UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the Securities Exchange Act of
1934
Date of
Report: February 20, 2008
(Date of
earliest event reported)
SYS
(Exact
name of registrant as specified in its charter)
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California
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001-32397
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95-2467354
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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5050
Murphy Canyon Road, Suite 200, San Diego, CA 92123
(Address
of principal executive offices, Zip Code)
858-715-5500
(Registrant’s
telephone number, including area code)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (
see
General Instruction A.2. below):
[X]
Written communication pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240. 13e-4(c))
Item
1.01
Entry
into a Material Definitive Agreement.
On
February 20, 2008, SYS (the “Company”) entered into an Agreement and Plan of
Merger and Reorganization (the “Agreement”) with Kratos Defense & Security
Solutions, Inc. (“Kratos”) and its wholly-owned subsidiary, White Shadow, Inc.
(“Merger Sub”), pursuant to which White Shadow will be merged with and into the
Company (the “Merger”). The Company will be the surviving entity and
a wholly owned subsidiary of Kratos. Effective at the time of Merger,
each outstanding share of the Company’s common stock will be converted into
1.2582 shares of Kratos common stock.
At the
effective time of the Merger, each outstanding option to purchase common stock
of the Company will be cancelled. Warrants to purchase common stock
of the Company will continue to be in effect pursuant to their terms following
the Merger.
Consummation
of the Merger is subject to several closing conditions, including:
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·
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approval
of the Merger by the shareholders of the
Company;
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·
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approval
of the issuance of shares of Kratos common stock in the Merger by the
stockholders of Kratos; and
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·
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the
effectiveness of a Form S-4 registration statement to be filed by
Kratos.
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The
Merger Agreement contains certain termination rights, including a termination
fee of $2,394,000 to be paid by the Company to Kratos upon termination of the
Merger Agreement in certain circumstances
The
foregoing description of the Merger Agreement is qualified in its entirety by
reference to the full text of the Merger Agreement, a copy of which is attached
hereto as Exhibit 10.1 and is incorporated herein by reference.
In
connection with the Merger Agreement, on February 20, 2008, certain executive
officers and directors of the Company entered into Voting Agreements with Kratos
(the “SYS Voting Agreements”) pursuant to which such officers and directors have
undertaken to vote their shares of common stock of the Company in favor of the
Merger and against any other proposal or offer to acquire the Company unless the
Merger Agreement has been terminated. The SYS Voting Agreements apply
to all shares of the Company’s common stock held by the signatories at the
record date for the relevant Company stockholder meeting. The SYS
Voting Agreements restrict the transfer of shares by the signatories, except
under certain limited conditions.
Additionally,
on February 20, 2008 certain executive officers and directors of Kratos entered
into Voting Agreements with the Company (the “Kratos Voting Agreements”),
pursuant to which such officers and directors have undertaken to vote their
shares of common stock of Kratos in favor of the issuance of additional shares
of common stock of Kratos in connection with the Merger, unless the Merger
Agreement has been terminated. The Kratos Voting Agreements apply to
all shares of Kratos common stock held by the signatories at the record date for
the relevant Kratos stockholder meeting. The Kratos Voting Agreements restrict
the transfer of shares by the signatories, except under certain limited
conditions.
A copy of
the form of SYS Voting Agreement and form of Kratos Voting Agreement is attached
hereto as Exhibit 10.2 and 10.3, respectively, and is incorporated herein by
reference. The foregoing description of the SYS Voting Agreements and
Kratos Voting Agreements is qualified in its entirety by reference to the full
text of such agreements.
The
Merger Agreement, form of SYS Voting Agreement and form of Kratos Voting
Agreement have been included to provide security holders with information
regarding their terms. They are not intended to provide any other
factual information about Kratos, Merger Sub or the Company. The
Merger Agreement contains representations and warranties that Kratos and the
Company have made for the benefit of each other. The assertions
embodied in those representations and warranties are qualified by information in
confidential disclosure schedules that the parties have exchanged with each
other in connection with the signing of the Merger
Agreement. Accordingly, investors and security holders should not
rely on the representations and warranties as characterizations of the actual
state of facts, since they were only made as of the date of the Merger Agreement
and are modified in important part by the underlying disclosure
schedule.
You are
encouraged to read the Merger Agreement, the form of SYS Voting Agreement and
the form of Kratos Voting Agreement for a more complete understanding of the
transaction. The foregoing descriptions of the Merger Agreement, the form of SYS
Voting Agreement and the form of Kratos Voting Agreement are qualified in their
entirety by reference to the full text of the Merger Agreement, the form of SYS
Voting Agreement and the form of Kratos Voting Agreement.
On
February 21, 2008, the Company issued a press release announcing the
execution of the Merger Agreement. A copy of the press release is
furnished as Exhibit 99.1.
On
February 21, 2008, a conference call was held by the Company to discuss the
Merger. A replay of the recorded conference call will be available
for 30 days following the conference call and can be obtained through the
Investors link of Kratos’ website at www.kratosdefense.com.
