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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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CONTINENTAL CIRCUITS CORP.
(NAME OF SUBJECT COMPANY)
CONTINENTAL CIRCUITS CORP.
(NAME OF PERSON(s) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
211213 10 3
(CUSIP NUMBER OF CLASS OF SECURITIES)
JOSEPH G. ANDERSEN, SECRETARY
CONTINENTAL CIRCUITS CORP.
3502 EAST ROESER ROAD
PHOENIX, AZ 85040
(602) 268-3461
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF PERSON(s) FILING STATEMENT)
COPY TO:
P. ROBERT MOYA
ONE CAMELBACK BUILDING, SUITE 400
ONE EAST CAMELBACK ROAD
PHOENIX, ARIZONA 85012-1649
(602) 230-5500
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Continental Circuits Corp., a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 3502 East Roeser Road, Phoenix, Arizona 85040. The title of
the class of equity securities to which this statement relates is the Company's
common stock, par value $.01 per share (each, a "Share," collectively the
"Shares").
ITEM 2. TENDER OFFER OF BIDDER.
This statement relates to the tender offer by Hadco Acquisition Corp. II, a
Delaware corporation ("Purchaser"), which is a direct wholly owned subsidiary of
Hadco Corporation, a Massachusetts corporation ("Parent"), to purchase all
outstanding Shares at a price of $23.90 per Share, net to the seller in cash
(the "Offer Consideration"), on the terms and subject to the conditions set
forth in the Offer to Purchase, dated February 20, 1998 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, together with the
Offer to Purchase and any amendments or supplements thereto, collectively
constitute the "Offer"). Copies of the Offer to Purchase and Letter of
Transmittal are being sent to the Company's stockholders (the "Stockholders")
with this Schedule 14D-9. The Offer is disclosed in a Tender Offer Statement on
Schedule 14D-1, dated February 20, 1998 (the "Schedule 14D-1"), which was filed
with the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
promulgated by the Commission thereunder. The Offer is being made by Purchaser
pursuant to the Agreement and Plan of Merger dated as of February 16, 1998 among
Parent, Purchaser and the Company (the "Merger Agreement"), and the Stockholders
Agreement dated as of February 16, 1998 (the "Stockholders Agreement") among
Parent, Purchaser and certain stockholders (the "Selling Stockholders")
comprising certain executive officers of the Company. Copies of the Merger
Agreement and the Stockholders Agreement have been filed with the Commission as
Exhibits 1 and 2, respectively, hereto and are incorporated by reference herein.
As set forth in the Schedule 14D-1, the address of the principal executive
offices of each of the Purchaser and Parent is 12A Manor Parkway, Salem, New
Hampshire 03079.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this statement, are set forth in Item 1 above.
(b) Except as described herein and in Schedule I hereto, to the knowledge
of the Company, as of the date hereof, there are no material contracts,
agreements, arrangements or understandings, or any potential or actual conflicts
of interest between the Company or its affiliates and (1) the Company and its
executive officers, directors or affiliates or (2) Parent and Purchaser and
their respective executive officers, directors and affiliates.
(1) CERTAIN CONTRACTS, AGREEMENTS, ARRANGEMENTS OR UNDERSTANDINGS AND
ANY ACTUAL OR POTENTIAL CONFLICTS OF INTERESTS BETWEEN (A) THE COMPANY OR
ITS AFFILIATES AND (B) THE COMPANY AND ITS EXECUTIVE OFFICERS, DIRECTORS OR
AFFILIATES.
Frederick G. McNamee, III entered into an employment agreement with the
Company dated as of August 1, 1997 replacing his previous agreement with the
Company dated August 25, 1994, pursuant to which he is employed as Chairman of
the Board, President and Chief Executive Officer. Under the agreement, Mr.
McNamee is entitled to an annual base salary of $235,000 per year, plus an
incentive bonus to be based on an incentive compensation program for key
employees to be designed by the Company's Compensation Committee and presented
to the Company's Board of Directors for review. In addition, the Company agreed
to grant Mr. McNamee options to purchase 150,000 Shares at fair market value on
the date the Agreement was executed, which options become exercisable to the
extent of 2,500 Shares on August 31, 1997, and so long as Mr. McNamee is
employed by the Company, become exercisable to the extent of an additional 2,500
Shares on the last day of each calendar month thereafter (a total of 15,000
Shares as of January 31, 1998).
