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AGREEMENT AND PLAN OF MERGER
AMONG
TYCO INTERNATIONAL LTD.,
T10 ACQUISITION CORP.
AND
SIGMA CIRCUITS, INC.
DATED AS OF JUNE 1, 1998
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TABLE OF CONTENTS
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ARTICLE I THE OFFER
Section 1.1 The Offer.................................................... 1
Section 1.2 Company Actions.............................................. 3
ARTICLE II THE MERGER
Section 2.1 The Merger....................................................4
Section 2.2 Effective Time................................................4
Section 2.3 Effects of the Merger.........................................4
Section 2.4 Certificate of Incorporation and Bylaws; Directors
and Officers..................................................4
Section 2.5 Conversion of Securities......................................5
Section 2.6 Payment of Certificates.......................................6
Section 2.7 Dissenting Shares.............................................7
Section 2.8 Merger Without Meeting of Stockholders........................7
Section 2.9 No Further Ownership Rights in Common Stock...................7
Section 2.10 Closing of Company Transfer Books............................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 3.1 Organization and Qualification...............................8
Section 3.2 Authority Relative to this Agreement.........................8
Section 3.3 No Conflict; Required Filings and Consents...................8
Section 3.4 Brokers......................................................9
Section 3.5 Ownership of Sub; No Prior Activities........................9
Section 3.6 Financing....................................................9
Section 3.7 Full Disclosure.............................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization and Qualification; Subsidiaries................10
Section 4.2 Certificate of Incorporation and Bylaws.....................10
Section 4.3 Capitalization..............................................10
Section 4.4 Authority Relative to this Agreement........................11
Section 4.5 Contracts; No Conflict; Required Filings and Consents.......11
Section 4.6 Compliance; Permits.........................................12
Section 4.7 SEC Filings; Financial Statements...........................13
Section 4.8 Absence of Certain Changes or Events........................13
Section 4.9 No Undisclosed Liabilities..................................13
Section 4.10 Absence of Litigation.......................................14
Section 4.11 Employee Benefit Plans; Employment Agreements...............14
Section 4.12 Labor Matters...............................................17
Section 4.13 Limitation on Business Conduct..............................17
Section 4.14 Title to Property...........................................17
Section 4.15 Real Property; Leased Premises..............................18
Section 4.16 Taxes.......................................................18
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Section 4.17 Environmental Matters.......................................20
Section 4.18 Intellectual Property.......................................21
Section 4.19 Insurance...................................................22
Section 4.20 Accounts Receivable.........................................22
Section 4.21 Customers...................................................22
Section 4.22 Interested Party Transactions...............................22
Section 4.23 Absence of Certain Payments.................................22
Section 4.24 Takeover Statute............................................23
Section 4.25 Opinion of Financial Advisor................................23
Section 4.26 Brokers.....................................................23
Section 4.27 Full Disclosure.............................................23
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1 Conduct of Business by the Company Pending the Merger....... 23
Section 5.2 Acquisition Proposals........................................25
Section 5.3 Annual Meeting of Stockholders...............................26
Section 5.4 Conduct of Business of Sub Pending the Merger................26
ARTICLE VI ADDITIONAL AGREEMENTS
Section 6.1 Company Stockholder Approval; Proxy Statement................27
Section 6.2 Access to Information; Confidentiality.......................28
Section 6.3 Fees and Expenses............................................28
Section 6.4 Stock Plans and Warrants.....................................29
Section 6.5 Reasonable Best Efforts......................................29
Section 6.6 Public Announcements.........................................30
Section 6.7 Indemnification; Directors and Officers Insurance............30
Section 6.8 Board Representation.........................................31
Section 6.9 Notification of Certain Matters..............................31
ARTICLE VII CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger.......................................................32
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination..................................................32
Section 8.2 Effect of Termination........................................34
Section 8.3 Amendment....................................................34
Section 8.4 Waiver.......................................................34
ARTICLE IX GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties...............34
Section 9.2 Notices......................................................35
Section 9.3 Interpretation...............................................36
Section 9.4 Counterparts.................................................36
Section 9.5 Entire Agreement; No Third-Party Beneficiaries...............36
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Section 9.6 Governing Law................................................36
Section 9.7 Assignment...................................................36
Section 9.8 Severability.................................................36
Section 9.9 Enforcement of this Agreement; Attorneys Fees................36
Section 9.10 Material Adverse Effect......................................37
EXHIBIT A Conditions of the Offer
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 1, 1998 (this "Agreement"),
among Tyco International Ltd., a Bermuda company ("Parent"), T10 Acquisition
Corp., a Delaware corporation ("Sub") and an indirect, wholly owned subsidiary
of Parent, and Sigma Circuits, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
each have approved the acquisition of the Company by Parent pursuant to a tender
offer (the "Offer") by Sub for all of the outstanding shares of Common Stock,
par value $.001 per share ("Common Stock"), of the Company at a price of $10.50
per share (the "Per Share Amount"), net to the seller in cash, without interest,
followed by a merger (the "Merger") of Sub with and into the Company, all upon
the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving the Offer and the Merger and recommending that the Company's
stockholders accept the Offer; and
WHEREAS, pursuant to the Merger, each issued and outstanding share of Common
Stock not owned directly or indirectly by Parent or the Company, except shares
of Common Stock held by holders who comply with the provisions of Delaware law
regarding the right of stockholders to dissent from the Merger and require
appraisal of their shares of Common Stock, will be converted into the right to
receive the per share consideration paid pursuant to the Offer.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, Parent, Sub and the
Company hereby agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Subject to the provisions of this Agreement,
within five business days after the first public announcement of this Agreement,
Sub shall, and Parent shall cause Sub to, commence, within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (including the rules
and regulations promulgated thereunder, the "Exchange Act"), the Offer. The
obligation of Sub to, and of Parent to cause Sub to, commence the Offer and
accept for payment, and pay for, any shares of Common Stock tendered pursuant to
the Offer shall be subject to the conditions set forth in Exhibit A (the "Offer
Conditions"). The Offer shall initially expire twenty (20) business days after
the date of its commencement, unless this Agreement is terminated in accordance
with Article VIII, in which case the Offer (whether or not previously extended
in accordance with the terms hereof) shall expire on such date of termination.
Without the prior written consent of the Company, Sub shall not (i) impose
conditions to the Offer in addition to the Offer Conditions, (ii) modify or
amend the Offer Conditions or any other term of the Offer in a manner adverse to
the holders of shares of Common Stock, (iii) waive or amend the Minimum
Condition (as defined in Exhibit A), (iv) reduce the number of shares of Common
Stock subject to the Offer, (v) reduce the Per Share Amount, (vi) except as
provided in the following sentence, extend the Offer, if all of the Offer
Conditions are satisfied or waived, or (vii) change the form of consideration
payable in the Offer. Notwithstanding the foregoing, Sub may, without the
consent of the Company, extend the Offer at any time, and from time to time, (i)
if at the then scheduled expiration date of the Offer any of the conditions to
Sub's obligation to accept for payment and pay for shares of Common Stock shall
not have been satisfied or waived, until such time as such conditions are
satisfied or waived; (ii) for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or its staff applicable to the Offer; or (iii) if all Offer Conditions are
satisfied or waived but the number of shares of Common Stock tendered is less
than 90% of the then outstanding number of shares of Common Stock, for an
aggregate period of not more than 10 business days (for all such extensions)
beyond the latest expiration date that would be permitted under clause (i) or
(ii) of this sentence. So long as this Agreement is in effect and the Offer
Conditions have not been satisfied or waived, Sub shall, and Parent shall cause
Sub to, cause the Offer not to expire. Subject to the terms and conditions of
the Offer (but subject to the right of termination in accordance with Article
VIII), Sub shall, and Parent shall cause Sub to, pay for all shares of Common
Stock validly tendered and not withdrawn pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer, which shall contain an offer to purchase and a related
letter of transmittal (such Schedule 14D-1 and the documents therein
pursuant to which the Offer will be made, together with any supplements
or amendments thereto, the "Offer Documents"). The Company and its
counsel shall be given an opportunity to review and comment upon the
Offer Documents prior to the filing thereof with the SEC. The Offer
Documents shall comply as to form in all material respects with the
requirements of the Exchange Act, and, on the date filed with the SEC and
on the date first published, sent or given to the Company's stockholders,
the Offer Documents shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Parent or Sub with respect to information
supplied by the Company in writing for inclusion in the Offer Documents.
Each of Parent, Sub and the Company agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and each of Parent and Sub further agrees to take all
steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of shares of Common Stock,
in each case as and to the extent required by applicable federal
securities laws. Parent and Sub agree to provide the Company
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and its counsel in writing with any comments Parent, Sub or their counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly upon receipt of such comments.
Section 1.2 Company Actions. (a) The Company hereby approves of and consents
to the Offer and represents that the Board of Directors of the Company at a
meeting duly called and held has duly adopted resolutions (i) approving this
Agreement, the Offer and the Merger, (ii) determining that the terms of the
Offer and Merger are fair to, and in the best interests of, the Company and its
stockholders, and (iii) recommending that the Company's stockholders accept the
Offer and tender their shares of Common Stock and approve the Merger and this
Agreement. The Company hereby consents to the inclusion in the Offer Documents
of such recommendation of the Board of Directors of the Company. The Company
represents that its Board of Directors has received the written opinion (the
"Fairness Opinion") of X.X. Xxxxxxxx & Co. (the "Financial Advisor") that the
proposed consideration to be received by the holders of shares of Common Stock
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view. The Company has been authorized by the Financial Advisor to
permit, subject to the prior review and consent by the Financial Advisor (such
consent not to be unreasonably withheld), the inclusion of the Fairness Opinion
(or a reference thereto) in the Offer Documents, the Schedule 14D-9 (as
hereinafter defined) and the Proxy Statement (as hereinafter defined).
Notwithstanding the foregoing, the Company may withdraw, modify or amend its
recommendation (and the Financial Advisor may withdraw, modify or amend its
Fairness Opinion) in accordance with the provisions of Section 5.2 of this
Agreement.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement
on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as
amended from time to time, including the exhibits thereto, the "Schedule
14D-9") containing the recommendations described in paragraph (a) of
Section 1.2 above (subject to the provisions of Section 5.2 of this
Agreement) and shall mail the Schedule 14D-9 to the stockholders of the
Company as required by Rule 14D-9 promulgated under the Exchange Act.
Parent and its counsel shall be given an opportunity to review and
comment upon the Schedule 14D-9 prior to the filing thereof with the SEC.
The Schedule 14D-9 shall comply as to form in all material respects with
the requirements of the Exchange Act and, on the date filed with the SEC
and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information
supplied by Parent or Sub in writing for inclusion in the Schedule 14D-9.
