STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of May 3, 2001, by and
among EFTC CORPORATION, a Colorado corporation ("EFTC"), XXXXXX-XXXX FUNDING,
L.L.C., a Delaware limited liability company ("TBF"), XXXXXX-XXXX FUNDING III,
L.L.C., a Delaware limited liability company ("TBF III") and EXPRESS EMS
CORPORATION, a newly-formed Delaware corporation with nominal capitalization,
the issued and outstanding capital stock of which is nominally owned by EFTC
("Parent").
WHEREAS, TBF owns a controlling interest in EFTC, and TBF III, an affiliate
of TBF, owns Xxxxxx-XXXX Funding II, L.L.C. ("TBF II"), which owns all of the
outstanding capital stock of K*TEC Electronics Holding Corporation ("K*TEC");
WHEREAS, because of the ownership of such interests in EFTC and K*TEC by
affiliated entities the board of directors of EFTC formed a special committee
(the "Special Committee") to evaluate a proposal by K*TEC to combine the
business of EFTC and K*TEC;
WHEREAS, the Boards of Directors of EFTC and K*TEC, the Special Committee
and the sole member of TBF II deem it advisable and in the best interests of
each entity and their respective equity owners that EFTC and TBF II combine in
order to advance the interests of EFTC and TBF II and their respective
shareholders and member;
WHEREAS, the combination of EFTC and TBF II (the "Merger") shall be
effected by the terms of the Amended and Restated Agreement and Plan of Merger
by and among EFTC, Parent, K*TEC and TBF II (as amended from time to time prior
to the Effective Time defined therein, the "Merger Agreement");
WHEREAS, as a condition to EFTC's execution of the Merger Agreement, TBF
and TBF III have agreed to execute this Agreement whereby, among other things,
TBF agrees to convert the Senior Subordinated Convertible Note Due June 30,
2006, issued on August 23, 2000 by EFTC to TBF (the "Convertible Note") and all
shares of EFTC's Series B Convertible Preferred Stock (the "Preferred Stock")
into Common Stock of EFTC (the "Conversion Shares");
WHEREAS, the parties hereto desire to amend and restate the Stockholder
Agreement (the "Stockholder Agreement") dated as of May 2, 2001 by and among
EFTC, TBF, TBF II and Parent to release TBF II and add TBF III as parties
thereto and to reflect certain changes in the Merger Agreement: and
NOW, THEREFORE, in connection with and in consideration of the foregoing
and the Merger and the other transactions contemplated by the Merger Agreement,
and the respective representations, warranties, covenants and agreements set
forth below, the parties amend and restate the Stockholder Agreement, which is
hereby superseded by this Agreement in its entirety, and hereby further agree as
follows:
ARTICLE I
DEFINITIONS; REPRESENTATIONS AND WARRANTIES
Section 1.1. Defined Terms. All capitalized terms used herein and not
defined shall have the meanings assigned to them in the Merger Agreement.
Section 1.2. Representations and Warranties of TBF. TBF represents and
warrants to EFTC as follows:
(a) Ownership of Securities. TBF is the record and beneficial owner
of the Convertible Note, the Preferred Stock and 5,625,000 additional
shares of EFTC Common Stock (the "Additional Shares"). TBF now has (with
respect to the Preferred Stock and
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Additional Shares) and will have (with respect to the Conversion Shares
upon conversion of the Convertible Note and the Preferred Stock) sole
voting power and sole power to issue instructions with respect to the
voting of the Preferred Stock, the Additional Shares and the Conversion
Shares, sole power of disposition, sole power of exercise or conversion and
the sole power to demand appraisal rights, in each case with respect to the
Convertible Note and all of the Preferred Stock, the Additional Shares and
the Conversion Shares.
(b) Power; Binding Agreement. TBF has the legal capacity, power and
authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by TBF
will not violate any other agreement to which TBF is a party including,
without limitation, any trust agreement, voting agreement, stockholder's
agreement or voting trust. This Agreement has been duly and validly
executed and delivered by TBF and constitutes a valid and binding agreement
of TBF, enforceable against TBF in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a
proceeding at law or in equity.
(c) No Conflicts. No filing (except for filings with the SEC) with,
and no permit, authorization, consent or approval of, any state or federal
public body or authority is necessary for the execution of this Agreement
by TBF and the consummation by TBF of the transactions contemplated hereby
and neither the execution and delivery of this Agreement by TBF nor the
consummation by TBF of the transactions contemplated hereby nor compliance
by TBF with any of the provisions hereof shall conflict with or result in
any breach of any applicable limited liability company agreement or other
organizational documents applicable to TBF, result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third-party right of termination,
cancellation, material modification or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or
other instrument or obligation of any kind to which TBF is a party or by
which TBF's properties or assets may be bound or violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable
to TBF or any of TBF's properties or assets, except as would not have a
material adverse effect on the ability of TBF to perform its obligations
hereunder.
