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Delaware | 3663 | 11-2139466 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Code Number) 68 South Service Road, Suite 230 | (I.R.S. Employer Identification Number) | ||
Melville, New York 11747 (631) 962-7000 |
Jeffrey W. Tindell, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 (212) 735-3000 | Robert A. Cantone, Esq. Proskauer Rose, LLP 1585 Broadway New York, New York 10036 (212) 969-3235 | Richard C. Wirthlin, Esq. Irell & Manella LLP 1800 Avenue of the Stars, Suite 900 Los Angeles, California 90067 (310) 277-1010 |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Proposed Maximum | ||||||||||||
Title Of Each Class | Amount To Be | Offering Price | Proposed Maximum | Amount Of | ||||||||
Of Securities To Be Registered | Registered(1) | Per Share | Aggregate Offering Price(2) | Registration Fee(3) | ||||||||
Common Stock, par value $0.10 per share | 4,406,000 | N/A | $87,607,514 | $6,246 | ||||||||
(1) | Represents the maximum number of shares of common stock of Comtech estimated to be issuable upon completion of the merger described in this proxy statement/prospectus, based on the number of shares of CPI common stock issued and outstanding on June 16, 2010. | |
(2) | Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and calculated pursuant to Rules 457(f)(1) and 457(c) under the Securities Act. The proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the market value of shares of CPI common stock (the securities to be canceled in the merger) in accordance with Rule 457(c) and is equal to (a) the product of (i) $15.76, the average of the high and low prices per share of CPI common stock on the NASDAQ Global Select Market Exchange on June 15, 2010, multiplied by (ii) 16,788,992, the maximum number of shares of CPI common stock that may be canceled and exchanged in the merger as of June 16, 2010, less (b) $176,987,000, the aggregate amount of cash consideration expected to be paid by Comtech in the merger pursuant to Rule 457(f)(3). | |
(3) | Calculated pursuant to Section 6(b) of the Securities Act and SEC Fee Advisory #4 for Fiscal Year 2010 at a rate equal to $71.30 per $1,000,000 of the proposed maximum aggregate offering price. |
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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This proxy statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. |
Sincerely, | ||
Michael Targoff | O. Joe Caldarelli | |
Chairman of the Board of Directors | Chief Executive Officer |
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Comtech Telecommunications Corp. 68 South Service Road, Suite 230 Melville, New York 11747 Attention: Investor Relations (631) 962-7000 | CPI International, Inc. 811 Hansen Way Palo Alto, California 94303 Attention: Investor Relations (650) 846-2900 |
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Palo Alto, California 94303
• | To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of May 8, 2010 (as it may be amended from time to time), among Comtech Telecommunications Corp., which is referred to as Comtech, Angels Acquisition Corp., a wholly owned subsidiary of Comtech, and CPI. A copy of the Agreement and Plan of Merger is attached as Annex A to the proxy statement/prospectus accompanying this notice; and | |
• | To approve the adjournment of the CPI special meeting if necessary to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting. |
Corporate Secretary
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811 Hansen Way
Palo Alto, California 94303
Attention: Investor Relations
Telephone:(650) 846-2900
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EX-5.1 | ||||||||
EX-23.1 | ||||||||
EX-23.2 | ||||||||
EX-24.1 | ||||||||
EX-99.1 | ||||||||
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EX-99.3 |
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Q: | Why am I receiving this document? | |
A: | Comtech and CPI have agreed to a merger, pursuant to which CPI will become a wholly owned subsidiary of Comtech and will cease to be a publicly held corporation. In order for the companies to complete the merger, the holders of a majority of the outstanding shares of CPI common stock must vote to adopt the merger agreement, and CPI is holding a special meeting of stockholders solely to obtain such stockholder approval. In the merger, in addition to the payment of cash, Comtech will issue shares of Comtech common stock as the consideration to be paid to holders of CPI common stock. | |
This document is being delivered to you as both a proxy statement of CPI and a prospectus of Comtech in connection with the merger. It is the proxy statement by which the CPI board of directors is soliciting proxies from you to vote on the adoption of the merger agreement at the special meeting or at any adjournment or postponement of the special meeting. It is also the prospectus by which Comtech will issue Comtech common stock to you in the merger. | ||
Q: | What am I being asked to vote on? | |
A: | CPI stockholders are being asked to vote on the following proposals: |
• | to adopt the merger agreement between Comtech and CPI, a copy of which is attached as Annex A to this proxy statement/prospectus; and | |
• | to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting. |
The approval of the proposal to adopt the merger agreement by CPI stockholders is a condition to the obligations of CPI and Comtech to complete the merger. | ||
Q: | What will happen in the merger? | |
A: | In the merger, Angels Acquisition Corp., a wholly owned subsidiary of Comtech that was formed for the purpose of the merger, will be merged with and into CPI. CPI will be the surviving corporation in the merger and will be a wholly owned subsidiary of Comtech following completion of the merger. | |
Q: | What will I receive in the merger? | |
A: | If the merger is completed, each of your shares of CPI common stock will be cancelled and converted automatically into the right to receive $9.00 in cash and between 0.2132 and 0.2382 shares of Comtech common stock (and dividends, if any, on Comtech common stock with a record date after the date of the merger agreement and before the effective time of the merger). The exact number of shares of Comtech common stock to be received in the merger will be determined based on a conversion ratio (rounded to four decimal places) equal to $8.10 divided by the average closing price of Comtech’s stock over the five consecutive trading days ending on (and including) the second trading day prior to closing, provided that if such average closing price of Comtech common stock is greater than $38.00, then the conversion ratio will equal 0.2132, and if such average closing sale price is less than $34.00, then the conversion ratio will equal 0.2382. CPI stockholders will receive cash in lieu of any fractional shares of Comtech common stock that they would otherwise receive in the merger. | |
Using only the closing price of $31.06 for Comtech common stock on the NASDAQ Global Select Market on May 7, 2010, the last trading day before the public announcement of the merger agreement, the merger consideration represented approximately $16.40 in value for each share of CPI common stock. Based on the closing price of $[l]for Comtech common stock on the NASDAQ Global Select Market on[l], 2010, the most |
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recent practicable trading day prior to the date of this proxy statement/prospectus, the conversion ratio was[l], and the merger consideration represented approximately $[l]in value for each share of CPI common stock. See “Risk Factors” beginning on page[l]of this proxy statement/prospectus. | ||
Q: | How did you determine the merger consideration to be paid to holders of CPI common stock? | |
A: | The merger consideration was determined as a result of arm’s length negotiations between CPI’s board of directors, on the one hand, and the management of Comtech and its board of directors, on the other hand. | |
Q: | Why are you proposing the merger? | |
A: | For a discussion of CPI’s reasons for the merger, you are urged to read the information under “The Merger — CPI’s Reasons for the Merger; Recommendation of the CPI Board of Directors” beginning on page[l]of this proxy statement/prospectus. For a discussion of Comtech’s reasons for the merger, you are urged to read the information under “The Merger — Comtech’s Reasons for the Merger” beginning on page[l]of this proxy statement/prospectus. | |
Q: | What happens if the merger is not completed? | |
A: | If the merger agreement is not adopted by CPI stockholders or if the merger is not completed for any other reason, you will not receive any payment for your shares of CPI common stock in connection with the merger. Instead, CPI will remain an independent public company and its common stock will continue to be listed and traded on the NASDAQ Global Select Market. If the merger agreement is terminated under specified circumstances, CPI may be required to pay Comtech a termination fee of $12 million and, in some cases, liquidated damages of $15 million, as described under “The Merger Agreement — Termination of the Merger Agreement — Termination Fee Payable by CPI” beginning on page[l]of this proxy statement/prospectus. | |
Q: | Does CPI’s board of directors recommend that stockholders adopt the merger agreement? | |
A: | Yes. The CPI board of directors has unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable and in the best interests of CPI and its stockholders. Therefore, the CPI board of directors unanimously recommends that you vote “FOR” the proposal to adopt the merger agreement at the special meeting. See “The Merger — CPI’s Reasons for the Merger; Recommendation of the CPI Board of Directors” beginning on page[l]of this proxy statement/prospectus. | |
Q: | What stockholder vote is required for the approval of each proposal? | |
A: | The following are the vote requirements for the proposals: |
• | Adoption of the Merger Agreement: Once a quorum has been established, the affirmative vote of holders of a majority of the shares of CPI common stock outstanding and entitled to vote on the proposal. Accordingly, abstentions, broker non-votes and unvoted shares will have the same effect as votes “AGAINST” adoption. | |
• | Adjournment (if necessary): Whether or not a quorum is present, the affirmative vote of a majority of the votes present in person or by proxy. |
Q: | What constitutes a quorum for the special meeting? | |
A: | A majority in voting power of all of the outstanding shares of CPI common stock entitled to vote at the meeting being present in person or represented by proxy constitutes a quorum for the special meeting. | |
Q: | When is this proxy statement/prospectus being mailed? | |
A: | This proxy statement/prospectus and the proxy card are first being sent to CPI stockholders on or near[l], 2010. |
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Q: | Who is entitled to vote at the special meeting? | |
A: | All holders of CPI common stock who held shares at the close of business on the record date for the special meeting ([l], 2010) are entitled to receive notice of and to vote at the special meeting, provided that such shares remain outstanding on the date of the special meeting. As of the close of business on the record date, there were[l] shares of CPI common stock outstanding and entitled to vote at the special meeting. Each share of CPI common stock is entitled to one vote. | |
Q: | Are any CPI stockholders already committed to vote in favor of the merger? | |
A: | Yes. Pursuant to a voting and standstill agreement entered into concurrently with the merger agreement, Cypress Associates II LLC and certain of its affiliates, which are referred to as the Cypress Group stockholders in this proxy statement/prospectus, have, subject to certain exceptions, agreed to vote 49.9% of the outstanding shares of CPI common stock in favor of the merger. Under certain circumstances, if the CPI board of directors changes its recommendation with respect to the merger, the Cypress Group stockholders will be required to vote only 25% of the outstanding shares of CPI common stock in favor of the adoption of the merger agreement. In addition, the voting and standstill agreement will terminate automatically upon the termination of the merger agreement. For a more complete description of the voting and standstill agreement, see “The Voting and Standstill Agreement” beginning on page[l]of this proxy statement/prospectus. The voting and standstill agreement is also attached to this proxy statement/prospectus as Annex B. | |
Q: | When and where is the special meeting? | |
A: | The special meeting will be held at[l]on[l], 2010 at 10:00 a.m., local time. | |
Q: | How do I vote my shares at the special meeting? | |
A: | If you are entitled to vote at the CPI special meeting and you hold your shares in your own name, you can submit a proxy or vote in person by completing a ballot at the special meeting. However, CPI encourages you to submit a proxy before the special meeting even if you plan to attend the special meeting. A proxy is a legal designation of another person to vote your shares of CPI common stock on your behalf. If you hold shares in your own name, you may submit a proxy for your shares: |
• | telephonically by calling[l] and following the instructions when prompted; | |
• | electronically via the Internet atwww.[l]and following the instructions provided to you; or | |
• | by filling out, signing and dating the enclosed proxy card and mailing it in the pre-paid envelope included with these proxy materials. |
Q: | If my shares are held in “street name” by my broker, will my broker automatically vote my shares for me? | |
A: | No. If your shares are held in an account at a broker or through another nominee, you must instruct the broker or other nominee on how to vote your shares by following the instructions that the broker or other nominee provides to you with these materials. Most brokers offer the ability for stockholders to submit voting instructions by mail by completing a voting instruction card, by telephone or via the Internet. | |
Brokers do not have discretionary authority to vote on the proposal to adopt the merger agreement. The broker may still register your shares as being present at the special meeting for purposes of determining a quorum but without your specific authorization, your shares will not be voted in favor of the merger or on any other matters over which brokers lack discretionary authority. This is called a broker non-vote.A broker non-vote will have the same effect as a vote “AGAINST” adoption of the merger agreement. | ||
If your shares are held in an account at a broker or through another nominee, you must instruct the broker or other nominee on how to vote your shares by following the instructions that the broker or other nominee provides to you with these materials. Most brokers offer the ability for stockholders to submit voting instructions by mail by completing a voting instruction card, by telephone or via the Internet. |
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If you hold shares through a broker or other nominee and wish to vote your shares in person at the special meeting, you must obtain a proxy from your broker or other nominee and present it to the inspector of election with your ballot when you vote at the special meeting. | ||
Q: | How will my shares be represented at the special meeting? | |
A: | If you submit your proxy by telephone, the Internet or by signing and returning your proxy card, the officers named in your proxy card will vote your shares in the manner you requested if you correctly submitted your proxy. If you sign your proxy card and return it without indicating how you would like to vote your shares, your proxy will be voted as the CPI board of directors recommends, which is: |
• | “FOR”the adoption of the merger agreement; and | |
• | “FOR”the approval of the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting. |
Q: | Who may attend the special meeting? | |
A: | CPI stockholders (or their authorized representatives) and CPI’s invited guests may attend the special meeting. Stockholders may call CPI Investor Relations at(650) 846-2900 to obtain directions to the location of the special meeting. | |
Q: | Is my vote important? | |
A: | Yes, your vote is very important. If you do not submit a proxy or vote in person at the special meeting, it will be more difficult for CPI to obtain the necessary quorum to hold the special meeting. In addition, an abstention or your failure to submit a proxy or to vote in person, or, if your shares are held in an account at a broker or through another nominee, your failure to instruct the broker or other nominee on how to vote your shares, will have the same effect as a vote “AGAINST” the adoption of the merger agreement.The CPI board of directors recommends that you vote “FOR” the adoption of the merger agreement. | |
Q: | Can I revoke my proxy or change my voting instructions? | |
A: | Yes. You may revoke your proxy and/or change your vote at any time before your proxy is voted at the special meeting. If you are a stockholder of record, you can do this by: |
• | sending a written notice stating that you revoke your proxy to CPI at 811 Hansen Way, Palo Alto, California 94303, Attention: Corporate Secretary, that bears a date later than the date of the proxy and is received prior to the special meeting; | |
• | submitting a valid, later-dated proxy by mail, telephone or Internet that is received prior to the special meeting; or | |
• | attending the special meeting and voting by ballot in person (your attendance at the special meeting will not, by itself, revoke any proxy that you have previously given). |
If you hold your shares through a broker or other nominee, you must contact your broker or other nominee to change your vote or obtain a “legal proxy” to vote your shares if you wish to cast your vote in person at the meeting. | ||
Q: | What happens if I sell my shares after the record date but before the special meeting? | |
A: | The record date for the special meeting is earlier than the date of the special meeting and the date that the merger is expected to be completed. If you sell or otherwise transfer your CPI shares after the record date but before the date of the special meeting, you will retain your right to vote at the special meeting. However, you will not have the right to receive the merger consideration to be received by CPI stockholders in the merger. In order to receive the merger consideration, you must hold your shares through completion of the merger. | |
Q: | What do I do if I receive more than one set of voting materials? | |
A: | You may receive more than one set of voting materials for the special meeting, including multiple copies of this proxy statement/prospectus, proxy cards and voting instruction forms. This can occur if you hold your shares in |
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more than one brokerage account, if you hold shares directly as a record holder and also in “street name,” or otherwise through a nominee, and in certain other circumstances. If you receive more than one set of voting materials, each should be voted and/or returned separately in order to ensure that all of your shares are voted. | ||
Q: | Am I entitled to appraisal rights if I do not vote or if I vote against the adoption of the merger agreement? | |
A: | Yes. Under Delaware law, if the merger is completed, record holders of CPI common stock who do not vote in favor of the adoption of the merger agreement and who otherwise properly assert their appraisal rights will be entitled to seek appraisal and obtain payment in cash for the judicially determined fair value of their shares of CPI common stock, in lieu of receiving the merger consideration. This value could be more than, the same as, or less than the value of the merger consideration. To exercise your appraisal rights, you must strictly follow the procedures described by Delaware law. Due to the complexity of these procedures, CPI stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. These procedures are summarized under the heading, “The Merger — Appraisal Rights,” beginning on page[l]of this proxy statement/prospectus. In addition, the text of the applicable provisions of Delaware law is included as Annex C to this proxy statement/prospectus. Failure to strictly comply with these provisions will result in loss of the right of appraisal. | |
Q: | Is completion of the merger subject to any conditions? | |
A: | Yes. In addition to the adoption of the merger agreement by CPI stockholders, completion of the merger requires the receipt of the necessary governmental and regulatory approvals and the satisfaction or, to the extent permitted by applicable law, waiver of the other conditions specified in the merger agreement. | |