Each of the Company, Parent and Sub agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the
extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and disseminated to the holders of shares of Common Stock, in
each case as and to the extent required by applicable federal securities
laws. The Company agrees to provide Parent and Sub and their counsel in
writing with any comments the Company or its
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counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to promptly furnish Sub with a list, as of a recent date,
of the holders of Common Stock and mailing labels containing the names
and addresses of the record holders of Common Stock and of those persons
becoming record holders subsequent to such date, together with copies of
all lists of stockholders, security position listings (including shares
of Common Stock held by depositories) and computer files and all other
information in the Company's possession or control regarding the
beneficial owners of Common Stock, and shall furnish to Sub such
information and assistance (including updated lists of stockholders,
security position listings and computer files) as Sub may reasonably
request in communicating the Offer to the Company's stockholders.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions hereof,
and in accordance with the General Corporation Law of the State of Delaware, as
amended (the "DGCL"), Sub shall be merged with and into the Company at the
Effective Time (as hereinafter defined). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub in accordance with the DGCL.
Section 2.2 Effective Time. The Merger shall become effective when the
Certificate of Merger or, if applicable, the Certificate of Ownership and Merger
(each, the "Certificate of Merger"), executed in accordance with the relevant
provisions of the DGCL, are accepted for record by the Secretary of State of the
State of Delaware. When used in this Agreement, the term "Effective Time" shall
mean the later of the date and time at which the Certificate of Merger is
accepted for record or such later time established by the Certificate of Merger.
The filing of the Certificate of Merger shall be made as soon as reasonably
practicable (but not later than the third business day) after the satisfaction
or waiver of the conditions to the Merger set forth herein.
Section 2.3 Effects of the Merger. The Merger shall have the effects set
forth in the DGCL.
Section 2.4 Certificate of Incorporation and Bylaws; Directors and Officers.
Unless otherwise determined by Parent prior to the Effective Time, the
Certificate of Incorporation and Bylaws of Sub, as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
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(a) The directors of Sub at the Effective Time shall, from and after
the Effective Time, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal, in accordance with the
Surviving Corporation's Certificate of Incorporation and Bylaws.
(b) The officers of the Company at the Effective Time and such other
persons as designated by Parent shall, from and after the Effective Time, be
the officers of the Surviving Corporation until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal, in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
Section 2.5 Conversion of Securities. As of the Effective Time, by virtue of
the Merger and without any action on the part of any stockholder of the Company:
(a) All shares of Common Stock that are held in the treasury of the
Company or by any wholly owned subsidiary of the Company and any shares of
Common Stock owned by Parent, Sub or any other wholly owned subsidiary of
Parent shall be canceled and no consideration shall be delivered in exchange
therefor.
(b) Each share of Common Stock issued and outstanding immediately prior
to the Effective Time (other than shares to be canceled in accordance with
Section 2.5(a) and other than Dissenting Shares (as defined in Section 2.7))
shall be converted into the right to receive from Parent in cash, without
interest, the Per Share Amount (the "Merger Consideration"). All such shares
of Common Stock, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and each holder of a certificate or
certificates (the "Certificates") representing any such shares shall cease
to have any rights with respect thereto, except the right to receive the
Merger Consideration for such shares upon surrender of such Certificates.
(c) Each issued and outstanding share of the capital stock of Sub shall
be converted into and become one fully paid and nonassessable share of
Common Stock of the Surviving Corporation.
(d) Each option outstanding at the Effective Time to purchase shares of
Common Stock (a "Stock Option") granted under the Company's (i) Amended and
Restated 1997 Stock Option Plan, (ii) 1994 Non-employee Director's Stock
Option Plan, and (iii) any other option plan or agreement including stock
options granted outside the Company's stock option plans (collectively, the
"Company Option Plans") shall be converted into the right to receive, upon
the exercise of such Stock Option in accordance with the terms thereof
(including the provisions providing for full vesting of all unvested shares
in the event that such options are not assumed following a Change-in-Control
(as defined in the Company Option Plans)), an amount of cash equal to the
Merger Consideration multiplied by such number of shares of Common Stock
underlying such option.
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(e) The warrant expiring June 10, 1999 to purchase 200,000 shares of
Common Stock at a price of $3.30 per share (the "Warrant"), shall be
exercisable, from and after the Effective Time and in accordance with the
terms thereof, for an amount of cash equal to the Merger Consideration
multiplied by 200,000.
(f) The Company's $1.8 million 10.0% convertible subordinated note due
2001 (the "Note"), convertible into a maximum of 400,000 shares of Common
Stock, shall be convertible, from and after the Effective Time and in
accordance with the terms thereof, for an amount of cash equal to the Merger
Consideration multiplied by such number of shares of Common Stock as such
note was convertible into prior to the Effective Time assuming that the Note
was fully convertible at that time.
Section 2.6 Payment of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall appoint ChaseMellon Shareholder Services LLC or
such other commercial bank or trust company designated by Parent and reasonably
acceptable to the Company to act as paying agent hereunder (the "Paying Agent")
for the payment of the Merger Consideration upon surrender of Certificates. All
of the fees and expenses of the Paying Agent shall be borne by Parent.
(b) Surviving Corporation to Provide Funds. Parent shall take all steps
necessary to enable and cause the Surviving Corporation to provide the
Paying Agent with cash in amounts necessary to pay for all of the shares of
Common Stock pursuant to Section 2.5 (determined as though there are no
Dissenting Shares (as hereinafter defined)), when and as such amounts are
needed by the Paying Agent.
(c) Payment Procedures. As soon as practicable after the Effective
Time, the Paying Agent shall mail to each holder of record of a Certificate,
other than Parent, the Company and any wholly owned subsidiary of Parent or
the Company, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall
pass, only upon actual delivery of the Certificates to the Paying Agent and
shall be in a form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for the use thereof in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such
other agent or agents as may be appointed by the Surviving Corporation,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the amount of cash into
which the shares of Common Stock theretofore represented by such Certificate
shall have been converted pursuant to Section 2.5, and the Certificates so
surrendered shall forthwith be canceled. No interest will be paid or will
accrue on the cash payable upon the surrender of any Certificate. If payment
is to be made to a person other than the person in whose name the
Certificate so surrendered is registered, it shall be a condition of payment
that such Certificate shall be properly endorsed or otherwise in proper form
for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the transfer of such
Certificate or establish to the satisfaction of
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the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.6, each Certificate
(other than Certificates representing Dissenting Shares and Certificates
representing any shares of Common Stock owned by Parent or any wholly owned
subsidiary of Parent or held in the treasury of the Company or by any wholly
owned subsidiary of the Company) shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
the amount of cash, without interest, into which the shares of Common Stock
theretofore represented by such Certificate shall have been converted
pursuant to Section 2.5. Notwithstanding the foregoing, none of the Paying
Agent, the Surviving Corporation or any party hereto shall be liable to a
former stockholder of the Company for any cash or interest delivered to a
public official pursuant to applicable abandoned property, escheat or
similar laws. In the event any Certificate shall have been lost, stolen or
destroyed, Parent may, in its discretion and as a condition precedent to the
payment of the Merger Consideration in respect of the shares represented by
such Certificate, require the owner of such lost, stolen or destroyed
Certificate to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Parent or the Paying
Agent.
Section 2.7 Dissenting Shares. Notwithstanding any provision of this
Agreement to the contrary, if required by the DGCL (but only to the extent
required thereby), shares of Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by holders of such
shares of Common Stock who have properly exercised appraisal rights with respect
thereto in accordance with Section 262 of the DGCL (the "Dissenting Shares")
will not be exchangeable for the right to receive the Merger Consideration, and
holders of such shares of Common Stock will be entitled to receive payment of
the appraised value of such shares of Common Stock in accordance with the
provisions of such Section 262 unless and until such holders fail to perfect or
effectively withdraw or lose their rights to appraisal and payment under the
DGCL. If, after the Effective Time, any such holder fails to perfect or
effectively withdraws or loses such right, such shares of Common Stock will
thereupon be treated as if they had been converted into and have become
exchangeable for, at the Effective Time, the right to receive the Merger
Consideration, without any interest thereon. The Company will give Parent prompt
notice of any demands received by the Company for appraisals of shares of Common
Stock, and Parent shall have the right to participate in all negotiations and
proceedings with respect to any such demands. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of Parent,
make any payment with respect to any demands for appraisal or offer to settle or
settle any such demands.
Section 2.8 Merger Without Meeting of Stockholders. Notwithstanding the
foregoing in this Article II, in the event that Sub, or any other direct or
indirect subsidiary of Parent, shall acquire at least 90 percent of the
outstanding shares of Common Stock, the parties hereto agree to take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
Section 2.9 No Further Ownership Rights in Common Stock. From and after the
Effective Time, the holders of shares of Common Stock which were outstanding
immediately
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prior to the Effective Time shall cease to have any rights with respect to such
shares of Common Stock except as otherwise provided in this Agreement or by
applicable law. All cash paid upon the surrender of Certificates in accordance
with the terms hereof shall be deemed to have been issued in full satisfaction
of all rights pertaining to the shares of Common Stock.
Section 2.10 Closing of Company Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of shares of
Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged as provided in this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub hereby represent and warrant to the Company as follows:
Section 3.1 Organization and Qualification. Each of Parent and Sub is a
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority necessary to own, lease and operate the properties it purports to own,
operate or lease and to carry on its business as it is now being conducted,
except as would not reasonably be expected to prevent or delay consummation of
the Merger, or otherwise materially and adversely affect the ability of Parent
or Sub to perform their respective obligations under this Agreement.
Section 3.2 Authority Relative to this Agreement. Each of Parent and Sub has
all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Sub and the consummation by Parent and Sub of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Parent and Sub, and no other corporate
proceedings on the part of Parent or Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. The Board of
Directors of Parent has determined that it is advisable and in the best interest
of Parent's stockholders for Parent to enter into this Agreement and to
consummate, upon the terms and subject to the conditions of this Agreement, the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Parent and Sub.
Section 3.3 No Conflict; Required Filings and Consents. The execution and
delivery of this Agreement by Parent and Sub do not, and the performance of this
Agreement by Parent and Sub will not, (i) conflict with or violate Parent's
Memorandum of Association or Sub's Certificate of Incorporation or the Bylaws of
Parent or Sub, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
its or their respective properties are bound or affected, or (iii) result
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in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or impair Parent's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of Parent or any of its subsidiaries pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries or its or
any of their respective properties are bound or affected, except in any such
case for any such conflicts, violations, breaches, defaults or other occurrences
that would not reasonably be expected to prevent or delay consummation of the
Merger, or otherwise materially and adversely affect the ability of Parent or
Sub to perform their respective obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent and Sub does
not, and the performance of this Agreement by Parent and Sub will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange
Act, the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act"), and the filing and recordation of
appropriate merger or other documents as required by the DGCL, and (ii)
where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not reasonably be
expected to prevent or delay consummation of the Merger, or otherwise
materially and adversely affect the ability of Parent or Sub to perform
their respective obligations under this Agreement.