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The agreement provides for an employment term of two years commencing on August
1, 1997, which term shall automatically renew for additional one-year terms
until notice of non-renewal by either party.
Mr. McNamee also entered into a transitional compensation agreement with
the Company dated May 8, 1997, pursuant to which he shall be entitled to
severance benefits in the event of a change of control of the Company during the
term of his employment. If a change in control of the Company occurs during the
term of Mr. McNamee's employment, and his employment with the Company is
terminated within 24 months after such change in control, he shall be entitled
to base salary, other earned or accrued compensation, and other benefits
depending on the reason for such termination. The agreement terminates on
December 31, 1998 unless extended pursuant to the terms thereof.
Mr. McNamee has entered into an employment agreement with Parent, to become
effective following the transactions contemplated by the Merger Agreement, which
will supersede the employment agreement and transitional compensation agreement
described above. See "McNamee Employment Agreement" below in this Item 3(b).
Joseph G. Andersen accepted an employment offer letter from the Company on
September 3, 1996, pursuant to which he is employed as Vice
President -- Finance, Chief Financial Officer, Secretary and Treasurer. The
letter grants Mr. Andersen a base salary of $150,000 plus a monthly car
allowance and other customary benefits. In addition, the Company granted Mr.
Andersen options to purchase 75,000 Shares at fair market value on the date of
acceptance of the Company's offer of employment. The letter does not specify an
employment term.
Mr. Andersen also entered into a transitional compensation agreement with
the Company dated May 8, 1997, pursuant to which he shall be entitled to
severance benefits in the event of a change of control of the Company during the
term of his employment. If a change in control of the Company occurs during the
term of Mr. Andersen's employment, and his employment with the Company is
terminated within 18 months after such change in control, he shall be entitled
to base salary, other earned or accrued compensation, and other benefits
depending on the reason for such termination. The agreement terminates on
December 31, 1998 unless extended pursuant to the terms thereof.
James Buchanan accepted an employment offer letter from the Company on July
28, 1997, pursuant to which he is employed as Vice President -- Sales and
Marketing. The letter grants Mr. Buchanan a base salary of $170,000 plus a
monthly car allowance and a one-time signing bonus, and other customary
benefits. In addition, the Company granted Mr. Buchanan options to purchase
75,000 Shares at fair market value on July 28, 1997. The letter states that if
Mr. Buchanan's employment is terminated during the first 12 months of his
employment for any reason other than criminal activity or ethical misconduct, he
will receive 24 months of base salary from the date of termination. The letter
does not specify an employment term.
Steven N. Lach accepted an employment offer letter from the Company on
October 16, 1997, pursuant to which he is employed as Vice
President -- Operations. The letter grants Mr. Lach a base salary of $150,000
plus a signing bonus of $25,000, relocation assistance, a monthly car allowance
and other customary benefits. In addition, the Company granted to Mr. Lach
options to purchase 50,000 Shares at fair market value on the date of acceptance
of the Company's offer of employment. Mr. Lach is entitled to severance benefits
equal to 12 months of base salary if during the first 12 months of his
employment he is terminated for any reason other than cause related to criminal
activity or ethical misconduct. The letter does not specify an employment term.
The Company's 1987 Stock Option Plan and 1996 Stock Option Plan (the "Stock
Option Plans") each provides that in the event (a) of a merger, consolidation or
reorganization with another corporation in which the Company is not the
surviving corporation or (b) the Company agrees to be acquired, the Company is
subject to a non-negotiated takeover attempt, or there is a change in control of
the Company, all options outstanding and unexercised under the Stock Option
Plans shall immediately become exercisable. In accordance with the terms of the
Stock Option Plans, upon publication of the announcement of the Offer, all
options issued under such plans vested immediately and are exercisable.
