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As filed with the Securities and Exchange Commission on June 21, 2010
Registration No. 333-[     ]
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
 
 
 
Comtech Telecommunications Corp.
(Exact Name of Registrant as Specified in Its Charter)
 
         
Delaware
 
3663
 
11-2139466
(State or Other Jurisdiction of
Incorporation or Organization)
 
(Primary Standard Industrial
Classification Code Number)

68 South Service Road, Suite 230
  (I.R.S. Employer
Identification Number)
    Melville, New York 11747
(631) 962-7000
   
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
 
 
 
 
Mr. Fred Kornberg
Comtech Telecommunications Corp.
68 South Service Road, Suite 230
Melville, New York 11747
(631) 962-7000
 
 
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)
 
 
 
 
Copies to:
 
         
Jeffrey W. Tindell, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-3000
  Robert A. Cantone, Esq.
Proskauer Rose, LLP
1585 Broadway
New York, New York 10036
(212) 969-3235
  Richard C. Wirthlin, Esq.
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
(310) 277-1010
 
 
 
 
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this registration statement and the effective time of the merger of Angels Acquisition Corp. (“Merger Sub”), a wholly owned subsidiary of Comtech Telecommunications Corp. (“Comtech”), with and into CPI International, Inc. (“CPI”), as described in the Agreement and Plan of Merger dated as of May 8, 2010 among CPI, Comtech and Merger Sub.
 
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o
 
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”).
 
             
Large accelerated filer þ
  Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
(Do not check if a smaller reporting company)
 
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) o
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) o
 
 
 
 
CALCULATION OF REGISTRATION FEE
 
                         
            Proposed Maximum
           
Title Of Each Class
    Amount To Be
    Offering Price
    Proposed Maximum
    Amount Of
Of Securities To Be Registered     Registered(1)     Per Share     Aggregate Offering Price(2)     Registration Fee(3)
Common Stock, par value $0.10 per share
    4,406,000     N/A     $87,607,514     $6,246
                         
 
(1) Represents the maximum number of shares of common stock of Comtech estimated to be issuable upon completion of the merger described in this proxy statement/prospectus, based on the number of shares of CPI common stock issued and outstanding on June 16, 2010.
 
(2) Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and calculated pursuant to Rules 457(f)(1) and 457(c) under the Securities Act. The proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the market value of shares of CPI common stock (the securities to be canceled in the merger) in accordance with Rule 457(c) and is equal to (a) the product of (i) $15.76, the average of the high and low prices per share of CPI common stock on the NASDAQ Global Select Market Exchange on June 15, 2010, multiplied by (ii) 16,788,992, the maximum number of shares of CPI common stock that may be canceled and exchanged in the merger as of June 16, 2010, less (b) $176,987,000, the aggregate amount of cash consideration expected to be paid by Comtech in the merger pursuant to Rule 457(f)(3).
 
(3) Calculated pursuant to Section 6(b) of the Securities Act and SEC Fee Advisory #4 for Fiscal Year 2010 at a rate equal to $71.30 per $1,000,000 of the proposed maximum aggregate offering price.
 
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
 


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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This proxy statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
 
 
PRELIMINARY — SUBJECT TO COMPLETION — DATED JUNE 21, 2010
 
(COMPANY LOGO)
 
MERGER PROPOSAL — YOUR VOTE IS VERY IMPORTANT
 
[l], 2010
 
Dear CPI International, Inc. Stockholder:
 
You are cordially invited to attend our upcoming special meeting of stockholders of CPI International, Inc., referred to as CPI, to be held on [l], 2010 at 10:00 a.m., local time, at [l]. As announced on May 10, 2010, CPI, Comtech Telecommunications, Inc., referred to as Comtech, and Angels Acquisition Corp. entered into an agreement and plan of merger, dated May 8, 2010, which provides for a merger in which CPI will become a wholly owned subsidiary of Comtech. The CPI board of directors has unanimously determined that the merger and the merger agreement are advisable and in the best interests of CPI and its stockholders and has approved the merger agreement and the merger.
 
If the merger is completed, each outstanding share of CPI common stock will be converted into the right to receive a combination of $9.00 in cash, without interest, and a fraction of a share of Comtech common stock equal to the conversion ratio. The conversion ratio will equal $8.10 divided by the average closing trading price of Comtech common stock over a specified period prior to the closing of the merger, but will not be greater than 0.2382 nor less than 0.2132.
 
The common stock of CPI and common stock of Comtech are each traded on the NASDAQ Global Select Market under the symbols “CPII” and “CMTL,” respectively.
 
CPI is holding the special meeting of stockholders to obtain your vote to adopt the merger agreement. Your vote is important. The merger cannot be completed unless the holders of a majority of the shares of CPI common stock outstanding and entitled to vote affirmatively vote for the adoption of the merger agreement at the special meeting. As described in the accompanying proxy statement/prospectus, Cypress Associates II LLC and certain of its affiliates have entered into a voting and standstill agreement under which, subject to limited exceptions, they have agreed to vote shares representing 49.9% of the outstanding shares of CPI common stock as of the record date for the special meeting in favor of the adoption of the merger agreement.
 
The CPI board of directors unanimously recommends that CPI stockholders vote “FOR” the adoption of the merger agreement.
 
On behalf of the CPI board of directors, you are invited to attend the special meeting. Whether or not you expect to attend the CPI special meeting in person, you are urged to submit your proxy as promptly as possible through one of the delivery methods described in the accompanying proxy statement/prospectus. In addition, you are urged to read carefully the accompanying proxy statement/prospectus (and the documents incorporated by reference into the accompanying proxy statement/prospectus), which includes important information about the merger agreement, the proposed merger, CPI, Comtech and the special meeting. Please pay particular attention to the section titled “Risk Factors” beginning on page [l] of the accompanying proxy statement/prospectus.
 
On behalf of the CPI board of directors, thank you for your continued support.
 
     
Sincerely,
   
     
Michael Targoff
  O. Joe Caldarelli
Chairman of the Board of Directors
  Chief Executive Officer
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying proxy statement/prospectus or determined that the accompanying proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
 
The accompanying proxy statement/prospectus is dated [l], 2010 and is first being mailed to the stockholders of CPI on or about [l], 2010.


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ADDITIONAL INFORMATION
 
The accompanying document is the proxy statement of CPI for its special meeting of stockholders and the prospectus of Comtech for the shares of Comtech common stock to be issued as consideration in the merger. The accompanying proxy statement/prospectus incorporates important business and financial information about Comtech and CPI from documents that are not included in or delivered with the accompanying proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain documents incorporated by reference into the accompanying proxy statement/prospectus by requesting them in writing or by telephone from Comtech or CPI at the following addresses and telephone numbers:
 
     
Comtech Telecommunications Corp.
68 South Service Road, Suite 230
Melville, New York 11747
Attention: Investor Relations
(631) 962-7000
  CPI International, Inc.
811 Hansen Way
Palo Alto, California 94303
Attention: Investor Relations
(650) 846-2900
 
In addition, if you have questions about the merger or the accompanying proxy statement/prospectus, would like additional copies of the accompanying proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, please contact CPI Investor Relations at (650) 846-2900. You will not be charged for any of these documents that you request.
 
If you would like to request documents, please do so by [l], 2010 in order to receive them before the special meeting.
 
See “Where You Can Find More Information” beginning on page [l] of the accompanying proxy statement/prospectus for further information.


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(COMPANY LOGO)
 
811 Hansen Way
Palo Alto, California 94303
 
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
 
To the Stockholders of CPI International, Inc.:
 
Notice is hereby given that a special meeting of stockholders of CPI International, Inc., a Delaware corporation, which is referred to as CPI, will be held on [l], 2010 at 10:00 a.m., local time, at [l], solely for the following purposes:
 
  •  To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of May 8, 2010 (as it may be amended from time to time), among Comtech Telecommunications Corp., which is referred to as Comtech, Angels Acquisition Corp., a wholly owned subsidiary of Comtech, and CPI. A copy of the Agreement and Plan of Merger is attached as Annex A to the proxy statement/prospectus accompanying this notice; and
 
  •  To approve the adjournment of the CPI special meeting if necessary to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting.
 
These items of business, including the merger agreement and the proposed merger, are described in detail in the accompanying proxy statement/prospectus. The CPI board of directors has determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable and in the best interests of CPI and its stockholders and recommends that CPI stockholders vote “FOR” the proposal to adopt the merger agreement and “FOR” the adjournment of the CPI special meeting if necessary to solicit additional proxies in favor of such adoption.
 
Only stockholders of record as of the close of business on [l], 2010 are entitled to notice of the CPI special meeting and to vote at the CPI special meeting or at any adjournment thereof. A list of stockholders entitled to vote at the special meeting will be available in CPI’s offices located at 811 Hansen Way, Palo Alto, California 94303, during regular business hours for a period of no less than 10 days before the special meeting, as well as at the place of the special meeting during the meeting.
 
Adoption of the merger agreement by the CPI stockholders is a condition to the merger and requires the affirmative vote of holders of a majority of the shares of CPI common stock outstanding and entitled to vote thereon. Therefore, your vote is very important. Your failure to vote your shares will have the same effect as a vote “AGAINST” the adoption of the merger agreement.
 
By order of the board of directors,
 
Joel Littman
Corporate Secretary
 
Palo Alto, California
[l], 2010


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YOUR VOTE IS IMPORTANT!
 
WHETHER OR NOT YOU EXPECT TO ATTEND THE CPI SPECIAL MEETING IN PERSON, WE URGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE (I) THROUGH THE INTERNET, (II) BY TELEPHONE OR (III) BY MARKING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. You may revoke your proxy or change your vote at any time before the CPI special meeting. If your shares are held in the name of a bank, broker or other fiduciary, please follow the instructions on the voting instruction card furnished to you by such record holder.
 
You are urged to read the accompanying proxy statement/prospectus, including all documents incorporated by reference into the accompanying proxy statement/prospectus, and its annexes carefully and in their entirety. If you have any questions concerning the merger, the special meeting or the accompanying proxy statement/prospectus, would like additional copies of the accompanying proxy statement/prospectus or need help voting your shares of CPI common stock, please contact CPI Investor Relations at:
 
CPI International, Inc.
811 Hansen Way
Palo Alto, California 94303
Attention: Investor Relations
Telephone: (650) 846-2900


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 EX-5.1
 EX-23.1
 EX-23.2
 EX-24.1
 EX-99.1
 EX-99.2
 EX-99.3


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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING
 
The following are some questions that you, as a stockholder of CPI, may have regarding the merger and the special meeting, and brief answers to those questions. You are urged to read this proxy statement/prospectus and the other documents referred to in this proxy statement/prospectus carefully and in their entirety because this section may not provide all of the information that is important to you with respect to the merger and the special meeting. Additional important information is contained in the annexes to, and the documents incorporated by reference into, this proxy statement/prospectus.
 
Q: Why am I receiving this document?
 
A: Comtech and CPI have agreed to a merger, pursuant to which CPI will become a wholly owned subsidiary of Comtech and will cease to be a publicly held corporation. In order for the companies to complete the merger, the holders of a majority of the outstanding shares of CPI common stock must vote to adopt the merger agreement, and CPI is holding a special meeting of stockholders solely to obtain such stockholder approval. In the merger, in addition to the payment of cash, Comtech will issue shares of Comtech common stock as the consideration to be paid to holders of CPI common stock.
 
This document is being delivered to you as both a proxy statement of CPI and a prospectus of Comtech in connection with the merger. It is the proxy statement by which the CPI board of directors is soliciting proxies from you to vote on the adoption of the merger agreement at the special meeting or at any adjournment or postponement of the special meeting. It is also the prospectus by which Comtech will issue Comtech common stock to you in the merger.
 
Q: What am I being asked to vote on?
 
A: CPI stockholders are being asked to vote on the following proposals:
 
  •  to adopt the merger agreement between Comtech and CPI, a copy of which is attached as Annex A to this proxy statement/prospectus; and
 
  •  to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting.
 
The approval of the proposal to adopt the merger agreement by CPI stockholders is a condition to the obligations of CPI and Comtech to complete the merger.
 
Q: What will happen in the merger?
 
A: In the merger, Angels Acquisition Corp., a wholly owned subsidiary of Comtech that was formed for the purpose of the merger, will be merged with and into CPI. CPI will be the surviving corporation in the merger and will be a wholly owned subsidiary of Comtech following completion of the merger.
 
Q: What will I receive in the merger?
 
A: If the merger is completed, each of your shares of CPI common stock will be cancelled and converted automatically into the right to receive $9.00 in cash and between 0.2132 and 0.2382 shares of Comtech common stock (and dividends, if any, on Comtech common stock with a record date after the date of the merger agreement and before the effective time of the merger). The exact number of shares of Comtech common stock to be received in the merger will be determined based on a conversion ratio (rounded to four decimal places) equal to $8.10 divided by the average closing price of Comtech’s stock over the five consecutive trading days ending on (and including) the second trading day prior to closing, provided that if such average closing price of Comtech common stock is greater than $38.00, then the conversion ratio will equal 0.2132, and if such average closing sale price is less than $34.00, then the conversion ratio will equal 0.2382. CPI stockholders will receive cash in lieu of any fractional shares of Comtech common stock that they would otherwise receive in the merger.
 
Using only the closing price of $31.06 for Comtech common stock on the NASDAQ Global Select Market on May 7, 2010, the last trading day before the public announcement of the merger agreement, the merger consideration represented approximately $16.40 in value for each share of CPI common stock. Based on the closing price of $[l] for Comtech common stock on the NASDAQ Global Select Market on [l], 2010, the most


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recent practicable trading day prior to the date of this proxy statement/prospectus, the conversion ratio was [l], and the merger consideration represented approximately $[l] in value for each share of CPI common stock. See “Risk Factors” beginning on page [l] of this proxy statement/prospectus.
 
Q: How did you determine the merger consideration to be paid to holders of CPI common stock?
 
A: The merger consideration was determined as a result of arm’s length negotiations between CPI’s board of directors, on the one hand, and the management of Comtech and its board of directors, on the other hand.
 
Q: Why are you proposing the merger?
 
A: For a discussion of CPI’s reasons for the merger, you are urged to read the information under “The Merger — CPI’s Reasons for the Merger; Recommendation of the CPI Board of Directors” beginning on page [l] of this proxy statement/prospectus. For a discussion of Comtech’s reasons for the merger, you are urged to read the information under “The Merger — Comtech’s Reasons for the Merger” beginning on page [l] of this proxy statement/prospectus.
 
Q: What happens if the merger is not completed?
 
A: If the merger agreement is not adopted by CPI stockholders or if the merger is not completed for any other reason, you will not receive any payment for your shares of CPI common stock in connection with the merger. Instead, CPI will remain an independent public company and its common stock will continue to be listed and traded on the NASDAQ Global Select Market. If the merger agreement is terminated under specified circumstances, CPI may be required to pay Comtech a termination fee of $12 million and, in some cases, liquidated damages of $15 million, as described under “The Merger Agreement — Termination of the Merger Agreement — Termination Fee Payable by CPI” beginning on page [l] of this proxy statement/prospectus.
 
Q: Does CPI’s board of directors recommend that stockholders adopt the merger agreement?
 
A: Yes. The CPI board of directors has unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable and in the best interests of CPI and its stockholders. Therefore, the CPI board of directors unanimously recommends that you vote “FOR” the proposal to adopt the merger agreement at the special meeting. See “The Merger — CPI’s Reasons for the Merger; Recommendation of the CPI Board of Directors” beginning on page [l] of this proxy statement/prospectus.
 
Q: What stockholder vote is required for the approval of each proposal?
 
A: The following are the vote requirements for the proposals:
 
  •  Adoption of the Merger Agreement:  Once a quorum has been established, the affirmative vote of holders of a majority of the shares of CPI common stock outstanding and entitled to vote on the proposal. Accordingly, abstentions, broker non-votes and unvoted shares will have the same effect as votes “AGAINST” adoption.
 
  •  Adjournment (if necessary):  Whether or not a quorum is present, the affirmative vote of a majority of the votes present in person or by proxy.
 
Q: What constitutes a quorum for the special meeting?
 
A: A majority in voting power of all of the outstanding shares of CPI common stock entitled to vote at the meeting being present in person or represented by proxy constitutes a quorum for the special meeting.
 
Q: When is this proxy statement/prospectus being mailed?
 
A: This proxy statement/prospectus and the proxy card are first being sent to CPI stockholders on or near [l], 2010.


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Q: Who is entitled to vote at the special meeting?
 
A: All holders of CPI common stock who held shares at the close of business on the record date for the special meeting ([l], 2010) are entitled to receive notice of and to vote at the special meeting, provided that such shares remain outstanding on the date of the special meeting. As of the close of business on the record date, there were [l] shares of CPI common stock outstanding and entitled to vote at the special meeting. Each share of CPI common stock is entitled to one vote.
 
Q: Are any CPI stockholders already committed to vote in favor of the merger?
 
A: Yes. Pursuant to a voting and standstill agreement entered into concurrently with the merger agreement, Cypress Associates II LLC and certain of its affiliates, which are referred to as the Cypress Group stockholders in this proxy statement/prospectus, have, subject to certain exceptions, agreed to vote 49.9% of the outstanding shares of CPI common stock in favor of the merger. Under certain circumstances, if the CPI board of directors changes its recommendation with respect to the merger, the Cypress Group stockholders will be required to vote only 25% of the outstanding shares of CPI common stock in favor of the adoption of the merger agreement. In addition, the voting and standstill agreement will terminate automatically upon the termination of the merger agreement. For a more complete description of the voting and standstill agreement, see “The Voting and Standstill Agreement” beginning on page [l] of this proxy statement/prospectus. The voting and standstill agreement is also attached to this proxy statement/prospectus as Annex B.
 
Q: When and where is the special meeting?
 
A: The special meeting will be held at [l] on [l], 2010 at 10:00 a.m., local time.
 
Q: How do I vote my shares at the special meeting?
 
A: If you are entitled to vote at the CPI special meeting and you hold your shares in your own name, you can submit a proxy or vote in person by completing a ballot at the special meeting. However, CPI encourages you to submit a proxy before the special meeting even if you plan to attend the special meeting. A proxy is a legal designation of another person to vote your shares of CPI common stock on your behalf. If you hold shares in your own name, you may submit a proxy for your shares:
 
  •  telephonically by calling [l] and following the instructions when prompted;
 
  •  electronically via the Internet at www.[l] and following the instructions provided to you; or
 
  •  by filling out, signing and dating the enclosed proxy card and mailing it in the pre-paid envelope included with these proxy materials.
 
Q: If my shares are held in “street name” by my broker, will my broker automatically vote my shares for me?
 
A: No. If your shares are held in an account at a broker or through another nominee, you must instruct the broker or other nominee on how to vote your shares by following the instructions that the broker or other nominee provides to you with these materials. Most brokers offer the ability for stockholders to submit voting instructions by mail by completing a voting instruction card, by telephone or via the Internet.
 
Brokers do not have discretionary authority to vote on the proposal to adopt the merger agreement. The broker may still register your shares as being present at the special meeting for purposes of determining a quorum but without your specific authorization, your shares will not be voted in favor of the merger or on any other matters over which brokers lack discretionary authority. This is called a broker non-vote. A broker non-vote will have the same effect as a vote “AGAINST” adoption of the merger agreement.
 
If your shares are held in an account at a broker or through another nominee, you must instruct the broker or other nominee on how to vote your shares by following the instructions that the broker or other nominee provides to you with these materials. Most brokers offer the ability for stockholders to submit voting instructions by mail by completing a voting instruction card, by telephone or via the Internet.


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If you hold shares through a broker or other nominee and wish to vote your shares in person at the special meeting, you must obtain a proxy from your broker or other nominee and present it to the inspector of election with your ballot when you vote at the special meeting.
 
Q: How will my shares be represented at the special meeting?
 
A: If you submit your proxy by telephone, the Internet or by signing and returning your proxy card, the officers named in your proxy card will vote your shares in the manner you requested if you correctly submitted your proxy. If you sign your proxy card and return it without indicating how you would like to vote your shares, your proxy will be voted as the CPI board of directors recommends, which is:
 
  •  “FOR” the adoption of the merger agreement; and
 
  •  “FOR” the approval of the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting.
 
Q: Who may attend the special meeting?
 
A: CPI stockholders (or their authorized representatives) and CPI’s invited guests may attend the special meeting. Stockholders may call CPI Investor Relations at (650) 846-2900 to obtain directions to the location of the special meeting.
 
Q: Is my vote important?
 
A: Yes, your vote is very important. If you do not submit a proxy or vote in person at the special meeting, it will be more difficult for CPI to obtain the necessary quorum to hold the special meeting. In addition, an abstention or your failure to submit a proxy or to vote in person, or, if your shares are held in an account at a broker or through another nominee, your failure to instruct the broker or other nominee on how to vote your shares, will have the same effect as a vote “AGAINST” the adoption of the merger agreement. The CPI board of directors recommends that you vote “FOR” the adoption of the merger agreement.
 
Q: Can I revoke my proxy or change my voting instructions?
 
A: Yes. You may revoke your proxy and/or change your vote at any time before your proxy is voted at the special meeting. If you are a stockholder of record, you can do this by:
 
  •  sending a written notice stating that you revoke your proxy to CPI at 811 Hansen Way, Palo Alto, California 94303, Attention: Corporate Secretary, that bears a date later than the date of the proxy and is received prior to the special meeting;
 
  •  submitting a valid, later-dated proxy by mail, telephone or Internet that is received prior to the special meeting; or
 
  •  attending the special meeting and voting by ballot in person (your attendance at the special meeting will not, by itself, revoke any proxy that you have previously given).
 
If you hold your shares through a broker or other nominee, you must contact your broker or other nominee to change your vote or obtain a “legal proxy” to vote your shares if you wish to cast your vote in person at the meeting.
 
Q: What happens if I sell my shares after the record date but before the special meeting?
 
A: The record date for the special meeting is earlier than the date of the special meeting and the date that the merger is expected to be completed. If you sell or otherwise transfer your CPI shares after the record date but before the date of the special meeting, you will retain your right to vote at the special meeting. However, you will not have the right to receive the merger consideration to be received by CPI stockholders in the merger. In order to receive the merger consideration, you must hold your shares through completion of the merger.
 
Q: What do I do if I receive more than one set of voting materials?
 
A: You may receive more than one set of voting materials for the special meeting, including multiple copies of this proxy statement/prospectus, proxy cards and voting instruction forms. This can occur if you hold your shares in


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more than one brokerage account, if you hold shares directly as a record holder and also in “street name,” or otherwise through a nominee, and in certain other circumstances. If you receive more than one set of voting materials, each should be voted and/or returned separately in order to ensure that all of your shares are voted.
 
Q: Am I entitled to appraisal rights if I do not vote or if I vote against the adoption of the merger agreement?
 
A: Yes. Under Delaware law, if the merger is completed, record holders of CPI common stock who do not vote in favor of the adoption of the merger agreement and who otherwise properly assert their appraisal rights will be entitled to seek appraisal and obtain payment in cash for the judicially determined fair value of their shares of CPI common stock, in lieu of receiving the merger consideration. This value could be more than, the same as, or less than the value of the merger consideration. To exercise your appraisal rights, you must strictly follow the procedures described by Delaware law. Due to the complexity of these procedures, CPI stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. These procedures are summarized under the heading, “The Merger — Appraisal Rights,” beginning on page [l] of this proxy statement/prospectus. In addition, the text of the applicable provisions of Delaware law is included as Annex C to this proxy statement/prospectus. Failure to strictly comply with these provisions will result in loss of the right of appraisal.
 
Q: Is completion of the merger subject to any conditions?
 
A: Yes. In addition to the adoption of the merger agreement by CPI stockholders, completion of the merger requires the receipt of the necessary governmental and regulatory approvals and the satisfaction or, to the extent permitted by applicable law, waiver of the other conditions specified in the merger agreement.
 
Q: When do you expect to complete the merger?
 
A: CPI and Comtech are working towards completing the merger promptly. The consummation of the merger is subject to, among other things, receipt of CPI stockholder approval, governmental and regulatory approvals and other usual and customary closing conditions. As a result, no assurance can be given as to when, or if, the merger will occur.
 
Q: Is the transaction expected to be taxable to CPI stockholders?
 
A: The merger generally will be a taxable transaction, and U.S. holders will generally recognize gain or loss in an amount equal to the difference, if any, between (i) the sum of any cash received (including cash received in lieu of a fractional share of Comtech common stock) and the fair market value, as of the effective time of the merger, of the shares of Comtech common stock received by such holder in the exchange and (ii) such holder’s tax basis in the shares of CPI common stock exchanged therefor.
 
CPI stockholders are urged to consult their tax advisors as to the specific tax consequences to them of the merger, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws in their particular circumstances.
 
Additional information is provided under “The Merger — Certain Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [l].
 
Q: As a CPI stockholder, what risks should I consider in deciding whether to vote in favor of the merger?
 
A: You should carefully review the section of this proxy statement/prospectus entitled “Risk Factors” beginning on page [l], which sets forth and incorporates by reference certain risks and uncertainties related to the merger, certain risks and uncertainties to which the combined company’s business will be subject, and certain risks and uncertainties to which each of CPI and Comtech, as an independent company, is subject.


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Q: What do I need to do now?
 
A: Carefully read and consider the information contained in and incorporated by reference into this proxy statement/prospectus, including its annexes. Then, please vote your shares of CPI common stock, which you may do by:
 
  •  completing, dating, signing and returning the enclosed proxy card in the accompanying postage-paid envelope;
 
  •  submitting your proxy by telephone or via the Internet by following the instructions included on your proxy card; or
 
  •  attending the special meeting and voting by ballot in person.
 
If you hold shares through a broker or other nominee, please instruct your broker or nominee to vote your shares by following the instructions that the broker or nominee provides to you with these materials.
 
Q: Should I send in my stock certificates now?
 
A: No. CPI stockholders should not send in their stock certificates at this time. After completion of the merger, Comtech’s exchange agent will send you a letter of transmittal and instructions for exchanging your shares of CPI common stock for the merger consideration. Unless you specifically request to receive Comtech common stock certificates, the shares of Comtech common stock you receive in the merger will be issued in book-entry form.
 
Q: Whom should I contact with questions?
 
A: If you have any questions about the merger or the special meeting or would like to obtain additional copies of this proxy statement/prospectus, proxy cards or voting instruction forms, you may contact CPI by mail at CPI International, Inc., 811 Hansen Way, Palo Alto, California 94303, Attention: Investor Relations, or by phone at (650) 846-2900.


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SUMMARY
 
This summary highlights selected information from this proxy statement/prospectus. It may not contain all of the information that is important to you. Moreover, this summary is qualified in its entirety by reference to the more detailed information contained elsewhere in this proxy statement/prospectus including the annexes attached hereto, and incorporated by reference herein. You are urged to read carefully this entire proxy statement/prospectus and the other documents referred to in this proxy statement/prospectus in order to fully understand the merger agreement, the voting and standstill agreement and the proposed merger. See “Where You Can Find More Information” beginning on page [l] of this proxy statement/prospectus. Each item in this summary refers to the page of this proxy statement/prospectus on which that subject is discussed in more detail.
 
Information about Comtech Telecommunications Corp., Angels Acquisition Corp. and CPI International, Inc. (See Page [l])
 
Comtech Telecommunications Corp.
 
Comtech Telecommunications Corp., which is referred to in this proxy statement/prospectus as Comtech, designs, develops, produces and markets innovative products, systems and services for advanced communications solutions. Comtech believes many of its solutions play a vital role in providing or enhancing communication capabilities when terrestrial communications infrastructure is unavailable, inefficient or too expensive. Comtech conducts business through three complementary segments: telecommunications transmission, mobile data communications and RF microwave amplifiers. Comtech sells products to a diverse customer base in the global commercial and government communications markets. Comtech believes it is a leader in the market segments that it serves.
 
The principal trading market for Comtech’s common stock (NASDAQGS: CMTL) is the NASDAQ Global Select Market.
 
The principal executive offices of Comtech are located at 68 South Service Road, Suite 230, Melville, New York 11747; its telephone number is (631) 962-7000; and its web site is www.comtechtel.com.
 
Angels Acquisition Corp.
 
Angels Acquisition Corp., which is referred to in this proxy statement/prospectus as Merger Sub, is a Delaware corporation and a wholly owned subsidiary of Comtech. Merger Sub was formed solely for the purpose of consummating the merger. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the merger.
 
The principal executive offices of Merger Sub are located at 68 South Service Road, Suite 230, Melville, New York 11747, and its telephone number is (631) 962-7000.
 
CPI International, Inc.
 
CPI International, Inc., which is referred to in this proxy statement/prospectus as CPI, is the parent company of Communications & Power Industries, Inc., a leading provider of microwave, radio frequency, power and control solutions for critical defense, communications, medical, scientific and other applications. Communications & Power Industries, Inc. develops, manufactures and distributes products used to generate, amplify, transmit and receive high-power/high-frequency microwave and radio frequency signals and/or provide power and control for various applications. End-use applications of these systems include the transmission of radar signals for navigation and location; transmission of deception signals for electronic countermeasures; transmission and amplification of voice, data and video signals for broadcasting, Internet and other types of commercial and military communications; providing power and control for medical diagnostic imaging; and generating microwave energy for radiation therapy in the treatment of cancer and for various industrial and scientific applications.
 
The principal trading market for CPI’s common stock (NASDAQGS: CPII) is the NASDAQ Global Select Market.


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The principal executive offices of CPI are located at 811 Hansen Way, Palo Alto, California 94303; its telephone number is (650) 846-2900; and its web site is www.cpii.com.
 
The Merger (See Page [l])
 
Comtech, Merger Sub and CPI have entered into the Agreement and Plan of Merger, dated as of May 8, 2010, which, as it may be amended from time to time, is referred to in this proxy statement/prospectus as the merger agreement. Subject to the terms and conditions of the merger agreement and in accordance with Delaware law, Merger Sub will be merged with and into CPI, with CPI continuing as the surviving corporation. Upon completion of this transaction, which is referred to in this proxy statement/prospectus as the merger, CPI will be a wholly owned subsidiary of Comtech, and CPI common stock will no longer be outstanding or publicly traded.
 
A copy of the merger agreement is attached as Annex A to this proxy statement/prospectus. You should read the merger agreement carefully because it is the legal document that governs the merger.
 
Special Meeting of CPI Stockholders (See Page [l])
 
Meeting
 
The special meeting will be held at [l], on [l], 2010 at 10:00 a.m., local time. At the special meeting, CPI stockholders will be asked to vote on the following proposals:
 
  •  to adopt the merger agreement; and
 
  •  to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting.
 
Record Date
 
Only CPI stockholders of record at the close of business on [l], 2010 will be entitled to receive notice of and to vote at the special meeting or any adjournment of the special meeting. As of the close of business on the record date of [l], 2010, there were [l] shares of CPI common stock outstanding and entitled to vote at the special meeting. Each holder of CPI common stock is entitled to one vote for each share of CPI common stock owned as of the record date.
 
Required Vote
 
To adopt the merger agreement, holders of a majority of the shares of CPI common stock outstanding and entitled to vote on the proposal must vote in favor of adoption of the merger agreement. CPI cannot complete the merger unless its stockholders adopt the merger agreement. Because approval is based on the affirmative vote of a majority of the outstanding shares of CPI common stock entitled to vote thereon, a CPI stockholder’s failure to vote, an abstention from voting or the failure of a CPI stockholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee will have the same effect as a vote “AGAINST” adoption of the merger agreement.
 
If there are not sufficient votes to adopt the merger agreement at the time of the special meeting, a majority of the votes present in person or by proxy (whether or not a quorum is present) may adjourn the meeting to another time and place in order to solicit additional proxies. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” the proposal to adjourn the special meeting. Shares not in attendance at the special meeting will have no effect on the outcome of any vote to adjourn the special meeting.
 
See “— The Voting and Standstill Agreement” below for information regarding CPI stockholders who have committed to vote shares of CPI common stock in favor of the two proposals described above, subject to certain exceptions.
 
Stock Ownership of and Voting by CPI’s Directors and Executive Officers
 
At the close of business on the record date for the special meeting, CPI’s directors and executive officers and their affiliates beneficially owned [l] shares of CPI common stock, and have the right to vote [l] of those shares at


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the special meeting, which represents approximately [l]% of the shares of CPI common stock entitled to vote at the special meeting.
 
Except with respect to the shares held by entities affiliated with CPI director Jeffrey Hughes, none of the directors or executive officers of CPI has entered into any agreement requiring them to vote for or against the merger proposal. See “— The Voting and Standstill Agreement” below for information regarding CPI stockholders who have committed to vote shares of CPI common stock in favor of the two proposals described above.
 
What CPI Stockholders Will Receive in the Merger (See Page [l])
 
If the merger is completed, each share of CPI common stock will be cancelled and converted automatically into the right to receive $9.00 in cash and between 0.2132 and 0.2382 shares of Comtech common stock (and dividends, if any, on Comtech common stock with a record date after the date of the merger agreement and before the effective time of the merger). The exact number of shares of Comtech common stock to be received in the merger will be determined based on a conversion ratio (rounded to four decimal places) equal to $8.10 divided by the average closing price of Comtech’s stock over the five consecutive trading days ending on (and including) the second trading day prior to closing, provided that if such average closing price of Comtech common stock is greater than $38.00, then the conversion ratio will equal 0.2132, and if such average closing sale price is less than $34.00, then the conversion ratio will equal 0.2382. The fraction of a share of Comtech common stock delivered in respect of each share of CPI common stock in the merger is referred to in this proxy statement/prospectus as the conversion ratio. Comtech will not issue any fractional shares of its common stock in the merger. Instead, the total number of shares of Comtech common stock that each CPI stockholder will receive in the merger will be rounded down to the nearest whole number, and each CPI stockholder will receive cash, without interest, for any fractional shares of Comtech common stock that he or she would otherwise receive in the merger. The amount of cash for fractional shares will be based on the prevailing prices at which Comtech common stock will be sold on the NASDAQ Global Select Market by Comtech’s exchange agent as soon as practicable after the effective time of the merger. The Comtech common stock received based on the conversion ratio, together with the cash consideration (including any cash received in lieu of fractional shares and dividends, if any, on Comtech common stock with a record date after the date of the merger agreement and before the effective time of the merger), is referred to in this proxy statement/prospectus as the merger consideration. Below are three illustrative examples of the merger consideration that a CPI stockholder will receive depending on different per-share prices of Comtech common stock:
 
Example 1:  If at closing you own 100 shares of CPI common stock and the average closing price of Comtech’s shares over the five consecutive trading days ending on (and including) the second trading day prior to closing is $36.00, you will be entitled to receive 22 shares of Comtech common stock, $900 in cash and an additional amount of cash in respect of 0.50 shares of Comtech common stock at the prevailing sale price of a share of Comtech common stock as soon as practicable after closing.
 
Example 2:  If at closing you own 100 shares of CPI common stock and the average closing price of Comtech’s shares over the five consecutive trading days ending on (and including) the second trading day prior to closing is $30.00, you will be entitled to receive 23 shares of Comtech common stock, $900 in cash and an additional amount of cash in respect of 0.82 shares of Comtech common stock at the prevailing sale price of a share of Comtech common stock as soon as practicable after closing.
 
Example 3:  If at closing you own 100 shares of CPI common stock and the average closing price of Comtech’s shares over the five consecutive trading days ending on (and including) the second trading day prior to closing is $42.00, you will be entitled to receive 21 shares of Comtech common stock, $900 in cash and an additional amount of cash in respect of 0.32 shares of Comtech common stock at the prevailing sale price of a share of Comtech common stock as soon as practicable after closing.
 
Using only the closing price of $31.06 for Comtech common stock on the NASDAQ Global Select Market on May 7, 2010, the last trading day before the public announcement of the merger agreement, the merger consideration represented approximately $16.40 in value for each share of CPI common stock. Based on the closing price of $[l] for Comtech common stock on the NASDAQ Global Select Market on [l], 2010, the most recent practicable trading day prior to the date of this proxy statement/prospectus, the merger consideration represented approximately $[l] in value for each share of CPI common stock.


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Treatment of Equity Awards (See Page [l])
 
Each option to purchase shares of CPI common stock that were granted under CPI’s equity compensation plans and are outstanding immediately prior to the closing, whether or not exercisable or vested, will be canceled at the closing in exchange for cash, equal to the excess, if any, of (i) the sum of (A) $9.00 and (B) the average per-share closing prices of Comtech common stock for the 10 consecutive trading days immediately preceding the date that is two days before the closing, as reported on the NASDAQ Global Select Market, multiplied by the conversion ratio, reduced by (ii) the per-share exercise price of such option.
 
Each restricted stock award and restricted stock unit granted under CPI’s equity compensation plans outstanding immediately prior to the closing will be canceled at the closing in exchange for a payment, in cash, equal to the sum of (i) $9.00 and (ii) the average per-share closing prices of Comtech common stock for the 10 consecutive trading days immediately preceding the date that is two days before the closing, as reported on the NASDAQ Global Select Market, multiplied by the conversion ratio.
 
