:00 a.m. at the
executive offices of GenRad, Inc., 7 Technology Park Drive, Westford,
Massachusetts, and any adjournment or adjournments thereof (the "Meeting"). The
undersigned acknowledges receipt of GenRad's proxy statement - prospectus which
was mailed to shareholders herewith. The proxies are further authorized to
vote, in their discretion in accordance with applicable law, upon such other
business as may properly come before the Meeting.
Please return this card in the enclosed postage paid envelope to MacKenzie
Partners, Inc. Proxy Tabulation, Madison Square Station, PO Box 865, New York,
NY 10160-1051.
----------- -----------
SEE REVERSE (Continued, and to be Signed on Reverse Side) SEE REVERSE
SIDE SIDE
----------- -----------
EX-99.3
8
a2059472zex-99_3.txt
EXHIBIT 99.3
Exhibit 99.3
NOTICE TO PARTICIPANTS IN THE GENRAD CHOICE INVESTMENT PLAN
OF THE SPECIAL MEETING OF GENRAD SHAREHOLDERS
The GenRad Choice Investment Plan ("ChIP") provides that The Vanguard Group of
Investment Companies, as Trustee of the ChIP, will follow the voting
instructions of the ChIP participants with respect to any voting rights
pertaining to their respective interests in Shares of GenRad, Inc. Common Stock
held in ChIP Parts I and II. The enclosed Proxy identifies the number of shares
of GenRad Common Stock that you may direct the Trustee to vote.
Please complete, date and sign the Proxy and return it to MacKenzie Partners,
Inc. Proxy Tabulation, Madison Square Station, P.O. Box 865, New York, NY
10160-1051. All ChIP Participants must return the completed Proxy on or before
October 25, 2001 in the envelope provided. Please note, if you do not return
your Proxy, your shares will not be voted. The Trustee has provided MacKenzie
Partners with a ballot executed in blank. MacKenzie Partners will tabulate the
total from the Proxies it receives and will enter the totals on the ballot. This
ballot will then be tabulated by MacKenzie Partners with all other ballots cast
at the Special Meeting.
For ChIP Participants, the number of shares indicated on the enclosed Proxy is
the total number represented by your allocations to the GenRad Stock Fund in
ChIP Part I (Profit Sharing Trust Account) and Part II (employee contribution
account). If you have any questions about the manner in which this number was
computed, or about any other matter in this notice, please contact GenRad's
Human Resource Department at (978) 589-7331.
All ChIP Participants are cordially invited to attend the Special Meeting.
GenRad, Inc.
By: Walter A. Shephard, CLERK
September 25, 2001
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE ENVELOPE PROVIDED