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EXHIBIT 10.0
AGREEMENT AND PLAN OF MERGER dated as of July 22, 1997, among SANMINA
CORPORATION, a Delaware corporation ("Parent"), SANM ACQUISITION SUBSIDIARY,
INC., a Delaware corporation and a wholly owned subsidiary of Parent ("Sub"),
and ELEXSYS INTERNATIONAL, INC., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company, and Parent, acting as the sole stockholder of Sub, have approved the
merger of Sub with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement, whereby each issued and
outstanding share of common stock, par value $1.00 per share, of the Company
("Company Common Stock"), other than Company Common Stock owned by Parent, Sub
or the Company, will be converted into common stock, par value $.01 per share,
of Parent ("Parent Common Stock");
WHEREAS, substantially concurrently herewith and as a condition and
inducement to Parent's willingness to enter into this Agreement, Parent and
certain stockholders of the Company are entering into Stockholder Agreements
(the "Stockholder Agreements");
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for financial accounting purposes, it is intended that the
Merger will be accounted for as a pooling of interests transaction.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
The Merger
SECTION 1.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.3). Following the
Merger, the separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Sub in accordance
with the DGCL. At the election of Parent, any direct or indirect wholly owned
subsidiary (as defined in Section 8.3) of Parent may be substituted for Sub as
a constituent corporation in the Merger. In such event, the parties hereto
agree to execute an appropriate amendment to this Agreement in order to reflect
such substitution.
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SECTION 1.2 Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
the conditions set forth in Article VI (as such date may be extended, but not
for more than 30 days, by the Company, in its sole discretion) (the "Closing
Date"), at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000, unless another date or
place is agreed to in writing by the parties hereto.
SECTION 1.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file with the Delaware Secretary of State a certificate of merger (the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Delaware Secretary of State, or at such other
time as Parent and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
SECTION 1.4 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.5 Certificate of Incorporation and Bylaws.
(a) Subject to Section 5.7(a), the Certificate of
Incorporation of Sub, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law, except
that the name of the Surviving Corporation in such Certificate of Incorporation
will be changed to be Elexsys International, Inc..
(b) Subject to Section 5.7(a), the Bylaws of Sub, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable law.
SECTION 1.6 Directors. The directors of Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.7 Officers. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
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ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.1 Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding
share of capital stock of Sub shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned
Stock. Each share of Company Common Stock that is owned by the Company and
each share of Company Common Stock that is owned by Parent or Sub shall
automatically be canceled and retired and shall cease to exist, and no Parent
Common Stock or other consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to
Section 2.2(e), each issued and outstanding share of Company Common Stock
(other than shares to be canceled in accordance with Section 2.1(b)) shall be
converted into thirty three hundredths (0.33) (such fraction, as it may be
adjusted pursuant to the final sentence of this Section 2.1(c), being referred
to as the "Exchange Ratio") of a fully paid and nonassessable share of Parent
Common Stock. As of the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate which
immediately prior to the Effective Time represented any such shares of Company
Common Stock shall cease to have any rights with respect thereto, except the
right to receive certificates representing the number of fully paid and
nonassessable shares of Parent Common Stock into which such shares of Company
Common Stock were converted at the Effective Time and any cash in lieu of
fractional shares of Parent Common Stock to be issued or paid in consideration
therefor upon surrender of such certificate in accordance with Section 2.2,
without interest. Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding shares of Parent Common Stock
shall have been changed into a different number of shares or a different class,
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange of shares or any similar
transaction or if Parent pays an extraordinary dividend or makes an
extraordinary distribution, the Exchange Ratio shall be appropriately adjusted
to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination , exchange or other similar transaction or
extraordinary dividend or distribution.
SECTION 2.2 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent
shall deposit with Norwest Bank Minnesota, N.A. or such other bank or trust
company as may be designated by Parent prior to the Effective Time (with the
approval of the Company) (the "Exchange Agent"), for the benefit of the
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holders of shares of Company Common Stock, for exchange in accordance with this
Article II, through the Exchange Agent, certificates representing the shares of
Parent Common Stock issuable pursuant to Section 2.1 and cash sufficient to
make payments in lieu of fractional shares in accordance with Section 2.2(e)
(such shares of Parent Common Stock, together with any dividends or
distributions with respect thereto with a record date after the Effective Time,
and the cash so deposited, being hereinafter referred to as the "Exchange
Fund").
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Parent shall cause the Exchange Agent to
mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates") whose shares were converted into
Parent Common Stock pursuant to Section 2.1(c), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent and shall be in customary form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of a Certificate
for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Parent Common Stock which such holder has the right to
receive pursuant to the provisions of this Article II after taking into account
all the shares of Company Common Stock then held by such holder under all such
Certificates so surrendered, cash in lieu of fractional shares of Parent Common
Stock to which such holder is entitled pursuant to Section 2.2(e) and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(c), and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Company Common Stock which is not
registered in the transfer records of the Company, a certificate representing
the proper number of shares of Parent Common Stock may be issued to a person
other than the person in whose name the Certificate so surrendered is
registered, if, upon presentation to the Exchange Agent, such Certificate shall
be properly endorsed or otherwise be in proper form for transfer and the person
requesting such issuance shall pay any transfer or other taxes required by
reason of the issuance of shares of Parent Common Stock to a person other than
the registered holder of such Certificate or establish to the satisfaction of
Parent that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.2(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the shares of Parent Common
Stock into which the shares of Company Common Stock represented thereby were
converted at the Effective Time, and the right to receive cash in lieu of any
fractional shares of Parent Common Stock as contemplated by Section 2.2(e) and
any dividends or other distributions to which such holder is entitled pursuant
to Section 2.2(c). No interest will be paid or will accrue on any cash payable
pursuant to Sections 2.2(c) or 2.2(e).
(c) 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 shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby and no cash payment in lieu of fractional shares shall be
paid to any such holder
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pursuant to Section 2.2(e) until the holder of record of such Certificate shall
surrender such Certificate. Following surrender of any such Certificate, there
shall be paid to the record holder of the certificate representing whole shares
of Parent Common Stock issued in exchange therefor, without interest, (i) at
the time of such surrender, the amount of any cash payable in lieu of a
fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such whole shares of Parent Common
Stock.
(d) No Further Ownership Rights in Company Common Stock.
All shares of Parent Common Stock issued pursuant to this Article II (and any
cash paid pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been
issued and paid in full satisfaction of all rights pertaining to such shares of
Company Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time which may have been declared or made by the
Company on such shares of Company Common Stock in accordance with the terms of
this Agreement or prior to the date of this Agreement and which remain unpaid
at the Effective Time, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
Company Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article II.
(e) No Fractional Shares.
(i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Parent.
(ii) Notwithstanding any other provision of this
Agreement, each holder of shares of Company Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Parent Common Stock (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount, less the amount of any withholding taxes which may be
required thereon, equal to such fraction of a share of Parent Common Stock
multiplied by the per share closing price of Parent Common Stock as of the
Closing Date as such price is reported on the Nasdaq National Market (as
published by The Wall Street Journal, or, if not published therein, any other
authoritative source).
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the Certificates
for six months after the Effective Time shall be delivered to Parent upon
demand, and any holders of the Certificates who have not theretofore complied
with this Article II shall thereafter look only to Parent for certificates
evidencing Parent Common Stock,
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any cash in lieu of fractional shares of Parent Common Stock and any dividends
or distributions with respect to Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company or
the Exchange Agent shall be liable to any person in respect of any shares of
Parent Common Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund in each case properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund, as directed by Parent, on
a daily basis. Any interest and other income resulting from such investments
shall be paid to Parent.
(i) Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue and pay in exchange for such lost, stolen or
destroyed Certificate (i) a certificate representing the shares of Parent
Common Stock into which the shares of Company Common Stock represented by such
Certificate were converted pursuant to Section 2.1, and (ii) any cash in lieu
of fractional shares, and unpaid dividends and distributions on such shares of
Parent Common Stock, pursuant to this Agreement.
ARTICLE III
Representations and Warranties
SECTION 3.1 Representations and Warranties of the Company.
Except as set forth on the disclosure schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule"), and except as set forth in the Company SEC Documents (as defined in
Section 3.1(e)), or in the exhibits thereto, the Company represents and
warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The
Company and each of its subsidiaries (as defined in Section 8.3) is a
corporation or other legal entity duly organized, validly existing and in good
standing (with respect to jurisdictions that recognize such concept) under the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate power and authority to carry on its business as now being
conducted. The Company and each of its subsidiaries is duly qualified or
licensed to do business and is in good standing (with respect to jurisdictions
that recognize such concept) in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed individually or in the aggregate
would not have a material adverse effect (as defined in Section 8.3) on the
Company. The Company has delivered
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to Parent complete and correct copies of its Restated Certificate of
Incorporation and Bylaws, in each case as amended to the date hereof.
(b) Subsidiaries. The Company has no subsidiaries and
does not own as of the date hereof, directly or indirectly, beneficially or of
record, any shares of capital stock or other equity security of any other
entity or any other similar investment in any other entity.
(c) Capital Structure. The authorized capital stock of
the Company consists of 20,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $1.00 per share (" Company Preferred
Stock"). At the close of business on July 21, 1997, (i) 9,492,676 shares of
Company Common Stock were issued and outstanding, (ii) no shares of Company
Common Stock were held by the Company in its treasury, (iii) 1,055,660 shares
of Company Common Stock were subject to issuance pursuant to outstanding
options to purchase shares of Company Common Stock, (iv) 303,797 shares of
Company Common Stock were reserved for issuance pursuant to the conversion of
the Company's 5 1/2% Convertible Subordinated Debentures due March 1, 2012 (the
"Convertible Debentures"), (v) 250,000 shares of Company Common Stock were
reserved for issuance under the Company's 1996 Employee Stock Purchase Plan
(the "Company ESPP") (stock options granted by the Company are referred to in
this Agreement as "Company Options"), and (vi) no shares of Company Preferred
Stock were issued or outstanding. Except as set forth above and except for
Company Common Stock issued between July 21, 1997 and the date of this
Agreement upon the exercise of options to purchase Company Common Stock, at the
close of business on July 22, 1997, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding.
All outstanding shares of capital stock of the Company are, and all shares
which may be issued pursuant to Company Options will be, when issued in
accordance with the terms thereof, duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. Except for the
Convertible Debentures, there are no bonds, debentures, notes or other
indebtedness of the Company outstanding having the right to vote (or
convertible into securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except as set forth above and except for
(a) Company Common Stock issued between July 21, 1997 and the date of this
Agreement upon the exercise of options to purchase Company Common Stock and (b)
"rights" to purchase Company Common Stock outstanding under the Company ESPP,
as of the date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind to which the Company is a party, or by which it is bound, obligating the
Company to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the Company or
obligating the Company to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are not any outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of capital stock or other securities of the Company. As of
the date of this Agreement, and except as contemplated by this Agreement, there
are no stockholder agreements, voting trusts or other agreements or
understandings to which the Company is a party or by which it is bound relating
to the voting of any shares of capital stock of the Company. All of the
outstanding capital stock of the Company's subsidiaries is owned by the
Company, directly or indirectly, free and clear of any Lien (as defined in
Section 3.1(d)) or any other limitation or restriction (including any
restriction
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on the right to vote or sell the same, except as may be provided as a matter of
law), except for shares of capital stock or other similar ownership interests
of certain subsidiaries of the Company that may be owned by certain nominee
equity holders as required by the applicable law of the jurisdiction of
organization of such subsidiaries. There are no securities of the Company or
its subsidiaries convertible into or exchangeable for, no options or other
rights to acquire from the Company or its subsidiaries, and no other contract,
understanding, arrangement or obligation (whether or not contingent) providing
for the issuance or sale, directly or indirectly, of, any capital stock or
other ownership interests in, or any other equity securities of, any subsidiary
of the Company. As of the date of this Agreement, there are no outstanding
contractual obligations of the Company or its subsidiaries to repurchase,
redeem or otherwise acquire any outstanding shares of capital stock or other
ownership interests in any subsidiary of the Company.
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to the adoption and approval of this Agreement and the approval of the
Merger by the holders of a majority of the shares of Company Common Stock
outstanding on the record date for the Stockholders Meeting (as defined in
Section 5.1), to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of the
Company, subject, in the case of this Agreement and the Merger, to approval and
adoption of this Agreement and approval of the Merger by the holders of a
majority of the shares of Company Common Stock outstanding on the record date
for the Stockholders Meeting. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution, and
delivery of this Agreement by Parent and Merger Sub, constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium and similar laws, both state
and federal, affecting the enforcement of creditors' rights or remedies in
general as from time to time in effect or (ii) the exercise by courts of equity
powers. The execution and delivery of this Agreement by the Company do not,
and the consummation by the Company of the transactions contemplated by this
Agreement and compliance by the Company with the provisions of this Agreement
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any pledge, adverse claim,
lien, charge, encumbrance or security interest of any kind or nature whatsoever
(collectively, "Liens") in or upon any of the properties or assets of the
Company under any provision of (i) the Restated Certificate of Incorporation or
Bylaws of the Company, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or its properties or assets and to which
the Company is a party as of the date of this Agreement or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any (A) statute, law, ordinance, rule or regulation applicable to the Company
or (B) judgment, order or decree applicable to the Company or its properties or
assets, other than, in the case of clause (ii) and clause (iii)(A), any such
conflicts, violations, defaults, rights, losses or Liens that individually or
in the aggregate would not (x) have a material adverse effect on the Company,
(y) impair in any material respect the ability of the Company to perform its
obligations
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under this Agreement, or (z) prevent or materially delay the consummation of
any of the transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
third party, including any federal, state or local government or any court,
administrative agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required to be made or
obtained by the Company at or before the Effective Time in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated by this Agreement, except for (1)
the filing of a premerger notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and any applicable filings under the antitrust laws of any foreign
country, (2) the filing with the Securities and Exchange Commission (the "SEC")
of a proxy statement relating to the adoption and approval by the Company's
stockholders of this Agreement and approval by the Company's stockholders of
the Merger (as amended or supplemented from time to time, the "Proxy
Statement") and such reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (3) the filing
of the Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which
the Company is qualified to do business, and (4) such other consents,
approvals, orders, authorizations, registrations, declarations and filings,
which if not obtained or made, would not, individually or in the aggregate,
have a material adverse effect on the Company or prevent or materially delay
the consummation of any of the transactions contemplated by this Agreement.
(e) SEC Documents. The Company has filed all required
reports, schedules, forms, statements and other documents with the SEC between
September 30, 1994 and the date of this Agreement. All reports, schedules,
forms, statements and other documents filed by the Company with the SEC between
September 30, 1994 and the date of this Agreement (other than any exhibits to
such reports, schedules, forms, statements and documents) are collectively
referred to in this Agreement as the "Company SEC Documents." As of the time
each of the Company SEC Documents was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing), (i) the Company SEC Documents complied in all material respects
with the requirements of the Securities Act of 1933 (the "Securities Act"), or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Documents, and (ii)
except to the extent that information contained in any Company SEC Document has
been revised or superseded by a later-filed Company SEC Document, none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the Company SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly presented the consolidated financial position of the Company as of
the dates thereof and the consolidated results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments).
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Between March 31, 1997 and the date of this Agreement, the Company has not
incurred any liabilities of the type required to be disclosed in the
liabilities column of a balance sheet prepared in accordance with U.S.
generally accepted accounting principles, except for (i) liabilities incurred
in the ordinary course of business, and (ii) liabilities that would not,
individually or in the aggregate, have a material adverse effect on the
Company.
(f) Information Supplied. None of the information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the issuance of Parent Common
Stock in connection with the Merger (the "Form S-4") will, at the time the Form
S-4 is filed with the SEC, at any time it is amended or supplemented and at the
time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading and (ii) the Proxy
Statement will, at the date it is first mailed to the Company's stockholders
and at the time of the Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by Parent or
Sub specifically for inclusion or incorporation by reference in the Proxy
Statement.
(g) Absence of Certain Changes or Events. Between March
31, 1997 and the date of this Agreement, there has not occurred (i) any
material adverse change in the Company, (ii) any material change by the Company
in its accounting methods, principles or practices except as required by
concurrent changes in U.S. generally accepted accounting principles, (iii) any
material reevaluation by the Company of any of its assets, including, without
limitation, writing down the value of capitalized inventory or writing off
notes or accounts receivable other than in the ordinary course, or (iv) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company's
capital stock.
(h) Litigation. There is no suit, action or proceeding
pending, and no person has overtly threatened in a writing delivered to the
Company since January 1, 1997 to commence any suit, action or proceeding,
against or affecting the Company or any of its subsidiaries that would,
individually or in the aggregate, have a material adverse effect on the
Company, nor is there any judgment, decree, injunction, or order of any
Governmental Entity or arbitrator outstanding against, or, to the knowledge of
the Company, pending investigation by any Governmental Entity involving, the
Company or any of its subsidiaries that individually or in the aggregate would
have a material adverse effect on the Company.
(i) Contracts. As of the date this Agreement, there are
no contracts or agreements that are of a nature required to be filed by the
Company as an exhibit to a Report on Form 10-K under the Exchange Act and the
rules and regulations promulgated thereunder. Neither the Company nor any
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of its subsidiaries is in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of notice or
both would cause such a violation of or default under) any lease, permit,
concession, franchise, license or any other contract, agreement, arrangement or
understanding to which any of them is a party or by which any of their
properties or assets is bound, except for violations or defaults that
individually or in the aggregate would not have a material adverse effect on
the Company.