Recommendation of the CPI Board of Directors (See Page [l])
 
The CPI board of directors has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of CPI and its stockholders and unanimously recommends that you vote “FOR” the adoption of the agreement and “FOR” the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting.
 
Opinion of CPI’s Financial Advisors (See Page [l])
 
In connection with the merger, CPI’s financial advisor, J.P. Morgan Securities Inc., referred to as J.P. Morgan in this proxy statement/prospectus, delivered its oral opinion, subsequently confirmed in writing, to the CPI board of directors as to the fairness, from a financial point of view, as of the date of such opinion, and based upon and subject to the various factors, assumptions and limitations set forth in such written opinion, of the per share merger consideration to be received by the holders of CPI common stock (other than the Cypress Group and its affiliates) in the proposed merger. The full text of J.P. Morgan’s written opinion, dated May 7, 2010, is attached to this proxy statement/prospectus as Annex D and sets forth, among other things, the procedures followed, assumptions made, matters considered and limitations on the scope of review undertaken.
 
In connection with the merger, CPI engaged Moelis & Company LLC, referred to as Moelis in this proxy statement/prospectus, to act as financial advisor to the special committee of CPI’s board of directors. Moelis delivered its oral opinion, subsequently confirmed in writing, to the special committee of the CPI board of directors as to the fairness, from a financial point of view, as of the date of such opinion, and based upon and subject to the various factors, assumptions, limitations and qualifications set forth in such opinion, of the per share merger consideration to be received by CPI’s stockholders (other than the Cypress Group and its affiliates) pursuant to the terms and subject to the conditions set forth in the merger agreement. The full text of Moelis’ written opinion, dated May 7, 2010, is attached to this proxy statement/prospectus as Annex E and sets forth, among other things, the procedures followed, assumptions made, matters considered and limitations on the scope of review undertaken.
 
The opinions of J.P. Morgan and Moelis are directed to the board of directors of CPI and the special committee of the CPI board of directors, respectively, and each opinion addresses only the fairness, from a financial point of view, of the consideration to be paid to the holders of common stock of CPI (other than the Cypress Group stockholders) in the proposed merger, and does not address any other aspect of the merger. The opinions of J.P. Morgan and Moelis do not constitute a recommendation as to how any stockholder should vote with respect to the proposed merger.
 
Ownership of Comtech After the Merger (See Page [l])
 
Based on the number of shares of CPI common stock outstanding as of [l], 2010, Comtech expects to issue approximately [l] shares of its common stock to CPI stockholders pursuant to the merger. The actual number of shares of Comtech common stock to be issued pursuant to the merger will be determined at the completion of the


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merger based on the conversion ratio then in effect and the number of shares of CPI common stock outstanding at such time. Immediately after completion of the merger, it is expected that former CPI stockholders will own approximately [l]% of the [l] then outstanding shares of Comtech common stock, based on the number of shares of CPI and Comtech common stock outstanding, on a fully diluted basis, as of [l], 2010.
 
Comtech Stockholder Approval Is Not Required
 
Comtech stockholders are not required to adopt the merger agreement or approve the merger or the issuance of the shares of Comtech common stock in connection with the merger.
 
Interests of Certain Persons in the Merger (See Page [l])
 
In considering the recommendation of the CPI board of directors with respect to the merger agreement, CPI stockholders should be aware that the executive officers of CPI and certain members of the CPI board of directors have interests in the transactions contemplated by the merger agreement that are different from, or in addition to, the interests of CPI stockholders generally. These interests include certain CPI executive officers being entitled to receive specified severance and other benefits following the effective time of the merger. The CPI board of directors was aware of these interests, and considered them, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that CPI stockholders adopt the merger agreement.
 
Comtech is presently in negotiations with CPI’s executive officers regarding the terms of their continued employment and the treatment of their existing equity awards, and, if no such agreement is reached, some or all of the executive officers might not continue with the surviving company or its subsidiaries in their current capacity or otherwise.
 
Listing of Comtech Common Stock and Delisting and Deregistration of CPI Common Stock (See Page [l])
 
Comtech will use reasonable best efforts to cause the shares of Comtech common stock to be issued in connection with the merger to be approved for listing on the NASDAQ Global Select Market (where Comtech common stock is currently listed), subject to official notice of issuance. If the merger is completed, CPI shares will no longer be listed on the NASDAQ Global Select Market, and will be deregistered under the Securities Exchange Act of 1934, as amended, which is referred to in this proxy statement/prospectus as the Exchange Act.
 
Appraisal Rights Available (See Page [l])
 
Under Delaware law, record holders of CPI common stock who do not vote in favor of the adoption of the merger agreement and who otherwise comply with the procedures for exercising appraisal rights under Delaware law will be entitled to seek appraisal rights in connection with the merger, and if the merger is completed, obtain payment in cash of the fair value of their shares of common stock as determined by the Delaware Chancery Court, instead of the merger consideration. To exercise your appraisal rights, you must strictly follow the procedures described by Delaware law. Due to the complexity of these procedures, CPI stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. These procedures are summarized under the heading, “The Merger — Appraisal Rights,” beginning on page [l] of this proxy statement/prospectus. In addition, the text of the applicable provisions of Delaware law is included as Annex C to this proxy statement/prospectus. Failure to strictly comply with these provisions will result in loss of the right of appraisal.
 
Completion of the Merger Is Subject to Certain Conditions (See Page [l])
 
The obligation of each of Comtech, CPI and Merger Sub to complete the merger is subject to the satisfaction, at or prior to the effective time of the merger, of a number of conditions, including the following:
 
  •  adoption of the merger agreement by holders of a majority of the outstanding shares of CPI common stock in accordance with applicable law, the amended and restated certificate of incorporation of CPI and the amended and restated bylaws of CPI;
 
  •  absence of any law, injunction or other order of a court or governmental entity of competent jurisdiction preventing completion of the merger;


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  •  (i) expiration or termination of any applicable waiting period (or extensions thereof) relating to the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 which is referred to in this proxy statement/prospectus as the HSR Act and (ii) expiration or termination of any applicable waiting periods, or receipt of all consents required under any other applicable competition laws;
 
  •  approval for trading on the NASDAQ Global Select Market of the shares of Comtech common stock to be issued in the merger, subject to official notice of issuance;
 
  •  the effectiveness of, and the absence of any stop order (or proceedings for that purpose) with respect to, the registration statement on Form S-4 of which this proxy statement/prospectus forms a part;
 
  •  accuracy of the representations and warranties made in the merger agreement by the other party, subject to certain materiality thresholds;
 
  •  performance and compliance in all material respects by the other party of the obligations required to be performed by it or complied with at or prior to the effective time of the merger;
 
  •  absence of a material adverse effect on the other party since the date of the merger agreement (see “The Merger Agreement — Definition of ‘Material Adverse Effect’” beginning on page [l] of this proxy statement/prospectus for the definition of material adverse effect); and
 
  •  except as previously disclosed to the other party, the absence of any pending litigation or proceeding of any kind which would reasonably be expected to have a material adverse effect on the disclosing party.
 
In addition, the obligations of Comtech and Merger Sub to complete the merger are subject to the satisfaction of the following condition:
 
  •  the absence of any pending action or proceeding of any kind by any governmental entity that (i) challenges or seeks to make illegal, delay materially or otherwise directly or indirectly prohibit the completion of the merger, (ii) seeks to prohibit Comtech’s or Merger Sub’s ability effectively to exercise full rights of ownership of CPI’s common stock following the completion of the merger or (iii) seeks to compel Comtech, CPI or any of their respective subsidiaries to take any burdensome action described under “The Merger Agreement — Covenants and Agreements — Efforts to Complete Transactions” beginning on page [l] of this proxy statement/prospectus.
 
Comtech and CPI cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.
 
The Merger May Not Be Completed Without All Required Regulatory Approvals (See Page [l])
 
Completion of the merger is conditioned upon the receipt of certain governmental clearances or approvals, including, but not limited to, the expiration or termination of the applicable waiting period relating to the merger under the HSR Act.
 
Comtech and CPI have agreed to use their reasonable best efforts to obtain all regulatory approvals required to consummate the merger. However, in using its reasonable best efforts to obtain these required regulatory approvals, Comtech will not be required to license, sell or dispose of any assets or submit to any limitation on the conduct of the business of Comtech or CPI that, in either case, arise out of this merger and would be reasonably expected after the closing to result in the divestiture of a material asset of Comtech or CPI or have a material adverse effect on Comtech, CPI or the benefits which Comtech reasonably expects to be realized from the merger. Comtech and CPI have agreed that any business or assets acquired or to be acquired by Comtech after May 8, 2010 will not be deemed material for purposes of the previous sentence.
 
CPI and Comtech have filed their required HSR Act notification and regulatory forms in other jurisdictions with respect to the merger and various governmental reviews are underway.


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No Solicitation of Transactions by CPI (See Page [l])
 
CPI will not, nor will it permit any of its subsidiaries to, nor will it authorize or knowingly permit any of its or any of its subsidiaries’ officers, directors, employees or representatives to (i) solicit, initiate or otherwise knowingly facilitate or encourage the submission of any acquisition proposal (as defined under “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus), (ii) participate in any discussions or negotiations regarding any acquisition proposal or furnish to any person any non-public information with respect to or access to the properties of CPI in connection with an acquisition proposal, (iii) enter into any agreement or other understanding with respect to any acquisition proposal or enter into any agreement requiring CPI to terminate or otherwise fail to consummate the merger or (iv) fail to make, or withdraw or modify in a manner adverse to Comtech, the recommendation of the CPI board of directors in favor of the adoption of the merger agreement. Notwithstanding these restrictions, however, the merger agreement provides that, under specified circumstances at any time prior to the adoption of the merger agreement by CPI stockholders:
 
  •  CPI may, in response to an unsolicited acquisition proposal from a third party that the CPI board of directors or a committee thereof determines constitutes or would reasonably be expected to lead to a superior acquisition proposal (as defined under “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus), directly or through its representatives participate in negotiations or discussions with such party and furnish non-public information to such third party pursuant to a customary confidentiality agreement (provided that all such information is or has been provided or made available to Comtech).
 
  •  The CPI board of directors or any committee thereof may fail to make, or withdraw or modify in a manner adverse to Comtech, its recommendation in favor of the adoption of the merger agreement or may approve, recommend or endorse an unsolicited acquisition proposal, in each case either (i) following receipt of an unsolicited acquisition proposal made after the date of the merger agreement that CPI’s board of directors or a committee thereof determines constitutes a superior acquisition proposal or (ii) in response to a material event, development, circumstance, occurrence or change in circumstances or facts not related to a competing acquisition proposal that was not known to CPI’s board of directors or a committee thereof on the date of the merger agreement (or if known, the magnitude or material consequences of which were not known or understood as of that date).
 
Notwithstanding the two bullet points above, the CPI board of directors or a committee thereof may not change its recommendation or approve an unsolicited acquisition proposal unless CPI notifies Comtech of its intention to do so (together with a copy of the agreement for any proposed acquisition proposal) at least three business days prior to taking such action and Comtech does not, within three business days of receipt of such notice, make an offer that the CPI board of directors or a committee thereof determines, in good faith, after consultation with its outside financial and legal advisors, is at least as favorable to CPI stockholders as the acquisition proposal (if the intended recommendation change relates to a acquisition proposal) or that would obviate the need for the recommendation change (if the intended recommendation change relates to any other event). Furthermore, the actions described in the preceding two bullet points may be taken only if the CPI board of directors or a committee thereof determines in good faith, after consultation with its outside legal advisors, that failure to take such action would be reasonably likely to constitute a violation of its fiduciary duties under Delaware law. See “The Merger — Background of the Merger” and “The Merger — CPI’s Reasons for the Merger; Recommendation of the CPI Board of Directors” beginning on pages [l] and [l], respectively, of this proxy statement/prospectus.
 
CPI’s board of directors also may respond to any tender offer that may be made in order to comply with the requirements of Rule 14e-2 or Rule 14d-9 under the Exchange Act and make any disclosure to its stockholders if required by law or by the rules and regulations of the NASDAQ Global Select Market or, if the board of directors, after consultation with counsel, concludes in good faith that making such disclosure is required in order for the board to comply with its fiduciary duties under applicable law.
 
Comtech has the right to terminate the merger agreement if, prior to the special meeting, the CPI board of directors or a committee of the board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech. CPI has the right to terminate the merger agreement in order to enter


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into an acquisition that is a superior acquisition proposal. See “The Merger Agreement — Termination of the Merger Agreement” beginning on page [l] of this proxy statement/prospectus.
 
Termination of the Merger Agreement (See Page [l])
 
The merger agreement may be terminated at any time before the completion of the merger by mutual written consent of Comtech and CPI.
 
The merger agreement may also be terminated prior to the completion of the merger by either Comtech or CPI if:
 
  •  a court or other government entity has issued an order enjoining or has otherwise prohibited the merger and such injunction or prohibition has become final and non-appealable;
 
  •  CPI stockholder approval is not received at the duly called and held special meeting of CPI stockholders; or
 
  •  the closing has not occurred on or before December 1, 2010; provided that either Comtech or CPI may extend such date by 45 days, subject to certain limitations, if the closing has not occurred because of the failure to obtain a required approval from one or more regulatory authorities.
 
The merger agreement may also be terminated prior to the completion of the merger by Comtech (provided that Comtech is not then in breach of any of its representations, warranties, covenants or agreements, such that Comtech could not satisfy the applicable conditions to the closing related to its representations, warranties and obligations under the merger agreement) if:
 
  •  CPI has breached or failed to perform any of its representations, warranties, covenants or agreements, such that CPI could not satisfy the applicable conditions to the closing related to its representations, warranties, covenants, and obligations, and such breach or failure to perform is incapable of being cured by December 1, 2010 (or valid extension of such date) or has not been cured within 30 days of written notice from Comtech;
 
  •  the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in connection with a superior acquisition proposal (see “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus); or
 
  •  the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in response to a material event, development, circumstance, occurrence or change in circumstances or facts not related to a competing acquisition proposal that was not known to CPI’s board of directors on the date of the merger agreement (or if known, the magnitude or material consequences of which were not known or understood as of that date) (see “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus).
 
The merger agreement may also be terminated prior to the completion of the merger by CPI (provided that CPI is not then in breach of any of its representations, warranties, covenants or agreements, such that CPI could not satisfy the applicable conditions to the closing related to its representations, warranties and obligations under the merger agreement):
 
  •  if Comtech has breached or failed to perform any of its representations, warranties, covenants or agreements, such that Comtech could not satisfy the applicable conditions to the closing related to its representations, warranties, covenants, and obligations, and such breach or failure to perform is incapable of being cured by December 1, 2010 (or valid extension of such date) or has not been cured within 30 days of written notice from CPI; or
 
  •  in order to enter into a superior acquisition proposal, subject to its obligations to pay Comtech a termination fee (see “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus).


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Termination Fee and Liquidated Damages Payable by CPI (See Page [l])
 
CPI has agreed to pay a termination fee of $12 million to Comtech if the merger agreement is terminated under any of the following circumstances:
 
  •  Comtech terminates the merger agreement because the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in connection with a superior acquisition proposal;
 
  •  CPI terminates the merger agreement in order to enter into a superior acquisition proposal;
 
  •  the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech, and Comtech or CPI terminates the merger agreement because CPI stockholder approval is not received at the duly called and held special meeting of CPI stockholders;
 
  •  (i) an acquisition proposal is made for CPI; (ii) the CPI board of directors does not change its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech; (iii) Comtech or CPI terminates the merger agreement because CPI stockholder approval is not received at the duly called and held special meeting of CPI stockholders; and (iv) within 12 months, CPI enters into a definitive agreement or consummates an alternative transaction (as defined under “The Merger Agreement — Termination of the Merger Agreement — Termination Fee Payable by CPI” beginning on page [l] of this proxy statement/prospectus); or
 
  •  (i) an acquisition proposal is made for CPI; (ii) Comtech or CPI terminates the merger agreement because (a) a court or other government entity has issued an order enjoining or has otherwise prohibited the merger and such injunction or prohibition has become final and non-appealable or (b) the closing has not occurred on or before December 1, 2010 (or as otherwise validly extended); and (iii) within 12 months, CPI enters into a definitive agreement or consummates an alternative transaction (as defined under “The Merger Agreement — Termination of the Merger Agreement — Termination Fee Payable by CPI” beginning on page [l] of this proxy statement/prospectus).
 
In addition, CPI has agreed to pay liquidated damages of $15 million to Comtech if Comtech terminates the merger agreement because the CPI board of directors or a committee thereof changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in response to a material event, development, circumstance, occurrence or change in circumstances or facts not related to a competing acquisition proposal that was not known to CPI’s board of directors or a committee thereof on the date of the merger agreement (or if known, the magnitude or material consequences of which were not known or understood as of that date).
 
If the merger agreement is terminated and pursuant to the terms of the merger agreement, Comtech is entitled receive a termination fee or liquidated damages, the receipt of the termination fee or liquidated damages, as applicable, will be Comtech’s exclusive remedy, and Comtech will not be entitled to any further or other rights, claims or remedies at law or in equity, all of which further or other rights, claims and remedies Comtech has irrevocably waived in the merger agreement.
 
The CPI board of directors, after consultation with CPI’s legal and financial advisors, believed that, among other things, the termination fees and liquidated damages payable by CPI in all the above circumstances, as a percentage of the equity value of the transaction, were reasonable and would not unduly impede the ability of a third party to make a superior bid to acquire CPI if such third party were interested in doing so, and were at a level consistent with, or favorable to, the fees payable in customary and comparable merger transactions. See “The Merger — CPI’s Reasons for the Merger; Recommendation of the CPI Board of Directors” beginning on page [l] of this proxy statement/prospectus.
 
The Voting and Standstill Agreement (See Page [l])
 
Pursuant to a voting and standstill agreement entered into concurrently with the merger agreement, the Cypress Group stockholders have agreed to vote 49.9% of the outstanding shares of CPI common stock in favor of the merger. However, if the CPI board of directors changes its recommendation with respect to the merger in connection with a superior acquisition proposal (as such term is described in “The Merger Agreement — Covenants and


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Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus), the Cypress Group stockholders will be obligated to vote only 25% of the outstanding shares of CPI common stock in favor of the merger and the remaining shares may be voted at the discretion of the Cypress Group stockholders. If the CPI board of directors changes its recommendation for any reason other than in connection with a superior acquisition proposal, the Cypress Group stockholders will still be obligated to vote 49.9% of the outstanding shares of CPI common stock in favor of the merger unless the five-day average closing price of Comtech common stock immediately prior to the change of recommendation is less than $24.00. In addition, the voting and standstill agreement includes restrictions on the ability of the Cypress Group stockholders to transfer their shares of CPI’s common stock before the merger and on their ability to transfer shares of Comtech common stock received in the merger following the closing of the merger. The voting and standstill agreement terminates upon the earliest of (i) the mutual agreement of the Cypress Group stockholders and Comtech, (ii) the termination of the merger agreement or (iii) the second anniversary of the merger.
 
Accordingly, the adoption of the merger agreement by CPI stockholders is substantially assured as long as the voting and standstill agreement remains in effect and the CPI board of directors does not change its recommendation (i) in response to a superior acquisition proposal or (ii) for any other reason following a decline in the five-day average closing price of Comtech’s common stock below $24.00. For a more complete description of the voting and standstill agreement, see “The Voting and Standstill Agreement” beginning on page [l] of this proxy statement/prospectus. The voting and standstill agreement is also attached to this proxy statement/prospectus as Annex B.
 
Certain Material U.S. Federal Income Tax Consequences of the Merger (See Page [l])
 
The merger generally will be a taxable transaction, and U.S. holders will generally recognize gain or loss in an amount equal to the difference, if any, between (i) the sum of any cash received (including cash received in lieu of a fractional share of Comtech common stock) and the fair market value, as of the effective time of the merger, of the shares of Comtech common stock received by such holder in the exchange and (ii) such holder’s tax basis in the shares of CPI common stock exchanged therefor.
 
CPI stockholders are urged to consult their tax advisors as to the specific tax consequences to them of the merger, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws in their particular circumstances.
 
Additional information is provided under “The Merger — Certain Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [l].
 
Accounting Treatment (See Page [l])
 
The merger will be accounted for as an acquisition of a business. Comtech will record net tangible and identifiable intangible assets acquired and liabilities assumed from CPI at their respective fair values at the date of the completion of the merger. Any excess of the purchase price, which will equal the market value, at the date of the completion of the merger, of the Comtech common stock issued as consideration for the merger, over the net fair value of such assets and liabilities will be recorded as goodwill.
 
The financial condition and results of operations of Comtech after completion of the merger will reflect CPI’s balances and results after completion of the transaction but will not be restated retroactively to reflect the historical financial condition or results of operations of CPI. The earnings of Comtech following the completion of the merger will reflect acquisition accounting adjustments, including the effect of changes in the carrying value for assets and liabilities on depreciation and amortization expense. Intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually, and all assets including goodwill will be tested for impairment when certain indicators are present. If in the future, Comtech determines that tangible or intangible assets (including goodwill) are impaired, Comtech would record an impairment charge at that time.


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Rights of CPI Stockholders Will Change as a Result of the Merger (See Page [l])
 
CPI stockholders will have different rights once they become Comtech stockholders due to differences between the organizational documents of Comtech and CPI. These differences are described in more detail under “Comparison of Stockholder Rights” beginning on page [l] of this proxy statement/prospectus.
 
Repayment of Existing CPI Indebtedness (See Page [l])
 
Comtech intends to repay in full all existing outstanding indebtedness of CPI either upon the closing or shortly following closing, in each case in accordance with the terms of such indebtedness. Assuming that the appropriate notices required under the indentures governing CPI’s existing floating rate senior notes and senior subordinated notes outstanding are provided on the date of closing of the merger, these notes may be outstanding for up to 75 days following the closing of the merger.


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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF COMTECH
 
The following table presents selected historical consolidated financial data of Comtech. The data as of, and for, the years ended July 31, 2009, 2008, 2007, 2006 and 2005 are derived from Comtech’s audited consolidated financial statements for those periods, as adjusted for the retroactive application of FSP APB 14-1. The data as of, and for, the nine months ended April 30, 2010 and 2009 (as adjusted for the retroactive application of FSP APB 14-1) are derived from Comtech’s unaudited condensed consolidated financial statements for those periods. Comtech’s management believes that the company’s interim unaudited financial statements have been prepared on a basis consistent with its audited financial statements and include all normal and recurring adjustments necessary for a fair presentation of the results for each interim period.
 
The information in the following table is only a summary and is not indicative of the results of future operations of Comtech. You should read the following information together with Comtech’s Annual Report on Form 10-K for the year ended July 31, 2009, Comtech’s Quarterly Reports on Form 10-Q for the quarterly periods ended April 30, 2010, January 31, 2010 and October 31, 2009, and the other information that Comtech has filed with the Securities and Exchange Commission, which is referred to as the SEC in this proxy statement/prospectus, and incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page [l] of this proxy statement/prospectus.
 
                                                         
    As of / for Nine Months
                               
    Ended April 30,
    As of / for Year Ended July 31,
 
    (unaudited)     As Adjusted
 
          2009
    (audited)  
    2010     As Adjusted     2009     2008     2007     2006     2005  
    (In thousands, except per share amounts)  
 
Net sales
  $ 521,251     $ 464,346     $ 586,372     $ 531,627     $ 445,684     $ 391,511     $ 307,890  
Net income
  $ 47,161     $ 41,347     $ 47,525     $ 73,650     $ 62,637     $ 42,884     $ 34,449  
Net income per share
                                                       
Basic
  $ 1.67     $ 1.61     $ 1.81     $ 3.05     $ 2.70     $ 1.88     $ 1.59  
Diluted
  $ 1.48     $ 1.55     $ 1.73     $ 2.76     $ 2.42     $ 1.72     $ 1.42  
Total assets
  $ 1,013,910     $ 724,711     $ 938,671     $ 652,723     $ 555,780     $ 454,542     $ 381,517  
Long-term obligations
  $ 202,420     $ 2,211     $ 202,283     $ 91,946     $ 87,475     $ 83,359     $ 79,565  
Cash dividends per common share
  $     $     $     $     $     $     $  


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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF CPI
 
The following table presents selected historical consolidated financial data of CPI. The data as of, and for, the years ended October 2, 2009, October 3, 2008, September 28, 2007, September 29, 2006 and September 30, 2005 are derived from CPI’s audited consolidated financial statements for those periods. The data as of, and for, the six months ended April 2, 2010 and April 3, 2009 are derived from CPI’s unaudited condensed consolidated financial statements for those periods. CPI’s management believes that the company’s interim unaudited financial statements have been prepared on a basis consistent with its audited financial statements and include all normal and recurring adjustments necessary for a fair presentation of the results for each interim period.
 
The information in the following table is only a summary and is not indicative of the results of future operations of CPI. You should read the following information together with CPI’s Annual Report on Form 10-K for the year ended October 2, 2009, CPI’s Quarterly Reports on Form 10-Q for the quarterly periods ended April 2, 2010 and January 1, 2010, and the other information that CPI has filed with the SEC and incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page [l] of this proxy statement/prospectus.
 
                                                         
    As of / for Six Months Ended
    As of / for Year Ended
 
    (unaudited)     (audited)  
    April 2,
    April 3,
    October 2,
    October 3,
    September 28,
    September 29,
    September 30,
 
    2010     2009     2009     2008     2007     2006     2005  
    (In thousands, except per share amounts)  
 
Sales
  $ 171,119     $ 159,049     $ 332,876     $ 370,014     $ 351,090     $ 339,717     $ 320,732  
Net income
  $ 8,333     $ 11,344     $ 23,466     $ 20,449     $ 22,503     $ 17,219     $ 13,672  
Net income per share
                                                       
Basic
  $ 0.50     $ 0.69     $ 1.44     $ 1.25     $ 1.39     $ 1.20     $ 1.05  
Diluted
  $ 0.46     $ 0.65     $ 1.34     $ 1.16     $ 1.27     $ 1.09     $ 0.98  
Total assets
  $ 470,575     $ 463,756     $ 458,254     $ 466,948     $ 476,222     $ 441,759     $ 454,544  
Long-term obligations
  $ 197,169     $ 219,813     $ 197,149     $ 226,349     $ 246,321     $ 245,108     $ 284,231  
Cash dividends per common share
  $     $     $     $     $     $ 1.19     $ 5.80  


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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
 
The following selected unaudited pro forma condensed combined financial information has been derived from, and should be read in conjunction with, the consolidated financial statements and the related notes of both Comtech and CPI incorporated herein by reference, together with the more detailed unaudited pro forma condensed combined financial information provided in the section titled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page [l]. The following table presents selected unaudited pro forma condensed combined balance sheet data, as of April 30, 2010, and selected unaudited pro forma condensed combined statements of operations data for the nine months ended April 30, 2010 and for the fiscal year ended July 31, 2009, which are based on the historical financial statements of Comtech and CPI. Because of different fiscal period ends, and in accordance with the SEC’s 93-day conformity rule, information is presented as outlined below:
 
  •  The unaudited pro forma condensed combined balance sheet data as of April 30, 2010 is presented as if Comtech’s acquisition of CPI had occurred on April 30, 2010, and combines historical balance sheet data of Comtech as of April 30, 2010 with historical balance sheet data of CPI as of April 2, 2010.
 
  •  The unaudited pro forma condensed combined statement of operations data for the nine months ended April 30, 2010 is presented as if Comtech’s acquisition of CPI had occurred on August 1, 2009, and combines Comtech’s historical statement of operations data for the nine months ended April 30, 2010 with CPI’s historical statement of operations data for the nine months ended April 2, 2010. CPI’s historical statement of operations for the nine months ended April 2, 2010 was derived by taking CPI’s historical results of operations for the six months ended April 2, 2010, and adding CPI’s historical results of operations for the three months ended October 2, 2009.
 
  •  The unaudited pro forma condensed combined statement of operations data for the fiscal year ended July 31, 2009 is presented as if Comtech’s acquisition of CPI had occurred on August 1, 2008, and combines Comtech’s historical statement of operations data for the fiscal year ended July 31, 2009, as adjusted for the retroactive application of FASB ASC 470-20, “Debt — Debt with Conversion and Other Options,” with CPI’s historical statement of operations data for the fiscal year ended October 2, 2009.
 
                 
    Nine Months Ended
  Year Ended
    April 30, 2010   July 31, 2009
    (Unaudited)
    (in thousands, except per share amounts)
 
Net sales
  $ 782,476     $ 917,717  
Net income
  $ 62,007     $ 68,854  
Net income per share
               
Basic
  $ 1.90     $ 2.24  
Diluted
  $ 1.70     $ 2.13  
Total assets
  $ 1,321,816        
Long-term obligations
  $ 203,757        
Cash dividends per common share
           
 
The unaudited pro forma combined financial information set forth above is based on preliminary estimates of the fair values of assets acquired and liabilities assumed and is based on the net book value of CPI’s assets and liabilities as of April 2, 2010. The preliminary estimates are based on available information, certain assumptions and preliminary valuation work and may change upon finalization of the fair values of assets acquired and liabilities assumed. In addition, because a portion of the purchase price is to be paid in the form of Comtech common stock, purchase accounting rules require that some of the merger and integration related charges and the value of CPI’s intangible assets (including goodwill) be determined based on the fair value of merger consideration on the date the acquisition closes.


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COMPARATIVE PER SHARE DATA
 
The following table presents, for the nine months ended April 30, 2010 and the fiscal year ended July 31, 2009, selected historical per share data of Comtech and CPI as well as similar information, reflecting the combination of Comtech and CPI as if the transaction had been effective for the periods presented, which we refer to as “pro forma combined” information. The hypothetical CPI equivalent per share data presented below is calculated by multiplying the pro forma combined amounts for Comtech by the exchange ratio of 0.2382 of a share of Comtech for each share of CPI.
 
The ultimate amount of consideration that CPI shareholders will receive will be equal to a combination of $9.00 in cash plus a fraction of Comtech common stock equal to $8.10 divided by the average closing price of Comtech common stock over a specified period of time prior to closing, provided that the fraction shall not be greater than 0.2382 nor less than 0.2132. The hypothetical CPI equivalent per share data does not take into account the cash portion of the merger consideration.
 
The pro forma combined information is provided for informational purposes only and is not necessarily an indication of the results that would have been achieved had the transaction been completed as of the dates indicated or that may be achieved in the future. The July 31, 2009 selected comparative per share information of Comtech and CPI set forth below was derived from audited financial statements of Comtech (as adjusted for the adoption of FASB ASC 470-20, “Debt — Debt with Conversion and Other Options”) combined with CPI’s historical statement of operations data for the fiscal year ended October 2, 2009. The April 30, 2010 selected comparative share information of Comtech and CPI set forth below was derived from unaudited interim financial statements. In the opinion of Comtech and CPI’s management, respectively, the unaudited interim financial statements have been prepared on the same basis as their respective audited financial statements. You should read the information in this section along with Comtech and CPI’s historical consolidated financial statements and accompanying notes for the period referred to above included in the documents described under “Where You can Find More Information” beginning on page [l]. You should also read the unaudited pro forma condensed combined financial information and accompanying discussion and notes included in this proxy statement/prospectus beginning on page [l].
 
                 
    As of / for the
  As of / for the
    Nine Months Ended
  Year Ended
    April 30, 2010   July 31, 2009
 
Basic Earnings Per Share
               
Comtech Historical
  $ 1.67     $ 1.81  
CPI Historical
  $ 1.01     $ 1.44  
Pro Forma Combined
  $ 1.90     $ 2.24  
CPI Equivalent
  $ 0.45     $ 0.53  
                 
Diluted Earnings Per Share
               
Comtech Historical
  $ 1.48     $ 1.73  
CPI Historical
  $ 0.94     $ 1.34  
Pro Forma Combined
  $ 1.70     $ 2.13  
CPI Equivalent
  $ 0.40     $ 0.51  
                 


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    As of / for the
  As of / for the
    Nine Months Ended
  Year Ended
    April 30, 2010   July 31, 2009
 
Dividends Per Share
               
Comtech Historical
  $     $  
CPI Historical
  $     $  
Pro Forma Combined
  $     $  
CPI Equivalent
  $     $  
                 
Book Value Per Share
               
Comtech Historical
  $ 20.10     $  
CPI Historical
  $ 10.47     $  
Pro Forma Combined
  $ 20.96     $  
CPI Equivalent
  $ 4.99     $  
 
The unaudited pro forma combined financial information set forth above is based on preliminary estimates of the fair values of assets acquired and liabilities assumed and is based on the net book value of CPI’s assets and liabilities as of April 2, 2010. The preliminary estimates are based on available information, certain assumptions and preliminary valuation work and may change upon finalization of the fair values of assets acquired and liabilities assumed. In addition, because a portion of the purchase price is to be paid in the form of Comtech common stock, purchase accounting rules require that some of the merger and integration related charges and the value of CPI’s intangible assets (including goodwill) be determined based on the fair value of merger consideration on the date the acquisition closes.

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
 
Market Prices
 
The following table sets forth, for the fiscal periods indicated, the intra-day high and low sales prices per share for Comtech and CPI common stock as reported on the NASDAQ Global Select Market, which is the principal trading market for both Comtech and CPI common stock.
 
                 
    Comtech
 
    Common Stock  
    High     Low  
 
Fiscal Year 2008:
               
First Quarter (August 1, 2007 to October 31, 2007)
  $ 58.00     $ 35.45  
Second Quarter (November 1, 2007 to January 31, 2008)
    56.07       43.01  
Third Quarter (February 1, 2008 to April 30, 2008)
    48.41       37.59  
Fourth Quarter (May 1, 2008 to July 31, 2008)
    51.21       38.63  
Fiscal Year 2009:
               
First Quarter (August 1, 2008 to October 31, 2008)
  $ 50.55     $ 40.00  
Second Quarter (November 1, 2008 to January 31, 2009)
    50.34       38.62  
Third Quarter (February 1, 2009 to April 30, 2009)
    41.91       19.56  
Fourth Quarter (May 1, 2009 to July 31, 2009)
    34.24       26.40  
Fiscal Year 2010:
               
First Quarter (August 1, 2009 to October 31, 2009)
  $ 36.74     $ 31.22  
Second Quarter (November 1, 2009 to January 31, 2010)
    38.39       28.42  
Third Quarter (February 1, 2010 to April 30, 2010)
    35.74       29.56  
Fourth Quarter (May 1, 2010 through [l], 2010)
    [l]       [l]  
 
                 
    CPI Common Stock  
    High     Low  
 
Fiscal Year 2008:
               
First Quarter (September 29, 2007 to December 28, 2007)
  $ 21.00     $ 15.81  
Second Quarter (December 29, 2007 to March 28, 2008)
    18.09       8.80  
Third Quarter (March 29, 2008 to June 27, 2008)
    14.31       9.25  
Fourth Quarter (June 28, 2008 to October 3, 2008)
    16.02       11,42  
Fiscal Year 2009:
               
First Quarter (October 4, 2008 to January 2, 2009)
  $ 12.43     $ 5.07  
Second Quarter (January 3, 2009 to April 3, 2009)
    9.83       5.67  
Third Quarter (April 4, 2009 to July 3, 2009)
    12.93       7.13  
Fourth Quarter (July 4, 2009 to October 2, 2009)
    12.22       8.37  
Fiscal Year 2010:
               
First Quarter (October 3, 2009 to January 1, 2010)
  $ 14.48     $ 9.27  
Second Quarter (January 2, 2010 to April 2, 2010)
    14.27       10.80  
Third Quarter (April 3, 2010 through [l], 2010)
    [l]       [l]  
 
The following table sets forth the closing sale price per share of Comtech and CPI common stock as reported on the NASDAQ Global Select Market as of May 7, 2010, the last trading day before the public announcement of the merger agreement, and as of [l], 2010, the most recent practicable trading day prior to the date of this proxy statement/prospectus. The table also shows the implied value of the merger consideration proposed for each share of CPI common stock using only the closing price of CPI common stock as of the same two dates. The actual value of


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the merger consideration will be determined by the average closing price of Comtech’s stock over the five consecutive trading days ending on (and including) the second trading day prior to closing.
 
                         
            Implied Per Share
            Value of Merger
    Comtech Common Stock   CPI Common Stock   Consideration
 
May 7, 2010
  $ 31.06     $ 13.05     $ 16.40  
[l], 2010
  $ [l]     $ [l]     $ [l]  
 
No assurance can be given concerning the market prices of Comtech or CPI common stock before the completion of the merger or Comtech common stock after the completion of the merger.
 
Dividends
 
Comtech has never paid cash dividends on its common stock. Although Comtech currently expects to use earnings and cash on hand to finance the development and expansion of its business, Comtech’s board of directors reviews its dividend policy periodically. The payment of dividends in the future will depend upon Comtech’s earnings, capital requirements, financial condition, compliance with its credit facility, and other factors considered relevant by Comtech’s board of directors.
 
CPI currently expects to retain future earnings for use in the operation and expansion of its business and does not anticipate paying any cash dividends on its common stock in the foreseeable future.