(d) No Liens. The Additional Shares, the Preferred Stock and the
Convertible Note are now, and the Conversion Shares upon conversion of the
Preferred Stock and the Convertible Note will be, and at all times during
the term hereof will be held by TBF, or by a nominee or custodian for the
benefit of TBF, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for any encumbrances arising
hereunder and under applicable securities laws.
(e) Tax Matters. To the best knowledge of TBF, after consulting with
its tax advisors, neither TBF nor any of its Affiliates has taken or agreed
to take any action
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which would (i) prevent the EFTC Merger from qualifying as a reorganization
described in Section 368(a) of the Code and/or, taken together with the
K*TEC Merger, as a transfer of property described in Section 351 of the
Code to Parent by holders of EFTC Common Stock and TBF II Units or (ii)
prevent the K*TEC Merger taken with the EFTC Merger from qualifying as a
transfer of property described in Section 351 of the Code to Parent by
holders of TBF II Units and EFTC Common Stock. TBF does not have a present
plan, intention or arrangement to sell or otherwise dispose of Parent
Common Stock received in the K*TEC Merger.
(f) Xxxx-Xxxxx-Xxxxxx. No filing will be required by TBF under the
HSR Act in connection with the transactions contemplated by the Merger
Agreement because the "ultimate parent entity" (as such term is defined in
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 ("HSR")) of TBF is
the same as the ultimate parent entity of TBF III.
Section 1.3. Representations and Warranties of TBF III. TBF III
represents and warrants to EFTC as follows:
(a) Ownership of Securities. TBF III owns all the membership
interests in TBF II, which is the record and beneficial owner of all of the
outstanding capital stock of K*TEC, consisting of 23,000,000 shares common
stock of K*TEC, par value $.01 (the "K*TEC Shares"). TBF III has sole
voting power and sole power to issue instructions with respect to the
voting of the TBF II Units, sole power of disposition and sole power of
exercise or conversion, in each case with respect to all of the TBF II
Units.
(b) Power; Binding Agreement. TBF III has the legal capacity, power
and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by
TBF III will not violate any other agreement to which TBF III is a party
including, without limitation, any trust agreement, voting agreement,
stockholder's agreement or voting trust. This Agreement has been duly and
validly executed and delivered by TBF III and constitutes a valid and
binding agreement of TBF III, enforceable against TBF III in accordance
with its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is
considered in a proceeding at law or in equity.
(c) No Conflicts. No filing (except for filings with the SEC) with,
and no permit, authorization, consent or approval of, any state or federal
public body or authority is necessary for the execution of this Agreement
by TBF III and the consummation by TBF III of the transactions contemplated
hereby and neither the execution and delivery of this Agreement by TBF III
nor the consummation by TBF III of the transactions contemplated hereby nor
compliance by TBF III with any of the provisions hereof shall conflict with
or result in any breach of any applicable limited liability company
agreement or other organizational documents applicable to TBF III, result
in a violation or breach of, or constitute (with or without notice or lapse
of time or both) a default (or give rise to any third-party right of
termination, cancellation, material modification or
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acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to
which TBF III is a party or by which TBF III's properties or assets may be
bound or violate any order, writ, injunction, decree, judgment, order,
statute, rule or regulation applicable to TBF III or any of TBF III's
properties or assets, except as would not have a material adverse effect on
the ability of TBF III to perform its obligations hereunder.
(d) No Liens. TBF III represents that the TBF II Units are now, and
at all times during the term hereof will be, held by TBF III, or by a
nominee or custodian for the benefit of TBF III, free and clear of all
liens, claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever, except
for encumbrances arising hereunder, and under applicable securities laws.
(e) Tax Matters. To the best knowledge of TBF III, after consulting
with its tax advisors, neither TBF III nor any of its Affiliates has taken
or agreed to take any action which would (i) prevent the EFTC Merger from
qualifying as a reorganization described in Section 368(a) of the Code
and/or, taken together with the K*TEC Merger, as a transfer of property
described in Section 351 of the Code to Parent by holders of EFTC Common
Stock and TBF II Units or (ii) prevent the K*TEC Merger taken with the EFTC
Merger from qualifying as a transfer of property described in Section 351
of the Code to Parent by holders of TBF II Units and EFTC Common Stock. TBF
III does not have a present plan, intention or arrangement to sell or
otherwise dispose of Parent Common Stock received in the K*TEC Merger.
(f) Xxxx-Xxxxx-Xxxxxx. No filing will be required by TBF III or TBF
II under the HSR Act in connection with the transactions contemplated by
the Merger Agreement because the "ultimate parent entity" of TBF III is the
same as the ultimate parent entity of TBF.
