-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WGKkxqrWx6o3fL45oYB7D8NmuXikxmgR/7M+BFPYgylr1E7FWdIqYNi+C7qwKOxQ P1xTgGQt/NeGXtllOtJ99Q== 0000950136-03-000935.txt : 20030425 0000950136-03-000935.hdr.sgml : 20030425 20030425082302 ACCESSION NUMBER: 0000950136-03-000935 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20030425 GROUP MEMBERS: STC MERGER CO. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SIGNAL TECHNOLOGY CORP CENTRAL INDEX KEY: 0000901119 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 042758268 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-47032 FILM NUMBER: 03663313 BUSINESS ADDRESS: STREET 1: 222 ROSEWOOD DR CITY: DANVERS STATE: MA ZIP: 01923 BUSINESS PHONE: 9787742281 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CRANE CO /DE/ CENTRAL INDEX KEY: 0000025445 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 131952290 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: CRANE CO. STREET 2: 100 FIRST STAMFORD PLACE CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 203-363-7300 MAIL ADDRESS: STREET 1: CRANE CO. STREET 2: 100 FIRST STAMFORD PLACE CITY: STAMFORD STATE: CT ZIP: 06902 SC 13D 1 file001.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 SIGNAL TECHNOLOGY CORPORATION ----------------------------------------------------------------- (Name of Issuer) Common Stock, par value $0.01 per share ----------------------------------------------------------------- (Title of Class of Securities) 826675 100 ----------------------------------- (CUSIP Number) Crane Co. 100 First Stamford Place Stamford, Connecticut 06902 ATTN: General Counsel (203) 363-7300 ----------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 16, 2003 ------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act. CUSIP NO. 826675 10 0 - -------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY). Crane Co. -------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [x] ---------------------------------------------------------- (b) [ ] ---------------------------------------------------------- 3. SEC USE ONLY -------------------------------------------------------------------- 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) BK, WC -------------------------------------------------------------------- 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] -------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------- NUMBER OF 7. SOLE VOTING POWER SHARES 0 BENEFICIALLY ----------------------------------------------------------- OWNED BY EACH 8. SHARED VOTING POWER REPORTING 1,762,318 PERSON WITH ----------------------------------------------------------- 9. SOLE DISPOSITIVE POWER 0 ----------------------------------------------------------- 10. SHARED DISPOSITIVE POWER 1,762,318 ----------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,762,318 -------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ] -------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.9% -------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO -------------------------------------------------------------------- CUSIP NO. 826675 100 - -------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY). STC Merger Co. -------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [x] ---------------------------------------------------------- (b) [ ] ---------------------------------------------------------- 3. SEC USE ONLY -------------------------------------------------------------------- 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) AF -------------------------------------------------------------------- 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] -------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------- NUMBER OF 7. SOLE VOTING POWER SHARES 0 BENEFICIALLY ----------------------------------------------------------- OWNED BY EACH 8. SHARED VOTING POWER REPORTING 1,762,318 PERSON WITH ----------------------------------------------------------- 9. SOLE DISPOSITIVE POWER 0 ----------------------------------------------------------- 10. SHARED DISPOSITIVE POWER 1,762,318 ----------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,762,318 -------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ] -------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.9% -------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO -------------------------------------------------------------------- SCHEDULE 13D On April 16, 2003, Crane Co., a Delaware corporation ("Crane"), STC Merger Co., a Delaware corporation ("Purchaser"), and Signal Technology Corporation, a Delaware corporation (the "Issuer"), entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which, following consummation of the Offer (as defined in the Offer to Purchase), Purchaser will be merged with and into the Issuer (the "Merger"), with the Issuer continuing as an indirect wholly owned subsidiary of Crane. Purchaser is a direct, wholly owned subsidiary of Crane International Holdings, Inc., a Delaware corporation ("CIH") that is a direct, wholly owned subsidiary of Crane. In connection with the execution of the Merger Agreement, Crane and Purchaser entered into Tender and Voting Agreements, each dated April 16, 2003 (the "Tender and Voting Agreements"), with certain stockholders of the Issuer (the "Tendering Stockholders") pursuant to which each Tendering Stockholder has agreed (x) to tender, or cause the relevant record holder(s) to tender, in the Offer all of the shares of common stock, par value $0.01 per share ("Shares"), of the Issuer beneficially owned by the Tendering Stockholder and (y) at any meeting of the stockholders of the Issuer, however called, or in any written consent in lieu thereof, to be present at any such meeting and to vote his or her Shares in favor of the Merger, the Merger Agreement and otherwise in favor of the transactions contemplated thereby, and against any action or agreement that would impede, interfere with, delay, postpone, discourage or adversely affect the Merger or the Offer, including, but not limited to, any agreement or arrangement related to a Competing Transaction (as defined in the Offer to Purchase). Any Shares that a Tendering Stockholder may subsequently acquire automatically become subject to the Tender and Voting Agreement. Pursuant to the Tender and Voting Agreements, each Tendering Stockholder granted to Purchaser and to each officer of Crane, a proxy to vote the Tendering Stockholder's Shares as indicated above. The Merger Agreement and the Tender and Voting Agreements are described more fully in the Offer to Purchase, dated April 25, 2003 (the "Offer to Purchase"), filed as Exhibit 1 hereto. ITEM 1. SECURITY AND ISSUER This Schedule 13D relates to shares of the common stock, par value $0.01 per share (the "Shares"), of Signal Technology Corporation, a Delaware corporation (the "Issuer"). The principal executive offices of the Issuer are located at The Tower at Northwoods, 222 Rosewood Drive, Danvers, Massachusetts 01923. ITEM 2. IDENTITY AND BACKGROUND (a) - (c) and (f) This Schedule 13D is being filed by Crane Co., a Delaware corporation ("Crane"), and STC Merger Co., a Delaware corporation ("Purchaser"). Purchaser is a wholly owned subsidiary of Crane International Holdings, Inc., a Delaware corporation ("CIH") that is wholly owned by Crane. Information concerning the principal business and the address of the principal offices of Crane, CIH and Purchaser is set forth in "Section 8 -- Certain Information Concerning Crane and Purchaser" of the Offer to Purchase, and is incorporated herein by reference. The names, citizenship, principal occupation or employment and the name, principal business and address of any organization in which such employment is conducted of the directors and executive officers of Crane and Purchaser are set forth in Annex A to the Offer to Purchase and are incorporated herein by reference. (d) and (e) During the last five years, neither Crane, CIH, Purchaser nor, to the best of their knowledge, any of the persons listed in Annex A to the Offer to Purchase (1) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); or (2) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The information set forth in "Section 9 - Source and Amount of Funds" of the Offer to Purchase is incorporated herein by reference. The Credit Agreement referred to therein is filed as Exhibit 12(b) to the Schedule TO filed by Purchaser on April 25, 2003 and is incorporated herein by reference. ITEM 4. PURPOSE OF TRANSACTION (a) - (g) and (j) The information set forth in "Section 11 - Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights" of the Offer to Purchase is incorporated herein by reference. (h) and (i) The information set forth in "Section 12 - Certain Effects of the Offer and the Merger" of the Offer to Purchase is incorporated herein by reference. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a)-(c) Crane, CIH and Purchaser each may be deemed to beneficially own 1,762,318 Shares in the aggregate, representing 16.9% of the Shares outstanding as of the close of business on April 24, 2003. Pursuant to the Tender and Voting Agreements, the Tendering Stockholders have agreed with Crane and Purchaser to tender the Shares owned by them pursuant to the Offer and to vote the Shares owned by them in favor of the Merger Agreement and the transactions contemplated thereby, and against other transactions, and grant Purchaser and each officer of Crane an irrevocable proxy to so vote or grant consent or approval. CIH may be deemed to beneficially own the Shares beneficially owned by Purchaser as reported herein by virtue of its ownership of all of the capital stock of Purchaser. Crane and Purchaser share with the Tendering Stockholders the power to vote or direct the vote and to dispose or direct the disposition of the Shares owned by the Tendering Stockholders. Following the acceptance for payment of such Shares in the Offer, Crane and Purchaser shall have the sole power to vote or direct the vote of the shares reported as beneficially owned herein. The information set forth in "Introduction", "Section 8 - Certain Information Concerning Crane and Purchaser" and "Section 11 - Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights" of the Offer to Purchase is incorporated herein by reference. (d) Subject to the terms and conditions of each of the Tender and Voting Agreements, each Tendering Stockholder has the right to receive and the power to direct the receipt of dividends from, or the proceeds from the sale of, the Shares to which each of the Tender and Voting Agreements relates. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER The information set forth in "Introduction" and "Section 10 -- Background of the Offer; Contacts with Signal", "Section 11 -- Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights", and "Section 16 -- Fees and Expenses" of the Offer to Purchase is incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT NO. DESCRIPTION - -------------- -------------------------------------------------------------------------------------------- 1 Offer to Purchase dated April 25, 2003. 2 Agreement and Plan of Merger dated April 16, 2003 by and among Crane, Purchaser and Signal. 3 Form of Stockholder Tender and Voting Agreement by and among Crane, Purchaser and the Tendering Stockholders 4 Joint Filing Agreement dated April 25, 2003 by and between Crane and Purchaser. 5 Multicurrency Credit Agreement, dated as of November 18, 1998, with the Bank of New York as Syndication Agent, Fleet National Bank as Documentation Agent, Chase Manhattan Bank and First Union National Bank as Co-Agents, First National Bank of Chicago as Administration Agent and certain other lenders (Incorporated by reference to Exhibit 12(b) to the Schedule TO filed by the Purchaser on April 25, 2003).
SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: April 25, 2003 CRANE CO. /s/ Augustus I. duPont ------------------------------------------- Name: Augustus I. duPont Title: Vice President STC MERGER CO. /s/ Augustus I. duPont ------------------------------------------- Name: Augustus I. duPont Title: Vice President EXHIBIT INDEX
EXHIBIT DESCRIPTION NO. ----------- -------------------------------------------------------------------------------------------- 1 Offer to Purchase dated April 25, 2003. 2 Agreement and Plan of Merger dated April 16, 2003 by and among Crane, Purchaser and Signal. 3 Form of Stockholder Tender and Voting Agreement by and among Crane, Purchaser and the Tendering Stockholders. 4 Joint Filing Agreement dated April 25, 2003 by and between Crane and Purchaser. 5 Multicurrency Credit Agreement, dated as of November 18, 1998, with the Bank of New York as Syndication Agent, Fleet National Bank as Documentation Agent, Chase Manhattan Bank and First Union National Bank as Co-Agents, First National Bank of Chicago as Administration Agent, and certain other lenders (Incorporated by reference to Exhibit 12(b) to the Schedule TO filed by the Purchaser on April 25, 2003).
EX-99.1 3 file002.txt OFFER TO PURCHASE DATED APRIL 25, 2003 OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS) OF SIGNAL TECHNOLOGY CORPORATION AT $13.25 NET PER SHARE BY STC MERGER CO. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF CRANE CO. - ------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, MAY 22, 2003, UNLESS THE OFFER IS EXTENDED. - ------------------------------------------------------------------------------- This Offer is being made pursuant to an Agreement and Plan of Merger, dated April 16, 2003, among Crane Co., a Delaware corporation, STC Merger Co., a Delaware corporation and an indirect wholly owned subsidiary of Crane (the "Purchaser"), and Signal Technology Corporation, a Delaware corporation ("Signal"). The Board of Directors of Signal (i) has approved the merger agreement and the transactions contemplated thereby, including this Offer and the subsequent merger of the Purchaser with and into Signal, (ii) has declared the merger agreement advisable, (iii) has determined that the terms of this Offer and the merger are fair to, and in the best interests of Signal and its stockholders, and (iv) has recommended that Signal's stockholders accept this Offer and tender their shares of Signal common stock. This Offer is conditioned upon (i) there having been validly tendered pursuant to the Offer, and not withdrawn, prior to the expiration of the Offer, a number of outstanding shares of the common stock of Signal (the "Shares") that, when added to the Shares, if any, previously acquired by the Purchaser or Crane or any of their respective affiliates, represents a majority of the then total outstanding Shares (assuming, for this purpose, the exercise of all options to purchase shares of common stock with a per share exercise price of less than $13.25) and (ii) any applicable waiting period (and any extension(s) thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having expired or been terminated prior to the expiration of the Offer. This Offer is also subject to other important conditions. See "The Tender Offer--Certain Conditions of the Offer." A summary of the principal terms of the Offer appears on pages 1 through 5 of this Offer to Purchase. You should read this entire document carefully before deciding whether to tender your Shares in the Offer. IMPORTANT Any stockholder desiring to tender Shares in the Offer must (1) complete and sign the Letter of Transmittal (or a manually signed facsimile thereof) in accordance with the instructions in the Letter of Transmittal, including any required signature guarantees, and mail or deliver the Letter of Transmittal (or such manually signed facsimile), with the certificate(s) for the tendered Shares and any other required documents, to The Bank of New York, as Depositary, (2) follow the procedures for book-entry transfer of Shares set forth in "The Tender Offer--Procedures for Tendering Shares" or (3) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. Stockholders having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if they desire to tender such registered Shares in the Offer. A stockholder who desires to tender Shares and whose certificates for such Shares are not immediately available, or who cannot comply with the procedures for book-entry transfer on a timely basis, may tender such Shares by following the procedures for guaranteed delivery set forth in "The Tender Offer--Procedures for Tendering Shares." Questions and requests for assistance may be directed to Georgeson Shareholder Communications Inc., the Information Agent, at its address and telephone numbers set forth on the back cover of this Offer to Purchase. Requests for additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and any other tender offer materials may be directed to the Information Agent. Stockholders may also contact their brokers, dealers, commercial banks, trust companies or other nominees. ---------- April 25, 2003 TABLE OF CONTENTS
SECTION PAGE TABLE OF CONTENTS ...................................................................... i SUMMARY TERM SHEET ..................................................................... 1 INTRODUCTION ........................................................................... 6 THE TENDER OFFER ....................................................................... 8 1. Terms of the Offer .............................................................. 8 2. Acceptance for Payment and Payment for Shares ................................... 9 3. Procedures for Tendering Shares ................................................. 10 4. Rights of Withdrawal ............................................................ 13 5. Certain Federal Income Tax Consequences of the Offer ............................ 14 6. Price Range of Shares; Dividends ................................................ 14 7. Certain Information Concerning Signal ........................................... 15 8. Certain Information Concerning Crane and Purchaser .............................. 16 9. Source and Amount of Funds. ..................................................... 17 10. Background of the Offer; Contacts with Signal ................................... 18 11. Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights. 21 12. Certain Effects of the Offer and the Merger ..................................... 39 13. Dividends and Distributions ..................................................... 41 14. Certain Conditions of the Offer ................................................. 41 15. Certain Legal Matters ........................................................... 42 16. Fees and Expenses ............................................................... 44 17. Miscellaneous ................................................................... 45 Annex A Information Concerning the Directors and Executive Officers of Crane and Purchaser ..................................................................... A-1 Annex B Section 262 of the Delaware General Corporation Law ........................... B-1
i SUMMARY TERM SHEET Following are some of the questions that you, as a Signal Technology Corporation stockholder, may have about us and our tender offer and answers to those questions. The following questions and answers are intended to be an overview only and may not include all of the information about the offer that is important to you. To better understand the offer and for a more complete description of the terms of the offer, you should read carefully this entire Offer to Purchase and the accompanying Letter of Transmittal. We have included section references of the Offer to Purchase to direct you to a more complete description of the topics contained in this summary. WHO IS OFFERING TO BUY MY SECURITIES? We are STC Merger Co., an indirect wholly owned subsidiary of Crane, and we were formed for the purpose of making the offer for all the shares of common stock of Signal Technology Corporation, as described in this document. Since we were formed, our only activities have been related to making this tender offer and effecting the subsequent merger with Signal. Crane is a diversified manufacturer of engineered industrial products. See "The Tender Offer--Certain Information Concerning Crane and Purchaser" for further information about us and Crane. WHY ARE YOU MAKING THIS OFFER? We are making this tender offer to enable our parent company, Crane, to acquire control of, and ultimately to acquire the entire equity interest in, Signal. Our offer to buy your shares is the first step in our plans to acquire 100% of Signal. As soon as practicable following the closing of our offer, we will merge into Signal. After the merger, Signal will be wholly owned by a subsidiary of our parent, Crane. See "The Tender Offer--Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights" for more information. WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER? We are offering to buy all of the outstanding shares of common stock of Signal, including the associated common stock purchase rights. This is the only class of Signal capital stock outstanding. See "The Tender Offer--Terms of the Offer" for more information. HOW MUCH ARE YOU OFFERING TO PAY, AND WHAT IS THE FORM OF PAYMENT? We are offering to pay $13.25 net in cash, without interest, for each outstanding share of common stock of Signal. See "The Tender Offer--Terms of the Offer" for more information. DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT? Yes. We will be financing the offer with cash available from our parent, Crane. Crane will contribute and/or loan to us sufficient funds to pay for all of the shares of Signal common stock that are accepted for payment by us in our offer and to make payments for any shares of Signal common stock that are not purchased in our offer and that will be converted into the right to receive $13.25 per share in cash in the merger described above, following the successful completion of our offer. Crane expects to use its existing cash resources and funds borrowed under its existing line of credit in order to make these contributions or loans. Our offer is not conditioned upon any specific financing arrangements. See "The Tender Offer--Source and Amount of Funds" for more information. WHAT DOES MY BOARD OF DIRECTORS THINK OF THE OFFER? The Board of Directors of Signal, by unanimous vote (with one recused director), (i) has approved the merger agreement and the transactions contemplated thereby, including the offer and the subsequent merger of us with and into Signal, (ii) has declared the merger agreement advisable, (iii) has determined that the terms of the offer and the merger are fair to, and in the best interests of, Signal and its stockholders, and (iv) has recommended that Signal's stockholders accept the offer. The Board of Directors has also amended Signal's stockholder rights agreement to render it inapplicable to the offer and the merger. Accordingly, Signal's Board of Directors has recommended that stockholders tender their shares of Signal common stock pursuant to the offer and vote to adopt the merger agreement at any meeting of Signal's stockholders that may be called to consider such adoption. See "Introduction" for more information. WILL THE EXECUTIVE OFFICERS AND DIRECTORS OF SIGNAL PARTICIPATE IN THE OFFER? Yes. Certain executive officers and directors of Signal (and certain family members and trusts of the directors) have entered into agreements with us and Crane under which they have agreed to tender their shares in the offer and, if required, to vote their shares in favor of the merger. See "Introduction" and "The Tender Offer--Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights" for more information. IS YOUR FINANCIAL CONDITION OR THE FINANCIAL CONDITION OF CRANE RELEVANT TO MY DECISION ON WHETHER TO TENDER MY SHARES IN THE OFFER? We do not think that our or Crane's financial condition is particularly relevant to your decision because: o our offer is being made for all outstanding shares and solely for cash; o our offer is not subject to any specific financing condition; o Crane presently has available cash and financing commitments that are more than sufficient to pay the purchase price for all outstanding shares of Signal's common stock; and o if we consummate the offer, we will acquire any remaining shares for the same cash price in the merger. See "The Tender Offer--Source and Amount of Funds" for more information. IS THERE AN AGREEMENT GOVERNING THE OFFER? Yes. Signal has entered into a merger agreement with Crane and us, dated April 16, 2003. The merger agreement provides for the terms and conditions of our offer and our merger into Signal. See "The Tender Offer--Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights" for more information. HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER MY SHARES? You may tender your shares into the offer until 12:00 midnight, New York City time, on Thursday, May 22, 2003, which is the scheduled expiration date of the offering period, unless we decide or are required to extend the offering period and/or we provide for a subsequent offering period. If you cannot deliver everything that is required to tender your shares by that time, you may be able to use a guaranteed delivery procedure to tender your shares. See "The Tender Offer--Terms of the Offer" and "The Tender Offer--Procedures for Tendering Shares" for more information. CAN THE OFFER BE EXTENDED, AND HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED? Yes. We have agreed in the merger agreement that: o We may, from time to time, extend the offer beyond the otherwise scheduled expiration date if at that date any conditions to our obligation to accept for payment and to pay for shares has not been satisfied or waived. 2 o If on any date that the offer is otherwise scheduled to expire, any condition(s) to the offer has not been satisfied or waived, Signal may require that we extend the offer from time to time for up to such period(s) of time thereafter as Signal reasonably determines to be necessary in order to permit such condition(s) to be satisfied (but in no event will Signal be able to require us to extend the offer for more than thirty-five (35) days in the aggregate or, if earlier, beyond June 30, 2003, or to waive any condition(s) to the offer). o We shall extend the offer for any period required by rule, regulation, interpretation or position of the Securities and Exchange Commission applicable to the offer. o If on any date that the offer is otherwise scheduled to expire, there have been tendered at least a majority of the outstanding shares, but less than ninety (90%) percent, we may extend the offer, from time to time, for up to an aggregate of fifteen (15) business days. If we extend our offer, we will notify The Bank of New York, as Depositary, and issue a press release by 9:00 a.m., New York City time, on the next business day following the previously scheduled expiration date of our offer stating the approximate number of shares tendered as of such date and the extended expiration date. See "The Tender Offer--Terms of the Offer" for more information. WILL THERE BE A SUBSEQUENT OFFERING PERIOD? Following the acceptance of and payment for all the shares tendered during the initial offering period, we may elect to provide a subsequent offering period for up to twenty (20) business days. If we opt to provide a subsequent offering period, you may tender your shares to us in the subsequent offering period for the same price payable in the initial offering period. See "The Tender Offer--Terms of the Offer" for more information. WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER? The offer is conditioned upon (i) there having been validly tendered pursuant to the offer, and not withdrawn prior to the expiration of the offer, a number of shares of the common stock of Signal that, when added to the shares, if any, previously acquired by us or Crane or any of our respective affiliates, represents a majority of the then total issued and outstanding shares (assuming, for this purpose, the exercise of all options to purchase shares that have a per share exercise price of less than $13.25), and (ii) any applicable waiting period (and any extension(s) thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having expired or been terminated prior to the expiration of the offer. The offer is also subject to other important conditions. See "The Tender Offer--Certain Conditions of the Offer." HOW DO I TENDER MY SHARES? If you hold the certificates for your shares, you should complete the enclosed Letter of Transmittal and enclose all the documents required by it, including your share certificates, and send them to the Depositary at one of the addresses listed on the back cover of this document. If your shares are held in "street name" by your broker, dealer, commercial bank, trust company or other nominee, you must instruct that nominee to tender such shares on your behalf. In any case, the Depositary must receive all required documents prior to 12:00 midnight, New York City time, on Thursday, May 22, 2003, which is the expiration date of the offer, unless the offer is extended. If you cannot comply with any of these procedures, you still may be able to tender your shares by using the guaranteed delivery procedures described in this document. See "The Tender Offer--Procedures for Tendering Shares" for more information. CAN I WITHDRAW SHARES THAT I PREVIOUSLY TENDERED IN YOUR OFFER, AND UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES? The tender of your shares may be withdrawn at any time prior to the expiration date of our offer, and, if we have not accepted your shares for payment by June 23, 2003, you may withdraw them at 3 any time after such time until we accept shares for payment. You may not, however, withdraw shares tendered during any subsequent offering period. See "The Tender Offer--Rights of Withdrawal" for more information. HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES? You (or your broker, dealer, bank, trust company or other nominee if your shares were held in "street name") must notify the Depositary at one of the addresses listed on the back cover of this document, and the notice must include the name of the stockholder that tendered the shares, the number of shares to be withdrawn and the name in which the tendered shares are registered. For more information about the procedures for withdrawing your previously tendered shares, see "The Tender Offer--Rights of Withdrawal." HOW WILL I BE PAID FOR MY TENDERED SHARES? We will pay for your validly tendered, and not withdrawn, shares by depositing the purchase price with the Depositary, which will act as your agent for the purpose of receiving payment from us and transmitting such payment to you. In all cases, payment for tendered Signal shares will be made only after timely receipt by the Depositary of certificates for the shares (or of a confirmation of a book-entry transfer of the shares), a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) and any other required documents. See "The Tender Offer--Acceptance for Payment and Payment for Shares" for more information. IF YOU CONSUMMATE THE OFFER, WHAT ARE YOUR PLANS WITH RESPECT TO SHARES THAT ARE NOT TENDERED IN THE OFFER? If we consummate the offer, we have agreed to cause a merger to occur between us and Signal in which any stockholders who have not previously tendered, or have tendered and subsequently withdrawn, their shares also will receive $13.25 per share, net in cash, without interest, subject to the right of these remaining stockholders to dissent and demand the fair cash value of their shares under Delaware law. See "The Tender Offer--Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights" for more information. WILL I HAVE DISSENTERS' RIGHTS? Dissenters' rights are not available in connection with the offer. However, if the merger is consummated, holders of shares that were not accepted for payment and paid for by us in the offer may have rights pursuant to the provisions of Section 262 of the Delaware General Corporation Law to dissent and demand an appraisal of their shares. Under Section 262, dissenting stockholders who comply with all of the applicable statutory procedures will be entitled to receive a judicial determination of the fair value of their shares (exclusive of any element of value arising from the accomplishment or expectation of the merger) and to receive payment of such fair value in cash, together with a fair rate of interest, if any. Any such judicial determination of the fair value of the shares could be based upon factors other than, or in addition to, the price per share to be paid in the merger or the market value of the shares. The value so determined could be more or less than the price per share to be paid in the merger. See "The Tender Offer--Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights" and Annex B to this Offer to Purchase for a fuller discussion and the complete text of Section 262 of the Delaware General Corporation Law. IF YOU SUCCESSFULLY COMPLETE YOUR OFFER, WHAT WILL HAPPEN TO SIGNAL'S BOARD OF DIRECTORS? If we successfully complete our offer, under the merger agreement, we are entitled to designate a number of individuals who would become directors of Signal and comprise at least a majority of the 4 members of Signal's Board of Directors. If that happens, Signal has agreed to use its reasonable best efforts to cause our designees to be elected or appointed to its Board of Directors. Therefore, if we successfully complete our offer, we will obtain control over the management of Signal shortly afterwards. We have agreed in the merger agreement that, prior to the merger, Signal's Board of Directors always will have at least two members who are current directors of Signal (one of whom shall be George Lombard, Signal's current Chairman and Chief Executive Officer). After the election or appointment of the directors designated by us to Signal's Board of Directors and prior to the effectiveness of the merger, the approval of a majority of the continuing Signal directors (or the approval of the remaining director if there are fewer than two such directors on Signal's Board of Directors at the time) will be required (i) for Signal to amend or terminate the merger agreement; (ii) for any amendment to Signal's Certificate of Incorporation or By-laws; (iii) for Signal to extend the time for the performance of any of our or Crane's obligations or other acts; (iv) to exercise or grant a waiver of any of Signal's rights under the merger agreement; or (v) for any other consent or action by Signal's Board of Directors with regard to any substantive matter relating to the merger agreement. For more information, see "The Tender Offer--Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights." IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES? The purchase of Signal shares by us in the offer will reduce the number of shares that might otherwise trade publicly and may reduce the number of holders of shares, which could adversely affect the liquidity and market value of the remaining shares held by the public. The shares may also cease to be quoted on the Nasdaq National Market. Also, Signal may cease making filings with the Securities and Exchange Commission or otherwise may no longer be required to comply with the Securities and Exchange Commission's rules relating to publicly-held companies. Following our merger with and into Signal, Crane intends to cause the shares of Signal to cease to be quoted on the Nasdaq National Market and cease to be registered under the Securities Exchange Act of 1934, as amended. See "The Tender Offer--Certain Effects of the Offer and the Merger" for more information. WHAT WAS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE? On April 15, 2003, the last full trading day prior to the date of execution of the merger agreement, the last reported sales price of Signal common stock on the Nasdaq National Market was $11.27. On April 24, 2003, the last full trading day before the commencement of the offer, the last reported sales price of Signal common stock on the Nasdaq National Market was $13.15. You should obtain recent market quotations for your shares in helping you to decide whether to tender your shares. See "The Tender Offer--Price Range of Shares; Dividends" for recent high and low sales prices of such shares. IS MY SALE OF SHARES IN THE OFFER A TAXABLE TRANSACTION? For most stockholders, yes. In general, stockholders who are United States persons will recognize gain or loss for United States federal income tax purposes equal to the difference between the adjusted basis of the shares sold and the amount of cash received for them. You are urged to consult your own tax advisor to determine the particular tax consequences to you of our offer and the merger. See "The Tender Offer--Certain Federal Income Tax Consequences of the Offer" for more general information. WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER? If you have any questions you should contact the Information Agent, Georgeson Shareholder Communications Inc., at (800) 678-9601. See the back cover of this document for more information. 5 To: The Holders of Shares of the Common Stock of Signal Technology Corporation: INTRODUCTION STC Merger Co., a Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of Crane Co., a Delaware corporation ("Crane"), hereby offers to purchase all of the outstanding shares (the "Shares") of common stock, par value $0.01 per share (the "Common Stock"), of Signal Technology Corporation, a Delaware corporation ("Signal" or the "Company"), and the associated common stock purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as of January 26, 1999, between Signal and BankBoston, N.A., as Rights Agent (as amended, the "Rights Agreement"), at $13.25 per Share, net to the seller in cash, without interest thereon (the "Per Share Amount"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). Unless the context otherwise requires, all references to Shares shall include the Rights. The Offer is being made pursuant to an Agreement and Plan of Merger, dated April 16, 2003 (the "Merger Agreement"), among Crane, Purchaser and Signal, pursuant to which, after the completion of the Offer and on the terms and subject to the conditions of the Merger Agreement, Purchaser will be merged with and into Signal (the "Merger"), with Signal continuing as the surviving corporation (the "Surviving Corporation"). As a result of the Merger, Signal will become an indirect wholly owned subsidiary of Crane. In connection with the Merger Agreement, Crane and Purchaser have entered into Stockholder Tender and Voting Agreements (the "Tender and Voting Agreements") with certain directors and executive officers of Signal (and certain family members and trusts of certain of such directors) pursuant to which such directors, executive officers, family members and trusts have, among other things, agreed to tender pursuant to the Offer or otherwise sell to Purchaser or Crane their Shares. These directors, executive officers, family members and trusts hold, in the aggregate, 1,762,318 Shares (or, based on information supplied by Signal, approximately 16.9% of the outstanding Shares as of April 24, 2003). The Merger Agreement and the Tender and Voting Agreements are more fully described below in "The Tender Offer--Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights." Tendering stockholders who are record holders of their Shares and tender directly to The Bank of New York (the "Depositary") will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer. Stockholders whose Shares are held through a broker, dealer, commercial bank, trust company or other nominee should consult such institution as to whether it charges any service fees. Purchaser will pay all reasonable charges and expenses of the Depositary and Georgeson Shareholder Communications Inc. (the "Information Agent") incurred in connection with the Offer. The Offer is conditioned upon there having been validly tendered pursuant to the Offer, and not withdrawn, prior to the expiration of the Offer, that number of Shares which, when added to the Shares, if any, previously acquired by Purchaser or Crane or any of their respective affiliates, represents a majority of the then total issued and outstanding Shares (assuming, for this purpose, the exercise of all options to purchase shares of Common Stock with a per share exercise price of less than $13.25) (the "Minimum Condition"). The Offer is also subject to certain other important terms and conditions. The Board of Directors of Signal by unanimous vote (with one director recused) (i) has approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, (ii) has declared the Merger Agreement advisable, (iii) has determined that the terms of the Offer and the Merger are fair to, and in the best interests of, Signal and its stockholders, and (iv) has recommended that Signal's stockholders accept the Offer. Accordingly, Signal's Board of Directors has recommended that its stockholders tender their Shares pursuant to the Offer and, if they do not, to vote to adopt the Merger Agreement at any meeting of stockholders that may be called to consider such matter. 6 Wachovia Securities, Inc. ("Wachovia"), financial advisor to the Board of Directors of Signal, has delivered to the Board of Directors of Signal its opinion, dated April 16, 2003 (the "Financial Advisor Opinion"), to the effect that, as of such date, and based on and subject to the matters set forth therein, the cash consideration to be received by the holders of Shares pursuant to the Offer and the Merger is fair to such holders, from a financial point of view. A copy of the Financial Advisor Opinion, which sets forth the assumptions made, procedures followed, matters considered and limits on the review undertaken, is attached as Annex A to Signal's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), which has been filed by Signal with the Securities and Exchange Commission (the "SEC") in connection with the Offer and is being mailed to Signal stockholders with this Offer to Purchase. Stockholders are urged to read the Financial Advisor Opinion in its entirety. According to Signal, as of April 24, 2003, there were 10,457,887 Shares issued and outstanding and 2,772,700 shares of Common Stock reserved for future issuance pursuant to stock options or other rights to acquire shares of Common Stock granted and outstanding pursuant to Signal's 1992 Equity Incentive Stock Option Plan and 2001 Equity Incentive Plan (collectively, the "Stock Option Plans") and its Employee Stock Purchase Plan. According to Signal, as of April 24, 2003 there were 2,321,200 options to acquire shares of Common Stock with a per share exercise price of less than $13.25. Accordingly, the Minimum Condition would be satisfied if at least 6,389,544 Shares were validly tendered and not withdrawn prior to the expiration of the Offer. Of the 6,389,544 Shares required to satisfy the Minimum Condition, 1,762,318 Shares, or 27.6% of the Minimum Condition, are required to be tendered pursuant to the Tender and Voting Agreements. The Signal stockholders party to such agreements hold stock options covering additional shares of Common Stock. Completion of the Merger is subject to the satisfaction of a number of conditions, including, if required by applicable law, the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding Shares. If the Offer is successfully completed, Purchaser will have sufficient voting power to ensure that the Merger will be approved. In addition, if Purchaser owns ninety (90%) percent or more of the then outstanding Shares after purchasing Shares in the Offer, under the Delaware General Corporation Law (the "DGCL"), Purchaser and Crane will be able to complete the Merger without obtaining approval of the Merger Agreement by any remaining holders of Shares. Dissenters' rights are not available in connection with the Offer; however, stockholders will have dissenters' rights in connection with the Merger regardless of whether the Merger is consummated with or without a vote of Signal's stockholders. See "The Tender Offer--Purposes of the Offer; the Merger Agreement; the Tender and Voting Agreements; the Indemnification Agreements; Dissenters' Rights; Plans for Signal; the Rights." Certain general United States federal income tax consequences of the sale of Shares in the Offer and the conversion of Shares into cash pursuant to the Merger are described in "The Tender Offer--Certain Federal Income Tax Consequences of the Offer." THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION ABOUT THE OFFER AND SHOULD BE READ CAREFULLY AND IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 7 THE TENDER OFFER 1. TERMS OF THE OFFER Upon the terms and subject to the conditions of the Offer (including, if the Offer were extended or amended, the terms and conditions of such extension or amendment), Purchaser will accept for payment and pay for all Shares validly tendered, and not withdrawn in the manner described in Section 4 of this Offer to Purchase, on or prior to the Expiration Date. The term "Expiration Date" means 12:00 midnight, New York City time, on Thursday, May 22, 2003, unless Purchaser, in accordance with the Merger Agreement, elects or is required to extend the period during which the Offer is open, in which event the term "Expiration Date" means the latest time and date on which the Offer, as so extended, expires. Subject to the terms and conditions of the Merger Agreement, (i) if, on any otherwise scheduled Expiration Date, any condition(s) to the Offer has not been satisfied or waived, Purchaser may, in its sole discretion, extend the Offer from time to time for such period(s) of time as Purchaser reasonably determines to be necessary in order to permit such condition(s) to be satisfied, (ii) if, on any otherwise scheduled Expiration Date, any condition(s) to the Offer has not been satisfied or waived, Purchaser shall, if Signal so demands in writing at least two (2) business days prior to the otherwise scheduled Expiration Date, extend the Offer from time to time for up to such period(s) of time thereafter as Signal reasonably determines to be necessary in order to permit such condition(s) to be satisfied (but in no event shall Purchaser be required to so extend the Offer for more than thirty-five (35) days in the aggregate or, if earlier, beyond June 30, 2003, or to waive any condition(s) to the Offer), (iii) Purchaser shall extend the Offer for any period of time that may be required by any rule, regulation, interpretation or position of the SEC applicable to the Offer, or (iv) if, on any otherwise scheduled Expiration Date, the Minimum Condition has been satisfied but the sum of the number of Shares that have been validly tendered and not withdrawn pursuant to the Offer plus the number of Shares owned by Purchaser or Crane or any of their respective affiliates represents less than ninety (90%) percent of the then outstanding Shares, Purchaser may, from time to time, extend the Offer for up to an aggregate of fifteen (15) business days thereafter. The Offer is conditioned upon the satisfaction of the Minimum Condition and the other conditions set forth in Section 14 of this Offer to Purchase. Subject to the provisions of the Merger Agreement, Purchaser may, in its sole discretion, increase the Per Share Amount and waive (to the extent legally permissible) or make any other change to the terms and conditions of the Offer, except that Purchaser shall not, without the prior written consent of Signal, (i) waive or amend the Minimum Condition, (ii) reduce the number of Shares sought to be purchased in the Offer, (iii) reduce the Per Share Amount, (iv) modify or add to the conditions to the Offer set forth in Section 14 of this Offer to Purchase, (v) change the form of consideration payable in the Offer, (vi) extend the Offer except as described above, or (vii) amend or alter any other term of the Offer in a manner adverse to the holders of Shares. Purchaser also may elect, in its sole discretion, to provide a subsequent offering period (a "Subsequent Offering Period") of up to twenty (20) business days in accordance with Rule 14d-11 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in compliance with all other provisions of applicable securities laws, following its acceptance for payment of Shares in the Offer. A Subsequent Offering Period, if one were provided, would not be an extension of the Offer. Rather, a Subsequent Offering Period would be an additional period of time, following the expiration of the Offer, in which stockholders would be able to tender Shares not tendered during the Offer for the same form and amount of consideration as in the initial Offer period. If Purchaser were to decide to provide a Subsequent Offering Period, Purchaser will make an announcement to that effect by issuing a press release no later than 9:00 a.m., New York City time, on the next business day following the expiration of the Offer. This would immediately commence the Subsequent Offering Period and Purchaser will immediately accept and promptly pay for all Shares tendered during the Subsequent Offering Period. All conditions to the Offer must be satisfied or duly waived prior to the commencement of any Subsequent Offering Period. There will be no withdrawal rights during the Subsequent Offering Period. 8 Subject to the applicable rules and regulations of the SEC and the provisions of the Merger Agreement (including those described above), Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, to waive any condition to the Offer or otherwise amend the Offer in any respect, in each case, by giving oral or written notice of such waiver or amendment to the Depositary and by making a public announcement thereof. Any extension, termination or material amendment of the Offer will be followed as promptly as practicable by public announcement thereof, such announcement, in the case of an extension, to be made no later than 9:00 a.m., New York City time, on the next business day after the otherwise scheduled Expiration Date, in accordance with the public announcement requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law (including Rules 14d-4(d) and 14d-6(c) under the Exchange Act, which require that material changes be promptly disseminated to stockholders in a manner reasonably designed to inform them of such changes), and without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release to the Dow Jones News Service. If Purchaser extends the Offer, is delayed in its acceptance for payment of or payment for Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to Purchaser's rights under the Offer, the Depositary may retain tendered Shares on behalf of Purchaser, and such Shares may not be withdrawn, except to the extent tendering stockholders are entitled to withdrawal rights as described in Section 4 of this Offer to Purchase. However, the ability of Purchaser to delay the payment for Shares that Purchaser has accepted for payment is limited by (i) Rule 14e-1(c) under the Exchange Act, which requires that an offeror pay the consideration offered or return the securities deposited by or on behalf of stockholders promptly after the termination or withdrawal of a tender offer, and (ii) the terms of the Merger Agreement, which require that Purchaser pay for Shares that are tendered pursuant to the Offer promptly after the Shares are accepted for payment pursuant to the Offer. Under no circumstances will interest on the Per Share Amount be paid, regardless of any delay in making such payment. If Purchaser makes a material change in the terms of the Offer, Purchaser will disseminate additional tender offer materials and extend the Offer if, as and to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1(b) under the Exchange Act. The minimum period during which an offer must remain open following material changes in the terms of the Offer, other than a change in price, percentage of securities sought or inclusion of or changes to a dealer's soliciting fee, will depend upon the facts and circumstances, including the materiality, of the changes. In the SEC's view, an offer should remain open for a minimum of five (5) business days from the date that the material change is first published, sent or given to stockholders and, if material changes are made with respect to information that relates to price, share levels or dealers' fees, a minimum of ten (10) business days is required to allow for adequate dissemination to stockholders. Accordingly, if, prior to the Expiration Date, Purchaser were to change the consideration payable pursuant to the Offer, and if the Offer were scheduled to expire at any time earlier than the tenth (10th) business day from the date that notice of such change is first published, sent or given to stockholders, the Offer would be extended at least until the expiration of such tenth (10th) business day. Signal has provided Purchaser with its stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares whose names appear on Signal's stockholder list and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on such stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES Upon the terms and subject to the conditions of the Offer, Purchaser will accept for payment all Shares validly tendered on or prior to the Expiration Date and not properly withdrawn in accordance 9 with Section 4 of this Offer to Purchase as soon as practicable after Purchaser is permitted to do so, and shall pay for such Shares promptly thereafter. If there is a Subsequent Offering Period, all Shares validly tendered during the Subsequent Offering Period will be immediately accepted for payment and paid for as they are tendered. Any determination concerning the satisfaction of the terms and conditions of the Offer will be in the sole discretion of Purchaser, and such determination will be final and binding on all tendering stockholders. Subject to applicable rules of the SEC, Purchaser expressly reserves the right, in its sole discretion, to delay acceptance for payment of or payment for Shares in order to comply in whole or in part with any applicable law, including, without limitation, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations thereunder (the "HSR Act"). See "--Certain Conditions of the Offer" and "--Certain Legal Matters." Crane will shortly file a Notification and Report Form with respect to the Offer under the HSR Act. The waiting period under the HSR Act with respect to the Offer will expire at 11:59 p.m., New York City time, on the fifteenth (15th) day after the date such Form is filed, unless early termination of the waiting period is sought and granted. In addition, the Antitrust Division of the Department of Justice (the "Antitrust Division") or the Federal Trade Commission (the "FTC") may extend the waiting period by requesting additional information, or documentary material, from Crane. If such a request is made, such waiting period will expire at 11:59 p.m., New York City time, on the tenth (10th) day after substantial compliance by Crane with such request. See Section 15 of this Offer to Purchase for additional information concerning the HSR Act and the applicability of antitrust laws to the Offer. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or a confirmation of a book-entry transfer of such Shares (a "Book-Entry Confirmation") into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility")), (ii) a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) or, in the case of a book-entry transfer, an Agent's Message (as defined in "--Procedures for Tendering Shares"), (iii) any required signature guarantees and (iv) any other required documents. For purposes of the Offer, Purchaser will be deemed to have accepted for payment Shares validly tendered and not withdrawn as, if and when Purchaser gives oral or written notice to the Depositary of its acceptance for payment of such Shares pursuant to the Offer. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for the tendering stockholders for the purpose of receiving payments from Purchaser and transmitting such payments to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PER SHARE AMOUNT BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR OF ANY DELAY IN MAKING SUCH PAYMENT. If any tendered Shares are not accepted for payment pursuant to the terms and conditions of the Offer because of an invalid tender or for any other reason, or if certificates are submitted for more Shares than are tendered, certificates for such unpurchased Shares will be returned, without expense, to the tendering stockholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedures set forth in "--Procedures for Tendering Shares," such Shares will be credited to an account maintained with the Book-Entry Transfer Facility), as soon as practicable after the expiration or termination of the Offer. Purchaser reserves the right to transfer or assign in whole or in part from time to time to one or more direct or indirect subsidiaries of Crane the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURES FOR TENDERING SHARES Valid Tender. In order to tender Shares pursuant to the Offer (a) a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), together with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer of Shares, and 10 any other documents required by the Letter of Transmittal, must be received by the Depositary on or prior to the Expiration Date at one of its addresses set forth on the back cover of this Offer to Purchase and certificates representing tendered Shares either must be received by the Depositary or tendered pursuant to the procedures for book-entry transfer described below and the Book-Entry Confirmation must be received by the Depositary, in each case on or prior to the Expiration Date, or (b) the tendering stockholder must comply with the guaranteed delivery procedures described below. The term "Agent's Message" means a message transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against such participant. Book-Entry Delivery. The Depositary will make a request to establish accounts with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two (2) business days after the date of this Offer to Purchase. Any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry transfers of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the Book-Entry Transfer Facility's procedures for such transfer. Although delivery of Shares may be made through a book-entry transfer, either the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in lieu thereof, and any other required documents, must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, or the tendering stockholder must comply with the guaranteed delivery procedures described below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND SOLE RISK OF THE TENDERING STOCKHOLDER. THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Signature Guarantees. Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange, Inc. Medallion Signature Program (each, an "Eligible Institution"). Signatures on a Letter of Transmittal need not be guaranteed (a) if the Letter of Transmittal is signed by the registered holder (which term, for purposes of this section, includes any participant in the Book-Entry Transfer Facility's system whose name appears on a security position listing as the owner of the Shares) of Shares tendered therewith and such registered holder has not completed the "Special Payment Instructions" or the "Special Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. If the certificates for Shares are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made or certificates for Shares not tendered or not accepted for payment are to be returned to a person other than the registered holder of the certificates surrendered, then the tendered certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holders or owners appear on the certificates, with the signatures on the certificates or stock powers guaranteed as described above. See Instructions 1 and 5 of the Letter of Transmittal. 11 Guaranteed Delivery. A stockholder who desires to tender Shares pursuant to the Offer and whose certificates for Shares are not immediately available, or who cannot comply with the procedures for book-entry transfer on a timely basis, or who cannot deliver all required documents to the Depositary on or prior to the Expiration Date, may tender such Shares by following all of the procedures set forth below: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery (or a manually signed facsimile thereof) is received by the Depositary, as provided below, on or prior to the Expiration Date; and (iii) the certificates for all tendered Shares, in proper form for transfer (or a Book-Entry Confirmation with respect to all such Shares), together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal), and any other documents required by the Letter of Transmittal, are received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery. A "trading day" is any day on which the Nasdaq National Market is open for business. The Notice of Guaranteed Delivery may be delivered by hand to the Depositary or transmitted by telegram, telex, facsimile transmission or mail to the Depositary and must include a signature guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. Other Requirements. Notwithstanding any other provision of this Offer to Purchase, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) certificates evidencing, or a timely Book-Entry Confirmation with respect to, such Shares, (b) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal) and (c) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when certificates for Shares or Book-Entry Confirmations with respect to Shares or other documents are actually received by the Depositary. Grant of Proxy. By executing a Letter of Transmittal, as discussed above, the tendering stockholder thereby irrevocably appoints the Depositary as such stockholder's true and lawful agent and attorney-in-fact, with full power of substitution, to the fullest extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by Purchaser and with respect to any and all dividends, distributions, rights, other Shares or other securities issued or issuable in respect of such Shares on or after April 25, 2003 (collectively, "Distributions"). All such proxies will be considered coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, Purchaser deposits the payment for such Shares with the Depositary. All authority conferred, or agreed to be conferred, pursuant to the Letter of Transmittal will be irrevocable and will be deemed granted in consideration of the acceptance for payment by Purchaser of the Shares tendered in accordance with the terms of the Offer. Upon the effectiveness of such appointment, without further action, all prior powers of attorney, proxies and consents given by such stockholder with respect to any of the tendered Shares will be revoked, and no subsequent powers of attorney, proxies, consents or revocations may be given (and, if given, will be deemed not effective). The Depositary will transfer ownership of the Shares to or upon the order of Purchaser. Thereafter, Purchaser's designees will, with respect to the Shares (and any and all Distributions), be empowered to exercise all voting and other rights of such stockholder as they, in their sole discretion, deem proper at any annual, special or adjourned meeting of the stockholders of Signal, in respect of actions by written consent in lieu of any such meeting or otherwise. Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Purchaser's acceptance for payment of such Shares, Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares (and any Distributions). Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by Purchaser in its sole discretion, 12 which determinations will be final and binding. Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of or payment for which may, in the view of Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to waive any defect or irregularity in the tender of any Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities relating thereto have been cured or waived by Purchaser. None of Crane, Purchaser, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or will incur any liability for failure to give any such notification. Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and Instructions thereto) will be final and binding. Binding Agreement. The tender of Shares pursuant to any one of the procedures described above will constitute the tendering stockholder's acceptance of the Offer, as well as the tendering stockholder's representation and warranty that such stockholder has the full power and authority to tender and assign the Shares tendered, as specified in the Letter of Transmittal. Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and Purchaser upon the terms and subject to the conditions of the Offer. Backup Withholding. Under the "backup withholding" provisions of United States federal income tax law, the Depositary may be required to withhold thirty (30%) percent of the amount of any payments pursuant to the Offer. To prevent backup federal income tax withholding, each stockholder must provide the Depositary with such stockholder's correct taxpayer identification number and certify that such stockholder is not subject to backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. See Instruction 9 of the Letter of Transmittal. 4. RIGHTS OF WITHDRAWAL Tenders of Shares made pursuant to the Offer are irrevocable except that Shares tendered pursuant to the Offer may be withdrawn at any time on or prior to the Expiration Date and, unless theretofore accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn at any time after June 23, 2003. There will be no withdrawal rights for Shares tendered during a Subsequent Offering Period. If, for any reason whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer is delayed, or Purchaser is unable to accept for payment or pay for Shares tendered pursuant to the Offer, then, without prejudice to Purchaser's rights set forth herein, the Depositary may, on behalf of Purchaser, retain tendered Shares and such Shares may not be withdrawn except to the extent that the tendering stockholder is entitled to and duly exercises withdrawal rights as described in this Section 4. Any such delay will, to the extent required by law, be by an extension of the Offer. In order for a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the names in which the certificate(s) evidencing the Shares to be withdrawn are registered, if different from that of the person who tendered such Shares. The signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer as set forth in "Section 3--Procedures for Tendering Shares," any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. If certificates for Shares to be withdrawn have been delivered or otherwise identified to the Depositary, the name of the registered holder and the serial numbers of the particular certificates evidencing the Shares to be withdrawn must also be furnished to the Depositary as aforesaid prior to the physical release of such certificates. Withdrawals of tendered Shares may not be rescinded, and any Shares properly withdrawn will thereafter be deemed not to have been validly 13 tendered for any purposes of the Offer. However, withdrawn Shares may be re-tendered by following one of the procedures described in "Section 3--Procedures for Tendering Shares" at any time on or prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by Purchaser, in its sole discretion, which determinations will be final and binding. None of Crane, Purchaser, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or have any liability for failure to give such notification. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER Sales of Shares pursuant to the Offer and the exchange of Shares for cash pursuant to the Merger generally will be taxable transactions for United States federal income tax purposes and may also be taxable under applicable foreign, state, local and other tax laws. For United States federal income tax purposes, a stockholder whose Shares are purchased pursuant to the Offer or who receives cash as a result of the Merger will recognize gain or loss equal to the difference between the adjusted aggregate basis of the Shares sold or exchanged and the amount of cash received therefor. Such gain or loss will be capital gain or loss if the Shares are held as capital assets by the stockholder and will be long-term capital gain or loss if the stockholder has held the Shares for more than one year. Long-term capital gain of a non-corporate stockholder is generally subject to a maximum marginal tax rate of twenty (20%) percent. The ability of a stockholder to utilize capital losses, if any, is subject to various limitations. Under the "backup withholding" provisions of United States federal income tax law, the Depositary may be required to withhold thirty (30%) percent of the amount of any payments pursuant to the Offer. To prevent backup federal income tax withholding, each stockholder must provide the Depositary with such stockholder's correct taxpayer identification number and certify that such stockholder is not subject to backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. See Instruction 9 of the Letter of Transmittal. THE INCOME TAX DISCUSSION SET FORTH ABOVE MAY NOT BE APPLICABLE TO STOCKHOLDERS IN SPECIAL SITUATIONS, SUCH AS STOCKHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND STOCKHOLDERS WHO ARE NOT UNITED STATES PERSONS. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF UNITED STATES FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX LAWS. 6. PRICE RANGE OF SHARES; DIVIDENDS The Shares are traded on the Nasdaq National Market under the symbol "STCO." The following table sets forth, for the periods indicated, the high and low sales prices per Share on the Nasdaq National Market based upon published financial sources. According to Signal, no dividends were paid on the Shares during any of the periods presented. 14
HIGH LOW ----------- ---------- YEAR ENDED DECEMBER 31, 2001: First Quarter ................................... $ 12.25 $ 6.19 Second Quarter .................................. 10.80 5.00 Third Quarter ................................... 11.00 6.06 Fourth Quarter .................................. 8.29 3.60 YEAR ENDED DECEMBER 31, 2002: First Quarter ................................... $ 8.15 $ 4.58 Second Quarter .................................. 9.95 7.75 Third Quarter ................................... 9.50 6.44 Fourth Quarter .................................. 13.29 8.95 YEAR ENDING DECEMBER 31, 2003: First Quarter ................................... $ 11.36 $ 8.45 Second Quarter (through April 24, 2003) ......... 13.18 10.75