(j) Compliance with Laws.
(i) The Company and each of its subsidiaries is
in compliance with all applicable statutes, laws, ordinances, regulations,
rules, judgments, decrees and orders of any Governmental Entity (collectively,
"Legal Provisions") applicable to their business or operations, except for
instances of possible noncompliance that, individually or in the aggregate,
would not have a material adverse effect on the Company or prevent or
materially delay the consummation of the Merger. The Company and each of its
subsidiaries has in effect all federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses,
notices, permits and rights, including all authorizations under Environmental
Laws (as hereinafter defined) ("Permits"), necessary for them to own, lease or
operate their properties and assets and to carry on their business
substantially as now conducted, and there currently exists no default under, or
violation of, any such Permit, except for the lack of Permits and for defaults
under, or violations of, Permits which lack, default or violation individually
or in the aggregate would not have a material adverse effect on the Company.
Between January 1, 1997 and the date of this Agreement, the Company has not
received any written notice or other written communication from any
Governmental Entity alleging any violation of any Legal Provision by the
Company (except for (A) notices of violations which have been cured or
corrected in all material respects (B) notices which have been rescinded or
withdrawn, and (C) notices which would not have a material adverse effect on
the Company).
(ii) The term "Hazardous Material" means
any material or substance that has been designated by any Governmental Entity
to be radioactive, toxic, hazardous or otherwise a danger to health,
reproduction or the environment. The term "Company Business Facility" means
any property including the land, the improvements thereon, the groundwater
thereunder and the surface water thereon, that is or at any time has been
owned, operated, occupied, controlled or leased by the Company or any of its
subsidiaries in connection with the operation of its business. The term
"Disposal Site" means a landfill, disposal agent, waste hauler or recycler of
Hazardous Materials. The term "Environmental Laws" means all applicable laws,
rules, regulations, orders, treaties, statutes, and codes promulgated by any
Governmental Entity which prohibit, regulate or control any Hazardous Material
or any Hazardous Material Activity, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
the Resource Recovery and Conservation Act of 1976, the Federal Water Pollution
Control Act, the Clean air Act, the Hazardous Materials Transportation Act, the
Clean Water Act, comparable laws, rules, regulations, orders, treaties,
statutes, and codes of other Governmental Entities the regulations promulgated
pursuant to any of the foregoing, and all amendments and modifications of any
of the foregoing, all as amended to date. The term "Hazardous Materials
Activity" means the
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transportation, transfer, recycling, storage, use, treatment, manufacture,
removal, remediation, release, exposure of others to, sale, or distribution of
any Hazardous Material or any product containing a Hazardous Material. The
term "Company Environmental Permit" means any approval, permit, license,
clearance or consent required to be obtained from any private person or any
Governmental Entity with respect to a Hazardous Materials Activity which is or
was conducted by the Company or any of its subsidiaries.
(iii) To the knowledge of the Company, no
Hazardous Materials are present on any Company Business Facility currently
owned, operated, occupied, controlled or leased by the Company or any of its
subsidiaries except in such cases as would not reasonably be expected to have a
material adverse effect on the Company. There are no underground storage
tanks, asbestos which is friable or likely to become friable or PCBs present on
any Company Business Facility currently owned, operated, occupied, controlled
or leased by the Company or any of its subsidiaries except in such cases as
would not reasonably be expected to have a material adverse effect on the
Company.
(iv) The Company and each of its
subsidiaries are conducting all Hazardous Material Activities in compliance in
all material respects with all applicable Environmental Laws except where the
failure to comply would not have a material adverse effect on the Company. To
the knowledge of the Company after reasonable inquiry, the Hazardous Materials
Activities of the Company and each of its subsidiaries have not resulted in the
exposure of any person to a Hazardous Material in a manner which has resulted
in said person currently having a claim against the Company that is likely to
be adversely determined against the Company and that would reasonably be
expected to have a material adverse effect on the Company.
(v) The Company Environmental Permits
held by the Company and each of its subsidiaries are all of the Environmental
Permits necessary for the continued conduct of any Hazardous Material Activity
of the Company and each of its subsidiaries as such activities are currently
being conducted, except for those permits the absence of which could not
reasonably be expected to result in a material adverse effect on the Company.
All such Company Environmental Permits are valid and in full force and effect
except where the failure to be valid and in full force and effect would not
have a material adverse effect on the Company. The Company and its
subsidiaries are in compliance in all material respects with all covenants and
conditions of any Company Environmental Permit which are in force with respect
to their Hazardous Materials Activities, except where the failure to comply
with such covenants and conditions would not have a material adverse effect on
the Company. To the knowledge of the Company, no circumstance exists which
would reasonably be expected to cause any Company Environmental Permit to be
revoked, modified, or rendered non-renewable upon payment of the permit fee,
except to the extent such revocation, modification, or non-renewability would
not have a material adverse effect on the Company.
(vi) No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending against
the Company or its subsidiaries by any Governmental Entity, and no person has
overtly threatened in a writing delivered to the Company since January 1, 1997
to commence any action, proceeding, revocation proceeding or amendment
procedure against the
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Company or its subsidiaries, concerning or relating to any Company
Environmental Permit or any Hazardous Materials Activity of the Company or any
of its subsidiaries, or to any Company Business Facility currently owned,
operated, occupied, controlled or leased by the Company or any of its
subsidiaries, which could reasonably be expected to have a material adverse
effect on the Company.
(vii) To the knowledge of the Company
after reasonable inquiry, no action, proceeding, or claim exists, and no
person has overtly threatened in a writing delivered to the Company since
January 1, 1997 to commence any action or proceeding, against any Disposal Site
or against the Company or any of its subsidiaries with respect to any transfer
or release of Hazardous Materials by the Company to a Disposal Site which could
reasonably be expected to have a material adverse effect on the Company.
(viii) The Company has delivered to Parent
or made available for inspection by Parent and its agents and employees all
material records in the Company's possession as of the date of this Agreement
concerning the current Hazardous Materials Activities of the Company and each
of its subsidiaries and all environmental audits and environmental assessments
of any Company Business Facility conducted at the request of, or otherwise in
the possession of, the Company or any of its subsidiaries as of the date of
this Agreement.
(k) Labor Matters. As of the date of this Agreement, there
are no collective bargaining agreements or other labor union agreements to
which the Company or any of its subsidiaries is a party, or by which they are
bound. The Company and each of its subsidiaries are in compliance with all
federal, state and local laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and are not engaged in
any unfair labor practice except where the failure to comply, or the engaging
in such practice, would not have a material adverse effect on the Company. As
of the date of this Agreement, there is no unfair labor practice complaint
against the Company or any of its subsidiaries pending, and no person has
overtly threatened in a writing delivered to the Company since January 1, 1997
to commence any unfair labor practices complaint before the National Labor
Relations Board or the United States Department of Labor. There is no labor
strike, slowdown or stoppage in progress, and no person has overtly threatened
in a writing delivered to the Company since January 1, 1997 to commence any
strike, slowdown or stoppage, against or involving the Company or any of its
subsidiaries. No written agreement restricts the Company or any of its
subsidiaries from relocating, closing or terminating any of its operations or
facilities. Neither the Company nor any of its subsidiaries has, in the past
three years, experienced any labor strike, slowdown or stoppage.
(l) Absence of Changes in Benefit Plans. Between March
31, 1997 and the date of this Agreement, there has not been any adoption or
amendment in any material respect by the Company or any of its subsidiaries of
any collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
providing benefits for which the Company or any of its subsidiaries will be
responsible to any current or former employee, officer or director of the
Company (collectively,
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"Benefit Plans"). As of the date of this Agreement, there exist no employment,
consulting, severance, termination or indemnification agreements, arrangements
or understandings between the Company and any current or former employee,
officer or director of the Company, which is either currently effective or will
become effective at the Closing Date.
(m) ERISA Compliance.
(i) Each Benefit Plan has been
administered in accordance with its terms, and the Company and all the Benefit
Plans are all in compliance with applicable provisions of ERISA and the Code,
except where the failure to so administer the Benefit Plans or to so comply
would not have a material adverse effect on the Company.
(ii) Neither the Company nor any person
or entity that, together with the Company, is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Code (the Company and each such
other person or entity, a "Commonly Controlled Entity") has maintained,
contributed or been obligated to contribute to any Benefit Plan that is subject
to Title IV of ERISA; and neither the Company nor any Commonly Controlled
Entity is obligated to make any contribution, other than discretionary
contributions, to any Benefit Plan.
(iii) With respect to any Benefit Plan
that is an "employee welfare benefit plan," (as defined in Section 3(l) of
ERISA) there are no agreements, written or oral, that would prevent any such
plan (including any such plan covering retirees or other former employees) from
being amended or terminated without material adverse effect on the Company on
or at any time after the Effective Time.
(iv) Neither the Company nor any of its
subsidiaries contributes to or has any material liability to the Pension
Benefit Guaranty Corporation or any other person, plan or entity under or with
respect to (A) a pension plan subject to Title IV of ERISA or Section 412 of
the Code, or (B) a multiemployer pension plan, as defined in Section 3(37) of
ERISA. Neither the Company nor any of its subsidiaries maintains an employee
welfare benefit plan providing health or medical benefits for retired
employees.
(v) No employee welfare benefit plan of
the Company or any of its subsidiaries provides for continuing benefits or
coverage after termination or retirement from employment, except with respect
to any "group health plan" as defined in Section 4980B(g) of the Code and
Section 607 of ERISA. With respect to any Benefit Plan which is a "group
health plan," as so defined, the Company warrants that in all "qualified
events" (including those resulting from the Merger) occurring prior to or on
the Closing Date, the Company has or will offer to its eligible employees and
their "qualified beneficiaries" the opportunity to elect continuation coverage
under Section 602 of ERISA to the extent required by ERISA Sections 601-607 and
will provide that coverage, if elected, at no expense to Parent.
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(vi) There is no Benefit Plan covering
any employee or former employee of the Company or any of its subsidiaries that,
individually or collectively, could give rise to the payment of an amount that
would not be deductible pursuant to the terms of Sections 280G or 162 of the
Code.
(vii) Neither the Company nor any entity
under common control with the Company has ever participated in or withdrawn
from a multi-employer plan as defined in Section 4001(a)(3) of Title IV of
ERISA, and neither the Company nor any of its subsidiaries has incurred or owes
any liability as a result of any partial or complete withdrawal by any employer
from such a multi-employer plan as described under Sections 4201, 4203, or 4205
of ERISA.
(viii) No executive officer of the Company
or, to the Company's knowledge, other employee of the Company or any of its
subsidiaries is obligated under any agreement or judgment that would conflict
with such employee's obligation to use his best efforts to promote the
interests of the Company or would conflict with the Company's business as
conducted or proposed to be conducted. No executive officer of the Company or,
to the Company's knowledge, other employee of the Company or any of its
subsidiaries is, by virtue of his or her employment by the Company or any of
its subsidiaries, in material violation of the terms of any employment
agreement or any other agreement relating to such employee's relationship with
any previous employer and no litigation is pending, and no person has overtly
threatened in a writing delivered to the Company since January 1, 1997 to
commence any litigation, against the Company with regard thereto.
(ix) Schedule 3.1(m)(ix) to the Company Disclosure
Schedule lists all Company Options outstanding as of the date of this
Agreement, showing for each such option: (1) the number of shares issuable
under each option grant, and (2) the exercise price thereof.
(x) No employee of the Company will be entitled
to any additional compensation or benefits or any acceleration of the time of
payment or vesting of any compensation or benefits under any Benefit Plan as a
result of the transactions contemplated by this Agreement except as described
in the Company Option Plans.
(xi) The deduction of any amount payable pursuant
to the terms of the Benefit Plans will not be subject to disallowance under
Section 162(m) of the Code.
(n) Taxes. As of the date of this Agreement, the Company
has filed all tax returns and reports required to be filed by it and has paid
all taxes that are shown on such tax returns as due and payable, and the most
recent financial statements contained in the Company SEC Documents reflect an
adequate reserve for all taxes payable by the Company for all taxable periods
and portions thereof through the date of such financial statements. As of the
date of this Agreement, no material deficiencies for any taxes have been
proposed, asserted or assessed against the Company, nor is there, to the
knowledge of the Company after reasonable inquiry, any reasonable basis for the
assertion of any such deficiency. No requests for waivers of the time to
assess any such taxes are pending as of the date of this Agreement. No
material special charges, penalties, fines, liens, or similar encumbrances are
owed by or pending against the Company with respect to payment of or failure to
pay any taxes. The
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Company is not a party to any executory agreements extending the period for
assessment or collection of any taxes. Proper amounts have been withheld by
the Company from employee compensation payments for all periods in compliance
with the tax withholding provisions of applicable federal and state laws,
except where the failure to withhold proper amounts would not have a material
adverse effect on the Company. As of the date of this Agreement, none of the
Federal income tax returns of the Company have been examined by the United
States Internal Revenue Service for the fiscal years through September 30,
1996. The Company has not taken any action nor does it have any knowledge of
any fact or circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code. As used in this Agreement, "taxes" shall include all Federal, state,
local and foreign income, property, sales, excise and other taxes, tariffs or
governmental charges of any nature whatsoever.
(o) No Excess Parachute Payments. No amount that could
be received (whether in cash or property or the vesting of property) as a
result of any of the transactions contemplated by this Agreement by any
employee, officer or director of the Company or any of its subsidiaries who is
a "disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.28OG-1) under any employment, severance or termination
agreement, other compensation arrangement or Benefit Plan currently in effect
would be an "excess parachute payment" (as such term is defined in Section
280G(b)(1) of the Code). No such person is entitled to receive any additional
payment from the Company, the Surviving Corporation or any other person (a
"Parachute Gross-Up Payment") in the event that the excise tax of Section
4999(a) of the Code is imposed on such person. No officer, director or
employee of the Company or any of its subsidiaries has been granted any right
to receive any Parachute Gross-Up Payment by the Company or any of its
subsidiaries.
(p) Title to Properties.
(i) The Company and each of its subsidiaries has
good title to, or valid leasehold interests in, all its material properties and
assets except for such as are no longer used or useful in the conduct of its
businesses or as have been disposed of in the ordinary course of business and
except for defects in title, easements, restrictive covenants and other
encumbrances that individually or in the aggregate would not materially
interfere with the ability of the Company and its subsidiaries to conduct their
business as currently conducted. All such material assets and properties,
other than assets and properties in which the Company or any of its
subsidiaries has a leasehold interest, are free and clear of all Liens except
for Liens that (A) are created or arise in the ordinary course of business, (B)
are created, arise or exist under or in connection with any of the contracts or
other matters referred to in the Company Disclosure Schedule or in the Company
SEC Documents or the exhibits thereto, (C) relate to any taxes or other
governmental charges or levies that are not yet due and payable, (D) relate to,
or are created, arise or exist in connection with, any legal proceeding that is
being contested in good faith, or (E) individually or in the aggregate would
not materially interfere with the ability of the Company and each of its
subsidiaries to conduct their business as currently conducted ("Company
Permitted Liens").
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(ii) The Company and each of its subsidiaries are
in compliance in all material respects with the terms of all material leases to
which they are a party and under which they are in occupancy, and all such
leases are in full force and effect except where the failure to be in
compliance or the failure to be in full force and effect would not have a
material adverse effect on the Company. As of the date of this Agreement, the
Company and/or one or more of its subsidiaries enjoys peaceful and undisturbed
possession under all such material leases, except for failures to do so that
would not individually or in the aggregate have a material adverse effect on
the Company.
(q) Intellectual Property. The Company owns, or is
validly licensed or otherwise has the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service xxxx rights, copyrights and other proprietary intellectual property
rights and computer programs (collectively, "Intellectual Property Rights")
which are material to the conduct of the business of the Company and its
subsidiaries taken as a whole. As of the date of this Agreement, no suits,
actions or proceedings are pending, and no person has overtly threatened in a
writing delivered to the Company since January 1, 1997 to commence any suit,
action or proceeding, alleging that the Company or any of its subsidiaries is
infringing the rights of any person with regard to any Intellectual Property
Right, except for suits, actions or proceedings which, individually or in the
aggregate, would not have a material adverse effect on the Company. To the
knowledge of the Company, no person is infringing the rights of the Company or
any of its subsidiaries with respect to any Intellectual Property Right, except
for infringements which individually or in the aggregate, would not have a
material adverse effect on the Company. Neither the Company nor any of its
subsidiaries is licensing, or otherwise granting, to any third party, any
rights in or to any Intellectual Property Rights which would have a material
adverse effect on the Company.
(r) Voting Requirements. The affirmative vote of the
holders of a majority of the shares of Company Common Stock outstanding as of
the record date for the Stockholders Meeting is the only vote of the holders of
any class or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated by this Agreement.
(s) State Takeover Statutes. The Board of Directors of
the Company has approved the Merger and this Agreement and such approval is
sufficient to render inapplicable to the Merger and this Agreement the
provisions of Section 203 of the DGCL to the extent, if any, such Section is
applicable to the Merger and this Agreement To the best of the Company's
knowledge, no other state takeover statute or similar statute or regulation
applies to or purports to apply to the Merger or this Agreement.
