APPENDIX A CONFORMED COPY
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AGREEMENT AND PLAN OF REORGANIZATION
among
EFTC CORPORATION
CTI ACQUISITION CORP.
and
CIRCUIT TEST, INC.
dated as of July 9, 1997
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TABLE OF CONTENTS
RECITALS .........................................................................................................1
AGREEMENT.........................................................................................................1
ARTICLE I THE MERGER......................................................................................2
1.1 The Merger......................................................................................2
1.2 The Closing.....................................................................................2
1.3 Effective Time..................................................................................2
1.4 Certain Tax Positions...........................................................................2
ARTICLE II SURVIVING CORPORATION...........................................................................2
2.1 Articles of Incorporation.......................................................................2
2.2 Bylaws..........................................................................................3
2.3 Directors.......................................................................................3
2.4 Officers........................................................................................3
ARTICLE III EFFECT OF MERGER ON CAPITAL STOCK...............................................................3
3.1 Effect on Capital Stock.........................................................................3
3.2 Exchange of Certificates........................................................................4
3.3 No Further Ownership Rights in Circuit Test Common Stock........................................5
3.4 Lost, Stolen or Destroyed Certificates..........................................................5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CIRCUIT TEST..................................................5
4.1 Organization, Standing and Power................................................................5
4.2 Capitalization; Shareholders....................................................................6
4.3 Subsidiaries....................................................................................7
4.4 Due Authorization...............................................................................7
4.5 Financial Statements............................................................................8
4.6 Absence of Certain Changes......................................................................8
4.7 Liabilities.....................................................................................8
4.8 Accounts Receivable.............................................................................9
4.9 Litigation......................................................................................9
4.10 Restrictions on Business Activities.............................................................9
4.11 Governmental Authorization......................................................................9
4.12 Contracts and Commitments.......................................................................9
4.13 Title to Property..............................................................................10
4.14 Intellectual Property..........................................................................10
4.15 Environmental Matters..........................................................................12
4.16 Taxes..........................................................................................13
4.17 S Corporation and Other Matters................................................................14
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4.18 Employee Benefit Plans.........................................................................14
4.19 Employee Matters...............................................................................16
4.20 Interested Party Transactions..................................................................16
4.21 Insurance......................................................................................16
4.22 Compliance With Laws...........................................................................17
4.23 Major Customers................................................................................17
4.24 Suppliers......................................................................................17
4.25 Inventory......................................................................................17
4.26 Product Warranty and Product Liability.........................................................18
4.27 Minute Books...................................................................................18
4.28 Brokers' and Finders' Fees.....................................................................18
4.29 Proxy Statement................................................................................18
4.30 Regulation D Offering..........................................................................18
4.31 Disclosure.....................................................................................19
4.32 Xxxx-Xxxxx-Xxxxxx..............................................................................19
4.33 Reliance.......................................................................................19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB.....................................................................................19
5.1 Organization, Standing and Power...............................................................19
5.2 Capitalization.................................................................................20
5.3 Due Authorization..............................................................................20
5.4 SEC Documents; Financial Statements............................................................21
5.5 Absence of Certain Changes.....................................................................21
5.6 Compliance with Laws...........................................................................22
5.7 Board Approval.................................................................................22
5.8 Litigation.....................................................................................22
5.9 Title to Property..............................................................................22
5.10 Intellectual Property..........................................................................22
5.11 Taxes..........................................................................................23
5.12 Employee Benefit Plans; ERISA..................................................................23
5.13 Compliance With Laws...........................................................................24
5.14 Major Customers................................................................................24
5.15 Suppliers......................................................................................24
5.16 Brokers' and Finders' Fees.....................................................................24
5.17 Disclosure.....................................................................................24
5.18 Xxxx-Xxxxx-Xxxxxx..............................................................................24
5.19 Reliance.......................................................................................24
ARTICLE VI CONDUCT PRIOR TO EFFECTIVE TIME................................................................25
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6.1 Conduct of Business of Circuit Test............................................................25
6.2 No Solicitation; Acquisition Proposals.........................................................28
6.3 Conduct of Business of Parent..................................................................28
6.4 Notice of Breach...............................................................................29
ARTICLE VII ADDITIONAL COVENANTS................................................................................29
7.1 Proxy Statement................................................................................29
7.2 Meetings of Shareholders.......................................................................29
7.3 Access to Information..........................................................................30
7.4 Confidentiality................................................................................30
7.5 Publicity......................................................................................30
7.6 Filings; Cooperation...........................................................................30
7.7 Employment Matters.............................................................................31
7.8 Stock Options..................................................................................31
7.9 Director Nominees..............................................................................31
7.10 Further Assurances.............................................................................31
7.11 Certain Tax Matters............................................................................31
7.12 Audited Financial Statements...................................................................32
7.13 Additional Agreements..........................................................................32
7.14 Deferred Compensation..........................................................................32
ARTICLE VIII CONDITIONS PRECEDENT...............................................................................32
8.1 Conditions to Obligations of Each Party to Effect the Merger...................................32
8.2 Additional Conditions to Obligations of Circuit Test to Effect the Merger......................33
8.3 Additional Conditions to the Obligations of Parent and Merger Sub to
Effect the Merger..............................................................................33
ARTICLE IX RESTRICTIONS ON TRANSFER.......................................................................35
9.1 Legends........................................................................................35
9.2 Notice of Proposed Dispositions................................................................36
ARTICLE X TERMINATION, AMENDMENT AND WAIVER..............................................................36
10.1 Termination....................................................................................36
10.2 Effect of Termination..........................................................................37
10.3 Amendment......................................................................................37
10.4 Extension; Waiver..............................................................................37
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ARTICLE XI GENERAL PROVISIONS.............................................................................37
11.1 Survival of Representations and Warranties.....................................................37
11.2 Indemnification by Parent......................................................................38
11.3 Notices........................................................................................38
11.4 Interpretation.................................................................................39
11.5 Counterparts...................................................................................40
11.6 Entire Agreement; Nonassignability; Parties in Interest........................................40
11.7 Severability...................................................................................40
11.8 Remedies Cumulative; No Waiver.................................................................40
11.9 Governing Law..................................................................................40
11.10 Rules of Construction..........................................................................40
11.11 Expenses. ....................................................................................41
11.12 Attorneys Fees.................................................................................41
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EXHIBITS
Exhibit 1.3 (A) Articles of Merger
Exhibit 1.3 (B) Plan of Merger
Exhibit 7.7 Form of Employment Agreement
Exhibit 7.13 Form of Voting Letter Agreement
Exhibit 8.2(c) Opinion of Counsel to Parent
Exhibit 8.2(d) Registration Rights Agreement
Exhibit 8.3(c) Opinion of Counsel to Circuit Test
Exhibit 8.3(h) Indemnification Agreement
SCHEDULES
Schedule 3.1 Circuit Test Common Stock and Pro Forma Conversions to Parent
Common Stock
Schedule 7.8 Options Issuable by Parent to Management of Circuit Test
Target Disclosure Schedule
Parent Disclosure Schedule
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INDEX OF DEFINED TERMS
Page
1989 Act ................................................................................................2
Agreement ................................................................................................1
Airhub ................................................................................................1
Annual Financial Statements.......................................................................................8
CERCLA ...............................................................................................12
Certificates ................................................................................................4
Circuit Test ................................................................................................1
Circuit Test Authorizations.......................................................................................9
Circuit Test Common Stock.........................................................................................6
Circuit Test Disclosure Schedule..................................................................................5
Circuit Test Employee Plans......................................................................................15
Class A Common ................................................................................................6
Class B Common ................................................................................................6
Closing ................................................................................................2
Closing Date ................................................................................................2
COBRA ...............................................................................................16
Code ................................................................................................1
Confidential Information.........................................................................................11
controlled group ...............................................................................................23
CT Shareholders ................................................................................................1
Deferred Compensation............................................................................................32
Designees ...............................................................................................31
Effective Time ................................................................................................2
Employment Agreements............................................................................................31
environment ...............................................................................................12
Environmental Law ...............................................................................................12
ERISA ...............................................................................................14
ERISA Affiliate ...............................................................................................14
Governmental Entity...............................................................................................7
Hazardous Substance..............................................................................................12
Holder ...............................................................................................35
HSR Act ...............................................................................................19
include ...............................................................................................39
includes ...............................................................................................39
including ...............................................................................................39
Indemnification Agreement........................................................................................34
Indemnification Threshold........................................................................................38
Intellectual Property............................................................................................10
Interim Circuit Test Financial Statements.........................................................................8
Inventory ...............................................................................................17
knowledge ...............................................................................................39
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Lien ................................................................................................6
LLC ................................................................................................1
LLC Agreement ................................................................................................1
Losses ...............................................................................................38
made available ...............................................................................................39
material ...............................................................................................39
Material Adverse Effect..........................................................................................39
Merger ................................................................................................2
Merger Sub ................................................................................................1
Merger Sub Common Stock...........................................................................................3
NASD ...............................................................................................21
no action ...............................................................................................36
Parent ................................................................................................1
Parent Balance Sheet Date........................................................................................21
Parent Common Stock...............................................................................................3
Parent SEC Documents.............................................................................................21
Parent Shareholders Meeting......................................................................................18
Parent Stock Option Plans........................................................................................20
plan of reorganization............................................................................................1
Proprietary Information..........................................................................................30
Proxy Statement ...............................................................................................18
Registration Rights Agreement....................................................................................33
release ...............................................................................................12
Representatives ...............................................................................................30
Restricted Securities............................................................................................35
SEC ...............................................................................................21
SECURITIES ACT ...............................................................................................35
Shareholder Indemnity Claim......................................................................................38
Surviving Corporation.............................................................................................2
Tax ...............................................................................................14
Tax authority ...............................................................................................14
Tax Return ...............................................................................................14
Taxable ...............................................................................................14
Taxes ...............................................................................................14
Third Party Intellectual Property Rights.........................................................................11
Transaction ................................................................................................1
ultimate parent entity...........................................................................................19
unrealized built in gain.........................................................................................14
Voting Agreement ...............................................................................................34
without limitation...............................................................................................39
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as
of July 9, 1997, is among EFTC Corporation, a Colorado corporation ("Parent"),
CTI ACQUISITION CORP., a Florida corporation and a wholly-owned subsidiary of
Parent ("Merger Sub"), and CIRCUIT TEST, INC., a Florida corporation ("Circuit
Test").
RECITALS
A. The Boards of Directors of Parent and Circuit Test have determined
that a business combination between Parent and Circuit Test is in the best
interests of their respective companies and shareholders, and accordingly have
approved this Agreement and the merger provided for herein whereupon Merger Sub
shall merge with and into Circuit Test upon the terms, and subject to the
conditions, set forth herein. In addition, each of the shareholders of Circuit
Test (the "CT Shareholders") has approved this Agreement and the merger provided
for herein.
B. In addition to the transactions contemplated by this Agreement,
Parent intends to acquire certain other entities which are closely affiliated
with Circuit Test. As a result, simultaneous with the execution of this
Agreement, Parent is entering into that certain Limited Liability Company Unit
Purchase Agreement (the "Purchase Agreement") with Circuit Test International,
L.C., a Florida limited liability company ("LLC"), and Airhub Services Group,
L.C., a Kentucky limited liability company ("Airhub"). This Agreement, the
Purchase Agreement, and the exhibits and schedules contained therein represent
the entire transaction by which Parent is acquiring control of the business
conducted by Circuit Test, LLC and Airhub (the "Transaction").
C. The merger is intended to qualify, for federal income tax purposes,
as a tax-free reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement is
intended to be a "plan of reorganization" within the meaning of the regulations
promulgated under Section 368 of the Code.
D. Parent, Merger Sub and Circuit Test desire to make certain representations,
warranties and agreements in connection with the merger.
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AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.3), Merger Sub shall be merged
with and into Circuit Test in accordance herewith and the separate corporate
existence of Merger Sub shall thereupon cease (the "Merger"). Circuit Test shall
be the surviving corporation in the Merger, and therefore is sometimes
hereinafter referred to as "Surviving Corporation." The Merger shall have the
effects specified in Section 607.1106 of the Florida 1989 Business Corporation
Act (the "1989 Act").
1.2 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place (a) at the offices of
Holme Xxxxxxx & Xxxx LLP, 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx
00000, at 10:00 a.m., local time, within three business days following the day
on which the conditions set forth in Article VIII shall be fulfilled or waived
in accordance herewith or (b) at such other time, date or place as Parent and
Circuit Test agree. The date on which the Closing occurs is hereinafter referred
to as the "Closing Date."
