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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported) May 15, 1998
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MICROSEMI CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 0-8866 95-2110371
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
2830 South Fairview Street, Santa Ana, California 92704
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (714) 979-8220
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Not Applicable
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(Former name or former address, if changed, since last report)
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Item 2. Acquisition or Disposition of Assets
Acquisition of BKC Semiconductors
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(a) On May 15, 1998, Microsemi Corporation, a Delaware corporation (the
"Registrant"), issued a news release which announced that the Registrant's
wholly-owned subsidiary, Micro BKC Acquisition Corp. ("Merger Sub"), merged
with and into BKC Semiconductors Incorporated, a Massachusetts corporation
("BKC") effective May 15, 1998. The Registrant's news release concerning the
merger is attached as Exhibit 99.1 hereto and incorporated herein by this
reference.
The merger resulted the Registrant owning all of the outstanding capital
stock of BKC in exchange for approximately $13.2 million in cash and all of
the outstanding options to purchase BKC stock being cancelled in exchange for
an additional $0.5 million in cash, approximately. The shareholders of BKC
approved the merger at a special meeting of the BKC shareholders held on
May 14, 1998. BKC was the surviving corporation in the merger. Microsemi
financed the acquisition with drawings on its line of credit from Imperial
Bank.
The merger was consummated pursuant to an Agreement and Plan of Merger
dated as of January 21, 1998 ("Merger Agreement") among the Registrant, Merger
Sub and BKC. The Merger Agreement is attached as Exhibit 2.1 hereto and
incorporated herein by this reference.
As BKC does not constitute a significant business under Regulation S-X, the
financial statements and pro forma financial information regarding BKC are
not required to be provided.
(b) The Registrant intends to continue to operate BKC as a stand-alone
subsidiary, operating its property, plant and equipment in Lawrence,
Massachusetts.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Unaudited Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
2.1 Agreement and Plan of Merger dated as of January 21,
1998, among the Registrant, Micro BKC Acquisition
Corp., a Delaware corporation, and BKC Semiconductors
Incorporated, a Massachusetts corporation
99.1 News Release dated May 15, 1998 relating
to the merger of BKC Semiconductors Incorporated
and Micro BKC Acquisition Corp., the Registrant's
wholly-owned subsidiary
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
MICROSEMI CORPORATION
(Registrant)
Date: June 1, 1998 By:/s/DAVID R. SONKSEN
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David R. Sonksen,
Vice President-Finance, Treasurer,
Chief Financial Officer and Secretary
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MICROSEMI CORPORATION
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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2.1 Agreement and Plan of Merger dated as of January 21,
1998, among the Registrant, Micro BKC Acquisition
Corp., a Delaware corporation, and BKC Semiconductors
Incorporated, a Massachusetts corporation
99.1 News Release dated May 15, 1998 relating
to the merger of BKC Semiconductors Incorporated
and Micro BKC Acquisition Corp., the Registrant's
wholly-owned subsidiary
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and among
MICROSEMI CORPORATION,
BKC SEMICONDUCTORS INCORPORATED,
and
MICRO BKC ACQUISITION CORP.
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ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
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1.1 Definitions...................................................... 2
1.2 Rules of Construction............................................ 6
ARTICLE II
THE MERGER
2.1 The Merger....................................................... 6
2.2 Corporate Documents, Directors and Officers...................... 6
2.3 Treatment of Company Common Stock and Merger Sub Stock........... 7
2.3.1 Conversion of Company Common Stock........................ 7
2.3.2 Dissenting Shares......................................... 8
2.3.4 Conversion of Merger Sub Stock............................ 8
2.4 Exchange of Certificates......................................... 8
2.4.1 Common Stock Exchange Procedures.......................... 8
2.4.2 Certain Taxes............................................. 9
2.4.3 Lost, Stolen or Destroyed Certificate..................... 9
2.4.4 Unclaimed Monies.......................................... 9
2.5 Closing of Transfer Books........................................ 10
2.6 Stock Options and Stock Plans.................................... 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Approval of the Company Board of Directors....................... 11
3.2 Organization and Qualification; No Subsidiaries.................. 12
3.3 Articles of Organization and Bylaws.............................. 12
3.4 Capitalization................................................... 12
3.5 Authority Relative to this Agreement............................. 13
3.6 SEC Documents; Financial Statements; No Undisclosed Liabilities.. 14
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3.6.1 SEC Documents............................................ 14
3.6.2 Financial Statements..................................... 14
3.6.3 No Undisclosed Liabilities............................... 14
3.7 Disclosure Documents............................................. 14
3.8 Financial Statements............................................. 15
3.9 Absence of Certain Changes or Events............................. 16
3.10 Material Contracts; Clients...................................... 16
3.11 Conflicts........................................................ 18
3.12 Compliance, Permits.............................................. 18
3.13 Absence of Litigation............................................ 19
3.14 Employee Benefit Plans........................................... 19
3.14.1 Employee Benefit Plans................................... 19
3.14.2 Benefit Plan Matters..................................... 20
3.14.3 Employment Agreements; Consulting Agreements............. 20
3.14.4 Labor Matters............................................ 21
3.15 Restrictions on Business Activities.............................. 21
3.16 Tangible Assets.................................................. 21
3.17 Intangible Personal Property..................................... 22
3.18 Real Properties; Leases.......................................... 23
3.19 Accounts Receivable.............................................. 24
3.20 Inventories...................................................... 24
3.21 Title to and Adequacy of Assets.................................. 24
3.22 Taxes............................................................ 25
3.23 Environmental Matters............................................ 27
3.24 Interested Party Transactions.................................... 28
3.26 Brokers.......................................................... 28
3.27 Illegal or Improper Payments..................................... 28
3.28 Bank Accounts; Powers of Attorney................................ 28
3.29 Full Disclosure.................................................. 29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
4.1 Organization and Qualification................................... 29
4.2 Authority Relative to this Agreement............................. 29
4.3 Disclosure Documents............................................. 30
4.4 No Conflict, Required Filings and Consents....................... 30
4.5 Brokers.......................................................... 31
4.6 Ownership of Merger Sub, No Prior Activities..................... 31
4.7 Absence of Litigation............................................ 31
4.8 Investment Intention............................................. 31
4.9 Funds Available.................................................. 32
4.10 Full Disclosure.................................................. 32
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ARTICLE V
ADDITIONAL AGREEMENTS
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5.1 No Solicitation.................................................. 32
5.2 Shareholder Meeting; Proxy Material.............................. 33
5.3 Access........................................................... 34
5.4 Cooperation...................................................... 35
5.5 Cooperation in Arrangements with Lenders......................... 35
5.6 Advice of Changes................................................ 35
5.7 Current Information.............................................. 36
5.8 Conduct of Business by the Company............................... 36
5.9 Certain Operating Covenants...................................... 37
5.10 Shareholder and Non-Competition Agreements....................... 38
5.11 Fair Price Structure............................................. 39
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of Both Parties........................ 40
6.1.1 Approval by the Shareholders............................. 40
6.1.2 No Pending or Threatened Claims.......................... 40
6.2 Conditions to the Obligations of Parent and Merger Sub........... 40
6.2.1 Dissenting Shares........................................ 40
6.2.2 Accuracy of Representations and Warranties............... 40
6.2.3 Compliance with Covenants................................ 41
6.2.4 Securities Outstanding................................... 41
6.2.5 Third Party Consents..................................... 41
6.2.6 Receipt of Legal Opinion................................. 41
6.2.7 Shareholders and Non-Competition Agreements.............. 41
6.2.8 Receipt of Officers' Certificates........................ 41
6.2.9 Documents and Instruments in Satisfactory Form........... 42
6.2.9 Recommendation to Shareholders........................... 42
6.2.9 Consent of Auditors...................................... 42
6.3 Conditions to the Obligations of the Company..................... 42
6.3.1 Accuracy of Representations and Warranties............... 42
6.3.2 Compliance with Covenants................................ 43
6.3.3 Receipt of Legal Opinion................................. 43
6.3.4 Receipt of Officers' Certificate......................... 43
6.3.5 Documents and Instruments in Satisfactory Form........... 43
6.3.6 Parent's Borrowings...................................... 43
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ARTICLE VII
CLOSING
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7.1 Closing......................................................... 44
ARTICLE VIII
TERMINATION; TERMINATION FEE
8.1 By Mutual Agreement............................................. 44
8.2 By Parent....................................................... 44
8.3 By the Company.................................................. 45
8.4 Effect of Termination; Remedies................................. 46
8.4.1 Effect of Termination................................... 46
8.4.2 Fees and Expenses and Recovery of Damages............... 46
ARTICLE IX
COVENANTS OF THE PARTIES
9.1 HSR Act Filings, If Any......................................... 49
9.2 Reasonable Efforts.............................................. 49
9.3 Obtaining Consents.............................................. 49
9.4 Limitation on Covenants......................................... 50
9.5 Prompt Notice................................................... 50
ARTICLE X
DIRECTOR AND OFFICER INDEMNIFICATION
10.1 Director Indemnity.............................................. 51
10.2 Existing Indemnity Obligations.................................. 51
10.3 Successor Liability............................................. 52
10.4 Third-Party Beneficiaries....................................... 52
10.5 Insurance....................................................... 52
10.6 Exclusions...................................................... 52
ARTICLE XI
MISCELLANEOUS
11.1 Publicity....................................................... 53
11.2 Notices......................................................... 53
11.3 Interpretation.................................................. 54
11.4 Entire Agreement................................................ 54
11.5 Benefits; Binding Effect; Assignment and Designation............ 54
11.6 Waiver.......................................................... 54
11.7 No Third Party Beneficiary...................................... 54
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11.8 Severability.............................................. 55
11.9 Counterparts.............................................. 55
11.10 Applicable Law; Consent to Jurisdiction; Attorneys Fees... 55
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of January 21,
1998, is made by and among MICROSEMI CORPORATION, a Delaware corporation
("Parent"), BKC SEMICONDUCTORS INCORPORATED, a Massachusetts corporation (the
"Company") and MICRO BKC ACQUISITION CORP., a Delaware corporation and wholly-
owned subsidiary of Parent ("Merger Sub").
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved the merger of Merger Sub with and into the Company,
pursuant to which (i) the Company would become a wholly-owned subsidiary of
Parent, and (ii) the Company Shareholders would receive, in exchange for their
shares of Company Common Stock, the Merger Consideration described below, all on
the terms and subject to the conditions set forth in this Agreement and the MBCL
and the DGCL; and
WHEREAS, the Board of Directors of the Company has (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger (as
defined hereinafter), are fair to and in the best interests of the Company
Shareholders, (ii) determined that the Merger Consideration to be paid in the
Merger to the Company Shareholders is fair to and in the best interests of the
Company Shareholders, and (iii) approved this Agreement and the transactions
contemplated hereby, including the Merger; and
WHEREAS, Parent, Merger Sub and the Company desire to consummate the Merger
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree, as follows:
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ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
1.1 Definitions. Capitalized terms contained in this Agreement and not
defined in the preamble or the recitals above shall have the meanings set forth
below.
"Acquisition Proposal" shall mean any inquiry, proposal, term sheet,
discussion draft, letter of intent or other communication or agreement that
contemplates, proposes or relates to (i) any possible sale or disposition by the
Company of, or any mortgage, lien or encumbrance on, any of its assets (other
than sales of assets that are made in the ordinary course of business consistent
with past practices); (ii) any sales by the Company or the Management and
Principal Shareholders or issuance of shares of capital stock or Convertible
Securities of the Company (other than upon the exercise of vested Company
Options under the Option Plans); (iii) any redemption or repurchase, or any
recapitalization, of any of the outstanding shares of Company Common Stock by
the Company, (iv) any offer to purchase more than five percent (5%) of the
outstanding shares of capital stock of the Company, (v) any financing or
refinancing, including any sale-leaseback of the assets of the Company that
involves the granting of any security interest or lien on, or the transfer of
ownership of any of the assets of the Company (other than in the ordinary course
of business), or (vi) any merger or reorganization of the Company with or any
other business combination between the Company and any other entity.
"Agreement" means this Agreement, as the same may be hereafter amended,
including all Exhibits and Disclosure Schedules hereto.
"Articles of Merger" means the articles of merger attached hereto as
Exhibit A-1 which shall be filed with the Massachusetts Secretary of State on
- -----------
the Closing Date in accordance with Sections 78 and 79 of the MBCL and the
merger agreement attached hereto as Exhibit A-2 which shall be filed with the
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Delaware Secretary of State in accordance with Section 252 of the DGCL in order
to effectuate the Merger.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday or Friday
that banks in Los Angeles, California are not required or permitted by Law to be
closed.
"Closing" means the closing of the Merger, to be held on the Closing Date
at a location fixed pursuant to Section 7.1.
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"Closing Date" shall mean the date fixed pursuant to Section 7.1.
"Code" means the Internal Revenue Code of 1986, as amended to the date of
this Agreement.
"Company" means BKC SEMICONDUCTORS INCORPORATED, a Massachusetts
corporation.
"Company Board of Directors" means, except where another entity is
expressly referenced, the Board of Directors of the Company, as elected and
qualified from time to time.
"Company Common Stock" means the common stock of the Company, no par value.
"Company Shareholders" means the record holders of the Company Common Stock
as of the Effective Time.
"Convertible Security" means any debt or equity security that is
convertible into, exchangeable for or exercisable into shares of Company Common
Stock, including any option, warrant, or right to purchase shares of Company
Common Stock or any Convertible Security of the Company.
"DGCL" means the Delaware General Corporation Law, as amended through the
applicable date.
"Disclosure Schedules" shall have the meaning given to such term in the
opening paragraph of Article III hereof.
"Dissenting Shares" means all shares of Common Stock whose holders have
perfected dissenters' rights in the manner set forth in Section 85 of the MBCL.
"Effective Time" means the time as of which the Merger is deemed to have
become effective, as agreed upon by the Parties, as specified in the Merger
Agreement filed with the Massachusetts Secretary of State pursuant to Sections
78 and 79 of the MBCL.
"Equity Security" shall have the meaning given to it in the Securities
Exchange Act of 1934, as amended and "Company Equity Security" shall mean an
Equity Security issued by the Company or that is convertible into an Equity
Security of the Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
8
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"ERISA Affiliate" shall have the meaning specified in Section 3.14.1.
"Exchange Fund" shall have the meaning specified in Section 2.4.
"Excluded Shares" means shares of Common Stock owned as of the Effective
Time by the Company, Parent or any direct or indirect subsidiary of Parent, in
each case other than shares owned in a fiduciary capacity or as a result of
debts previously contracted.