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RISK FACTORS
 
In addition to the other information contained or incorporated by reference into this proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [l] of this proxy statement/prospectus, you should carefully consider the following risk factors in determining whether to vote for the adoption of the merger agreement. You should also read and consider the risk factors associated with each of the businesses of Comtech and CPI because these risk factors may affect the operations and financial results of the combined company. These risk factors may be found under Part I, Item IA, “Risk Factors” in Comtech’s Annual Report on Form 10-K for the year ended July 31, 2009 and CPI’s Annual Report on Form 10-K for the year ended October 2, 2009, and Part II, Item IA, “Risk Factors” in Comtech’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2010, and CPI’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2010, each of which is on file with the SEC and all of which are incorporated by reference into this proxy statement/prospectus.
 
Risks Related to the Merger
 
The conversion ratio for the stock portion of the merger consideration will not be greater than 0.2382. As a result, the value of the shares of Comtech common stock that CPI stockholders will receive in connection with the merger could be less than the value of those shares today.
 
In the merger, CPI stockholders will be entitled to receive for each share of CPI common stock owned by them a combination of $9.00 in cash and a number of shares of Comtech common stock equal to the conversion ratio. The conversion ratio is equal to $8.10 divided by the average closing price of Comtech common stock for a specified period prior to the closing of the merger, but not to be less than 0.2132 or more than 0.2382. Accordingly, so long as the price of Comtech common stock remains below $34.00, the conversion ratio will be fixed at 0.2382. Comtech and CPI will not adjust the conversion ratio upward, regardless of the market price of Comtech common stock at any price below $34.00 per share. The market price of Comtech common stock will likely be different, and may be lower, on the date CPI stockholders receive their shares of Comtech common stock than the market price of Comtech common stock on the date of this proxy statement/prospectus. Differences in the market price of Comtech common stock may be the result of changes in the business, operations or prospects of Comtech, market reactions to the proposed merger, regulatory considerations, general market and economic conditions or other factors.
 
In addition, because it is possible that the merger will be completed later than the time of the special meeting, CPI stockholders may not know the exact value of the Comtech common stock that will be issued in the merger, and the exact value of the Comtech common stock issued in the merger may be less than it would have been had the merger occurred on the date of the special meeting. There is no minimum closing price of Comtech common stock on the closing date at which either CPI or Comtech may unilaterally terminate the merger agreement. CPI and Comtech encourage you to obtain current market quotations for Comtech common stock before you vote your shares.
 
During the twelve-month period ending on [l], 2010, the closing price of Comtech common stock varied from a low of $[l] to a high of $[l], and ended that period at $[l]. If the average closing price of common stock for the specified period prior to the closing is equal to $[l] (the closing price on [l], the most recent practicable trading day prior to the date of this proxy statement/prospectus), the conversion ratio would be [l] (or $[l] worth of Comtech common stock per share of CPI common stock), resulting in total merger consideration value of $[l] per share of CPI common stock.
 
Because the conversion ratio may be decreased in the event of an increase in the price of Comtech common stock, CPI stockholders may not receive the full benefit of that increase.
 
Because the conversion ratio is subject to adjustment pursuant to the terms of the merger agreement if the average closing price of Comtech common stock is between $34.00 and $38.00, CPI stockholders will not receive the full benefit of any increase in the average closing price of Comtech common stock between those price levels.


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In order to complete the merger, CPI and Comtech must obtain certain governmental approvals, and if such approvals are not granted or are granted with conditions that bind the parties, the completion of the merger may be jeopardized or the anticipated benefits of the merger could be reduced.
 
Completion of the merger is conditioned upon the receipt of certain governmental clearances or approvals, including, but not limited to, the expiration or termination of the applicable waiting period relating to the merger under the HSR Act and the expiration or termination of the applicable waiting period, or receipt of approval, under certain foreign antitrust laws. Although CPI and Comtech have agreed in the merger agreement to use their reasonable best efforts to obtain the requisite governmental approvals, there can be no assurance that these approvals will be obtained. In addition, the governmental authorities from which these approvals are required have broad discretion in administering the governing regulations. As a condition to approval of the merger, these governmental authorities may impose requirements, limitations or costs or require divestitures or place restrictions on the conduct of Comtech’s business after the completion of the merger. Under the terms of the merger agreement, Comtech is generally not required to take actions (such as divesting or holding separate assets or entering into settlements or consent decrees with governmental authorities) if such action would reasonably be expected to result in the sale of a material asset or in a material adverse effect on CPI, Comtech or the benefits Comtech reasonably expects to be realized from the merger. However, if, notwithstanding the provisions of the merger agreement, either CPI or Comtech becomes subject to any term, condition, obligation or restriction (whether because such term, condition, obligation or restriction does not rise to the specified level of materiality or Comtech otherwise consents to its imposition), the imposition of such term, condition, obligation or restriction could adversely affect Comtech’s ability to integrate CPI’s operations into Comtech’s operations, reduce the anticipated benefits of the merger or otherwise adversely affect the combined companies’ business and results of operations after the completion of the merger. See “The Merger — Regulatory Approvals Required for the Merger” and “The Merger Agreement — Conditions to the Completion of the Merger” beginning on pages [l] and [l], respectively, of this proxy statement/prospectus.
 
CPI’s failure to achieve future results in line with Comtech’s expectations could adversely affect the combined businesses and Comtech’s stock price.
 
The acquisition of CPI may pose certain risks to Comtech’s business. If, in the future, CPI experiences substantially lower results than Comtech expects, it could have a material adverse impact on Comtech’s business, results of operations and financial condition. Neither CPI nor Comtech can assure you that CPI will perform in accordance with Comtech’s expectations.
 
Failure to achieve expected benefits of the merger and integrate CPI operations with Comtech’s could adversely affect the combined businesses and Comtech’s stock price.
 
Although Comtech expects to realize strategic, operational and financial benefits as a result of the CPI acquisition, Comtech cannot be certain whether, and to what extent, such benefits will be achieved in the future. In particular, the success of the CPI acquisition will depend on achieving efficiencies and cost savings, and no assurances can be given that Comtech will be able to do so. In addition, in order to obtain the benefits of the merger, Comtech must integrate CPI’s subsidiaries and operations, including CPI’s international subsidiaries and operations, and such integration may be complex and the failure to do so quickly and effectively may negatively affect earnings.
 
In addition, the market price of Comtech common stock may decline as a result of the merger if the integration of Comtech and CPI is unsuccessful, takes longer than expected or fails to achieve financial benefits to the extent anticipated by financial analysts or investors, or the effect of the merger on Comtech’s financial results is otherwise not consistent with the expectations of financial analysts or investors.
 
The CPI acquisition will significantly expand Comtech’s business, which could have an adverse effect on operating results.
 
The CPI acquisition will significantly expand the types of products that Comtech sells, the number of facilities Comtech operates and the associated corporate and administrative operations, including, for example; managing


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foreign currency fluctuations and hedging international operations, thereby presenting Comtech with significant challenges including managing the substantial increase in the scale of Comtech’s operations resulting from the acquisition. Comtech foresees having to test, and possibly make changes to and refine, internal controls relating to CPI. Moreover, Comtech cannot be certain when the appropriate testing and refinement of controls and procedures will be completed. The diversion of Comtech management’s attention to these matters and away from other business concerns could have an adverse effect on Comtech’s business and operating results.
 
Comtech expects to incur significant non-recurring expenses related to the merger.
 
In connection with its plan to integrate the operations of CPI with its own operations after the merger, Comtech anticipates that certain non-recurring charges, such as change-in control related payments made to certain CPI executives, the acceleration of vesting of certain stock-based awards held by CPI employees, and professional fees for financial and legal advisors of both Comtech and CPI will be incurred. Comtech cannot identify the timing, nature and amount of all such charges as of the date of this proxy statement/prospectus. However, such charges could affect Comtech’s results of operations in the period in which such charges are recorded.
 
CPI’s and Comtech’s business relationships, including customer relationships, may be subject to disruption due to uncertainty associated with the merger.
 
Parties with which CPI and Comtech do business, including customers and suppliers, may experience uncertainty associated with the transaction, including with respect to current or future business relationships with CPI, Comtech or the combined business. As a result, CPI’s and Comtech’s business relationships may be subject to disruptions if customers, suppliers and others attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than CPI, Comtech or the combined business. These disruptions could have an adverse effect on the businesses, financial condition, results of operations or prospects of the combined business. The adverse effect of such disruptions could be exacerbated by a delay in the completion of the merger or termination of the merger agreement.
 
The price of Comtech common stock and Comtech’s results of operations may be affected by factors different from those affecting the price of CPI common stock and CPI’s results of operations.
 
Holders of CPI common stock will be entitled to receive cash and Comtech common stock in the merger and will thus become holders of Comtech common stock. Comtech’s business is different in certain ways from that of CPI, and Comtech’s results of operations, as well as the price of Comtech common stock, may be affected by factors different from those affecting CPI’s results of operations and the price of CPI common stock. The price of Comtech common stock may fluctuate significantly following the merger, including as a result of factors over which Comtech has no control.
 
Directors and executive officers of CPI have interests in the transaction that are different from, or in addition to, the interests of CPI stockholders.
 
CPI’s executive officers and directors have financial interests in the merger that are different from, or in addition to, their interests as CPI stockholders. Except with respect to separate agreements with certain CPI executives, unvested stock options, restricted stock and restricted stock units held by CPI’s executive officers and directors will vest in connection with the merger and will be cancelled in exchange for cash payments. As disclosed in the table in the section titled “Interests of Certain Persons in the Merger” beginning on page [l] and subject to the assumptions referenced in the text accompanying that table, CPI’s executive officers and directors collectively may receive up to $[l] as a result of the merger, which includes (i) an estimated payment of approximately $[l] of merger consideration for shares of CPI common stock that they own, (ii) an estimated payment of approximately $[l] of merger consideration for stock options, restricted stock and restricted stock units that they hold and (iii) if the executive officers of CPI are terminated without cause or resign for good reason in connection with the merger, aggregate severance payments and benefits of approximately $[l].
 
CPI’s executive officers and directors will also receive indemnification and liability insurance benefits in connection with the merger and certain of CPI’s executive officers may enter into employment agreements with


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Comtech, although no agreements have been entered into and no terms, conditions or understandings have been finalized as of the date of this proxy statement/prospectus.
 
The merger agreement limits CPI’s ability to pursue alternatives to the merger.
 
The merger agreement contains provisions that make it more difficult for CPI to sell its business to a party other than Comtech. These provisions include a general prohibition on CPI soliciting any acquisition proposal or offer for a competing transaction. Further, there are only limited exceptions to CPI’s agreement that CPI’s board of directors or a committee thereof will not withdraw or modify in a manner adverse to Comtech the recommendation of the CPI board of directors in favor of the adoption of the merger agreement, and Comtech generally has a right to match any competing acquisition proposals that may be made. Although the CPI board of directors or a committee thereof may take these actions and, in certain circumstances, CPI may terminate the merger agreement if the CPI board of directors or a committee thereof determines in good faith that failure to do so would be reasonably likely to constitute a violation of its fiduciary duties to CPI’s stockholders under Delaware law, doing so in specified situations could entitle Comtech to a termination fee of $12 million or liquidated damages of $15 million. See “The Merger Agreement — Covenants and Agreements,” “The Merger Agreement — Termination of the Merger Agreement” and “The Voting and Standstill Agreement — No Solicitation” beginning on pages [l], [l] and [l], respectively, of this proxy statement/prospectus.
 
While CPI believes these provisions are reasonable and not preclusive of other offers, the provisions might discourage a third party that has an interest in acquiring all or a significant part of CPI from considering or proposing that acquisition, even if that party were prepared to pay consideration with a higher per-share value than the currently proposed merger consideration. Furthermore, the termination fee may result in a potential competing acquirer proposing to pay a lower per-share price to acquire CPI than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.
 
The merger may be dilutive to Comtech’s earnings per share, which may negatively affect the market price of Comtech common stock. Furthermore, the acquisition of CPI may ultimately not prove successful, and Comtech may not realize anticipated benefits from the acquisition.
 
Because the value of the aggregate merger consideration is determined in part by the future price per share of Comtech common stock, it is unclear whether the merger will be accretive or dilutive to Comtech’s earnings per share. In addition, any accretion or dilution may be affected by future events and conditions, including adverse changes in market conditions and additional transaction and integration related costs. Any lack of accretion to, or any dilution of, Comtech’s earnings per share could cause the price of Comtech’s common stock to decline. As a result of these and other factors, the acquisition of CPI may ultimately not prove successful, and Comtech may not realize anticipated benefits from the acquisition.
 
Comtech’s investments in recorded goodwill and other intangible assets as a result of the acquisition of CPI and prior acquisitions could be impaired as a result of future business conditions or if Comtech changes its reporting unit structure.
 
Comtech has goodwill and intangible assets of $199.4 million recorded on Comtech’s balance sheet as of April 30, 2010 and this amount is expected to significantly increase in connection with the proposed merger with CPI. For purposes of reviewing impairment and the recoverability of goodwill, each of Comtech’s three operating segments currently constitutes a reporting unit, and Comtech must make various assumptions regarding estimated future cash flows and other factors in determining the fair values of the reporting unit. The annual impairment test is based on several factors requiring judgment and is based on how Comtech’s President and Chief Executive Officer manages the business. If these estimates or their related assumptions change in the future, or if Comtech changes its future reporting structure, including any changes as a result of the proposed merger with CPI, Comtech may be required to record impairment charges in future periods. Comtech generally performs an annual impairment review in the first quarter of each fiscal year or when there are indicators of impairments, such as a significant adverse change that could impact Comtech’s future financial performance. Although Comtech performed its fiscal 2010 impairment testing on August 1, 2009 and Comtech determined that there was no impairment of its goodwill, changes in its future operating performance or business conditions, in general, could result in an impairment of


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goodwill in future periods, which could be material to Comtech’s results of operations. In addition, if Comtech is not successful in maintaining operating efficiencies associated with its acquisition of CPI, Comtech’s goodwill and intangible assets may become impaired. Any impairment charges that Comtech may take in the future, could be material to its results of operations and financial condition.
 
Failure to complete the merger could negatively impact the stock price and the future business and financial results of CPI.
 
If the merger is not completed, the ongoing businesses of CPI may be adversely affected and, without realizing any of the benefits of having completed the merger, CPI will be subject to a number of risks, including the following:
 
  •  CPI may be required to pay Comtech a termination fee of $12 million or liquidated damages of $15 million if the merger is terminated under certain circumstances, as described in the merger agreement and summarized in this proxy statement/prospectus;
 
  •  CPI will be required to pay certain costs relating to the proposed merger, whether or not the merger is completed;
 
  •  under the merger agreement, CPI is subject to certain restrictions on the conduct of its business prior to completing the merger which may affect its ability to execute certain of its business strategies; and
 
  •  matters relating to the merger (including integration planning) may require substantial commitments of time and resources by CPI management, which could otherwise have been devoted to other opportunities that may have been beneficial to CPI as an independent company.
 
In addition, CPI could be subject to litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against CPI to perform its respective obligations under the merger agreement. If the merger is not completed, these risks may materialize and may adversely affect CPI’s business, financial results and stock price.
 
CPI stockholders will have reduced ownership and voting interests after the merger and will exercise less influence over management of Comtech than currently exercised over management of CPI.
 
After the effective time of the merger, CPI stockholders will own in the aggregate a significantly smaller percentage of Comtech than their current 100% ownership of CPI. Following completion of the merger, CPI stockholders are expected to own less than [l] percent of the outstanding shares of Comtech common stock based on the number of shares of CPI common stock and Comtech common stock outstanding on the record date and the price of Comtech common stock on the record date. Consequently, CPI stockholders, as a general matter, will have less influence over the management and policies of Comtech than they currently exercise over the management and policies of CPI.
 
CPI stockholders will have substantively different rights with respect to their holdings following the merger.
 
Upon consummation of the merger, the CPI stockholders will become stockholders of Comtech. There are material differences between the rights of CPI stockholders under the CPI governing documents and the rights of Comtech stockholders under the Comtech governing documents. See “Comparison of Stockholder Rights” beginning on page [l] of this proxy statement/prospectus.
 
Risks Relating to Comtech and CPI
 
Comtech and CPI are, and following completion of the merger, Comtech and CPI will continue to be, subject to the risks described in Part I, Item IA, “Risk Factors” in Comtech’s Annual Report on Form 10-K for the year ended July 31, 2009 and CPI’s Annual Report on Form 10-K for the year ended October 2, 2009, and Part II, Item IA, “Risk Factors” in Comtech’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2010, and CPI’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2010, each of which is on file with the SEC and all of which are


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incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page [l] of this proxy statement/prospectus.
 
Those risks include, but are not limited to, risks associated with a variety of U.S. federal, state and local, as well as foreign, environmental, zoning and other land use laws and regulations. Changes in environmental, zoning and other land use laws or regulations (or in their enforcement) affecting or limiting, for example, the use of certain chemicals, and/or certain of the manufacturing processes or disposal practices of Comtech or CPI, could restrict the ability of Comtech and CPI to operate their businesses as and where they are currently operating and/or could impose material additional costs of operating.


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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus contain “forward looking statements” that are intended to be covered by the safe harbor provided by the Private Securities Litigation Reform Act of 1995. Representatives of Comtech and CPI may also make forward-looking statements. Forward-looking statements are statements that are not historical facts, and are identified by words such as “expect,” “believe,” “predict,” “anticipate,” “contemplate,” “will,” “may,” “might,” “continue,” “plan,” “estimate,” “objective,” “intend,” “project,” “budget,” “forecast,” “can,” “could,” “should,” “would,” “likely,” “potential” and similar expressions. These statements include, but are not limited to, statements about the expected costs and benefits of the merger, the adoption of the merger agreement by CPI stockholders, the satisfaction of the closing conditions to the merger, the timing of the completion of the merger and Comtech’s plans, objectives and expectations after the completion of the merger.
 
Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of management of Comtech and CPI and are subject to numerous risks and uncertainties that could cause actual outcomes and results, including project completion dates, production rates, capital expenditures, costs and business plans, to be materially different from those projected or anticipated. In addition to the risks described under “Risk Factors” beginning on page [l] of this proxy statement/prospectus and those risks described in documents that are incorporated by reference into this proxy statement/prospectus, the following factors, among others, could cause such differences:
 
Merger-Related Factors
 
  •  CPI stockholder approval may not be obtained in a timely manner, or at all;
 
  •  the regulatory approvals required for the merger may not be obtained on the proposed terms, on the anticipated schedule, or at all;
 
  •  the merger may not close due to the failure to satisfy any of the closing conditions;
 
  •  expected synergies and value creation from the merger may not be realized, or will not be realized within the anticipated time period;
 
  •  disruption from the merger may make it more difficult for Comtech and CPI to maintain business and operational relationships;
 
  •  key employees of CPI may not be retained;
 
  •  the businesses may not be integrated successfully; and
 
  •  management time may be diverted on merger-related matters;
 
Other Factors
 
  •  risks related to actions taken by either of the companies, including but not limited to, restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions);
 
  •  diversion of corporate resources and management attention by future acquisitions and investments, and the failure of such acquisitions to meet expectations;
 
  •  risks related to the current economic climate, including the difficulty of forecasting results of operations, the possibility of additional reductions in telecommunications equipment and systems spending, the inability of customers to obtain financing and the difficulty of maintaining affordable credit insurance;
 
  •  the timing of receipt of, and performance on, new or existing customer orders that can cause significant fluctuations in net sales and operating results;
 
  •  significant fluctuations in, and likely volatility of, operating results;
 
  •  potential material adverse effects from changes in government policy, including changes in U.S. policies relating to Iraq and Afghanistan;


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  •  potential material adverse effects from terrorist attacks and threats, and government responses thereto, and threats of war;
 
  •  ability to maintain current levels of U.S. government business;
 
  •  the timing and funding of government contracts, including risks associated with Comtech’s U.S. Army Movement Tracking System (referred to as MTS) and Blue Force Tracking (referred to as BFT) contracts and next generation MTS and BFT contracts;
 
  •  adjustments to gross profits on long-term contracts;
 
  •  possibility of noncompliance with numerous domestic and international laws, regulations and restrictions (including those pertaining to income taxes) which could materially impact the business, results of operations and financial condition;
 
  •  risks associated with pending or threatened legal proceedings and other matters;
 
  •  risks associated with Comtech’s obligations under its revolving credit facility;
 
  •  unexpected material increases in costs and compliance expenses related to the securities laws, related regulations and financial reporting standards;
 
  •  risks associated with international sales, rapid technological change, evolving industry standards, frequent new product announcements and enhancements, changing customer demands, and changes in prevailing economic and political conditions;
 
  •  risks associated with currency fluctuations and related hedging operations;
 
  •  natural disasters;
 
  •  risks relating to the recent and anticipated growth, including loss of key technical or management personnel, inability to improve processes and systems to keep pace with anticipated growth and highly competitive markets for communications products;
 
  •  risks associated with environmental and zoning laws and regulations and obligations relating to environmental matters;
 
  •  inability to implement business plans;
 
  •  adverse effects on cash flow from debt service obligations; and
 
  •  volatility of stock price.
 
You are cautioned not to place undue reliance on the forward-looking statements made in this proxy statement/prospectus or documents incorporated into this proxy statement/prospectus or by representatives of Comtech or CPI. These statements speak only as of the date hereof, or, in the case of statements in any document incorporated by reference, as of the date of such document, or, in the case of statements made by representatives of Comtech or CPI, on the date those statements are made. All subsequent written and oral forward-looking statements concerning the merger, the combined company or any other matter addressed in this proxy statement/prospectus and attributable to Comtech, CPI or any person acting on behalf of either company are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Comtech and CPI expressly disclaim any obligation to update or publish revised forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of any unanticipated events.


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THE COMPANIES
 
Comtech
 
Comtech designs, develops, produces and markets innovative products, systems and services for advanced communications solutions. Comtech believes many of its solutions play a vital role in providing or enhancing communication capabilities when terrestrial communications infrastructure is unavailable, inefficient or too expensive. Comtech conducts business through three complementary segments: telecommunications transmission, mobile data communications and RF microwave amplifiers. Comtech sells products to a diverse customer base in the global commercial and government communications markets. Comtech believes it is a leader in the market segments that it serves.
 
The principal trading market for Comtech’s common stock (NASDAQGS: CMTL) is the NASDAQ Global Select Market.
 
The principal executive offices of Comtech are located at 68 South Service Road, Suite 230 Melville, New York 11747; its telephone number is (631) 962-7000; and its web site is www.comtechtel.com.
 
Angels Acquisition Corp.
 
Angels Acquisition Corp., referred to in this proxy statement/prospectus as Merger Sub, is a Delaware corporation and a wholly owned subsidiary of Comtech. Merger Sub was formed solely for the purpose of consummating the merger. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the merger.
 
The principal executive offices of Merger Sub are located at 68 South Service Road, Suite 230 Melville, New York 11747, and its telephone number is (631) 962-7000.
 
CPI
 
CPI is a provider of microwave, radio frequency, power and control products for critical defense, communications, medical, scientific and other applications. CPI develops, manufactures and distributes products used to generate, amplify, transmit and receive high-power/high-frequency microwave and radio frequency signals and/or provide power and control for various applications.
 
Approximately half of CPI’s product sales for fiscal year 2009 were for United States and foreign government and military end use, particularly for radar, electronic warfare and communications applications. CPI’s products are critical elements of high-priority U.S. and foreign military programs and platforms, including numerous planes, ships and ground-based platforms. Defense applications of CPI’s products include transmitting and receiving radar signals for locating and tracking threats, weapons guidance and navigation, as well as transmitting decoy and jamming signals for electronic warfare and transmitting signals for satellite communications. The U.S. Government is CPI’s only customer that accounted for more than 10% of its sales in the last three fiscal years.
 
In addition, CPI has applied its key technologies to commercial end markets, including communications, medical, industrial and scientific applications, which provide it with a diversified base of sales. Approximately half of CPI’s product sales for fiscal year 2009 were for commercial applications.
 
CPI estimates that approximately 40% of its total sales for fiscal year 2009 were generated from recurring sales of replacements, spares and repairs, including upgraded replacements for existing products. CPI believes that this aspect of its business is inherently more stable and predictable, and that it is less susceptible to dramatic shifts in market conditions.


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CPI is incorporated in Delaware. CPI’s principal executive offices are located at CPI International, Inc., 811 Hansen Way, Palo Alto, California 94303, and its telephone number is (650) 846-2900. CPI’s web site is www.cpii.com. Information on CPI’s web site is not incorporated into this proxy statement/prospectus.
 
The principal trading market for CPI’s common stock (NASDAQGS: CPII) is the NASDAQ Global Select Market.
 
For a further discussion of CPI’s business, we urge you to read CPI’s Form 10-K, incorporated by reference herein. See “Where You Can Find More Information” beginning on page [l] of this proxy statement/prospectus.


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SPECIAL MEETING OF STOCKHOLDERS OF CPI
 
CPI is providing this proxy statement/prospectus to its stockholders in connection with the solicitation of proxies to be voted at the special meeting of stockholders that CPI has called for the purpose of holding a vote upon a proposal to adopt the merger agreement with Comtech and Merger Sub and at any adjournment or postponement thereof. This proxy statement/prospectus constitutes a prospectus for Comtech in connection with the issuance by Comtech of its common stock in connection with the merger. This proxy statement/prospectus is first being mailed to CPI stockholders on or about [l], 2010 and provides CPI stockholders with the information they need to know to be able to vote or instruct their vote to be cast at the special meeting of CPI stockholders.
 
Date, Time and Place
 
The special meeting will be held at [l] on [l], 2010 at 10:00 a.m., local time.
 
Purpose
 
At the special meeting, CPI stockholders will be asked to vote solely on the following proposals:
 
  •  to adopt the merger agreement; and
 
  •  to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting.
 
CPI Board Recommendation
 
The CPI board of directors has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of CPI and its stockholders and unanimously recommends that you vote “FOR” the adoption of the agreement and “FOR” the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the special meeting. See “The Merger — CPI’s Reasons for the Merger; Recommendation of the CPI Board of Directors” beginning on page [l] of this proxy statement/prospectus.
 
CPI stockholders should carefully read this proxy statement/prospectus in its entirety for more detailed information concerning the merger agreement and the merger. In addition, CPI stockholders are urged to read the merger agreement in its entirety because it is the legal document that governs the merger. A copy of the merger agreement is attached as Annex A to this proxy statement/prospectus.
 
CPI Record Date; Outstanding Shares; Shares Entitled to Vote
 
The record date for the CPI special meeting is [l], 2010. Only CPI stockholders of record at the close of business on [l], 2010 will be entitled to receive notice of and to vote at the special meeting or any adjournment of the special meeting. Shares of CPI common stock held by CPI as treasury shares and by CPI’s subsidiaries will not be entitled to vote.
 
As of the close of business on the record date of [l], 2010, there were [l] shares of CPI common stock outstanding and entitled to vote at the special meeting. Each holder of CPI common stock is entitled to one vote for each share of CPI common stock owned as of the record date.
 
A complete list of CPI stockholders entitled to vote at the CPI special meeting will be available for inspection at the principal place of business of CPI during regular business hours for a period of no less than 10 days before the special meeting, as well as at the place of the CPI special meeting during the meeting.
 
Quorum
 
A quorum of stockholders is required for CPI stockholders to adopt the merger agreement at the special meeting, but not to approve any adjournment of the meeting. The presence at the special meeting, in person or by proxy, of the holders of a majority in voting power of the outstanding shares of CPI common stock entitled to vote on the record date will constitute a quorum. Proxies received but marked as abstentions, if any, will be included in the


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calculation of the number of shares considered to be present at the meeting for quorum purposes. With respect to broker non-votes (as defined below), the adoption of the merger agreement is not considered a routine matter. Therefore, your broker will not be permitted to vote on the adoption of the merger agreement without instruction from you as the beneficial owner of the shares of CPI common stock. Broker non-votes will, however, be counted for purposes of determining whether a quorum is present at the special meeting.
 
Required Vote
 
To adopt the merger agreement, holders of a majority of the shares of CPI common stock outstanding and entitled to vote on the proposal must vote in favor of adoption of the merger agreement. Because approval is based on the affirmative vote of a majority of the outstanding shares of CPI common stock, a CPI stockholder’s failure to submit a proxy card or to vote in person at the special meeting or an abstention from voting, or the failure of a CPI stockholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee, will have the same effect as a vote “AGAINST” adoption of the merger agreement.
 
If there are not sufficient votes to adopt the merger agreement at the time of the special meeting, a majority of the votes present in person or by proxy (whether or not a quorum is present) may adjourn the meeting to another time and place in order to solicit additional proxies. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” the proposal to adjourn the special meeting. Shares not in attendance at the special meeting will have no effect on the outcome of any vote to adjourn the special meeting.
 
The Voting and Standstill Agreement
 
Pursuant to a voting and standstill agreement entered into concurrently with the merger agreement, the Cypress Group stockholders have agreed to vote 49.9% of the outstanding shares of CPI common stock in favor of the merger. However, if the CPI board of directors changes its recommendation with respect to the merger in connection with a superior acquisition proposal (as such term is described in “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus), the Cypress Group stockholders will be obligated to vote only 25% of the outstanding shares of CPI common stock in favor of the merger and the remaining shares may be voted at the discretion of the Cypress Group stockholders. If the CPI board of directors changes its recommendation for any reason other than in connection with a superior acquisition proposal, the Cypress Group stockholders will still be obligated to vote 49.9% of the outstanding shares of CPI common stock in favor of the merger unless the five-day average closing price of Comtech common stock immediately prior to the change of recommendation is less than $24.00. In addition, the voting and standstill agreement includes restrictions on the ability of the Cypress Group stockholders to transfer their shares of CPI’s common stock before the merger and on their ability to transfer shares of Comtech common stock received in the merger following the closing of the merger. The voting and standstill agreement terminates upon the earliest of (i) the mutual agreement of the Cypress Group stockholders and Comtech, (ii) the termination of the merger agreement or (iii) the second anniversary of the merger.
 
Accordingly, the adoption of the merger agreement by CPI stockholders is substantially assured as long as the voting and standstill agreement remains in effect and the CPI board of directors does not change its recommendation (i) in response to a superior acquisition proposal or (ii) for any other reason following a decline in the five-day average closing price of Comtech’s common stock below $24.00. For a more complete description of the voting and standstill agreement, see “The Voting and Standstill Agreement” beginning on page [l] of this proxy statement/prospectus. The voting and standstill agreement is also attached to this proxy statement/prospectus as Annex B.
 
Stock Ownership of and Voting by CPI’s Directors and Executive Officers
 
As of the record date, directors and executive officers of CPI as a group beneficially owned and had the right to vote [l] shares of CPI common stock, entitling them to collectively cast approximately [l]% of the votes entitled to be cast at the special meeting. This does not include [l] shares of CPI common stock beneficially held by the Cypress Group stockholders and certain of their affiliates as of the date of this proxy statement/prospectus of which Mr. Hughes, one of CPI’s directors, may be deemed to have beneficial ownership by virtue of his position as a


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managing member of Cypress Associates II LLC. As noted above, those affiliates have agreed collectively to vote a portion of those shares (comprising 49.9% of the outstanding shares of CPI common stock) in favor of the merger, subject to certain exceptions. See “The Voting and Standstill Agreement” beginning on page [l] of this proxy statement/prospectus.
 
These [l] shares also include [l] shares that are subject to stock options that are or will be exercisable by the holder within 60 days of the date hereof, but which are not expected to be exercised prior to the closing.
 
Except as described above as to shares held by the Cypress Group stockholders, none of CPI’s directors or officers has entered into any agreement requiring them to vote for or against the merger proposal.
 
Voting of Shares by Holders of Record
 
By Internet or Telephone
 
If you hold CPI shares directly in your name as a stockholder of record, you may vote electronically via the Internet at www.[l], or telephonically by calling [l]. Votes submitted telephonically or via the Internet must be received by 11:59 p.m. (Eastern time) on [l], 2010.
 
If you hold CPI shares in street name through a broker or other nominee, you may vote electronically via the Internet at www.[l]. If you wish to vote by telephone you will need to request paper copies of the materials from your broker or other nominee in order to obtain a Voting Instruction Form which contains a specific telephone number for your broker or other nominee. Votes submitted telephonically or via the Internet must be received by 11:59 p.m. (Eastern time) on [l], 2010.
 
In Person
 
If you hold CPI shares directly in your name as a stockholder of record, you may vote in person at the special meeting. Stockholders of record also may be represented by another person at the special meeting by executing a proper proxy designating that person.
 
If you hold CPI shares in street name through a broker or other nominee, you must obtain a legal proxy from that institution and present it to the inspector of elections with your ballot to be able to vote in person at the special meeting. To request a legal proxy please follow the instructions at www.[l].
 
By Mail
 
If you hold CPI shares directly in your name as a stockholder of record, you will need to mark, sign and date your proxy card and return it using the pre-paid return envelope provided. CPI must receive your proxy card no later than close of business on [l], 2010.
 
If you hold CPI shares in street name through a broker or other nominee, to vote by mail you must request paper copies of the proxy materials from your broker or other nominee. Once you receive your paper copies, you will need to mark, sign and date the Voting Instruction Form and return it in the pre-paid return envelope provided. Your Voting Instruction Form must be received no later than the close of business on [l], 2010.
 
When a stockholder submits a proxy by telephone or through the Internet, his or her proxy is recorded immediately. CPI encourages its stockholders to submit their proxies using these methods whenever possible. If you submit a proxy by telephone or via the Internet, please do not return your proxy card by mail. If you attend the meeting, you may also submit your vote in person. Any votes that you previously submitted — whether via the Internet, by telephone or by mail — will be superseded by the vote that you cast at the meeting.
 
All shares represented by each properly executed and valid proxy received before the special meeting will be voted in accordance with the instructions given on the proxy. If a CPI stockholder executes a proxy card without giving instructions, the shares of CPI common stock represented by that proxy card will be voted “FOR” approval of the proposal to adopt the merger agreement.
 
Your vote is important. Accordingly, please submit your proxy by telephone, through the Internet or by mail, whether or not you plan to attend the meeting in person.


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Voting of Shares Held in Street Name
 
If your shares are held in an account at a broker or through another nominee, you must instruct the broker or other nominee on how to vote your shares. If you do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote. This is referred to in this proxy statement/prospectus and in general as a broker non-vote. In these cases, the broker or other nominee can register your shares as being present at the special meeting for purposes of determining a quorum, but will not be able to vote your shares on those matters for which specific authorization is required. Brokers do not have discretionary authority to vote on the proposal to adopt the merger agreement. Therefore, a broker non-vote will have the same effect as a vote “AGAINST” adoption of the merger agreement. A broker non-vote will have the same effect as a vote “AGAINST” the proposal to adjourn the special meeting.
 
Revocability of Proxies; Changing Your Vote
 
You may revoke your proxy and/or change your vote at any time before your shares are voted at the special meeting. If you are a stockholder of record, you can do this by:
 
  •  sending a written notice stating that you revoke your proxy to CPI International, Inc. at 811 Hansen Way, Palo Alto, California 94303, Attention: Corporate Secretary. The written notice must bear a date later than the date of the proxy and be received prior to the special meeting;
 
  •  submitting a valid, later-dated proxy by mail, telephone or Internet that is received prior to the special meeting; or
 
  •  attending the special meeting and voting by ballot in person (your attendance at the special meeting will not, by itself, revoke any proxy that you have previously given).
 
If you hold your shares through a broker or other nominee, you must contact your broker or other nominee to change your vote or obtain a “legal proxy” to vote your shares if you wish to cast your vote in person at the meeting.
 
Solicitation of Proxies
 
This proxy statement/prospectus is furnished in connection with the solicitation of proxies by the CPI board of directors to be voted at the CPI special meeting. CPI will bear all costs and expenses in connection with the solicitation of proxies, including the charges of brokerage houses and other custodians, nominees or fiduciaries for forwarding documents to security owners. Proxies may also be solicited by certain of CPI’s directors, officers and employees by telephone, electronic mail, letter, facsimile or in person, but no additional compensation will be paid to them.
 
Stockholders should not send stock certificates with their proxies. A letter of transmittal and instructions for the surrender of CPI common stock certificates will be mailed to CPI stockholders shortly after the completion of the merger, if approved.
 
Stockholders Sharing an Address
 
Consistent with notices sent to stockholders of record sharing a single address, CPI is sending only one copy of this proxy statement/prospectus to that address unless CPI received contrary instructions from any stockholder at that address. This “householding” practice reduces the volume of duplicate information received at your household and helps CPI reduce costs. Stockholders may request to discontinue householding, or may request a separate copy of this proxy statement/prospectus by one of the following methods:
 
  •  stockholders of record wishing to discontinue or begin householding, or any stockholder of record residing at a household address wanting to request delivery of a copy of this proxy statement/prospectus should contact CPI International, Inc., 811 Hansen Way, Palo Alto, California 94303, Attention: Investor Relations, telephone number (650) 846-2900; and
 
  •  stockholders owning their shares through a broker or nominee who wish to either discontinue or begin householding should contact their record holder.


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No Other Business
 
Under CPI’s amended and restated bylaws, the business to be conducted at the special meeting will be limited to the purposes stated in the notice to CPI stockholders provided with this proxy statement/prospectus.
 