Q: | When do you expect to complete the merger? | |
A: | CPI and Comtech are working towards completing the merger promptly. The consummation of the merger is subject to, among other things, receipt of CPI stockholder approval, governmental and regulatory approvals and other usual and customary closing conditions. As a result, no assurance can be given as to when, or if, the merger will occur. | |
Q: | Is the transaction expected to be taxable to CPI stockholders? | |
A: | The merger generally will be a taxable transaction, and U.S. holders will generally recognize gain or loss in an amount equal to the difference, if any, between (i) the sum of any cash received (including cash received in lieu of a fractional share of Comtech common stock) and the fair market value, as of the effective time of the merger, of the shares of Comtech common stock received by such holder in the exchange and (ii) such holder’s tax basis in the shares of CPI common stock exchanged therefor. | |
CPI stockholders are urged to consult their tax advisors as to the specific tax consequences to them of the merger, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws in their particular circumstances. | ||
Additional information is provided under “The Merger — Certain Material U.S. Federal Income Tax Consequences of the Merger” beginning on page[l]. | ||
Q: | As a CPI stockholder, what risks should I consider in deciding whether to vote in favor of the merger? | |
A: | You should carefully review the section of this proxy statement/prospectus entitled “Risk Factors” beginning on page[l], which sets forth and incorporates by reference certain risks and uncertainties related to the merger, certain risks and uncertainties to which the combined company’s business will be subject, and certain risks and uncertainties to which each of CPI and Comtech, as an independent company, is subject. |
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Q: | What do I need to do now? | |
A: | Carefully read and consider the information contained in and incorporated by reference into this proxy statement/prospectus, including its annexes. Then, please vote your shares of CPI common stock, which you may do by: |
• | completing, dating, signing and returning the enclosed proxy card in the accompanying postage-paid envelope; | |
• | submitting your proxy by telephone or via the Internet by following the instructions included on your proxy card; or | |
• | attending the special meeting and voting by ballot in person. |
If you hold shares through a broker or other nominee, please instruct your broker or nominee to vote your shares by following the instructions that the broker or nominee provides to you with these materials. | ||
Q: | Should I send in my stock certificates now? | |
A: | No. CPI stockholders should not send in their stock certificates at this time. After completion of the merger, Comtech’s exchange agent will send you a letter of transmittal and instructions for exchanging your shares of CPI common stock for the merger consideration. Unless you specifically request to receive Comtech common stock certificates, the shares of Comtech common stock you receive in the merger will be issued in book-entry form. | |
Q: | Whom should I contact with questions? | |
A: | If you have any questions about the merger or the special meeting or would like to obtain additional copies of this proxy statement/prospectus, proxy cards or voting instruction forms, you may contact CPI by mail at CPI International, Inc., 811 Hansen Way, Palo Alto, California 94303, Attention: Investor Relations, or by phone at(650) 846-2900. |
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• | to adopt the merger agreement; and | |
• | to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting. |
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• | adoption of the merger agreement by holders of a majority of the outstanding shares of CPI common stock in accordance with applicable law, the amended and restated certificate of incorporation of CPI and the amended and restated bylaws of CPI; | |
• | absence of any law, injunction or other order of a court or governmental entity of competent jurisdiction preventing completion of the merger; |
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• | (i) expiration or termination of any applicable waiting period (or extensions thereof) relating to the merger under theHart-Scott-Rodino Antitrust Improvements Act of 1976 which is referred to in this proxy statement/prospectus as the HSR Act and (ii) expiration or termination of any applicable waiting periods, or receipt of all consents required under any other applicable competition laws; | |
• | approval for trading on the NASDAQ Global Select Market of the shares of Comtech common stock to be issued in the merger, subject to official notice of issuance; | |
• | the effectiveness of, and the absence of any stop order (or proceedings for that purpose) with respect to, the registration statement onForm S-4 of which this proxy statement/prospectus forms a part; | |
• | accuracy of the representations and warranties made in the merger agreement by the other party, subject to certain materiality thresholds; | |
• | performance and compliance in all material respects by the other party of the obligations required to be performed by it or complied with at or prior to the effective time of the merger; | |
• | absence of a material adverse effect on the other party since the date of the merger agreement (see “The Merger Agreement — Definition of ‘Material Adverse Effect’” beginning on page[l]of this proxy statement/prospectus for the definition of material adverse effect); and | |
• | except as previously disclosed to the other party, the absence of any pending litigation or proceeding of any kind which would reasonably be expected to have a material adverse effect on the disclosing party. |
• | the absence of any pending action or proceeding of any kind by any governmental entity that (i) challenges or seeks to make illegal, delay materially or otherwise directly or indirectly prohibit the completion of the merger, (ii) seeks to prohibit Comtech’s or Merger Sub’s ability effectively to exercise full rights of ownership of CPI’s common stock following the completion of the merger or (iii) seeks to compel Comtech, CPI or any of their respective subsidiaries to take any burdensome action described under “The Merger Agreement — Covenants and Agreements — Efforts to Complete Transactions” beginning on page[l]of this proxy statement/prospectus. |
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• | CPI may, in response to an unsolicited acquisition proposal from a third party that the CPI board of directors or a committee thereof determines constitutes or would reasonably be expected to lead to a superior acquisition proposal (as defined under “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page[l]of this proxy statement/prospectus), directly or through its representatives participate in negotiations or discussions with such party and furnish non-public information to such third party pursuant to a customary confidentiality agreement (provided that all such information is or has been provided or made available to Comtech). | |
• | The CPI board of directors or any committee thereof may fail to make, or withdraw or modify in a manner adverse to Comtech, its recommendation in favor of the adoption of the merger agreement or may approve, recommend or endorse an unsolicited acquisition proposal, in each case either (i) following receipt of an unsolicited acquisition proposal made after the date of the merger agreement that CPI’s board of directors or a committee thereof determines constitutes a superior acquisition proposal or (ii) in response to a material event, development, circumstance, occurrence or change in circumstances or facts not related to a competing acquisition proposal that was not known to CPI’s board of directors or a committee thereof on the date of the merger agreement (or if known, the magnitude or material consequences of which were not known or understood as of that date). |
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• | a court or other government entity has issued an order enjoining or has otherwise prohibited the merger and such injunction or prohibition has become final and non-appealable; | |
• | CPI stockholder approval is not received at the duly called and held special meeting of CPI stockholders; or | |
• | the closing has not occurred on or before December 1, 2010; provided that either Comtech or CPI may extend such date by 45 days, subject to certain limitations, if the closing has not occurred because of the failure to obtain a required approval from one or more regulatory authorities. |
• | CPI has breached or failed to perform any of its representations, warranties, covenants or agreements, such that CPI could not satisfy the applicable conditions to the closing related to its representations, warranties, covenants, and obligations, and such breach or failure to perform is incapable of being cured by December 1, 2010 (or valid extension of such date) or has not been cured within 30 days of written notice from Comtech; | |
• | the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in connection with a superior acquisition proposal (see “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page[l]of this proxy statement/prospectus); or | |
• | the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in response to a material event, development, circumstance, occurrence or change in circumstances or facts not related to a competing acquisition proposal that was not known to CPI’s board of directors on the date of the merger agreement (or if known, the magnitude or material consequences of which were not known or understood as of that date) (see “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page[l]of this proxy statement/prospectus). |
• | if Comtech has breached or failed to perform any of its representations, warranties, covenants or agreements, such that Comtech could not satisfy the applicable conditions to the closing related to its representations, warranties, covenants, and obligations, and such breach or failure to perform is incapable of being cured by December 1, 2010 (or valid extension of such date) or has not been cured within 30 days of written notice from CPI; or | |
• | in order to enter into a superior acquisition proposal, subject to its obligations to pay Comtech a termination fee (see “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page[l]of this proxy statement/prospectus). |
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• | Comtech terminates the merger agreement because the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in connection with a superior acquisition proposal; | |
• | CPI terminates the merger agreement in order to enter into a superior acquisition proposal; | |
• | the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech, and Comtech or CPI terminates the merger agreement because CPI stockholder approval is not received at the duly called and held special meeting of CPI stockholders; | |
• | (i) an acquisition proposal is made for CPI; (ii) the CPI board of directors does not change its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech; (iii) Comtech or CPI terminates the merger agreement because CPI stockholder approval is not received at the duly called and held special meeting of CPI stockholders; and (iv) within 12 months, CPI enters into a definitive agreement or consummates an alternative transaction (as defined under “The Merger Agreement — Termination of the Merger Agreement — Termination Fee Payable by CPI” beginning on page[l]of this proxy statement/prospectus); or | |
• | (i) an acquisition proposal is made for CPI; (ii) Comtech or CPI terminates the merger agreement because (a) a court or other government entity has issued an order enjoining or has otherwise prohibited the merger and such injunction or prohibition has become final and non-appealable or (b) the closing has not occurred on or before December 1, 2010 (or as otherwise validly extended); and (iii) within 12 months, CPI enters into a definitive agreement or consummates an alternative transaction (as defined under “The Merger Agreement — Termination of the Merger Agreement — Termination Fee Payable by CPI” beginning on page[l]of this proxy statement/prospectus). |
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As of / for Nine Months | ||||||||||||||||||||||||||||
Ended April 30, | As of / for Year Ended July 31, | |||||||||||||||||||||||||||
(unaudited) | As Adjusted | |||||||||||||||||||||||||||
2009 | (audited) | |||||||||||||||||||||||||||
2010 | As Adjusted | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||||
Net sales | $ | 521,251 | $ | 464,346 | $ | 586,372 | $ | 531,627 | $ | 445,684 | $ | 391,511 | $ | 307,890 | ||||||||||||||
Net income | $ | 47,161 | $ | 41,347 | $ | 47,525 | $ | 73,650 | $ | 62,637 | $ | 42,884 | $ | 34,449 | ||||||||||||||
Net income per share | ||||||||||||||||||||||||||||
Basic | $ | 1.67 | $ | 1.61 | $ | 1.81 | $ | 3.05 | $ | 2.70 | $ | 1.88 | $ | 1.59 | ||||||||||||||
Diluted | $ | 1.48 | $ | 1.55 | $ | 1.73 | $ | 2.76 | $ | 2.42 | $ | 1.72 | $ | 1.42 | ||||||||||||||
Total assets | $ | 1,013,910 | $ | 724,711 | $ | 938,671 | $ | 652,723 | $ | 555,780 | $ | 454,542 | $ | 381,517 | ||||||||||||||
Long-term obligations | $ | 202,420 | $ | 2,211 | $ | 202,283 | $ | 91,946 | $ | 87,475 | $ | 83,359 | $ | 79,565 | ||||||||||||||
Cash dividends per common share | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
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As of / for Six Months Ended | As of / for Year Ended | |||||||||||||||||||||||||||
(unaudited) | (audited) | |||||||||||||||||||||||||||
April 2, | April 3, | October 2, | October 3, | September 28, | September 29, | September 30, | ||||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||||
Sales | $ | 171,119 | $ | 159,049 | $ | 332,876 | $ | 370,014 | $ | 351,090 | $ | 339,717 | $ | 320,732 | ||||||||||||||
Net income | $ | 8,333 | $ | 11,344 | $ | 23,466 | $ | 20,449 | $ | 22,503 | $ | 17,219 | $ | 13,672 | ||||||||||||||
Net income per share | ||||||||||||||||||||||||||||
Basic | $ | 0.50 | $ | 0.69 | $ | 1.44 | $ | 1.25 | $ | 1.39 | $ | 1.20 | $ | 1.05 | ||||||||||||||
Diluted | $ | 0.46 | $ | 0.65 | $ | 1.34 | $ | 1.16 | $ | 1.27 | $ | 1.09 | $ | 0.98 | ||||||||||||||
Total assets | $ | 470,575 | $ | 463,756 | $ | 458,254 | $ | 466,948 | $ | 476,222 | $ | 441,759 | $ | 454,544 | ||||||||||||||
Long-term obligations | $ | 197,169 | $ | 219,813 | $ | 197,149 | $ | 226,349 | $ | 246,321 | $ | 245,108 | $ | 284,231 | ||||||||||||||
Cash dividends per common share | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1.19 | $ | 5.80 |
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• | The unaudited pro forma condensed combined balance sheet data as of April 30, 2010 is presented as if Comtech’s acquisition of CPI had occurred on April 30, 2010, and combines historical balance sheet data of Comtech as of April 30, 2010 with historical balance sheet data of CPI as of April 2, 2010. | |
• | The unaudited pro forma condensed combined statement of operations data for the nine months ended April 30, 2010 is presented as if Comtech’s acquisition of CPI had occurred on August 1, 2009, and combines Comtech’s historical statement of operations data for the nine months ended April 30, 2010 with CPI’s historical statement of operations data for the nine months ended April 2, 2010. CPI’s historical statement of operations for the nine months ended April 2, 2010 was derived by taking CPI’s historical results of operations for the six months ended April 2, 2010, and adding CPI’s historical results of operations for the three months ended October 2, 2009. | |
• | The unaudited pro forma condensed combined statement of operations data for the fiscal year ended July 31, 2009 is presented as if Comtech’s acquisition of CPI had occurred on August 1, 2008, and combines Comtech’s historical statement of operations data for the fiscal year ended July 31, 2009, as adjusted for the retroactive application of FASB ASC 470-20, “Debt — Debt with Conversion and Other Options,” with CPI’s historical statement of operations data for the fiscal year ended October 2, 2009. |
Nine Months Ended | Year Ended | |||||||
April 30, 2010 | July 31, 2009 | |||||||
(Unaudited) | ||||||||
(in thousands, except per share amounts) | ||||||||
Net sales | $ | 782,476 | $ | 917,717 | ||||
Net income | $ | 62,007 | $ | 68,854 | ||||
Net income per share | ||||||||
Basic | $ | 1.90 | $ | 2.24 | ||||
Diluted | $ | 1.70 | $ | 2.13 | ||||
Total assets | $ | 1,321,816 | — | |||||
Long-term obligations | $ | 203,757 | — | |||||
Cash dividends per common share | — | — |
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As of / for the | As of / for the | |||||||
Nine Months Ended | Year Ended | |||||||
April 30, 2010 | July 31, 2009 | |||||||
Basic Earnings Per Share | ||||||||
Comtech Historical | $ | 1.67 | $ | 1.81 | ||||
CPI Historical | $ | 1.01 | $ | 1.44 | ||||
Pro Forma Combined | $ | 1.90 | $ | 2.24 | ||||
CPI Equivalent | $ | 0.45 | $ | 0.53 | ||||
Diluted Earnings Per Share | ||||||||
Comtech Historical | $ | 1.48 | $ | 1.73 | ||||
CPI Historical | $ | 0.94 | $ | 1.34 | ||||
Pro Forma Combined | $ | 1.70 | $ | 2.13 | ||||
CPI Equivalent | $ | 0.40 | $ | 0.51 | ||||
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As of / for the | As of / for the | |||||||
Nine Months Ended | Year Ended | |||||||
April 30, 2010 | July 31, 2009 | |||||||
Dividends Per Share | ||||||||
Comtech Historical | $ | — | $ | — | ||||
CPI Historical | $ | — | $ | — | ||||
Pro Forma Combined | $ | — | $ | — | ||||
CPI Equivalent | $ | — | $ | — | ||||
Book Value Per Share | ||||||||
Comtech Historical | $ | 20.10 | $ | — | ||||
CPI Historical | $ | 10.47 | $ | — | ||||
Pro Forma Combined | $ | 20.96 | $ | — | ||||
CPI Equivalent | $ | 4.99 | $ | — |
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Comtech | ||||||||
Common Stock | ||||||||
High | Low | |||||||
Fiscal Year 2008: | ||||||||
First Quarter (August 1, 2007 to October 31, 2007) | $ | 58.00 | $ | 35.45 | ||||
Second Quarter (November 1, 2007 to January 31, 2008) | 56.07 | 43.01 | ||||||
Third Quarter (February 1, 2008 to April 30, 2008) | 48.41 | 37.59 | ||||||
Fourth Quarter (May 1, 2008 to July 31, 2008) | 51.21 | 38.63 | ||||||
Fiscal Year 2009: | ||||||||
First Quarter (August 1, 2008 to October 31, 2008) | $ | 50.55 | $ | 40.00 | ||||
Second Quarter (November 1, 2008 to January 31, 2009) | 50.34 | 38.62 | ||||||
Third Quarter (February 1, 2009 to April 30, 2009) | 41.91 | 19.56 | ||||||
Fourth Quarter (May 1, 2009 to July 31, 2009) | 34.24 | 26.40 | ||||||
Fiscal Year 2010: | ||||||||
First Quarter (August 1, 2009 to October 31, 2009) | $ | 36.74 | $ | 31.22 | ||||
Second Quarter (November 1, 2009 to January 31, 2010) | 38.39 | 28.42 | ||||||
Third Quarter (February 1, 2010 to April 30, 2010) | 35.74 | 29.56 | ||||||
Fourth Quarter (May 1, 2010 through[l], 2010) | [l] | [l] |
CPI Common Stock | ||||||||
High | Low | |||||||
Fiscal Year 2008: | ||||||||
First Quarter (September 29, 2007 to December 28, 2007) | $ | 21.00 | $ | 15.81 | ||||
Second Quarter (December 29, 2007 to March 28, 2008) | 18.09 | 8.80 | ||||||
Third Quarter (March 29, 2008 to June 27, 2008) | 14.31 | 9.25 | ||||||
Fourth Quarter (June 28, 2008 to October 3, 2008) | 16.02 | 11,42 | ||||||
Fiscal Year 2009: | ||||||||
First Quarter (October 4, 2008 to January 2, 2009) | $ | 12.43 | $ | 5.07 | ||||
Second Quarter (January 3, 2009 to April 3, 2009) | 9.83 | 5.67 | ||||||
Third Quarter (April 4, 2009 to July 3, 2009) | 12.93 | 7.13 | ||||||
Fourth Quarter (July 4, 2009 to October 2, 2009) | 12.22 | 8.37 | ||||||
Fiscal Year 2010: | ||||||||
First Quarter (October 3, 2009 to January 1, 2010) | $ | 14.48 | $ | 9.27 | ||||
Second Quarter (January 2, 2010 to April 2, 2010) | 14.27 | 10.80 | ||||||
Third Quarter (April 3, 2010 through[l], 2010) | [l] | [l] |
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Implied Per Share | ||||||||||||
Value of Merger | ||||||||||||
Comtech Common Stock | CPI Common Stock | Consideration | ||||||||||
May 7, 2010 | $ | 31.06 | $ | 13.05 | $ | 16.40 | ||||||
[l], 2010 | $ | [l] | $ | [l] | $ | [l] |
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• | CPI may be required to pay Comtech a termination fee of $12 million or liquidated damages of $15 million if the merger is terminated under certain circumstances, as described in the merger agreement and summarized in this proxy statement/prospectus; | |
• | CPI will be required to pay certain costs relating to the proposed merger, whether or not the merger is completed; | |
• | under the merger agreement, CPI is subject to certain restrictions on the conduct of its business prior to completing the merger which may affect its ability to execute certain of its business strategies; and | |