Under the terms of the Merger Agreement, holders of outstanding options to
purchase Shares (including outstanding options under the Stock Option Plans)
will receive in settlement thereof an amount in cash (less
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applicable withholding taxes) equal to the product of (i) the number of Shares
previously subject to such option (whether or not exercisable) multiplied by the
excess of the per share amount paid to holders tendering their Shares in the
Offer over the exercise price per share of the Common Stock previously subject
to such option. See "The Merger Agreement -- Company Stock Options" below.
Under the Merger Agreement, the Company has agreed to take such action as
is necessary to terminate, as of the Effective Time (as defined in the Merger
Agreement), the Stock Option Plans and the Company's Employee Stock Purchase
Plan.
Non-employee members of the Board receive the following compensation for
their services as directors: (i) a $10,000 annual fee, (ii) $1,000 for each
Board meeting attended in person or by telephone ($2,000 for a non-employee
Chairman of the Board of Directors), (iii) $500 for each committee meeting
attended, and (iv) reimbursement for reasonable expenses incurred in attending
meetings.
The Company is a Delaware corporation. Under Delaware law, indemnification
of directors and officers is generally permitted for expenses incurred by them
by reason of their position with the corporation, if the director or officer has
acted in good faith and with the reasonable belief that his conduct was in the
best interest of the corporation. However, Delaware law does not permit a
corporation to indemnify persons against judgments in actions brought by or in
the right of the corporation (although it does permit indemnification in such
situations if approved by the Delaware Court of Chancery and for expenses of
such actions).
The Company believes that indemnification is beneficial in attracting and
retaining qualified directors and accordingly its Restated Certificate of
Incorporation includes a provision eliminating liability for monetary damages
for any breach of fiduciary duty as a director, except: (1) for any breach of
the duty of loyalty to the Company or the Stockholders; (2) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (3) for any transaction from which the director derived an
improper personal benefit; and (4) for unlawful payments of dividends or
unlawful stock repurchases or redemptions as provided in Section 174 of the
Delaware General Corporation Law (the "DGCL"). Thus, pursuant to Delaware law,
directors of the Company are not insulated from liability for breach of their
duty of loyalty (requiring that, in making a business decision, directors act in
good faith and in the honest belief that the action was taken in the best
interests of the corporation) or for claims arising under the federal securities
laws. The Company has entered into indemnity agreements with all of its
directors and officers for the indemnification of and advancing of expenses to
such persons to the full extent permitted by law.
The Company maintains insurance policies relating to the indemnification of
directors and officers pursuant to the provisions described above and the Merger
Agreement generally provides that such insurance will be maintained for a period
of six years after the Effective Time.
INTEREST OF CERTAIN PERSONS IN THE OFFER AND MERGER. In considering the
recommendations of the Board set forth in Item 4(a) below, the Stockholders
should be aware that certain members of the Board of Directors (the "Board") and
executive officers of the Company have interests in the Merger and the Offer
which are described above, below, and in Schedule I hereto, and which may
present them with certain conflicts of interest.
(2) CERTAIN CONTRACTS, AGREEMENTS, ARRANGEMENTS OR UNDERSTANDINGS AND
ANY ACTUAL OR POTENTIAL CONFLICTS OF INTEREST BETWEEN (A) THE COMPANY OR
ITS AFFILIATES AND (B) THE PURCHASER AND ITS EXECUTIVE OFFICERS, DIRECTORS
OR AFFILIATES.
For a description of certain agreements and understandings between the
Company, on the one hand, and Parent or certain affiliates of Parent, on the
other, see the information set forth below and in Item 4 hereof under the
heading "Background of the Transaction: Past Contracts, Transactions and
Negotiations with Parent and Purchaser."
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement, a copy of which has been filed with the Commission as
Exhibit 1 hereto and is incorporated herein by reference.