Section 3.4 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
Section 3.5 Ownership of Sub; No Prior Activities. (a) Sub is an indirect,
wholly-owned subsidiary of Parent and was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except
for this Agreement and any other agreements or arrangements contemplated by
this Agreement, Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person.
Section 3.6 Financing. Parent or Sub have sufficient funds available to
enable Sub to purchase all outstanding shares, on a fully diluted basis, of
Common Stock and to pay all fees and expenses related to the transactions
contemplated by this Agreement.
9
Section 3.7 Full Disclosure. No statement contained in any certificate or
schedule furnished or to be furnished by Parent or Sub to the Company in, or
pursuant to the provisions of, this Agreement contains or shall contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary, in the light of the circumstances under which it was made, in
order to make the statements herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Sub as follows:
Section 4.1 Organization and Qualification; Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power and authority would not reasonably be expected to have a Material Adverse
Effect (as defined in Section 9.10 of this Agreement). The Company is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not reasonably be expected
to have a Material Adverse Effect. The Company does not have any subsidiaries.
Except as set forth in Section 4.1 of the written disclosure schedule previously
delivered by the Company to Parent (the "Disclosure Schedule") or the SEC
Reports (as defined below), the Company does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity, with respect
to which interest the Company has invested or is required to invest $100,000 or
more, excluding securities in any publicly traded company held for investment by
the Company and comprising less than five percent of the outstanding stock of
such company.
Section 4.2 Certificate of Incorporation and Bylaws. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and Bylaws as most recently restated and subsequently amended to
date. Such Certificate of Incorporation and Bylaws are in full force and effect.
The Company is not in violation of any of the provisions of its Certificate of
Incorporation or Bylaws.
Section 4.3 Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock, par value $.001 per share (the "Preferred Stock"). As of May 23, 1998,
4,252,985 shares of Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and no shares were held in
treasury, (ii) no shares of Preferred Stock were outstanding or held in
treasury, (iii) 1,535,044 shares of Common Stock were reserved for
10
future issuance pursuant to outstanding stock options granted under the
Company's Option Plans, (iv) 191,283 shares of Common Stock were reserved for
future issuance pursuant to the Company's 1994 Employee Stock Purchase Plan (the
"ESPP"), (v) 200,000 shares of Common Stock were reserved for future issuance
pursuant to the Warrant, and (vi) 400,000 shares of Common Stock were reserved
for future issuance pursuant to the Note. No material change in such
capitalization has occurred since May 23, 1998. Except as set forth in Section
4.1, this Section 4.3 or Section 4.11 or in Section 4.3 or Section 4.11 of the
Disclosure Schedule or the SEC Reports, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or obligating the Company to
issue or sell any shares of capital stock of, or other equity interests in, the
Company. All shares of Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly issued, fully paid
and nonassessable. Except as disclosed in Section 4.3 of the Disclosure Schedule
or the SEC Reports, there are no obligations, contingent or otherwise, of the
Company to repurchase, redeem or otherwise acquire any shares of Common Stock or
to provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any other entity.
Section 4.4 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than the
adoption of this Agreement by the holders of at least a majority of the
outstanding shares of Common Stock entitled to vote in accordance with the DGCL
and the Company's Certificate of Incorporation and Bylaws). The Board of
Directors of the Company has determined that it is advisable and in the best
interest of the Company's stockholders for the Company to enter into this
Agreement and to consummate, upon the terms and subject to the conditions of
this Agreement, the transaction contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Sub, as applicable,
constitutes a legal, valid and binding obligation of the Company.
Section 4.5 Contracts; No Conflict; Required Filings and Consents. (a)
Section 4.5(a) of the Disclosure Schedule includes a list of (i) all loan
agreements, indentures, mortgages, pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, guaranties, standby
letters of credit, equipment leases or lease purchase agreements, each in an
amount equal to or exceeding $100,000, to which the Company is a party or by
which any of them is bound; and (ii) all agreements which, as of the date
hereof, are required to be filed as "material contracts" pursuant to the
requirements of the Exchange Act, as amended, and the SEC's rules thereunder
(each of the foregoing and any contract or agreement of the Company with any
customer listed on Schedule 4.21 of the Disclosure Schedule, being referred to
as a "Material Contract"). Except as set forth in Section 4.5(a) of the
Disclosure Schedule, the Company is not in default or violation (and to
11
the Company's best knowledge, no event has occurred which with notice or lapse
of time or both would constitute a default or violation) of any Material
Contract, nor, to the knowledge of the Company, is any other party to any
Material Contract in default or violation thereof (and no event has occurred
which with notice or lapse of time or both would constitute such a default or
violation), except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) Except as set forth in Section 4.5(b) of the Disclosure Schedule,
the execution and delivery of this Agreement by the Company does not, and
the performance of this Agreement by the Company will not, (i) conflict with
or violate the Certificate of Incorporation or Bylaws of the Company, (ii)
conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to the Company or by which its properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default), or
impair the Company's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company is
a party or by which the Company or its properties is bound or affected,
except for any such conflicts, violations, breaches, defaults or other
occurrences that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(c) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange
Act, the pre-merger notification requirements of the HSR, and the filing and
recordation of appropriate merger or other documents as required by the
DGCL, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would
not reasonably be expected to prevent or delay consummation of the Merger,
or otherwise prevent or delay the Company from performing its obligations
under this Agreement, or would not otherwise reasonably be expected to have
a Material Adverse Effect.
Section 4.6 Compliance; Permits. (a) Except as disclosed in Section 4.6 of
the Disclosure Schedule, the Company is not in conflict with, or in default or
violation of, any law, rule, regulation, order, judgment or decree applicable to
the Company or by which its properties is bound or affected, except for any such
conflicts, defaults or violations which would not reasonably be expected to have
a Material Adverse Effect.
(b) Except as disclosed in Section 4.6 of the Disclosure Schedule or
the SEC Reports, the Company holds all franchises, grants, authorization,
permits, licenses, easements, variances, exemptions, consents, certificates,
orders and approvals which are material to the operation of the business of
the Company as it is now being conducted
12
("Permits"). The Company is in compliance with the terms of the Permits,
except where the failure to so comply would not reasonably be expected to
have a Material Adverse Effect.
Section 4.7 SEC Filings; Financial Statements. (a) The Company has filed all
forms, reports and documents required to be filed with the SEC since July 1,
1995 and has made available to Parent (i) its Annual Reports on Form 10-K for
the fiscal years ended July 1, 1995, June 29, 1996 and June 28, 1997, (ii) all
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since July 1, 1995, (iv) all other reports or
registration statements filed by the Company with the SEC since July 1, 1997,
and (v) all amendments and supplements to all such reports and registration
statements filed by the Company with the SEC ((i) - (v) collectively, the "SEC
Reports"). Except as disclosed in Section 4.7 of the Disclosure Schedule or the
SEC Reports, the SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, or the Exchange Act, as the
case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the financial statements (including, in each case, any
related notes thereto) contained in the SEC Reports was prepared in
accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto), and each fairly in all material respects
presents the financial position of the Company as at the respective dates
thereof and the results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or
are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount.
Section 4.8 Absence of Certain Changes or Events. Except as set forth in
Section 4.8 of the Disclosure Schedule or the SEC Reports, since March 31, 1998
the Company has conducted its business in the ordinary course and there has not
occurred: (i) any Material Adverse Effect; (ii) any amendments or changes in the
Certificate of Incorporation or Bylaws of the Company; (iii) any damage to,
destruction or loss of any asset of the Company (whether or not covered by
insurance) that would reasonably be expected to have a Material Adverse Effect;
(iv) any material change by the Company in its accounting methods, principles or
practices; (v) any material revaluation by the Company of any of its assets,
including writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; (vi) any other action
or event that would have required the consent of Parent pursuant to Section 5.1
had such action or event occurred after the date of this Agreement; or (vii) any
sale of a material amount of property of the Company, except in the ordinary
course of business.
Section 4.9 No Undisclosed Liabilities. Except as set forth in Section 4.9
of the Disclosure Schedule or the SEC Reports, the Company does not have any
liabilities (absolute, accrued, contingent or otherwise). Since March 31, 1998,
the Company has not
13
incurred any liabilities (absolute, accrued, contingent or otherwise) other than
those liabilities incurred in the ordinary course of business consistent with
past practice, incurred in connection with this Agreement or which would not
reasonably be expected to have a Material Adverse Effect.
Section 4.10 Absence of Litigation. Except as set forth in Section 4.10 of
the Disclosure Schedule or the SEC Reports, there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
overtly threatened against the Company, or any properties or rights of the
Company, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that would reasonably be
expected to have a Material Adverse Effect. Except as set forth in Section 4.10
of the Disclosure Schedule or the SEC Reports, since August 27, 1993, there have
been no actions, suits or proceedings made or pending against the Company
alleging (x) any Environmental Claims (as defined in Section 4.17) or (y) any
breach by the Company of applicable standards of conduct in rendering any
engineering, construction, design, operation, maintenance, management,
assessment, cleanup or remediation services, except for such actions, suits or
proceedings which, in the case of either clause (x) or (y) above, would not
reasonably be expected to result in liability to the Company of $25,000, in any
individual case, or $100,000 in the aggregate.
Section 4.11 Employee Benefit Plans; Employment Agreements. (a) Section
4.11(a) of the Company Disclosure Schedule lists all employee pension benefit
plans (as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), all employee welfare benefit plans (as defined
in Section 3(1) of ERISA, and all other bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
similar fringe or employee benefit plans, programs or arrangements, and any
employment, executive compensation or severance agreements, written or
otherwise, as amended, modified or supplemented, for the benefit of, or relating
to, any former or current employee, officer or consultant (or any of their
beneficiaries) of the Company or any other entity (whether or not incorporated)
which is a member of a controlled group including the Company or which is under
common control with the Company (an "ERISA Affiliate") within the meaning of
Sections 414(b), (c), (m) or (o) of the Code or Section 4001(a) (14) or (b) of
ERISA, as well as each plan with respect to which the Company or an ERISA
Affiliate could incur liability under Title IV of ERISA or Section 412 of the
Internal Revenue Code of 1986, as amended (the "Code") (together for the
purposes of this Section 4.11, the "Employee Plans"). Prior to the date of this
Agreement, the Company has provided to Parent copies of (i) each such written
Employee Plan (or a written description of any Employee Plan which is not
written) and all related trust agreements, insurance and other contracts
(including policies), summary plan descriptions, summaries of material
modifications and communications distributed to plan participants, (ii) the
three most recent annual reports on Form 5500 series, with accompanying
schedules and attachments, filed with respect to each Employee Plan required to
make such a filing, (iii) the most recent actuarial valuation for each Employee
Plan subject to Title IV of ERISA, (iv) the latest reports which have been filed
with the Department of Labor with respect to each Employee Plan required to make
such filing and (v) the most recent favorable determination letters issued for
each Employee Plan and related trust which is subject to Parts 1, 2 and 4 of
14
the Subtitle B of Title I of ERISA (and, if an application for such
determination is pending, a copy of the application for such determination). For
purposes of this Section 4.11, the term "material," when used with respect to
(i) any Employee Plan, shall mean that the Company or an ERISA Affiliate has
incurred or may incur obligations in an amount exceeding $100,000 with respect
to such Employee Plan, and (ii) any liability, obligation, breach or
non-compliance, shall mean that the Company or an ERISA Affiliate has incurred
or may incur obligations in an amount exceeding $50,000, with respect to any one
such or series of related liabilities, obligations, breaches, defaults,
violations or instances of non-compliance.