• | matters relating to the merger (including integration planning) may require substantial commitments of time and resources by CPI management, which could otherwise have been devoted to other opportunities that may have been beneficial to CPI as an independent company. |
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• | CPI stockholder approval may not be obtained in a timely manner, or at all; | |
• | the regulatory approvals required for the merger may not be obtained on the proposed terms, on the anticipated schedule, or at all; | |
• | the merger may not close due to the failure to satisfy any of the closing conditions; | |
• | expected synergies and value creation from the merger may not be realized, or will not be realized within the anticipated time period; | |
• | disruption from the merger may make it more difficult for Comtech and CPI to maintain business and operational relationships; | |
• | key employees of CPI may not be retained; | |
• | the businesses may not be integrated successfully; and | |
• | management time may be diverted on merger-related matters; |
• | risks related to actions taken by either of the companies, including but not limited to, restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions); | |
• | diversion of corporate resources and management attention by future acquisitions and investments, and the failure of such acquisitions to meet expectations; | |
• | risks related to the current economic climate, including the difficulty of forecasting results of operations, the possibility of additional reductions in telecommunications equipment and systems spending, the inability of customers to obtain financing and the difficulty of maintaining affordable credit insurance; | |
• | the timing of receipt of, and performance on, new or existing customer orders that can cause significant fluctuations in net sales and operating results; | |
• | significant fluctuations in, and likely volatility of, operating results; | |
• | potential material adverse effects from changes in government policy, including changes in U.S. policies relating to Iraq and Afghanistan; |
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• | potential material adverse effects from terrorist attacks and threats, and government responses thereto, and threats of war; | |
• | ability to maintain current levels of U.S. government business; | |
• | the timing and funding of government contracts, including risks associated with Comtech’s U.S. Army Movement Tracking System (referred to as MTS) and Blue Force Tracking (referred to as BFT) contracts and next generation MTS and BFT contracts; | |
• | adjustments to gross profits on long-term contracts; | |
• | possibility of noncompliance with numerous domestic and international laws, regulations and restrictions (including those pertaining to income taxes) which could materially impact the business, results of operations and financial condition; | |
• | risks associated with pending or threatened legal proceedings and other matters; | |
• | risks associated with Comtech’s obligations under its revolving credit facility; | |
• | unexpected material increases in costs and compliance expenses related to the securities laws, related regulations and financial reporting standards; | |
• | risks associated with international sales, rapid technological change, evolving industry standards, frequent new product announcements and enhancements, changing customer demands, and changes in prevailing economic and political conditions; | |
• | risks associated with currency fluctuations and related hedging operations; | |
• | natural disasters; | |
• | risks relating to the recent and anticipated growth, including loss of key technical or management personnel, inability to improve processes and systems to keep pace with anticipated growth and highly competitive markets for communications products; | |
• | risks associated with environmental and zoning laws and regulations and obligations relating to environmental matters; | |
• | inability to implement business plans; | |
• | adverse effects on cash flow from debt service obligations; and | |
• | volatility of stock price. |
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• | to adopt the merger agreement; and | |
• | to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting. |
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• | sending a written notice stating that you revoke your proxy to CPI International, Inc. at 811 Hansen Way, Palo Alto, California 94303, Attention: Corporate Secretary. The written notice must bear a date later than the date of the proxy and be received prior to the special meeting; | |
• | submitting a valid, later-dated proxy by mail, telephone or Internet that is received prior to the special meeting; or | |
• | attending the special meeting and voting by ballot in person (your attendance at the special meeting will not, by itself, revoke any proxy that you have previously given). |
• | stockholders of record wishing to discontinue or begin householding, or any stockholder of record residing at a household address wanting to request delivery of a copy of this proxy statement/prospectus should contact CPI International, Inc., 811 Hansen Way, Palo Alto, California 94303, Attention: Investor Relations, telephone number(650) 846-2900; and | |
• | stockholders owning their shares through a broker or nominee who wish to either discontinue or begin householding should contact their record holder. |
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• | Consideration; Historical Market Prices. The value of the consideration to be received by CPI’s stockholders pursuant to the merger, including that the implied merger consideration as of the close of trading on May 7, 2010, of $16.40 per share, represented a significant premium over the market prices at which CPI common stock had previously recently traded, including a premium of approximately 26.8% over the closing price of CPI common stock of $12.93 on May 7, 2010, the last trading day prior to the meeting of the board of directors at which the merger was approved. | |
• | Sizeable Portion of Merger Consideration in Cash. The fact that a sizeable portion of the merger consideration will be paid in cash, giving CPI stockholders an opportunity to immediately realize value for a significant portion of their investment and providing certainty of value. | |
• | Participation in Potential Upside. The fact that, since a portion of the merger consideration will be paid in Comtech common stock, CPI stockholders would have the opportunity to participate in any future earnings or growth of the combined company and future appreciation in the value of Comtech common stock following the merger should they decide to retain the Comtech common stock payable in the merger. |
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• | Financial Advisor’s Opinion. The fact that the CPI board of directors received an oral opinion, dated May 7, 2010, subsequently confirmed in writing, from J.P. Morgan that, as of that date, and based on and subject to the various factors, assumptions and limitations set forth in such written opinion, the per share merger consideration to be received by holders of CPI common stock (other than the Cypress Group and its affiliates) in the proposed merger was fair, from a financial point of view, to such holders as more fully described below under the heading “— Opinion of J.P. Morgan Securities Inc.” beginning on page[l]of this proxy statement/prospectus. | |
• | Financial Advisor’s Other Advice. The fact that J.P. Morgan, a qualified and independent financial advisor, assisted the board of directors in its process of exploring strategic alternatives. | |
• | The Special Committee Recommendation. The fact that a special committee of the board of directors comprised of independent directors recommended, among other things, that the full board approve and adopt the merger agreement. | |
• | The Opinion of the Financial Advisor to the Special Committee. The fact that the special committee received an oral opinion, dated May 7, 2010, subsequently confirmed in writing, that, as of that date and based on and subject to the various factors, assumptions, limitations and qualifications set forth in such written opinion, the per share merger consideration to be received by CPI’s stockholders, pursuant to the terms and subject to the conditions set forth in the merger agreement, was fair, from a financial point of view, to CPI’s stockholders (other than the Cypress Group and its affiliates), as more fully described below under the heading “— Opinion of Moelis & Company LLC.” | |
• | Support of Certain CPI Stockholders. The fact that stockholders representing a majority of the shares of CPI common stock outstanding as of the date of the merger agreement expressed support for the proposed merger, as evidenced by their willingness to enter into the voting and standstill agreement. | |
• | Lack of Public Float and Perceived Overhang. The belief that the upside for CPI’s common stock price as an independent company was limited due to CPI’s relatively small market capitalization, small public float (due to the majority holdings of the Cypress Group stockholders), low trading volume when compared to other companies listed on the NASDAQ Global Select Market, relative lack of research analyst coverage of CPI’s common stock, and the perception by analysts that substantial sales of CPI common stock by the Cypress Group stockholders could depress CPI’s stock price. Among other things, CPI’s small market capitalization was due to CPI’s inability to grow significantly through acquisitions. | |
• | Terms of the Merger Agreement and Voting and Standstill Agreement. The terms and conditions of the merger agreement and voting and standstill agreement, including: |
• | The limited closing conditions to Comtech’s obligations under the merger agreement, including the fact that the merger agreement is not subject to approval by Comtech stockholders or the receipt of any financing by Comtech; | |
• | The provisions of the merger agreement that allow, under certain circumstances more fully described under “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page[l]of this proxy statement/prospectus, CPI to engage in negotiations with, and provide information to, third parties in response to an unsolicited competing acquisition proposal from a third party that the CPI board of directors determines constitutes or would reasonably be expected to lead to a proposal that is superior to the merger; | |
• | The provisions of the merger agreement that allow, under certain circumstances more fully described under “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page[l]of this proxy statement/prospectus, the CPI board of directors to change its recommendation that CPI stockholders adopt the merger agreement in response to certain competing acquisition proposals and certain intervening events, if the CPI board of directors determines in good faith that a failure to make a change in its recommendation would be reasonably likely to constitute a violation of its fiduciary duties to stockholders under Delaware law; |
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• | The provisions of the voting and standstill agreement that provide for the termination of the voting and standstill agreement automatically upon termination of the merger agreement, including upon termination of the merger agreement by CPI to enter into a definitive, written agreement concerning a superior acquisition proposal as described under “The Merger Agreement — Termination of the Merger Agreement” beginning on page[l]of this proxy statement/prospectus and “The Voting and Standstill Agreement” beginning on page[l]of this proxy statement/prospectus); | |
• | The provisions of the voting and standstill agreement that reduce the amount of shares the Cypress Group stockholders are required to vote in favor of the adoption of the merger agreement to 25% of the outstanding shares of CPI common stock if the CPI board of directors changes its recommendation with respect to the merger under certain circumstances (see “The Merger Agreement — Termination of the Merger Agreement” beginning on page[l]of this proxy statement/prospectus and “The Voting and Standstill Agreement” beginning on page[l]of this proxy statement/prospectus). In such circumstances the Cypress Group stockholders could vote their remaining shares of stock (representing approximately 25% of the outstanding shares of CPI common stock) against the adoption of the merger agreement, which would effectively allow the non-Cypress Group stockholders to determine whether the merger agreement is adopted; and | |
• | The ability of CPI to specifically enforce the terms of the merger agreement. |
• | Availability of Appraisal Rights. The fact that stockholders who do not vote in favor of the adoption of the merger agreement and who otherwise properly comply with Delaware law will have the right to demand appraisal of the fair value of their shares of CPI common stock under Delaware law, and that there was no condition in the merger agreement relating to the maximum number of shares of CPI common stock for which CPI stockholders could demand appraisal. |
• | Potential for Decline in Value of Stock Portion of Merger Consideration. The fact that the value of the Comtech common stock portion of the merger consideration could decline prior to consummation of the merger, thereby causing the value of the merger consideration to decline. The CPI board of directors determined that this structure was appropriate and the risk acceptable in view of factors such as: |
• | The CPI board of directors’ review of the relative intrinsic values and financial performance of Comtech and CPI and the relative performance of each company’s stock; and | |
• | The fact that a substantial portion of the merger consideration will be paid in a fixed cash amount which reduces the impact of any decline in the trading price of Comtech common stock on the value of the merger consideration. |
• | Risks of Non-Completion. The possibility that the merger might not be completed as a result of, among other reasons, potential objections of regulatory authorities, and the transaction costs that will be incurred even if the merger is not consummated, along with the effect the resulting public announcement of termination of the merger agreement may have on the trading price of CPI common stock and CPI’s operating results. | |
• | Possible Deterrence of Competing Offers. The risk that various provisions of the merger agreement, including the requirement that CPI must pay to Comtech abreak-up fee of up to $12 million, if the merger agreement is terminated under certain circumstances, may discourage other parties potentially interested in an acquisition of, or combination with, CPI from pursuing that opportunity. See “The Merger Agreement — Termination of the Merger Agreement” beginning on page[l]of this proxy statement/prospectus. | |
• | Effect of Voting and Standstill Agreement. The fact that while the approval of the adoption of the merger agreement by CPI’s stockholders is required under Delaware law, approximately 49.9% of the shares of CPI common stock entitled to vote at the special meeting have committed to vote in favor of such adoption pursuant to the voting and standstill agreement. As a result, the adoption of the merger agreement at the special meeting is nearly assured merely by the vote of those CPI stockholders party to the voting and |
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standstill agreement, absent: (i) the termination of the voting and standstill agreement as a result of, among other things, CPI terminating the merger agreement in order to enter into a definitive agreement with respect to a superior acquisition proposal or (ii) the CPI board of directors changing its recommendation under certain circumstances, in which case the percentage of shares that the Cypress Group stockholders would be required to be vote in favor of the adoption of the merger agreement would be reduced to 25% of the total outstanding shares of CPI common stock. See “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” and “The Voting and Standstill Agreement” beginning on pages[l] and[l]of this proxy statement/prospectus, respectively. |
• | Possible Disruption of the Business and Costs and Expenses. The possible disruption to CPI’s business that may result from the merger, the resulting distraction of the attention of CPI’s management and potential attrition of CPI’s employees, as well as the costs and expenses associated with completing the merger. | |
• | Restrictions on Operation of CPI’s Business. The requirement that CPI conduct its business only in the ordinary course prior to the completion of the merger and subject to specified restrictions on the conduct of CPI’s business without Comtech’s prior consent, which might delay or prevent CPI from taking advantage of certain business opportunities that might arise pending completion of the merger. | |
• | Merger Consideration Taxable. The fact that the merger is a taxable transaction to CPI stockholders, and the receipt of Comtech common stock and cash in exchange for CPI common stock in the merger will generally be taxable to CPI stockholders. See “The Merger — Certain Material U.S. Federal Income Tax Consequences of the Merger” beginning on page[l]of this proxy statement/prospectus. | |
• | Other Risks. The additional risks described in the section entitled “Risk Factors” beginning on page[l]of this proxy statement/prospectus. |
• | the merger allows Comtech to strategically redeploy a significant portion of its existing cash to enhance earnings per share and stockholder value; |
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• | the merger increases the size of Comtech’s RF microwave amplifier segment and Comtech anticipates that this increased size will enhance its growth prospects and have a positive impact on Comtech’s earnings before interest, income taxes, depreciation and amortization; | |
• | Comtech believes the merger will result in Comtech becoming a leading global supplier of vacuum electron devices (including klystrons, traveling wave tubes and power grid devices) as CPI’s vacuum electron devices and amplifiers are incorporated into products that are used in a broad array of applications and end-markets; | |
• | Comtech believes the merger will help to further drive innovation by combining manufacturing, engineering and sales teams for Comtech’s XICOM branded-product group with CPI’s Satcom product group to take advantage of united resources which are expected to deliver new and advanced amplifiers and other products to be used in satellite communications, radar applications and electronic warfare systems; | |
• | the complementary nature of CPI’s products, including CPI’s extensive portfolio of over 4,500 microwave and power grid devices, provides diversity to Comtech’s product portfolio and customer base; | |
• | a material portion of CPI’s sales are derived from sales for replacements, spares and repairs, including upgraded replacements for existing sole-sourced products, which have strong related cash flows that Comtech believes will help provide more stability and predictability to its business and will assist in partially insulating Comtech from dramatic shifts in market conditions; and | |
• | Comtech expects that the merger will allow it to combine its product offerings with those of CPI to take advantage of some customers’ preference for “one-stop shopping.” |
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• | reviewed a draft dated May 5, 2010 of the merger agreement; | |
• | reviewed certain publicly available business and financial information concerning CPI and Comtech and the industries in which they operate; | |
• | compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving companies J.P. Morgan deemed relevant and the consideration received for such companies; | |
• | compared the financial and operating performance of CPI and Comtech with publicly available information concerning certain other companies J.P. Morgan deemed relevant, and reviewed the current and historical market prices of CPI’s common stock and Comtech’s common stock and certain publicly traded securities of such other companies; | |
• | reviewed certain internal financial analyses and forecasts prepared by or at the direction of the managements of CPI and Comtech relating to their respective businesses, as well as the estimated amount and timing of the cost savings and related expenses and synergies expected to result from the merger, referred to in this section as the “Synergies;” and | |
• | performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion. |