1.3 Effective Time. If all the conditions to the Merger set forth in
Article VIII shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article X, the parties
hereto shall cause Articles of Merger and a Plan of Merger meeting the
requirements of Section 607.1101 and 607.1105 of the 1989 Act to be properly
executed and duly filed in accordance with the 1989 Act on the Closing Date.
Forms of the Articles of Merger and Plan of Merger are set forth hereto as
Exhibits 1.3 (A) and (B). The Merger shall become effective at the time when the
Articles of Merger and Plan of Merger are so filed with the Department of State
of the State of Florida or at such later time that the parties hereto agree and
is designated in such Articles of Merger (the "Effective Time").
1.4 Certain Tax Positions. The parties hereto intend the Merger to
qualify, and will take the position for tax purposes that the Merger qualifies,
as a non-taxable reorganization under Sections 368(a)(1)(A) and (a)(2)(E) of the
Code. Neither party hereto nor any affiliate thereof will take any action that
would cause the Merger not to qualify as a reorganization under those sections
or regulations promulgated thereunder.
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ARTICLE II
SURVIVING CORPORATION
2.1 Articles of Incorporation. The Articles of Incorporation of Merger
Sub in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of Surviving Corporation until duly amended in accordance with
applicable law.
2.2 Bylaws. At the Effective Time, Surviving Corporation shall take
such actions as may be necessary to amend and restate the Bylaws of Surviving
Corporation to be the same as the Bylaws of Merger Sub, until duly amended in
accordance with applicable law.
2.3 Directors. The directors of the Surviving Corporation shall be
Xxxx Xxxxxxxx, Xxxxxx X. Xxxxxxxxxx, and Xxxxx X. Xxxxxxxx, Xx.
2.4 Officers. The officers the of Surviving Corporation shall be Xxxxx X.
Xxxxxxxx, Xx., President, Xxxxxx X. Xxxxxxxxxx, Treasurer, and Xxxx Xxxxxxxx,
Vice President and Secretary, or as the parties hereto may otherwise agree prior
to the Effective Time.
ARTICLE III
EFFECT OF MERGER ON CAPITAL STOCK
3.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub, Circuit Test or the holders of
any of the following securities all of the following shall occur:
(a) Conversion of Circuit Test Common Stock.
(i) Each issued and outstanding share of Circuit Test Common Stock (as
defined in Section 4.2) shall no longer be outstanding but instead converted
into the right to receive 152.788 shares of Common Stock, $.01 par value, of
Parent (the "Parent Common Stock").
(ii) Schedule 3.1 sets forth all shares of Circuit Test Common Stock
outstanding as of the date of this Agreement, along with a calculation of the
shares of Parent Common Stock issuable as of the Effective Time.
(b) Fractional Shares. No fraction of a share of Parent Common
Stock will be issued in the Merger. In lieu of such issuance, all shares of
Parent Common Stock issued to the Circuit Test shareholders pursuant to this
Agreement shall be rounded to the closest whole share of Parent Common Stock.
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(c) Capital Stock of Merger Sub. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of any
capital stock of Parent, Merger Sub or Circuit Test, each issued and outstanding
share of Common Stock, $.01 par value, of Merger Sub ("Merger Sub Common Stock")
shall be converted into one (1) share of Circuit Test Common Stock.
3.2 Exchange of Certificates.
(a) Exchange. As soon as practicable after the Closing and
against surrender to Parent by any holder of record of a certificate or
certificates that prior to the Effective Time represented shares of Circuit Test
Common Stock (the "Certificates"), Parent shall cause to be delivered to the
holder of record of such Certificates the Merger Consideration to be received by
such holder as specified in Section 3.1. Until such Certificates are so
surrendered, Parent shall not cause to be delivered to the holder of record of
such Certificates the shares referred to in the previous sentence. Each
outstanding Certificate that prior to the Effective Time represented shares of
Circuit Test Common Stock will be deemed from and after the Effective Time, for
all corporate purposes, other than the payment of dividends, to evidence the
right to receive the Merger Consideration and the right to receive unpaid
dividends and distributions, if any, that such holder has the right to receive
in respect of such Parent Common Stock, after giving effect to any required
withholding tax, in each case without interest thereon. The shares represented
by the Certificates surrendered to Parent shall forthwith be canceled. The risk
of loss and title to the Certificates shall pass only upon receipt by Parent of
the Certificates.
(b) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time will be paid to the holder of any
Certificate until such Certificate is surrendered for exchange as provided
herein. Subject to applicable law, following surrender of any such Certificate,
there shall be paid to the holder of the certificates representing whole shares
of Parent Common Stock issued in exchange therefor, without interest, at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore payable (but for the provisions
of this Section 3.2(b)) with respect to such shares of Parent Common Stock and
not paid, less the amount of any withholding taxes that may be required thereon.
(c) Transfers. At or after the Effective Time, there shall be
no transfers on the stock transfer books of Circuit Test of the shares of
Circuit Test Common Stock that were outstanding immediately prior to the
Effective Time. If, at or after the Effective Time, Certificates are presented
to the Surviving Corporation, they shall be canceled and exchanged for
certificates representing the shares of Parent Common Stock deliverable in
respect thereof pursuant to this Agreement in accordance with the procedures set
forth in this Article III. Certificates surrendered for exchange by any person
shall not be exchanged until Parent has received confirmation of the continued
accuracy and effectiveness of the Investor Questionnaire and the Investor
Letter, Indemnification Agreement and Registration Rights Agreement (each as
defined in Section 8.3) executed and delivered by such person.
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(d) No Liability. Notwithstanding anything to the contrary in
this Section 3.2, neither the Surviving Corporation nor any party hereto shall
be liable to any person for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
3.3 No Further Ownership Rights in Circuit Test Common Stock. All
shares of Parent Common Stock issued upon surrender for exchange of shares of
Circuit Test Common Stock in accordance with the terms hereof shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares of
Circuit Test Common Stock, and there shall be no further registration of
transfers on the records of Surviving Corporation of shares of Circuit Test
Common Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to Surviving Corporation
for any reason, they shall be canceled and exchanged as provided in this Article
III.
3.4 Lost, Stolen or Destroyed Certificates. If any Certificate is lost,
stolen or destroyed, the Parent's exchange agent shall issue in exchange for
such lost, stolen or destroyed Certificate, upon the making of an affidavit of
that fact by the holder thereof, such shares of Parent Common Stock (and cash in
lieu of fractional shares) as may be required pursuant to Section 3.1, except
that Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent, Surviving Corporation or the exchange
agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CIRCUIT TEST
Except as disclosed in a document of even date herewith and delivered
by Circuit Test to Parent prior to the execution and delivery of this Agreement
and referring to the section number and subsection of the representations and
warranties in this Agreement, subject to its subsequent revision from time to
time prior to the Effective Time (with the prior written consent of Parent),
(the "Circuit Test Disclosure Schedule"), Circuit Test represents and warrants
to Parent and Merger Sub as follows:
4.1 Organization, Standing and Power. Circuit Test is a corporation
duly organized and validly existing under the laws of the State of Florida, has
the full corporate power to own its properties and to carry on its business as
now being conducted and as proposed to be conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified and in good standing would have a Material Adverse Effect (as
defined in Section 11.3) on Circuit Test. Circuit Test has delivered to Parent a
true and correct copy of its Articles of Incorporation and Bylaws, each as
amended to date. Circuit Test is not in violation of any of the provisions of
its Articles of Incorporation or Bylaws or equivalent organizational
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documents. The Circuit Test Disclosure Schedule lists a complete and correct
list of the officers and directors of Circuit Test.
4.2 Capitalization; Shareholders.
(a) The authorized capital stock of Circuit Test consists of
50,000 shares of Circuit Test Class A Common Stock par value $.01 per share (the
"Class A Common"), of which there are issued and outstanding five (5) shares of
Class A Common and 50,000 shares of Circuit Test Class B Common Stock par value
$.01 per share (the "Class B Common"), of which there are issued and outstanding
12,162 shares of Class B Common. The Class A Common and the Class B Common are
collectively referred to herein as the "Circuit Test Common Stock." There are no
other outstanding shares of capital stock or other securities of Circuit Test
and no outstanding subscriptions, options, warrants, puts, calls, purchase or
sale rights, exchangeable or convertible securities or other commitments or
agreements of any nature relating to the capital stock or other securities of
Circuit Test, or otherwise obligating Circuit Test to issue, transfer, sell,
purchase, redeem or otherwise acquire such stock or securities. All outstanding
shares of Circuit Test Common Stock are duly authorized, validly issued, fully
paid and non-assessable, are free and clear of any mortgage, pledge, lien,
encumbrance, charge or other security interest (a "Lien"), except Liens created
by or imposed upon the holders thereof, and are not subject to preemptive rights
or rights of first refusal created by statute, the Articles of Incorporation or
Bylaws of Circuit Test or any agreement to which Circuit Test is a party or by
which it is bound. There are not any options, warrants, calls, conversion
rights, commitments, agreements, contracts, understandings, restrictions,
arrangements or rights of any character to which Circuit Test is a party or by
which Circuit Test may be bound obligating Circuit Test to issue, deliver, or
sell, or cause to be issued, delivered or sold, additional shares of the capital
stock of Circuit Test or obligating Circuit Test to enter into such an option,
warrant, call, conversion right, commitment, agreement, contract, understanding,
restriction, arrangement or right. There are no contracts, commitments or
agreements relating to voting, purchase or sale of Circuit Test's capital stock
(i) between or among Circuit Test and any of its shareholders and (ii) to the
Circuit Test's knowledge, between or among any of Circuit Test's shareholders,
except for the shareholders named in the Circuit Test Disclosure Schedule.
Circuit Test does not have any outstanding bonds, debentures, notes or other
indebtedness the holders of which have the right to vote (or convertible or
exercisable into securities having the right to vote) with holders of shares of
Circuit Test Common Stock on any matter.
(b) Schedule 3.1 sets forth a true and complete list of the
names of all the record holders of Circuit Test Common Stock, together with the
number of shares of Circuit Test Common Stock held by each such holder. Except
as set forth in Schedule 3.1, each holder so listed that is an individual is a
competent adult and is the record and the beneficial owner of all shares or
other equity securities so listed in his or her name, with the sole right to
vote, dispose of, and receive dividends or distributions with respect to such
shares. Each holder so listed on Schedule 3.1 that is an entity is the record
and beneficial owner, or if a trust, its beneficiaries are the beneficial owners
of, all shares or other equity securities so listed in its name, has the sole
right to vote, dispose of, and receive dividends or distributions with respect
to such shares, has
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the full power and authority, and has or will be fully empowered and authorized
as of the Effective Time, to consummate the matters contemplated to be
consummated by such holder herein.
4.3 Subsidiaries. Circuit Test does not directly or indirectly own any
equity or similar interest in, or any interest convertible or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
4.4 Due Authorization.
(a) Circuit Test has the full corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Circuit Test, subject only to the approval of
the Merger by Circuit Test's shareholders as contemplated by Section 7.2. This
Agreement has been duly executed and delivered by Circuit Test and constitutes
the valid and binding obligation of Circuit Test enforceable against Circuit
Test in accordance with its terms. The execution and delivery of this Agreement
by Circuit Test do not, and the consummation of the transactions contemplated
hereby will not: (i) conflict with or violate any provision of the Articles of
Incorporation or Bylaws of Circuit Test, (ii) violate or conflict with any
permit, order, license, decree, judgment, statute, law, ordinance, rule or
regulation applicable to Circuit Test or the properties or assets of Circuit
Test, or (iii) result in any breach or violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of, or result in the creation
of any Lien on any of the properties or assets of Circuit Test pursuant to or
require the consent or approval of any party to any mortgage, indenture, lease,
contract or other agreement or instrument, bond, note, concession or franchise
applicable to Circuit Test or any of its properties or assets, except, in the
case of this clause (iii) only, where such conflict, violation, default,
termination, cancellation or acceleration would not have and could not
reasonably be expected to have a Material Adverse Effect on Circuit Test or
prevent the consummation of the transactions contemplated hereby. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality ("Governmental Entity") is required by or with
respect to Circuit Test in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for the filing of the Plan of Merger and the Articles of Merger as provided in
Section 1.3 and such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on Circuit Test or prevent the consummation of transactions contemplated
hereby.
(b) All holders of Circuit Test Common Stock have approved, by
written consent or otherwise, this Agreement and the Merger in accordance with
applicable law, and no other consent or approval of any holder of Circuit Test
Common Stock or other equity securities of Circuit Test is required for Circuit
Test to execute and deliver this Agreement and consummate the transaction
contemplated hereby. By virtue of such approval, no holder of
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Circuit Test Common Stock or other equity securities of Circuit Test has any
right to dissent and obtain payment for such holder's shares under applicable
law.