(b) Except as set forth in Section 4.11(b) of the Company Disclosure
Schedule, (i) none of the Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, and none of the
Employee Plans is a "multiemployer plan" as such term is defined in Section
3(37) of ERISA; (ii) no party in interest or disqualified person (as defined
in Section 3(14) of ERISA and Section 4975 of the Code) has at any time
engaged in a transaction with respect to any Employee Plan which could
subject the Company or any ERISA Affiliate, directly or indirectly, to a
tax, penalty or other material liability for prohibited transactions under
ERISA or Section 4975 of the Code; (iii) no fiduciary of any Employee Plan
has breached any of the responsibilities or obligations imposed upon
fiduciaries under Title I of ERISA, which breach could result in any
material liability to the Company or any ERISA Affiliate; (iv) all Employee
Plans have been established and maintained substantially in accordance with
their terms and have operated in compliance in all material respects with
the requirements prescribed by any and all statutes (including ERISA and the
Code), orders, or governmental rules and regulations currently in effect
with respect thereto (including all applicable requirements for notification
to participants or the Department of Labor, Internal Revenue Service (the
"IRS") or Secretary of the Treasury), and may by their terms be amended
and/or terminated at any time subject to applicable law, and the Company has
performed all material obligations required to be performed by it under, is
not in any material respect in default under or violation of, and has no
knowledge of any default or violation by any other party to, any of the
Employee Plans; (v) each Employee Plan which is subject to Parts 1, 2 and 4
of Subtitle B of ERISA is the subject of a favorable determination letter
from the IRS, and nothing has occurred which may reasonably be expected to
impair such determination; (vi) all contributions required to be made with
respect to any Employee Plan pursuant to Section 412 of the Code, or the
terms of the Employee Plan or any collective bargaining agreement, have been
made on or before their due dates; (vii) with respect to each Employee Plan,
no "reportable event" within the meaning of Section 4043 of ERISA (excluding
any such event for which the 30 day notice requirement has been waived under
the regulations to Section 4043 of ERISA) or any event described in Section
4062, 4063 or 4041 of ERISA has occurred for which there is any material
outstanding liability to the Company or any ERISA Affiliate nor would the
consummation of the transaction contemplated hereby (including the execution
of this agreement) constitute a reportable event for which the 30-day
requirement has not been waived; and (viii) neither the Company nor any
ERISA Affiliate has incurred or reasonably expects to incur any liability
under Title IV of ERISA (other than liability for premium payments to the
Pension Benefit Guaranty Corporation (the "PBGC") arising in the ordinary
course).
15
(c) Section 4.11(c) of the Company Disclosure Schedule sets forth a
true and complete list of each current or former employee, officer or
director of the Company who holds (i) any option to purchase Company Common
Stock as of the date hereof, together with the number of shares of Company
Common Stock subject to such option, the option price of such option (to the
extent determined as of the date hereof), whether such option is intended to
qualify as an incentive stock option within the meaning of Section 422(b) of
the Code (an "ISO"), and the expiration date of such option; (ii) any shares
of Company Common Stock that are restricted; and (iii) any other right,
directly or indirectly, to receive Company Common Stock, together with the
number of shares of Company Common Stock subject to such right. Section
4.11(c) of the Company Disclosure Schedule also sets forth the total number
of any such ISOs and any such nonqualified options and other such rights.
(d) Section 4.11(d) of the Company Disclosure Schedule sets forth a
true and complete list of (i) all employment agreements with officers of the
Company; (ii) all agreements with consultants who are individuals obligating
the Company to make annual cash payments in an amount exceeding $50,000;
(iii) all agreements with respect to the services of independent contractors
or leased employees whether or not they participate in any of the Employee
Plans; (iv) all officers of the Company who have executed a non-competition
agreement with the Company; (v) all severance agreements, programs and
policies of the Company with or relating to its employees, in each case with
outstanding commitments exceeding $750,000, excluding programs and policies
required to be maintained by law; and (vi) all plans, programs, agreements
and other arrangements of Company which contain change in control
provisions.
(e) Except as set forth in Section 4.11(e) of the Company Disclosure
Schedule, no employee of the Company has participated in any employee
pension benefit plans (as defined in Section 3(2) of ERISA) maintained by or
on behalf of the Company. The PBGC has not instituted proceedings to
terminate any Employee Benefit Plan that is subject to Title IV of ERISA
(each, a "Defined Benefit Plan"). The Defined Benefit Plans have no
accumulated or waived funding deficiencies within the meaning of Section 412
of the Code nor have any extensions of any amortization period within the
meaning of Section 412 of the Code or 302 of ERISA been applied for with
respect thereto. The present value of the benefit liabilities (within the
meaning of Section 4041 of ERISA) of the Defined Benefit Plans, determined
on a termination basis using actuarial assumptions that would be used by the
PBGC does not exceed by more than $100,000 the value of the Plans' assets.
All applicable premiums required to be paid to the PBGC with respect to the
Defined Benefit Plans have been paid. No facts or circumstances exist with
respect to any Defined Benefit Plan which would give rise to a lien on the
assets of the Company under Section 4068 of ERISA or otherwise. All the
assets of the Defined Benefit Plans are readily marketable securities or
insurance contracts.
(f) Except as provided in Schedule 4.11(f) of the Company Disclosure
Schedule, (i) the Company has never maintained an employee stock ownership
plan (within the meaning of Section 4975(e)(7) of the Code) or any other
Employee Plan that invests in Company stock; (ii) the Company has not
proposed nor agreed to any increase in benefits under any Employee Plan (or
the creation of new benefits) or change in employee coverage
16
which would increase the expense of maintaining any Employee Plan; (iii) the
consummation of the transactions contemplated by this Agreement will not
result in an increase in the amount of compensation or benefits or
accelerate the vesting or timing of payment of any benefits or compensation
payable in respect of any employee; (iv) no person will be entitled to any
severance benefits under the terms of any Employee Plan solely by reason of
the consummation of this transaction contemplated by this Agreement. All
actions required to be taken by a fiduciary of any Employee Plan in order to
effectuate the transactions contemplated by this Agreement shall comply with
the terms of such Plan, ERISA and all other applicable laws. All actions
required to be taken by a trustee of any Employee Plan that owns Company
stock shall have been duly authorized by the appropriate fiduciaries of such
Plan, and shall comply with the terms of Plan, ERISA and other applicable
laws.
(g) Each Employee Plan covering non-U.S. employees (an "International
Plan") has been maintained in substantial compliance with its terms and with
the requirements prescribed by any and all applicable Laws (including any
special provisions relating to registered or qualified plans where such
International Plan was intended to so qualify) and has been maintained in
good standing with applicable regulatory authorities. The fair market value
of the assets of each funded International Plan (or the liability of each
funded International Plan funded through insurance) is sufficient to procure
or provide for the benefits accrued thereunder through the Closing Date
according to the actuarial assumptions and valuations most recently used to
determine employer contributions to the International Plan.
(h) The Company has fiduciary liability insurance of at least
$1,000,000 in effect covering the fiduciaries of the Employee Plans
(including the Company) with respect to whom the Company may have liability.
Section 4.12 Labor Matters. Except as set forth in Section 4.12 of the
Disclosure Schedule or the SEC Reports, (i) there are no controversies pending
or, to the knowledge of the Company, threatened, between the Company and its
employees, which controversies would reasonably be expected to have a Material
Adverse Effect; (ii) the Company is not a party to any material collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company, nor does the Company know of any activities or
proceedings of any labor union to organize any such employees; and (iii) the
Company does not have any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the Company
which would reasonably be expected to have a Material Adverse Effect.
Section 4.13 Limitation on Business Conduct. Except as set forth in Section
4.13 of the Disclosure Schedule or the SEC Reports, the Company is not a party
to, and has no obligation under, any contract or agreement, written or oral,
which contains any covenants currently or prospectively limiting in any material
respect the freedom of the Company to engage in any line of business or to
compete with any entity.
Section 4.14 Title to Property. Except as set forth in Section 4.14 of the
Disclosure Schedule or the SEC Reports, the Company owns the properties and
assets that it purports to
17
own free and clear of all liens, charges, mortgages, security interests or
encumbrances of any kind ("Liens"), except for Liens which arise in the ordinary
course of business and do not materially impair the Company's ownership or use
of such properties or assets or Liens for taxes not yet due. With respect to the
property and assets it leases, the Company and to the best of the Company's
knowledge each of the other parties thereto, is in material compliance with such
leases and the Company holds a valid leasehold interest free of any Liens. The
rights, properties and assets presently owned, leased or licensed by the Company
include all rights, properties and assets necessary to permit the Company to
conduct its business in all material respects in the same manner as its
businesses has been conducted prior to the date hereof.
Section 4.15 Real Property; Leased Premises. (a) Each of the buildings,
improvements and structures located upon any real property and land owned by the
Company (collectively, the "Real Property"), and each of the buildings,
structures and premises leased by the Company (the "Leased Premises"), is in
reasonably good repair and operating condition, except as would not reasonably
be expected to have a Material Adverse Effect.
(b) Except as set forth in Section 4.15 of the Disclosure Schedule, the
Company has not received any notice of or writing referring to any
requirements by any insurance company that has issued a policy covering any
part of any Real Property or Leased Premises or by any board of fire
underwriters or other body exercising similar functions, requiring any
repairs or work to be done on any part of any Real Property or Leased
Premises, except as would not reasonably be expected to have a Material
Adverse Effect.
(c) Except as set forth in Section 4.15 of the Disclosure Schedule, all
public utilities used in the operation of each Real Property or Leased
Premises in the manner currently operated are installed and operating, and
all installation and connection charges have been paid in full or provided
for; and the plumbing, electrical, heating, air conditioning, ventilating,
septic and all other structural or material mechanical systems in the
buildings upon the Real Property and Leased Properties are in good working
order and working condition, so as to be adequate for the operation of the
business of the Company as heretofore conducted, except as would not
reasonably be expected to have a Material Adverse Effect.