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Implied Exchange Ratio Analysis — Historical Period | Implied Exchange Ratio | |||
Current | 0.420 | x | ||
1-month median | 0.413 | x | ||
2-month median | 0.414 | x | ||
3-month median | 0.411 | x | ||
6-month median | 0.380 | x | ||
1-year median | 0.341 | x | ||
2-year median | 0.306 | x | ||
3-year median | 0.316 | x | ||
High | 0.498 | x | ||
Low | 0.127 | x |
• | Applied Signal Technology Inc.; | |
• | Cubic Corporation; | |
• | EMS Technologies, Inc.; | |
• | Globecomm Systems Inc.; | |
• | Harris Corporation; | |
• | Herley Industries, Inc.; | |
• | L-3 Communications Corporation; | |
• | Rockwell Collins, Inc.; and | |
• | ViaSat, Inc. |
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Firm Value/ | Firm Value/ | Price per Share/ | Price per Share/ | |||||||||||||
2010E EBITDA | 2011E EBITDA | 2010E EPS | 2011E EPS | |||||||||||||
Median | 6.7 | x | 7.0 | x | 16.4 | x | 12.3 | x | ||||||||
Mean | 7.1 | x | 7.2 | x | 15.4 | x | 13.0 | x |
Implied per Share | Per Share Merger | |||||||
Valuation Basis | Equity Value Ranges | Consideration | ||||||
Firm Value as multiple of 2010E EBITDA | $ | 10.25 to $16.00 | ||||||
Firm Value as multiple of 2011E EBITDA | $ | 9.75 to $15.75 | $ | 16.40 | (1) | |||
Price per Share as multiple of 2010E EPS | $ | 12.75 to $17.25 | ||||||
Price per Share as multiple of 2011E EPS | $ | 12.50 to $17.50 |
(1) | Based on market data as of May 7, 2010 |
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Announcement | ||||
Acquiror | Target | Date | ||
Crane Co. | Merrimac Industries, Inc. | 12/23/09 | ||
Cobham plc | M/A-Com. Technology Solutions | 05/13/08 | ||
Comtech Telecommunications Corp. | Radyne Corporation | 05/12/08 | ||
Cobham plc | Surveillance and Attack Business (BAE Systems) | 12/19/07 | ||
Veritas Capital | Aeroflex Inc. | 05/25/07 | ||
Cobham plc | Remec Defense & Space Unit | 12/21/04 | ||
Cypress Group | Communications & Power Industries, Inc. | 12/01/03 | ||
Crane Co. | Signal Technology Corporation | 04/16/03 |
Transaction Group | Median | |||
Firm Value/LTM EBITDA | 9.1x |
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Implied Per Share Equity Value Range | Per Share Merger Consideration | |
$15.00 to $19.00 | $16.40 (1) |
(1) | Based on market data as of May 7, 2010 |
Comtech per Share | ||||||||
Implied per Share | Price on May 7, | |||||||
Valuation Basis | Equity Value Range | 2010 | ||||||
Firm Value as multiple of 2010E EBITDA | $ | 39.50 to $46.50 | $ | 31.06 | ||||
Firm Value as multiple of 2011E EBITDA | $ | 40.50 to $48.50 | ||||||
Price per Share as multiple of 2010E EPS | $ | 30.75 to $41.00 | ||||||
Price per Share as multiple of 2011E EPS | $ | 30.50 to $42.00 |
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Implied per Share Equity Value Range | Comtech per Share Price on May 7, 2010 | |
$44.25 to $50.00 | $31.06 |
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Implied CPI Equity | ||||
Valuation Metric | Value Accretion | |||
Midpoint of discounted cash flow Equity Value | 24.0 | % | ||
Publicly Traded Equity Value | 27.9 | % |
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• | reviewed certain publicly available business and financial information relating to CPI and Comtech that Moelis deemed relevant; | |
• | reviewed certain internal information relating to the business, including financial forecasts, earnings, cash flow, assets, liabilities and prospects of CPI, furnished to Moelis by CPI; | |
• | reviewed certain internal information relating to the business, including financial forecasts, earnings, cash flow, assets, liabilities and prospects of Comtech, furnished to Moelis by Comtech; | |
• | conducted discussions with members of senior management and representatives of CPI and Comtech concerning the matters described in the foregoing bullets, as well as their respective businesses and prospects before and after giving effect to the merger; | |
• | reviewed publicly available financial and stock market data, including valuation multiples, for CPI and Comtech and compared them with those of certain other companies in lines of business that Moelis deemed relevant; | |
• | compared the proposed financial terms of the merger with the financial terms of certain other transactions that Moelis deemed relevant; | |
• | considered certain potential pro forma effects of the merger; | |
• | reviewed a draft of the merger agreement, dated May 6, 2010 and a draft of the voting and standstill agreement, dated May 6, 2010; | |
• | participated in certain discussions and negotiations among representatives of CPI and Comtech and their financial and legal advisors; and | |
• | conducted such other financial studies and analyses and took into account such other information as Moelis deemed appropriate. |
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Valuation Methodology | Range | |||
Comparable public companies analysis | $ | 11.96 - $15.75 | ||
Precedent transactions analysis | $ | 11.21 - $16.73 | ||
Discounted cash flow analysis | $ | 10.82 - $17.61 |
• | Anaren, Inc.; | |
• | Comtech Telecommunications Corp.; | |
• | e2v Technologies plc; | |
• | EMS Technologies, Inc.; | |
• | Globecomm Systems Inc.; |
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• | Herley Industries, Inc.; | |
• | Spectrum Control, Inc.; and | |
• | Teledyne Technologies Incorporated. |
Mean | Median | |||||||
Enterprise Value/ EBITDA | ||||||||
LTM | 7.7x | 6.8x | ||||||
CY2010E | 6.0x | 6.1x | ||||||
CY2011E | 5.4x | 5.0x | ||||||
Equity Value/ Earnings | ||||||||
CY2010E | 14.2x | 13.9x | ||||||
CY2011E | 11.8x | 12.7x |
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Date Announced | Acquiror | Target | ||
03/30/10 | Microsemi Corporation | White Electronics Designs Corporation | ||
12/23/09 | Crane Co. | Merrimac Industries, Inc.* | ||
04/01/09 | Rockwell Collins, Inc. | DataPath, Inc. | ||
05/13/08 | Cobham plc | M/A-Com Technology Solutions (Subsidiary of Tyco)* | ||
05/10/08 | Comtech Telecommunications Corp. | Radyne Corporation | ||
06/15/07 | AVX Corp. | American Technological Ceramics Corp. | ||
05/22/07 | Veritas Capital | Aeroflex Inc. | ||
03/03/05 | Radyne Corporation | Xicom Technology, Inc. | ||
12/20/04 | Cobham plc | REMEC Defense & Space | ||
07/08/04 | Teledyne | Celeritek Defense Electronic Business | ||
04/24/04 | Smiths Group | TRAK Communications Inc. | ||
11/17/03 | Cypress Holdings | Communications and Power Industries, Inc.* (Predecessor to CPI) | ||
04/16/03 | Crane Co. | Signal Technology Corporation |
* | Most relevant precedent transactions |
All Precedent Transactions: | Enterprise Value/LTM EBITDA | |||
Mean** | 10.0x | |||
Median** | 10.1x | |||
Most Relevant Precedent Transactions: | ||||
Mean | 6.8x | |||
Median | 6.8x |
** | Excludes Radyne acquisition of Xicom, which was deemed to be an outlier due to the fact that Xicom did not have material EBITDA. |
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• | ADC Telecommunications, Inc.; | |
• | Cobham plc; | |
• | EMS Technologies, Inc.; | |
• | Elbit Systems Ltd.; | |
• | Harris Corp.; | |
• | L-3 Communications; and | |
• | ViaSat, Inc. |
Mean | Median | |||||||
Enterprise Value/ EBITDA | ||||||||
LTM(1) | 7.0x | 7.3x | ||||||
CY2010E | 7.0x | 6.7x | ||||||
CY2011E | 6.4x | 6.4x | ||||||
Equity Value/Earnings | ||||||||
CY2010E | 13.5x | 12.2x | ||||||
CY2011E | 12.3x | 10.8x |
(1) | LTM EBITDA multiple median and mean excludes ViaSat, Inc. which was deemed to be an outlier |
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FY2010E | FY2011E | FY2012E | FY2013E | FY2014E | FY2015E | |||||||||||||||||||
Total Sales | $ | 750,001 | $ | 685,388 | $ | 726,200 | $ | 769,499 | $ | 815,795 | $ | 864,925 | ||||||||||||
Operating Income | 100,760 | 121,603 | 134,021 | 146,517 | 160,098 | 174,459 | ||||||||||||||||||
EBITDA* | 127,888 | 148,926 | 161,824 | 175,637 | 190,467 | 205,893 |
* | Earnings before interest, taxes, depreciation and amortization (both amortization of intangible assets and stock-based compensation). |
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FY2010E | FY2011E | FY2012E | FY2013E | FY2014E | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenue | $ | 365.0 | $ | 386.0 | $ | 420.5 | $ | 458.6 | $ | 499.2 | ||||||||||
EBITDA* | 58.0 | 58.7 | 68.0 | 76.5 | 85.8 |
* | Earnings before interest, taxes, depreciation and amortization. Also excludes charges related to the extinguishment of debt. |
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• | financial institutions; | |
• | mutual funds, regulated investment companies or real estate investment trusts; | |
• | tax-exempt organizations; | |
• | persons whose functional currency is not the U.S. dollar; | |
• | insurance companies; | |
• | dealers in securities or foreign currencies; | |
• | traders in securities who elect to apply amarket-to-market method of accounting; | |
• | foreign holders (i.e., persons other than U.S. holders, as defined below); | |
• | persons who actually or constructively own 5% or more of the outstanding shares of CPI stock; |
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• | persons who hold shares of CPI stock as a hedge against currency risk or as part of a straddle, constructive sale or conversion transaction; or | |
• | holders who acquired their shares of CPI stock upon the exercise of warrants or employee stock options or otherwise as compensation or through a tax-qualified plan. |
• | an individual who is a citizen or resident of the United States; | |
• | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States or any State or the District of Columbia; | |
• | an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or | |
• | a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect under the applicable U.S. Treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes. |
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• | corporate organization, valid existence, good standing and qualification to conduct business; | |
• | capitalization; | |
• | due authorization, execution, delivery and validity of the merger agreement; | |
• | absence of any conflict with organizational documents, absence of any violation, breach or default of certain agreements and the absence of any violation of laws or orders; |
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• | governmental and third-party consents necessary to complete the merger; | |
• | SEC filings, the absence of material misstatements or omissions from such filings and compliance with the Sarbanes-Oxley Act; | |
• | absence of certain changes through the date of the merger agreement; | |
• | disclosure documents to be filed with the SEC in connection with the merger; | |
• | fees payable to financial advisors in connection with the merger; | |
• | litigation; and | |
• | compliance with laws and orders. |
• | taxes; | |
• | employee benefit plans; | |
• | labor matters including matters related to labor unions and layoffs; | |
• | environmental matters, including matters concerning hazardous materials, environmental liabilities, compliance with environmental laws, required environmental permits, environmental reports, studies and other data, and indemnification for environmental liability; | |
• | property and assets; | |
• | absence of undisclosed liabilities; | |
• | intellectual property; | |
• | the existence, validity and enforceability of certain contracts meeting certain financial, legal and other thresholds, including contracts with, or subcontracts relating to contracts with, governmental entities; | |
• | permits and other approvals from governmental entities required by CPI and its subsidiaries to own, lease or operate their assets and carry on their businesses; | |
• | insurance; | |
• | transactions with affiliates; | |
• | receipt of the opinions of J.P. Morgan and Moelis; | |
• | absence of any stockholder rights plan; | |
• | absence of beneficial ownership of any capital stock of Comtech; and | |
• | inapplicability of Delaware anti-takeover laws. |
• | availability of sufficient cash resources to consummate the merger and repay the indebtedness of CPI; | |
• | absence of any business activities or operations of Merger Sub; and | |
• | beneficial ownership of capital stock of CPI. |
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• | general changes in economic, market, financial or capital market, regulatory or political conditions in the United States or elsewhere in the world; | |
• | terrorism, war, the outbreak of hostilities or natural disaster in the United States or elsewhere in the world; | |
• | changes generally applicable to the industries in which the party and its subsidiaries are involved; | |
• | changes in law or accounting regulations or principles or interpretations thereof; | |
• | changes in such party’s stock price or trading volume, or any failure, in and of itself, by the party to meet any projections or any change in any analyst recommendation concerning the party (it being understood that the facts or occurrences giving rise or contributing to such change may be deemed to constitute, or be taken into account, in determining whether a material adverse effect has occurred); | |
• | the downgrade in rating of any debt or debt securities of a party or any of its subsidiaries (it being understood that the facts or occurrences giving rise or contributing to such change may be deemed to constitute, or be taken into account, in determining whether a material adverse effect has occurred); | |
• | the failure to take any action as a result of any restrictions or prohibitions set forth in the merger agreement with respect to which the other party failed, after being requested, to provide a waiver or to do so in a reasonably timely manner; | |
• | changes as a result of any amendment, cancellation, termination or other adverse event related to any existing contract of the party or any of its subsidiaries, or the failure by the party or any of its subsidiaries to enter into, or be awarded the right to enter into or receive funding under, any contract or any extension thereof; | |
• | changes as a result of any action consented to in writing by the other party; | |
• | the taking of any action expressly contemplated or required by the merger agreement, or the consummation of the transactions contemplated by the merger agreement; or | |
• | any actions, claims, suits or proceedings arising out of or related to the merger agreement or any of the transactions contemplated by the merger agreement; |
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• | issue, deliver, sell, dispose of, pledge or otherwise encumber its capital stock, or any securities or rights convertible into or exchangeable for any such shares or ownership interests or permit or authorize any of the above other than the issuance of shares in connection with the exercise of options under any CPI equity compensation plan; | |
• | redeem, purchase or otherwise acquire, or propose to redeem, purchase or otherwise acquire, its capital stock; | |
• | split, combine, subdivide or reclassify any of its capital stock; | |
• | declare, set aside for payment or pay any dividend in respect of any shares of its capital stock, other than dividends paid by one of its subsidiaries to another subsidiary or to CPI; | |
• | adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of it or any of its subsidiaries or alter through merger, liquidation, reorganization or restructuring the corporate structure of any of its subsidiaries; | |
• | amend its amended and restated certificate of incorporation or amended and restated bylaws or the organizational documents of any subsidiary; | |
• | exempt any third party from any state anti-takeover law or adopt any shareholder rights plan; | |
• | enter into, adopt, amend, renew or extend any employee benefit plan or any other compensatory program, policy or arrangement; | |
• | increase the compensation of, or provide any benefit to, any current or former employee, officer, director or other consultant except as required by applicable law or the terms of any employee benefit plan in effect on the date of the merger agreement or except as in the ordinary course of business in accordance with past practice; | |
• | hire any employee, officer, director or other consultant entitled to receive annual compensation in excess of $200,000; | |
• | terminate (other than for cause consistent with past practice) the employment or service of any officer or director of CPI or any of its subsidiaries; | |
• | enter into or make any loans to any of its officers, directors, employees, affiliates, agents or consultants (other than business expense advances in the ordinary course consistent with past practice) or make any change in existing borrowing or lending arrangements except as required by any equity or benefit plan maintained by CPI as of the date of the merger agreement; | |
• | make any material change in financial accounting methods, principles or practices, except as required by a change in GAAP, the rules or policies of the Public Company Accounting Oversight Board or law; | |
• | directly or indirectly acquire or agree to acquire any equity interest in, or business of, any entity; | |
• | other than purchases and sales of inventory and supplies in the ordinary course of business, consistent with past practice, acquire, sell, lease (as lessor), license, or otherwise dispose of any tangible properties or assets in excess of $1,000,000, or sell, lease, license, mortgage, sell and leaseback or otherwise dispose of any real properties or any interests therein; |
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• | encumber any tangible properties or assets or any interests therein except as permitted by the merger agreement; | |
• | make or change any material tax election or settle or compromise any material tax liability, change its fiscal year, change any accounting method for tax purposes and file any amended tax return, except, in each case, as required by law; | |
• | other than in the ordinary course consistent with past practice and other than as between CPI and its subsidiaries, grant or acquire, or dispose of or permit to lapse, any rights to any material intellectual property or disclose any trade secret to any person other than the representatives of Comtech; | |
• | incur any indebtedness (subject to certain thresholds and ordinary course exceptions), except for (i) indebtedness incurred in the ordinary course of business under CPI’s existing credit agreement, provided that such indebtedness may not exceed the amount outstanding as of the date of the merger agreement; (ii) guarantees by CPI or its subsidiaries of the indebtedness of CPI or any of its subsidiaries; or (iii) indebtedness among CPI and its subsidiaries; | |
• | make, or agree or commit to make, any capital expenditure in excess of $1,000,000 or capital expenditures which in the aggregate exceed $3,000,000 for each six-month period beginning on the date of the merger agreement; | |
• | enter into or amend any contract or take any other action if such contract, amendment or action would reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation of the merger or any of the other transactions contemplated by the merger agreement; | |
• | enter into or amend any contract (including any exclusivity agreement) materially restricting the right of CPI to conduct its business as it is presently conducted or which could require the disposition of any material assets or line of business of CPI; | |
• | enter into or amend any material contract to the extent that consummation of the merger would reasonably be expected to conflict with, or have certain other adverse consequences with respect to obligations or assets of CPI, or enter into certain contracts not in the ordinary course of business which are not terminable without penalty on notice of 90 days or less; | |
• | voluntarily contribute or commit cash or funds to any pension plans or any administrator thereof for purposes of funding shortfalls in any pension plan other than as required by law; | |
• | enter into a new line of business or engage in the conduct of any business other than the current lines of business of CPI and its subsidiaries and products and services reasonably ancillary thereto, or enter into a contract which limits or restricts CPI and its subsidiaries or Comtech and its affiliates from engaging or competing in any material line of business or in any material geographic area; | |
• | file for any permit or approval outside of the ordinary course of business, the receipt of which would reasonably be likely to prevent or materially impair or delay the consummation of the transactions contemplated by the merger agreement; | |