4.5 Financial Statements. Circuit Test has heretofore delivered to
Parent true and complete copies of (i) the unaudited balance sheet, and the
related statements of operations and stockholders' equity and of cash flows for
each of the years ended December 31, 1995 and 1994, and (ii) unaudited balance
sheet, and the related statements of operations and stockholders' equity and of
cash flows at December 31, 1996 (collectively, the "Annual Financial
Statements"). Circuit Test also has heretofore delivered to Parent true copies
of the unaudited balance sheet of Circuit Test at May 31, 1997 and the related
unaudited statements of income for the five (5) months then ended (the "Interim
Circuit Test Financial Statements"). The Annual Financial Statements and the
Interim Circuit Test Financial Statements were prepared in accordance with
generally accepted accounting principles applied on a basis consistent
throughout the periods indicated and consistent with each other (except as
indicated in the notes thereto and, in the case of the Interim Circuit Test
Financial Statements, that no notes are included) and fairly present the
consolidated financial condition and operating results of Circuit Test at the
dates and during the periods indicated therein, subject, in the case of the
Interim Circuit Test Financial Statements, to normal, recurring year-end audit
adjustments. Upon delivery of the audited financial statements to be delivered
to Parent pursuant to Section 7.12, such audited financial statements will be
deemed to be the Annual Financial Statements as to which representations and
warranties are made herein, and such representations and warranties will be
deemed to have been made by Circuit Test with respect to such financial
statements as of the date of such delivery.
4.6 Absence of Certain Changes. Except as specifically permitted by
this Agreement or as set forth in Schedule 4.6 of the Circuit Test Disclosure
Schedule, since December 31, 1996, Circuit Test has conducted its business in
the ordinary course consistent with past practice and there has not occurred:
(i) any change, event or condition (whether or not covered by insurance) that
has resulted in, or might reasonably be expected to result in, a Material
Adverse Effect on Circuit Test; (ii) any action by or with respect to Circuit
Test that would have constituted a breach of any of the covenants contained in
Section 6.1(b); or (iii) any of the following matters:
(a) any material damage, destruction or loss (whether or not covered by
insurance) to the properties and assets of Circuit Test;
(b) any Lien on any asset other than those otherwise permitted by this
Agreement;
(c) any labor dispute, litigation or governmental investigation affecting
the business or financial condition of Circuit Test;
4.7 Liabilities. Except as set forth in the Annual Financial
Statements, the Interim Circuit Test Financial Statements, the Circuit Test
Disclosure Schedule and except for liabilities or obligations arising in the
ordinary course and consistent with past practice and those incurred
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in connection herewith, Circuit Test does not have any liability or obligation
of any nature, whether due or to become due, fixed or contingent.
4.8 Accounts Receivable. All of the accounts receivable shown on the
balance sheet included in the Interim Circuit Test Financial Statements as of
May 31, 1997 have been collected or are good and collectible in the aggregate
recorded amounts thereof (less the allowance for doubtful accounts also
appearing in such May 31, 1997 balance sheet and net of returns and payment
discounts allowable by Circuit Test's policies) and can reasonably be
anticipated to be paid in full in the ordinary course of business consistent
with past practice without outside collection efforts, subject to no
counterclaims or setoffs.
4.9 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Circuit Test,
threatened against Circuit Test or any of its assets and properties or any of
its officers or directors (in their capacities as such) that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect on
Circuit Test. There is no judgment, decree or order against Circuit Test, or, to
the knowledge of Circuit Test, any of its directors or officers (in their
capacities as such), that could prevent consummation of the transactions
contemplated by this Agreement, or that could reasonably be expected to have a
Material Adverse Effect on Circuit Test.
4.10 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or decree binding upon Circuit Test which
has or reasonably could be expected to have the effect of prohibiting or
materially impairing any current or proposed business practice of Circuit Test,
any acquisition of property by Circuit Test or the conduct of business by
Circuit Test as currently conducted or as proposed to be conducted by Circuit
Test.
4.11 Governmental Authorization. Circuit Test has obtained each
federal, state, county, local or foreign governmental consent, license, permit,
grant, or other authorization that is necessary for Circuit Test to own or
lease, operate and use its respective assets and properties and to carry on
business as currently conducted or as proposed to be conducted (collectively
"Circuit Test Authorizations"), Circuit Test has performed and fulfilled its
obligations under the Circuit Test Authorizations, and all the Circuit Test
Authorizations are in full force and effect, except where the failure to obtain
or have any of such Circuit Test Authorizations could not reasonably be expected
to have a Material Adverse Effect on Circuit Test.
4.12 Contracts and Commitments. Circuit Test is not a party to any oral
or written (a)(i) obligation for borrowed money, (ii) obligation evidenced by
bonds, debentures, notes or other similar instruments, (iii) obligation to pay
the deferred purchase price of property or services (other than trade accounts
arising in the ordinary course of business), (iv) obligation under capital
leases, (v) debt of others secured by a Lien on its property, (vi) guaranty of
liabilities or obligations of others, (vii) agreement under which Circuit Test
is obligated to make or expects to receive payments in excess of $50,000 or
(viii) agreement granting any person a Lien on any of its properties or assets
(except purchase money security interests created in the
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ordinary course of business consistent with past practice); (b)(i) employment
agreement or collective bargaining agreement or (ii) agreements that limit the
right of Circuit Test, or any of its employees to compete in any line of
business; or (c) agreement which, after giving effect to the transactions
contemplated hereby, purports to restrict or bind Parent or any of its
subsidiaries, other than Surviving Corporation, in any respect. True and
complete copies of all agreements described in the Circuit Test Disclosure
Schedule have been delivered to Parent. Circuit Test has fulfilled, or taken all
actions necessary to enable it to fulfill when due, its obligations under each
of such agreements. All parties thereto have complied in all material respects
with the provisions thereof and no party is in breach or violation of, or in
default (with or without notice or lapse of time, or both) under such
agreements. With respect to such agreements, Circuit Test has not received any
notice of termination, cancellation or acceleration or any notice of breach,
violation or default thereof.
4.13 Title to Property. Circuit Test has good and marketable title to
all of its respective properties and assets, or in the case of leased properties
and assets, valid leasehold interests in such properties, free and clear of any
Lien. The plants, property and equipment of Circuit Test that are used in the
operations of its business are in good operating condition and repair. All
plants, property and equipment owned by Circuit Test conform (to Circuit Test's
knowledge) with all applicable ordinances, regulations and zoning and other laws
and do not encroach on the property of others, the failure to conform with which
would have a Material Adverse Effect on Circuit Test. There is no pending or, to
Circuit Test's knowledge, threatened change in any such ordinance, regulation or
zoning or other law, and there is no pending or, to Circuit Test's knowledge,
threatened condemnation of any such building, machinery or equipment. The
properties and assets of Circuit Test include all rights, properties, interests
in properties and assets necessary to permit Surviving Corporation to conduct
its business as currently conducted. The Circuit Test Disclosure Schedule
identifies each parcel of real property owned or leased by Circuit Test.
4.14 Intellectual Property.
(a) Circuit Test owns, or is licensed or otherwise possesses
legally enforceable rights to use, all patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, maskworks, net lists,
schematics, technology, know-how, trade secrets, inventory, ideas, algorithms,
processes, computer software programs or applications (in both source code and
object code form), and tangible or intangible proprietary information or
material ("Intellectual Property") that are used in the business of Circuit Test
as currently conducted, except to the extent that the failure to have such
rights has not and could not reasonably be expected to have a Material Adverse
Effect on Circuit Test.
(b) The Circuit Test Disclosure Schedule lists: (i) all
patents and patent applications and all registered and unregistered trademarks,
trade names and service marks, registered and unregistered copyrights, and
maskworks, which Circuit Test considers to be material to its business and
included in the Intellectual Property, including the jurisdictions in which each
such Intellectual Property right has been issued or registered or in which any
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application for such issuance and registration has been filed, (ii) all material
licenses, sublicenses and other agreements as to which Circuit Test is a party
and pursuant to which any person is authorized to use any Intellectual Property,
and (iii) all material licenses, sublicenses and other agreements as to which
Circuit Test is a party and pursuant to which Circuit Test is authorized to use
any third party patents, trademarks or copyrights, including software ("Third
Party Intellectual Property Rights"), in each case which are incorporated in,
are, or form a part of any product or service of Circuit Test.
(c) To the knowledge of Circuit Test, there is no unauthorized
use, disclosure, infringement or misappropriation of any Intellectual Property
rights of Circuit Test, any trade secret material to Circuit Test, or any Third
Party Intellectual Property Right, by any third party, including any employee or
former employee of Circuit Test. Circuit Test has not entered into any agreement
to indemnify any other person against any charge of infringement of any
Intellectual Property, other than indemnification provisions contained in
purchase orders arising in the ordinary course of business, or contained in
license agreements relating to Intellectual Property licensed to Circuit Test in
the ordinary course of business.
(d) Circuit Test is not, and will not be as a result of the
execution and delivery of this Agreement or the performance of Circuit Test's
obligations under this Agreement be, in breach of any license, sublicense or
other agreement relating to the Intellectual Property or Third Party
Intellectual Property Rights, the breach of which could have a Material Adverse
Effect on Circuit Test.
(e) All patents, registered trademarks, service marks and
copyrights held by Circuit Test are valid and subsisting. Circuit Test (i) has
not been sued in any suit, action or proceeding which involves a claim of
infringement of any patents, trademarks, service marks, copyrights or violation
of any trade secret or other proprietary right of any third party or (ii) has
not brought any action, suit or proceeding for infringement of Intellectual
Property or breach of any license or agreement involving Intellectual Property
against any third party. To the knowledge of Circuit Test, the manufacture,
marketing, licensing or sale of the products and services of Circuit Test does
not infringe any patent, trademark, service xxxx, copyright, trade secret or
other proprietary right of any third party.
(f) Circuit Test has secured valid written assignments from
all consultants and employees who contributed to the creation or development of
Intellectual Property of the rights to such contributions that Circuit Test does
not already own by operation of law.
(g) Circuit Test has taken all reasonable and appropriate
steps to protect and preserve the confidentiality of all Intellectual Property
not otherwise protected by patents, or patent applications or copyright
("Confidential Information"). All use, disclosure or appropriation of
Confidential Information owned by Circuit Test by or to a third party has been
pursuant to the terms of a written agreement with such third party. All use,
disclosure or appropriation of Confidential Information not owned by Circuit
Test has been pursuant to the
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terms of a written agreement with the owner of such Confidential Information, or
is otherwise lawful.
4.15 Environmental Matters.
(a) Circuit Test has complied with, and is in compliance with,
all Environmental Laws (as defined in this Section 4.15(a)) applicable to its
current and prior business, properties and assets. Circuit Test has, and Circuit
Test has provided to Parent, true and complete copies of, all permits,
approvals, registrations, licenses and other authorizations required by any
Governmental Entity pursuant to any Environmental Law applicable to its
business, properties and assets, the absence of which would have a Material
Adverse Effect on Circuit Test and all such permits, approvals, registrations,
licenses and other authorization are listed on the Circuit Test Disclosure
Schedule. There is no pending or, to Circuit Test's knowledge, threatened civil
or criminal litigation, written notice of violation, formal administrative
proceeding, or investigation, inquiry or information request by any Governmental
Entity, relating to any Environmental Law to which Circuit Test is a party or,
to Circuit Test's knowledge, threatened to be made a party. For purposes of this
Agreement, "Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, order or judgment or the common law relating to
protection of public health, safety or the environment or occupational health
and safety, or that regulates, or creates liability for, releases or threatened
releases of any Hazardous Substance. As used in this Section 4.15, the terms
"release" and "environment" have the meanings set forth in the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), and "Hazardous Substance" means any substance regulated by, or the
presence of which creates liability under, any Environmental Law (including
without limitation CERCLA) and includes without limitation industrial, toxic or
hazardous substances, pollutants and contaminants, oil or petroleum products,
solid or hazardous waste, chemicals and asbestos.
(b) There have been no releases or threatened releases of any
Hazardous Substance in violation of Environmental Law at any parcel of real
property or any facility currently or formerly owned, leased, operated or
controlled by Circuit Test. With respect to any such releases of or threatened
releases of Hazardous Substance, Circuit Test has given all required notices to
government authorities, copies of which have been provided to Parent. Circuit
Test is not aware of any releases of Hazardous Substance at parcels of real
property or facilities other than those presently or formerly owned, leased,
operated or controlled by Circuit Test that could reasonably be expected to have
an impact on the real property or facilities owned, leased, operated or
controlled by Circuit Test.