(t) Brokers. No broker, investment banker, financial
advisor or other person, other than Xxxxxxx & Company, the fees and expenses of
which will be paid by the Company, is entitled to any broker's, finder's or
financial advisor's fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company.
(u) Opinion of Financial Advisor. The Company has
received the opinion of Xxxxxxx & Company, dated the date hereof, to the effect
that, as of such date, the consideration to be
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received in the Merger by the Company's stockholders is fair to the Company's
stockholders from a financial point of view, a copy of which opinion has been
delivered to Parent for informational purposes only.
(v) Accounting Matters. The Company has not taken or
agreed to take any action that would prevent the business combination to be
effected by the Merger to be accounted for as a pooling of interests.
(w) Equipment and Other Personal Property Leases. All
of the material items of equipment and personal property leased by the Company
or any of its subsidiaries from any third party is currently used by the
Company and/or one or more of its subsidiaries in the ordinary course of their
businesses. All leases in effect as of the date of this Agreement pursuant to
which the Company leases material items of equipment or other material items of
personal property are valid, subsisting and in full force and effect, and
neither the Company nor any other party thereto is in default of any of its
obligations under any of such leases, except for defaults and failures to be
valid, subsisting and in full force and effect which would not have a material
adverse effect on the Company. No consent to the consummation of the
transactions contemplated by this Agreement is required from the lessors under
such leases except for any such consent the failure to obtain which would not
have a material adverse effect on the Company.
(x) Product and Service Warranties. Between January 1,
1997 and the date of this Agreement, the Company has not received any written
notice pursuant to which any third party has made any claims against the
Company or its subsidiaries regarding any product or service warranties sold or
provided by the Company or its subsidiaries, except for (i) claims which have
been fully settled and (ii) unresolved claims that would not have a material
adverse effect on the Company.
(y) Customers. As of the date of this Agreement, neither
the Company nor any of its subsidiaries has received any information from any
current material Customer that such Customer will not continue as a customer of
the Company, such subsidiary or Parent after the Closing or that any such
Customer intends to terminate or materially modify any such Customer Contract,
except where the termination or modification of a customer relationship would
not have a material adverse effect on the Company.
(z) Inventory. The inventory of the Company is in all
material respects of good and merchantable quality and is in all material
respects usable and saleable in the ordinary course of the Company's and its
subsidiaries' businesses, except for items of obsolete materials and materials
of below standard quality, substantially all of which have been written down to
realizable market value or for which adequate reserves have been provided.
SECTION 3.2 Representations and Warranties of Parent and Sub.
Except as set forth on the disclosure schedule delivered by Parent to the
Company prior to the execution of this Agreement (the "Parent Disclosure
Schedule"), and except as set forth in the Parent SEC Documents (as defined in
Section 3.2(e)), or in the exhibits thereto, Parent represents and warrants to
the Company as follows:
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(a) Organization, Standing and Corporate Power. Each of
Parent and Sub is a corporation duly organized, validly existing and in good
standing under the laws of Delaware and has all requisite corporate power and
authority to carry on its business as now being conducted. Each of Parent and
Sub is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership, leasing
or operation of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed individually or in the aggregate would not have a material adverse
effect on Parent. Parent has delivered to the Company complete and correct
copies of its Certificate of Incorporation and Bylaws and the Certificate of
Incorporation and Bylaws of Sub, in each case as amended to the date hereof.
(b) Subsidiaries. Parent has no subsidiaries and does
not own as of the date hereof, directly or indirectly, beneficially or of
record, any shares of capital stock or other equity security of any other
entity or any other similar investment in any other entity.
(c) Capital Structure. The authorized capital stock of
Parent consists of 75,000,000 shares of Common Stock, par value $0.01 per
share, and 5,000,000 shares of preferred stock, par value $0.01 per share
("Parent Preferred Stock"). At the close of business on July 21, 1997, (i)
17,159,618 shares of Parent Common Stock were issued and outstanding, (ii) no
shares of Parent Common Stock were held by the Company in its treasury, (iii)
2,957,152 shares of Parent Common Stock were reserved for issuance pursuant to
Parent's stock option and employee stock purchase plans ("Parent Equity
Incentive Plans"), (iv) 3,059,324 shares of Parent Common Stock were reserved
for issuance pursuant to the conversion of Parent's 5 1/4% Convertible
Subordinated Debentures due August 15, 2002 (the "Parent Convertible
Debentures"), and (v) no shares of Parent Preferred Stock were issued or
outstanding. Except as set forth above, at the close of business on July 22,
1997, no shares of capital stock or other voting securities of Parent were
issued, reserved for issuance or outstanding. All outstanding shares of
capital stock of Parent are, and all shares which may be issued pursuant to the
Parent Equity Incentive Plans will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. Except for the Parent Convertible Debentures,
there are no bonds, debentures, notes or other indebtedness of Parent
outstanding having the right to vote (or, other than the Parent Convertible
Debentures, convertible into securities having the right to vote) on any
matters on which stockholders of Parent may vote. Except as set forth above,
there are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Parent is a
party, or by which it is bound, obligating Parent to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of Parent or obligating Parent to issue, grant, extend
or enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. As of the date of this Agreement, are
not any outstanding contractual obligations of Parent to repurchase, redeem or
otherwise acquire any shares of capital stock or other securities of Parent.
As of the date of this Agreement, there are no stockholder agreements, voting
trusts or other agreements or understandings to which Parent is a party or by
which it is bound relating to the voting of any shares of capital stock of
Parent. All of the outstanding capital stock of Parent's subsidiaries is owned
by Parent, directly or indirectly, free and clear of any Lien or any other
limitation or restriction (including any restriction on the right to vote or
sell the same, except as may be provided as a matter of law), except for shares
of
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capital stock or other similar ownership interests of certain subsidiaries of
Parent that may be owned by certain nominee equity holders as required by the
applicable law of the jurisdiction of organization of such subsidiaries. There
are no securities of Parent or its subsidiaries convertible into or
exchangeable for, no options or other rights to acquire from Parent or its
subsidiaries, and no other contract, understanding, arrangement or obligation
(whether or not contingent) providing for the issuance or sale, directly or
indirectly, of any capital stock or other ownership interests in, or any other
equity securities of, any subsidiary of Parent. As of the date of this
Agreement, there are no outstanding contractual obligations of Parent or its
subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares
of capital stock or other ownership interests in any subsidiary of Parent.
(d) Authority; Noncontravention. Parent and Sub have the
requisite corporate power and authority to enter into this Agreement (and, in
the case of Parent, the Stockholder Agreements), and to consummate the
transactions contemplated by this Agreement (and, in the case of Parent, those
contemplated by the Stockholder Agreements). The execution and delivery of
this Agreement by Parent and Sub (and, in the case of Parent, the Stockholder
Agreements), and the consummation by Parent and Sub of the transactions
contemplated by this Agreement (and, in the case of Parent, those contemplated
by the Stockholder Agreements), have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement (and, in the
case of Parent, the Stockholder Agreements) has been duly executed and
delivered by Parent and Sub, and, assuming the due authorization, execution,
and delivery of this Agreement by the Company, constitutes a valid and binding
obligation of Parent and Sub, enforceable against Parent and Sub in accordance
with its terms, except as enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium and similar laws, both state and
federal, affecting the enforcement of creditors' rights or remedies in general
as from time to time in effect or (ii) the exercise by courts of equity powers.
The execution and delivery of this Agreement by Parent and Sub (and, in the
case of Parent, the Stockholder Agreements), do not, and the consummation by
Parent and Sub of the transactions contemplated by this Agreement (and, in the
case of Parent, the Stockholder Agreements) and compliance by Parent and Sub
with the provisions of this Agreement (and, in the case of Parent, the
Stockholder Agreements) will not, conflict with, or result in any violation of,
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of any Lien
upon any of the properties or assets of Parent or any of its subsidiaries under
any provision of (i) the Certificate of Incorporation or Bylaws of Parent or
Sub, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or license
applicable to Parent or Sub or their respective properties or assets and to
which Parent or Sub is a party as of the date of this Agreement or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any (A) statute, law, ordinance, rule or regulation
applicable to Parent or Sub or (B) judgment, order or decree applicable to
Parent, Sub or their respective properties or assets, other than, in the case
of clause (ii) and clause (iii)(A), any such conflicts, violations, defaults,
rights, losses or Liens that individually or in the aggregate would not (x)
have a material adverse effect on Parent, (y) impair in any material respect
the ability of Parent and Sub to perform their respective obligations under
this Agreement or (z) prevent or materially delay the consummation of any of
the transactions contemplated by this Agreement. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity is required to be
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made or obtained by Parent or Sub at or before the Effective Time in connection
with the execution and delivery of this Agreement (and, in the case of Parent,
the Stockholder Agreements) by Parent and Sub or the consummation by Parent and
Sub of the transactions contemplated by this Agreement (and, in the case of
Parent, those contemplated by the Stockholder Agreements), except for (1) the
filing of a premerger notification and report form by Parent under the HSR Act
and any applicable filings under the antitrust laws of any foreign country, (2)
the filing with the SEC of the Form S-4 and such reports under the Exchange Act
as may be required in connection with this Agreement or the Stockholder
Agreements and the transactions contemplated by this Agreement or the
Stockholder Agreements, (3) the filing of the Certificate of Merger with the
Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business and (4)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings, which if not obtained or made, would not,
individually or in the aggregate, have a material adverse effect on Parent or
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
(e) SEC Documents. Parent has filed all required
reports, schedules, forms, statements and other documents with the SEC between
September 30, 1994 and the date of this Agreement. All reports, schedules,
forms, statements and other documents filed by Parent with the SEC between
September 30, 1994 and the date of this Agreement (other than any exhibits to
such reports, schedules, forms, statements and documents) are collectively
referred to in this Agreement as the "Parent SEC Documents." As of the time
each of the Parent SEC Documents was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing), (i) the Parent SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and (ii) except to the extent that
information contained in any Parent SEC Document has been revised or superseded
by a later-filed Parent SEC Document, none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Parent included in the Parent SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly presented the
consolidated financial position of Parent as of the dates thereof and the
consolidated results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Between March 31, 1997 and the date of this Agreement, Parent
has not incurred any liabilities of the type required to be disclosed in the
liabilities column of a balance sheet prepared in accordance with U.S.
generally accepted accounting principles, except for (i) liabilities incurred
in the ordinary course of business, and (ii) liabilities that would not,
individually or in the aggregate, have a material adverse effect on Parent.
(f) Information Supplied. None of the information
supplied or to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time
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the Form S-4 is filed with the SEC, at any time it is amended or supplemented
or at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading, and (ii) the Proxy
Statement will, at the date it is first mailed to the Company's stockholders or
at the time of the Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Form S-4 will
comply as to form in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder, except that no
representation is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
specifically for inclusion or incorporation by reference in the Form S-4.
(g) Absence of Certain Changes or Events. Between March
31, 1997 and the date of this Agreement, there has not occurred (i) any
material adverse change in Parent, (ii) any material change by Parent in its
accounting methods, principles or practices except as required by concurrent
changes in U.S. generally accepted accounting principles, (iii) any material
reevaluation by Parent of any of its assets, including, without limitation,
writing down the value of capitalized inventory or writing off notes or
accounts receivable other than in the ordinary course, (iv) any declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to any of Parent's capital stock.
(h) Litigation. There is no suit, action or proceeding
pending, and no person has overtly threatened in a writing delivered to Parent
since January 1, 1997 to commence any suit, action or proceeding, against or
affecting Parent or any of its subsidiaries that would, individually or in the
aggregate, have a material adverse effect on Parent, nor is there any judgment,
decree, injunction, or order of any Governmental Entity or arbitrator
outstanding against, or, to the knowledge of Parent, pending investigation by
any Governmental Entity involving, Parent or any of its subsidiaries that
individually or in the aggregate would have a material adverse effect on
Parent.
(i) Contracts. As of the date of this Agreement,
there are no contracts or agreements that are of a nature required to be filed
by Parent as an exhibit to a Report on Form 10-K under the Exchange Act and the
rules and regulations promulgated thereunder. Neither Parent nor any of its
subsidiaries is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any lease, permit, concession,
franchise, license or any other contract, agreement, arrangement or
understanding to which any of them is a party or by which any of their
properties or assets is bound, except for violations or defaults that
individually or in the aggregate would not have a material adverse effect on
Parent.
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(j) Compliance with Laws.
(i) Parent and each of its subsidiaries is in
compliance with all Legal Provisions applicable to their business or
operations, except for instances of possible noncompliance that, individually
or in the aggregate, would not have a material adverse effect on Parent or
prevent or materially delay the consummation of the Merger. Parent and each of
its subsidiaries has in effect all Permits, necessary for them to own, lease or
operate their properties and assets and to carry on their business
substantially as now conducted, and there currently exists no default under, or
violation of, any such Permit, except for the lack of Permits and for defaults
under, or violations of, Permits which lack, default or violation individually
or in the aggregate would not have a material adverse effect on Parent. Between
January 1, 1997 and the date of this Agreement, Parent has not received any
written notice or other written communication from any Governmental Entity
alleging any violation of any Legal Provision by Parent (except for (A) notices
of violations which have been cured or corrected in all material respects, (B)
notices which have been rescinded or withdrawn, and (C) notices which would not
have a material adverse effect on Parent).
(ii) The term "Parent Business Facility" means any
property including the land, the improvements thereon, the groundwater
thereunder and the surface water thereon, that is or at any time has been
owned, operated, occupied, controlled or leased by Parent or any of its
subsidiaries in connection with the operation of its business. The term
"Parent Environmental Permit" means any approval, permit, license, clearance or
consent required to be obtained from any private person or any Governmental
Entity with respect to a Hazardous Materials Activity which is or was conducted
by Parent or any of its subsidiaries.
(iii) To the knowledge of Parent, no Hazardous
Materials are present on any Parent Business Facility currently owned,
operated, occupied, controlled or leased by Parent or any of its subsidiaries
except in such cases as would not reasonably be expected to have a material
adverse effect on Parent. There are no underground storage tanks, asbestos
which is friable or likely to become friable or PCBs present on any Parent
Business Facility currently owned, operated, occupied, controlled or leased by
Parent or any of its subsidiaries except in such cases as would not reasonably
be expected to have a material adverse effect on Parent.
(iv) Parent and each of its subsidiaries are
conducting all Hazardous Material Activities in compliance in all material
respects with all applicable Environmental Laws except where the failure to
comply would not have a material adverse effect on Parent. To the knowledge of
Parent after reasonable inquiry, the Hazardous Materials Activities of Parent
and each of its subsidiaries have not resulted in the exposure of any person to
a Hazardous Material in a manner which has resulted in said person currently
having a claim against Parent that is likely to be adversely determined against
Parent and that would reasonably be expected to have a material adverse effect
on Parent.
(v) The Parent Environmental Permits held by
Parent and each of its subsidiaries are all of the Environmental Permits
necessary for the continued conduct of any Hazardous Material Activity of
Parent and each of its subsidiaries as such activities are currently being
conducted,
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except for those permits the absence of which could not reasonably be expected
to result in a material adverse effect on Parent. All such Parent
Environmental Permits are valid and in full force and effect except where the
failure to be valid and in full force and effect would not have a material
adverse effect on Parent. Parent and its subsidiaries are in compliance in all
material respects with all covenants and conditions of any Parent Environmental
Permit which are in force with respect to their Hazardous Materials Activities,
except where the failure to comply with such covenants and conditions would not
have a material adverse effect on Parent. To the knowledge of Parent, no
circumstance exists which would reasonably be expected to cause any Parent
Environmental Permit to be revoked, modified, or rendered non-renewable upon
payment of the permit fee, except to the extent such revocation, modification,
or non-renewability would not have a material adverse effect on Parent.
(vi) No action, proceeding, revocation proceeding,
amendment procedure, writ, injunction or claim is pending against Parent or its
subsidiaries by any Governmental Entity, and no person has threatened in a
writing delivered to Parent since January 1, 1997 to commence any action,
proceeding, revocation proceeding or amendment procedure against Parent or its
subsidiaries, concerning or relating to any Parent Environmental Permit or any
Hazardous Materials Activity of Parent or any of its subsidiaries, or to any
Parent Business Facility currently owned, operated, occupied, controlled or
leased by Parent or any of its subsidiaries which could reasonably be expected
to have a material adverse effect on Parent.
(vii) To the knowledge of Parent after reasonable
inquiry, no action, proceeding or claim exists , and no person has overtly
threatened in a writing delivered to Parent since January 1, 1997 to commence
any action or proceeding, against any Disposal Site or against Parent or any of
its subsidiaries with respect to any transfer or release of Hazardous Materials
by Parent to a Disposal Site which could reasonably be expected to have a
material adverse effect on Parent.
(viii) Parent has delivered to the Company or made
available for inspection by the Company and its agents and employees all
material records in Parent's possession as of the date of this Agreement
concerning the current Hazardous Materials Activities of Parent and each of its
subsidiaries and all environmental audits and environmental assessments of any
Parent Business Facility conducted at the request of, or otherwise in the
possession of, Parent or any of its subsidiaries as of the date of this
Agreement.