"Expenses" means all out-of-pocket legal, accounting, consulting and other
fees and expenses reasonably incurred by the applicable Party (including, in
each case, those of the Party's subsidiaries) in connection with the Merger,
including expenses incurred in connection with the preparation of this Agreement
and all negotiations, due diligence and other activities conducted prior hereto,
and including all legal, broker's, finder's and similar fees and expenses
relating to the Merger.
"GAAP" means generally accepted accounting principles as in effect in the
United States, consistently applied.
"Governmental Entity" means any administrative agency, commission, court or
other governmental authority or instrumentality, domestic or foreign, including
any government-sponsored corporation having regulatory authority under law, the
National Association of Securities Dealers, and the Nasdaq Stock Market.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"IRS" means the United States Internal Revenue Service.
"Law" means any statute, law, ordinance, rule, regulation, process, or
administrative policy of, or agreement with, any Governmental Entity, that is
applicable to the referenced Person.
"Management and Principal Shareholders" shall mean the Company Shareholders
so identified in Schedule 5.10.1 hereto.
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"Material Adverse Effect" means, with respect to any Person, a material
adverse effect on the business, properties, assets, liabilities (whether
absolute, contingent or otherwise), operations, liquidity, income or condition
(financial or other) of such Person, considered as a whole together with its
subsidiaries and including such an effect caused indirectly through any of its
subsidiaries, or on the ability of such Person to consummate the Merger on the
terms hereof.
9
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"MBCL" means the Massachusetts Business Corporation Law (Chapter 156B), as
amended through the applicable date.
"Merger" means the merger of Merger Sub with and into the Company as more
particularly described in Section 2 hereof.
"Merger Consideration" shall have the meaning given that term in Section
2.3.1.
"Merger Sub" means MICRO BKC ACQUISITION CORP., a Delaware corporation, or,
in the discretion of Parent, such other direct or indirect wholly-owned
subsidiary of Parent as it may hereafter designate.
"Parent" means MICROSEMI CORPORATION, a Delaware corporation.
"Parties" means, collectively, the Company, Merger Sub and Parent.
"Permits" means permits, licenses, variances, exemptions, orders, consents
and approvals of any applicable Governmental Entity.
"Permitted Lien" means (i) minor imperfections of title, none of which
materially detract from the value, or impair the use, of the Tangible Assets or
Intangible Assets subject thereto or impair the operations of the Company and
(ii) liens or encumbrances for taxes and other governmental charges, assessments
or fees which are not yet due and payable.
"Person" means any natural person, corporation, limited liability company,
general or limited partnership, limited liability partnership, joint venture,
joint stock company, trust, unincorporated organization, association, sole
proprietorship, governmental body, or agency or political subdivision of any
government.
"Representatives" means each of the applicable Person's directors,
officers, employees, agents, representatives and advisors.
"Shareholder Approval" or terms such as "approval of the Shareholders" when
used with respect to this Agreement or the Merger shall mean approval thereof by
the holders of at least two-thirds of the outstanding shares of Common Stock
entitled to vote on this Agreement and the Merger in accordance with the MBCL
and the Company's Articles of Organization and Bylaws.
"Parent" means Microsemi Corporation, a Delaware corporation.
10
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"Surviving Corporation" means the corporation that is the survivor of the
Merger which, in accordance with Section 2.1 hereof, shall be the Company.
1.2 Rules of Construction. The following rules of construction shall
apply to the interpretation of this Agreement:
1.2.1 All references to Sections and Articles shall, unless another
agreement or document is expressly referenced, mean the applicable sections or
articles of this Agreement. All references to Schedules shall mean the
applicable Disclosure Schedule.
1.2.2 The titles and other headings or captions of Articles, Sections
or paragraphs contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of any provisions of this
Agreement.
1.2.3 Whenever used in this Agreement, the word "including" shall be
non-exclusive and shall mean "including without limitation" and the term "or"
also shall be non-exclusive.
1.2.4 The terms "herein", "hereunder", and terms of similar import
refer to this Agreement as a whole and not to the specific Section or Article in
which they are used.
ARTICLE II
THE MERGER
2.1 The Merger. The Company and Merger Sub shall be the constituent
corporations in the Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Merger shall be implemented by means of a
merger (hereinafter sometimes referred to as the "Merger") of Merger Sub with
and into the Company in accordance with Sections 78 and 79 of the MBCL and
Section 252 of the DGCL, to be effected by the filing of the Articles of Merger,
substantially in the form attached hereto as Exhibit A-1, with the Massachusetts
-----------
Secretary of State and, substantially in the form of Exhibit A-2, with the
-----------
Delaware Secretary of State. In accordance with such statutes, at the Effective
Time, the Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease, and the Company shall be the
Surviving Corporation and shall continue its corporate existence under the laws
of The Commonwealth of Massachusetts.
2.2 Corporate Documents, Directors and Officers.
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(a) From and after the Effective Time and thereafter until amended as
provided by law, the Articles of Organization of the Company as in effect
immediately prior to the effective time shall become the Articles of
Organization of the Surviving Corporation, except that Article 3 of the Articles
of Organization of the Surviving Corporation, regarding authorized capital
stock, and Article 4, concerning the rights, preferences and privileges of the
capital stock, shall be amended and restated in their entirety to read as set
forth in Article 4 of the Certificate of Incorporation of Merger Sub, and that
Sections 6.9; 6.10 and 6.11 shall be deleted. The Parties may prepare such
amendment in the form of an amended and restated articles of organization or
otherwise.
(b) From and after the Effective Time and thereafter until amended as
provided by law, the Bylaws of the Company as in effect immediately prior to the
effective time shall become the Bylaws of the Surviving Corporation, except that
the first sentence on Section 1 of Article II of the Bylaws of the Surviving
Corporation shall be amended and restated to read as follows:
Section 1. Number and Election. There shall be a Board of one or more
-------------------
directors, which number may be changed from time to time, by a resolution
duly adopted by the shareholders or a majority of the directors then in
office.
(c) The directors and officers of the Surviving Corporation shall be
the officers and directors specified in Schedule 2.2, and each such director or
------------
officer shall serve until his or her successor has been duly elected or
appointed and qualified or until his or her earlier death, resignation or
removal in accordance with the terms of the Surviving Corporation's Articles of
Organization and Bylaws.
2.3 Treatment of Company Common Stock and Merger Sub Stock.
2.3.1 Conversion of Company Common Stock.
(a) At the Effective Time, each of the shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
Dissenting Shares and Excluded Shares, if any) shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into the
right to receive an amount in cash of Nine and 17/100ths Dollars ($9.17) (the
"Merger Consideration").
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(b) All shares of Company Common Stock converted into the right to
receive the Merger Consideration pursuant to Section 2.3.1(a) shall, as of the
Effective Time, no longer be outstanding and shall automatically be cancelled
and shall cease to exist, and each certificate previously representing any such
shares shall thereafter represent only the right to receive the Merger
Consideration into which the shares of Company Common Stock represented by such
certificate have been converted. As of the Effective Time, all Excluded Shares,
if any, shall cease to exist and the certificates for such shares shall, as
promptly as practicable thereafter, be cancelled and no payments shall be made
in consideration therefor.
2.3.2 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Dissenting Shares shall not be converted into the right to
receive, or be exchangeable for, the Merger Consideration provided for in
Section 2.3.1 hereof, but, instead, the holders thereof shall be entitled to
payment for such Dissenting Shares in accordance with the provisions of Section
85 of the MBCL unless and until a holder of Dissenting Shares shall have failed
to perfect or shall have effectively withdrawn or lost such holder's rights to
appraisal and payment, as the case may be. The Company shall (a) comply with
the provisions of Sections 85 through 89, inclusive, of the MBCL applicable to
it in a prompt and expeditious manner, (b) give Parent prompt written notice of
(i) the identities of all Company Shareholders who have perfected rights to
dissent pursuant to MBCL Section 85 and (ii) the receipt of any notice from any
Company Shareholder demanding the purchase of his, her or its Company Common
Stock, (c) not settle or offer to settle any such demands without the prior
written consent of Parent, and (d) not, without the prior written consent of
Parent, waive any vote in favor of the Merger or failure of any Company
Shareholder timely to take any other action required under MBCL Sections 85
through 89, inclusive.
2.3.3 Conversion of Merger Sub Stock. At the Effective Time, the
shares of common stock of Merger Sub then issued and outstanding shall be
converted into a like number of shares of common stock of the Surviving
Corporation, which thereafter shall constitute all of the issued and outstanding
shares of common stock of the Surviving Corporation. From and after the
Effective Time, the authorized capital stock of the Surviving Corporation shall
consist of the authorized capital stock of Merger Sub.
2.4 Exchange of Certificates.
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2.4.1 Common Stock Exchange Procedures. After the Effective Time,
each holder of a certificate or certificates theretofore representing shares of
issued and outstanding Company Common Stock (other than the Dissenting Shares
and Excluded Shares) shall, upon the surrender of such certificates to Parent,
be entitled to receive, in exchange for each of the shares represented by such
certificate or certificates so surrendered, an amount in cash equal to the
Merger Consideration, less any required withholding of Taxes (as hereinafter
defined). The holder of a certificate that prior to the Merger represented
issued and outstanding shares of Company Common Stock shall have no rights,
after the Effective Time, with respect to such shares except to surrender the
certificate in exchange for cash without interest thereon or, if applicable, to
perfect such rights as a holder of Dissenting Shares as such holder may have
pursuant to the applicable provisions of Section 85 of the MBCL. Within five
(5) Business Days after the Effective Time, the Surviving Corporation will send
to each holder of Common Stock at the Effective Time a letter of transmittal for
use in such exchange. Prior to the Effective Time, Parent shall deposit with a
bank or trust company (the "Paying Agent"), for the benefit of the holders of
Company Common Stock and Company Options, cash in the aggregate amount
sufficient to pay the aggregate Merger Consideration and amounts payable to
holders of Company Options.
2.4.2 Certain Taxes. If any payment for shares of Common Stock is to
be made in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of such payment that
the certificate so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form for transfer,
and that the person requesting such exchange shall pay to Parent, in advance,
any transfer or other Taxes required by reason of the payment to a person other
than the registered holder of the certificate surrendered, or required for any
other reason, or shall establish to the satisfaction of Parent that such Tax has
been paid or is not payable.
2.4.3 Lost, Stolen or Destroyed Certificate. In the event 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 amount as the Surviving Corporation may direct
as indemnity against any claim that may be made against it with respect to such
certificate, Parent will deliver, or cause to be
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delivered, from the Exchange Fund, in exchange for such lost, stolen or
destroyed certificate, the cash Merger Consideration payable in respect thereof
pursuant to Section 2.3.
2.4.4 Unclaimed Monies. Any portion of the Exchange Fund that
remains unclaimed by any of the Company Shareholders pursuant to the provisions
of Section 2.4.1 one year after the Closing Date shall be withdrawn by Parent,
and any Shareholder who has not exchanged his, her or its shares of Common Stock
for the Merger Consideration in accordance with Section 2.4.1 prior to that time
shall thereafter look solely to Parent for payment in respect of such shares.
Notwithstanding the foregoing, neither Parent, the Surviving Corporation, nor
any other Person shall be liable to any Company Shareholder for the payment by
Parent to a public official of any unclaimed Merger Consideration pursuant to
applicable abandoned property laws.
2.5 Closing of Transfer Books. At the Effective Time, the transfer books
for the Company Common Stock shall be closed, and no transfer of shares of
Company Common Stock shall thereafter be made on such books. If, after the
Effective Time, certificates representing any such shares are presented for
transfer to Parent, they shall be cancelled and exchanged for the Merger
Consideration as provided in this Article II.
2.6 Stock Options and Stock Plans.
2.6.1 Parent, Merger Sub and the Company shall take all actions
necessary to provide that, as to those holders who so agree, at the Effective
Time, (i) each Company Option (defined below) so surrendered for cash, shall be
cancelled, and (ii) in consideration of such cancellation, and except to the
extent that Parent or Merger Sub and the holder of any such Company Option
otherwise agree, the Company shall pay to each such holder of Company Options an
amount in cash, net of applicable tax withholdings, in respect of each Company
Option held by such holder equal to the product of (1) the excess, if any, of
the Merger Consideration over the per share exercise price thereof and (2) the
number of shares of Company Common Stock subject thereto immediately prior to
the Effective Time; and Parent shall provide Company a loan of such amounts as
are necessary to finance such payments. The Company represents that the Board
of Directors of the Company has determined pursuant to the Company's 1994 Stock
Option Plan, as amended and restated as of January 10, 1996 (the "Employee
Option Plan") and 1994 Non-Employee Director Stock Option Plan ("Director Stock
Option Plan"), that holders of Company Options thereunder who
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do not elect to surrender their Company Options for cancellation pursuant to the
first sentence of this Section 2.6(a), upon exercise of such Company Options
after the Effective Time shall receive upon such exercise and payment of the
aggregate exercise price contemplated thereby an amount in cash (subject to
applicable withholding taxes) equal to the product of (1) the Merger
Consideration and (2) the number of shares of Company Common Stock subject
thereto immediately prior to the Effective Time. "Company Option" means any
option granted, whether or not exercisable (it being understood that all Company
Options shall be deemed to be, and shall be treated under this Section 2.6 as
though, such Company Options were fully vested immediately prior to the
Effective Time), and not exercised or expired, to a current or former employee,
director or independent contractor of the Company or any of its subsidiaries or
any predecessor thereof to purchase shares of Company Common Stock pursuant to
the Employee Option Plan or the Director Stock Option Plan (together with the
Employee Option Plan, collectively, the "Option Plans").
2.6.2 The Company represents that each director of the Company who
holds Company Options has agreed for the benefit of Parent and Merger Sub to
exercise all of his Company Options prior to the Effective Time or to surrender
such Company Options in the manner prescribed by Section 2.6(a) and each such
director has agreed that he shall provide notice to the Company of his decision
to exercise or surrender his Company Options prior to the Effective Time.
2.6.3 Prior to the Effective Time, the Company shall use reasonable
efforts to (i) obtain any consents from holders of Company Options and (ii) make
any amendments to the terms of such stock option or compensation plans or
arrangements that are necessary to give effect to the transactions contemplated
by this Section 2.6.