(c) The Circuit Test Disclosure Schedule lists all
environmental reports, investigations, audits or similar environmental documents
in the possession of Circuit Test with respect to the operations of, or real
property owned, leased, operated or controlled by Circuit Test (whether
conducted by or on behalf of Circuit Test or a third party and whether done at
the initiative of Circuit Test or directed by a Governmental Entity or other
third party). True and complete copies of each such document have been provided
to Parent.
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(d) Circuit Test is not subject to, and is not reasonably
expected to be subject to any material environmental liability, including
without limitation liability arising out of the utilization by Circuit Test of
any transporter or facility used for treatment, recycling, storage or disposal.
4.16 Taxes. Circuit Test, and any consolidated, combined,
unitary or aggregate group for Tax (as defined in this Section 4.16) purposes of
which Circuit Test is or has been a member have timely filed all Tax Returns (as
defined in this Section 4.16) required to be filed by it taking into account
extensions of due dates, have paid all Taxes shown thereon to be due and have
provided adequate accruals in accordance with generally accepted accounting
principles in its financial statements for any Taxes that have not been paid,
whether shown as being due on any Tax returns. Circuit Test has withheld and
paid over all Taxes required to have been withheld and paid over (including any
estimated taxes), and has complied with all information reporting and backup
withholding requirements, including maintenance of required records with respect
thereto, in connection with amounts paid or owing to any employee, creditor,
independent contractor, or other third party. Circuit Test does not have any
liability under Treasury Regulation ss. 1.1502-6 or any analogous state, local
or foreign law by reason of having been a member of any consolidated, combined
or unitary group. Except as disclosed in the Circuit Test Disclosure Schedule:
(a) no material claim for Taxes has become a Lien against the property of
Circuit Test or is being asserted against Circuit Test other than Liens for
Taxes not yet due and payable, (b) no audit of any Tax Return of Circuit Test is
being conducted by a Tax authority, (c) no Tax authority is now asserting, or to
the knowledge of Circuit Test, threatening to assert against Circuit Test any
deficiency or claim for additional Taxes, and there are no requests for
information from a Tax authority currently outstanding that could affect the
Taxes of Circuit Test, (d) no extension of the statute of limitations on the
assessment of any Taxes has been granted by Circuit Test and is currently in
effect, (e) Circuit Test has not entered into any compensatory agreements with
respect to the performance of services which payment thereunder would result in
a nondeductible expense pursuant to Sections 162(m) or 280G of the Code, (f) no
action has been taken that would have the effect of deferring any liability for
Taxes for Circuit Test from any period prior to the Effective Date to any period
after the Effective Date, (g) Circuit Test has never been included in an
affiliated group of corporations, within the meaning of Section 1504 of the
Code, (h) Circuit Test is not (nor has it ever been) a party to any Tax sharing
agreement, (i) no consent under Section 341(f) of the Code has been filed with
respect to Circuit Test, (j) Circuit Test has not disposed of any property that
has been accounted for under the installment method, (k) Circuit Test is not a
party to any interest rate swap, currency swap or similar transaction, (l)
Circuit Test is not a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code, (m) Circuit Test is not subject to any
joint venture, partnership or other arrangement or contract that is treated as a
partnership for federal income tax purposes, (n) Circuit Test has not made any
of the foregoing elections and is not required to apply any of the foregoing
rules under any comparable state or local income tax provisions, (o) the
transactions contemplated herein are not subject to the tax withholding
provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the
Code, or of any other provision of law and (p) Circuit Test is not required to
treat any asset as owned by another person for federal income tax purposes or as
tax exempt bond financed property or tax exempt use property within
A-21
the meaning of section 168 of the Code. Circuit Test will not be required to
include any material adjustment in Taxable income for any Tax period (or portion
thereof) ending after the Effective Time attributable to adjustments made prior
to the Merger pursuant to Section 481 or 263A of the Code or any comparable
provision of any state or foreign Tax law. The Circuit Test Disclosure Schedule
contains accurate and complete information with respect to: (w) all material tax
elections in effect with respect to Circuit Test, (x) the current tax basis of
the assets of Circuit Test, (y) the current and accumulated earnings and profits
of Circuit Test, and (z) the tax credit carry overs of Circuit Test. As used
herein, "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means (i)
any net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, business and occupations,
occupation, premium, property, environmental or windfall profit tax, custom,
duty, or other tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Entity (a "Tax authority")
responsible for the imposition of any such tax (domestic or foreign), (ii) any
liability for the payment of any amounts of the type described in clause (i) as
a result of being a member of an affiliated, consolidated, combined or unitary
group for any Taxable period and (iii) any liability for the payment of any
amounts of the type described in clause (i) or (ii) as a result of any express
or implied obligation to indemnify any other person. As used herein, "Tax
Return" shall mean any return, statement, report or form (including, without
limitation,) estimated Tax returns and reports, withholding Tax returns and
reports and information reports and returns required to be filed with respect to
Taxes. Circuit Test is in full compliance with all terms and conditions of any
Tax exemptions or other Tax-sharing agreement or order of a foreign government
and the consummation of the Merger shall not have any adverse effect on the
continued validity and effectiveness of such Tax exemptions or other Tax-sharing
agreement or order.
4.17 S Corporation and Other Matters. Circuit Test is, and at all times
since 1984 has been, an S Corporation within the meaning of Section 1361 of the
code for federal income tax purposes. Each Circuit Test shareholder is an
individual U.S. citizen or resident or an estate or trust described in Section
1361 (c)(2) of the Code. The amount of Circuit Test's "unrealized built in gain"
(as such term is defined in Section 1374(d) of the Code) prior to the Closing
is, and as of the Closing will be, zero. The Circuit Test Disclosure Schedule
contains a true list of those states where Circuit Test has filed as an S
Corporation for applicable state income tax purposes.
4.18 Employee Benefit Plans.
(a) The Circuit Test Disclosure Schedule lists, with respect
to Circuit Test, and any trade or business (whether or not incorporated) which
is treated as a single employer with Circuit Test (an "ERISA Affiliate") within
the meaning of Section 414(b), (c), (m) or (o) of the Code: (i) all material
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), (ii) each loan to a
non-officer employee in excess of $50,000, loans to officers and directors and
any stock option, stock purchase, phantom stock, stock appreciation right,
supplemental retirement, severance, sabbatical, medical, dental, vision care,
disability, employee relocation, cafeteria benefit (Code
A-22
Section 125) or dependent care (Code Section 129), life insurance or accident
insurance plans, programs or arrangements, (iii) all bonus, pension, profit
sharing, savings, deferred compensation or incentive plans, programs or
arrangements, (iv) other fringe or employee benefit plans, programs or
arrangements that apply to senior management and that do not generally apply to
all employees, and (v) any current or former employment or executive
compensation or severance agreements, written or otherwise, as to which
unsatisfied obligations of greater than $50,000 remain for the benefit of, or
relating to, any present or former employee, consultant or director
(collectively, the "Circuit Test Employee Plans").
(b) Circuit Test has furnished to Parent a copy of each of the
Circuit Test Employee Plans and related plan documents (including trust
documents, insurance policies or contracts, employee booklets, summary plan
descriptions and other authorizing documents, and, to the extent still in its
possession, any material employee communications relating thereto) and has, with
respect to each Circuit Test Employee Plan which is subject to ERISA reporting
requirements, provided copies of the Form 5500, including all schedules attached
thereto and actuarial reports, if any, filed for the last three Plan years. Any
Circuit Test Employee Plan intended to be qualified under Sections 401(a) or
501(c)(9) of the Code is so qualified. Circuit Test has furnished Parent with
the most recent Internal Revenue Service determination letter issued with
respect to each such Circuit Test Employee Plan (and nothing has occurred since
the issuance of each such letter which could reasonably be expected to cause the
loss of the tax-qualified status of any Circuit Test Employee Plan subject to
Code Section 401(a)), and all communications with respect to any plan described
in Section 4.18(a) with the Internal Revenue Service, the Department of Labor or
the Pension Benefit Guaranty Corporation.
(c) (i) None of the Circuit Test Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person; (ii)
there have been no violations of applicable provisions of the Code or ERISA with
respect to any Circuit Test Employee Plan that could reasonably be expected to
have, in the aggregate, a Material Adverse Effect; (iii) each Circuit Test
Employee Plan is in compliance with the requirements prescribed by any and all
statutes, rules and regulations (including ERISA and the Code), except as would
not have a Material Adverse Effect on Circuit Test, and Circuit Test and each
ERISA Affiliate have no knowledge of any default or violation by any other party
to any of the Circuit Test Employee Plans, which default or violation could
reasonably be expected to have a Material Adverse Effect on Circuit Test; (iv)
all material contributions required to be made by Circuit Test or any ERISA
Affiliate to any Circuit Test Employee Plan have been made on or before its due
dates and a reasonable amount has been accrued for contributions to each Circuit
Test Employee Plan for the current plan years; and (v) neither Circuit Test no
any ERISA Affiliate has ever maintained or otherwise incurred any obligation
under any plan subject to Title IV of ERISA. No suit, administrative proceeding,
action or other litigation has been brought, or to the knowledge of Circuit
Test, is threatened, against or with respect to any such Circuit Test Employee
Plan, including any audit or inquiry by the Internal Revenue Service or United
States Department of Labor.
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(d) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not: (i) entitle any
current or former employee or other service provider or any director of Circuit
Test, or any ERISA Affiliate to severance benefits or any other payment
(including unemployment compensation, golden parachute, bonus or otherwise),
(ii) increase any benefits otherwise payable or (iii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such
employee, service provider or director.
(e) There has been no amendment to, written interpretation or
announcement (whether or not written) by Circuit Test, or any ERISA Affiliate
relating to, or change in participation or coverage under, any Circuit Test
Employee Plan which would materially increase the expense of maintaining such
Plan above the level of expense incurred with respect to that Plan for the most
recent fiscal year included in the Annual Financial Statements.
4.19 Employee Matters. The Circuit Test Disclosure Schedule lists all
employees of Circuit Test and the remuneration and benefits to which such
employees are entitled. The Circuit Test Disclosure Schedule also lists all
employment contracts and collective bargaining agreements, and all pension,
bonus, profit sharing, or other agreements or arrangements not otherwise
described in Section 4.18 providing for employee remuneration or benefits to
which Circuit Test is a party or by which it is bound; all of these contracts
and arrangements are in full force and effect, and neither Circuit Test nor any
other party is in default under them. There have been no claims of defaults and,
to Circuit Test's knowledge there are no facts or conditions which if continued,
or on notice, will result in a default under these contracts or arrangements.
There is no pending or, to Circuit Test's knowledge, threatened labor dispute,
strike, or work stoppage that would have a Material Adverse Effect on Circuit
Test. Circuit Test is in compliance in all material respects with all current
applicable laws and regulations respecting employment, discrimination in
employment, terms and conditions of employment, wages, hours and occupational
safety and health and employment practices, and is not engaged in any unfair
labor practice. There are no pending claims against Circuit Test under any
workers compensation plan or policy or for long term disability. Circuit Test
does not have any obligations under The Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") with respect to any former employees or
qualifying beneficiaries thereunder.
4.20 Interested Party Transactions. Circuit Test is not indebted to any
shareholder, director, officer, employee or agent of Circuit Test (except for
amounts due as normal salaries and bonuses and in reimbursement of ordinary
expenses), and no such person is indebted to Circuit Test, and there have been
no other transactions of the type required to be disclosed pursuant to Items 402
and 404 of Regulation S-K under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended.
4.21 Insurance. Circuit Test has policies of insurance and bonds of the
type and in amounts customarily carried by persons conducting businesses or
owning assets similar to those of Circuit Test. The Circuit Test Disclosure
Schedule sets forth a true and complete listing of all such policies, including
in each case applicable coverage limits, deductibles and policy
A-24
expiration dates. There is no material claim pending under any of such policies
or bonds as to which Circuit Test has received a denial, or, to Circuit Test's
knowledge, as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies and bonds have been paid and Circuit Test is otherwise in
compliance in all material respects with the terms of such policies and bonds.
Circuit Test has no knowledge of any threatened termination of, or material
premium increase with respect to, any of such policies. Each policy or bond is
legal, valid, binding, enforceable and in full force and effect and will
continue to be legal, valid, binding, enforceable and in full force and effect
following the consummation of the transactions contemplated hereby.