(k) Labor Matters. As of the date of this Agreement,
there are no collective bargaining agreements or other labor union agreements
to which Parent or any of its subsidiaries is a party, or by which they are
bound. Parent and each of its subsidiaries are in compliance with all federal,
state and local laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and are not engaged in any unfair
labor practice except where the failure to comply, or the engaging in such
practice, would not have a material adverse effect on Parent. As of the date
of this Agreement, there is no unfair labor practice complaint against Parent
or any of its subsidiaries pending, and no person has overtly threatened in a
writing delivered to Parent since January 1, 1997 to commence and unfair labor
practices complaint before the National Labor Relations Board
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or the United States Department of Labor. There is no labor strike, slowdown
or stoppage in progress, and no person has overtly threatened in a writing
delivered to Parent since January 1, 1997 to commence any strike, slowdown or
stoppage against or involving Parent or any of its subsidiaries. No written
agreement restricts Parent or any of its subsidiaries from relocating, closing
or terminating any of its operations or facilities. Neither Parent nor any of
its subsidiaries has, in the past three years, experienced any labor strike,
slowdown or stoppage.
(l) Absence of Changes in Benefit Plans. Between March
31, 1997 and the date of this Agreement, there has not been any adoption or
amendment in any material respect by Parent or any of its subsidiaries of any
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
providing benefits for which Parent or any of its subsidiaries will be
responsible to any current or former employee, officer or director of Parent
(collectively, "Parent Benefit Plans").
(m) Taxes. As of the date of this Agreement, Parent has
filed all tax returns and reports required to be filed by it and has paid all
taxes that are shown on such tax returns as due and payable, and the most
recent financial statements contained in the Parent SEC Documents reflect an
adequate reserve for all taxes payable by Parent for all taxable periods and
portions thereof through the date of such financial statements. As of the date
of this Agreement, no material deficiencies for any taxes have been proposed,
asserted or assessed against Parent, nor is there, to the knowledge of Parent
after reasonable inquiry, any reasonable basis for the assertion of any such
deficiency. No requests for waivers of the time to assess any such taxes are
pending as of the date of this Agreement. No material special charges,
penalties, fines, liens, or similar encumbrances are owed by or pending against
Parent with respect to payment of or failure to pay any taxes. Parent is not a
party to any executory agreements extending the period for assessment or
collection of any taxes. Proper amounts have been withheld by Parent from
employee compensation payments for all periods in compliance with the tax
withholding provisions of applicable federal and state laws, except where the
failure to withhold proper amounts would not have a material adverse effect on
Parent. As of the date of this Agreement, none of the Federal income tax
returns of Parent have been examined by the United States Internal Revenue
Service for the fiscal years through September 30, 1996. Parent has not taken
any action nor does it have any knowledge of any fact or circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
(n) Title to Properties.
(i) Parent and each of its subsidiaries has good
title to, or valid leasehold interests in, all its material properties and
assets except for such as are no longer used or useful in the conduct of its
businesses or as have been disposed of in the ordinary course of business and
except for defects in title, easements, restrictive covenants and other
encumbrances that individually or in the aggregate would not materially
interfere with the ability of Parent and its subsidiaries to conduct their
business as currently conducted. All such material assets and properties,
other than assets and properties
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in which Parent or any of its subsidiaries has a leasehold interest, are free
and clear of all Liens except for Liens that (A) are created or arise in the
ordinary course of business, (B) are created, arise or exist under or in
connection with any of the contracts or other matters referred to in the Parent
Disclosure Schedule or in the Parent SEC Documents or the exhibits thereto, (C)
relate to any taxes or other governmental charges or levies that are not yet
due and payable, (D) relate to, or are created, arise or exist in connection
with, any legal proceeding that is being contested in good faith, or (E)
individually or in the aggregate would not materially interfere with the
ability of Parent and each of its subsidiaries to conduct their business as
currently conducted ("Parent Permitted Liens").
(ii) Parent and each of its subsidiaries are in
compliance in all material respects with the terms of all material leases to
which it is a party and under which they are in occupancy, and all such leases
are in full force and effect, except where the failure to be in compliance or
the failure to be in full force and effect would not have a material adverse
effect on Parent. As of the date of this Agreement, Parent and/or one or more
of its subsidiaries enjoys peaceful and undisturbed possession under all such
material leases, except for failures to do so that would not individually or in
the aggregate have a material adverse effect on Parent.
(o) Intellectual Property. Parent owns, or is validly
licensed or otherwise has the right to use all Parent Intellectual Property
Rights which are material to the conduct of the business of Parent and its
subsidiaries taken as a whole. As of the date of this Agreement, no suits,
actions or proceedings are pending, and no person has overtly threatened in a
writing delivered to Parent since January 1, 1997 to commence any suit, action
or proceeding, alleging that Parent or any of its subsidiaries is infringing
the rights of any person with regard to any Intellectual Property Right, except
for suits, actions or proceedings which, individually or in the aggregate,
would not have a material adverse effect on Parent. To the knowledge of
Parent, no person is infringing the rights of Parent or any of its subsidiaries
with respect to any Intellectual Property Right, except for infringements which
individually or in the aggregate, would not have a material adverse effect on
Parent. Neither Parent nor any of its subsidiaries is licensing, or otherwise
granting, to any third party, any rights in or to any Intellectual Property
Rights which would have a material adverse effect on Parent.
(p) Voting Requirements. Assuming the accuracy of the
representations and warranties of the Company in Sections 3.1(c) and 3.1
(m)(x), no vote of or other action by the holders of Parent's Common Stock (or
securities convertible into Parent's Common Stock) is required (by law, by the
Marketplace Rules of The Nasdaq Stock Market or otherwise) in connection with
the execution, delivery or performance of this Agreement or the consummation by
Parent of any of the transactions contemplated hereby.
(q) Brokers. No broker, investment banker, financial
advisor or other person, other than Xxxxxxxxxx Securities, the fees and
expenses of which will be paid by Parent, is entitled to any broker's, finder's
or financial advisor's fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent.
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(r) Opinion of Financial Advisor. Parent has received
the opinion of Xxxxxxxxxx Securities, dated the date hereof, to the effect
that, as of such date, the Merger (including the consideration to be paid by
Parent) is fair to Parent's stockholders from a financial point of view, a copy
of which opinion has been delivered to the Company for informational purposes
only.
(s) Accounting Matters. Parent has not taken or agreed
to take any action that would prevent the business combination to be effected
by the Merger to be accounted for as a pooling of interests.
(t) Product and Service Warranties. Between January 1,
1997 and the date of this Agreement, Parent has not received any written notice
pursuant to which any third party has made any claims against Parent or its
subsidiaries regarding any produce or service warranties sold or provided by
Parent or its subsidiaries, except for (i) claims which have been fully settled
and (ii) unresolved claims that would not have a material adverse effect on
Parent.
(u) Customers. As of the date of this Agreement, neither
Parent nor any of its subsidiaries has received any information from any
current material Customer that such Customer will not continue as a customer of
Parent, such subsidiary or the Company after the Closing or that any such
Customer intends to terminate or materially modify any such Customer Contract,
except where the termination or modification of a customer relationship would
not have a material adverse effect on Parent.
(v) Inventory. The inventory of Parent is in all
material respects of good and merchantable quality and is in all material
respects usable and saleable in the ordinary course of Parent's and its
subsidiaries' businesses, except for items of obsolete materials and materials
of below standard quality, substantially all of which have been written down to
realizable market value or for which adequate reserves have been provided.
(w) Interim Operations of Sub. Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
(x) Parent Common Stock. The Parent Common Stock to be
issued in connection with the Merger (including the Parent Common Stock to be
issued in accordance with Article II and the Parent Common Stock to be issued
in accordance with Section 5.6(b)) has been duly authorized by all necessary
corporate action, and when issued in accordance with this Agreement, will be
validly issued, fully paid and nonassessable and not subject to preemptive
rights, and will be freely tradable except for restrictions on transfer
(applicable to affiliates of the Company) required in order to preserve pooling
of interests accounting treatment of the Merger. Without limiting the
generality of the foregoing and subject to the provisions of Rule 145 under the
Securities Act, none of the shares of Parent Common Stock to be issued in
connection with the Merger will constitute "restricted securities" within the
meaning of Rule 144 under the Securities Act.
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ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.1 Conduct of Business by Parent and the Company.
(a) Conduct of Business by Parent. During the period
from the date of this Agreement to the Effective Time and except (i) to the
extent the Company shall otherwise consent in writing (which consent will not
be unreasonably withheld), (ii) as set forth in the Parent Disclosure Schedule
or (iii) as contemplated or permitted by or not inconsistent with this
Agreement, Parent shall carry on its businesses in the ordinary course
consistent with the manner as heretofore conducted and, to the extent
consistent therewith, use reasonable efforts to preserve intact its current
business organization, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with it. Without
limiting the generality of the foregoing, except as set forth in the Parent
Disclosure Schedule or as contemplated or permitted by or not inconsistent with
this Agreement, during the period from the date of this Agreement to the
Effective Time, Parent shall not, without the written consent of the Company
(which consent will not be unreasonably withheld):
(i) (x) declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its capital stock, (y) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (z) purchase, redeem or otherwise acquire
any shares of capital stock of Parent or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities;
(ii) amend its Restated Certificate of Incorporation
or Bylaws;
(iii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities (other than in the
ordinary course of business and consistent with past practice pursuant to stock
option plans, employee stock purchase plans and convertible indebtedness in
effect as of the date of this Agreement, or pursuant to acquisitions of
businesses involving the issuance by Parent of less than 1,000,000 shares in the
aggregate for all such acquisitions);
(iv) 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 (including through any of its subsidiaries), any business or
any corporation, partnership, joint venture, association or other business
organization or division thereof, except that this Section 4.1(a)(iv) shall not
prohibit Parent from effecting an acquisition of any other business if (A) such
acquisition would not materially affect the ability of Parent to, or materially
delay Parent's ability to, complete the transactions contemplated by this
Agreement, and (B) such acquisition would involve the issuance by Parent of
equity securities and, when
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considered together with all other acquisitions effected by Parent, would not
involve the issuance of more than 1,000,000 shares of Parent's capital stock or
securities convertible into or exercisable for more than 1,000,000 shares of
Parent's capital stock;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any substantial part of
its (or any of its subsidiaries') material properties, assets or business,
except sales made in the ordinary course of business and except for subjecting
any of its properties to Parent Permitted Liens;
(vi) make any material payments outside the ordinary
course of business for purposes of settling any dispute;
(vii) allow Parent or any of its subsidiaries, or any
significant portion of their respective businesses or assets, to be acquired (by
merger, tender offer, purchase or otherwise);
(viii) enter into (directly or through any subsidiary)
any transaction that is extraordinary in nature or magnitude (when compared to
the transactions historically entered into by Parent); or
(ix) authorize any of, or commit or agree to take any
of, the foregoing actions.
(b) Conduct of Business by the Company. During the
period from the date of this Agreement to the Effective Time and except (i) to
the extent Parent shall otherwise consent in writing (which consent will not be
unreasonably withheld), (ii) as set forth in the Company Disclosure Schedule or
(iii) as contemplated or permitted by or not inconsistent with this Agreement,
the Company shall carry on its businesses in the ordinary course consistent
with the manner as heretofore conducted and, to the extent consistent
therewith, use reasonable efforts to preserve intact its current business
organization, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with it. Without limiting the
generality of the foregoing, except as set forth in the Company Disclosure
Schedule or as contemplated or permitted by or not inconsistent with this
Agreement, during the period from the date of this Agreement to the Effective
Time, the Company shall not, without the written consent of Parent (which
consent will not be unreasonably withheld):
(i) (x) declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its capital stock, (y) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (z) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any other securities thereof or
any rights, warrants or options to acquire any such shares or other securities;
(ii) amend its Restated Certificate of Incorporation
or Bylaws;
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(iii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities (other than (A) the
sale of shares of Company Common Stock in the ordinary course to employees under
the Company's ESPP (B) the issuance of shares of Company Common Stock pursuant
to the conversion of the Convertible Debentures in accordance with the terms
thereof, (C) the issuance of shares of Company Common Stock upon the exercise of
Company Options outstanding on the date of this Agreement in accordance with the
present terms of such Company Options and the issuance of shares of Company
Common Stock upon the exercise of Company Options granted after the date of this
Agreement as permitted by this Agreement, and (D) the issuance of options to
purchase up to 50,000 shares of Common Stock under the stock option plans of the
Company (the "Company Option Plans");
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner (including through any of its subsidiaries), any business or
any corporation, partnership, joint venture, association or other business
organization or division thereof or (y) any asset except in the ordinary course
of business;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its (or any of
its subsidiaries') material properties, assets, or business except sales made in
the ordinary course of business and except for subjecting any of its properties
or assets to Company Permitted Liens;
(vi) (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person (other than a subsidiary of
the Company), issue or sell any debt securities or warrants or other rights to
acquire any debt securities of the Company, guarantee any debt securities of
another person (other than a subsidiary of the Company), enter into any "keep
well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, except for (i) short-term borrowings incurred in the ordinary
course of business consistent with past practice, (ii) borrowings pursuant to
existing credit facilities in the ordinary course of business or pursuant to any
modifications, renewals or replacements of such credit facilities (it being
understood that the maximum amount of borrowing which may be made under such
credit facilities may be increased by up to 20% of the current maximum amount)
and (iii) borrowings under a new credit facility to be entered into by the
Company, which borrowings will not exceed $32 million (of which approximately
$20 million will be used to refinance existing bank debt) or (z) make any loans,
advances or capital contributions to, or investments in, any other person other
than a subsidiary of the Company, and other than advances to employees in the
ordinary course of business consistent with past practice;
(vii) make or agree to make any new capital
expenditure or expenditures which are outside the ordinary course of business or
inconsistent with past practice;
(viii) make any material payments outside the ordinary
course of business for purposes of settling any dispute;
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(ix) except in the ordinary course of business,
modify, amend or terminate any material contract or agreement to which the
Company is a party or waive, release or assign any material rights or claims
thereunder;
(x) except as required to comply with applicable law
and except for actions which do not materially increase the Company's
compensation expense or benefits to employees taken as a whole, (A) adopt, enter
into, terminate or amend any Benefit Plan or other arrangement for the benefit
or welfare of any director, officer or current or former employee, (B) increase
in any manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee (except for normal increases of cash compensation
or cash bonuses in the ordinary course of business consistent with past
practice), (C) pay any benefit not provided for under any Benefit Plan, (D)
except as permitted in clause (B), grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Benefit Plan (including
the grant of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock or the removal of existing
restrictions in any Benefit Plans or agreements or awards made thereunder) or
(E) except as permitted in clauses (A) through (D), take any action to fund or
in any other way secure the payment of compensation or benefits under any
employee plan, agreement, contract or arrangement or Benefit Plan;
(xi) form any subsidiary of the Company;
(xii) allow any of its subsidiaries, or any
significant portion of their respective businesses or assets, to be acquired (by
merger, tender offer, purchase or otherwise);
(xiii) enter into (directly or through any subsidiary)
any transaction that is extraordinary in nature or magnitude (when compared to
the transactions historically entered into by the Company); or
(xiv) authorize any of, or commit or agree to take any
of, the foregoing actions.
(c) Certain Tax Matters. From the date hereof until the
Effective Time, (i) each of the Company and Parent will file all tax returns
and reports ("Post-Signing Returns") required to be filed by it (other than the
Company's federal and state tax return for the year ended September 30, 1996,
which will be filed promptly following the receipt by the Company of
information necessary for such return); (ii) each of the Company and Parent
will timely pay all taxes due and payable with respect to such Post-Signing
Returns that are so filed; (iii) each of the Company and Parent will promptly
notify the other of any action, suit, proceeding, claim or audit (collectively,
"Actions") pending against or with respect to such party in respect of any tax
where there is a reasonable possibility of a determination or decision which
would have a material adverse effect on the other party 's tax liabilities or
tax attributes, and the Company will not settle or compromise any such Action
without Parent's consent; and (iv) each of the Company and Parent will not make
any material tax election without the consent of the other (which consent will
not be unreasonably withheld).
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SECTION 4.2 No Solicitation.
(a) The Company shall not, nor shall it authorize or
instruct any of its officers, directors or employees or any investment banker,
attorney or other advisor or representative retained by it to, directly or
indirectly, (i) solicit, initiate or knowingly encourage the submission of any
Takeover Proposal (as hereinafter defined) by any person (other than Parent or
its affiliates or representatives) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any non-public information
with respect to, or take any other action intended or reasonably expected to
facilitate the making of any inquiry or proposal to the Company that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal by
any person (other than Parent or its affiliates or their respective
representatives); provided, however, that notwithstanding anything to the
contrary contained in this Section 4.2(a) or elsewhere in this Agreement, if,
at any time prior to receipt of the Stockholder Approval, the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that failure to do so would create a substantial risk of
liability for breach of its fiduciary duties to the Company's stockholders
under applicable law, the Company may, in response to a Takeover Proposal that
was unsolicited or that did not otherwise result from a breach of this Section
4.2(a), and subject to compliance with Section 4.2(c), (x) furnish nonpublic
information with respect to the Company and its subsidiaries to any person
pursuant to a customary and reasonable confidentiality agreement and (y)
participate in discussions and negotiations regarding such Takeover Proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any officer, director or
employee of the Company or any investment banker, attorney or other advisor or
representative of the Company, acting on behalf of and with the authorization
of the Company, shall be deemed to be a breach of this Section 4.2(a) by the
Company. For purposes of this Agreement, "Takeover Proposal" means any
proposal or offer from any person (other than Parent or its affiliates or their
respective representatives) for any acquisition by such person of a substantial
amount of assets of the Company (other than an acquisition of assets of the
Company in the ordinary course of business or as permitted under the terms of
this Agreement) having a fair market value (as determined by the Board of
Directors of the Company in good faith) in excess of 25% of the fair market
value of all the assets of the Company and its subsidiaries immediately prior
to such acquisition or more than a 25% interest in the total voting securities
of the Company or any tender offer or exchange offer that if consummated would
result in any person beneficially owning 25% or more of any class of equity
securities of the Company or any merger, consolidation, or business combination
of the Company with any unaffiliated third party, other than the transactions
contemplated by this Agreement or the Stockholder Agreements. Notwithstanding
anything to the contrary contained in this 4.2(a) or elsewhere in this
Agreement, at any time after the date hereof, the Company may file with the SEC
a report on Form 8-K with respect to this Agreement and may file a copy of this
Agreement and any related agreements as an exhibit to such report.