2.6.4 The Company represents that, as of the date hereof, 227,500
options have been granted and are outstanding under the Employee Option Plan and
22,310 options have been granted and are outstanding under the Director Stock
Option Plan; and, prior to the Effective Time, the Company agrees that it shall
not issue any additional options under the Option Plans.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company makes the representations and warranties to Parent and Merger
Sub set forth hereinafter in this Article III. Such representations and
warranties are qualified by the Disclosure Schedules. The Disclosure Schedules
have been arranged in sections corresponding to the numbered and lettered
paragraphs contained in this Article III. The Company shall disclose all
matters set forth in the Disclosure Schedules in reasonable detail, with
appropriate cross-references.
3.1 Approval of the Company Board of Directors. The Board of Directors of
the Company, at a duly called and noticed meeting of the Company Board attended
by all of the incumbent Company Directors, by unanimous vote, have (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, are fair to and in the best interests of the Company
Shareholders, (ii) determined that the Merger Consideration to be paid to the
Company Shareholders pursuant to this Agreement is fair, from a financial
standpoint, to the Company Shareholders, (iii) approved this Agreement and the
transactions contemplated hereby, including the Merger and (iv) recommended that
the Company Shareholders approve this Agreement and the Merger and the other
transactions contemplated by this Agreement.
3.2 Organization and Qualification; No Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of The Commonwealth of Massachusetts and has the requisite corporate power and
authority and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("Approvals") necessary to own, lease and operate the assets it purports to own
or lease and operate and to carry on its business as it is now being conducted.
The Company is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
make such qualification or licensing necessary, except where the failure to be
so qualified or licensed would not have a Material Adverse Effect on the
Company. Except as set forth in Schedule 3.2 of the Disclosure Schedules, the
------------
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture, limited
liability company or other business association or entity (a "Subsidiary").
3.3 Articles of Organization and Bylaws. The Company has heretofore
furnished to Parent a complete and correct copy of its Articles of Organization
and Bylaws as most recently
17
<PAGE>
restated and subsequently amended to date. Such Articles of Organization and
Bylaws are in full force and effect and the Company is not in violation of any
of the provisions of its Articles of Organization or Bylaws.
3.4 Capitalization. The authorized capital stock of the Company consists
of (i) 2,000,000 shares of Company Common Stock, without par value, of which
1,276,411 shares have been issued and are outstanding, and (ii) 10,000 shares of
preferred stock, 2,940 of which, designated Series A Convertible Preferred
Stock, are issued and held in the Company's treasury. No shares of Company
Common Stock and no other shares of preferred stock are held in treasury.
Immediately prior to the Effective Time, (i) 1,276,411 shares of Common Stock
(plus any shares of Common Stock issued after the date hereof under the Option
Plans pursuant to the exercise of vested Company Options) will be issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
no shares of preferred stock will be outstanding and (iii) no shares of Company
Common Stock or preferred stock will be held by any Subsidiary of the Company.
There is no Convertible Security of the Company, or any right to purchase or
otherwise acquire any Company Equity Security (an "Equity Purchase Right"), that
is now outstanding and no Company Convertible Security or other Equity Purchase
Right shall be outstanding at or prior to the Effective Time. Except as
disclosed in Disclosure Schedule 3.4, the Company has not, during the past five
------------
(5) years reacquired or repurchased any of its shares of capital stock and there
are no obligations, contingent or otherwise, of the Company to repurchase,
redeem or otherwise acquire any shares of Company Common Stock, or provide funds
to or make any investment (in the form of a loan, capital contribution or
otherwise) in any entity. The Company has furnished to Parent copies of any
written agreement or understanding, and a summary of the material terms of any
oral agreement or understanding that relates to or restricts or otherwise
affects the ownership or transferability of any of the shares of Company Common
Stock, a list of which agreements and understandings, if any, is set forth on
Disclosure Schedule 3.4. There are no debt securities, or agreements or
------------
instruments governing any indebtedness of the Company that entitle the holders
thereof to vote (either currently, in the future or on the happening of any
event), on any matters on which shareholders of a Massachusetts corporation are
ordinarily entitled to vote.
3.5 Authority Relative to this Agreement. The Company has all necessary
corporate power and authority to execute and deliver this Agreement and (subject
to the approval of its
18
<PAGE>
Shareholders) to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than approval of its Shareholders). This Agreement has been
duly and validly executed and delivered by the Company and, assuming due
authorization, execution and delivery by Parent, this Agreement constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as the enforceability thereof may
be subject to or limited by (i) bankruptcy, insolvency, reorganization,
arrangement, moratorium, or other similar laws relating to or affecting rights
of creditors, and (ii) general equitable principles, regardless of whether the
issue of enforceability is considered in a proceeding in equity or at law.
3.6 SEC Documents; Financial Statements; No Undisclosed Liabilities.
3.6.1 SEC Documents. The Company has filed, and delivered to Parent
true and complete copies of, all required reports, schedules, forms, statements,
exhibits and other documents filed with the SEC since January 1, 1994 (the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act"), or the
Exchange Act, as the case may be, applicable to such SEC Documents, and none of
the 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.
3.6.2 Financial Statements. The financial statements of the Company
included in the SEC Documents comply in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles (except, in the case of unaudited statements, as
permitted by Form 10-Q and Regulation S-X as promulgated by the SEC) applied on
a consistent basis throughout the periods involved ("GAAP") (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated
19
<PAGE>
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments which are not
material in amount and the omission of the footnote disclosure).
3.6.3 No Undisclosed Liabilities. Except as set forth in the SEC
Documents or on Disclosure Schedule 3.6.3, neither the Company nor any of its
--------------
subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities and obligations
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
3.7 Disclosure Documents. The proxy statement of the Company (the
"Company Proxy Statement") to be filed with the SEC in connection with the
Merger, and any amendments or supplements thereto will, when filed, comply in
all material respects with the applicable requirements of the Exchange Act. At
the time of filing the Company Proxy Statement with the SEC, at the time the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to shareholders of the Company, at the time such shareholders vote on adoption
of this Agreement, and at the Effective Time, the Company Proxy Statement, as
supplemented or amended, if applicable, will not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties contained in this
Section 3.7 will not apply to statements or omissions included in the Company
Proxy Statement based upon information furnished to the Company in writing by
Parent or Merger Sub specifically for use therein.
3.8 Financial Statements. The Company has delivered to Parent (i) the
balance sheets of the Company at September 30, 1994, 1995, 1996 and 1997 and the
related statements of operations, shareholders equity and cash flows of the
Company for the fiscal years then ended (the "Audited Financial Statements"),
together with the audit opinions thereon of Sullivan Bille, P.C., independent
certified public accountants (the September 30, 1997 Balance Sheet is sometimes
herein called the "1997 Balance Sheet"); and (ii) the unaudited balance sheet of
the Company at December 31, 1997 and the related statement of operations,
shareholders equity and cash flows of the Company for the period then ended (the
"Interim Financial Statements" and, together with the Audited Financial
20
<PAGE>
Statements, the "Financial Statements"). Except as set forth in Disclosure
Schedule 3.8, the Financial Statements were prepared on an accrual basis in
- ------------
accordance with GAAP (subject, in the case of the Interim Financial Statements,
to normal year-end adjustments which will not have a Material Adverse Effect on
the Company and the omission of footnote disclosures therefrom), are complete
and correct in all material respects and present fairly the financial position
of the Company at the dates indicated and the results of its operations and the
changes in its cash flows for the periods then ended. The bad debt reserves and
any other contingency reserves set forth in the balance sheet of the Company in
the 1997 Balance Sheet are adequate to cover foreseeable losses due to the
uncollectability of accounts or other contingencies that may exist, and were
established in accordance with GAAP. During the fiscal year ended September 30,
1997, and subsequent periods, there have been no material amounts of bargain
purchases of inventory, sales of undervalued inventory or non-valued inventory,
dispositions of assets outside the ordinary course of business, or other such
non-recurring events, and there have been no material inventory writedowns or
other non-recurring events, that in either case shall have lead to above-normal
gross margins during the fiscal year ended September 30, 1997 or thereafter and
prior to the Effective Time.
3.9 Absence of Certain Changes or Events. Except as set forth in
Disclosure Schedule 3.9, since September 30, 1997, the Company has conducted its
------------
business in the ordinary course and there has not occurred: (i) any change that
has had or could be reasonably expected to have a Material Adverse Effect on the
Company; (ii) any amendments or changes in the Articles of Organization or
Bylaws of the Company; (iii) any damage to, destruction or loss of any asset of
the Company (whether or not covered by insurance) that could have a Material
Adverse Effect; (iv) any material change by the Company in its accounting
methods, principles or practices; (v) any material revaluation by the Company of
any of its assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business; (vi) any other action or event that would require the
consent of Parent pursuant to Section 5.8 if such action or event were to occur
or were to be taken after the date of this Agreement, including, any declaration
or payment of any dividend or distribution on, or the redemption or repurchase
of, any of the shares of capital stock of the Company, the sale or issuance of
any authorized, but unissued, shares of capital stock of the Company (other than
upon the exercise of vested Company Options under the Option Plans), the grant,
sale or issuance of any Convertible
21
<PAGE>
Securities, Equity Purchase Right or other Equity Securities by the Company
(other than the issuance of Common Stock upon exercise of outstanding stock
options under the Option Plans), the sale of any assets of the Company that is
outside the ordinary course of its business or is not consistent with its past
practices, the incurrence of any indebtedness or obligation, not reflected in
the 1997 Balance Sheet, that is either material in amount or outside the
ordinary course of the business of the Company, and any increase in compensation
or benefits payable to any of the officers, directors or employees of the
Company; or (vii) the execution of any agreement or understanding or the making
of any commitment to do any of the foregoing.
3.10 Material Contracts; Clients.
3.10.1 Disclosure Schedule 3.10 includes a list of all agreements to
-------------
which the Company is a party or by which the Company is bound (i) under which
the consequences of a default, nonrenewal or termination could have a Material
Adverse Effect on the Company; or (ii) pursuant to which payments might be
required or acceleration of benefits may be required upon a "change of
ownership" of the Company, which shall include any agreements or notes or other
instruments under which the Company borrows money or finances the purchase of
any goods or services, that grants any security interest or other lien or
encumbrance on any assets of the Company, restricts the scope or nature of or
places geographic restrictions on the business of the Company that governs the
provision of services by the Company to its clients, provides for the sale or
issuance of any shares of Company Common Stock or any Convertible Securities or
for the sale of any assets of the Company, other than in the ordinary course of
business consistent with past practice (collectively, the "Material Contracts").
Notwithstanding clause (i) of the foregoing, the Material Contracts shall not
include any of the following unless it requires the consent of the other party
in connection with the Merger:
(a) Any purchase commitment or other similar contract with a vendor or
supplier made in the ordinary course of business if such commitment involves
less than $25,000 in each transaction or series of related transactions;
(b) Any maintenance or service contract requiring payment at an
average rate of $5,000 per month or less and which is terminable by the Company
without penalty on not more than thirty (30) days' notice without penalty;
22
<PAGE>
(c) Any contract for the lease of personal property used by the
Company in the ordinary course of business requiring payment at a rate of $5,000
per month or less and which is terminable by the Company on not more than thirty
(30) days' notice without penalty;
(d) Any oral contract for the employment of any individual on a full-
time or part-time basis which is "at-will" and provides for annual compensation
of less than $75,000;
(e) Any other contract made in the ordinary course of business, the
performance of which over the life of the contract involves less than $25,000 of
annual, and less than $100,000 of aggregate, expenditures, consideration or
liability.
Except as set forth in Schedule 3.10 of the Disclosure Schedules, all
-------------
of the Material Agreements are valid and binding obligations of the Company and,
to the knowledge of the Company, of the other parties thereto, all such Material
Contracts are in full force and effect and there has not occurred any default
under or breach of any of the Material Contracts, whether by the Company or, to
the knowledge of the Company, by the other parties thereto and, to the knowledge
of the Company, no events or circumstances have occurred that, with the passage
of time or the giving of notice, or both, would constitute a breach or default
of any such Material Contract (whether by the Company or any of the other
parties thereto) under any of the Material Contracts, or would impair the
Company's rights or alter the rights or obligations of any third party under, or
give to any of the other parties any rights of termination, amendment,
acceleration or cancellation of any Material Contract, or result in the creation
of a lien or encumbrance on any of the assets of the Company.
3.10.2 Disclosure Schedule 3.10 also contains a list of the clients
-------------
or customers of the Company that accounted for more than 10% of the Company's
net revenues in the fiscal year ended September 30, 1997 or are expected to
account for more than 10% of its revenues in the fiscal year ending September
30, 1998 ("Material Clients"). Additionally, Schedule 3.10 shall identify any
-------------
service contracts awarded to or obtained by the Company from a Governmental
Entity or other Person with respect to any program or project as to which the
funding is contingent. Except as set forth on Schedule 3.10, there are no
-------------
disputes with any of the Material Clients.
3.11 Conflicts. Except as set forth in Disclosure Schedule 3.11, the
-------------
execution and delivery of this Agreement by the Company does not, and the
performance by the Company of its
23
<PAGE>
obligations and covenants under this Agreement will not, (i) conflict with or
violate the Articles of Organization or Bylaws of the Company, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree or Permit
applicable to the Company or by which its business, assets or properties is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, or impair the Company's rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of any Material Contract, or result in the creation
of a lien or encumbrance on any of the properties or assets of the Company
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, Permit, franchise or other instrument or obligation to which the
Company is a party or by which the Company or any of its properties is bound or
affected, except to the extent any of the foregoing under clauses (i), (ii) or
(iii) would not have a Material Adverse Effect on the Company. Except as set
forth in Disclosure Schedule 3.11, the execution and delivery of this Agreement
-------------
by the Company does not, and the performance of this Agreement by the Company
will not, require any consent, approval, authorization or Permit from, or any
filing with or notification to, any Governmental Entity, except for the filing
and recordation of appropriate merger or other documents as required by the
MBCL.
3.12 Compliance, Permits.
3.12.1 Except as disclosed in Disclosure Schedule 3.12, the Company
-------------
is not in conflict with, or in default or violation of, (i) any Law applicable
to the Company or by which any of its business operations or assets are bound or
affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company is a party or by which the Company or its business operations or any of
its assets are bound or affected, except in any case under this Section 3.12,
for such conflicts, defaults or violations which would not have a Material
Adverse Effect on the Company.
3.12.2 Except as disclosed in Disclosure Schedule 3.12, the Company
-------------
holds all Permits from Government Entities which are required in connection with
the operation of the businesses of the Company as such businesses are now being
conducted, except where failure to hold any of the foregoing would not have a
Material Adverse Effect on the Company (collectively, the
24
<PAGE>
"Company Permits"). The Company is in compliance with the terms of the Permits,
except where non-compliance would not have a Material Adverse Effect on the
Company.