On April 15, 2003, the last full trading day prior to the date of execution of the Merger Agreement, the last reported sales price on the Nasdaq National Market was $11.27. On April 24, 2003, the last full trading day prior to the commencement of the Offer, the last reported sales price on the Nasdaq National Market was $13.15. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. 7. CERTAIN INFORMATION CONCERNING SIGNAL Signal. Signal was incorporated in Delaware in 1982 and became a public company on May 27, 1993. Signal's principal executive offices are located at The Tower at Northwoods, 222 Rosewood Drive, Danvers, Massachusetts 01923, and its telephone number at that address is (978) 774-2281. According to reports filed by it with the SEC under the Exchange Act, Signal designs, manufactures, and markets power management products and sophisticated electronic radio frequency, or RF, components and subsystems and provides the program management and systems integration for wireless networks of sensors. Signal's products are used in defense applications and certain space applications. Signal's defense electronics experience includes over 20 years of expertise providing state-of-the-art RF components and power management systems to the United States government, defense and aerospace prime contractors and international customers. Signal's products are often integrated into complex electronic systems and subsystems that require precision control, management and generation of radio, microwave and millimeter-wave frequencies and electrical currents. Certain Projections and Operating Results. In connection with Crane's due diligence investigation of Signal, Signal provided Crane with certain non-public historical and projected financial information. In particular, at a meeting held on April 3, 2003 (see "Section 10--Background of the Offer; Contacts with Signal" of this Offer to Purchase for additional information concerning the April 3 meeting), Signal's operating management presented to Crane its internal forecast (which reflected preliminary actual results for the first quarter of 2003) for revenue and pre-tax income for 2003 of $109.4 million and $12.3 million, respectively. Signal informed Crane that, as compared to its external guidance, these internal operating forecasts did not include any discount for unforeseen risks or uncertainties that Signal has generally applied. Signal stated that such discount for 2003 amounted to a reduction of approximately 10 to 15 percent of revenues and pre-tax income. With respect to the first quarter of 2003, Signal informed Crane that, subject to final closing adjustments, revenues were expected to be $21.5 million and pre-tax income was expected to be $1.7 million. During this meeting, Signal's operating management also presented to Crane information concerning orders, which Signal stated were below its internal plan for the first quarter but were expected to recover to meet planned levels for the full year 2003. 15 Crane and Purchaser understand that the above projections were not prepared with a view to public disclosure or compliance with published guidelines of the SEC or guidelines established by the American Institute of Certified Public Accountants regarding projections or forecasts and are included herein only because such information was provided to Crane and Purchaser in connection with their evaluation of a business combination transaction. The projections do not purport to present operations in accordance with U.S. generally accepted accounting principles, and Signal's independent auditors have not examined or even compiled the projections presented herein and, accordingly, assume no responsibility for them. These forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995) are subject to certain known and unknown risks and uncertainties that could cause actual results to differ materially from the projections. Signal has advised Crane and Purchaser that its internal financial forecasts (upon which the projections provided to Crane and Purchaser were in part based) are, in general, prepared solely for internal use for capital budgeting and other management decisions and are subjective in many respects and thus susceptible to interpretation and revision based on actual experience and business and other developments. The projections also reflect numerous underlying assumptions (not all of which were provided to Crane and Purchaser), all made by management of Signal, with respect to industry performance, general business, economic, market and financial conditions and other matters, including effective tax rates consistent with historical levels for Signal, all of which are difficult to predict, many of which are beyond Signal's control, and none of which is subject to approval or control by Crane or Purchaser. Accordingly, there can be no assurance that the assumptions used in preparing the projections will prove accurate or to have been reasonable. It is expected that there will be differences between actual and projected results, and actual results may be materially greater or less than those contained in the projections. The inclusion of the projections herein should not be regarded as an indication that any of Crane, Purchaser, Signal or their respective affiliates or representatives considered or consider the projections to be integral to a consideration of the projected business operation, or a reliable prediction of future events, and the projections should not be relied upon as such. None of Crane, Purchaser, Signal or any of their respective affiliates or representatives has made or makes any representation to any person regarding the ultimate performance of Signal compared to the information contained in the projections, and none of them intends to update or otherwise revise the projections to reflect circumstances existing after the date(s) when made or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the projections are shown to be in error. Available Information. Signal is subject to the information and reporting requirements of the Exchange Act and, in accordance therewith, is obligated to file reports and other information with the SEC relating to its business, financial condition, results of operations and other matters. Information, as of particular dates, concerning Signal's directors and officers, their compensation, stock options granted to them, the principal holders of Signal's equity securities, any material interests of such persons in transactions with Signal and other matters is required to be disclosed in proxy statements distributed to Signal's stockholders and filed with the SEC. Such reports, proxy statements and other information are available for inspection at the public reference room at the SEC's offices at 450 Fifth Street, N.W., Washington, DC 20549. Copies may be obtained, by mail, upon payment of the SEC's customary charges, by writing to its principal office at 450 Fifth Street, N.W., Washington, DC 20549. Such reports, proxy statements and other information are also available on the SEC's website at http://www.sec.gov. 8. CERTAIN INFORMATION CONCERNING CRANE AND PURCHASER Purchaser. Purchaser is a Delaware corporation that was incorporated on April 10, 2003. The principal executive offices of Purchaser are located at 100 First Stamford Place, Stamford, Connecticut 06902, and its telephone number at that address is (203) 363-7300. Purchaser is a direct wholly owned subsidiary of Crane International Holdings, Inc., a Delaware corporation ("CIH"), which in turn is a direct wholly owned subsidiary of Crane. Until immediately prior to the time that Purchaser will purchase Shares pursuant to the Offer, it is not expected that Purchaser will have any significant assets or liabilities or engage in any activities other than ownership of Shares and those activities incident to the transactions contemplated by the Offer and the Merger. 16 CIH. CIH is a Delaware corporation with its principal executive offices located at 100 First Stamford Place, Stamford, Connecticut 06902, and its telephone number at that address is (203) 363-7300. CIH is a holding company for a number of Crane's other indirect subsidiaries. Crane. Crane is a Delaware corporation with its principal executive offices located at 100 First Stamford Place, Stamford, Connecticut 06902, and its telephone number at that address is (203) 363-7300. Crane is a diversified manufacturer of engineered industrial products. Founded in 1855, Crane employs over 9,500 people in North America, Europe, Asia and Australia. The name, citizenship, business address, principal occupation or employment and five-year employment history for each of the directors and executive officers of Crane and Purchaser are set forth on Annex A to this Offer to Purchase. Except through the Tender and Voting Agreements, neither Crane nor Purchaser nor, to the knowledge of Crane or Purchaser, any of the persons listed on Annex A hereto, or any associate or majority-owned subsidiary of such persons, beneficially owns any equity security of Signal, and neither Crane nor Purchaser nor, to the knowledge of Crane or Purchaser, any of the other persons referred to above, has effected any transaction in any equity security of Signal during the past 60 days. Except for the Tender and Voting Agreements, and agreements signed by certain holders of Signal Stock Options regarding the acceleration and payment thereof, neither Crane nor Purchaser nor, to the knowledge of Crane or Purchaser, any of the persons listed on Annex A hereto, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of Signal, including, without limitation, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Company, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except for the Tender and Voting Agreements, the above mentioned agreement relating to Signal Stock Options and the Crane guarantees of the Indemnification Agreements (defined below in Section 11 of this Offer to Purchase) and as otherwise set forth in this Offer to Purchase, neither Crane nor Purchaser nor, to the knowledge of Crane or Purchaser, any of the persons listed on Annex A hereto has had any transactions with the Company, or any of its executive officers, directors or affiliates, that would require reporting under the rules of the SEC. During the past five years, neither Crane nor Purchaser nor, to the knowledge of Crane or Purchaser, any of the persons listed on Annex A hereto has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, U.S. federal or state securities laws, or finding any violation of such laws. 9. SOURCE AND AMOUNT OF FUNDS The Offer is not conditioned on any specific financing arrangements. The total amount of funds required by Purchaser to consummate the Offer and the Merger and to pay related fees and expenses is estimated to be approximately $155.8 million. Purchaser plans to obtain the funds needed for the Offer and the Merger through capital contributions and/or loans that will be made by Crane to Purchaser. To make those contributions or loans, Crane expects to use its existing cash resources and funds borrowed under its existing line of credit pursuant to the Credit Agreement (defined below). See Section 14 of this Offer to Purchase. Crane and certain of its subsidiaries are parties to a Multicurrency Credit Agreement, dated as of November 18, 1998 (the "Credit Agreement"), with the Bank of New York, as Syndication Agent, Fleet National Bank, as Documentation Agent, Chase Manhattan Bank and First Union National Bank, as Co-Agents, First National Bank of Chicago, as Administrative Agent, and other lenders. Pursuant to the Credit Agreement, Crane may borrow, on an unsecured basis, up to $300 million. Crane's current outstanding borrowings under the Credit Agreement are approximately $45 million. The Credit Agreement contains representations and warranties, conditions precedent, covenants, events of default and other provisions believed by Crane to be generally found in similar agreements. 17 The borrowings under the Credit Agreement are either Alternate Base Rate Loans or Eurocurrency Loans. The Alternate Base Rate is the greater of (a) the rate announced periodically by First National Bank of Chicago or (b) the rate published each day by the Federal Reserve Bank of New York plus one-half (.5%) percent, plus, in either case, the applicable margin, which changes depending upon Crane's corporate credit rating at the time of borrowing. The Eurocurrency Rate is the rate deposits are offered to banks in London's interbank market two business days prior to the first day of the interest period or, if no such rate exists, the rate for deposits approximately equal to such interest period, divided by one minus the reserve requirement, plus the applicable margin, which changes depending upon Crane's corporate credit rating at the time of borrowing. The Eurocurrency Rate may be fixed for one-, two-, three- or six-month periods, at Crane's option. The effective interest rate for Crane's currently outstanding borrowings under the Credit Agreement is 1.52% per annum. The foregoing summary of the Credit Agreement does not purport to be a complete description of the terms and conditions of the Credit Agreement and is qualified in its entirety by reference to the Credit Agreement, a copy of which is filed as an exhibit to the Tender Offer Statement on Schedule TO that has been filed with the SEC by Purchaser in connection with the Offer, and which is hereby incorporated in this Offer to Purchase by reference. If Crane were to use funds under the Credit Agreement in connection with the acquisition of Signal, Crane intends to repay borrowings under the Credit Agreement from working capital and funds provided by future operations, and to refinance any outstanding borrowings on or prior to the maturity date. While Crane has no specific arrangements in this regard at this time, Crane currently expects that, if necessary, it will be able to obtain any refinancing on commercially reasonable terms at the time. 10. BACKGROUND OF THE OFFER; CONTACTS WITH SIGNAL The following information was prepared by Crane, the Purchaser and Signal. Information about Signal was provided by Signal, and neither Purchaser nor Crane takes any responsibility for the accuracy or completeness of any information regarding meetings or discussions in which Crane or its representatives did not participate or regarding actions initiated by Signal or its representatives. Crane initially began considering the possibility of acquiring Signal in June of 2002 when Ray Boushie, President of Crane Aerospace, learned from Joseph Schneider, a director of Signal, that Signal was exploring its possible sale. On June 11, 2002, Crane and Wachovia, on behalf of Signal, executed a confidentiality agreement. On June 24, 2002, Mr. Boushie and Mr. Schneider discussed the reasons behind Signal's decision to initiate an auction process. Following these discussions and based on publicly-available information and an offering memorandum prepared by Wachovia, on June 24, 2002, Crane delivered to Wachovia a written preliminary indication of interest in acquiring all of the Shares for a purchase price expected to be in the range of $11.70 to $12.80 per Share, payable in cash. On August 5, 2002, various members of Crane management, including Mr. Boushie, Eric Fast, Crane's President and Chief Executive Officer, James Whitelock, Crane's Director of Corporate Development, and Lou Bieck, President of Interpoint (a wholly owned subsidiary of Crane), attended management presentations regarding Signal's business. On August 5 and 6, 2002, representatives of Crane visited a data room prepared by Signal to conduct initial due diligence. On August 21, 2002, Crane received a letter from Wachovia sent on behalf of Signal soliciting revised indications of interest from interested bidders. Between August 23 and September 3, 2002, Wachovia provided additional financial and other information in response to supplemental due diligence requests that Crane had made and also delivered to Crane Signal's proposed form of merger agreement. Based on the updated information that had been provided and the due diligence results, on September 6, 2002, Crane submitted a revised written indication of interest in acquiring all of the Shares for between $11.84 and $12.59 per Share payable in cash. Crane also provided comments to Wachovia on the form of merger agreement proposed by Signal, including a proposal to structure any transaction as a tender offer followed by a merger. Crane's indication of interest stated that it was based on a number of assumptions, including assumptions concerning Signal's debt and cash levels, certain anticipated environmental liabilities, and 18 the prior sale of Signal's wireless and semiconductor businesses. Crane also indicated that its indication of interest was subject to Crane's satisfaction with the results of a contemplated environmental review of Signal, and that any transaction would require the approval of Crane's Board of Directors and clearance under the HSR Act. Between September 6 and September 13, 2002, Mr. Whitelock engaged in several discussions with representatives of Signal and Wachovia in which Signal sought to persuade Crane to increase its indicated price range and sought further clarification regarding Crane's September 6, 2002 indication of interest, including Crane's assumptions underlying the price range. Crane engaged J. P. Morgan Securities Inc. ("JPMorgan") to act as its exclusive financial advisor in relation to a possible transaction with Signal on September 13, 2002. Between September 17, 2002 and September 20, 2002, representatives of Crane, including Mr. Fast and Mr. Whitelock, and representatives of JPMorgan attended presentations by operating management at each of Signal's divisions and were provided with additional operational and financial information about each division. On September 23, 2002, a presentation concerning Signal and its business was made to Crane's Board of Directors by Mr. Whitelock. During the next several weeks, various members of Crane management and senior and operating management at Signal discussed numerous aspects of the operations and financial performance of Signal's businesses, and additional information was supplied in response to Crane's requests. On October 1, 2002, Mr. Boushie, Mr. Whitelock and Mr. Bieck held a conference call with representatives of Wachovia and Mr. Schneider during which they discussed current and anticipated levels of defense spending by the U.S. government and the history of Signal and its businesses. On October 7, 2002, Crane received a written request from Wachovia for a final indication of its proposed purchase price. Over the next several weeks, representatives of JPMorgan and of Wachovia engaged in a number of discussions regarding the auction process, timing and the price expectations of the respective parties. At its regular meeting on October 28, 2002, the Board of Directors of Crane was given an update by Mr. Whitelock on the discussions with Signal. Later that day, representatives of JPMorgan gave an oral indication of interest to representatives of Wachovia indicating that Crane would consider a price for Signal based upon an imputed firm value of $134 million for Signal's defense businesses, subject to adjustment for cash and debt levels and the estimated value of certain legacy liabilities, including a significant unresolved environmental litigation, reflecting a per Share price of approximately $11.50. Representatives of Wachovia indicated to representatives of JPMorgan that Signal had hoped to receive a higher valuation and subsequently provided Crane with certain financial projections for Signal's businesses. On November 4, 2002, Crane submitted to Signal a non-binding written proposal to acquire the Shares at a price of $11.47 per Share. Crane indicated that it had sufficient funds available to complete a transaction at that price and that it intended to retain the operating management of Signal. Crane also indicated that its price proposal was based on the assumptions that (i) Signal would have $4.2 million in outstanding debt to third parties, (ii) that the cost of settling pending environmental litigation with Eaton Corporation would not exceed $5 million, (iii) that various other specified contingent liabilities would not exceed $6.3 million, and (iv) Signal would need a minimum cash balance of $5 million to support normal operations. Along with its proposal, Crane submitted a worksheet detailing Crane's calculation of its proposed purchase price. In its proposal, Crane also indicated that it might be willing to increase its price depending upon Signal's cash position. Crane's November 4, 2002 proposal stated that it was subject to a number of conditions, including: o satisfactory completion of its due diligence (including environmental, contract and budget reviews, a review of the impact of the prior divestiture of Signal's wireless business, and tax review); o approval by Crane's Board of Directors; 19 o HSR clearance; and o execution of a definitive merger agreement. On November 5, 2002, representatives of JPMorgan and of Wachovia discussed the assumptions underlying Crane's proposal by telephone. On November 11, 2002, George Lombard, Signal's Chairman and Chief Executive Officer, had a telephone conversation regarding the transaction with Mr. Fast. Mr. Lombard indicated that Crane's November 4, 2002 proposal was not satisfactory to Signal and that there was at least one other party that had shown strong interest that Mr. Lombard expected would result in a superior offer. Mr. Lombard encouraged Mr. Fast to improve Crane's proposal. Mr. Fast stated that, on the basis of the information available at that time, Crane could not agree to improve its proposal. He suggested that Signal should pursue the alternative proposal if they deemed the proposal superior, but that Crane would be willing to resume discussions with Signal if new information became available. On December 3, 2002 representatives of Wachovia, on behalf of Signal, provided new information. Such information indicated that Signal was on track to achieve EBITDA for the year ended December 31, 2002 in excess of that previously indicated to Crane, that Signal's cash balances had increased and that the Eaton environmental litigation was expected to be resolved on terms more favorable than had been previously indicated to Crane. On December 10, 2002, Mr. Lombard telephoned Mr. Whitelock to discuss the work sheet calculations submitted on November 4 with Crane's proposal and Mr. Lombard proposed the resumption of discussions regarding a possible transaction. On or about December 16, 2002, Crane resumed its due diligence investigation of Signal and its business through additional conversations with Signal management and the review of additional documents. On January 10, 2003, representatives of JPMorgan discussed with representatives of Wachovia a proposed purchase price of $13.10 per Share, subject to receipt of a six-week exclusivity agreement from Signal and certain other terms. The representatives of Wachovia indicated that such proposal would not be acceptable to the Board of Directors of Signal and suggested that the senior representatives of Crane and Signal have a discussion to see whether an agreement could be reached. On January 10, 2003, Mr. Fast and Mr. Lombard had a telephone conversation regarding the transaction. Mr. Lombard reviewed the factors that, in his view, would support a higher proposal from Crane, and he indicated that a price of approximately $14.00 per Share would be acceptable for a sale of Signal. At the conclusion of this conversation, Mr. Fast indicated that Crane would increase its proposal to $13.50 per Share. On January 13, 2003, Crane submitted a revised non-binding written proposal to acquire Signal at $13.50 per Share, subject to the same conditions outlined in the November 4, 2002 proposal, and also including a proposed exclusivity period through February 25, 2003. After revisions to the January 13, 2003 letter to reflect comments from Signal and its counsel, it was executed by the parties on January 17, 2003. The exclusivity agreement provided that Signal would not solicit or negotiate, either directly or indirectly, or enter into any agreement with any other person or entity, prior to February 25, 2003, with respect to a sale of Signal or a substantial part of its assets, and that Signal would notify Crane promptly after the receipt by Signal of any proposal in respect of such a transaction. The exclusivity agreement did not prohibit Signal from furnishing information to, or entering into discussions or negotiations or an agreement with, any person or entity that made an unsolicited, bona fide written proposal in respect of such a transaction if the Board of Directors of Signal, after consultation with its financial and legal advisors, determined in good faith that such transaction was reasonably likely to be more favorable to the stockholders of Signal, from a financial point of view, than the terms stated in Crane's proposal, and that such action was necessary for the Board of Directors of Signal to comply with its fiduciary duties to stockholders. The exclusivity agreement provided that if the Board of Directors of Signal made any of the determinations referred to in the preceding sentence, Signal would reimburse Crane for its out-of-pocket expenses (up to $250,000). Between January 23, 2003, and February 20, 2003, representatives of Crane met with management and other representatives of Signal at Signal's various facilities and otherwise continued its due diligence investigation of Signal. On February 3, 2003, Robert Nelsen, Signal's Chief Financial Officer, 20 informed representatives of Crane that on January 30, 2003, the Signal Board of Directors had granted options to purchase 155,000 shares of Common Stock to certain directors and an officer of Signal. At its regular meeting on January 27, 2003, the Board of Directors of Crane was briefed on the status of the proposed transaction with Signal, and at the regular meeting of the Crane Board of Directors on February 24, 2003, Mr. Boushie, Mr. Bieck and representatives of JPMorgan made detailed presentations regarding the proposed transaction. The Board of Directors of Signal was also briefed on the proposed transaction with Crane at its regular meeting on February 24, 2003. At a meeting with Mr. Lombard and Mr. Nelsen on March 6, 2003, Mr. Fast and Mr. Whitelock raised a number of issues concerning Signal elicited during the due diligence process, including certain lower operating results for the defense business in 2002 compared to Signal's expectations in December, potentially lower orders for the first quarter of 2003 compared to Signal's operating plan, a higher than anticipated liability in respect of the Weymouth environmental matter, the costs associated with continuing directors' and officers' insurance coverage and the option grants referred to above. Mr. Fast and Mr. Lombard discussed the implications of these and other matters on the value of Signal. Later on March 6, 2003, the Signal Board of Directors met to consider Crane's proposal and that day's discussions between Mr. Fast and Mr. Lombard. Over the next several days, the parties continued to discuss Crane's proposal, and on March 10, 2003, Mr. Fast and Mr. Lombard agreed that Crane would make a revised proposal of $13.25 per Share. On April 3, 2003, Mr. Fast, Mr. Whitelock and certain other members of the management of Crane and Crane Aerospace, together with representatives of JPMorgan, met with Mr. Lombard, Mr. Nelsen and members of Signal's operating management to review Signal's results for the quarter ended March 31, 2003 and its updated forecast for the balance of the year on a divisional basis. For a more thorough discussion of these projections, see "Section 7--Certain Information Concerning Signal" of this Offer to Purchase. On April 9, 2003, the Signal Board of Directors met and approved the Offer and the Merger, subject to the satisfactory completion of definitive documentation. On April 11, 2003, the Crane Board of Directors convened by telephone and approved the Offer and the Merger, subject to the satisfactory completion of definitive documentation. In connection with the negotiation of the Merger Agreement, several drafts of the Merger Agreement were exchanged and the attorneys for Crane and Signal had several telephonic negotiation sessions. The principal issues discussed in these negotiations were the conditions to the Offer, the scope and nature of indemnification for Signal's directors and officers after the Merger, the limits of certain representations and warranties, the treatment of Signal Stock Options and payments due upon termination of the Merger Agreement. On April 16, 2003, Crane, Signal and Purchaser executed the Merger Agreement and, after the close of trading on the New York Stock Exchange, publicly announced the agreement to acquire Signal. 11. PURPOSES OF THE OFFER; THE MERGER AGREEMENT; THE TENDER AND VOTING AGREEMENTS; THE INDEMNIFICATION AGREEMENTS; DISSENTERS' RIGHTS; PLANS FOR SIGNAL; THE RIGHTS Purposes. The purposes of the Offer and the Merger are to acquire control of, and the entire equity interest in, Signal. The Merger Agreement. Following is a summary of the Merger Agreement, a copy of which has been filed as an exhibit to the Schedule TO filed by Purchaser with the SEC in connection with the Offer. This summary is qualified in its entirety by reference to the Merger Agreement, which is hereby incorporated in this Offer to Purchase by reference. The Merger Agreement should be read in its entirety for a more complete description of the matters summarized below. Defined terms used below and not defined herein have the respective meanings assigned to those terms in the Merger Agreement. 21 The Merger Agreement provides that, without the prior written consent of Signal, Purchaser may not (i) waive or amend the Minimum Condition, (ii) reduce the number of Shares sought to be purchased in the Offer, (iii) reduce the Per Share Amount, (iv) modify or add to the conditions set forth on Annex A to the Merger Agreement, (v) change the form of consideration payable in the Offer, (vi) extend the expiration date of the Offer, except as permitted by the Merger Agreement, or (vii) amend or alter any other term of the Offer in a manner adverse to the holders of Shares. Subject to the terms and conditions of the Merger Agreement, (i) if, on any otherwise scheduled Expiration Date, any condition(s) to the Offer has not been satisfied or waived, Purchaser may, in its sole discretion, extend the Offer from time to time for such period(s) of time as Purchaser reasonably determines to be necessary in order to permit such condition(s) to be satisfied, (ii) if, on any otherwise scheduled Expiration Date, any condition(s) to the Offer has not been satisfied or waived, Purchaser shall, if Signal so demands in writing at least two (2) business days prior to the otherwise scheduled Expiration Date, extend the Offer from time to time for up to such period(s) of time thereafter as Signal reasonably determines to be necessary in order to permit such condition(s) to be satisfied (but in no event shall Purchaser be required to so extend the Offer for more than thirty-five (35) days in the aggregate or, if earlier, beyond June 30, 2003, or to waive any condition(s) to the Offer), (iii) Purchaser shall extend the Offer for any period of time that may be required by any rule, regulation, interpretation or position of the SEC applicable to the Offer, or (iv) if, on any otherwise scheduled Expiration Date, the Minimum Condition has been satisfied but the sum of the number of Shares that have been validly tendered and not withdrawn pursuant to the Offer plus the number of Shares owned by Purchaser or Crane or any of their respective affiliates represents less than ninety (90%) percent of the then outstanding Shares, Purchaser may, from time to time, extend the Offer for up to an aggregate of fifteen (15) business days thereafter. Purchaser also may elect, in its sole discretion, to provide for a Subsequent Offering Period of up to twenty (20) business days in accordance with Rule 14d-11 under the Exchange Act following its acceptance for payment of Shares in the Offer. A Subsequent Offering Period, if one were provided, would not be an extension of the Offer. Rather, a Subsequent Offering Period would be an additional period of time, following the expiration of the Offer, in which stockholders would be able to tender Shares not tendered during the Offer for the same form and amount of consideration as in the initial Offer. If Purchaser decides to provide a Subsequent Offering Period, Purchaser will make an announcement to that effect by issuing a press release no later than 9:00 a.m., New York City time, on the next business day following the expiration of the Offer, will immediately begin the Subsequent Offering Period and will immediately accept and promptly pay for all Shares tendered during the Subsequent Offering Period. All conditions to the Offer must be satisfied or duly waived prior to the commencement of any Subsequent Offering Period. There will be no withdrawal rights during any Subsequent Offering Period. Signal has represented to Crane and Purchaser in the Merger Agreement that the Board of Directors of Signal, at a meeting duly called and held, has, by unanimous vote (with one director recused), (i) approved the Merger Agreement and the transactions contemplated thereby, including the Offer, the Merger and the Tender and Voting Agreements, (ii) declared the Merger Agreement advisable, (iii) determined that the terms of the Offer and the Merger are fair to, and in the best interests of, Signal and its stockholders, (iv) recommended that Signal's stockholders accept the Offer, tender their Shares pursuant to the Offer and approve and adopt the Merger Agreement and the Merger (if required by applicable law) and (v) approved the acquisition of the Shares by Purchaser pursuant to the Offer and the other transactions contemplated by the Merger Agreement and the Tender and Voting Agreements, including for purposes of Section 203 of the DGCL and Section 1 of Chapter 110C of the Massachusetts General Laws (the "MGL"). Signal has further represented that, prior to the execution of the Merger Agreement, Wachovia delivered to the Board of Directors of Signal the Financial Advisor Opinion, which states that, as of the date of the opinion and subject to the matters described therein, the consideration to be received pursuant to the Offer and the Merger is fair, from a financial point of view, to Signal's stockholders. The Merger Agreement provides that, subject to compliance with applicable law, immediately upon the payment by Purchaser for Shares pursuant to the Offer, Crane shall be entitled to designate 22 such number of directors, rounded up to the next whole number, on the Board of Directors of Signal as is equal to the product of (i) the total number of directors on the Board of Directors of Signal (determined after giving effect to the directors designated pursuant to this sentence) and (ii) a fraction whose (x) numerator is the aggregate number of Shares then beneficially owned by Crane or its affiliates and (y) denominator is the total number of Shares then outstanding, and Signal shall, upon the request of Crane, use its reasonable best efforts to cause Crane's designees to be elected or appointed, including, if necessary, increasing the number of directors and seeking the resignations of one or more existing directors; provided, however, that, prior to the Effective Time, the Board of Directors of Signal shall always have, subject to the following sentence, at least two (2) directors who were directors of Signal on the date of the Merger Agreement, one of whom shall be George Lombard ("Continuing Directors"). If, at any time prior to the Effective Time, there shall be only one (1) Continuing Director serving as a director of Signal for any reason, then the Board of Directors of Signal shall cause an individual selected by the remaining Continuing Director to be designated to serve on the Board of Directors of Signal (and such individual shall be deemed to be a Continuing Director for all purposes of the Merger Agreement), and if, at any time prior to the Effective Time, no Continuing Director then remains, then the Board of Directors of Signal shall designate and cause two (2) individuals to serve on the Board of Directors of Signal who are not officers, employees or affiliates of Signal, Crane or Purchaser and such individuals shall be deemed to be Continuing Directors for all purposes under the Merger Agreement. Signal shall promptly take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder in order to fulfill its obligations referred to above. Following any election or appointment of Crane's designees and prior to the Effective Time, the approval of a majority of the Continuing Directors or, if there shall be only one, of the Continuing Director, shall be required to authorize any amendment or termination of the Merger Agreement by Signal, any amendment of Signal's Certificate of Incorporation or By-Laws, any extension by Signal of the time for the performance of any of the obligations or other acts of Crane or Purchaser, any exercise or waiver of any of Signal's rights or remedies under the Merger Agreement or any other consent or action by the Board of Directors of Signal with regard to any substantive matter relating to the Merger Agreement or the Merger. The Merger. The Merger Agreement provides that, at the Effective Time, Purchaser will be merged with and into Signal. Following the Merger, the separate corporate existence of Purchaser will cease and Signal will continue as the Surviving Corporation. At the Effective Time, the Certificate of Incorporation of Purchaser in effect immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation. The By-Laws of Purchaser in effect immediately prior to the Effective Time shall be the By-laws of the Surviving Corporation unless and until thereafter amended as provided by law, the Certificate of Incorporation of the Surviving Corporation and/or such By-laws. The directors of Purchaser immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and By-laws of the Surviving Corporation, and officers of Signal immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified and/or additional persons are added. At the Effective Time, by virtue of the Merger and without any further action on the part of Purchaser, Crane, Signal or the holders of the Shares, each Share issued and outstanding immediately prior to the Effective Time (other than (i) any shares of Common Stock held in the treasury of Signal and any Shares held by Crane, Purchaser or any direct or indirect wholly owned subsidiary of Crane or Signal, which, by virtue of the Merger and without any action on the part of the holders thereof, will be canceled and extinguished without any conversion thereof, and no payment will be made with respect thereto and (ii) Dissenting Shares) shall be converted into the right to receive the Per Share Amount in cash, without interest. The Shares outstanding immediately prior to the Effective Time (other than shares of Common Stock to be canceled as described above) shall no longer be outstanding, shall automatically be canceled and shall cease to exist, and each holder of a certificate that formerly represented such Shares shall cease to have any rights with respect to such Shares, except only the right to receive, for each Share represented by such certificate, a cash amount equal to 23 the Per Share Amount, without interest, or, if such holder is a Dissenting Stockholder, the rights afforded to such holder under Section 262 of the DGCL. The Merger Agreement provides that Signal shall take all actions or cause all such actions to be taken prior to the commencement date of the Offer as are necessary to ensure that, immediately prior to the Effective Time, all then outstanding options to purchase shares of Common Stock (the "Signal Options"), whether or not exercisable, whether or not vested, and whether or not performance-based, under the Stock Option Plans that are held by Signal's current directors and officers and one former officer (covering 1,803,000 shares of Common Stock) shall be automatically converted into the right to receive only an amount of cash (net of applicable withholding taxes) equal to (x) the difference, if any, between the Per Share Amount less the exercise price per share of Common Stock payable upon exercise of such Signal Options, multiplied by (y) the number of shares of Common Stock issuable thereunder upon exercise immediately prior to the Effective Time. Additionally, the Merger Agreement provides that Signal shall take all actions or cause all such actions to be taken prior to the consummation of the Offer as are necessary to ensure that the holders of at least eighty (80%) percent of the Signal Options not held by those persons referred to above (the "Remaining Options") shall be converted as set forth above. Signal shall use its reasonable best efforts to ensure that as soon as practicable and in any event prior to the Effective Time all of the Remaining Options that were not converted as set forth above on or before the consummation of the Offer shall be exercised or converted as set forth above. The Merger Agreement also provides that Signal shall use its reasonable best efforts to take all such actions or cause such actions to be taken such that, as soon as practicable, all Signal Options that have an exercise price per share of Common Stock equal to or greater than the Per Share Amount shall be converted and terminated as of the Effective Time. Purchaser shall pay, or cause to be paid, the cash amounts payable in respect of such conversion of Signal Options at or shortly (and in no event more than five (5) business days) after the Effective Time, except that such payment with respect to the 155,000 Signal Options granted to Signal's directors and one officer on January 31, 2003 shall be made from funds deposited with The Bank of New York, as exchange agent, on the 90th day following the Effective Time (unless such day is not a business day, in which case payment shall be made on the next succeeding business day). Signal shall use its reasonable best efforts to obtain a signed consent of each holder of outstanding Signal Options to the conversion of such Signal Options as specified above. Except with respect to Signal Options for which such a signed consent is obtained, and notwithstanding anything to the contrary in the Merger Agreement, no payment shall be made to any holder of a Signal Option that is to be converted and terminated unless that holder delivers a signed waiver acknowledging that all of his or her outstanding Signal Options are to be converted and terminated at the Effective Time and waiving all of his or her rights under or with respect to those Signal Options. The Merger Agreement provides that, subject to the provisions described above, all Stock Option Plans shall terminate as of the Effective Time and the provisions in any other Signal benefit plan providing for the issuance, transfer or grant of any capital stock of Signal or any interest in respect of any capital stock of Signal shall be deleted as of the Effective Time. The Merger Agreement further provides that Signal shall use its reasonable best efforts to ensure that, immediately following the consummation of the Offer, no holder of a Signal Option or any participant in any Stock Option Plan shall have any right thereunder to acquire any capital stock of Signal, Crane or the Surviving Corporation. Signal has agreed to take all actions necessary pursuant to the terms of Signal's Employee Stock Purchase Plan in order to shorten the offering period under that plan which includes the Effective Time, such that the offering period will terminate prior to the Effective Time. The purchase price for any shares of Common Stock purchased under Signal's Employee Stock Purchase Plan during such shortened offering period shall be paid for in cash. According to Signal, as of April 15, 2003, 57,018 shares of Common Stock were reserved and eligible for future issuance pursuant to the Employee Stock Purchase Plan. Signal has agreed pursuant to the Merger Agreement that, if approval of the Merger Agreement and the Merger by the stockholders of Signal is required by the DGCL in order to effect the Merger, 24 Signal shall (i) duly give notice of, convene and hold a special meeting of its stockholders for the purpose of voting upon the Merger Agreement, the Merger and any related matters as soon as possible following consummation of the Offer; (ii) file with the SEC as promptly as practicable following consummation of the Offer, but in any event within fifteen (15) days thereafter, a preliminary proxy or information statement relating to the Merger Agreement and the Merger (the "Signal Proxy Statement"); and (iii) include in the definitive Signal Proxy Statement the recommendation of the Board of Directors of Signal that stockholders of Signal vote in favor of the approval and adoption of the Merger Agreement and the Merger. Representations and Warranties of Signal. The Merger Agreement contains various representations and warranties of Signal, including with respect to: (i) the organization, corporate powers and qualifications of Signal and its subsidiaries; (ii) the capitalization of Signal and its subsidiaries; (iii) the due and valid authorization of the execution and delivery of the Merger Agreement and the consummation of the transactions contemplated thereby by all necessary corporate action on the part of Signal; (iv) the absence of conflicts, violations or breaches of law or agreements resulting from the execution, delivery and performance by Signal of the Merger Agreement; (v) the possession by Signal and its subsidiaries of necessary permits and their compliance with law; (vi) the accuracy of the documents filed by Signal with the SEC; (vii) Signal's financial statements and its financial condition and the absence of material undisclosed liabilities; (viii) the absence of certain changes or events since December 31, 2002, including that there has been no material adverse change with respect to Signal and its subsidiaries, taken as a whole; (ix) the absence of certain litigation involving Signal and its subsidiaries; (x) Signal's employee benefit plans; (xi) certain labor matters; (xii) real and personal property owned or leased by Signal or any of its subsidiaries; (xiii) patents, trademarks and other intellectual property of Signal and its subsidiaries; (xiv) tax matters regarding Signal and its subsidiaries; (xv) environmental matters affecting Signal or any of its subsidiaries or their respective properties; (xvi) contracts to which Signal or any of its subsidiaries is a party; (xvii) the Financial Advisor Opinion received by the Board of Directors of Signal from Wachovia; (xviii) the inapplicability of state takeover statutes; (xix) the vote of Signal stockholders required to approve the Merger, if any; (xx) the absence of brokerage or finders' fees or commissions payable in connection with the Merger Agreement and the transactions contemplated thereby (other than with respect to fees payable to Wachovia and Needham & Co., Inc.); (xxi) certain of Signal's customers; (xxii) the absence of certain payments by Signal or its subsidiaries, directors, officers, agents, employees or other entities associated with or acting on its behalf of Signal or its subsidiaries; and (xxiii) the Schedule 14D-9. Representations and Warranties of Crane and Purchaser. The Merger Agreement contains customary representations and warranties of Crane and Purchaser, including with respect to: (i) the organization, corporate powers and qualifications of Crane and Purchaser; (ii) the due and valid authorization of the execution and delivery of the Merger Agreement and the consummation of the transactions contemplated thereby by all necessary corporate action on the parts of Crane and Purchaser; (iii) the absence of conflicts, violations or breaches of law or agreements resulting from the execution, delivery and performance by Crane and Purchaser of the Merger Agreement; (iv) the absence of certain litigation involving Crane; (v) the absence of brokerage or finders' fees or commissions payable in connection with the Merger Agreement and the transactions contemplated thereby (other than with respect to fees payable to JPMorgan); (vi) Crane's and Purchaser's ability to fund the Offer; and (vii) this Offer to Purchase and other related documents. Certain Covenants. The Merger Agreement obligates Signal, from the date of the Merger Agreement until the earlier of the termination of the Merger Agreement or the Effective Time, unless Crane, in its sole discretion, agrees otherwise in writing, to conduct its and its subsidiaries' businesses only in the ordinary course of business and in a manner consistent with past practice and to use its reasonable best efforts to preserve substantially intact its business organization, to keep available the services of the current officers, employees and consultants and to preserve the current relationships of Signal and its subsidiaries with customers, suppliers and other persons with which they have significant business relations. The Merger Agreement also contains a specific agreement by Signal that neither Signal nor any of its subsidiaries shall, directly or indirectly, do, propose or commit to do, or 25 authorize, without the prior written consent of Crane, until the earlier of the termination of the Merger Agreement or the Effective Time: (i) amending, repealing or otherwise changing Signal's Certificate of Incorporation or By-laws or the equivalent organizational documents of any subsidiary; (ii) issuing, selling, pledging, disposing of, granting or encumbering, or authorizing the issuance, sale, pledge, disposition, grant or encumbrance of, any Shares or any shares of capital stock of any class of Signal or its subsidiaries, or any options, warrants, convertible securities or other rights of any kind to acquire any Shares or shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Signal or any subsidiary (except, subject to the provisions regarding conversion of Signal Stock Options discussed above, for the issuance of Shares issuable pursuant to the exercise, in accordance with their respective terms, of employee stock options or other awards outstanding on the date of the Merger Agreement); (iii) transferring, leasing, licensing, selling, mortgaging, pledging, disposing of or encumbering any assets of Signal or its subsidiaries, except for sales of finished goods, invoicing under cost-plus contracts and invoicing for the achievement of milestones under contracts, each in the ordinary course of business and in a manner consistent with past practice; (iv) declaring, setting aside, making or paying any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that a wholly-owned subsidiary may declare and pay a dividend to its parent; (v) reclassifying, combining, splitting or subdividing, or redeeming, purchasing or otherwise acquiring, directly or indirectly, any of its capital stock; (vi) (a) acquiring (including, without limitation, by merger, consolidation, or acquisition of capital stock or assets) (1) any corporation, partnership, other business organization or any division thereof or (2) any assets outside the ordinary course of business; (b) incurring any indebtedness for borrowed money or issuing any debt securities or assuming, guaranteeing or endorsing, or otherwise as an accommodation becoming responsible for, the obligations of any person, or making any loans or advances, except in the ordinary course of business to venders and/or employees and consistent with past practice; (c) entering into any material contract, other than in the ordinary course of business consistent with past practice; (d) authorizing any single capital expenditure in excess of $50,000 or capital expenditures, in the aggregate, in excess of $250,000 for Signal and its subsidiaries taken as a whole; or (e) entering into or amending in any material respect any material contract or any contract, agreement, commitment or arrangement with respect to any matters described above in clauses (a) through (d); (vii) increasing (except salary increases in the ordinary course of business and consistent with past practice) the compensation payable or to become payable to its officers or employees generally or to any employee with an annual salary in excess of $90,000, or granting any bonus, severance, change of control or termination pay or material benefits to, or entering into any employment or severance agreement with, any director, officer or other employee of Signal or any subsidiary, or establishing, adopting, entering into, terminating or amending any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee; (viii) taking any action, other than reasonable and usual actions in the ordinary course of business and consistent with past practice, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (ix) paying, discharging or otherwise satisfying any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities as 26 reflected or reserved against in Signal's December 31, 2002 balance sheet, or subsequently incurred in the ordinary course of business and consistent with past practice; (x) failing to comply in all material respects with all applicable laws; (xi) failing to pay and discharge any taxes upon Signal (or any of its subsidiaries) or against any of its properties or assets before the same shall become delinquent and before penalties accrue thereon, except to the extent and so long as the same are being contested in good faith and by appropriate proceedings; (xii) failing to perform any of its material obligations under any of the material contracts or terminating any of the material contracts; or (xiii) settling or compromising any material claim or litigation. Notice of Changes. The Merger Agreement provides that each party shall promptly notify the other party of (i) the occurrence, or non-occurrence, of any event the occurrence, or non-occurrence, of which would be likely to cause (a) any representation or warranty made in the Merger Agreement by that party, or any information furnished on any schedule of any disclosure schedule provided by that party, as the case may be, to be inaccurate either at the time that representation or warranty was made, or that information is furnished, or at the time of the occurrence or non-occurrence of that event or (b) any failure by that party to comply with or satisfy any condition to the obligations of that party to effect the Offer, the Merger and the other transactions contemplated by the Merger Agreement; or (ii) the failure of Signal or Crane, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it pursuant to the Merger Agreement which would be likely to result in any of the conditions to the obligations of any party to effect the Offer, the Merger and the other transactions contemplated by the Merger Agreement not to be satisfied. No Solicitation. The Merger Agreement provides that neither Signal nor any of its subsidiaries shall, directly or indirectly, through any officer or director or any agent acting at Signal's authorization or direction, initiate, solicit or knowingly encourage (including by way of furnishing non-public information or assistance), or take any other action knowingly to facilitate, any inquiries about or the making of any proposal that Signal enter into any Competing Transaction (as defined below), or enter into, maintain or have discussions or negotiate with any person in furtherance of such inquiries or to obtain or seek to obtain a Competing Transaction, or agree to, recommend or endorse any Competing Transaction or withdraw or modify, or propose publicly to withdraw or modify, the recommendation of the Board of Directors of Signal that Signal's stockholders accept the Offer, tender their Shares pursuant to the Offer and approve and adopt the Merger Agreement and the Merger, or authorize or permit any person to take any such action. Signal shall notify Crane orally (within one (1) business day) and in writing (as promptly as practicable) after receipt by any officer or director of Signal or any of its subsidiaries or any investment banker, financial advisor, agent or attorney retained by Signal or any of its subsidiaries, of any inquiry concerning, or proposal for, a Competing Transaction, or of any request for non-public information relating to Signal or any of its subsidiaries either in connection with such an inquiry or proposal or when the request for non-public information could reasonably be expected to lead to such a proposal. These obligations do not prohibit the Board of Directors of Signal from, (i) at any time prior to the acceptance for payment by Purchaser of the Shares, furnishing information to, or entering into discussions or negotiations with, any person that makes an unsolicited, bona fide proposal for a Competing Transaction, if, and only to the extent that, (A) the Board of Directors of Signal, after consultation with independent legal counsel (who may be Signal's regularly engaged independent legal counsel), determines in good faith that failure to take such action would constitute a breach of the fiduciary duties of such directors to Signal's stockholders under applicable law, and, solely with respect to entering into such discussions or negotiations, the Board of Directors of Signal determines in good faith, based on the advice of its financial advisor, that the Competing Transaction is reasonably likely to be more favorable to Signal's stockholders, from a financial point of view, than the Offer and the Merger and (B) prior to furnishing information to, or entering into discussions or negotiations with, 27 that person, Signal (x) provides at least two (2) business days' prior written notice to Crane to the effect that it is furnishing information to, or entering into discussions or negotiations with, that person and provides in the notice to Crane, in reasonable detail, the identity of the person making the proposal and the terms and conditions of the proposal, (y) provides Crane with all information to be provided to the person which Crane has not previously been provided, and (z) receives from the person an executed confidentiality agreement in reasonably customary form and having terms no less favorable to Signal than those contained in the Confidentiality Agreement described below; (ii) complying with Rule 14e-2 (and any associated obligation under Rule 14D-9) promulgated under the Exchange Act with regard to a third-party tender or exchange offer; provided, however, that the Board of Directors of Signal shall not recommend acceptance of the tender or exchange offer unless, in the good faith judgment of the Board of Directors of Signal, after consultation with independent legal counsel (who may be Signal's regularly engaged independent legal counsel), the failure to recommend such acceptance would constitute a breach of its fiduciary duties to Signal's stockholders under applicable law; (iii) referring any third party to the existence of this covenant or making a copy of it available to any third party; or (iv) at any time prior to the acceptance for payment by Purchaser of the Shares, failing to make or withdrawing or modifying its recommendation that Signal's stockholders accept the Offer, tender their Shares pursuant to the Offer and approve and adopt the Merger Agreement and the Merger following the making of an unsolicited, bona fide proposal relating to a Competing Transaction if the Board of Directors of Signal, after consultation with independent legal counsel (who may be Signal's regularly engaged independent legal counsel) determines in good faith that failure to take the action would constitute a breach of the fiduciary duties of such directors to Signal's stockholders under applicable law and the Board of Directors of Signal determines in good faith, based on the advice of its financial advisor, that the Competing Transaction is reasonably likely to be more favorable to Signal's stockholders, from a financial point of view, than the Offer and the Merger. For purposes of the Merger Agreement, "Competing Transaction" means: (i) any merger, consolidation, liquidation, share exchange, business combination, recapitalization or other similar transaction involving Signal or any of its subsidiaries; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of fifteen (15%) percent or more of the assets or capital stock of Signal and its subsidiaries, taken as a whole, in a single transaction or series of transactions; (iii) any tender offer or exchange offer for fifteen (15%) percent or more of the Shares (other than by Signal or an affiliate thereof) or the filing of a registration statement under the Securities Act of 1933, as amended, in connection therewith; (iv) any person having acquired beneficial ownership or the right to acquire beneficial ownership of, or any "group" (as the term is defined under Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) having been formed which beneficially owns, or has the right to acquire beneficial ownership of, fifteen (15%) percent or more of the Shares or any other class of capital stock of Signal; or (v) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. For a Competing Transaction to be more favorable to Signal's stockholders, it must be a bona fide proposal made by a third party to acquire, for consideration consisting solely of cash and/or equity securities, more than fifty (50%) percent of the voting power of the outstanding Shares, or all, or substantially all, of the assets of Signal and for which financing, to the extent required, is then committed or which, in the good faith, reasonable judgment of the Board of Directors of Signal, is capable of being obtained by such third party. Access to Information. The Merger Agreement provides that, until the earlier of the termination of the Merger Agreement and the Effective Time, upon reasonable notice and subject to restrictions contained in confidentiality agreements to which Signal is subject (from which Signal shall use its reasonable best efforts to be released), Signal shall provide to Crane and its representatives full access to all information and documents which Crane reasonably requests regarding the financial condition, business, assets, liabilities, employees and other aspects of Signal, other than information and documents that in the opinion of Signal's counsel may not be disclosed under applicable law. Crane shall keep such information confidential in accordance with the terms of the Confidentiality Agreement. 28 Required Authorizations. Signal and Crane shall use their respective reasonable best efforts to (i) take, or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary, proper or advisable under applicable law or otherwise to consummate and make effective the Offer, the Merger and the other transactions contemplated thereby as promptly as practicable; (ii) obtain in a timely manner from governmental authorities any consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained or made by Crane or Signal or any of their respective subsidiaries in connection with the authorization, execution and delivery of the Merger Agreement and the consummation of the Offer, the Merger and the other transactions contemplated thereby; and (iii) as promptly as practicable make all necessary filings, and thereafter make any other required submissions, with respect to the Merger Agreement, the Offer, the Merger or the other transactions contemplated thereby that are required under (A) the Exchange Act, and any other applicable federal or state securities laws, (B) the HSR Act and any related governmental request(s) thereunder and (C) any other applicable law. Crane and Signal shall cooperate with each other in connection with the making of all such filings, including providing copies of all such documents to the non-filing party and its advisors prior to filing and, if requested, to accept all reasonable additions, deletions or changes suggested in connection therewith. Crane and Signal shall furnish to each other all information required for any application or other filing to be made pursuant to any applicable law (including all information required to be included in the Signal Proxy Statement) in connection with the transactions contemplated by the Merger Agreement. Each party to the Merger Agreement shall (i) use its commercially best efforts to prevent the entry, in a judicial or administrative proceeding brought under any antitrust law by any governmental authority with jurisdiction over enforcement of any applicable antitrust laws or any other party, of any permanent or preliminary injunction or other order that would make consummation of the Offer, the Merger or any other transaction contemplated thereby in accordance with the terms of the Merger Agreement unlawful or would prevent or delay it; and (ii) take promptly, in the event that such an injunction or order has been issued in such a proceeding, all steps necessary to take an appeal of the injunction or order; however, Crane and Purchaser, together, shall not be required to undertake more than one such appeal. In response to any action taken or threatened to be taken by any court or governmental authority, Crane shall not be required to (i) take any action or agree to the imposition of any order or judgment that would compel Crane or Signal (or any of their respective subsidiaries) to sell, license or otherwise dispose of, hold separate or otherwise divest itself of any portion of its respective business, operations or assets in order to consummate the Offer, the Merger or any other transaction contemplated thereby or (ii) impose any material limitation(s) on Crane's ability to own or operate any of the businesses and operations of Signal and its subsidiaries. Each of Crane and Signal shall give (or shall cause its respective subsidiaries to give) any notices to third parties, and use, and cause its respective subsidiaries to use, their reasonable best efforts to obtain any third-party consents or waivers, (A) necessary, proper or advisable to consummate the transactions contemplated in the Merger Agreement, (B) disclosed or required to be disclosed in any disclosure schedule provided by Signal or (C) required to prevent a material adverse effect from occurring with respect to Signal prior to or after the Effective Time or with respect to Crane after the Effective Time. Without the prior written consent of Crane, however, Signal and its subsidiaries shall not incur fees and expenses in excess of $100,000 in the aggregate in order to obtain, and/or in seeking to obtain, any such third-party consents or waivers. In the event that either Crane or Signal fails to obtain any third-party consent or waiver described above, it shall use its reasonable best efforts, and shall take any action reasonably requested by the other party, to minimize any adverse effect upon Signal and Crane, their respective subsidiaries, and their respective businesses resulting, or which could reasonably be expected to result after the Effective Time, from the failure to obtain such consent or waiver. From the date of the Merger Agreement until the Effective Time or the earlier termination of the Merger Agreement in accordance with its terms, each party shall promptly notify the other party in writing of any pending or threatened action, proceeding or investigation by any governmental 29 authority or any other person known to it (i) challenging or seeking material damages in connection with the Offer, the Merger or any other transaction contemplated hereby; or (ii) seeking to delay, restrain or prohibit the consummation of the Offer, the Merger or any other transaction contemplated thereby or otherwise limit the right of Crane or its subsidiaries to own or operate all or any portion of the businesses or assets of Signal or its subsidiaries, which in either case is reasonably likely to have, individually or in the aggregate, a material adverse effect with respect to Signal prior to or after the Effective Time, or with respect to Crane after the Effective Time. Directors' and Officers' Insurance. The Merger Agreement provides that the Surviving Corporation shall use its reasonable best efforts to maintain in effect for six (6) years from the Effective Time, if available, either (i) directors' and officers' liability insurance covering only those persons who are currently covered by Signal's directors' and officers' liability insurance policy on terms comparable to those applicable to the then current directors and officers of Crane; or (ii) the current directors' and officers' liability insurance policies maintained by Signal with respect to matters occurring prior to the Effective Time. In no event shall the Surviving Corporation be required to expend more than an amount per year equal to two hundred (200%) percent of current annual premiums paid by Signal for that insurance. Public Announcement. The Merger Agreement provides that Crane and Signal shall consult with each other before issuing any press release or otherwise making any public statement with respect to the Merger Agreement, the Offer, the Merger and the other transactions contemplated thereby and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by law or any listing agreement with the New York Stock Exchange, the Nasdaq National Market or any other national securities exchange to which Crane or Signal may be a party. Stockholder Litigation. The Merger Agreement provides that Signal shall use its reasonable best efforts to defend any stockholder litigations or claims against Signal and its directors (and/or officers) relating to the Offer, the Merger or any of the other transactions contemplated by the Merger Agreement (including any derivative claims) and shall give Crane the opportunity to participate, at Crane's expense, in, and shall actively cooperate with Crane in, the defense or settlement of any such litigations or claims. The Merger Agreement also provides that Signal shall take all such actions required so that, prior to the Effective Time, each of Signal's 401(k) Profit Sharing Plan and Executive Deferred Compensation Plan is terminated without any further material monetary liability or obligation thereunder. Conditions to Consummation of the Merger. Pursuant to the Merger Agreement, the obligation of each of Crane, Purchaser and Signal to consummate the Merger is subject to the satisfaction, at or before the Effective Time, of each of the following conditions: (i) if required by applicable law, the Merger Agreement and the Merger shall have been approved and adopted by the requisite affirmative vote at a meeting or the written consent of the stockholders of Signal in accordance with the DGCL; (ii) Purchaser shall have purchased Shares pursuant to the Offer; and (iii) no order, stay, decree, judgment or injunction shall have been entered, issued or enforced by any governmental authority or court of competent jurisdiction and remain in effect that prohibits consummation of the Merger, and there shall not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Merger that makes the consummation of the Merger illegal or prohibits the Merger. Termination. The Merger Agreement may be terminated and the Offer and the Merger may be abandoned at any time prior to the Effective Time, notwithstanding any requisite approval and adoption of the Merger Agreement and the transactions contemplated thereby by the stockholders of Signal: (a) by mutual written consent duly authorized by the Boards of Directors of each of Crane, Purchaser and Signal; (b) by either Crane, Purchaser or Signal if either (i) the Offer shall not have been consummated on or before June 30, 2003 (the "Termination Date"); provided, however, that the right to so 30 terminate the Merger Agreement shall not be available to any party whose failure to fulfill any of its obligations under the Merger Agreement has been the cause of, or resulted in, the failure of the consummation of the Offer to occur on or before such Termination Date; provided, further, that, if a Request for Additional Information is received from a governmental authority pursuant to the HSR Act, such Termination Date shall be extended up to the 90th day following acknowledgment by such governmental authority that Crane and Signal have complied with such Request, but in any event not later than August 29, 2003; and, provided, further, that if there shall be instituted or pending, at any scheduled expiration date of the Offer, any suit, action or proceeding by any person (other than a governmental authority) that would give rise to the failure of a condition set forth in subsection (a) of Annex A to the Merger Agreement, the parties shall reasonably and mutually seek to agree to any appropriate extension of the Termination Date; (ii) there shall be any Law that makes consummation of the Merger illegal or otherwise prohibited or if any court of competent jurisdiction or other governmental authority shall have issued an order, judgment, decree, ruling, injunction or taken any other action restraining, enjoining or otherwise prohibiting or materially altering the terms of the Offer or the Merger and such order, judgment, decree, ruling, injunction or other action shall have become final and nonappealable (any such order, judgment, decree, ruling, injunction or action shall be deemed final and nonappealable if Crane or Purchaser is exercising its right to so terminate and Crane or Purchaser has unsuccessfully appealed the same on at least one (1) occasion), except that no party may so terminate unless such party shall have complied with its obligations under the Merger Agreement to contest such action or proceeding; or (iii) the Offer expires pursuant to its terms without the acceptance for payment of Shares thereunder; provided, however, that neither Crane, Purchaser nor Signal has the right to so terminate the Merger Agreement if the failure of the acceptance for payment of Shares pursuant to the Offer to occur is attributable to the failure of such party to perform any of the covenants contained in the Merger Agreement required to be performed by it at or prior to the acceptance for payment of Shares pursuant to the Offer; (c) by Crane, if (i) the Board of Directors of Signal shall have withdrawn, modified, or changed its approval or recommendation in respect of the Merger Agreement, the Merger or the Offer in a manner adverse to the Merger or the Offer, or adverse to Crane or Purchaser, (ii) the Board of Directors of Signal shall have recommended any Competing Transaction; (iii) Signal shall have violated or breached in any material respect any of its obligations described above in "--No Solicitation" or (iv) the Board of Directors of Signal shall have resolved to take any of the foregoing actions; (d) by Signal, at any time prior to the acceptance for payment of Shares pursuant to the Offer, if the Board of Directors of Signal, after its compliance with its obligations described above in "--No Solicitation," shall have recommended or resolved to recommend to the stockholders of Signal a proposal for a Competing Transaction under circumstances where a majority of the directors reasonably determines in good faith (i) after consultation with independent legal counsel, that failure to accept the proposal would constitute a breach of the fiduciary duties of the directors to Signal's stockholders under applicable law and (ii) based on the advice of its financial advisor, that the Competing Transaction is reasonably likely to be more favorable to Signal's stockholders, from a financial point of view, than the Offer and the Merger; however, that any termination of the Merger Agreement by Signal for this reason shall not be effective unless and until (A) the Board of Directors of Signal has provided Crane with written notice that Signal intends to enter into a binding written agreement in respect of the Competing Transaction, (B) Signal shall have attached the most current written version of the Competing Transaction to the notice, (C) Crane does not make, within three (3) days after receipt of Signal's written notice, an offer that the Board of Directors of Signal (which shall be obligated to timely review in good faith any such revised or new offer) shall have determined in good faith (after consultation with its aforementioned outside legal and financial advisors) is at least as favorable to the stockholders of Signal as the Competing Transaction and (D) Signal has made payment of the full termination fee required by the Merger Agreement, and discussed below, as a condition to its ability to terminate under this provision of the Merger Agreement. The parties acknowledged and agreed that, notwithstanding any other provision of the Merger Agreement, a Competing Transaction may not be deemed to be more favorable to Signal's stockholders unless it is a 31 bona fide proposal made by a third party to acquire, for consideration consisting solely of cash and/or equity securities, more than fifty (50%) percent of the voting power of the outstanding Shares or all, or substantially all, of the assets of Signal and for which financing, to the extent required, is then committed or which, in the good faith, reasonable judgment of the Board of Directors of Signal, is capable of being obtained by such third party; (e) by Signal, at any time prior to the acceptance for payment of Shares pursuant to the Offer, in the event of a breach by Crane or Purchaser of any representation, warranty or material agreement contained in the Merger Agreement, which breach is incapable of being cured or, with respect to a breach that is curable, has not been cured within twenty (20) business days after the giving of written notice thereof to Crane or Purchaser, as applicable, except for such breaches which are not reasonably likely to affect adversely Crane's or Purchaser's ability to complete the Offer or the Merger subject to the terms and conditions of the Merger Agreement; (f) by Crane, at any time prior to the acceptance for payment of Shares pursuant to the Offer, in the event of a breach by Signal of any representation, warranty or material agreement contained in the Merger Agreement and the breach would give rise to the failure of a condition set forth in clause (f) or (g) (after giving effect to the cure provisions contained therein) on pages 41 and 42 of this Offer to Purchase after the giving of written notice thereof to Signal; or (g) by Signal, if Crane or Purchaser shall have failed to commence the Offer as required by the Merger Agreement. In the event of any such termination of the Merger Agreement, the Merger Agreement shall forthwith become void, there shall be no liability under the Merger Agreement on the part of Crane, Purchaser or Signal or any of their respective officers or directors and all rights and obligations of any party under the Merger Agreement shall cease, subject to the sole and exclusive remedies of Crane and Purchaser described below regarding the payment of fees and expenses; provided, that nothing in the Merger Agreement shall relieve any party from liability for any willful breach of the Merger Agreement. The payment of the termination fee and expenses pursuant to the Merger Agreement by Signal shall constitute liquidated damages in consideration of the time and opportunity and related costs of Crane and Purchaser and, upon receipt of the termination fee and expenses, Crane and Purchaser shall have no further recourse at law or in equity against Signal in respect of the Merger Agreement or any breach thereof other than as set forth above. The Merger Agreement may be amended by the parties by action taken by or on behalf of their respective Boards of Directors at any time prior to the Effective Time. After the approval and adoption of the Merger Agreement and the transactions contemplated thereby by the stockholders of Signal, if required, no amendment may be made which would reduce the Per Share Amount or change the consideration into which each Share will be converted upon consummation of the Merger. The Merger Agreement may not be amended except by an instrument in writing signed by the parties. At any time prior to the Effective Time, any party to the Merger Agreement may, to the extent legally allowed, (a) extend the time for the performance of any obligation or other act of any other party thereto, (b) waive any inaccuracy in the representations and warranties contained therein or in any document delivered pursuant thereto and (c) waive compliance with any agreement or condition contained therein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party or parties to be bound thereby. Fees and Expenses. Except as provided below, all costs and expenses incurred in connection with the Merger Agreement and the Offer, the Merger or any other transaction contemplated thereby shall be paid by the party incurring those expenses, whether or not the Offer, the Merger or any other transaction contemplated by the Merger Agreement is consummated. Signal shall pay Crane a cash fee of $4,500,000 plus Expenses (as defined below) upon the termination of the Merger Agreement pursuant to clause (c) or (d) above. Payment of this termination fee and Expenses shall be made as promptly as practicable but not, subject to Signal's obligations to pay such fee in advance of terminating this Agreement as described in clause (d) above, later than five (5) business days after the termination giving rise to the termination fee and shall be made by wire transfer of immediately available funds to an account designated by Crane. 