(b) Except as expressly permitted by this Section 4.2,
neither the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse
to Parent or Sub, the approval or recommendation by such Board of Directors or
any such committee of this Agreement or the Merger, (ii) approve or recommend
any Takeover Proposal or (iii) cause the Company to enter into any letter of
intent, agreement in principle,
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acquisition agreement or other similar agreement with respect to any Takeover
Proposal. Notwithstanding the foregoing or anything else contained in this
Agreement, prior to the adoption and approval of this Agreement and the
approval of the Merger by the holders of a majority of the shares of Company
Common Stock outstanding on the record date for the Stockholders Meeting, the
Board of Directors of the Company, to the extent it determines in good faith,
after consultation with outside counsel, that failure to do so would create a
substantial risk of liability for breach of its fiduciary duties to the
Company's stockholders under applicable law, may (1) withdraw or modify its
approval or recommendation of this Agreement or the Merger and/or (2) approve
or recommend any Takeover Proposal.
(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 4.2, the Company promptly shall
advise Parent orally and in writing of any request to the Company for nonpublic
information which the Company reasonably believes could lead to a Takeover
Proposal or of any Takeover Proposal submitted to the Company, or any inquiry
directed to the Company with respect to or which the Company reasonably
believes could lead to any Takeover Proposal, the material terms and conditions
of such request, Takeover Proposal or inquiry, and the identity of the person
making any such Takeover Proposal or inquiry. The Company will keep Parent
informed in all material respects of the status and details (including
amendments or proposed amendments) of any such Takeover Proposal or inquiry,
except to the extent that the Board of Directors of the Company determines in
good faith, after consultation with outside counsel, that to do so would create
a substantial risk of liability for breach of its fiduciary duties to the
Company's stockholders under applicable law.
(d) Nothing contained in this Section 4.2 or elsewhere in
this Agreement shall prohibit the Company from (i) taking and disclosing to its
stockholders a position contemplated by Rule 14d-9 or 14e-2(a) promulgated
under the Exchange Act or (ii) making any disclosure to the Company's
stockholders or any public announcement if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure to so disclose would be inconsistent with any applicable law, rule or
regulation or any duty of the Board of Directors; provided that the Company
shall not, except in accordance with the provisions of Section 4.2(b), withdraw
or modify, or propose to withdraw or modify, its recommendation of the Merger
or approve or recommend, or propose to approve or recommend, a Takeover
Proposal.
ARTICLE V
Additional Agreements
SECTION 5.1 Preparation of Form S-4 and Proxy Statement;
Stockholders Meeting.
(a) As soon as practicable following the date of this
Agreement, the Company and Parent shall prepare and the Company shall file with
the SEC the Proxy Statement and Parent shall prepare and file with the SEC the
Form S-4, in which the Proxy Statement will be included as a
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prospectus. Each of the Company and Parent shall use all reasonable efforts to
have the Form S-4 declared effective under the Securities Act as promptly as
practicable after such filing. To the extent that presenting this Agreement
and the Merger to the Company's stockholders would not violate or otherwise be
inconsistent with applicable law, the Company will use its reasonable efforts
to cause the Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act. Parent shall also take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified) required to
be taken under any applicable state securities laws or other applicable laws,
rules or regulations in connection with the issuance of Parent Common Stock
pursuant to Article II and Section 5.6(b) and under the Company Option Plans
and the Company ESPP. Each of Parent and the Company shall furnish all
information concerning itself to the other as may be reasonably requested in
connection with any such action and the preparation, filing and distribution of
the Proxy Statement.
(b) The Company will, as soon as reasonably practicable
following the date of this Agreement, establish a record date (which will be as
soon as practicable following the date of this Agreement) for, and, to the
extent that convening and holding a meeting would not violate or otherwise be
inconsistent with applicable law, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Stockholders Meeting") for the purpose of
approving and adopting this Agreement. Except to the extent the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that to do so would create a substantial risk of liability for
breach of its fiduciary duties to the Company's stockholders under applicable
law, the Company will, through its Board of Directors, recommend to its
stockholders approval and adoption of this Agreement.
SECTION 5.2 Letters of the Company's Accountants.
(a) The Company shall use its reasonable efforts to cause
to be delivered to Parent two letters from Deloitte and Touche LLP, the
Company's independent public accountants, one dated a date within three
business days before the date on which the Form S-4 shall become effective and
one dated a date within three business days before the Closing Date, each
addressed to Parent, in customary form, relating to the performance by Deloitte
& Touche LLP of its procedures with respect to the financial statements of the
Company contained in or incorporated by reference in the Form S-4.
(b) The Company shall use its reasonable efforts to cause
to be delivered to Parent a copy of a letter from Deloitte and Touche LLP,
addressed to the Company, dated as of the Closing Date (which letter may
contain customary qualifications and assumptions), to the effect that Deloitte
& Touche LLP believes that the Company would meet the applicable specific
criteria for a pooling of interests in accordance with generally accepted
accounting principles as such criteria relate only to the Company (and not to
Parent).
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SECTION 5.3 Letters of Parent's Accountants.
(a) Parent shall use reasonable efforts to cause to be
delivered to the Company two letters from Xxxxxx Xxxxxxxx LLP, Parent's
independent public accountants, one dated a date within three business days
before the date on which the Form S-4 shall become effective and one dated a
date within three business days before the Closing Date, each addressed to the
Company, in customary form, relating to the performance by Xxxxxx Xxxxxxxx LLP
of its procedures with respect to the financial statements of Parent contained
in or incorporated by reference in the Form S-4.
(b) Parent shall use its reasonable efforts to cause to
be delivered to the Company a copy of a letter from Xxxxxx Xxxxxxxx LLP,
addressed to Parent, dated as of the Closing Date (which letter may contain
customary qualifications and assumptions), stating that Xxxxxx Xxxxxxxx LLP
concurs with Parent's management's conclusion that no conditions exist that
would preclude Parent from accounting for the Merger as a pooling of interests
transaction under Opinion 16 of the Accounting Principles Board and applicable
SEC rules and regulations.
SECTION 5.4 Access to Information; Confidentiality. The Company
shall afford to Parent, and to Parent's officers, employees, accountants,
counsel, financial advisors and other representatives, reasonable access during
normal business hours during the period prior to the Effective Time or the
termination of this Agreement to all its properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall
furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of Federal or state securities laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request; provided, however, that (i) Parent shall not contact, and Parent shall
ensure that none of its officers, employees, accountants, counsel, financial
advisors or other representatives contacts, any employee of the Company or any
of its subsidiaries without the prior authorization of the Company's Chief
Executive Officer, Chief Operating Officer or Chief Financial Officer, and (ii)
Parent shall ensure that none of its employees, accountants, counsel, financial
advisors or other representatives interferes with or otherwise disrupts the
business or operations of the Company while exercising the rights provided
under this Section 5.4. Parent shall afford to the Company, and to the
Company's officers, employees, accountants, counsel, financial advisors and
other representatives, reasonable access during normal business hours during
the period prior to the Effective Time or the termination of this Agreement to
all its properties, books, contracts, commitments, personnel and records and,
during such period, Parent shall furnish promptly to the Company (a) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or state securities
laws and (b) all other information concerning its business, properties and
personnel as the Company may reasonably request; provided, however, that (i)
the Company shall not contact, and the Company shall ensure that none of its
officers, employees, accountants, counsel, financial advisors or other
representatives contacts, any employee of Parent or any of its subsidiaries
without the prior authorization of Parent's Chief Executive Officer, Chief
Operating Officer or Chief Financial Officer, and (ii) the Company shall ensure
that none of its employees, accountants, counsel, financial advisors or other
representatives interferes with or otherwise disrupts the business or
operations of Parent while exercising the rights provided under this Section
5.4. Parent and
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Company will each hold, and will cause their respective officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, any and all information received from the other party,
directly or indirectly, in confidence, in accordance with the respective
Confidentiality Agreements dated as of July 3, 1997.
SECTION 5.5 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to avoid an action or proceeding by any Governmental
Entity, (ii) the obtaining of all necessary consents, approvals or waivers from
third parties (other than consents, approval or waivers, the failure to obtain
which would not have a material adverse effect on the Company or Parent, as the
case may be), (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (iv) the execution and delivery of
any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement;
provided, however, that notwithstanding anything to the contrary contained in
this Section 5.5 or elsewhere in this Agreement, the Company shall not be
required to take any action or do any thing if the Board of Directors of the
Company determines in good faith, after consultation with outside counsel, that
the taking of such action or the doing of such thing would create a substantial
risk of liability for breach of its fiduciary duties to the Company's
stockholders under applicable law. In connection with and without limiting the
foregoing, the Company and its Board of Directors shall, if any state takeover
statute or similar statute or regulation is or becomes applicable to the Merger
or this Agreement, use all reasonable efforts to ensure that the Merger may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger and this Agreement.
(b) The Company shall give prompt notice to Parent of (i)
any representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate such that the condition set forth in Section 6.2(a) would
not be satisfied as a result thereof, or (ii) the failure by it to comply with
or satisfy in any material respect any covenant or agreement to be complied
with or satisfied by it under this Agreement such that the condition set forth
in Section 6.2(b) would not be satisfied as a result thereof; provided,
however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement. Parent shall give prompt
notice to the Company of (i) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate such that the
condition set forth in Section 6.3(a) would not be satisfied as a result
thereof or (ii) the failure by it to comply with or satisfy
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in any material respect any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement such that the condition set forth
in Section 6.3(b) would not be satisfied as a result thereof; provided,
however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION 5.6 Stock Options and Other Employee Benefits.
(a) Subject to Section 5.6(b), Parent and the Company
shall take all actions necessary to implement the provisions of the Company
Option Plans and the agreements evidencing Company Options, including the
provisions therein relating to acceleration and termination.
(b) The Company shall cause to be delivered to Parent,
prior to the Effective Time, a list specifying those Company Options (the
"Specified Options") with respect to which Parent is to issue shares of Parent
Common Stock pursuant to this Section 5.6(b) as of the Effective Time. As of
the Effective Time, Parent shall issue, with respect to each Specified Option
that remains unexercised as of the Effective Time, in the name of the holder
thereof, a number of shares of Parent Common Stock equal to:
A * B - A * C
-----
D
where:
A = the maximum number of shares of Company Common Stock purchasable
immediately prior to the Effective Time upon exercise of the
applicable Specified Option
B = the Exchange Ratio
C = the per share exercise price of the applicable Specified Option
D = the per share closing price of Parent Common Stock on the Nasdaq
National Market (as reported in The Wall Street Journal or, if not
reported thereby, any other authoritative source), on the Closing Date
No certificates or scrip representing fractional shares of Parent Common Stock
shall be issued in connection with the issuance of Parent Common Stock pursuant
to this Section 5.6(b). Any holder of a Specified Option who would otherwise
have been entitled to receive a fraction of a share of Parent Common Stock in
connection with the issuance of Parent Common Stock pursuant to this Section
5.6(b)(after aggregating all fractional shares of Parent Common Stock that
otherwise would be received by such holder pursuant to this Section 5.6(b))
shall receive, in lieu thereof, cash (without interest) in an amount, less the
amount of any withholding taxes which may be required thereon, equal to such
fraction of a share of Parent Common Stock multiplied by the per share closing
price of Parent Common
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Stock on the Nasdaq National Market, as reported in The Wall Street Journal
(or, if not reported thereby, any other authoritative source), on the Closing
Date. Parent agrees to use reasonable efforts to take such actions as are
necessary to provide for the reservation, issuance and listing of Parent Common
Stock to be issued pursuant to this Section 5.6(b).
(c) Subject to Section 5.6(b), all Company Option Plans
shall terminate as of the Effective Time, and the Company shall ensure that
following the Effective Time no holder of a Company Option or any participant
in any Company Option Plan shall have any right thereunder to acquire any
capital stock of the Company.
(d) Parent shall ensure that all employees of the Company
and all employees of each of the Company's subsidiaries are allowed and are
eligible to participate in Parent's employee benefit plans after the Effective
Time, to the same extent as if they were employees of Parent. Without limiting
the generality of the foregoing, (i) to the extent that any employee of the
Company or any of the Company's subsidiaries becomes eligible to participate in
any employee benefit plan of Parent after the Effective Time, Parent, the
Surviving Corporation and their subsidiaries shall credit such employee's
service with the Company or its subsidiaries, to the same extent as such
service was credited under the similar employee benefit plans of the Company
and its subsidiaries immediately prior to the Effective Time, for purposes of
determining eligibility to participate in and vesting under, and for purposes
of calculating the benefits under, such employee benefit plan of Parent, and
(ii) to the extent permitted by such employee benefit plan of Parent and
applicable law, Parent, the Surviving Corporation and its subsidiaries shall
waive any pre-existing condition limitations, waiting periods or similar
limitations under such employee benefit plan of Parent and shall provide each
such employee with credit for any co-payments previously made and any
deductibles previously satisfied.
(e) At the Effective Time, each outstanding right under
the currently ongoing "offering period", to purchase Company Common Stock under
the Company ESPP (an "Assumed Purchase Right") shall be deemed to constitute a
purchase right to acquire, on the same terms and conditions as were applicable
under the Company ESPP immediately prior to the Effective Time, a number of
shares of Parent Common Stock determined as provided in the Company ESPP except
that the purchase price of such shares of Parent Common Stock under each
Assumed Purchase Right shall be eighty-five percent (85%) of the lower of (i)
the quotient determined by dividing the fair market value of the Company Common
Stock on the offering date of each offering period that is ongoing as of the
Effective Time by the Exchange Ratio or (ii) the fair market value of the
Parent Common Stock on each exercise date occurring after the Effective Time
with respect to each offering period that is ongoing as of the Effective Time.
The Assumed Purchase Rights, in accordance with their terms, shall be subject
to further adjustment upon a stock split, stock dividend, recapitalization or
similar transaction after the Effective Time. As soon as practicable after the
Effective Time (and in any event within 5 days after the Effective Time),
Parent shall deliver to the participants in the Company ESPP an appropriate
notice setting forth such participants' rights pursuant thereto and stating
that the Assumed Purchase Rights pursuant to the Company ESPP shall continue in
effect on the same terms and conditions.
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(f) As soon as reasonably practical (and in any event
within five days) after the Effective Time, Parent shall file a registration
statement on Form S-8 with respect to the Assumed Purchase Rights and the
shares of Parent Common Stock issuable under the Company ESPP, and shall
maintain the effectiveness of such registration statement thereafter until the
later of the date on which no Assumed Purchase Rights remain outstanding or the
Company ESPP is terminated.
(g) Parent shall reserve sufficient shares of Parent
Common Stock for issuance with respect to the employee benefit plans referred
to in this Section 5.6.
(h) This Section 5.6 will survive the consummation of the
Merger and the Effective Time, is intended to benefit and may be enforced by
each of the persons who participate in any of the employee benefit plans
referred to in this Section 5.6, and will be binding on all successors and
assigns of Parent and the Surviving Corporation.
SECTION 5.7 Indemnification and Insurance.
(a) From and after the Effective Time, Parent will cause
the Surviving Corporation to fulfill and honor in all respects the obligations
of the Company pursuant to (i) each indemnification agreement currently in
effect between the Company and each person who is or was a director or officer
of the Company at or prior to the Effective Time and (ii) any indemnification
provision under the Company's Restated Certificate of Incorporation or By-Laws
as each is in effect on the date hereof (the persons to be indemnified pursuant
to the agreements or provisions referred to in clauses (i) and (ii) of this
Section 5.7(a) shall be referred to as, collectively, the "Indemnified
Parties"). The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
exculpation from liability set forth in the Company's Restated Certificate of
Incorporation and By-Laws on the date of this Agreement, which provisions shall
not be amended, repealed or otherwise modified for a period of six years after
the Effective Time in any manner that would adversely affect the rights
thereunder of any Indemnified Party.
(b) Without limiting the provisions of Section 5.7(a),
during the period ending six years after the Effective Time, Parent will
indemnify and hold harmless each Indemnified Party against and from any costs
or expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, to the extent such claim, action, suit,
proceeding or investigation arises out of or pertains to (1) any action or
omission or alleged action or omission in his or her capacity as a director or
officer of the Company or any of its subsidiaries (regardless of whether such
action or omission, or alleged action or omission, occurred prior to, on or
after the Closing Date) or (2) any of the transactions contemplated by this
Agreement; provided, however, that if, at any time prior to the sixth
anniversary of the Effective Time, any Indemnified Party delivers to Parent a
written notice asserting a claim for indemnification under this Section 5.7(b),
then the claim asserted in such notice shall survive the sixth anniversary of
the Effective Time until such time as such claim is fully and finally resolved.