Section 4.16 Taxes. (a) The Company has filed, or caused to be filed, all
material Tax Returns (as hereinafter defined) required to be filed by it, and
has paid, collected or withheld, or caused to be paid, collected or withheld,
all material amounts of Taxes (as hereinafter defined) required to be paid,
collected or withheld, other than such Taxes for which adequate reserves in the
Company Financial Statements have been established or which are being contested
in good faith. All such Tax Returns are complete and correct in all material
respects. There are no material claims or assessments pending against the
Company for any alleged deficiency in any Tax, there are no pending or, to the
Company's best knowledge, threatened audits or investigations for or relating to
any liability in respect of any Taxes, and the Company has not been notified in
writing of any proposed Tax claims or assessments against the Company (other
than in each case, claims or assessments that have been satisfied, claims or
assessments for which adequate reserves in the Company Financial
18
Statements have been established or which are being contested in good faith or
are immaterial in amount). The Company has not executed any waivers or
extensions of any applicable statute of limitations to assess any material
amount of Taxes. There are no outstanding requests by the Company for any
extension of time within which to file any material Tax Return or within which
to pay any material amounts of Taxes shown to be due on any Tax Return. To the
best knowledge of the Company, there are no liens for material amounts of Taxes
on the assets of the Company except for statutory liens for current Taxes not
yet due and payable.
(b) For purposes of this Agreement, the term "Tax" shall mean any
federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
alternative or add-on minimum, ad valorem, transfer or excise tax, or any
other tax, custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty imposed by any
Governmental Authority. The term "Tax Return" shall mean a report, return or
other information (including any attached schedules or any amendments to
such report, return or other information) required to be supplied to or
filed with a governmental entity with respect to any Tax, including an
information return, claim for refund, amended return or declaration or
estimated Tax.
(c) Except as set forth in Section 4.16 of the Company's Disclosure
Schedule: (i) the Company has never been a member of an affiliated group
within the meaning of Section 1504 of the Code or filed or been included in
a combined, consolidated or unitary Tax Return; (ii) the Company is not
liable for Taxes of any other Person, nor is it currently under any
contractual obligation to indemnify any person with respect to Taxes (except
for customary agreements to indemnify lenders or security holders in respect
of taxes other than income taxes), nor is it a party to any tax sharing
agreement or any other agreement providing for payments by the Company with
respect to Taxes; (iii) the Company is not a party to any joint venture,
partnership or other arrangement or contract which could be treated as a
partnership for federal income tax purposes; (iv) the Company has not
entered into any sale leaseback or any leveraged lease transaction that
fails to satisfy the requirements of Revenue Procedure 75-21 (or similar
provisions of foreign law); (v) the Company has not agreed nor is it
required, as a result of a change in method of accounting or otherwise, to
include any adjustment under Section 481 of the Code (or any corresponding
provision of state, local or foreign law) in taxable income; (vi) the
Company is not a party to any agreement, contract, arrangement or plan that
would result (taking into account the transactions contemplated by this
Agreement), separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code; (vii)
the Company is not liable with respect to any indebtedness the interest of
which is not deductible for applicable federal, foreign, state or local
income tax purposes; (viii) the Company is not a "consenting corporation"
under Section 341(F) of the Code or any corresponding provision of state,
local or foreign law; and (ix) none of the assets owned by the Company is
property that is required to be treated as owned by any other person
pursuant to Section 168(g)(8) of the Internal Revenue Code of 1954, as
amended, as in effect immediately prior to the enactment of the Tax Reform
Act of 1986, or is "tax-exempt use property" within the meaning of Section
168(h) of the Code; provided that each of the
19
statements made in clauses (i) through (ix) above shall be deemed true and
correct for purposes of this Agreement unless in any such case any failure
of such statement to be true or correct would reasonably be expected to
result in a Material Adverse Effect.
Section 4.17 Environmental Matters. (a) Except as set forth in Section 4.17
to the Company's Disclosure Schedule, the operations and properties of the
Company are in material compliance with the Environmental Laws (as hereinafter
defined), which compliance includes the possession by the Company of all permits
and governmental authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof. The Company has not
received any communication (written or oral), whether from a governmental
authority, citizens group, employee or otherwise, that alleges that the Company
is not in such compliance, and, to the Company's best knowledge, there are no
circumstances or conditions related to the operations or properties of the
Company that may give rise to any such non-compliance in the future.
(b) Except as set forth in Section 4.17 of the Company's Disclosure
Schedule, there are no Environmental Claims (as hereinafter defined),
including claims based on "arranger liability," pending or, to the best
knowledge of the Company, threatened against the Company or against any
person or entity whose liability for any Environmental Claim the Company has
retained or assumed either contractually or by operation of law.
(c) To the Company's best knowledge, there are no past or present
actions, inactions, activities, circumstances, conditions, events or
incidents, including the release, emission, discharge, presence or disposal
of any Material of Environmental Concern (as hereinafter defined), that
would form the basis of any Environmental Claim against the Company or
against any person or entity whose liability for any Environmental Claim the
Company has retained or assumed either contractually or by operation of law,
except for such Environmental Claims that would not reasonably be expected
to have a Material Adverse Effect.
(d) No off-site locations where the Company has stored, disposed or
arranged for the disposal of Materials of Environmental Concern has been
listed on the National Priority List, CERCLIS, state Superfund site list or
state analog to CERCLIS, and the Company has not been notified that it is a
potentially responsible party at any such location; (ii) there are no
underground storage tanks located on property owned or leased by the
Company; (iii) to the Company's best knowledge, there is no asbestos
containing material contained in or forming part of any building, building
component, structure or office space owned, leased or operated by the
Company; and (iv) there are no polychlorinated biphenyls (PCB's) or
PCB-containing items contained in or forming part of any building, building
component, structure or office space owned, leased or operated by the
Company.
(e) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, action, cause of
action, investigation or notice (written or oral) by any person or
entity alleging potential liability (including potential liability for
investigatory costs, cleanup costs, governmental response
20
costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from (x) the
presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned or operated
by the Company, or (y) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Laws" means all Federal, state, local and
foreign laws, regulations, codes, ordinances, any guidance or directive
relating to pollution or protection of human health and the environment
(including ambient air, surface water, ground water, land surface or
sub- surface strata), including laws and regulations relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Materials of Environmental Concern, including, but not
limited to CERCLA, RCRA, TSCA, OSHA, the Clean Air Act, the Clean Water
Act, each as amended or supplemented, and any applicable transfer
statutes or laws.
(iii) "Materials of Environmental Concern" means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances and
hazardous wastes, toxic substances, petroleum and petroleum products,
asbestos-containing materials, poly chlorinated biphenyls, and any
other chemicals, pollutants or substances regulated under any
Environmental Law.
Section 4.18 Intellectual Property. (a) The Company owns, or is licensed or
otherwise possesses legally enforceable rights to use all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
technology, know-how, computer software programs or applications, and tangible
or intangible proprietary information or material that are used in the business
of the Company as currently conducted, except as would not reasonably be
expected to have a Material Adverse Effect.
(b) To the best knowledge of the Company, there are no valid grounds
for any bona fide claims (i) to the effect that the business of the Company
infringes on any copyright, patent, trademark, service xxxx or trade secret;
(ii) against the use by the Company, of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software
programs and applications used in the business of the Company as currently
conducted; (iii) challenging the ownership, validity or effectiveness of any
of the patents, registered and material unregistered trademarks and service
marks, registered copyrights, trade names and any applications therefor
owned by the Company (the "Company Intellectual Property Rights") or other
trade secret material to the Company; or (iv) challenging the license or
legally enforceable right to use of any third-party patents, trademarks,
service marks and copyrights by the Company, except, in each case, for
claims that, if determined adversely to the Company, would not reasonably be
expected to have a Material Adverse Effect.
(c) To the best knowledge of the Company, all material patents,
registered trademarks, service marks and copyrights held by the Company are
valid and subsisting. Except as set forth in Section 4.18(c) of the
Disclosure Schedule or the SEC Reports, to the
21
Company's knowledge, there is no material unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property by any third
party, including any employee or former employee of the Company.
Section 4.19 Insurance. All material fire and casualty, general liability,
professional liability, business interruption, product liability and sprinkler
and water damage insurance policies maintained by the Company are with reputable
insurance carriers, are in full force and effect with no premium delinquencies,
provide full and adequate coverage for all normal risks incident to the business
of the Company and its properties and assets and are in character and amount at
least equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards, except as would not reasonably
be expected to have a Material Adverse Effect.
Section 4.20 Accounts Receivable. The accounts receivable of the Company as
reflected in the most recent financial statements contained in the SEC Reports,
to the extent uncollected on the date hereof, and the accounts receivable
reflected on the books of the Company are valid and existing and represent
monies due, and the Company has made reserves reasonably considered adequate for
receivables not collectible in the ordinary course of business, and (subject to
the aforesaid reserves) are not subject to any refunds or other adjustments or
to any defenses, rights of set-off, assignments, restrictions, encumbrances or
conditions enforceable by third parties on or affecting any thereof, except for
such refunds, adjustments, defenses, rights of set-off, assignments,
restrictions, encumbrances or conditions as would not reasonably be expected to
have a Material Adverse Effect.
Section 4.21 Customers. Section 4.21 of the Disclosure Schedule sets forth a
list of the Company's twenty five (25) largest customers (detailed, in the case
of government agencies, by separate government agency) in terms of gross sales
for the fiscal year ended June 28, 1997. Except as set forth in Section 4.21 of
the Disclosure Schedule, since June 28, 1997 there have not been any adverse
changes in the business relationships of the Company with any of the customers
named therein that would constitute a Material Adverse Effect.
Section 4.22 Interested Party Transactions. Except as set forth in Section
4.22 of the Disclosure Schedule or the SEC Reports, since the date of the
Company's proxy statement dated November 6, 1997, no event has occurred that
would be required to be reported as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC,
except for contracts entered into in the ordinary course of business of the
Company, on an arms-length basis, with terms no less favorable to the Company
than would reasonably be expected in a similar transaction with an unaffiliated
third party.
Section 4.23 Absence of Certain Payments. None of the Company or any of its
affiliates or any of their respective officers, directors, employees or agents
or other people acting on behalf of any of them have (i) engaged in any activity
prohibited by the United States Foreign Corrupt Practices Act of 1977 or any
other similar law, regulation, decree, directive or order of any other country
and (ii) without limiting the generality of the preceding clause (i), used any
corporate or other funds for unlawful contributions, payments,
22
gifts or entertainment, or made any unlawful expenditures relating to political
activity to government officials or others. None of the Company or any of its
affiliates or any of their respective directors, officers, employees or agents
of other persons acting on behalf of any of them, has accepted or received any
unlawful contributions, payments, gifts or expenditures.