• | settle, compromise, dismiss, discharge or otherwise dispose of litigation or proceedings other than those that (i) do not involve payment of damages in excess of $50,000 individually or $100,000 in the aggregate, plus applicable reserves and insurance coverage, and do not involve material injunctive or other non-monetary relief or impose material restrictions on the business or operations of CPI or its subsidiaries and (ii) provide a complete release of CPI and its subsidiaries for all claims; provided, however, that CPI may settle, compromise, dismiss, discharge or otherwise dispose of litigation or proceedings based on the merger which involve payment of damages not in excess of $1,000,000 in the aggregate; | |
• | take any action that would reasonably be expected to materially restrict or impede the consummation of the transactions contemplated by the merger agreement or cause any of the conditions to the closing of the merger as set forth in the merger agreement to fail to be satisfied as of the closing date; |
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• | except as described below under “— Covenants and Agreements — No Solicitation of Transactions by CPI,” approve or authorize any action to be submitted to the stockholders of CPI for approval that is intended, or would reasonably be expected, to prevent, impede, interfere with, delay, postpone or adversely affect the transactions contemplated by the merger agreement; | |
• | enter into any settlement or commitment with any person (whether oral or in writing), including, without limitation, the City of Palo Alto, that may adversely affect any of the operations currently conducted at 607, 811 and 3120 Hansen Way, Palo Alto, California; or | |
• | authorize any of, or commit, resolve or agree to take any of the foregoing actions. |
• | CPI may, in response to an unsolicited acquisition proposal from a third party that the CPI board of directors or a committee thereof determines constitutes, or would reasonably be expected to lead to, a superior acquisition proposal (as defined below), directly or through its representatives, participate in negotiations or discussions with such party and furnish non-public information to such third party pursuant to a customary confidentiality agreement (provided that all such information is or has been provided or made available to Comtech). | |
• | The CPI board of directors or any committee thereof may fail to make, or withdraw or modify in a manner adverse to Comtech, its recommendation in favor of the adoption of the merger agreement or may approve, recommend or endorse an unsolicited acquisition proposal, in each case either (i) following receipt of an unsolicited acquisition proposal made after the date of the merger agreement that CPI’s board of directors or a committee thereof determines constitutes a superior acquisition proposal or (ii) in response to a material event, development, circumstance, occurrence or change in circumstances or facts not related to a competing acquisition proposal that was not known to CPI’s board of directors or a committee thereof on the date of the merger agreement (or if known, the magnitude or material consequences of which were not known or understood as of that date). |
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• | Comtech will not, and will not permit any of its subsidiaries to, take or omit to take any action that would reasonably be expected to, individually or in the aggregate, result in any of the conditions to the merger set forth in the merger agreement not being satisfied or satisfaction of those conditions being delayed; and | |
• | Comtech will not adopt or propose to adopt any amendments to its restated certificate of incorporation or amended and restated by-laws which would reasonably be expected to prevent or delay the consummation of |
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the merger or disproportionately adversely affect a holder of shares of CPI common stock relative to a holder of Comtech common stock. |
• | adoption of the merger agreement by holders of a majority of the outstanding shares of CPI common stock in accordance with applicable law and the amended and restated certificate of incorporation of CPI and the amended and restated bylaws of CPI; | |
• | absence of any law, injunction or other order of a court or governmental entity of competent jurisdiction preventing completion of the merger; | |
• | (i) expiration or termination of any applicable waiting period (or extensions thereof) relating to the merger under the HSR Act and (ii) all consents required under any other applicable competition law are obtained or any applicable waiting periods relating to the merger have expired or been terminated; | |
• | approval for trading on the NASDAQ Global Select Market of the shares of Comtech common stock to be issued in the merger, subject to official notice of issuance; and | |
• | the effectiveness of, and the absence of any stop order (or proceedings for that purpose) with respect to, the registration statement onForm S-4 of which this proxy statement/prospectus forms a part. |
• | the accuracy in all material respects as of the date of the merger agreement and as of the effective time of the merger (or, in the case of representations and warranties that by their terms address matters only as of another specified time, as of that time) of certain representations and warranties made in the merger agreement by Comtech regarding, among other matters, Comtech’s capital structure and Comtech’s corporate authority relative to the merger agreement; | |
• | the accuracy of all other representations and warranties made in the merger agreement by Comtech (disregarding any materiality or material adverse effect qualifications contained in such representations and warranties) as of the effective time of the merger (or, in the case of representations and warranties that by their terms address matters only as of another specified time, as of that time), except for any such inaccuracies that have not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Comtech; | |
• | performance and compliance in all material respects by Comtech of the obligations required to be performed by it or complied with at or prior to the effective time of the merger; | |
• | absence of a material adverse effect on Comtech since the date of the merger agreement; and | |
• | except as previously disclosed to CPI, the absence of any pending litigation or proceeding of any kind which would reasonably be expected to have a material adverse effect on Comtech. |
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• | the accuracy in all material respects as of the date of the merger agreement and as of the effective time of the merger (or, in the case of representations and warranties that by their terms address matters only as of another specified time, as of that time) of certain representations and warranties made in the merger agreement by CPI regarding, among other matters, CPI’s capital structure, CPI’s corporate authority relative to the merger agreement, conformity of the merger with the organizational documents of CPI and its subsidiaries, lack of a material adverse effect with respect to CPI and receipt by CPI of fairness opinions from each of J.P. Morgan and Moelis; | |
• | the accuracy of all other representations and warranties made in the merger agreement by CPI (disregarding any materiality or material adverse effect qualifications contained in such representations and warranties) as of the effective time of the merger (or, in the case of representations and warranties that by their terms address matters only as of another specified time, as of that time), except for any such inaccuracies that have not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on CPI; | |
• | performance and compliance in all material respects by CPI of the obligations required to be performed by it or complied with at or prior to the effective time of the merger; | |
• | absence of a material adverse effect on CPI since the date of the merger agreement; | |
• | except as previously disclosed to Comtech, the absence of any pending litigation or proceeding of any kind which would reasonably be expected to have a material adverse effect on CPI; and | |
• | absence of any pending action or proceeding of any kind by any governmental entity that (i) challenges or seeks to make illegal, delay materially or otherwise directly or indirectly prohibit the completion of the merger, (ii) seeks to prohibit Comtech’s or Merger Sub’s ability to exercise effectively full rights of ownership of CPI’s common stock following the completion of the merger or (iii) seeks to compel Comtech, CPI or any of their respective subsidiaries to take any burdensome action described under “— Covenants and Agreements — Efforts to Complete Transactions” beginning on page[l]of this proxy statement/prospectus. |
• | a court or other government entity has issued an order enjoining or has otherwise prohibited the merger and such injunction or prohibition has become final and non-appealable; | |
• | CPI stockholder approval is not received at the duly called and held special meeting of CPI stockholders; or | |
• | the closing has not occurred on or before December 1, 2010; provided that either Comtech or CPI may extend such date by 45 days, subject to certain limitations, if the closing has not occurred because of the failure to obtain a required approval from one or more regulatory authorities. |
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• | CPI has breached or failed to perform any of its representations, warranties, covenants or agreements, such that CPI could not satisfy the applicable conditions to the closing related to its representations, warranties, covenants, and obligations, and such breach or failure to perform is incapable of being cured by December 1, 2010 (or valid extension of such date) or has not been cured within 30 days of written notice from Comtech; | |
• | the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in connection with a superior acquisition proposal (see “— Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page[l]of this proxy statement/prospectus); or | |
• | the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in response to a material event, development, circumstance, occurrence or change in circumstances or facts not related to a competing acquisition proposal that was not known to CPI’s board of directors on the date of the merger agreement (or if known, the magnitude or material consequences of which were not known or understood as of that date) (see “— Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page[l]of this proxy statement/prospectus). |
• | if Comtech has breached or failed to perform any of its representations, warranties, covenants or agreements, such that Comtech could not satisfy the applicable conditions to the closing related to its representations, warranties, covenants, and obligations, and such breach or failure to perform is incapable of being cured by December 1, 2010 (or valid extension of such date) or has not been cured within 30 days of written notice from CPI; or | |
• | in order to enter into a superior acquisition proposal subject to its obligations to pay Comtech a termination fee (see “— Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page[l]of this proxy statement/prospectus). |
• | Comtech terminates the merger agreement because the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in connection with a superior acquisition proposal; | |
• | CPI terminates the merger agreement in order to enter into a superior acquisition proposal; | |
• | the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech, and Comtech or CPI terminates the merger agreement because CPI stockholder approval is not received at the duly called and held special meeting of CPI stockholders; | |
• | (i) an acquisition proposal is made for CPI; (ii) the CPI board of directors does not change its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech; (iii) Comtech or CPI terminates the merger agreement because CPI stockholder approval is not received at the duly called and |
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held special meeting of CPI stockholders; and (iv) within 12 months, CPI enters into a definitive agreement or consummates an alternative transaction; or |
• | (i) an acquisition proposal is made for CPI; (ii) Comtech or CPI terminates the merger agreement because (a) a court or other government entity has issued an order enjoining or has otherwise prohibited the merger and such injunction or prohibition has become final and non-appealable or (b) the closing has not occurred on or before December 1, 2010 (or as otherwise validly extended); and (iii) within 12 months, CPI enters into a definitive agreement or consummates an alternative transaction. |
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• | in favor of the adoption and approval of the merger agreement, the merger and the other transactions contemplated by the merger agreement; | |
• | against any action, proposal, transaction or agreement that would reasonably be expected to result in a breach of a covenant, representation or warranty in the merger agreement or the voting and standstill agreement; and | |
• | against any alternative acquisition proposal, any change in the members of the CPI board of directors, any material change in the capitalization of CPI or an amendment to its amended and restated certificate of incorporation or amended and restated bylaws, any material change in CPI’s corporate structure or business or any other action or proposal reasonably expected to prevent, impede, interfere with, delay, postpone or adversely affect the transactions contemplated by the merger agreement. |
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Number of Shares | ||||
of CPI Common Stock | ||||
Held as of | ||||
June 4, 2010(1) | ||||
Michael Targoff | 74,528 | |||
Michael F. Finley | 31,716 | |||
Stephen R. Larson | 7,153 | |||
Jeffrey P. Hughes(2) | 8,264 | |||
William P. Rutledge | 14,008 |
(1) | Excludes shares subject to continuing vesting restrictions under applicable incentive plans. | |
(2) | Includes shares held directly by Mr. Hughes. Does not include shares owned by the Cypress Group stockholders as to which Mr. Hughes may be deemed to have beneficial ownership. |
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Vesting and Cancellation of All Outstanding CPI Stock Options at Closing
Weighted | Weighted | |||||||||||||||||||
Average | Average | |||||||||||||||||||
No. of Shares | Exercise | No. of Shares | Exercise | |||||||||||||||||
Underlying | Price | Underlying | Price | |||||||||||||||||
Unvested | of Unvested | Vested | of Vested | |||||||||||||||||
In-the-Money | In-the-Money | In-the-Money | In-the-Money | Total Estimated | ||||||||||||||||
Options | Options | Options | Options | Resulting Cash-Out | ||||||||||||||||
Name | (#) | ($) | (#) | ($) | Payment ($)(1) | |||||||||||||||
Michael Targoff | — | — | 24,157 | 4.32 | 289,938 | |||||||||||||||
Michael F. Finley | — | — | — | — | — | |||||||||||||||
Stephen R. Larson | — | — | — | — | — | |||||||||||||||
Jeffrey P. Hughes | — | — | — | — | — | |||||||||||||||
William P. Rutledge | — | — | — | — | — |
(1) | Actual cash payment received will depend upon the trailing10-day average closing trading price of Comtech common stock for the period ending two days before completion of the merger. |
Vesting and Cash-Out of all Outstanding CPI Restricted Shares
No. of | ||||||||
Accelerated | ||||||||
Unvested | ||||||||
CPI | ||||||||
Restricted | ||||||||
Shares | Total Estimated Resulting | |||||||
Name | (#) | Cashout Payment ($)(1) | ||||||
Michael Targoff | 3,642 | 58,804 | ||||||
Michael F. Finley | 3,215 | 51,909 | ||||||
Stephen R. Larson | 9,646 | 155,744 | ||||||
Jeffrey P. Hughes | 9,646 | 155,744 | ||||||
William P. Rutledge | 3,642 | 58,804 |
(1) | Actual cash payment received will depend upon the trailing10-day average closing trading price of Comtech common stock for the period ending two days before completion of the merger. |
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Name | Total Fees Payable ($) | |||
Michael Targoff | 22,000 | |||
Michael F. Finley | 30,000 | |||
William P. Rutledge | 25,000 |
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Estimated Cash | Estimated Health and | Aggregate Estimated Cash, Health and | ||||||||||||||||||||||||||
Severance ($)(1) | Fringe Benefits ($)(2) | Fringe Benefits ($) | ||||||||||||||||||||||||||
Within | Within | Within | ||||||||||||||||||||||||||
Specified | Specified | Specified | Incremental | |||||||||||||||||||||||||
Period | Period | Period | Cost on | |||||||||||||||||||||||||
In the Absence | Following | In the Absence | Following | In the Absence | Following | Account of | ||||||||||||||||||||||
of a Change | a Change | of a Change | a Change | of a Change | a Change | a Change | ||||||||||||||||||||||
Name | in Control | in Control | in Control | in Control | in Control | in Control | in Control | |||||||||||||||||||||
O. Joe Caldarelli(3) | 2,736,540 | 4,198,762 | 254,165 | 317,707 | 2,990,705 | 4,516,469 | 1,525,764 | |||||||||||||||||||||
Joel A. Littman | 867,502 | 1,243,166 | 90,975 | 121,300 | 958,477 | 1,364,466 | 405,989 | |||||||||||||||||||||
Robert A. Fickett | 1,187,497 | 1,667,800 | 105,076 | 140,101 | 1,292,573 | 1,807,901 | 515,328 | |||||||||||||||||||||
Andrew E. Tafler(3) | 288,981 | 288,981 | 60,322 | 60,322 | 349,303 | 349,303 | — | |||||||||||||||||||||
Don C. Coleman | 303,000 | 303,000 | 67,579 | 67,579 | 370,579 | 370,579 | — | |||||||||||||||||||||
John R. Beighley | 262,500 | 262,500 | 81,721 | 81,721 | 344,221 | 344,221 | — |
(1) | Includes management incentive plan payments for fiscal year 2010, which were calculated assuming that each executive achieved the target level performance under the management incentive plan. Actual payments would be based on actual results (not target). In addition, the management incentive plan payments included for Messrs. Caldarelli, Littman and Fickett are based on payments for the full fiscal year 2010. If a qualifying termination were to occur prior to the end of fiscal year 2010, the amount paid to Messrs. Caldarelli, Fickett and Littman would be pro-rated to reflect the portion of the fiscal year prior to termination. | |
(2) | Benefits are primarily based on current benefit costs, with certain exceptions; where an amount is not yet known, a prior fiscal year amount is used. CPI does not expect the prior-year amounts to differ materially from the actual amounts. | |
(3) | Payments and benefits for Messrs. Caldarelli and Tafler are shown in U.S. dollars, although such individuals are paid in Canadian dollars. The Canadian dollar to U.S. dollar exchange rate on June 17, 2010 was in the range of approximately 0.968 to 0.978 U.S. dollars to one Canadian dollar. Using the mid-point of this range, the multiplier for Messrs. Caldarelli and Tafler to convert Canadian dollars to U.S. dollars in the above table is 0.973. This conversion rate is constantly changing, and the multiplier indicated in this footnote is for illustrative purposes only. |
Number of Shares | ||||
of CPI Common Stock | ||||
Held as of | ||||
June 4, 2010(1) | ||||
O. Joe Caldarelli | 147,284 | |||
Joel A. Littman | 29,886 | |||
Robert A. Fickett | 19,544 | |||
Andrew E. Tafler | 4,201 | |||
Don C. Coleman | 2,500 | |||
John R. Beighley | 1,250 |
(1) | Excludes shares subject to continuing vesting restrictions under applicable incentive plans. |
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Cancellation of All Outstanding CPI Stock Options at Closing
Weighted | Weighted | |||||||||||||||||||
Average | Average | |||||||||||||||||||
No. of Shares | Exercise | No. of Shares | Exercise | |||||||||||||||||
Underlying | Price | Underlying | Price | |||||||||||||||||
Unvested | of Unvested | Vested | of Vested | |||||||||||||||||
In-the-Money | In-the-Money | In-the-Money | In-the-Money | Total Estimated | ||||||||||||||||
Options | Options | Options | Options | Resulting Cash-Out | ||||||||||||||||
Name | (#) | ($) | (#) | ($) | Payment ($)(1) | |||||||||||||||
O. Joe Caldarelli | 78,750 | 10.45 | 890,110 | 3.46 | 11,740,495 | |||||||||||||||
Joel A. Littman | 39,250 | 10.44 | 319,754 | 3.74 | 4,190,829 | |||||||||||||||
Robert A. Fickett | 52,500 | 10.45 | 548,585 | 3.54 | 7,214,503 | |||||||||||||||
Andrew E. Tafler | 26,250 | 10.45 | 112,446 | 5.36 | 1,362,363 | |||||||||||||||
Don C. Coleman | 26,250 | 10.45 | 165,191 | 3.96 | 2,162,538 | |||||||||||||||
John R. Beighley | 13,000 | 10.41 | 91,614 | 4.05 | 1,182,731 |
(1) | Actual cash payment received will depend upon the trailing10-day average closing trading price of Comtech common stock for the period ending two days before completion of the merger. |
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Cash-Out of all Outstanding CPI Restricted Shares and Restricted Stock Units
No. of | ||||||||
Accelerated | ||||||||
Unvested | ||||||||
CPI | ||||||||
Restricted | ||||||||
Shares and Restricted | ||||||||