ARTICLE II
VOTING
Section 2.1. Agreement to Vote Shares. At every meeting of the
stockholders of EFTC called with respect to any of the following, and at every
adjournment thereof, and on every action or approval by written consent of the
shareholders of EFTC with respect to any of the following, TBF shall vote or
cause to be voted all of the Additional Shares, the Preferred Stock, the
Conversion Shares or any other shares of EFTC's capital stock that TBF
beneficially owns on the record date of any such vote (i) in favor of the
Merger, the adoption of the Merger Agreement and the approval of the terms
thereof and (ii) against any action that would impede, interfere with, delay,
postpone, or materially adversely affect the consummation of the Merger or the
transactions contemplated by the Merger Agreement or this Agreement. TBF will
retain at all times during the term hereof the right to vote the Additional
Shares, the Preferred Stock and the
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Conversion Shares (as applicable), in TBF's sole discretion, on all matters
other than those in this Article II which are at any time or from time to time
presented to EFTC's shareholders.
ARTICLE III
COVENANTS
Section 3.1. Conversion of Securities. TBF shall, on or before May 31,
2001, (i) convert the Convertible Note into EFTC Common Stock in accordance with
the terms of Section 8 of the Convertible Note and (ii) convert all shares of
Preferred Stock into EFTC Common Stock in accordance with the terms of Section 4
of the Designations, Preferences, Limitations and Relative Rights of the Series
B Convertible Preferred Stock of EFTC's Articles of Incorporation.
Section 3.2. Nasdaq Listing.
(a) Except for the conversion of EFTC Common Stock pursuant to Section
2.1(c) of the Merger Agreement (the effect of which cannot be predetermined),
each of Parent, TBF and TBF III agrees that it will take no affirmative action
to delist the Common Stock of Parent, $0.01 par value, to be issued in
connection with the Merger (the "Parent Common Stock") from the Nasdaq Stock
Market. While continued listing of the Parent Common Stock on the Nasdaq
National Market cannot be assured, each of Parent, TBF and TBF III agrees that
following the Closing through September 30, 2010 (unless Parent has been the
subject of a "Rule 13e-3 transaction" (as defined in Rule 13e-3 adopted under
the Exchange Act), or has been sold to a third party unaffiliated with TBF or
TBF III), (i) Parent will use commercially reasonable efforts (A) to maintain
the listing of the Parent Common Stock on the Nasdaq National Market by
complying with the non-quantitative designation criteria applicable to Nasdaq
National Market issuers and to comply with any applicable minimum per share bid
price by effecting a reverse stock split if necessary, and (B) to list the
Parent Common Stock on the Nasdaq Small Cap Market if the Parent Common Stock is
delisted or is in the process of being delisted from the Nasdaq National Market
(although Parent will be required to satisfy only the non-quantitative
designation criteria applicable to Nasdaq National Market issuers and any
applicable minimum per share bid price by effecting a reverse stock split if
necessary), and (ii) each of TBF and TBF III (and any successor) will use
commercially reasonable efforts to cause Parent to comply with the non-
quantitative designation criteria applicable to Nasdaq National Market issuers
and to comply with any applicable minimum per share bid price by effecting a
reverse stock split if necessary. Nothing herein shall prohibit TBF, TBF III or
any of their Affiliates from proposing or effecting a Rule 13e-3 transaction if
permitted under Section 3.2(b) hereof, or from causing Parent to enter into a
sale with a third party unaffiliated with TBF or TBF III. Compliance with this
continued listing requirement after March 31, 2004 may be waived by a majority
of Parent's disinterested directors. If Parent lists the Parent Common Stock on
the New York Stock Exchange (NYSE), the foregoing obligations shall apply to the
continued listing of Parent Common Stock on the NYSE rather than the Nasdaq
National Market.
(b) Each of TBF and TBF III agrees that neither it (nor any successor)
will take any action prior to December 31, 2001 to cause Parent to be the
subject of a Rule 13e-3 transaction
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with an Affiliate of TBF or TBF III (or any successor) unless approved by a
majority of disinterested directors of Parent.