3.13 Absence of Litigation. There are no claims, actions, suits,
proceedings or investigations that are pending, or, to the knowledge of the
Company, that are threatened, against the Company, or any assets or rights of
the Company, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign. Except as set forth in
Schedule 3.13 and Schedule 3.23, to the knowledge of the Company, there are no
- ------------- -------------
facts or circumstances that could reasonably be expected to lead to the
assertion or the bringing against the Company of any claims, actions, suits,
proceedings or investigations that would be expected to have a Material Adverse
Effect on the Company.
3.14 Employee Benefit Plans.
3.14.1 Employee Benefit Plans. Disclosure Schedule 3.14 lists all
-------------
employee pension plans (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all material employee
welfare plans (as defined in Section 3(1) of ERISA), and all other bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee benefit plans,
programs or arrangements, and any material current or former employment,
executive compensation, consulting or severance agreements, written or
otherwise, for the benefit of, or relating to, any employee of or consultant (or
former employee of or consultant) to the Company, any trade or business (whether
or not incorporated) which is a member of a controlled group including the
Company or which is under common control with the Company (an "ERISA Affiliate")
within the meaning of Section 414 of the Code, (all such plans, practices and
programs are referred to as the "Company Benefit Plans"), excluding agreements
with former employees under which the Company has no remaining monetary
obligations. Neither the Company nor any ERISA Affiliate maintains, or has ever
maintained, a Company Benefit Plan intended to qualify under Section 401(a) of
the Code or subject to Title IV of ERISA. There have been made available to
Parent copies of (i) each written Company Benefit Plan and (ii) the most recent
annual report on Form 5500 series, with accompanying schedules and attachments,
filed with respect to each Company Benefit Plan required to make such a filing.
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<PAGE>
3.14.2 Benefit Plan Matters. Except as set forth in Disclosure
Schedule 3.14, (i) no Company Benefit Plans promises or provides retiree medical
- -------------
or other retiree welfare benefits to any person, and no Company Benefit Plans is
a "multiemployer plan" as such term is defined in Section 3(37) of ERISA; (ii)
there has been no "prohibited transaction," as such term is defined in Section
406 of ERISA and Section 4975 of the Code with respect to any Company Benefit
Plan, which could result in any material liability to the Company; (iii) all
Company Benefit Plans are in material compliance with the requirements
prescribed by any and all statutes (including ERISA and the Code), orders, or
governmental rules and regulations currently in effect with respect thereto
(including all applicable requirements for notification to participants or the
Department of Labor, IRS or Secretary of the Treasury), and, the Company has
performed all obligations required to be performed by it under, are not in any
respect in default under or violation of, and the Company has no knowledge of
any default or violation by any other party to, any Company Benefit Plans; and
(iv) all contributions required to be made to any Company Benefit Plan pursuant
to the terms of such Company Benefit Plan have been made on or before their due
dates.
3.14.3 Employment Agreements; Consulting Agreements. Disclosure
Schedule 3.14 also sets forth a true and complete list of (i) all employment
- -------------
agreements with officers or key management personnel of the Company; (ii) all
agreements with consultants obligating the Company to make annual cash payments
in an amount exceeding $10,000; (iii) all employees of, or consultants to, the
Company who have executed a confidentiality or non-competition agreement with
the Company; (iv) all severance agreements, programs and policies of the Company
with or relating to its employees, excluding programs and policies required to
be maintained by law; and (v) all plans, programs, agreements and other
arrangements of the Company with or relating to its employees which contain
change in control provisions.
3.14.4 Labor Matters. Except as set forth in Schedule 3.14 of the
-------------
Disclosure Schedules, (i) there are no controversies, including any unfair labor
practice complaint, pending or, to the knowledge of the Company, threatened,
between the Company and any of its employees, nor to the knowledge of the
Company, is there any factual basis for any such controversy; (ii) the Company
is in compliance with all applicable Laws respecting employment and employment
practices, terms and conditions of employment and wages and hours and the
Company is not engaged in any unfair labor practice, (iii) the Company is not a
party to any collective bargaining
26
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agreement or other labor union contract applicable to persons employed by the
Company, nor to the knowledge of the Company have there been any activities or
proceedings of any labor union to organize any such employees within the past
five (5) years; and (iv) there have been no strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the Company
during the past five (5) years.
3.15 Restrictions on Business Activities. Except for this Agreement or as
set forth in Schedule 3.15 of the Disclosure Schedules, there is no non-
-------------
competition, invention or know-how transfer or confidentiality or information
sharing or other agreement or any judgment, injunction, order or decree binding
upon the Company which has or could have the effect of prohibiting or impairing
any business activities or practices of the Company, any acquisition of assets
by the Company or the conduct of any business by the Company as currently
conducted or as proposed to be conducted by the Company.
3.16 Tangible Assets. Schedule 3.16 of the Disclosure Schedules contains
-------------
a list of all machinery, equipment, computers, and substantially all of the
furniture, fixtures, tools, spare parts, repair materials and other similar
assets or tangible personal property, wherever located, that are leased, used or
owned by the Company (the "Tangible Assets"). Except as set forth on Schedule
--------
3.16, the Tangible Assets (a) are in good working order and condition (ordinary
- ----
wear and tear excepted), and have been properly maintained, except to the extent
of any failure to maintain under this clause (a) that would not be expected to
have a Material Adverse Effect on Tangible Assets and (b) are in a condition
such that their continued use or lease by the Company, in the manner used or
leased thereby prior to the Closing Date, will not violate or breach, in any
material respect, any applicable laws or regulations or any Material Contracts
to which the Company is a party.
3.17 Intangible Personal Property. Schedule 3.17 of the Disclosure
-------------
Schedules contains a true and correct listing of all proprietary information,
know-how, and intellectual property and intangible assets, owned by the Company
or in which the Company has rights or licenses, and which are material to the
business of the Company, including patents, copyrights, trademarks, service
marks, trade names and all applications therefor, processes, trade secrets,
know-how, software, and protected formulae (collectively, "Intellectual Property
Rights"). Except as set forth on
27
<PAGE>
Schedule 3.17, to the knowledge of the Company, neither the Company nor any
- -------------
present or former employees thereof, has infringed, or is now infringing, any
Intellectual Property Rights of any other Person ("Third Party Intellectual
Property Rights") and the Company has not received any written notice or other
indication of any such claim of infringement. The Company owns, or holds,
adequate licenses or other rights to use, all Intellectual Property Rights used
in or necessary for the operation of its businesses as conducted now and since
January 1, 1996. The Company is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations hereunder,
in violation of any licenses, sublicenses and other agreements as to which the
Company is a party and pursuant to which the Company is authorized to use any
Third-Party Intellectual Property Rights. Except as set forth in Schedule 3.17
-------------
hereto, all patents, registered trademarks, service marks and copyrights held by
the Company are valid and subsisting. No claims with respect to the patents,
registered and material unregistered trademarks and service marks, registered
copyrights, trade names and any applications therefor owned by the Company or
any trade secret material to the Company, or Third Party Intellectual Property
Rights to the extent arising out of any use, reproduction or distribution of
such Third Party Intellectual Property Rights by or through the Company, are
currently pending or, to the knowledge of the Company, are overtly threatened by
any Person. To the knowledge of the Company, there are no bona fide claims (i)
to the effect that the manufacture, sale, licensing, provision or use of any
product, or of any Intellectual Property Right or Third Party Intellectual
Property Right or of any other information as now used, provided, sold or
licensed or proposed to be used or provided, or licensed by the Company,
infringes on any copyright, patent, trademark, service mark or trade secret of
any other Person; (ii) against the use by the Company of any trademarks, trade
names, trade secrets, copyrights, patents, technology, know-how or computer
software programs and applications used in the business of the Company as
currently conducted or as proposed to be conducted; (iii) challenging the
ownership, validity or effectiveness of any of the Company's Intellectual
Property Rights or other trade secret material to the Company; or (iv)
challenging the license or legally enforceable right to use of the Third Party
Intellectual Rights by the Company. Except as set forth in Schedule 3.17, the
-------------
Company has valid and legally binding non-competition and confidentiality
agreements with each of its officers and employees who perform professional,
management, research, development and consulting services for or to any of the
clients of the Company or any other employee or consultant that has been
28
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provided access by the Company to any Intellectual Property Rights or any Third
Party Intellectual Property.
3.18 Real Properties; Leases. Attached hereto as Schedule 3.18 of the
-------------
Disclosure Schedules contains a list setting forth the addresses and brief
descriptions of each of the real properties that are owned or leased by the
Company, the improvements and structures thereon and the uses being made thereof
by the Company. Each such description indicates, among other things, with
respect to each such real property, whether it is leased or owned. Schedule
--------
3.18 also contains a list of all leases under which the Company possesses or
- ----
uses real property (the "Real Property Leases") and all leases under which the
Company possesses or uses items of tangible personal property (the "Personal
Property Leases"). True, correct and complete copies of the Real Property
Leases and Personal Property Leases have been delivered to Parent, together with
the names and addresses of the lessors thereunder. The Company is not, and as
of the Closing Date and Effective Time will not be, in default and, to the
knowledge of the Company, no facts or circumstances have occurred which through
the passage of time or the giving of notice, or both, would constitute a
default, under any of the Real Property Leases or the Personal Property Leases.
In addition, the Company has delivered to Parent true, correct and complete
copies of all environmental studies and reports in the possession or control of
the Company with respect to any of the real properties described in Schedule
--------
3.18. All structures and facilities on the real properties listed on Schedule
- ---- --------
3.18 are equipped in substantial conformity with laws and governmental
- ----
regulations applicable to the business of the Company and, to the knowledge of
the Company, the zoning of each parcel of real property permits the presently
existing improvements and continuation of the business presently conducted
thereon and no changes therein, and no condemnation or similar proceedings
against any of the real properties set forth on Schedule 3.18 are pending or
-------------
threatened or will occur as a result of the execution and delivery of this
Agreement or the consummation of the Merger.
3.19 Accounts Receivable. At the Closing, the Company shall deliver to
Parent an accurate list, as of a date not more than five (5) days prior to the
Closing Date, of all accounts and notes receivable of the Company, including
payments earned under contracts for services rendered or to be rendered to
clients of the Company (the "Receivables"), whether or not reflected in the 1997
Balance Sheet, showing amounts due in 30-day aging categories. The Receivables
on such listing
29
<PAGE>
arose, or will have arisen, from the provision of services or the sale of goods
by the Company in the ordinary course of business. The Company has not received
any notice or knows of any counterclaim or set-off with respect to any of the
Receivables, or any facts or circumstances that would be the basis for any such
counterclaim or set-off, which is not reflected or taken into account in the bad
debt reserves set forth in the 1997 Balance Sheet.
3.20 Inventories. All inventories of the Company, including all raw
materials, work in process or finished goods (the "Inventory") are of a good and
marketable quality, and of quality and quantity saleable or usable in the
ordinary course of business, except for obsolete, damaged or slow moving items
at below standard quality, which, in the aggregate, are not material in amount
and which, in any case, have been written down to their net realizable value.
Except as disclosed in Schedule 3.20, the Company is not under any liability or
-------------
obligation with respect to the return of Inventory in the possession of its
customers or distributors. Since October 1, 1996, no Inventory has been sold
or disposed of except through sales in the ordinary course of business
consistent with past practices. All work-in-process inventory is either
dedicated to firm orders or finished goods produced for stock and saleable in
the ordinary course.
3.21 Title to and Adequacy of Assets. Except as disclosed on Schedule
--------
3.21 of the Disclosure Schedules, the Company has good and marketable title to
- ----
its assets, including the Tangible Assets and Intellectual Property Rights, free
and clear of restrictions or conditions on transfer or assignment, and free and
clear of all mortgages, liens, security interests, encumbrances, pledges,
options, leases, equities, claims, charges, conditions, and conditional sale
contracts, except Permitted Liens. Except as set forth on Schedule 3.21, the
-------------
assets of the Company constitute all the assets, properties, rights, privileges
and interests that are necessary for the operation of its business substantially
in the same manner as such business is now, and since January 1, 1996 has been,
conducted and such assets are in the exclusive possession and control of the
Company, each of which has the unencumbered right to use and dispose of such
assets without interference from third parties, except where all such failures,
taken as a whole, would not have a Material Adverse Effect on the Company.
3.22 Taxes.
30
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3.22.1 For purposes of this Agreement, "Tax" or "Taxes" shall mean
taxes, fees, levies, duties, tariffs, imposts, and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean returns, reports, and
information statements with respect to Taxes required to be filed with the IRS
or any other taxing authority, domestic or foreign, including, without
limitation, consolidated, combined and unitary tax returns. "Income Tax" or
"Income Taxes" means Taxes imposed on net income within the meaning of Section
901 of the Code.
3.22.2 Other than as disclosed in Schedule 3.22 of the Disclosure
-------------
Schedules, the Company has filed all United States Federal Income Tax Returns
and has not failed to file any other Tax Returns required to be filed by them
under any applicable federal, state, local or foreign laws, and the Company has
paid and discharged all Taxes due in connection with or with respect to the
periods or transactions covered by such Tax Returns and have paid all other
Taxes as are due, except (i) such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are required)
and for which adequate reserves have been established, and (ii) as may be
determined to be owed upon completion of any Tax Return not yet filed based upon
an extension of time to file, and there are no other Taxes that would be due if
asserted by a taxing authority, except with respect to which the Company is
maintaining adequate reserves. Except as disclosed in Schedule 3.22, (i) there
-------------
are no tax liens on any assets of the Company; and (ii) the Company has not
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax; and (iii) to the Company's
knowledge, there are no facts or circumstances which could reasonably be
expected to constitute a basis for assessments or claims for the payment of
additional Taxes by the Company. The accruals and reserves for Taxes (including
deferred taxes) reflected in the Company's 1997 Balance Sheet are adequate to
cover all Taxes required to be accrued through the date thereof (including
interest and penalties, if any, thereon and Taxes being contested) in accordance
with generally accepted accounting principles.
31
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3.22.3 The Company is not currently the beneficiary of any extension
of time within which to file any Tax Return.