Adjournments
 
Adjournments may be made for the purpose of, among other things, soliciting additional proxies. Whether or not a quorum is present, a majority of the votes present in person or by proxy may adjourn the meeting to another time and place. CPI is not required to notify stockholders of any adjournment of 30 days or less if the time and place of the adjourned meeting are announced at the meeting at which the adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At any adjourned meeting, CPI may transact any business that it might have transacted at the original meeting, provided that a quorum is present at such adjourned meeting. Proxies submitted by CPI stockholders for use at the special meeting will be used at any adjournment or postponement of the meeting. References to the CPI special meeting in this proxy statement/prospectus are to such special meeting as adjourned or postponed.
 
Assistance
 
If you need assistance in completing your proxy card or have questions regarding the special meeting, please contact CPI International, Inc., 811 Hansen Way, Palo Alto, California 94303, Attention: Investor Relations.


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THE MERGER
 
General
 
On May 8, 2010, the CPI board of directors unanimously approved and adopted the merger agreement that provides for the acquisition by Comtech of CPI through a merger of Merger Sub with and into Comtech. After the merger, CPI will be the surviving entity and will be a wholly owned subsidiary of Comtech. At the effective time of the merger, each share of CPI common stock (other than shares owned by CPI, Comtech and Merger Sub) will be converted into the right to receive a combination of $9.00 in cash, without interest, and a fraction of a share of Comtech common stock equal to $8.10 divided by the average closing price of Comtech common stock over a specified period of time prior to the effective date of the merger, provided that the fraction shall not be greater than 0.2382 nor less than 0.2132. For information regarding the treatment of stock options and restricted stock, see “The Merger Agreement — Merger Consideration; Conversion or Cancellation of Shares in the Merger — Treatment of CPI Equity Awards” beginning on page [l] of this proxy statement/prospectus.
 
Background of the Merger
 
The following is a summary of the meetings, negotiations, material contacts and discussions between CPI and Comtech and certain of their representatives and affiliates that preceded the execution of the merger agreement.
 
Since CPI’s initial public offering in April 2006, the CPI board of directors and management have regularly focused on the company’s strategic plan and alternatives. As part of this process, the CPI board of directors and management have assessed strategic transactions in order to enhance the ability of CPI to maximize stockholder value. The acquisition of Malibu Research Associates, Inc. in 2007 resulted from this process.
 
Comtech and its board of directors continually review strategic alternatives which include evaluating mergers and strategic combinations with numerous companies of different sizes and a variety of business models.
 
In the period before January 2008, limited discussions took place between CPI, Comtech and representatives of Cypress Associates II LLC (the entity which controls the Cypress Group stockholders and which is referred to in this proxy statement/prospectus as Cypress) regarding the potential acquisition by Comtech of CPI. CPI did not formally engage a financial advisor in connection with these discussions, and these discussions, which ceased in January 2008, did not progress beyond a preliminary stage.
 
In January 2008, Comtech entered into a confidentiality agreement with Radyne Corporation. Comtech announced its agreement to acquire Radyne Corporation on May 12, 2008, and closed the transaction on August 1, 2008. During the period between August 2008 and January 2009, Comtech and its management team integrated the Radyne acquisition.
 
In January 2009, Comtech inquired with Cypress as to whether Cypress would be interested in considering the possible strategic and financial merits of a potential acquisition of CPI by Comtech.
 
On February 25, 2009, Comtech management made a presentation to Cypress at Cypress’ offices regarding a possible merger between Comtech and CPI.
 
On April 15, 2009, CPI and Comtech executed a nondisclosure agreement.
 
On April 16, 2009, management of CPI provided a briefing regarding CPI’s business to Comtech management by telephone.
 
On April 23, 2009, Mr. Jeffrey Hughes and Mr. Christopher Harned from Cypress received a presentation from Comtech management at Comtech’s head office in Long Island, New York regarding, in the view of Comtech management, the benefits to CPI of a combination with Comtech.
 
During May 2009 and June 2009, CPI provided Comtech with a variety of information and materials regarding CPI’s business.


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On July 1, 2009, J.P. Morgan presented an analysis regarding the potential acquisition of CPI by Comtech to representatives of CPI.
 
On August 26, 2009, representatives of Cypress met with Comtech management at Comtech’s offices and received an updated presentation from Comtech regarding the benefits to CPI of a merger with Comtech.
 
On September 19, 2009, the Cypress Group stockholders executed a nondisclosure agreement with Comtech with respect to certain Comtech business and financial information to be provided to Cypress.
 
On September 29, 2009, J.P. Morgan made a presentation to representatives of Cypress and Mr. O. Joe Caldarelli, Chief Executive Officer of CPI and member of the CPI board of directors at Cypress’ offices in New York regarding an analysis of a potential transaction between Comtech and CPI as well as strategic alternatives.
 
On October 1, 2009, CPI provided a summary of CPI’s fiscal year 2010 and five-year financial projections to Cypress to provide to Comtech. Cypress provided these projections to Comtech on October 15, 2009.
 
On October 15, 2009, representatives of Cypress met with Comtech management at Cypress’ offices and received from Comtech management a presentation regarding the benefits to CPI’s stockholders of a merger with Comtech.
 
As part of its strategic planning, CPI from time to time evaluates potential acquisitions. During the period described in this section, CPI submitted a bid to acquire another company in a related industry. That bid was not successful.
 
In addition, throughout 2009, Comtech management provided regular updates to the Comtech board of directors regarding the preliminary discussions with CPI, with the Comtech board of directors instructing Comtech management to pursue discussions in order to determine if a transaction would be beneficial to Comtech.
 
On January 27, 2010, Mr. Hughes, a managing member of Cypress and Mr. Fred Kornberg, the Chairman of the Board, Chief Executive Officer and President of Comtech, had a telephone conversation regarding a potential acquisition of CPI by Comtech, including a discussion of a range of pricing and the composition of the consideration.
 
On February 2, 2010, Mr. Caldarelli provided updated CPI financial information to Mr. Harned and Mr. Hughes, which Cypress in turn provided to Comtech with the authorization of CPI.
 
On February 6, 2010, Mr. Caldarelli provided updated financial CPI information to Mr. Jerome Kapelus, Comtech’s Senior Vice President, Strategy and Business Development.
 
On February 16-17, 2010, certain members of Comtech’s management (including Mr. Kornberg, Mr. Michael Porcelain, Senior Vice President and Chief Financial Officer of Comtech, and Mr. Kapelus) visited CPI’s Canadian facilities for presentations regarding two of CPI’s operating divisions. During that visit, Mr. Kornberg inquired whether CPI management would be interested in continuing to work for CPI if CPI were to be acquired by Comtech in a merger transaction. Mr. Caldarelli confirmed that members of CPI management would generally be interested in continuing employment if such a transaction were to occur.
 
On February 23, 2010, the CPI board of directors held a regularly scheduled meeting. At that meeting, members of CPI management and Mr. Hughes updated the CPI board members on the status of their discussions with Comtech. Mr. Hughes indicated to the CPI board of directors that from the Cypress Group stockholders’ perspective, a transaction in which the stockholders of CPI could receive an interest in Comtech would be attractive to Cypress. Mr. Hughes also indicated that the Cypress Group stockholders would be interested in a potential transaction, in which the consideration to be received would consist of a combination of approximately $9.00 in cash and 0.225 shares of Comtech common stock per share of CPI common stock.
 
On February 26, 2010, Mr. Porcelain called Mr. Joel Littman, Chief Financial Officer, Treasurer and Secretary of CPI, and discussed the due diligence which Comtech would need to complete in connection with a strategic transaction. Mr. Porcelain discussed potentially setting a target to sign a definitive agreement by mid-March 2010.


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On February 26, 2010, the CPI board of directors held a special telephonic meeting to discuss the status of the discussions with Comtech. Also in attendance were representatives of J.P. Morgan, Irell & Manella LLP (which is referred to in this proxy statement/prospectus as Irell), CPI’s legal counsel, and Morris, Nichols, Arsht & Tunnell LLP (referred to in this proxy statement/prospectus as Morris Nichols), special Delaware counsel. Representatives of Irell and Morris Nichols reviewed with the directors certain legal matters regarding the discussions with Comtech, including the directors’ fiduciary obligations. Representatives of J.P. Morgan made a presentation to the board of directors regarding strategic alternatives. J.P. Morgan was subsequently engaged by CPI to act as its financial advisor in connection with a potential strategic transaction involving CPI.
 
During the period described in this section, CPI did not formally solicit offers from potential acquirers other than Comtech. CPI’s financial advisors advised CPI that the universe of potential strategic buyers was limited and that, based on informal historical discussions between CPI’s financial advisors and such entities, the potential strategic buyers other than Comtech were unlikely to make an attractive offer for CPI. In addition, CPI chose not to solicit offers from potential financial buyers such as private equity funds because CPI was advised that financial buyers were unlikely to make an offer for CPI that would be as attractive as an offer from Comtech. Based on this advice, CPI did not solicit formal offers from other parties because the CPI board of directors felt that the probability that such solicitations would result in a more attractive offer was low and that soliciting other offers might jeopardize a potential transaction with Comtech. However, because no formal solicitation process was conducted prior to executing the merger agreement, CPI insisted on having the right to terminate the merger agreement (subject to payment of a reasonable termination fee) in order to ensure that other potential acquirers could submit offers for CPI after the merger agreement was announced.
 
On March 1, 2010, the CPI board of directors held a special telephonic meeting to discuss the status of the discussions with Comtech. Also in attendance were representatives of Irell and Morris Nichols. The CPI board of directors discussed the appropriate procedures to be followed in connection with Comtech’s expression of interest. After receiving input from legal counsel, the CPI board of directors voted to establish two committees consisting of members of the CPI board of directors to evaluate Comtech’s expression of interest. The first was the transaction committee, to which the CPI board of directors appointed Mr. Caldarelli, Mr. Hughes and Mr. Michael Finley. The role of the transaction committee was to engage in negotiations and discussions with respect to Comtech’s expression of interest and alternatives thereto. The second committee established was a special committee consisting of three non-management directors who were determined to be independent from the Cypress Group stockholders, Mr. Finley, Mr. William Rutledge and Mr. Michael Targoff. The special committee was formed for the purpose of reviewing, evaluating and, as appropriate, negotiating or participating in negotiations with respect to Comtech’s expression of interest and alternatives thereto. The CPI board of directors determined that no transaction could proceed unless the special committee approved the transaction. The special committee was also given the power to retain its own legal and financial advisors. The special committee engaged Morris Nichols as its legal counsel.
 
During March 2010, members of CPI management made available to members of Comtech management and to Comtech’s legal, financial and other advisors due diligence materials relating to CPI, and members of Comtech management conducted site visits at certain CPI facilities. During this period, members of CPI management and its legal and financial advisors also conducted due diligence and reviewed materials related to Comtech.
 
Also beginning in March 2010 and continuing through the execution of the merger agreement, members of Comtech management provided the Comtech board of directors with detailed briefings as to the status, proposed terms and outstanding issues of the potential transaction with CPI. The Comtech board of directors also had discussions on several occasions with Comtech’s legal counsel, Skadden, Arps, Slate, Meagher & Flom LLP (referred to in this proxy statement/prospectus as Skadden) and Proskauer Rose LLP (referred to in this proxy statement/prospectus as Proskauer), as well as Comtech’s financial advisor, Citigroup Global Markets Inc. (referred to in this proxy/prospectus as Citigroup). In addition, throughout this period, the Comtech board of directors received and reviewed several financial due-diligence reports in connection with the potential transaction from its accounting advisers, KPMG LLP and PricewaterhouseCoopers LLP.


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On March 3, 2010, a telephonic meeting of CPI’s special committee was held, with representatives of Morris Nichols in attendance. The special committee discussed the committee’s role and authority and the potential hiring of a financial advisor for the special committee.
 
On March 4, 2010, representatives of Skadden contacted representatives of Irell and described the broad outlines of Comtech’s views as to the potential structure of a transaction between Comtech and CPI. Following this discussion, on March 10, 2010, Comtech sent to CPI a proposed term sheet for a potential merger transaction as well as a term sheet relating to the employment of CPI senior executives following the potential transaction. The merger term sheet did not indicate a proposed price to be paid by Comtech in connection with a potential merger. The employment term sheet was included because Comtech had indicated that the continued commitment of senior executives was an important factor in Comtech’s interest in pursuing a transaction.
 
On March 11, 2010, a telephonic meeting of CPI’s special committee was held, with representatives of Morris Nichols in attendance. The special committee discussed the engagement of a financial advisor to advise the special committee as well as the term sheet that had been sent to CPI by Comtech. The special committee subsequently engaged Moelis to act as its financial advisor. The special committee determined that the term sheet raised a number of issues that needed to be addressed and that members of CPI’s management should be instructed not to engage in discussions on the terms of their subsequent employment arrangements with Comtech until a later time.
 
On March 12, 2010, certain members of CPI management, along with representatives of J.P. Morgan, Moelis and Cypress, attended a meeting at Comtech’s headquarters where Comtech executives made a presentation regarding Comtech’s business. Mr. Finley and Mr. Rutledge, members of the special committee of the CPI board of directors, attended the meeting by telephone. As part of this meeting CPI representatives asked due diligence questions regarding Comtech’s business and prospects.
 
On March 14, 2010, CPI’s transaction committee (Mr. Caldarelli, Mr. Finley and Mr. Hughes), Mr. Harned of Cypress and representatives of Irell and Morris Nichols discussed the issues related to the proposed term sheet and formulated proposed responses.
 
On March 15, 2010, Mr. Harned and representatives of J.P. Morgan, at the request of CPI’s transaction committee, discussed the proposed term sheet with Mr. Kapelus of Comtech.
 
On March 17 and 19, 2010, representatives of Irell, Morris Nichols and Skadden, along with representatives of J.P. Morgan, Moelis and Cypress discussed issues related to the proposed term sheet.
 
On March 22, 2010, representatives of J.P. Morgan and representatives of Citigroup spoke regarding the status of the proposed transaction. The representatives agreed that the most important next step was for Comtech to make a more formal proposal (including price) to CPI.
 
On March 24, 2010, a telephonic meeting of CPI’s special committee was held, with representatives of Morris Nichols in attendance. The special committee discussed the status and terms of Comtech’s proposal and Moelis’ analysis of the proposal to date.
 
Following the discussions between representatives of CPI and Comtech regarding the initial term sheet, on March 25, 2010, representatives of Citigroup and Skadden sent a revised term sheet regarding the potential transaction to J.P. Morgan and Irell.
 
On March 27 and 28, 2010, representatives of J.P. Morgan and Citigroup discussed the status of the proposed transaction and the best method for advancing dialogue.
 
On March 30, 2010, the members of CPI’s special committee held a telephonic meeting, with representatives of Morris Nichols in attendance, to discuss Comtech’s proposed term sheet and develop a proposed response. In particular, the members of the special committee expressed their objections to the provisions (described as “force-the-vote” provisions) proposed by Comtech in its term sheet which would prohibit CPI from terminating the proposed merger agreement in the event that CPI received a superior proposal after the merger agreement was signed. The special committee also expressed the view that the CPI board of directors would need to have the right to change its recommendation regarding the transaction in certain circumstances.


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On March 31, 2010, the members of CPI’s transaction committee (Mr. Caldarelli, Mr. Finley and Mr. Hughes) and Mr. Harned of Cypress had a teleconference, with representatives of J.P. Morgan, Irell and Moelis in attendance, in which they discussed the special committee’s proposed response and expressed their agreement with the proposed response. The next day a revised version of the term sheet was sent to Skadden reflecting this response.
 
On April 8, 2010, Comtech sent a letter to the CPI board of directors setting forth Comtech’s non-binding proposal to acquire all of the outstanding common stock of CPI in a merger transaction in which the stockholders of CPI would receive consideration consisting of between $8.00 to $9.00 in cash per share plus 0.225 shares of Comtech common stock for each share of CPI common stock. Comtech included a further revised term sheet with the letter setting forth the principal proposed legal terms of the proposed transaction. The letter also indicated that Comtech would be reluctant to continue negotiations regarding a potential merger without the continuing commitment of key CPI executives.
 
On April 9, 2010, the members of CPI’s transaction committee (Mr. Caldarelli, Mr. Finley and Mr. Hughes), together with representatives of J.P. Morgan, held a teleconference in which they discussed the letter from Comtech. Later that day, CPI’s entire board of directors met via telephone, with representatives of J.P. Morgan, Moelis, Irell and Morris Nichols in attendance, as well as Mr. Harned of Cypress. The CPI board of directors discussed the terms of Comtech’s letter and revised term sheet and directed J.P. Morgan to communicate to Citigroup that the members of the board were disappointed with the economic and legal terms of Comtech’s proposal. J.P. Morgan communicated this message to Citigroup later that evening.
 
That same day, a telephonic meeting of CPI’s special committee was held, with representatives of Morris Nichols and Moelis in attendance. The special committee discussed the terms of Comtech’s proposal and approved the communications strategy for discussions with Comtech as agreed upon at the earlier board meeting. J.P. Morgan communicated to Citigroup later that evening the response approved by the CPI board of directors and the special committee.
 
On April 10, 2010, Mr. Kornberg called Mr. Caldarelli to discuss whether the parties should continue their discussions in light of the concerns communicated by J.P. Morgan to Citigroup. Mr. Caldarelli indicated that the CPI board of directors was prepared to continue discussions.
 
On April 13, 2010, a telephonic meeting of the CPI board of directors was held. Representatives of J.P. Morgan, Moelis, Irell and Morris Nichols were also in attendance. J.P. Morgan made a presentation to the CPI board of directors regarding J.P. Morgan’s preliminary views as to the value of CPI as well as CPI’s potential strategic alternatives.
 
Later that day, CPI’s special committee held a telephonic meeting, with representatives of Morris Nichols and Moelis in attendance. The special committee discussed J.P. Morgan’s presentation along with Moelis and Morris Nichols. Members of the special committee expressed their views as to the terms and price currently offered by Comtech.
 
On April 14, 2010, the CPI board of directors held a telephonic meeting, with representatives of J.P. Morgan, Moelis, Irell and Morris Nichols in attendance. At the board meeting, Mr. Targoff summarized for the other board members of CPI the special committee’s preliminary views on certain elements of the Comtech proposal. The CPI board of directors discussed the impact of changes in Comtech’s stock price on the deal value and discussed potential pricing arrangements that would employ a “collar” mechanism to address the effect that changes in the value of the Comtech common stock between signing and closing would have on the number of shares of Comtech common stock issued in respect of each share of CPI common stock. The CPI board of directors asked questions of legal counsel regarding certain legal implications of the proposal, including the “force-the-vote” provision proposed by Comtech. The CPI board of directors directed J.P. Morgan to communicate to Citigroup that: (i) the board wanted Comtech’s proposal to reflect a minimum value of $17.10 per share at the time of signing; (ii) the board would not be prepared to agree to the “force-the-vote” provision requested by Comtech; and (iii) the board would not agree to breakup fees that were in excess of market levels.
 
On April 15, 2010, representatives of J.P. Morgan spoke with Citigroup and communicated the position of the CPI board of directors with respect to the Comtech proposal.


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On April 16, 2010, Mr. Caldarelli called Mr. Kornberg and discussed the status of the parties’ discussions. In addition, on April 16, 2010 Comtech sent a letter to the CPI board of directors containing a modified nonbinding proposal to acquire CPI. Under this proposal, each share of CPI common stock would be converted into $9.00 in cash and 0.225 shares of Comtech common stock. This proposal was contingent upon CPI agreeing to include a “force-the-vote” provision in the final agreement and agreeing to a breakup fee proposed by Comtech. Since CPI management, as directed by CPI’s special committee, had not engaged in discussions regarding the terms of their continued employment with Comtech, the letter also requested that CPI management engage in immediate discussions with Comtech regarding their future roles at Comtech.
 
On April 19, 2010, the CPI board of directors held a telephonic meeting. The CPI board of directors discussed Comtech’s April 16 letter and the fact that Comtech had not accepted CPI’s positions. The CPI board of directors instructed J.P. Morgan to reiterate the positions it had communicated on April 15, 2010. In addition, the CPI board of directors concluded that it would be desirable to receive a draft merger agreement rather than continue to exchange term sheets. The CPI board of directors also concluded, based on the lack of agreement on key terms, that CPI management should continue to not engage in discussions with Comtech regarding their potential future employment by Comtech.
 
On April 20, 2010, representatives of J.P. Morgan spoke with Citigroup and Comtech and communicated the positions of the CPI board of directors. Comtech indicated that it was not in a position to commit to a minimum value of $17.10 per share at signing, but that a collar structure might provide a solution to the gap between the parties on price.
 
Following these discussions, on April 22, 2010, Skadden sent to Irell initial drafts of a merger agreement and voting and standstill agreement as well as draft employment letters for certain of CPI’s executive officers.
 
On April 24, 2010, representatives of J.P. Morgan spoke to representatives of Citigroup regarding process-related matters and potential methods for facilitating resolution of open issues.
 
On April 25, 2010, a telephonic meeting of the CPI board of directors was held. The CPI board of directors discussed the terms of the draft merger agreement and directed J.P. Morgan to communicate again the board’s positions regarding the price which the board would expect to apply at execution, as well as the “force-the-vote” provisions in the draft merger agreement, the provisions restricting the board of directors’ ability to change its recommendation under certain circumstances and the provisions limiting Comtech’s obligations to pursue certain regulatory approvals. The CPI board of directors instructed its legal advisors to prepare proposed changes to the draft merger agreement.
 
On April 26, 2010, representatives of J.P. Morgan called Citigroup and informed Citigroup that the legal advisors to CPI would be sending comments on the proposed merger agreement but that CPI did not want to engage in detailed negotiations on the contract until the price issues and the principal contractual issues (i.e., “force-the-vote”; ability of the CPI board of directors to change its recommendation; and regulatory approval conditions) were resolved. Later that day, the legal advisors to CPI sent to Skadden comments on the proposed merger agreement.
 
On April 27, 2010, representatives of J.P. Morgan spoke with representatives of Citigroup regarding the proposed merger agreement.
 
In addition, on April 27, 2010, CPI held a telephonic board meeting in which J.P. Morgan summarized its recent communications with Citigroup and Comtech. J.P. Morgan also made a presentation to the CPI board of directors regarding potential collar structures. After discussion of the status of the negotiations between the parties, the CPI board of directors concluded that it was not willing to concede on its key negotiating points (i.e., price; “force-the-vote”; ability of the CPI board of directors to change its recommendation; and regulatory approval conditions).
 
The special committee of the CPI board of directors also met telephonically that day, with representatives of Morris Nichols in attendance. The special committee approved the payment by CPI of attorneys’ fees in connection with the review of possible employment agreements between Comtech and members of CPI’s management as well as the voting and standstill agreement being negotiated between the Cypress funds and Comtech.


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On April 28, 2010, Mr. Porcelain inquired whether CPI executives were in a position to begin discussions with Comtech regarding the proposed employment contracts between Comtech and the executives. On April 29, 2010, Mr. Littman informed Mr. Porcelain that, while the executives had begun analyzing the proposal, they had not yet been authorized by the CPI board of directors to begin discussions with Comtech on the topic.
 
The special committee of the CPI board of directors also met telephonically that day, with representatives of Morris Nichols and Moelis in attendance. The special committee received and discussed a presentation from Moelis as to the value of CPI as well as CPI’s potential strategic alternatives. The special committee also discussed the status of discussions with Comtech and the special committee’s views relating to a collar structure. After the meeting, the special committee communicated those views to CPI’s transaction committee and J.P. Morgan.
 
On April 29, 2010, representatives of Skadden, Comtech, Cypress and Golenbock, Eiseman, Assor, Bell & Peskoe, counsel for the Cypress Group stockholders, discussed the proposed voting and standstill agreement to be entered into between the Cypress Group stockholders and Comtech.
 
On April 29, 2010, the CPI board of directors held a telephonic meeting. Mr. Hughes reported to the CPI board of directors the discussions with Comtech that representatives of Cypress had regarding the provisions of the voting and standstill agreement. The board discussed whether management should be permitted to commence discussions with Comtech regarding the proposed terms of their employment by Comtech. After discussion and advice of counsel, the CPI board of directors concluded that, in light of its position on certain key negotiating points, permitting executives to commence discussions on those agreements would be in the best interest of CPI and therefore authorized the executives to commence discussions with Comtech on those matters.
 
Later on April 29, 2010, Skadden contacted Irell suggesting that CPI management begin discussions with Comtech on their proposed employment arrangements and that in-person meetings be set up to advance the negotiations on the merger agreement.
 
On April 30, 2010, Mr. Kornberg placed phone calls to each of the directors of CPI separately. He advised each of the directors with whom he was able to speak that Comtech continued to be interested in pursuing a transaction with CPI and that Comtech would be sending an offer letter containing modified terms on key points. Shortly after these discussions, Comtech sent a letter to the CPI board of directors containing what Comtech described as Comtech’s final proposal to the board. In that letter, Comtech indicated that it was willing to provide CPI stockholders with consideration equal to $17.10 per share at the time of signing, consisting of $9.00 in cash and $8.10 worth of Comtech common stock, subject to a collar mechanism. Under Comtech’s proposed collar mechanism, the amount of stock received by CPI stockholders when the merger closed would depend on the Comtech common stock price during a specified period prior to the closing. If the Comtech common stock price during the specified period fell within a predetermined range, the exchange ratio for Comtech common stock would float such that CPI stockholders would receive $8.10 worth of Comtech common stock for each share of CPI common stock. If the Comtech common stock price prior to the closing was outside the predetermined range, the amount of Comtech common stock payable with respect to each CPI share would be a fixed ratio, which would vary depending on whether the stock price was less than or greater than the range. The range and the fixed ratios would be determined based on the price of the Comtech common stock at signing.
 
In its April 30, 2010 letter, Comtech also indicated that: (i) Comtech was willing to remove the “force-the-vote” provision from the merger agreement; (ii) Comtech was willing to agree to a termination fee of $12 million if the merger agreement were terminated due to a superior proposal; and (iii) while Comtech continued to expect that members of CPI management would play meaningful roles in a combined company (and Comtech separately indicated to the members of CPI management Comtech’s continued desire to enter arrangements for ongoing employment with each executive), Comtech did not want the logistical difficulties of negotiating employment agreements to delay arriving at a definitive merger agreement, and therefore Comtech’s proposal was no longer contingent on CPI management entering into employment arrangements with Comtech.
 
On May 2, 2010, the CPI board of directors held a telephonic board meeting, with representatives of J.P. Morgan, Moelis, Irell and Morris Nichols in attendance. The CPI board of directors discussed the collar structure that had been proposed by Comtech as well as potential alternatives to the proposed collar structure. After discussion, the CPI board of directors directed J.P. Morgan to submit a counterproposal to Comtech. In addition, at


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the meeting, legal advisors to CPI summarized the open legal issues on the merger agreement for the CPI board of directors. The board authorized Mr. Caldarelli to provide guidance to CPI’s financial advisors and legal advisors in connection with the negotiations over the next few days, subject to the right of CPI’s special committee and board of directors to approve any transaction presented. In light of this role, Mr. Caldarelli suspended his discussions and negotiations regarding his potential employment with Comtech following the merger.
 
On May 3, 2010, J.P. Morgan communicated CPI’s counterproposal on pricing to Citigroup. Under the CPI counterproposal, (i) Comtech would provide consideration to the CPI stockholders with a value at the date of signing equal to $17.10 per share, consisting of $9.00 in cash and $8.10 in Comtech common stock; (ii) if the price of Comtech common stock at the time of the closing was greater than or equal to the price at the time of signing but equal to or less than $36.00 per share, the value of the Comtech common stock to be provided at closing would remain at $8.10 per share; (iii) if the price of Comtech common stock at the time of the closing was less than the price at the time of signing, the number of shares of Comtech common stock to be received for each share of CPI common stock would be equal to $8.10 divided by the price of the Comtech common stock at the time of signing; and (iv) if the price of Comtech common stock at the time of the closing was greater than $36.00 per share, Comtech would provide 0.225 shares of Comtech common stock per share of CPI common stock.
 
Between May 3 and May 6, 2010, numerous discussions took place between Mr. Caldarelli and J.P. Morgan on behalf of CPI and Citigroup, Mr. Porcelain and Mr. Kapelus on behalf of Comtech with respect to the price to be paid in the proposed transaction. Comtech did not accept CPI’s most recent pricing proposal, but indicated that Comtech might be open to minor adjustments to Comtech’s proposed collar mechanism provided that the collar was centered and symmetrical around a $36.00 per share Comtech common stock price.
 
Between May 3 and May 7, 2010, CPI’s and Cypress’ legal representatives had conference calls with Skadden and exchanged drafts regarding open issues on the merger agreement and the voting and standstill agreement.
 
On May 6, 2010, a telephonic meeting of the Comtech board of directors was convened and attended by certain members of Comtech’s senior management as well as representatives of Skadden, Proskauer and Citigroup. Comtech’s senior management updated the Comtech board of directors on discussions with CPI. Representatives of Citigroup discussed the proposed collar mechanism and the negotiations regarding the proposed transaction. Comtech’s management discussed with the Comtech board of directors the rationale for the transaction. Also at the meeting, the representatives of Skadden provided an overview of the proposed merger, including the material transaction terms set forth in the draft merger agreement and voting and standstill agreement previously provided to the Comtech board of directors, and reviewed certain legal matters relating to the board of directors’ consideration of the proposed merger. Following discussions regarding the merits of the proposed merger with CPI, the Comtech board of directors agreed that management should continue its discussions with CPI with a view to management presenting a possible transaction for approval to the Comtech board of directors as early as the next day.
 
On May 6, 2010, a telephonic meeting of the special committee of the CPI board of directors was held, with representatives of Moelis, Morris Nichols and Irell in attendance. At the request of the special committee, Mr. Caldarelli was also invited to attend a portion of the meeting to report on the progress of the negotiations. Mr. Caldarelli and CPI’s legal representatives updated the members of the special committee regarding the status of the negotiations of the merger agreement, described the open legal points and answered the directors’ questions regarding the terms and provisions of the proposed agreement.
 
Later on May 6, 2010 a conference call took place in which Mr. Caldarelli updated certain members of the CPI board of directors on the status of the deal discussions, including Comtech’s rejection of CPI’s revised pricing proposal. Representatives of J.P. Morgan and Irell were also on the call. Because of where the Comtech common stock price was at that time (around $32.00 per share) the collar structure in the form proposed by Comtech at that time was viewed as unattractive as the Comtech common stock price would have to increase by 25% (to around $40.00 per share) before the CPI stockholders could benefit from the increase in the Comtech common stock price. It was suggested that Mr. Caldarelli explore with Comtech the possibility of reverting to Comtech’s original proposal of $9.00 in cash plus 0.225 shares of Comtech common stock. This would not meet the goal of having a value of $17.10 per share at the time of signing but would provide potentially greater upside to the CPI stockholders.


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Following the call with certain members of the CPI board of directors, Mr. Caldarelli held discussions with Mr. Kornberg, Mr. Porcelain and Mr. Kapelus of Comtech to explore structures that would provide greater potential upside to CPI stockholders in the event that the price of Comtech’s common stock increased.
 
On May 7, 2010 Mr. Porcelain and Mr. Kapelus told Mr. Caldarelli that the Comtech board was not willing to revert to the original proposal of $9.00 per share plus 0.225 shares of Comtech common stock and that the only price proposal on the table was the April 30, 2010 collar proposal. Mr. Kornberg also made a call to Mr. Caldarelli in which he expressed a similar message. Mr. Caldarelli inquired whether Comtech was open to adjustments to the collar formula. Mr. Kornberg indicated that Comtech might be open to a modest, symmetrical (e.g., centered around $36.00) adjustment to the collar formula.
 
Also on May 7, 2010, the CPI board of directors held a telephonic board meeting, with representatives of J.P. Morgan, Moelis, Irell and Morris Nichols in attendance. At the meeting, Mr. Caldarelli updated the members of the CPI board of directors regarding the open issues with respect to price, and indicated that Comtech had expressed a willingness to entertain modest modifications to its original collar proposal. J.P. Morgan made a presentation to the CPI board of directors regarding the impact of Comtech’s original collar proposal under various Comtech common stock price scenarios. A potential counterproposal was discussed which would narrow the range of the collar, and J.P. Morgan discussed the impact of that counterproposal under various Comtech common stock price ranges. Under the counterproposal, the value of the stock portion of the consideration would be $8.10 per share as long as Comtech’s stock price was between $34.00 and $38.00 prior to the closing of the merger. If the Comtech common stock price prior to the closing were $34.00 or lower, the stock portion of the consideration would be based on 0.2382 shares of Comtech common stock. If the Comtech common stock price prior to the closing were $38.00 or higher, the stock portion of the consideration would be based on 0.2132 shares of Comtech common stock. After discussion, the CPI board of directors decided that even though the counterproposal could present a lower value at signing than Comtech’s April 30 collar proposal, the counterproposal could be to the likely benefit of CPI’s stockholders because it permitted greater participation in the upside in the Comtech common stock, and the CPI board of directors authorized Mr. Caldarelli and J.P. Morgan to make the proposal to Comtech. In addition, the board agreed that CPI should propose to Comtech that the shares of CPI common stock held by the Cypress Group stockholders would be partially freed up from the voting agreement in the event of a change in recommendation by the CPI board of directors if the Comtech common stock price was less than $24.00 per share at the time of the change in recommendation. In addition, Mr. Caldarelli and CPI’s legal counsel summarized the status of the other open points on the draft merger agreement.
 
Following that meeting J.P. Morgan communicated the revised collar proposal to Citigroup and Comtech. Comtech later notified CPI that the proposal was acceptable, subject to approval by the Comtech board of directors.
 
In the evening of May 7, 2010, CPI’s special committee held a telephonic meeting, with representatives of Moelis and Morris Nichols in attendance. Mr. Caldarelli was invited to attend a portion of the meeting to provide an update as to the status of negotiations on the merger agreement. In addition, representatives of Irell were in attendance for a portion of the meeting. CPI’s legal advisors updated the committee members regarding the status of negotiations on the merger agreement, and reviewed certain of the provisions of the draft merger agreement. Mr. Caldarelli and the representatives of Irell left the meeting and the members of the special committee discussed the proposed transaction. Moelis delivered to the special committee its oral opinion, dated May 7, 2010, subsequently confirmed in writing, that, as of that date and based on and subject to the various factors, assumptions, limitations and qualifications set forth in such written opinion, the per share merger consideration to be received by CPI’s stockholders, pursuant to the terms and subject to the conditions set forth in the merger agreement, was fair, from a financial point of view, to CPI’s stockholders (other than the Cypress Group and its affiliates). Following such opinion, the members of the special committee unanimously adopted resolutions recommending that the entire CPI board of directors adopt and approve the proposed transaction.
 
Following the meeting of the CPI special committee, later on May 7, 2010, the CPI board of directors held a telephonic meeting. Representatives of J.P. Morgan, Moelis, Morris Nichols and Irell were in attendance. Mr. Frederick Alexander of Morris Nichols informed the CPI board of directors that the special committee had unanimously approved the proposed transaction and had recommended that the entire CPI board of directors adopt and approve the transaction. The CPI board of directors then discussed the proposed transaction, including the


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pricing and the progress of the negotiations. J.P. Morgan presented to the CPI board of directors its financial analysis of the proposed transaction and described how the proposed collar mechanism would work. J.P. Morgan delivered its oral opinion dated May 7, 2010, subsequently confirmed in writing, that, as of that date and based on and subject to the various factors, assumptions and limitations set forth in such written opinion the per share merger consideration to be received by holders of CPI common stock (other than the Cypress Group and its affiliates) in the proposed merger was fair, from a financial point of view, to such holders. The CPI board of directors engaged in further discussion and then unanimously approved the proposed merger.
 
Late in the evening on May 7, 2010, the Comtech board of directors convened a telephonic meeting to review and consider the proposed merger. Present at the meeting were members of Comtech’s senior management and representatives of Skadden, Proskauer and Citigroup. At the meeting, Comtech’s senior management briefed the board of directors on negotiations that had occurred since their last update and reviewed the merits of the transaction and recommended in favor of a transaction on the terms presented. Representatives of Citigroup reviewed with the Comtech board of directors certain financial aspects of the proposed merger, and a representative of Skadden discussed with the board of directors certain material terms of the merger agreement and the voting and standstill agreement and certain legal matters relating to the Comtech board of directors’ consideration of the proposed merger. Following consideration of the terms of the proposed merger and discussion among the directors, senior management and Comtech’s legal and financial advisors, early in the morning of May 8, 2010, the Comtech board of directors unanimously approved the proposed merger and authorized management to enter into the merger agreement and the voting and standstill agreement.
 
On May 8, 2010, the CPI board of directors approved the final version of the merger agreement, CPI and Comtech executed and delivered the merger agreement and Comtech and the Cypress Group stockholders executed and delivered the voting and standstill agreement. On May 10, 2010, prior to the commencement of trading on the NASDAQ Global Select Market, CPI and Comtech issued a joint press release announcing the signing of the merger agreement and the voting and standstill agreement.
 