32 For these purposes, "Expenses" means all reasonable and documented out-of-pocket expenses (excluding any wages or salaries of any of Crane's or Purchaser's or any of their affiliates' employees and any transportation expenses associated with means of transportation owned by Crane or any of its affiliates) and fees incurred by Crane and/or Purchaser prior to the termination of the Merger Agreement (including, without limitation, all fees and expenses of counsel, financial advisors, accountants, environmental and other experts and consultants to Crane, and its affiliates and all printing and advertising expenses) actually incurred or accrued by either of them or on their behalf in connection with the Offer, the Merger or any other transaction contemplated by the Merger Agreement. The Expenses shall not exceed $500,000 (the "Cap"). However, in the event that Signal fails to pay the applicable termination fee and/or any Expenses when due, the term "Expenses" shall be deemed to include, irrespective of the Cap, the costs and expenses actually incurred or accrued by Crane and its affiliates (including, without limitation, fees and expenses of counsel) in connection with the collection of the termination fee and Expenses, and Signal shall pay interest on such unpaid termination fee and/or Expenses, commencing on the date that the termination fee and/or the Expenses became due, at a rate equal to the rate of interest publicly announced by Fleet Bank, from time to time, in the City of Boston, as such bank's Base Rate plus two (2%) percent; provided, however, that such costs of collection shall not exceed $250,000. The Tender and Voting Agreements. Following is a summary of the Tender and Voting Agreements, a form of which has been filed as an exhibit to the Schedule TO filed by Purchaser with the SEC in connection with the Offer. This summary is qualified in its entirety by reference to the full text of the form of Tender and Voting Agreement. The form of Tender and Voting Agreement should be read in its entirety for a more complete description of the matters summarized below. Defined terms used but not defined below have the respective meanings assigned to these terms in the Merger Agreement or the Tender and Voting Agreements, as the case may be. Pursuant to the Tender and Voting Agreements, certain executive officers and directors of Signal (and certain family members and trusts of the directors) (each, a "Tendering Stockholder") have agreed that (i) promptly following the commencement of this Offer, the Tendering Stockholder will tender (or cause the relevant record holder(s) to tender) in this Offer, and, to the extent not inconsistent with applicable law, not withdraw or cause to be withdrawn (except following termination of the Offer in accordance with its terms), any and all Shares currently beneficially owned (as defined in Rule 13d-3 under the Exchange Act) and/or owned of record by the Tendering Stockholder and any additional Shares with respect to which the Tendering Stockholder may become the beneficial and/or record owner after the date of the Tender and Voting Agreement; however, the Tendering Stockholder shall not be required to exercise any unexercised Signal Options held by the Tendering Stockholder and shall have no obligation to tender Shares into the Offer if that tender would cause the Tendering Stockholder to incur liability under Section 16(b) of the Exchange Act, and (ii) until the earliest of (x) the Effective Time, (y) the date, if any, on which the parties shall, by mutual written consent, agree to terminate the Tender and Voting Agreement or (z) the due termination of the Merger Agreement in accordance with its express terms (such date, the "Tender and Voting Agreement Expiration Date"), at any meeting of the stockholders of Signal or in any written consent in lieu thereof, the Tendering Stockholder will, or will cause the record holder(s) of the Tendering Stockholder's Shares, to be present at the applicable meeting(s) of stockholders and to vote such Shares in favor of the Merger, the Merger Agreement and the transactions contemplated by the Merger Agreement and against any action or agreement that would impede, interfere with, delay or adversely affect the Merger or the Offer, including, but not limited to, any agreement or arrangement related to a Competing Transaction. If the waiver of the right of withdrawal described above is, or is alleged to be, unenforceable and the Tendering Stockholder withdraws, or attempts to withdraw, its Shares, then at the time of acceptance for payment of the Shares pursuant to this Offer, the Tendering Stockholder shall sell its Shares to Purchaser, and Purchaser shall purchase the Shares, for a price per Share equal to the Per Share Amount. The Tendering Stockholders hold 1,762,318 Shares in the aggregate. The Tendering Stockholders have granted to Purchaser, and to each officer of Crane, a proxy to vote the Tendering Stockholder's Shares as indicated above. The Tendering Stockholders have agreed 33 to take such further action and execute such other instruments as may be necessary to effectuate the intent of that proxy. The Tendering Stockholders expressly revoked any proxies previously granted with respect to their Shares. The proxy will terminate upon the Tender and Voting Agreement Expiration Date. Each Tender and Voting Agreement contains the agreement of the Tendering Stockholder that, until the Tender and Voting Agreement Expiration Date, the Tendering Stockholder shall not (i) sell, transfer, pledge, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, pledge, assignment or other disposition of, any of its Shares to any person, other than Purchaser or Purchaser's designee and that any attempted transfer or other disposition will be null and void; (ii) enter into, or otherwise subject any Shares to, any voting arrangement, whether by proxy, voting agreement, voting trust, power-of-attorney or otherwise; or (iii) take any other action that would in any way restrict, limit or interfere with the performance of the Tendering Stockholder's obligations under the Tendering and Voting Agreement or the transactions contemplated to be performed thereunder. Each Tendering Stockholder has also agreed irrevocably and unconditionally to waive, and has agreed not to exercise, and to prevent the exercise of, any rights of appraisal or to dissent in connection with the Merger that such Tendering Stockholder may have with respect to its Shares. Each Tender and Voting Agreement contains the Tendering Stockholder's agreement that it will not, and will cause its agents and representatives not to, take any actions prohibited by Section 6.05 of the Merger Agreement (regarding Competing Transactions); however, the Tender and Voting Agreement does not prevent the Tendering Stockholder or any of its agents or representatives from acting as a director or officer of Signal or taking any action in such capacity (including at the direction of Signal's Board of Directors) to the extent permitted by the Merger Agreement. The Tender and Voting Agreements will automatically terminate on the Tender and Voting Agreement Expiration Date. Notwithstanding any other provision of the Tender and Voting Agreements, (i) no Tendering Stockholder makes any agreement or understanding in any capacity other than in the Tendering Stockholder's capacity as a record holder and beneficial owner of Shares, (ii) nothing in the Tender and Voting Agreements is to be construed to limit or affect any action or inaction by any Tendering Stockholder or any agent or representative of a Tendering Stockholder, in either case serving on Signal's Board of Directors solely acting in such person's capacity as a director or fiduciary of Signal, and (iii) no Tendering Stockholder is to have any liability to Crane, Purchaser or any of their respective affiliates under the Tender and Voting Agreements as a result of any action or inaction by such Tendering Stockholder, or any agent or representative, as applicable, of such Tendering Stockholder, in either case serving on the Board of Directors of Signal solely acting in such person's capacity as a director or fiduciary of Signal. Indemnification Agreements. On April 15, 2003, Signal entered into a six-year indemnification agreement (each, an "Indemnification Agreement") with each current officer and director of Signal (each, an "Indemnitee"). Each Indemnification Agreement provides that it shall become effective only upon the occurrence of the Effective Time. Pursuant to each Indemnification Agreement, Signal has agreed to indemnify and hold harmless the Indemnitee, to the fullest extent authorized by the DGCL, from and against any expenses (including expenses of investigation and preparation and fees and disbursements of counsel, accountants and other experts), judgments, fines, liability, losses and amounts paid in settlement, actually and reasonably incurred by the Indemnitee in connection with any threatened, pending or completed action, suit, claim or proceeding (hereinafter, a "proceeding"), including affirmative defenses raised therein, whether civil, criminal, administrative or investigative, by reason of the fact that the Indemnitee is or was a director or officer of Signal, or shall, after the Effective Time, serve at the specific request of Signal as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust or other enterprise, and whether or not the cause of such proceeding occurred before or after April 15, 2003. Notwithstanding the foregoing, except as provided in Section 7 of each Indemnification Agreement (as discussed below), Signal shall indemnify the Indemnitee in 34 connection with a proceeding (or part thereof) initiated by the Indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of Signal. Any indemnification or advance of expenses under the Indemnification Agreements shall be made promptly, and in any event within twenty (20) days, upon the written request of the Indemnitee. If Signal fails to respond within sixty (60) days of a written request for indemnity, Signal shall be deemed to have approved the request. If Signal denies a written request for indemnification or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within the time periods described above, the right to indemnification or advances as granted by the Indemnification Agreement shall be enforceable by the Indemnitee in any court of competent jurisdiction. The Indemnitee's costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by Signal in accordance with Section 7 of each Indemnification Agreement. Except as set forth in the second sentence of this paragraph, it shall be a defense by Signal to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to Signal) that the Indemnitee has not met the standards of conduct which make it permissible under Delaware law, as determined in accordance with Delaware law, for Signal to indemnify the Indemnitee for the amount claimed, but the burden of proving such defense, by a preponderance of evidence, shall be on Signal and the Indemnitee shall be presumed to have acted in accordance with such standard unless it shall be so shown that the Indemnitee has not met such standard. The failure of Signal to have made a determination prior to the commencement of any such action that indemnification of the Indemnitee is proper because the applicable standard of conduct has been met shall not be a defense to such action or create a presumption that the Indemnitee has not met the applicable standard of conduct. Pursuant to each Indemnification Agreement, the Indemnitee shall control the defense (including the selection of qualified counsel) of any proceeding against it which may give rise to a right of indemnification under the Indemnification Agreement; however, if any insurance carrier which shall have supplied any directors' and officers' insurance coverage shall be willing to conduct such defense without any reservation as to coverage, then, unless on written application by the Indemnitee concurred with by the Board of Directors of Signal, the Indemnitee and the Board of Directors deem it undesirable, such insurance carrier shall select counsel to conduct such defense. In the event of any proceeding against the Indemnitee which may give rise to a right of indemnification pursuant to an Indemnification Agreement, following written request to Signal by the Indemnitee, Signal shall advance to the Indemnitee amounts equal to reasonable expenses incurred by the Indemnitee in defending such proceeding in advance of the final disposition thereof upon receipt of (i) a satisfactory undertaking by or on behalf of the Indemnitee to repay such amount if it shall ultimately be determined by final judgment of a court of competent jurisdiction that he or she is not entitled to be indemnified by Signal under the Indemnification Agreement, and (ii) satisfactory documentation as to the amount of such expenses. The Indemnitee shall not settle or compromise any proceeding covered by an Indemnification Agreement without first obtaining the written consent to such settlement or compromise from Signal, which consent in no event shall be unreasonably withheld. In the event that Signal unreasonably withholds or delays such consent and, as a direct result, the aggregate liability of Signal exceeds the limitation described below, such limitation shall not apply to such proceeding. In the event an Indemnitee is required to bring any action to enforce rights or to collect amounts due under an Indemnification Agreement and is successful in such action, Signal shall reimburse the Indemnitee for all of the Indemnitee's costs and expenses in bringing and pursuing such action. Except as described in the preceding paragraph, the aggregate liability of Signal under each Indemnification Agreement (other than any liability for costs and expenses of collection referred to above) shall in no event exceed (x) the amount of $10,000,000 less (y) the aggregate amount incurred by Signal from April 15, 2003 through the date of determination in respect of indemnification and expense obligations to all the Indemnitees. Each Indemnification Agreement shall automatically terminate on April 15, 2009. 35 Each Indemnitee has expressly acknowledged and agreed that the indemnification rights and the rights to payment of expenses granted to the Indemnitee under the Indemnification Agreement are the sole and exclusive rights of the Indemnitee to indemnification and/or payment of expenses by Signal or any of its subsidiaries or affiliates. Each Indemnitee has irrevocably waived any and all rights (other than those set forth in the Indemnification Agreement) that Indemnitee has or is alleged to have against Signal for indemnification and/or payment of expenses, whether such rights arose or are alleged to have arisen under contract (written or oral), statute (other than as required under Delaware law), course of dealing, custom or otherwise. Subject to the occurrence of the Effective Time, Crane has agreed to guarantee Signal's (as the surviving corporation in the Merger) obligations under the Indemnification Agreements, subject to the $10,000,000 aggregate and other limitations discussed above. Dissenters' Rights. Dissenters' rights are not available in connection with the Offer. However, if the Merger is consummated, stockholders who comply fully with the dissenters' procedures set forth in the DGCL, the relevant portions of which are attached to this Offer to Purchase as Annex B, will be entitled to receive cash for the fair value of their Shares, as determined pursuant to the procedures presented by the DGCL. Merely voting against the Merger Agreement will not perfect a stockholder's dissenters' rights. Stockholders are urged to review carefully the dissenting stockholders' rights provisions of Section 262 of the DGCL, a description of which is provided below and the full text of which is attached to this Offer to Purchase as Annex B and incorporated herein by reference. The description below is not a complete statement of law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262 of the DGCL. STOCKHOLDERS WHO FAIL TO COMPLY STRICTLY WITH THE APPLICABLE PROCEDURES WILL FORFEIT THEIR DISSENTERS' RIGHTS IN CONNECTION WITH THE MERGER. If the Merger is consummated, each holder of Shares who properly demands and perfects appraisal rights and who has not voted in favor of the Merger will be entitled to an appraisal by the Delaware Court of Chancery of the fair value of such Shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with a fair rate of interest, if any, to be paid. In determining the fair value, the Court may consider all relevant factors. The judicially determined value could be more or less than the consideration to be paid in the Offer and the Merger. Any judicial determination of the fair value could be based upon considerations other than or in addition to the market value of the Shares, including, among other things, asset values and earning capacity. If any holder of Shares who demands appraisal under Section 262 of the DGCL fails to perfect, effectively withdraws or otherwise loses the right to appraisal as provided in the DGCL, the Shares of that stockholder will be converted into the right to receive the Per Share Amount in accordance with the Merger Agreement. A stockholder may withdraw a demand for appraisal by delivery to Purchaser of a written withdrawal of the demand for appraisal and a statement of acceptance of the Merger. IN VIEW OF THE COMPLEXITIES OF THESE PROVISIONS OF DELAWARE LAW, STOCKHOLDERS WHO ARE CONSIDERING DISSENTING FROM THE MERGER SHOULD CONSULT THEIR OWN LEGAL COUNSEL. Offers of Continued Employment. By letters dated April 9, 2003, Purchaser extended offers of continued at-will employment to eleven (11) employees of Signal, which offers were accepted. Each offer is subject to the occurrence of the Effective Time. Each offer of continued employment includes a signing bonus and severance benefits in the event that the employee's employment with Purchaser is terminated under specified circumstances. Each employee who accepted such offer waived any rights he or she may have had under any severance arrangement with Signal. The Confidentiality Agreement. Crane and Wachovia, acting in its capacity as financial advisor to Signal, entered into a confidentiality agreement on June 11, 2002 (the "Confidentiality Agreement"). Pursuant to the Confidentiality Agreement, Crane agreed to keep confidential certain information provided by Signal or its representatives. The Merger Agreement provides that certain information exchanged pursuant to the Merger Agreement will be subject to the Confidentiality Agreement prior to the Effective Time. 36 Plans for Signal. Crane expects that, immediately following the Offer and the Merger, the business and operations of Signal will continue generally as they are currently being conducted. Crane currently intends to cause Signal's day-to-day operations to continue to be run and managed by certain members of Signal's existing management together with members of Crane's management. Crane, through its wholly owned subsidiary General Technology Corporation, which was acquired by Crane in November 2002, purchased from Signal approximately $2.1 million of electronic components in 2002 (including the pre- and post-acquisition periods) and approximately $300,000 of electronic components (including a pending order) to date in 2003. If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement provides that Purchaser will be entitled to designate representatives to serve on the Board of Directors of Signal following the purchase; however, until the Effective Time, there must be at least two directors who are current directors of Signal, one of whom shall be George Lombard. Purchaser currently intends to seek the maximum representation on the Board of Directors of Signal permitted by the Merger Agreement. Purchaser expects that its representation on the Board of Directors of Signal would permit Purchaser to exert control over the conduct of Signal's business and operations. As a result of the Merger, the directors of Purchaser immediately prior to the Effective Time will become the directors of the Surviving Corporation. After the Effective Time, Crane, through a subsidiary, will be the sole holder of Signal's capital stock and, accordingly, will be entitled to all the benefits resulting from its ownership interests, including all income generated by Signal's operations and any future increase in Signal's value. Similarly, Crane will also bear the risk of losses generated by Signal's operations and any future decrease in the value of Signal after the Effective Time. Subsequent to the Merger, all current holders of Shares will cease to have any equity interest in Signal, will not have the opportunity to participate in the earnings and growth of Signal and will not have any right to vote on Signal corporate matters. Similarly, all current holders of Shares will not face the risk of losses generated by Signal's operations or any decline in the value of Signal after the Merger. The Shares are currently quoted on the Nasdaq National Market. Following the consummation of the Merger, the Shares will no longer be quoted on Nasdaq, and the registration of the Shares under the Exchange Act will be terminated. Accordingly, after the Merger there will be no publicly-traded equity securities of Signal outstanding, and Signal no longer will be required to file periodic reports with the SEC. See "Section 12--Certain Effects of the Offer and the Merger." Purchaser believes that, if Shares are not accepted for payment by Purchaser pursuant to the Offer and the Merger is not consummated, Signal's current management, under the general direction of Signal's Board of Directors, will manage Signal as an ongoing business. Except as disclosed elsewhere in this Offer to Purchase, neither Crane nor Purchaser has any present plans or proposals that would result in (i) an extraordinary transaction involving Signal, such as a merger, reorganization or liquidation; (ii) any purchase, sale or transfer of a material amount of assets of Signal or any of its Subsidiaries; (iii) any material change in Signal's dividend policy, indebtedness or capitalization (except that Purchaser will repay Signal's indebtedness to Citizens Bank of Massachusetts at or shortly after the Effective Time); and (iv) any material changes in Signal's corporate structure or business or the composition of the management of Signal. Crane will continue to evaluate and review Signal and its business, assets, corporate structure, operations, properties, policies, management, prospects and personnel with a view towards determining how optimally to realize any potential benefits which arise from the relationship of the operations and assets of Signal with those of Crane. Other than as described above, such evaluation and review is ongoing and is expected not to be completed until after the consummation of the Merger. If the Merger is completed, Crane will complete such evaluation and review and will determine what, if any, changes would be desirable in light of the circumstances and the strategic opportunities which then exist. Purchaser presently intends to select its designees to the Board of Directors of Signal from among individuals who are currently officers or directors of Crane or its affiliates and who are identified in the Information Statement which is attached as Annex B to the Schedule 14D-9 of Signal included with this Offer to Purchase and such other individuals as Purchaser may identify in the future. 37 Following consummation of the Offer, and as permitted by the Merger Agreement and applicable law, Purchaser or an affiliate of Purchaser may acquire additional Shares through open market purchases, privately negotiated transactions or otherwise, upon such terms and at such prices as it determines, which may be more or less than the price paid in the Offer, and Purchaser and affiliates of Purchaser also reserve the right to dispose of any or all Shares acquired by them, subject to the terms of the Merger Agreement. Rights. On January 26, 1999, the Board of Directors of Signal declared a dividend distribution of one Right for each outstanding Share. Except as described below, each Right, when exercisable, entitles the registered holder to purchase from Signal one share of Common Stock at a price of $25.00 (the "Purchase Price"), subject to adjustment. The description and terms of the Rights are set forth in the Rights Agreement. Pursuant to the Merger Agreement, Signal has agreed to amend the Rights Agreement to (i) render the Rights Agreement inapplicable to the Merger Agreement, the Tender and Voting Agreements, the Offer, the Merger and the other transactions contemplated thereby and (ii) provide that (x) neither Crane nor Purchaser is deemed an Acquiring Person pursuant to the Rights Agreement and (y) a Distribution Date (as defined in the Rights Agreement) does not occur by reason of the execution of the Merger Agreement or the Tender and Voting Agreements, or the commencement or consummation of the Offer, the Merger or the other transactions contemplated by this Agreement or the Tender and Voting Agreements. Signal effected this amendment to the Rights Agreement on April 16, 2003. Until the earlier to occur of (i) 10 business days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired beneficial ownership of fifteen (15%) percent or more of the outstanding Shares (the date of such an announcement being a "Shares Acquisition Date") or (ii) 10 business days (or such later date as may be determined by action of the Board of Directors of Signal prior to such time as any person becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of fifteen (15%) percent or more of such outstanding Shares (the earlier of such dates being referred to as the "Distribution Date"), the Rights will be evidenced by share certificates, together with a copy of a summary of the Rights. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Rights Certificates") will be mailed to holders of record of the Shares as of the close of business on the Distribution Date, and the separate Rights Certificates alone will evidence the Rights. The Rights are not exercisable until the Distribution Date. The Rights will expire on January 26, 2009 (the "Final Expiration Date"), unless earlier redeemed by Signal, as described below. Shares of Common Stock purchasable upon exercise of the Rights will not be redeemable. The Purchase Price payable, and the number of shares of Common Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the shares of Common Stock, (ii) upon the grant to holders of the Shares of certain rights or warrants to subscribe for or purchase shares of Common Stock at a price, or securities convertible into shares of Common Stock with a conversion price, less than the then current market price of the Shares or (iii) upon the distribution to holders of the Shares of evidences of indebtedness or assets (excluding regular periodic cash dividends paid out of earnings or retained earnings or dividends payable in shares of Common Stock) or of subscription rights or warrants (other than those referred to above). The numbers of outstanding Rights and the shares of Common Stock issuable upon exercise of each Right are also subject to adjustment in the event of a stock split or a stock dividend on the Shares payable in shares of Common Stock or subdivisions, consolidations or combinations of the Shares occurring, in any such case, prior to the Distribution Date. In the event that, after the first date of public announcement by Signal or an Acquiring Person that an Acquiring Person has become such, Signal is involved in a merger or other business 38 combination transaction in which the Shares are exchanged or changed, or fifty (50%) percent or more of Signal's consolidated assets or earning power is sold (in one transaction or a series of related transactions), proper provision will be made so that each holder of a Right (other than an Acquiring Person) will thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring company (or, in the event there is more than one acquiring company, the acquiring company receiving the greatest portion of the assets or earning power transferred), which, at the time of such transaction, would have a market value of two times the exercise price of the Right. In the event that any person becomes an Acquiring Person, each holder of a Right will thereafter have the right to receive upon exercise that number of shares of Common Stock having a market value of two times the exercise price of the Right. Upon occurrence of the event described in the immediately preceding sentence, any Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person shall immediately become null and void. At any time after the occurrence of any such event and prior to the acquisition by such person or group of fifty (50%) percent or more of the outstanding Shares, the Board of Directors of Signal may exchange the Rights (other than Rights owned by such person or group which have become void), in whole or in part, at an exchange ratio of one share of Common Stock per Right (subject to adjustment). With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least one (1%) percent in such Purchase Price. No fractional shares of Common Stock will be issued and in lieu thereof, an adjustment in cash will be made based on the market price of the Shares on the last trading day prior to the date of exercise. At any time prior to the earlier of (i) the tenth day after a Shares Acquisition Date or (ii) the expiration of the Rights, the Board of Directors of Signal may redeem the Rights in whole, but not in part, at a price of $.001 per Right (the "Redemption Price"). The redemption of the Rights may be made effective at such time on such basis and with such conditions as the Board of Directors of Signal, in its sole discretion, may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Other than those provisions relating to the principal economic terms of the Rights, any of the provisions of the Rights Agreement may be amended by the Board of Directors of Signal prior to the Distribution Date. After the Distribution Date, the provisions of the Rights Agreement may be amended by the Board of Directors of Signal in order to cure any ambiguity, to make changes that do not adversely affect the interests of holders of Rights (excluding the interests of any Acquiring Person), or to shorten or lengthen any time period under the Rights Agreement; however, no amendment to adjust the time period governing redemption shall be made at a time when the Rights are not redeemable. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of Signal, including, without limitation, the right to vote or to receive dividends. The foregoing summary of the Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the Rights Agreement filed as an exhibit to Signal's Current Report on Form 8-K filed on February 10, 1999 with the SEC and any subsequent amendments to the Rights Agreement. Copies of these documents may be obtained in the manner set forth above in Section 7. Stockholders are required to tender one Right for each Share tendered in order to effect a valid tender of such Share. If the Distribution Date does not occur prior to the expiration of the offer, a tender of Shares will automatically constitute a tender of the associated Rights. 12. CERTAIN EFFECTS OF THE OFFER AND THE MERGER Market for Shares. The purchase of Shares by Purchaser pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and may reduce the number of holders of 39 Shares, which could adversely affect the liquidity and market value of the remaining Shares held by the public. After the Merger, other than Crane or any of its affiliates, there will be no holders of Shares. Stock Quotation. The Shares are currently quoted on the Nasdaq National Market. According to published guidelines of the National Association of Securities Dealers, in order for the Shares to continue to be eligible for quotation on Nasdaq, the Shares must substantially meet, among other things, either of the following: (i) (A) at least 750,000 Shares must be publicly-held, (B) the market value of publicly-held Shares must be at least $5,000,000, (C) Signal must have stockholders' equity of at least $10,000,000, (D) there must be at least 400 holders of round lots of Shares, (E) the bid price per Share must be at least $1 and (F) there must be at least two registered and active market makers for the Shares or (ii) (A) at least 1,100,000 Shares must be publicly-held, (B) the market value of publicly held Shares must be at least $15,000,000, (C) the bid price per Share must be at least $3, (D) there must be at least 400 holders of round lots of Shares, (E) there must be at least four registered and active market makers and (F) either (x) the market value of the Shares must be at least $50,000,000 or (y) the total assets and total revenue of Signal for the most recently completed fiscal year or two of the last three most recently completed fiscal years must be at least $50,000,000. Shares held directly or indirectly by directors, officers or beneficial owners of more than ten (10%) percent of the Shares are not considered as being publicly-held for this purpose. According to information furnished to Purchaser by Signal, as of the close of business on April 21, 2003, there were 76 holders of record of Shares, not including beneficial owners of Shares held in street name, and as of April 24, 2003 there were 10,457,887 Shares outstanding. If the Shares were to cease to be quoted on the Nasdaq National Market, the market for Shares would be adversely affected. It is possible that the Shares would be traded or quoted on other securities exchanges or in the over-the- counter market, and that price quotations would be reported by such exchanges or other sources. The extent of the public market for Shares and the availability of such quotations would, however, depend upon the number of stockholders and/or the aggregate market value of the Shares remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the likely termination of registration of the Shares under the Exchange Act and other factors. Exchange Act Registration. The Shares are currently registered under the Exchange Act. Such registration may be terminated by Signal upon application to the SEC if the outstanding Shares are not listed on a national securities exchange and if there are fewer than 300 holders of record of Shares. Termination of registration of the Shares under the Exchange Act would greatly reduce the information required to be furnished by Signal to its stockholders and to the SEC and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) and the requirement to furnish a proxy statement in connection with stockholders' meetings pursuant to Section 14(a) and the related requirement to furnish an annual report to stockholders, no longer applicable with respect to the Shares. Furthermore, the ability of "affiliates" of Signal and persons holding "restricted securities" of Signal to dispose of such securities pursuant to Rule 144 under the Securities Act of 1933, as amended, would be impaired or eliminated. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be eligible for Nasdaq quotation. Purchaser intends to seek to cause Signal to apply for termination of registration of the Shares as soon as possible after consummation of the Offer. If registration of the Shares is not terminated prior to the Merger, then the registration of the Shares under the Exchange Act and the quotation of the Shares on Nasdaq will be terminated promptly following completion of the Merger. Margin Regulations. The Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect of, among other things, allowing brokers to extend credit on the collateral of the Shares. Depending on factors similar to those described above regarding listing and market quotations, following the Offer, Shares would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and, therefore, could no longer be used as collateral for loans made by brokers. 40 13. DIVIDENDS AND DISTRIBUTIONS The Merger Agreement provides that Signal will not, between the date of the Merger Agreement and the Effective Time, without the prior written consent of Crane, declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock. 14. CERTAIN CONDITIONS OF THE OFFER Notwithstanding any other provisions of the Offer, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange Act, pay for any Shares tendered pursuant to the Offer if (i) there shall not have been validly tendered and not withdrawn prior to the expiration of the Offer that number of Shares which, when added to Shares, if any, previously acquired by Purchaser or Crane or any of their respective affiliates, represents a majority of the then total issued and outstanding Shares (assuming, for this purpose, the exercise of all options to purchase shares of Common Stock that have a per share exercise price of less than $13.25), (ii) any applicable waiting period (and any extension(s) thereof) under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer or (iii) at any time on or after the date of the Merger Agreement and prior to any acceptance for payment or payment for any Shares pursuant to the Offer, any one or more of the following events shall have occurred: (a) there shall be instituted or be pending by any person or Governmental Authority any suit, action or proceeding that is reasonably likely to prevail (i) challenging or seeking to restrain or prohibit the making or consummation of the Offer or the Merger or to substantially deprive Crane of any of its anticipated benefits of the Merger, (ii) seeking to prohibit or materially limit the ownership or operation by Signal, Crane or any of their respective subsidiaries of a material portion of the business, operations or assets of Signal or Crane and/or its subsidiaries or to compel Signal or Crane to dispose of or hold separate any material portion of the business or assets of Signal or Crane and/or its subsidiaries as a result of the Offer or the Merger or (iii) seeking to impose material limitations on the ability of Crane or Purchaser to acquire or exercise full rights of ownership of Shares, including, without limitation, the right to vote such Shares on all matters properly presented to the stockholders of Signal; (b) any statute, rule, regulation, judgment, order or injunction shall be enacted, entered, enforced, promulgated or deemed applicable to the Offer and/or the Merger, or any other action shall be taken by any Governmental Authority or court, other than the application to the Offer or the Merger of applicable waiting periods under the HSR Act, that is reasonably likely to result, directly or indirectly, in any of the consequences described in clauses (i) through (iii) of subsection (a) above; (c) there shall have occurred a Material Adverse Effect with respect to Signal; (d) (i) the Board of Directors of Signal shall have withdrawn, modified, or changed its approval or recommendation in respect of the Merger Agreement, the Merger or the Offer in a manner adverse to the Merger or the Offer, or adverse to Crane or Purchaser, (ii) the Board of Directors of Signal shall have recommended any Competing Transaction, (iii) Signal shall have violated or breached in any material respect any of its obligations under Section 6.05 of the Merger Agreement (regarding, among other things, solicitation of Competing Transactions), or (iv) the Board of Directors of Signal shall have resolved to take any of the foregoing actions; (e) Signal, Purchaser and Crane shall have agreed in writing to terminate the Offer, or the Merger Agreement shall have been terminated in accordance with its terms; (f) any of the representations and warranties of Signal set forth in the Merger Agreement shall not be true and correct (without regard to any materiality qualifications or references to Material Adverse Effect contained in any specific representation or warranty) as if such 41 representations and warranties were made at the time of any such determination, except to the extent such representations and warranties expressly relate to an earlier date (in which case as of such date); provided, that the condition described in this clause (f) shall be deemed not to have been triggered so long as the failure of all such representations and warranties so to be true and correct would not have a Material Adverse Effect on Signal or prevent or materially delay the consummation of the Offer; (g) Signal shall have failed to perform in any material respect any of its obligations required to be performed by it under the Merger Agreement at or prior to consummation of the Offer, which failure to perform is incapable of being cured or, with respect to a failure that is curable, has not been cured within twenty (20) business days after the giving of written notice thereof by Crane to Signal; provided, that any material breach of Section 6.05 of the Merger Agreement shall be covered by subsection (d) above and not this subsection (g); provided, further, that with respect to any breach by Signal of the provisions of Section 2.04(a) (other than the first sentence thereof, which has no cure period) of the Merger Agreement, Signal shall be afforded up to thirty (30) business days to cure such breach; or (h) there shall have occurred, and continued to exist, (x) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (y) a commencement of a war, armed hostilities or other national or international calamity involving the United States or, in the case of any of the foregoing occurrences existing on or at the time of the commencement of the Offer, a material worsening or acceleration thereof, or (z) a material limitation (whether or not mandatory) by any Governmental Authority on the extension of credit by banks or other lending institutions, which in the case of clauses (x), (y) or (z) prevents Crane from borrowing money pursuant to its credit facilities in effect on the date of the Merger Agreement (i.e., April 16, 2003). The foregoing conditions (including those set forth in clauses (i) and (ii) of the initial paragraph of this Section 14) are for the sole benefit of Crane and Purchaser and may be asserted by Crane or Purchaser regardless of the circumstances giving rise to any such conditions and may be waived by Crane or Purchaser, by express and specific action to that effect, in whole or in part, at any time and from time to time in their sole discretion, in each case, subject to any applicable provisions of the Merger Agreement. The failure by Crane or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right, which may be asserted at any time and from time to time. 15. CERTAIN LEGAL MATTERS General. Except as otherwise disclosed in this Offer to Purchase, based upon an examination of publicly available filings with respect to Signal, Purchaser is not aware of any licenses or other regulatory permits which appear to be material to the business of Signal and which might be adversely affected by the acquisition of Shares by Purchaser pursuant to the Offer or of any approval or other action by any governmental, administrative or regulatory agency or authority which would be required for the acquisition or ownership of Shares by Purchaser pursuant to the Offer or the Merger. Should any such approval or other action be required, it is currently contemplated that such approval or action would be sought or taken. There can be no assurance that any such approval or action, if needed, would be obtained or, if obtained, that it would be obtained without substantial conditions or costs or that adverse consequences might not result to Signal's or Crane's business or that certain parts of Signal's or Crane's business might not have to be disposed of in the event that such approvals were not obtained or such other actions were not taken, any of which could cause Purchaser to elect to terminate the Offer without the purchase of the Shares thereunder, if the relevant conditions to termination are met. Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions. See "Section 14--Certain Conditions of the Offer." Antitrust Compliance. Under the HSR Act and the rules that have been promulgated thereunder by the FTC, certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division and the FTC and certain waiting period requirements have 42 been satisfied. The acquisition of Shares by Purchaser pursuant to the Offer is subject to these requirements. See "Section 2--Acceptance for Payment and Payment for Shares" as to the effect of the HSR Act on the timing of Purchaser's obligation to accept Shares for payment. Pursuant to the HSR Act, Crane will shortly file a Notification and Report Form with respect to the acquisition of Shares pursuant to the Offer and the Merger with the Antitrust Division and the FTC. Under the provisions of the HSR Act applicable to the purchase of Shares pursuant to the Offer, such purchases may not be made until the expiration of a 15-day waiting period following the filing by Crane, unless early termination of the waiting period is sought and granted or Crane receives a prior request for additional information or documentary material. If either the FTC or the Antitrust Division were to request additional information or documentary material from Crane, the waiting period would expire at 11:59 p.m., New York City time, on the tenth (10th) calendar day after the date of substantial compliance by Crane with such request, unless the waiting period is sooner terminated by the FTC or the Antitrust Division. Thereafter, the waiting period could be extended only by agreement or by court order. See "Section 2--Acceptance for Payment and Payment for Shares." Only one extension of such waiting period pursuant to a request for additional information is authorized by the rules promulgated under the HSR Act, except by agreement or by court order. Any extension of the waiting period will not give rise to any withdrawal rights not otherwise provided for by the Exchange Act. See "Section 4--Rights of Withdrawal." However, the Merger Agreement may be terminated by any party on and after August 29, 2003. Although Signal is required to file certain information and documentary material with the FTC and the Antitrust Division in connection with the Offer, neither Signal's failure to make such filings nor a request from the FTC or the Antitrust Division for additional information or documentary material made to Signal will extend the waiting period. The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisition of Shares by Purchaser pursuant to the Offer and the Merger. At any time before or after Purchaser's purchase of Shares, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the acquisition of Shares pursuant to the Offer or seeking divestiture of Shares acquired by Purchaser or the divestiture of substantial assets of Crane, Signal or any of their respective subsidiaries. Private parties (including individual states of the United States) may also bring legal action under the antitrust laws under certain circumstances. There can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if a challenge is made, what the result will be. See "Section 14--Certain Conditions of the Offer" for certain conditions to the Offer that could become applicable in the event of such a challenge. State Takeover Laws. A number of states have adopted laws and regulations that purport to be applicable to offers to acquire securities of corporations which are incorporated in those states, or that have substantial assets, stockholders, principal executive offices or principal places of business or whose business operations otherwise have substantial economic effects in, those states. Although Signal, directly or through its subsidiary, conducts business in a number of states throughout the United States, some of which have enacted such laws, Crane and Purchaser believe it is unlikely that the anti-takeover or similar laws and regulations of any state, other than the State of Delaware and the Commonwealth of Massachusetts, will apply to the Offer or the Merger. Section 203 of the DGCL limits the ability of a Delaware corporation to engage in business combinations with "interested stockholders" (defined generally as any beneficial owner of fifteen (15%) percent or more of the outstanding voting stock of the corporation) unless, among other things, the corporation's board of directors has given its prior approval to either the business combination or the transaction which resulted in the stockholder becoming an "interested stockholder." Section 1 of Chapter 110C of the MGL generally requires an offeror to make certain disclosures and filings in connection with a "take-over bid." A "take-over bid" does not include a bid to which the target company consents, by action of its board of directors, if the board of directors has recommended acceptance of the bid to its stockholders and the terms thereof, including any inducements to officers or directors that are not made available to all stockholders, have been furnished to its stockholders. The Board of Directors of Signal, at a meeting duly called and held, has adopted resolutions, among other things, (i) approving 43 the acquisition of the Shares by Purchaser pursuant to the Offer, the Merger and the other transactions contemplated by the Merger Agreement, including for purposes of Section 203 of the DGCL and Section 1 of Chapter 110C of the MGL, (ii) approving the execution and delivery of the Tender and Voting Agreements, including for purposes of Section 203 of the DGCL and Section 1 of Chapter 110C of the MGL, and (iii) recommending acceptance of the Offer to Signal's stockholders. In addition, the information required to be provided pursuant to Section 1 of Chapter 110C of the MGL has been furnished to Signal's stockholders in this Offer to Purchase and in the Schedule 14D-9 being mailed herewith. Therefore, Purchaser believes that Section 203 of the DGCL and Section 1 of Chapter 110C of the MGL are inapplicable to the Offer and the Merger. 16. FEES AND EXPENSES JPMorgan has provided certain financial advisory services to Crane in connection with the Offer and the Merger. Pursuant to a letter agreement among Crane and JPMorgan, dated March 17, 2003, Crane has agreed to pay JPMorgan a fee of $2,000,000 for its services in connection with the Offer and the Merger payable upon, and subject to, closing of the Merger. In addition, JPMorgan will be reimbursed for its reasonable out-of-pocket expenses, including the fees and expenses of its counsel, incurred in connection with the Offer and the Merger. Crane has also agreed to indemnify JPMorgan and its affiliates against certain liabilities and expenses in connection with the Offer and the Merger, including under United States federal securities laws. Crane has also retained Georgeson Shareholder Communications Inc. to act as the Information Agent in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph, other methods of electronic communications and personal interviews and may request brokers, dealers, banks, trust companies and other nominee stockholders to forward materials relating to the Offer to beneficial owners of Shares. The Information Agent will receive customary and reasonable compensation for such services, plus reimbursement of its out-of-pocket expenses, and Crane will indemnify the Information Agent against certain liabilities and expenses in connection with the Offer. Crane will pay the Depositary customary and reasonable compensation for its services in connection with the Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the Depositary against certain liabilities and expenses in connection therewith. Crane will reimburse brokers, dealers, commercial banks and trust companies for customary mailing and handling expenses incurred by them in forwarding material to their customers. The Depositary will also act as the paying agent in connection with the Merger. As more fully described above on pages 32 and 33 of this Offer to Purchase, Signal will pay Crane a fee of $4,500,000 plus certain of Crane's expenses in the event that the Merger Agreement is terminated in certain circumstances. In addition, Signal will incur its own fees and expenses in connection with the Offer. The following is an estimate of the fees and expenses to be incurred by Purchaser and Crane: SEC filing fee ........................................ $ 12,400 HSR Act filing fee .................................... 125,000 Depositary and Paying Agent fees and expenses ......... 11,000 Information Agent fees and expenses ................... 17,000 Printing and mailing expenses ......................... 35,000* Financial advisor's fees and expenses ................. 2,020,000 Legal fees and expenses ............................... 450,000 Miscellaneous expenses ................................ 100,000 ---------- Total ................................................. $2,770,400
* Signal has agreed to pay 50% of the aggregate printing and mailing expenses if the Merger is not completed. 44 17. MISCELLANEOUS This Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of this Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. However, Purchaser may, in its sole discretion, take such action as it may deem necessary to make lawful the Offer in any such jurisdiction and extend the Offer to holders of Shares in such jurisdiction. Neither Crane nor Purchaser is aware of any jurisdiction in which it intends to make the Offer wherein the making of this Offer or the acceptance of Shares in connection therewith would not be in compliance with the laws of such jurisdiction. Crane and Purchaser have filed with the SEC a Schedule TO pursuant to Rule l4d-3 under the Exchange Act, furnishing certain additional information with respect to the Offer, and may file amendments thereto. The Schedule TO and any amendments thereto, including exhibits, may be examined and copies may be obtained from the principal office of the SEC in Washington, DC and can be obtained electronically from the SEC's website at http://www.sec.gov in the manner set forth in "Section 7--Certain Information Concerning Signal -- Available Information" and can be obtained from Crane at the address set forth in "Section 8--Certain Information Concerning Crane and Purchaser". NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF CRANE OR PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. STC Merger Co. April 25, 2003 45 ANNEX A INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF CRANE AND PURCHASER The following tables set forth the name, business address, present principal occupation, principal business and address of any corporation or other organization in which the occupation or employment is conducted, and material occupations, positions, offices or employment held during the past five years of each director and executive officer of Crane and Purchaser. Unless otherwise specified, each person listed below is a citizen of the United States and has his or her principal business address at 100 First Stamford Place, Stamford, Connecticut 06902. DIRECTORS AND EXECUTIVE OFFICERS OF CRANE
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, NAME POSITION MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS - -------------------------------- --------------------- ----------------------------------------------------- E. Thayer Bigelow, Jr. ......... Director Director since 1984. Managing Director of Bigelow Media, New York, NY (investment in media and entertainment companies) since September 2000. Senior Advisor of AOL Time Warner Inc., New York, NY (a media and entertainment company) since October 1998. Chief Executive Officer of Court TV, New York, NY, an affiliate of Time Warner Entertainment LP (cable television program services) from March 1997 to October 1998. Also a director of Huttig Building Products, Inc. and Lord Abbett & Co. Mutual Funds (42 funds). R.S. Evans ..................... Chairman of the Director since 1979. Chairman and Chief Executive Board Officer of Crane from 1984 to 2001. Also a director of Fansteel, Inc., HBD Industries, Inc. and Huttig Building Products, Inc. Eric C. Fast ................... President and Chief Director since 1999. President and Chief Executive Executive Officer Officer of Crane since April 2001. President and and Director Chief Operating Officer of Crane from September 1999 to April 2001. Co-Head of Global Investment Banking of Salomon Smith Barney (investment banking firm) from 1997 to 1998. Also a director of Convergys Corporation. Richard S. Forte ............... Director Director since 1983. Chairman of Forte Cashmere Company, South Natick, MA (importer and manufacturer) since January 2002. President of Dawson Forte Cashmere Company (importer) from 1997 to 2001. Also a director of Huttig Building Products, Inc.
A-1
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, NAME POSITION MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS - --------------------------------- ------------------- ---------------------------------------------------- Dorsey R. Gardner ............... Director Director from 1982 to 1986 and since 1989. President of Kelso Management Company, Inc., Boston, MA (investment management). General Partner of Hollybank Investments, L.P., and Thistle Investments, L.P., Miami FL (private investment funds). Also a director of Huttig Building Products, Inc. Jean Gaulin ..................... Director Director from 1995 to 1999 and since 2001. Retired Chairman, President and Chief Executive Officer of Ultramar Diamond Shamrock Corporation, San Antonio, TX (petroleum refining and marketing). Chairman, President and Chief Executive Officer of Ultramar Diamond Shamrock Corporation from January 2000 to December 2001. Vice Chairman, President and Chief Operating Officer of Ultramar Diamond Shamrock Corporation from December 1996 to December 1998. Also a director of Abitibi Consolidated, Inc. and National Bank of Canada. William E. Lipner ............... Director Director since 1999. Chairman and Chief Executive Officer of NFO WorldGroup, Inc., Greenwich, CT (marketing information/research services worldwide). Also a director of Change Technology Partners, Inc. and NFO WorldGroup, Inc. Dwight C. Minton ................ Director Director since 1983. Chairman Emeritus of the Board and Director of Church & Dwight Co., Inc., Princeton, NJ (manufacturer of consumer and specialty products). Charles J. Queenan, Jr. ......... Director Director since 1986. Senior Counsel since 1995, and prior thereto, Partner, of Kirkpatrick & Lockhart LLP, Pittsburgh, PA (attorneys at law). Also a director of Allegheny Technologies Incorporated, Teledyne Technologies Incorporated and Water Pik Technologies, Inc. James L. L. Tullis .............. Director Director since 1998. Chief Executive Officer of Tullis-Dickerson & Co., Inc., Greenwich, CT (venture capital investments in the health care industry) since 1986. Gil A. Dickoff .................. Treasurer Treasurer of Crane since 1992. Augustus I. duPont .............. Vice President, Vice President, General Counsel and Secretary of General Counsel Crane since 1996. and Secretary Bradley L. Ellis ................ Vice President -- Vice President -- Chief Information Officer of Chief Information Crane since July 1997. Officer
A-2
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, NAME POSITION MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS - ------------------------------- ------------------- --------------------------------------------------- Elise M. Kopczick ............. Vice President -- Vice President -- Human Resources of Crane since Human Resources January 2001. President of Crane's Lear Romec division from August 1999 to January 2001 and Vice President -- Human Resources at Crane's Hydro-Aire subsidiary from January 1996 to August 1999. Joan Atkinson Nano ............ Vice President & Vice President & Controller of Crane since Controller November 2001. Director of New Controllership Initiatives at GE Capital Corporation (financial services) from 2000 to 2001 and Director, Worldwide Planning and Analysis of Pitney Bowes Corporation (business machines and services) from 1994 to 1999. Thomas M. Noonan .............. Vice President -- Vice President -- Taxes of Crane since November Taxes 2001. Vice President, Controller and Chief Tax Officer of Crane from April 2000 to November 2001. Vice President, Taxes of Crane from September 1999 to April 2000. Director of Taxes of Crane from March 1996 to September 1999. Anthony D. Pantaleoni ......... Vice President -- Vice President -- Environment, Health & Safety of Environment, Crane since 1989. Health & Safety George S. Scimone ............. Vice President -- Vice President -- Finance and Chief Financial Finance and Chief Officer of Crane since March 2003. Chief Financial Financial Officer Officer of MarketEcho LLC (direct marketing services) from May 2002 to March 2003. Senior Vice President and Chief Financial Officer of Reader's Digest Association, Inc. (publisher of books and magazines) from 1997 to 2001.
A-3 DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, NAME POSITION MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS - ---------------------------- ------------------ --------------------------------------------------- Augustus I. duPont ......... Vice President, Vice President, General Counsel and Secretary of Secretary Crane since 1996. and Director Eric C. Fast ............... President and Director since 1999. President and Chief Executive Director Officer of Crane since April 2001. President and Chief Operating Officer of Crane from September 1999 to April 2001. Co-Head of Global Investment Banking of Salomon Smith Barney (investment banking firm) from 1997 to 1998. Also a director of Convergys Corporation. George S. Scimone .......... Vice President & Vice President -- Finance and Chief Financial Director Officer of Crane since March 2003. Chief Financial Officer of MarketEcho LLC (direct marketing services) from May 2002 to March 2003. Senior Vice President and Chief Financial Officer of Reader's Digest Association, Inc. (publisher of books and magazines) from 1997 to 2001. Gil A. Dickoff ............. Treasurer Treasurer of Crane since 1992.