Section 4.24 Takeover Statute. The Board of Directors of the Company has
taken all appropriate action so that neither Parent nor Sub will be an
"interested stockholder" within the meaning of Section 203 of the DGCL.
Section 4.25 Opinion of Financial Advisor. The Company has been advised by
its financial advisor, X. X. Xxxxxxxx & Co. that in its opinion, as of the date
hereof, the Merger Consideration is fair to the holders of the Common Stock.
Section 4.26 Brokers. No broker, finder or investment banker (other than X.
X. Xxxxxxxx, the fees and expenses of whom will be paid by the Company) is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company. The Company has heretofore furnished to
Parent a complete and correct copy of all agreements between the Company and X.
X. Xxxxxxxx & Co. pursuant to which such firm would be entitled to any payment
relating to the transactions contemplated hereunder.
Section 4.27 Full Disclosure. (i) No statement contained in any certificate
or schedule furnished or to be furnished by the Company to Parent or Sub in, or
pursuant to the provisions of, this Agreement and (ii) none of the monthly
consolidated financial statements for April, 1998 furnished by the Company to
Parent, including the accompanying commentary, contains or shall contain any
untrue statement of a material fact or omits to state any material fact
necessary, in the light of the circumstances under which it was made, in order
to make the statements herein or therein not misleading.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1 Conduct of Business by the Company Pending the Merger. Except as
otherwise expressly contemplated by this Agreement or consented to in advance by
Parent (which consent is in writing or subsequently confirmed in writing), which
consent shall not be unreasonably withheld, during the period from the date of
this Agreement through the earlier of the time that the change in composition of
the Board of Directors of the Company contemplated by Section 6.8 has occurred
and the Effective Time, the Company shall in all material respects carry on its
business in, and not enter into any material transaction other than in
accordance with, the regular and ordinary course and, to the extent consistent
therewith, use its reasonable best efforts to preserve intact its current
business organization, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it. Without limiting the generality of the
foregoing, and except as otherwise expressly contemplated by this
23
Agreement (including the time period specified above), the Company shall not,
without the prior consent of Parent (which consent is in writing or subsequently
confirmed in writing), which consent shall not be unreasonably withheld:
(a) (i) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to stockholders of the Company
in their capacity as such, (ii) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
(iii) purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(b) issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities or equity equivalent (other than the issuance of Common Stock
during the period from the date of this Agreement through the Effective Time
upon the exercise of Stock Options or Warrants outstanding on the date of
this Agreement in accordance with their current terms);
(c) amend or change its Certificate of Incorporation or Bylaws;
(d) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire or
agree to acquire any assets, in each case that are material, individually or
in the aggregate, to the Company;
(e) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets that are material, individually or
in the aggregate, to the Company;
(f) make any commitment or enter into any contract or agreement except
(i) in the ordinary course of business consistent with past practice or (ii)
for capital expenditures to be made in fiscal 1998 as identified in a
capital expenditure budget previously delivered to Parent;
(g) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others, except for borrowings or guarantees incurred in the
ordinary course of business consistent with past practice under financing
arrangements in existence on the date hereof, or make any loans, advances or
capital contributions to, or investments in, any other person, other than in
the ordinary course of business consistent with past practice;
24
(h) except as may be required as a result of a change in law or
pursuant to GAAP, change any of the accounting principles or practices used
by it;
(i) make any tax election or settle or compromise any material income
tax liability;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities reflected or
reserved against in, or contemplated by, the financial statements (or the
notes thereto) of the Company or incurred in the ordinary course of business
consistent with past practice;
(k) increase in any manner the compensation or fringe benefits of any
of its directors, officers and other key employees or pay any pension or
retirement allowance not required by any existing plan or agreement to any
such employees, or become a party to, amend or commit itself to any pension,
retirement, profit-sharing or welfare benefit plan or agreement or
employment agreement with or for the benefit of any employee, other than
increases in the compensation of employees who are not officers or directors
of the Company made in the ordinary course of business consistent with past
practice, or (except pursuant to the terms of preexisting plans or
agreements) accelerate the vesting of any compensation or benefit;
(l) except in connection with the exercise of its fiduciary duties by
the Board of Directors of the Company as set forth in Section 5.2, waive,
amend or allow to lapse any term or condition of any confidentiality or
"standstill" agreement to which the Company is a party; or
(m) take, or agree in writing or otherwise to take, any of the
foregoing actions or any action which would make any of the representations
or warranties of the Company contained in this Agreement untrue or incorrect
at or prior to the Effective Time.
Section 5.2 Acquisition Proposals. From and after the date of this Agreement
and prior to the Effective Time, except as provided below, the Company agrees
(i) that the Company shall not, and the Company shall direct and use its
reasonable best efforts to cause its officers, directors, employees and
authorized agents and representatives (including any investment banker, attorney
or accountant retained by it) not to, initiate, solicit or encourage, directly
or indirectly, any inquiries or the making or implementation of any proposal or
offer (including any proposal or offer to its stockholders) with respect to a
merger, acquisition, consolidation or similar transaction involving, or any
purchase of, any equity securities (except pursuant to the exercise of the
outstanding options, warrants or other rights set forth in Section 4.3 of this
Agreement, including, Section 4.3 of the Disclosure Schedule) or all or any
significant portion of the assets of, the Company (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with,
25
any person or entity relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal;
(ii) that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any person or entity conducted
heretofore with respect to any of the foregoing and will take the necessary
steps to inform the person or entity referred to above of the obligations
undertaken in this Section 5.2; and (iii) that it will notify Parent immediately
if any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, it (but the Company shall not be required to
disclose the names of any party making or the terms of any such proposal);
provided, however, that nothing contained in this Section 5.2 shall prohibit the
Board of Directors of the Company from (x) furnishing information to, or
entering into discussions or negotiations with, any person or entity that makes
an unsolicited bona fide proposal in writing to engage in an Acquisition
Proposal transaction which the Board of Directors of the Company in good faith
determines represents a financially superior transaction for the stockholders of
the Company as compared to the Offer and the Merger if, and only to the extent
that, (A) the Board of Directors determines, after consultation with outside
counsel of national reputation (which may be the Company's regularly engaged
counsel) for its expertise in corporate and securities law matters as the
Company shall select ("Company Counsel"), that failure to take such action would
be inconsistent with the compliance by the Board of Directors with its fiduciary
duties to stockholders imposed by law, (B) prior to or concurrently with
furnishing such information to, or entering into discussions or negotiations
with, such a person or entity, the Company provides written notice to Parent to
the effect that it is furnishing information to, or entering into discussions or
negotiations with, such a person or entity, and (C) the Company keeps Parent
informed of the status (excluding, however, the identity of such person) of any
such discussions or negotiations; and (y) to the extent applicable, complying
with Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal. Nothing in this Section 5.2 shall (t) permit the Company to terminate
this Agreement (except as contemplated by Section 8.1(b)(ii)), (u) permit the
Company to enter into any agreement with respect to an Acquisition Proposal
during the term of this Agreement, or (v) affect any other obligation of any
party under this Agreement.
Section 5.3 Annual Meeting of Stockholders. The Company shall defer and/or
postpone the holding of its 1998 Annual Meeting of Stockholders (the "Annual
Meeting") indefinitely pending consummation of the Merger unless the Company is
otherwise required to hold the Annual Meeting by an order from a court of
competent jurisdiction.
Section 5.4 Conduct of Business of Sub Pending the Merger. During the period
from the date of this Agreement through the Effective Time, Sub shall not engage
in any activities of any nature except as provided in or contemplated by this
Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
26
Section 6.1 Company Stockholder Approval; Proxy Statement. (a) If approval
or action in respect of the Merger by the stockholders of the Company is
required by applicable law, the Company shall (i) if appropriate, call a meeting
of its stockholders (the "Stockholder Meeting") for the purpose of voting upon
the Merger and shall use its reasonable best efforts to obtain stockholder
approval of the Merger, (ii) hold the Stockholder Meeting as soon as practicable
following the purchase of shares of Common Stock pursuant to the Offer, (iii)
recommend to its stockholders the approval of the Merger through its Board of
Directors, and (iv) use its reasonable best efforts to obtain the necessary
approvals by its stockholders of the Merger, this Agreement and the transactions
contemplated hereby, but subject in each case to the fiduciary duties of its
Board of Directors under applicable law as determined by the Board of Directors
in good faith after consultation with Company Counsel. The record date for the
Stockholder Meeting shall be a date subsequent to the date Parent or Sub becomes
a record holder of Common Stock purchased pursuant to the Offer.
(b) If required by applicable law, the Company will, as soon as
practicable following the expiration of the Offer, prepare and file a
preliminary version of the proxy statement to be sent to the stockholders of
the Company in connection with the Stockholders Meeting (the "Proxy
Statement"), or, if applicable, an information statement in lieu of a proxy
statement pursuant to Rule 14C under the Exchange Act (with all references
herein to the Proxy Statement being deemed to refer to such information
statement, to the extent applicable) with the SEC with respect to the
Stockholders Meeting and will use its reasonable best efforts to respond to
any comments of the SEC or its staff and to cause the Proxy Statement to be
cleared by the SEC. The Company will notify Parent of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or
its staff, on the other hand, with respect to the Proxy Statement or the
Merger. The Company shall give Parent and its counsel the opportunity to
review the Proxy Statement prior to its being filed with the SEC and shall
give Parent and its counsel the opportunity to review all amendments and
supplements to the Proxy Statement and all responses to requests for
additional information and replies to comments prior to their being filed
with, or sent to, the SEC. Each of the Company and Parent agrees to use its
reasonable best efforts, after consultation with the other parties hereto,
to respond promptly to all such comments of and requests by the SEC. As
promptly as practicable after the Proxy Statement has been cleared by the
SEC, the Company shall mail the Proxy Statement to the stockholders of the
Company. If at any time prior to the approval of this Agreement by the
Company's stockholders there shall occur any event that should be set forth
in an amendment or supplement to the Proxy Statement, the Company will
prepare and mail to its stockholders such an amendment or supplement. The
Company represents and warrants to Parent and Sub that the Proxy Statement
(x) will not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders, at the time of the
Stockholders Meeting, or at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading; and (y) will
comply in all material respects with the requirements of the Exchange Act.
Notwithstanding the foregoing, the Company makes
27
no representation or warranty with respect to any information supplied by
Parent or Sub in writing for inclusion in the Proxy Statement.
(c) Parent agrees to cause all shares of Common Stock purchased
pursuant to the Offer and all other shares of Common Stock owned by Sub or
any other subsidiary or affiliate of Parent to be voted in favor of the
approval of the Merger.