CPI’s Reasons for the Merger; Recommendation of the CPI Board of Directors
 
The CPI board of directors carefully evaluated the merger agreement and the merger. The CPI board of directors unanimously determined that the merger agreement and the merger are advisable and in the best interests of, CPI and its stockholders, and unanimously recommended that the stockholders of CPI vote “FOR” the adoption of the merger agreement.
 
In the course of reaching its recommendation, the CPI board of directors consulted with CPI’s senior management, its financial advisors and outside legal counsel and considered a number of substantive factors, both positive and negative, and potential benefits and detriments of the merger to CPI and its stockholders. The CPI board of directors believed that, taken as a whole, the following factors supported its decision to approve the proposed merger:
 
  •  Consideration; Historical Market Prices.  The value of the consideration to be received by CPI’s stockholders pursuant to the merger, including that the implied merger consideration as of the close of trading on May 7, 2010, of $16.40 per share, represented a significant premium over the market prices at which CPI common stock had previously recently traded, including a premium of approximately 26.8% over the closing price of CPI common stock of $12.93 on May 7, 2010, the last trading day prior to the meeting of the board of directors at which the merger was approved.
 
  •  Sizeable Portion of Merger Consideration in Cash.  The fact that a sizeable portion of the merger consideration will be paid in cash, giving CPI stockholders an opportunity to immediately realize value for a significant portion of their investment and providing certainty of value.
 
  •  Participation in Potential Upside.  The fact that, since a portion of the merger consideration will be paid in Comtech common stock, CPI stockholders would have the opportunity to participate in any future earnings or growth of the combined company and future appreciation in the value of Comtech common stock following the merger should they decide to retain the Comtech common stock payable in the merger.


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  •  Financial Advisor’s Opinion.  The fact that the CPI board of directors received an oral opinion, dated May 7, 2010, subsequently confirmed in writing, from J.P. Morgan that, as of that date, and based on and subject to the various factors, assumptions and limitations set forth in such written opinion, the per share merger consideration to be received by holders of CPI common stock (other than the Cypress Group and its affiliates) in the proposed merger was fair, from a financial point of view, to such holders as more fully described below under the heading “— Opinion of J.P. Morgan Securities Inc.” beginning on page [l] of this proxy statement/prospectus.
 
  •  Financial Advisor’s Other Advice.  The fact that J.P. Morgan, a qualified and independent financial advisor, assisted the board of directors in its process of exploring strategic alternatives.
 
  •  The Special Committee Recommendation.  The fact that a special committee of the board of directors comprised of independent directors recommended, among other things, that the full board approve and adopt the merger agreement.
 
  •  The Opinion of the Financial Advisor to the Special Committee.  The fact that the special committee received an oral opinion, dated May 7, 2010, subsequently confirmed in writing, that, as of that date and based on and subject to the various factors, assumptions, limitations and qualifications set forth in such written opinion, the per share merger consideration to be received by CPI’s stockholders, pursuant to the terms and subject to the conditions set forth in the merger agreement, was fair, from a financial point of view, to CPI’s stockholders (other than the Cypress Group and its affiliates), as more fully described below under the heading “— Opinion of Moelis & Company LLC.”
 
  •  Support of Certain CPI Stockholders.  The fact that stockholders representing a majority of the shares of CPI common stock outstanding as of the date of the merger agreement expressed support for the proposed merger, as evidenced by their willingness to enter into the voting and standstill agreement.
 
  •  Lack of Public Float and Perceived Overhang.  The belief that the upside for CPI’s common stock price as an independent company was limited due to CPI’s relatively small market capitalization, small public float (due to the majority holdings of the Cypress Group stockholders), low trading volume when compared to other companies listed on the NASDAQ Global Select Market, relative lack of research analyst coverage of CPI’s common stock, and the perception by analysts that substantial sales of CPI common stock by the Cypress Group stockholders could depress CPI’s stock price. Among other things, CPI’s small market capitalization was due to CPI’s inability to grow significantly through acquisitions.
 
  •  Terms of the Merger Agreement and Voting and Standstill Agreement.  The terms and conditions of the merger agreement and voting and standstill agreement, including:
 
  •  The limited closing conditions to Comtech’s obligations under the merger agreement, including the fact that the merger agreement is not subject to approval by Comtech stockholders or the receipt of any financing by Comtech;
 
  •  The provisions of the merger agreement that allow, under certain circumstances more fully described under “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus, CPI to engage in negotiations with, and provide information to, third parties in response to an unsolicited competing acquisition proposal from a third party that the CPI board of directors determines constitutes or would reasonably be expected to lead to a proposal that is superior to the merger;
 
  •  The provisions of the merger agreement that allow, under certain circumstances more fully described under “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus, the CPI board of directors to change its recommendation that CPI stockholders adopt the merger agreement in response to certain competing acquisition proposals and certain intervening events, if the CPI board of directors determines in good faith that a failure to make a change in its recommendation would be reasonably likely to constitute a violation of its fiduciary duties to stockholders under Delaware law;


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  •  The provisions of the voting and standstill agreement that provide for the termination of the voting and standstill agreement automatically upon termination of the merger agreement, including upon termination of the merger agreement by CPI to enter into a definitive, written agreement concerning a superior acquisition proposal as described under “The Merger Agreement — Termination of the Merger Agreement” beginning on page [l] of this proxy statement/prospectus and “The Voting and Standstill Agreement” beginning on page [l] of this proxy statement/prospectus);
 
  •  The provisions of the voting and standstill agreement that reduce the amount of shares the Cypress Group stockholders are required to vote in favor of the adoption of the merger agreement to 25% of the outstanding shares of CPI common stock if the CPI board of directors changes its recommendation with respect to the merger under certain circumstances (see “The Merger Agreement — Termination of the Merger Agreement” beginning on page [l] of this proxy statement/prospectus and “The Voting and Standstill Agreement” beginning on page [l] of this proxy statement/prospectus). In such circumstances the Cypress Group stockholders could vote their remaining shares of stock (representing approximately 25% of the outstanding shares of CPI common stock) against the adoption of the merger agreement, which would effectively allow the non-Cypress Group stockholders to determine whether the merger agreement is adopted; and
 
  •  The ability of CPI to specifically enforce the terms of the merger agreement.
 
  •  Availability of Appraisal Rights.  The fact that stockholders who do not vote in favor of the adoption of the merger agreement and who otherwise properly comply with Delaware law will have the right to demand appraisal of the fair value of their shares of CPI common stock under Delaware law, and that there was no condition in the merger agreement relating to the maximum number of shares of CPI common stock for which CPI stockholders could demand appraisal.
 
The CPI board of directors also considered certain potentially negative factors in its deliberations concerning the merger, including the following:
 
  •  Potential for Decline in Value of Stock Portion of Merger Consideration.  The fact that the value of the Comtech common stock portion of the merger consideration could decline prior to consummation of the merger, thereby causing the value of the merger consideration to decline. The CPI board of directors determined that this structure was appropriate and the risk acceptable in view of factors such as:
 
  •  The CPI board of directors’ review of the relative intrinsic values and financial performance of Comtech and CPI and the relative performance of each company’s stock; and
 
  •  The fact that a substantial portion of the merger consideration will be paid in a fixed cash amount which reduces the impact of any decline in the trading price of Comtech common stock on the value of the merger consideration.
 
  •  Risks of Non-Completion.  The possibility that the merger might not be completed as a result of, among other reasons, potential objections of regulatory authorities, and the transaction costs that will be incurred even if the merger is not consummated, along with the effect the resulting public announcement of termination of the merger agreement may have on the trading price of CPI common stock and CPI’s operating results.
 
  •  Possible Deterrence of Competing Offers.  The risk that various provisions of the merger agreement, including the requirement that CPI must pay to Comtech a break-up fee of up to $12 million, if the merger agreement is terminated under certain circumstances, may discourage other parties potentially interested in an acquisition of, or combination with, CPI from pursuing that opportunity. See “The Merger Agreement — Termination of the Merger Agreement” beginning on page [l] of this proxy statement/prospectus.
 
  •  Effect of Voting and Standstill Agreement.  The fact that while the approval of the adoption of the merger agreement by CPI’s stockholders is required under Delaware law, approximately 49.9% of the shares of CPI common stock entitled to vote at the special meeting have committed to vote in favor of such adoption pursuant to the voting and standstill agreement. As a result, the adoption of the merger agreement at the special meeting is nearly assured merely by the vote of those CPI stockholders party to the voting and


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  standstill agreement, absent: (i) the termination of the voting and standstill agreement as a result of, among other things, CPI terminating the merger agreement in order to enter into a definitive agreement with respect to a superior acquisition proposal or (ii) the CPI board of directors changing its recommendation under certain circumstances, in which case the percentage of shares that the Cypress Group stockholders would be required to be vote in favor of the adoption of the merger agreement would be reduced to 25% of the total outstanding shares of CPI common stock. See “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” and “The Voting and Standstill Agreement” beginning on pages [l] and [l] of this proxy statement/prospectus, respectively.
 
  •  Possible Disruption of the Business and Costs and Expenses.  The possible disruption to CPI’s business that may result from the merger, the resulting distraction of the attention of CPI’s management and potential attrition of CPI’s employees, as well as the costs and expenses associated with completing the merger.
 
  •  Restrictions on Operation of CPI’s Business.  The requirement that CPI conduct its business only in the ordinary course prior to the completion of the merger and subject to specified restrictions on the conduct of CPI’s business without Comtech’s prior consent, which might delay or prevent CPI from taking advantage of certain business opportunities that might arise pending completion of the merger.
 
  •  Merger Consideration Taxable.  The fact that the merger is a taxable transaction to CPI stockholders, and the receipt of Comtech common stock and cash in exchange for CPI common stock in the merger will generally be taxable to CPI stockholders. See “The Merger — Certain Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [l] of this proxy statement/prospectus.
 
  •  Other Risks.  The additional risks described in the section entitled “Risk Factors” beginning on page [l] of this proxy statement/prospectus.
 
The CPI board of directors concluded that the potential benefits that it expected CPI stockholders would receive as a result of the merger outweighed the potentially negative factors associated with the proposed merger. Accordingly, the CPI board of directors unanimously determined that the merger agreement and the merger are advisable to, and in the best interests of, CPI and its stockholders.
 
In addition, the CPI board of directors was aware of and considered the interests that CPI’s directors and executive officers may have with respect to the merger that differ from, or are in addition to, their interests as stockholders of CPI generally, as described in “Interests of Certain Persons in the Merger” beginning on page [l] of this proxy statement/prospectus.
 
The foregoing discussion of the information and factors considered by the CPI board of directors is not exhaustive. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the CPI board of directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative or specific weight or values to any of these factors. Rather, the CPI board of directors viewed its position and recommendation as being based on an overall analysis and on the totality of the information presented to and factors considered by it. In addition, in considering the factors described above, individual directors may have given different weights to different factors. After considering this information, the CPI board of directors unanimously approved and declared the advisability of the merger agreement and the merger, and recommended that CPI stockholders adopt the merger agreement.
 
This explanation of CPI’s reasons for the merger and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [l] of this proxy statement/prospectus.
 
Comtech’s Reasons for the Merger
 
Comtech’s board of directors has unanimously approved and adopted the merger agreement. In evaluating the merger, Comtech’s board of directors considered, among other things, the following key strategic benefits:
 
  •  the merger allows Comtech to strategically redeploy a significant portion of its existing cash to enhance earnings per share and stockholder value;


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  •  the merger increases the size of Comtech’s RF microwave amplifier segment and Comtech anticipates that this increased size will enhance its growth prospects and have a positive impact on Comtech’s earnings before interest, income taxes, depreciation and amortization;
 
  •  Comtech believes the merger will result in Comtech becoming a leading global supplier of vacuum electron devices (including klystrons, traveling wave tubes and power grid devices) as CPI’s vacuum electron devices and amplifiers are incorporated into products that are used in a broad array of applications and end-markets;
 
  •  Comtech believes the merger will help to further drive innovation by combining manufacturing, engineering and sales teams for Comtech’s XICOM branded-product group with CPI’s Satcom product group to take advantage of united resources which are expected to deliver new and advanced amplifiers and other products to be used in satellite communications, radar applications and electronic warfare systems;
 
  •  the complementary nature of CPI’s products, including CPI’s extensive portfolio of over 4,500 microwave and power grid devices, provides diversity to Comtech’s product portfolio and customer base;
 
  •  a material portion of CPI’s sales are derived from sales for replacements, spares and repairs, including upgraded replacements for existing sole-sourced products, which have strong related cash flows that Comtech believes will help provide more stability and predictability to its business and will assist in partially insulating Comtech from dramatic shifts in market conditions; and
 
  •  Comtech expects that the merger will allow it to combine its product offerings with those of CPI to take advantage of some customers’ preference for “one-stop shopping.”
 
In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Comtech board of directors did not find it useful, and did not attempt, to quantify, rank or otherwise assign any relative or specific weights to the factors that it considered in reaching its determination to approve the merger and the merger agreement. In addition, individual members of the Comtech board of directors may have given differing weights to different factors. The Comtech board of directors conducted an overall analysis of the factors described above, including through discussions with, and inquiry of, Comtech’s management and outside legal and financial advisors regarding certain of the matters described above.
 
Opinion of J.P. Morgan Securities Inc.
 
CPI retained J.P. Morgan as its financial advisor for the purpose of advising CPI in connection with the transactions contemplated by the merger agreement and to evaluate whether the consideration in the merger was fair, from a financial point of view, to the holders of common stock of CPI (other than The Cypress Group and its affiliates). At the meeting of the board of directors of CPI on May 7, 2010, J.P. Morgan rendered its oral opinion, subsequently confirmed in writing to the board of directors of CPI, that, as of such date and on the basis of and subject to the various factors, assumptions and limitations set forth in such written opinion, the per share merger consideration to be received by holders of CPI common stock (other than The Cypress Group and its affiliates) in the proposed merger was fair, from a financial point of view, to such holders. The J.P. Morgan written opinion, dated May 7, 2010, is sometimes referred to herein as the J.P. Morgan opinion.
 
The full text of the written opinion of J.P. Morgan, dated May 7, 2010, which sets forth, among other things, the assumptions made, procedures followed, matters considered and any limitations on the review undertaken in rendering its opinion, is attached as Annex D. The summary of J.P. Morgan’s opinion set forth in this document is qualified in its entirety by reference to the full text of the opinion. Stockholders should read this opinion carefully and in its entirety. J.P. Morgan’s opinion is directed to the board of directors of CPI, addresses only the fairness, from a financial point of view, of the consideration to be received by the holders of common stock of CPI (other than The Cypress Group and its affiliates) in the proposed merger, and does not address any other aspect of the merger. The issuance of the J.P. Morgan opinion was approved by a fairness opinion committee of J.P. Morgan. J.P. Morgan provided its advisory services and opinion for the information and assistance of the board of directors of CPI in connection with its consideration of the proposed merger. The opinion of J.P. Morgan does not constitute a recommendation as to how any stockholder should vote with respect to the proposed merger. In addition, the J.P. Morgan opinion does


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not in any manner address the prices at which CPI’s or Comtech’s common stock will trade following the date of the opinion.
 
In arriving at its opinion, J.P. Morgan, among other things:
 
  •  reviewed a draft dated May 5, 2010 of the merger agreement;
 
  •  reviewed certain publicly available business and financial information concerning CPI and Comtech and the industries in which they operate;
 
  •  compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving companies J.P. Morgan deemed relevant and the consideration received for such companies;
 
  •  compared the financial and operating performance of CPI and Comtech with publicly available information concerning certain other companies J.P. Morgan deemed relevant, and reviewed the current and historical market prices of CPI’s common stock and Comtech’s common stock and certain publicly traded securities of such other companies;
 
  •  reviewed certain internal financial analyses and forecasts prepared by or at the direction of the managements of CPI and Comtech relating to their respective businesses, as well as the estimated amount and timing of the cost savings and related expenses and synergies expected to result from the merger, referred to in this section as the “Synergies;” and
 
  •  performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.
 
J.P. Morgan also held discussions with certain members of the management of CPI and Comtech with respect to certain aspects of the merger, the past and current business operations of CPI and Comtech, the financial condition and future prospects and operations of CPI and Comtech, the effects of the merger on the financial condition and future prospects of CPI and Comtech, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.
 
In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by CPI and Comtech or otherwise reviewed by or for J.P. Morgan, and J.P. Morgan did not independently verify (nor did it assume responsibility or liability for independently verifying) any such information or its accuracy or completeness. J.P. Morgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of CPI and Comtech under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, including the Synergies, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best then-available estimates and judgments by management as to the expected future results of operations and financial condition of CPI and Comtech to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts (including the Synergies) or the assumptions on which they were based. J.P. Morgan also assumed that the merger and the other transactions contemplated by the merger agreement would have the tax consequences described in discussions with, and materials furnished to J.P. Morgan by, representatives of CPI, and would be consummated as described in the merger agreement, and that the definitive merger agreement would not differ in any material respects from the draft thereof furnished by CPI and reviewed by J.P. Morgan. J.P. Morgan also assumed that the representations and warranties made by CPI, Comtech and Merger Sub in the merger agreement and the related agreements were and would be true and correct in all respects material to its analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by CPI’s advisors with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents, authorizations and approvals necessary for the consummation of the merger will be obtained without any adverse effect on CPI and Comtech or on the contemplated benefits of the merger.
 
The J.P. Morgan opinion is necessarily based on economic, market, regulatory and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of the J.P. Morgan opinion. Subsequent developments may affect the J.P. Morgan opinion, and J.P. Morgan does not have any obligation to update, revise or


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reaffirm the J.P. Morgan opinion. The J.P. Morgan opinion is limited to the fairness, from a financial point of view, of the consideration to be received by the holders of CPI’s common stock (other than The Cypress Group and its affiliates) in the proposed merger, and J.P. Morgan has expressed no opinion as to the fairness of the merger to any person or entity, or as to the fairness of any consideration to be received by the holders of any other class of securities, creditors or other constituencies of CPI or as to the underlying decision by CPI to engage in the merger. Furthermore, J.P. Morgan has expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the merger, or any class of such persons relative to the consideration to be received by the holders of CPI’s common stock (other than The Cypress Group and its affiliates) in the merger or with respect to the fairness of any such compensation. J.P. Morgan has also expressed no opinion as to the price at which shares of CPI’s and Comtech’s common stock will trade at any future time.
 
In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methods in reaching its opinion. The following is a summary of the material financial analyses undertaken by J.P. Morgan in connection with rendering the J.P. Morgan opinion delivered to the CPI board of directors on May 7, 2010 and contained in the presentation delivered to the CPI board of directors on May 7, 2010 in connection with the rendering of such opinion. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s financial analyses. For purposes of the “CPI Financial Analyses” summarized below, the “per-share merger consideration” refers to the $16.40 implied per share value of the per-share merger consideration based on the $9.00 per-share cash, without interest, portion of the per-share merger consideration and the implied per-share value of the Comtech common stock portion of the per-share merger consideration of $7.40 on May 7, 2010.
 
Estimates
 
In performing its analysis of CPI, J.P. Morgan relied upon estimates provided by the management of CPI prepared in connection with the proposed merger for the period from October 1, 2009 through September 30, 2014, plus an extrapolation of such estimates for the period from October 1, 2014 through September 30, 2019 reviewed and approved by the management of CPI, which are referred to in this document as the “CPI Management Estimates”. In performing its analysis as it applies to Comtech, J.P. Morgan relied upon estimates provided by the management of Comtech prepared in connection with the proposed merger for the period from August 1, 2009 through July 31, 2015 which were reviewed and approved by the management of CPI, plus an extrapolation of such estimates for the period from August 1, 2015 through July 31, 2019, reviewed and approved by the management of CPI.
 
The forecasts furnished to J.P. Morgan for CPI and Comtech were prepared by the management of CPI and Comtech, respectively, in connection with the proposed merger. Neither CPI nor Comtech publicly discloses internal management forecasts of the type provided to J.P. Morgan in connection with J.P. Morgan’s analysis of the merger, and such forecasts were prepared in connection with the proposed merger and were not prepared with a view toward public disclosure. These forecasts were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of management, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates. Accordingly, actual results could vary significantly from those set forth in such forecasts.
 
CPI Financial Analyses
 
Historical Share Price Exchange Ratio Analysis; 52-Week Trading Range; 3-Month Volume-Weighted Average Price; 6-Month Volume-Weighted Average Price; Analyst Targets
 
J.P. Morgan reviewed the per share daily closing market price of CPI’s common stock and Comtech’s common stock over the three-year period ending on May 7, 2010, calculated the implied historical exchange ratios during such period by dividing the daily closing price per share of CPI’s common stock by Comtech’s common stock and identified the median of those implied historical exchange ratios for the one-month, two-month, three-month, six-


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month, one-year, two-year and three-year periods ending May 7, 2010 and the high and low of those implied exchange ratios for the three-year period ending May 7, 2010. The price implied by the offer was $16.40 per share of CPI’s common stock (based on market data as of May 7, 2010), and the exchange ratio implied by such offer price, assuming 100% Comtech common stock consideration and no cash consideration, was 0.528x based on the closing share price of Comtech’s common stock of $31.06 on May 7, 2010. The results of the implied exchange ratio analysis, assuming 100% Comtech common stock consideration and no cash consideration, (rounded to the nearest thousandth) are set forth in the table below:
 
         
Implied Exchange Ratio Analysis — Historical Period
  Implied Exchange Ratio
 
Current
    0.420 x
1-month median
    0.413 x
2-month median
    0.414 x
3-month median
    0.411 x
6-month median
    0.380 x
1-year median
    0.341 x
2-year median
    0.306 x
3-year median
    0.316 x
High
    0.498 x
Low
    0.127 x
 
J.P. Morgan reviewed the 52-week trading range of CPI’s stock price. Specifically, the reference range was $7.80 to $14.55 for the 52-week trading range ending May 7, 2010, as compared to the per share merger consideration of $16.40 (based on market data as of May 7, 2010). J.P. Morgan also reviewed the 3-months and 6-months volume-weighted average price (referred to in this section as VWAP) of CPI’s stock price. Specifically, the reference VWAPs were $13.02 for the 3-months trading range ending May 7, 2010 and $12.41 for the 6-months trading range ending May 7, 2010. Finally, J.P. Morgan reviewed Wall Street equity research analyst price targets for CPI’s stock price based on which the reference range was $15.00 to $16.00.
 
J.P. Morgan noted that all of the foregoing analyses are not valuation methodologies and that such analyses were presented merely for reference purposes.
 
Selected Publicly Traded Companies
 
Using publicly available information, J.P. Morgan compared selected financial performance of CPI with publicly available information of selected publicly traded companies engaged in businesses which J.P. Morgan deemed relevant to CPI’s business. The companies were as follows:
 
  •  Applied Signal Technology Inc.;
 
  •  Cubic Corporation;
 
  •  EMS Technologies, Inc.;
 
  •  Globecomm Systems Inc.;
 
  •  Harris Corporation;
 
  •  Herley Industries, Inc.;
 
  •  L-3 Communications Corporation;
 
  •  Rockwell Collins, Inc.; and
 
  •  ViaSat, Inc.
 
These companies were selected, among other reasons, because they share similar business characteristics to CPI based on operational and financial metrics as well as business sector participation.


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In all instances, multiples were based on closing stock prices on May 7, 2010. For each of the following analyses performed by J.P. Morgan, financial data for selected companies were based on the selected companies’ filings with the Securities and Exchange Commission and publicly available Wall Street research analysts’ estimates.
 
For each of the selected companies, J.P. Morgan calculated (i) the company’s firm value divided by its estimated earnings before interest, taxes, depreciation and amortization (referred to in this proxy statement/prospectus as EBITDA), for calendar years 2010 and 2011, which are referred to as Firm Value/2010E EBITDA Multiple and Firm Value/2011E EBITDA Multiple, respectively, and (ii) the per share closing price of such company’s price of common stock divided by the estimated earnings per share (referred to in this proxy statement/prospectus as EPS) for calendar years 2010 and 2011, which are referred to as Price/2010E Earnings Multiple and Price/2011E Earnings Multiple, respectively. For the purpose of this analysis, Firm Value of a particular company was calculated as market value of such company’s outstanding common stock (as of May 7, 2010) plus the value of such company’s indebtedness and minority interests, in-the-money options and warrants, net of option proceeds, and preferred stock, minus such company’s cash, cash equivalents and marketable securities.
 
The analysis indicated the following mean and median Firm Value and stock price multiples:
 
                                 
    Firm Value/
  Firm Value/
  Price per Share/
  Price per Share/
    2010E EBITDA   2011E EBITDA   2010E EPS   2011E EPS
 
Median
    6.7 x     7.0 x     16.4 x     12.3 x
Mean
    7.1 x     7.2 x     15.4 x     13.0 x
 
Based on the results of this analysis and on other factors J.P. Morgan considered appropriate, J.P. Morgan applied (i) a Firm Value/2010E EBITDA ratio range of 6.0x to 8.0x and a Firm Value/2011E EBITDA ratio range of 5.5x to 7.5x and (ii) a Price/2010E Earnings Multiple range of 11.0x to 15.0x and a Price/2011E Earnings Multiple range of 10.0x to 14.0x to CPI’s management projections of CPI’s 2010 and 2011 EBITDA and EPS, respectively, and derived the following implied per share equity value ranges for CPI’s common stock, as compared to the value of the per share merger consideration (rounded to the nearest $0.25):
 
                 
    Implied per Share
  Per Share Merger
Valuation Basis
  Equity Value Ranges   Consideration
 
Firm Value as multiple of 2010E EBITDA
  $ 10.25 to $16.00          
Firm Value as multiple of 2011E EBITDA
  $ 9.75 to $15.75     $ 16.40  (1)
Price per Share as multiple of 2010E EPS
  $ 12.75 to $17.25          
Price per Share as multiple of 2011E EPS
  $ 12.50 to $17.50          
 
 
(1) Based on market data as of May 7, 2010
 
No company used in this analysis is identical or directly comparable to CPI. Accordingly, an evaluation of the results of this analysis necessarily involves complex considerations and judgments concerning differences in financial, operating, and business sector characteristics, and other factors that could affect the public trading or other values of the companies to which CPI is compared.


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Precedent Transaction Multiples Analysis
 
Using publicly available information, J.P. Morgan examined the following selected transactions involving companies or businesses which J.P. Morgan judged to be analogous or similar to CPI’s business.
 
         
        Announcement
Acquiror
 
Target
  Date
 
Crane Co. 
  Merrimac Industries, Inc.   12/23/09
Cobham plc
  M/A-Com. Technology Solutions   05/13/08
Comtech Telecommunications Corp. 
  Radyne Corporation   05/12/08
Cobham plc
  Surveillance and Attack Business (BAE Systems)   12/19/07
Veritas Capital
  Aeroflex Inc.   05/25/07
Cobham plc
  Remec Defense & Space Unit   12/21/04
Cypress Group
  Communications & Power Industries, Inc.   12/01/03
Crane Co. 
  Signal Technology Corporation   04/16/03
 
For each of the selected transactions, to the extent information was publicly available, J.P. Morgan calculated the target’s firm value implied by the transaction divided by its EBITDA for the last twelve month period, which is referred to in proxy statement/prospectus as LTM, prior to announcement of the transaction. The analysis indicated the following:
 
         
Transaction Group
  Median  
 
Firm Value/LTM EBITDA
    9.1x  
 
Based on the results of this analysis and other factors that J.P. Morgan considered appropriate, J.P. Morgan applied the range of 7.5x to 9.5x LTM EBITDA multiples to CPI’s LTM EBITDA and derived an implied per share equity value range for CPI’s common stock of $13.00 to $18.25.
 
No company, business or transaction used in this analysis is identical or directly comparable to CPI or the merger. Accordingly, an evaluation of the results of this analysis necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which CPI and the merger were compared.
 
Discounted Cash Flow Analysis
 
J.P. Morgan conducted a discounted cash flow analysis for CPI for the purpose of determining an implied fully diluted equity value per share for CPI’s common stock on a stand-alone basis (i.e., without Synergies). A discounted cash flow analysis is a method of evaluating an asset using estimates of the future unlevered free cash flows generated by assets and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value.” “Present value” refers to the current value of one or more future unlevered free cash flows from the asset, which J.P. Morgan refers to as that asset’s cash flows, and is obtained by discounting those cash flows back to the present using a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity cost of capital, capitalized returns and other appropriate factors. “Terminal value” refers to the capitalized value of all cash flows from an asset for periods beyond the final forecast period.
 
J.P. Morgan calculated the value of the standalone, unlevered free cash flows that CPI is expected to generate from July 1, 2010 through September 30, 2014 based upon CPI Management Estimates and the value of the unlevered free cash flows that CPI is expected to generate from October 1, 2014 through September 30, 2019 based upon extrapolations reviewed and approved by CPI’s management, calculated assuming that the projected unlevered free cash flows for both periods occur at the middle of each annual period, and then discounted such cash flows to present value as of June 30, 2010 using a range of discount rates from 11.0% to 12.0%. This range of discount rates was chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of CPI which included, among other considerations, an analysis of the cost of equity and cost of debt of CPI using publicly available information and J.P. Morgan’s judgment. J.P. Morgan also calculated a range of Terminal Values for CPI,


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as of September 30, 2019, by applying a perpetual revenue growth rate ranging from 2.0% to 3.0%, which were discounted to present value as of June 30, 2010 using a range of discount rates from 11.0% to 12.0%.
 
The implied per share equity value range of CPI’s common stock that J.P. Morgan derived from such analyses, as compared to the implied price per share in the proposed merger is set forth below (rounded to the nearest $0.25):
 
     
Implied Per Share Equity Value Range
 
Per Share Merger Consideration
 
$15.00 to $19.00   $16.40 (1)
 
 
(1) Based on market data as of May 7, 2010
 
Comtech Financial Analyses
 
52-Week Trading Range; 3-Month Volume-Weighted Average Price; 6-Month Volume-Weighted Average Price; Analyst Targets
 
J.P. Morgan reviewed the 52-week trading range of Comtech’s stock price. Specifically, the reference range was $26.65 to $38.17 for the 52-week trading range ending May 7, 2010, as compared to the price per share of $31.06 as of May 7, 2010. J.P. Morgan also reviewed the 3-months and 6-months VWAP of Comtech’s stock price. Specifically, the reference VWAPs were $31.54 for the 3-months trading range ending May 7, 2010 and $32.73 for the 6-months trading range ending May 7, 2010. Finally, J.P. Morgan reviewed Wall Street equity research analyst price targets for Comtech’s stock price based on which the reference range was $38.00 to $48.00.
 
J.P. Morgan noted that all of the foregoing analyses are not valuation methodologies and that such analyses were presented merely for reference purposes.
 
Selected Publicly Traded Companies
 
J.P. Morgan compared the financial performance of Comtech with publicly available information on the same set of selected publicly traded companies J.P. Morgan considered in the context of the Selected Publicly Traded Companies analysis relating to CPI which is described above. J.P. Morgan’s determination of the appropriateness of this set of publicly traded companies in the context of comparison with Comtech was based on the same reasoning as was applied in the determination of its use in the context of comparison with CPI.
 
Based on the results of its analysis and on other factors J.P. Morgan considered appropriate, J.P. Morgan applied (i) a Firm Value/2010E EBITDA ratio range of 6.5x to 8.5x and a Firm Value/2011E EBITDA ratio range of 6.0x to 8.0x and (ii) a Price/2010E Earnings Multiple range of 15.0x to 20.0x and a Price/2011E Earnings Multiple range of 13.0x to 18.0x to Comtech’s management projections of Comtech’s 2010 and 2011 EBITDA and EPS, respectively, which were reviewed and approved by the management of CPI, and derived the following implied per share equity value range for Comtech’s common stock, as compared to the value of Comtech’s common stock on May 7, 2010 (rounded to the nearest $0.25):
 
                 
        Comtech per Share
    Implied per Share
  Price on May 7,
Valuation Basis
  Equity Value Range   2010
 
Firm Value as multiple of 2010E EBITDA
  $ 39.50 to $46.50     $ 31.06  
Firm Value as multiple of 2011E EBITDA
  $ 40.50 to $48.50          
Price per Share as multiple of 2010E EPS
  $ 30.75 to $41.00          
Price per Share as multiple of 2011E EPS
  $ 30.50 to $42.00          
 
No company used in this analysis is identical or directly comparable to Comtech. Accordingly, an evaluation of the results of this analysis necessarily involves complex considerations and judgments concerning differences in financial, operating, and business sector characteristics, and other factors that could affect the public trading or other values of the companies to which Comtech is compared.


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Discounted Cash Flow
 
J.P. Morgan calculated the value of the standalone, unlevered free cash flows that Comtech is expected to generate from July 1, 2010 through July 31, 2015 based on the estimates provided by Comtech’s management, which were reviewed and approved by the management of CPI, and the value of the unlevered free cash flows that Comtech is expected to generate for August 1, 2015 through July 31, 2019 based upon extrapolations, which were reviewed and approved by the management of CPI, calculated assuming that the projected unlevered free cash flows for both periods occur at the middle of each annual period, and then discounted such cash flows to present value as of June 30, 2010 using a range of discount rates from 10.5% to 11.5%. This range of discount rates was chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of Comtech, which included, among other considerations, an analysis of the cost of equity and cost of debt of Comtech using publicly available information and J.P. Morgan’s judgment. J.P. Morgan also calculated a range of Terminal Values for Comtech, as of July 31, 2019, by applying a perpetual revenue growth rate ranging from 2.0% to 3.0%, which were discounted to present value as of June 30, 2010 using a range of discount rates from 11.0% to 12.0%.
 
The implied per share equity value range of Comtech’s common stock that J.P. Morgan derived from such analyses, as compared to the per share price of Comtech’s common stock on May 7, 2010 is set forth below (rounded to the nearest $0.25):
 
     
Implied per Share Equity Value Range
 
Comtech per Share Price on May 7, 2010
 
$44.25 to $50.00   $31.06
 
Value Creation Analysis
 
Based on discounted cash flow equity value:  J.P. Morgan conducted a value creation analysis that compared the implied fully diluted equity value of CPI’s common stock derived from the midpoint of the discounted cash flow analysis on a stand-alone basis using the CPI Management Estimates to the implied fully diluted equity value of CPI’s common stock pro forma for the merger together with the cash portion of the transaction consideration pursuant to the merger agreement. The pro forma implied fully diluted equity value was based on CPI’s pro forma ownership (based on a 14%/86% CPI/Comtech ownership split, calculated assuming Comtech’s fully diluted shares and net debt (based on Comtech’s share price of $31.06 as of May 7, 2010) and including the shares to be issued to CPI pursuant to the merger agreement) of: (1) (a) the midpoint of Comtech’s stand-alone discounted cash flow implied equity value based on the forecast provided by the management of Comtech, which was reviewed and approved by the management of CPI, plus (b) the midpoint of CPI’s stand-alone discounted cash flow implied equity value based on the CPI Management Estimates, plus (c) the present value of the Synergies (calculated assuming $10 million of annual synergies with a 36% tax rate discounted at 11.0% and growing at 2.5% per year in perpetuity), less (d) cash consideration received by CPI stockholders pursuant to the merger agreement, less (e) estimated transaction expenses, divided by (2) Comtech’s fully diluted shares outstanding (based on Comtech’s share price of $31.06 as of May 7, 2010) pro forma to include the additional shares to be issued as consideration pursuant to the merger agreement.
 
Based on current publicly traded equity values:  J.P. Morgan conducted a value creation analysis that compared the publicly traded fully diluted equity value of CPI’s common stock to the implied fully diluted equity value of CPI’s common stock pro forma for the merger together with the cash portion of the transaction consideration pursuant to the merger agreement. The pro forma implied fully diluted equity value was based on CPI’s pro forma ownership (based on a 14%/86% CPI/ Comtech ownership split, calculated assuming Comtech’s fully diluted shares and net debt (based on Comtech’s share price of $31.06 as of May 7, 2010) and including the shares to be issued to CPI pursuant to the merger agreement) of: (1) (a) Comtech’s publicly traded fully diluted equity value as of May 7, 2010 plus (b) CPI’s publicly traded fully diluted equity value as of May 7, 2010, plus (c) the present value of the Synergies (calculated assuming $10 million of annual synergies with a 36% tax rate discounted at 11.0% and growing at 2.5% per year in perpetuity), less (d) cash consideration received by CPI stockholders pursuant to the merger agreement, less (e) estimated transaction expenses, divided by (2) Comtech’s fully diluted shares outstanding (based on Comtech’s share price of $31.06 as of May 7, 2010 ) pro forma to include the additional shares to be issued as consideration pursuant to the merger agreement.


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The value creation analyses yielded the following pro forma implied accretion to CPI’s fully diluted equity value:
 
         
    Implied CPI Equity
Valuation Metric
  Value Accretion
 
Midpoint of discounted cash flow Equity Value
    24.0 %
Publicly Traded Equity Value
    27.9 %
 
The foregoing summary of the material financial analyses does not purport to be a complete description of the analyses or data presented or considered by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of CPI. In arriving at its opinion, J.P. Morgan reviewed various financial and operational metrics for both CPI and Comtech, including forecasts with respect to CPI and Comtech, which were made available to J.P. Morgan by or on behalf of CPI and Comtech. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion. Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold. The consideration and other terms of the merger were determined through arm’s-length negotiations between CPI and Comtech.
 