4.22 Compliance With Laws. Circuit Test has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state, local or foreign statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of its business, except
for such violations or failures to comply as could not be reasonably expected to
have a Material Adverse Effect on Circuit Test.
4.23 Major Customers. The Circuit Test Disclosure Schedule contains a
list of the customers of Circuit Test for each of the two most recent fiscal
years, that individually accounted for more than five percent of the total
dollar amount of net sales, showing the total dollar amount of net sales to each
such customer during each such year. Circuit Test has no knowledge nor has it
received notice from any of the customers listed on the Circuit Test Disclosure
Schedule, that any of the customers listed in the Circuit Test Disclosure
Schedule will not continue to be customers of Circuit Test after the Closing at
substantially the same level of purchases.
4.24 Suppliers. As of the date hereof, no supplier of Circuit Test has
indicated to Circuit Test that it will stop, or decrease the rate of, supplying
materials, products or service to Circuit Test. Circuit Test has not knowingly
breached, so as to provide a benefit to Circuit Test that was not intended by
the parties, any agreement with, or engaged in any fraudulent conduct with
respect to, any customer or supplier of Circuit Test.
4.25 Inventory. All inventories of raw materials, work-in process and
finished goods (including all such in transit) of Circuit Test, together with
related packaging materials (collectively, "Inventory"), reflected in the
Interim Circuit Test Financial Statements consist of a quality and quantity
usable and saleable in the ordinary course of business, have commercial values
at least equal to the value shown on such balance sheet or are subject to
purchase obligations by customers or suppliers at such value and is valued in
accordance with generally accepted accounting principles at the lower of cost
(on a first in first out basis) or market. All Inventory purchased since the
date of such balance sheet consists of a quality and quantity usable and
saleable in the ordinary course of business. Except as set forth in the Circuit
Test Disclosure Schedule, all Inventory is located on premises owned or leased
by Circuit Test. All work-in process contained in Inventory constitutes items in
process of production pursuant to contracts or open orders taken in the ordinary
course of business, from regular customers of Circuit Test with no recent
history of credit problems with respect to Circuit Test; neither Circuit Test
nor any such customer is in material breach of the terms of any obligation to
the other, and, based on Circuit
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Test's knowledge or what Circuit Test reasonably should know, valid grounds
exist for any counterclaim or set-off of amounts billable to such customers upon
the completion of orders to which work-in-process relates. All work-in process
is of a quality ordinarily produced in accordance with the requirements of the
orders to which such work-in-process is identified, and will require no rework
with respect to work performed prior to Closing.
4.26 Product Warranty and Product Liability. The Circuit Test
Disclosure Schedule contains a true and complete copy of Circuit Test's standard
warranty or warranties for its manufacturing services. There has been no
variation from such warranties, except as set forth in the Circuit Test
Disclosure Schedule. Except as stated therein, there are no warranties,
commitments or obligations with respect to Circuit Test's performance of
services. The Circuit Test Disclosure Schedule contains a description of all
product liability claims and similar claims, actions, litigation and other
proceedings relating to services rendered, which are presently pending or, to
Circuit Test's knowledge, threatened, or which have been asserted or commenced
against Circuit Test within the last five years, in which a party thereto either
requests injunctive relief (whether temporary or permanent) or alleges damages
(whether or not covered by insurance). There are no defects in Circuit Test's
manufacturing services that would adversely affect performance of products
Circuit Test manufactures or create an unusual risk of injury to persons or
property. Circuit Test's manufacturing services have been designed or performed
so as to meet and comply with all governmental standards and specifications
currently in effect, and have received all governmental approvals necessary to
allow its performance.
4.27 Minute Books. The minute books of Circuit Test made available to
Parent contain true and complete summaries of all meetings of directors and
shareholders or actions by written consent since the time of incorporation of
Circuit Test, and reflect all transactions referred to in such minutes
accurately in all material respects.
4.28 Brokers' and Finders' Fees. Except for commissions or fees payable
to Broadview Associates, LLC, Circuit Test has not incurred, and will not incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or investment bankers' fees or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
4.29 Proxy Statement. The information supplied by Circuit Test for
inclusion in the proxy statement to be sent to the shareholders of Parent in
connection with the meeting of Parent's shareholders (the "Parent Shareholders
Meeting") to consider the Merger (such proxy statement as amended or
supplemented is referred to herein as the "Proxy Statement") shall not, on the
date the Proxy Statement is first mailed, at the time of the Parent Shareholders
Meeting and at the Effective Time, contain any statement which, at such time, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they are made, not false or misleading; or omit
to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Parent
Shareholders Meeting which has become false or misleading.
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4.30 Regulation D Offering. To Circuit Test's knowledge, the
information provided to Parent by the holders of shares of Circuit Test Common
Stock, which information is set forth in each such holder's Voting Agreement (as
defined in Section 8.3(g)) delivered to Parent, is true and correct in all
material respects.
4.31 Disclosure. None of the representations or warranties made by
Circuit Test herein or in the Circuit Test Disclosure Schedule, or in any
certificate furnished by Circuit Test pursuant to this Agreement, when all such
documents are read together in their entirety, contain or will contain at the
Effective Time any untrue statement of a material fact, or omit or will omit at
the Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading. Circuit Test has delivered or made available true
and complete copies of each document that has been requested by Parent or its
counsel in connection with their legal and accounting review of Circuit Test.
4.32 Xxxx-Xxxxx-Xxxxxx. None of Circuit Test, its shareholders or any
of their respective affiliates is an "ultimate parent entity" within the meaning
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, and the rules and
regulations promulgated thereunder (the "HSR Act"), that has $100,000,000 of
total assets or sales (as determined under the HSR Act), as of the date of any
such ultimate parent entity's last regularly prepared balance sheet or as of the
date hereof.
4.33 Reliance. The foregoing representations and warranties are being
made by Circuit Test with the knowledge and expectation that Parent and Merger
Sub are placing reliance thereon.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in a document of even date herewith and delivered
by Parent to Circuit Test prior to the execution and delivery of this Agreement
and referring to the sections and subsections of the representations and
warranties in this Agreement (the "Parent Disclosure Schedule"), subject to its
subsequent revision from time to time to the Effective Time (with the prior
written consent of Circuit Test) Parent and Merger Sub represent and warrant to
Circuit Test as follows:
5.1 Organization, Standing and Power. Each of Parent and its
subsidiaries, including Merger Sub, is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, has the full corporate power to own its properties and to carry on
its business as now being conducted and as proposed to be conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified and
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in good standing would have a Material Adverse Effect on Parent. Merger Sub has
not engaged in any business (other than certain organizational matters) since
the date of its incorporation.
5.2 Capitalization. As of March 31, 1997, the authorized capital stock
of Parent consisted of 45,000,000 shares of Parent Common Stock and 5,000,000
shares of Preferred Stock, $.01 par value, of which there were issued and
outstanding 5,928,060 shares of Parent Common Stock and no shares of Preferred
Stock. There are no other outstanding shares of capital stock or other
securities of Parent other than shares of Parent Common Stock issued after March
31, 1997 upon the exercise of options issued under Parent's 1993 Incentive Stock
Option Plan and its Stock Option Plan for Non-Employee Directors (collectively,
the "Parent Stock Option Plans") and other outstanding stock options granted by
Parent to its employees. The authorized capital stock of Merger Sub consists of
1,000 shares of Merger Sub Common Stock, all of which are issued and outstanding
and are held by Parent. All outstanding shares of Parent and Merger Sub have
been duly authorized, validly issued, fully paid and are non-assessable and free
and clear of any Lien, except Liens created by or imposed upon the holders
thereof. As of March 31, 1997, Parent has reserved (a) 1,155,000 shares of
Parent Common Stock for issuance to employees, directors and independent
contractors pursuant to the Parent Stock Option Plans, (b) 243,800 shares of
Parent Common Stock for issuance pursuant to other outstanding stock options
granted to its employees. Other than this Agreement, as disclosed in the
immediately preceding sentence or as to additional shares to be authorized under
employee benefit plans of Parent, there are no other options, warrants, puts,
calls, rights, exchangeable or convertible securities or other commitments or
agreements of any nature to which Parent or Merger Sub is a party or by which
either of them is bound obligating Parent or Merger Sub to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, or repurchased,
any shares of the capital stock of Parent or Merger Sub or obligating Parent or
Merger Sub to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement. The shares of Parent Common Stock to be issued pursuant
to the Merger will, when issued, be duly authorized, validly issued, fully paid,
and non-assessable.
5.3 Due Authorization. Parent and Merger Sub have the full corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, subject only to the approval of the Merger by Parent's shareholders as
contemplated by Section 7.2. This Agreement has been duly executed and delivered
by Parent and Merger Sub and constitutes the valid and binding obligations of
Parent and Merger Sub. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby will not: (a) conflict
with or violate any provision of the Amended and Restated Articles of
Incorporation or Amended and Restated Bylaws of Parent, as amended, the Articles
of Incorporation or Bylaws of Merger Sub, or equivalent charter documents of any
of Parent's subsidiaries, as amended, (b) violate or conflict with any permit,
order, license, decree, judgment, statute, law, ordinance, rule or regulation
applicable to Parent or any of its subsidiaries or the properties or assets of
Parent or any of its subsidiaries, or (c) result in any breach or violation of,
or constitute a default (with or without notice or lapse of time, or both)
under, or
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give rise to any right of termination, cancellation or acceleration of, or
result in the creation of any Lien on any of the properties or assets of Parent
or any of its subsidiaries pursuant to any mortgage, indenture, lease, contract
or other agreement or instrument, bond, note, concession or franchise applicable
to Parent or any of its subsidiaries or their properties or assets, except, in
the case of this clause (c) only, where such conflict, violation, default,
termination, cancellation or acceleration would not have and could not
reasonably be expected to have a Material Adverse Effect on Parent. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Parent or any of
its subsidiaries in connection with the execution and delivery of this Agreement
by Parent and Merger Sub or the consummation by Parent and Merger Sub of the
transactions contemplated hereby, except for (i) the filing of the Articles of
Merger and Plan of Merger as provided in Section 1.3, (ii) the filing with the
Securities and Exchange Commission (the "SEC") and the National Association of
Securities Dealers, Inc. ("NASD") of the Proxy Statement relating to the Parent
Shareholders Meeting, (iii) the filing of a Form 8-K with the SEC and NASD
within 15 days after the Closing Date, (iv) any filings as may be required under
applicable state securities laws and the securities laws of any foreign country,
and (v) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on Parent or would not prevent or materially alter or delay any of the
transactions contemplated by this Agreement.
5.4 SEC Documents; Financial Statements. Parent has furnished Circuit
Test with true and complete copies of its (a) Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, as filed with the SEC, (b) Quarterly
Reports on Form 10-Q for the quarter ended March 31, 1997, as filed with the
SEC, (c) proxy statements related to all meetings of its shareholders (whether
annual or special) since December 31, 1995, and (d) all other reports and
registration statements filed by Parent with the SEC since December 31, 1995,
except registration statements on Form S-8 relating to employee benefit plans
(collectively, the "Parent SEC Documents"). As of their respective filing dates,
the Parent SEC Documents prepared in all material respects in accordance with
the requirements of the Exchange Act or the Securities Act, as applicable, and
the rules and regulations of the SEC thereunder applicable to such Parent SEC
Documents. The annual and interim financial statements included in the Parent
SEC Documents were prepared in accordance with generally accepted accounting
principles applied on a basis consistent throughout the periods indicated and
consistent with each other (except as indicated in the notes thereto) and fairly
present the consolidated financial condition and operating results of Parent and
its consolidated subsidiaries at the dates and during the periods indicated
therein, subject, in the case of interim financial statements, to normal,
recurring year-end audit adjustments.
5.5 Absence of Certain Changes. Except as disclosed in the Parent SEC
Documents filed with the SEC prior to the date hereof, since March 31, 1997 (the
"Parent Balance Sheet Date"), each of Parent and its subsidiaries has conducted
its business in the ordinary course consistent with past practice and there has
not occurred: (a) any change, event or condition (whether or not covered by
insurance) that has resulted in, or might reasonably be expected to result in, a
Material Adverse Effect on Parent or (b) any declaration, setting aside, or
payment of
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a dividend or other distribution with respect to the shares of Parent, or any
direct or indirect redemption, retirement, purchase or other acquisition by
Parent of any of its capital stock. Except as disclosed in such Parent SEC
Documents, Parent is not aware of any facts which are reasonably likely to have
a Material Adverse Effect on Parent.
5.6 Compliance with Laws. Each of Parent and its subsidiaries has
complied with, is not in violation of, and have not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for such violations or failures to comply as
could not be reasonably expected to have a Material Adverse Effect on Parent.