In the event of any such claim, action, suit, proceeding or investigation, (i)
Parent will have the right to control the defense thereof after the Effective
Time (it
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being understood that, by electing to control the defense thereof, Parent will
be deemed to have waived any right to object to the Indemnified Parties'
entitlement to indemnification hereunder with respect thereto), (ii) any
counsel retained by the Indemnified Parties with respect to the defense thereof
for any period after the Effective Time must be reasonably satisfactory to
Parent, and (iii) after the Effective Time, Parent will pay the reasonable fees
and expenses of such counsel, promptly after statements therefor are received
(provided that in the event that any Indemnified Party is not entitled to
indemnification hereunder, any amounts advanced on his or her behalf shall be
remitted to the Surviving Corporation); provided, however, that neither Parent
nor the Surviving Corporation nor any Indemnified Party, will be liable for any
settlement effected without its express written consent. The Indemnified
Parties as a group may retain only one law firm (in addition to local counsel)
to represent them with respect to any single action unless counsel for any
Indemnified Party determines in good faith that, under applicable standards of
professional conduct, a conflict exists or is reasonably likely to arise on any
material issue between the positions of any two or more Indemnified Parties.
Notwithstanding anything to the contrary contained in this Section 5.7(b) or
elsewhere in this Agreement, Parent agrees that it will not settle or
compromise or consent to the entry of any judgment or otherwise seek
termination with respect to any claim, action, suit, proceeding or
investigation for which indemnification may be sought under this Agreement
unless such settlement, compromise, consent or termination includes an
unconditional release of all Indemnified Parties from all liability arising out
of such claim, action, suit, proceeding or investigation.
(c) For six years after the Effective Time, Parent shall
maintain in effect the current level and scope of directors' and officers'
liability insurance covering those persons who are currently covered by the
Company's directors' and officers' liability insurance policy (a copy of which
has been heretofore delivered to Parent); provided, however, that in no event
shall Parent be required to expend in any one year an amount in excess of 150%
of the annual premium currently paid by the Company for such insurance, and
provided, further, that if the annual premiums of such insurance coverage
exceed such amount, Parent shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount.
(d) Parent and the Surviving Corporation jointly and
severally agree to pay all expenses, including attorneys' fees, that may be
incurred by the Indemnified Parties in enforcing the indemnity and other
obligations provided for in this Section 5.7.
(e) This Section 5.7 shall survive the consummation of
the Merger and the Effective Time, is intended to benefit and may be enforced
by the Company, Parent, the Surviving Corporation and the Indemnified Parties,
and shall be binding on all successors and assigns of Parent and the Surviving
Corporation.
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SECTION 5.8 Fees and Expenses.
(a) All fees and expenses incurred in connection with the
Merger, this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such fees or expenses, whether or not the
Merger is consummated, except that expenses incurred in connection with
printing and mailing the Proxy Statement and the Form S-4 shall be shared
equally by Parent and the Company.
(b) In the event that this Agreement is validly
terminated pursuant to Section 7.1(b)(iv) and Parent shall not have materially
breached this Agreement, the Company shall pay to Parent a fee in the aggregate
amount of $7,500,000, in cash, in immediately available funds, according to the
following schedule:
(i) promptly, but in no event later than five business
days after the date of such termination, the Company shall pay to Parent the
amount of $2,500,000;
(ii) on the date that is 180 days after the date of
such termination, the Company shall pay to Parent the amount of $2,500,000;
provided, however, that if, prior to such 181st day, the Company shall
consummate the transaction contemplated by a Superior Proposal accepted by the
Company, then the Company shall pay to Parent such $2,500,000 amount on the date
of the consummation of such transaction; and
(iii) on the date that is 270 days after the date of
such termination, the Company shall pay to Parent the amount of $2,500,000;
provided, however, that if, prior to such 270th day, the Company shall
consummate the transaction contemplated by a Superior Proposal accepted by the
Company, then the Company shall pay to Parent such $2,500,000 amount on the date
of the consummation of such transaction.
In no event shall the receipt by the Company of any Superior Proposal or any
consummation of any transaction by the Company be a condition to any obligation
of the Company pursuant to this Section 5.8(b). For purposes of this
Agreement, a "Superior Proposal" means any bona fide proposal made by a third
party to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of the voting power of the Company Common
Stock or all or substantially all the assets of the Company and otherwise on
terms which the Board of Directors of the Company determines in its good faith
judgment (after consultation with its financial advisor) to be more favorable
to the Company's stockholders than the Merger and for which financing, to the
extent required, is then committed or which, in the good faith judgment of the
Board of Directors of the Company, is capable of being obtained by such third
party.
SECTION 5.9 Public Announcements. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before
issuing, and to the extent reasonably practicable, give each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, and shall not
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issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange or national securities quotation system. The parties agree that the
initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form heretofore agreed to by the
parties.
SECTION 5.10 Affiliates.
(a) Prior to the Closing Date, the Company shall
deliver to Parent a letter identifying all persons who in the Company's
judgment are or may be deemed to be, at the time this Agreement is submitted
for approval to the stockholders of the Company, "affiliates" of the Company
for purposes of Rule 145 under the Securities Act or for purposes of qualifying
the Merger for pooling of interests accounting treatment under Opinion 16 of
the Accounting Principles Board and applicable SEC rules and regulations. The
Company shall use its reasonable efforts to cause each such person to deliver
to Parent at least 30 days prior to the Closing Date a written agreement
substantially in the form attached as Exhibit A hereto.
(b) As soon as practicable after the execution of
this Agreement, Parent shall deliver to the Company a letter identifying all
persons who, in Parent's reasonable judgment, are or may be deemed to be, as of
the date of such letter, "affiliates" of Parent under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations. Parent
shall use its reasonable efforts to cause each such person to deliver to the
Company at least 30 days prior to the Closing Date a written agreement
substantially in the form of Exhibit B hereto.
SECTION 5.11 Nasdaq National Market Listing. Parent shall use its
reasonable efforts to cause the shares of Parent Common Stock to be issued
pursuant to Article II and Section 5.6(b), and such other shares of Parent
Common Stock required to be reserved for issuance with respect to the Company
ESPP and the Convertible Debentures, to be approved for listing on the Nasdaq
National Market, subject to official notice of issuance, prior to the Closing
Date.
SECTION 5.12 Pooling of Interests. Each of the Company and Parent
will use reasonable efforts to cause the Merger to be accounted for as a
pooling of interests under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations, and such accounting treatment to be
accepted by each of the Company's and Parent's independent public accountants,
and by the SEC, respectively, and each of the Company and Parent agrees that it
will voluntarily take no action that would cause such accounting treatment not
to be obtained.
SECTION 5.13 Stop Transfer. The Company shall not register the
transfer of any Certificate representing any Subject Shares (as defined in the
Stockholder Agreements), unless such transfer is made to Parent or Sub or
otherwise in compliance with the Stockholder Agreements.
SECTION 5.14 Tax Treatment. Each of Parent and the Company shall
not (before or after the Effective Time) take any action and shall not (before
or after the Effective Time) fail to take any action
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which action or failure to act would prevent, or would be reasonably likely to
prevent, the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code, and each shall use reasonable efforts to obtain the
opinions of counsel referred to in Sections 6.2(d) and 6.3(d), respectively.
SECTION 5.15 Convertible Debentures. Parent shall take such action
(if any) as may be required by the indenture relating to the Convertible
Debentures in connection with the consummation of the Merger. Promptly after
the Effective Time, Parent shall either (i) commence a tender offer for the
outstanding Company Convertible Debentures at a price not less than the
prevailing market price for such Convertible Debentures or (ii) cause the
redemption of such Convertible Debentures in accordance with the redemption
provisions of the indenture relating thereto. Until the Convertible Debentures
are acquired or redeemed by Parent or the Company, Parent shall reserve
sufficient shares of Parent Common Stock for issuance upon conversion of the
Convertible Debentures.
ARTICLE VI
Conditions Precedent
SECTION 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been
approved and adopted by the affirmative vote of the holders of a majority of
the shares of Company Common Stock outstanding as of the record date for the
Stockholders Meeting.
(b) Nasdaq Market Listing. The shares of Parent Common
Stock issuable to the Company's securityholders pursuant to Article II and
Section 5.6(b), shall have been approved for listing on the Nasdaq National
Market, subject to official notice of issuance.
(c) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been terminated
or shall have expired.
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any U.S. federal or state court of competent jurisdiction or other material
legal restraint or prohibition issued or promulgated by a U.S. federal or state
Governmental Entity preventing the consummation of the Merger shall be in
effect.
(e) Form S-4. The Form S-4-shall have become effective
under the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
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(f) Pooling Letters. The Company shall have received
from Deloitte & Touche LLP, independent accountants for the Company, a letter
addressed to the Company dated the Closing Date (which may contain customary
qualifications and assumptions) to the effect that Deloitte & Touche LLP
believes that the Company would meet the applicable specific criteria for a
pooling of interests in accordance with generally accepted accounting
principles as such criteria relate only to the Company (and not to Parent),
and Parent shall have been provided with a copy of such letter; and Parent
shall have received from Xxxxxx Xxxxxxxx LLP, independent accountants for
Parent, a letter dated the Closing Date (which may contain customary
qualifications and assumptions) to the effect that Xxxxxx Xxxxxxxx LLP concurs
with Parent's management's conclusion that no conditions exist that would
preclude Parent from accounting for the Merger as a pooling of interests, and
the Company shall have been provided with a copy of such letter.
SECTION 6.2 Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
following conditions:
(a) Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement (excluding any
representation or warranty that refers specifically to "the date of this
Agreement," "the date hereof" or any other date other than the Closing Date)
shall be accurate in all material respects as of the Closing Date as if made on
and as of the Closing Date (it being understood that, for purposes of
determining the accuracy of such representations and warranties as of the
Closing Date, (i) any inaccuracy that does not have a material adverse effect
on the Company shall be disregarded, (ii) any inaccuracy that results from or
relates to general business, economic or industry conditions shall be
disregarded, and (iii) any inaccuracy that results from or relates to the
taking of any action contemplated or permitted by this Agreement or the
announcement or pendency of the Merger shall be disregarded).
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing Date.
(c) Letters from Company Affiliates. Parent shall have
received from each person named in the letter referred to in Section 5.10(a) an
executed copy of an agreement substantially in the form of Exhibit A hereto.
(d) Tax Opinion. The opinion of Xxxxxx Xxxxxxx Xxxxxxxx
& Xxxxxx, Professional Corporation, counsel to Parent, in form and substance
reasonably satisfactory to Parent, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(A) of the Code,
and based on certain letters provided by Parent and Sub and the Company,
respectively, in customary form dated on or about the date that is two business
days prior to the date the Proxy Statement is first mailed to stockholders of
the Company, shall have been delivered to Parent and shall not have been
withdrawn or modified in any material respect ; provided, however, that if
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, does not render
such opinion or withdraws or modifies such opinion, this condition shall
nonetheless be deemed to be satisfied if counsel to the Company renders such
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opinion to Parent. In rendering such opinion, such firm may rely on such
representations, warranties and certificates as it deems reasonable or
appropriate under the circumstances.
(e) Noncompetition Agreement. At or before the Effective
Time, the Company and the Company's Chairman and Chief Executive Officer shall
have executed a Noncompetition Agreement in substantially the form attached
hereto as Exhibit C.
SECTION 6.3 Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
following conditions:
(a) Representations and Warranties. The representations
and warranties of Parent and Sub set forth in this Agreement (excluding any
representation or warranty that refers specifically to "the date of this
Agreement," "the date hereof" or any other date other than the Closing Date)
shall be accurate in all material respects as of the Closing Date as if made on
and as of the Closing Date (it being understood that, for purposes of
determining the accuracy of such representations and warranties as of the
Closing Date, (i) any inaccuracy that does not have a material adverse effect
on Parent or Sub shall be disregarded, (ii) any inaccuracy that results from or
relates to general business, economic or industry conditions shall be
disregarded, and (iii) any inaccuracy that results from or relates to the
taking of any action contemplated or permitted or the announcement or pendency
of the Merger by this Agreement shall be disregarded).
(b) Performance of Obligations of Parent and Sub. Parent
and Sub shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing Date.
(c) Tax Opinion. The opinion of Xxxxxx Godward LLP,
counsel to the Company, in form and substance reasonably satisfactory to the
Company, to the effect that the Merger will constitute a reorganization within
the meaning of Section 368(A) of the Code, and based on certain letters
provided by Parent and Sub and the Company, respectively, in customary form
dated on the date that is two business days prior to the Proxy Statement is
first mailed to stockholders of the Company, shall have been delivered to the
Company and shall not have been withdrawn or modified in any material respect;
provided, however, that if Xxxxxx Godward LLP does not render such opinion or
withdraws or modifies such opinion, this condition shall nonetheless be deemed
to be satisfied if counsel to Parent renders such opinion to the Company. In
rendering such opinion, such firm may rely on such representations, warranties
and certificates as it deems reasonable or appropriate under the circumstances.
(d) Letters from Parent Affiliates. The Company shall
have received from each person named in the letter referred to in Section
5.10(b) an executed copy of an agreement substantially in the form of Exhibit B
hereto.
(e) Indenture. Parent shall have performed all
obligations required to performed by it pursuant to the first sentence of
Section 5.15.
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ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.1 Termination. This Agreement may be terminated, and
the Merger contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after approval of matters presented in
connection with the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent, Sub and the
Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated
by December 31, 1997 for any reason; provided, however, that the right to
terminate this Agreement under this Section 7.1(b)(i) shall not be available to
any party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to occur on or before such date if such
action or failure to act constitutes a wilful and material breach of this
Agreement;
(ii) if any temporary restraining order,
preliminary or permanent injunction or other order issued by any U.S. federal
or state court of competent jurisdiction or other material legal restraint or
prohibition issued or promulgated by a U.S. federal or state Governmental
Entity having any of the effects set forth in Section 6.1(d) shall be in effect
and shall have become final and nonappealable;
(iii) if (A) the Stockholders Meeting (including
any adjournments thereof) shall have been held and completed and the Company's
stockholders shall have taken a final vote on a proposal to approve and adopt
this Agreement and to approve the Merger, and (B) the adoption and approval of
this Agreement and the approval of the Merger by the holders of a majority of
the shares of Company Common Stock outstanding on the record date for the
Stockholders Meeting shall not have been obtained; or
(iv) if (A) the Board of Directors of the Company
or any committee thereof shall have withheld, withdrawn or modified in a manner
adverse to Parent its approval or recommendation of the Merger, or approved or
recommended any Superior Proposal or (B) the Board of Directors of the Company
shall have resolved to take any of the foregoing actions;
(c) by the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any such representation or warranty of Parent shall have
become inaccurate, in either case such that the conditions set forth in Section
6.3(a) or Section 6.3(b), as the case may be, would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall
have become inaccurate; provided, that if such inaccuracy in
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Parent's representations and warranties or breach by Parent is curable by
Parent, then (i) the Company may not terminate this Agreement under this
Section 7.1(c) with respect to a particular breach or inaccuracy prior to or
during the 45-day period commencing upon delivery by the Company of written
notice to Parent describing such breach or inaccuracy, provided Parent
continues to exercise reasonable efforts to cure such breach or inaccuracy and
(ii) the Company may not, in any event, terminate this Agreement under this
Section 7.1(c) if such inaccuracy or breach shall have been cured in all
material respects; and, provided further that the Company may not terminate
this Agreement pursuant to this Section 7.1(c) if it shall have wilfully and
materially breached this Agreement; or
(d) by Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement, or if any such representation or warranty of the Company shall have
become inaccurate, in either case such that the conditions set forth in Section
6.2(a) or Section 6.2(b), as the case may be, would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall
have become inaccurate; provided, that if such inaccuracy in the Company's
representations and warranties or breach by the Company is curable by the
Company, then (i) Parent may not terminate this Agreement under this Section
7.1(d) with respect to a particular breach or inaccuracy prior to or during the
45-day period commencing upon delivery by Parent of written notice to the
Company describing such breach or inaccuracy, provided the Company continues to
exercise reasonable efforts to cure such breach or inaccuracy and (ii) Parent
may not, in any event, terminate this Agreement under this Section 7.1(d) if
such inaccuracy or breach shall have been cured in all material respects; and,
provided further that Parent may not terminate this Agreement pursuant to this
Section 7.1(d) if it shall have wilfully and materially breached this
Agreement.
SECTION 7.2 Effect of Termination. In the event of termination
of this Agreement by either the Company or Parent as provided in Section 7.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other than
the provisions of the last sentence of Section 5.4, Section 5.8, Section 5.9,
this Section 7.2 and Article VIII and except to the extent that such
termination results from the wilful and material breach by a party of any of
its representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 7.3 Amendment. This Agreement may be amended by the
parties hereto at any time before or after any required approval of matters
presented in connection with the Merger by the stockholders of the Company;
provided, however, that after any such approval, there shall be made no
amendment that by law requires further approval by such stockholders without
the further approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION 7.4 Extension; Waiver. At any time prior to the
Effective Time, any party 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, (b) waive any inaccuracies in the representations and warranties made
to such party pursuant to this Agreement or in any document delivered pursuant
hereto or (c) subject to the proviso of Section 7.3, 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 to any such extension
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or waiver shall be valid only if set forth in an instrument in writing signed
on behalf of such party. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of such rights.