As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes. J.P. Morgan was selected on the basis of such experience and its familiarity with CPI, Comtech and other companies in the industries in which they operate to advise CPI in connection with a potential transaction such as the merger and to potentially deliver a fairness opinion to the board of directors of CPI addressing the fairness from a financial point of view of the consideration in such a transaction to the holders of common stock of CPI (other than The Cypress Group and its affiliates) as of the date of such opinion.
 
For services rendered in connection with the merger (including the delivery of its opinion), CPI has agreed to pay J.P. Morgan a fee estimated to be approximately $5.0 million, a substantial portion of which will become payable only if the proposed merger is consummated. Finally, CPI has agreed to reimburse J.P. Morgan for certain expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities, including liabilities arising under the federal securities laws.
 
During the two years preceding the date of the J.P. Morgan opinion, neither J.P. Morgan nor any of its affiliates has had any other significant financial advisory or other significant commercial or investment banking relationships with CPI. J.P. Morgan and its affiliates have performed in the past, and continue to perform, certain commercial or investment banking services for Comtech and its affiliates, all for customary compensation or other financial benefits including, during the last two years, acting as a bookrunner in May 2009 for Comtech’s $200,000,000 aggregate principal amount of 3.0% Convertible Senior Notes due 2029. In the ordinary course of its businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities of CPI and Comtech for their own accounts or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities.


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Opinion of Moelis & Company LLC
 
Pursuant to a letter agreement dated April 7, 2010, CPI engaged Moelis to act as financial advisor to the special committee of CPI’s board of directors in connection with the merger or combination of CPI with a third party, or a third party’s acquisition of all or substantially all of CPI’s assets, properties or business. Subsequently, the special committee asked Moelis to provide it with an opinion as to the fairness, from a financial point of view, to CPI’s stockholders (other than The Cypress Group and its affiliates, Comtech, Merger Sub or any other wholly owned subsidiary of Comtech to the extent any such entities own shares of CPI common stock, collectively referred to herein as the excluded holders) of the per share merger consideration to be received by such stockholders pursuant to the terms and subject to the conditions set forth in the merger agreement.
 
On May 7, 2010, at a meeting of the special committee held to evaluate the merger agreement and the transactions contemplated thereby, Moelis delivered to the special committee its oral opinion, subsequently confirmed by delivery of a written opinion dated May 7, 2010, that, based upon and subject to the various factors, assumptions, limitations and qualifications set forth in the opinion, as of the date of the opinion, the per share merger consideration to be received by CPI’s stockholders, pursuant to the terms and subject to the conditions set forth in the merger agreement, is fair, from a financial point of view, to CPI’s stockholders, other than the excluded holders.
 
The full text of Moelis’ opinion is attached as Annex E to this proxy statement/prospectus and is incorporated herein by reference. This summary is qualified in its entirety by reference to the full text of the opinion. The full text of the opinion describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Moelis in connection with such opinion.
 
Stockholders are encouraged to read the opinion carefully in its entirety. Moelis’ opinion is directed to the special committee of CPI’s board of directors and addresses only the fairness from a financial point of view of the merger consideration to be received by CPI stockholders (other than the excluded holders). The special committee has not asked Moelis to address, and its opinion does not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of CPI, other than the holders of CPI common stock.
 
Moelis’ opinion does not address CPI’s underlying business decision to effect the transactions contemplated by the merger agreement or the relative merits of the merger as compared to any alternative business strategies or transactions that might be available to CPI, and it does not constitute a recommendation to any CPI stockholder as to how such stockholder should vote with respect to the merger or any other matter. At the direction of the special committee, Moelis was not asked to, nor did it, offer any opinion as to the material terms of the merger agreement or the form of the merger. Moelis expressed no opinion as to what the value of Comtech’s common stock will be when it is issued pursuant to the merger agreement or the prices at which Comtech’s common stock will trade in the future.
 
In addition, Moelis did not express any opinion as to the fairness of the amount or nature of any compensation to be received by any of CPI’s officers, directors or employees, or any class of such persons, relative to the merger consideration.
 
Moelis’ opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Moelis as of, the date of Moelis’ opinion. Moelis has also assumed, with the consent of the special committee, that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without the imposition of any material delay, limitation, restriction, divestiture or condition that would have an adverse effect on CPI or Comtech or on the expected benefits of the merger.
 
Moelis has also assumed, with the consent of the special committee, that the final executed form of the merger agreement does not differ in any material respect from the draft that Moelis examined, and that Comtech and CPI will comply with all the material terms of the merger agreement without amendment thereto and all conditions to the consummation of the merger will be satisfied without waiver by any party of the conditions or obligations thereto. Moelis has not been authorized to solicit, and has not solicited, indications of interest in a possible transaction with CPI from any party. The opinion was approved by a Moelis fairness opinion committee.


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In arriving at the conclusions reached in its opinion, Moelis has, among other things:
 
  •  reviewed certain publicly available business and financial information relating to CPI and Comtech that Moelis deemed relevant;
 
  •  reviewed certain internal information relating to the business, including financial forecasts, earnings, cash flow, assets, liabilities and prospects of CPI, furnished to Moelis by CPI;
 
  •  reviewed certain internal information relating to the business, including financial forecasts, earnings, cash flow, assets, liabilities and prospects of Comtech, furnished to Moelis by Comtech;
 
  •  conducted discussions with members of senior management and representatives of CPI and Comtech concerning the matters described in the foregoing bullets, as well as their respective businesses and prospects before and after giving effect to the merger;
 
  •  reviewed publicly available financial and stock market data, including valuation multiples, for CPI and Comtech and compared them with those of certain other companies in lines of business that Moelis deemed relevant;
 
  •  compared the proposed financial terms of the merger with the financial terms of certain other transactions that Moelis deemed relevant;
 
  •  considered certain potential pro forma effects of the merger;
 
  •  reviewed a draft of the merger agreement, dated May 6, 2010 and a draft of the voting and standstill agreement, dated May 6, 2010;
 
  •  participated in certain discussions and negotiations among representatives of CPI and Comtech and their financial and legal advisors; and
 
  •  conducted such other financial studies and analyses and took into account such other information as Moelis deemed appropriate.
 
In connection with its review, Moelis did not assume any responsibility for independent verification of any of the information supplied to, discussed with, or reviewed by it for the purpose of its opinion and, with the consent of the special committee, relied on such information being complete and accurate in all material respects. In addition, at the direction of the special committee, Moelis has not made any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of CPI or Comtech, nor has Moelis been furnished with any such evaluation or appraisal. With respect to the forecasted financial information referred to above, Moelis assumed, with the consent of the special committee, that such information was reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of CPI or Comtech as to the future performance of their respective companies and that such future financial results will be achieved at the times and in the amounts projected by management. Moelis was not requested to, and did not, express any opinion regarding any legal, tax, accounting or financial reporting matters, including the tax effect of the merger on CPI or its stockholders.
 
Financial Analyses
 
The following is a summary of the material financial analyses presented by Moelis to the special committee at its meeting held on May 7, 2010 in connection with the delivery of the oral opinion of Moelis at such meeting and its subsequent written opinion, dated May 7, 2010.
 
The summary set forth below does not purport to be a complete description of the analyses performed and factors considered by Moelis in arriving at its opinion. The preparation of a fairness opinion is a complex process involving various determinations and subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, such a process is not readily susceptible to partial analysis or summary description. With respect to the comparable public companies analysis and the precedent transactions analysis summarized below, no company, business or transaction used in such analyses as a comparison is either identical or directly comparable to CPI or the merger, nor is an evaluation of


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such analyses entirely mathematical. These analyses necessarily involve complex considerations and judgments concerning financial and operating characteristics and other factors.
 
Moelis did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, nor did Moelis attribute any particular weight to any analysis or factor, but rather arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole, and believes that the totality of the factors considered and analyses it performed in connection with its opinion operated collectively to support its determination as to the fairness from a financial point of view as of the date of its opinion of the merger consideration to be received by the CPI stockholders, other than the excluded holders.
 
Some of the summaries of the financial analyses below include information presented in tabular format. In order to fully understand Moelis’ analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analyses performed by Moelis. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Moelis’ analyses.
 
The analyses performed by Moelis include analyses based upon forecasts of future results, which results might be significantly more or less favorable than those upon which Moelis’ analyses were based. The analyses do not purport to be appraisals or to reflect the prices at which CPI’s or Comtech’s shares of common stock might trade at any time following the announcement of the merger. Because the analyses are inherently subject to uncertainty, being based upon numerous factors and events, including, without limitation, factors relating to general economic and competitive conditions beyond the control of the parties or their respective advisors, neither Moelis nor any other person assumes responsibility if future results or actual values are materially different from those contemplated below.
 
CPI Financial Analyses
 
In its evaluation of the proposed transaction, Moelis selected three principal valuation methodologies (specifically, a comparable public companies analysis, a precedent transactions analysis, and a discounted cash flow analysis), each of which is summarized on the following pages. Set forth in the table immediately below are the derived per share valuation ranges resulting from the application, subject to certain assumptions, of the three valuation methodologies that Moelis selected. The implied per share value of the merger consideration is $16.40 per CPI share based on Comtech’s closing stock price as of May 7, 2010 of $31.06 per share.
 
         
Valuation Methodology
  Range  
 
Comparable public companies analysis
  $ 11.96 - $15.75  
Precedent transactions analysis
  $ 11.21 - $16.73  
Discounted cash flow analysis
  $ 10.82 - $17.61  
 
Comparable Public Companies Analysis
 
Moelis compared certain financial information of the company with corresponding financial information of similar public companies.
 
Moelis selected publicly traded companies that shared similar characteristics with CPI’s business, operations and size, and for which relevant financial information was publicly available. The list of selected companies is set forth below:
 
  •  Anaren, Inc.;
 
  •  Comtech Telecommunications Corp.;
 
  •  e2v Technologies plc;
 
  •  EMS Technologies, Inc.;
 
  •  Globecomm Systems Inc.;


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  •  Herley Industries, Inc.;
 
  •  Spectrum Control, Inc.; and
 
  •  Teledyne Technologies Incorporated.
 
As part of its comparable public companies analysis, Moelis calculated and analyzed each selected company’s ratio of its enterprise value (calculated as fully diluted equity value based on closing stock prices as of May 7, 2010, including in-the-money stock options and in-the-money convertible preferred stock or debt, plus debt, minority interest, preferred stock and out-of-the money convertibles, less cash as of each company’s most recently reported quarter end) to EBITDA for the most recent reported LTM and calendar years 2010 and 2011, each of which is referred to in this section as CY 2010 and 2011 based on consensus analyst estimates compiled by Thomson Reuters. In addition, Moelis calculated and analyzed each selected company’s ratio of its equity value to its earnings for CY 2010 and 2011, also based on such analyst estimates. The following summarizes the results of these calculations:
 
                 
    Mean     Median  
 
Enterprise Value/ EBITDA
               
LTM
    7.7x       6.8x  
CY2010E
    6.0x       6.1x  
CY2011E
    5.4x       5.0x  
Equity Value/ Earnings
               
CY2010E
    14.2x       13.9x  
CY2011E
    11.8x       12.7x  
 
Moelis selected multiple ranges for each metric based on the foregoing and in consideration of CPI’s business, operations and size relative to its peers. Moelis used selected ranges of 7.0x – 8.0x, 6.5x – 7.5x and 6.0x – 7.0x for enterprise value as a multiple of LTM EBITDA, CY2010E EBITDA and CY2011E EBITDA, respectively. Moelis used selected ranges of 12.5x – 14.5x and 11.0x – 13.0x for Equity Value as a multiple CY2010E Earnings and CY2011E Earnings, respectively. Moelis applied the selected ranges to the relevant statistics for CPI using projections for CY2010 and CY2011 prepared by CPI management and calculated an implied range of CPI common stock prices. This resulted in a valuation range for CPI of $11.96 to $15.75 per share. Moelis noted that the merger consideration of $16.40 per CPI share based on Comtech’s closing stock price as of May 7, 2010 of $31.06 per share exceeded such valuation range.
 
Precedent Transactions Analysis
 
Moelis compared selected financial and transaction metrics of CPI and the merger with similar data of relevant transactions in the defense technologies sectors. The most comparable of these transactions as determined by business profile and market environment were Crane Co.’s acquisition of Merrimac Industries, Inc., Cobham plc’s acquisition of M/A-Com (a subsidiary of Tyco), and Cypress Holdings’ acquisition of Communications and Power Industries.
 
For each of the precedent transactions, Moelis calculated valuation multiples based on information that was publicly available, focusing on the ratios of enterprise value to EBITDA and enterprise value to revenue for the identified target company for the last reported LTM period as of the announcement date of the transaction.
 


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Date Announced
 
Acquiror
 
Target
 
03/30/10
  Microsemi Corporation   White Electronics Designs Corporation
12/23/09
  Crane Co.    Merrimac Industries, Inc.*
04/01/09
  Rockwell Collins, Inc.   DataPath, Inc.
05/13/08
  Cobham plc   M/A-Com Technology Solutions (Subsidiary of Tyco)*
05/10/08
  Comtech Telecommunications Corp.   Radyne Corporation
06/15/07
  AVX Corp.   American Technological Ceramics Corp.
05/22/07
  Veritas Capital   Aeroflex Inc.
03/03/05
  Radyne Corporation   Xicom Technology, Inc.
12/20/04
  Cobham plc   REMEC Defense & Space
07/08/04
  Teledyne   Celeritek Defense Electronic Business
04/24/04
  Smiths Group   TRAK Communications Inc.
11/17/03
  Cypress Holdings   Communications and Power Industries, Inc.* (Predecessor to CPI)
04/16/03
  Crane Co.    Signal Technology Corporation
 
 
* Most relevant precedent transactions
 
         
All Precedent Transactions:
  Enterprise Value/LTM EBITDA
 
Mean**
    10.0x  
Median**
    10.1x  
         
Most Relevant Precedent Transactions:
       
         
Mean
    6.8x  
Median
    6.8x  
 
 
** Excludes Radyne acquisition of Xicom, which was deemed to be an outlier due to the fact that Xicom did not have material EBITDA.
 
Based on the foregoing precedent transactions analysis, Moelis selected a range of 6.5x – 8.5x for enterprise value as a multiple of LTM EBITDA and derived a valuation range for CPI of $11.21 to $16.73 per share. Moelis noted that the merger consideration of $16.40 per CPI share based on Comtech’s closing stock price as of May 7, 2010 of $31.06 per share was within such valuation range.
 
Discounted Cash Flow Analysis
 
Moelis conducted a discounted cash flow, or DCF, analysis of CPI to calculate a range of implied equity values for CPI. A DCF analysis is a method of evaluating an asset using estimates of the future unlevered free cash flows generated by assets and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value.” “Present value” refers to the current value of one or more future cash payments for the asset, which Moelis refers to as that asset’s free cash flows, and is obtained by discounting those free cash flows back to the present using a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity costs of capital, capitalized returns and other appropriate factors. “Terminal value” refers to the capitalized value of all free cash flows from an asset for periods beyond the final forecast period.
 
Using projections provided by CPI management, Moelis performed a DCF analysis utilizing the after-tax unlevered free cash flows for the fiscal years 2011 to 2014, applying the year-end convention and discount rates ranging from 12.5% to 15.0% based on relevant metrics for the selected companies referred to above under “— Comparable Public Companies Analysis.” Moelis computed a terminal value based on the perpetuity growth methodology, and selected a perpetuity growth range of 3.00% to 4.00%.

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Based on the foregoing, Moelis derived a valuation range of $10.82 to $17.61 per share. Moelis noted that the merger consideration of $16.40 per CPI share based on Comtech’s closing stock price as of May 7, 2010 of $31.06 per share was within such valuation range.
 
Comtech Financial Analyses
 
Comparable Public Companies Analysis
 
To assess the fairness of the public stock portion of the merger consideration offered in connection with the proposed transaction, Moelis derived a valuation range for Comtech using a comparable public company analysis.
 
Moelis selected publicly traded companies that shared similar characteristics with Comtech’s business, operations and size, and for which relevant financial information was publicly available. The list of selected companies is set forth below:
 
  •  ADC Telecommunications, Inc.;
 
  •  Cobham plc;
 
  •  EMS Technologies, Inc.;
 
  •  Elbit Systems Ltd.;
 
  •  Harris Corp.;
 
  •  L-3 Communications; and
 
  •  ViaSat, Inc.
 
As part of its comparable public companies analysis, Moelis calculated and analyzed each selected company’s ratio of its enterprise value to EBITDA for the LTM and CY 2010 and 2011 based on consensus analyst estimates compiled by Thomson Reuters. In addition, Moelis calculated and analyzed each selected company’s ratio of its equity value to its earnings for CY 2010 and 2011, also based on such analyst estimates. The following summarizes the results of these calculations:
 
                 
    Mean     Median  
 
Enterprise Value/ EBITDA
               
LTM(1)
    7.0x       7.3x  
CY2010E
    7.0x       6.7x  
CY2011E
    6.4x       6.4x  
Equity Value/Earnings
               
CY2010E
    13.5x       12.2x  
CY2011E
    12.3x       10.8x  
 
 
(1) LTM EBITDA multiple median and mean excludes ViaSat, Inc. which was deemed to be an outlier
 
Moelis selected multiple ranges for each metric based on the foregoing and in consideration of Comtech’s business, operations and size relative to its peers. Moelis used selected ranges of 7.5x - 8.5x, 6.5x - 7.5x and 5.5x - 7.0x for enterprise value as a multiple of LTM EBITDA, CY2010E EBITDA and CY2011E EBITDA, respectively. Moelis used selected ranges of 15.0x - 17.0x and 13.0x - 15.0x for Equity Value as a multiple CY2010E Earnings and CY2011E Earnings, respectively. Moelis applied the selected ranges to the relevant statistics for Comtech using projections for CY2010 and CY2011 prepared by Comtech management and calculated an implied range of Comtech common stock prices. This resulted in a valuation range for Comtech of $35.00 to $51.16 per share. In connection with its analysis, Moelis noted that the closing price of Comtech’s stock on May 7, 2010 was $31.06 per share.


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Combination Analysis
 
Moelis analyzed the pro forma impact of the merger on Comtech’s earnings per share utilizing projections and financial information provided by management of each of CPI and Comtech. This analysis is important given the form of consideration being offered by Comtech to CPI stockholders. Moelis assumed, among other things, that (i) CPI’s existing debt would be refinanced and (ii) the consideration to be received by holders of shares of CPI common stock pursuant to the merger was $9.00 per share in cash and an estimated $7.40 per share in Comtech common stock, based on an conversion ratio of 0.2382 shares of Comtech common stock per share of CPI common stock and the May 7, 2010 closing price of Comtech common stock of $31.06 per share. See “The Merger Agreement — Merger Consideration; Conversion or Cancellation of Shares in the Merger — Merger Consideration” for a description of the conversion ratio contemplated by the merger agreement.
 
Based on this analysis, Moelis observed that the merger would result in earnings per share accretion for Comtech stockholders in 2010. For 2011, Moelis observed that the merger would result in earnings per share accretion as well. In each case, the analysis excluded one-time charges associated with the transaction. This accretion, which was determined on a pre-synergy basis, implies that Comtech would realize an increase in earnings that could result in an increase in the price of Comtech’s stock and indicates that CPI stockholders who will become stockholders of Comtech may also realize the benefits of the transaction after the consummation of the merger.
 
Other Information
 
The consideration to be paid pursuant to the merger agreement was determined through arm’s-length negotiations between CPI and Comtech and was approved by each company’s board of directors. Moelis provided advice to the special committee of the CPI board of directors during these negotiations, however, Moelis did not recommend any specific consideration to the special committee or suggest that any specific consideration constituted the only appropriate consideration for a transaction.
 
The merger consideration was determined through negotiations among CPI and its representatives, on the one hand, and Comtech and its representatives, on the other hand, and the decision by the CPI board of directors and the special committee to approve, adopt and authorize the merger agreement was solely that of each of the CPI board of directors and the special committee. The Moelis opinion and financial analyses, taken together, represented only one of many factors considered by each of the CPI board of directors and the special committee in its evaluation of the merger and was not determinative of the views of the CPI board of directors, the special committee or CPI management with respect to the merger, the merger consideration or whether the CPI board of directors or special committee would have been willing to agree to different merger consideration.
 
Pursuant to the terms of Moelis’ engagement as financial advisor to the special committee, CPI agreed to pay Moelis a retainer fee of up to $250,000, which would be offset on a one-time basis against the opinion fee of $800,000, which became payable upon the delivery of the Moelis opinion described above, regardless of the conclusion reached in such opinion. In the event Moelis renders more than one opinion, CPI has agreed to pay an opinion fee of $400,000 for each such subsequent opinion promptly upon Moelis having completed the customary work that is appropriate to render each such opinion, regardless of the conclusion reached in such opinion, and any such subsequent opinion fee would be credited against the subsequent transaction fee referenced below. In addition, CPI has agreed to pay Moelis a nonrefundable post-signing retainer fee of $150,000, payable promptly upon CPI’s decision to solicit alternative proposals to the merger agreement during the term of its engagement with Moelis. Any payment made in connection with such post-signing retainer fee would be credited against the subsequent transaction fee described below.
 
If during the term of CPI’s engagement with Moelis, CPI enters into an agreement, other than the merger agreement with Comtech, (i) to merge or otherwise combine CPI with a third party or (ii) that provides for the acquisition by a third party of all or substantially all of the assets, properties or business of CPI, CPI has agreed to pay Moelis a subsequent transaction fee payable at the closing of such transaction equal to 2.0% of the excess (if any) of the transaction value of such closed transaction over the transaction value determined with respect to the merger agreement.


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In addition, CPI has agreed to indemnify Moelis for certain liabilities arising out of and reimburse Moelis for certain expenses in connection with its engagement.
 
The special committee retained Moelis based upon Moelis’ experience and knowledge. Moelis is an investment banking enterprise with substantial experience in transactions similar to the merger. Moelis, as part of its investment banking business, is continually engaged in the valuation of businesses and securities in connection with business combinations and acquisitions and for other purposes.
 
Certain Illustrative Financial Projections Provided by Comtech
 
During the course of the negotiations between Comtech and CPI, Comtech supplied CPI, its financial advisors and the Cypress Group stockholders with certain business and financial information that was not publicly available, including certain illustrative financial projections on a standalone basis.
 
The illustrative financial projections presented below have been prepared by, and are the responsibility of, the management of Comtech. The illustrative financial projections were not prepared in connection with a detailed analysis of the fundamentals of Comtech’s business and assets nor were they prepared on a basis consistent with the historical accounting policies included in the section titled “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” contained in Comtech’s Annual Report on Form 10-K for the year ended July 31, 2009, which is incorporated by reference in this proxy statement/prospectus. For more information, see the section titled “Where you Can Find More Information” beginning on page [l] of this proxy statement/prospectus.
 
The summary of the illustrative financial projections is included in this proxy statement/prospectus only because this information was exchanged between Comtech and CPI, their financial advisors and the Cypress Group stockholders in connection with the proposed merger. The inclusion of the summary of illustrative financial projections should not be regarded as an indication that either Comtech or CPI considered the illustrative financial projections to be material, and the summary is not being included in this proxy statement/prospectus for the purpose of influencing your decision whether to vote for the adoption of the merger agreement. Such illustrative financial projections were neither prepared with a view to public disclosure, nor were such illustrative financial projections prepared in compliance with United States generally accepted accounting principles or with published guidelines of the SEC or the American Institute of Certified Public Accountants regarding financial projections. Comtech’s independent public registered accounting firm has not examined or compiled any of the illustrative financial projections, expressed any conclusion or provided any form of assurance with respect to the illustrative financial projections and, accordingly, assumes no responsibility for them.
 
Comtech cautions you that the illustrative financial projections are speculative in nature and based upon subjective decisions and assumptions. The illustrative financial projections were prepared as of March 12, 2010 and do not reflect actual results through Comtech’s most recent quarter ended April 30, 2010, nor were they updated to reflect Comtech’s publicly issued guidance on June 3, 2010. The illustrative financial projections were not prepared with a view toward public disclosure and are inherently subject to uncertainty, being based upon numerous factors and events beyond the control of the parties and their respective advisors, and the inclusion of this information should not be regarded as an indication that any of Comtech, CPI or any recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.
 
While presented with numerical specificity, the illustrative financial projections are necessarily speculative given the time periods involved and are intended to show the impact of a given revenue and EBITDA growth rate for illustrative purposes. No specific estimates and assumptions were utilized relating to industry performance and competition, general business, economic, market and financial conditions, or any additional matters specific to Comtech’s businesses, all of which are difficult to predict and many of which are beyond Comtech’s control. These illustrative assumptions are likely to be different than actual results for any number of reasons, including general economic conditions, competition and the risks discussed in this proxy statement/prospectus under the section titled “Risk Factors” beginning on page [l] of this proxy statement/prospectus and the risk factors found under Part I, Item IA, “Risk Factors” in Comtech’s Annual Report on Form 10-K for the year ended July 31, 2009.
 
Since the illustrative financial projections cover multiple years, such information by its nature becomes less meaningful and reliable with each successive year. The illustrative financial projections also do not take into


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account any circumstances or events occurring after the date on which they were prepared and do not give effect to the transactions contemplated by the merger agreement, including the merger. Accordingly, there can be no assurance that the results reflected in the illustrative financial projections will be realized, and actual results may vary materially from those reflected in such illustrative financial projections. You should read the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [l] of this proxy statement/prospectus for additional information regarding the risks inherent in forward-looking information such as the illustrative financial projections.
 
The following projected financial data for Comtech on a standalone basis was provided by Comtech management to CPI (in thousands):
 
                                                 
    FY2010E     FY2011E     FY2012E     FY2013E     FY2014E     FY2015E  
 
Total Sales
  $ 750,001     $ 685,388     $ 726,200     $ 769,499     $ 815,795     $ 864,925  
Operating Income
    100,760       121,603       134,021       146,517       160,098       174,459  
EBITDA*
    127,888       148,926       161,824       175,637       190,467       205,893  
 
 
* Earnings before interest, taxes, depreciation and amortization (both amortization of intangible assets and stock-based compensation).
 
Readers of this proxy statement/prospectus are cautioned not to place any reliance on the summary of the illustrative financial projections set forth above. No representation is made by Comtech, CPI or any other person to any stockholder of Comtech or any stockholder of CPI regarding the ultimate performance of Comtech compared to the information included in the above summary of the illustrative financial projections. The inclusion of the summary of the illustrative financial projections in this proxy statement/prospectus should not be regarded as an indication that such illustrative financial projections will be an accurate prediction of future events nor construed as financial guidance, and they should not be relied on as such. Comtech has made no representation to CPI or any other person concerning the projected financial data.
 
COMTECH DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ILLUSTRATIVE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH ILLUSTRATIVE FINANCIAL PROJECTIONS ARE NO LONGER APPROPRIATE.
 
Certain Illustrative Financial Projections Provided by CPI
 
During the course of the negotiations between Comtech and CPI, CPI supplied its financial advisors and Comtech with certain business and financial information that was not publicly available, including certain illustrative financial projections on a standalone basis.
 
The illustrative financial projections presented below have been prepared by, and are the responsibility of, the management of CPI. The illustrative financial projections were not prepared in connection with a detailed analysis of the fundamentals of CPI’s business and assets. For more information, see the section titled “Where you Can Find More Information” beginning on page [l] of this proxy statement/prospectus.
 
The summary of the illustrative financial projections is included in this proxy statement/prospectus only because this information was exchanged between CPI and its financial advisors in connection with the proposed merger and Comtech was provided similar information in connection with the proposed merger. The inclusion of the summary of illustrative financial projections should not be regarded as an indication that either CPI or Comtech considered the illustrative financial projections to be material and the summary is not being included in this proxy statement/prospectus for the purpose of influencing your decision whether to vote for the adoption of the merger agreement. Such illustrative financial projections were neither prepared with a view to public disclosure, nor were such illustrative financial projections prepared in compliance with United States generally accepted accounting principles or with published guidelines of the SEC or the American Institute of Certified Public Accountants regarding financial projections. CPI’s independent public registered accounting firm has not examined or compiled


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any of the illustrative financial projections, expressed any conclusion or provided any form of assurance with respect to the illustrative financial projections and, accordingly, assumes no responsibility for them.
 
CPI cautions you that the illustrative financial projections are speculative in nature and based upon subjective decisions and assumptions. The illustrative financial projections were prepared as of April 15, 2010 and do not reflect actual results through CPI’s recent quarter ended April 2, 2010. The illustrative financial projections were not prepared with a view toward public disclosure and are inherently subject to uncertainty, being based upon numerous factors and events beyond the control of the parties and their respective advisors, and the inclusion of this information should not be regarded as an indication that any of CPI or Comtech or any recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.
 
While presented with numerical specificity, the illustrative financial projections are necessarily speculative given the time periods involved and are intended to show the impact of a given revenue and EBITDA growth rate for illustrative purposes. Except as noted below with respect to currency conversion rates, no specific estimates and assumptions were utilized relating to industry performance and competition, general business, economic, market and financial conditions, or any additional matters specific to CPI’s businesses, all of which are difficult to predict and many of which are beyond CPI’s control. These illustrative assumptions are likely to be different than actual results for any number of reasons, including general economic conditions, competition and the risks discussed in this proxy statement/prospectus under the section titled “Risk Factors” beginning on page [l] of this proxy statement/prospectus and the risk factors found under Part I, Item IA, “Risk Factors” in CPI’s Annual Report on Form 10-K for the year ended October 2, 2009, and Part II, Item IA, “Risk Factors” in CPI’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2010.
 
Since the illustrative financial projections cover multiple years, such information by its nature becomes less meaningful and reliable with each successive year. The illustrative financial projections also do not take into account any circumstances or events occurring after the date they were prepared and do not give effect to the transactions contemplated by the merger agreement, including the merger. Accordingly, there can be no assurance that the results reflected in the illustrative financial projections will be realized, and actual results may vary materially from those reflected in such illustrative financial projections. You should read the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [l] of this proxy statement/prospectus for additional information regarding the risks inherent in forward-looking information such as the illustrative financial projections.
 
The following projected financial data for CPI on a standalone basis was provided by CPI management to CPI’s financial advisors:
 
                                         
    FY2010E   FY2011E   FY2012E   FY2013E   FY2014E
    (In millions)
 
Revenue
  $ 365.0     $ 386.0     $ 420.5     $ 458.6     $ 499.2  
EBITDA*
    58.0       58.7       68.0       76.5       85.8  
 
 
* Earnings before interest, taxes, depreciation and amortization. Also excludes charges related to the extinguishment of debt.
 
The illustrative financial projections were based on similar financial projections prepared by CPI in September 2009 and provided to Comtech at that time. The financial projections summarized in the table above differ from those provided to Comtech due to different assumptions regarding exchange rates between the Canadian dollar and the U.S. dollar for fiscal years 2011 through 2014. As a result of the change in exchange rate assumptions, the projected EBITDA figures provided to Comtech for each of the fiscal years 2011 through 2014 were approximately 9% to 11% greater than the corresponding values set forth above.
 
Readers of this proxy statement/prospectus are cautioned not to place any reliance on the summary of the illustrative financial projections set forth above. No representation is made by CPI, Comtech or any other person to any stockholder of CPI or any stockholder of Comtech regarding the ultimate performance of CPI compared to the information included in the above summary of the illustrative financial projections. The inclusion of the summary of the illustrative financial projections in this proxy statement/prospectus should not be regarded as an indication that such illustrative financial projections will be an accurate prediction of future events nor construed as financial


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guidance, and they should not be relied on as such. CPI has made no representation to its financial advisors, Comtech or any other person concerning the projected financial data.
 
CPI DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ILLUSTRATIVE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH ILLUSTRATIVE FINANCIAL PROJECTIONS ARE NO LONGER APPROPRIATE.
 
Regulatory Approvals Required for the Merger
 
General
 
Each of Comtech’s, CPI’s and Merger Sub’s obligation to effect the merger is conditioned upon, among other things, the expiration or termination of the applicable waiting period under the HSR Act. See “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page [l] of this proxy statement/prospectus.
 
Department of Justice, Federal Trade Commission and Other U.S. Antitrust Authorities
 
Under the HSR Act and the rules and regulations promulgated thereunder, certain transactions, including the merger, may not be consummated unless certain waiting period requirements have expired or been terminated. The HSR Act provides that each party (and, as applicable, its ultimate parent entities) must file a pre-merger notification with the Federal Trade Commission, or the FTC, and the Antitrust Division of the Department of Justice, or the DOJ. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-calendar-day waiting period following the parties’ filing of their respective HSR Act notification forms or the early termination of that waiting period. If the DOJ or the FTC issues a Request for Additional Information and Documentary Material prior to the expiration of the initial waiting period, the parties must observe a second 30-day waiting period, which would begin to run only after both parties have substantially complied with the request for additional information, unless the waiting period is terminated earlier.
 
CPI and Comtech have filed their required HSR notification and regulatory forms in other jurisdictions with respect to the merger and various governmental reviews are underway.
 
Notwithstanding such expiration, at any time before or after the merger is completed, either the DOJ or the FTC could take action under the antitrust laws in opposition to the merger, including seeking to enjoin completion of the merger, condition approval of the merger upon the divestiture of assets of Comtech, CPI or their subsidiaries or impose restrictions on Comtech’s post-merger operations. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest including without limitation seeking to enjoin the completion of the merger or permitting completion subject to regulatory concessions or conditions. Private parties may also seek to take legal action under the antitrust laws under some circumstances.
 
Non-U.S. Antitrust Approvals
 
Comtech and CPI have filed a notification with respect to the merger to the Brazilian competition authority, CADE (the Conselho Administrativo de Defesa Econômica, or Administrative Council for Economic Defense), under the applicable Brazilian antitrust merger control laws (i.e., Federal Law #8,884/94, article 54) on May 28, 2010. The review of the merger by CADE will not prevent Comtech and CPI from completing the merger.
 
The merger review process in Brazil involves three different agencies, and the review period is divided into three phases. Initially, the SEAE (the Secretaria de Acompanhamento Econômico or Secretariat of Economic Monitoring) has 30 days from its receipt of the notification to issue its (non-binding) opinion on the transaction. Upon expiration of this 30-day period, the file is transmitted to the SDE (the Secretaria de Direito Econômico or Secretariat of Economic Law). From the date of its receipt of the file from the SEAE, the SDE has 30 days to issue its (non-binding) opinion to CADE. Finally, CADE has 60 days (from the date it receives the file from SDE) to issue a final decision. If CADE does not issue a decision within the statutory period, the transaction is deemed approved.


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The review period may be significantly extended if any of the three agencies request additional documents or information from the parties involved in the transaction.
 
Challenges by Governmental and Other Entities
 
Notwithstanding the expiration of the initial waiting period under the HSR Act, there can be no assurance that any of the governmental or other entities described above, including the DOJ, the FTC, foreign competition law authorities, U.S. state attorneys general and private parties, will not challenge the merger on antitrust or competition grounds and, if such a challenge is made, there can be no assurance as to its result.
 
Other Governmental Approvals
 
A division of CPI utilizes radioactive materials in manufacturing certain products, and such division currently holds both U.S. federal and state licenses for the use of these radioactive materials. In connection with the merger, control of these licenses is deemed to be transferred from CPI to Comtech. CPI is required to file and obtain approval from the Nuclear Regulatory Commission and the State of Massachusetts Radiation Control Program for the transfer of control of these licenses.
 
Appraisal Rights
 
In connection with the merger, record holders of CPI common stock who comply with Section 262 of the General Corporation Law of the State of Delaware (which is referred to in this proxy statement/prospectus as Section 262) will be entitled to appraisal rights if the merger is completed. Under Section 262, as a result of completion of the merger, holders of shares of CPI common stock, with respect to which appraisal rights are properly demanded and perfected and not withdrawn or lost, are entitled, in lieu of receiving the merger consideration, to have the “fair value” of their shares at the completion of the merger (exclusive of any element of value arising from the accomplishment or expectation of the merger) judicially determined and paid to them in cash by complying with the provisions of Section 262. CPI is required to send a notice to that effect to each stockholder not less than 20 days prior to the special meeting. This proxy statement/prospectus constitutes that notice to you.
 
The following is a brief summary of Section 262, which sets forth the procedures for exercising statutory appraisal rights. This summary is qualified in its entirety by reference to Section 262, a copy of the text of which is attached to this proxy statement/prospectus as Annex C. This discussion and Annex C should be reviewed carefully by any holder who wishes to exercise statutory appraisal rights or who wishes to preserve the right to do so, as failure to comply with the procedures set forth herein or therein will result in the loss of appraisal rights. The following summary does not constitute any legal or other advice nor does it constitute a recommendation that stockholders exercise their appraisal rights under Section 262.
 