5.7 Board Approval. The Boards of Directors of Parent and Merger Sub
have (a) approved this Agreement and the Merger, (b) determined that the Merger
is in the best interests of their respective shareholders and is on terms that
are fair to such shareholders and (c) recommended that the shareholders of
Parent and Merger Sub approve this Agreement and the Merger.
5.8 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Parent, threatened
against Parent, any of its subsidiaries, or any of their respective assets and
properties or any of Parent's officers or directors (in their capacities as
such) that, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect on Parent. There is no judgment, decree or order
against Parent, or, to the knowledge of Parent, any of its directors or officers
(in their capacities as such), that could prevent consummation of the
transactions contemplated by this Agreement, or that could reasonably be
expected to have a Material Adverse Effect on Parent.
5.9 Title to Property. Parent and each of its subsidiaries has good and
marketable title to all of its respective properties and assets, or in the case
of leased properties and assets, valid leasehold interests in such properties,
free and clear of any Lien. The plants, property and equipment of Parent that
are used in the operations of its business are in good operating condition and
repair. All plants, property and equipment owned by Parent conform (to Parent's
knowledge) with all applicable ordinances, regulations and zoning and other laws
and do not encroach on the property of others, the failure to conform with which
would have a Material Adverse Effect on Parent.
5.10 Intellectual Property.
(a) Parent and its subsidiaries own, or are licensed or
otherwise possess legally enforceable rights to use, all Intellectual Property
used in the business of Parent and its subsidiaries as currently conducted,
except to the extent that the failure to have such rights has not and could not
reasonably be expected to have a Material Adverse Effect on Parent.
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(b) To the knowledge of Parent, there is no unauthorized use,
disclosure, infringement or misappropriation of any Intellectual Property rights
of Parent or its subsidiaries, any trade secret material to Parent, or any Third
Party Intellectual Property Right, by any third party, including any employee or
former employee of Parent or its subsidiaries. Neither Parent nor any subsidiary
of Parent has entered into any agreement to indemnify any other person against
any charge of infringement of any Intellectual Property, other than
indemnification provisions contained in purchase orders arising in the ordinary
course of business, or contained in license agreements relating to Intellectual
Property licensed to Parent or its subsidiaries in the ordinary course of
business.
(c) All patents, registered trademarks, service marks and
copyrights held by Parent and its subsidiaries are valid and subsisting. Neither
Parent nor any subsidiary of Parent (i) has been sued in any suit, action or
proceeding which involves a claim of infringement of any patents, trademarks,
service marks, copyrights or violation of any trade secret or other proprietary
right of any third party or (ii) has brought any action, suit or proceeding for
infringement of Intellectual Property or breach of any license or agreement
involving Intellectual Property against any third party. To the knowledge of
Parent, the manufacture, marketing, licensing or sale of the products and
services of Parent does not infringe any patent, trademark, service xxxx,
copyright, trade secret or other proprietary right of any third party.
(d) Parent has taken all reasonable and appropriate steps to
protect and preserve the confidentiality of all Confidential Information. All
use, disclosure or appropriation of Confidential Information owned by Parent or
any of its subsidiaries by or to a third party has been pursuant to the terms of
a written agreement with such third party. All use, disclosure or appropriation
of Confidential Information not owned by Parent or its subsidiaries has been
pursuant to the terms of a written agreement with the owner of such Confidential
Information, or is otherwise lawful.
5.11 Taxes. Except matters as would not have a Material Adverse Effect
on Parent: (i) Parent and its subsidiaries have (a) filed (or there have been
filed on their behalf) with appropriate governmental authorities all Tax Returns
required to be filed by them and such Tax Returns were true, correct and
complete, and (b) duly paid in full or made provision in accordance with GAAP
for the payment of all Taxes for all periods ending though the date of this
Agreement; and (ii) Parent and its subsidiaries have complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes and had, within the time and manner prescribed by law,
withheld from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over under
applicable laws.
5.12 Employee Benefit Plans; ERISA. Except matters as would not have a
Material Adverse Effect on Parent: the material employee benefit plans,
arrangements, practices, contracts and agreements (including, without
limitation, employment agreement, change of control agreement and severance
agreements, incentive compensation, bonus, stock option, stock appreciation
rights and stock purchase plans, and including, but not limited to, plans
described in
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section 3(3) of ERISA, maintained by Parent, any of its subsidiaries or any
trade or business, whether or not incorporated, that together with Parent would
be deemed a "controlled group" within the meaning section 4001(a)(14) or ERISA,
or with respect to which Parent or any of its subsidiaries has or may have a
liability were in substantial compliance with applicable laws, including ERISA
and the Code.
5.13 Compliance With Laws. Parent and its subsidiaries have complied
with, are not in violation of, and have not received any notices of violation
with respect to, any federal, state, local or foreign statute, law or regulation
with respect to the conduct of their respective businesses, or the ownership or
operation of their respective businesses, except for such violations or failures
to comply as could not be reasonably expected to have a Material Adverse Effect
on Parent.
5.14 Major Customers. Parent has no knowledge or information of any
facts indicating, nor any other reason to believe, that any of the principal
customers of Parent and its subsidiaries will not continue to be customers of
Parent or such subsidiaries after the Closing at substantially the same level of
purchases.
5.15 Suppliers. As of the date hereof, no supplier of Parent has
indicated to Parent that it will stop, or decrease the rate of, supplying
materials, products or service to Parent. Parent has not knowingly breached, so
as to provide a benefit to Parent that was not intended by the parties, any
agreement with, or engaged in any fraudulent conduct with respect to, any
customer or supplier of Parent.
5.16 Brokers' and Finders' Fees. Parent has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
5.17 Disclosure. None of the representations or warranties made by
Parent herein or in the Parent Disclosure Schedule, or in any certificate
furnished by Parent pursuant to this Agreement, when all such documents are read
together in their entirety, contain or will contain at the Effective Time any
untrue statement of a material fact, or omit or will omit at the Effective Time
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading. Parent has delivered or made available true and complete copies of
each document that has been requested by Circuit Test or its counsel in
connection with their legal and accounting review of Parent.
5.18 Xxxx-Xxxxx-Xxxxxx. Neither Parent nor any of its subsidiaries is
an "ultimate parent entity" within the meaning of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, and the rules and regulations promulgated
thereunder (the "HSR Act"), that has $100,000,000 of total assets or sales (as
determined under the HSR Act), as of the date of any such ultimate parent
entity's last regularly prepared balance sheet or as of the date hereof.
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5.19 Reliance. The foregoing representations and warranties are being
made by Parent and Merger Sub with the knowledge and expectation that Circuit
Test is placing reliance thereon.
ARTICLE VI
CONDUCT PRIOR TO EFFECTIVE TIME
6.1 Conduct of Business of Circuit Test. Prior to the Effective Time,
except as expressly contemplated by this Agreement or as agreed in writing by
Parent:
(a) Affirmative Covenants. Circuit Test will:
(i) carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and use its best efforts
to preserve intact its present business organizations, keep available the
services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, to the end that its goodwill and
ongoing businesses shall be unimpaired at the Effective Time;
(ii) maintain insurance coverages and its books, accounts and records in
the usual manner consistent with past practice;
(iii) comply in all material respects with all laws and regulations of any
Governmental Entity applicable to it;
(iv) maintain and keep its plants, property and equipment in good repair,
working order and condition, ordinary wear and tear excepted;
(v) perform in all material respects its obligations under all contracts
and commitments to which it is a party or by which it is bound;
(vi) notify Parent of any event or occurrence not in the ordinary course of
its business, and of any event which could have a Material Adverse Effect on
Circuit Test; or
(vii) pay, consistent with past practice, all accounts payable that arise
in the ordinary course of its business.
(b) Negative Covenants. Circuit Test will not:
(i) cause or permit any amendments to its Articles of Incorporation or
Bylaws or equivalent charter documents;
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(ii) accelerate, amend or change the period of exercisability or vesting of
options or other rights granted under its employee stock plans or director stock
plans or authorize cash payments in exchange for any options or other rights
granted under any of such plans;
(iii) transfer to any person or entity any rights to its Intellectual
Property;
(iv) enter into or amend any agreements pursuant to which any other party
is granted exclusive marketing or other exclusive rights of any type or scope
with respect to any of its products or technology;
(v) enter into any operating lease providing for payments in excess of
an aggregate of $50,000;
(vi) adopt or amend any employee benefit or stock purchase or option plan,
or hire any new director level or officer level employee (other than in the
ordinary course of business), pay any special bonus or special remuneration to
any employee or director, or increase the salaries or wage rates of its
employees, except as set forth in Section 6.1(b) of the Circuit Test Disclosure
Schedule;
(vii) commence a lawsuit other than (A) for the routine collection of
bills, (B) in such cases where it in good faith determines that failure to
commence suit would result in the material impairment of a valuable aspect of
its business, provided that it consults with Parent prior to the filing of such
a suit, or (C) for a breach of this Agreement;
(viii) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, 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, other than in the ordinary course of business consistent with past
practice;
(ix) other than in the ordinary course of business, make or change any
material election in respect of Taxes, adopt or change any accounting method in
respect of Taxes, file any material Tax Return or any amendment to a material
Tax Return, enter into any closing agreement, settle any claim or assessment in
respect of Taxes, or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;
(x) revalue any of its assets, including without limitation writing down
the value of inventory or writing off notes or accounts receivable other than in
the ordinary course of business;
(xi) take, or agree in writing or otherwise to take, any other action that
would make any of its representations or warranties contained in this Agreement
untrue;
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(xii) delay in the payment of any trade or other payables other than in the
ordinary course of business consistent with past practice;
(xiii) sell, lease or otherwise transfer or dispose of any property or
asset of Circuit Test, other than in the ordinary course of business consistent
with past practice;
(xiv) change its accounting methods, practices or policies (including any
change in depreciation or amortization policies or rates) by Circuit Test or
revalue any of its assets, except as described in the notes to the Annual
Financial Statements;
(xv) declare, set aside, or pay any dividend or other distribution to
Circuit Test's shareholders, or any direct or indirect redemption, retirement,
purchase or other acquisition by Circuit Test of any of its capital stock or
other securities or options, warrants or other rights to acquire capital stock,
except as set forth on Schedule 6.1(b);
(xvi) enter into commitment or transaction (including any capital
expenditure, capital financing or sale of assets) for any amount that requires
or could require payments in excess of $50,000 with respect to any individual
contract or a series of related contracts;
(xvii) cancel any debt or waive or release of any right or claim by Circuit
Test, other than in the ordinary course of business;
(xviii) make any payment, or discharge or satisfy any claim, liability or
obligation by Circuit Test, other than as reflected or reserved against in the
Annual Financial Statements or the Interim Circuit Test Financial Statements or
in the ordinary course of business consistent with past practice;
(xix) issue or sell any capital stock or other securities, exchangeable or
convertible securities, options, warrants, puts, calls or other rights to
acquire capital stock or other securities of Circuit Test;
(xx) incur any indebtedness for borrowed money, or guarantee or otherwise
assume any such indebtedness, except as set forth in Schedule 6.1(b);
(xxi) make any loan or advance (other than advances to employees in the
ordinary course of business for travel and entertainment in accordance with past
practice) to any person;
(xxii ) increase in any salary, wage, benefit or other remuneration payable
or to become payable to any current or former officer, director, employee,
independent contractor or agent of Circuit Test or pay or agree to pay any bonus
or severance payment or arrangement made to, for or with any officer, director,
employee or agent of Circuit Test or provide for any supplemental retirement
plan or other program or special remuneration for any officer, director,
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employee or agent of Circuit Test, except for normal salary or wage increases
relating to periodic performance reviews and annual bonuses consistent with past
practice of Circuit Test;
(xxiii) grant credit to any customer on terms or in amounts more favorable
than those which have been extended to such customer in the past, any other
change in the terms of any credit heretofore extended or any other change in the
policies or practices of Circuit Test with respect to the granting of credit; or
(xiv) agree, whether in writing or otherwise, to do any of the foregoing.
6.2 No Solicitation; Acquisition Proposals. Subject to the fiduciary
duties of Circuit Test's Board of Directors under applicable law, as advised by
counsel, Circuit Test shall not, directly or indirectly, through any officer,
director, employee, representative, agent, financial advisor or otherwise,
solicit, initiate or encourage inquiries or submission of proposals or offers
from any person relating to any sale of all or any portion of the assets,
business, properties of (other than immaterial or insubstantial assets or
inventory in the ordinary course of business), or any equity interest in,
Circuit Test or any business combination with Circuit Test whether by merger,
purchase of assets, tender offer or otherwise or participate in any negotiation
regarding, or furnishing to any other person any information with respect to, or
otherwise cooperate in any way with, or assist in, facilitate or encourage, any
effort or attempt by any other person to do or seek to do any of the foregoing.