3.22.4 A true, correct and complete copy of each of the income Tax
Returns filed by the Company during, or related to, any of the preceding three
calendar years, have been furnished to Parent. The amount set up as reserves
for Taxes, if any, on the 1997 Balance Sheet is sufficient for the payment of
all unpaid Taxes of the Company accrued for or applicable to the period ended on
September 30, 1997 and all years and periods prior thereto and for which the
Company, at any of those dates, may have been liable. Except as set forth in
Schedule 3.22 of the Disclosure Schedules, the Company has properly withheld and
- -------------
paid, or accrued for payment, when due, to appropriate state and/or federal
authorities, all sales and use taxes, if any, and all amounts required to be
withheld from payments made to its employees, independent contractors,
creditors, shareholders, or other third parties and has also paid all employment
taxes as required under applicable laws except to the extent all such failures
to do so taken as a whole would not have a Material Adverse Effect on the
Company.
3.22.5 Except as set forth in Schedule 3.22, the Company has not
-------------
filed a consent under Section 341(f) of the Code concerning collapsible
corporations.
3.22.6 Except as set forth in Schedule 3.22, the Company has not made
-------------
any payments, is not obligated to make any payments, and is not a party to any
agreement that under any circumstances could obligate it to make any payments,
that would not be deductible by the Company or Parent, in whole or in part under
Section 280G or Section 162(m) of the Code. The Company has not been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code. The Company is not a party to any tax allocation or tax sharing
agreement.
3.22.7 Except as set forth in Schedule 3.22, the Company (i) is not
-------------
now required and has never been required to file a consolidated or combined
state or federal income Tax Return with any other person or entity and (ii) is
not liable for the Taxes of any person under Treasury Regulation (S) 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor, by contract or otherwise.
32
<PAGE>
3.23 Environmental Matters. Except as set forth in Schedule 3.23 of the
-------------
Disclosure Schedules, (i) the Company has obtained all applicable permits,
licenses and other authorizations which are required to be obtained under all
applicable federal, state or local laws or any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, or hazardous or toxic materials or wastes
into ambient air, surface water, ground water, or land or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("Environmental Laws") by the Company (or its agents) except
where any failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on the Company; (ii) the Company is in compliance with
all terms and conditions of such required permits, licenses and authorizations,
and also is in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Laws except where any failure to do so
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company; (iii) there has not been any past or present violations of
Environmental Laws or any event, condition, circumstance, activity, practice,
incident, action or plan which could interfere with or prevent continued
compliance with or which would give rise to any common law or statutory
liability, or otherwise form the basis of any claim, action, suit or proceeding,
against the Company based on or resulting from any business operations or other
activities of the Company, including the storage, disposal, transport or
handling, or the emission, discharge or release into the environment, of any
pollutant, contaminant or hazardous or toxic material or waste, except, in any
case under this clause (iii) as to which any violation, event, condition,
circumstance, activity, practice, incident, action or plan which would not have,
either individually or in the aggregate, a Material Adverse Effect on the
Company or Parent; and (iv) the Company has taken all actions necessary under
applicable Environmental Laws to register any products or materials required to
be registered by the Company (or any of its agents) thereunder.
3.24 Interested Party Transactions. Except as set forth in Schedule 3.24
-------------
of the Disclosure Schedules, there are no existing or pending transactions, nor
are there any agreements or understandings, between the Company and any
33
<PAGE>
of its shareholders, or between the Company and any of its officers, directors,
or employees, including any transactions or agreement relating to (i) the
purchase from or sale to the Company of any goods or services, (ii) the sale,
lease, licensing or use of any assets to or from the Company, with or without
adequate compensation, or (iii) any borrowings from or loans to the Company.
3.25 Insurance. All fire and casualty, general liability, business
interruption, product liability, professional liability and sprinkler and water
damage insurance policies maintained by the Company are set forth in Schedule
--------
3.25 of the Disclosure Schedules. All such policies are with reputable
- ----
insurance carriers, are now in full force and effect and those policies or other
policies covering the same risks and in substantially the same amounts have been
in full force and effect continuously for the past five (5) years.
3.26 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any Company Shareholders, other than amounts due to
Tucker Anthony Incorporated as set forth in Schedule 3.26.
-------------
3.27 Illegal or Improper Payments. During the past three (3) years
neither the Company nor, to the Company's knowledge, any of the directors,
officers or employees of the Company has, in connection with the operation of
the business of the Company, (i) made, either directly or indirectly, any
illegal political contribution from assets of the Company, (ii) been involved in
the disbursement or receipt of corporate funds in violation of law, for the
purpose of influencing the decision of any governmental or private official in
any illegal or improper manner, (iii) paid any employees or agents for purposes
other than the satisfaction of lawful obligations, or (iv) been involved in the
willful inaccurate recording of payments and receipts on the books of the
Company which would result in a violation of law.
3.28 Bank Accounts; Powers of Attorney. Schedule 3.28 of the Disclosure
-------------
Schedules sets forth a true and complete listing, as of the date hereof, of the
name and addresses of each bank or other institution in which the Company has an
account or safe deposit box, the account numbers thereof, and the names of all
persons authorized to draw thereon or to have access thereto, and the names of
all persons, if any, who hold any powers of attorney for or granted by the
Company.
34
<PAGE>
3.29 Full Disclosure. No representation or warranty made by the Company
in this Agreement and no statement contained in any certificate or schedule
furnished or to be furnished by the Company to Parent in, or pursuant to the
provisions of, this Agreement, including without limitation the Disclosure
Schedules, contains or shall contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make statements herein or
therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub each hereby represents and warrants to the Company
that:
4.1 Organization and Qualification. Parent and Merger Sub each is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority and
is in possession of all Approvals necessary to own, lease and operate the
properties it purports to own, operate or lease and to carry on its business as
it is now being conducted.
4.2 Authority Relative to this Agreement. Parent and Merger Sub each has
all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Merger Sub, and the consummation by Parent and Merger Sub of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Parent and Merger Sub, and no other
corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
The Board of Directors of Parent has determined that it is advisable and in the
best interest of Parent and Parent's shareholders for Merger Sub to enter into a
business combination with the Company upon the terms and subject to the
conditions of this Agreement. This Agreement has been duly and validly executed
and delivered by Parent and Merger Sub and, assuming due authorization,
execution and delivery thereof by the Company, constitutes a legal, valid and
binding obligation of Parent and Merger Sub enforceable against each thereof in
accordance with its terms, except as the enforceability thereof may be subject
to or limited by (i) bankruptcy, insolvency, reorganization, arrangement,
moratorium, or other similar laws relating to or affecting rights of
35
<PAGE>
creditors, and (ii) general equitable principles, regardless of whether the
issue of enforceability is considered in a proceeding in equity or at law.
4.3 Disclosure Documents. (i) The information with respect to Parent and
its subsidiaries that Parent or Merger Sub furnishes to the Company in writing,
specifically for use in the Company Proxy Statement will not contain, any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading at the time of filing the Company
Proxy Statement with the SEC, at the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to shareholders of the Company,
at the time the shareholders vote on adoption of this Agreement and at the
Effective Time.
4.4 No Conflict, Required Filings and Consents.
4.4.1 The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance by Parent and Merger Sub of its
respective obligations under this Agreement will not, (i) conflict with or
violate the Certificate of Incorporation or Bylaws of Parent or Merger Sub, (ii)
conflict with or violate any Law applicable to Parent or Merger Sub or by which
its properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation, or result in the creation of a lien or
encumbrance on any of the properties or assets of Parent or Merger Sub pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Merger
Sub is a party or by which Parent or any of its subsidiaries or its or any of
their respective properties are bound or affected, except where such default,
termination, amendment, acceleration, cancellation or lien would not have a
Material Adverse Effect on Parent and its consolidated subsidiaries taken as a
whole.
4.4.2 The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance by Parent and Merger Sub of its
respective obligations under this Agreement will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except for (i) the filing and recordation of appropriate
36
<PAGE>
merger or other documents as required by the MBCL and the DGCL, and (ii) the
consent of Parent's bank lenders or similar financial institutions.
4.5 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Merger Sub.
4.6 Ownership of Merger Sub: No Prior Activities. Merger Sub has been
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement. As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any material obligations or
liabilities or engaged in any business activities or entered into any agreements
or arrangements with any person.
4.7 Absence of Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to Parent's or Merger Sub's
knowledge, threatened against Parent or Merger Sub, or any properties or rights
of Parent or Merger Sub, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign and which
could reasonably be expected to adversely affect Parent's or Merger Sub's
ability to perform its obligations under this Agreement or consumate any of the
transactions contemplated hereby.
4.8 Investment Intention. Parent and Merger Sub has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of acquiring the Company Common Stock. Parent and Merger
Sub each confirms that the Company has made available to Parent and Merger Sub
the opportunity to ask questions of the officers and management of the Company
and to acquire additional information about the business, assets and financial
condition of the Company. Parent and Merger Sub are acquiring the Company
Common Stock for investment only, and not with a present intention or view
toward or for sale in connection with any distribution thereof.
37
<PAGE>
4.9 Funds Available. Parent has, and will have at the Closing, sufficient
cash, available lines of credit and/or other sources of immediately available
funds and shall make such funds available to Merger Sub to enable Merger Sub to
make payment of the Merger Consideration.
4.10 Full Disclosure. No representation or warranty of Parent or Merger
Sub contained in this Agreement and no statement contained in any certificate or
schedule furnished or to be furnished by Parent or Merger Sub to the Company in,
or pursuant to the provisions of, this Agreement, contains or will contain any
untrue statement of a material fact or omits or shall omit to state any material
fact necessary, in light of the circumstances under which it was made, in order
to make the statements herein or therein not misleading.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 No Solicitation.
5.1.1 Unless and until this Agreement is terminated in accordance
with its terms, neither the Company nor any of its officers, directors,
employees, agents or other Representatives shall (i) solicit, initiate, or
encourage, or enter into discussions or any letter of intent or agreement with
respect to, any inquiries, proposals or offers that contemplate, propose or
relate to any Acquisition Proposal (as hereinabove defined), (ii) undertake or
consummate, any sale or other disposition of, or grant of any rights or options
with respect to, or any pledge, hypothecation or encumbrance of, any of the
outstanding shares of capital stock of the Company or any authorized but
unissued shares of capital stock or Convertible Securities of the Company; or
(iii) provide information regarding the Company or its businesses or assets,
capitalization, financial condition or operating results to any Person (other
than as provided in Section 5.3 hereof or to a government agency having
jurisdiction over the Company).
5.1.2 The Company shall immediately notify Parent after receipt of
any Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company in
connection with a possible Acquisition Proposal or for access to the properties,
books or records of the Company by any person or entity that informs the Board
of Directors of the Company that it is considering making, or has made, an
Acquisition Proposal.
38
<PAGE>
5.1.3 The Company shall immediately cease and cause to be terminated
any existing discussions or negotiations with any person (other than Parent)
conducted heretofore with respect to possible Acquisition Proposal. The Company
agrees not to release any third party from the confidentiality provisions of any
confidentiality agreement to which the Company is a party.
5.1.4 The Company shall ensure that all of the Company's
Representatives are aware of the restrictions described in this Section 5.1 and
the Company shall take all actions necessary to assure that such Representatives
comply with those restrictions. The Company shall be responsible for any breach
of those restrictions by any of its Representatives.
5.1.5 Provided, however, that nothing in this Agreement shall
-------- -------
prohibit the Board of Directors of the Company from furnishing information to,
or entering into, maintaining or continuing discussions or negotiations with, or
approving, entering into or recommending to the Company's shareholders an
agreement with, any person that makes an unsolicited Acquisition Proposal after
the date hereof, or withdrawing or modifying the approval or recommendation of
the Board of Directors with respect to the Merger, if, and to the extent that,
the Board of Directors of the Company, after consultation with and based upon
the advice of outside legal counsel, determines in good faith that (a) such
Acquisition Proposal would likely be more favorable to the Company's
shareholders than the Merger and (b) the failure to take such action would
result in a breach by the Board of Directors of the Company of its fiduciary
duties to the Company's shareholders under applicable law, and, prior to
furnishing any non-public information to such person, the Company receives from
such person an executed confidentiality agreement with provisions no less
favorable to the Company than the Confidentiality Agreement relating to the
furnishing of confidential information of the Company to Parent referred to in
Section 5.3. The Company shall promptly notify Parent if the Company or any
representative or agent thereof is prepared to provide access to the properties,
books or records of the Company or any of its past or present Subsidiaries to
any Person who has made or contemplates possibly making an Acquisition Proposal,
and the Company shall at such time inform Parent of the material terms of any
such Acquisition Proposal and any indication of a Person of an intention to
possibly make an Acquisition Proposal.
5.2 Shareholder Meeting; Proxy Material. The Company shall cause a
meeting of its shareholders (the "Company Shareholder Meeting") to be duly
called and held as soon as reasonably
39
<PAGE>
practicable for the purpose of voting on the approval and adoption of this
Agreement and the Merger. The Directors of the Company shall, subject to their
fiduciary duties under the MBCL as determined by the Board of Directors in their
reasonable good faith judgment, recommend approval and adoption of this
Agreement and the Merger by the Company's shareholders. In connection with such
meeting, the Company (i) will promptly prepare and file with the SEC, will use
its best efforts to have cleared by the SEC and will thereafter mail to its
shareholders as promptly as practicable the Company Proxy Statement and all
other proxy materials for such meeting, (ii) subject to the fiduciary duties of
the Board of Directors of the Company under the MBCL as determined by the Board
of Directors will use its best efforts to obtain the necessary approvals by its
shareholders of this Agreement and the transactions contemplated hereby and
(iii) will otherwise comply with all legal requirements applicable to such
meeting. The Company has been advised that all of its directors and executives
currently intend to vote all shares owned by them in favor of the Merger. The
Company will provide Parent with a copy of the preliminary proxy statement and
all modifications thereto prior to filing or delivery to the SEC and will
consult with Parent in connection therewith. The Company will notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Company
Proxy Statement or for additional information and will supply Parent with copies
of all correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the
Company Proxy Statement or the Merger. If at any time prior to the Company's
Shareholder Meeting there shall occur any event that should be set forth in an
amendment or supplement to the Company Proxy Statement, the Company will
promptly prepare and mail to its shareholders such an amendment or supplement.