Stockholders of record who desire to exercise their appraisal rights must satisfy all of the following conditions. All references in this summary of appraisal rights to a “stockholder” or “holder” of shares of CPI common stock are to the record holder or holders of shares of CPI common stock.
 
A stockholder who desires to exercise appraisal rights must (i) not vote in favor of the adoption of the merger agreement, (ii) deliver in the manner set forth below a written demand for appraisal of the stockholder’s shares to the Corporate Secretary of CPI before the vote on the adoption of the merger agreement at the special meeting at which the proposal to adopt the merger agreement will be submitted to CPI stockholders, (iii) continuously hold the shares of record from the date of making the demand through the effective time of the merger because appraisal rights will be lost if the shares are transferred prior to the effective time of the merger, and (iv) otherwise comply with the requirements of Section 262.
 
Only a holder of record of CPI common stock is entitled to demand an appraisal of the shares registered in that holder’s name. A demand for appraisal must be executed by or for the stockholder of record, fully and correctly, and must reasonably inform CPI of the identity of the stockholder and that such stockholder intends thereby to demand appraisal of the CPI stock. If shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, such demand must be executed by the fiduciary. If shares are owned of record by more than one person,


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as in a joint tenancy or tenancy in common, the demand must be executed by all joint owners. An authorized agent, including an agent of two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner and expressly disclose that, in exercising the demand, the agent is acting as agent for the record owner. If a stockholder holds shares of CPI common stock through a broker who in turn holds the shares through a central securities depository nominee such as Cede & Co., a demand for appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as record holder.
 
A record owner, such as a broker or depository, who holds shares as a nominee for others may exercise appraisal rights with respect to the shares held for all or less than all beneficial owners of shares for which the holder is the record owner. In that case, the written demand must set forth the number of shares covered by the demand. Where the number of shares is not expressly stated, the demand will be presumed to cover all shares outstanding in the name of the record owner.
 
Beneficial owners who are not record owners and who intend to exercise appraisal rights should instruct the record owner to comply strictly with the statutory requirements with respect to the exercise of appraisal rights before the vote on the adoption of the merger agreement at the special meeting. A holder of shares held in “street name” who desires appraisal rights with respect to those shares must take such actions as may be necessary to ensure that a timely and proper demand for appraisal is made by the record owner of the shares. Shares held through brokerage firms, banks and other financial institutions are frequently deposited with and held of record in the name of a nominee of a central security depositary, such as Cede & Co., The Depository Trust Company’s nominee. Any holder of shares desiring appraisal rights with respect to such shares who held such shares through a brokerage firm, bank or other financial institution is responsible for ensuring that the demand for appraisal is made by the record holder. The stockholder should instruct such firm, bank or institution that the demand for appraisal must be made by the record holder of the shares, which might be the nominee of a central security depositary if the shares have been so deposited.
 
Stockholders of record who elect to demand appraisal of their shares must mail or deliver their written demand to: CPI, 811 Hansen Way, Palo Alto, California 94303, Attention: Corporate Secretary. The written demand for appraisal should specify the stockholder’s name and mailing address, the number of shares owned and that the stockholder is demanding appraisal of his, her or its shares. The written demand must be received by CPI prior to the special meeting. Neither voting (in person or by proxy) against, abstaining from voting on or failing to vote on the proposal to adopt the merger agreement will alone suffice to constitute a written demand for appraisal within the meaning of Section 262. In addition, the stockholder must not vote its shares of common stock in favor of adoption of the merger agreement. Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of adoption of the merger agreement, it will constitute a waiver of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the adoption of the merger agreement or abstain from voting on the adoption of the merger agreement.
 
Within 120 days after the effective time of the merger, but not thereafter, either the surviving corporation in the merger or any stockholder who has timely and properly demanded appraisal of such stockholder’s shares and who has complied with the requirements of Section 262 and is otherwise entitled to appraisal rights, or any beneficial owner for which a demand for appraisal has been properly made by the record holder, may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares of all stockholders who have properly demanded appraisal, with a copy served on the surviving corporation in the case of a petition filed by a stockholder.
 
There is no present intent on the part of the surviving corporation to file an appraisal petition and stockholders seeking to exercise appraisal rights should not assume that the surviving corporation will file such a petition or that the surviving corporation will initiate any negotiations with respect to the fair value of such shares. Accordingly, stockholders who desire to have their shares appraised should initiate any petitions necessary for the perfection of their appraisal rights within the time periods and in the manner prescribed in Section 262. Within 120 days after the effective time, any stockholder who has theretofore complied with the applicable provisions of Section 262 will be entitled, upon written request, to receive from the surviving corporation a statement setting forth the aggregate


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number of shares of common stock not voting in favor of the merger and with respect to which demands for appraisal were received by the surviving corporation and the number of holders of such shares. A person who is the beneficial owner of shares held in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition or request from the corporation the statement described in the previous sentence. Such statement must be mailed within 10 days after the written request therefor has been received by the surviving corporation.
 
If a petition for an appraisal is timely filed, at the hearing on such petition, the Delaware Court of Chancery will determine which stockholders are entitled to appraisal rights. The Delaware Court of Chancery 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 Delaware Court of Chancery may dismiss the proceedings as to such stockholder. Where proceedings are not dismissed, the appraisal proceeding shall be conducted, as to the shares of common stock owned by such stockholders, in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings.
 
After a hearing on such petition, the Delaware Court of Chancery will determine which stockholders are entitled to appraisal rights and thereafter will appraise the shares owned by those stockholders, determining the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest to be paid, if any, upon the amount determined to be the fair value. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharges) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. In determining fair value, the Delaware Court of Chancery is to take into account all relevant factors. In Weinberger v. UOP, Inc., et al., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that in making this determination of fair value the court must consider “market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts which were known or which could be ascertained as of the date of merger which throw any light on future prospects of the merged corporation.” The Delaware Supreme Court construed Section 262 to mean that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.” However, the Delaware Supreme Court noted that Section 262 provides that fair value is to be determined “exclusive of any element of value arising from the accomplishment or expectation of the merger.”
 
Stockholders considering seeking appraisal should bear in mind that the fair value of their shares determined under Section 262 could be more than, the same as, or less than the merger consideration they are entitled to receive pursuant to the merger agreement if they do not seek appraisal of their shares, and that opinions of investment banking firms as to the fairness from a financial point of view of the consideration payable in a transaction are not opinions as to, and do not address, fair value under Section 262. Neither Comtech nor CPI anticipates offering more than the applicable merger consideration to any CPI stockholder exercising appraisal rights, and they reserve the right to assert, in any appraisal proceeding, that for purposes of Section 262, the “fair value” of a share of CPI common stock is less than the applicable merger consideration.
 
The cost of the appraisal proceeding may be determined by the Delaware Court of Chancery and charged upon the parties as the Delaware Court of Chancery deems equitable in the circumstances. However, costs do not include attorneys’ and expert witness fees. Each dissenting holder is responsible for his or her attorneys’ and expert witness fees, although upon application of a stockholder seeking appraisal rights, the Delaware Court of Chancery may order that all or a portion of the expenses incurred by such stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, be charged pro rata against the value of all shares entitled to appraisal. In the absence of such a determination of assessment, each party bears its own expenses.


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Any stockholder who has duly demanded appraisal in compliance with Section 262 will not, after the effective time, be entitled to vote for any purpose any shares subject to such demand or to receive payment of dividends or other distributions on such shares, except for dividends or distributions payable to stockholders of record at a date prior to the effective time.
 
Except as explained in the last sentence of this paragraph, at any time within 60 days after the effective time of the merger, any stockholder who has demanded appraisal and who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder’s demand for appraisal and to accept the cash and Comtech common stock to which the stockholder is entitled pursuant to the merger by delivering to the surviving corporation a written withdrawal of his or her demand for appraisal and acceptance of the merger consideration. After this period, the stockholder may withdraw such stockholder’s demand for appraisal only with the consent of the surviving corporation. If no petition for appraisal is filed with the Delaware Court of Chancery within 120 days after the effective time of the merger, stockholders’ rights to appraisal shall cease and all stockholders shall be entitled only to receive the merger consideration as provided for in the merger agreement. Inasmuch as the parties to the merger agreement have no obligation to file such a petition, and have no present intention to do so, any stockholder who desires that such petition be filed is advised to file it on a timely basis. No petition timely filed in the Delaware Court of Chancery demanding appraisal shall be dismissed as to any stockholders without the approval of the Delaware Court of Chancery, and that approval may be conditioned upon such terms as the Delaware Court of Chancery deems just. However, the preceding sentence will not affect the right of any stockholder who has not commenced an appraisal proceeding or joined the proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger within 60 days.
 
The foregoing is a brief summary of Section 262 that sets forth the procedures for exercising statutory appraisal rights. This summary, however, is not a complete statement of all applicable requirements and is qualified in its entirety by reference to Section 262, a copy of the text of which is attached as Annex C to this proxy statement/prospectus.
 
Failure to strictly comply with all the procedures set forth in Section 262 will result in the loss of a stockholder’s statutory appraisal rights. Consequently, if you wish to exercise your appraisal rights, you are strongly urged to consult a legal advisor before attempting to exercise your appraisal rights.
 
Certain Material U.S. Federal Income Tax Consequences of the Merger
 
The following summarizes certain material U.S. federal income tax consequences of the merger. The following summary is not binding on the Internal Revenue Service. It is based upon the Internal Revenue Code, referred to in this proxy statement/prospectus as the Code, and the regulations, rulings, and decisions thereunder in effect as of the date of this document, all of which are subject to change, possibly with retroactive effect, and to differing interpretations. This summary addresses only those stockholders who hold their shares of CPI common stock as a capital asset within the meaning of Section 1221 of the Code, and does not address all of the U.S. federal income tax consequences that may be relevant to particular CPI stockholders in light of their individual circumstances, or to CPI stockholders who are subject to special rules, such as:
 
  •  financial institutions;
 
  •  mutual funds, regulated investment companies or real estate investment trusts;
 
  •  tax-exempt organizations;
 
  •  persons whose functional currency is not the U.S. dollar;
 
  •  insurance companies;
 
  •  dealers in securities or foreign currencies;
 
  •  traders in securities who elect to apply a market-to-market method of accounting;
 
  •  foreign holders (i.e., persons other than U.S. holders, as defined below);
 
  •  persons who actually or constructively own 5% or more of the outstanding shares of CPI stock;


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  •  persons who hold shares of CPI stock as a hedge against currency risk or as part of a straddle, constructive sale or conversion transaction; or
 
  •  holders who acquired their shares of CPI stock upon the exercise of warrants or employee stock options or otherwise as compensation or through a tax-qualified plan.
 
In addition, tax consequences under state, local and foreign laws and U.S. federal laws other than U.S. federal income tax laws are not addressed.
 
CPI stockholders are urged to consult their tax advisors as to the specific tax consequences to them of the merger, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws in their particular circumstances.
 
For purposes of this discussion, a U.S. holder means a beneficial owner of CPI stock who is:
 
  •  an individual who is a citizen or resident of the United States;
 
  •  a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States or any State or the District of Columbia;
 
  •  an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
 
  •  a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect under the applicable U.S. Treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes.
 
If a business entity classified as a partnership for U.S. federal tax purposes (a “partnership”) holds CPI stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Partners of partnerships holding CPI stock should consult their own tax advisers.
 
U.S. Federal Income Tax Consequences to CPI Stockholders
 
Each U.S. holder of CPI common stock will recognize gain or loss with respect to each share of CPI common stock that it exchanges in the merger equal to the difference, if any, between (i) the sum of any cash received (including cash received in lieu of a fractional share of Comtech common stock) and the fair market value, as of the effective time of the merger, of the shares of Comtech common stock received by such holder in the exchange and (ii) such holder’s tax basis in the shares of CPI common stock exchanged therefor. Gain or loss, as well as the holding period, will be determined separately for each block of shares (i.e., shares acquired at the same cost in a single transaction) surrendered pursuant to the merger. Such gain or loss will be long-term capital gain or loss, provided that a stockholder’s holding period for such shares is more than one year at the time of the consummation of the merger. Long-term capital gains of individuals are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to certain limitations.
 
CPI Stockholders Exercising Appraisal Rights
 
A U.S. holder who exercises appraisal rights under Delaware law and receives cash in exchange for its CPI common stock will generally recognize capital gain or loss equal to the difference between the cash received by such holder (other than any cash received that is treated as actual or imputed interest, which will be taxable as ordinary income) and such holder’s tax basis in the CPI common stock exchanged therefor.
 
Information Reporting and Backup Withholding
 
A U.S. holder may be subject to information reporting and backup withholding, currently at a rate of 28%, unless the holder provides proof of an applicable exemption, furnishes its taxpayer identification number (in the case of individuals, their social security number) and otherwise complies with all applicable requirements of the backup withholding rules. Any amounts withheld from payments to a U.S. holder under the backup withholding


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rules are not additional tax and will be allowed as a refund or credit against the U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the Internal Revenue Service.
 
The summary of material U.S. federal income tax consequences set forth above is not intended to be a complete analysis or description of all potential United States federal income tax consequences of the merger. Moreover, the summary set forth above does not address tax consequences that may vary with, or are contingent upon, individual circumstances. In addition, the summary set forth above does not address any non-income tax or any foreign, state or local tax consequences of the merger and does not address the tax consequences of any transaction other than the merger.
 
Accounting Treatment
 
The merger will be accounted for as an acquisition of a business. Comtech will record net tangible and identifiable intangible assets acquired and liabilities assumed from CPI at their respective fair values at the date of the completion of the merger. Any excess of the purchase price, which will equal the market value, at the date of the completion of the merger, of the Comtech common stock issued as consideration for the merger, over the net fair value of such assets and liabilities will be recorded as goodwill.
 
The financial condition and results of operations of Comtech after completion of the merger will reflect CPI’s balances and results after completion of the transaction but will not be restated retroactively to reflect the historical financial condition or results of operations of CPI. The earnings of Comtech following the completion of the merger will reflect acquisition accounting adjustments, including the effect of changes in the carrying value for assets and liabilities on depreciation and amortization expense. Intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually, and all assets including goodwill will be tested for impairment when certain indicators are present. If in the future, Comtech determines that tangible or intangible assets (including goodwill) are impaired, Comtech would record an impairment charge at that time.
 
Listing of Comtech Common Stock and Delisting and Deregistration of CPI Common Stock
 
Application will be made to have the shares of Comtech common stock to be issued in the merger approved for listing on the NASDAQ Global Select Market, where Comtech common stock is currently traded. If the merger is completed, CPI common stock will no longer be listed on the NASDAQ Global Select Market and will be deregistered under the Exchange Act.
 
Repayment of Existing CPI Indebtedness
 
Comtech intends to repay in full all existing outstanding indebtedness of CPI either upon the closing or shortly following closing, in each case in accordance with the terms of such indebtedness. Assuming that the appropriate notices required under the indentures governing CPI’s existing floating rate senior notes and senior subordinated notes outstanding are provided on the date of closing of the merger, these notes may be outstanding for up to 75 days following the closing of the merger.


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THE MERGER AGREEMENT
 
The following is a summary of the material terms and conditions of the merger agreement. This summary may not contain all the information about the merger agreement that is important to you. This summary is qualified in its entirety by reference to the merger agreement attached as Annex A to, and incorporated by reference into, this proxy statement/prospectus. You are encouraged to read the merger agreement in its entirety because it is the legal document that governs the merger.
 
Explanatory Note Regarding the Merger Agreement and the Summary of the Merger Agreement: Representations, Warranties and Covenants in the Merger Agreement Are Not Intended to Function or Be Relied on as Public Disclosures
 
The merger agreement and the summary of its terms in this proxy statement/prospectus have been included to provide information about the terms and conditions of the merger agreement. The terms and information in the merger agreement are not intended to provide any other public disclosure of factual information about Comtech, CPI or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the merger agreement are made by Comtech, CPI and Merger Sub only for the purposes of the merger agreement and were qualified and subject to certain limitations and exceptions agreed to by Comtech, CPI and Merger Sub in connection with negotiating the terms of the merger agreement. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were made solely for the benefit of the parties to the merger agreement and were negotiated for the purpose of allocating contractual risk among the parties to the merger agreement rather than to establish matters as facts. The representations and warranties may also be subject to a contractual standard of materiality or material adverse effect different from those generally applicable to stockholders and reports and documents filed with the SEC, and, in some cases, they may be qualified by disclosures made by one party to the other, which are not necessarily reflected in the merger agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the merger agreement, and subsequent developments or new information qualifying a representation or warranty may have been included in or incorporated by reference into this proxy statement/prospectus.
 
For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone or relied upon as characterizations of the actual state of facts or condition of Comtech, CPI or any of their respective subsidiaries or affiliates. Instead, such provisions or descriptions should be read only in conjunction with the other information provided elsewhere in this document or incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page [l] of this proxy statement/prospectus.
 
Form, Effective Time and Closing of the Merger
 
The merger agreement provides for a transaction in which Merger Sub will merge with and into CPI. CPI will be the surviving corporation in the merger and, following completion of the merger, will be a wholly owned subsidiary of Comtech.
 
The merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware. Unless another date and time are agreed by Comtech and CPI, the closing will occur no later than the second business day following satisfaction or, to the extent permitted under applicable law, waiver, of the conditions to completion of the merger. See “— Conditions to the Completion of the Merger” beginning on page [l] of this proxy statement/prospectus.
 
There can be no assurances as to when, or if, the merger will occur. If the merger is not completed on or before December 1, 2010, either Comtech or CPI may terminate the merger agreement, unless the failure to comply in any material respect with any provision of the merger agreement by the party seeking to terminate the merger agreement was the direct cause of the failure of the merger to be completed by that date. The termination date of December 1, 2010 may be extended by 45 days by either party, subject to certain limitations, if the closing has not occurred because of the failure to obtain a required approval from one or more regulatory authorities. See “— Conditions to


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the Completion of the Merger” and “— Termination of the Merger Agreement” beginning on pages [l] and [l], respectively, of this proxy statement/prospectus.
 
Certificate of Incorporation, Bylaws, Directors and Officers of the Surviving Corporation
 
After completion of the merger, the certificate of incorporation of the surviving corporation will be amended so as to read in the form of an exhibit to the merger agreement, and the bylaws of Merger Sub in effect as of the effective time of the merger will be the bylaws of the surviving corporation, in each case until amended in accordance with applicable law. After completion of the merger, the directors of Merger Sub and the officers of CPI will be the directors and officers of the surviving corporation until their successors are duly elected or appointed and qualified in accordance with the certificate of incorporation and bylaws of the surviving corporation and applicable law.
 
Merger Consideration; Conversion or Cancellation of Shares in the Merger
 
Merger Consideration
 
If the merger is completed, each share of CPI common stock (other than treasury stock or CPI common stock held by Comtech or its subsidiaries or CPI common stock with respect to which appraisal rights have been properly exercised and perfected under Delaware law) will be cancelled and converted automatically into the right to receive $9.00 in cash and between 0.2132 and 0.2382 shares of Comtech common stock (and dividends, if any, on Comtech common stock with a record date after the date of the merger agreement and before the effective time of the merger). The exact number of shares of Comtech common stock to be received in the merger will be determined based on a conversion ratio (rounded to four decimal places) equal to $8.10 divided by the average closing price of Comtech’s stock over the five consecutive trading days ending on (and including) the second trading day prior to closing, provided that if such average closing price of Comtech common stock is greater than $38.00, then the conversion ratio will equal 0.2132, and if such average closing sale price is less than $34.00, then the conversion ratio will equal 0.2382. CPI stockholders will receive cash in lieu of any fractional shares of Comtech common stock as described immediately below. No interest will be paid or accrue on the cash portion of the merger consideration.
 
No Fractional Shares
 
Comtech will not issue any fractional shares of its common stock in the merger. Instead, the total number of shares of Comtech common stock that each CPI stockholder will receive in the merger will be rounded down to the nearest whole number, and each CPI stockholder will receive cash, without interest, for any fractional shares of Comtech common stock that such stockholder would otherwise receive in the merger. The amount of cash for fractional shares received by a CPI stockholder will be their proportionate interest in proceeds from the sale by Comtech’s exchange agent of the aggregate of the fractional shares of Comtech common stock that otherwise would be issued in the merger at the prevailing prices at which Comtech common stock may be sold (net of any related fees) on the NASDAQ Global Select Market as soon as practicable after the effective time of the merger.
 
Procedures for Surrendering CPI Stock Certificates
 
The conversion of CPI common stock into the right to receive the merger consideration will occur automatically at the effective time of the merger. Prior to completion of the merger, Comtech will appoint an exchange agent reasonably acceptable to CPI to handle the exchange of CPI stock certificates in the merger for Comtech common stock and the payment of cash (including cash in lieu of fractional shares of Comtech common stock). Prior to the effective time of the merger, Comtech will deliver to the exchange agent the merger consideration payable in respect of CPI common stock. As promptly as practicable after the effective time, but in no event later than five business days thereafter, the exchange agent will send a letter of transmittal to each person who is a record holder of CPI common stock at the effective time of the merger for use in the exchange, as well as instructions explaining how to surrender CPI stock certificates to the exchange agent.
 
Each CPI stockholder who surrenders their stock certificate to the exchange agent or, in the case of CPI stock held in book-entry form surrenders such stock (evidenced by receipt of an “agent’s message” by the exchange agent), in either case, together with a duly completed letter of transmittal (and such other documents as may


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reasonably be required by the exchange agent), will receive (i) certificates (or electronic equivalents) representing the number of shares of Comtech common stock into which such CPI shares will have been converted, and (ii) a bank check for an amount equal to the cash portion of the merger consideration due to such stockholder (including cash in lieu of fractional shares). In any event, after the effective time of the merger, each certificate that previously represented shares of CPI common stock will only represent the right to receive the merger consideration into which those shares of CPI common stock have been converted.
 
Neither Comtech nor CPI will be responsible for transfer or other similar taxes and fees incurred by any holder of CPI common stock in connection with the merger, and thus, such taxes and fees, if any, will be the sole responsibility of such holder. In addition, if any merger consideration is to be issued in the name of a person other than the person in whose name a surrendered CPI certificate is registered, the surrendered certificate must be endorsed or must otherwise be in proper form for transfer, and the person requesting such exchange must either pay to the exchange agent any transfer or other taxes required or otherwise satisfy the exchange agent that any such transfer or other taxes have been paid or that no payment of such taxes is necessary.
 
Treatment of CPI Equity Awards
 
Except with respect to separate agreements that may be entered into with certain CPI executives, each option to purchase shares of CPI common stock granted under CPI’s equity compensation plans outstanding immediately prior to the closing, whether or not exercisable or vested, will be canceled at the closing in exchange for cash, equal to the excess, if any, of (i) the sum of (A) $9.00 and (B) the average per-share closing prices of Comtech common stock for the 10 consecutive trading days immediately preceding the date that is two days before the closing, as reported on the NASDAQ Global Select Market, multiplied by the conversion ratio, reduced by (ii) the per-share exercise price of such option.
 
Except with respect to separate agreements that may be entered into with certain CPI executives, each restricted stock award and restricted stock unit granted under CPI’s equity compensation plans that are outstanding immediately prior to the closing will be canceled at the closing in exchange for a payment, in cash, equal to the sum of (i) $9.00 and (ii) the cash value of the average per-share closing prices of Comtech common stock for the 10 consecutive trading days immediately preceding the date that is two days before the closing, as reported on the NASDAQ Global Select Market, multiplied by the conversion ratio.
 
Withholding
 
All payments under the merger agreement are subject to applicable withholding requirements.
 
Representations and Warranties
 
The merger agreement contains a number of representations and warranties made by CPI on the one hand and Comtech and Merger Sub on the other hand. The representations and warranties were made by the parties as of the date of the merger agreement and expire at the effective time of the merger. The representations and warranties are subject, in some cases, to exceptions and qualifications (including knowledge qualifiers and exceptions that do not result in, and would not reasonably be expected to have, a “material adverse effect”). See also “— Definition of ’Material Adverse Effect”’ beginning on page [l] of this proxy statement/prospectus.
 
Representations and Warranties of CPI, and Comtech and Merger Sub
 
Both CPI and Comtech made representations and warranties in the merger agreement relating to, among other things:
 
  •  corporate organization, valid existence, good standing and qualification to conduct business;
 
  •  capitalization;
 
  •  due authorization, execution, delivery and validity of the merger agreement;
 
  •  absence of any conflict with organizational documents, absence of any violation, breach or default of certain agreements and the absence of any violation of laws or orders;


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  •  governmental and third-party consents necessary to complete the merger;
 
  •  SEC filings, the absence of material misstatements or omissions from such filings and compliance with the Sarbanes-Oxley Act;
 
  •  absence of certain changes through the date of the merger agreement;
 
  •  disclosure documents to be filed with the SEC in connection with the merger;
 
  •  fees payable to financial advisors in connection with the merger;
 
  •  litigation; and
 
  •  compliance with laws and orders.
 
Representations and Warranties of CPI
 
In addition, CPI made representations and warranties in the merger agreement relate to, among other things:
 
  •  taxes;
 
  •  employee benefit plans;
 
  •  labor matters including matters related to labor unions and layoffs;
 
  •  environmental matters, including matters concerning hazardous materials, environmental liabilities, compliance with environmental laws, required environmental permits, environmental reports, studies and other data, and indemnification for environmental liability;
 
  •  property and assets;
 
  •  absence of undisclosed liabilities;
 
  •  intellectual property;
 
  •  the existence, validity and enforceability of certain contracts meeting certain financial, legal and other thresholds, including contracts with, or subcontracts relating to contracts with, governmental entities;
 
  •  permits and other approvals from governmental entities required by CPI and its subsidiaries to own, lease or operate their assets and carry on their businesses;
 
  •  insurance;
 
  •  transactions with affiliates;
 
  •  receipt of the opinions of J.P. Morgan and Moelis;
 
  •  absence of any stockholder rights plan;
 
  •  absence of beneficial ownership of any capital stock of Comtech; and
 
  •  inapplicability of Delaware anti-takeover laws.
 
Representations and Warranties of Comtech and Merger Sub
 
In addition, Comtech and Merger Sub made representations and warranties in the merger agreement relate to, among other things:
 
  •  availability of sufficient cash resources to consummate the merger and repay the indebtedness of CPI;
 
  •  absence of any business activities or operations of Merger Sub; and
 
  •  beneficial ownership of capital stock of CPI.
 
The representations and warranties in the merger agreement do not survive after the effective time of the merger.


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See “— Explanatory Note Regarding the Merger Agreement and the Summary of the Merger Agreement: Representations, Warranties and Covenants in the Merger Agreement Are Not Intended to Function or Be Relied on as Public Disclosures” on page [l] of this proxy statement/prospectus.
 
Definition of “Material Adverse Effect”
 
Many of the representations and warranties are qualified as to materiality or “material adverse effect.” For the purposes of the merger agreement, “material adverse effect” means any adverse event, development or change in condition of Comtech or CPI, as the case may be, or any subsidiary thereof which is material to such party and its subsidiaries, taken as a whole; provided, however, that none of the following, and no change, event or development to the extent resulting from any of the following, will be taken into account in determining the occurrence of a material adverse effect:
 
  •  general changes in economic, market, financial or capital market, regulatory or political conditions in the United States or elsewhere in the world;
 
  •  terrorism, war, the outbreak of hostilities or natural disaster in the United States or elsewhere in the world;
 
  •  changes generally applicable to the industries in which the party and its subsidiaries are involved;
 
  •  changes in law or accounting regulations or principles or interpretations thereof;
 
  •  changes in such party’s stock price or trading volume, or any failure, in and of itself, by the party to meet any projections or any change in any analyst recommendation concerning the party (it being understood that the facts or occurrences giving rise or contributing to such change may be deemed to constitute, or be taken into account, in determining whether a material adverse effect has occurred);
 
  •  the downgrade in rating of any debt or debt securities of a party or any of its subsidiaries (it being understood that the facts or occurrences giving rise or contributing to such change may be deemed to constitute, or be taken into account, in determining whether a material adverse effect has occurred);
 
  •  the failure to take any action as a result of any restrictions or prohibitions set forth in the merger agreement with respect to which the other party failed, after being requested, to provide a waiver or to do so in a reasonably timely manner;
 
  •  changes as a result of any amendment, cancellation, termination or other adverse event related to any existing contract of the party or any of its subsidiaries, or the failure by the party or any of its subsidiaries to enter into, or be awarded the right to enter into or receive funding under, any contract or any extension thereof;
 
  •  changes as a result of any action consented to in writing by the other party;
 
  •  the taking of any action expressly contemplated or required by the merger agreement, or the consummation of the transactions contemplated by the merger agreement; or
 
  •  any actions, claims, suits or proceedings arising out of or related to the merger agreement or any of the transactions contemplated by the merger agreement;
 
except to the extent, in the case of the first four bullet points above, that such changes would reasonably be expected to have a materially disproportionate impact on the condition (financial or otherwise), business, properties or results of operations of the party and its subsidiaries, taken as a whole, relative to other participants in the industries in which the party and its subsidiaries are involved (in which event the extent of such material adverse change may be taken into account in determining whether a material adverse effect has occurred).
 
Covenants and Agreements
 
Conduct of Business of CPI Pending the Merger
 
CPI has agreed to certain restrictions on it and its subsidiaries until the effective time of the merger. In general, except with Comtech’s prior written approval or as otherwise expressly contemplated or permitted by the merger


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agreement, CPI has agreed that until the effective time of the merger, it will, and will cause its subsidiaries to, conduct its operations in the ordinary and usual course of business consistent with past practice and, to the extent consistent therewith, to use its reasonable best efforts to preserve intact its present business organizations, to keep available the services of its current officers and employees, and preserve its relationships with customers, suppliers and others having business dealings with it to the end that goodwill and ongoing businesses will not be impaired in any material respect at the effective time of the merger. Without limiting the generality of the foregoing, CPI has also agreed, except with Comtech’s prior written approval or as otherwise expressly contemplated or permitted by the merger agreement that, until the effective time of the merger it will not and its subsidiaries will not, among other things:
 
  •  issue, deliver, sell, dispose of, pledge or otherwise encumber its capital stock, or any securities or rights convertible into or exchangeable for any such shares or ownership interests or permit or authorize any of the above other than the issuance of shares in connection with the exercise of options under any CPI equity compensation plan;
 
  •  redeem, purchase or otherwise acquire, or propose to redeem, purchase or otherwise acquire, its capital stock;
 
  •  split, combine, subdivide or reclassify any of its capital stock;
 
  •  declare, set aside for payment or pay any dividend in respect of any shares of its capital stock, other than dividends paid by one of its subsidiaries to another subsidiary or to CPI;
 
  •  adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of it or any of its subsidiaries or alter through merger, liquidation, reorganization or restructuring the corporate structure of any of its subsidiaries;
 
  •  amend its amended and restated certificate of incorporation or amended and restated bylaws or the organizational documents of any subsidiary;
 
  •  exempt any third party from any state anti-takeover law or adopt any shareholder rights plan;
 
  •  enter into, adopt, amend, renew or extend any employee benefit plan or any other compensatory program, policy or arrangement;
 
  •  increase the compensation of, or provide any benefit to, any current or former employee, officer, director or other consultant except as required by applicable law or the terms of any employee benefit plan in effect on the date of the merger agreement or except as in the ordinary course of business in accordance with past practice;
 
  •  hire any employee, officer, director or other consultant entitled to receive annual compensation in excess of $200,000;
 
  •  terminate (other than for cause consistent with past practice) the employment or service of any officer or director of CPI or any of its subsidiaries;
 
  •  enter into or make any loans to any of its officers, directors, employees, affiliates, agents or consultants (other than business expense advances in the ordinary course consistent with past practice) or make any change in existing borrowing or lending arrangements except as required by any equity or benefit plan maintained by CPI as of the date of the merger agreement;
 
  •  make any material change in financial accounting methods, principles or practices, except as required by a change in GAAP, the rules or policies of the Public Company Accounting Oversight Board or law;
 
  •  directly or indirectly acquire or agree to acquire any equity interest in, or business of, any entity;
 
  •  other than purchases and sales of inventory and supplies in the ordinary course of business, consistent with past practice, acquire, sell, lease (as lessor), license, or otherwise dispose of any tangible properties or assets in excess of $1,000,000, or sell, lease, license, mortgage, sell and leaseback or otherwise dispose of any real properties or any interests therein;


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  •  encumber any tangible properties or assets or any interests therein except as permitted by the merger agreement;
 
  •  make or change any material tax election or settle or compromise any material tax liability, change its fiscal year, change any accounting method for tax purposes and file any amended tax return, except, in each case, as required by law;
 
  •  other than in the ordinary course consistent with past practice and other than as between CPI and its subsidiaries, grant or acquire, or dispose of or permit to lapse, any rights to any material intellectual property or disclose any trade secret to any person other than the representatives of Comtech;
 
  •  incur any indebtedness (subject to certain thresholds and ordinary course exceptions), except for (i) indebtedness incurred in the ordinary course of business under CPI’s existing credit agreement, provided that such indebtedness may not exceed the amount outstanding as of the date of the merger agreement; (ii) guarantees by CPI or its subsidiaries of the indebtedness of CPI or any of its subsidiaries; or (iii) indebtedness among CPI and its subsidiaries;
 
  •  make, or agree or commit to make, any capital expenditure in excess of $1,000,000 or capital expenditures which in the aggregate exceed $3,000,000 for each six-month period beginning on the date of the merger agreement;
 
  •  enter into or amend any contract or take any other action if such contract, amendment or action would reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation of the merger or any of the other transactions contemplated by the merger agreement;
 
  •  enter into or amend any contract (including any exclusivity agreement) materially restricting the right of CPI to conduct its business as it is presently conducted or which could require the disposition of any material assets or line of business of CPI;
 
  •  enter into or amend any material contract to the extent that consummation of the merger would reasonably be expected to conflict with, or have certain other adverse consequences with respect to obligations or assets of CPI, or enter into certain contracts not in the ordinary course of business which are not terminable without penalty on notice of 90 days or less;
 
  •  voluntarily contribute or commit cash or funds to any pension plans or any administrator thereof for purposes of funding shortfalls in any pension plan other than as required by law;
 
  •  enter into a new line of business or engage in the conduct of any business other than the current lines of business of CPI and its subsidiaries and products and services reasonably ancillary thereto, or enter into a contract which limits or restricts CPI and its subsidiaries or Comtech and its affiliates from engaging or competing in any material line of business or in any material geographic area;
 
  •  file for any permit or approval outside of the ordinary course of business, the receipt of which would reasonably be likely to prevent or materially impair or delay the consummation of the transactions contemplated by the merger agreement;
 
  •  settle, compromise, dismiss, discharge or otherwise dispose of litigation or proceedings other than those that (i) do not involve payment of damages in excess of $50,000 individually or $100,000 in the aggregate, plus applicable reserves and insurance coverage, and do not involve material injunctive or other non-monetary relief or impose material restrictions on the business or operations of CPI or its subsidiaries and (ii) provide a complete release of CPI and its subsidiaries for all claims; provided, however, that CPI may settle, compromise, dismiss, discharge or otherwise dispose of litigation or proceedings based on the merger which involve payment of damages not in excess of $1,000,000 in the aggregate;
 
  •  take any action that would reasonably be expected to materially restrict or impede the consummation of the transactions contemplated by the merger agreement or cause any of the conditions to the closing of the merger as set forth in the merger agreement to fail to be satisfied as of the closing date;


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  •  except as described below under “— Covenants and Agreements — No Solicitation of Transactions by CPI,” approve or authorize any action to be submitted to the stockholders of CPI for approval that is intended, or would reasonably be expected, to prevent, impede, interfere with, delay, postpone or adversely affect the transactions contemplated by the merger agreement;
 
  •  enter into any settlement or commitment with any person (whether oral or in writing), including, without limitation, the City of Palo Alto, that may adversely affect any of the operations currently conducted at 607, 811 and 3120 Hansen Way, Palo Alto, California; or
 
  •  authorize any of, or commit, resolve or agree to take any of the foregoing actions.
 
No Solicitation of Transactions by CPI
 
CPI will not nor will it permit any of its subsidiaries to, nor will it authorize or knowingly permit any of its or any of its subsidiaries’ officers, directors, employees or representatives to (i) solicit, initiate or otherwise knowingly facilitate or encourage the submission of any acquisition proposal (as defined below), (ii) participate in any discussions or negotiations regarding any acquisition proposal or furnish to any person any non-public information with respect to or access to the properties of CPI in connection with an acquisition proposal, (iii) enter into any agreement or other understanding with respect to any acquisition proposal or enter into any agreement requiring CPI to terminate or otherwise fail to consummate the merger or (iv) fail to make, or withdraw or modify in a manner adverse to Comtech, the recommendation of the CPI board of directors in favor of the adoption of the merger agreement. Notwithstanding these restrictions, however, the merger agreement provides that, under specified circumstances at any time prior to the adoption of the merger agreement by CPI stockholders:
 
  •  CPI may, in response to an unsolicited acquisition proposal from a third party that the CPI board of directors or a committee thereof determines constitutes, or would reasonably be expected to lead to, a superior acquisition proposal (as defined below), directly or through its representatives, participate in negotiations or discussions with such party and furnish non-public information to such third party pursuant to a customary confidentiality agreement (provided that all such information is or has been provided or made available to Comtech).
 