ARTICLE VIII
General Provisions
SECTION 8.1 Nonsurvival of Representations and Warranties. None
of the representations or warranties contained in this Agreement or in any
certificate or instrument delivered pursuant hereto shall survive the Effective
Time. This Section 8.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
SECTION 8.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of delivery)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
if to Parent or Sub, to:
Sanmina Corporation
000 Xxxx Xxxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: Jure Sola
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxx
if to the Company, to:
Elexsys International, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
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with a copy to:
Cooley Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx
SECTION 8.3 Definitions. For purposes of this Agreement:
an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
an "agreement," "arrangement," "contract," "commitment,"
"plan," "purchase order," "understanding" or "undertaking" when used in this
Agreement shall mean a legally binding, written agreement, arrangement,
contract, commitment, plan, purchase order, understanding or undertaking, as
the case may be;
"material adverse change" or "material adverse effect" means,
when used in connection with the Company or Parent, any change or effect that
is materially adverse to the business, financial condition or results of
operations of either the Company and its subsidiaries or Parent and its
subsidiaries, taken as a whole, as the case may be;
"person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
a "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by such first person;
SECTION 8.4 Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
SECTION 8.5 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 and delivered to the other parties.
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SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the Confidentiality Agreement (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement and the Confidentiality Agreement and (b) except for the provisions
of Article II, Section 5.6, Section 5.7 and Section 5.14 are not intended to
confer upon any person other than the parties any rights or remedies.
SECTION 8.7 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
SECTION 8.8 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
SECTION 8.9 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in any Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any court of the United States located in the State of
Delaware or of any Delaware state court in the event any dispute arises out of
this Agreement or the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or the transactions contemplated by
this Agreement in any court other than a court of the United States located in
the State of Delaware or a Delaware state court.
SECTION 8.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
SANMINA CORPORATION
By:________________________________
Name:
Title:
SANM ACQUISITION SUBSIDIARY, INC.
By:________________________________
Name:
Title:
ELEXSYS INTERNATIONAL, INC.
By:________________________________
Name:
Title:
52
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 22, 1997
AMONG
SANMINA CORPORATION
SANM ACQUISITION SUBSIDIARY, INC.
AND
ELEXSYS INTERNATIONAL, INC.
53
TABLE OF CONTENTS
PAGE
ARTICLE I The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.5 Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.6 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II Effect of the Merger on the Capital Stock of the Constituent Corporations; Exchange of Certificates . 3
SECTION 2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.1 Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . 6
(a) Organization, Standing and Corporate Power . . . . . . . . . . . . . . . . . . . . . . 6
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(g) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . 10
(h) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(i) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(j) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(k) Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(l) Absence of Changes in Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 13
(m) ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(n) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(o) No Excess Parachute Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(p) Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(q) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(r) Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(s) State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(t) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(u) Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(v) Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(w) Equipment and Other Personal Property Leases . . . . . . . . . . . . . . . . . . . . . 18
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TABLE OF CONTENTS
(CONTINUED)
PAGE
(x) Product and Service Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(y) Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(z) Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.2 Representations and Warranties of Parent and Sub. . . . . . . . . . . . . . . . . . . 18
(a) Organization, Standing and Corporate Power . . . . . . . . . . . . . . . . . . . . . . 19
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(e) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(f) Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(g) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . 22
(h) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(i) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(j) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(k) Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(l) Absence of Changes in Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 25
(m) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(n) Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(o) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(p) Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(q) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(r) Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(s) Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(t) Product and Service Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(u) Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(v) Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(w) Interim Operations of Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(x) Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE IV Covenants Relating to Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.1 Conduct of Business by Parent and the Company . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.2 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE V Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.1 Preparation of Form S-4 and Proxy Statement; Stockholders Meeting . . . . . . . . . . 33
SECTION 5.2 Letters of the Company's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.3 Letters of Parent's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.4 Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 35
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 5.5 Reasonable Efforts; Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.6 Stock Options and Other Employee Benefits . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.7 Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.8 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.9 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
SECTION 5.10 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.11 Nasdaq National Market Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.12 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.13 Stop Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.14 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.15 Convertible Debentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VI Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . 43
SECTION 6.2 Conditions to Obligations of Parent and Sub . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.3 Conditions to Obligation of the Company . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII Termination, Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.1 Nonsurvival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.3 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.9 Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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TABLE OF CONTENTS
(CONTINUED)
EXHIBIT A Elexsys International, Inc. Affiliate Agreement
EXHIBIT B Sanmina Corporation Affiliate Agreement
EXHIBIT C Noncompetition Agreement
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EXHIBIT A
ELEXSY INTERNATIONAL, INC. AFFILIATE AGREEMENT
This AFFILIATE AGREEMENT (this "Agreement") is made as of __________,
1997, between Sanmina Corporation, a Delaware corporation ("Parent"), Elexsys
International, Inc., a Delaware corporation ("Company"), and the undersigned
(the "Affiliate").
WHEREAS, Parent and Company have entered into an Agreement and Plan of
Merger ("Merger Agreement") pursuant to which Parent and Company intend to
enter into a business combination transaction to pursue their long term
business strategies (the "Merger") (capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to them in the
Merger Agreement);
WHEREAS, pursuant to the Merger, at the Effective Time, all of the
issued and outstanding shares of Company Common Stock, including any shares
owned by Affiliate as of the Effective Time, will be converted into shares of
Parent Common Stock as set forth in the Merger Agreement;
WHEREAS, Affiliate has been advised that Affiliate may be deemed to be
an "affiliate" of Company, as the term "affiliate" is used (i) for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations of the
Securities and Exchange Commission (the "SEC") and (ii) in the SEC's Accounting
Series Releases 130 and 135, as amended, although nothing contained herein
shall be construed as an admission by Affiliate that Affiliate is in fact an
affiliate of the Company;
WHEREAS, it is intended that the Merger will be accounted for as a
pooling of interests under Accounting Principles Board Opinion No. 16;
WHEREAS, the execution and delivery of this Agreement by Affiliate is
a material inducement to Parent to enter into the Merger Agreement.
NOW, THEREFORE, intending to be legally bound, the parties hereby
agree as follows:
1. Acknowledgments by Affiliate. Affiliate acknowledges and
understands that the representations, warranties and covenants by Affiliate set
forth herein will be relied upon by Parent, Company, and their respective
affiliates, counsel and accounting firms for purposes of determining Parent's
eligibility to account for the Merger as a "pooling of interests". Affiliate
has carefully read this Agreement and the Merger Agreement and has had an
opportunity to discuss the requirements of this Agreement with Affiliate's
professional advisors.
58
2. Compliance with Rule 145 and the Act.
(a) Affiliate has been advised that (i) the issuance of
shares of Parent Common Stock in connection with the Merger is expected to be
effected pursuant to a Registration Statement on Form S-4 under the Securities
Act of 1933, as amended (the "Act"), and as such will not be deemed "restricted
securities" within the meaning of Rule 144 promulgated thereunder, (ii) resale
of such shares will not be subject to any restrictions other than as set forth
in Rule 145 under the Act and (iii) Affiliate may be deemed to be an affiliate
of the Company. Affiliate accordingly agrees not to sell, transfer or
otherwise dispose of any Parent Common Stock issued to Affiliate in the Merger
unless (1) such shares of Parent Common Stock are registered under the Act or
are transferred pursuant to an appropriate exemption from registration, (2)
such sale, transfer or other disposition is made in conformity with the
requirements of Rule 145(d) promulgated under the Act, (3) an authorized
representative of the SEC takes the position in writing to the effect that the
SEC would take no action, or that the staff of the SEC would not recommend that
the SEC take action, with respect to such sale, transfer or other disposition,
and a copy of such written position ("No Action Correspondence") is delivered
to Parent, (4) Affiliate delivers to Parent a written opinion of counsel,
reasonably acceptable to Parent in form and substance, that such sale, transfer
or other disposition is otherwise exempt from registration under the Act, or
(5) such sale, transfer or disposition occurs after the earlier of (A) the
first anniversary of the Effective Time, or (B) the date on which the
restrictions upon sale, transfer or disposition under Rule 145 are eliminated
pursuant to action of the SEC.
(b) Parent will give stop transfer instructions to its
transfer agent with respect to any Parent Common Stock received by Affiliate
pursuant to the Merger and there will be placed on the certificates
representing such Parent Common Stock, or any substitutions therefor issued
prior to the termination of the restrictions described in Section 2(a) above, a
legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, APPLIES AND MAY ONLY BE TRANSFERRED
(A) IN CONFORMITY WITH RULE 145(d) UNDER SUCH ACT, (B) IN
ACCORDANCE WITH A WRITTEN OPINION OF COUNSEL, REASONABLY
ACCEPTABLE TO THE ISSUER IN FORM AND SUBSTANCE THAT SUCH
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED OR (C) AS IS OTHERWISE PERMITTED UNDER
THAT CERTAIN AFFILIATE AGREEMENT DATED AS OF __________, 1997,
A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE ISSUER."
The legend set forth above shall be removed from any certificates representing
shares of Parent Common Stock received by Affiliate pursuant to the Merger (by
delivery of a substitute certificate
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59
without such legend), and Parent shall instruct its transfer agent to remove
such legend, if the shares of Parent Common Stock evidenced by any such
certificates are registered under the Act or if Affiliate delivers to Parent
(i) satisfactory written evidence that the shares have been sold in compliance
with Rule 145 (in which case, the substitute certificate will be issued in the
name of the transferee), (ii) a copy of the No Action Correspondence, (iii) an
opinion of counsel, in form and substance reasonably satisfactory to Parent to
the effect that public sale of the shares by the holder thereof is no longer
subject to Rule 145, or (iv) a written request for removal of such legend after
the earlier of (x) the inapplicability of Rule 145 by its terms, or (y) the
effective date of any action by the SEC eliminating the restrictions upon sale,
transfer or disposition under Rule 145 or otherwise rendering compliance with
such restrictions unnecessary.
3. Covenants Related to Pooling of Interests. In accordance with
SAB 65, during the period contemplated by SAB 65, until the earlier of (A)
Parent's public announcement of financial results covering at least 30 days of
combined operations of Parent and Company or (B) the Merger Agreement is
terminated in accordance with its terms, Affiliate will not sell, exchange,
transfer, pledge, distribute, or otherwise dispose of or grant any option,
establish any "short" or put-equivalent position with respect to or enter into
any similar transaction (through derivatives or otherwise) having the effect,
directly or indirectly, of reducing his risk relative to: (A) any shares of
Company Common Stock, except pursuant to and upon the consummation of the
Merger; or (B) any shares of Parent Common Stock received by Affiliate in the
Merger; provided, however, that Affiliate may (after consulting with Parent)
transfer or otherwise reduce his risk relative to shares of Company Common
Stock or Parent Common Stock during such period if the transfer of or reduction
of risk relative to such Company Common Stock or Parent Common Stock would not
reasonably be expected to adversely affect the ability of Parent to account for
the Merger as a pooling of interests. Parent may, at its discretion, cause a
restrictive legend covering the restrictions referred to in this Section 3 to
be placed on Parent Common Stock certificates issued to Affiliate in the Merger
and place a stock transfer notice consistent with the restrictions referred to
in this Section 3 with its transfer agent with respect to such certificates,
provided that such restrictive legend shall be removed and/or such notice shall
be countermanded promptly upon expiration of the necessity therefor at the
request of Affiliate.
4. Permitted Transfers. Notwithstanding anything to the contrary
contained in this Agreement, Affiliate may: (a) transfer shares of Company
Common Stock to Company in payment of the exercise price of options to purchase
Company Common Stock; (b) transfer shares of Parent Common Stock to Parent in
payment of the exercise price of options to purchase Parent Common Stock, (c)
transfer shares of Company Common Stock to any organization qualified under
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, so long as
such organization has traditionally been supported by contributions from the
general public (as opposed to being supported largely by a specific donor), and
(d) transfer shares of Company Common Stock or shares of Parent Common Stock to
a trust established for the benefit of Affiliate and/or for the benefit of one
or more members of Affiliate's family, or make a bona fide gift of shares of
Company Common Stock or shares of Parent Common Stock to one or more members of
Affiliate's family, provided that in the
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60
case of a transfer or gift pursuant to this clause (d), a transferee of such
shares agrees to be bound by the limitations set forth in this Agreement.
5. Specific Performance. Affiliate agrees that irreparable
damages would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms, or were otherwise
breached. It is, accordingly, agreed that Parent shall be entitled to
injunctive relief to prevent breaches of the provisions of this Agreement, and
to enforce specifically the terms and provisions hereof, in addition to any
other remedy to which Parent may be entitled at law or in equity.
6. Miscellaneous.
(a) For the convenience of the parties hereto, this
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document.
(b) This Agreement shall be enforceable by, and shall
inure to the benefit of and be binding upon, the parties hereto and their
respective successors and assigns. As used herein, the term "successors and
assigns" shall mean, where the context so permits, heirs, executors,
administrators, trustees and successor trustees, and personal and other
representatives.
(c) This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the internal laws of the State of
California (without regard to the principles of conflict of laws thereof).
(d) If a court of competent jurisdiction determines that
any provision of this Agreement is not enforceable or enforceable only if
limited in time and/or scope, this Agreement shall continue in full force and
effect with such provision stricken or so limited.
(e) Counsel to and accountants for the parties to this
Agreement shall be entitled to rely upon this Agreement as needed.
(f) This Agreement shall not be modified or amended, or
any right hereunder waived or any obligation excused, except by a written
agreement signed by both parties.
(g) Notwithstanding any other provision contained herein,
this Agreement and all obligations of and restrictions imposed on Affiliate
hereunder shall terminate upon the termination of the Merger Agreement in
accordance with its terms.
(h) Parent currently intends to file on a timely basis,
from and after the Effective Time and as long as is necessary in order to
permit Affiliate to sell Parent Common Stock held by Affiliate pursuant to Rule
145, all reports required to be filed by it pursuant to the Exchange Act, and
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61
currently intends to otherwise make available adequate information regarding
Parent in such manner as may be required to satisfy the requirements of Rule
144(c) under the Act as now in effect.
[(i) Nothing contained in this Agreement shall limit any
of Affiliate's rights or any of Parent's obligations under the Registration
Rights Agreement of even date herewith between Parent and Affiliate.]
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Executed as of the date shown on the first page of this Agreement.
SANMINA CORPORATION
By: _____________________________
Name: ____________________
Title: ____________________
ELEXSYS INTERNATIONAL, INC.
By: _____________________________
Name: ____________________
Title: ____________________
AFFILIATE
By: _____________________________
Name of Affiliate: ______________
Name of Signatory:
__________________________________
(if different from Affiliate)
Title of Signatory
(if applicable): ________________
Number of shares of Company Common Stock beneficially owned by Affiliate:
Number of shares of Company Common Stock subject to options beneficially owned
by Affiliate:
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EXHIBIT B
SANMINA CORPORATION AFFILIATE AGREEMENT
This AFFILIATE AGREEMENT (this "Agreement") is made as of __________,
1997, between Sanmina Corporation, a Delaware corporation ("Parent"), Elexsys
International, Inc., a Delaware corporation ("Company"), and the undersigned
(the "Affiliate").
WHEREAS, Parent and Company have entered into an Agreement and Plan of
Merger ("Merger Agreement") pursuant to which Parent and Company intend to
enter into a business combination transaction to pursue their long term
business strategies (the "Merger") (capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to them in the
Merger Agreement);
WHEREAS, pursuant to the Merger, at the Effective Time, all of the
issued and outstanding shares of Company Common Stock will be converted into
shares of Parent Common Stock as set forth in the Merger Agreement;
WHEREAS, Affiliate has been advised that Affiliate may be deemed to be
an "affiliate" of Parent, as the term "affiliate" is used in the SEC's
Accounting Series Releases 130 and 135, as amended, although nothing contained
herein shall be construed as an admission by Affiliate that Affiliate is in
fact an affiliate of Parent;
WHEREAS, it is intended that the Merger will be accounted for as a
pooling of interests under Accounting Principles Board Opinion No. 16;
WHEREAS, the execution and delivery of this Agreement by Affiliate is
a material inducement to the Company to enter into the Merger Agreement.
NOW, THEREFORE, intending to be legally bound, the parties hereby
agree as follows:
1. Acknowledgments by Affiliate. Affiliate acknowledges and
understands that the representations, warranties and covenants by Affiliate set
forth herein will be relied upon by Parent, Company, and their respective
affiliates, counsel and accounting firms for purposes of determining Parent's
eligibility to account for the Merger as a "pooling of interests". Affiliate
has carefully read this Agreement and the Merger Agreement and has had an
opportunity to discuss the requirements of this Agreement with Affiliate's
professional advisors.