5.3 Access. The Company shall make available to Parent all information
regarding the Company that Parent or its Representatives reasonably may request
and shall authorize all reasonable visits to the Company's premises with such
staff, consultants and experts as Parent may reasonably request. Parent agrees
to coordinate closely all such activities with the Company's CEO or Chief
Financial Officer and to conduct any such inquiries with appropriate discretion
and sensitivity to the Company's relationships with its employees, clients and
suppliers. The Parties acknowledge that certain of the information made
available to one another pursuant to this Section 5.3 and otherwise in
connection with the Merger may be confidential, proprietary or otherwise
nonpublic, and each Party agrees, for itself and for each of Representatives,
that it shall continue to comply with its obligations
40
<PAGE>
under that certain Confidentiality Agreement between Parent and the Company
dated as of November 10, 1997, a copy of which is attached hereto as Exhibit B
---------
(the "Confidentiality Agreement"). The respective agreements of Parent and the
Company contained in Sections 1, 2, 3, 4, 5, and 8 of the Confidentiality
Agreement, which by this reference are incorporated herein and made an integral
part of this Agreement, shall survive any termination of this Agreement and the
consummation of the Merger, except that if the Merger is consummated, the
obligations of and restrictions on Parent thereunder shall thereupon terminate.
Each Party shall remain responsible for any disclosure of Confidential
Information by any of its Representatives.
5.4 Cooperation. The Parties shall cooperate with each other and each
Party agrees that it shall use its reasonable best efforts (i) to prepare and
file promptly all necessary documentation, to effect all applications, notices,
petitions and filings, and to obtain as promptly as practicable all consents or
Permits required from of all third parties and Governmental Entities which are
necessary or advisable to consummate the Merger and (ii) to satisfy or cause the
satisfaction of the conditions precedent set forth in Article VI over which it
has any control. The Parties agree that they will consult with each other with
respect to the obtaining of all such consents and Permits, and each Party will
keep the other apprised of the status of matters relating to the satisfaction of
the conditions precedent to and the completion of the Merger. Each Party shall,
upon request, furnish the other Party with all information concerning itself as
may be reasonably necessary or advisable in connection with any filing or
application made by or on behalf of such other Party to any Governmental Entity
in connection with the Merger. Each Party shall promptly advise the other Party
upon receiving (i) any communication from any Governmental Entity whose consent
or approval is required for consummation of the Merger which causes such Party
to believe that there is a reasonable likelihood that any required Governmental
Approval will not be obtained or that the receipt of any such Governmental
Approval will be materially delayed, or (ii) any notice or a copy of any
complaint or other filing which indicates that any Governmental Entity or other
third party intends to seek or is seeking an injunction, restraining order or
decree or judgment to halt or delay the consummation of the Merger.
5.5 Cooperation in Arrangements with Lenders. The Company shall, and
shall cause its subsidiaries to, cooperate with and assist Parent and its
professionals and advisors in arranging for the borrowing by Parent at the
Effective Time to fund this transaction and to cause the continuation of all
indebtedness of the Company, and the Company shall provide whatever other
assistance and
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cooperation Parent and its professionals and advisors might reasonably request
in connection therewith.
5.6 Advice of Changes. Each Party shall promptly advise the other Party
of any change or event having a Material Adverse Effect on it or its ability to
perform its obligations under this Agreement or which it believes would or may
be reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants contained herein or to preclude the
satisfaction of one or more of the conditions set forth in Article VI.
5.7 Current Information. During the period from the date of this
Agreement to the Closing Date, the Company will cause one or more of its
designated representatives to confer on a regular and frequent basis (not less
than bi-weekly) with representatives of Parent and to report the general status
of the ongoing operations of the Company. The Company will promptly notify
Parent of (a) any material adverse change in the normal course of business or in
the operation of the properties of the Company, (b) any governmental complaint,
investigation or hearing (or communications indicating that the same may be
contemplated), or (c) the institution or the threat of material litigation
involving the Company, and will keep Parent fully informed of such events. The
Company will provide to Parent copies of the minutes (or consents in lieu of
meeting) of its Board of Directors and all committees thereof promptly following
each such meeting; provided, however, that the Company may omit therefrom any
portion of such minutes that it determines, with the concurrence of its counsel,
relates to the Parties' compliance or non-compliance with the terms of this
Agreement or any matter which is subject to an attorney-client privilege.
5.8 Conduct of Business by the Company. The Company shall (a) conduct its
business in the usual, regular and ordinary course of business consistent with
past practice (except as required by applicable Law or by this Agreement), (b)
use all reasonable efforts to maintain and preserve intact its business
organization, employees and advantageous contractual and business relationships
and retain the services of its officers and key employees (including by causing
its current insurance policies not to be cancelled or terminated or any of the
coverage thereunder to lapse prior to or upon the Closing, unless simultaneously
with such event replacement policies providing substantially similar coverage
for substantially similar (or lesser) premiums are in full force and effect),
(c) conduct relations with its employees, including hiring and terminating
practices, only in the ordinary course of business and consistent with past
practice, and (d) take no action which could reasonably be expected to adversely
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affect or delay the ability of the Company or Parent or any of their respective
direct or indirect subsidiaries to obtain any necessary approvals of any
Governmental Entity or other third persons required for the Merger or for the
transactions contemplated in connection therewith, or to perform its covenants
and agreements under this Agreement.
5.9 Certain Operating Covenants. Without Parent's prior written consent
(which consent shall not be unreasonably withheld or delayed), and without
limiting the generality of the provisions of Section 5.7, the Company shall not:
5.9.1 Amend or otherwise change the Articles of Organization or
Bylaws of the Company;
5.9.2 Issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class (other than upon the exercise of vested Company Options under
the Option Plans), Convertible Securities or any other rights of any kind to
acquire any shares of capital stock or Convertible Securities, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company;
5.9.3 Sell, pledge, dispose of, grant any security interest in or
encumber any assets of the Company (except for (i) sales of assets or inventory
in the ordinary course of business and in a manner consistent with past
practice, (ii) dispositions of obsolete or worthless assets and (iii) sales of
immaterial assets not in excess of $10,000 individually or $25,000 in the
aggregate);
5.9.4 (i) Declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, or (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) amend the terms or change the period of exercisability
of, purchase, repurchase, redeem or otherwise acquire, any of its shares of
Common Stock or propose to do any of the foregoing;
5.9.5 (i) Acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any person or, except in
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the ordinary course of business consistent with past practice or in connection
with purchases of equipment or capital improvements made in the ordinary course
of business and consistent with past practices, make any loans or advances,
(iii) enter into any new or amend or terminate any existing Material Contract;
(iv) authorize any capital expenditures or purchase of fixed assets which are,
in the aggregate, in excess of $25,000; or (v) enter into or amend any contract,
agreement, commitment or arrangement to effect any of the matters prohibited by
this Section 5.9.5;
5.9.6 Increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of non-officer
employees of the Company in accordance with past practice or grant any severance
or termination pay to, or enter into any employment or severance agreement with
any director, officer or other employee of the Company, or establish, adopt,
enter into or amend any collective bargaining, any Company Benefit Plan or
other plan, agreement, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees, except, in each case, as may
be required by law;
5.9.7 Take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable);
5.9.8 Make any material tax election inconsistent with past practice
or settle or compromise any material federal, state, local or foreign Tax
liability or agree to an extension of a statute of limitations, except to the
extent the amount of any such settlement has been reserved for in the Financial
Statements;
5.9.9 Pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practices of current liabilities
that have become mandatorily due and payable and are reflected or reserved
against in the Financial Statements; or
5.9.10 Take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.9.1 through 5.9.9 above, or any action which
would make any of the representations or
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warranties of the Company contained in this Agreement untrue or incorrect or
prevent the Company from performing or cause the Company not to perform its
covenants hereunder.
5.10 Shareholder and Non-Competition Agreements.
5.10.1 The Company shall have arranged for each of the Management
and Principal Shareholders that are named on Schedule 5.10.1 hereto to execute
---------------
and deliver to Parent a Shareholders' Agreement, substantially in the form of
Exhibit C hereto, as soon as reasonably practicable.
- ---------
5.10.2 The Company shall have arranged for each of the Management
and Principal Shareholders and any other individuals identified on Schedule
--------
5.10.2 hereto (collectively, "Non-Compete Signatories"), to execute and deliver
to Parent a Non-Competition Agreement substantially in the form of Exhibit D
---------
hereto.
5.10.3 Such Shareholders' Agreements and Non-Competition Agreements
shall provide that, if this Agreement is terminated in accordance with its
terms, such Shareholders' Agreements and Non-Competition Agreements shall
terminate at the same time.
5.11 Fair Price Structure. If any "fair price," "control share
acquisition" or "moratorium" statute or other anti-takeover or similar statute
or regulation or any state "blue sky" statute shall become applicable to the
transactions contemplated hereby, the Company and the members of the Board of
Directors of the Company shall grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby and thereby may be
consummated as promptly as practicable on the terms contemplated hereby and
thereby and otherwise act to minimize the effects of such statute or regulation
on the transactions contemplated hereby or thereby.
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ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of the Parties. The obligations of Parent,
Merger Sub and the Company to consummate the Merger are subject to the
satisfaction of each of the following conditions on or before the Termination
Date (as hereinafter defined):
6.1.1 Approval by the Shareholders. The Merger shall have been
approved by (i) the affirmative vote or written consent of the holders of a two-
thirds of the shares of Company Common Stock that are outstanding and entitled
to vote thereon in accordance with the MBCL and the Articles of Organization and
Bylaws of the Company and (ii) Parent as the sole shareholder of Merger Sub.
6.1.2 No Pending or Threatened Claims. There shall be no claim,
action, suit, investigation or other proceeding pending or overtly threatened
before any court or other Governmental Entity that presents a substantial risk
of restraint or prohibition of the Merger or the obtaining of material damages
from the Company, Parent or Merger Sub or their respective officers or directors
in connection therewith; and no such restraint or prohibition shall be effective
as of the Closing or the Effective Time, whether or not the action in which the
same was entered shall remain pending.
6.2 Conditions to the Obligations of Parent and Merger Sub. The
obligations of Merger Sub to consummate the Merger, and of Parent to cause
Merger Sub to consummate the Merger, are further subject to the satisfaction of,
or Parent's written waiver of, each of the following conditions by or before the
Termination Date:
6.2.1 Dissenting Shares. The number of shares of Company Common
Stock which constitute Dissenting Shares within the meaning of Section 85 of the
MBCL shall not exceed ten percent (10%) of the outstanding shares of Company
Common Stock.
6.2.2 Accuracy of Representations and Warranties. The Company's
representations and warranties contained in this Agreement shall have been true
and correct as of the respective dates when made, and as of the Closing Date and
the Effective Time, except to the extent that (without giving effect to any
qualifications contained therein relating to "materiality" or the absence of a
"Material Adverse Effect") the event or development rendering any such
representation or warranty
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untrue, individually or in the aggregate with all other events or developments
rendering that or any other representation or warranty untrue, shall not have
resulted in or constitute, and could not reasonably be expected to result in or
constitute, a Material Adverse Effect on the Company, on the Company's ability
to consummate the Merger, or on Parent if it were to consummate the Merger.
6.2.3 Compliance with Covenants. The Company shall have performed,
satisfied and complied with, in all material respects, each of its agreements
and covenants contained in Article V and elsewhere in this Agreement.
6.2.4 Securities Outstanding. There shall be no shares of Common
Stock or other Company securities issued and outstanding as of the Effective
Time other than the 1,276,411 shares of Company Common Stock that are issued and
outstanding as of the date hereof (plus any shares of Common Stock issued prior
to the Effective Time upon exercise of vested Company Options) and 249,810
Company Options issued and outstanding on the date hereof (less any vested
Company Options exercised after the date hereof).
6.2.5 Third Party Consents. The consent, approval or waiver of each
Person whose consent, approval or waiver shall be required in order to permit
the consummation of the Merger or the preservation of the contractual rights of
the Company with respect to its business shall have been obtained.
6.2.6 Receipt of Legal Opinion.. Parent shall have received a legal
opinion from Choate, Hall & Stewart, legal counsel for the Company, addressed to
Parent and Merger Sub and dated the Closing Date, in form and substance
reasonably satisfactory to Parent, opining to the matters set forth on Exhibit
-------
E, subject to customary assumptions and qualifications.
- -
6.2.7 Shareholders and Non-Competition Agreements. The Management
and Principal Shareholders shall have executed and delivered the Shareholders'
Agreements, and the Non-Compete Signatories shall have executed and delivered
the Non-Competition Agreements, and none of such Persons shall have breached or
failed to perform, in any material respects, any of their respective obligations
or covenants under those respective agreements.
6.2.8 Receipt of Officers' Certificates. The Company shall have
delivered to Parent and Merger Sub a certificate, executed by the Chief
Executive Officer and Chief Financial Officer of
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the Company and dated as of the Closing Date, certifying to the fulfillment of
the conditions specified in Section 6.1 (with regard to the Company only) and
Section 6.2, including a certification that each representation or warranty
contained in Article III is true and correct as of the Closing Date (or, if such
certification cannot be made, specifying the exceptions thereto), excepting only
representations and warranties which speak expressly as of an earlier specified
date and matters disclosed in the Disclosure Schedules.
6.2.9 Documents and Instruments in Satisfactory Form. All corporate
and other proceedings in connection with this Agreement and with the Merger and
all documents and instruments incidental to the Merger shall be reasonably
satisfactory in substance and form to Parent and its counsel, and Parent and its
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
6.2.10 Recommendation to Shareholders. The Board of Directors of the
Company shall have unanimously recommended to Shareholders the Merger and this
Agreement, and the Board of Directors shall not have withdrawn such
recommendation or publicly announced any intention to withdraw it or reconsider
such recommendation or to postpone the Shareholders Meeting in connection with
considering, facilitating or inviting a competing offer.
6.2.11 Consent of Auditors. Sullivan Bille, P.C., independent
certified public accountants or the Company, shall have consented and agreed in
writing to the inclusion of their audit reports in all filings intended to be
made by the Company or Parent before or after the Effective Time with the
Securities and Exchange Commission or the Nasdaq Stock Market that in the
judgment of the Company or Parent require such consents to be included, such as,
but not limited to, Form 10-K's, Form 8-K's, Form S-3's, and Form S-8's.
6.3 Conditions to the Obligations of the Company. The obligations of the
Company to consummate the Merger are further subject to the satisfaction of, or
the Company's written waiver of, each of the following conditions by or before
the Termination Date:
6.3.1 Accuracy of Representations and Warranties. Parent's
representations and warranties contained in this Agreement shall have been true
and correct as of the dates when made and again as of the Closing Date, except
to the extent that (without giving effect to any qualifications
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contained therein relating to "materiality" or the absence of a "Material
Adverse Effect") the event or development rendering such representation or
warranty untrue, individually or in the aggregate with all other events or
developments rendering that or any other representation or warranty of Parent
untrue, shall not have resulted in or constitute, and could not reasonably be
expected to result in or constitute, a Material Adverse Effect on the Company or
on the ability of the Company or Parent to consummate the Merger.