A-4 ANNEX B SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW APPRAISAL RIGHTS 262. APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to (Section) 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder's shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word "stockholder" means a holder of record of stock in a stock corporation and also a member of record of a nonstock corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a nonstock corporation; and the words "depository receipt" mean a receipt or other instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository. (b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to (Section) 251 (other than a merger effected pursuant to (Section) 251(g) of this title), (Section) 252, (Section) 254, (Section) 257, (Section) 258, (Section) 263 or (Section) 264 of this title: (1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of (Section) 251 of this title. (2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to Section (Sections) 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except: a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders; c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph. (3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under (Section) 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. B-1 (c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable. (d) Appraisal rights shall be perfected as follows: (1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder's shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder's shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or (2) If the merger or consolidation was approved pursuant to (Section) 228 or Section 253 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder's shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, B-2 the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given. (e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) hereof and who is otherwise entitled to appraisal rights, may file a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw such stockholder's demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder's written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) hereof, whichever is later. (f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation. (g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. (h) After determining the stockholders entitled to an appraisal, the Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. In determining the fair rate of interest, the Court may consider all relevant factors, including the rate of interest which the surviving or resulting corporation would have had to pay to borrow money during the pendency of the proceeding. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, permit discovery or other pretrial proceedings and may proceed to trial upon the appraisal prior to the final determination of the stockholder entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder's certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section. B-3 (i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Interest may be simple or compound, as the Court may direct. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state. (j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal. (k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder's demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just. (l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation. B-4 Facsimile copies of the Letter of Transmittal, properly executed and clearly delivered will be accepted. The Letter of Transmittal, certificates for the Shares and any other required documents should be sent or delivered by each stockholder of Signal or such stockholder's broker, dealer, commercial bank, trust company or other nominee to the Depositary as follows: THE BANK OF NEW YORK BY MAIL: BY HAND OR OVERNIGHT COURIER: Tender & Exchange Department Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver Window New York, New York 10286-1248 New York, New York 10286
FACSIMILE NUMBER: (FOR ELIGIBLE INSTITUTIONS ONLY) 212-815-6433 FOR CONFIRMATION OF FACSIMILE: 212-815-6212 Any questions or requests for assistance or additional copies of the Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and the other tender offer materials may be directed to the Information Agent, Georgeson Shareholder Communications Inc. at the address and telephone number set forth below. Shareholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. [LOGO OMITTED]Georgeson Shareholder 17 State Street, 10th Floor New York, NY 10004 (800) 678-9601 (Toll Free) Banks and Brokerage Firms please call: (212) 440-9800 EX-99.2 4 file003.txt AGREEMENT AND PLAN OF MERGER DATED APRIL 16, 2003 EXECUTION COPY - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER AMONG CRANE CO., STC MERGER CO. AND SIGNAL TECHNOLOGY CORPORATION DATED APRIL 16, 2003 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
Section Page - ------- ---- ARTICLE I THE OFFER AND THE MERGER...................................................................1 SECTION 1.01. The Offer..................................................................1 SECTION 1.02. Company Actions............................................................3 SECTION 1.03. Directors..................................................................4 SECTION 1.04. The Merger.................................................................5 SECTION 1.05. Effective Time; Closing....................................................6 SECTION 1.06. Effect of the Merger.......................................................6 SECTION 1.07. Certificate of Incorporation; By-laws......................................6 SECTION 1.08. Directors and Officers.....................................................6 ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES....,...................................6 SECTION 2.01. Conversion Of Securities...................................................6 SECTION 2.02. Exchange of Certificates for Cash..........................................7 SECTION 2.03. Stock Transfer Books.......................................................9 SECTION 2.04. Stock Options..............................................................9 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................11 SECTION 3.01. Organization and Qualification; Subsidiaries..............................11 SECTION 3.02. Certificate of Incorporation and By-laws..................................11 SECTION 3.03. Capitalization............................................................11 SECTION 3.04. Authority Relative to this Agreement......................................12 SECTION 3.05. No Conflict; Required Filings and Consents................................13 SECTION 3.06. Permits; Compliance with Law..............................................13 SECTION 3.07. SEC Filings; Financial Statements.........................................14 SECTION 3.08. Absence of Certain Changes or Events......................................15 SECTION 3.09. Absence of Litigation.....................................................16 SECTION 3.10. Employee Benefit Plans....................................................16 SECTION 3.11. Labor Matters.............................................................17 SECTION 3.12. Real Property and Leases..................................................17 SECTION 3.13. Intellectual Property.....................................................17 SECTION 3.14. Taxes.....................................................................18 SECTION 3.15. Environmental Matters.....................................................19 SECTION 3.16. Material Contracts; Government Contracts..................................20 SECTION 3.17. Opinion of Financial Advisor..............................................23 SECTION 3.18. Vote Required.............................................................23 SECTION 3.19. Brokers; Fees and Expenses................................................23 SECTION 3.20. Customers.................................................................24 SECTION 3.21. Anti-Takeover Laws........................................................24 SECTION 3.22. Disclosure Documents......................................................24 SECTION 3.23. Certain Payments..........................................................25
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Section Page ------- ---- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER...................................25 SECTION 4.01. Organization and Qualification............................................25 SECTION 4.02. Certificate of Incorporation and By-laws..................................26 SECTION 4.03. Authority Relative to this Agreement......................................26 SECTION 4.04. No Conflict; Required Filings and Consents................................26 SECTION 4.05. Absence of Litigation.....................................................27 SECTION 4.06. Brokers...................................................................27 SECTION 4.07. Funds.....................................................................27 SECTION 4.08. Disclosure Documents......................................................27 ARTICLE V CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME............................................28 SECTION 5.01. Conduct of Business by the Company Pending the Effective Time.............28 ARTICLE VI ADDITIONAL AGREEMENTS....................................................................30 SECTION 6.01. Company Stockholders' Meeting.............................................30 SECTION 6.02. Company Proxy Statement...................................................30 SECTION 6.03. Appropriate Action; Consents; Filings.....................................31 SECTION 6.04. Access to Information; Confidentiality....................................33 SECTION 6.05. No Solicitation of Competing Transactions.................................33 SECTION 6.06. Directors' and Officers' Insurance........................................35 SECTION 6.07. Notification of Certain Matters...........................................35 SECTION 6.08. Public Announcements......................................................36 SECTION 6.09. Bonus Plan................................................................36 SECTION 6.10. Stockholder Litigation....................................................37 SECTION 6.11. Termination of 401(k) Plan and Executive Deferred Compensation Plan.......37 SECTION 6.12. Additional Company SEC Reports; Financial Statements......................37 SECTION 6.13. Rights Agreement..........................................................37 SECTION 6.14. Limitation on Expenses....................................................38 ARTICLE VII CONDITIONS TO THE MERGER................................................................38 SECTION 7.01. Conditions to the Obligation of Each Party................................38 ARTICLE VIII TERMINATION; AMENDMENT; AND WAIVER.....................................................38 SECTION 8.01. Termination...............................................................38 SECTION 8.02. Effects of Termination....................................................41 SECTION 8.03. Fees and Expenses.........................................................41 SECTION 8.04. Amendment.................................................................42 SECTION 8.05. Waiver....................................................................42 ARTICLE IX GENERAL PROVISIONS.......................................................................42 SECTION 9.01. Non-Survival of Representations, Warranties and Agreements................42 SECTION 9.02. Notices...................................................................42
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Section Page ------- ---- SECTION 9.03. Certain Definitions.......................................................43 SECTION 9.04. Severability..............................................................45 SECTION 9.05. Entire Agreement; Assignment..............................................45 SECTION 9.06. Parties in Interest.......................................................45 SECTION 9.07. Specific Performance......................................................45 SECTION 9.08. Governing Law; Exclusive Forum............................................45 SECTION 9.09. Consent to Jurisdiction and Venue.........................................45 SECTION 9.10. Headings..................................................................46 SECTION 9.11. Counterparts..............................................................46
-iii- COMPANY DISCLOSURE SCHEDULE --------------------------- Schedule No. - ------------ 2.04A Certain Company Options 2.04B Post-closing Option Payouts 3.01 Subsidiaries 3.03-1 Stock Options 3.03-2 Contractual Obligations with respect to Capital Stock 3.03-3 Liens on Capital Stock of Subsidiaries 3.05-1 No Conflicts 3.05-2 Required Filings and Consents 3.06-1 Company Authorizations 3.06-2 Company Permits 3.06-3 Conflicts with Law 3.06-4 Department of Defense Investigations 3.07 Amendments to Filed Documents 3.08 Changes or Events Since December 31, 2002 3.09 Litigation 3.10 Employee Benefit Plans 3.12-1 Real Property 3.12-2 Encumbrances on Assets 3.13-1 Company Intellectual Property Licenses 3.13-2 License or Use of Company Intellectual Property by Third Parties 3.14 Taxes 3.15 Environmental Matters 3.16-1 Material Contracts 3.16-2 Defaults Under Material Contracts 3.16-3 Material Contracts Not Provided to Parent 3.16-4 Government Contracts 3.16-5 Exceptions to Government Contracts 3.19 Actual Transaction Expenses 3.20 Customers 5.01 Conduct of Business Pending Merger ANNEX ----- A Conditions to the Offer EXHIBIT ------- 1.07 Certificate of Incorporation of the Surviving Corporation -iv- INDEX OF DEFINED TERMS ---------------------- (Not Part of this Agreement) ---------------------------- Actual Transaction Expenses Section 3.19 affiliate Section 9.03(a) Agreement Recitals associate Section 9.03(b) beneficial owner Section 9.03(c) Blue Sky Laws Section 3.05(b) business day Section 9.03(d) Cap Section 8.03(b) Certificate of Merger Section 1.05 Certificates Section 2.02(b) Code Section 2.02(f) Commencement Date Section 1.01(a) Common Stock Recitals Company Recitals Company Disclosure Schedule Section 3.01 Company Intellectual Property Section 3.13 Company Material Adverse Effect Section 3.01 Company Options Section 2.04(a) Company 2002 Balance Sheet Section 3.07(c) Company Permits Section 3.06 Company Proxy Statement Section 3.22(b) Company SEC Reports Section 3.07(a) Company Stock Option Plans Section 2.04(a) Company Stockholders' Meeting Section 6.01 Company Transaction Expenses Section 6.09 Competing Transaction Section 6.05 Confidentiality Agreement Section 6.04(a) Continuing Directors Section 1.03(a) control Section 9.03(e) Current Offering Section 2.04(b) DGCL Recitals Dissenting Stockholder Section 2.01(e) Dissenting Shares Section 2.01(e) Effective Time Section 1.05 Employee Stock Purchase Plan Section 2.04(b) Employment Contracts Section 3.10 Environmental Laws Section 3.15(a) Environmental Permits Section 3.15(b) ERISA Section 3.10 Exchange Act Section 1.01(a) Exchange Agent Section 2.02(a) I-1 Exchange Fund Section 2.02(a) Expenses Section 8.03(b) Government Section 3.16(c) Government Contract Section 3.16(c) Governmental Authority Section 9.03(f) Hazardous Substances Section 3.15(a) HSR Act Section 3.05(b) Insured Parties Section 6.06(c) knowledge of the Company Section 9.03(g) Laws Section 3.05(a) Letter of Transmittal Section 1.01(d) Material Contracts Section 3.16(a) Merger Recitals Merger Consideration Section 2.01(a) Minimum Condition Annex A Offer Recitals Offer to Purchase Section 1.01(d) Offer Documents Section 1.01(d) Organizational Documents Section 3.02 Purchaser Recitals Parent Recitals Parent Material Adverse Effect Section 4.01 Per Share Amount Recitals person Section 9.03(h) Plans Section 3.10 Remaining Options Section 2.04(a) Rights Agreement Section 6.13 Schedule 14D-9 Section 1.02(b) Schedule TO Section 1.01(d) SEC Section 1.01(c) Shares Recitals Special Purpose Entities Section 3.07(c) Stock Incentive Plans Section 3.03 subsidiary/subsidiaries Section 9.03(i) Subsidiary Section 3.01 Surviving Corporation Section 1.04 Tax Section 9.03(j) Tender and Voting Agreement(s) Recitals Termination Date Section 8.01(b) Termination Fee Section 8.03(a) Wachovia Securities Section 3.17 I-2 AGREEMENT AND PLAN OF MERGER, dated April 16, 2003 (this "Agreement"), among Crane Co., a Delaware corporation ("Parent"), STC Merger Co., a Delaware corporation and an indirect wholly owned subsidiary of Parent ("Purchaser"), and Signal Technology Corporation, a Delaware corporation (the "Company"). WHEREAS, it is proposed that Purchaser will make a tender offer (as such offer may be amended from time to time as permitted under this Agreement, the "Offer") to purchase, on the terms of, and subject to the conditions set forth on Annex A to, this Agreement, all of the issued and outstanding shares (the "Shares") of the Company's common stock, par value $0.01 per share (the "Common Stock"), for $13.25 per Share (such amount, or any other amount per Share offered pursuant to the Offer in accordance with the terms of this Agreement, being hereinafter referred to as the "Per Share Amount"), net to each seller in cash; WHEREAS, the respective Boards of Directors of Parent, Purchaser and the Company have each approved and declared advisable this Agreement, the Offer and the merger (the "Merger") of Purchaser with and into the Company following the consummation of the Offer, upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of Delaware (the "DGCL"); WHEREAS, certain stockholders of the Company have each entered into a Stockholder Tender and Voting Agreement (each, a "Tender and Voting Agreement" and, collectively, the "Tender and Voting Agreements") with Parent and Purchaser providing for, among other things, the agreement of such stockholders to tender pursuant to the Offer or sell all Shares owned by them to Purchaser, and to vote all Shares owned by them in favor of the Merger and this Agreement, subject to the terms and conditions stated therein; and WHEREAS, Parent, Purchaser and the Company desire to make certain representations, warranties and agreements in connection with the Offer, the Merger and the other transactions contemplated by this Agreement and to prescribe various conditions to the Offer, the Merger and the other transactions contemplated by this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, Parent, Purchaser and the Company hereby agree as follows: ARTICLE I THE OFFER AND THE MERGER ------------------------ SECTION 1.01. The Offer. --------- (a) So long as this Agreement shall not have been terminated in accordance with Article VIII hereof and none of the events or circumstances set forth on Annex A hereto shall have occurred or be existing (unless, to the extent permitted hereby, waived), as soon as practicable after the date hereof (but in no event later than 10 days after the date hereof), Parent shall cause Purchaser to, and Purchaser shall, commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Offer. The obligation of Purchaser to accept for payment and pay for Shares tendered pursuant to the Offer shall be subject only to the conditions set forth on Annex A hereto; provided, that Purchaser may, in its sole discretion, increase the Per Share Amount and waive (to the extent permissible) or make any other change to the terms and conditions of the Offer, except that Purchaser shall not, without the prior written consent of the Company: (i) waive or amend the Minimum Condition (as defined in Annex A hereto); (ii) reduce the number of Shares sought to be purchased in the Offer; (iii) reduce the Per Share Amount; (iv) modify or add to the conditions set forth on Annex A hereto; (v) change the form of consideration payable in the Offer; (vi) extend the expiration date of the Offer other than as permitted by Section 1.01(c) hereof; or (vii) amend or alter any other term of the Offer in a manner adverse to the holders of Shares. The date that the Offer is commenced in accordance with this Section 1.01(a) is referred to herein as the "Commencement Date." (b) Subject to the terms and conditions of the Offer, Parent shall cause Purchaser to, and Purchaser shall, accept for payment all Shares validly tendered pursuant to the Offer (and not withdrawn) as soon as practicable after Purchaser is permitted to do so under applicable Law (as defined in Section 3.05(a) hereof), and Parent shall cause Purchaser to pay for such Shares promptly thereafter (and in any event in compliance with Rule 14e-1(c) under the Exchange Act). Parent shall provide, or cause to be provided to Purchaser, on a timely basis, the funds necessary to pay for any Shares that Purchaser accepts or is obligated to accept for payment pursuant to the Offer. (c) Subject to the terms and conditions hereof (including Annex A hereto), the Offer shall expire at midnight, New York City time, on the date that is twenty (20) business days after the Commencement Date; provided, that, subject to the parties' rights to terminate this Agreement pursuant to Article VIII hereof, (i) if, on any date as of which the Offer is otherwise scheduled to expire, any condition(s) to the Offer has not been satisfied or waived, Purchaser may, in its sole discretion, extend the Offer from time to time for such period(s) of time as Purchaser reasonably determines to be necessary in order to permit such condition(s) to be satisfied; (ii) if, on any date as of which the Offer is otherwise scheduled to expire, any condition(s) to the Offer has not been satisfied or waived, Purchaser shall, if the Company so demands in writing at least two (2) business days prior to the otherwise scheduled expiration date of the Offer, extend the Offer from time to time for up to such period(s) of time thereafter as the Company reasonably determines to be necessary in order to permit such condition(s) to be satisfied (but in no event shall Purchaser be required to extend the Offer pursuant to this Section 1.01(c)(ii) for more than 35 days in the aggregate or, if earlier, beyond June 30, 2003 or to waive any condition(s) to the Offer); (iii) Purchaser shall extend the Offer for any period of time that may be required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the "SEC") applicable to the Offer; (iv) if, on any date as of which the Offer is otherwise scheduled to expire, the Minimum Condition has been satisfied but the sum of the number of Shares that have been validly tendered and not withdrawn pursuant to the Offer plus the number of Shares owned by Purchaser or Parent or any of their respective affiliates -2- represents less than ninety (90%) percent of the then outstanding Shares, Purchaser may, from time to time, extend the Offer for up to an aggregate of fifteen (15) business days thereafter; and (v) Purchaser may elect to provide for a "subsequent offering period" in accordance with Rule 14d-11 under the Exchange Act and in compliance with all other provisions of applicable securities Laws for up to twenty (20) business days. (d) The Offer shall be made by means of an offer to purchase (the "Offer to Purchase") and related letter of transmittal (the "Letter of Transmittal") containing the relevant terms of this Agreement and the conditions set forth on Annex A hereto. As soon as practicable on the Commencement Date, Parent and Purchaser shall file with the SEC a Tender Offer Statement on Schedule TO (together with all amendments and supplements thereto, the "Schedule TO") with respect to the Offer. The Schedule TO shall contain (included as an exhibit) or shall incorporate by reference the Offer to Purchase, the Letter of Transmittal, as well as all other information and exhibits required by applicable Law (which Schedule TO, Offer to Purchase and related Letter of Transmittal and such other information and exhibits, together with any supplements or amendments thereto, are referred to herein collectively as the "Offer Documents"). On the Commencement Date, Parent and Purchaser shall disseminate the Offer Documents (other than the Schedule TO) to holders of Shares. The Offer Documents shall comply in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder and all other applicable Laws. Each of Parent, Purchaser and the Company shall promptly correct or supplement any information provided by it in writing specifically for inclusion in the Offer Documents that becomes false or misleading in any material respect, and each of Parent and Purchaser shall take all steps necessary to cause the Schedule TO, as so corrected or supplemented, to be filed with the SEC, and the other Offer Documents, as so corrected or supplemented, to be disseminated to holders of Shares, in each case as and to the extent required by applicable Law. The Company and its counsel shall be given a reasonable opportunity to review and timely comment upon the Offer Documents prior to their being filed with the SEC. Parent and Purchaser shall provide the Company and its counsel with any comments Parent, Purchaser or their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after receipt of such comments. SECTION 1.02. Company Actions. --------------- (a) Subject to Section 6.05 hereof, the Company hereby consents to and approves the Offer. The Company hereby represents that its Board of Directors, at a meeting duly called and held, adopted resolutions (i) approving this Agreement and the transactions contemplated hereby, including the Offer, the Merger and the Tender and Voting Agreements; (ii) declaring that this Agreement is advisable; (iii) determining that the terms of the Offer and the Merger are fair to, and in the best interests of, the Company and its stockholders; (iv) recommending that the Company's stockholders accept the Offer, tender their Shares pursuant to the Offer and approve and adopt this Agreement and the Merger (if required by applicable Law); and (v) approving the acquisition of Shares by Purchaser pursuant to the Offer and the other transactions contemplated by this Agreement and the Tender and Voting Agreements, including for purposes of Section 203 of the DGCL and Section 1 of Chapter 110C of the Massachusetts General Laws. -3- (b) As soon as practicable on the Commencement Date, the Company shall file with the SEC and (following or contemporaneously with the dissemination of the Offer Documents (other than the Schedule TO)) disseminate to the holders of Shares a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the "Schedule 14D-9"). The Schedule 14D-9 shall comply in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder and other applicable Laws and, subject to Section 6.05 hereof, shall contain the recommendation of the Company's Board of Directors set forth in Section 1.02(a) hereof. Each of Parent, Purchaser and the Company shall promptly correct or supplement any information provided by it in writing specifically for inclusion in the Schedule 14D-9 that becomes false or misleading in any material respect, and the Company shall take all steps necessary to cause the Schedule 14D-9, as so corrected or supplemented, to be filed with the SEC, and disseminated to holders of Shares, in each case as and to the extent required by applicable Law. Parent, Purchaser and their counsel shall be given a reasonable opportunity to review and timely comment upon the Schedule 14D-9 prior to its being filed with the SEC. The Company shall provide Parent, Purchaser and their counsel with any comments the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt of such comments. (c) In connection with the Offer, the Company will instruct its transfer agent promptly to furnish to Purchaser a list, as of a recent date, of the record holders of Shares and their addresses, as well as mailing labels containing the names and addresses of all record holders of Shares, and recent lists of security positions of Shares held in stock depositories. The Company will furnish Purchaser with such additional information (including, but not limited to, updated lists of holders of Shares and their addresses, mailing labels and lists of security positions in electronic format, to the extent available) and such other assistance as Parent or Purchaser or their agents may reasonably request in communicating the Offer to the record and beneficial holders of Shares. Subject to the requirements of applicable Law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer and the Merger, Purchaser and Parent and their agents shall, prior to the Effective Time (as defined in Section 1.05 hereof), hold in confidence the information contained in any such labels, listings and files, will use such information only in connection with the Offer and the Merger and, if this Agreement is terminated pursuant to Article VIII hereof, shall deliver to the Company all copies of such information then in its possession. SECTION 1.03. Directors. --------- (a) Subject to compliance with applicable Law, effective immediately upon the payment by Purchaser for Shares pursuant to the Offer, Parent shall be entitled to designate such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as is equal to the product of (i) the total number of directors on the Board of Directors of the Company (determined after giving effect to the directors designated pursuant to this sentence) and (ii) a fraction whose (x) numerator is the aggregate number of Shares then beneficially owned by Parent and Purchaser and (y) denominator is the total number of Shares then outstanding, and the Company shall, upon the request of Parent, use its reasonable best efforts to cause Parent's designees to be elected or appointed, including, -4- if necessary, increasing the number of directors and seeking the resignations of one or more existing directors; provided, however, that, prior to the Effective Time, the Board of Directors of the Company shall always have, subject to the following sentence, at least two (2) directors who were directors of the Company as of the date hereof, one of whom shall be George Lombard ("Continuing Directors"). If, at any time prior to the Effective Time, there shall be only one (1) Continuing Director serving as a director of the Company for any reason, then the Company's Board of Directors shall cause an individual selected by the remaining Continuing Director to be designated to serve on the Company's Board of Directors (and such individual shall be deemed to be a Continuing Director for all purposes under this Agreement), and if, at any time prior to the Effective Time, no Continuing Director then remains, then the Company's Board of Directors shall designate and cause two (2) individuals to serve on the Company's Board of Directors who are not officers, employees or affiliates of the Company, Parent or Purchaser and such individuals shall be deemed to be Continuing Directors for all purposes under this Agreement. (b) The Company's obligation to appoint Parent's designees to the Board of Directors of the Company shall include its compliance with Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, including mailing to the Company's stockholders, at the same time as the mailing of the Schedule 14D-9, an information statement containing the information required by such Section and Rule. The Company shall promptly take all actions, and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors as is required under such Section and such Rule, in order to fulfill its obligations under this Section 1.03 so long as Parent shall have provided to the Company, on a timely basis, the information with respect to Parent and its designees, officers, directors and affiliates required by such Section and such Rule. (c) Following any election or appointment of Parent's designees pursuant to this Section 1.03 and prior to the Effective Time, the approval of a majority of the Continuing Directors or, if there shall only be one (1), of the Continuing Director, shall be required to authorize (and such authorization shall constitute the authorization of the Company's Board of Directors and no other action on the part of the Company, including any action of the Company's Board of Directors, shall be required to authorize) (i) any amendment or termination of this Agreement by the Company, (ii) any amendment of the Company's Certificate of Incorporation or By-laws, (iii) any extension by the Company of the time for the performance of any of the obligations or other acts of Parent or Purchaser, (iv) any exercise or waiver of any of the Company's rights or remedies hereunder or (v) any other consent or action by the Company's Board of Directors with regard to any substantive matter relating to this Agreement or the Merger. SECTION 1.04. The Merger. Upon the terms and subject to the conditions set forth herein, and in accordance with the DGCL, at the Effective Time, Purchaser (or another direct or indirect subsidiary of Parent) shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Purchaser shall cease and the Company shall continue as the surviving corporation of the Merger (the "Surviving Corporation"). -5- SECTION 1.05. Effective Time; Closing. As promptly as practicable after the satisfaction of the conditions set forth in Article VII hereof, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the "Certificate of Merger") with the Secretary of State of the State of Delaware, in such form as is required by, and executed in accordance with, the relevant provisions of the DGCL. The term "Effective Time" means the date and time of the filing of the Certificate of Merger with the Secretary of State of the State of Delaware (or such later time as may be agreed to by each of the parties hereto and specified in the Certificate of Merger). Immediately prior to the filing of the Certificate of Merger, a closing will be held at the offices of Fish & Richardson P.C. at 225 Franklin Street, Boston, MA 02110-2804 (or at such other date/time and place as the parties may agree). SECTION 1.06. Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of each of the Company and Purchaser shall vest in the Surviving Corporation, and all debts, liabilities, obligations and duties of each of the Company and Purchaser shall become the debts, liabilities, obligations and duties of the Surviving Corporation. SECTION 1.07. Certificate of Incorporation; By-laws. ------------------------------------- (a) At the Effective Time, the Certificate of Incorporation of Purchaser as in effect immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation and shall read substantially as set forth on Exhibit 1.07 hereto. (b) At the Effective Time, the By-laws of Purchaser as in effect immediately prior to the Effective Time shall be the By-laws of the Surviving Corporation unless and until thereafter amended as provided by Law, the Certificate of Incorporation of the Surviving Corporation and/or such By-laws. SECTION 1.08. Directors and Officers. The directors of Purchaser immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and By-laws of the Surviving Corporation, and officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified and/or additional persons are selected. ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES -------------------------------------------------- SECTION 2.01. Conversion Of Securities. At the Effective Time, by virtue of the Merger and without any further action on the part of Purchaser, Parent, the Company or the holders of any of the following securities: -6- (a) Each Share issued and outstanding immediately prior to the Effective Time (other than any Shares to be canceled pursuant to Section 2.01(b) hereof and other than Dissenting Shares (as defined in Section 2.01(e) hereof)), shall be converted into the right to receive the Per Share Amount in cash, without interest (the aggregate cash amount payable pursuant to this Section 2.01(a) being hereinafter referred to as the "Merger Consideration"). (b) Each share of Common Stock held in the treasury of the Company and each Share owned by Parent or any direct or indirect wholly owned subsidiary of Parent or of the Company immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof, and no payment shall be made with respect thereto. (c) Each share of common stock of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully-paid and nonassessable share of common stock of the Surviving Corporation. (d) The Shares outstanding immediately prior to the Effective Time (other than Shares to be canceled pursuant to Section 2.01(b) hereof) shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a Certificate (as defined in Section 2.02(b) hereof) shall cease to have any rights with respect thereto, except only the right to receive, for each Share represented by such Certificate, a cash amount equal to the Per Share Amount, without interest, or, if such holder is a Dissenting Stockholder (as defined in Section 2.01(e) hereof), the rights, if any, afforded to such holder under Section 262 of the DGCL. (e) Notwithstanding anything in this Agreement to the contrary, any Shares held by a person that shall have properly demanded and perfected a right to receive payment of the fair value of such Shares (a "Dissenting Stockholder") pursuant to Section 262 of the DGCL ("Dissenting Shares") shall not be converted as described in Section 2.01(a) hereof, unless such holder fails to comply with the provisions of Section 262 of the DGCL or withdraws or otherwise loses its right to receive such fair value payment. If, after the Effective Time, such Dissenting Stockholder fails to comply with the provisions of Section 262 of the DGCL or withdraws or otherwise loses its right to receive such fair value payment, such Dissenting Stockholder's Shares shall no longer be considered Dissenting Shares for the purposes of this Agreement and shall thereupon be deemed to have been converted into and become exchangeable for, at the Effective Time, the right to receive for each such Share, in cash, the Per Share Amount, without interest. The Company shall give Parent (i) prompt written notice of any demands to receive payment of fair value of Shares received by the Company and (ii) the opportunity to participate in and direct all negotiations and proceedings with respect to such demands. The Company shall not, without the prior written consent of Parent, make any payment with respect to, settle, offer to settle or otherwise negotiate any such demands. SECTION 2.02. Exchange of Certificates for Cash. --------------------------------- (a) Exchange Agent. As of the Effective Time, Parent shall deposit, or shall cause to be deposited, with The Bank of New York or such other bank or trust company as -7- may be designated by Parent (the "Exchange Agent"), for the benefit of the holders of Shares, for exchange in accordance with this Article II through the Exchange Agent, the Merger Consideration (such Merger Consideration, together with any interest earned thereon, being hereinafter referred to as the "Exchange Fund") payable pursuant to Section 2.01 hereof in exchange for Shares. The Exchange Agent shall, pursuant to irrevocable instructions given by Parent, deliver the cash (excluding any interest earned thereon) out of the Exchange Fund. All interest earned on the Exchange Fund shall be payable to Parent. Except as contemplated by this Section 2.02(a), the Exchange Fund shall not be used for any other purpose. (b) Exchange Procedures. As promptly as practicable after the Effective Time, Parent shall cause the Exchange Agent to mail to each holder of a certificate or certificates which immediately prior to the Effective Time represented Shares (the "Certificates"): (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to such Shares shall pass, only upon proper delivery of the Certificates to the Exchange Agent and shall be in customary form); and (ii) instructions for effecting the surrender of the Certificates in exchange for the appropriate portion of the Merger Consideration. Upon surrender to the Exchange Agent of a Certificate for cancellation, together with such letter of transmittal, duly executed, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor the amount in cash which such holder has the right to receive pursuant to Section 2.01(a) hereof (after giving effect to any required Tax withholdings) in respect of Shares formerly represented by such Certificate, and the Certificate so surrendered shall forthwith be canceled. No interest will be paid or will accrue on the amount payable upon the surrender of any Certificate. In the event of a transfer of ownership of Shares which is not registered in the transfer records of the Company, the proper amount of cash may be paid to a transferee if the Certificate representing such Shares is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer taxes have been paid. Until surrendered as contemplated by this Section 2.02, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive, upon such surrender, the appropriate portion of the Merger Consideration in respect of Shares formerly represented thereby. (c) No Further Rights in Common Stock. All cash paid upon conversion of Shares in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to such Shares. (d) Termination of Exchange Fund. Any portion of the Exchange Fund which remains undistributed to the holders of Shares outstanding immediately prior to the Effective Time for one (1) year after the Effective Time shall be delivered to Parent, upon demand, and any holders of such Shares who have not theretofore complied with this Article II shall thereafter look only to Parent for payment of any cash to which they are entitled. Any portion of the Exchange Fund remaining unclaimed by such holders as of a date that is immediately prior to such date as such amounts would otherwise escheat to or become the property of any Governmental Authority (as defined in Section 9.03(f) hereof) shall, to the -8- extent permitted by applicable Law, become the property of Parent, free and clear of any claims or interest of any person previously entitled thereto. (e) No Liability. Neither Parent, the Company nor the Surviving Corporation shall be liable to any holder of Shares for any cash delivered to a Governmental Authority pursuant to any abandoned property, escheat or similar Law. (f) Withholding Rights. Each of the Surviving Corporation, Parent and the Exchange Agent shall be entitled to deduct and withhold from the cash consideration otherwise payable pursuant to this Agreement to any holder of Shares such amounts as it is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the "Code"), or any provision of state, local or foreign Tax Law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of such Shares in respect of which such deduction and withholding were made. SECTION 2.03. Stock Transfer Books. As of the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of Shares thereafter on the records of the Company or the Surviving Corporation. From and after the Effective Time, the holders of Certificates shall cease to have any rights with respect to Shares represented thereby, except as otherwise provided herein or by Law. On or after the Effective Time, any Certificates duly presented to the Exchange Agent or Parent for any reason shall be converted into the amount of cash to which the holders thereof are entitled pursuant to this Article II. SECTION 2.04. Stock Options. ------------- (a) The Company shall take all actions or cause all such actions to be taken prior to the Commencement Date as are necessary to ensure that, immediately prior to the Effective Time, all then outstanding options to purchase Common Stock of the Company set forth on Schedule 3.03-1 of the Company Disclosure Schedule (collectively, the "Company Options"), whether or not exercisable, whether or not vested, and whether or not performance-based, under the Company's 1992 Equity Incentive Stock Option Plan and 2001 Equity Incentive Plan (collectively, the "Company Stock Option Plans") that are held by those persons set forth on Schedule 2.04A of the Company Disclosure Schedule (as defined in Section 3.01 hereof), shall be automatically converted into the right to receive only an amount of cash (net of applicable withholding Taxes) equal to (x) the difference, if any, between the Per Share Amount less the exercise price per share of Common Stock payable upon exercise of such Company Options multiplied by (y) the number of shares of Common Stock issuable thereunder upon exercise immediately prior to the Effective Time. Additionally, the Company shall take all actions or cause all such actions to be taken prior to the date of the consummation of the Offer as are necessary to ensure that the holders of at least 80% of the Company Options that are not held by those persons set forth on said Schedule 2.04A (the "Remaining Options") shall be converted as set forth above. The Company shall use its reasonable best efforts to ensure that as soon as practicable and in any event prior to the Effective Time all of the Remaining Options that were not converted -9- as set forth above on or before the date of the consummation of the Offer shall be exercised or converted as set forth above. The Company shall use its reasonable best efforts to obtain a signed consent of each holder of outstanding Company Options to the conversion of such Company Options as specified in this Section 2.04(a). Except with respect to Company Options for which a signed consent is obtained in accordance with this Section 2.04(a), and notwithstanding anything to the contrary in this Section 2.04(a), no payment shall be made to any holder of a Company Option that is to be converted and terminated unless such holder delivers a signed waiver acknowledging that all of his or her outstanding Company Options are converted and terminated at the Effective Time and waiving all of his or her rights under or with respect to those Company Options. The Company shall use its reasonable best efforts to take all such actions or cause such actions to be taken such that, as soon as practicable, all Company Options that have an exercise price per share of Common Stock equal to or greater than the Per Share Amount shall be converted and terminated as of the Effective Time. Purchaser shall pay, or cause to be paid, the cash amounts payable pursuant to this Section 2.04(a) in respect of Company Options at or shortly (and in no event more than five (5) business days) after the Effective Time, except that such payment with respect to the Company Options set forth on Schedule 2.04B of the Company Disclosure Schedule shall be made from the Exchange Fund on the 90th day following the Effective Time (unless such day is not a business day, in which case payment shall be made on the next succeeding business day). The Company shall not make, or agree to make, any payment of any kind to any holder of a Company Option (except for the payments described in this Section 2.04) without the prior written consent of Parent. (b) Subject to Section 2.04(a) hereof, all Company Stock Option Plans shall terminate as of the Effective Time and the provisions in any other Company benefit plan providing for the issuance, transfer or grant of any capital stock of the Company or any interest in respect of any capital stock of the Company shall be deleted as of the Effective Time. The Company shall use its reasonable best efforts to ensure that, immediately following the consummation of the Offer, no holder of a Company Option or any participant in any Company Stock Option Plan shall have any right thereunder to acquire any capital stock of the Company, Parent or the Surviving Corporation. (c) The Company shall take all actions necessary pursuant to the terms of the Company's Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") in order to shorten the offering period under such Plan which includes the Effective Time (the "Current Offering"), such that the Current Offering shall terminate prior to the Effective Time. The purchase price for any shares of Common Stock purchased under the Employee Stock Purchase Plan during the Current Offering (as shortened in accordance with the preceding sentence) shall be paid in cash. -10- ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- The Company hereby represents and warrants to Parent and Purchaser that: SECTION 3.01. Organization and Qualification; Subsidiaries. The Company and each subsidiary of the Company (a "Subsidiary") is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has the requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure(s) to be so organized, existing or in good standing or to have such power and authority would not, individually or in the aggregate, have a Company Material Adverse Effect (as defined below). The Company and each Subsidiary is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for any failure(s) to be so qualified or licensed or in good standing that would not, individually or in the aggregate, have a Company Material Adverse Effect. The term "Company Material Adverse Effect" means any change or effect that is or is reasonably likely to be materially adverse to the business, assets, results of operations or financial condition of the Company and the Subsidiaries, taken as a whole, or otherwise materially and adversely affects the ability of the Company to consummate the Merger, except for such changes or effects that may relate solely to the incurrence by the Company of the Company Transaction Expenses and except for such changes or effects that are the result of general economic conditions affecting the Company's industry generally. A true and complete list of all the Subsidiaries, together with the jurisdiction of incorporation of each Subsidiary and the percentage, if less than one hundred (100%) percent, of the outstanding capital stock of each Subsidiary owned by the Company, is set forth on Schedule 3.01 of the separate Disclosure Schedule previously delivered by the Company to Parent (the "Company Disclosure Schedule"). Except as set forth on said Schedule 3.01, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity. SECTION 3.02. Certificate of Incorporation and By-laws. The Company has heretofore furnished to Parent a complete and correct copy of each of the Certificate of Incorporation and the By-laws or equivalent organizational documents, each as amended to date, of the Company and each Subsidiary (collectively, the "Organizational Documents"). The Organizational Documents are in full force and effect. Neither the Company nor any Subsidiary is in violation of any provision of its Organizational Documents. SECTION 3.03. Capitalization. The authorized capital stock of the Company consists solely of 30,000,000 shares of Common Stock and 5,000,000 shares of preferred stock. As of the close of business on April 15, 2003, (a) 10,453,512 Shares were issued and outstanding, all of which were validly issued, fully paid and nonassessable, (b) 455,713 shares of Common Stock were held in the treasury of the Company, (c) no shares of Common Stock were held by any of the Subsidiaries, (d) 2,774,912 shares of Common -11- Stock were reserved for future issuance pursuant to stock options granted and outstanding pursuant to the Company Stock Option Plans, (e) 57,018 shares of Common Stock were reserved and eligible for future issuance pursuant to the Employee Stock Purchase Plan (the Employee Stock Purchase Plan, together with the Company Stock Option Plans, being referred to hereinafter collectively as the "Stock Incentive Plans") and (f) no shares of preferred stock were outstanding. Since April 15, 2003, the Company has not issued any shares of its capital stock, other than any shares of Common Stock issued upon the valid exercise of Company Options in accordance with the terms thereof, or granted any stock options. Set forth on Schedule 3.03-1 of the Company Disclosure Schedule is a complete and accurate description of the grant date, number of shares of Common Stock available under, strike or exercise price and holder of each outstanding grant of options or any other rights to acquire shares of Common Stock pursuant to the Company Stock Option Plans. Each grant of options or other rights to acquire shares of Common Stock under any of the Company Stock Option Plans is evidenced by a Stock Option Agreement. Each election to purchase shares of Common Stock under the Company's Employee Stock Purchase Plan is evidenced by an Enrollment Form. Except for the options and rights to purchase granted under the Stock Incentive Plans as expressly set forth in this Section 3.03 and except as set forth on Schedule 3.03-2 of the Company Disclosure Schedule, there are no outstanding options, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any Subsidiary or obligating the Company or any Subsidiary to issue or sell any shares of capital stock of, or other equity interests in, the Company or any Subsidiary. All shares of Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the agreements pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as set forth on Schedule 3.03-2 of the Company Disclosure Schedule, there are no contractual or other obligations of the Company or any Subsidiary to repurchase, redeem, otherwise acquire or pay any amounts in connection with any Shares (outstanding or deemed outstanding) or any capital stock of, or any other equity interests in, any Subsidiary. Each outstanding share of capital stock of each Subsidiary is duly authorized, validly issued, fully paid and nonassessable and, except as set forth on Schedule 3.03-3 of the Company Disclosure Schedule, each such share is owned by the Company and is free and clear of all security interests, liens, claims, pledges, options, tag-along rights, rights of first refusal, agreements, limitations on the Company's voting rights, charges and other encumbrances of any nature whatsoever. SECTION 3.04. Authority Relative to this Agreement. The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Merger and the other transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation by the Company of the Merger and the other transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the Merger (other than, with respect to the Merger, if required, the approval and adoption of this Agreement by the holders of a majority of the then outstanding Shares and the filing and recordation of appropriate merger documents as required by the DGCL) and the other transactions contemplated hereby. This Agreement -12- has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Purchaser, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. SECTION 3.05. No Conflict; Required Filings and Consents. ------------------------------------------ (a) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not: (i) conflict with or violate the Organizational Documents of the Company or any Subsidiary; (ii) conflict with or violate in any material respect any material U.S. (federal, state or local) or foreign law, statute, rule, regulation, order, judgment or decree (collectively, "Laws") applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected; or (iii) except as set forth on Schedule 3.05-1 of the Company Disclosure Schedule, require a consent, result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of the Company or any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or any property or asset of the Company or any Subsidiary is otherwise bound or affected, except for any such absence of consents, breaches, defaults or other occurrences which would not, individually or in the aggregate, have a Company Material Adverse Effect. (b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement, the consummation of the Offer, the Merger and the other transactions contemplated hereby and compliance with the provisions of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except: (i) for applicable requirements, if any, of the Exchange Act, the Nasdaq National Market, state securities or "blue sky" Laws ("Blue Sky Laws") and state takeover Laws, the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the "HSR Act"), the filing and recordation of appropriate merger documents as required by the DGCL; (ii) as set forth on Schedule 3.05-2 of the Company Disclosure Schedule; and (iii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or materially delay consummation of the Offer, the Merger or any other transaction contemplated hereby, or, individually or in the aggregate, have a Company Material Adverse Effect. SECTION 3.06. Permits; Compliance with Law. Except as set forth on Schedule 3.06-1 of the Company Disclosure Schedule, the Company and each Subsidiary is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders necessary for the Company and each Subsidiary to own, lease and operate its properties or to carry on its business as it is now being conducted (the "Company Permits"), and no suspension or -13- cancellation of any of the Company Permits is pending or, to the knowledge of the Company, threatened, except where the failure to have, or the suspension or cancellation of, any of the Company Permits would not, individually or in the aggregate, have a Company Material Adverse Effect. Set forth on Schedule 3.06-2 of the Company Disclosure Schedule is a true and complete list of those Company Permits, the loss or suspension of any of which would, individually or in the aggregate, have a Company Material Adverse Effect. Except as set forth on Schedule 3.06-3 of the Company Disclosure Schedule, neither the Company nor any Subsidiary is in conflict with, or in default or violation of (i) any Laws, including the Foreign Corrupt Practices Act and related regulations, applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected; (ii) any of the Company Permits; or (iii) any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or any property or asset of the Company or any Subsidiary is otherwise bound or affected, except for any such conflicts, defaults or violations that would not, individually or in the aggregate, have a Company Material Adverse Effect. Except as set forth on Schedule 3.06-4 of the Company Disclosure Schedule, since January 1, 1998, neither the Company nor any Subsidiary has been the subject of or otherwise involved in any investigation or enforcement action arising under contracting regulations of the Department of Defense, and, to the knowledge of the Company, no such investigation or action is threatened or contemplated. SECTION 3.07. SEC Filings; Financial Statements. --------------------------------- (a) The Company has timely filed all forms, reports and other documents required to be filed by it with the SEC since December 31, 1998, and has heretofore made available to Parent, in the form filed with the SEC and as amended prior to the date hereof: (i) its Annual Reports on Form 10-K for the fiscal years ended December 31, 2001 and 2002; (ii) all proxy statements relating to the Company's meetings of stockholders (whether annual or special) held since January 1, 2002; (iii) all other forms, reports and other registration statements filed by the Company with the SEC since January 1, 2003 through the date hereof (the forms, reports and other documents referred to in clauses (i), (ii) and (iii) above being referred to herein, collectively, as the "Company SEC Reports"); and (iv) complete (i.e., unredacted) copies of each exhibit to the Company SEC Reports filed with the SEC. The Company SEC Reports: (x) were prepared in accordance with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act, as the case may be, and the rules and regulations thereunder, including, without limitation, such requirements resulting from the Sarbanes-Oxley Act of 2002, to the extent applicable thereto; (y) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and (z) did not at the time they were filed omit any documents required to be filed as exhibits thereto. No Subsidiary is required to file any form, report or other document with the SEC. (b) Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Company SEC Reports was prepared in accordance with U.S. -14- generally accepted accounting principles applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto), and each fairly presents the consolidated financial position, results of operations and cash flows of the Company and the consolidated Subsidiaries as at the respective dates thereof and for the respective periods indicated therein in accordance with U.S. generally accepted accounting principles (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which were not material in amount). (c) Except as and to the extent set forth on the consolidated balance sheet of the Company and the consolidated Subsidiaries as at December 31, 2002, including the notes thereto (the "Company 2002 Balance Sheet"), neither the Company nor any Subsidiary has any liability or obligation of any nature (whether accrued, absolute, contingent or otherwise), except for liabilities and obligations (i) incurred since December 31, 2002 which would not, individually or in the aggregate, have a Company Material Adverse Effect; or (ii) incurred pursuant to this Agreement. There are no Special Purpose Entities (as defined below) owned directly or indirectly, in whole or in part, by the Company or any of its affiliates or in or with respect to which the Company or any of its affiliates have a direct or indirect business relationship or interest of any kind, in whole or in part, including any equity interest, any leasing relationship, any loan or other financing relationship, any other contractual relationship or any other economic interest, relationship or arrangement of any kind, where such relationship or interest is directly or indirectly related to, or part of, the business or the assets owned by or the liabilities of the Company. There are no guarantees by the Company, its Subsidiaries or other affiliates of the liabilities of or with respect to any Special Purpose Entities. "Special Purpose Entities" has the meaning given to that term under U.S. accounting rules governing consolidation, including proposed rules and interpretations of the Financial Accounting Standards Board, such as those contained in guidance (as proposed or as finally adopted) interpreting Statement of Financial Accounting Standard 94, Consolidation of all Majority-Owned Subsidiaries and Accounting Research Bulletin No. 51, Consolidated Financial Statements. (d) The Company has heretofore furnished to Parent complete and correct copies of all amendments and modifications that have not been filed by the Company with the SEC to all agreements, documents and other instruments that previously had been filed by the Company with the SEC and are currently in effect. A true and complete list of such amendments and modifications is set forth on Schedule 3.07 of the Company Disclosure Schedule. SECTION 3.08. Absence of Certain Changes or Events. Since December 31, 2002, except as contemplated by this Agreement or as set forth on Schedule 3.08 of the Company Disclosure Schedule, the Company and the Subsidiaries have conducted their businesses in the ordinary course and in a manner consistent with past practice, and there has not been (a) any event or events having a Company Material Adverse Effect, (b) any change by the Company in its accounting methods, principles or practices, (c) any revaluation by the Company of any asset (including, without limitation, any writing down of the value of inventory or writing off of notes or accounts receivable), other than in the ordinary course of business consistent with past practice, (d) any entry by the Company or any Subsidiary -15- into any commitment or transaction material to the Company and the Subsidiaries taken as a whole, except in the ordinary course of business and consistent with past practice, (e) any declaration, setting aside or payment of any dividend or distribution in respect of any capital stock of the Company or any redemption, purchase or other acquisition of any of its securities, (f) any material damage, destruction or loss to property, whether or not covered by insurance, (g) any settlement or compromise of any material litigation, action or claim, or (h) other than pursuant to the contracts and Plans expressly referred to in Section 3.10 hereof, any increase in, establishment or material amendment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan, or any other increase in the compensation payable or to become payable to any officers or key employees of the Company or any Subsidiary, except for salary increases and benefit accruals in the ordinary course of business consistent with past practice. SECTION 3.09. Absence of Litigation. Except as set forth on Schedule 3.09 of the Company Disclosure Schedule, there is no claim, action, proceeding, compliance review or investigation pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary, or any property or asset of the Company or any Subsidiary, before any court, arbitrator or Governmental Authority which (a) individually or in the aggregate, would have a Company Material Adverse Effect, or (b) seeks to delay or prevent the consummation of the Offer, the Merger or the other transactions contemplated hereby. Except as set forth on Schedule 3.09 of the Company Disclosure Schedule, neither the Company nor any Subsidiary nor any property or asset of the Company or any Subsidiary is subject to any order, writ, judgment, injunction, decree, determination or award which would have, individually or in the aggregate, a Company Material Adverse Effect. SECTION 3.10. Employee Benefit Plans. Schedule 3.10 of the Company Disclosure Schedule sets forth a true and complete list of (i) all the employee benefit plans, programs and arrangements maintained for the benefit of any current or former employee, officer or director of the Company or any Subsidiary, as amended to date (the "Plans"), and (ii) all contracts and agreements relating to employment which provide for annual compensation in excess of $75,000, and all severance or change of control agreements, with any of the directors, officers, consultants or employees of the Company or its Subsidiaries (other than, in each case, any such contract or agreement that is terminable at any time by the Company or a Subsidiary at will and without penalty or other adverse consequence) (the "Employment Contracts"). Parent has been furnished with a true and complete copy of each Plan, each material document prepared in connection with each Plan and each Employment Contract. Except as set forth on Schedule 3.10 of the Company Disclosure Schedule: (i) none of the Plans is a multi-employer plan within the meaning of Section 4001(a)(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); (ii) none of the Plans or Employment Contracts promises or provides retiree medical or life insurance benefits to any person, except as required by Part 6 of Title I of ERISA, Section 4980B of the Code or any similar state Law relating to the continuation of health insurance coverage; (iii) each Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service that it is so qualified and -16- nothing has occurred since the date of such letter to affect the qualified status of such Plan; (iv) none of the Plans or Employment Contracts promises or provides severance benefits or benefits contingent upon a change in ownership or control within the meaning of Section 280G of the Code; (v) each Plan has been operated in all material respects in accordance with its terms and the requirements of applicable Law; (vi) none of the Plans is subject to Title IV of ERISA; (vii) neither the Company nor any Subsidiary has incurred any direct or indirect liability under, arising out of, or by operation of, Title IV of ERISA in connection with the termination of, or withdrawal from, any Plan or other retirement plan or arrangement; and (viii) the Company and the Subsidiaries have not incurred any liability under, and have complied in all respects with, the Worker Adjustment Retraining Notification Act. Other than routine claims for benefits under the Plans, no claim with respect to, or legal proceeding involving, any Plan or a breach of any Employment Contract is pending or, to the knowledge of the Company, threatened. SECTION 3.11. Labor Matters. Neither the Company nor any Subsidiary is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by the Company or any Subsidiary, and, since January 1, 1998, there has not occurred any strike, work stoppage or material union organizing effort and no such action is threatened. SECTION 3.12. Real Property and Leases. ------------------------ (a) Schedule 3.12-1 of the Company Disclosure Schedule sets forth a true and complete list of all real property owned or leased by the Company or any Subsidiary since January 1, 1998 and separately identifies that which is, or was previously, owned and that which is, or was previously, leased. The Company and the Subsidiaries have sufficient title or valid leasehold interests to or in all of their properties and assets to conduct in all material respects their respective businesses as currently conducted or as contemplated to be conducted and, except as set forth on Schedule 3.12-2 of the Company Disclosure Schedule, there are no material security interests or encumbrances on such owned properties and assets. (b) All leases of real property leased for the use or benefit of the Company or any Subsidiary to which the Company or any Subsidiary is a party requiring rental payments in excess of $100,000 during the period of the lease, and all amendments and modifications thereto, are in full force and effect and have not been modified or amended, and there exists no default under any such lease by the Company, any Subsidiary, or by any other party thereto, nor any event which with notice or lapse of time or both would constitute a default thereunder by the Company, any Subsidiary, or by any other party thereto, which would, individually or in the aggregate, have a Company Material Adverse Effect. SECTION 3.13. Intellectual Property. The term "Company Intellectual Property" means all trademarks, trademark rights, trade names, trade name rights, patents, patent rights, industrial models, inventions, copyrights, servicemarks, trade secrets, know-how, computer software programs and other proprietary rights and information used or held for use in connection with the businesses of the Company and the Subsidiaries as currently conducted, together with all applications currently pending for any of the foregoing. Except -17- where the failure to so own or have would not have, individually or in the aggregate, a Company Material Adverse Effect, the Company and the Subsidiaries own or have legally enforceable rights to use all of the Company Intellectual Property and, to the knowledge of the Company, there is no assertion or claim (or basis therefor) challenging the validity of the Company's or any Subsidiary's ownership of, or right to use, any Company Intellectual Property. Except as set forth on Schedule 3.13-1 of the Company Disclosure Schedule, the Company is not party to any license or other agreement pursuant to which it has the right to use any Company Intellectual Property utilized in connection with any product or process of the Company or any of its Subsidiaries. There are no pending or, to the knowledge of the Company, threatened interferences, re-examinations, oppositions or nullities involving any patents, patent rights or applications therefor of the Company or any Subsidiary that, individually or in the aggregate, would have a Company Material Adverse Effect. Substantially all employees of the Company have executed confidentiality and invention assignment agreements in the forms previously delivered to the Parent. There have been no notices received by the Company from, or claims made by or, to the knowledge of the Company, claims threatened in writing by, third parties regarding actual or potential infringements of any third-party intellectual property rights by the Company's products or processes. There are no infringements by third parties of any Company Intellectual Property which, individually or in the aggregate, would have a Company Material Adverse Effect. Except as set forth on Schedule 3.13-2 of the Company Disclosure Schedule, neither the Company nor any Subsidiary has licensed or otherwise permitted the use by any third party of any Company Intellectual Property. SECTION 3.14. Taxes. Except as set forth on Schedule 3.14 of the Company Disclosure Schedule: (i) the Company and the Subsidiaries have filed all federal, state, local and foreign Tax returns and reports required to be filed by them and have paid all Taxes when and as due under applicable Law, other than such payments as are being contested in good faith by appropriate proceedings, as set forth on Schedule 3.14 of the Company Disclosure Schedule; (ii) neither the Internal Revenue Service nor any other Taxing authority or agency, domestic or foreign, is now asserting or, to the knowledge of the Company, threatening to assert against the Company or any Subsidiary any deficiency or claim for additional Taxes or interest thereon or penalties in connection therewith; (iii) neither the Company nor any Subsidiary has granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any federal, state, county, municipal or foreign income Tax; (iv) the accruals and reserves for Taxes reflected in the Company 2002 Balance Sheet and the Company's most recent quarterly financial statements are adequate to cover all taxes accruable through the date thereof (including interest and penalties, if any, thereon) in accordance with U.S. generally accepted accounting principles; (v) neither the Company nor any Subsidiary has made an election under Section 341(f) of the Code; (vi) the Company and the Subsidiaries have withheld or collected and paid over to the appropriate Governmental Authorities or are properly holding for such payment all Taxes required by Law to be withheld or collected; (vii) there are no liens for Taxes upon the assets of the Company or the Subsidiaries, other than liens for Taxes that are being contested in good faith by appropriate proceedings, as set forth on Schedule 3.14 of the Company Disclosure Schedule, and liens for Taxes not yet due and payable; (viii) neither the Company nor any of its Subsidiaries is party to or bound by (nor -18- will the Company or any of its Subsidiaries, prior to the Effective Time, become a party to or become bound by) any Tax indemnity, Tax sharing or Tax allocation agreement; (ix) except for the group of which the Company is presently a member, the Company has never been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Code, other than as a common parent corporation, and none of the Subsidiaries of the Company has ever been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Code, except where the Company was the common parent corporation of such affiliated group; (x) the Company has not filed a consent pursuant to the collapsible corporation provisions of Section 341(f) of the Code (or any corresponding provisions of state, local, or foreign income Tax Law) or agreed to have Section 341(f)(2) of the Code (or any corresponding provision of state, local or foreign income Tax Law) apply to any disposition of any asset owned by it; (xi) all material elections with respect to Taxes affecting the Company as of the date of this Agreement are reflected on the Tax returns delivered to Parent and no material election with respect to Taxes will be made after the date of this Agreement without the written consent of Parent; (xii) none of the assets of the Company is property which the Company is required to treat as being owned by any other person pursuant to the so-called "safe harbor lease" provisions of former Section 168(f)(8) of the Code; (xiii) none of the assets of the Company directly or indirectly secures any debt the interest on which is tax exempt under Section 103(a) of the Code; (xiv) none of the assets of the Company is "tax exempt use property" within the meaning of Section 168(h) of the Code; (xv) the Company has not made, nor