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THE OFFER. The Merger Agreement provides for the commencement of the Offer
within five business days after the public announcement of the execution and
delivery of the Merger Agreement. Without the prior written consent of the
Company, Purchaser has agreed not to (and Parent has agreed to cause Purchaser
not to) (i) decrease or change the form of consideration payable in the Offer or
decrease the number of Shares sought pursuant to the Offer, (ii) change, in any
material respect, the conditions to the Offer, (iii) impose additional material
conditions to the Offer, (iv) waive the condition that there shall be validly
tendered and not withdrawn prior to the time the Offer expires at least 90% of
the number of Shares outstanding on a fully diluted basis (as defined in the
Merger Agreement) (the "90% Tender Condition"), provided that Purchaser shall
have the right, at its option and without the Company's consent, to modify such
condition to reduce the minimum number of Shares being sought to a number of
Shares that constitutes at least a majority of the Shares outstanding on a fully
diluted basis on the date of purchase (the condition as so modified, herein
referred to as the "Majority Tender Condition"), (v) extend the expiration date
of the Offer except that (a) Purchaser may extend the expiration date of the
Offer as required by law, (b) Purchaser may extend the expiration date of the
Offer for up to 10 business days after the initial expiration date or for longer
periods (not to exceed 90 calendar days from the date of commencement) in the
event that any condition to the Offer is not satisfied, and (c) Purchaser may
extend the Offer one or more times for an aggregate period of 15 days (not to
exceed 90 calendar days from the date of commencement for any reason other than
those in the immediately preceding clause (a) or (b)), or (vi) amend any term of
the Offer in any manner materially adverse to holders of Shares; provided,
however, that, except as set forth above and subject to applicable legal
requirements, Purchaser may waive any other condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the Commission. Assuming the
prior satisfaction or waiver of the conditions to the Offer, Purchaser shall
accept for payment, and pay for, in accordance with the terms of the Offer, all
Shares validly tendered and not withdrawn pursuant to the Offer as soon as
practicable after the expiration date of the Offer. The initial expiration date
of the Offer shall be 20 business days from its commencement (i.e., the initial
expiration date is 12:00 midnight, New York City time, on March 19, 1998).
Purchaser shall extend the expiration date of the Offer for up to 30 additional
days in the event and to the extent that (x) the conditions to the Offer are not
satisfied solely because the applicable waiting periods under the HSR Act (as
defined in the Merger Agreement) have not expired or been terminated and (y) the
Company has made the required filing under the HSR Act within 10 days from the
date of the Merger Agreement.
The parties further agree in the Merger Agreement that, if the Majority
Tender Condition and all of the conditions to the Offer other than the 90%
Tender Condition have been satisfied as of the expiration date of the Offer (as
such expiration date may have been extended in accordance with the Merger
Agreement), then Parent and Purchaser shall either (i) waive the 90% Tender
Condition and substitute the Majority Tender Condition, or (ii) terminate the
Offer without purchasing any Shares thereunder and require the Company to
solicit the approval of the Stockholders for a cash merger (the "Cash Merger")
of the Company with Purchaser in accordance with the applicable provisions of
the Merger Agreement. In the Cash Merger, each issued and outstanding Share,
options to acquire Shares and shares of capital stock of Purchaser will be
treated in accordance with the applicable provisions of the Merger Agreement.
The effects of the Cash Merger on such securities will be the same as those in
the Merger. See "Effects of the Merger" below. If Parent and Purchaser elect to
terminate the Offer and pursue the Cash Merger, the Company and Parent shall
promptly undertake the actions required by the Merger Agreement with respect to
the preparation, filing with the Commission and mailing to Stockholders of a
Proxy Statement (as defined in the Merger Agreement), duly calling and holding a
Company Stockholders Meeting (as defined in the Merger Agreement) and soliciting
Stockholder approval of the Cash Merger. The obligations of Parent and Purchaser
to effect the Cash Merger will be subject to Stockholder approval of the Cash
Merger and the satisfaction of other conditions described in the Merger
Agreement (including the conditions to the Offer, other than the 90% Tender
Condition). See "Conditions to the Merger" and "Conditions to the Offer" below
in this Item 3(b).