6.3.2 Compliance with Covenants. Parent shall have performed,
satisfied and complied with, in all material respects, each of its agreements
and covenants contained in Article V and elsewhere in this Agreement, unless the
failure to perform, satisfy or comply relates to an immaterial obligation that,
taken together with all other such failures, does not constitute a material
failure by Parent to perform its obligations hereunder.
6.3.3 Receipt of Legal Opinion. The Company shall have received a
legal opinion from Stradling Yocca Carlson & Rauth, a Professional Corporation,
counsel for Parent and Merger Sub, addressed to the Company and dated the
Closing Date, in form and substance reasonably satisfactory to the Company,
opining to the matters set forth on Exhibit F, subject to customary assumptions
---------
and qualifications.
6.3.4 Receipt of Officers' Certificate. The Company shall have
received from each of Parent and Merger Sub a certificate, executed by
respectively, the President and Chief Financial Officer of Parent and the
President and Chief Financial Officer of Merger Sub and dated as of the Closing
Date, certifying to the fulfillment of the conditions specified in Section 6.1
(with regard to Parent and Merger Sub only) and Section 6.3, including a
certification that each representation or warranty contained in Article IV is
true and correct as of the Closing Date (or, if such certification cannot be
made, specifying the exceptions thereto), excepting only representations and
warranties which speak expressly as of an earlier specified date.
6.3.5 Documents and Instruments in Satisfactory Form. All corporate
and other proceedings in connection with this Agreement and with the Merger and
all documents and instruments incidental to the Merger shall be reasonably
satisfactory in substance and form to the Company and its counsel, and the
Company and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
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6.3.6 Parent's Borrowings. The Company shall be reasonably
satisfied at or prior to the Effective Time that all financing commitments
necessary for Parent's consummation of the transactions contemplated in this
Agreement has been obtained effective upon the Closing Date, including for any
indebtedness of the Company that is, as of or prior to the Closing Date, subject
to acceleration, upon notice or lapse of time, according to its terms as
expressly disclosed by the Company in an appropriate Schedule hereto.
ARTICLE VII
CLOSING
7.1 Closing. Unless the Parties shall mutually fix another date, time or
place, the Closing of the Merger shall take place at 10:00 A.M. on or before the
fifth business day following the satisfaction or waiver of the conditions
precedent contained in Article VI, at the offices of Stradling Yocca Carlson &
Rauth in Newport Beach, California. Except as otherwise provided herein, all
proceedings to be taken and all documents to be executed at the Closing shall be
deemed to have been taken, delivered and executed simultaneously as of the
Effective Time, and no proceeding shall be deemed taken nor documents deemed
executed or delivered until all have been taken, delivered and executed. On
completion of the Closing, the parties shall cause the completed Merger
Agreement, and the related Officers' Certificates appended thereto, to be filed
with the Massachusetts Secretary of State and the Delaware Secretary of State.
ARTICLE VIII
TERMINATION; TERMINATION FEE
This Agreement may be terminated, and the Merger abandoned, prior to the
Closing solely by the following means and with the following effects:
8.1 By Mutual Agreement. The Company and Parent (on behalf of itself and
Merger Sub) may terminate this Agreement by mutual written consent at any time.
8.2 By Parent. Parent (on behalf of itself and Merger Sub) may
unilaterally terminate this Agreement:
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8.2.1 If the Company has breached any of its representations or
warranties or covenants contained in this Agreement and such breach is of a
nature that would, in the reasonable determination of Parent, cause the failure
of the condition set forth in Section 6.2.2 or 6.2.3, and the Company has failed
to cure such breach within ten (10) Business Days following written notice to
the Company from the Parent identifying and describing such breach in reasonable
detail;
8.2.2 If the Company has failed to perform, satisfy or comply with
any of its agreements and covenants contained in this Agreement, and such breach
is of a nature that would, in the reasonable determination of Parent, cause the
failure of the condition set forth in Section 6.2.4 and such breach has not been
cured within ten (10) Business Days following written notice from Parent to the
Company identifying and describing such breach in reasonable detail;
8.2.3 If any of the Company Shareholders, Directors or executives
that are parties either to the Shareholders Agreement or the Non-Competition
Agreements (the "Company Related Parties") has failed to perform, satisfy or
comply with any of his or her respective material agreements and covenants
contained therein unless such breach is susceptible of cure and is cured within
ten (10) days following written notice from Parent to the Company identifying
such breach;
8.2.4 Upon notice to the Company, if any of the conditions to the
obligations of Parent contained in Section 6.2 has not been satisfied by the
Termination Date; or
8.2.5 Upon notice to the Company at any time after May 31, 1998 (the
"Termination Date"), if the Closing shall not have occurred on or prior to such
date, unless such failure results from Parent breaching any of its
representations, warranties, covenants or agreements contained in this
Agreement.
8.3 By the Company. The Company may unilaterally terminate this
Agreement:
8.3.1 If Parent has breached any of its representations or warranties
contained in this Agreement and such breach is of a nature that would, in the
reasonable determination of the Company, cause the failure of the condition set
forth in Section 6.3.1, and Parent has failed to cure such breach within ten
(10) Business Days following written notice to Parent from the Company
identifying and describing such breach in reasonable detail;
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8.3.2 If Parent has failed to perform or comply with in any material
respect any of its agreements and covenants contained in this Agreement, and
such breach is of a nature that would, in the reasonable determination of the
Company, cause the failure of the condition set forth in Section 6.3.2, and
Parent has failed to cure such breach within ten (10) Business Days following
written notice to Parent from the Company identifying and describing such breach
in reasonable detail;
8.3.3 Upon notice to Parent if any of the conditions to the
obligations of the Company contained in Section 6.3 has not been satisfied by
the Termination Date; or
8.3.4 Upon notice to Parent after the Termination Date, if the
Closing shall not have occurred on or prior to such date, unless the failure
results from the Company breaching any of its representations, warranties,
covenants or agreements contained in this Agreement.
8.4 Effect of Termination; Remedies.
8.4.1 Effect of Termination. In the event of the termination of this
Agreement pursuant to this Section 8, this Agreement shall forthwith become void
and there shall be no liability on the part of any Party hereto or any of its
affiliates, directors, officers or stockholders except as set forth in Section
8.4.2 and all documents, instruments and consideration delivered hereunder shall
be returned to the delivering Party within two days of such termination.
Specifically, and without limiting the generality of the foregoing, Parent and
Merger Sub agree that, except as expressly provided in Section 8.4.2,
termination of this Agreement shall be their sole and exclusive remedy for any
nonwillful breach by the Company of its representations, warranties and
covenants under this Agreement and the Company agrees that termination of this
Agreement shall be its sole and exclusive remedy for any nonwillful breach by
Parent or Merger Sub of their representations, warranties and covenants under
this Agreement.
8.4.2 Fees and Expenses and Recovery of Damages.
(a) Except as otherwise provided in this Section, all costs and
expenses incurred in connection with this Agreement shall be paid by the Party
incurring such cost or expense.
(b) If within one (1) year after the date hereof (i) any person or
group (as contemplated by Section 13(d)(3) of the Exchange Act) other than
Parent or Merger Sub or any of
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their respective subsidiaries or affiliates (collectively, an "Acquiring
Person") shall have acquired (by merger, consolidation, recapitalization or
otherwise) 25% or more of the outstanding shares of Company Common Stock or all
or substantially all of the assets of the Company, (ii) any Acquiring Person
shall have become the beneficial owner of a majority of the outstanding shares
of Company Common Stock, (iii) the Board of Directors of the Company approves or
recommends any Acquisition Proposal other than from Parent or Merger Sub, (iv)
the Company enters into an agreement with respect to a merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar transaction
involving, or any purchase of all or a substantial portion of the assets or
equity securities of, the Company, (v) any of the Management and Principal
Shareholders disposes of any or all of his shares of Company Common Stock to any
person not an affiliate or an associate of Parent (or realizes cash proceeds in
respect of such Shares as a result of a distribution to the Shareholder by the
Company following the sale of a material amount of the Company's assets) in
connection with a transaction proposed, described or set forth in an Acquisition
Proposal or agreement or pursuant to an Acquisition Proposal (other than open
market sales in accordance with Rule 144) or (vi) the Company undergoes a
recapitalization, dissolution, liquidation or similar transaction proposed,
described or set forth in an Acquisition Proposal or agreement or the Company
issues an extraordinary dividend or other distribution in accordance with such
Acquisition Proposal or agreement, then the Company shall promptly, but in no
event later than ten (10) days after the date of any request therefor, pay
Parent a fee equal to $600,000. The Company shall be obligated to pay the
foregoing amount not more than once.
(c) If Parent and Merger Sub shall have terminated this Agreement
pursuant to Section 8.2 (other than pursuant to Section 8.2.5) the Company shall
promptly, but in no event later than ten days after the date of any request
therefor, reimburse Parent up to $300,000 for the documented fees and expenses
of Parent and Merger Sub related to this Agreement, the transactions
contemplated hereby and any related financing.
(d) If the Company shall have terminated this Agreement pursuant to
Section 8.3 (other than pursuant to Section 8.3.4), Parent shall promptly, but
in no event later than ten days after the date of any request therefor,
reimburse Parent up to $300,000 for the documented fees and expenses of the
Company related to this Agreement or the transactions contemplated hereby.
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(e) Each of the Parties acknowledges that the agreements contained in
this Section 8.4.2 are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, the other Parties would not enter
into this Agreement; accordingly, if a Party fails to pay promptly the amounts
due pursuant to this Section 8.4.2, and, in order to obtain such payments,
another Party commences a suit against the Party for the amount set forth in
this Section 8.4.2, the prevailing Party shall pay to the other Party or Parties
their costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount thereof at the prevailing
prime rate as published in the Wall Street Journal on the date such payment was
required to be made. Amounts due under this Section 8.4.2 shall be payable in
same day funds.
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ARTICLE IX
COVENANTS OF THE PARTIES
9.1 HSR Act Filings, If Any. Each of Parent, Merger Sub and the Company
shall (i) promptly make or cause to be made the filings, if any, required of
such Party or any of its subsidiaries under the HSR Act with respect to the
transactions contemplated by this Agreement, (ii) comply at the earliest
practicable date with any request under the HSR Act for additional information,
documents, or other material received by such Party or any of its subsidiaries
from the Federal Trade Commission or the Department of Justice or any other
Governmental Entity in respect of such filings or such transactions, and (iii)
cooperate with the other Party in connection with any such filing, and in
connection with resolving any investigation or other inquiry of any such agency
or other Governmental Entity under the HSR Act, the Sherman Act, as amended, the
Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any
other federal or state statutes, rules, regulations, orders or decrees that are
designed to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade with respect to any such filing or any
such transaction. Each Party shall promptly inform the other Parties of any
communication with, and any proposed understanding, undertaking, or agreement
with, any Governmental Entity regarding any such filings or any such
transaction. Neither Party shall participate in any meeting, with any
Governmental Entity in respect of any such filings, investigation, or other
inquiry without giving the other Parties notice of the meeting and, to the
extent permitted by such Governmental Entity, the opportunity to attend and
participate.
9.2 Reasonable Efforts. Each of Parent, Merger Sub and the Company shall
use all reasonable efforts to take such action as may be required to cause the
expiration of the notice periods under the HSR Act or any state statutes, rules,
regulations, orders or decrees that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade with respect to the transactions contemplated hereby as promptly as
possible after the execution of this Agreement.
9.3 Obtaining Consents. Subject to the fiduciary duties of the Board of
Directors of the Company, 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
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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 other
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all other necessary registrations and
filings (including other filings with Governmental Entities, if any), (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the preparation of the Company Proxy Statement, 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.
9.4 Limitation on Covenants. Notwithstanding anything to the contrary in
this Article IX, (i) neither Parent nor any of its subsidiaries shall be
required to divest, or cause or permit the Company or its subsidiaries or
affiliates to divest, any of their respective businesses, product lines or
assets, or to take or agree to take any other action or agree to any limitation
that could reasonably be expected to have a material adverse effect on the
value, condition (financial or otherwise), prospects, business or results of
operations or prospects of Parent and its subsidiaries taken as a whole or of
the Company and its subsidiaries taken as a whole, or all such entities taken
together, and (ii) neither Parent nor Merger Sub shall be required to waive any
of the conditions to the Merger set forth in Article VI.
9.5 Prompt Notice. The Company shall give prompt notice to Parent, and
Parent or Merger Sub shall give prompt notice to the Company, of: (i) any
notice or other communication from any person alleging that the consent of such
person is or may be required in connection with the transactions contemplated by
this Agreement; (ii) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings commenced or, to
the best of its knowledge threatened against, relating to or involving or
otherwise affecting it or any of its subsidiaries which, if pending on the date
of this Agreement would have been required to have been disclosed pursuant to
Article III or which relate to the consummation of the transactions contemplated
by this Agreement.
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ARTICLE X
DIRECTOR AND OFFICER INDEMNIFICATION
10.1 Director Indemnify. From and after the Effective Time, to the extent
legally permissible, the Surviving Corporation shall indemnify, defend and hold
harmless each person who is now or who becomes, prior to the Effective Time, a
director of the Company against any and all liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees, reasonably incurred by him in connection with the
defense or disposition of any action, suit or other proceeding, whether civil or
criminal, in which he may be involved or with which he may be threatened, by
reason of his having been a director of the Company (including, without
limitation, any claim that is based upon or arises out of the Merger or the
transactions contemplated by this Agreement or any other agreements related to
the Merger, and in connection with, arising out of or relating to the
enforcement of the obligations of the Surviving Corporation in this Article X)
(collectively, "Claims"), except with respect to any matter as to which he shall
have been adjudicated in any proceeding not to have acted in good faith in the
reasonable belief that his action was in the best interests of the Company.
Except to the extent prohibited by law, expenses, including counsel fees,
reasonably incurred by any such director in connection with the defense or
disposition of any such action, suit or proceeding shall be paid from time to
time by the Surviving Corporation in advance of the final disposition thereof
upon receipt of an undertaking by such director to repay the amounts so paid to
the Surviving Corporation if it is ultimately determined that indemnification is
not required or permitted under this Article X.