Circuit Test shall use its best efforts to cause all confidential materials
previously furnished to any third parties in connection with any of the
foregoing to be promptly returned to Circuit Test and shall cease any
negotiations conducted in connection therewith or otherwise conducted with any
such parties.
6.3 Conduct of Business of Parent. Prior to the Effective Time, except
as expressly contemplated by this Agreement or as agreed in writing by Circuit
Test, Parent will, and will cause each of its subsidiaries to:
(a) carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and use its best efforts
to preserve intact its present business organizations, keep available the
services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, to the end that its goodwill and
ongoing businesses shall be unimpaired at the Effective Time;
(b) maintain insurance coverages and its books, accounts and records in the
usual manner consistent with past practice;
(c) comply in all material respects with all laws and regulations of any
Governmental Entity applicable to it;
(d) maintain and keep its plants, property and equipment in good repair,
working order and condition, ordinary wear and tear excepted;
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(e) perform in all material respects its obligations under all contracts
and commitments to which it is a party or by which it is bound;
(f) notify Circuit Test of any event or occurrence not in the ordinary
course of its business, and of any event which could have a Material Adverse
Effect on Parent; or
(g) pay, consistent with past practice, all accounts payable that arise in
the ordinary course of its business except to the extent that the amount owing
is being duly contested by Parent and such contest does not have a Material
Adverse Effect on Parent and adequate reserves therefor are reflected on the
Annual Financial Statements or the Interim Financial Statements for Parent.
6.4 Notice of Breach. Each party hereto shall promptly give written
notice to the others upon becoming aware of the occurrence or, to its knowledge,
impending or threatened occurrence, of any event that could cause or constitute
a breach of any of its representations, warranties or covenants hereunder.
ARTICLE VII
ADDITIONAL COVENANTS
7.1 Proxy Statement. As promptly as practicable after the execution of
this Agreement, Parent shall prepare and file with the SEC preliminary proxy
materials relating to the approval of the Merger and the transactions
contemplated hereby by the shareholders of Parent.
7.2 Meetings of Shareholders.
(a) Parent Shareholders Meeting. As promptly as practicable
after the date hereof, Parent shall take all action necessary in accordance with
applicable law and its Articles of Incorporation and Bylaws to convene the
Parent Shareholders Meeting. Subject to Section 7.1, Parent shall use its
reasonable efforts to solicit from shareholders proxies in favor of the Merger
and shall take all other action necessary or advisable to secure the vote or
consent of shareholders required to effect the Merger, and subject to the
fiduciary duties of Parent's Board of Directors under applicable law, as advised
by counsel, the Board of Directors of Parent shall recommend a vote in favor of
the Merger.
(b) Circuit Test Shareholders Meeting. Circuit Test shall take
all action necessary in accordance with applicable law and its Articles of
Incorporation and Bylaws within ten (10) days after the date hereof either (i)
to obtain the written consent of the shareholders of Circuit Test to this
Agreement and the transactions contemplated hereby or (ii) to convene a special
meeting of its shareholders and solicit from shareholders proxies in favor of
the Merger. In any event, Circuit Test shall take all action necessary or
advisable to secure the vote or consent of shareholders required to effect the
Merger, and subject to the fiduciary duties of Circuit Test's
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Board of Directors under applicable law, as advised by counsel, the Board of
Directors of Circuit Test shall recommend a consent or vote in favor of the
Merger.
7.3 Access to Information. Each party shall afford the other and its
accountants, counsel and other representatives (collectively, "Representatives")
full access during normal business hours (and at such other times as the parties
hereto agree) during the period prior to the Effective Time to: (a) all of such
party's properties, books, contracts, commitments and records, and (b) all other
information concerning the business, properties and personnel of such party as
the other party may reasonably request. Each party agrees to provide to the
other and its accountants, counsel and other representatives copies of internal
financial statements promptly upon request. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of Parent
and Circuit Test shall confer on a regular and frequent basis with one or more
representatives of the other party to report operational matters of materiality
and the general status of ongoing operations. No information or knowledge
obtained in any investigation pursuant to this Section 7.3 shall affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties hereto to consummate the Merger.
7.4 Confidentiality. Each party hereto and its Representatives will
treat as confidential and hold in confidence all information concerning the
businesses and affairs of the other that is not already generally available to
the public and is not otherwise known to the party to whom it was disclosed on a
non-confidential basis ("Proprietary Information") and refrain from using any
Proprietary Information except in furtherance of this Agreement or as required
by law.
7.5 Publicity. Circuit Test shall not, and shall use its reasonable
efforts to cause its shareholders not to, issue, or cause or permit to be
issued, any press release or otherwise make any public statement regarding the
terms of this Agreement or the transactions contemplated hereby without Parent's
prior written consent. Parent and Merger Sub shall consult with Circuit Test
before issuing any press release or otherwise making any public statement
regarding the terms of this Agreement or the transactions contemplated hereby,
except as required by law or its other legal obligations.
7.6 Filings; Cooperation. Parent and Circuit Test shall make, and cause
their affiliates to make, all necessary filings with respect to the Merger and
the other transactions contemplated hereby including those required under the
Securities Act and the Exchange Act and the rules and regulations thereunder,
and under applicable Blue Sky or similar securities laws, and shall use all
reasonable efforts to obtain required approvals and clearances with respect
thereto to (a) comply as promptly as practicable with all governmental
requirements applicable to the transaction and (b) obtain promptly all necessary
permits, orders and other consents of Governmental Entities and consents of
third parties necessary for the consummation of the Merger.
7.7 Employment Matters. At the Effective Time, Parent will enter into
employment agreements with each of Messrs. Xxxxx X. Xxxxxxxx, Xx., Xxxxxxx
Xxxxxx, Xxxxxx Xxxxx and
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Xxxxxx Xxx (the "Employment Agreements"), which Employment Agreements shall be
substantially in the form attached hereto as Exhibit 7.7.
7.8 Stock Options. At the Effective Time, Parent will issue stock
options to certain employees of Circuit Test. Such stock options will be issued
and exercisable under Parent's Equity Incentive Plan. Schedule 7.8 hereto sets
forth the names of the grantees, the number of options to be granted and the
manner in which such options will vest. The exercise price of the options shall
be the last closing sale price of the Parent Common Stock on the date of grant.
7.9 Director Nominees. At or prior the Effective Time, Parent shall take
such action as may be necessary such that two persons designated by Circuit Test
will be elected to Parent's Board of Directors (the "Designees"), effective at
the Effective Time. Circuit Test has selected as the Designees Messrs. Xxxxx X.
Xxxxxxxx, Xx. and Xxxxx X. Xxxxxxxx, Xx. Unless waived by the Designees, Parent
also shall take such action as may be necessary to nominate the Designees for
election to the Board of Directors at Parent's Annual Meeting of Shareholders
held next following the Effective Time.
7.10 Further Assurances.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use all reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using all
reasonable efforts to obtain all necessary waivers, consents and approvals, to
effect all necessary registrations and filings (including, but not limited to,
filings with all applicable Governmental Entities) and to lift any injunction or
other legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible).
(b) In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and/or directors of Parent and the Surviving Corporation
shall take all such necessary action.
(c) Circuit Test and its shareholders shall confirm and
represent to Parent, by signed certificates, such factual matters as Parent may
reasonably request in order for Parent to confirm that the Merger will qualify
as a nontaxable reorganization under Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Code.
7.11 Certain Tax Matters. Parent shall continue at least one
significant historical business line of Circuit Test, or shall use at least a
significant portion of Circuit Test's historical business assets in a business,
in each case within the meaning of Treasury Regulation Section 1.368-1(d).
7.12 Audited Financial Statements. On or before July 16, 1997, Circuit Test
shall deliver or cause to be delivered to Parent the consolidated audited
balance sheet, and the related
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statements of operations, stockholders' and members' equity and of cash flows of
Circuit Test, LLC and Airhub for the year ended December 31, 1996.
7.13 Additional Agreements. On or before July 16, 1997: (a) Parent shall
deliver or cause to be delivered to Circuit Test executed Voting Letter
Agreements (the form of which is attached as Exhibit 7.13 hereto) from each of
the directors of Parent who is also a shareholder of Parent; (b) Circuit Test
shall deliver or cause to be delivered to Parent a Voting Agreement executed by
all of the CT Shareholders (other than the Xxxxx X. Xxxxxxxx, Xx. Grantor
Retained Income Trust and Xxxxx X. Xxxxxxxx, Xx. who shall execute such Voting
Agreement as of the date hereof).
7.14 Deferred Compensation. The parties hereto agree that after the
Effective Time Circuit Test shall be authorized to pay up to an aggregate of
$500,000 to its employees as "Deferred Compensation", less the amount of any
Deferred Compensation paid by Airhub and CTLLC pursuant to Section 7.8 of the
Purchase Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party hereto to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by agreement of the parties
hereto:
(a) This Agreement and the Merger shall have been approved and
adopted by the requisite vote of the holders of Parent Common Stock and by the
requisite vote of the holders of Circuit Test Common Stock.
(b) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal or regulatory restraint or prohibition preventing the consummation of the
Merger, nor any proceeding brought by an administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, seeking
any of the foregoing, shall be pending; nor shall there be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal.
(c) Parent, Circuit Test and Merger Sub and their respective
subsidiaries, if any, shall have timely obtained from each Governmental Entity
all approvals, waivers and consents, if any, necessary for consummation of or in
connection with the Merger and the several transactions contemplated hereby,
including such approvals, waivers and consents as may be required under the
federal securities and state Blue Sky laws.
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(d) Simultaneous with the occurrence of the Closing hereunder, the Closing
shall have occurred under the Purchase Agreement.
8.2 Additional Conditions to Obligations of Circuit Test to Effect the
Merger. The obligations of Circuit Test to consummate and effect this Agreement
and the transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Circuit Test:
(a) Parent and Merger Sub shall have performed and complied in
all material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by them on or prior to the
Effective Time and the representations and warranties of Parent and Merger Sub
in this Agreement shall be true and correct in all material respects (or in all
respects in the case of any representation or warranty that is qualified by its
terms by a reference to Material Adverse Effect or otherwise the concept of
materiality) when made and on and as of the Effective Time as though such
representations and warranties were made on and as of such date.
(b) Circuit Test shall have received a certificate executed on
behalf of Parent by its Chief Financial Officer certifying that the conditions
specified in Section 8.2(a) have been fulfilled.
(c) Circuit Test shall have received a legal opinion of Holme
Xxxxxxx & Xxxx LLP, counsel to Parent, substantially in the form attached hereto
as Exhibit 8.2(c).
(d) Parent shall have executed and delivered to the holders of
Circuit Test Common Stock an agreement with respect to demand and piggyback
registration rights of such holders (the "Registration Rights Agreement"), which
Registration Rights Agreement shall be substantially in the form of Exhibit
8.2(d) attached hereto.
(e) Parent shall have agreed to grant, as of the Effective
Time, to the members of Circuit Test's management identified on Schedule 8.2(e),
the employee stock options specified in such schedule.
(f) There shall not have occurred any Material Adverse Effect on Parent.
(g) Parent shall have executed and delivered to the other
parties thereto, all Employment Agreements to be entered into at the Effective
Time, which Employment Agreements shall be substantially in the form attached
hereto as Exhibit 7.7.
8.3 Additional Conditions to the Obligations of Parent and Merger Sub
to Effect the Merger. The obligations of Parent and Merger Sub to consummate and
effect this Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Parent:
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(a) Circuit Test shall have performed and complied in all
material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by it on or prior to the
Effective Time and the representations and warranties of Circuit Test in this
Agreement shall be true and correct in all material respects (or in all respects
in the case of any representation or warranty that is qualified by its terms by
a reference to Material Adverse Effect or otherwise by the concept of
materiality) when made and on and as of the Effective Time as though such
representations and warranties were made on and as of such time.
(b) Parent shall have received a certificate, dated as of the
Effective Time, executed on behalf of Circuit Test by its President and its
Chief Financial Officer certifying that the conditions specified in Section
8.3(a) have been fulfilled.
(c) Parent shall have received a legal opinion from Xxxxx,
Xxxxxx & Xxxxxxx, PLLC, legal counsel to Circuit Test, substantially in form
attached hereto as Exhibit 8.3(c).