Stock Units | Total Estimated Resulting | |||||||
Name | (#) | Cashout Payment ($)(1) | ||||||
O. Joe Caldarelli | 28,500 | 460,161 | ||||||
Joel A. Littman | 14,250 | 230,080 | ||||||
Robert A. Fickett | 19,000 | 306,774 | ||||||
Andrew E. Tafler | 9,500 | 153,387 | ||||||
Don C. Coleman | 9,500 | 153,387 | ||||||
John R. Beighley | 4,750 | 76,693 |
(1) | Actual cash payment received will depend upon the trailing10-day average closing trading price of Comtech common stock for the period ending two days before completion of the merger. |
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CPI Stockholder Rights | Comtech Stockholder Rights | |||
Authorized Capital Stock | The authorized capital stock of CPI consists of 90,000,000 shares of common stock, $0.01 par value per share and 10,000,000 shares of preferred stock, $0.01 par value per share. | The authorized capital stock of Comtech consists of 100,000,000 shares of common stock, $0.10 par value per share and 2,000,000 shares of preferred stock, $0.10 par value per share. | ||
Voting Rights of Common Stock | CPI’s amended and restated certificate of incorporation and CPI’s amended and restated bylaws provide that the holders of CPI common stock are entitled to one vote per share on all matters on which stockholders are generally entitled to vote. | Comtech’s restated certificate of incorporation provides that the holders of Comtech common stock are entitled to one vote per share on all matters voted upon by the stockholders. | ||
Dividend Rights of Common Stock | CPI’s amended and restated certificate of incorporation provides that, subject to applicable law, to the amended and restated certificate of incorporation and to the express terms of any preferred stock, the holders of CPI common stock are entitled, to the exclusion of the holders of shares of Preferred Stock of any and all series, to receive such dividends, if any, as may be declared from time to time by the board of directors. | Comtech’s restated certificate of incorporation provides that, subject to limitations set forth in Comtech’s restated certificate of incorporation (including the provisions relating to preferred stock therein), the holders of Comtech common stock are entitled to receive, as and when declared by Comtech’s board of directors, dividends payable either in cash or in property, including securities of Comtech, out of | ||
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CPI Stockholder Rights | Comtech Stockholder Rights | |||
assets that are legally available therefor. | ||||
Preemptive Rights of Common Stock | CPI’s amended and restated certificate of incorporation does not grant any preemptive rights. | Comtech’s restated certificate of incorporation provides that no holder of shares of any class of Comtech capital stock is entitled to any preemptive rights. | ||
Preferred Stock | CPI’s amended and restated certificate of incorporation authorizes CPI’s board of directors, without any action by the stockholders, to designate and issue preferred stock in one or more series and to designate the rights, qualifications, restrictions and limitations, preferences and privileges of each series, which may be greater than the rights of the common stock. | Comtech’s restated certificate of incorporation authorizes Comtech’s board of directors, without any action by the stockholders, to designate and issue preferred stock in one or more series and to designate the rights, preferences, privileges, qualifications, restrictions and limitations of each series, which may be greater than the rights of the common stock. | ||
Designations of Preferred Stock | CPI’s amended and restated certificate of incorporation does not designate any series of preferred stock. | Comtech’s restated certificate of incorporation designates Series A Junior Participating Cumulative Preferred Stock, which stock is entitled to quarterly dividends, voting rights superior to the common stock and a liquidation preference. No shares of Series A Junior Participating Cumulative Preferred Stock are outstanding. | ||
Number of Directors on the Board of Directors | CPI’s amended and restated certificate of incorporation provides that the number of directors will be not less than three and not more than fifteen, with the exact number being fixed from time to time by the board of directors. | Comtech’s restated certificate of incorporation provides that the number of directors will be not less than three, with the exact number being fixed from time to time by the board of directors. | ||
Classification of the Board of Directors | CPI’s amended and restated certificate of incorporation and CPI’s amended and restated bylaws provide for the division of CPI’s board of directors (other than directors elected by the holders of preferred stock, if any) into three classes of directors serving staggered three-year terms, with | Comtech’s restated certificate of incorporation provides for the division of Comtech’s board of directors into three classes of directors serving staggered three-year terms, with one-third of the board of directors being elected each year. | ||
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CPI Stockholder Rights | Comtech Stockholder Rights | |||
one-third of the board of directors being elected each year. | ||||
Special Meetings of the Stockholders | CPI’s amended and restated certificate of incorporation and CPI’s amended and restated bylaws provide that only the majority of the members of the board of directors, the chairman of the board of directors or the chief executive officer may call a special meeting of stockholders. | Comtech’s amended and restated by-laws provide that the board of directors, the chairman of the board or any officer instructed by the board of directors may call a special meeting of stockholders. | ||
Cumulative Voting | CPI’s amended and restated certificate of incorporation prohibits cumulative voting in the election of directors. | Comtech’s restated certificate of incorporation does not provide for cumulative voting and accordingly, Comtech stockholders do not have cumulative voting in connection with the election of directors. | ||
Nomination of Directors | CPI’s amended and restated bylaws provide that directors may be nominated by the board of directors, any nominating committee designated by the board of directors or a stockholder complying with the stockholder nomination requirements set forth therein (and described below). | Comtech’s amended and restated by-laws provide that directors may be nominated by the board of directors or a stockholder complying with the stockholder nomination requirements set forth therein (and described below). | ||
Delivery and Notice Requirements of Stockholder Nominations and Proposals | CPI’s amended and restated bylaws provide that in order to submit a director nomination or a proposal, a stockholder must give timely notice in advance of an annual meeting or a special meeting. | Comtech’s amended and restated by-laws provide that a stockholder may nominate directors for election at an annual meeting of the stockholders. | ||
To be timely, a notice in advance of an annual meeting must generally be received at the executive office of CPI, addressed to the attention of CPI’s secretary, not less than 90 days nor more than 120 days prior to the first anniversary of the date of the prior year’s annual meeting. | To be timely, a written notice of the nomination must generally be received at the executive offices of Comtech, addressed to Comtech’s secretary, not less than 90 days nor more than 120 days prior to the first anniversary of the date of the prior year’s annual meeting. | |||
To be timely, a notice of a director nomination in advance of a special meeting must generally be received at the executive office of CPI, | ||||
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CPI Stockholder Rights | Comtech Stockholder Rights | |||
addressed to the attention of CPI’s secretary, not more than 120 days prior to such special meeting and not less than the later of 90 days prior to such special meeting and the tenth day following the press release announcing such meeting. | ||||
The notice must set forth: • the stockholder’s name and address as recorded on CPI’s books; | The notice must set forth: • the stockholder’s name and address as recorded on Comtech’s books; | |||
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CPI Stockholder Rights | Comtech Stockholder Rights | |||
The person presiding over the meeting may, if the facts warrant, determine that the nomination was not properly brought before the meeting and that the nomination be disregarded. | If the board of directors determines, based upon the facts, that the nomination was not properly brought before the meeting, the chairman of the meeting may so declare and the nomination will be disregarded. | |||
Furthermore, the stockholder must appear at the meeting to present the proposal notwithstanding that proxies in respect of such vote may have been received by CPI. | ||||
Action by Written Consent | CPI’s amended and restated certificate of incorporation and CPI’s amended and restated bylaws provide that stockholders may only take action at an annual or special meeting of stockholders and may not act by written consent. | Comtech’s restated certificate of incorporation provides that stockholders may take action only at a duly called annual or special meeting of stockholders and may not act by written consent. | ||
Removal of Directors | CPI’s amended and restated certificate of incorporation provides that any director (other than directors elected by the holders of preferred stock, if any) may be removed from office only for cause and only by the affirmative vote of at least 662/3% of the issued and outstanding capital stock entitled to vote in the election of directors, voting together as a single class. | Comtech’s restated certificate of incorporation provides that any or all of the directors may be removed for cause by the stockholders or by the board of directors. The DGCL only permits stockholders to remove directors and provides that such removal may be accomplished by the affirmative vote by the majority of the shares then entitled to vote at an election of directors. | ||
Liability of Directors | CPI’s amended and restated certificate of incorporation provides that no director will be personally liable to CPI or its stockholders for breach of | Comtech’s restated certificate of incorporation provides that no director will be personally liable to Comtech or its stockholders for |
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CPI Stockholder Rights | Comtech Stockholder Rights | |||
fiduciary duty as a director except for: | breach of fiduciary duty as a director except for: | |||
Indemnification | CPI’s amended and restated certificate of incorporation provides that CPI will indemnify directors and officers against liability (including attorney’s fees) arising from any proceeding relating to the service of such director or officer to CPI; provided that CPI is not obligated to indemnify a director or officer in connection with a proceeding initiated by such director or officer (other than a proceeding to enforce rights to indemnification) unless such proceeding was authorized by, or consented to, by the board. | Comtech’s amended and restated by-laws provide that Comtech will indemnify directors, officers and employees against liability (including attorney’s fees) arising from any proceeding other than an action by or in the right of Comtech relating to the service of such director, officer or employee to Comtech so long as such officer, director or employee acted in good faith and in a manner reasonably believed to be in the best interests of Comtech and, with respect to any criminal proceeding, without the belief that any conduct was unlawful. | ||
With respect to any action by or in the right of Comtech, Comtech’s amended and restated bylaws provide that Comtech will indemnify directors, officers and employees against liability (including attorney’s fees) arising therefrom relating to the service of such director, officer or employee to Comtech so long as such | ||||
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CPI Stockholder Rights | Comtech Stockholder Rights | |||
director, officer or employee acted in good faith and in a manner reasonably believed to be in the best interests of Comtech, except that no such indemnification would be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to Comtech unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought rules and provides otherwise. | ||||
Business Combinations and Section 203 of the DGCL | In general, Section 203 prohibits a Delaware corporation from engaging in certain transactions with a stockholder once that stockholder has acquired a significant holding in the corporation. CPI’s amended and restated certificate of incorporation provides that Section 203 of the DGCL will not apply to CPI until the Cypress Group stockholders own less than fifteen percent of the total voting power of CPI’s common stock, at which date Section 203 will apply prospectively. | In general, Section 203 prohibits a Delaware corporation from engaging in certain transactions with a stockholder once that stockholder has acquired a significant holding in the corporation. A corporation may elect not to be governed by Section 203 of the DGCL, but Comtech has not made such an election. Accordingly, Comtech is governed by Section 203 of the DGCL. | ||
In addition, Comtech’s restated certificate of incorporation requires 80% of the stockholders (including at least 662/3% of the outstanding stock held by disinterested stockholders) to approve business combinations (including, among other things, mergers and certain significant sales of assets) with any “interested shareholder” (including, among other persons, a beneficial owner of 10% of Comtech voting stock and its affiliates). Such stockholder approval is not required (and only the affirmative vote required by law will apply) if, among other things: | ||||
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CPI Stockholder Rights | Comtech Stockholder Rights | |||
Amendment of the Certificate of Incorporation | CPI’s amended and restated certificate of incorporation provides that the affirmative vote of the holders of at least 662/3% of the voting power of CPI’s issued and outstanding capital stock entitled to vote in the election of directors is required to amend the following provisions of CPI’s amended and restated certificate of incorporation: | Comtech’s restated certificate of incorporation provides that the affirmative vote of the holders of at least 80% of the voting power of Comtech’s shares entitled to vote in the election of directors is required to amend the following provisions of Comtech’s restated certificate of incorporation: | ||
Amendment of the Bylaws | CPI’s board of directors is permitted to amend or repeal CPI’s amended and restated bylaws or adopt new bylaws without obtaining stockholder approval. In order for CPI stockholders to | Comtech’s board of directors is permitted to alter or repeal Comtech’s amended and restated by-laws or adopt new by-laws, subject to the power of the stockholders to alter or repeal any | ||
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CPI Stockholder Rights | Comtech Stockholder Rights | |||
amend or repeal CPI’s amended and restated bylaws, or adopt new bylaws, the vote of at least 662/3% of the voting power of CPI’s issued and outstanding capital stock entitled to vote on the election of directors (voting together as a single class) is required. | by-law adopted or altered by the board of directors. In order for Comtech’s stockholders to alter or repeal Comtech’s amended and restated by-laws, or adopt new by-laws, the vote of at least a majority of the voting power of Comtech’s issued and outstanding capital stock entitled to vote is required, provided that notice of the proposed adoption, alteration or repeal must have been given in the notice of such meeting of stockholders. |
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• | Comtech as of and for the three and nine months ended April 30, 2010; | |
• | Comtech as of and for the fiscal year ended July 31, 2009 (as adjusted for the adoption of FASB ASC470-20, “Debt — Debt with Conversion and Other Options”); | |
• | CPI as of and for the three and six months ended April 2, 2010; and | |
• | CPI as of and for the fiscal year ended October 2, 2009, |
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AND SUBSIDIARIES
Pro Forma | Pro Forma | |||||||||||||||||
Comtech | CPI | Adjustments | Combined | |||||||||||||||
April 30, 2010 | April 2, 2010 | (See Note 6) | (See Note 2) | |||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 568,277,000 | 36,529,000 | (376,494,000 | ) | (A,D,E) | $ | 228,312,000 | ||||||||||
Restricted cash | — | 994,000 | — | 994,000 | ||||||||||||||
Accounts receivable, net | 107,695,000 | 39,432,000 | — | 147,127,000 | ||||||||||||||
Inventories, net | 75,077,000 | 79,379,000 | 6,400,000 | (B) | 160,856,000 | |||||||||||||
Prepaid expenses and other current assets | 9,745,000 | 6,868,000 | — | 16,613,000 | ||||||||||||||
Deferred tax asset | 13,919,000 | 8,674,000 | 2,681,000 | (H) | 25,274,000 | |||||||||||||
Total current assets | 774,713,000 | 171,876,000 | (367,413,000 | ) | 579,176,000 | |||||||||||||
Property, plant and equipment, net | 33,549,000 | 55,741,000 | 29,154,000 | (B) | 118,444,000 | |||||||||||||
Goodwill | 149,253,000 | 162,225,000 | 9,953,000 | (C) | 321,431,000 | |||||||||||||
Intangibles, net | 50,102,000 | 73,964,000 | 168,586,000 | (B) | 292,652,000 | |||||||||||||
Deferred financing costs, net | 5,022,000 | 2,949,000 | (2,949,000 | ) | (D) | 5,022,000 | ||||||||||||
Other assets, net | 1,271,000 | 3,820,000 | — | 5,091,000 | ||||||||||||||
Total assets | $ | 1,013,910,000 | 470,575,000 | (162,669,000 | ) | $ | 1,321,816,000 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
Current liabilities | ||||||||||||||||||
Accounts payable | $ | 43,798,000 | 23,828,000 | — | $ | 67,626,000 | ||||||||||||
Accrued expenses and other current liabilities | 47,216,000 | 20,281,000 | 30,007,000 | (D,E,F,G) | 97,504,000 | |||||||||||||
Product warranty | — | 4,615,000 | (4,615,000 | ) | (G) | — | ||||||||||||
Customer advances and deposits | 10,951,000 | 12,013,000 | — | 22,964,000 | ||||||||||||||
Interest payable | 3,031,000 | — | — | 3,031,000 | ||||||||||||||
Deferred income taxes | — | 332,000 | — | 332,000 | ||||||||||||||
Income taxes payable | 8,296,000 | 2,993,000 | — | 11,289,000 | ||||||||||||||
Total current liabilities | 113,292,000 | 64,062,000 | 25,392,000 | 202,746,000 | ||||||||||||||
Convertible senior notes | 200,000,000 | — | — | 200,000,000 | ||||||||||||||
Long-term debt | — | 194,928,000 | (194,928,000 | ) | (D) | — | ||||||||||||
Other liabilities | 2,420,000 | 2,241,000 | (904,000 | ) | (E,H) | 3,757,000 | ||||||||||||
Income taxes payable | 5,088,000 | — | 741,000 | (H) | 5,829,000 | |||||||||||||
Deferred tax liability | 8,321,000 | 24,279,000 | 70,446,000 | (H) | 103,046,000 | |||||||||||||
Total liabilities | 329,121,000 | 285,510,000 | (99,253,000 | ) | 515,378,000 | |||||||||||||
Stockholders’ equity: | ||||||||||||||||||
Preferred stock | — | — | — | — | ||||||||||||||
Common stock | 2,852,000 | 169,000 | 272,000 | (I) | 3,293,000 | |||||||||||||
Additional paid-in capital | 344,142,000 | 77,804,000 | 58,619,000 | (I) | 480,565,000 | |||||||||||||
Retained earnings | 337,980,000 | 108,290,000 | (123,505,000 | ) | (F,I) | 322,765,000 | ||||||||||||
Other comprehensive income | — | 1,602,000 | (1,602,000 | ) | (I) | — | ||||||||||||
684,974,000 | 187,865,000 | (66,216,000 | ) | 806,623,000 | ||||||||||||||
Less: | ||||||||||||||||||
Treasury stock | (185,000 | ) | (2,800,000 | ) | 2,800,000 | (I) | (185,000 | ) | ||||||||||
Total stockholders’ equity | 684,789,000 | 185,065,000 | (63,416,000 | ) | 806,438,000 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 1,013,910,000 | 470,575,000 | (162,669,000 | ) | $ | 1,321,816,000 | |||||||||||
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AND SUBSIDIARIES
For the nine months ended April 30, 2010
Nine Months Ended: | Pro Forma | Pro Forma | ||||||||||||||||
Comtech | CPI | Adjustments | Combined | |||||||||||||||
April 30, 2010 | April 2, 2010 | (See Note 6) | (See Note 2) | |||||||||||||||
Net sales | $ | 521,251,000 | 262,426,000 | (1,201,000 | ) | (J) | $ | 782,476,000 | ||||||||||
Cost of sales | 333,185,000 | 184,739,000 | 4,734,000 | (B,J,K) | 522,658,000 | |||||||||||||
Gross profit | 188,066,000 | 77,687,000 | (5,935,000 | ) | 259,818,000 | |||||||||||||
Expenses: | ||||||||||||||||||
Selling, general and administrative | 70,256,000 | 17,618,000 | 13,920,000 | (K,L,M) | 101,794,000 | |||||||||||||
Selling and marketing | — | 15,128,000 | (15,128,000 | ) | (K,M) | — | ||||||||||||