2. Covenants Related to Pooling of Interests. In accordance with
SAB 65, during the period contemplated by SAB 65, until the earlier of (A)
Parent's public announcement of financial results covering at least 30 days of
combined operations of Parent and Company or (B) the Merger
64
Agreement is terminated in accordance with its terms, Affiliate will not sell,
exchange, transfer, pledge, distribute, or otherwise dispose of or grant any
option, establish any "short" or put-equivalent position with respect to or
enter into any similar transaction (through derivatives or otherwise) having
the effect, directly or indirectly, of reducing his risk relative to, any
shares of Parent Common Stock; provided, however, that Affiliate may (after
consulting with Parent and Company) transfer or otherwise reduce his risk
relative to shares of Parent Common Stock during such period if the transfer of
or reduction of risk relative to such Parent Common Stock would not reasonably
be expected to adversely affect the ability of Parent to account for the Merger
as a pooling of interests. Parent may, at its discretion, cause a restrictive
legend covering the restrictions referred to in this Section 2 to be placed on
Parent Common Stock certificates issued to Affiliate and place a stock transfer
notice consistent with the restrictions referred to in this Section 2 with its
transfer agent with respect to such certificates, provided that such
restrictive legend shall be removed and/or such notice shall be countermanded
promptly upon expiration of the necessity therefor at the request of Affiliate.
3. Permitted Transfers. Notwithstanding anything to the contrary
contained in this Agreement, Affiliate may: (a) transfer shares of Parent
Common Stock to any organization qualified under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended, so long as such organization has
traditionally been supported by contributions from the general public (as
opposed to being supported largely by a specific donor); and (b) transfer
shares of Parent Common Stock to a trust established for the benefit of
Affiliate and/or for the benefit of one or more members of Affiliate's family,
or make a bona fide gift of shares of Parent Common Stock to one or more
members of Affiliate's family, provided that in the case of a transfer or gift
pursuant to this clause (b), a transferee of such shares agrees to be bound by
the limitations set forth in this Agreement.
4. Specific Performance. Affiliate agrees that irreparable
damages would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms, or were otherwise
breached. It is, accordingly, agreed that Parent and Company shall be entitled
to injunctive relief to prevent breaches of the provisions of this Agreement,
and to enforce specifically the terms and provisions hereof, in addition to any
other remedy to which Parent or Company may be entitled at law or in equity.
5. Miscellaneous.
(a) For the convenience of the parties hereto, this
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document.
(b) This Agreement shall be enforceable by, and shall
inure to the benefit of and be binding upon, the parties hereto and their
respective successors and assigns. As used herein, the term "successors and
assigns" shall mean, where the context so permits, heirs, executors,
administrators, trustees and successor trustees, and personal and other
representatives.
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65
(c) This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the internal laws of the State of
California (without regard to the principles of conflict of laws thereof).
(d) If a court of competent jurisdiction determines that
any provision of this Agreement is not enforceable or enforceable only if
limited in time and/or scope, this Agreement shall continue in full force and
effect with such provision stricken or so limited.
(e) Counsel to and accountants for the parties to this
Agreement shall be entitled to rely upon this Agreement as needed.
(f) This Agreement shall not be modified or amended, or
any right hereunder waived or any obligation excused, except by a written
agreement signed by both parties.
(g) Notwithstanding any other provision contained herein,
this Agreement and all obligations of and restrictions imposed by Affiliate
hereunder shall terminate upon the termination of the Merger Agreement in
accordance with its terms.
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Executed as of the date shown on the first page of this Agreement.
SANMINA CORPORATION
By: _____________________________
Name: ____________________
Title: ____________________
ELEXSYS INTERNATIONAL, INC.
By: _____________________________
Name: ____________________
Title: ____________________
AFFILIATE
By: _____________________________
Name of Affiliate: ______________
Name of Signatory:
__________________________________
(if different from Affiliate)
Title of Signatory
(if applicable): ________________
Number of shares of Company Common Stock beneficially owned by Affiliate:
Number of shares of Company Common Stock subject to options beneficially owned
by Affiliate:
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EXHIBIT C
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (this "Agreement") is made as of
_______, 1997, by and among Sanmina Corporation, a Delaware corporation
("Parent"), Elexsys International, Inc., a Delaware corporation ("Company"),
and Xxxxx Xxxxxxxx (the "Shareholder").
RECITALS
A. As an employee and shareholder of Company, the Shareholder has
obtained extensive and valuable knowledge and information concerning the
business of Company (including confidential information relating to Company and
its operations, assets, contracts, customers, personnel, plans and prospects).
B. Concurrently with the execution and delivery of this
Agreement, Parent is acquiring Company through a merger of Company with a
wholly-owned subsidiary of Parent (the "Merger") pursuant to an Agreement and
Plan of Merger dated as of July 22, 1997 (the "Reorganization Agreement").
Section 6.2(e) of the Reorganization Agreement requires that a noncompetition
agreement be executed and delivered by the Shareholder as a condition to the
completion of the Merger, and the Shareholder is entering into this Agreement
in order to induce Parent to complete the Merger.
C. Company has conducted and is conducting its business
throughout North America and the United Kingdom.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. Definitions. Capitalized terms used but not expressly defined
in this Agreement shall have the meanings ascribed to them in the
Reorganization Agreement.
2. Acknowledgments by the Shareholder. The Shareholder
acknowledges that the Shareholder has occupied a position of trust and
confidence with Company prior to the date hereof and has become familiar with
the following information, any and all of which constitute confidential
information of Company (collectively the "Confidential Information"): (a) any
and all trade secrets belonging to, and concerning the business and affairs of,
Company, and any and all data, know-how, compositions, processes, customer
lists, current and anticipated customer requirements, price lists, market
studies and business plans that are confidential and proprietary in
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nature and that belong to, and pertain to the business and affairs of, Company;
(b) any and all other information that is confidential and proprietary in
nature belonging to, and concerning the business and affairs of, Company (which
includes the following information to the extent it is confidential and
proprietary in nature and it belongs to, and pertains to the business and
affairs of, Company: historical financial statements, financial projections and
budgets, historical and projected sales, capital spending budgets and plans,
the names and backgrounds of key personnel and personnel training techniques
and materials), however documented; and (c) any and all notes, analysis,
compilations, studies, summaries, and other material prepared by or for Company
containing or based, in whole or in part, on any information included in the
foregoing; provided, however, that, notwithstanding anything to the contrary
contained in this Agreement, "Confidential Information" does not and will not
include any information that is in or enters the public domain or that
otherwise is or becomes generally available to the public or within the
electronics manufacturing services industry other than as a direct result of
the improper and unauthorized disclosure thereof by the Shareholder. The
Shareholder further acknowledges that (i) Parent has required that the
Shareholder make the covenants set forth in this Agreement as a condition to
the consummation of the Merger by Parent, (ii) the provisions of this Agreement
are reasonable and necessary to protect and preserve Company's business, and
(iii) Company would be irreparably damaged if the Shareholder were to breach
the covenants set forth in Sections 3, 4 and 5 of this Agreement.
3. Confidential Information. The Shareholder acknowledges and
agrees that all Confidential Information is the property of Company.
Therefore, the Shareholder agrees that the Shareholder will not, for a period
of two years after the Effective Time, disclose to any unauthorized persons or
use for his own account or for the benefit of any third party any Confidential
Information, whether the Shareholder has such information in the Shareholder's
memory or embodied in writing or other physical form, without Parent's written
consent; provided, however, that, notwithstanding anything to the contrary
contained in this Agreement, the Shareholder may furnish and otherwise disclose
Confidential Information (a) to his legal advisers or accountants who are
advised or otherwise made aware that such information is confidential, and (b)
to the extent that the Shareholder determines in good faith that disclosure
thereof may be required by any law, regulation, judicial order, administrative
order, subpoena, interrogatory, discovery request, investigative demand or
other legal requirement or legal process. The Shareholder agrees to deliver to
Parent at any time after the Effective Time that Parent may request, all
documents, memoranda, notes, plans, records, reports and other documentation,
models, components or computer software, whether embodied in a disk or in other
form (and all copies of all of the foregoing), relating to the businesses,
operations, or affairs of Company to the extent they constitute Confidential
Information and any other Confidential Information that the Shareholder may
then possess or have under the Shareholder's control.
4. Noncompetition. As an inducement for Parent to consummate the
Merger, the Shareholder agrees that, except as provided below, during the
Noncompetition Period (as hereinafter defined), the Shareholder will not engage
in Competitive Activities (as hereinafter defined) in North America, the United
Kingdom and Ireland, or invest in, own, manage, operate, control, or
participate in the ownership, management, operation, or control of, be employed
by, or render services or advice to, any Competing Entity (as hereinafter
defined). For purposes of this Agreement (a) "Competitive Activities" shall
mean designing, manufacturing, selling or developing complex custom-designed,
press-fit backpanels (of the type being designed, manufactured,
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sold or developed by Company as of the Effective Time), surface mount backpanel
assemblies (of the type being designed, manufactured, sold or developed by
Company as of the Effective Time), related subsystems (of the type being
designed, manufactured, sold or developed by Company as of the Effective Time)
or high density multi-layer printed circuit boards (of the type being designed,
manufactured, sold or developed by Company as of the Effective Time) in or for
the mid-volume sector of the electronic interconnect industry, and (b)
"Competing Entity" shall mean an entity that is engaged in Competitive
Activities in North America, the United Kingdom or Ireland; provided, however,
that an entity shall not, and shall not be deemed to, constitute a Competing
Entity if the total consolidated gross revenues derived by such entity from
Competitive Activities in any twelve month period represents less than 20% of
the total consolidated gross revenues of such entity during such twelve month
period. Notwithstanding anything to the contrary contained in this Agreement,
(A) the Shareholder may purchase or otherwise acquire, and own, directly or
indirectly, up to (but not more than) nineteen and nine-tenths percent (19.9%)
of any class of securities of any Competing Entity, (B) the Shareholder may
render services or advice to or be employed by a Competing Entity if the
services or advice rendered by the Shareholder, or the primary responsibilities
of the Shareholder, do not relate directly to Competitive Activities, (C) the
Shareholder may loan money to or guaranty the loans of any Competing Entity,
(D) the Shareholder may engage in any Competitive Activity, and the Shareholder
may invest in, own, manage, operate, control or participate in the ownership,
management, operation or control of, be employed by or render services or
advice to, any Competing Entity that is engaged in any Competitive Activity, if
Parent ceases to derive more than $50 million in consolidated gross revenues
from such Competitive Activity in any twelve month period, (E) the Shareholder
may continue to serve as a special limited partner of Xxxxxxx Capital (even if
such entity invests in, owns, manages, operates or controls, or renders
services or advice to, one or more Competing Entities), and the Shareholder may
serve as an investor (including as a partner) in any other entity that invests
in, owns, manages, operates or controls, or renders services or advice to, one
or more Competing Entities, so long as (unless otherwise permitted under this
Agreement) the Shareholder does not actively participate in the management or
operation of, or render services or advice to, any such Competing Entity, and
(F) after the first anniversary of the Effective Time, the Shareholder may
serve as a non-employee director (but not as the Chairman of the Board) of any
Competing Entity in which the Shareholder or any person or entity affiliated
with or related to the Shareholder has a direct or indirect ownership interest.
The Shareholder agrees that this covenant is reasonable with respect to its
duration, geographical area, and scope. As used herein, the "Noncompetition
Period" shall commence upon the Effective Time and end upon the date five years
after the Effective Time.
5. Nonsolicitation. The Shareholder further agrees that for a
period of five years after the Effective Time, he will not knowingly and
intentionally:
(a) personally or through others, encourage, induce,
attempt to induce, solicit or attempt to solicit (on the Shareholder's own
behalf or on behalf of any other person or entity) any employee of Company who
was employed by Company as of the Effective Time and whose annual salary
exceeded $100,000 as of the Effective Time (a "Specified Employee") to leave
his or her employment with such firm and become employed in any Competing
Entity; or
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(b) employ in any Competing Entity, or permit any
Competing Entity over which the Shareholder exercises any control, to employ
any Specified Employee who has terminated his or her employment with Parent or
Company during such five-year period and who has not been subsequently employed
by another person or entity.
Nothing in this Agreement shall prevent or limit the Shareholder, any
entity over which the Shareholder exercises any control or any other person or
entity from (i) publishing any advertisement or similar notice in any newspaper
and hiring any person who responds to such advertisement or notice without
prior solicitation by the Shareholder, or (ii) engaging any recruiting firm or
similar organization to identify or solicit persons for employment and hiring
any person identified or solicited by such firm without the participation of
the Shareholder or identification by the Shareholder of particular Specified
Employees to be recruited.
6. Independence of Obligations. The covenants of the Shareholder
set forth in this Agreement shall be construed as independent of any other
agreement or arrangement between the Shareholder, on the one hand, and Parent
or Company, on the other. The existence of any claim or cause of action by the
Shareholder against Parent or Company shall not constitute a defense to the
enforcement of such covenants against the Shareholder.
7. Remedies. If the Shareholder breaches the covenants set forth
in this Agreement, each of Parent and Company will be entitled to the following
remedies:
(a) damages from the Shareholder; and
(b) in addition to its right to damages and any other
rights it may have, to obtain injunctive or other equitable relief to restrain
any breach or threatened breach or otherwise to specifically enforce any
provision of this Agreement, it being agreed that money damages alone would be
inadequate to compensate Parent or Company and would be an inadequate remedy
for such breach.
Notwithstanding anything to the contrary contained in this Agreement,
no conduct or action shall be deemed to constitute a breach by the Shareholder
of any provision of this Agreement unless (i) Parent shall have delivered to
the Shareholder a written notice describing in reasonable detail the conduct or
action that Parent believes constitutes a breach of this Agreement, and (ii)
the Shareholder shall have failed to discontinue such conduct or action within
15 days after receiving such written notice.
8. Non-Exclusivity. The rights and remedies of Parent and
Company hereunder are not exclusive of or limited by any other rights or
remedies which Parent or Company may have, whether at law, in equity, by
contract or otherwise, all of which shall be cumulative (and not alternative).
Without limiting the generality of the foregoing, the rights and remedies of
Parent and Company hereunder, and the obligations and liabilities of the
Shareholder hereunder, are in addition to their
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respective rights, remedies, obligations and liabilities under the law of
unfair competition, misappropriation of trade secrets and the like.
9. Indemnification. Without in any way limiting any of the
rights or remedies otherwise available to Company, the Shareholder shall hold
harmless and indemnify Company from and against any damages which are directly
suffered or incurred at any time by Parent or Company, or to which Parent or
Company otherwise becomes subject (regardless of whether or not such damages
relate to a third-party claim) and that arise directly from any breach of any
covenant or obligation of the Shareholder contained herein.
10. Waiver. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement will operate as
a waiver of such right, power, or privilege, and no single or partial exercise
of any such right, power, or privilege will preclude any other or further
exercise of such right, power, or privilege or the exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right arising out of this Agreement can be discharged by one party, in
whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement.
11. Governing Law. This Agreement will be governed by the laws of
the State of California without regard to conflicts of laws principles.
12. Jurisdiction; Service of Process Any legal action or other
legal proceeding relating to this Agreement or the enforcement of any provision
of this Agreement shall be brought or otherwise commenced in any state or
federal court located in the County of Santa Clara, California. Each party to
this Agreement:
(a) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of Santa
Clara, California (and each appellate court located in the State of California)
in connection with any such legal proceeding;
(b) agrees that each state and federal court located in
the County of Santa Clara, California shall be deemed to be a convenient forum;
and
(c) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any state or federal
court located in the County of Santa Clara, California, any claim that such
party is not subject personally to the jurisdiction of such court, that such
legal proceeding has been brought in an inconvenient forum, that the venue of
such proceeding is improper or that this Agreement or the subject matter of
this Agreement may not be enforced in or by such court.
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13. Severability. If any provision of this Agreement or any part
of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c)
such invalidity or enforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Agreement. Each
provision of this Agreement is separable from every other provision of this
Agreement, and each part of each provision of this Agreement is separable from
every other part of such provision.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
15. Section Headings, Construction. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement unless
otherwise specified. All words used in this Agreement will be construed to be
of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
16. Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand, (b) sent by facsimile,
provided that a copy is mailed by registered mail, return receipt requested, or
(c) when received by the addressee, if sent by a nationally recognized
overnight delivery service or registered mail (receipt requested), in each case
to the appropriate addresses and facsimile numbers set forth below (or to such
other addresses and facsimile numbers as a party may designate by notice to the
other parties):
Shareholder: Xxxxx Xxxxxxxx
0000 Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Parent: Sanmina Corporation
000 Xxxx Xxxxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: Chief Executive Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
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with a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxxxxxxxx X. Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Company: Elexsys International, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxx Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
17. Further Assurances. The Shareholder shall execute and/or
cause to be delivered to Parent or Company such instruments and other documents
as Parent or Company may reasonably request to effectuate the intent and
purposes of this Agreement.
18. Assignment. This Agreement and all obligations hereunder are
personal to the Shareholder and may not be transferred or assigned by the
Shareholder at any time. Each of Parent and Company may assign its respective
rights under this Agreement to any entity in connection with any sale or
transfer of all or substantially all of its respective assets to such entity.
19. Binding Nature. Subject to Section 18, this Agreement will be
binding upon the Shareholder, and will inure to the benefit of Parent and
Company and their respective successors and assigns.
20. Attorneys' Fees and Expenses. If any legal action or other
legal proceeding relating to the enforcement of any provision of this Agreement
is brought by any party hereto against any other party hereto, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party
may be entitled).
21. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter of this
Agreement and supersedes all prior written and oral agreements and
understandings among Parent, Company and the Shareholder with respect to the
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subject matter of this Agreement. This Agreement may not be amended except by
a written agreement executed by all parties hereto.
[remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
PARENT: SHAREHOLDER:
By: ______________________________ By: ______________________________
COMPANY:
By: ______________________________