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon the
purchase by Parent or any of its Subsidiaries pursuant to the Offer of such
number of Shares as represents at least 50.1% of the total outstanding Shares
(on a fully diluted basis), and from time to time thereafter, (i) Parent shall
be entitled to
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designate such number of directors ("Parent's Designees") rounded up to the next
whole number as will give Parent, subject to compliance with Section 14(f) of
the Exchange Act, representation on the Board equal to the product of (x) the
number of directors on the Board (giving effect to any increase in the number of
directors pursuant to the Merger Agreement) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (but not more than 75%) (such number being, the "Board Percentage"),
and (ii) the Company shall, upon request by Parent, promptly satisfy the Board
Percentage by (x) increasing the size of the Board or (y) using its best efforts
to secure the resignations of such number of directors as is necessary to enable
Parent's Designees to be elected to the Board and shall cause Parent's Designees
promptly to be so elected; provided however, that in no event prior to the
Effective Time (as defined in the Merger Agreement) of the Merger shall the
number of Continuing Directors (as defined below) be less than one. At the
request of Parent, the Company shall take, at the Company's expense, all lawful
action necessary to effect any such election, including, without limitation,
mailing to the Stockholders the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, unless such information has
been previously provided to the Stockholders in the Schedule 14D-9. Schedule I
of this Schedule 14D-9 contains such information.
Following the election or appointment of Parent's Designees pursuant to the
Merger Agreement and prior to the Effective Time of the Merger, any (i)
amendment or termination of the Merger Agreement, (ii) extension for the
performance or waiver of the obligations or other acts of Parent or Purchaser,
(iii) action which might affect the accuracy of the Company's representations
and warranties in the Merger Agreement or (iv) waiver of the Company's rights
thereunder shall require the concurrence of a majority of the directors of the
Company then in office who are Continuing Directors. The term "Continuing
Director" means each member of the Board on the date of the Merger Agreement who
is a "disinterested director," as such term is used in Arizona Revised Statutes
Section 10-2741 and any successor to any Continuing Director who was recommended
to succeed such Continuing Director by a majority of the Continuing Directors
then on the Board, but shall not mean any of Parent's Designees. See Schedule I.
EFFECTS OF THE MERGER. The Merger Agreement provides that, upon the terms
and subject to the conditions set forth in the Merger Agreement and in
accordance with the DGCL, Purchaser will be merged with and into the Company at
the Effective Time (the "Merger"). Each of the parties shall use its reasonable
best efforts to cause the Merger to occur as promptly as possible (subject to
the limitations contained in the Merger Agreement). At the Effective Time, the
separate corporate existence of Purchaser shall cease, and the Company shall
continue as the Surviving Corporation (as defined in the Merger Agreement) and a
wholly owned subsidiary of Parent. Each share of the capital stock of Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Surviving Corporation. Each Share and
all other shares of capital stock of the Company that are owned by the Company
and all Shares and other shares of capital stock of the Company owned by Parent
or Purchaser or any other wholly owned Subsidiary of Parent or the Company shall
be canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor. Each remaining Share (other than
Shares owned by Stockholders who have properly exercised dissenters' rights of
appraisal under the DGCL) will be converted into the right to receive the Offer
Consideration (as defined in the Merger Agreement) of $23.90 per Share, net to
the seller in cash, less any required withholding taxes (the "Merger
Consideration"), upon surrender and exchange of the certificates representing
the Shares. The Merger will become effective upon the filing of a certificate of
merger ("Certificate of Merger") with the Secretary of State of the State of
Delaware or at such time thereafter as is provided in the Certificate of Merger.
The Merger Agreement provides that, as a result of the Merger, the
Certificate of Incorporation and Bylaws of Purchaser will be the Certificate of
Incorporation (with the name changed to Hadco Phoenix, Inc.) and Bylaws of the
Company as the Surviving Corporation, until amended in accordance with the DGCL.
In addition, the directors of Purchaser and the officers of the Company
immediately prior to the Effective Time will be the initial directors and
officers of the Company as the Surviving Corporation until their successors have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
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COMPANY STOCK OPTIONS. The Merger Agreement provides that, at the earlier
of the Effective Time or immediately prior to the expiration of the Offer
(provided that the settlement of the options below, when taken together with
Shares tendered immediately prior to such expiration, meets the 90% Tender
Condition), each holder of a then-outstanding option to purchase Shares under
the Stock Option Plans, whether or not then exercisable (the "Options"), shall,
in settlement thereof, receive for each Share subject to such Option an amount
(subject to any applicable withholding tax) in cash equal to the difference
between the Offer Consideration and the per Share exercise price of such Option
to the extent such difference is a positive number (such amount being
hereinafter referred to as, the "Option Consideration"); provided, however, that
with respect to any person subject to Section 16(a) of the Exchange Act, any
such amount shall be paid as soon as practicable after the first date payment
can be made without liability to such person under Section 16(b) of the Exchange
Act.