Forward-Looking
Statements
This
Report on Form 8-K contains certain forward-looking statements including,
without limitation, expressed or implied statements concerning the Company’s
expectations regarding the timing of the closing of the Merger, anticipated
benefits to be realized from the Merger, future financial performance and cash
flows and market developments that involve risks and
uncertainties. Such statements are only predictions, and the
Company’s actual results may differ materially. Factors that may
cause the Company’s results to differ include, but are not limited
to: risks that the closing will be delayed or that the conditions to
closing will not be satisfied; risks that the integration will prove more
costly, take more time, or be more distracting than currently
anticipated; risks that the transaction will cause disruption of the
Company’s operations and distraction of its management; risks of adverse
regulatory action or litigation; risks that changes or cutbacks in spending by
the U.S. Department of Defense may occur, which could cause delays or
cancellations of key government contracts; and competition in the marketplace
which could reduce revenues and profit margins. The Company
undertakes no obligation to update any forward-looking statements.
These and other risk factors are more fully discussed in the
Company’s Annual Report on Form 10-K for the period ended June 30, 2007,
the Company’s Quarterly Reports on Form 10-Q for the periods ended
September 28, 2007 and December 28, 2007, and in other filings made
with the Securities and Exchange Commission (the “SEC”).
Important
Additional Information
This
filing is being made in respect of the proposed transaction involving Kratos and
the Company. In connection with the proposed transaction, Kratos
plans to file with the SEC a Registration Statement on Form S-4 containing a
Joint Proxy Statement/Prospectus, and each of Kratos and the Company plan to
file with the SEC other documents regarding the proposed
transaction. The definitive Joint Proxy Statement/ Prospectus will be
mailed to stockholders of Kratos and the Company.
INVESTORS AND SECURITY HOLDERS ARE
URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED
WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION.
Investors
and security holders will be able to obtain free copies of the Registration
Statement and the Joint Proxy Statement/Prospectus (when available) and other
documents filed with the SEC by Kratos and the Company through the web site
maintained by the SEC at www.sec.gov. In addition, investors and
security holders will be able to obtain free copies of the Registration
Statement and the Joint Proxy Statement/Prospectus (when available) and other
documents filed with the SEC from Kratos by directing a request to Kratos
Defense & Security Solutions, Inc, ATTN: Investor Relations, 4810 Eastgate
Mall, San Diego, CA 92121, or going to Kratos’s corporate website at
www.kratosdefense.com, or from the Company by directing a request to ATTN:
Investor Relations, 5050 Murphy Canyon Road, Ste. 200, San Diego, CA, 92123, or
going to the Company’s corporate website at
www.systechnologies.com.
Kratos
and the Company, and their respective directors and executive officers, may be
deemed to be participants in the solicitation of proxies in respect of the
proposed transaction. Information regarding Kratos’ directors and executive
officers is contained in its annual proxy statement filed with the SEC on
October 10, 2007. Information regarding the Company’s directors and
executive officers is contained in the Company’s annual proxy statement filed
with the SEC on October 29, 2007. Additional information
regarding the interests of such potential participants will be included in the
Joint Proxy Statement/Prospectus and the other relevant documents filed with the
SEC (when available).
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
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Exhibit
Number
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Description
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10.1
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Agreement
and Plan of Merger and Reorganization, dated February 20, 2008, by and
among Kratos Defense & Security Solutions, Inc., White Shadow, Inc.
and the Company.*
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10.2
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Form
of Voting Agreement, dated February 20, 2008, by and among Kratos Defense
& Security Solutions, Inc.
and the
shareholders of the Company.
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10.3
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Form
of Voting Agreement, dated February 20, 2008, by and among the Company and
the stockholders of Kratos Defense & Security Solutions,
Inc.
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99.1
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Press
Release of the Company issued on February 21, 2008.
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* Certain
schedules and exhibits referenced in the Merger Agreement have been omitted in
accordance with Item 601(b)(2) of Regulation S-K. A copy of any
omitted schedule and/or exhibit will be furnished supplementally to the
Securities and Exchange Commission upon request.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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SYS
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/s/ Michael
W. Fink
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Date: February
21, 2008
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Michael W.
Fink
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Secretary
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Exhibit List
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Exhibit
Number
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Description
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10.1
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Agreement
and Plan of Merger and Reorganization, dated February 20, 2008, by and
among Kratos Defense & Security Solutions, Inc., White Shadow, Inc.
and the Company.*
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10.2
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Form
of Voting Agreement, dated February 20, 2008, by and among Kratos Defense
& Security Solutions, Inc.
and the
shareholders of the Company.
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10.3
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Form
of Voting Agreement, dated February 20, 2008, by and among the Company and
the stockholders of Kratos Defense & Security Solutions,
Inc.
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99.1
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Press
Release of the Company issued on February 21, 2008.
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*
Certain schedules and exhibits referenced in the Merger Agreement have
been omitted in accordance with Item 601(b)(2) of Regulation
S-K. A copy of any omitted schedule and/or exhibit will be
furnished supplementally to the Securities and Exchange Commission upon
request.
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