(d) Parent and Sub represent and warrant to the Company that the
information supplied by Parent or Sub in writing for inclusion in the Proxy
Statement (or any amendment or supplement thereto) will not, on the date the
Proxy Statement is first mailed to stockholders, at the time of the
Stockholders Meeting or at the Effective Time contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
Section 6.2 Access to Information; Confidentiality. The Company shall afford
to Parent, and to Parent's accountants, counsel, financial advisers and other
representatives, reasonable access and permit them to make such inspections as
they may reasonably require during normal business hours during the period from
the date of this Agreement through the Effective Time to all their respective
properties, books, contracts, commitments and records and, during such period,
the Company shall furnish promptly to Parent (i) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws and (ii)
all other information concerning its business, properties and personnel as
Parent may reasonably request.
Section 6.3 Fees and Expenses. (a) Except as provided in subsections (b) and
(c) below, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses.
(b) The Company agrees that if this Agreement is terminated pursuant
to:
(i) Section 8.1(d)(i) and
(I) (x) the Offer has remained open for a minimum of twenty
(20) business days, (y) the Minimum Condition has not been
satisfied and (z) an Acquisition Proposal existed during such
twenty day period; or
(II) at the time of such termination any person, entity or
group (as defined in Section 13(d)(3) of the Exchange Act)
(other than Parent or any of its affiliates) shall have
become the beneficial owner of more than 20% of the
outstanding shares of Common Stock and such person, entity or
group (or any affiliate of such person, entity or group)
thereafter (x) shall make an Acquisition Proposal at a price
per share of at least $10.50, and, in the case of a
consensual transaction with the Company, shall substantially
have negotiated the terms thereof, at any
28
time on or prior to the date which is six months after such
termination of this Agreement, and (y) shall consummate such
Acquisition Proposal at any time on or prior to the date which
is one year after termination of this Agreement, in the case
of a consensual transaction, or six months after termination
of this Agreement, in the case of a non-consensual
transaction, in each case with a value per share of Common
Stock of at least $10.50 (with appropriate adjustments for
reclassifications of capital stock, stock dividends, stock
splits, reverse stock splits and similar events);
(ii) Section 8.1(b)(ii);
(iii) Section 8.1(c)(i); or
(iv) Section 8.1(c)(iii),
then the Company shall pay to Parent (such payment, with respect to clause (iv)
above only, to be Parent's sole and exclusive remedy) the sum of (a) $2 million,
plus (b) the amount of all documented out-of-pocket costs and expenses incurred
by Parent, Sub or their affiliates in an aggregate amount not to exceed $150,000
in connection with this Agreement or the transactions contemplated hereby. Such
payment shall be made as promptly as practicable but
in no event later than five business days following termination of this
Agreement pursuant to the immediately preceding sentence, or, in the case of
clause (i)(II) of the immediately preceding sentence, upon consummation of such
Acquisition Proposal, and shall be made by wire transfer of immediately
available funds to an account designated by Parent.
(c) The Company agrees that if this Agreement is terminated pursuant to
Section 8.1(c)(ii)(1), the Company shall pay to Parent the amount of all
documented out-of-pocket costs and expenses incurred by Parent, Sub or their
affiliates in an aggregate amount not to exceed $150,000 in connection with
this Agreement or the transactions contemplated hereby.
Section 6.4 Option Plans etc.. Prior to the Effective Time, the Company
shall take all such actions as shall be necessary to effectuate the provisions
of Sections 2.5(d), (e) and (f). The Company shall take such action as is
necessary to cause the ending date of the then current offering period under the
ESPP to be prior to the Effective Time and to terminate the ESPP as of the
Effective Time. The Company shall give written notice of the Merger to the
registered holder of the Warrant at least twenty (20) days prior to the
Effective Time or by such other time required pursuant to the terms thereof.
Section 6.5 Reasonable Best Efforts. Subject to Section 5.2 of this
Agreement, upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its reasonable best efforts to
take, or cause to be taken, all actions (including entering into transactions),
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Merger, and the
other transactions
29
contemplated by this Agreement, including (a) the prompt making of their
respective filings (including under the HSR Act) and thereafter the making of
any other required submission with respect to the Offer and the Merger, (b) the
obtaining of all additional necessary actions or non-actions, waivers, consents
and approvals from any applicable federal, state, foreign or supranational
court, commission, governmental body, regulatory or administrative agency,
authority or tribunal of competent jurisdiction (a "Governmental Entity") and
the making of all necessary registrations and filings (including filings with
Governmental Entities) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from any Governmental Entity, (c) the
obtaining of all necessary consents, approvals or waivers from third parties,
(d) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (e) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by this
Agreement; provided, however, that neither Parent, Sub nor the Company shall be
required to take any action pursuant to clauses (b), (c), (d) or (e) above that
would in any event have a Material Adverse Effect, in the case of the Company,
or any similar effect on Parent and/or its subsidiaries; and provided further
that neither Parent, Sub nor any of their affiliates shall be required to enter
into any transaction or take any other action that would require a waiver of, or
that is inconsistent with satisfaction of, the conditions of the Offer set forth
in clauses (a)(iii), (iv) or (v) in Exhibit A hereto.
Section 6.6 Public Announcements. Parent and Sub, on the one hand, and the
Company, on the other hand, will consult with each other before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange.
Section 6.7 Indemnification; Directors and Officers Insurance. (a) From and
after the Effective Time, the Surviving Corporation shall indemnify and hold
harmless all past and present officers and directors (the "Indemnified Parties")
of the Company to the full extent such persons may be indemnified by the Company
pursuant to Delaware law, the Company's Certificate of Incorporation and Bylaws
as in effect from time to time for acts and omissions occurring at or prior to
the Effective Time and shall advance reasonable litigation expenses incurred by
such persons in connection with defending any action arising out of such acts or
omissions, provided that such persons provide the requisite affirmations and
undertaking, as set forth in Section 145(e) of the DGCL.
(b) In addition, Parent will provide, or cause the Surviving
Corporation to provide, for a period of not less than six years after the
Effective Time, the Company's current directors and officers an insurance
and indemnification policy that provides coverage for events occurring at or
prior to the Effective Time (the "D&O Insurance") that is no less favorable
than the existing policy or, if substantially equivalent insurance coverage
is unavailable, the best available coverage; provided, however, that Parent
and the Surviving Corporation shall not be required to pay an annual premium
for the D&O Insurance in excess
30
of 200% of the annual premium currently paid by the Company for such
insurance, but in such case shall purchase as much such coverage as
possible for such amount.
(c) This Section 6.7 is intended to benefit the Indemnified Parties and
shall be binding on all successors and assigns of Parent, Sub, the Company
and the Surviving Corporation. Parent hereby guarantees the performance by
the Surviving Corporation of the indemnified obligations pursuant to this
Section 6.7, which guaranty is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including the bankruptcy or
insolvency of the Surviving Corporation or any other person. The Indemnified
Parties shall be intended third-party beneficiaries of this Section 6.7.
Section 6.8 Board Representation. (a) Promptly upon the purchase of shares
of Common Stock pursuant to the Offer, Parent shall be entitled to designate
such number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as will give Parent, subject to compliance with Section
14(f) of the Exchange Act, representation on the Board of Directors equal to the
product of (a) the total number of directors on the Board of Directors and (b)
the percentage that the number of shares of Common Stock purchased by Sub bears
to the number of shares of Common Stock outstanding, and the Company shall, upon
request by Parent, promptly increase the size of the Board of Directors and/or
exercise its reasonable best efforts to secure the resignations of such number
of directors as is necessary to enable Parent's designees to be elected to the
Board of Directors and shall cause Parent's designees to be so elected. The
Company shall take, at its expense, all action required pursuant to Section
14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 6.8
and shall include in the Schedule 14D-9 or otherwise timely mail to its
stockholders such information with respect to the Company and its officers and
directors as is required by Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under this Section 6.8. Parent will supply to the Company in writing
and be solely responsible for any information with respect to itself and its
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
(b) Following the election of designees of Parent pursuant to this
Section 6.8, prior to the Effective Time, any amendment of this Agreement or
the Certificate of Incorporation or Bylaws of the Company, any termination
of this Agreement by the Company, any extension by the Company of the time
for the performance of any of the obligations or other acts of Parent or Sub
or waiver of any of the Company's rights or obligations hereunder shall
require the concurrence of a majority of the directors of the Company then
in office who are directors as of the date hereof or persons designated by
such directors and neither were designated by Parent nor are employees of
the Company ("Continuing Directors"). Prior to the Effective Time, the
Company and Parent shall use all reasonable efforts to ensure that the
Company's Board of Directors at all times includes at least three Continuing
Directors.
Section 6.9 Notification of Certain Matters. The Company shall give prompt
notice to Parent and Sub, and Parent and Sub shall give prompt notice to the
Company, of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or
31
inaccurate in any material respect at or prior to the Effective Time, or (ii)
any material failure of the Company, Parent or Sub, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.9 shall not cure such breach or non-compliance or
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. If approval of the Merger by the holders of
the Common Stock is required by applicable law, the Merger shall have been
approved by the requisite vote of such holders.
(b) No Order. No court or other Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any law, rule, regulation,
executive order, decree or injunction which prohibits or has the effect of
prohibiting the consummation of the Merger; provided, however, that, prior
to invoking this provision, the Company, Parent and Sub shall use their
reasonable best efforts (subject to the other terms and conditions of this
Agreement) to have any such order, decree or injunction vacated.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after any approval by the stockholders
of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by the Company if:
(i) the Offer has not been timely commenced (except as a result of
actions or omissions by the Company) in accordance with Section 1.1(a);
or
(ii) there is an Acquisition Proposal which the Board of Directors
of the Company in good faith determines represents a financially
superior transaction for the stockholders of the Company as compared to
the Offer and the Merger, and the Board of Directors of the Company
determines, after
32
consultation with Company Counsel, that failure to terminate this
Agreement would be inconsistent with the compliance by the Board of
Directors with its fiduciary duties to stockholders imposed by law;
provided, however, that the right to terminate this Agreement pursuant
to this clause shall not be available (x) if the Company has breached
in any material respect its obligations under Section 5.2, or (y) if,
prior to or concurrently with any purported termination pursuant to
this clause, the Company shall not have paid the fees and expenses
contemplated by Section 6.3(b); or
(iii) any representation or warranty of Parent or Sub shall not
have been true and correct in all material respects when made or shall
have ceased at any later date to be true and correct in all material
respects as if made at such later date; or
(iv) Parent or Sub fails to comply in any material respect with
any of its material obligations or covenants contained herein,
including the obligation of Sub to purchase shares of Common Stock
pursuant to the Offer;
(c) by Parent if:
(i) the Board of Directors of the Company shall have failed to
recommend, or shall have withdrawn, modified or amended in any material
respect its approval or recommendations of the Offer or the Merger or
shall have resolved to do any of the foregoing; or
(ii) any representation or warranty of the Company shall not have
been true and correct (1) in all material respects when made or (2)
other than where the failure to be true and correct would not
reasonably be expected, individually, or in the aggregate, to have a
Material Adverse Effect, shall have ceased at any later date to be true
and correct as if made at such later date; provided, however, that the
right to terminate this Agreement pursuant to this clause shall not be
available to Parent if Sub or any affiliate of Sub shall acquire shares
of Common Stock pursuant to the Offer; or
(iii) the Company shall have failed to comply in any material
respect with any of its material obligations or covenants contained
herein; provided, however, that the right to terminate this Agreement
pursuant to this clause shall not be available to Parent if Sub or any
affiliate of Sub shall acquire shares of Common Stock pursuant to the
Offer;
(d) by either Parent or the Company if:
(i) either (x) as the result of the failure of the Minimum
Condition or any of the other conditions set forth in Exhibit A hereto,
the Offer shall have terminated or expired in accordance with its terms
without Sub having purchased any shares of Common Stock pursuant to the
Offer, or (y) the Offer
33
shall not have been consummated on or before October 31, 1998;
provided, however, that the right to terminate this Agreement pursuant
to this clause shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement results in the
failure of any such condition; or
(ii) any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable.