(d) Parent shall have been furnished with evidence
satisfactory to it of the consent or approval of those persons whose consent or
approval shall be required in connection with the Merger under any material
contract of Circuit Test otherwise.
(e) There shall not have occurred any Material Adverse Effect
on Circuit Test.
(f) Parent shall have received letters of resignation,
effective as of the Effective Time, executed and tendered by each of the then
incumbent directors of Circuit Test.
(g) The Voting Agreement, dated the date hereof (the "Voting
Agreement"), among the CT Shareholders and Parent shall be in full force and
effect as of the Effective Time and the parties to the Voting Agreement other
than Parent shall have performed and complied in all material respects with all
covenants, obligations and conditions of the Voting Agreement required to be
performed or complied with by them. The CT Shareholders shall have executed and
delivered to Parent: (i) a certificate confirming the continued accuracy of the
representations and warranties given by them under the Voting Agreement; and
(ii) the Registration Rights Agreement.
(h) The parties to the Voting Agreement, other than Parent,
and Xxxxx X. Xxxxxxxx, Xxx X. Xxxxxxxx, and Xxxxx X. Xxxxxx shall have entered
into an agreement regarding the indemnification of Parent and Merger Sub with
respect to the representations, warranties and covenants of this Agreement (the
"Indemnification Agreement"), which Indemnification Agreement shall be
substantially in the form of Exhibit 8.3(h) attached hereto;
(i) Each employee who is to be party thereto shall have
executed and delivered to Parent, all Employment Agreements to be entered into
at the Effective Time, which Employment Agreements shall be substantially in the
form attached hereto as Exhibit 7.7.
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(j) Parent shall have received from each of the holders of
Circuit Test Common Stock who are receiving Parent Common Stock in the Merger a
letter substantially in the form of Exhibit 8.3(j) attached hereto, and Parent
shall have confirmed, to its reasonable satisfaction, that the Merger will
qualify as a nontaxable reorganization under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code.
(k) There shall be no material variation between the audited
financial statements for the year ended December 31, 1996 delivered to Parent
pursuant to Section 7.12 and the unaudited financial statements for such period
previously delivered to Parent.
(l) For matters from its inception until the Closing, all
corporate actions of Circuit Test, other than those that require no Board
approval, shall have been approved or otherwise ratified by the Circuit Test
Board of Directors as the valid and duly authorized actions of Circuit Test.
(m) Parent shall have received such clearance certificate or
shall have received or filed such other documents that may be required by any
state taxing authority in order to relieve Parent of any obligation to withhold
any portion of the consideration payable.
(n) Circuit Test shall deliver to Parent at Closing a
"Certificate of Nonforeign Status" under section 1445 of the Code in a form
reasonably satisfactory to Parent.
ARTICLE IX
RESTRICTIONS ON TRANSFER
9.1 Legends. Each certificate representing shares of Parent Common
Stock issued in connection with the Merger (the "Restricted Securities") shall
bear a legend to the following effect:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH
RESTRICTIONS ON THE TRANSFERABILITY CONTAINED IN AN AGREEMENT RELATING
TO THE SECURITIES AND APPLICABLE FEDERAL AND STATE SECURITIES LAWS AND
NO TRANSFER WILL BE RECOGNIZED UNLESS MADE IN COMPLIANCE WITH SUCH
LAWS."
Any holder of Restricted Securities (a "Holder") who disposes of Restricted
Securities in accordance with Section 9.2 shall be entitled to have Parent cause
new unlegended certificates to be issued promptly to the Holder in exchange for
outstanding legended certificates representing
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the disposed shares if: (a) the opinion to counsel referred to in Section 9.2 is
to the further effect that such legend is not required in order to establish
compliance with any provisions of the Securities Act; (b) the transfer is in
connection with a transaction intended to comply with Rule 144 and Rule 145 as
promulgated by the SEC under the Securities Act, as such Rules may be amended
from time to time, or any similar successor rule that may be promulgated by the
SEC, or (c) an appropriate registration statement with respect to such
Restricted Securities has been filed by Parent with the SEC and has been
declared effective by the SEC.
9.2 Notice of Proposed Dispositions. Each Holder of Restricted
Securities by acceptance thereof shall agree to comply in all respects with the
provisions of this Section 9.2. Prior to any proposed disposition of any
Restricted Securities (unless there is in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement) the holder thereof shall
give written notice to Parent of such Holder's intention to effect such
disposition. Each such notice shall describe the manner and circumstances of the
proposed disposition and shall be accompanied by either (a) a written opinion of
legal counsel addressed to Parent and reasonably satisfactory in form and
substance to Parent, to the effect that the proposed disposition of Restricted
Securities may be effected without registration of such Restricted Securities or
(b) a "no action" letter from the SEC to the effect that such disposition
without registration of such Restricted Securities will not result in
recommendation by the staff of the SEC that enforcement action be taken with
respect thereto, whereupon the Holder of such Restricted Securities shall be
entitled to transfer such Restricted Securities in accordance with the terms of
the notice delivered by the Holder to Parent. The provisions of this Section 9.2
shall not apply to Restricted Securities that are then freely tradeable pursuant
to Rule 144(k) under the Securities Act, as amended from time to time, or any
similar successor rule that may be promulgated by the SEC.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. At any time prior to the Effective Time, whether
before or after approval of the matters presented in connection with the Merger
by the shareholders of Circuit Test and Parent, this Agreement may be
terminated:
(a) by mutual consent of Parent and Circuit Test;
(b) by either Parent or Circuit Test, if, without fault of the
terminating party, the Closing shall not have occurred on or before the later of
(i) 30 days after the date the Proxy Statement is mailed, but in no event later
than November 30, 1997, or (ii) such later date as may be agreed upon in writing
by the parties hereto;
(c) by Parent, if any of the conditions specified in Section
8.3 have not been satisfied or waived at such time as such condition is no
longer capable of satisfaction;
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(d) by Circuit Test, if any of the conditions specified in
Section 8.2 have not been satisfied or waived at such time as such condition is
no longer capable of satisfaction;
(e) by either Parent or Circuit Test if the other shall have
breached its respective representations, warranties or other obligations under
Articles IV through VII in any material respect and such breach continues for a
period of 10 days after receipt of notice of the breach from the non-breaching
party hereto.
10.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 10.1, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of Parent, Merger
Sub or Circuit Test or their respective officers, directors, shareholders or
affiliates, except to the extent that such termination results from the breach
by a party hereto of any of its representations, warranties or covenants set
forth in this Agreement; provided that, the provisions of this Section 10.2 and
Section 7.4 (Confidentiality) and Article XI (General Provisions) shall remain
in full force and effect and survive any termination of this Agreement.
10.3 Amendment. The respective Boards of Directors of the parties
hereto may cause this Agreement to be amended at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto; provided
that an amendment made subsequent to adoption of the Agreement by the
shareholders of Circuit Test or Merger Sub shall not (a) alter or change the
amount or kind of consideration to be received on conversion of the Circuit Test
Common Stock, (b) alter or change any term of the Articles of Incorporation of
Surviving Corporation to be effected by the Merger, or (c) alter or change any
of the terms and conditions of this Agreement if such alteration or change would
adversely affect the holders of Circuit Test Common Stock or Parent.
10.4 Extension; Waiver. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. 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 XI
GENERAL PROVISIONS
11.1 Survival of Representations and Warranties. The representations
and warranties of Circuit Test in Article IV shall survive the Merger and
continue in full force and effect for two years after the Effective Time, except
for those contained in Section 4.16 and 4.17 shall survive the Merger and
continue in full force and effect after the Effective Time for the applicable
statute
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of limitations period. The Shareholders of Circuit Test have agreed to indemnify
Parent pursuant to the Indemnification Agreement, subject to the limitations
contained therein. The representations and warranties of Parent and Merger Sub
shall survive the Merger and continue in full force and effect for two years
after the Effective Time and Parent shall indemnify the Shareholders of Circuit
Test pursuant to Section 11.2, in each case subject to the limitations contained
therein.
11.2 Indemnification by Parent.
(a) Indemnity Obligation of Parent. Parent hereby agrees to
indemnify and hold harmless each of the CT Shareholders harmless from, and to
reimburse each of the CT Shareholders for, any Shareholder Indemnity Claims
arising under the terms and conditions of this Agreement. For purpose of this
Agreement, the term "Shareholder Indemnity Claim" shall mean any loss, damage,
deficiency, claim, liability, suit, action, fee, cost or expense of any nature
whatsoever ("Losses") incurred by the CT Shareholders resulting from any breach
of representation or warranty of Parent or Merger Sub that is contained in this
Agreement.
(b) Limitation on Indemnification. Notwithstanding the
foregoing, any claim for indemnification or breach of representation and
warranty against Parent hereunder shall be payable by Parent only in the event,
and to the extent, that the accumulated amount of claims in respect of such
indemnifying party's obligations to indemnify hereunder shall exceed the amount
of $100,000 in the aggregate (the "Indemnification Threshold"). In addition, the
aggregate liability of Parent for amounts in excess of the Indemnification
Threshold shall not exceed an aggregate of $2.5 million unless such Losses are
caused by or arise out of any breach of which Parent had actual knowledge at the
time of the related representation was made or deemed made, in which case an
aggregate ceiling of $14.5 million shall apply.
11.3 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail, return receipt
requested, or sent via facsimile, with confirmation of receipt, to the parties
at the following address or at such other address for a party as shall be
specified by notice hereunder:
(a) if to Parent or Merger Sub, to:
EFTC Corporation
0000 Xxxx 0xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Facsimile No.: (000) 000-0000
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with a copy to:
Holme Xxxxxxx & Xxxx LLP
0000 Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
(b) if to Circuit Test, to:
Circuit Test, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Xx.
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx, Xxxxxx & Xxxxxxx, PLLC
00 Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Warner X. Xxxxx
Facsimile No.: (000) 000-0000
11.4 Interpretation. When a reference is made in this Agreement to
Exhibits, Articles or Sections, such reference shall be to an Exhibit, Article
or Section to this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party hereto to whom such information is to be made available.
The table of contents, index of defined terms and Article and Section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. In this Agreement,
any reference to any event, change, condition or effect being "material" with
respect to any entity or group of entities means any material event, change,
condition or effect related to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such entity or group of entities. In this
Agreement, any reference to a "Material Adverse Effect" with respect to any
entity or group of entities means any event, change or effect that is materially
adverse to the condition (financial or otherwise), properties, assets,
liabilities, business, operations or results of operations of such entity and
its subsidiaries, taken as a whole. In this Agreement, any reference to a
party's "knowledge" means such party's actual knowledge of a particular fact or
matter after due and diligent inquiry of officers, directors and other employees
of such party reasonably
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believed to have knowledge of such matters. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine and neuter
forms.
11.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to the other parties hereto, it being
understood that all parties hereto need not sign the same counterpart.
11.6 Entire Agreement; Nonassignability; Parties in Interest. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, the
Circuit Test Disclosure Schedule and the Parent Disclosure Schedule (a)
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties hereto with respect to the subject
matter hereof; (b) are not intended to confer upon any other person any rights
or remedies hereunder; and (c) shall not be assigned by operation of law or
otherwise except as otherwise specifically provided.
11.7 Severability. In the event that any provision of this Agreement,
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties hereto further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
11.8 Remedies Cumulative; No Waiver. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. No failure or delay
on the part of any party hereto in the exercise of any right hereunder shall
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty or agreement herein, nor shall any single
or partial exercise of any such right preclude other or further exercise thereof
or of any other right.
11.9 Governing Law. The Merger shall be governed by the laws of the
state of Florida. All other aspects of this Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado (without regard
to the principles of conflicts of law thereof).
11.10 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
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11.11 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses of its
advisers, accountants and legal counsel) shall be paid by the party incurring
such expense.
11.12 Attorneys Fees. In the event of any proceeding to enforce this
Agreement, the prevailing party shall be entitled to receive from the losing
party all reasonable costs and expenses, including the reasonable fees of
attorneys, accountants and other experts, incurred by the prevailing party in
investigating and prosecuting (or defending) such action at trial or upon any
appeal.
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SIGNATURE PAGE--AGREEMENT AND PLAN OF REORGANIZATION
IN WITNESS WHEREOF, Circuit Test, Parent and Merger Sub have caused
this Agreement to be executed and delivered by their respective officers
thereunto duly authorized, all as of the date first written above.
EFTC CORPORATION,
a Colorado corporation
By: /s/ Xxxxxx Xxxxxxxxxx
CTI ACQUISITION CORP.,
a Florida corporation
By: /s/ Xxxxxx Xxxxxxxxxx
CIRCUIT TEST, INC.
a Florida corporation
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
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