  •  The CPI board of directors or any committee thereof may fail to make, or withdraw or modify in a manner adverse to Comtech, its recommendation in favor of the adoption of the merger agreement or may approve, recommend or endorse an unsolicited acquisition proposal, in each case either (i) following receipt of an unsolicited acquisition proposal made after the date of the merger agreement that CPI’s board of directors or a committee thereof determines constitutes a superior acquisition proposal or (ii) in response to a material event, development, circumstance, occurrence or change in circumstances or facts not related to a competing acquisition proposal that was not known to CPI’s board of directors or a committee thereof on the date of the merger agreement (or if known, the magnitude or material consequences of which were not known or understood as of that date).
 
Notwithstanding the two bullet points above, the CPI board of directors or a committee thereof may not change its recommendation or approve an unsolicited acquisition proposal unless CPI notifies Comtech of its intention to do so (together with a copy of the agreement for any proposed acquisition proposal) at least three business days prior to taking such action and Comtech does not, within three business days of receipt of such notice, make an offer that the CPI board of directors or a committee thereof determines, in good faith, after consultation with its outside financial and legal advisors, is at least as favorable to CPI stockholders as the acquisition proposal (if the intended recommendation change relates to an acquisition proposal) or that would obviate the need for the recommendation change (if the intended recommendation change relates to any other event). Furthermore, the actions described in the preceding two bullet points may be taken only if the CPI board of directors or a committee thereof determines in good faith, after consultation with its outside legal advisors, that failure to take such action would be reasonably likely to constitute a violation of its fiduciary duties under Delaware law.
 
CPI’s board of directors also may respond to any tender offer that may be made in order to comply with the requirements of Rule 14e-2 or Rule 14d-9 under the Exchange Act and make any disclosure to its stockholders if required by law or by the rules and regulations of the NASDAQ Global Select Market or, if the board of directors,


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after consultation with counsel, concludes in good faith that making such disclosure is required in order for the board to comply with its fiduciary duties under applicable law.
 
Comtech has the right to terminate the merger agreement if, prior to the special meeting, the CPI board of directors or a committee of the board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech. CPI has the right to terminate the merger agreement in order to enter into an acquisition that is a superior acquisition proposal. See “— Termination of the Merger Agreement” beginning on page [l] of this proxy statement/prospectus.
 
For the purposes of the merger agreement, “acquisition proposal” means any proposal or offer, whether in writing or otherwise, from any third party (other than Comtech, Merger Sub or their affiliates) to acquire beneficial ownership (as determined under Rule 13d-3 of the Exchange Act) of all or more than 15% of the assets of CPI and its subsidiaries, taken as a whole, or 15% or more of any class of equity securities of CPI pursuant to a merger, consolidation or other business combination, sale of shares of stock, sale of assets, tender offer, exchange offer or similar transaction or series of related transactions, which is structured to permit such third party to acquire beneficial ownership of more than 15% of the assets of CPI and its subsidiaries, taken as a whole, or 15% or more of any class of equity securities of CPI.
 
For the purposes of the merger agreement, “superior acquisition proposal” means any bona fide written acquisition proposal not solicited or initiated in violation of CPI’s non-solicitation obligations that (i) relates to an acquisition by a person or group acting in concert of either (A) more than 50% of CPI’s capital stock pursuant to a tender offer, merger or otherwise or (B) more than 50% of the assets used in the conduct of the business of CPI and its subsidiaries, taken as a whole, (ii) the CPI board determines in its good faith judgment (after consultation with outside legal counsel and the CPI board’s independent financial advisors) would, if consummated, result in a transaction (A) that offers for each share of CPI capital stock an amount in consideration greater than the merger consideration as of the date of determination and (B) that is, in light of the other terms of such proposal, more favorable to CPI stockholders than the transactions contemplated by the merger agreement, or in any other proposal made by Comtech after Comtech’s receipt of notice of CPI’s proposed board recommendation change in response to the superior acquisition proposal, and (iii) CPI’s board determines in good faith (after consultation with its financial advisors and its outside legal counsel) is reasonably capable of being consummated on the terms proposed, in each case taking into account all legal, financial, regulatory, fiduciary and other aspects of the proposal, and for which financing, if a cash transaction (whether in whole or in part), is then fully committed or reasonably determined to be available by CPI’s board.
 
CPI’s Proxy Statement, Recommendation and Stockholders Meeting; Comtech’s Registration Statement and Listing of Shares on NASDAQ
 
CPI, acting through its board, has agreed to use its reasonable best efforts to promptly (and, in any event, within 45 days after the date of the merger agreement) prepare and file a proxy statement in connection with the merger, respond promptly to any comments thereto by the Securities and Exchange Commission and undertake to obtain the necessary approvals by its stockholders. CPI further agreed to include its recommendation in the proxy statement and to convene a special meeting of its stockholders, within 45 days of the effective date of the proxy statement, to approve and adopt the merger agreement and the merger; provided that CPI may postpone the stockholders meeting for a maximum of 10 business days in order to amend the proxy statement as required by law or performance of the fiduciary duties of CPI’s board and provided further that CPI’s board may fail to make, withdraw or modify such recommendation in certain circumstances (as described in “— Covenants and Agreements — No Solicitation of Transactions by CPI,” above).
 
Comtech has agreed to use its reasonable best efforts to promptly (and, in any event, within 45 days after the date of the merger agreement) prepare and file a registration statement on Form S-4 and to respond promptly to any comments thereto by the Securities and Exchange Commission.
 
Both CPI and Comtech have agreed to cause their representatives to fully cooperate with the other in the preparation of the proxy statement or the registration statement on Form S-4, as the case may be, and neither CPI nor Comtech may amend the proxy statement or the registration statement on Form S-4, as the case may be, without the approval of the other party, which may not be unreasonably withheld or delayed.


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Comtech will use its reasonable best efforts to cause the shares of Comtech common stock to be issued in connection with the merger and approved for listing on the NASDAQ Global Select Market (where Comtech common stock is currently listed), subject to official notice of issuance, and CPI has agreed to reasonably cooperate with respect to such listing. Approval for listing on the NASDAQ Global Select Market of such shares of Comtech common stock is a condition to the obligations of Comtech and CPI to complete the merger. See “— Conditions to the Completion of the Merger — Mutual Closing Conditions” beginning on page [l] of this proxy statement/prospectus.
 
Efforts to Complete Transactions
 
Both Comtech and CPI will use their reasonable best efforts to take all actions, and do all things necessary, proper or advisable under applicable laws to consummate and make effective the merger, including, without limitation, obtaining all necessary or appropriate permits, consents, approvals, authorizations, qualifications and orders of governmental entities and parties to contracts with Comtech and CPI.
 
Comtech and CPI have agreed to use their reasonable best efforts to resist any action or proceeding and to contest any injunction or other order that prevents or otherwise restricts consummation of the merger unless either Comtech or CPI determines, in its reasonable discretion after consulting with the other party, that litigation is not in its best interests.
 
Although Comtech and CPI have agreed to use their reasonable best efforts to obtain all regulatory approvals required to consummate the merger, Comtech will not be required to take any action that would result in a burdensome condition, which means that Comtech will not be required to license, sell or dispose of any assets or impose any limitation on the conduct of the business of Comtech or CPI that, in either case, arise out of this merger and would be reasonably expected after the closing to result in the divestiture of a material asset of Comtech or CPI or have a material adverse effect on Comtech, CPI or the benefits which Comtech reasonably expects to be realized from the merger. Comtech and CPI have agreed that any business or assets acquired or to be acquired by Comtech after May 8, 2010 will not be deemed material for purposes of the previous sentence.
 
Until 90 days after the date of the merger agreement, Comtech will not, and will not permit its subsidiaries to, make any acquisition of any entity for consideration in excess of $150,000,000.
 
Comtech and CPI have agreed to cooperate in taking all actions necessary to have CPI common stock delisted from the NASDAQ Global Select Market and deregistered under the Exchange Act, which will become effective upon completion of the merger.
 
Access to Information
 
The merger agreement requires CPI to provide Comtech, upon reasonable notice, reasonable access to its officers, employees, accountants, consultants, representatives, plants, properties, contracts, commitments, books and records and to reasonably promptly furnish to Comtech all information regarding its business, properties and personnel as reasonably requested by Comtech. Any such access will be conducted under supervision and may not materially interfere with CPI’s operations. Other than information provided to Comtech’s counsel in connection with HSR filings, CPI will not be required to make available competitively sensitive pricing or customer information.
 
Any such information received by either party will be treated in accordance with a confidentiality agreement executed between Comtech and CPI.
 
Publicity
 
Comtech and CPI agreed, subject to certain exceptions, to consult with each other and mutually agree upon any press release or public announcement pertaining to the merger in advance of such announcement.


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Indemnification of Directors and Officers; Insurance
 
Under the terms of the merger agreement, for a period of six years following the merger, the certificate of incorporation and the bylaws of the surviving corporation will contain provisions relating to exculpation, indemnification and advancement of expenses that are no less favorable than the amended and restated certificate of incorporation of CPI or the amended and restated bylaws of CPI to the directors, officers, employees, fiduciaries or other agents of CPI. The merger agreement further requires that, for six years following the effective time of the merger, subject to certain exceptions, Comtech and the surviving corporation indemnify each present and former director, officer, employee, fiduciary and agent of CPI and its subsidiaries against losses arising out of their capacity as such. Finally, subject to certain limitations, the surviving corporation will maintain coverage under CPI’s existing directors’ and officers’ liability insurance policies with a scope and in an amount not less favorable than coverage existing as of the date of the merger agreement, provided that the surviving corporation may not be required to pay more than 200% of the annual premiums of such insurance policies as of the date of the merger agreement.
 
Employee Matters
 
Immediately following the closing, Comtech will provide continuing CPI employees with benefits pursuant to currently existing CPI benefit plans or the benefits plans of Comtech and its subsidiaries.
 
Comtech will provide, and will use its reasonable best efforts to cause its third-party insurers to provide, full credit to CPI’s continuing employees for their service to CPI as of the closing date in determining eligibility to participate in, and vesting with respect to any, “employee benefit plan,” as defined in Section 3(3) of the Employee Retirement Income Security Act (but not for purposes of benefit accrual under any defined benefit pension plans, special or early retirement programs, window separation programs, or similar plans which may be in effect from time to time).
 
Comtech will generally use its reasonable best efforts (i) to provide continuing employees of CPI with welfare benefit plans having pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods no less favorable than those maintained by CPI and (ii) to the extent such continuing employees participate in any health benefit plan of Comtech or its subsidiaries, to cause such health benefit plan to recognize the dollar amount of all co-payments, deductibles and similar expenses incurred by such continuing employees (and his or her eligible dependents) during such calendar year.
 
Comtech and CPI agreed that nothing in the merger agreement will be treated as an amendment to any employee benefit plan, prohibit Comtech from amending or terminating any employee benefit plan, limit the ability to terminate the employment or service of any individual or confer any rights on any person other than the parties to the merger agreement.
 
Notwithstanding any provision of the merger agreement, Comtech may negotiate and enter into employment agreements, effective as of the closing, with certain executive officers of CPI.
 
Termination of Certain Arrangements
 
CPI has agreed not to commence any new offer periods under its employee stock purchase plan after the date of the merger agreement. CPI will terminate the employee stock purchase plan as of the closing date.
 
Conduct of Comtech’s Business
 
Comtech has agreed that, until the effective time of the merger, except (i) with CPI’s prior written approval (which may not be unreasonably withheld, conditioned or delayed), (ii) as otherwise expressly contemplated or permitted by the merger agreement or (iii) for transactions between or among Comtech and its subsidiaries:
 
  •  Comtech will not, and will not permit any of its subsidiaries to, take or omit to take any action that would reasonably be expected to, individually or in the aggregate, result in any of the conditions to the merger set forth in the merger agreement not being satisfied or satisfaction of those conditions being delayed; and
 
  •  Comtech will not adopt or propose to adopt any amendments to its restated certificate of incorporation or amended and restated by-laws which would reasonably be expected to prevent or delay the consummation of


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  the merger or disproportionately adversely affect a holder of shares of CPI common stock relative to a holder of Comtech common stock.
 
Conditions to the Completion of the Merger
 
Mutual Closing Conditions
 
The obligation of each of Comtech, CPI and Merger Sub to complete the merger is subject to the satisfaction, at or prior to the effective time of the merger, of the following conditions:
 
  •  adoption of the merger agreement by holders of a majority of the outstanding shares of CPI common stock in accordance with applicable law and the amended and restated certificate of incorporation of CPI and the amended and restated bylaws of CPI;
 
  •  absence of any law, injunction or other order of a court or governmental entity of competent jurisdiction preventing completion of the merger;
 
  •  (i) expiration or termination of any applicable waiting period (or extensions thereof) relating to the merger under the HSR Act and (ii) all consents required under any other applicable competition law are obtained or any applicable waiting periods relating to the merger have expired or been terminated;
 
  •  approval for trading on the NASDAQ Global Select Market of the shares of Comtech common stock to be issued in the merger, subject to official notice of issuance; and
 
  •  the effectiveness of, and the absence of any stop order (or proceedings for that purpose) with respect to, the registration statement on Form S-4 of which this proxy statement/prospectus forms a part.
 
Additional Closing Conditions for CPI’s Benefit
 
The obligation of CPI to complete the merger is subject to the satisfaction, at or prior to the effective time, of the following additional conditions (any of which may be waived by CPI, in whole or in part, at any time prior to the effective time):
 
  •  the accuracy in all material respects as of the date of the merger agreement and as of the effective time of the merger (or, in the case of representations and warranties that by their terms address matters only as of another specified time, as of that time) of certain representations and warranties made in the merger agreement by Comtech regarding, among other matters, Comtech’s capital structure and Comtech’s corporate authority relative to the merger agreement;
 
  •  the accuracy of all other representations and warranties made in the merger agreement by Comtech (disregarding any materiality or material adverse effect qualifications contained in such representations and warranties) as of the effective time of the merger (or, in the case of representations and warranties that by their terms address matters only as of another specified time, as of that time), except for any such inaccuracies that have not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Comtech;
 
  •  performance and compliance in all material respects by Comtech of the obligations required to be performed by it or complied with at or prior to the effective time of the merger;
 
  •  absence of a material adverse effect on Comtech since the date of the merger agreement; and
 
  •  except as previously disclosed to CPI, the absence of any pending litigation or proceeding of any kind which would reasonably be expected to have a material adverse effect on Comtech.


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Additional Closing Conditions for Comtech’s and Merger Sub’s Benefit
 
The obligation of Comtech and Merger Sub to complete the merger is subject to the satisfaction, at or prior to the effective time, of the following additional conditions (any of which may be waived by Comtech and Merger Sub, in whole or in part, at any time prior to the effective time):
 
  •  the accuracy in all material respects as of the date of the merger agreement and as of the effective time of the merger (or, in the case of representations and warranties that by their terms address matters only as of another specified time, as of that time) of certain representations and warranties made in the merger agreement by CPI regarding, among other matters, CPI’s capital structure, CPI’s corporate authority relative to the merger agreement, conformity of the merger with the organizational documents of CPI and its subsidiaries, lack of a material adverse effect with respect to CPI and receipt by CPI of fairness opinions from each of J.P. Morgan and Moelis;
 
  •  the accuracy of all other representations and warranties made in the merger agreement by CPI (disregarding any materiality or material adverse effect qualifications contained in such representations and warranties) as of the effective time of the merger (or, in the case of representations and warranties that by their terms address matters only as of another specified time, as of that time), except for any such inaccuracies that have not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on CPI;
 
  •  performance and compliance in all material respects by CPI of the obligations required to be performed by it or complied with at or prior to the effective time of the merger;
 
  •  absence of a material adverse effect on CPI since the date of the merger agreement;
 
  •  except as previously disclosed to Comtech, the absence of any pending litigation or proceeding of any kind which would reasonably be expected to have a material adverse effect on CPI; and
 
  •  absence of any pending action or proceeding of any kind by any governmental entity that (i) challenges or seeks to make illegal, delay materially or otherwise directly or indirectly prohibit the completion of the merger, (ii) seeks to prohibit Comtech’s or Merger Sub’s ability to exercise effectively full rights of ownership of CPI’s common stock following the completion of the merger or (iii) seeks to compel Comtech, CPI or any of their respective subsidiaries to take any burdensome action described under “— Covenants and Agreements — Efforts to Complete Transactions” beginning on page [l] of this proxy statement/prospectus.
 
Termination of the Merger Agreement
 
Termination by Mutual Consent
 
The merger agreement may be terminated at any time before the completion of the merger by mutual written consent of Comtech and CPI.
 
Termination by Either Comtech or CPI
 
The merger agreement may also be terminated prior to the completion of the merger by either Comtech or CPI if:
 
  •  a court or other government entity has issued an order enjoining or has otherwise prohibited the merger and such injunction or prohibition has become final and non-appealable;
 
  •  CPI stockholder approval is not received at the duly called and held special meeting of CPI stockholders; or
 
  •  the closing has not occurred on or before December 1, 2010; provided that either Comtech or CPI may extend such date by 45 days, subject to certain limitations, if the closing has not occurred because of the failure to obtain a required approval from one or more regulatory authorities.


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Termination by Comtech
 
The merger agreement may also be terminated prior to the completion of the merger by Comtech (provided that Comtech is not then in breach of any of its representations, warranties, covenants or agreements, such that Comtech could not satisfy the applicable conditions to the closing related to its representations, warranties and obligations under the merger agreement) if:
 
  •  CPI has breached or failed to perform any of its representations, warranties, covenants or agreements, such that CPI could not satisfy the applicable conditions to the closing related to its representations, warranties, covenants, and obligations, and such breach or failure to perform is incapable of being cured by December 1, 2010 (or valid extension of such date) or has not been cured within 30 days of written notice from Comtech;
 
  •  the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in connection with a superior acquisition proposal (see “— Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus); or
 
  •  the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in response to a material event, development, circumstance, occurrence or change in circumstances or facts not related to a competing acquisition proposal that was not known to CPI’s board of directors on the date of the merger agreement (or if known, the magnitude or material consequences of which were not known or understood as of that date) (see “— Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus).
 
Termination by CPI
 
The merger agreement may also be terminated prior to the completion of the merger by CPI (provided that CPI is not then in breach of any of its representations, warranties, covenants or agreements, such that CPI could not satisfy the applicable conditions to the closing related to its representations, warranties and obligations under the merger agreement):
 
  •  if Comtech has breached or failed to perform any of its representations, warranties, covenants or agreements, such that Comtech could not satisfy the applicable conditions to the closing related to its representations, warranties, covenants, and obligations, and such breach or failure to perform is incapable of being cured by December 1, 2010 (or valid extension of such date) or has not been cured within 30 days of written notice from CPI; or
 
  •  in order to enter into a superior acquisition proposal subject to its obligations to pay Comtech a termination fee (see “— Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus).
 
Termination Fee and Liquidated Damages Payable by CPI
 
CPI has agreed to pay a termination fee of $12 million to Comtech if the merger agreement is terminated under any of the following circumstances:
 
  •  Comtech terminates the merger agreement because the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in connection with a superior acquisition proposal;
 
  •  CPI terminates the merger agreement in order to enter into a superior acquisition proposal;
 
  •  the CPI board of directors changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech, and Comtech or CPI terminates the merger agreement because CPI stockholder approval is not received at the duly called and held special meeting of CPI stockholders;
 
  •  (i) an acquisition proposal is made for CPI; (ii) the CPI board of directors does not change its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech; (iii) Comtech or CPI terminates the merger agreement because CPI stockholder approval is not received at the duly called and


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  held special meeting of CPI stockholders; and (iv) within 12 months, CPI enters into a definitive agreement or consummates an alternative transaction; or
 
  •  (i) an acquisition proposal is made for CPI; (ii) Comtech or CPI terminates the merger agreement because (a) a court or other government entity has issued an order enjoining or has otherwise prohibited the merger and such injunction or prohibition has become final and non-appealable or (b) the closing has not occurred on or before December 1, 2010 (or as otherwise validly extended); and (iii) within 12 months, CPI enters into a definitive agreement or consummates an alternative transaction.
 
In addition, CPI has agreed to pay liquidated damages of $15 million to Comtech if Comtech terminates the merger agreement because the CPI board of directors or a committee thereof changes its recommendation in favor of the adoption of the merger agreement in a manner adverse to Comtech in response to a material event, development, circumstance, occurrence or change in circumstances or facts not related to a competing acquisition proposal that was not known to CPI’s board of directors or a committee thereof on the date of the merger agreement (or if known, the magnitude or material consequences of which were not known or understood as of that date).
 
If the merger agreement is terminated and pursuant to the terms of the merger agreement, Comtech is entitled to receive a termination fee or liquidated damages, the receipt of the termination fee or liquidated damages, as applicable, will be Comtech’s exclusive remedy, and Comtech will not be entitled to any further or other rights, claims or remedies at law or in equity, all of which further or other rights, claims and remedies Comtech has irrevocably waived in the merger agreement.
 
For the purposes of the merger agreement, “alternative transaction” means a transaction of a type described in the definition of “acquisition proposal” under “— Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus except that the references to 15% in such definition of “acquisition proposal” are deemed to be references to 50%.
 
Payment of Expenses; Specific Performance; Modification or Amendment; and Waiver of Conditions
 
Payment of Expenses
 
Other than as described above under “— Termination of the Merger Agreement — Termination Fee Payable by CPI” the merger agreement provides that each party will pay its own fees and expenses in connection with the merger agreement.
 
Specific Performance
 
The parties to the merger agreement are entitled to injunctions to prevent breaches of the merger agreement and to enforce specifically the terms and provisions of the merger agreement in addition to any and all other remedies at law or in equity.
 
Modification or Amendment
 
The parties to the merger agreement may modify or amend the merger agreement by written agreement executed and delivered by their duly authorized officers, provided that, after approval of the merger agreement by CPI stockholders, no amendment may be made which by law requires further approval by CPI stockholders, without the approval of such stockholders.
 
Waiver
 
Comtech or CPI may waive, in whole or in part, compliance with any of the conditions to its obligation to consummate the merger to the extent permitted by law.


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THE VOTING AND STANDSTILL AGREEMENT
 
The following is a summary of the material terms and conditions of the voting and standstill agreement. This summary may not contain all the information about the voting and standstill agreement that is important to you. This summary is qualified in its entirety by reference to the voting and standstill agreement, which is attached as Annex B to, and incorporated by reference into, this proxy statement/prospectus. You are encouraged to read the voting and standstill agreement in its entirety.
 
Concurrently with the execution and delivery of the merger agreement, on May 8, 2010, Cypress Merchant Banking Partners II L.P., Cypress Merchant B II C.V. and 55th Street Partners II L.P., which are referred to as the Cypress Group stockholders in this proxy statement/prospectus, entered into a voting and standstill agreement with Comtech. As of [l], 2010, the Cypress Group stockholders collectively held [l] shares of CPI common stock, or approximately [l]% of the outstanding.
 
Agreement to Vote
 
The voting and standstill agreement obligates the Cypress Group stockholders to vote 49.9% of the outstanding shares of CPI common stock at any meeting of CPI stockholders (or any adjournment or postponement thereof) as follows (provided, that the Cypress Group stockholders remain free to vote any shares of CPI common stock which they own in excess of 49.9% of the outstanding shares in any manner they deem appropriate):
 
  •  in favor of the adoption and approval of the merger agreement, the merger and the other transactions contemplated by the merger agreement;
 
  •  against any action, proposal, transaction or agreement that would reasonably be expected to result in a breach of a covenant, representation or warranty in the merger agreement or the voting and standstill agreement; and
 
  •  against any alternative acquisition proposal, any change in the members of the CPI board of directors, any material change in the capitalization of CPI or an amendment to its amended and restated certificate of incorporation or amended and restated bylaws, any material change in CPI’s corporate structure or business or any other action or proposal reasonably expected to prevent, impede, interfere with, delay, postpone or adversely affect the transactions contemplated by the merger agreement.
 
However, if the CPI board of directors makes a board recommendation change (see “The Merger Agreement — Covenants and Agreements — No Solicitation of Transactions by CPI” beginning on page [l] of this proxy statement/prospectus) related to a superior acquisition proposal, the Cypress Group stockholders will only be required to vote 25% of the outstanding shares of CPI common stock in the manner described in the paragraph above. In such case, each Cypress Group stockholder’s remaining shares may be voted in a manner deemed appropriate by such Cypress Group stockholder in its sole discretion. In addition, if the CPI board of directors makes a board recommendation change for any reason other than in connection with a superior acquisition proposal and the five-day average closing price of Comtech common stock immediately prior to the change of recommendation is less than $24.00, the Cypress Group stockholders will again only be required to vote 25% of the outstanding shares of CPI common stock in the manner described in the paragraph above. As above, each Cypress Group stockholder’s remaining shares may be voted in a manner deemed appropriate by such Cypress Group stockholder in its sole discretion.
 
Transfer and Other Restrictions
 
In addition, the Cypress Group stockholders have agreed to certain restrictions on the transfer of the shares of CPI common stock owned by them until the earlier of the effective time of the merger or the termination of the merger agreement. During this period, the Cypress Group stockholders may not, among other things, (i) sell, transfer, tender, pledge, encumber or assign or otherwise dispose of their shares of CPI common stock, (ii) solicit any proxies for the voting of CPI common stock (other than to recommend that stockholders vote in favor of the merger and the merger agreement), (iii) make any public announcement with respect to, or submit a proposal for, or offer of any extraordinary transaction involving CPI, or (iv) take any actions which could reasonably be expected to prevent, impede, interfere with or adversely affect the completion of the merger.


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For a period of two years following the completion of the merger, the Cypress Group stockholders have agreed to not, among other things, (i) sell, transfer, tender, pledge, encumber or assign or otherwise dispose of their shares of Comtech common stock received in the merger other than as contemplated by the voting and standstill agreement (as described below), (ii) acquire any additional shares of Comtech common stock, (iii) solicit any proxies for the voting of Comtech common stock, or (iv) make any public announcement with respect to, or submit a proposal for, or offer any extraordinary transaction involving Comtech.
 
The Cypress Group stockholders have agreed not to transfer or sell any shares of Comtech common stock for six months following the completion of the merger. Following such six-month period, the Cypress Group stockholders will be permitted to sell the shares of Comtech common stock they hold to certain permitted transferees in one or more block trades or through a broker-dealer on a national securities exchange, provided that with respect to trades through a broker-dealer, during any three-month period, the Cypress Group stockholders are limited to selling the greater of 2.5% of the total outstanding shares of Comtech or an amount equal to the average weekly trading volume for the four weeks prior to the proposed sale. With respect to block trades, the Cypress Group stockholders are prohibited from selling shares of Comtech common stock to any person that (i) would, to the actual knowledge of the Cypress Group stockholder (without any duty of inquiry with respect to an exchange transaction other than review of filings on the web site of the Securities and Exchange Commission), own more than 5% of the number of outstanding Comtech common stock following such sale, (ii) has submitted a stockholder proposal to Comtech, (iii) solicited proxies to vote shares of Comtech common stock, or (iv) has made a public announcement regarding any extraordinary transaction involving Comtech. Following the six-month period referred to above, the Cypress Group stockholders are permitted to tender their shares in a tender offer for Comtech’s common stock after providing Comtech with a right of first refusal on such shares at the tender offer price (payable in cash).
 
No Solicitation
 
The Cypress Group stockholders have also agreed not to knowingly (subject to certain exceptions) solicit or initiate any acquisition proposal for CPI, participate in any discussions or negotiations regarding any acquisition proposals for CPI, or enter into any agreement with respect to an acquisition proposal for CPI, or an agreement requiring such Cypress Group stockholder to abandon, terminate or fail to consummate the merger.
 
Termination
 
The voting and standstill agreement terminates upon the earliest of (i) the mutual agreement of the stockholders and Comtech, (ii) the termination of the merger agreement or (iii) the second anniversary of the merger.


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INTERESTS OF CERTAIN PERSONS IN THE MERGER
 
Interests of Certain Persons in the Merger
 
In considering the recommendation of the CPI board of directors that stockholders adopt the merger agreement, stockholders should be aware that CPI’s directors and executive officers have financial interests in the merger, in addition to their interests as stockholders of CPI entitled to receive the merger consideration (set forth below), that may be different from, or in addition to, the interests of CPI stockholders generally. The CPI board of directors was aware of these interests, and considered these interests, among other matters, in evaluating and negotiating the merger agreement and in recommending to CPI stockholders that the merger agreement be adopted.
 
CPI Non-Employee Directors
 
CPI Common Stock Ownership
 
CPI’s non-employee directors hold shares of CPI common stock that are not subject to any vesting restrictions or other restrictions, and, if they still hold such shares at the effective time of the merger, will receive the merger consideration for such shares upon completion of the merger.
 
The following table sets forth the number of shares of CPI common stock (excluding shares of restricted stock that remain subject to vesting restrictions) held by CPI’s non-employee directors as of June 4, 2010.
 
Non-Employee Director CPI Common Stock Ownership
 
         
    Number of Shares
    of CPI Common Stock
    Held as of
    June 4, 2010(1)
 
Michael Targoff
    74,528  
Michael F. Finley
    31,716  
Stephen R. Larson
    7,153  
Jeffrey P. Hughes(2)
    8,264  
William P. Rutledge
    14,008  
 
 
(1) Excludes shares subject to continuing vesting restrictions under applicable incentive plans.
 
(2) Includes shares held directly by Mr. Hughes. Does not include shares owned by the Cypress Group stockholders as to which Mr. Hughes may be deemed to have beneficial ownership.
 
CPI Option and Restricted Stock Treatment
 
As part of their overall compensation for services on the CPI board of directors, each of CPI’s non-employee directors has received certain equity grants in the form of options to purchase CPI common stock and/or grants of shares of CPI restricted common stock.
 
The merger agreement provides that each stock option granted to CPI’s non-employee directors under CPI’s equity compensation plans and outstanding immediately prior to completion of the merger will be cancelled upon completion of the merger and exchanged for an amount, in cash, equal to the excess, if any, of (i) the sum of (A) $9.00 and (B) the cash value of the per share closing prices of Comtech common stock for the 10 consecutive trading days immediately preceding the date that is two days before closing of the merger, as reported on the NASDAQ Global Select Market, multiplied by the conversion ratio, reduced by (ii) the per-share exercise price of such option.
 
The following table sets forth the number of outstanding unvested and vested in-the-money stock options, including the weighted average exercise price for each, to acquire CPI common stock held by CPI’s non-employee directors as of June 4, 2010, and the estimated cash consideration that each of them will receive upon cancellation of such options upon completion of the merger. The actual cash amount payable upon completion of the merger may vary, depending on the trading value of Comtech common stock prior to completion of the merger. The table is


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based upon the assumption of a trailing 10-trading day average for the closing trading price of Comtech common stock of $30.00 per share on the date that is two days prior to completion of the merger (resulting in aggregate cash merger consideration of $16.15 per share of CPI common stock subject to each option).
 
Cash Consideration to be Received by Non-Employee Directors upon
Vesting and Cancellation of All Outstanding CPI Stock Options at Closing
 
                                         
        Weighted
      Weighted
   
        Average
      Average
   
    No. of Shares
  Exercise
  No. of Shares
  Exercise
   
    Underlying
  Price
  Underlying
  Price
   
    Unvested
  of Unvested
  Vested
  of Vested
   
    In-the-Money
  In-the-Money
  In-the-Money
  In-the-Money
  Total Estimated
    Options
  Options
  Options
  Options
  Resulting Cash-Out
Name
  (#)   ($)   (#)   ($)   Payment ($)(1)
 
Michael Targoff
                24,157       4.32       289,938  
Michael F. Finley
                             
Stephen R. Larson
                             
Jeffrey P. Hughes
                             
William P. Rutledge
                             
 
 
(1) Actual cash payment received will depend upon the trailing 10-day average closing trading price of Comtech common stock for the period ending two days before completion of the merger.
 
The merger agreement provides that each restricted stock award that was granted to CPI’s non-employee directors under CPI’s equity compensation plans and that is outstanding immediately prior to the closing will be canceled at the closing in exchange for a payment, in cash, equal to the sum of (A) $9.00 and (B) the trailing 10-day average closing trading price of Comtech common stock for the period ending two days before completion of the merger, as reported on the NASDAQ Global Select Market, multiplied by the conversion ratio.
 
The following table sets forth the number of CPI restricted shares held by CPI’s non-employee directors as of June 4, 2010, and the estimated cash consideration that each of them will receive upon cancellation of such shares upon completion of the merger. The actual cash amount payable upon completion of the merger may vary, depending on the trading value of Comtech common stock prior to completion of the merger. The table is based upon the assumption of a trailing 10-trading day average for the closing trading price of Comtech common stock of $30.00 per share on the date that is two days prior to completion of the merger (resulting in an aggregate cash merger consideration of $16.15 per share of restricted stock).
 
Cash Consideration to be Received by Non-Employee Directors upon
Vesting and Cash-Out of all Outstanding CPI Restricted Shares
 
                 
    No. of
   
    Accelerated
   
    Unvested
   
    CPI
   
    Restricted
   
    Shares
  Total Estimated Resulting
Name
  (#)   Cashout Payment ($)(1)
 
Michael Targoff
    3,642       58,804  
Michael F. Finley
    3,215       51,909  
Stephen R. Larson
    9,646       155,744  
Jeffrey P. Hughes
    9,646       155,744  
William P. Rutledge
    3,642       58,804  
 
 
(1) Actual cash payment received will depend upon the trailing 10-day average closing trading price of Comtech common stock for the period ending two days before completion of the merger.


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Fees Paid to Members of the Special Committee of CPI’s board of directors
 
The board of directors of CPI established a special committee consisting of Mr. Finley, Mr. Rutledge and Mr. Targoff for the purpose of reviewing, evaluating and, as appropriate, negotiating or participating in negotiations with respect to Comtech’s expression of interest and alternatives thereto. Mr. Finley was appointed as the chairman of the committee. As compensation for their service as members of the special committee, each of the members of the committee received a one-time fee of $10,000 ($15,000 for the chairman). In addition, each member of the special committee is entitled to receive $1,500 for each meeting of the special committee attended having a duration of not less than 30 minutes but less than three hours and $3,000 for each meeting of the special committee attended having a duration of three hours or more.
 
The following table sets forth the aggregate amount of cash fees that CPI expects to pay to each member of the special committee in respect of their service through the date of this proxy statement/prospectus.
 
Aggregate Cash Fees Paid or Payable to Members of CPI’s Special Committee
 
         
Name
  Total Fees Payable ($)
 
Michael Targoff
    22,000  
Michael F. Finley
    30,000  
William P. Rutledge
    25,000  
 
Interests of Mr. Hughes arising out of his affiliation with Cypress Associates
 
Mr. Hughes is a managing member of Cypress Associates. CPI has agreed to reimburse Cypress Associates for certain legal fees and other expenses incurred and to be incurred by Cypress Associates in connection with the negotiation and execution of the voting and standstill agreement with Comtech and other items relating to the Merger. The aggregate amount of such fees is not expected to exceed $[l].
 
CPI Executive Officers
 
The executive officers of CPI are expected to continue in employment with the surviving company or its subsidiaries in their current capacities immediately following the merger, unless they voluntarily terminate their employment or are terminated by Comtech. Comtech is presently in negotiations with CPI’s executive officers regarding the terms of their continued employment and treatment of their equity awards, and, if no such agreement is reached, some or all of the executive officers might not continue with the surviving company or its subsidiaries in their current capacity or otherwise.
 
Severance Arrangements
 
Each of CPI’s executive officers has entered into agreements with CPI that provide for certain severance benefits upon a qualifying termination of such executive’s employment. For certain of the executive officers, these benefits are enhanced for qualifying terminations following a change-of-control event, which includes the merger. For comparative purposes, the following describes the benefits that would be provided to the officers in the case of a qualifying termination of employment, both prior to and following a change-of-control event.
 
Messrs. Caldarelli, Fickett and Littman
 
If the employment of any of these executive officers is terminated by the employer without cause or by the executive officer for good reason (each as defined in the applicable agreement) before the occurrence of a change-of-control event, then the executive officer will be entitled to receive severance payments equal to a multiple of the sum of the executive officer’s base salary and the average value of bonuses under CPI’s management incentive plan and other performance bonuses received by the executive officer for the three fiscal years preceding the termination date. The applicable multiples for Messrs. Caldarelli, Fickett and Littman are 2.0, 1.5 and 1.5, respectively. If the qualifying termination occurs more than six months after the beginning of a fiscal year, then the executive officer will be eligible to receive a prorated bonus for the year of termination. Messrs. Caldarelli, Fickett and Littman will


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also be eligible to continue receiving certain benefits for 24 months, 18 months and 18 months, respectively, following termination.
 
In the case of a termination of any of these executive officers by the employer without cause or by the executive officer for good reason within the two-year period following a change-of-control event, the severance payments will be equal to a specified multiple of the sum of the executive officer’s base salary and