will it make, a deemed dividend election under Treas. Reg. Section 1.1502-32(f)(2) or a consent dividend election under Section 565 of the Code; (xvi) the Company has not participated in, nor will it participate in, an international boycott within the meaning of Section 999 of the Code; (xvii) the Company is not a party to any Employment Contract or Plan that has resulted or would result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code; (xviii) the Company is not, nor has it ever been, a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code; (xix) the Company does not have, nor has it ever had, a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States of America and such foreign country; and (xx) the Company is not a party to any joint venture, partnership or other arrangement or contract which could be treated as a partnership for federal income Tax purposes. SECTION 3.15. Environmental Matters. --------------------- (a) For purposes of this Agreement, the following terms shall have the following meanings: (i) "Hazardous Substances" means (A) those substances defined in or regulated under any of the following U.S. federal statutes and/or their state or foreign counterparts, as each may be amended from time to time, and all regulations thereunder: the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Marine Protection, Research and Sanctuaries Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide Act, the Occupational Health and Safety Act and the Clean Air Act; (B) petroleum and petroleum products including crude oil and any fractions thereof; (C) natural -19- gas, synthetic gas, and any mixtures thereof; (D) radon; (E) asbestos; (F) any other pollutant or contaminant; and (G) any substance with respect to which a federal, state or local agency requires environmental investigation, monitoring, reporting or remediation; and (ii) "Environmental Laws" means any U.S. federal, state or local or foreign Law, including, without limitation, any code or rule of common law, relating to (A) releases or threatened releases of Hazardous Substances or materials containing Hazardous Substances; (B) the manufacture, handling, transport, use, treatment, storage or disposal of or exposure to Hazardous Substances or materials containing Hazardous Substances; or (C) otherwise relating to pollution of the environment or the protection of natural resources or human health. (b) Except as set forth on Schedule 3.15 of the Company Disclosure Schedule or as would not, individually or in the aggregate, have a Company Material Adverse Effect: (i) neither the Company nor any of its Subsidiaries has violated or is in violation of any Environmental Law; (ii) there is and has been no release, threatened release, contamination, disposal, spilling, dumping, incineration, discharge, storage, treatment or handling of any Hazardous Substance, at, on, under or from any of the properties owned or leased by the Company or any of its Subsidiaries (including, without limitation, soils and surface and ground waters); (iii) neither the Company nor any of its Subsidiaries is liable for any contamination, release or threatened release of Hazardous Substances at any location off of the properties and facilities owned or operated by the Company or any Subsidiary; (iv) neither the Company nor any Subsidiary is liable with respect to any claims that have been or may be asserted under any Environmental Law; (v) each of the Company and its Subsidiaries has all permits, licenses and other authorizations and has made all registrations, notifications, reports and submissions required under any Environmental Law ("Environmental Permits"); (vi) each of the Company and its Subsidiaries has been and is in compliance with its Environmental Permits; (vii) there are no pending or, to the knowledge of the Company, threatened claims against the Company or any Subsidiary arising under or relating to any Environmental Law or Hazardous Substance; (viii) neither the Company nor any of its Subsidiaries is subject to or has entered into any order, consent, decree or other agreement under or relating to any Environmental Law or Hazardous Substance; and (ix) neither the Company nor any of its Subsidiaries has entered into any written or unwritten agreement pursuant to which the Company or any of the Subsidiaries is obligated to assume, indemnify, defend, hold harmless, release or perform any liabilities, claims or obligations arising under or related to any Environmental Law or Hazardous Substance. SECTION 3.16. Material Contracts; Government Contracts. ---------------------------------------- (a) Subsections (i) through (viii) of Schedule 3.16-1 of the Company Disclosure Schedule set forth a true and complete list of all of the following contracts and agreements (including, without limitation, oral and informal arrangements) to which the Company or any Subsidiary is a party (each of such contracts and agreements, and each other contract or agreement of the Company or any Subsidiary that would have been required to be set forth on Schedule 3.16-1 of the Company Disclosure Schedule, had such contract or agreement been entered into prior to the date of this Agreement, collectively, the "Material Contracts"): -20- (i) each contract and agreement (other than any routine purchase orders or pricing quotes made in the ordinary course of business involving less than $100,000 individually) for the purchase of inventory, spare parts, other materials or personal property with any supplier or for the furnishing of services to the Company or any Subsidiary under the terms of which the Company or any Subsidiary: (A) paid or otherwise gave consideration of more than $100,000 in the aggregate during the calendar year ended December 31, 2002; (B) is likely to pay or otherwise give consideration of more than $100,000 in the aggregate during the calendar year ending December 31, 2003; (C) is likely to pay or otherwise give consideration of more than $100,000 in the aggregate over the remaining term of the contract or agreement; or (D) cannot be canceled by the Company or such Subsidiary on thirty (30) or fewer days' notice without penalty or payment of less than $25,000; (ii) each customer contract and agreement (other than any routine purchase orders, pricing quotes with open acceptance or tender bids made in the ordinary course of business involving less than $100,000 individually) to which the Company or any Subsidiary is a party which: (A) involved consideration of more than $250,000 in the aggregate during the calendar year ended December 31, 2002; (B) is likely to involve consideration of more than $250,000 in the aggregate during the calendar year ending December 31, 2003; (C) is likely to involve consideration of more than $250,000 in the aggregate over the remaining term of the contract or agreement; or (D) cannot be canceled by the Company or such Subsidiary on thirty (30) or fewer days' notice without penalty or payment of less than $50,000; (iii) all management contracts and contracts (or similar arrangements) with independent contractors or consultants to which the Company or any Subsidiary is a party and which: (A) involved consideration of more than $100,000 in the aggregate during the calendar year ended December 31, 2002; (B) are likely to involve consideration of more than $100,000 in the aggregate during the calendar year ending December 31, 2003; (C) are likely to involve consideration of more than $100,000 in the aggregate over the remaining term of the contract or agreement; or (D) cannot be canceled by the Company or such Subsidiary on thirty (30) or fewer days' notice without penalty or payment of less than $25,000; (iv) all contracts and agreements (excluding routine checking account overdraft agreements involving petty cash amounts) under which the Company or any Subsidiary has created, incurred, assumed, agreed to indemnify against or guaranteed (or may so create, incur, assume, agree to indemnify against or guarantee) indebtedness involving an amount in excess of $250,000 in any individual case or $500,000 in the aggregate or under which the Company or any Subsidiary has granted or incurred (or may grant or incur) a security interest or lien on any of their respective assets, whether tangible or intangible, to secure indebtedness of an amount in excess of $250,000 in any individual case or $500,000 in the aggregate or under which the Company or any Subsidiary has agreed to indemnify against or guarantee obligations (other than indebtedness) involving an amount in excess of $250,000 in any individual case or $500,000 in the aggregate; -21- (v) all contracts and agreements that limit the ability of the Company or and Subsidiary or, after the Effective Time, would limit the ability of Parent or any of its affiliates, to compete in any line of business or with any person or in any geographic area or during any period of time, or to solicit any customer or client; (vi) all contracts and agreements between or among the Company or any Subsidiary, on the one hand, and any affiliate (as defined in Section 9.03(a) hereof) or associate (as defined in Section 9.03(b) hereof) of the Company, including, without limitation, present and former officers or directors of the Company or any Subsidiary or any of their respective associates, on the other hand, including, without limitation, any agreement to indemnify, advance expenses and/or defend any of the foregoing in respect of any matter; (vii) all contracts and agreements to which the Company or any Subsidiary is a party under which it has agreed to supply products to a customer at specified prices, whether directly or through a specific distributor, manufacturer's representative or dealer, which contract involves products or sales of at least $500,000 and extends for one year or more; and (viii) each other contract and agreement (A) the breach of which would have a Company Material Adverse Effect or (B) that would be deemed to be material pursuant to Item 601 of Regulation S-K under the Securities Act and the Exchange Act. (b) Except as set forth on Schedule 3.16-2 of the Company Disclosure Schedule, each Material Contract is (assuming the due authorization, execution and delivery by, and the validity and binding nature of the Contract against, the parties thereto other than the Company (or any Subsidiary)) a legal, valid and binding agreement of the Company or the Subsidiary, as the case may be, and none of the Company, any Subsidiary or any other party thereto is in material default under any Material Contract; neither the Company nor any Subsidiary is in receipt of any notice of default under any Material Contract; and none of the Company or any of the Subsidiaries anticipates any termination or change to, or receipt of a proposal with respect to, any of the Material Contracts as a result of the Offer, the Merger or otherwise. Except as set forth on Schedule 3.16-3 of the Company Disclosure Schedule, the Company has furnished Parent with true and complete copies of all Material Contracts, together with all amendments, waivers or other changes thereto. (c) For purposes of this Section 3.16, (i) the term "Government" shall mean any entity within the U.S. federal government and (ii) the term "Government Contract" shall mean any Government prime contract, cooperative research and development agreement, "other transaction", or any subcontract at any tier under a Government prime contract, or any basic ordering agreement, letter contract, purchase order or delivery order of any kind, including without limitation, as to all of the foregoing, all amendments, modifications and options thereunder or relating thereto. -22- (d) Schedule 3.16-4 of the Company Disclosure Schedule sets forth a true and complete list of: (i) all Government Contracts currently in force between the Company and the Government or any prime contractor or subcontractor; (ii) all outstanding quotations, bids and proposals submitted by the Company, which the Company believes are still subject to acceptance, to the Government or any prime contractor or subcontractor; and (iii) any Government Contract that by its terms remains subject to audit. (e) Except as set forth on Schedule 3.09 or Schedule 3.16-5 of the Company Disclosure Schedule, with respect to the Government Contracts, there is no pending or, to the knowledge of the Company, threatened, (i) civil fraud or criminal action, proceeding or investigation by any Governmental Authority, (ii) suspension or debarment action or proceeding against the Company or any Subsidiary, (iii) request by the Government for a contract price adjustment based on a claimed disallowance by the Government in excess of $1 million, (iv) dispute between the Company or any of its Subsidiaries and the Government which has resulted in a government contracting officer's determination and finding final decision where the amount in controversy exceeds, or is reasonably expected to exceed, $500,000 or (v) claim or equitable adjustment by the Company or any of its Subsidiaries against the Government in excess of $500,000. SECTION 3.17. Opinion of Financial Advisor. The Company's Board of Directors has received the opinion of Wachovia Securities, Inc. ("Wachovia Securities"), on or prior to the date of this Agreement, to the effect that, as of the date of such opinion, the Per Share Amount to be received by the holders of the Shares pursuant to the Offer and the Merger is fair to such holders, from a financial point of view, and such opinion has not been withdrawn or modified. A true copy of such opinion has been, or will promptly after receipt thereof by the Company be, delivered to Parent. SECTION 3.18. Vote Required. The affirmative vote of the holders of a majority of Shares outstanding as of the record date for the Company Stockholders' Meeting, required under the DGCL, is the only vote of the holders of any class or series of capital stock of the Company necessary to approve the Merger and this Agreement. SECTION 3.19. Brokers; Fees and Expenses. No broker, finder, investment banker or other person (other than Wachovia Securities and Needham & Co., Inc.) is entitled to or will be paid any brokerage, finder's or similar fee or commission in connection with the Offer or the Merger based upon arrangements made by or on behalf of the Company or any Subsidiary. The Company has heretofore furnished to Parent complete and correct copies of all agreements between the Company and Wachovia Securities pursuant to which such firm would be entitled to any payment relating to the Offer and the Merger. The maximum Actual Transaction Expenses shall be as set forth on Schedule 3.19 of the Company Disclosure Schedule. The term "Actual Transaction Expenses" means all costs, expenses and fees of the Company (including, without limitation, all fees and expenses of counsel, financial advisors, accountants, attorneys and other experts and consultants to the Company and its affiliates, and all printing and advertising expenses) actually incurred or accrued by it or on its behalf since January 1, 2003 in connection with the Offer, the Merger and the other transactions contemplated hereby; provided, however, that such term shall not include -23- reasonable legal fees and expenses incurred in connection with any threatened or actual litigation involving the Company with respect to any of the transactions contemplated hereby and/or reasonable professional fees and expenses incurred with respect to a Competing Transaction. SECTION 3.20. Customers. Schedule 3.20 of the Company Disclosure Schedule sets forth the ten (10) largest customers of the Company, each ranked by revenue, for fiscal year 2002. Except as set forth on Schedule 3.20 of the Company Disclosure Schedule, no customer named on said Schedule 3.20 has canceled, otherwise terminated or materially curtailed or, to the knowledge of the Company, threatened to cancel, otherwise terminate or materially curtail its relationship with the Company. SECTION 3.21. Anti-Takeover Laws. The Company has taken all actions required to be taken by it in order to except this Agreement, the Tender and Voting Agreements, and the transactions contemplated hereby from application of the provisions of Section 203 of the DGCL and Section 1 of Chapter 110C of the Massachusetts General Laws, and, accordingly, neither Section 203 of the DGCL nor Section 1 of Chapter 110C of the Massachusetts General Laws applies to the Offer, the Merger or any of the other transactions contemplated hereby, including the Tender and Voting Agreements. To the Company's knowledge, no other anti-takeover Laws or regulations enacted under state or federal Laws of the United States apply to this Agreement or any of the transactions contemplated hereby. SECTION 3.22. Disclosure Documents. -------------------- (a) None of the Schedule 14D-9 nor any of the information supplied by the Company in writing specifically for inclusion in the Offer Documents will, at the respective times the Schedule 14D-9 or the Offer Documents are filed with the SEC or are first published, sent or given to stockholders of the Company, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Schedule 14D-9, when filed with the SEC, and when first published, sent or given to stockholders, will comply as to form in all material respects with the applicable requirements of the Exchange Act and the rules and regulations thereunder. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by Parent or Purchaser or any of their respective representatives specifically for inclusion in the Schedule 14D-9 (including any amendments or supplements thereto). (b) The proxy or information statement relating to any meeting of the Company's stockholders that may be required to be held in connection with the Merger (as it may be amended from time to time, the "Company Proxy Statement") will not, when filed with the SEC, at the date mailed to the Company's stockholders or at the time of such meeting of stockholders to be held in connection with the Merger, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading or necessary to correct any statement in any earlier communication -24- with respect to any solicitation of proxies or otherwise. The Company Proxy Statement will, when filed with the SEC by the Company, comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by Parent or Purchaser or any of their respective representatives specifically for inclusion in the Company Proxy Statement. SECTION 3.23. Certain Payments. Neither the Company nor any Subsidiary nor, to the knowledge of the Company, any director, officer, agent or employee of the Company or any Subsidiary (when acting in such capacity or otherwise on behalf of the Company or any Subsidiary) nor any other person acting for or on behalf of the Company or any Subsidiary (when so acting) has, directly or indirectly, (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any person or Governmental Authority, regardless of form, whether in money, property or services (other than immaterial promotional gifts made in the ordinary course of business) (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of the Company, any Subsidiary or any affiliate of the Company or any Subsidiary or (iv) in violation of any federal, state, local or foreign Law; or (b) established or maintained any fund or asset that has not been recorded in the books and records of the Company or any Subsidiary. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT ---------------------------------------- AND PURCHASER ------------- Parent and Purchaser hereby, jointly and severally, represent and warrant to the Company that: SECTION 4.01. Organization and Qualification. Each of Parent and Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has the requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure(s) to be so organized, existing or in good standing or to have such power and authority would not, individually or in the aggregate, have a Parent Material Adverse Effect (as defined below). Each of Parent and Purchaser is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for any failure(s) to be so qualified or licensed or in good standing that would not, individually or in the aggregate, have a Parent Material Adverse Effect. The term "Parent Material Adverse Effect" means any change or effect that is or is reasonably likely to be materially adverse to the business, assets, results of operations or financial condition of Parent and its subsidiaries, taken as a whole, or otherwise materially and adversely affects the ability of the Parent and the Purchaser to consummate the transactions contemplated hereby. -25- SECTION 4.02. Certificate of Incorporation and By-laws. Parent has heretofore furnished to the Company complete and correct copies of the Certificates of Incorporation and By-laws, each as amended to date, of Parent and Purchaser. Such Certificates of Incorporation and By-laws are in full force and effect. Neither Parent nor Purchaser is in violation of any provision of its Certificate of Incorporation or By-laws. SECTION 4.03. Authority Relative to this Agreement. Each of Parent and Purchaser has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Offer, the Merger and the other transactions contemplated hereby. The execution and delivery of this Agreement by Parent and Purchaser and the consummation by Parent and Purchaser of the Offer and the Merger and the other transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of Parent or Purchaser are necessary to authorize this Agreement or to consummate the Offer, the Merger and the other transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Parent and Purchaser and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of each of Parent and Purchaser enforceable against each of Parent and Purchaser in accordance with its terms. SECTION 4.04. No Conflict; Required Filings and Consents. ------------------------------------------ (a) The execution and delivery of this Agreement by Parent and Purchaser do not, and the performance of this Agreement by Parent and Purchaser will not: (i) conflict with or violate the Certificate of Incorporation or By-laws of Parent or Purchaser; (ii) conflict with or violate in any material respect any material Law applicable to Parent or Purchaser or by which any property or asset of either of them is bound or affected; or (iii) require a consent, result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of Parent or Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Parent or Purchaser is a party or by which Parent or Purchaser or any property or asset of either of them is otherwise bound or affected, except for any such absence of consents, breaches, defaults or other occurrences which would not, individually or in the aggregate, have a Parent Material Adverse Effect. (b) The execution and delivery of this Agreement by Parent and Purchaser do not, and the performance of this Agreement, the consummation of the Offer, the Merger and the other transactions contemplated hereby and compliance with the provisions of this Agreement by Parent and Purchaser will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except: (i) for applicable requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover Laws, the HSR Act, the filing and recordation of appropriate merger documents as required by the DGCL and the rules of the New York Stock Exchange; and (ii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or -26- notifications, would not prevent or materially delay consummation of the Offer, the Merger or any other transaction contemplated hereby, or, individually or in the aggregate, have a Parent Material Adverse Effect. SECTION 4.05. Absence of Litigation. There is no claim, action, proceeding or investigation pending or, to the knowledge of the Parent, threatened against the Parent before any court, arbitrator or Governmental Authority, which seeks to delay or prevent the consummation of the Offer, the Merger or any of the other transactions contemplated hereby. SECTION 4.06. Brokers. No broker, finder, investment banker or other person (other than JPMorgan) is entitled to any brokerage or finder's fee or commission in connection with the Offer or the Merger based upon arrangements made by or on behalf of Parent or Purchaser. SECTION 4.07. Funds. Parent or Purchaser has, or will have prior to the consummation of the Offer, sufficient funds available to consummate the purchase of all Shares and to pay all related payments, fees and expenses pursuant to the Offer and this Agreement, in each case in accordance with the terms and conditions of the Offer and this Agreement. SECTION 4.08. Disclosure Documents. -------------------- (a) None of the Offer Documents or the information supplied by Parent or Purchaser in writing specifically for inclusion in the Schedule 14D-9 will, at the respective times the Offer Documents or the Schedule 14D-9 are filed with the SEC or are first published, sent or given to stockholders of the Company, as the case may be, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) None of the information supplied by Parent or Purchaser in writing specifically for inclusion or incorporation by reference in the Company Proxy Statement, if required, will, when filed with the SEC, at the date mailed to the Company's stockholders and at the time of the meeting, if any, of the Company's stockholders to be held in connection with the Merger, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. If at any time prior to the Effective Time any event or circumstance relating to Parent or any of its subsidiaries, or their respective officers or directors, is discovered by Parent that should be set forth in an amendment or a supplement to the Company Proxy Statement, Parent shall promptly inform the Company. Notwithstanding the foregoing, Parent and Purchaser make no representation or warranty with respect to any information supplied by the Company or any of its representatives in writing specifically for inclusion in any of the aforementioned documents or in the Offer Documents. -27- ARTICLE V CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME ---------------------------------------------- SECTION 5.01. Conduct of Business by the Company Pending the Effective Time. The Company covenants and agrees that, between the date of this Agreement and the earlier of the termination of this Agreement pursuant to Article VIII hereof or the Effective Time, except as set forth on Schedule 5.01 of the Company Disclosure Schedule or unless Parent shall (in its sole discretion) otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its reasonable best efforts to preserve substantially intact its business organization, to keep available the services of the current officers, employees and consultants of the Company and the Subsidiaries and to preserve the current relationships of the Company and the Subsidiaries with customers, suppliers and other persons with which the Company or any Subsidiary has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or as expressly set forth on Schedule 5.01 of the Company Disclosure Schedule, neither the Company nor any of the Subsidiaries shall, between the date of this Agreement and the earlier of the termination of this Agreement pursuant to Article VIII hereof or the Effective Time, directly or indirectly, do, propose or commit to do, or authorize any of the following, without the prior written consent of Parent: (a) amend, repeal or otherwise change the Company's or any of its Subsidiary's Organizational Documents; (b) issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of, any Shares or any shares of capital stock of any class of the Company or the Subsidiaries, or any options, warrants, convertible securities or other rights of any kind to acquire any Shares or shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except, subject to Section 2.04(a) hereof, for the issuance of shares of Common Stock pursuant to the exercise, in accordance with their respective terms, of employee stock options or other awards outstanding on the date hereof as set forth on Schedule 3.03-1 of the Company Disclosure Schedule); (c) transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any assets of the Company or any Subsidiary, except for sales of finished goods, invoicing under cost-plus contracts and invoicing for the achievement of milestones under contracts, each in the ordinary course of business and in a manner consistent with past practice; (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that a wholly-owned Subsidiary may declare and pay a dividend to its parent; -28- (e) reclassify, combine, split or subdivide, or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) (i) acquire (including, without limitation, by merger, consolidation, or acquisition of capital stock or assets) (A) any corporation, partnership, other business organization or any division thereof or (B) any assets outside the ordinary course of business; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person, or make any loans or advances, except in the ordinary course of business to vendors and/or employees and consistent with past practice; (iii) enter into any Material Contract, other than in the ordinary course of business, consistent with past practice; (iv) authorize any single capital expenditure in excess of $50,000 or capital expenditures, in the aggregate, in excess of $250,000 for the Company and the Subsidiaries taken as a whole; or (v) enter into or amend in any material respect any Material Contract or any contract, agreement, commitment or arrangement with respect to any matter set forth in this subsection (f); (g) increase (except salary increases in the ordinary course of business and consistent with past practice) the compensation payable or to become payable to its officers or employees generally or to any employee with an annual salary in excess of $90,000, or grant any bonus, severance, change of control or termination pay or material benefits to, or enter into any employment or severance agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into, terminate or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee; (h) take any action, other than reasonable and usual actions in the ordinary course of business and consistent with past practice, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (i) pay, discharge or otherwise satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities as reflected or reserved against in the Company 2002 Balance Sheet, or subsequently incurred in the ordinary course of business and consistent with past practice; (j) fail to comply in all material respects with all applicable Laws; (k) fail to pay and discharge any Taxes on the Company (or any of its Subsidiaries) or against any of its properties or assets before the same shall become -29- delinquent and before penalties accrue thereon, except to the extent and so long as the same are being contested in good faith and by appropriate proceedings; (l) fail to perform any of its material obligations under any of the Material Contracts or terminate any of the Material Contracts; or (m) settle or compromise any material claim or litigation. ARTICLE VI ADDITIONAL AGREEMENTS --------------------- SECTION 6.01. Company Stockholders' Meeting. If approval of this Agreement and the Merger by the stockholders of the Company is required by the DGCL in order to effect the Merger, the Company shall duly give notice of, convene and hold a special meeting of its stockholders (the "Company Stockholders' Meeting") for the purpose of voting upon this Agreement, the Merger and any related matters as soon as possible following consummation of the Offer. The Company will, through its Board of Directors, recommend (and continue to recommend) to its stockholders their approval and adoption of this Agreement and approval of the Merger until and unless the Board of Directors of the Company shall withdraw its approval or recommendation of this Agreement or the Merger, if and to the extent permitted by, and in accordance with, Section 6.05 hereof. The obligations of the Company contained in the first sentence of this Section 6.01 shall apply and remain in full force and effect regardless of whether the Company shall have withdrawn its approval or recommendation of this Agreement or the Merger or taken any other actions described in Section 6.05 hereof. SECTION 6.02. Company Proxy Statement. ----------------------- (a) Following consummation of the Offer, if holding of the Company Stockholders' Meeting is required by Law in order to effect the Merger, the Company will, as promptly as practicable following consummation of the Offer but in any event within fifteen (15) days thereafter, file a preliminary Company Proxy Statement with the SEC and will use reasonable efforts to respond to any comments of the SEC or its staff and to cause the definitive Company Proxy Statement promptly to be mailed to the Company's stockholders. The Company will notify Parent promptly of the receipt of, and will respond promptly to, any comments from the SEC or its staff and any request by the SEC or its staff for amendments or supplements to the Company Proxy Statement or for additional information, and will supply Parent with copies of all correspondence between the Company or any of its representatives, on the one hand, and the SEC or its staff, on the other hand, with respect to the Company Proxy Statement or the Merger. The Company shall give Parent an opportunity to review and comment on any correspondence with the SEC or its staff or any proposed materials to be included in the Company Proxy Statement prior to transmission to the SEC or its staff and shall not transmit any such materials to which Parent reasonably objects. If at any time prior to the approval of this Agreement by the Company's stockholders there shall occur any event that is required to be set forth in an amendment or supplement to the Company Proxy Statement, the Company will promptly -30- notify Parent thereof and prepare and mail to its stockholders such amendment or supplement. Parent shall furnish to the Company such information concerning itself and Purchaser for inclusion in the Company Proxy Statement as may reasonably be requested by the Company and required to be included in the Company Proxy Statement under applicable Law. The Company shall include in the definitive Company Proxy Statement the recommendation set forth in Section 1.02(a) hereof and shall use all reasonable efforts to solicit, if so requested by Parent, from holders of Common Stock proxies in favor of the Merger and this Agreement and take all other actions reasonably necessary or, in the reasonable opinion of Purchaser, advisable to secure the approval of the Company's stockholders required by the DGCL in order to effect the Merger. (b) Notwithstanding the foregoing, if the number of Shares owned by Parent, Purchaser and any other affiliate of Parent collectively, immediately following consummation of the Offer, shall constitute at least ninety (90%) percent of the outstanding Shares, and so long as all other conditions to the Company's obligations set forth in Article VII shall have been satisfied, the parties shall take all necessary and appropriate action to cause the Merger to become effective as soon as possible after such acquisition, without the approval of the other stockholders of the Company, in accordance with Section 253 of the DGCL. Parent agrees to cause all Shares purchased pursuant to the Offer, and any other Shares owned by Purchaser, Parent or any affiliate of Parent or with respect to which Parent then has the right to vote, to be voted in favor of the approval and adoption of this Agreement and the approval of the Merger. SECTION 6.03. Appropriate Action; Consents; Filings. ------------------------------------- (a) The Company and Parent shall use their respective reasonable best efforts to: (i) take, or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the Offer, the Merger and the other transactions contemplated hereby as promptly as practicable; (ii) obtain in a timely manner from Governmental Authorities any consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained or made by Parent or the Company or any of their respective subsidiaries in connection with the authorization, execution and delivery of this Agreement and the consummation of the Offer, the Merger and the other transactions contemplated hereby; and (iii) as promptly as practicable make all necessary filings, and thereafter make any other required submissions, with respect to this Agreement, the Offer, the Merger or the other transactions contemplated hereby that are required under (A) the Exchange Act, and any other applicable federal securities or Blue Sky Laws, (B) the HSR Act and any related governmental request(s) thereunder and (C) any other applicable Law; provided, that Parent and the Company shall cooperate with each other in connection with the making of all such filings, including providing copies of all such documents to the non-filing party and its advisors prior to filing and, if requested, to accept all reasonable additions, deletions or changes suggested in connection therewith. Each of the Company and Parent shall furnish to each other all information required from it for any application or other filing to be made pursuant to any applicable Law (including all information required to be included in the Company Proxy Statement) in connection with the transactions contemplated by this Agreement. -31- (b) Without limiting the generality of its undertakings pursuant to Section 6.03(a) hereof, each party shall (i) use its commercially best efforts to prevent the entry, in a judicial or administrative proceeding brought under any antitrust Law by any Governmental Authority with jurisdiction over enforcement of any applicable antitrust Laws or any other party, of any permanent or preliminary injunction or other order that would make consummation of the Offer, the Merger or any other transaction contemplated hereby in accordance with the terms of this Agreement unlawful or would prevent or delay it and (ii) take promptly, in the event that such an injunction or order has been issued in such a proceeding, all steps necessary to take an appeal of such injunction or order; provided, however, that Parent and Purchaser, together, shall not be required to undertake more than one such appeal. (c) Notwithstanding anything to the contrary in this Section 6.03 or elsewhere in this Agreement, the parties agree that, in response to any action taken or threatened to be taken by any court or Governmental Authority, Parent shall not be required to (i) take any action or agree to the imposition of any order or judgment that would compel Parent or the Company (or any of their respective subsidiaries) to sell, license or otherwise dispose of, hold separate or otherwise divest itself of any portion of its respective business, operations or assets in order to consummate the Offer, the Merger or any other transaction contemplated hereby or (ii) impose any material limitation(s) on Parent's ability to own or operate any of the businesses and operations of the Company and its Subsidiaries. (d) (i) Each of Parent and the Company shall give (or shall cause its respective subsidiaries to give) any notices to third parties, and use, and cause its respective subsidiaries to use, their reasonable best efforts to obtain any third-party consents or waivers, (A) necessary, proper or advisable to consummate the transactions contemplated in this Agreement, (B) disclosed or required to be disclosed in the Company Disclosure Schedule or (C) required to prevent a Company Material Adverse Effect from occurring prior to or after the Effective Time or a Parent Material Adverse Effect from occurring after the Effective Time; provided, however, that, without the prior written consent of Parent, the Company and its Subsidiaries shall not incur fees and expenses in excess of $100,000 in the aggregate in order to obtain, and/or in seeking to obtain, any such third-party consents or waivers. (ii) In the event that either Parent or the Company shall fail to obtain any third-party consent or waiver described in subsection (d)(i) above, it shall use its reasonable best efforts, and shall take any such actions reasonably requested by the other party, to minimize any adverse effect upon the Company and Parent, their respective subsidiaries, and their respective businesses resulting, or which could reasonably be expected to result after the Effective Time, from the failure to obtain such consent or waiver. (e) From the date of this Agreement until the Effective Time or the earlier termination of this Agreement pursuant to Article VIII hereof, each party shall promptly notify the other party in writing of any pending or threatened action, proceeding or investigation by any Governmental Authority or any other person known to it (i) challenging or seeking material damages in connection with the Offer, the Merger or any -32- other transaction contemplated hereby; or (ii) seeking to delay, restrain or prohibit the consummation of the Offer, the Merger or any other transaction contemplated hereby or otherwise limit the right of Parent or Parent's subsidiaries to own or operate all or any portion of the businesses or assets of the Company or its Subsidiaries, which in either case is reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect prior to or after the Effective Time, or a Parent Material Adverse Effect after the Effective Time. SECTION 6.04. Access to Information; Confidentiality. -------------------------------------- (a) From the date hereof to the earlier of the termination of this Agreement pursuant to Article VIII hereof and the Effective Time, upon reasonable notice and subject to restrictions contained in confidentiality agreements to which the Company is subject (from which the Company shall use its reasonable best efforts to be released), the Company will provide to Parent (and its representatives) full access to all information and documents which Parent may reasonably request regarding the financial condition, business, assets, liabilities, employees and other aspects of the Company, other than information and documents that in the opinion of the Company's counsel may not be disclosed under applicable Law. Parent shall keep such information confidential in accordance with the terms of the confidentiality agreement, dated June 11, 2002 (the "Confidentiality Agreement"), between Parent and Wachovia Securities. (b) No investigation pursuant to this Section 6.04 shall affect any representation or warranty or any condition to the obligations of the parties hereto contained in this Agreement. SECTION 6.05. No Solicitation of Competing Transactions. Neither the Company nor any Subsidiary shall, directly or indirectly, through any officer or director or any agent acting at the Company's authorization or direction, initiate, solicit or knowingly encourage (including by way of furnishing non-public information or assistance), or take any other action knowingly to facilitate, any inquiries about or the making of any proposal that the Company enter into any Competing Transaction (as defined below), or enter into, maintain or have discussions or negotiate with any person in furtherance of such inquiries or to obtain or seek to obtain a Competing Transaction, or agree to, recommend or endorse any Competing Transaction or withdraw or modify, or propose publicly to withdraw or modify, its recommendation set forth in Section 1.02(a) hereof, or authorize or permit any person to take any such action, and the Company shall notify Parent orally (within one (1) business day) and in writing (as promptly as practicable) after receipt by any officer or director of the Company or any Subsidiary or any investment banker, financial advisor, agent or attorney retained by the Company or any Subsidiary, of any inquiry concerning, or proposal for, a Competing Transaction, or of any request for non-public information relating to the Company or any of its Subsidiaries either in connection with such an inquiry or proposal or when such request for non-public information could reasonably be expected to lead to such a proposal; provided, however, that nothing contained in this Section 6.05 or any other provision hereof shall prohibit the Board of Directors of the Company from, (i) at any time prior to the acceptance for payment by Purchaser of the Shares, furnishing information to, or entering into discussions or negotiations with, any person that makes an unsolicited, bona -33- fide proposal for a Competing Transaction if, and only to the extent that, (A) the Board of Directors of the Company, after consultation with independent legal counsel (who may be the Company's regularly engaged independent legal counsel), determines in good faith that failure to take such action would constitute a breach of the fiduciary duties of such directors to the Company's stockholders under applicable Law, and, solely with respect to entering into such discussions or negotiations, the Board of Directors of the Company determines in good faith, based on the advice of its financial advisor, that such Competing Transaction is reasonably likely to be more favorable to the Company's stockholders, from a financial point of view, than the Offer and the Merger and (B) prior to furnishing such information to, or entering into discussions or negotiations with, such person, the Company (x) provides at least two (2) business days' prior written notice to Parent to the effect that it is furnishing information to, or entering into discussions or negotiations with, such person and provides in such notice, in reasonable detail, the identity of the person making such proposal and the terms and conditions of such proposal, (y) provides Parent with all information to be provided to such person which Parent has not previously been provided, and (z) receives from such person an executed confidentiality agreement in reasonably customary form and having terms no less favorable to the Company than those contained in the Confidentiality Agreement; (ii) complying with Rule 14e-2 (and any associated obligation under Rule 14D-9) promulgated under the Exchange Act with regard to a third-party tender or exchange offer; provided, however, that the Board of Directors of the Company shall not recommend acceptance of such tender or exchange offer unless, in the good faith judgment of the Board of Directors of the Company, after consultation with independent legal counsel who may be the Company's regularly engaged independent legal counsel, failure to recommend such acceptance would constitute a breach of its fiduciary duties to the Company's stockholders under applicable Law; (iii) referring any third party to this Section 6.05 or making a copy of this Section 6.05 available to any third party; or (iv) at any time prior to the acceptance for payment by Purchaser of the Shares, failing to make or withdrawing or modifying its recommendation referred to in Section 1.02(a) hereof following the making of an unsolicited, bona fide proposal relating to a Competing Transaction if the Board of Directors of the Company, after consultation with independent legal counsel (who may be the Company's regularly engaged independent legal counsel) determines in good faith that failure to take such action would constitute a breach of the fiduciary duties of such directors to the Company's stockholders under applicable Law and the Board of Directors of the Company determines in good faith, based on the advice of its financial advisor, that such Competing Transaction is reasonably likely to be more favorable to the Company's stockholders, from a financial point of view, than the Offer and the Merger. The Company agrees not to release any third party from, or waive any provision of, any confidentiality or standstill agreement to which the Company is a party. For purposes of this Agreement, the term "Competing Transaction" shall mean: (i) any merger, consolidation, liquidation, share exchange, business combination, recapitalization or other similar transaction involving the Company or any Subsidiary; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 15% or more of the assets or capital stock of the Company and the Subsidiaries, taken as a whole, in a single transaction or series of transactions; (iii) any tender offer or exchange offer for 15% or more of the Shares (other than by the Company or any affiliate thereof) or the filing of a registration statement under the Securities Act in connection therewith; (iv) any person having acquired beneficial ownership or the right to -34- acquire beneficial ownership of, or any "group" (as such term is defined under Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) having been formed which beneficially owns, or has the right to acquire beneficial ownership of, 15% or more of the Shares or any other class of capital stock of the Company; or (v) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. For a Competing Transaction to be more favorable to the Company's stockholders, it must be a bona fide proposal made by a third party to acquire, for consideration consisting solely of cash and/or equity securities, more than fifty (50%) percent of the voting power of the outstanding Shares or all, or substantially all, of the assets of the Company and for which financing, to the extent required, is then committed or which, in the good faith, reasonable judgment of the Board of Directors of the Company, is capable of being obtained by such third party. SECTION 6.06. Directors' and Officers' Insurance. ---------------------------------- (a) The Surviving Corporation shall use its reasonable best efforts to maintain in effect for six (6) years from the Effective Time, if available, either (i) directors' and officers' liability insurance covering only those persons who are currently covered by the Company's directors' and officers' liability insurance policy on terms comparable to those applicable to the then current directors and officers of Parent; or (ii) the current directors' and officers' liability insurance policies maintained by the Company with respect to matters occurring prior to the Effective Time; provided, however, that in no event shall the Surviving Corporation be required to expend pursuant to this Section 6.06(a) more than an amount per year equal to 200% of current annual premiums paid by the Company for such insurance coverage (i.e., the current annual premium paid by the Company is $240,000). (b) This Section 6.06 shall survive the consummation of the Merger, is intended to benefit the Surviving Corporation and the directors and officers of the Company in office at the Effective Time (the "Insured Parties"), shall be binding on all successors and assigns of the Surviving Corporation, and shall be enforceable by the Insured Parties. (c) The parties hereto hereby acknowledge that, as of the date hereof, the Company has entered into six-year indemnification agreements with each of the Company's current officers and directors. Subject to the following sentence, such indemnification agreements and the provisions of this Section 6.06 shall constitute the only legal and contractual provisions, at the Effective Time, providing indemnification or directors' and officers' liability insurance for any of the former or present officers, directors, employees or agents of the Company, except only as may otherwise be specifically required under the DGCL. Parent has guaranteed the obligations of the Company under such indemnification agreements, subject to the occurrence of, and following, the Effective Time and subject to the limitations contained therein. SECTION 6.07. Notification of Certain Matters. From and after the date of this Agreement until the Effective Time or the earlier termination of this Agreement pursuant to Article VIII hereof, each party hereto shall promptly notify the other party hereto of (a) the occurrence, or non-occurrence, of any event the occurrence, or non-occurrence, of which would be likely to cause: (i) any representation or warranty made in this Agreement by -35- such party, or any information furnished in the Company Disclosure Schedule by such party, as the case may be, to be inaccurate either at the time such representation or warranty was made, or such information is furnished, or at the time of the occurrence or non-occurrence of such event; or (ii) any failure by such party to comply with or satisfy any condition to the obligations of such party to effect the Offer, the Merger and the other transactions contemplated by this Agreement, or (b) the failure of the Company or Parent, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it pursuant to this Agreement which would be likely to result in any of the conditions to the obligations of any party to effect the Offer, the Merger and the other transactions contemplated by this Agreement not to be satisfied; provided, however, that the delivery of any notice pursuant to this Section 6.07 shall not be deemed to be an amendment of this Agreement or any schedule of the Company Disclosure Schedule and shall not cure any breach of any representation or warranty requiring disclosure of such matter on the date of this Agreement. No delivery of any notice pursuant to this Section 6.07 shall limit or affect the remedies available hereunder to the party receiving such notice. SECTION 6.08. Public Announcements. Parent and the Company shall consult with each other before issuing any press release or otherwise making any public statement with respect to this Agreement, the Offer, the Merger and the other transactions contemplated hereby and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by Law or any listing agreement with the New York Stock Exchange, the Nasdaq National Market or any other national securities exchange to which Parent or the Company may be a party. The parties have agreed on the text of a joint press release by which Parent and the Company will announce the execution of this Agreement. SECTION 6.09. Bonus Plan. With respect to the Company's Management Bonus and Profit Sharing Plan, the determination of whether the performance targets have been met thereunder for the Company's fiscal year ending December 31, 2003 shall be made based on the actual performance results as of the end of such fiscal year; provided, however, that the impact of the Company Transaction Expenses (as defined below) shall be disregarded for purposes of determining whether such targets have been met; and provided, further, that in determining whether such targets have been met, the corporate expenses actually incurred or accrued by the Company through the Effective Time shall be annualized in determining the costs and expenses for the full 2003 fiscal year, whether or not actual costs and expenses were higher or lower. As used herein, the term "Company Transaction Expenses" means all reasonable and documented costs, expenses and fees incurred by the Company (including, without limitation, all fees and expenses of counsel, financial advisors, accountants, attorneys and other experts and consultants to the Company and its affiliates, and all printing and advertising expenses) actually incurred or accrued by it since January 1, 2003 or on its behalf in connection with the Offer, the Merger or any other transaction contemplated hereby, and shall specifically include any severance, change of control or similar payments made by the Company to any of its officers and employees directly as a result of the transactions contemplated hereby. -36- SECTION 6.10. Stockholder Litigation. The Company shall use its reasonable best efforts to defend any stockholder litigations or claims against the Company and its directors (and/or officers) relating to the Offer, the Merger or any of the other transactions contemplated by this Agreement (including any derivative claims) and shall give Parent the opportunity to participate, at Parent's expense, in, and shall actively cooperate with Parent in, the defense or (subject to Section 5.01(m) hereof) settlement of any such litigations or claims. SECTION 6.11. Termination of 401(k) Plan and Executive Deferred Compensation Plan. The Company shall take all such actions required so that, prior to the Effective Time, each of the Company's 401(k) Profit Sharing Plan and the Signal Technology Executive Deferred Compensation Plan is terminated without any further material monetary liability or obligation thereunder. SECTION 6.12. Additional Company SEC Reports; Financial Statements. From and after the date of this Agreement until the Effective Time: (i) the Company shall timely file all forms, reports and documents required to be filed by it with the SEC; (ii) each of such forms shall be prepared in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder; (iii) each of such forms will not at the time it is filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading; and (iv) each of such forms will not at the time it is filed omit any documents required to be filed as exhibits thereto. Each of the consolidated financial statements (including, in each case, the notes thereto) contained in the SEC reports referred to in the previous sentence shall be prepared in accordance with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and each will fairly present the consolidated financial position, results of operations and cash flows of the Company and its Subsidiaries as at the respective dates thereof and for the respective periods indicated therein in accordance with U.S. generally accepted accounting principles (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which are not expected by the Company to be material in amount). SECTION 6.13. Rights Agreement. On or as soon as practicable following the date hereof (and prior to the commencement of the Offer), the Company shall amend the Rights Agreement, dated as of January 26, 1999, between the Company and Bank Boston, N.A., as Rights Agent (the "Rights Agreement"), (i) to render the Rights Agreement inapplicable to this Agreement, the Tender and Voting Agreements, the Offer, the Merger and the other transactions contemplated hereby and thereby and (ii) to ensure that (x) neither Parent nor Purchaser is an Acquiring Person (as defined in the Rights Agreement) pursuant to the Rights Agreement and (y) a Share Acquisition Date, Distribution Date or Triggering Event (in each case, as defined in the Rights Agreement) does not occur by reason of the execution of this Agreement or the Tender and Voting Agreements, or the commencement or consummation of the Offer, the Merger or the other transactions contemplated by this Agreement or the Tender and Voting Agreements. The Company may not further amend, or -37- invoke the provisions of, the Rights Agreement unless this Agreement shall have been terminated in accordance with the provisions of Section 8.01 hereof. SECTION 6.14. Limitation on Expenses. The Company shall not incur Actual Transaction Expenses in excess of the amount set forth on Schedule 3.19 of the Company Disclosure Schedule, without the prior written consent of Parent. ARTICLE VII CONDITIONS TO THE MERGER ------------------------ SECTION 7.01. Conditions to the Obligation of Each Party. The obligation of each of the Company, Parent and Purchaser to consummate the Merger is subject to the satisfaction of each of the following conditions: (a) if required by applicable Law, this Agreement and the Merger contemplated hereby shall have been approved and adopted by the requisite affirmative vote at a meeting or the written consent of the stockholders of the Company in accordance with the DGCL; (b) Purchaser shall have purchased Shares pursuant to the Offer; and (c) no order, stay, decree, judgment or injunction shall have been entered, issued or enforced by any Governmental Authority or court of competent jurisdiction and remain in effect that prohibits consummation of the Merger, and there shall not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Merger that makes the consummation of the Merger illegal or prohibits the Merger. ARTICLE VIII TERMINATION; AMENDMENT; AND WAIVER ---------------------------------- SECTION 8.01. Termination. This Agreement may be terminated and the Offer and the Merger may be abandoned at any time prior to the Effective Time, notwithstanding any requisite approval and adoption of this Agreement and the transactions contemplated hereby by the stockholders of the Company: (a) by mutual written consent duly authorized by the Boards of Directors of each of Parent, Purchaser and the Company; or (b) by either Parent, Purchaser or the Company if either (i) the Offer shall not have been consummated on or before June 30, 2003 (the "Termination Date"); provided, however, that the right to terminate this Agreement under this Section 8.01(b)(i) shall not be available to any party whose failure to fulfill any of its obligations under this Agreement has been the cause of, or resulted in, the failure of -38- the consummation of the Offer to occur on or before such Termination Date; provided, further, that, if a Request for Additional Information is received from a Governmental Authority pursuant to the HSR Act, such Termination Date shall be extended up to the 90th day following acknowledgment by such Governmental Authority that Parent and the Company have complied with such Request, but in any event not later than August 29, 2003; and, provided, further, that if there shall be instituted or pending, at any scheduled expiration date of the Offer, any suit, action or proceeding by any person (and not a Governmental Authority) that would give rise to the failure of a condition set forth in subsection (a) of Annex A hereto, the parties hereto shall reasonably and mutually seek to agree to any appropriate extension of the Termination Date; (ii) there shall be any Law that makes consummation of the Merger illegal or otherwise prohibited or if any court of competent jurisdiction or other Governmental Authority shall have issued an order, judgment, decree, ruling, injunction or taken any other action restraining, enjoining or otherwise prohibiting or materially altering the terms of the Offer or the Merger and such order, judgment, decree, ruling, injunction or other action shall have become final and nonappealable (any such order, judgment, decree, ruling, injunction or action shall be deemed final and nonappealable if Parent or Purchaser is exercising its right to terminate under this Section 8.01(b)(ii) and Parent or Purchaser has unsuccessfully appealed the same on at least one (1) occasion), except that no party may terminate pursuant to this Section 8.01(b)(ii) unless such party shall have complied with its obligations under Section 6.03(a) and (b) hereof, subject to the terms of Section 6.03(c) hereof, and Section 6.10 hereof, as applicable; or (iii) the Offer expires pursuant to its terms without the acceptance for payment of Shares thereunder; provided, however, that neither Parent, Purchaser nor the Company has the right to terminate this Agreement pursuant to this Section 8.01(b)(iii) if the failure of the acceptance for payment of Shares pursuant to the Offer to occur is attributable to the failure of such party to perform any of the covenants contained in this Agreement required to be performed by it at or prior to the acceptance for payment of Shares pursuant to the Offer; or (c) by Parent, if (i) the Company's Board of Directors shall have withdrawn, modified, or changed its approval or recommendation in respect of this Agreement, the Merger or the Offer in a manner adverse to the Merger or the Offer, or adverse to Parent or Purchaser, (ii) the Company's Board of Directors shall have recommended any Competing Transaction, (iii) the Company shall have violated or breached in any material respect any of its obligations under Section 6.05 hereof or (iv) the Board of Directors of the Company shall have resolved to take any of the foregoing actions; or (d) by the Company, at any time prior to the acceptance for payment of Shares pursuant to the Offer, if the Board of Directors of the Company, after its compliance with its obligations under Section 6.05 hereof, shall have recommended or resolved to recommend to the stockholders of the Company a proposal for a Competing Transaction under circumstances where a majority of such directors reasonably determines in good faith (i) after consultation with independent legal counsel, that failure to accept such proposal would constitute a breach of the -39- fiduciary duties of such directors to the Company's stockholders under applicable Law and (ii) based on the advice of its financial advisor, that such Competing Transaction is reasonably likely to be more favorable to the Company's stockholders, from a financial point of view, than the Offer and the Merger; provided, that any termination of this Agreement by the Company pursuant to this Section 8.01(d) shall not be effective unless and until (A) the Board of Directors of the Company has provided Parent with written notice that the Company intends to enter into a binding written agreement in respect of such Competing Transaction, (B) the Company shall have attached thereto the most current, written version of such Competing Transaction, (C) Parent does not make, within three (3) days after receipt of the Company's written notice, an offer that the Board of Directors of the Company (which shall be obligated to timely review in good faith any such revised or new offer) shall have determined in good faith (after consultation with its aforementioned outside legal and financial advisors) is at least as favorable to the stockholders of the Company as such Competing Transaction and (D) the Company has made payment of the full Termination Fee required by Section 8.03(a) hereof as a condition to its ability to terminate under this subsection (d); provided, further, that the parties hereto acknowledge and agree that, notwithstanding any other provision of this Agreement, a Competing Transaction may not be deemed to be more favorable to the Company's stockholders unless it is a bona fide proposal made by a third party to acquire, for consideration consisting solely of cash and/or equity securities, more than fifty (50%) percent of the voting power of the outstanding Shares or all, or substantially all, of the assets of the Company and for which financing, to the extent required, is then committed or which, in the good faith, reasonable judgment of the Board of Directors of the Company, is capable of being obtained by such third party; or (e) by the Company, at any time prior to the acceptance for payment of Shares pursuant to the Offer, in the event of a breach by Parent or Purchaser of any representation, warranty or material agreement contained herein, which breach is incapable of being cured or, with respect to a breach that is curable, has not been cured within twenty (20) business days after the giving of written notice thereof to Parent or Purchaser, as applicable, except in any case under this subsection (e) for such breaches which are not reasonably likely to affect adversely Parent's or Purchaser's ability to complete the Offer or the Merger subject to the terms and conditions of this Agreement; or (f) by Parent, at any time prior to the acceptance for payment of Shares pursuant to the Offer, in the event of a breach by the Company of any representation, warranty or material agreement contained herein such that such breach would give rise to the failure of a condition set forth in subsections (f) or (g) (after giving effect to the cure provisions contained therein) of Annex A hereto after the giving of written notice thereof to the Company; or (g) by the Company, if Parent or Purchaser shall have failed to commence the Offer in accordance with the first sentence of Section 1.01(a) hereof. -40- SECTION 8.02. Effects of Termination. Except as provided in Sections 6.04, 6.08 and 9.01 hereof, in the event of the termination of this Agreement pursuant to, and in accordance with, Section 8.01 hereof, this Agreement shall forthwith become void, there shall be no liability under this Agreement on the part of Parent, Purchaser or the Company or any of their respective officers or directors and all rights and obligations of any party hereto shall cease, subject to the sole and exclusive remedies of Parent and Purchaser set forth in Section 8.03 hereof; provided, that nothing herein shall relieve any party from liability for any willful breach hereof. The payment of the Termination Fee and Expenses under Section 8.03(a) hereof by the Company following a termination pursuant to Section 8.01(c) or 8.01(d) hereof shall constitute liquidated damages in consideration of the time and opportunity and related costs of Parent and Purchaser and, upon receipt of such Termination Fee and Expenses, Parent and Purchaser shall have no further recourse at law or in equity against the Company in respect of this Agreement or any breach hereof other than as provided in this Section 8.02. SECTION 8.03. Fees and Expenses. ----------------- (a) The Company shall pay Parent a cash fee of $4,500,000 (the "Termination Fee") plus Expenses (as hereinafter defined) upon the termination of this Agreement pursuant to Section 8.01(c) or 8.01(d) hereof. (b) As used herein, the term "Expenses" means all reasonable and documented out-of-pocket expenses (excluding any wages or salaries of any of Parent's or Purchaser's or any of their affiliates' employees and any transportation expenses associated with means of transportation owned by Parent or any of its affiliates) and fees incurred by Parent and/or Purchaser prior to the termination of this Agreement (including, without limitation, all fees and expenses of counsel, financial advisors, accountants, environmental and other experts and consultants to Parent, and its affiliates and all printing and advertising expenses) actually incurred or accrued by either of them or on their behalf in connection with the Offer, the Merger or any other transaction contemplated hereby; provided, however, that Expenses shall not exceed $500,000 (the "Cap"). (c) Any Termination Fee and Expenses required to be paid pursuant to this Section 8.03 shall be paid as promptly as practicable but not, subject to Section 8.01(d)(D) hereof, later than five (5) business days after the termination giving rise to the Termination Fee and shall be paid by wire transfer of immediately available funds to an account designated by Parent. (d) Except as otherwise provided in this Section 8.03, all costs and expenses incurred in connection with this Agreement and the Offer, the Merger or any other transaction contemplated hereby shall be paid by the party incurring such expenses, whether or not the Offer, the Merger or any other transaction contemplated hereby is consummated. (e) In the event that the Company shall fail to pay the Termination Fee and/or Expenses when due, the term "Expenses" shall be deemed to include, irrespective of the Cap, the costs and expenses actually incurred or accrued by Parent and its affiliates -41- (including, without limitation, fees and expenses of counsel) in connection with the collection of such Termination Fee and Expenses, and the Company shall pay interest on such unpaid Termination Fee and/or Expenses, commencing on the date that such Termination Fee and/or Expenses became due, at a rate equal to the rate of interest publicly announced by Fleet Bank, from time to time, in the City of Boston, at such Bank's Base Rate plus two (2%) percent; provided, however, that the costs of collection reimbursable under this subsection (e) shall not exceed $250,000. SECTION 8.04. Amendment. Subject to Section 1.03(c) hereof, this Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors at any time prior to the Effective Time; provided, however, that, after the approval and adoption of this Agreement and the transactions contemplated hereby by the stockholders of the Company, if required, no amendment may be made which would reduce the Per Share Amount or change the type of consideration into which each Share shall be converted upon consummation of the Merger. This Agreement may not be amended except by an instrument in writing signed by the parties hereto. SECTION 8.05. Waiver. Subject to Section 1.03(c) hereof, at any time prior to the Effective Time, any party hereto may, to the extent permitted by applicable Law, (a) extend the time for the performance of any obligation or other act of any other party hereto, (b) waive any inaccuracy in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any agreement or condition contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party or parties to be bound thereby. ARTICLE IX GENERAL PROVISIONS ------------------ SECTION 9.01. Non-Survival of Representations, Warranties and Agreements. The representations, warranties and agreements in this Agreement and any certificates delivered pursuant hereto by any persons shall terminate at the Effective Time or upon the termination of this Agreement pursuant to Section 8.01 hereof, as the case may be, except that the agreements set forth in Articles I and II and Section 6.06 hereof shall survive the Effective Time in accordance with their respective terms, and those agreements set forth in Sections 6.08, 8.02 and 8.03 hereof and in this Article IX shall survive the termination of this Agreement indefinitely. SECTION 9.02. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, facsimile, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a later notice given in accordance with this Section 9.02): -42- if to Parent or Purchaser: Corporate Secretary Crane Co. 100 First Stamford Place Stamford, CT 06902 Facsimile: (203) 363-7350 with a copy (which shall not constitute notice) to: Stephen R. Connoni, Esq. Janice C. Hartman, Esq. Kirkpatrick & Lockhart LLP Henry W. Oliver Building 535 Smithfield Street Pittsburgh, PA 15222 Facsimile: (412) 355-6501 if to the Company: George Lombard Signal Technology Corporation 222 Rosewood Drive Danvers, MA 01923 Facsimile: (978) 774-2939 with a copy (which shall not constitute notice) to: Roger D. Feldman, Esq. Fish & Richardson P.C. 225 Franklin Street Boston, MA 02110 Facsimile: (617) 542-8906 SECTION 9.03. Certain Definitions. For purposes of this Agreement, the term: (a) "affiliate" of a specified person means a person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person; (b) "associate" shall have the meaning ascribed thereto under Rule 405 promulgated under the Securities Act; (c) "beneficial owner", with respect to any shares of capital stock, means a person who shall be deemed to be the beneficial owner of such shares (i) which such person or any of its affiliates or associates beneficially owns, directly or -43- indirectly; (ii) which such person or any of its affiliates or associates has, directly or indirectly, (A) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of consideration rights, exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding; or (iii) which are beneficially owned, directly or indirectly, by any other persons with whom such person or any of its affiliates or associates or any person with whom such person or any of its affiliates or associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any such shares; (d) "business day" means any day on which the principal offices of the SEC in Washington, DC are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized to close in the City of Boston, Massachusetts; (e) "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise; (f) "Governmental Authority" means any United States (federal, state or local) or foreign government, or governmental, regulatory or administrative authority, agency, instrumentality or commission; (g) "knowledge of the Company" means the knowledge of any of the individuals listed under the heading "Senior Management" in the Company's 2002 Annual Report to Stockholders, after their making reasonable inquiries of appropriate persons within the Company; (h) "person" means a natural person, corporation, partnership, limited partnership, syndicate, person (including, without limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity; (i) "subsidiary" or "subsidiaries" of any person means any corporation, partnership, joint venture or other legal entity of which such person (either alone or through or together with any other subsidiary), owns, directly or indirectly, more than 50% of the stock or other equity interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity; and (j) "Tax" means any U.S. federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, -44- personal property, capital stock, intangibles, social security, unemployment, disability, payroll, license, employee, or other tax or levy, of any kind whatsoever, including any interest, penalties, or additions to tax in respect of the foregoing. SECTION 9.04. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under applicable Law, or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Merger and the other transactions contemplated hereby are not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the Offer, the Merger and the other transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. SECTION 9.05. Entire Agreement; Assignment. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be assigned by operation of law or otherwise, except that Parent and Purchaser may assign and/or delegate all or any of their rights and obligations hereunder to any affiliate of Parent so long as no such assignment or delegation shall relieve the assigning or delegating party of its obligations hereunder if such assignee or delegee does not perform such obligations. SECTION 9.06. Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than Section 6.06(a) hereof (which is intended to be for the benefit of the persons covered thereby and may be enforced by such persons). SECTION 9.07. Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity. SECTION 9.08. Governing Law; Exclusive Forum. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State. All actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any Delaware State or federal court sitting in the City of Wilmington. SECTION 9.09. Consent to Jurisdiction and Venue. --------------------------------- (a) EACH OF PARENT, THE COMPANY AND PURCHASER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS OF THE STATE OF DELAWARE AND TO THE -45- JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, FOR THE PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND EACH OF PARENT, THE COMPANY AND PURCHASER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT TO SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED EXCLUSIVELY IN ANY DELAWARE STATE OR FEDERAL COURT SITTING IN THE CITY OF WILMINGTON. EACH OF PARENT, THE COMPANY AND PURCHASER HEREBY IRREVOCABLY WAIVES ANY OBJECTION THAT SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN SUCH ACTION OR PROCEEDING IN SUCH FORUM AND ANY OBJECTION TO SUCH FORUM ON THE BASIS OF IT BEING AN INCONVENIENT FORUM. EACH OF PARENT, THE COMPANY AND PURCHASER AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. (b) EACH OF PARENT, THE COMPANY AND PURCHASER IRREVOCABLY CONSENTS TO ANY SERVICE OF A SUMMONS AND COMPLAINT AND ANY OTHER PROCESS IN ANY OTHER ACTION OR PROCEEDING RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, ON BEHALF OF ITSELF OR ITS PROPERTY, BY THE PERSONAL DELIVERY OF COPIES OF SUCH PROCESS TO SUCH PARTY. NOTHING IN THIS SECTION 9.09 SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. SECTION 9.10. Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 9.11. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -46- IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this Agreement to be executed as of the date first written above by their respective executive officers thereunto duly authorized. CRANE CO. Attest: /s/ Augustus I. duPont By: /s/ Eric C. Fast - ---------------------- ----------------------------------- Title: Secretary Name: Eric C. Fast Title: President and Chief Executive Officer STC MERGER CO. Attest: /s/ Augustus I. duPont By: /s/ Eric C. Fast - ---------------------- ----------------------------------- Title: Secretary Name: Eric C. Fast Title: President and Chief Executive Officer SIGNAL TECHNOLOGY CORPORATION Attest: /s/ Roger D. Feldman By: /s/ George Lombard - ---------------------- ----------------------------------- Title: Secretary George Lombard Title: Chairman and Chief Executive Officer -47- ANNEX A to Agreement and Plan of Merger Conditions to the Offer ----------------------- Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange Act, pay for any Shares tendered pursuant to the Offer if (i) there shall not have been validly tendered and not withdrawn prior to the expiration of the Offer that number of Shares which, when added to Shares, if any, previously acquired by Purchaser or Parent or any of their respective affiliates, represents a majority of the then total issued and outstanding Shares (assuming, for this purpose, the exercise of all options to purchase Shares which are then or which will be within six (6) months thereafter vested and exercisable) (the "Minimum Condition"), (ii) any applicable waiting period (and any extension(s) thereof) under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer or (iii) at any time on or after the date of the Merger Agreement and prior to any acceptance for payment or payment for any Shares pursuant to the Offer, any one or more of the following events shall have occurred: (a) there shall be instituted or be pending by any person or Governmental Authority any suit, action or proceeding, that is reasonably likely to prevail, (i) challenging or seeking to restrain or prohibit the making or consummation of the Offer or the Merger or to substantially deprive Parent of any of its anticipated benefits of the Merger, (ii) seeking to prohibit or materially limit the ownership or operation by the Company, Parent or any of their respective subsidiaries of a material portion of the business, operations or assets of the Company or Parent and/or its subsidiaries or to compel the Company or Parent to dispose of or hold separate any material portion of the business or assets of the Company or Parent and/or its subsidiaries as a result of the Offer or the Merger, or (iii) seeking to impose material limitations on the ability of Parent or Purchaser to acquire or exercise full rights of ownership of Shares, including, without limitation, the right to vote such Shares on all matters properly presented to the stockholders of the Company; (b) any statute, rule, regulation, judgment, order or injunction shall be enacted, entered, enforced, promulgated or deemed applicable to the Offer and/or the Merger, or any other action shall be taken by any Governmental Authority or court, other than the application to the Offer or the Merger of applicable waiting periods under the HSR Act, that is reasonably likely to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (iii) of subsection (a) above; (c) there shall have occurred a Company Material Adverse Effect; A-1 (d) (i) the Company's Board of Directors shall have withdrawn, modified, or changed its approval or recommendation in respect of the Merger Agreement, the Merger or the Offer in a manner adverse to the Merger or the Offer, or adverse to Parent or Purchaser, (ii) the Company's Board of Directors shall have recommended any Competing Transaction, (iii) the Company shall have violated or breached in any material respect any of its obligations under Section 6.05 of the Merger Agreement, or (iv) the Board of Directors of the Company shall have resolved to take any of the foregoing actions; (e) the Company, Purchaser and Parent shall have agreed in writing to terminate the Offer, or the Merger Agreement shall have been terminated in accordance with its terms; (f) any of the representations and warranties of the Company set forth in the Merger Agreement shall not be true and correct (without regard to any materiality qualifications or references to Company Material Adverse Effect contained in any specific representation or warranty) as if such representations and warranties were made at the time of any such determination, except to the extent such representations and warranties expressly relate to an earlier date (in which case as of such date); provided, that the condition contained in this subsection (f) shall be deemed not to have been triggered so long as the failure of all such representations and warranties so to be true and correct would not have a Company Material Adverse Effect or prevent or materially delay the consummation of the Offer; (g) the Company shall have failed to perform in any material respect any of its obligations required to be performed by it under the Merger Agreement at or prior to consummation of the Offer, which failure to perform is incapable of being cured or, with respect to a failure that is curable, has not been cured within twenty (20) business days after the giving of written notice thereof by Parent to the Company; provided, that any material breach of Section 6.05 of the Merger Agreement shall be covered by subsection (d) above and not this subsection (g); provided, further, that with respect to any breach by the Company of the provisions of Section 2.04(a) (other than the first sentence thereof, which has no cure period) of the Merger Agreement, the Company shall be afforded up to thirty (30) business days to cure such breach; or (h) there shall have occurred, and continued to exist, (x) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (y) a commencement of a war, armed hostilities or other national or international calamity involving the United States or, in the case of any of the foregoing occurrences existing on or at the time of the commencement of the Offer, a material worsening or acceleration thereof, or (z) a material limitation (whether or not mandatory) by any A-2 Governmental Authority on the extension of credit by banks or other lending institutions, which in the case of clauses (x), (y) or (z) prevents Parent from borrowing money pursuant to its credit facilities in effect on the date hereof. The foregoing conditions (including those set forth in clauses (i) and (ii) of the initial paragraph hereof) are for the sole benefit of Parent and Purchaser and may be asserted by Parent or Purchaser regardless of the circumstances giving rise to any such conditions and may be waived by Parent or Purchaser, by express and specific action to that effect, in whole or in part, at any time and from time to time in their sole discretion, in each case, subject to any applicable provisions of the Merger Agreement. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right, which may be asserted at any time and from time to time. Capitalized terms used herein but not defined herein shall have the meanings given them in the Merger Agreement, except that the term "Merger Agreement" shall be deemed to refer to the Agreement to which this Annex A is attached. A-3 EX-99.3 5 file004.txt FORM OF STOCKHOLDER TENDER AND VOTING AGREEMENT STOCKHOLDER TENDER AND VOTING AGREEMENT, dated as of April 16, 2003 (this "Agreement"), among Crane Co., a Delaware corporation ("Parent"), STC Merger Co., a Delaware corporation and an indirect wholly owned subsidiary of Parent ("Purchaser"), and the stockholder of Signal Technology Corporation, a Delaware corporation (the "Company"), set forth on the signature page of this Agreement ("Stockholder"). WHEREAS, in order to induce Parent and Purchaser to enter into the Agreement and Plan of Merger dated as of the date hereof with the Company (the "Merger Agreement"), Parent and Purchaser have requested Stockholder, and Stockholder has agreed, to enter into this Agreement; WHEREAS, Stockholder, Parent and Purchaser desire to make certain representations, warranties, covenants and agreements in connection with this Agreement; and WHEREAS, capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement. NOW, THEREFORE, for valuable consideration and in consideration of the foregoing and the mutual covenants and agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, Parent, Purchaser and Stockholder hereby agree as follows: ARTICLE I TENDER OR SALE OF SHARES; VOTING -------------------------------- SECTION 1.01 Tender or Sale of Shares. Promptly following the commencement of the Offer, Stockholder shall tender (or cause the relevant record holder(s) to tender) in the Offer, and, to the extent not inconsistent with applicable Law, not withdraw or cause to be withdrawn (except following termination of the Offer in accordance with its terms), any and all Shares currently beneficially owned (as defined in Rule 13d-3 under the Exchange Act, which meaning will apply for all purposes of this Agreement) and/or owned of record by Stockholder and any additional Shares with respect to which Stockholder becomes the beneficial and/or record owner after the date of this Agreement (collectively, the "Subject Shares"); provided, however, that Stockholder shall not be required for purposes of this Agreement to exercise any unexercised Company Options held by Stockholder and shall have no obligation under this Section 1.01 to tender Stockholder's Subject Shares into the Offer if that tender would cause Stockholder to incur liability under Section 16(b) of the Exchange Act. If the waiver of such right of withdrawal set forth in the preceding sentence is, or is alleged to be, unenforceable and Stockholder withdraws, or attempts to withdraw, the Subject Shares, then at the time of acceptance for payment of Shares pursuant to the Offer, Stockholder shall sell to Purchaser, and Purchaser shall purchase from Stockholder, the Subject Shares for a price per Subject Share equal to the Per Share Amount. Stockholder shall take all actions necessary to cause the conversion of Company Options owned by Stockholder as and when contemplated by Section 2.04(a) of the Merger Agreement. SECTION 1.02 Voting. Stockholder agrees that from the date of this Agreement until the Expiration Date (as hereinafter defined), at any meeting of the stockholders of the Company, however called, or in any written consent in lieu thereof, Stockholder shall, or shall cause the record holder(s) of the Subject Shares, to, subject to Section 1.03 hereof, be present at the applicable meeting(s) of stockholders and to vote the Subject Shares (i) in favor of the Merger, the Merger Agreement and otherwise in favor of the transactions contemplated by the Merger Agreement as such Merger Agreement may be modified or amended from time to time and (ii) against any action or agreement that would impede, interfere with, delay, postpone, discourage or adversely affect the Merger or the Offer, including, but not limited to, any agreement or arrangement related to a Competing Transaction. SECTION 1.03 Proxy. Stockholder hereby grants to Purchaser, and to each officer of Parent, a proxy to vote the Subject Shares as indicated in Section 1.02 hereof. Stockholder intends this proxy to be, and this proxy is, irrevocable and coupled with an interest, and Stockholder will immediately take such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy and hereby revokes any proxy previously granted by Stockholder with respect to the Subject Shares. Notwithstanding any provision contained in such proxy, such proxy shall terminate upon the Expiration Date. ARTICLE II REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER --------------------------------------------- Stockholder represents and warrants to Parent and Purchaser as follows: SECTION 2.01 Valid Title. Stockholder is the record or beneficial owner of the Subject Shares set forth on the signature page hereto with no encumbrances against, and no restrictions on rights of disposition pertaining thereto, except for any applicable restrictions on transfer under the Securities Act. SECTION 2.02 Authority; Non-Contravention. Stockholder has the requisite power and authority or legal capacity to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by Stockholder and the consummation by Stockholder of the transactions contemplated by this Agreement have been duly authorized by all necessary action (including any consultation, approval or other action by or with any other person) on the part of Stockholder. This Agreement has been duly executed and delivered by Stockholder and (assuming the due authorization, execution and delivery by Parent and Purchaser of this Agreement) constitutes a valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject, as to enforcement, to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and similar laws relating to creditors' rights and to general principles of equity. The execution and delivery of this Agreement by Stockholder does not, and the consummation of the transactions contemplated by this Agreement and compliance with the -2- provisions of this Agreement by Stockholder will not, require consent under, conflict with or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under, or result in the creation of any lien upon any of Stockholder's properties or assets under, any provision of applicable Law or of any agreement, judgment, injunction, order, decree or other instrument binding on Stockholder. No consent, approval, order or authorization of, or registration, declaration or filing with or exemption by any Governmental Authority is required by or with respect to Stockholder in connection with Stockholder's execution and delivery of this Agreement or the consummation by Stockholder of the transactions contemplated by this Agreement, except for applicable requirements, if any, under the Exchange Act and the rules and regulations thereunder and state securities or "blue sky" laws. SECTION 2.03 Total Shares. As of the date hereof, the number of Shares set forth on the signature page hereto are the only Shares beneficially owned and/or owned of record by Stockholder on the date of this Agreement. Other than the Subject Shares and Company Options, if any, set forth on the signature page hereto, Stockholder does not own of record or beneficially any securities of or options to purchase or rights to subscribe for or otherwise acquire any securities of the Company and has no other interest in or voting rights with respect to any securities of the Company. SECTION 2.04 Finder's Fees. No investment banker, broker or finder is entitled to a commission or fee from Parent, Purchaser, the Company or any of their respective affiliates in respect of this Agreement based upon any arrangement or agreement made by or on behalf of Stockholder. SECTION 2.05 No Other Proxy. None of the Subject Shares are subject to any voting agreement or trust or proxy on the date of this Agreement, except pursuant to this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF --------------------------------- PARENT AND PURCHASER -------------------- Parent and Purchaser represent and warrant to Stockholder as follows: SECTION 3.01 Corporate Power and Authority. Parent and Purchaser each have all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of each of Parent and Purchaser. This Agreement has been duly executed and delivered by each of Parent and Purchaser and constitutes a valid and binding obligation of each of Parent and Purchaser, respectively, enforceable against each of them in accordance with its terms, subject, as to enforcement, to applicable bankruptcy, -3- insolvency, reorganization, fraudulent conveyance and similar laws relating to creditors' rights and to general principles of equity. SECTION 3.02 Non-Contravention. The execution and delivery of this Agreement by Parent and Purchaser does not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement by them will not, require consent under, conflict with or result in any violation of, or default (with or without notice of lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under any of either of their organizational documents, any provision of applicable Law or of any agreement, judgment, injunction, order, decree or other instrument binding upon either of them. No consent, approval, order or authorization of, or registration, declaration or filing with or exemption by any Governmental Authority is required by or with respect to Parent or Purchaser in connection with their respective execution and delivery of this Agreement or the consummation by either of them of the transactions contemplated by this Agreement, except for applicable requirements, if any, under the Exchange Act and the rules and regulations thereunder and state securities or "blue sky" laws. ARTICLE IV COVENANTS OF STOCKHOLDER ------------------------ SECTION 4.01 Covenants of Stockholder. Stockholder covenants and agrees with and for the benefit of Parent and Purchaser as follows: (a) Except as expressly contemplated by the terms of this Agreement, Stockholder shall not: (i) until the Expiration Date, sell, transfer, pledge, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, pledge, assignment or other disposition of, the Subject Shares to any person, other than Purchaser or Purchaser's designee. Any attempted transfer or other disposition in violation of this Section 4.01(a)(i) shall be null and void; (ii) until the Expiration Date, enter into, or otherwise subject the Subject Shares to, any voting arrangement, whether by proxy, voting agreement, voting trust, power-of-attorney or otherwise, with respect to the Subject Shares; or (iii) until the Expiration Date, take any other action that would in any way restrict, limit or interfere with the performance of Stockholder's obligations hereunder or the transactions contemplated to be performed by Stockholder hereunder. (b) Stockholder hereby irrevocably and unconditionally waives, and agrees not to exercise, and to prevent the exercise of, any rights of appraisal or rights to dissent in connection with the Merger that Stockholder may have with respect to the Subject Shares. Stockholder -4- agrees not to take or commence any action or proceeding challenging in any respect this Agreement, the Merger, the Offer or any of the transactions contemplated hereby or thereby. (c) Until the Expiration Date, Stockholder shall not, and shall cause its agents and representatives not to, directly or indirectly, take any actions prohibited by Section 6.05 of the Merger Agreement; provided, however, that nothing herein shall prevent Stockholder or any of Stockholder's agents or representatives from acting in its capacity as a director or officer of the Company, or taking any action in such capacity (including at the direction of the Company's Board of Directors) as and to the extent permitted by the Merger Agreement. SECTION 4.02 Further Assurances. Stockholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional or further transfers, assignments, endorsements, consents, forms of proxy and other instruments as may be necessary for the purpose of effectively carrying out the transactions contemplated by this Agreement and to vest the power to vote the Subject Shares as contemplated by Section 1.03 hereof. Additionally, Stockholder shall make any filings with Governmental Authorities required in connection with the transactions contemplated by this Agreement, including any amendments to any Schedule 13-D or 13-G filed under the Exchange Act. Parent and Purchaser agree to take, or cause to be taken, all actions necessary to comply promptly with all legal requirements that may be imposed with respect to the transactions contemplated by this Agreement. ARTICLE V MISCELLANEOUS ------------- SECTION 5.01 Representations. The representations and warranties made in this Agreement are made as of the date hereof and shall (i) survive the termination of this Agreement for a period of one year in the event that this Agreement is terminated pursuant to clause (y) or clause (z) of the definition of "Expiration Date" set forth in Section 5.15 hereof or (ii) terminate at the Effective Time. SECTION 5.02 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, facsimile, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 5.02): if to Parent or Purchaser: Corporate Secretary Crane Co. 100 First Stamford Place Stamford, CT 06902 Facsimile: (203) 363-7350 -5- with a copy (which shall not constitute notice) to: Stephen R. Connoni, Esq. Janice C. Hartman, Esq. Kirkpatrick & Lockhart LLP Henry W. Oliver Building 535 Smithfield Street Pittsburgh, PA 15222 Facsimile: (412) 355-6501 if to Stockholder: [ ] with a copy (which shall not constitute notice) to: Roger D. Feldman, Esq. Fish & Richardson P.C. 225 Franklin Street Boston, MA 02110 Facsimile: (617) 542-8906 SECTION 5.03 Expenses. All costs and expenses incurred by any party in connection with this Agreement shall be paid by the party incurring such cost or expense. SECTION 5.04 Stop Transfer Restriction. In furtherance of this Agreement, Stockholder shall and hereby does authorize Purchaser's counsel to notify the Company's transfer agent that there is a stop transfer restriction with respect to all of the Subject Shares (and that this Agreement places limits on the voting and transfer of such shares). SECTION 5.05 Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 5.06 Validity. The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provisions hereof, which will remain in full force and effect. Upon any determination by a court of competent jurisdiction that any term or other provision is invalid or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated by this Agreement may be consummated as originally contemplated to the fullest extent possible. -6- SECTION 5.07 Amendments. This Agreement may not be amended except by an instrument in writing signed by the parties hereto. SECTION 5.08 Assignment. This Agreement shall not be assigned by operation of law or otherwise, except that Parent and Purchaser may assign all or any of their rights and obligations hereunder to any affiliate of Parent provided that no such assignment shall relieve the assigning party of its obligations hereunder if such assignee does not perform such obligations. SECTION 5.9 Specific Performance. The parties hereto agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the parties will be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. SECTION 5.10 Governing Law. This Agreement shall be governed by, and construed in accordance with the laws of the State of Delaware applicable to contracts executed in and to be performed in that State. All actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any state or federal court sitting in the City of Wilmington. SECTION 5.11 Consent to Jurisdiction. ----------------------- (a) EACH OF PARENT, PURCHASER AND STOCKHOLDER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE COURTS OF THE STATE OF DELAWARE AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, FOR THE PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND EACH OF PARENT, PURCHASER AND STOCKHOLDER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT TO SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY DELAWARE STATE OR FEDERAL COURT SITTING IN THE CITY OF WILMINGTON. EACH OF PARENT, PURCHASER AND STOCKHOLDER HEREBY IRREVOCABLY WAIVES ANY OBJECTION THAT SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN SUCH ACTION OR PROCEEDING IN SUCH FORUM. EACH OF PARENT, PURCHASER AND STOCKHOLDER AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. (b) EACH OF PARENT, PURCHASER AND STOCKHOLDER IRREVOCABLY CONSENTS TO THE SERVICE OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS IN ANY OTHER ACTION OR PROCEEDING RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, ON BEHALF OF ITSELF OR ITS PROPERTY, BY THE PERSONAL DELIVERY OF COPIES OF SUCH PROCESS -7- TO SUCH PARTY. NOTHING IN THIS SECTION 5.11 SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. SECTION 5.12 Interpretation. When a reference is made in this Agreement to a Section, such reference will be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they will be deemed to be followed by the words "without limitation". References to the "Company" include the Subsidiaries of the Company unless the context clearly requires otherwise. The phrases "the date of this Agreement", "the date hereof" and terms of similar import, unless the context otherwise requires, will be deemed to refer to April 16, 2003. As used in this Agreement, the term "affiliate" shall have the meaning set forth in Rule 12b-2 of the Exchange Act; provided, that in no event will Parent or Purchaser, on the one hand, or Stockholder, on the other, be considered an affiliate of the other such party(ies). SECTION 5.13 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 5.14 Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 5.15 Termination. This Agreement shall automatically terminate on the Expiration Date. The term "Expiration Date" means the earliest of (x) the Effective Time, (y) the date, if any, on which the parties hereto shall, by mutual written consent, agree to terminate this Agreement or (z) the due termination of the Merger Agreement in accordance with its express terms. SECTION 5.16 Fiduciary Duties. Notwithstanding anything in this Agreement to the contrary: (a) Stockholder makes no agreement or understanding herein in any capacity other than in Stockholder's capacity as a record holder and beneficial owner of the Subject Shares; (b) nothing in this Agreement shall be construed to limit or affect any action or inaction by Stockholder or any agent or representative of Stockholder, in either case serving on the Company's board of directors solely acting in such person's capacity as a director or fiduciary of the Company; and (c) Stockholder shall have no liability to Parent, Purchaser or any of their respective affiliates under this Agreement or otherwise as a result of any action or inaction by Stockholder, or any agent or representative, as applicable, of Stockholder, in either case serving on the Company's board of directors solely acting in such person's capacity as a director or fiduciary of the Company. [Remainder of page intentionally left blank.] -8- IN WITNESS WHEREOF, Parent, Purchaser and Stockholder have caused this Agreement to be executed as of the date first written above. CRANE CO. By: ---------------------------- Name: -------------------------- Title: ------------------------- STC MERGER CO. By: ---------------------------- Name: -------------------------- Title: ------------------------- ------------------------------- Stockholder's Signature Printed Name: ------------------ Shares Owned: Company Options Owned: -9- EX-99.4 6 file005.txt JOINT FILING AGREEMENT DATED APRIL 25, 2003 JOINT FILING AGREEMENT In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the common stock, $0.01 par value per share, of Signal Technology Corporation and further agree that this Joint Filing Agreement be included as an Exhibit to such joint filings. IN WITNESS WHEREOF, the undersigned, being duly authorized have executed this Joint Filing Agreement this 25 day of April, 2003. CRANE CO. /s/ Augustus I. duPont ------------------------------------------- Name: Augustus I. duPont Title: Vice President STC MERGER CO. /s/ Augustus I. duPont ------------------------------------------- Name: Augustus I. duPont Title: Vice President EX-99.5 7 file006.txt MULTICURRENCY CREDIT AGREEMENT EXECUTION COPY MULTICURRENCY CREDIT AGREEMENT dated as of November 18, 1998 among CRANE CO., THE BORROWING SUBSIDIARIES, THE LENDERS, THE BANK OF NEW YORK, as Syndication Agent, FLEET NATIONAL BANK, as Documentation Agent, THE CHASE MANHATTAN BANK and FIRST UNION NATIONAL BANK, as Co-Agents and THE FIRST NATIONAL BANK OF CHICAGO, as Administrative Agent MULTICURRENCY CREDIT AGREEMENT This Multicurrency Credit Agreement (this "AGREEMENT"), dated as of November 18, 1998, is among Crane Co., a Delaware corporation, (the "Company"), any Borrowing Subsidiaries which are now or may hereafter become a party hereto from time to time, the Lenders, The Bank of New York, as Syndication Agent, Fleet National Bank, as Documentation Agent, The Chase Manhattan Bank and First Union National Bank, as Co-Agents and The First National Bank of Chicago, as Administrative Agent. The parties hereto agree as follows: ARTICLE I: DEFINITIONS 1.1. DEFINITIONS. As used in this Agreement: "ABSOLUTE RATE" means, with respect to an Absolute Rate Loan made by a Lender for the relevant Absolute Rate Interest Period, the rate of interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender and accepted by a Borrower pursuant to Section 2.1.3(vi). "ABSOLUTE RATE ADVANCE" means a borrowing hereunder consisting of the aggregate amount of the several Absolute Rate Loans made by some or all of the Lenders to the same Borrower at the same time, in the same currency and for the same Absolute Rate Interest Period. "ABSOLUTE RATE AUCTION" means a solicitation of Competitive Bid Quotes setting forth Absolute Rates pursuant to Section 2.1.3. "ABSOLUTE RATE INTEREST PERIOD" means, with respect to an Absolute Rate Advance or Absolute Rate Loan, a period of not fewer than 30 and not more than 270 days commencing on a Business Day selected by the applicable Borrower pursuant to this Agreement, but in no event extending beyond the Termination Date. If an Absolute Rate Interest Period would end on a day which is not a Business Day, such Absolute Rate Interest Period shall end on the next succeeding Business Day. "ABSOLUTE RATE LOAN" means a Loan which bears interest at the Absolute Rate. "ACQUISITION" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Company or any of its Subsidiaries (a) acquires any going business or all or substantially all of the assets of any firm, corporation, limited liability company or division thereof, whether through purchase of assets, merger or otherwise or (b) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the Capital Stock of a corporation, partnership, or limited liability company which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency). 2 "ADMINISTRATIVE AGENT" means The First National Bank of Chicago in its capacity as contractual representative for the Lenders pursuant to Article XI, and not in its individual capacity as a Lender, and any successor Administrative Agent appointed pursuant to Article XI. "ADVANCE" means a Revolving Advance, and Alternate Currency Advance or a Competitive Bid Advance. "AFFILIATE" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of Capital Stock, by contract or otherwise. "AGGREGATE COMMITMENT" means the aggregate of the Commitments of all the Lenders, as may be reduced from time to time pursuant to the terms hereof. The initial Aggregate Commitment is Three Hundred Million and 00/100 Dollars ($300,000,000). "AGREED CURRENCY" shall mean (i) Dollars, (ii) only so long as such currencies remain Eligible Currencies, Australian Dollars, Canadian Dollars, Deutsche Marks, French Francs and Sterling, (iii) upon and after the Euro Implementation Date, the Euro only for so long as the Euro is and remains an Eligible Currency, and (iv) and any other currency which is freely available and convertible into Dollars in which deposits are customarily offered to banks in the London interbank market, which the applicable Borrower requests the Administrative Agent to include as an Agreed Currency hereunder and which is acceptable to each Lender; provided that the Administrative Agent shall promptly notify each Lender of each such request and each Lender shall be deemed to have agreed to each such request if its objection thereto has not been received by the Administrative Agent within ten (10) Business Days from the date of such notification by the Administrative Agent to such Lender. "AGREEMENT" means this Multicurrency Credit Agreement, as it may be amended, modified, supplemented or restated and in effect from time to time. "ALTERNATE BASE RATE" means the sum of (a) the greater of (x) the Corporate Base Rate or (y) the Federal Funds Effective Rate plus 0.50% per annum plus (b) the percentage indicated as the Applicable Margin in connection with Alternate Base Rate Loans. "ALTERNATE BASE RATE ADVANCE" means an Advance which bears interest at the Alternate Base Rate. "ALTERNATE BASE RATE LOAN" means a Loan which bears interest at the Alternate Base Rate. "ALTERNATE CURRENCY" shall mean (i) only so long as such currencies remain Eligible Currencies, Australian Dollars, Canadian Dollars, Deutsche Marks and Sterling and (ii) any other Eligible Currency, which the applicable Borrower requests the Administrative Agent to include 3 as an Alternate Currency hereunder and which is acceptable to one hundred percent (100%) of the applicable Alternate Currency Banks and with respect to which an Alternate Currency Addendum has been executed among one of the Borrowers, the Alternate Currency Banks and an Alternate Currency Agent in connection therewith. "ALTERNATE CURRENCY ADDENDUM" means an addendum substantially in the form of Exhibit A, completed with the applicable information and entered into among one of the Borrowers eligible to borrow with respect to the applicable Alternate Currency, the Alternate Currency Banks and an Alternate Currency Agent. "ALTERNATE CURRENCY ADVANCE" means a borrowing hereunder (or conversion or continuation thereof) consisting of the aggregate amount of the several Alternate Currency Loans made by the Alternate Currency Banks to one or more of the Borrowers pursuant to Section 2.1.2 of the same Type, denominated in the same currency, to the same Borrower and for the same Interest Period. "ALTERNATE CURRENCY AGENT" means one or more entities (which may be the Administrative Agent or its local affiliates), satisfactory to the Administrative Agent, as specified in the applicable Alternate Currency Addendum. "ALTERNATE CURRENCY BANK" means each Lender or, at the option of such Lender, any Affiliate, branch or agency thereof and which is a party to an Alternate Currency Addendum. If any agency or Affiliate of a Lender shall be a party to an Alternate Currency Addendum, such agency or Affiliate shall, to the extent of any commitment extended and any Loans made by it, have all the rights of such Lender hereunder; provided, however, that such Lender shall, to the exclusion of such agency or Affiliate, continue to have all the voting rights vested in it by the terms hereof. "ALTERNATE CURRENCY BORROWING" means any borrowing consisting of a Loan made in an Alternate Currency. "ALTERNATE CURRENCY COMMITMENT" means, for each Lender (or where applicable its designated Alternate Currency Banks) for all Alternate Currencies, the obligation of such Lender (directly or through such designated Alternate Currency Banks) to make Alternate Currency Loans not exceeding in the aggregate for all such Alternate Currency Loans such Lender's Percentage of the Maximum Alternate Currency Amount, as such amount may be modified from time to time pursuant to the terms of this Agreement. "ALTERNATE CURRENCY INTEREST PERIOD" means, with respect to any Alternate Currency Advance, the Interest Period as set forth on the applicable Alternate Currency Addendum. "ALTERNATE CURRENCY LOAN" means any Loan denominated in an Alternate Currency made by the applicable Alternate Currency Banks for such Alternate Currency to a Borrower pursuant to Section 2.1.2 and an Alternate Currency Addendum. 4 "ALTERNATE CURRENCY NOTE" means a promissory note of any Borrower, in favor of the applicable Alternate Currency Banks evidencing the obligation of such Borrower to repay Alternate Currency Loans, as amended or modified from time to time and together with any promissory note or notes issued in exchange or replacement therefor. "APPLICABLE MARGIN" means, at any date of determination thereof with respect to any Advance (other than Competitive Bid Advances), the facility fees and utilization fees payable pursuant to Section 2.4, the respective rates per annum for such Advance, facility fees, and utilization fees calculated in accordance with the terms of Section 2.3, or, in the case of any Alternate Currency Advance, as set forth on the applicable Alternate Currency Addendum. "APPROXIMATE EQUIVALENT AMOUNT" of any currency with respect to any amount of Dollars shall mean the Equivalent Amount of such currency with respect to such amount of Dollars at such date (i) if such currency is Australian Dollars, Canadian Dollars, Deutsche Marks, French Francs or Sterling, rounded up to the nearest 100,000 of such currency and (ii) if such currency is any other Agreed Currency, rounded up to the nearest amount of such currency as determined by the Administrative Agent from time to time. "ARRANGER" means First Chicago Capital Markets, Inc. "ARTICLE" means an article of this Agreement unless another document is specifically referenced. "ASSUMPTION LETTER" means a letter of a Subsidiary of the Company addressed to the Lenders in substantially the form of Exhibit B hereto pursuant to which such Subsidiary agrees to become a "BORROWING SUBSIDIARY" and agrees to be bound by the terms and conditions hereof. "AUSTRALIAN DOLLARS" means the lawful currency of Australia. "AVAILABLE AMOUNT" means, at any particular time, the amount by which the Aggregate Commitment (taking into account each Competitive Bid Reduction) at such time exceeds the sum of the Syndicated Credit Obligations at such time. "BENEFIT ARRANGEMENT" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by the Company or any ERISA Affiliate. "BENEFIT PLAN" means a defined benefit plan as defined in Section 3(35) of ERISA (other than a Multiemployer Plan) subject to Title IV of ERISA in respect of which the Company or any ERISA Affiliate is an "employer" as defined in Section 3(5) of ERISA or with respect to which the Company or any ERISA Affiliate has any potential liability. "BORROWER" means, as applicable, the Company, the Subsidiaries listed on Schedule 1.1.1 and any other Borrowing Subsidiary, together with their respective successors and assigns. 5 "BORROWING DATE" means a date on which an Advance of any Type is made hereunder. "BORROWING NOTICE" means a notice as provided in Section 2.1.1 with respect to Revolving Loans, Section 2.1.2 with respect to Alternate Currency Loans, or Section 2.1.3 with respect to Competitive Bid Loans. "BORROWING SUBSIDIARY" means each of the Subsidiaries listed on Schedule 1.1.1 and any other Wholly-Owned Subsidiary duly designated by the Company pursuant to Section 2.5.14 hereof to request Advances hereunder, which Subsidiary shall have satisfied the provisions of Section 4.2 hereof and shall have delivered to the Administrative Agent an Assumption Letter in accordance with Section 2.5.14 and such other documents, instruments and agreements as may be required pursuant to the terms of this Agreement; provided, however, if any French Subsidiary is included on Schedule 1.1.1 or designated as a Borrowing Subsidiary pursuant to Section 2.5.14, notwithstanding anything else in this Agreement to the contrary, such Borrowing Subsidiary shall be permitted to request only Competitive Bid Loans pursuant to Section 2.1.3 and shall not be entitled to borrow any Alternate Currency Loans pursuant to Section 2.1.2. "BUSINESS DAY" means (i) with respect to any borrowing, payment or rate selection of or any currency conversion with respect to Eurocurrency Advances or Competitive Bid Advances denominated in a currency other than Dollars, a day other than Saturday or Sunday on which banks are open for business in Chicago, Illinois and New York, New York, on which dealings in Dollars are carried on in the London interbank market and, where funds are to be paid or made available in a currency other than Dollars (other than in Euro), on which commercial banks are open for domestic and international business (including dealings in deposits in such currency) in both London and the place where such funds are to be paid or made available, (ii) with respect to any borrowing, payment, or rate selection of Loans denominated in Euro, a day (other than a Saturday or Sunday) on which a suitable clearing system for the Euro is open for business as determined by the Administrative Agent, and (iii) for all other purposes, a day other than Saturday or Sunday on which banks are open for business in Chicago, Illinois and New York, New York. "CANADIAN DOLLARS" means the lawful currency of Canada. "CAPITAL STOCK" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (howsoever designated) of corporate stock, (iii) in the case of a partnership, partnership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing person, in each such case regardless of class or designation. "CAPITALIZED LEASE" means any lease the obligation for rentals with respect to which is required to be capitalized on a balance sheet of the lessee in accordance with U.S. GAAP. "CHANGE IN CONTROL" means: 6 (i) any person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under said Act) of 30% or more of the outstanding shares of Capital Stock of the Company which have ordinary voting power for the election of directors (other than Capital Stock having such power only by reason of the happening of a contingency); or (ii) during any period of twenty-four consecutive calendar months, individuals (a) who were directors of the Company on the first day of such period, or (b) whose election or nomination for election to the board of directors of the Company was recommended or approved by at least a majority of the directors then still in office who were directors of the Company on the first day of such period, or whose election or nomination for election was so approved, shall cease to constitute a majority of the board of directors of the Company. "CODE" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "COMMITMENT" means, for each Lender, the obligation of such Lender to make Loans not exceeding the Dollar Amount set forth on Schedule I hereof or as set forth in the applicable Assignment Agreement in the form of Exhibit C hereto received by the Administrative Agent under the terms of Section 13.3, as such amount may be modified from time to time pursuant to the terms of this Agreement or to give effect to any applicable assignment and acceptance. "COMPANY" means Crane Co., a Delaware corporation, and its successors and assigns, including a debtor-in-possession on behalf of the Company. "COMPETITIVE BID ADVANCE" means a borrowing hereunder consisting of the aggregate amount of the several Competitive Bid Loans made by some or all of the Lenders to the same Borrower on the same Borrowing Date, in the same currency, at the same interest basis, and for the same Interest Period. "COMPETITIVE BID BORROWING NOTICE" is defined in Section 2.1.3(vi). "COMPETITIVE BID LOAN" means, with respect of a Lender, a Loan made by such Lender pursuant to Section 2.1.3. "COMPETITIVE BID MARGIN" means the margin above or below the applicable Eurocurrency Base Rate or alternative indexed base rate offered for an Indexed Bid Rate Loan, expressed as a percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from such Eurodollar Base Rate or alternative indexed base rate. "COMPETITIVE BID QUOTE" means a Competitive Bid Quote, substantially in the form of Exhibit D hereto, completed and delivered by a Lender to the Administrative Agent in accordance with Section 2.1.3(iv). 7 "COMPETITIVE BID QUOTE REQUEST" means a Competitive Bid Quote Request, substantially in the form of Exhibit E hereto, completed and delivered by the Borrower to the Administrative Agent in accordance with Section 2.1.3(ii). "COMPETITIVE BID REDUCTION" has the meaning specified in Section 2.1.1. "CONSOLIDATED CASH FLOW" means for any period (i) Consolidated Net Income for such period PLUS (ii) to the extent deducted in determining Consolidated Net Income for such period, the sum, without duplication, of (x) depreciation and amortization expense for such period PLUS (y) the deferred portion of the provision for taxes on income for such period, all determined on a consolidated basis for the Company and its Consolidated Subsidiaries in accordance with U.S. GAAP. "CONSOLIDATED DEBT" means at any date the Debt of the Company and its Consolidated Subsidiaries, determined on a consolidated basis as of such date in accordance with U.S. GAAP. "CONSOLIDATED NET INCOME" means for any period the amount of net income (or deficit) (before preferred and common stock dividends) of the Company and its Consolidated Subsidiaries for such period, determined on a consolidated basis in accordance with U.S. GAAP. "CONSOLIDATED NET WORTH" means, at any date as of which the same is to be determined, the consolidated stockholders' equity of the Company and its Consolidated Subsidiaries, determined as of such date in accordance with U.S. GAAP. "CONSOLIDATED SUBSIDIARY" means, at any date as of which the same is to be determined, any Subsidiary or other entity the accounts of which would be consolidated with those of the Company in its consolidated financial statements if such statements were prepared as of such date in accordance with U.S. GAAP. "CONTROLLED GROUP" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. "CONVERSION/CONTINUATION NOTICE" is defined in Section 2.2.3. "CORPORATE BASE RATE" shall mean the rate of interest per annum announced by The First National Bank of Chicago from time to time, changing when and as said corporate base rate changes. "DEBT" means, with respect to any Person at any date, without duplication, such Person's (i) obligations for borrowed money, (ii) obligations which are evidenced by bonds, debentures, notes or other similar instruments, (iii) obligations representing the deferred purchase price of property or services (other than trade accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (iv) the principal component of obligations pursuant to Capitalized Leases, (v) non-contingent obligations (and, for purposes of 8 Section 6.13 and the definitions of Material Debt and Material Financial Obligations, contingent obligations) to reimburse any Lender or other Person in respect of amounts paid under a letter of credit or similar instrument, except letters of credit in an aggregate amount not exceeding, as of such date, $40,000,000, (vi) all Debt secured by a Lien or any property now or hereafter owned or acquired by such Person, whether or not such Debt is assumed or is otherwise an obligation of such Person, (vii) Synthetic Lease Liabilities of such Person and (viii) obligations for which such Person is obligated pursuant to a Guaranty other than recourse obligations in respect of chattel paper sold by such Person. "DEFAULT" means an event described in Article VII. "DEUTSCHE MARKS" means the lawful currency of Germany. "DOL" means the United States Department of Labor and any successor department or agency. "DOLLAR AMOUNT" of any currency at any date shall mean (i) the amount of such currency if such currency is Dollars or (ii) the Equivalent Amount of Dollars if such currency is any currency other than Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Administrative Agent for such currency on the London market at 11:00 a.m., London time, two Business Days prior to the date on which such amount is to be determined. "DOLLARS" and "$" shall mean lawful money of the United States of America. "EFFECTIVE DATE" means the date of this Agreement. "ELIGIBLE CURRENCY" means any currency other than Dollars with respect to which the Administrative Agent has not given notice in accordance with Section 2.5.12 and that is readily available, freely traded, in which deposits are customarily offered to banks in the London interbank market, convertible into Dollars in the international interbank market and as to which an Equivalent Amount may be readily calculated. "ENVIRONMENTAL LAWS" means any and all federal, state, local, regional, departmental and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, groundwater or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof, including, without limitation, relating to releases, discharges, emissions or disposals to air, water, land or groundwater, to the withdrawal or use of groundwater, to the use, handling or disposal of polychlorinated biphenyls (PCB's), asbestos or urea formaldehyde, to the treatment, storage, disposal or management of hazardous or dangerous substances (including, without limitation, petroleum, crude oil or any fraction thereof, or other hydrocarbons), pollutants or 9 contaminants, to exposure to toxic, hazardous or other controlled, prohibited or regulated substances or emissions. "EQUIVALENT AMOUNT" of any currency with respect to any amount of Dollars at any date shall mean the equivalent in such currency of such amount of Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Administrative Agent for such other currency at 11:00 a.m., London time, two Business Days prior to the date on which such amount is to be determined (i) if such currency is Sterling, Australian Dollars, Canadian Dollars, Deutsche Marks or French Francs, rounded up to the nearest 100,000 of such currency and (ii) if such currency is any other Agreed Currency or Alternate Currency, rounded up to the nearest amount of such currency as determined by the Administrative Agent from time to time. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time and any successor statute. "ERISA AFFILIATE" means any (i) corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as the Company, (ii) partnership or other trade or business (whether or not incorporated) under common control (within the meaning of Section 414(c) of the Internal Revenue Code) with the Company, and (iii) member of the same affiliated service group (within the meaning of Section 414(m) of the Internal Revenue Code) as the Company, any corporation described in clause (i) above or any partnership or trade or business described in clause (ii) above. "EURO" means the euro referred to in the Council Regulation (EC) No. 1103/97 dated 17 June 1997 passed by the Council of the European Union, or, if different, the then lawful currency of the member states of the European Union that participate in the third stage of the Economic and Monetary Union. "EURO IMPLEMENTATION DATE" means the first date (currently expected to be January 1, 1999) on which the Euro becomes the currency of some or all of the member states of the European Union. "EUROCURRENCY ADVANCE" means an Advance which bears interest at a Eurocurrency Rate requested by the applicable Borrower pursuant to Section 2.2, or, in the case of a Indexed Bid Rate Loan pursuant to Section 2.1.3. "EUROCURRENCY BASE RATE" means, with respect to any Eurocurrency Advance for any specified Interest Period or a Competitive Bid Advance pursuant to an Indexed Bid Rate Auction for an interest period designated by a Borrower, in each case with respect to an Agreed Currency, either (i) the rate at which deposits in the applicable Agreed Currency are offered by the Administrative Agent to first-class banks in the London interbank market at approximately 11 a.m. (London time) two Business Days prior to the first day of such Interest Period or interest period, in the approximate amount of the applicable Percentage of the Administrative Agent (in its capacity as a Lender) of such Eurocurrency Advance or in the case of an Indexed Bid Rate Auction in an Amount equal to $1,000,000 and, in each case, having a maturity approximately equal to such Interest Period or interest period or (ii) if no such rate of interest is available for any reason, for any specified Interest Period or interest period, the rate of interest per annum equal to the rate for deposits in the applicable Agreed Currency of such Eurocurrency Advance or Indexed Bid Rate Advance with a maturity approximately 10 equal to such Interest Period or interest period which appears on Telerate Page 3740 or Telerate Page 3750, as applicable, or, if there is more than one such rate, the average of such rates rounded to the nearest 1/100 of 1%, as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period. The terms "Telerate Page 3740" and "Telerate Page 3750" mean the display designated as "Page 3740" and "Page 3750", as applicable, on the Associated Press-Dow Jones Telerate Service (or such other page as may replace Page 3740 or Page 3750, as applicable, on the Associated Press-Dow Jones Telerate Service or such other service as may be nominated by the British Bankers' Association as the information vendor for the purpose of displaying British Bankers' Association interest rate settlement rates for the relevant Agreed Currency). Any Eurocurrency Base Rate determined on the basis of the rate displayed on Telerate Page 3740 or Telerate Page 3750 in accordance with the foregoing provisions of this subparagraph shall be subject to corrections, if any, made in such rate and displayed by the Associated Press-Dow Jones Telerate Service within one hour of the time when such rate is first displayed by such service. "EUROCURRENCY LOAN" means a Loan which bears interest at a Eurocurrency Rate requested by the applicable Borrower pursuant to Section 2.2. "EUROCURRENCY PAYMENT OFFICE" of the Administrative Agent or any Lender, as applicable, shall mean, for each of the Agreed Currencies, the office, branch or affiliate of the Administrative Agent or such Lender, as applicable, specified as the "EUROCURRENCY PAYMENT OFFICE" for such currency in Schedule I hereto or such other office, branch, affiliate or correspondent bank of the Administrative Agent or such Lender as it may from time to time specify to the Company and each Lender as its Eurocurrency Payment Office. "EUROCURRENCY RATE" means, with respect to a Eurocurrency Advance for the relevant Interest Period, the sum of (i) the quotient of (a) the Eurocurrency Base Rate applicable to such Interest Period, divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (ii) the Applicable Margin. "EXCLUDED TAXES" means, in the case of each Lender or applicable Lending Installation and the Administrative Agent, taxes imposed on its overall net income, and franchise taxes imposed on it, by (i) the jurisdiction under the laws of which such Lender or the Administrative Agent is incorporated or organized or (ii) the jurisdiction in which the Administrative Agent's or such Lender's principal executive office or such Lender's applicable Lending Installation designated pursuant to Section 2.5.13 is located. "FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating interest rate per annum equal for each day during such period to (i) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York; or (ii) if such rate is not so 11 published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (New York time) for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent. "FEE LETTER" is defined in Section 2.4.2. "FINANCIAL OFFICER" means the Chief Financial Officer, the Chief Accounting Officer, the Corporate Treasurer or such other officer of the Company as may be designated by the Company from time to time. "FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan as defined in Section 3(3) of ERISA which is maintained or contributed to for the benefit of the employees of the Company, any of its Subsidiaries or any members of its Controlled Group and is not covered by ERISA pursuant to ERISA Section 4(b)(4). "FOREIGN PENSION PLAN" means any employee benefit plan as described in Section 3(3) of ERISA which (i) is maintained or contributed to for the benefit of employees of the Company, any of its Subsidiaries or any of its ERISA Affiliates, (ii) is not covered by ERISA pursuant to Section 4(b)(4) of ERISA, and (iii) under applicable local law, is required to be funded through a trust or other funding vehicle. "GOVERNMENTAL AUTHORITY" means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government including any authority or other quasi-governmental entity established to perform any of such functions. "FUNDED DEBT" means at any date, with respect to any Person, all Debt of such Person that is not a current liability as of such date. "GROSS NEGLIGENCE" means either recklessness or actions taken or omitted with conscious indifference to or the complete disregard of consequences. Gross Negligence does not mean the absence of ordinary care or diligence, or an inadvertent act or inadvertent failure to act. If the term "gross negligence" is used with respect to the Administrative Agent or any Lender or any indemnitee in any of the other Loan Documents, it shall have the meaning set forth herein. "GUARANTEED OBLIGATIONS" is defined in Section 9.1. "GUARANTY" of any Person means any agreement by which such person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes liable upon, the obligation of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person or otherwise assures any creditor of such other Person against loss, and shall include, without limitation, the contingent liability of such Person under or in relation to any letter of credit and disclosed support agreements, but shall exclude endorsements for collection or deposit in the ordinary course of business. 12 "HEDGING OBLIGATIONS" of a Person means any and all net obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, exchange rates or forward rates applicable to such party's assets, liabilities or exchange transactions, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants, or any similar derivative transactions and (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any of the foregoing. "INDEXED BID RATE" means, with respect to an Indexed Bid Rate Loan made by a Lender for the relevant Interest Period, the sum of (i) the Eurocurrency Base Rate (or alternative indexed base rate identified in the applicable Competitive Bid Quote Request) and (ii) the Competitive Bid Margin offered by such Lender and accepted by the applicable Borrower pursuant to Section 2.1.3(vi). "INDEXED BID RATE ADVANCE" means a Competitive Bid Advance which bears interest at an Indexed Bid Rate. "INDEXED BID RATE LOAN" means a Competitive Bid Loan which bears interest at an Indexed Bid Rate. "INDEXED BID RATE AUCTION" means a solicitation of Competitive Bid Quotes setting forth Competitive Bid Margins pursuant to Section 2.1.3. "INTEREST PERIOD" means, (i) an Absolute Rate Interest Period, (ii) any Alternate Currency Interest Period, (iii) with respect to a Eurocurrency Advance or a Eurocurrency Loan, a period of one, two, three or six months commencing on a Business Day selected by the applicable Borrower pursuant to this Agreement. Such Interest Periods under clauses (ii) and (iii) shall end on (but exclude) the day which corresponds numerically to such date of commencement one, two, three or six months thereafter, provided, however, that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month, such Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, provided, however, that if said next succeeding Business Day falls in a new month, such Interest Period shall end on the immediately preceding Business Day. "INVITATION FOR COMPETITIVE BID QUOTES" means an Invitation for Competitive Bid Quotes, substantially in the form of Exhibit F hereto, completed and delivered by the Administrative Agent to the Lenders in accordance with Section 2.1.3(iii). "IRS" means the Internal Revenue Service and any Person succeeding to the functions thereof. 13 "LENDERS" means the financial institutions listed on the signature pages of this Agreement and their respective successors and assigns including, without limitation, any Lender which becomes party to this Agreement pursuant to Section 13.3. Unless the context otherwise requires, the term Lender shall include Alternate Currency Banks. "LENDING INSTALLATION" means any office, branch, subsidiary or affiliate of any Lender or the Administrative Agent. "LEVEL I STATUS" is defined in Section 2.3. "LEVEL II STATUS" is defined in Section 2.3. "LEVEL III STATUS" is defined in Section 2.3. "LEVEL IV STATUS" is defined in Section 2.3. "LEVEL V STATUS" is defined in Section 2.3. "LIEN" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "LOAN" means, (i) with respect to a Lender, such Lender's portion of any Revolving Advance, (ii) with respect to any Alternate Currency Bank, such Alternate Currency Bank's portion of any Alternate Currency Advance, and (iii) with respect to any Lender, such Lender's Bid Loan, and (iv) collectively, with respect to all Lenders, all Revolving Loans, Alternate Currency Loans and Competitive Bid Loans. "LOAN DOCUMENTS" means this Agreement, any Notes issued pursuant to Section 2.5.8, the Assumption Letters and all Alternate Currency Addenda. "MATERIAL ADVERSE CHANGE" means any change in the business, property, condition (financial or otherwise) or results of operations or prospects of the Company and its Subsidiaries taken as a whole which could reasonably be expected to have a Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means a material adverse effect on the business, property, condition (financial or otherwise) or results of operations or prospects of the Company and its Subsidiaries taken as a whole, the ability of any of the Borrowers to perform their obligations under the Loan Documents, or the validity or enforceability of any of the Loan Documents or the rights or remedies of the Administrative Agent or the Lenders thereunder. "MATERIAL DEBT" means Debt (other than the Obligations hereunder or under the Notes) or payment or reimbursement obligations with respect to letters of credit of the Borrower and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal or face amount exceeding $15,000,000. 14 "MATERIAL FINANCIAL OBLIGATIONS" means a principal or face amount of Debt, payment obligations in respect of Hedging Obligations and/or payment or reimbursement obligations with respect to letters of credit of the Company and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, exceeding in the aggregate $15,000,000. "MATERIAL SUBSIDIARY" means, at any time any Subsidiary which as of such time meets the definition of a "significant subsidiary" contained as of the date hereof in Regulation S-X of the Securities and Exchange Commission. "MAXIMUM ALTERNATE CURRENCY AMOUNT" means Seventy-Five Million Dollars ($75,000,000). "MOODY'S" means Moody's Investors Service, Inc. or any rating agency which is generally recognized as a successor thereto. "MOODY'S RATING" is defined in Section 2.3. "MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA subject to Title IV of ERISA and which is contributed to by either the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate has potential liability. "NATIONAL CURRENCY UNIT" means the unit of currency (other than a Euro unit) of each member state of the European Union that participates in the third stage of Economic and Monetary Union. "NEW CURRENCY" is defined in Section 2.5.7. "NON-U.S. BORROWER" is defined in Section 3.2(b). -------------- "NOTE" means any promissory note issued by any Borrower at the request of a Lender pursuant to Section 2.5.8 in the form supplied by the Administrative Agent. "NOTICE OF ASSIGNMENT" is defined in Section 13.3.2. "OBLIGATIONS" means all Loans, Advances, debts, liabilities, obligations, covenants and duties owing by the Company or any of its Subsidiaries to the Administrative Agent, any Lender, any Affiliate of the Administrative Agent, any Lender or any indemnitee, of any kind or nature, present or future, arising under this Agreement, the Notes issued hereunder or any other Loan Document, whether or not evidenced by any note, guaranty or other instrument, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, guaranty, indemnification, or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired. The term includes, without limitation, all interest charges, expenses, fees, attorneys' fees and disbursements, paralegals' fees, and any other sum chargeable to the Company or any of its Subsidiaries under this Agreement or any other Loan Document. 15 "ORIGINAL CURRENCY" is defined in Section 2.5.7. "OTHER TAXES" is defined in Section 3.1(i). "PBGC" means the Pension Benefit Guaranty Corporation or any Person succeeding to the function thereof. "PAYMENT DATE" means the last Business Day of each calendar month. "PERCENTAGE" means, with respect to any Lender, the percentage obtained by dividing (A) the sum of such Lender's Commitment at such time (in each case, as adjusted from time to time in accordance with the provisions of this Agreement) by (B) the Aggregate Commitment at such time; provided, however, if all of the Commitments are terminated pursuant to the terms of this Agreement, then "Percentage" means the percentage obtained by dividing (i) such Lender's Loans (including Competitive Bid Loans) by (ii) the aggregate amount of all Loans (including Competitive Bid Loans). "PERSON" means any corporation, limited liability company, natural person, firm, joint venture, partnership, trust, unincorporated organization, enterprise, government or any department or agency of any government. "PLAN" means any employee benefit plan defined in Section 3(3) of ERISA in respect of which the Company or any ERISA Affiliate is an "employer" as defined in Section 3(5) of ERISA or with respect to which the Company or any ERISA Affiliate has any potential liability. "PURCHASERS" is defined in Section 13.3.1. "REFUNDING BORROWING" means (a) a borrowing consisting of Alternate Currency Loans or Revolving Loans which, after application of the proceeds thereof, results in no net increase in the aggregate outstanding principal amount of such Loans made by any Lender or (b) a borrowing consisting of Competitive Bid Loans which, after application of the proceeds thereof, results in no net increase in the outstanding principal amount of such Loans made by any Lender. "REGULATION D" means Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect and shall include any successor or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System. "REGULATION T" means Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by and to brokers and dealers of Securities for the purpose of purchasing or carrying margin stock (as defined therein). "REGULATIONS U AND X" means Regulations U and X of the Board of Governors of the Federal Reserve System from time to time in effect and shall include any successor or other regulations or official interpretations of said Board of Governors relating to the extension of 16 credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System. "REPORTABLE EVENT" means any of the events described in Section 4043 of ERISA other than an event for which the 30-day notice requirement has been waived by regulation; provided, however, that events described in ERISA ss.4043(c)(1) or (5) shall be a Reportable Event regardless of such waiver. "REQUEST FOR A NEW ALTERNATE CURRENCY FACILITY" shall have the meaning ascribed thereto in Section 2.1.2(ii). "REQUIRED LENDERS" means Lenders having, in the aggregate, Percentages of at least sixty-six and two-thirds percent (66-2/3%). "RESERVE REQUIREMENT" means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities. "REVOLVING ADVANCE" means a borrowing hereunder (or conversion or continuation thereof) consisting of the aggregate amount of the several Revolving Loans made by the Lenders to the Company pursuant to Section 2.1.1 of the same Type and, in the case of Eurocurrency Advances, denominated in the same currency and for the same Interest Period. "REVOLVING LOAN" is defined in Section 2.1.1. "S&P" means Standard and Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc., or any rating agency which is generally recognized as a successor thereto. "S&P RATING" is defined in Section 2.3. "SECTION" means a numbered section of this Agreement, unless another document is specifically referenced. "SINGLE EMPLOYER PLAN" means a Plan maintained by the Company or any member of the Controlled Group for employees of the Company or any member of the Controlled Group. "STATUS" is defined in Section 2.3. "STERLING" means the lawful currency of England. "SUBSIDIARY" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise 17 expressly provided, all references herein to a "SUBSIDIARY" shall mean a Subsidiary of the Company. "SUBSTANTIAL PORTION" means, with respect to the Property of the Company and its Subsidiaries, Property which represents more than 10% of the consolidated assets of the Company and its Subsidiaries as would be shown in the consolidated financial statements of the Company and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made. "SYNDICATED CREDIT OBLIGATIONS" means, at any particular time, the sum of (i) the Dollar Amount of the aggregate unpaid principal balance of the Revolving Loans at such time, plus (ii) the Dollar Amount of the aggregate unpaid principal balance of the Alternate Currency Loans at such time. "SYNTHETIC LEASE LIABILITIES" of a Person means any liability under any tax retention operating lease or so-called "synthetic" lease transaction, or any obligations arising with respect to any other similar transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheets of such Person and its Subsidiaries (other than leases which do not have an attributable interest component that are not Capitalized Leases). "TAXES" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities (including but not limited to interest and penalties) with respect to the foregoing, imposed by any Governmental Authority, but excluding Excluded Taxes. "TERMINATION DATE" means the earlier of (i) November 18, 2003 and (ii) the date the Loans may be accelerated in accordance with this Agreement. "TERMINATION EVENT" means (i) a Reportable Event with respect to any Benefit Plan; (ii) the withdrawal of the Company or any ERISA Affiliate from a Benefit Plan during a plan year in which the Company or such ERISA Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or the cessation of operations which results in the termination of employment of 20% of Benefit Plan participants who are employees of the Company or any ERISA Affiliate; (iii) the imposition of an obligation on the Company or any ERISA Affiliate under Section 4041 of ERISA to provide affected parties written notice of intent to terminate a Benefit Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC or any similar foreign governmental authority of proceedings to terminate a Benefit Plan or a Foreign Pension Plan; (v) any event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Benefit Plan; (vi) a foreign governmental authority shall appoint or institute proceedings to appoint a trustee to administer any Foreign Pension Plan; or (vii) the partial or complete withdrawal of the Company or any ERISA Affiliate from a Multiemployer Plan or a Foreign Pension Plan. 18 "TOTAL CAPITALIZATION" means, at any date, the sum of Consolidated Debt and Consolidated Net Worth as of such date. "TYPE" means, with respect to any Loan or Advance, its nature as an Alternate Base Rate Advance or Loan or Eurocurrency Advance or Loan or, in the case of any Competitive Bid Advance or Loan, its nature as an Absolute Rate Advance or Loan or an Indexed Bid Rate Advance or Loan. "UNMATURED DEFAULT" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default. "U.S. GAAP" means accounting principles generally accepted in the United States of America as recommended by the Financial Accounting Standards Board as in effect as of the Effective Date applied consistently with the audited financial statements of the Company and its Consolidated Subsidiaries for the year ended December 31, 1997. "WHOLLY-OWNED," when used in connection with any Subsidiary, means (i) any Subsidiary all of the outstanding voting securities of which (other than nominal shares consisting of directors' qualifying shares) shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. "YEAR 2000 ISSUES" means, with respect to any Person, anticipated costs, problems and uncertainties associated with the inability of certain computer applications and embedded systems to effectively handle data, including dates, on and after January 1, 2000, as it affects the business, operations, and financial condition of such Person, and, to the best of such Person's knowledge, such Person's material customers, suppliers and vendors, but excluding any such costs, problems or uncertainties associated with computer applications and embedded systems of any Governmental Authority. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. 1.2. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with U.S. GAAP. 1.3. Rounding and Other Consequential Changes. Without prejudice to any method of conversion or rounding prescribed by any legislative measures of the Council of the European Union, each reference in this Agreement to a fixed amount or to fixed amounts in a National Currency Unit to be paid to or by the Administrative Agent shall be replaced by a reference to such comparable and convenient fixed amount or fixed amounts in the Euro as the Administrative Agent may from time to time specify unless such National Currency Unit 19 remains readily available and the applicable Borrower and the Administrative Agent agree to the continued use of such National Currency Unit instead of the Euro. ARTICLE II: THE LOAN FACILITIES 2.1. The Revolving Loan Facility to the Company. 2.1.1. Revolving Loans. (i) Upon the satisfaction of the applicable conditions precedent set forth in Sections 4.1, 4.2 and 4.3, from and including the date of this Agreement and prior to the Termination Date, each Lender severally and not jointly agrees, on the terms and conditions set forth in this Agreement (including, without limitation, the terms and conditions of Section 2.5.11 and Section 8.1 relating to the reduction, suspension or termination of the Aggregate Commitment), to make revolving loans (each individually, a "REVOLVING LOAN" and, collectively, the "REVOLVING LOANS") in one or more Agreed Currencies to the Company from time to time in a Dollar Amount not to exceed such Lender's Percentage of the Available Amount at such time; provided, however, that the Aggregate Commitment shall be deemed used from time to time to the extent of the aggregate amount of the Competitive Bid Loans then outstanding (such deemed use of the aggregate amount of the Commitments being a "COMPETITIVE BID REDUCTION"), and such deemed use in each case of the Aggregate Commitment shall be applied to the Lenders ratably according to their respective Commitments; provided, further, that each Revolving Loan made on or after the Euro Implementation Date shall be made in the Euro if such Revolving Loan would, but for this provision, be capable of being made in either the Euro or the National Currency Unit requested by the Company unless otherwise consented to by the Administrative Agent. Subject to the terms of this Agreement (including, without limitation, the terms and conditions of Sections 2.5.11 and 8.1 relating to the reduction, suspension or termination of the Aggregate Commitment), the Company may borrow, repay and reborrow Revolving Loans at any time prior to the Termination Date. The Revolving Loans made on the Effective Date or on or before the third (3rd) Business Day thereafter shall initially be Alternate Base Rate Loans and thereafter may be continued as Alternate Base Rate Loans or converted into Eurocurrency Loans in the manner provided in Section 2.2.3. Unless earlier terminated in accordance with the terms and conditions of this Agreement, the Commitments of the Lenders to lend hereunder shall expire on the Termination Date. The proceeds of all Revolving Loans made under this Section 2.1.1 shall be used in accordance with the terms of Section 6.2. All outstanding Revolving Loans shall be paid in full by the Company on the Termination Date. (ii) Borrowing Notice. When the Company desires to borrow under this Section 2.1.1, a Financial Officer shall deliver to the Administrative Agent a Borrowing Notice, signed by it, specifying that the Company is requesting a Revolving Loan pursuant to this Section 2.1.1. Any Borrowing Notice given pursuant to this Section 2.1.1 shall be irrevocable. (iii) Maximum Revolving Credit Amount. At no time shall the sum of (a) the Syndicated Credit Obligations plus (b) the outstanding principal balance of all Competitive Bid Loans exceed the Aggregate Commitment. 20 (iv) Making of Revolving Loans. Promptly after receipt of the Borrowing Notice under Section 2.1.1(ii) in respect of Revolving Loans, the Administrative Agent shall notify each Lender by telex or telecopy, or other similar form of transmission, of the proposed Advance. Each Lender shall make available its Revolving Loan in accordance with the terms of Section 2.5.1. The Administrative Agent will make the funds so received from the Lenders available to the Company in accordance with the terms of Section 2.5.1 and shall disburse such proceeds in accordance with the Company's disbursement instructions set forth in such Borrowing Notice. The failure of any Lender to deposit the amount described above with the Administrative Agent on the applicable Borrowing Date shall not relieve any other Lender of its obligations hereunder to make its Revolving Loan on such Borrowing Date. 2.1.2. Alternate Currency Loans. (i) Upon the execution of an applicable Alternate Currency Addendum and upon the satisfaction of the conditions precedent set forth in Sections 4.1, 4.2 and 4.3 hereof and set forth in such applicable Alternate Currency Addendum, from and including the later of the date of this Agreement and the date of execution of the applicable Alternate Currency Addendum and prior to the Termination Date (unless an earlier termination date shall be specified in the applicable Alternate Currency Addendum), each of the Lenders in its capacity as an Alternate Currency Bank agrees, on the terms and conditions set forth in this Agreement and in the applicable Alternate Currency Addendum, to make Alternate Currency Loans under such Alternate Currency Addendum to the applicable Borrower or Borrowers party to such Alternate Currency Addendum from time to time in the applicable Alternate Currency, in an amount not to exceed the lesser of (i) such Alternate Currency Bank's applicable Alternate Currency Commitment and (ii) such Lender's Percentage of the Available Amount; provided, however, at no time shall the Dollar Amount of the outstanding principal amount of the Alternate Currency Loans and Competitive Bid Loans for all Alternate Currencies other than Dollars exceed the Maximum Alternate Currency Amount other than as a result of currency fluctuations and then only to the extent permitted in Section 2.5.3.(B)(i)(d). For all purposes of this Section 2.1.2, where reference is made to a Lender's Percentage, where a Lender has designated an Affiliate, branch or agency of it to act as the Alternate Currency Bank, it shall be the designating Lender's Percentage which is utilized for purposes hereof. Each Alternate Currency Advance under this Section 2.1.2. shall consist of Alternate Currency Loans made by each Alternate Currency Bank ratably in proportion to such Lender's Percentage. Subject to the terms of this Agreement and the applicable Alternate Currency Addendum, the applicable Borrowers may borrow, repay and reborrow Alternate Currency Loans at any time prior to the Termination Date (unless an earlier termination date shall be specified in the applicable Alternate Currency Addendum). On the Termination Date (unless an earlier termination date shall be specified in the applicable Alternate Currency Addendum), the outstanding principal balance of the Alternate Currency Loans shall be paid in full by the applicable Borrower and prior to the Termination Date (unless an earlier termination date shall be specified in the applicable Alternate Currency Addendum) prepayments of the Alternate Currency Advances shall be made by the applicable Borrower if and to the extent required in Section 2.5.3.(B). 21 (ii) Borrowing Notice. When the applicable Borrower desires to borrow under this Section 2.1.2., a Financial Officer shall deliver to the applicable Alternate Currency Agent a Borrowing Notice, signed by it, specifying that such Borrower is requesting an Alternate Currency Advance pursuant to this Section 2.1.2. Any Borrowing Notice given pursuant to this Section 2.1.2. shall be irrevocable. (iii) Additional Alternate Currency Commitments. The Company may, by written notice to the Administrative Agent, request the establishment of Alternate Currency Commitments in additional Alternate Currencies agreed to by all of the Lenders other than the Alternate Currencies set forth in clause (i) of the definition thereof, provided the Dollar Amount of the aggregate amount of all of the Alternate Currency Loans shall not exceed the Maximum Alternate Currency Amount ("REQUEST FOR A NEW ALTERNATE CURRENCY FACILITY"). The Administrative Agent will promptly forward to the Lenders any Request for a New Alternate Currency Facility received from the Company; provided each Lender shall be deemed not to have agreed to such request unless its written consent thereto has been received by the Administrative Agent within ten (10) Business Days from the date of such notification by the Administrative Agent to such Lender. In the event that all the Lenders consent to such Request for a New Alternate Currency Facility, upon execution of the applicable Alternate Currency Addendum and the other documents, instruments and agreements required pursuant to this Agreement and such Alternate Currency Addendum, the Alternate Currency Advances with respect thereto may be made. (iv) Termination. Except as otherwise required by applicable law, in no event shall the Alternate Currency Agent or Alternate Currency Banks have the right to accelerate the Alternate Currency Loans outstanding under any Alternate Currency Addendum or to terminate their commitments (if any) thereunder to make Alternate Currency Loans prior to the Termination Date, except that such Alternate Currency Agent and Alternate Currency Banks shall, in each case, have such rights upon an acceleration of the Loans and a termination of the Commitments pursuant to Article VIII. (v) Statements. Each Alternate Currency Agent shall furnish to the Administrative Agent and the applicable Alternate Currency Banks, not less frequently than monthly, and at any other time at the reasonable request of the Administrative Agent, a statement setting forth the outstanding Alternate Currency Loans made and repaid during the period since the last such report under such Alternate Currency Addendum. (vi) Other Provisions Applicable to Alternate Currency Loans. The specification of payment of Alternate Currency Loans in the related Alternate Currency at a specific place pursuant to this Agreement is of the essence. Such Alternate Currency shall be the currency of account and payment of such Loans under this Agreement and the Notes issued hereunder. Notwithstanding anything in this Agreement, the obligation of the applicable Borrower in respect of such Loans shall not be discharged by an amount paid in any other currency or at another place, whether pursuant to a judgment or otherwise, to the extent the amount so paid, on prompt conversion into the applicable Alternate Currency and transfer to such Lender under normal banking procedure, does not yield the amount of such Alternate Currency due under this 22 Agreement and the Notes issued hereunder. In the event that any payment, whether pursuant to a judgment or otherwise, upon conversion and transfer, does not result in payment of the amount of such Alternate Currency due under this Agreement and the Notes issued hereunder, such Lender shall have an independent cause of action against the applicable Borrowers for the currency deficit. 2.1.3. Competitive Bid Advances. (i) Competitive Bid Option; Repayment of Competitive Bid Advances; Interest on Competitive Bid Advances. In addition to Revolving Advances and Alternate Currency Advances pursuant to Sections 2.1.1 and 2.1.2, but subject to the terms and conditions of this Agreement (including, without limitation, the limitations set forth in Section 2.1.1(iii) as to the maximum aggregate principal amount of all outstanding Obligations hereunder), the Borrowers may, as set forth in this Section 2.1.3, request the Lenders, prior to the Termination Date, to make offers to make Competitive Bid Advances in Dollars or any other Agreed Currency to the applicable requesting Borrower. Each Lender may, but shall have no obligation to, make such offers and the applicable Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section 2.1.3. Each Competitive Bid Advance shall be repaid in full by the applicable Borrower on the last day of the Interest Period applicable thereto. Competitive Bid Advances may be prepaid only to the extent set forth in the applicable Competitive Bid Quote Request. Interest accrued on each Competitive Bid Advance shall be payable in accordance with the terms of Section 2.5.6; provided unless otherwise specified in the applicable Competitive Bid Quote Request, interest on all Competitive Bid Advances shall be calculated for actual days elapsed on the basis of a 360-day year. (ii) Competitive Bid Quote Request. When a Borrower wishes to request offers to make Competitive Bid Loans under this Section 2.1.3, the Borrower shall transmit to the Administrative Agent by telex or facsimile transmission a Competitive Bid Quote Request so as to be received not later than: (w) for an INDEXED BID RATE AUCTION for Competitive Bid Advances denominated in any AGREED CURRENCY OTHER THAN DOLLARS, 10:00 a.m. (London time) at least five Business Days prior to the Borrowing Date proposed therein; (x) for an INDEXED BID RATE AUCTION for Competitive Bid Advances denominated in DOLLARS, 10:00 a.m. (Chicago time) at least four Business Days prior to the Borrowing Date proposed therein; (y) for an ABSOLUTE RATE AUCTION for Competitive Bid Advances denominated in any AGREED CURRENCY OTHER THAN DOLLARS, 9:00 a.m. (London time) at least three Business Days prior to the Borrowing Date proposed therein; or (z) for an ABSOLUTE RATE AUCTION for Competitive Bid Advances denominated in DOLLARS, 10:00 a.m.(Chicago time) at least one Business Day prior to the Borrowing Date proposed therein; 23 or, in any case, such other time or date as the applicable Borrower and the Administrative Agent shall have mutually agreed upon and shall have notified to the Lenders not later than the date of the Competitive Bid Quote Request for the first Indexed Bid Rate Auction or Absolute Rate Auction for which such change is to be effective, specifying: (a) the proposed Borrowing Date for the proposed Competitive Bid Advance; (b) the aggregate principal amount of such Competitive Bid Advance, which shall be in the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess thereof); (c) whether the Competitive Bid Quotes requested are to set forth a Competitive Bid Margin or an Absolute Rate, or both; (d) the Interest Period applicable thereto; (e) the Agreed Currency in which such Competitive Bid Advance is to be made; (f) the applicable Borrower for such Competitive Bid Advance; (g) whether or not the Competitive Bid Advance requested shall be subject to prepayment; and (h) where the Agreed Currency is other than Dollars or the Borrower is other than the Company, any other specified provisions applicable thereto (i.e., specifying an alternative index for Indexed Bid Rate Loans, special withholding tax requirements, or any other provisions applicable as a result of use of such Agreed Currency or specification of such Borrower). A Borrower may request offers to make Competitive Bid Loans for more than one Interest Period, for more than one Agreed Currency and for an Indexed Bid Rate Auction and an Absolute Rate Auction in a single Competitive Bid Quote Request. No Competitive Bid Quote Request shall be given within five Business Days (or, upon reasonable prior notice to the Lenders, such other number of days as the applicable Borrower and the Administrative Agent may agree upon) of any other Competitive Bid Quote Request. A Competitive Bid Quote Request that does not conform substantially to the format of Exhibit E hereto shall be rejected, and the Administrative Agent shall promptly notify the applicable Borrower of such rejection by telex or facsimile transmission. (iii) Invitation for Competitive Bid Quotes. Promptly upon receipt of a Competitive Bid Quote Request that is not rejected pursuant to Section 2.1.3(ii), the Administrative Agent shall send to each of the Lenders by telex or facsimile transmission an Invitation for Competitive Bid Quotes, which shall constitute an invitation by the Borrower to each Lender to submit Competitive Bid Quotes offering to make the Competitive Bid Loans to which such Competitive Bid Quote Request relates in accordance with this Section 2.1.3. 24 (iv) Submission and Contents of Competitive Bid Quotes. (a) Each Lender may, in its sole discretion, submit a Competitive Bid Quote containing an offer or offers to make Competitive Bid Loans in response to any Invitation for Competitive Bid Quotes. Each Competitive Bid Quote must comply with the requirements of this Section 2.1.3(iv) and must be submitted to the Administrative Agent by telex or facsimile transmission at its offices specified in or pursuant to Article XIV not later than: (i) for an INDEXED BID RATE AUCTION for Competitive Bid Advances denominated in any AGREED CURRENCY OTHER THAN DOLLARS, 1:00 p.m. (London time) at least four Business Days prior to the Borrowing Date proposed therein; (ii) for an INDEXED BID RATE AUCTION for Competitive Bid Advances denominated in DOLLARS, 8:30 a.m. (Chicago time) at least two Business Days prior to the Borrowing Date proposed therein; (iii) for an ABSOLUTE RATE AUCTION for Competitive Bid Advances denominated in any AGREED CURRENCY OTHER THAN DOLLARS, 1:00 p.m. (London time) at least two Business Days prior to the Borrowing Date proposed therein; or (iv) for an ABSOLUTE RATE AUCTION for Competitive Bid Advances denominated in DOLLARS, 9:00 a.m.(Chicago time) on the proposed Borrowing Date; or, in any such case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed upon and shall have notified to the Lenders not later than the date of the first Indexed Bid Rate Auction or Absolute Rate Auction for which such change is to be effective; provided that Competitive Bid Quotes submitted by the Administrative Agent (or any Affiliate of the Administrative Agent) in the capacity of a Lender may be submitted, and may only be submitted, if the Administrative Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) one-half hour prior to the deadline for the other Lenders, in the case of an Indexed Bid Rate Auction or an Absolute Rate Auction denominated in an Agreed Currency other than Dollars, or (y) 15 minutes prior to the deadline for the other Lenders, in the case of an Absolute Rate Auction denominated in Dollars. Subject to Articles IV and VIII, any Competitive Bid Quote so made shall be irrevocable except with the written consent of the Administrative Agent given on the instructions of the applicable Borrower. (b) Each Competitive Bid Quote shall in any case specify: (1) the proposed Borrowing Date, which shall be the same as that set forth in the applicable Invitation for Competitive Bid Quotes; (2) the principal amount of the Competitive Bid Loan for which each such offer is being made, which principal amount (1) may be greater than, less than or equal to the Commitment of the quoting Lender, but in no case greater than the unutilized Aggregate Commitment, (2) must be at least 25 $5,000,000 (and an integral multiple of $1,000,000 if in excess thereof), and (3) may not exceed the principal amount of Competitive Bid Loans for which offers were requested and (4) may be subject to an aggregate limitation as to the principal amount of Competitive Bid Loans for which offers being made by such quoting Lender may be accepted; (4) in the case of an Indexed Bid Rate Auction, the Competitive Bid Margin offered for each such Competitive Bid Loan; (5) in the case of an Absolute Rate Auction, the Absolute Rate offered for each such Competitive Bid Loan; (6) the minimum or maximum amount, if any, of the Competitive Bid Loan which may be accepted by the applicable Borrower; (7) the applicable Interest Period; (8) the identity of the quoting Lender; and (9) where the Agreed Currency is other than Dollars or the Borrower is other than the Company, any other specified provisions applicable thereto (i.e., specifying an alternative index for Indexed Bid Rate Loans, special withholding tax requirements, or any other provisions applicable as a result of use of such Agreed Currency or specification of such Borrower). (c) The Administrative Agent shall reject any Competitive Bid Quote that: (1) is not substantially in the form of Exhibit D hereto or does not specify all of the information required by clause (b) above; (2) contains qualifying, conditional or similar language, other than any such language contained in Exhibit D hereto or permitted as a result of clause (b)(9) above; (3) other than as set forth in clause (b)(9) above, proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bid Quotes; or (4) arrives after the time set forth in Section 2.1.3(iv)(a). (d) If any Competitive Bid Quote shall be rejected pursuant to Section 2.1.3(iv)(c), then the Administrative Agent shall notify the relevant Lender of such rejection as soon as practicable. (v) Notice to Borrower. The Administrative Agent shall promptly notify the applicable Borrower of the terms (i) of any Competitive Bid Quote submitted by a Lender that is in accordance with Section 2.1.3(iv) and (ii) of any Competitive Bid Quote that is in accordance with Section 2.1.3(iv) and amends, modifies or is otherwise inconsistent with a previous 26 Competitive Bid Quote submitted by such Lender with respect to the same Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded by the Administrative Agent unless such subsequent Competitive Bid Quote specifically states that it is submitted solely to correct a manifest error in such former Competitive Bid Quote. The Administrative Agent's notice to the Borrower shall specify the aggregate principal amount of Competitive Bid Loans for which offers have been received for each Interest Period specified in the related Competitive Bid Quote Request and the respective principal amounts and Competitive Bid Margins or Absolute Rates, as the case may be, so offered. (vi) Acceptance and Notice by Borrower. Subject to the receipt of the notice from the Administrative Agent referred to in Section 2.1.3(v), not later than: (i) for an INDEXED BID RATE AUCTION for Competitive Bid Advances denominated in any AGREED CURRENCY OTHER THAN DOLLARS, 10:00 a.m. (London time) at least three Business Days prior to the Borrowing Date proposed therein; (ii) for an INDEXED BID RATE AUCTION for Competitive Bid Advances denominated in DOLLARS, 9:30 a.m. (Chicago time) at least two Business Days prior to the Borrowing Date proposed therein; (iii) for an ABSOLUTE RATE AUCTION for Competitive Bid Advances denominated in any AGREED CURRENCY OTHER THAN DOLLARS, 2:00 p.m. (London time) at least two Business Days prior to the Borrowing Date proposed therein; or (iv) for an ABSOLUTE RATE AUCTION for Competitive Bid Advances denominated in DOLLARS, 10:00 a.m.(Chicago time) on the proposed Borrowing Date; or any such case, such other time or date as the Company and the Administrative Agent shall have mutually agreed upon and shall have notified to the Lenders not later than the date of the Competitive Bid Quote Request for the first Indexed Bid Rate Auction or Absolute Rate Auction for which such change is to be effective, the applicable Borrower shall notify the Administrative Agent of such Borrower's acceptance or rejection of the offers so notified to it pursuant to Section 2.1.3(v); provided, however, that the failure by the applicable Borrower to give such notice to the Administrative Agent shall be deemed to be a rejection by such Borrower of all such offers. In the case of acceptance, such notice (a "COMPETITIVE BID BORROWING NOTICE") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The applicable Borrower may accept or reject any Competitive Bid Quote in whole or in part; provided that: (A) the aggregate principal amount of each Competitive Bid Advance may not exceed the applicable amount set forth in the related Competitive Bid Quote Request; (B) the principal amount of each Competitive Bid Advance must be at least $5,000,000 (and an integral multiple of $1,000,000 if in excess thereof); 27 (C) acceptance of offers may only be made on the basis of ascending Competitive Bid Margins or Absolute Rates, as the case may be; and (D) the applicable Borrower may not accept any offer of the type described in Section 2.1.3(iv)(c) or that otherwise fails to comply with the requirements of this Agreement in respect of obtaining a Competitive Bid Loan under this Agreement. (vii) Allocation by the Administrative Agent. If offers are made by two or more Lenders with the same Competitive Bid Margins or Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which offers are permitted to be accepted for the related Interest Period and currency, the principal amount of Competitive Bid Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Lenders as nearly as possible (in such multiples as the Administrative Agent may deem appropriate) in proportion to the aggregate principal amount of such offers; provided, however, that no Lender shall be allocated a portion of any Competitive Bid Advance which is less than the minimum amount which such Lender has indicated that it is willing to accept. Allocations by the Administrative Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence of manifest error. The Administrative Agent shall promptly, but in any event by 11:00 a.m. (Chicago to London time, as applicable) on the third Business Day prior to the Borrowing Date, in the case of Indexed Bid Rate Advances and Absolute Rate Advances denominated in an agreed currency other than Dollars, and by 11:00 a.m.(Chicago time) on the same Business Day, in the case of Absolute Rate Advances, notify each Lender of its receipt of a Competitive Bid Borrowing Notice and the aggregate principal amount of each Competitive Bid Advance allocated to each participating Lender. (viii) Administration Fee. The Company hereby agrees to pay to the Administrative Agent an administration fee per Competitive Bid Quote Request transmitted by any Borrower to the Administrative Agent pursuant to Section 2.1.3(ii) in the amounts and at the times specified in the Fee Letter. 2.2. Types and Interest Periods. 2.2.1. Types of Advances. The Revolving Loans may be Alternate Base Rate Loans or Eurocurrency Loans, or a combination thereof, selected by the Company in accordance with Sections 2.2.2 and 2.2.3. The applicable interest rates, Types and Interest Periods applicable to the Alternate Currency Loans shall be as set forth in the applicable Alternate Currency Addendum. 2.2.2. Method of Selecting Types and Interest Periods for New Advances. The applicable Borrower shall select the Type of Advance and, in the case of each Alternate Currency Advance and Eurocurrency Advance, the Interest Period applicable to each Advance from time to time. The applicable Borrower shall give the Administrative Agent or applicable Alternate Currency Agent an irrevocable Borrowing Notice, or, if such Borrower is a Borrowing Subsidiary, the Company may on behalf of such Borrowing Subsidiary give a Borrowing Notice, not later than 11:00 a.m. (Chicago time) (x) on the Borrowing Date for each Alternate Base Rate 28 Advance, (y) three Business Days before the Borrowing Date for each Eurocurrency Advance in Dollars, and (z) four Business Days before the Borrowing Date for each Eurocurrency Advance in an Agreed Currency other than Dollars and each Alternate Currency Advance (or such other period as may be specified in the applicable Alternate Currency Addendum), provided that there shall be no more than six (6) Interest Periods in effect with respect to all of the Loans at any time. A Borrowing Notice shall specify: (i) the Borrowing Date, which shall be a Business Day, of such Advance; (ii) the aggregate amount and the currency of such Advance, provided, that, if any Advance made (or to be made) on or after the Euro Implementation Date would, but for this provision, be capable of being made either in the Euro or in the applicable National Currency Unit requested by the applicable Borrower, such Advance shall be made in the Euro; (iii) the Type of Advance selected and in respect of all Loans, the currency thereof; (iv) whether such borrowing is pursuant to a Revolving Loan or Alternate Currency Loan; (v) in the case of each Alternate Currency Advance or Eurocurrency Advance, the Interest Period applicable thereto; and (vi) the identity of the applicable Borrower. 2.2.3. Conversion and Continuation of Outstanding Advances. Alternate Base Rate Advances shall continue as Alternate Base Rate Advances unless and until such Alternate Base Rate Advances are converted into Eurocurrency Advances. Each Eurocurrency Advance shall continue as a Eurocurrency Advance until the end of the then applicable Interest Period therefor, at which time such Eurocurrency Advance shall be automatically converted into an Alternate Base Rate Advance unless the Company shall have given the Administrative Agent an irrevocable notice (a "CONVERSION/CONTINUATION NOTICE") requesting that, at the end of such Interest Period, such Eurocurrency Advance either continue as a Eurocurrency Advance for the same or another Interest Period or be converted into an Alternate Base Rate Advance. Subject to the terms of Sections 2.2.1 and 2.5.2, the Company may elect from time to time to convert all or any part of an Advance of any Type (other than Alternate Currency Advances) into any other Type or Types of Advances (other than Alternate Currency Advances); provided that any conversion of any Eurocurrency Advance shall be made on, and only on, the last day of the Interest Period applicable thereto. The Company shall give the Administrative Agent the Conversion/Continuation Notice of each conversion of an Advance or continuation of a Eurocurrency Advance not later than 10:00 a.m. (Chicago time) at least one Business Day, in the case of a conversion into an Alternate Base Rate Advance, or three Business Days, in the case of a conversion into or continuation of a Eurocurrency Advance, prior to the date of the requested conversion or continuation, specifying: 29 (i) the requested date, which shall be a Business Day, of such conversion or continuation; (ii) the aggregate amount and Type of the Advance which is to be converted or continued; and (iii) the amount and Type(s) of Advance(s) into which such Advance is to be converted or continued and, in the case of a conversion into or continuation of a Eurocurrency Advance, the duration of the Interest Period applicable thereto. 2.3. Applicable Margin. The Applicable Margins set forth below, with respect to each Advance (other than Alternate Currency Advances which shall be governed by the applicable Alternate Currency Addendum) and the applicable fee rate for facility fees and utilization fees payable hereunder, shall be subject to adjustment (upwards or downwards, as appropriate) in accordance with the table set forth below based on the Company's Status shall be determined from its then-current Moody's and S&P Ratings. The credit rating in effect on any date for all purposes is that in effect at the close of business on such date. If at any time the Borrower has no Moody's Rating or no S&P Rating, Level V Status shall exist. If the Borrower is split-rated and the ratings differential is one level, the higher rating will apply. If the Borrower is split-rated and the ratings differential is two levels, the intermediate rating at the midpoint will apply. If the Borrower is split-rated and the ratings differential is more than two levels, the rating that is one level above the lowest rating will apply. - ------------------------------------------------------------------------------- APPLICABLE LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V MARGIN STATUS STATUS STATUS STATUS STATUS - ------------------------------------------------------------------------------- EUROCURRENCY 0.195% 0.225% 0.300% 0.350% 0.550% MARGIN - ------------------------------------------------------------------------------- ALTERNATE BASE 0% 0% 0% 0% 0% RATE - ------------------------------------------------------------------------------- APPLICABLE FEE LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V RATE STATUS STATUS STATUS STATUS STATUS - ------------------------------------------------------------------------------- UTILIZATION FEE 0% 0% 0% 0.05% 0.10% - ------------------------------------------------------------------------------- FACILITY FEE 0.080% 0.100% 0.125% 0.150% 0.200% - ------------------------------------------------------------------------------- For the purposes of this Agreement, the Company's Status will be determined based on the following definitions: "LEVEL I STATUS" exists at any date if, on such date, the Company's Moody's Rating is A3 or better or the Company's S&P Rating is A- or better. "LEVEL II STATUS" exists at any date if, on such date, (i) the Company has not qualified for Level I Status and (ii) the Company's Moody's Rating is Baa1 or better or the Company's S&P Rating is BBB+ or better. 30 "LEVEL III STATUS" exists at any date if, on such date, (i) the Company has not qualified for Level I Status or Level II Status and (ii) the Company's Moody's Rating is Baa2 or better or the Company's S&P Rating is BBB or better. "LEVEL IV STATUS" exists at any date if, on such date (i) the Borrower has not qualified for Level I Status, Level II Status or Level III Status and (ii) the Company's Moody's Rating is Baa3 or better or the Company's S&P Rating is BBB- or better. "LEVEL V STATUS" exists at any date if, on such date, the Company has not qualified for Level I Status, Level II Status, Level III Status or Level IV Status. "MOODY'S RATING" means, at any time, the rating issued by Moody's and then in effect with respect to the Company's senior unsecured long-term debt securities without third-party credit enhancement. "S&P RATING" means, at any time, the rating issued by S&P and then in effect with respect to the Company's senior unsecured long-term debt securities without third-party credit enhancement. "STATUS" means either Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status. 2.4. Fees. The Company and the Borrowing Subsidiaries agree to pay the following fees: 2.4.1. Facility Fee. The Company and the Borrowing Subsidiaries hereby jointly and severally agree to pay to the Administrative Agent for the ratable account of each Lender, for the period from the date hereof to and including the Termination Date, a facility fee at the applicable rate per annum equal to the annual percentage rate indicated as the applicable facility fee in the table set forth in Section 2.3 changing as and when the Company's Status changes, payable on the average daily amount of such Lender's Commitment (without regard to utilization). All accrued facility fees shall be payable quarterly in arrears during the term of each Lender's Commitment hereunder, in arrears, not later than the last day of each March, June, September and December, commencing December 31, 1998 and, in the case of each Lender, on the effective date of any termination of the obligations of such Lender to make Loans hereunder, and facility fees shall cease to accrue thereafter. 2.4.2. Utilization Fee. If, at the end of any fiscal quarter, the average daily aggregate principal amount of outstanding Revolving Credit Obligations, Alternate Currency Loans and Competitive Bid Loans during such quarter exceeded fifty percent (50%) of the average daily amount of the Aggregate Commitment during such quarter, the Company and the Borrowing Subsidiaries hereby jointly and severally agree to pay to the Administrative Agent, for the ratable account of each Lender in accordance with its Percentage, a utilization fee at the respective rates per annum set forth in the table set forth in Section 2.3 on the average daily aggregate principal amount of all Revolving Credit Obligations, Alternate Currency Loans and Competitive Bid Loans during such quarter, payable quarterly, in arrears, not later than the last day of each 31 March, June, September and December, commencing December 31, 1998, and on the Termination Date or earlier termination of the Commitments and repayment in full of the Obligations. For purposes of calculating the utilization fee hereunder, the principal amount of each Loan made in a currency other than Dollars shall be the Dollar Amount of such Loan as determined under clause (ii) of the definition herein of "Dollar Amount". 2.4.3. Administrative Agent Fees. The Company agrees to pay certain fees to the Administrative Agent and the Arranger, solely for their account (to be allocated among the Administrative Agent and the Arranger in their discretion), on the dates and in the amounts set forth in the fee letter among the Company, the Arranger and The First National Bank of Chicago, dated October 7, 1998 (the "FEE LETTER"). 2.5. General Facility Terms. 2.5.1. Method of Borrowing. (i) Promptly after receipt of a Borrowing Notice with respect to Revolving Loans and Alternate Currency Loans, the Administrative Agent shall notify each Lender by telex or telecopy, or other similar form of transmission, of the proposed Advance. On each Borrowing Date with respect to Revolving Loans, each Lender shall make available its Revolving Loan, as applicable, (x) if such Loan is denominated in Dollars, not later than 2:00 p.m., Chicago time, in Federal or other funds immediately available to the Administrative Agent, in Chicago, Illinois at its address specified in or pursuant to Article XIV and, (y) if such Loan is denominated in another currency, not later than 12:00 noon, local time in the city of the Administrative Agent's Eurocurrency Payment Office for such currency, in such funds as may then be customary for the settlement of international transactions in such currency in the city of and at the address of the Administrative Agent's Eurocurrency Payment Office for such currency. Unless the Administrative Agent determines that any applicable condition specified in Article IV has not been satisfied, the Administrative Agent will make the funds so received from the Lenders available to the Company at the Administrative Agent's aforesaid address not later than 3:00 p.m. local time. (ii) Subject to the procedures set forth in the applicable Alternate Currency Addendum, each Alternate Currency Bank shall make available its Alternate Currency Loan or Loans, in funds immediately available to the Alternate Currency Agent at its office designated in the Alternate Currency Addendum for payments of such Alternate Currency in the Alternate Currency. The Alternate Currency Agent will promptly make the funds so received from the Alternate Currency Banks available to the applicable Borrower. Promptly upon any such disbursement of an Alternate Currency Advance, the Alternate Currency Agent shall give written notice to the Administrative Agent by telex or telecopy of the making of such Loan, which notice shall be substantially in the form attached hereto as Exhibit G. (iii) If for any reason any applicable Alternate Currency Bank fails to make payment to the applicable Alternate Currency Agent of any amount due under Section 2.5.1(ii) and the applicable Alternate Currency Addendum, the applicable Alternate Currency Agent shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Alternate Currency Bank hereunder until the Alternate Currency Agent receives 32 such payment from such Alternate Currency Bank or such obligation is otherwise fully satisfied. In addition to the foregoing, if for any reason any Alternate Currency Bank fails to make payment to the applicable Alternate Currency Agent of any amount due under Section 2.5.1(ii) and the applicable Alternate Currency Addendum, such Alternate Currency Bank shall be deemed, at the option of the applicable Alternate Currency Agent, to have unconditionally and irrevocably purchased from the applicable Alternate Currency Agent, without recourse or warranty, an undivided interest in and participation in the applicable Alternate Currency Advance in the amount such Alternate Currency Bank was required to pay pursuant to Section 2.5.1(ii) and the applicable Alternate Currency Addendum, and such interest and such participation may be recovered from such Alternate Currency Bank together with interest thereon at the Federal Funds Effective Rate for each day during the period commencing on the date of demand by the applicable Alternate Currency Agent and ending on the date such obligation is fully satisfied. 2.5.2. Minimum Amount of Each Advance. Each Advance shall be in the minimum amount of $5,000,000 and in integral multiples of $1,000,000 if in excess thereof (or the Approximate Equivalent Amount if denominated in an Agreed Currency other than Dollars or an Alternate Currency (or such other amounts as may be specified in the applicable Alternate Currency Addendum)); provided, however, that any Alternate Base Rate Advance may be in the amount of the aggregate applicable unused Aggregate Commitment. 2.5.3. Prepayments. (A) Voluntary Prepayments. Subject to the terms of Section 2.5.3, the Company may from time to time and at any time repay or prepay all or any part of outstanding Alternate Base Rate Advances; provided, that the Company may not so prepay Alternate Base Rate Advances unless it shall have provided at least one Business Day's written notice to the Administrative Agent of such prepayment. Eurocurrency Advances and Alternate Currency Advances may be voluntarily repaid or prepaid prior to the last day of the applicable Interest Period, subject to the indemnification provisions contained in Section 3.4 and the provisions of Section 2.5.3, provided, that the applicable Borrower may not so prepay Eurocurrency Advances unless it shall have provided at least three (3) Business Days' written notice to the Administrative Agent of such prepayment. Voluntary prepayments of the Loans shall be in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount; provided, that optional prepayments of Eurocurrency Advances made pursuant to Section 2.1.1 shall be for the entire amount of the outstanding Eurocurrency Advance and the minimum amounts set forth above shall not be applicable if the aggregate outstanding principal balance of the Alternate Base Rate Loans is to be prepaid in full. (B) Mandatory Prepayments. (i) If at any time and for any reason, other than the fluctuation in currency exchange rates (which shall be governed by the provisions of clause (ii) below), the Dollar Amount of the Revolving Credit Obligations, Alternate Currency Loans and Competitive Bid Loans are greater than the Aggregate Commitment, the Company shall immediately make a mandatory prepayment of the Obligations in an amount equal to such excess. (ii) If on the last Business Day of any month: 33 (y) the Dollar Amount of the Revolving Credit Obligations plus the Alternate Currency Loans plus the Competitive Bid Loans exceeds 105% of the Aggregate Commitment, the Company for the ratable benefit of the Lenders shall or shall cause the other Borrowers to immediately prepay Loans (to be applied to such Loans as the Company shall direct at the time of such payment) in an aggregate amount such that after giving effect thereto the Dollar Amount of the Revolving Credit Obligations plus the Alternate Currency Loans plus the Competitive Bid Loans is less than or equal to the Aggregate Commitment; or (z) the Dollar Amount of all outstanding Alternate Currency Loans under the Alternate Currency Addenda plus all Competitive Bid Loans in any currencies other than Dollars exceeds 105% of the Maximum Alternate Currency Amount, the applicable Borrowers shall on such date prepay Alternate Currency Loans or Competitive Bid Loans in an aggregate amount such that after giving effect thereto the Dollar Amount of all such Alternate Currency Loans plus all Competitive Bid Loans in any currencies other than ---- Dollars is less than or equal to the Maximum Alternate Currency Amount. (iii) Subject to the preceding provisions of this Section 2.5.3(B), all of the mandatory prepayments made under this Section 2.5.3(B) shall be applied first to Alternate Base Rate Loans, second to any Eurocurrency Loans and Alternate Currency Loans maturing on such date, third to any Competitive Bid Loans maturing on such date, and fourth to subsequently maturing Eurocurrency Loans, Alternate Currency Loans and Competitive Bid Loans in order of maturity; provided, that, if requested by the Company at a time when no Default has occurred and is continuing, the Administrative Agent shall hold as cash collateral the part of any such prepayment which, in accordance with this clause (iii) is to be applied to outstanding Eurocurrency Loans, Alternate Currency Loans and/or Competitive Bid Loans. The Administrative Agent shall apply such cash collateral to outstanding Eurocurrency Loans, Alternate Currency Loans and Competitive Bid Loans on the last day of the next expiring Interest Period with respect to such Loans. 2.5.4. Interest Rates; Interest Periods. Each Alternate Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such loan is made until it becomes due at a rate per annum equal to the Alternate Base Rate for such day. Each Eurocurrency Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Eurocurrency Rate applicable thereto. Each Alternate Currency Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum set forth in the applicable Alternate Currency Addendum. Subject to the provisions of Section 2.5.5, each Advance (other than those bearing interest by reference to the Alternate Base Rate, which shall be governed by the first sentence of this Section) shall bear interest from and including the first day of the Interest Period applicable thereto to (but not including) the earlier of (i) the last day of such Interest Period or (ii) the date of any earlier prepayment in full as permitted by Section 2.5.3, at the interest rate determined as applicable to such Advance. 34 2.5.5. Default Rate. After the occurrence and during the continuance of a Default, upon notice to the Company at the option of the Administrative Agent or at the direction of the Required Lenders (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates) the interest rate applicable to all of the Obligations shall be the Alternate Base Rate plus two percent (2%) per annum, provided that, during the continuance of a Default under Section 7.6 or 7.7, the interest rate set forth above shall be applicable to all Advances without any election or action on the part of the Administrative Agent or any Lender. 2.5.6. Interest Payment Dates; Interest Basis. Interest accrued on each Alternate Base Rate Advance shall be payable on each Payment Date and at maturity. Interest accrued on each Eurocurrency Advance, or Alternate Currency Advance shall be payable on the last day of its applicable Interest Period, on any date on which such Eurocurrency Advance or Alternate Currency Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Eurocurrency Advance or Alternate Currency Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest and utilization fees on Alternate Base Rate Loans, Alternate Currency Loans denominated in Sterling and Eurocurrency Loans denominated in Sterling and the facility fee shall be calculated for actual days elapsed on the basis of a 365/366-day year. Interest and utilization fees on all Alternate Currency Loans and Eurocurrency Loans, in each case, other than those denominated in Sterling, shall be calculated for actual days elapsed on the basis of a 360-day year (or a 365-day year if that is deemed by the Administrative Agent to be consistent with market practices for the applicable currency for any Agreed Currency added after the date hereof). Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to noon (local time) at the place of payment. If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment. 2.5.7. Method of Payment. Each Advance shall be repaid or prepaid in the currency in which it was made in the amount borrowed and interest payable thereon shall be paid in such currency. All payments of principal, interest, and fees in Dollars hereunder shall be made by noon (Chicago time) on the date when due in immediately available funds to the Administrative Agent at the Administrative Agent's address specified pursuant to Article XIV, or at any other Lending Installation of the Administrative Agent specified in writing by the Administrative Agent to the Company and shall be made ratably among all Lenders in the case of fees and payments in respect of Advances. After the occurrence and during the continuance of a Default, all payments of principal shall be applied ratably among all outstanding Advances. Each payment delivered to the Administrative Agent for the account of any Lender shall be delivered promptly by the Administrative Agent to such Lender in the same type of funds which the Administrative Agent received at its address specified pursuant to Article XIV or at any Lending Installation specified in a notice received by the Administrative Agent from such Lender. All payments to be made by the Borrowers hereunder or under the Notes issued hereunder in any currency other than Dollars (other than in respect of any Alternate Currency Loan) shall be made 35 in such currency on the date due in such funds as may then be customary for the settlement of international transactions in such currency for the account of the Administrative Agent, at its Eurocurrency Payment Office for such currency. All payments to be made by the Borrowers hereunder in respect of any Alternate Currency Loans shall be made in the currencies in which such Loans are denominated and in funds immediately available, freely transferable and cleared at the office or branch from which the Loan was made under Section 2.1.2 not later than 3:00 p.m. local time on the date on which such payment shall become due (unless a different time shall be specified in the applicable Alternate Currency Addendum). Promptly upon receipt of any payment of principal of the Alternate Currency Loans, the Lender receiving such payment shall give written notice to the Administrative Agent by telex or telecopy of the receipt of such payment, which notice shall be substantially in the form attached hereto as Exhibit H. The Administrative Agent will promptly cause such payments to be distributed to each Lender in like funds and currency. Notwithstanding the foregoing provisions of this Section, if, after the making of any Advance in any currency other than Dollars, currency control or exchange regulations are imposed in the country which issues such currency with the result that different types of such currency (the "NEW CURRENCY") are introduced and the type of currency in which the Advance was made (the "ORIGINAL CURRENCY") no longer exists or the applicable Borrower is not able to make payment to the Administrative Agent for the account of the Lenders in such Original Currency, then all payments to be made by the applicable Borrower hereunder or under the Notes issued hereunder in such currency shall be made in such amount and such type of the New Currency or Dollars as shall be equivalent to the amount of such payment otherwise due hereunder or under the Notes issued hereunder in the Original Currency, it being the intention of the parties hereto that the Borrowers take all risks of the imposition of any such currency control or exchange regulations. In addition, notwithstanding the foregoing provisions of this Section, if, after the making of any Advance in any currency other than Dollars, the applicable Borrower is not able to make payment to the Administrative Agent for the account of the Lenders in the type of currency in which such Advance was made because of the imposition of any such currency control or exchange regulation, then such Advance shall instead be repaid when due in Dollars in a principal amount equal to the Dollar Amount (as of the date of repayment) of such Advance; provided, that if and to the extent that any legislative measures of the Council of the European Union for the introduction of, changeover to or operation of a single or unified currency provided that following the commencement of the third stage of the Economic and Monetary Union an amount denominated either in the Euro or in the National Currency Unit of a participating member state and payable within that participating member state by crediting an account of the creditor can be paid by the debtor either in the Euro or in that National Currency Unit and so long as the applicable National Currency Unit in which the applicable Loan was made is an Eligible Currency, each Borrower shall be entitled to pay or repay any such amount either in the Euro or in such National Currency Unit. 2.5.8. Noteless Transaction; Evidence of Indebtedness. (i) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Company and each Borrowing Subsidiary to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. 36 (ii) The Administrative Agent shall also maintain accounts in which it will record (a) the amount of each Loan made hereunder, the Type thereof and the Interest Period with respect thereto, (b) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (c) the amount of any sum received by the Administrative Agent hereunder from any Borrower and each Lender's share thereof. (iii) The entries maintained in the accounts maintained pursuant to clauses (i) and (ii) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the Administrative Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of each Borrower to repay its Obligations in accordance with their terms. (iv) Any Lender may request that its Loans to one or more of the Borrowers be evidenced by a promissory note (a "NOTE"). In such event, the applicable Borrower shall prepare, execute and deliver to such Lender a Note payable to the order of such Lender in a form supplied by the Administrative Agent. Thereafter, the Loans evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 13.3) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 13.3, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in clauses (i) and (ii) above. 2.5.9. Notification of Advances, Interest Rates and Prepayments. Promptly after receipt thereof, the Administrative Agent will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice, and repayment notice received by it hereunder. The Administrative Agent will notify each Lender of the interest rate applicable to each Eurocurrency Advance and Alternate Currency Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate. 2.5.10. Non-Receipt of Funds by the Administrative Agent. Unless the Company, a Borrowing Subsidiary or a Lender, as the case may be, notifies the Administrative Agent prior to the date on which it is scheduled to make payment to the Administrative Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of the Company or a Borrowing Subsidiary, a payment of principal, interest or fees to the Administrative Agent for the account of the Lenders, that it does not intend to make such scheduled payment, the Administrative Agent may assume that such scheduled payment has been made. The Administrative Agent may, but shall not be obligated to, make the amount of such scheduled payment available to the intended recipient in reliance upon such assumption. If such Lender, Borrowing Subsidiary or the Company, as the case may be, has not in fact made such scheduled payment to the Administrative Agent, the recipient of such scheduled payment shall, on demand by the Administrative Agent, repay to the Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to (x) in the case of scheduled payment by 37 a Lender, the Federal Funds Effective Rate for such day or (y) in the case of scheduled payment by the Company or a Borrowing Subsidiary, the interest rate applicable to the relevant Loan. 2.5.11. Termination or Reduction in the Aggregate Commitment. The Company may at any time after the date hereof permanently reduce the Aggregate Commitment, in whole, or in a minimum aggregate amount of $5,000,000 and in integral multiples of $1,000,000 if in excess thereof, ratably among the Lenders upon at least three (3) Business Day's prior written notice to the Administrative Agent, which notice shall specify the amount of such reduction; provided, however, no such notice of reduction shall be effective to the extent that it would reduce the Aggregate Commitment to an amount which would be less than the outstanding principal Dollar Amount of the Obligations outstanding at the time such reduction is to take effect. The Aggregate Commitment once reduced as provided in this Section 2.5.11 may not be reinstated. 2.5.12. Market Disruption. Notwithstanding the satisfaction of all conditions referred to in Article II with respect to any Advance in any currency other than Dollars, if there shall occur on or prior to the date of such Advance any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which would in the reasonable opinion of the Administrative Agent or the Required Lenders make it impracticable for the Eurocurrency Loans, Alternate Currency Loans or Competitive Bid Loans comprising such Advance to be denominated in the currency specified by the applicable Borrower, then the Administrative Agent shall forthwith give notice thereof to the Company and the Lenders, and such Loans shall not be denominated in such currency but shall be made on such Borrowing Date in Dollars, in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Borrowing Notice, as Alternate Base Rate Loans, unless the applicable Borrower notifies the Administrative Agent at least one Business Day before such date that (i) it elects not to borrow on such date or (ii) it elects to borrow on such date in a different Agreed Currency or Alternate Currency, as the case may be, in which the denomination of such Loans would in the opinion of the Administrative Agent and the Required Lenders be practicable and in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Borrowing Notice. 2.5.13. Lending Installations. Each Lender may book its Loans at any Lending Installation selected by such Lender and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Loans and any Notes issued hereunder shall be deemed held by each Lender for the benefit of such Lending Installation. Each Lender may, by written notice to the Administrative Agent and the Company in accordance with Article XIV, designate replacement or additional Lending Installations through which Loans will be made by it and for whose account Loan payments are to be made. 2.5.14. Borrowing Subsidiaries. The Company may at any time or from time to time, with the consent of the Administrative Agent, which consent shall not be unreasonably withheld, add as a party to this Agreement any Australian, Canadian, English, French or German Subsidiary to be a "Borrowing Subsidiary" hereunder by (a) the execution and delivery to the Administrative Agent of a duly completed Assumption Letter by such Subsidiary, with the written consent of the Company at the foot thereof and (b) the execution and delivery to the 38 Administrative Agent of such other documents, instruments or agreement as may be reasonably required by the Administrative Agent; provided, however, if any French Subsidiary is designated as a Borrowing Subsidiary, notwithstanding anything else in this Agreement to the contrary, such Borrowing Subsidiary shall be permitted to request only Competitive Bid Loans pursuant to Section 2.1.3 and shall not be entitled to borrow any Alternate Currency Loans pursuant to Section 2.1.2. Upon such execution, delivery and consent such Subsidiary shall for all purposes be a party hereto as a Borrowing Subsidiary as fully as if it had executed and delivered this Agreement. So long as the principal of and interest on any Advances made to any Borrowing Subsidiary under this Agreement shall have been repaid or paid in full and all other obligations of such Borrowing Subsidiary under this Agreement shall have been fully performed, the Company may, upon not fewer than five (5) Business Days' prior notice to the Administrative Agent (which shall promptly notify the Lenders thereof), terminate such Borrowing Subsidiary's status as a "Borrowing Subsidiary". 2.5.15. Withholding Tax Exemption. (i) On or prior to the date of its execution and delivery of this Agreement in the case of any Lender (and on or prior to the effective date specified in the Notice of Assignment pursuant to which a Purchaser became a Lender in the case of each other Lender), each Lender that is not incorporated under the laws of the United States of America, or a state thereof, agrees that it will deliver to the Company and the Administrative Agent two duly completed copies of United States Internal Revenue Service Form 1001 or 4224 (or other appropriate form), certifying in either case that such Lender is entitled to receive payments from the Company under the Loan Documents without deduction or withholding of any United States federal income taxes. Each Lender which so delivers a Form 1001 or 4224 further undertakes to deliver to the Company and the Administrative Agent two additional copies of such form (or a successor form) on or before the date that such form (or a replacement of an expired form) expires (currently, three successive calendar years for Form 1001 and one calendar year for Form 4224) or becomes obsolete or after the occurrence of any event requiring a change in the most recent forms so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by the Company or the Administrative Agent, in each case certifying that such Lender is entitled to receive payments from the Company under the Loan Documents without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender promptly advises the Company and the Administrative Agent that it is not capable of receiving payments from the Company without any deduction or withholding of United States federal income tax. (ii) Each Lender agrees to file with the Administrative Agent and the Borrowers, in duplicate, (a) on the date such Lender becomes an Alternate Currency Bank with respect to an Alternate Currency and (b) thereafter as frequently as required by applicable law unless not legally able to do so, on or prior to the immediately following due date of any payment by the Borrowers hereunder, a properly completed and executed copy of any form, certification or similar documentation, if any, necessary for claiming complete exemption from withholding taxes, or an opinion of counsel confirming such exemption; provided that such Lender's failure 39 to complete, execute and file such form, certification or similar documentation shall not relieve the Borrowers of any of their obligations under this Agreement. 2.5.16. Judgment Currency. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due from a Borrower hereunder or under any of the Notes issued hereunder in the currency expressed to be payable herein or under the Notes issued hereunder (the "specified currency") into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the specified currency with such other currency at the Administrative Agent's office in Chicago, Illinois on the Business Day preceding that on which final, non-appealable judgment is given. The obligations of the applicable Borrower in respect of any sum due to any Lender or the Administrative Agent hereunder or under any Note shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such other currency such Lender or the Administrative Agent (as the case may be) may in accordance with normal, reasonable banking procedures purchase the specified currency with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Lender or the Administrative Agent, as the case may be, in the specified currency, the applicable Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Administrative Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds (a) the sum originally due to any Lender or the Administrative Agent, as the case may be, in the specified currency and (b) any amounts shared with other Lenders as a result of allocations of such excess as a disproportionate payment to such Lender under Section 12.2, such Lender or the Administrative Agent, as the case may be, agrees to remit such excess to the applicable Borrower. 2.5.17. Telephonic Notices. The Company and each Borrower hereby authorize the Lenders and the Administrative Agent to extend or continue Advances, effect selections of Types of Advances and transfer funds based on telephonic notices made by any person or persons the Administrative Agent or such Lender in good faith believes to be a Financial Officer or an officer, employee or agent of the Company or a Borrowing Subsidiary designated by a Financial Officer. The Company agrees to deliver or to cause to deliver promptly to the Administrative Agent a written confirmation of each telephonic notice given by the Company or any Subsidiary, signed by a Financial Officer. If the written confirmation differs in any material respect from the action taken by the Administrative Agent or the Lenders, the records of the Administrative Agent and the Lenders shall govern absent manifest error. 2.6 Termination Date. This Agreement shall be effective until the Termination Date. Notwithstanding the termination of this Agreement, until all of the Obligations (other than contingent indemnity obligations) shall have been fully and indefeasibly paid and satisfied, all financing arrangements among the Borrowers and the Lenders shall have been terminated, all of the rights and remedies under this Agreement and the other Loan Documents shall survive. 40 ARTICLE III: CHANGE IN CIRCUMSTANCES 3.1. Taxes. (i) All payments by the Borrowers to or for the account of any Lender or the Administrative Agent hereunder or under any Note shall be made free and clear of and without deduction for any and all Taxes. If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Administrative Agent, (a) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.1) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b) the applicable Borrower shall make such deductions, (c) the applicable Borrower shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) the applicable Borrower shall furnish to the Administrative Agent the original copy of a receipt evidencing payment thereof within 30 days after such payment is made. (ii) In addition, the applicable Borrower hereby agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note ("OTHER TAXES"). (iii) Each of the Borrowers hereby agrees to indemnify the Administrative Agent and each Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.1) paid by the Administrative Agent or such Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of the date the Administrative Agent or such Lender makes demand therefor pursuant to Section 3.7. (iv) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (each a "NON-U.S. LENDER") agrees that it will, not less than ten (10) Business Days after the date of this Agreement, (i) deliver to each of the Company and the Administrative Agent two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, certifying in either case that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and (ii) deliver to each of the Company and the Administrative Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from United States backup withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of the Company and the Administrative Agent (x) renewals or additional copies of such form (or any successor form) on or before the date that such form expires or becomes obsolete, and (y) after the occurrence of any event requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by the Company or the Administrative Agent certifying that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, provided that no event (including without limitation any change in treaty, law or regulation, or any change in the interpretation or administration by any Governmental Authority) has occurred 41 prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with respect to it. Each Lender shall advise the Company and the Administrative Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax, if it has actual knowledge of said fact. (v) For any period during which a Non-U.S. Lender has failed to provide the Company with an appropriate form pursuant to clause (iv), above (unless such failure is due to a change in treaty, law or regulation, or any change in the interpretation or administration thereof by any Governmental Authority, occurring subsequent to the date on which a form originally was required to be provided), such Non-U.S. Lender shall not be entitled to indemnification under this Section 3.1 with respect to U.S. federal income taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of its failure to deliver a form required under clause (iv), above, the Company shall take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes. (vi) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Note pursuant to the law of any relevant jurisdiction or any treaty upon written request from the Company shall deliver to the applicable Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law and specified in the Company's written request as will permit such payments to be made without withholding or at a reduced rate. 3.2. Yield Protection. (a) If, on or after the date of this Agreement, the adoption of any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender or applicable Lending Installation with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency: (i) subjects any Lender or any applicable Lending Installation to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender in respect of its Loans, or (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation (other than reserves and assessments taken into account in determining the interest rate applicable to Eurocurrency Advances or Alternate Currency Advances), or 42 (iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation of making, funding or maintaining its Loans or reduces any amount receivable by any Lender or any applicable Lending Installation in connection with its Loans, or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to the amount of Loans held or interest received by it, by an amount deemed material by such Lender, and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending Installation of making or maintaining its Loans or Commitment or to reduce the return received by such Lender or applicable Lending Installation in connection with such Loans or Commitment, then, within 15 days of demand by such Lender, the Company shall pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction in amount received. (b) Non-U.S. Reserve Costs With Respect to Loans to Non-U.S. Borrowers. If any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive of any jurisdiction outside of the United States of America or any subdivision thereof (whether or not having the force of law), imposes or deems applicable any reserve requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation, and the result of the foregoing is to increase the cost to such Lender or applicable Lending Installation of making or maintaining its Loans to any Borrower that is not incorporated under the laws of the United States of America or a state thereof (each a "NON-U.S. BORROWER") or its Commitment to any Non-U.S. Borrower or to reduce the return received by such Lender or applicable Lending Installation in connection with such Loans to any Non-U.S. Borrower or Commitment to any Non-U.S. Borrower, then, within 15 days of demand by such Lender, such Non-U.S. Borrower shall pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction in amount received, provided that such Non-U.S. Borrower shall not be required to compensate any Lender for such non-U.S. reserve costs to the extent that an amount equal to such reserve costs is received by such Lender as a result of the direct inclusion of such reserve costs in the calculation of the interest rate applicable to such Loans. 3.3.Changes in Capital Adequacy Regulations. If a Lender determines the amount of capital required or expected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling such Lender is increased as a result of a Change, then, within 15 days of demand by such Lender, the Company shall pay such Lender, as applicable, the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender determines is attributable to this Agreement, its Loans or its Commitment to make Loans hereunder (after taking into account such Lender's policies as to capital adequacy). "CHANGE" means (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or any Lending Installation or any 43 corporation controlling any Lender. "RISK-BASED CAPITAL GUIDELINES" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement. 3.4. Availability of Types of Advances. If any Lender determines that maintenance of its Eurocurrency Loans, Alternate Currency Loans or Competitive Bid Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required Lenders determine that (i) deposits of a type and maturity appropriate to match fund Eurocurrency Advances are not available or (ii) the interest rate applicable to a Type of Advance does not accurately reflect the cost of making or maintaining such Advance, then the Administrative Agent shall suspend the availability of the affected Type of Advance and require any affected Advances to be repaid or converted to Alternate Base Rate Advances, subject to the payment of any funding indemnification amounts required by Section 3.5. 3.5. Funding Indemnification. If any payment of a Eurocurrency Advance, Competitive Bid Advance or Alternate Currency Advance occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise or a Eurocurrency Advance, Alternate Currency Advance or Competitive Bid Advance is not made on the date specified by the applicable Borrower for any reason other than default by the Lenders, such Borrower will indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Advances, but excluding loss of margin for the period after any such payment or failure to borrow, provided that such Lender shall have delivered to the applicable Borrower a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error. 3.6. Mitigation of Additional Costs or Adverse Circumstances. If, in respect of any Lender, circumstances arise which would or would upon the giving of notice result in: (a) an increase in the liability of a Borrower to such Lender under Section 3.1, 3.2 or 3.3 or (b) the unavailability of a Type of Loan under Section 3.4; then, without in any way limiting, reducing or otherwise qualifying the applicable Borrower's obligations under any of the clauses referred to above in this Section 3.6, such Lender shall promptly upon becoming aware of the same notify the Administrative Agent thereof and shall, in consultation with the Administrative Agent and the Company and to the extent that it can do so in a manner that is not, in the judgment of such Lender, disadvantageous to such Lender, take such reasonable steps as may be reasonably available to it to mitigate the effects of such 44 circumstances. If and so long as a Lender has been unable to take, or has not taken, steps acceptable to the Company to mitigate the effect of the circumstances in question, such Lender shall be obliged, at the request of the Company, to assign all its rights and obligations hereunder to a financial institution nominated by the Company with the approval of the Administrative Agent and willing to participate in the facility in place of such Lender; provided that such financial institution satisfies all of the requirements of this Agreement including, but not limited to, providing the forms required by Sections 2.5.15 and 13.3.2; and provided further that, with respect to such assignment the Lender being replaced shall have concurrently received, in cash, all amounts due and owing to such Lender hereunder or under any other Loan Document, including, without limitation, the aggregate outstanding principal amount of the Loans owed to such Lender, together with accrued interest thereon through the date of such assignment, together with all accrued and unpaid fees and other amounts payable to such Lender. Notwithstanding any such assignment, the obligations of the Company under Sections 3.1, 3.2, 3.3 and 10.6 shall survive any such assignment and be enforceable by such Lender. 