Upon receipt of the Option Consideration, the Options shall be canceled.
The surrender of an Option to the Company in exchange for the Option
Consideration shall be deemed a release of any and all rights the holder had or
may have had in respect of such Option. Prior to the expiration of the Offer,
the Company shall obtain all necessary written consents or releases from holders
of Options under the Stock Option Plans and shall take all such other lawful
action as may be necessary to give effect to the transactions contemplated by
the foregoing described provisions of the Merger Agreement. To the extent Parent
is satisfied in its sole, good faith discretion that the settlement of Options
will result in satisfaction of the 90% Tender Condition on the expiration of the
Offer and that all other conditions to the Offer have been met, Parent will loan
the Company up to $13,000,000 for the purpose of paying the aggregate Option
Consideration.
The Company shall terminate the Company's Employee Stock Purchase Plan (the
"Stock Purchase Plan") as of the Effective Time pursuant to Article IX thereof
and shall refund all payroll deductions for the current Quarterly Investment
Period (as defined in such plan). All Stock Option Plans shall also terminate as
of the Effective Time and the provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any Subsidiary (as defined in the Merger
Agreement) thereof shall be canceled as of the Effective Time. The Company shall
take all action necessary to ensure that following the Effective Time no
participant in the Stock Option Plans, the Stock Purchase Plan or other plans,
programs or arrangements shall have any right thereunder to acquire equity
securities of the Company, the Surviving Corporation or any Subsidiary thereof
and to terminate all such plans.
STOCKHOLDER MEETING. The Merger Agreement provides that the Company will,
as soon as practicable following the acceptance for payment of and payment for
Shares by Purchaser in the Offer, duly call, give notice of, convene and hold a
Company Stockholders Meeting for the purpose of approving the Merger Agreement
and the transactions contemplated thereby. A Company Stockholders Meeting will
also be called and held to consider and approve the Cash Merger if Parent and
Purchaser elect under the Merger Agreement to terminate the Offer and require
the Company to solicit Stockholder approval of the Cash Merger. At the Company
Stockholders Meeting, Parent shall cause all of the Shares then owned by Parent
and Purchaser and any of their subsidiaries or affiliates to be voted in favor
of the Merger. As soon as practicable following (i) Purchaser's acceptance for
payment of and payment for Shares or (ii) Parent's and Purchaser's election to
terminate the Offer and require the Company to solicit Stockholder approval of
the Cash Merger, the Company and Parent shall prepare and file with the
Commission a Proxy Statement. The Company has agreed to use its best efforts to
respond to all Commission comments with respect to the Proxy Statement and to
cause the Proxy Statement to be mailed to the Company's Stockholders at the
earliest practicable date.
Notwithstanding the above, if Purchaser, or any other Subsidiary of Parent,
acquires at least 90% of the outstanding Shares in the Offer, at the request of
Purchaser, all parties to the Merger Agreement will take all necessary actions
to cause the Merger to become effective as soon as practicable after the
expiration of the Offer, without a meeting of the Stockholders, in accordance
with Section 253 of the DGCL.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties which do not survive the Effective
Time. These include representations and warranties by the Company with respect
to, among other things, (i) organization, standing and power; (ii) capital
structure;
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(iii) authority; no violations; and consents and approvals; (iv) Commission
documents; (v) information supplied; (vi) compliance with applicable laws; (vii)
litigation; (viii) taxes; (ix) pension and benefit plans and ERISA; (x) absence
of certain changes or events; (xi) no undisclosed material liabilities; (xii)
vote required; (xiii) labor matters; (xiv) intangible property; (xv)
environmental matters; (xvi) real property; (xvii) insurance; (xviii) board
recommendation; (xix) material contracts; (xx) related party transactions; (xxi)
indebtedness; (xxii) liens; and (xxiii) opinion of financial advisor.