Section 3.3. Tax Matters. Each of TBF and TBF III agrees that neither it
nor any of its Affiliates shall take any action, or fail to take any action,
that would jeopardize the treatment of the EFTC Merger as a reorganization
described in Section 368(a) of the Code and/or, taken together with the K*TEC
Merger, as a transfer of property described in Section 351 of the Code to Parent
by holders of EFTC Common Stock and TBF II Units or take any action, or fail to
take any action, that would jeopardize the treatment of the K*TEC Merger, taken
together with the EFTC Merger, as a transfer of property described in Section
351 of the Code to Parent by holders of TBF II Units or EFTC Common Stock. TBF
and TBF III shall cause all tax returns filed by them and relating to the
Mergers to be filed on the basis of treating the EFTC Merger as "reorganization"
under Section 368(a) of the Code and/or tax-free contributions under Section 351
of the Code and the K*TEC Merger taken together with the EFTC Merger as a
transfer of property described in Section 351 of the Code. Notwithstanding
anything to the contrary contained in this Agreement, this Section 3.3 shall
survive without limitation. Each of TBF and TBF III will deliver to Xxxxxx
Godward LLP, counsel to the Special Committee, representation letters in form
and substance acceptable to such counsel in connection with the tax opinions
delivered in accordance with Sections 5.4(e) and 6.2 of the Merger Agreement.
Section 3.4. No Transfer of Securities. TBF agrees not to transfer the
Convertible Note, the Preferred Stock, the Additional Shares or the Conversion
Shares to any other person or entity prior to the Effective Time. TBF III agrees
not to transfer the TBF II Units to any other person or entity prior to the
Effective Time. Further, TBF III agrees not to permit TBF II to transfer the
K*TEC Shares to any other person or entity prior to the Effective Time.
Section 3.5. Indemnification by TBF III. TBF III agrees to indemnify and
hold harmless Parent from and against any and all loss caused by any material
breach of TBF II's representation and warranty set forth in Section 4.5A of the
Merger Agreement.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Waiver of Restrictive Covenants in Convertible Note. TBF
hereby waives compliance by EFTC with those restrictions, covenants and other
obligations contained in the Convertible Note, including without limitation
those found in Sections 5(j), 5(p) and 5(s), that would otherwise be violated as
a result of EFTC's execution of the Merger Agreement and performance of its
obligations thereunder.
Section 4.2. Termination, Amendment and Waiver Prior to the Effective
Time.
(a) Prior to the Effective Time, this Agreement shall automatically
terminate upon termination of the Merger Agreement in accordance with its terms.
If this Agreement is terminated after the conversion of the Convertible Note and
the Preferred Stock in accordance with Section 3.1 hereof, TBF shall have no
right to rescind such conversion.
(b) Prior to the Effective Time, this Agreement may be amended, and
compliance with any provision herein may be waived, only by a writing executed
by TBF, TBF III and EFTC; provided, however, that any material amendment or
waiver must be approved by the Special Committee.
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Section 4.3. Termination, Amendment and Waiver After the Effective Time.
After the Effective Time, any provision of this Agreement may be amended or
waived only by a writing executed by TBF, TBF III and Parent; provided, however,
that any amendment or waiver materially affecting the rights of Parent's
stockholders other than TBF or TBF III must be approved by a majority of
Parent's disinterested directors.
Section 4.4. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or one business day after sent by a recognized overnight
delivery service to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to EFTC, to
EFTC Corporation
0000 Xxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx
Telecopy: (000) 000-0000
with copies to
Xx. Xxxxx X. Xxxxxxxx, Xx.
00 X. Xxxxx Xxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
and to
Xxxxxx Godward LLP
0000 00/xx/ Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to Parent, to
c/o EFTC Corporation
0000 Xxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxx, Esq.
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Telecopy: (000) 000-0000
(c) if to TBF or TBF III, to
c/x Xxxxxx Capital Partners
0000 Xxxxxxxxxxxx Xxx., X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
with copies to:
XXXX Capital Partners
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
Xxxxxx & Xxxxxxx
000 Xxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
Section 4.5. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement", "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to May
3, 2001.
Section 4.6. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 4.7. Entire Agreement. This Agreement and all documents and
instruments referred to herein constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
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Section 4.8. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
Section 4.9. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties and any attempt to do so will be null and void ab
initio, except that each party hereto may collaterally assign its rights under
this Agreement to parties providing financing in connection with the
transactions contemplated hereby; provided, however, that the parties
acknowledge and agree that any such assignment (i) shall result in the assignee
obtaining the same (but not greater) rights than the assignor under this
Agreement (it being understood and agreed that the rights of any such assignee
shall be subject in all respects to this Agreement) and (ii) shall not relieve
the parties hereto of their respective duties or obligations under this
Agreement. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
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Section 4.10. Release of TBF II. The other parties to the Stockholder
Agreement hereby release TBF II from any and all obligations under the
Stockholder Agreement.
IN WITNESS WHEREOF, EFTC, TBF, TBF III and Parent have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first written above.
EFTC CORPORATION
_______________________________________
By:
Its:
XXXXXX-XXXX FUNDING, L.L.C.
_______________________________________
By:
Its:
XXXXXX-XXXX FUNDING III, L.L.C.
_______________________________________
By:
Its:
EXPRESS EMS CORPORATION
_______________________________________
By:
Its:
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