Section 8.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or further
obligation hereunder on the part of the Company, Parent or Sub or their
respective officers or directors (except for Section 6.3, which shall survive
the termination); provided, however, that nothing contained in this Section 8.2
shall relieve any party hereto from any liability for any willful and material
breach of this Agreement.
Section 8.3 Amendment. This Agreement may be amended by the parties hereto,
by or pursuant to action taken by their respective Boards of Directors, at any
time before or after any approval of the Merger by the stockholders of the
Company but, after the purchase of shares of Common Stock pursuant to the Offer,
no amendment shall be made which decreases the Merger Consideration or which in
any way materially adversely affects the rights of such stockholders, without
the further approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 8.4 Waiver. At any time prior to the Effective Time, the parties
hereto may (i) subject to Section 1.1 of this Agreement, extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (iii) waive compliance
with any of the agreements or conditions contained herein which may legally be
waived. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the termination of this Agreement in
accordance with Article VIII or the Effective Time; provided, however, that
termination of this Agreement shall not
34
relieve any party hereto from any liability for any willful and material breach
by such party of any such representations or warranties.
Section 9.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, sent by overnight
courier or telecopied (with a confirmatory copy sent by overnight courier) 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 Parent or Sub, to:
Tyco International Ltd.
c/o Tyco International (US) Inc.
Xxx Xxxx Xxxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Attn: General Counsel, Tyco International (US) Inc.
Fax: (000) 000-0000
Conf: (000) 000-0000
with a copy to:
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
Conf: (000) 000-0000
(b) if to the Company to:
Sigma Circuits, Inc.
000 Xxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
Conf: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Conf: (000) 000-0000
35
Section 9.3 Interpretation. When a reference is made in this Agreement to a
Section, 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." As used in this Agreement, (i) "business day"
shall have the meaning ascribed thereto in Rule 14d-1(c)(6) under the Exchange
Act, and (ii) "subsidiary" shall have the meaning ascribed thereto in Rule 12b-2
under the Exchange Act.
Section 9.4 Counterparts. This Agreement may be executed in counterparts,
each such counterpart being deemed to be an original instrument and 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.
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
including the documents and instruments referred to herein, (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
and (b) except for the provisions of Section 6.7 is not intended to confer upon
any person other than the parties any rights or remedies hereunder.
Section 9.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Sub of any of
its obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
Section 9.8 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby are not affected in any manner materially
adverse to any party.
Section 9.9 Enforcement of this Agreement; Attorneys Fees. (a) The parties
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and
36
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
(b) The prevailing party in any judicial action shall be entitled to
receive from the other party reimbursement for the prevailing party's
reasonable attorneys' fees and disbursements, and court costs. The
provisions of this Section 9.9(b) shall survive the termination of this
Agreement in accordance with Article VIII.
Section 9.10 Material Adverse Effect. When used in this Agreement, the term
"Material Adverse Effect" means any change, effect or circumstance that is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition, prospects or results of operations of
the Company; provided, however, that the following shall be excluded from the
definition of "Material Adverse Effect" and from any determination as to whether
a Material Adverse Effect has occurred or may occur with respect to the Company:
the effects of changes that are applicable to (i) the Company's results of
operations for the fiscal quarter ending June 27, 1998, (ii) the United States
electronic interconnect industry generally, (iii) the United States economy
generally or (iv) the United States securities markets generally.
[SIGNATURE PAGE FOLLOWS]
37
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized all as of
the date first written above.
TYCO INTERNATIONAL LTD.
By: /s/ Xxxx X.. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President
T10 ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
SIGMA CIRCUITS, INC.
By: /s/ B. Xxxxx Xxxxx
-------------------------------
Name: B. Xxxxx Xxxxx
Title: President and Chief Executive Officer
38
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub shall not
be required to accept for payment or pay for, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) of the Exchange Act, any
shares of Common Stock not theretofore accepted for payment or paid for and may
terminate or amend the Offer as to such shares of Common Stock, unless (i) there
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer that number of shares of Common Stock which would represent at least a
majority of the outstanding shares of Common Stock on a fully diluted basis (the
"Minimum Condition"), and (ii) any waiting period under the HSR Act applicable
to the purchase of shares of Common Stock pursuant to the Offer shall have
expired or been terminated; provided, however, that Parent and Sub shall extend
the expiration date of the Offer from time to time until July 31, 1998 if, when
and as necessary to satisfy any request for additional information by the DOJ or
FTC pursuant to the HSR Act. Furthermore, notwithstanding any other term of the
Offer or this Agreement, Sub shall not be required to accept for payment or,
subject as aforesaid, to pay for any shares of Common Stock not theretofore
accepted for payment or paid for, and may terminate or amend the Offer if at any
time on or after the date of this Agreement and before the acceptance of such
shares of Common Stock for payment or the payment therefor, any of the following
conditions exist or shall occur and remain in effect:
(a) there shall have been instituted, pending or threatened any action
or proceeding by any court or other Governmental Entity, which (i) seeks to
challenge the acquisition by Parent or Sub (or any of its affiliates) of
shares of Common Stock pursuant to the Offer, restrain, prohibit or delay
the making or consummation of the Offer or the Merger, or obtain damages in
connection therewith in an amount which would reasonably be expected to have
a Material Adverse Effect, (ii) seeks to make the purchase of or payment for
some or all of the shares of Common Stock pursuant to the Offer or the
Merger illegal, (iii) seeks to impose limitations on the ability of Parent
(or any of its affiliates) effectively to acquire or hold, or to require
Parent or the Company or any of their respective affiliates or subsidiaries
to dispose of or hold separate, any portion of the assets or the business of
Parent and its affiliates or any material portion of the assets or the
business of the Company and its subsidiaries taken as a whole, (iv) seeks to
impose material limitations on the ability of Parent (or its affiliates) to
exercise full rights of ownership of the shares of Common Stock purchased by
it, including, without limitation, the right to vote the shares purchased by
it on all matters properly presented to the stockholders of the Company, or
(v) seeks to materially restrict any future business activity by Parent (or
any of its affiliates) in the United States electronic interconnect
industry, including, without limitation, requiring the prior consent of any
person or entity (including any Governmental Entity) to future transactions
by Parent (or any of its affiliates); or
(b) there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer or the Merger, by any statute, rule,
regulation,
39
judgment, decree, order or injunction, that is reasonably likely to
directly or indirectly result in any of the consequences referred to in
clauses (i) through (v) of subsection (a) above; or
(c) the Merger Agreement shall have been terminated in accordance with
its terms; or
(d) any of the representations and warranties made by the Company in
the Merger Agreement (1) shall not have been true and correct in all
material respects when made, or (2) other than where the failure to be true
and correct will not reasonably be expected, individually or in the
aggregate to have a Material Adverse Effect, shall thereafter have ceased to
be true and correct in all material respects as if made as of such later
date (other than representations and warranties made as of a specified
date), or the Company shall not in all material respects have performed in a
timely manner each material obligation and agreement and complied in a
timely manner with each covenant to be performed and complied with by it
under the Merger Agreement; or
(e) the Company's Board of Directors shall have modified or amended its
recommendation of the Offer in any manner adverse to Parent or shall have
withdrawn its recommendation of the Offer, or shall have recommended
acceptance of any Acquisition Proposal or shall have resolved to do any of
the foregoing; or
(f) (i) any corporation, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) ("person"), other than Parent and Sub, shall
have acquired beneficial ownership of more than 20% of the outstanding
shares of Common Stock, or shall have been granted any options or rights,
conditional or otherwise, to acquire a total of more than 20% of the
outstanding shares of Common Stock; (ii) any new group shall have been
formed which beneficially owns more than 20% of the outstanding shares of
Common Stock; or (iii) any person (other than Parent or one or more of its
affiliates) shall have entered into an agreement in principle or definitive
agreement with the Company with respect to a tender or exchange offer for
any shares of Common Stock or a merger, consolidation or other business
combination with or involving the Company; or
(g) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange, the American Stock Exchange or The Nasdaq Stock Market, (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States (whether or not mandatory), (iii) a
commencement or escalation of a war, armed hostilities or other inter
national or national calamity directly involving the United States (that
materially and adversely effect the Company and/or Parent's electronic
interconnect business, (iv) any material limitation (whether or not
mandatory) by any Governmental Entity on, or any other event that is
reasonably likely materially and adversely to affect the extension of credit
by banks or other lending institutions in the
00
Xxxxxx Xxxxxx, (v) any decline in either the Dow Xxxxx Industrial Average or
the Standard and Poor's 500 Index by an amount in excess of 15% measured
from the close of business on the date of this Agreement, or (vi) in the
case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof; or
(h) any change, development, effect or circumstance shall have occurred
or be threatened that would reasonably be expected to have a Material
Adverse Effect; or
(i) the Company shall commence a case under any chapter of Title XI of
the United States Code or any similar law or regulation; or a petition under
any chapter of Title XI of the United States Code or any similar law or
regulation is filed against the Company which is not dismissed within 10
business days.
The foregoing conditions are for the sole benefit of Parent and Sub and may
be asserted by Parent or Sub regardless of the circumstances giving rise to any
such condition and may be waived by Parent or Sub, in whole or in part, at any
time and from time to time, in the sole discretion of Parent. The failure by
Parent or Sub at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any right, the waiver of such right with respect to any
particular facts or circumstances shall not be deemed a waiver with respect to
any other facts or circumstances, and each right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Common Stock not theretofore accepted for payment shall
forthwith be returned by the Paying Agent to the tendering stockholders.
41