Research and development | 34,138,000 | 8,194,000 | (6,000 | ) | (K) | 42,326,000 | ||||||||||||
Amortization of intangibles | 5,283,000 | 2,067,000 | 7,160,000 | (B,K) | 14,510,000 | |||||||||||||
109,677,000 | 43,007,000 | 5,946,000 | 158,630,000 | |||||||||||||||
Operating income | 78,389,000 | 34,680,000 | (11,881,000 | ) | 101,188,000 | |||||||||||||
Other expenses (income): | ||||||||||||||||||
Interest expense | 5,913,000 | 11,750,000 | (9,650,000 | ) | (N) | 8,013,000 | ||||||||||||
Interest income and other | (728,000 | ) | — | 529,000 | (N,O) | (199,000 | ) | |||||||||||
Income before provision for income taxes | 73,204,000 | 22,930,000 | (2,760,000 | ) | 93,374,000 | |||||||||||||
Provision for income taxes | 26,043,000 | 6,345,000 | (1,021,000 | ) | (P) | 31,367,000 | ||||||||||||
Net income | $ | 47,161,000 | 16,585,00 | (1,739,000 | ) | $ | 62,007,000 | |||||||||||
Net income per share (see Note 7): | ||||||||||||||||||
Basic | $ | 1.67 | $ | 1.90 | ||||||||||||||
Diluted | $ | 1.48 | $ | 1.70 | ||||||||||||||
Weighted average number of common shares outstanding — basic | 28,254,000 | 4,406,000 | (I) | 32,660,000 | ||||||||||||||
Weighted average number of common shares and common equivalent shares outstanding assuming dilution — diluted | 34,074,000 | 4,406,000 | (I) | 38,480,000 | ||||||||||||||
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AND SUBSIDIARIES
For the fiscal year ended July 31, 2009
Twelve Months Ended: | Pro Forma | Pro Forma | ||||||||||||||||
Comtech | CPI | Adjustments | Combined | |||||||||||||||
July 31, 2009 | October 2, 2009 | (See Note 6) | (See Note 2) | |||||||||||||||
Net sales | $ | 586,372,000 | 332,876,000 | (1,531,000 | ) | (J) | $ | 917,717,000 | ||||||||||
Cost of sales | 345,472,000 | 239,385,000 | 4,248,000 | (B,J,K) | 589,105,000 | |||||||||||||
Gross profit | 240,900,000 | 93,491,000 | (5,779,000 | ) | 328,612,000 | |||||||||||||
Expenses: | ||||||||||||||||||
Selling, general and administrative | 100,171,000 | 20,757,000 | 19,446,000 | (K,L,M) | 140,374,000 | |||||||||||||
Selling and marketing | — | 19,466,000 | (19,466,000 | ) | (K,M) | — | ||||||||||||
Research and development | 50,010,000 | 10,520,000 | (8,000 | ) | (K) | 60,522,000 | ||||||||||||
Amortization of in-process research and development | 6,200,000 | — | — | 6,200,000 | ||||||||||||||
Amortization of intangibles | 7,592,000 | 2,769,000 | 9,534,000 | (B,K) | 19,895,000 | |||||||||||||
163,973,000 | 53,512,000 | 9,506,000 | 226,991,000 | |||||||||||||||
Operating income | 76,927,000 | 39,979,000 | (15,285,000 | ) | 101,621,000 | |||||||||||||
Other expenses (income): | ||||||||||||||||||
Interest expense | 6,396,000 | 16,979,000 | (14,879,000 | ) | (N) | 8,496,000 | ||||||||||||
Interest income and other | (2,738,000 | ) | — | 2,738,000 | (N,O) | — | ||||||||||||
Gain on extinguishment of debt | — | (248,000 | ) | 248,000 | (O) | — | ||||||||||||
Income before provision for income taxes | 73,269,000 | 23,248,000 | (3,392,000 | ) | 93,125,000 | |||||||||||||
Provision for income taxes | 25,744,000 | (218,000 | ) | (1,255,000 | ) | (P) | 24,271,000 | |||||||||||
Net income | $ | 47,525,000 | 23,466,000 | (2,137,000 | ) | $ | 68,854,000 | |||||||||||
Net income per share (see Note 7): | ||||||||||||||||||
Basic | $ | 1.81 | $ | 2.24 | ||||||||||||||
Diluted | $ | 1.73 | $ | 2.13 | ||||||||||||||
Weighted average number of common shares outstanding — basic | 26,321,000 | 4,406,000 | (I) | 30,727,000 | ||||||||||||||
Weighted average number of common shares and common equivalent shares outstanding assuming dilution — diluted | 29,793,000 | 4,406,000 | (I) | 34,199,000 | ||||||||||||||
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• | The unaudited pro forma condensed combined balance sheet as of April 30, 2010 is presented as if Comtech’s acquisition of CPI had occurred on April 30, 2010, and combines the historical balance sheet of Comtech as of April 30, 2010 with the historical balance sheet of CPI as of April 2, 2010. | |
• | The unaudited pro forma condensed combined statement of operations for the nine months ended April 30, 2010 is presented as if Comtech’s acquisition of CPI had occurred on August 1, 2009, and combines Comtech’s historical statement of operations for the nine months ended April 30, 2010 with CPI’s historical statement of operations for the nine months ended April 2, 2010. CPI’s historical statement of operations for the nine months ended April 2, 2010 was derived by taking CPI’s historical results of operations for the six months ended April 2, 2010, and adding CPI’s historical results of operations for the three months ended October 2, 2009. | |
• | The unaudited pro forma condensed combined statement of operations for the fiscal year ended July 31, 2009 is presented as if Comtech’s acquisition of CPI had occurred on August 1, 2008, and combines Comtech’s historical statement of operations for the fiscal year ended July 31, 2009 with CPI’s historical statement of operations for the fiscal year ended October 2, 2009. |
2. | Exclusion of Merger and Integration Related Costs from Unaudited Pro Forma Condensed Combined Statements of Operations. |
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3. | Repayment of CPI’s Existing Long-Term Debt and Related Interest Rate Swap Contract. |
4. | Calculation of Estimated Preliminary Aggregate Purchase Price for Accounting Purposes. |
Equivalent | ||||||||||||||||
Consideration | Value of | Preliminary | ||||||||||||||
CPI | to be Paid | Comtech | Aggregate | |||||||||||||
Shares | in Cash | Common Stock | Purchase Price | |||||||||||||
Common stock outstanding at April 30, 2010 | 16,745,000 | $ | 150,705,000 | 123,887,000 | $ | 274,592,000 | ||||||||||
Stock awards to receive cash and stock | 1,754,000 | 15,786,000 | 12,977,000 | 28,763,000 | ||||||||||||
Stock awards expected to receive only cash | 640,000 | 10,496,000 | — | 10,496,000 | ||||||||||||
Total | $ | 176,987,000 | 136,864,000 | $ | 313,851,000 | |||||||||||
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Total preliminary aggregate purchase price for accounting purposes | $ | 313,851,000 | ||
Plus CPI’s long-term debt at April 2, 2010 | 194,928,000 | |||
Less CPI’s cash at April 2, 2010 | (36,529,000 | ) | ||
Total preliminary aggregate enterprise value of the transaction | $ | 472,250,000 | ||
5. | Allocation of Preliminary Purchase Price for Accounting and Financial Reporting Purposes. |
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Total net book value of net assets at April 2, 2010 | $ | 185,065,000 |
Elimination of CPI’s pre-existing goodwill and intangibles: | ||||||||
Goodwill | (162,225,000 | ) | ||||||
Identifiable intangibles, net of accumulated amortization | (73,964,000 | ) | ||||||
Deferred financing costs, net of accumulated amortization | (2,949,000 | ) | ||||||
Deferred tax liabilities related to intangibles and deferred financing costs | 30,085,000 | |||||||
Net book value of net tangible liabilities at April 2, 2010 | (23,988,000 | ) |
Estimated | ||||||||
Preliminary estimated fair value adjustments to net book value of net tangible liabilities: | Useful Life | |||||||
Land | 4,633,000 | |||||||
Machinery and equipment | 15,610,000 | 3-12 years | ||||||
Buildings and related improvements | 8,911,000 | 6-25 years | ||||||
Inventory | 6,400,000 | 6 months | ||||||
Accrued expenses and other current liabilities (See Note 6(F)) | (8,789,000 | ) | ||||||
Long-term debt (See Note 6(D)) | (1,289,000 | ) | ||||||
Deferred tax liabilities, net | (12,621,000 | ) | ||||||
Preliminary estimated fair value of net tangible liabilities at April 2, 2010 | (11,133,000 | ) |
Preliminary estimated fair value of identifiable intangibles: | ||||||||
Technologies: | ||||||||
Core | 86,000,000 | 40 years | ||||||
Customer applications | 65,000,000 | 25 years | ||||||
Trademark | 50,000,000 | Indefinite | ||||||
Lease interests | 34,950,000 | 5-40 years | ||||||
Customer backlog | 6,600,000 | 1 year | ||||||
Deferred tax liabilities related to newly acquired intangibles | (89,744,000 | ) | ||||||
Total estimated fair value of identifiable net assets at April 2, 2010 | 141,673,000 | |||||||
Goodwill | 172,178,000 | Indefinite | ||||||
Total preliminary aggregate purchase price for accounting purposes | $ | 313,851,000 | ||||||
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6. | Pro Forma Financial Statement Adjustments. |
(A) | To record the cash portion of the preliminary aggregate purchase price of $176,987,000 (see Note 4). |
(B) | To record the difference between the historical values and preliminary estimated fair values of CPI’s intangibles, inventory, and property, plant and equipment acquired and the associated pre-tax depreciation and amortization expenses. |
Nine Month | Annual | |||||||||||||||||||
Depreciation and | Depreciation and | |||||||||||||||||||
Amortization | Amortization | |||||||||||||||||||
Preliminary | Based on | Based on | ||||||||||||||||||
CPI Historical | Estimated | Increase | Preliminary | Preliminary | ||||||||||||||||
Values, Net | Fair Values | (Decrease) | Fair Values | Fair Values | ||||||||||||||||
Intangibles: | ||||||||||||||||||||
Technologies: | ||||||||||||||||||||
Core | $ | 26,892,000 | 86,000,000 | $ | 59,108,000 | $ | 1,613,000 | $ | 2,150,000 | |||||||||||
Customer applications | 24,331,000 | 65,000,000 | 40,669,000 | 1,950,000 | 2,600,000 | |||||||||||||||
Trademarks | 7,563,000 | 50,000,000 | 42,437,000 | — | — | |||||||||||||||
Lease interests | 10,249,000 | 34,950,000 | 24,701,000 | 714,000 | 953,000 | |||||||||||||||
Customer backlog and other | 4,929,000 | 6,600,000 | 1,671,000 | 4,950,000 | 6,600,000 | |||||||||||||||
Total | $ | 73,964,000 | 242,550,000 | $ | 168,586,000 | $ | 9,227,000 | $ | 12,303,000 | |||||||||||
Tangible fair valuestep-ups: | ||||||||||||||||||||
Inventory | $ | 79,379,000 | 85,779,000 | $ | 6,400,000 | $ | 6,400,000 | $ | 6,400,000 | |||||||||||
Land | 2,947,000 | 7,580,000 | 4,633,000 | — | — | |||||||||||||||
Buildings and related improvements | 28,253,000 | 37,164,000 | 8,911,000 | 1,484,000 | 1,979,000 | |||||||||||||||
Machinery and equipment | 23,609,000 | 39,219,000 | 15,610,000 | 3,814,000 | 5,086,000 | |||||||||||||||
Construction in progress | 932,000 | 932,000 | — | 233,000 | 311,000 | |||||||||||||||
Total | $ | 135,120,000 | 170,674,000 | $ | 35,554,000 | $ | 11,931,000 | $ | 13,776,000 | |||||||||||
Total depreciation and amortization expense associated with preliminary estimated fair value adjustments to tangible and intangible assets | $ | 21,158,000 | $ | 26,079,000 | ||||||||||||||||
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In order to conform to Comtech’s presentation of amortization of intangibles, the $9,227,000 and $12,303,000 noted in the above table were recorded as amortization of intangibles in the unaudited pro forma condensed combined statement of operations for the nine months ended April 30, 2010 and fiscal year ended July 31, 2009, respectively. The adjustments necessary to eliminate CPI’s historical amortization of its land lease are reflected in Note 6(K). | ||
Because CPI historically recorded the majority of its depreciation expense of approximately $5,830,000 and $7,773,000 to cost of sales in their unaudited pro forma condensed combined statement of operations for the nine months ended April 30, 2010 and fiscal year ended July 31, 2009, an adjustment was recorded to reduce cost of sales by $299,000 and $397,000, respectively, which represents the difference between CPI’s historical depreciation and the estimated depreciation based on preliminary fair values. |
(C) | To eliminate CPI’s historical goodwill of $162,225,000 and to record the preliminary estimate of goodwill from Comtech’s acquisition of CPI of $172,178,000. | |
(D) | As discussed in Note 3, this adjustment is to record the required anticipated repayment of CPI’s long-term debt of $194,928,000, the related payment of $1,289,000 associated with the change in control put right contained in the indentures to CPI’s 8% Notes and Floating Rate Notes and the payment of accrued interest payable of $1,771,000. In addition, this adjustment also eliminates the net book value of CPI’s deferred financing costs associated with CPI’s long-term debt in the unaudited pro forma condensed combined balance sheet at April 30, 2010. | |
(E) | As discussed in Note 3, this adjustment is to record the required anticipated repayment of CPI’s accrued interest rate swap contract liability of $1,519,000 associated with the anticipated repayment of CPI’s term loan. At April 2, 2010, of the $1,519,000, $1,356,000 was recorded in accrued expenses and other current liabilities and $163,000 was recorded in other liabilities. | |
(F) | As discussed in Note 2, both Comtech and CPI expect to incur substantial merger and integration related costs. The following table summarizes the adjustments necessary to the unaudited pro forma condensed combined balance sheet using the high-end of the range of aggregate payments: |
Pro forma adjustments to unaudited condensed combined balance sheet at April 30, 2010: | ||||
Comtech: | ||||
Change-in-control related payments to certain CPI executives | $ | 7,000,000 | ||
Acceleration of vesting of certain stock-based awards held by CPI employees | 4,400,000 | |||
Merger related costs expected to be incurred | 9,311,000 | |||
Premium associated with anticipated repayment of CPI’s 8% Notes and Floating Rate Notes | 1,289,000 | |||
22,000,000 | ||||
CPI: | ||||
Merger and integration related costs expected to be incurred | 9,000,000 | |||
31,000,000 | ||||
Less merger and integration related costs previously recorded by Comtech and CPI as of April 30, 2010 and April 2, 2010, respectively | 1,192,000 | |||
$ | 29,808,000 | |||
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The $7,000,000 and $4,400,000 of costs included in the above table represent contractual compensatory payments that are anticipated to be paid to certain CPI employees (including senior management) who are expected to remain in their current or similar roles upon the closing of the transaction. These merger and integration costs relate directly to the transaction; however, because of the material nonrecurring nature of these expenses, they are not included in the unaudited pro forma condensed combined statements of operations, presented herein. However, in accordance with ASC Topic805-10-25, these payments will be required to be expensed in the post combination financial statements. | ||
Of the $29,808,000 of merger and integration related costs expected to be incurred, the required premium associated with the anticipated repayment of CPI’s 8% Notes and Floating Rate Notes of $1,289,000 was recorded as a fair value adjustment to CPI’s long-term debt in the unaudited pro forma condensed combined balance sheet at April 30, 2010 and repaid concurrent with or shortly after the closing of the transaction (see Note 3 for further discussion). The $1,289,000 will not be recorded as a post combination expense. | ||
The remaining $28,519,000 was recorded in the unaudited pro forma condensed combined balance sheet at April 30, 2010 as accrued expenses and other current liabilities. Of this amount, $8,732,000, net of tax of $57,000, related to CPI’s portion of such costs and was recorded as an increase to goodwill and $15,215,000, net of tax of $4,515,000, related to Comtech’s portion of such costs and was recorded as a reduction to retained earnings in the unaudited pro forma condensed combined balance sheet at April 30, 2010. These merger and integration costs relate directly to the transaction; however, because of the material nonrecurring nature of these costs, they are not included in the unaudited pro forma condensed combined statements of operations, presented herein. The deferred tax adjustments related to these merger and integration related costs are discussed in Note 6(H). | ||
(G) | To reclassify CPI’s product warranty accrual of $4,615,000 to accrued expenses and other current liabilities to conform to Comtech’s presentation. | |
(H) | The following table summarizes the pro forma adjustments relating to deferred taxes. The estimated tax rate applied represents the estimated weighted average tax rates of the jurisdictions in which the respective deferred tax asset or liability is expected to be settled. |
Preliminary | ||||||||||||
Estimated | Deferred Tax | Deferred Tax | ||||||||||
Fair Value | Asset (Liability) - | (Asset) Liability - | ||||||||||
Adjustment | Current | Non-Current | ||||||||||
Pro forma adjustments related to: | ||||||||||||
Increase in inventory acquired | $ | 6,400,000 | $ | (2,368,000 | ) | $ | — | |||||
Net increase in property, plant and equipment acquired | 29,154,000 | — | 10,787,000 | |||||||||
Fair value of newly acquired intangibles | 242,550,000 | — | 89,744,000 | |||||||||
Fair value increase of long-term debt assumed | 1,289,000 | 477,000 | — | |||||||||
Reversal of CPI’s pre-existing intangibles | (73,964,000 | ) | — | (28,994,000 | ) | |||||||
Reversal of CPI’s deferred financing costs, net | (2,949,000 | ) | — | (1,091,000 | ) | |||||||
Estimated remaining merger and integration related costs (see Note 2) | 28,519,000 | 4,572,000 | — | |||||||||
Total | $ | 2,681,000 | $ | 70,446,000 | ||||||||
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Also, to conform to Comtech’s presentation, this adjustment reclassifies CPI’s long-term tax payable of $741,000 at April 2, 2010 from other liabilities to income taxes payable (non-current). | ||
(I) | To remove CPI’s $185,065,000 of historical stockholders’ equity as of the unaudited pro forma condensed combined balance sheet date, presented herein. In addition, to record the portion of the preliminary aggregate purchase price expected to be paid in the form of Comtech’s common stock, which has been preliminarily estimated to be $136,864,000 (split $441,000 to common stock and $136,423,000 to additionalpaid-in-capital). | |
The following summarizes the pro forma adjustments that were made to retained earnings as of April 30, 2010: |
Elimination of CPI’s historical retained earnings at April 2, 2010 | $ | 108,290,000 | ||
Accrual of Comtech’s merger and integration related costs, net of tax (see Note 6(F)) | 15,215,000 | |||
Total decrease | $ | 123,505,000 | ||
(J) | To eliminate historical sales from CPI to Comtech of $1,201,000 and $1,531,000 for the nine months ended April 30, 2010 and the fiscal year ended July 31, 2009, respectively. | |
(K) | The below table summarizes the adjustment to eliminate CPI’s historical amortization associated with its land lease. |
Nine Months Ended | Fiscal Year Ended | |||||||
April 2, | October 2, | |||||||
2010 | 2009 | |||||||
Cost of sales | $ | 166,000 | $ | 224,000 | ||||
Selling and marketing | 8,000 | 10,000 | ||||||
General and administrative | 8,000 | 10,000 | ||||||
Research and development | 6,000 | 8,000 | ||||||
$ | 188,000 | $ | 252,000 | |||||
(L) | As discussed in Note 6(F), this adjustment eliminates $1,192,000 of Comtech and CPI’s merger and integration related costs previously expensed in the unaudited pro forma condensed combined statement of operations for the nine months ended April 30, 2010. There were no such costs incurred by either company in the unaudited condensed combined statement of operations for the fiscal year ended July 31, 2009. | |
(M) | To conform to Comtech’s presentation, the $15,128,000 and $19,466,000 of CPI’s historically reported selling and marketing expenses for the nine months ended April 2, 2010 and the fiscal year ended October 2, 2009, respectively, was reclassified in the unaudited pro forma condensed combined statements of operations as follows: |
Nine Months Ended | Fiscal Year Ended | |||||||
April 2, | October 2, | |||||||
2010 | 2009 | |||||||
Selling and marketing reclassified to: | ||||||||
Selling, general and administrative | $ | 15,120,000 | $ | 19,456,000 | ||||
Amortization of intangibles (see Note 6(K)) | 8,000 | 10,000 | ||||||
$ | 15,128,000 | $ | 19,466,000 | |||||
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(N) | As further discussed in Note 3, this adjustment eliminates all of CPI’s interest expense, except for $2,100,000 of estimated interest expense associated with CPI’s 8% Notes and Floating Rate Notes assumed to be outstanding for the 75 days immediately following the closing of the merger. In addition, to conform to Comtech’s presentation, for the nine months ended April 30, 2010 and fiscal year ended July 31, 2009, $25,000 and $143,000, respectively, of interest income on CPI’s historical statement of operations was reclassified from interest expense to interest income and other. | |