3.7. Lender Statements; Survival of Indemnity. Each Lender shall deliver a written statement of such Lender to the Company (with a copy to the Administrative Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.3 or 3.5. Such written statement shall set forth in reasonable detail the event by reason of which such Lender is entitled to make a claim for such amount and the calculations upon which such Lender determined such amount, which shall be final, conclusive and binding on the applicable Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurocurrency Loan, Alternate Currency Loan or Competitive Bid Loan shall be calculated as though each Lender funded such Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the interest rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement shall be payable within three (3) Business Days of demand after receipt by the applicable Borrower of the written statement. The obligations of such Borrower under Sections 3.1, 3.2, 3.3 and 3.5 shall survive payment of any other of such Borrower's Obligations and the termination of this Agreement. ARTICLE IV: CONDITIONS PRECEDENT 4.1. Initial Advance. No Lender shall be required to make the initial Loans to the Company unless the Company has furnished or caused to be furnished to the Administrative Agent with sufficient copies for the Lenders: (i) Copies of the articles or certificate of incorporation (or other similar constituting documents) of the Company, together with all amendments, and a certificate of good standing, each certified by the appropriate governmental officer in its jurisdiction of incorporation; (ii) Copies, certified by the Secretary or Assistant Secretary of the Company, of the Company's by-laws (or other similar governing agreements) and Board of 45 Directors' resolutions and of resolutions or actions of any other body authorizing the execution of the Loan Documents; (iii) An incumbency certificate, executed by the Secretary or Assistant Secretary of the Company, which shall identify by name and title and bear the signatures of the officers of the Company authorized to sign the Loan Documents to which the Company is a party and to request Advances, upon which certificate the Administrative Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Company; (iv) A certificate, signed by a Financial Officer of the Company, stating that on the initial Borrowing Date no Default or Unmatured Default has occurred and is continuing and that on the initial Borrowing Date the representations and warranties contained in the Loan Documents are true and correct; (v) A written opinion of counsel to the Company, addressed to the Lenders in substantially the form of Exhibit I; (vi) The Notes, if any, requested by a Lender pursuant to Section 2.5.8 payable to the order of each such requesting Lender; (vii) Written money transfer instructions, in substantially the form of Exhibit J, addressed to the Administrative Agent and signed by a Financial Officer, together with such other related money transfer authorizations as the Administrative Agent may have reasonably requested; (viii) The Company shall have provided evidence satisfactory to the Administrative Agent of the cancellation and termination of its Credit Agreement dated as of April 26, 1994, as amended and payment of all accrued and unpaid amounts in connection therewith; and (ix) Such other documents as any Lender or its counsel may have reasonably requested. 4.2. Initial Advance to Each Borrowing Subsidiary. No Lender shall be required to make an Advance hereunder to a Borrowing Subsidiary unless the Company has furnished or caused to be furnished to the Administrative Agent with sufficient copies for the Lenders: (i) The Assumption Letter executed and delivered by such Borrowing Subsidiary and containing the written consent of the Company at the foot thereof, as contemplated by Section 2.5.14; (ii) Copies, certified by the Secretary or Assistant Secretary of the Borrowing Subsidiary, of its Board of Directors' resolutions (and/or resolutions of other bodies, if any are deemed necessary by counsel for any Lender) approving the Assumption Letter; 46 (iii) An incumbency certificate, executed by the Secretary or Assistant Secretary of the Borrowing Subsidiary, which shall identify by name and title and bear the signature of the officers of such Borrowing Subsidiary authorized to sign the Assumption Letter and the other documents to be executed and delivered by such Borrowing Subsidiary hereunder, upon which certificate the Administrative Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Company; (iv) An opinion of counsel to such Borrowing Subsidiary in a form and substance reasonably acceptable to the Administrative Agent; (v) The Notes, if any, requested by a Lender from such Borrowing Subsidiary pursuant to Section 2.5.8 payable to the order of each such requesting Lender; (vi) With respect to the initial Advance made to any Borrowing Subsidiary incorporated in the United Kingdom or Australia, the Administrative Agent shall have received originals and/or copies, as applicable, of all filings required to be made certifying that each Lender, where applicable is entitled to receive payments under the Loan Documents without deduction or withholding of any English or Australian taxes; (vii) Prior to the making of any Alternate Currency Loan to such Borrowing Subsidiary, the applicable Alternate Currency Addendum executed by the Administrative Agent, the Lenders and the Borrowing Subsidiary; and (viii) Such other documents as any Lender or its counsel may have reasonably requested. In addition, all legal details and proceedings in connection with the transactions contemplated by this Agreement with respect to the relevant Borrowing Subsidiary shall be satisfactory to the Lenders (in their reasonable discretion), and the Administrative Agent shall have received all such counterpart originals or certified or other copies of such documents and proceedings in connection with such transactions, in form and substance satisfactory to the Administrative Agent, as the Administrative Agent may reasonably request. Notwithstanding anything in this Agreement to the contrary, the initial Loans or Advances to any Borrowing Subsidiary incorporated or domiciled under the laws of the United Kingdom or Australia shall not be made prior to the date that is six months after the Effective Date. 4.3. Each Advance. The Lenders shall not be required to make any Advance (including the initial Advance hereunder) unless on the applicable Borrowing Date: (i) Prior to and after giving effect to such Advance, there exists no Default or Unmatured Default; (ii) After giving effect to such Advance and to the application of the proceeds thereof the representations and warranties contained in this Agreement (except, in the 47 case of a Refunding Borrowing, the representations and warranties set forth in Sections 5.5, 5.7 and the second sentence of Section 5.13 as to any matter which has theretofore been disclosed in writing by the Company to the Lenders) are true and correct in all material respects as of such Borrowing Date (except such representations and warranties which expressly relate solely to, and were true and correct in all material respects as of, an earlier date); and (iii) All legal and regulatory matters incident to the making of such Advance shall be satisfactory to the Lenders and their counsel. Each Borrowing Notice with respect to each such Advance shall constitute a representation and warranty by the Borrower that the conditions contained in Sections 4.1, 4.2 and 4.3 have been satisfied. Any Lender may require a duly completed compliance certificate in substantially the form of Exhibit K as a condition to making an Advance. ARTICLE V: REPRESENTATIONS AND WARRANTIES The Company represents and warrants as follows to each Lender and the Administrative Agent as of the date hereof and thereafter on each date as required by Section 4.3: 5.1. Existence and Standing. Each of the Company and its Borrowing Subsidiaries is a corporation, partnership (in the case of Subsidiaries only) or limited liability company duly and properly incorporated or organized, as the case may be, validly existing and (to the extent such concept applies to such entity) in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite authority to conduct its business in each jurisdiction in which its business is conducted except to the extent that the failure to have such authority would not reasonably be expected to result in a Material Adverse Effect. 5.2. Authorization and Validity. The Company and each of the Borrowing Subsidiaries has the power and authority and legal right to execute and deliver the Loan Documents and to perform its obligations thereunder. The execution and delivery by the Company and each of the Borrowing Subsidiaries of the Loan Documents and the performance of its obligations thereunder have been duly authorized by proper corporate proceedings, and the Loan Documents constitute legal, valid and binding obligations of the Company and each of the Borrowing Subsidiaries enforceable against them in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and general equitable principles. 5.3. No Conflict; Government Consent. Neither the execution and delivery by the Company and the Borrowing Subsidiaries of the Loan Documents, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate any law (including, without limitation, any law of the United States of America, Australia, England, the United Kingdom, Canada, Germany or the European Community), rule, regulation, order, writ, judgment, injunction, decree or award binding on the Company or any of the Borrowing Subsidiaries or the Company's or any Borrowing Subsidiary's articles or certificate of 48 incorporation, partnership agreement, certificate of partnership, articles or certificate of organization, by-laws, or operating or other management agreement, as the case may be, or the provisions of any indenture, instrument or agreement to which the Company or any of the Borrowing Subsidiaries is a party or is subject, or by which it, or its property, is bound, or conflict with or constitute a default thereunder, or result in or require the creation or imposition of any Lien in, of or on the property of the Company or a Borrowing Subsidiary pursuant to the terms of any such indenture, instrument or agreement, in any such case which violation, conflict, default, creation or imposition could reasonably be expected to have a Material Adverse Effect. No order, consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority, or any subdivision thereof which has not been obtained, is required to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, any of the Loan Documents. 5.4. Financial Statements. The December 31, 1997 and June 30, 1998 financial statements of the Company and its Consolidated Subsidiaries heretofore delivered to the Lenders were prepared in accordance with U.S. GAAP in effect on the date such statements were prepared (subject, in the case of the June 30, 1998 financial statements to normal year-end adjustments) and fairly present the financial condition of the Company and its Consolidated Subsidiaries at such date and the results of their operations for the periods then ended. 5.5. Material Adverse Change. Since December 31, 1997 there has been no change in the business, property, prospects, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries which could reasonably be expected to have a Material Adverse Effect. 5.6. Taxes. The Company and its Subsidiaries have filed all United States federal tax returns and all other material tax returns which are required to be filed by any Governmental Authority and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Company or any of its Subsidiaries, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in accordance with U.S. GAAP. The United States income tax returns of the Company and its Subsidiaries have been audited by the Internal Revenue Service through the fiscal year ended December 31, 1994. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of any taxes or other governmental charges are, in the reasonable opinion of the Company, adequate. The Borrowing Subsidiaries have filed all income tax returns and all other material tax returns which are required to be filed by any Governmental Authority and have paid all taxes due pursuant to said returns or pursuant to any assessment received by any of such Borrowing Subsidiaries, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. 5.7. Litigation. There is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting the Company or any of its Subsidiaries which could reasonably be expected to have a 49 Material Adverse Effect or which seeks to prevent, enjoin or delay the making or repayment of any Loans. 5.8. ERISA. (a) The Company and each of its ERISA Affiliates has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. Neither the Company nor any ERISA Affiliate has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. (b) Each Foreign Employee Benefit Plan is in compliance in all material respects with all laws, regulations and rules applicable thereto and the respective requirements of the governing documents for such Plan, except for any non-compliance the consequences of which, in the aggregate, would not result in a Material Adverse Effect. 5.9. Accuracy of Information. No information, exhibit or report furnished by the Company or any of its Subsidiaries to the Administrative Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents contained any material misstatement of fact or omitted to state a material fact necessary to make the statements contained therein not misleading. 5.10. Environmental Matters. In the ordinary course of its business, the officers of the Company consider the effect of Environmental Laws on the business of the Company and its Subsidiaries, in the course of which they identify and evaluate potential risks and liabilities accruing to the Company and its Subsidiaries due to Environmental Laws. On the basis of this consideration, the Company has reasonably concluded that Environmental Laws are not likely to have a Material Adverse Effect. 5.11. Investment Company Act. Neither the Company nor any Subsidiary is an "investment company" within the meaning of the Investment Company Act of 1940, as amended or otherwise restricted from borrowing under the provisions of the Investment Company Act of 1940, as amended. 5.12. Public Utility Holding Company Act. Neither the Company nor any Subsidiary is a "holding company" or a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended or otherwise restricted from borrowing under the provisions of the Public Utility Holding Company Act of 1935. 5.13 Year 2000 Issues. The Company has made an assessment of the Year 2000 Issues applicable to the Company and its Subsidiaries and has a reasonably realistic program which the 50 Company reasonably believes can be implemented for remediating the material Year 2000 Issues on a timely basis. Based on this assessment and program, the Company does not believe that Year 2000 Issues will have a Material Adverse Effect, insofar as such Year 2000 issues are known to officers of the Company and within the reasonable control of the Company and its Subsidiaries. 5.14. No Immunity. No Non-U.S. Borrower nor any of its assets is entitled to immunity from suit, execution, attachment or other legal process. The execution and delivery of the Loan Documents to which any Non-U.S. Borrower is a party constitutes, and the exercise of its rights and performance of and compliance with its obligations under such Loan Documents will constitute, private and commercial acts done and performed for private and commercial purposes. 5.15. Non-U.S. Borrower Representations. Each of the representations set forth in Schedule 5.15 with respect to each Non-U.S. Borrower is true and accurate in all material respects. ARTICLE VI: COVENANTS During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing: 6.1. Financial Reporting. The Company will maintain, for itself and each Consolidated Subsidiary, a system of accounting established and administered in accordance with generally accepted accounting principles, and furnish to the Administrative Agent, for distribution to the Lenders: (i) Within 90 days after the close of each of its fiscal years, an audit report (with all amounts stated in Dollars) certified by Deloitte & Touche LLP or any other independent certified public accountants acceptable to the Required Lenders, prepared in accordance with U.S. GAAP on a consolidated basis for itself and the Consolidated Subsidiaries, including consolidated balance sheets and the related consolidated statements of income, cash flows and statements of changes in common shareholders' equity, setting forth in each case in comparative form the figures for such fiscal year and the previous fiscal year (it being understood that the requirement to deliver such information may be satisfied by the delivery of the Company's annual report on Form 10-K for such fiscal year so long as such annual report continues to include such information). (ii) Within 45 days after the close of the first three quarterly periods of each of its fiscal years, for itself and the Consolidated Subsidiaries, unaudited consolidated balance sheets as at the close of each such period and the related consolidated income statement and statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, setting forth in the case of such statements of income and cash flows in comparative form the figures for the 51 corresponding quarter and the corresponding portion of the Company's previous fiscal year (it being understood that the requirement to deliver such information may be satisfied by the delivery of the Company's quarterly report on Form 10-Q for such fiscal quarter so long as such quarterly report continues to include such information), all certified (subject to normal year-end adjustments) as to fairness of presentation, preparation in accordance with U.S. GAAP and consistency by a Financial Officer of the Company. (iii) Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit K hereto signed by its Financial Officer showing the calculations necessary to determine compliance with this Agreement and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof. (iv) Promptly upon the furnishing thereof to the shareholders of the Company, copies of all financial statements, reports and proxy statements so furnished. (v) Promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and annual, quarterly, monthly or other regular reports which the Company or any of its Subsidiaries files with the Securities and Exchange Commission. (vi) As soon as possible and in any event within 10 days after the Company knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by a Financial Officer of the Company, describing said Reportable Event and the action which the Company proposes to take with respect thereto. (vii) Such other information (including non-financial information) as the Administrative Agent or any Lender may from time to time reasonably request. 6.2. Use of Proceeds. The Company will, and will cause each Borrowing Subsidiary to, use the proceeds of the Advances to provide funds for working capital purposes (including to repay outstanding Advances) and other general corporate purposes, including without limitation the possible purchase of "margin stock" within the meaning of Regulation U; provided, none of the proceeds of the Advances shall be used in any manner which would violate or cause any Lender to be in violation of Regulations T, U or X of the Board of Governors of the Federal Reserve System. None of the proceeds of the Advances shall be used in connection with any Acquisition unless such Acquisition shall have been disclosed by the Company to each of the Lenders promptly upon the execution and delivery of any letter of intent or comparable agreement with respect thereto. 6.3. Notice of Default. The Company will, and will cause each of its Material Subsidiaries to, give prompt notice in writing to the Administrative Agent of the occurrence of any Default or Unmatured Default and of any other development, financial or otherwise, which could reasonably be expected to have a Material Adverse Effect. 52 6.4. Corporate Existence; Conduct of Business. The Company will, and will cause each Borrowing Subsidiary and each other Material Subsidiary to, do all things necessary to remain duly organized, validly existing and in good standing as a corporation in its jurisdiction of organization and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted except to the extent that the failure to maintain such authority would not reasonably be expected to result in a Material Adverse Effect. 6.5. Taxes. The Company will, and will cause each of its Subsidiaries to, timely file complete and correct (in all material respects) all material United States federal, state and local and applicable foreign tax returns required by laws and to pay when due all material taxes, assessments and governmental charges and levies upon it or its income, profits or property, except those which are being contested in good faith by appropriate proceedings, with respect to which adequate reserves have been set aside. 6.6. Insurance. The Company will, and will cause its Subsidiaries to, maintain (either in the name of the Company or in such Subsidiary's own name) with reputable insurance companies insurance on their property against losses greater than $5,000,000 in at least such amounts and covering such risks as is consistent with sound business practice and the Company will furnish to any Lender upon request full information as to the insurance carried. 6.7. Compliance with Laws. The Company will, and will cause each Subsidiary to, comply in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, including, without limitation, laws relating to pension funds and Environmental Laws, which, if violated, could reasonably be expected to have a Material Adverse Effect. 6.8. Inspection. The Company will, and will cause each Subsidiary to, permit the Administrative Agent and the Lenders, by their respective representatives and agents and, absent the occurrence and continuance of a Default at their expense, to inspect any of the properties, corporate books and financial records of the Company and each Subsidiary, to examine and make copies of the books of accounts and other financial records of the Company and each Subsidiary, and to discuss the affairs, finances and accounts of the Company and each Subsidiary with, and to be advised as to the same by, their respective officers at such reasonable times and intervals as the Lenders may designate. 6.9. Consolidations, Mergers and Sale of Assets. (a) Neither the Company nor any Borrowing Subsidiary will consolidate or merge with or into any other Person or sell, lease or otherwise transfer all or substantially all of its assets to any other Person; provided that any Subsidiary may merge into the Company or a Wholly-Owned Subsidiary. (b) The Company will not permit any other Material Subsidiary to consolidate or merge with or into any Person, or to sell, lease or otherwise transfer all or substantially all of its assets to any Person unless the surviving corporation or transferee, as the case may be, is the Company or a Wholly-Owned Subsidiary. 53 6.10. Liens. The Company will not, nor will it permit any Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the property of the Company or any Subsidiary, except: (i) Liens for taxes, assessments or governmental charges or levies on its property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with U.S. GAAP shall have been set aside on its books. (ii) Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books. (iii) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation. (iv) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Company or its Subsidiaries. (v) Liens existing on the date hereof and described in Schedule 6.10 and securing Debt outstanding on the date of this Agreement in an aggregate principal or face amount which when aggregated with the amount available for drawing under all letters of credit (and any reimbursement obligations with respect thereto) secured pursuant to clause (xiii) below does not exceed, at any time, $75,000,000. (vi) Liens existing on any asset of any corporation at the time such corporation becomes a Subsidiary of the Company and not created in contemplation of such event; provided that such Liens shall not apply to any property of the Company or its Subsidiaries other than that covered as of such date and the proceeds of such property. (vii) Liens on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset, provided that such Lien attaches to such asset concurrently with or within 90 days after the acquisition thereof. (viii) Liens on any asset of any corporation existing at the time such corporation is merged or consolidated with or into the Company or a Subsidiary of the Company and not created in contemplation of such event; provided that such Liens shall not apply to any property of the Company or its Subsidiaries other than that covered on the date of such merger or consolidation and the proceeds of such property. 54 (ix) Liens existing on any asset prior to the acquisition thereof by the Company or a Subsidiary of the Company and not created in contemplation of such acquisition; provided that such Liens shall not apply to any property of the Borrower or its Subsidiaries other than that acquired and the proceeds of such property. (x) Liens arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section, provided that such Debt is not increased and is not secured by any additional assets. (xi) Liens arising in the ordinary course of its business which (a) do not secure Debt or Hedging Obligations, (b) do not secure any obligation in an amount exceeding $75,000,000 and (c) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business. (xii) Liens on cash and cash equivalents securing Hedging Obligations, provided that the aggregate amount of cash and cash equivalents subject to such Liens may at no time exceed $5,000,000. (xiii) Liens (including cash collateral) securing obligations (including reimbursement obligations) in respect of letters of credit provided (i) the amount available for drawing under all such letters of credit (and any reimbursement obligations with respect thereto) (the "SECURED L/C AMOUNT") does not exceed, at any time, $40,000,000 and (ii) the sum of the Secured L/C Amount and the aggregate amount of Debt secured pursuant to clause (v) above does not exceed, at any time, $75,000,000. (xiv) Liens not otherwise permitted by the foregoing clauses of this Section securing Debt in an aggregate principal or face amount at any date not to exceed 10% of Consolidated Net Worth. 6.11 Subsidiary Debt. Other than pursuant to this Agreement, the Company will not permit any of its Subsidiaries to incur or at any time be liable with respect to any Funded Debt, or to issue or have outstanding any preferred stock, except: (i) Funded Debt or preferred stock outstanding on the date hereof; (ii) Funded Debt or preferred stock of a Subsidiary issued to and held by the Company or a Wholly-Owned Subsidiary; (iii) Funded Debt or preferred stock of any corporation existing at the time such corporation becomes a Subsidiary of the Company and not created in contemplation of such event; (iv) refinancing, extension, renewal or refunding of any Funded Debt permitted by the foregoing clauses (i) through (iii); and (v) Funded Debt in addition to that set forth in clauses (i) through (iv), if, after giving effect thereto, the aggregate outstanding principal amount of Funded Debt of all Subsidiaries pursuant to this clause (v) does not exceed $40,000,000 at any time. 6.12 Hedging Obligations. The Company shall not and shall not permit any of its Subsidiaries to enter into any interest rate, commodity or foreign currency exchange, swap, collar, cap, leveraged derivative or similar agreements other than interest rate, foreign currency or commodity exchange, swap, 55 collar, cap or similar agreements pursuant to which the Company or its Subsidiaries hedges its or its Subsidiaries' reasonably estimated interest rate, foreign currency or commodity exposure. 6.13 Leverage Ratio. At any and all times, the Company shall not permit the ratio of Consolidated Debt to Total Capitalization to exceed sixty-five percent (65%). 6.14 Cash Flow Coverage Ratio. The Company shall not, as of the last day of each fiscal quarter, permit Consolidated Cash Flow for the 12-month period ending on such date to be less than 20% of Consolidated Debt as of such date; provided, however, that if as a result of an Acquisition, Consolidated Debt increases during any fiscal quarter by an amount of $10,000,000 or more (the fact and amount of such increase being hereinafter referred to as the "INCURRENCE" of "ACQUISITION DEBT"), then compliance with this Section shall be determined as follows for the fiscal quarter in which the Acquisition Debt was incurred and the three succeeding fiscal quarters: (i) as of the end of the fiscal quarter during which the Acquisition Debt was incurred, Consolidated Debt shall be reduced by the amount of the Acquisition Debt and Consolidated Cash Flow shall be calculated exclusive of the cash flow of the related acquisition ("ACQUISITION CASH FLOW"); and (ii) as of the end of each of the three succeeding fiscal quarters, compliance shall be based on the ratio of "Adjusted Consolidated Cash Flow" (as defined below) for the twelve months then ended to Consolidated Debt at such date. For this purpose, "ADJUSTED CONSOLIDATED CASH FLOW" means Consolidated Cash Flow, determined exclusive of Acquisition Cash Flow, plus the annualized Acquisition Cash Flow for the period since the end of the fiscal quarter during which the Acquisition Debt was incurred (i.e., as of the end of the first fiscal quarter following the fiscal quarter during which the Acquisition Debt was incurred, the Acquisition Cash Flow for such quarter multiplied by four; as of the end of the second such fiscal quarter, the Acquisition Cash Flow for the six months then ended multiplied by two; and as of the end of the third fiscal quarter, the Acquisition Cash Flow for the nine months then ended multiplied by one and one-third). 6.15 Year 2000 Issues. The Company shall, and shall cause each of its Subsidiaries to continue to take reasonable actions in order to attempt to implement, on a timely basis, the Year 2000 compliance programs it has adopted from time to time. The Company shall provide the Administrative Agent and each of the Lenders a copy of the Company's program to address Year 2000 Issues, including (a) written reports prepared for its Board of Directors and (b) any other updates and progress reports as reasonably requested. The Company shall notify the Administrative Agent, in writing, if any Year 2000 Issues will have or could reasonably be expected to have a Material Adverse Effect. 56 ARTICLE VII: DEFAULTS The occurrence and continuance of any one or more of the following events shall constitute a Default: 7.1. Any material representation or warranty made or deemed made under Article V by the Company or any Subsidiary to the Lenders or the Administrative Agent under or in connection with this Agreement or any certificate or other document delivered in connection with this Agreement or any other Loan Document shall be materially false on the date as of which made or deemed made. 7.2. Nonpayment of principal of any Loans when due, or nonpayment of interest upon any Loan within five (5) days after the same becomes due, or non payment of any facility fee, utilization fee or other obligations under any of the Loan Documents within ten (10) days after the same becomes due. 7.3. The breach by the Company of (a) any of the terms or provisions of Sections 6.2, 6.9, 6.13 and 6.14 or (b) any of the terms or provisions of Sections 6.10 and 6.11 and such failure shall continue for 15 days. 7.4. The breach by the Company (other than a breach which constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of this Agreement which is not remedied within thirty days after written notice from the Administrative Agent or any Lender. 7.5. Failure of the Company or any of its Subsidiaries to pay any Material Financial Obligation when due; or the default by the Company or any of its Subsidiaries in the performance of any term, provision or condition contained in any agreement under which any Material Debt was created or is governed, or any other event shall occur or condition exist, the effect of which is to cause, or to permit the holder or holders of such Material Debt to cause such Material Debt to become due prior to its stated maturity; or Material Debt of the Company or any of its Subsidiaries shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment or as a result of the sale of an asset securing such Material Debt) prior to the stated maturity thereof. 7.6. Any Borrower or any Material Subsidiary shall (i) commence a voluntary case under any bankruptcy, insolvency or other similar law as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) fail to pay, or admit in writing its inability to pay, its debts generally as they become due, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its property, (v) institute any proceeding seeking an order for relief under any bankruptcy, insolvency or other similar law as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any 57 corporate action to authorize or effect any of the foregoing actions set forth in this Section 7.6 or (vii) fail to contest in good faith any appointment or proceeding described in Section 7.7. 7.7. Without the application, approval or consent of any Borrower or any Material Subsidiary, a receiver, trustee, examiner, liquidator or similar official shall be appointed for any Borrower or any Material Subsidiary or any Substantial Portion of the property of any such Person, or a proceeding described in Section 7.6(iv) shall be instituted against any Borrower or any Material Subsidiary and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days. 7.8. Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of (each a "Condemnation"), all or any portion of the property of any Borrower or any Material Subsidiary which, when taken together with all other property of any Borrower and the Material Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such Condemnation occurs, constitutes a Substantial Portion. 7.9. The Company or any of its Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge any judgment or order for the payment of money in excess of $10,000, 000 (or the Equivalent Amount if denominated in a currency other than Dollars), which is not stayed on appeal or otherwise being appropriately contested in good faith. 7.10. Any Reportable Event shall occur in connection with any Plan which could reasonably be expected to have a Material Adverse Effect. 7.11. The obligations of the Company under Article IX hereof shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of any of such obligations, or the Company shall deny that it has any further liability under such Article IX, or shall give notice to such effect. 7.12. Any Change in Control shall occur. 7.13 Any Termination Event occurs which could reasonably be expected to subject either the Company or any ERISA Affiliate to liability individually or in the aggregate in excess of $10,000,000. ARTICLE VIII: ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 8.1. Acceleration. If any Default described in Section 7.6 or 7.7 occurs with respect to the Company or any of its Material Subsidiaries, the obligations of the Lenders to make Loans hereunder shall automatically terminate and the Obligations of the Company and each Borrowing Subsidiary shall immediately become due and payable without presentment, demand, protest or notice of any kind (all of which the Company hereby expressly waives) or any other election or action on the part of the Administrative Agent or any Lender. If any other Default occurs and is continuing, the Required Lenders may terminate or suspend the obligations of the Lenders to 58 make Loans (including, without limitation, Alternate Currency Loans), whereupon the obligation of the Alternate Currency Banks to make Alternate Currency Loans hereunder shall also terminate or be suspended or declare the Obligations of the Company and each Borrowing Subsidiary to be due and payable, or both, in either case upon written notice to the Company and the applicable Borrower, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which each Borrower hereby expressly waives. 8.2. Amendments. Subject to the provisions of this Article VIII, the Required Lenders (or the Administrative Agent with the consent in writing of the Required Lenders) and the Company may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Company hereunder or waiving any Default hereunder; provided, however, that no such supplemental agreement shall, without the consent of each Lender affected thereby: (i) Postpone or extend the Termination Date or any other date fixed for the payment or prepayment of any Loans or other Obligations (except with respect to any modifications of the provisions relating to prepayments of Loans under Section 2.5.3(B)(ii) resulting from an increase by the Required Lenders of the percentages set forth therein to not greater than 115% or waiver of any prepayment which would have been required except for such an increase in the applicable percentage). (ii) Reduce the principal amount of any Loans, or reduce the rate or extend the time of payment of interest or fees thereon. (iii) Reduce the percentage specified in the definition of Required Lenders or any other percentage or number of Lenders specified to be the applicable percentage in this Agreement to act on specified matters or amend the definitions of "Required Lenders" or "Percentage". (iv) Increase the amount of the Commitment of any Lender hereunder or increase any Lender's Percentage. (v) Permit any Borrower to assign its rights or obligations under this Agreement or any other Loan Document. (vi) Amend or modify Section 8.1, this Section 8.2 or Section 12.2. (vii) Amend, modify or waive Article IX or release the Company from its obligations thereunder. No amendment of any provision of this Agreement relating in any way to the Administrative Agent shall be effective without the written consent of the Administrative Agent. The Administrative Agent may waive payment of the fees required under Section 2.4.3 or Section 13.3.2 without obtaining the consent of any of the Lenders. Notwithstanding anything herein to the contrary, after the Euro Implementation Date, or in immediate anticipation thereof, the 59 Administrative Agent (acting reasonably and after consultation with other parties hereto) may by reasonable prior notice to the other parties hereto amend this Agreement unilaterally for the exclusive purpose of effectuating changes hereto which are necessary to the integration of the making of Loans hereunder in Euro and only in a manner which shall not result in a deterioration of the position of any Administrative Agent or Lender from its respective position prior to the Euro Implementation Date. The Administrative Agent may notify the other parties to this Agreement of any amendments to this Agreement which the Administrative Agent reasonably determines to be necessary as a result of the commencement of the third stage of the European Economic and Monetary Union and the occurrence of the Euro Implementation Date. Notwithstanding anything to the contrary contained herein, any amendments so notified shall take effect in accordance with the terms of the relevant notification, and, to the extent possible, such amendments shall be implemented to put the parties in the same position as if the Euro Implementation Date had not occurred; provided, however, that if and to the extent that the Administrative Agent determines it is not possible to put all parties into such position, the Administrative Agent may give priority to putting the Administrative Agent, the Arranger and the Lenders into that position. 8.3. Preservation of Rights. No delay or omission of the Lenders or the Administrative Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Loan notwithstanding the existence of a Default or the inability of the Company or a Borrowing Subsidiary to satisfy the conditions precedent to such Loan or such issuance shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Administrative Agent and the Lenders until the Obligations have been paid in full. ARTICLE IX: GUARANTY 9.1. Guaranty. For valuable consideration, the receipt of which is hereby acknowledged, and to induce the Lenders to make advances to each Borrowing Subsidiary, the Company hereby absolutely and unconditionally guarantees prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, of any and all existing and future Obligations of each Borrowing Subsidiary to the Administrative Agent, the Lenders and any holder of a Note, or any of them, under or with respect to the Loan Documents, whether for principal, interest, fees, expenses or otherwise (collectively, the "GUARANTEED OBLIGATIONS"). 60 9.2. Waivers. The Company waives notice of the acceptance of this guaranty and of the extension or continuation of the Guaranteed Obligations or any part thereof. The Company further waives presentment, protest, notice of notices delivered or demand made on any Borrowing Subsidiary or action or delinquency in respect of the Guaranteed Obligations or any part thereof, including any right to require the Administrative Agent and the Lenders to sue the Borrowing Subsidiary or any other Person obligated with respect to the Guaranteed Obligations or any part thereof, or otherwise to enforce payment thereof against any collateral securing the Guaranteed Obligations or any part thereof, and provided further that if at any time any payment of any portion of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of any of the Borrowing Subsidiaries or otherwise, the Company's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had not been made and whether or not the Administrative Agent or the Lenders are in possession of this guaranty. The Administrative Agent and the Lenders shall have no obligation to disclose or discuss with the Company their assessments of the financial condition of the Borrowing Subsidiaries. 9.3. Guaranty Absolute. This guaranty is a guaranty of payment and not of collection, is a primary obligation of the Company and not one of surety, and the validity and enforceability of this guaranty shall be absolute and unconditional irrespective of, and shall not be impaired or affected by any of the following: (a) any extension, modification or renewal of, or indulgence with respect to, or substitutions for, the Guaranteed Obligations or any part thereof or any agreement relating thereto at any time; (b) any failure or omission to enforce any right, power or remedy with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto, or any collateral; (c) any waiver of any right, power or remedy with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto or with respect to any collateral; (d) any release, surrender, compromise, settlement, waiver, subordination or modification, with or without consideration, of any collateral, any other guaranties with respect to the Guaranteed Obligations or any part thereof, or any other obligation of any Person with respect to the Guaranteed Obligations or any part thereof; (e) the enforceability or validity of the Guaranteed Obligations or any part thereof or the genuineness, enforceability or validity of any agreement relating thereto or with respect to any collateral; (f) the application of payments received from any source to the payment of obligations other than the Guaranteed Obligations, any part thereof or amounts which are not covered by this guaranty even though the Administrative Agent and the Lenders might lawfully have elected to apply such payments to any part or all of the Guaranteed Obligations or to amounts which are not covered by this guaranty; (g) any change in the ownership of any Borrowing Subsidiary or the insolvency, bankruptcy or any other change in the legal status of any Borrowing Subsidiary; (h) the change in or the imposition of any law, decree, regulation or other governmental act which does or might impair, delay or in any way affect the validity, enforceability or the payment when due of the Guaranteed Obligations; (i) the failure of the Company or any Borrowing Subsidiary to maintain in full force, validity or effect or to obtain or renew when required all governmental and other approvals, licenses or consents required in connection with the Guaranteed Obligations or this guaranty, or to take any other action required in connection with the performance of all obligations pursuant to the Guaranteed Obligations or this guaranty; (j) the existence of any claim, setoff or other rights which the Company may have at any time against any Borrowing 61 Subsidiary, or any other Person in connection herewith or an unrelated transaction; or (k) any other circumstances, whether or not similar to any of the foregoing, which could constitute a defense to a guarantor; all whether or not the Company shall have had notice or knowledge of any act or omission referred to in the foregoing clauses (a) through (k) of this paragraph. It is agreed that the Company's liability hereunder is several and independent of any other guaranties or other obligations at any time in effect with respect to the Guaranteed Obligations or any part thereof and that the Company's liability hereunder may be enforced regardless of the existence, validity, enforcement or non-enforcement of any such other guaranties or other obligations or any provision of any applicable law or regulation purporting to prohibit payment by any Borrowing Subsidiary of the Guaranteed Obligations in the manner agreed upon between the Borrowing Subsidiary and the Administrative Agent and the Lenders. 9.4. Acceleration. The Company agrees that, as between the Company on the one hand, and the Lenders and the Administrative Agent, on the other hand, the obligations of each Borrowing Subsidiary guaranteed under this Article IX may be declared to be forthwith due and payable, or may be deemed automatically to have been accelerated, as provided in Section 8.1 hereof for purposes of this Article IX, notwithstanding any stay, injunction or other prohibition (whether in a bankruptcy proceeding affecting such Borrowing Subsidiary or otherwise) preventing such declaration as against such Borrowing Subsidiary and that, in the event of such declaration or automatic acceleration, such obligations (whether or not due and payable by such Borrowing Subsidiary) shall forthwith become due and payable by the Company for purposes of this Article IX. 9.5. Marshaling; Reinstatement. None of the Lenders nor the Administrative Agent nor any Person acting for or on behalf of the Lenders or the Administrative Agent shall have any obligation to marshall any assets in favor of the Company or against or in payment of any or all of the Guaranteed Obligations. If the Company or any Borrower makes a payment or payments to any Lender or the Administrative Agent, or any Lender or the Administrative Agent receives any proceeds of collateral, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to such Borrower, the Company or any other Person, or their respective estates, trustees, receivers or any other party, including, without limitation, the Company, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, the part of the Guaranteed Obligations which has been paid, reduced or satisfied by such amount shall be reinstated and continued in full force and effect as of the time immediately preceding such initial payment, reduction or satisfaction. 9.6. Termination Date. This guaranty shall continue in effect until the later of (i) the Termination Date and (ii) this Agreement has otherwise expired or been terminated in accordance with its terms and all of the Guaranteed Obligations have been paid in full in cash. 62 ARTICLE X: GENERAL PROVISIONS 10.1. Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, no Lender shall be obligated to extend credit to the Company or a Borrowing Subsidiary in violation of any limitation or prohibition provided by any applicable statute or regulation. 10.2. Taxes. Any recording or documentary taxes or other similar assessments or charges payable or ruled payable by any governmental authority in respect of the Loan Documents shall be paid by the Company. 10.3. Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents. 10.4. Entire Agreement. The Loan Documents embody the entire agreement and understanding among the Borrowers, the Administrative Agent and the Lenders and supersede all prior agreements and understandings among the Borrowers, the Administrative Agent and the Lenders relating to the subject matter thereof except as contemplated in Section 2.4.2. 10.5. Several Obligations. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Administrative Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. No Lender shall have any liability for the failure of any other Lender to perform its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns. 10.6. Expenses; Indemnification. The Company and each Borrowing Subsidiary, jointly and severally, shall reimburse (i) the Administrative Agent and the Arranger for any reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and, in connection with the preparation, execution and delivery of the Loan Documents, time charges of attorneys for the Administrative Agent and/or the Arranger, which attorneys may be employees of the Administrative Agent and/or the Arranger) including title insurance premiums, lien search charges, recording taxes, filing charges and other similar expenses paid or incurred by the Administrative Agent or the Arranger in connection with the preparation, review, execution, delivery, amendment, modification and administration of the Loan Documents, provided the attorney's fees for the Administrative Agent's outside counsel in connection with the preparation, execution and delivery of the Loan Documents shall not exceed the amount set forth in the letter agreement dated October 19, 1998 and (ii) the Administrative Agent, the Arranger and the Lenders for any costs, internal charges and out-of-pocket expenses (including attorneys' fees and time charges of attorneys for the Administrative Agent, the Arranger or the Lenders) paid or incurred by the Administrative Agent, the Arranger or any Lender in connection with the collection and enforcement of the Loan Documents (except to the extent that a court of 63 competent jurisdiction rules against the Administrative Agent, the Arranger or the Lenders in a final non-appealable judgment in any such collection or enforcement action), any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or any insolvency or bankruptcy proceedings in respect of the Company or any Borrowing Subsidiary. The Company and each Borrowing Subsidiary, jointly and severally, further agree to indemnify the Administrative Agent, the Arranger and each Lender, their respective directors, officers and employees (the "Indemnitees") against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the Administrative Agent, the Arranger or any Lender is a party thereto) (collectively, the "Indemnified Amounts") which any of them may pay or incur arising out of or relating to the direct or indirect application or proposed application of the proceeds of any Loan hereunder; provided, however, that neither the Company nor any Borrowing Subsidiary shall be liable to any Indemnitee for any Indemnified Amounts to the extent that a court of competent jurisdiction has determined in a final non-appealable judgment that the foregoing resulted from such Indemnitee's Gross Negligence or willful misconduct. The Company and each Borrowing Subsidiary further agree (y) to assert no claims for consequential, special, indirect or punitive damages on any theory of liability in connection in any way with the Loan Documents or the transactions evidenced thereby and (z) not to settle any claim, litigation or proceeding relating to the Loan Documents or the transactions evidenced thereby unless such settlement releases all Indemnitees from any and all liability in respect of such transaction or unless each Indemnitee approves such settlement. The obligations of the Company and each Borrowing Subsidiary under this Section 10.6 shall survive the termination of this Agreement. 10.7. Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the Administrative Agent with sufficient counterparts so that the Administrative Agent may furnish one to each of the Lenders. 10.8. Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 10.9. Nonliability of Lenders. The relationship between the Borrowers and the Lenders and the Administrative Agent shall be solely that of borrower and lender. Neither the Administrative Agent nor any Lender shall have any fiduciary responsibilities to the Borrowers. Neither the Administrative Agent nor any Lender undertakes any responsibility to the Borrowers to review or inform the Borrowers of any matter in connection with any phase of the Borrowers' business or operations. 10.10. CHOICE OF LAW. THIS AGREEMENT AND, UNLESS OTHERWISE SET FORTH THEREIN, THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE LAW OF CONFLICTS) OF THE STATE 64 OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 10.11 CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, MAY BE RESOLVED BY STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. TO THE EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO SUBMITS TO THE NON-EXCLUSIVE PERSONAL JURISDICTION OF SUCH COURTS AND WAIVES IN ANY SUITS OR OTHER PROCEEDINGS BROUGHT PURSUANT TO THIS SECTION ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE. 10.12. Confidentiality. Each Lender agrees to hold any confidential information which it may receive from the Company or any Subsidiary pursuant to this Agreement in confidence, except for disclosure (i) to other Lenders and their respective affiliates, (ii) to legal counsel, accountants, and other professional advisors to that Lender who need to know such information in connection with the transactions contemplated hereby, (iii) to regulatory officials, (iv) as requested pursuant to or as required by law, regulation, or legal process, (v) in connection with any legal proceeding to which that Lender is a party, and (vi) permitted by Section 13.4. The restrictions in this Section 10.12 shall not apply to any information which is or becomes generally available to the public other than as a result of disclosure by a Lender or a Lender's representatives. 10.13. English Language. All certificates, instruments and other documents to be delivered under or supplied in connection with this Agreement shall be in the English language or shall attach a certified English translation thereof, which translation shall be the governing version. 10.14 Alternate Currency Addenda Binding on Each Lender; Provisions Regarding Alternate Currency Agents. Each of the Lenders agrees that it shall be bound by the provisions of each Alternate Currency Addendum entered into in connection herewith, in particular as it relates to the provisions applicable to the Alternate Currency Agent appointed thereunder. 10.15 Collateral. Each of the Lenders represents to the Administrative Agent and each of the other Banks that it in good faith is not relying upon any "margin stock" (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement. 65 ARTICLE XI: THE ADMINISTRATIVE AGENT 11.1. Appointment. The First National Bank of Chicago is hereby appointed Administrative Agent hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Administrative Agent to act as the contractual representative of such Lender. The Administrative Agent agrees to act as such upon the express conditions contained in this Article XI. The Administrative Agent shall not have a fiduciary relationship in respect of the Company, any Borrowing Subsidiary, any Lender by reason of this Agreement or the Loan Documents. Notwithstanding the use of the defined term "Administrative Agent," it is expressly understood and agreed that the Administrative Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement and that the Administrative Agent is merely acting as the representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders' contractual representative, the Administrative Agent (i) does not assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders agrees to assert no claim against the Administrative Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender waives. 11.2. Powers. The Administrative Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Administrative Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Administrative Agent shall have no implied duties to the Lenders or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Administrative Agent. 11.3. General Immunity. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to the Company or to any Borrowing Subsidiary or Lender for any action taken or omitted to be taken by it or them under or in connection with this Agreement or any other Loan Document except to the extent such action or inaction is found in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the Gross Negligence or willful misconduct of such Person or an Affiliate thereof. 11.4. No Responsibility for Loans, Collateral, Recitals, etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (i) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder, including statements made in any offering memorandum or "Bank Book"; (ii) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document; (iii) the satisfaction of any condition specified in Article IV, except receipt of items required to be delivered to the Administrative Agent; or (iv) the validity, effectiveness or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith, except for the authority of the Administrative Agent's signatory to this Agreement. The Administrative Agent shall not be 66 responsible to any Lender for any recitals, statements, representations or warranties herein or in any of the other Loan Documents, for the perfection or priority of any of the Liens on any collateral, if any, or for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any of the other Loan Documents or the transactions contemplated thereby, or for the financial condition of the Company or any of its Subsidiaries. 11.5. Action on Instructions of Lenders. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders or all the Lenders, as applicable, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders and on all holders of Notes. The Administrative Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action, provided that, such indemnity need not include liability, costs and expenses which a court of competent jurisdiction has determined in a final non-appealable judgment arose from the Gross Negligence or willful misconduct of the Administrative Agent. 11.6. Employment of Administrative Agents and Counsel. The Administrative Agent may execute any of its duties as Administrative Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Administrative Agent shall be entitled to advice of counsel concerning all matters pertaining to the agency hereby created and its duties hereunder and under any other Loan Document. 11.7. Reliance on Documents; Counsel. The Administrative Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Administrative Agent, which counsel may be employees of the Administrative Agent. 11.8. Administrative Agent's Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Administrative Agent ratably in proportion to their respective Percentages (i) for any amounts not reimbursed by the Company or any Borrowing Subsidiary for which the Administrative Agent is entitled to reimbursement by the Company or any Borrowing Subsidiary under the Loan Documents, (ii) for any other expenses not reimbursed by the Company or any Borrowing Subsidiary incurred by the Administrative Agent on behalf of the Lenders in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including reasonable attorneys' and paralegals' fees) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever and not reimbursed by the Company or any Borrowing Subsidiary which may be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or 67 any other document delivered in connection therewith or the transactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents, provided that no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the Gross Negligence or willful misconduct of the Administrative Agent. 11.9. Rights as a Lender. With respect to its Commitment, Loans made by it and the Notes issued hereunder issued to it held by it, the Administrative Agent shall have the same rights and powers hereunder and under any other Loan Document as any Lender and may exercise the same as though it were not the Administrative Agent, and the term "Lender" or "Lenders"shall, unless the context otherwise indicates, include the Administrative Agent in its individual capacity. The Administrative Agent may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Company or any of its Subsidiaries. 11.10. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent, the Documentation Agent, the Syndication Agent or any other Lender and based on the financial statements prepared by the Company and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, Documentation Agent, Syndication Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. 11.11. Successor Administrative Agent. The Administrative Agent may resign at any time by giving at least 30 days' prior written notice thereof to the Lenders and the Company and such resignation shall be effective at the end of such 30-day period or upon the earlier appointment of a successor agent, and the Administrative Agent may be removed at any time with or without cause by written notice received by the Administrative Agent from the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Lenders, a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty days after the retiring Administrative Agent's removal or giving notice of resignation, then the retiring Administrative Agent may appoint, on behalf of the Lenders, a successor Administrative Agent. Such successor Administrative Agent shall be a commercial bank having capital and retained earnings of at least $500,000,000. The retiring Administrative Agent shall be discharged from any further duties and obligations hereunder and under the other Loan Documents upon the effectiveness of its removal or resignation hereunder. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Article XI shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent hereunder and under the other Loan Documents. 68 11.12. No Duties Imposed Upon Syndication Agent, Documentation Agent or Co-Agents. None of the Lenders identified on the cover page to this Agreement, the signature pages to this Agreement or otherwise in this Agreement as "Syndication Agent," "Documentation Agent" or "Co-Agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders identified on the cover page to this Agreement, the signature pages to this Agreement or otherwise in this Agreement as a "Syndication Agent," "Documentation Agent" or "Co-Agent" shall have or be deemed to have any fiduciary duty to or fiduciary relationship with any Lender. In addition to the agreements set forth in Section 11.10, each of the Lenders acknowledges that it has not relied, and will not rely, on any of the Lenders so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE XII: SETOFF; RATABLE PAYMENTS 12.1. Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if any Borrower becomes insolvent, however evidenced, or any Default occurs, any Debt from any Lender to such Borrower and any and all account balances, whether provisional or final and whether or not collected or available, may be offset and applied toward the payment of the Obligations owing to such Lender whether or not the Obligations, or any part thereof, shall then be due. 12.2. Ratable Payments. If, after the occurrence of a Default, any Lender, whether by setoff or otherwise, has payment made to it upon its share of any Advance (other than payments received which are for the account of the Administrative Agent or pursuant to Article III) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Loans comprising that Advance held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of Loans comprising that Advance. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their Loans. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. 12.3 Application of Payments. The Administrative Agent shall, unless otherwise specified at the direction of the Required Lenders which direction shall be consistent with the last sentence of this Section 12.3, apply all payments and prepayments in respect of any Obligations in the following order: (A) first, to pay interest on and then principal of any portion of the Loans which the Administrative Agent may have advanced on behalf of any Lender for which the Administrative Agent has not then been reimbursed by such Lender or the Company; 69 (B) second, to pay Obligations in respect of any fees, expense reimbursements or indemnities then due to the Administrative Agent; (C) third, to pay Obligations in respect of any fees, expenses, reimbursements or indemnities then due to the Lenders; (D) fourth, to pay interest due in respect of Loans; and (E) fifth, to the ratable payment of all other Obligations. Unless otherwise designated (which designation shall only be applicable prior to the occurrence of a Default) by the Company, all principal payments in respect of Loans shall be applied first, to the outstanding Revolving Loans, and second, to the outstanding Alternate Currency Loans, and third to the outstanding Competitive Bid Loans, in each case, first, to repay outstanding Alternate Base Rate Loans, and then to repay outstanding Eurocurrency Loans (or other fixed rate Loans) with those Loans which have earlier expiring Interest Periods being repaid prior to those which have later expiring Interest Periods. The order of priority set forth in this Section 12.3 and the related provisions of this Agreement are set forth solely to determine the rights and priorities of the Administrative Agent and the Lenders as among themselves. The order of priority set forth in clauses (D) and (E) of this Section 12.3 may at any time and from time to time be changed by the Required Lenders without necessity of notice to or consent of or approval by the any Borrower, or any other Person. The order of priority set forth in clauses (A) through (C) of this Section 12.3 may be changed only with the prior written consent of the Administrative Agent. ARTICLE XIII: BENEFIT OF AGREEMENT; PARTICIPATIONS; ASSIGNMENTS 13.1. Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrowers, the Lenders and their respective successors and assigns, except that (i) no Borrower shall have the right to assign its rights or obligations under the Loan Documents and (ii) any assignment by any Lender must be made in compliance with Section 13.3. Notwithstanding clause (ii) of this Section, any Lender may at any time, without the consent of any Borrower or the Administrative Agent, assign all or any portion of its rights under this Agreement and its Notes to a Federal Reserve Bank; provided, however, that no such assignment shall release the transferor Lender from its obligations hereunder. The Administrative Agent may treat the payee of any Note as the owner thereof for all purposes hereof unless and until such payee complies with Section 13.3 in the case of an assignment thereof or, in the case of any other transfer, a written notice of the transfer is filed with the Administrative Agent. Any assignee or transferee of a Note or any other interest in the Obligations agrees by acceptance thereof to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the holder of any Note, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor. 13.2. Participations. 70 13.2.1. Permitted Participants; Effect. Any Lender may in accordance with applicable law, without the consent of any Borrower or the Administrative Agent, at any time sell to one or more financial institutions ("PARTICIPANTS") participating interests in any Loan owing to such Lender, any Note held by such Lender, the Commitment of such Lender, or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the holder of any such Note for all purposes under the Loan Documents, all amounts payable by the Borrowers under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrowers and the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents. 13.2.2. Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Loan or Commitment, postpones any date fixed for any regularly-scheduled payment (but not prepayments) of principal of, or interest or fees on, any such Loan or Commitment, releases any guarantor of any such Loan (other than as contemplated hereunder or under any other Loan Document), if any, or releases all or substantially all of the collateral, if any, securing any such Loan. 13.2.3. Benefit of Setoff. The Borrowers agree that each Participant shall be deemed to have the right of setoff provided in Section 12.1 in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 12.1 with respect to the amount of participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 12.1, agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 12.2 as if each Participant were a Lender. 13.3. Assignments. 13.3.1. Permitted Assignments. Any Lender may, in accordance with applicable law, at any time assign to one or more financial institutions ("PURCHASERS") all or a portion of its rights and obligations under the Loan Documents, which assignment shall (unless (i) such assignment is to another Lender or an Affiliate thereof or (ii) the Administrative Agent and, if no Default has occurred and is continuing, the Company otherwise consents) be in amounts equal to or greater than $10,000,000 (or the Equivalent Amount thereof if denominated in an Alternate Currency or an Agreed Currency other than Dollars) or, if less, all of such assigning Lender's remaining Loans and Commitments hereunder. Such assignment shall be substantially in the form of Exhibit C hereto. The consent of the Administrative Agent and, if no Default has occurred and is 71 continuing, the Company (which consent, in each case, shall not be unreasonably withheld or delayed) shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof. 13.3.2. Effect; Effective Date. Upon (i) delivery to the Administrative Agent of a notice of assignment, substantially in the form attached as Exhibit I to Exhibit C hereto (a "NOTICE OF ASSIGNMENT"), together with any consent required by Section 13.3.1 (provided however, that no consent shall be required for an assignment from a Lender to an Affiliate of the Lender), and (ii) payment of a $3,500 fee to the Administrative Agent by the assigning Lender for processing such assignment, such assignment shall become effective on the effective date specified in such Notice of Assignment. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by any Borrower, the Lenders or the Administrative Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitment and Loans assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 13.3.2, the transferor Lender, the Administrative Agent and the Borrower shall, if the transferor Lender or the Purchaser desires that its Loans be evidenced by Notes, make appropriate arrangements so that new Notes or, as appropriate, replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to such assignment. 13.4. Dissemination of Information. Each Borrower authorizes each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Company and its Subsidiaries; provided that each Transferee and prospective Transferee agrees to be bound by Section 10.12 of this Agreement. 13.5. Tax Treatment. If any interest in any Loan Document is transferred to any Purchaser which is organized under the laws of any jurisdiction other than the United States of America or any State thereof, the transferor Lender shall cause such Purchaser, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 2.5.15(a). ARTICLE XIV: NOTICES 14.1. Giving Notice. All notices and other communications provided to any party hereto under this Agreement or any other Loan Document shall be in writing or by telex or by facsimile and addressed or delivered to such party at its address set forth below its signature hereto or at such other address as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid, shall be deemed given when 72 received; any notice, if transmitted by telex or facsimile, shall be deemed given when transmitted (answerback confirmed in the case of telexes). 14.2. Change of Address. The Company, each Borrowing Subsidiary, the Administrative Agent and each Lender may change the address for service of notice upon it by a notice in writing to the other parties hereto. ARTICLE XV: COUNTERPARTS This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Company, the Administrative Agent and the Lenders and each party has notified the Administrative Agent by telex or telephone, that it has taken such action. ARTICLE XVI: WAIVER OF JURY TRIAL EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 73 IN WITNESS WHEREOF, the Company, the Lenders and the Administrative Agent have executed this Agreement as of the date first above written. CRANE CO. By: ---------------------------------------- Title: Vice President Finance and Chief Financial Officer 100 First Stamford Place Stamford, CT 06902 Attention: Augustus I. duPont Telephone: (203) 363-7223 Facsimile: (203) 363-7350 74 THE FIRST NATIONAL BANK OF CHICAGO, as Administrative Agent and as a Lender By: ---------------------------------------- Title: ------------------------------------------- 153 West 51st Street Suite 4011 New York, NY 10019 Attention: Robert McMillan Telephone: (212) 373-1593 Facsimile: (212) 373-1180 75 THE BANK OF NEW YORK, as Syndication Agent and as a Lender By: ---------------------------------------- Title: Vice President One Wall Street 22nd Floor New York, NY 10286 Attention: Kenneth P. Sneider, Jr. Telephone: (212) 635-6863 Facsimile: (212) 635-1480 76 FLEET NATIONAL BANK, as Documentation Agent and as a Lender By: ---------------------------------------- Title: ------------------------------------------- One Landmark Square Stanford, CT 06904 Attention: Barbara A. Keegan Telephone: (203) 358-6195 Facsimile: (203) 358-6111 77 ABN AMRO BANK N.V., as a Lender By: ---------------------------------------- Title: ------------------------------------------- By: ---------------------------------------- Title: ------------------------------------------- 500 Park Avenue New York, NY 10022 Attention: Diane R. Maurice Telephone: (212) 446-4308 Facsimile: (212) 446-4237 78 FIRST UNION NATIONAL BANK, as a Co-Agent and as a Lender By: ---------------------------------------- Title: Executive Vice President 10 State House Square Hartford, CT 06103 Attention: James J. McKenna Telephone: (203) 406-6461 Facsimile: (203) 406-6521 79 THE CHASE MANHATTAN BANK, as a Co-Agent and as a Lender By: ---------------------------------------- Title: Vice President 999 Broad Street Bridgeport, CT 06604 Attention: Alan J. Aria Telephone: (203) 382-6573 Facsimile: (203) 382-5304 80 BANQUE NATIONALE DE PARIS, as a Lender By: ---------------------------------------- Title: ------------------------------------------- By: ---------------------------------------- Title: ------------------------------------------- 499 Park Avenue 9th Floor New York, NY 10022 Attention: Sophie R. Kaufman Telephone: (212) 415-9601 Facsimile: (212) 415-9606 81 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Lender By: ---------------------------------------- Title: Vice President 60 Wall Street New York, NY 10260 Attention: SoVonna Day Telephone: (212) 648-1350 Facsimile: (212) 648-5018 82 KEYBANK NATIONAL ASSOCIATION, as a Lender By: ---------------------------------------- Title: ------------------------------------------- 127 Public Square 6th floor Cleveland, OH 44114 Attention: Daniel W. Lally Telephone: (216) 689-8065 Facsimile: (216) 689-4981 83 -----END PRIVACY-ENHANCED MESSAGE-----