10.2 Existing Indemnity Obligations. For a period of six (6) years
immediately following the Effective Time, to the fullest extent permitted by
law, the Surviving Corporation shall honor any obligations of the Company
existing at the Effective Time with respect to the indemnification of any
director, officer or regular employee of the Company (including such persons who
serve or who have served at the request of the Company as a director, officer or
trustee of the Company's former subsidiaries as listed as subsidiaries in an
appropriate exhibit to any of the Company's Form 10-K or similar filings with
the Securities and Exchange Commission or of any of the Company Benefit Plans as
listed on the Company Disclosure Schedule) (collectively, the "Indemnitees") in
respect of acts or omissions occurring on or prior to the Effective Time arising
out provisions of the Company's Articles of Organization or Bylaws as set forth
in Schedule 10.2, as if such obligations
-------------
57
<PAGE>
were pursuant to a contract or arrangement between the Surviving Corporation and
such Indemnitees.
10.3 Successor Liability. In the event the Surviving Corporation or any
of its successors or assigns (i) reorganizes or consolidates with or merges into
or enters into another business combination transaction with any other person or
entity and is not the resulting, continuing or surviving corporation or entity
of such consolidation, merger or transaction, or (ii) liquidates, dissolves or
transfers all or substantially all of its properties or assets to any person or
entity, then, and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations of
the Surviving Corporation set forth in this Article X.
10.4 Third-Party Beneficiaries. This Article X shall be construed as a
agreement between the Surviving Corporation and the directors of the Company and
the other Indemnitees described in this Article X as unaffiliated third parties,
as to which agreement such persons are intended to be third-party beneficiaries
of the respective benefits conferred upon such persons by this Article X.
10.5 Insurance. For three years after the Effective Time, Parent will
cause the Surviving Corporation to use its reasonable efforts to provide
officers' and directors' liability insurance in respect of acts or omissions
occurring on or prior to the Effective Time covering each such person currently
covered by the Company's officers' and directors' liability insurance policy on
terms substantially similar to those of such policy in effect on the date
hereof, provided that in satisfying its obligation under this Section 10.5,
--------
Parent shall not be obligated to cause the Surviving Corporation to pay annual
premiums in excess of 150% of the amount per annum the Company paid in its last
full fiscal year, which amount has been disclosed to Parent, and if the
Surviving Corporation is unable to obtain the insurance required by this Section
10.5, it shall obtain as much comparable insurance as possible for an annual
premium equal to such maximum amount.
10.6 Exclusions. The obligations of the Surviving Corporation under this
Article X shall exclude any indemnification for (i) any Claims that are
currently pending or, to the knowledge of the Company or the Indemnitee, are
overtly threatened by any Person that are not disclosed in Schedule 10.5; or
-------------
(ii) any action brought by Parent or an affiliate of Parent to enforce any
obligation of the Company under this Agreement, except any under this Article X.
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ARTICLE XI
MISCELLANEOUS
11.1 Publicity. Promptly following the execution and delivery of this
Agreement, the Company and Parent shall issue a joint press release in a form
mutually to be agreed upon. The Company and Parent shall not, and shall instruct
their Representatives not to, issue or cause the publication of any press
release or other public announcement with respect to, or otherwise make any
public statement concerning, this Agreement or the Merger without the consent of
the other Party, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, in the event that any Party determines, based
upon the advice of counsel, that a press release, disclosure in a public filing,
or other public disclosure of or reference to this Agreement, the Merger or the
other Party is required by Law, the former Party shall first notify the latter
Party of the potential disclosure, afford the latter Party a reasonable
opportunity to review and comment on the proposed disclosure, provided that the
consent of the latter Party for such publication shall not be required in any
such instance.
11.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person or by electronic facsimile transmission
(with confirmation) or on the next business day after dispatch by an overnight
courier of national reputation to the respective Parties as follows:
If to Parent or Merger Sub: with a copy to:
-------------------------- --------------
MICROSEMI CORPORATION Stradling Yocca Carlson & Rauth
2830 South Fairview Street 660 Newport Center Drive, Suite 1600
Santa Ana, California 92704 Newport Beach, California 92660
Attention: Philip Frey, Jr.,
Chairman & CEO Attention: Nicholas J. Yocca, Esq.
Fax: (714) 966-5256 Fax: (714) 725-4100
59
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If to the Company: with a copy to:
----------------- --------------
BKC SEMICONDUCTORS, INC. Choate, Hall & Stewart
6 Lake Street Exchange Place
Lawrence, MA 01841 53 State Street
Attention: James R. Shiring Boston, MA 02109
Fax: (978) 975-0949 Attention: Stephen K. Fogg, Esq.
Fax: (617) 248-5000
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
11.3 Interpretation. This Agreement is the result of arms-length
negotiations between the parties hereto and no provision hereof or thereof,
because of any ambiguity found to be contained herein, therein or otherwise,
shall be construed against a party by reason of the fact that such party or its
legal counsel was the draftsman of that provision.
11.4 Entire Agreement. This Agreement (together with the provisions of
the Confidentiality Agreement incorporated herein by reference and the Exhibits
and Schedules hereto) constitutes the entire agreement among the Parties and,
supersedes all prior agreements, understandings, negotiations and discussions,
both written and oral, among the Parties with respect to the subject matter
hereof.
11.5 Benefits; Binding Effect; Assignment and Designation. This Agreement
shall be for the benefit of and binding upon the Parties, their respective
successors and, where applicable, assigns. No Party may assign this Agreement
or any of its rights, interests or obligations hereunder without the prior
written consent of the other Party. Notwithstanding any assignment or
delegation of any Party's rights, interests or obligations, each Party shall
nonetheless remain responsible for the performance of all of its obligations
provided hereunder.
11.6 Waiver. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly so provided.
11.7 No Third Party Beneficiary. Except as otherwise provided in Section
5.9.1 hereof, nothing expressed or implied in this Agreement is intended, or
shall be construed, to confer upon or
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give any Person other than the Parties and their respective successors and
permitted assigns any rights or remedies under or by reason of this Agreement.
11.8 Severability. The invalidity of any one or more of the words,
phrases, sentences, clauses, paragraphs, subsections or sections contained in
this Agreement shall not affect the enforceability of the remaining portions of
the Agreement or any part hereof, all of which are inserted conditionally on
their being valid in law. In the event any one or more of the words, phrases,
sentences, clauses, paragraphs, subsections or sections contained in this
Agreement shall be declared invalid, this Agreement shall be construed as if
such invalid word(s), phrase(s), sentence(s), clause(s), paragraph(s),
subsection(s), or section(s), had not been inserted; provided, however, that if
any provision is declared to be unenforceable because it is determined to be
overbroad, then, to the extent possible, in lieu of deletion thereof such
provision shall be modified to the minimum extent necessary to render such
provision enforceable.
11.9 Counterparts. This Agreement may be executed in any number of
counterparts and by the several Parties in separate counterparts, each of which
shall be deemed to be one and the same instrument.
11.10 Applicable Law; Consent to Jurisdiction; Attorneys Fees. This
Agreement and all rights of the parties relating to the transactions
contemplated hereby shall be governed by the laws of the United States and the
internal law of the state of California (without regard to the conflict of laws
provisions thereof), and all questions concerning the validity and construction
thereof shall be determined in accordance with the laws of said state. Except
with respect to disputes to be resolved pursuant to Section 9.3, each party
hereby irrevocably submits to the exclusive jurisdiction of the federal and
state courts sitting in the county of Orange, state of California in any action
or proceeding arising out of or relating to this Agreement and hereby
irrevocably agrees, on behalf of itself and on behalf of such party's successors
and permitted assigns, that all claims in respect of such action or proceeding
may be heard and determined in any such court and irrevocably waives any
objection such person may now or hereafter have as to the venue of any such
suit, action or proceeding brought in such a court or that such court is an
inconvenient forum. In the event any suit, action or proceeding is brought by
any party with respect to this Agreement, including with respect to the
performance or breach hereof by any Party, the prevailing party in any such
suit, action or proceeding, shall be entitled
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to recover its reasonable attorneys, accountants and expert witness fees and
expenses from the non-prevailing party.
IN WITNESS WHEREOF, the Parties have each executed and delivered this
Agreement as of the day and year first above written.
MICROSEMI CORPORATION
ATTEST:
DAVID R. SONKSEN By: PHILIP FREY, JR.
- --------------------------- ---------------------------------
David R. Sonksen, Secretary Philip Frey, Jr., Chairman, Chief
Executive Officer and President
[SEAL]
BKC SEMICONDUCTORS INCORPORATED
ATTEST:
JOHN L. CAMPBELL By: JAMES R. SHIRING
- --------------------------- ---------------------------------
John L. Campbell, Clerk James R. Shiring, President and
Chief Executive Officer
By: BRYAN A. SCHMIDT
---------------------------------
Bryan A. Schmidt, Chief Financial
Officer and Treasurer
[SEAL]
MICRO BKC ACQUISITION CORP.
ATTEST:
DAVID R. SONKSEN By: PHILIP FREY, JR.
- --------------------------- ---------------------------------
David R. Sonksen, Secretary Philip Frey, Jr., Chairman, Chief
Executive Officer and President
[SEAL]
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LIST OF EXHIBITS
----------------
Exhibit A-1 Form of Articles of Merger
- -----------
Exhibit A-2 Form of Merger Agreement
- -----------
Exhibit B Confidentiality Agreement
- ---------
Exhibit C Form of Shareholders' Agreement
- ---------
Exhibit D Form of Non-Competition Agreement
- ---------
Exhibit E Form of Opinion of Choate, Hall & Stewart, Counsel to the Company
- ---------
Exhibit F Form of Opinion of Stradling Yocca Carlson & Rauth, Counsel to
- --------- Parent and Merger Sub
<PAGE>
LIST OF SCHEDULES
-----------------
<TABLE>
<C> <S>
Schedule 2.2 Directors and Officers of the Surviving Corporation
- ------------
Schedule 3.2 The Company Investments
- ------------
Schedule 3.4 Capitalization of the Company
- ------------
Schedule 3.6.3 Financial Statement Exceptions; No Undisclosed Liabilities
- --------------
Schedule 3.9 Absence of Certain Changes
- ------------
Schedule 3.10 Material Contracts and Material Clients
- -------------
Schedule 3.11 Conflicts and Consents
- -------------
Schedule 3.12 Compliance with Laws and Permits
- -------------
Schedule 3.13 Litigation
- -------------
Schedule 3.14 The Company Benefit Plans, Employment Agreements and Labor Matters
- -------------
Schedule 3.15 Business Restrictions
- -------------
Schedule 3.16 Tangible Assets
- -------------
Schedule 3.17 Intangible Property Rights
- -------------
Schedule 3.18 Real Property Leases and Personal Property Leases
- -------------
Schedule 3.20 Inventory
- -------------
Schedule 3.21 Title Exceptions
- -------------
Schedule 3.22 Taxes and Tax Returns
- -------------
Schedule 3.23 Environmental and Safety Matters
- -------------
Schedule 3.24 Interested Party Transactions
- -------------
Schedule 3.25 Insurance
- -------------
Schedule 3.26 Brokers
- -------------
Schedule 3.28 Bank Accounts
- -------------
Schedule 5.10.1 Parties to the Shareholders' Agreements
- ---------------
Schedule 5.10.2 Parties to the Non-Competition Agreements
- ---------------
Schedule 10.2 Indemnification Provisions
- -------------
</TABLE>
<PAGE>
The Registrant agrees to furnish supplementally a copy of any of the Exhibits or
Schedules to the Securities and Exchange Commission upon request.
<PAGE>
EXHIBIT 99.1
NEWS RELEASE DATED MAY 15, 1998 RE BKC MERGER
Microsemi and BKC Semiconductors Complete Merger
SANTA ANA, Calif. and LAWRENCE, MASS.--(BUSINESS WIRE)--May 15, 1998-
Microsemi Corporation, Santa Ana, California, (Nasdaq:MSCC) and BKC
Semiconductors Incorporated, Lawrence, MA (Nasdaq:BKCS) jointly announced today
that they have completed the merger of BKC with a wholly-owned subsidiary of
Microsemi. The agreement to merge was previously announced on January 21, 1998.
Under the terms of the merger, Microsemi Corporation has acquired BKC for $9.17
per share in cash. As a result of this merger, BKC will become a wholly-owned
subsidiary of Microsemi. The current plan is for BKC to operate as a stand-alone
subsidiary.
In a statement, Philip Frey, Jr., Chairman, Chief Executive Officer and
President of Microsemi, said, "The addition of BKC diode products and customers
gives Microsemi Corporation a broader and stronger strategic position in the
military, space and commercial marketplace worldwide, which we believe will show
positive results in the coming year."
Mr. James Shiring, President and CEO of BKC, said, "Both the employees and
management of BKC are excited about being part of the Microsemi family of
companies and the growth possibilities resulting from the merger."
As a result of the merger, the registered holders of BKC stock will be receiving
instructions for tendering their stock certificates to State Street Bank and
Trust of Boston, Massachusetts in exchange for cash payment. Transfers of BKC
stock will no longer be registered, and BKC stock has ceased to be traded on the
Nasdaq Small Cap Market. The surviving corporation has filed with the
Securities and Exchange Commission to deregister and suspend further filing
requirements with respect to BKC.
Microsemi Corporation is a multinational supplier of high reliability power
semiconductors, surface mount and custom diode assemblies for the electronics,
computer, telecommunications, defense/aerospace and medical markets. More
information may be obtained by contacting the company directly or by visiting
the company's website at: http://www.microsemi.com
BKC Semiconductors Incorporated has its manufacturing and executive offices at
its Lawrence, Massachusetts site, and manufactures discrete, single function
semiconductor devices used by industrial, automotive, defense,
telecommunications, and aerospace industries to convert and control electrical
power in electronic equipment.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Any statements set forth in this News Release that are not historical in
nature are forward-looking statements that involve risks and uncertainties that
could cause actual results to differ materially from those in the
<PAGE>
forward-looking statements. Forward-looking statements are inherently subject to
risks and uncertainties, some of which cannot be predicted or quantified.
Potential risks and uncertainties include but are not limited to such factors as
the strength and competitive pricing environment of the semiconductor
marketplace, demand for and acceptance of the Company's products, the success of
planned marketing and promotional campaigns, as well as other factors identified
in Microsemi's Form 10-K for the year ended September 28, 1997 and subsequent
Form 10-Q's and 8-K's, and in BKC's Form 10-K for the year ended September 30,
1997 and subsequent Form 10-Q's and 8-K's filed by the Companies with the
Securities and Exchange Commission.
CONTACT: Silverman Heller Associates
Eugene G. Heller/Philip Bourdillon, 310/208-2550
or
Microsemi Corporation
David R. Sonksen, 714/979-8220
or
BKC Semiconductors Incorporated
James R. Shiring, 978/681-9132