(O) | To record the reduction of interest income as a result of the payment of $176,987,000 (see Note 4) in cash for the acquisition of CPI and the payments of $194,928,000, $1,289,000, $1,519,000 and $1,771,000 related to the repayment of CPI’s long-term debt, premium, swap contract settlement and accrued interest payable concurrent with the consummation of the merger. For the nine months ended April 30, 2010, interest income was reduced by $554,000 in the unaudited pro forma condensed combined statement of operations presented. For the fiscal year ended July 31, 2009, interest income was reduced by $2,881,000 in the unaudited pro forma condensed combined statement of operations presented. The interest rates used to calculate the interest income adjustments for the nine months ended April 30, 2010 and fiscal year ended July 31, 2009 was based upon the blended historical interest rates earned by each respective entity during the periods presented. The actual historical interest rates earned by both companies were nominal. In addition, this adjustment eliminates the $248,000 gain on extinguishment of debt recorded in the historical statement of operations of CPI for the fiscal year ended October 2, 2009. | |
(P) | To record the estimated net provision for income taxes associated with the unaudited pro forma adjustments recorded in the respective unaudited pro forma condensed combined statements of operations. Unaudited pro forma adjustments for each period presented were taxed at the estimated incremental rate of 37.0%. The pro forma combined provision for income taxes does not reflect the amounts that would have resulted had Comtech and CPI filed consolidated income tax returns for the respective periods presented. | |
CPI’s effective tax rate for fiscal year 2009 was a negative 0.9% and diverged from the federal and state statutory rate primarily due to several significant non-recurring discrete tax benefits: (1) approximately $4,900,000 relating to CPI’s position with regard to an outstanding audit by the Canada Revenue Agency (“CRA”), (2) approximately $1,700,000 for the correction of immaterial errors to CPI’s tax accounts that should have been recorded in prior year’s financial statements of CPI, (3) approximately $700,000 related to certain provisions of the California Budget Act of 2008 signed on February 20, 2009, which will allow a taxpayer to elect an alternative method to apportion taxable income to California for tax years beginning on or after January 1, 2011, and (4) $600,000 for state refunds claimed by CPI on prior year income tax returns based on the results of a foreign nexus study. Excluding these non-recurring discrete tax benefits, CPI’s effective tax rate would have approximated 35.9%. |
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7. | Pro Forma Earnings Per Share. |
Nine Months Ended | Fiscal Year Ended | |||||||
April 30, 2010 | July 31, 2009 | |||||||
Numerator: | ||||||||
Net income for basic calculation | $ | 62,007,000 | $ | 68,854,000 | ||||
Effect of dilutive securities: | ||||||||
Interest expense (net of tax) on 2.0% convertible senior notes | — | 2,866,000 | ||||||
Interest expense (net of tax) on 3.0% convertible senior notes | 3,351,000 | 1,030,000 | ||||||
Numerator for diluted calculation | $ | 65,358,000 | $ | 72,750,000 | ||||
Denominator: | ||||||||
Denominator for basic calculation | 32,660,000 | 30,727,000 | ||||||
Effect of dilutive securities: | ||||||||
Stock options | 332,000 | 448,000 | ||||||
Conversion of 2.0% convertible senior notes | — | 1,756,000 | ||||||
Conversion of 3.0% convertible senior notes | 5,488,000 | 1,268,000 | ||||||
Denominator for diluted calculation | 38,480,000 | 34,199,000 | ||||||
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Comtech SEC Filings | ||
(File No. 000-07928) | Period | |
Amendment No. 1 to Annual Report onForm 10-K for the Fiscal Year ended July 31, 2009 | Fiscal year ended July 31, 2009 | |
Annual Report onForm 10-K | Fiscal year ended July 31, 2009 | |
Quarterly Report onForm 10-Q | Fiscal quarter ended April 30, 2010 | |
Quarterly Report onForm 10-Q | Fiscal quarter ended January 31, 2010 | |
Quarterly Report onForm 10-Q | Fiscal quarter ended October 31, 2009 | |
Proxy Statement on Schedule 14A | Filed on November 9, 2009 | |
Current Report onForm 8-K | Filed on May 11, 2010 | |
Current Report onForm 8-K | Filed on May 5, 2010 | |
Current Report onForm 8-K | Filed on January 28, 2010 | |
Current Report onForm 8-K | Filed on December 14, 2009 | |
Current Report onForm 8-K | Filed on November 13, 2009 | |
Current Report onForm 8-K | Filed on September 23, 2009 | |
Current Report onForm 8-K | Filed on August 18, 2009 | |
Amendment No. 1 to Registration Statement onForm 8-A Filed on December 22, 1998 | Filed on December 23, 1998 | |
The description of Comtech’s common stock contained in the Registration Statement onForm 8-A | Filed on December 22, 1998 |
CPI SEC Filings | ||
(File No. 000-51298) | Period | |
Annual Report onForm 10-K | Fiscal year ended October 2, 2009 | |
Quarterly Report onForm 10-Q | Fiscal quarter ended April 2, 2010 | |
Quarterly Report onForm 10-Q | Fiscal quarter ended January 1, 2010 | |
Proxy Statement on Schedule 14A | Filed on January 20, 2010 | |
Current Report onForm 8-K | Filed on May 10, 2010 | |
Amendment No. 1 to Current Report onForm 8-K Filed February 26, 2010 | Filed on March 24, 2010 | |
Current Report onForm 8-K | Filed on February 26, 2010 | |
The description of CPI’s common stock contained in the Registration Statement onForm 8-A | Filed on April 24, 2006 |
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ARTICLE I DEFINITIONS | ||||||
1.1 | Certain Definitions | A-1 | ||||
ARTICLE II THE MERGER | ||||||
2.1 | The Merger | A-7 | ||||
2.2 | Effects of the Merger | A-7 | ||||
2.3 | Closing | A-7 | ||||
2.4 | Effective Time | A-7 | ||||
ARTICLE III SURVIVING CORPORATION | ||||||
3.1 | Certificate of Incorporation | A-8 | ||||
3.2 | Bylaws | A-8 | ||||
3.3 | Directors | A-8 | ||||
3.4 | Officers | A-8 | ||||
ARTICLE IV MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE MERGER | ||||||
4.1 | Share Consideration for the Merger; Conversion or Cancellation of Shares in the Merger | A-8 | ||||
4.2 | Exchange of Stock Certificates | A-10 | ||||
4.3 | Stock Options; Restricted Stock; Restricted Stock Units | A-12 | ||||
4.4 | Withholding Rights | A-12 | ||||
4.5 | Reservation of Shares | A-12 | ||||
4.6 | Certain Company Actions | A-12 | ||||
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY | ||||||
5.1 | Corporate Organization and Qualification | A-13 | ||||
5.2 | Capitalization | A-13 | ||||
5.3 | Authority Relative to This Agreement | A-14 | ||||
5.4 | Consents and Approvals; No Violation | A-15 | ||||
5.5 | SEC Reports; Financial Statements; Controls | A-15 | ||||
5.6 | Absence of Certain Changes or Events | A-17 | ||||
5.7 | Litigation | A-17 | ||||
5.8 | Proxy Statement; Registration Statement | A-18 | ||||
5.9 | Taxes | A-18 | ||||
5.10 | Employee Benefit Plans | A-19 | ||||
5.11 | Labor Matters | A-21 | ||||
5.12 | Environmental Laws and Regulations | A-21 | ||||
5.13 | Property and Assets | A-22 | ||||
5.14 | No Undisclosed Liabilities | A-23 | ||||
5.15 | Intellectual Property | A-23 | ||||
5.16 | Compliance with Laws and Orders | A-24 | ||||
5.17 | Company Contracts | A-24 | ||||
5.18 | Permits | A-28 |
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5.19 | Insurance | A-28 | ||||
5.20 | Transactions with Affiliates | A-28 | ||||
5.21 | Brokers and Finders | A-28 | ||||
5.22 | Opinion of Financial Advisor | A-28 | ||||
5.23 | No Rights Plan | A-28 | ||||
5.24 | Share Ownership | A-28 | ||||
5.25 | Takeover Provisions | A-29 | ||||
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB | ||||||
6.1 | Corporate Organization and Qualification | A-29 | ||||
6.2 | Capitalization | A-29 | ||||
6.3 | Authority Relative to This Agreement | A-30 | ||||
6.4 | Consents and Approvals; No Violation | A-30 | ||||
6.5 | SEC Reports; Financial Statements; Controls | A-31 | ||||
6.6 | Absence of Certain Changes or Events | A-31 | ||||
6.7 | Proxy Statement; Registration Statement | A-31 | ||||
6.8 | Cash Consideration | A-32 | ||||
6.9 | Voting Requirements | A-32 | ||||
6.10 | Interim Operations of Merger Sub | A-32 | ||||
6.11 | Brokers and Finders | A-32 | ||||
6.12 | Share Ownership; Interested Stockholder | A-32 | ||||
6.13 | Litigation | A-32 | ||||
6.14 | Compliance with Laws and Orders | A-32 | ||||
ARTICLE VII COVENANTS AND AGREEMENTS | ||||||
7.1 | Conduct of Business of the Company | A-32 | ||||
7.2 | No Solicitation of Transactions | A-35 | ||||
7.3 | Stockholders Meeting; Proxy Statement; Registration Statement | A-38 | ||||
7.4 | Efforts to Complete Transactions | A-39 | ||||
7.5 | Access to Information | A-40 | ||||
7.6 | Publicity | A-41 | ||||
7.7 | Indemnification of Directors and Officers | A-42 | ||||
7.8 | Employee Matters | A-43 | ||||
7.9 | Termination of Certain Arrangements | A-44 | ||||
7.10 | Certain Notifications | A-44 | ||||
7.11 | Further Assurances | A-44 | ||||
7.12 | Takeover Laws | A-44 | ||||
7.13 | Stockholder Litigation | A-44 | ||||
7.14 | Conduct of Parent Business | A-45 | ||||
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER | ||||||
8.1 | Conditions to Each Party’s Obligations to Effect the Merger | A-45 | ||||
8.2 | Conditions to the Company’s Obligations to Effect the Merger | A-45 | ||||
8.3 | Conditions to Parent’s and Merger Sub’s Obligations to Effect the Merger | A-46 |
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ARTICLE IX TERMINATION; WAIVER | ||||||
9.1 | Termination by Mutual Consent | A-47 | ||||
9.2 | Termination by Either Parent or the Company | A-47 | ||||
9.3 | Termination by Parent | A-47 | ||||
9.4 | Termination by the Company | A-47 | ||||
9.5 | Effect of Termination | A-47 | ||||
9.6 | Extension; Waiver | A-49 | ||||
ARTICLE X MISCELLANEOUS | ||||||
10.1 | Payment of Expenses | A-49 | ||||
10.2 | Survival of Representations and Warranties; Survival of Confidentiality | A-49 | ||||
10.3 | Modification or Amendment | A-49 | ||||
10.4 | Waiver of Conditions | A-49 | ||||
10.5 | Counterparts | A-49 | ||||
10.6 | Governing Law | A-49 | ||||
10.7 | Jurisdiction; Enforcement; Waiver of Jury Trial | A-50 | ||||
10.8 | Notices | A-51 | ||||
10.9 | Entire Agreement; Assignment | A-51 | ||||
10.10 | Parties in Interest | A-51 | ||||
10.11 | Obligation of Parent | A-52 | ||||
10.12 | Severability | A-52 | ||||
10.13 | Certain Interpretations | A-52 |
EXHIBIT A | Voting and Standstill Agreement | |
EXHIBIT B | Certificate of Incorporation of the Surviving Corporation |
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Acquisition Proposal | 7.2(a) | |
Agreement | Preamble | |
Anti-Bribery Laws | 5.16(b) | |
Anti-takeover Laws | 5.25 | |
Bid | 5.17(d) | |
Cash Consideration | 4.1(a)(ii) | |
Cashout Value | 4.3(a) | |
Certificate of Merger | 2.4 | |
Closing | 2.3 | |
Closing Date | 2.3 | |
Common Shares Trust | 4.1(b)(ii) | |
Company | Preamble | |
Company Actions | 5.7 | |
Company Balance Sheet | 5.13(a) | |
Company Board | Recitals | |
Company Bylaws | 5.1 | |
Company Capital Stock | 5.2(a) | |
Company Certificate | 5.1 | |
Company Contracts | 5.17(a)(xvii) | |
Company Disclosure Letter | 4.3(a) | |
Company Government Contract | 5.17(d) | |
Company Government Subcontract | 5.17(d) |
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Company Option | 4.3(a) | |
Company Permits | 5.18(a) | |
Company Preferred Stock | 5.2(a) | |
Company Real Property | 5.13(b) | |
Company Real Property Leases | 5.13(c) | |
Company Restricted Stock | 4.3(b) | |
Company Restricted Stock Unit | 4.3(b) | |
Company SEC Reports | 5.5(a) | |
Company Stock Award | 4.3(b) | |
Company Stockholder Approval | 5.4(b) | |
Confidentiality Agreement | 7.5(e) | |
Continuing Employees | 7.8(a) | |
Contract | 5.17(a)(i) | |
Conversion Ratio | 4.1(a)(ii) | |
DGCL | Recitals | |
Dissenting Shares | 4.1(e) | |
Effective Time | 2.4 | |
Environmental Laws | 5.12(a)(i) | |
Excess Shares | 4.1(b)(i) | |
Exchange Agent | 4.2(a) | |
Exchange Agent Agreement | 4.2(a) | |
Excluded Shares | 4.1(c) | |
Foreign Plan | 5.10(i) | |
Hazardous Material | 5.12(a)(i) | |
HSR Act | 5.4(a)(ii) | |
Indebtedness | 7.1(n) | |
Indemnified Parties | 7.7(b) | |
Law | 5.16(a) | |
Letter of Transmittal | 4.2(b) | |
Liens | 5.2(d) | |
Material Intellectual Property | 5.15(b) | |
Merger | 2.1 | |
Merger Consideration | 4.1(a)(i) | |
Merger Sub | Preamble | |
Merger Sub Capital Stock | 6.2(e) | |
Non-Controlled Entity | 5.2(f) | |
Order | 5.16(a) | |
Palo Alto Facility | 5.12(a)(vi) | |
Parent | Preamble | |
Parent Board | Recitals | |
Parent Capital Stock | 6.2(a) | |
Parent Disclosure Letter | Article VI | |
Parent Preferred Stock | 6.2(a) | |
Parent Representatives | 7.5(a) | |
Parent SEC Reports | 6.5(a) |
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Parent Stock Consideration | 4.1(a)(ii) | |
Parent Stock Price | 4.3(a) | |
Permits | 5.4(a)(ii) | |
Proxy Statement | 7.3(a)(i) | |
Registration Statement | 7.3(d) | |
SEC | 5.5(a) | |
Stockholders Meeting | 7.3(a)(iii) | |
Superior Acquisition Proposal | 7.2(f) | |
Surviving Corporation | 2.1 | |
Termination Date | 9.2 | |
Termination Fee | 9.5(b)(v) | |
Third Party | 7.2(a) | |
Varian | 5.12(c) | |
Voting Company Debt | 5.2(c) | |
WARN | 5.11(c) |
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607 Hansen Way
Palo Alto, CA 94304
Attn: O. Joe Caldarelli
Facsimile No.:(905) 877-5327
1800 Avenue of the Stars
Suite 900
Los Angeles, CA90067-4276
Attn: Richard C. Wirthlin
Facsimile No.:(310) 203-7199
68 South Service Road, Suite 230
Melville, NY 11747
Attn: Michael Porcelain
Facsimile No.:(631) 962-7203
Four Times Square
New York, NY10036-6522
Attn: Jeffrey W. Tindell
Facsimile No.:(212) 735-2000
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By: | /s/ O. J. Caldarelli |
Title: | CEO |
By: | /s/ Fred Kornberg |
Title: | CEO |
By: | /s/ Fred Kornberg |
Title: | CEO |
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by and among
Comtech Telecommunications Corp.,
and
the Stockholders named herein
dated as of May 8, 2010
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68 South Service Road, Suite 230
Melville, NY 11747
Attn: Michael Porcelain
Telephone:(631) 962-7103
Facsimile No.:(631) 962-7203
Four Times Square
New York, NY10036-6522
Attn: Jeffrey W. Tindell, Esq.
Telephone:(212) 735-3000
Facsimile No.:(212) 735-2000
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65 East 55th Street
New York, NY 10022
Attention: Jeffrey Hughes
Telephone:(212) 705-0150
Facsimile:(212) 705-0199
437 Madison Avenue
New York, NY 10022
Attention: Lawrence M. Bell, Esq.
Telephone:(212) 907-7300
Facsimile:(212) 574-0330
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By: | /s/ Fred Kornberg |
Title: | CEO |
PARTNERS II L.P.
By: | /s/ Jeffrey P. Hughes |
By: | /s/ Jeffrey P. Hughes |
Title: |
By: | /s/ Jeffrey P. Hughes |
Title: |
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CPI International, Inc.
811 Hansen Way
Palo Alto, CA 94303
D-1
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399 PARK AVENUE | ||
5th FLOOR | ||
NEW YORK, NEW YORK, 10013 | ||
T 212.883.3800 | ||
F 212.883.4260 |
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ITEM 20. | INDEMNIFICATION OF DIRECTORS AND OFFICERS |
• | for any breach of such director’s duty of loyalty to Comtech or stockholders; | |
• | for acts or omissions of such director not in good faith or which involve intentional misconduct or a knowing violation of law; | |
• | under Section 174 of the DGCL (which relates to, among other things, the liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions); or | |
• | for any transaction from which such director derived an improper personal benefit. |
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ITEM 21. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
Exhibit | ||||
Number | Description | |||
2 | .1 | Agreement and Plan of Merger by and among Comtech Telecommunications Corp., Angels Acquisition Corp. and CPI International, Inc. dated as of May 8, 2010 (included as Annex A to the proxy statement/prospectus forming part of this registration statement) (the schedules and exhibits have been omitted pursuant to Item 601(b)(2) ofRegulation S-K) | ||
3 | .1 | Restated Certificate of Incorporation of Comtech Telecommunications Corp. (incorporated herein by reference to Exhibit 3(a)(i) to the Annual Report of Comtech Telecommunications Corp. onForm 10-K for the fiscal year ended July 31, 2006) | ||
3 | .2 | Amended and Restated By-Laws of Comtech Telecommunications Corp. (incorporated herein by reference to Exhibit 3(ii) to the Current Report of Comtech Telecommunications Corp. onForm 8-K dated December 6, 2007) | ||
4 | .1 | The registrant has not filed with this registration statement copies of the instruments defining the rights of holders of long-term debt of the registrant and its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed. The registrant agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request. | ||
5 | .1 | Opinion of Proskauer Rose LLP regarding the validity of shares of Comtech Telecommunications Corp. common stock being registered hereunder | ||
10 | .1 | Voting and Standstill Agreement by and among Comtech Telecommunications Corp. and the Stockholders named therein dated as of May 8, 2010 (included as Annex B to the proxy statement/prospectus forming part of this registration statement) | ||
21 | .1 | Subsidiaries of Comtech Telecommunications Corp. (incorporated herein by reference to Exhibit 21 to the Annual Report of Comtech Telecommunications Corp. onForm 10-K for the fiscal year ended July 31, 2009) | ||
23 | .1 | Consent of KPMG LLP, Independent Registered Public Accounting Firm of Comtech Telecommunications Corp. |
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Exhibit | ||||
Number | Description | |||
23 | .2 | Consent of KPMG LLP, Independent Registered Public Accounting Firm of CPI International, Inc. | ||
24 | .1 | Power of Attorney | ||
99 | .1 | Form of Proxy Card of CPI International, Inc. | ||
99 | .2 | Consent of J.P. Morgan Securities Inc. | ||
99 | .3 | Consent of Moelis & Company LLC |
ITEM 22. | UNDERTAKINGS |
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By: | /s/ Fred Kornberg |
Title: | Chairman of the Board, |
Signature | Title | Date | ||||
/s/ Fred Kornberg Fred Kornberg | Chairman of the Board, Chief Executive Officer and President | June 21, 2010 | ||||
/s/ Michael Porcelain Michael Porcelain | Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | June 21, 2010 | ||||
/s/ Richard L. Goldberg Richard L. Goldberg | Director | June 21, 2010 | ||||
/s/ Edwin Kantor Edwin Kantor | Director | June 21, 2010 | ||||
/s/ Ira Kaplan Ira Kaplan | Director | June 21, 2010 | ||||
/s/ Gerard R. Nocita Gerard R. Nocita | Director | June 21, 2010 | ||||
/s/ Robert G. Paul Robert G. Paul | Director | June 21, 2010 |
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Exhibit | ||||
Number | Description | |||
2 | .1 | Agreement and Plan of Merger by and among Comtech Telecommunications Corp., Angels Acquisition Corp. and CPI International, Inc. dated as of May 8, 2010 (included as Annex A to the proxy statement/prospectus forming part of this registration statement) (the schedules and exhibits have been omitted pursuant to Item 601(b)(2) ofRegulation S-K) | ||
3 | .1 | Restated Certificate of Incorporation of Comtech Telecommunications Corp. (incorporated herein by reference to Exhibit 3(a)(i) to the Annual Report of Comtech Telecommunications Corp. onForm 10-K for the fiscal year ended July 31, 2006) | ||
3 | .2 | Amended and Restated By-Laws of Comtech Telecommunications Corp. (incorporated herein by reference to Exhibit 3(ii) to the Current Report of Comtech Telecommunications Corp. onForm 8-K dated December 6, 2007) | ||
4 | .1 | The registrant has not filed with this registration statement copies of the instruments defining the rights of holders of long-term debt of the registrant and its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed. The registrant agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request. | ||
5 | .1 | Opinion of Proskauer Rose LLP regarding the validity of shares of Comtech Telecommunications Corp. common stock being registered hereunder | ||
10 | .1 | Voting and Standstill Agreement by and among Comtech Telecommunications Corp. and the Stockholders named therein dated as of May 8, 2010 (included as Annex B to the proxy statement/prospectus forming part of this registration statement) | ||
21 | .1 | Subsidiaries of Comtech Telecommunications Corp. (incorporated herein by reference to Exhibit 21 to the Annual Report of Comtech Telecommunications Corp. onForm 10-K for the fiscal year ended July 31, 2009) | ||
23 | .1 | Consent of KPMG LLP, Independent Registered Public Accounting Firm of Comtech Telecommunications Corp. | ||
23 | .2 | Consent of KPMG LLP, Independent Registered Public Accounting Firm of CPI International, Inc. | ||
24 | .1 | Power of Attorney | ||
99 | .1 | Form of Proxy Card of CPI International, Inc. | ||
99 | .2 | Consent of J.P. Morgan Securities Inc. | ||
99 | .3 | Consent of Moelis & Company LLC |