Parent and Purchaser also have made certain representations and warranties
with respect to, among other things, (i) organization, standing and power; (ii)
authority; no violations; and consents and approvals; (iii) information
supplied; (iv) board recommendation; (v) financing and (vi) interim operations
of Purchaser.
CONDUCT OF BUSINESS PENDING THE MERGER. The Company has agreed that during
the period from the date of the Merger Agreement and continuing until the
Effective Time (except as expressly contemplated or permitted by the Merger
Agreement, or consented to by Parent in writing) the Company and its
Subsidiaries shall carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, and shall use
reasonable efforts to preserve intact its present business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business will not be impaired in any
material respect at the Effective Time. The Company has further agreed that
during such period it shall not, nor shall it permit any of its Subsidiaries to:
(i) declare or pay any dividends on or make other distributions in respect of
any of its capital stock; (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; (iii)
repurchase or otherwise acquire, or permit any Subsidiary to purchase or
otherwise acquire, any shares of its capital stock, except as required by the
terms of its securities outstanding on the date of the Merger Agreement, as
contemplated by the Merger Agreement or as contemplated by employee benefit and
dividend reinvestment plans in effect on the date of the Merger Agreement; (iv)
grant any options, warrants or rights to purchase Shares or amend or reprice any
Options, any Stock Option Plan or the Stock Purchase Plan; (v) issue, deliver or
sell, or authorize or propose to issue, deliver or sell, any shares of its
capital stock of any class or series, any Company Voting Debt (as defined in the
Merger Agreement) or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, Company Voting Debt or convertible
securities other than (A) the issuance of Shares upon the exercise of Options
granted under Stock Option Plans which were outstanding on the date of the
Merger Agreement, or in satisfaction of stock grants or stock based awards made
prior to the date of the Merger Agreement pursuant to Stock Option Plans or
based upon any individual agreements such as employment agreements or executive
termination agreements (in each such case, as in effect on the date of the
Merger Agreement); and (B) issuances by a wholly owned subsidiary of its capital
stock to its parent; (vi) amend or propose to amend its Restated Certificate of
Incorporation or Bylaws; (vii) acquire or agree to acquire by merger or
consolidation or purchase a substantial equity interest in or substantial
portion of assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof;
(viii) other than dispositions in the ordinary course of business consistent
with past practice which are not material, individually or in the aggregate, to
such party and its Subsidiaries taken as a whole, the Company shall not, nor
shall it permit any of its Subsidiaries to, sell, lease, encumber or otherwise
dispose of, or agree to sell, lease (whether such lease is an operating or
capital lease), any of its assets; (ix) authorize, recommend, propose or
announce an intention to adopt a plan of complete or partial dissolution except
as permitted by the Merger Agreement; (x) take or agree or commit to take any
action that would make inaccurate in any material respect any of the
representations or warranties or covenants contained in the Merger Agreement or
cause any of the conditions to the Merger to not be satisfied in all material
respects; (xi) (A) grant any increases in the compensation of any of its
directors, officers or key employees, (B) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or contemplated by
any existing employee benefit plan or pension plan to any such director, officer
or key employee, whether past or present, (C) enter into any new, or materially
amend any existing employment, severance or termination agreement with any such
director, officer or key employee, or (D) except as may be required to comply
with applicable law, become obligated under any new employee benefit plan or
pension plan or amend any existing plan or arrangement if such amendment would
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have the effect of materially enhancing any benefits thereunder; (xii) except as
specifically described in the Merger Agreement, assume or incur any indebtedness
or guarantee any indebtedness, or issue or sell any debt securities or warrants
or rights to acquire any debt securities or enter into any lease or create any
mortgages, liens or security interests on Company property or enter into any
"keep well" or other agreement or arrangement to maintain the financial
conditions of another person; (xiii) except as specifically described in the
Merger Agreement enter into, modify, rescind, terminate, waive, release or
otherwise amend in any material respect any of the terms of any Material
Contract (as defined in the Merger Agreement); (xiv) fail to provide Parent with
copies of all filings made by the Company with the Commission or any other
governmental entity in connection with the Merger Agreement; (xv) take any
action, other than in the ordinary course of business consistent with past
practice or as required by the Commission or by law, with respect to its
accounting policies, procedures and practices; or (xvi) except as described in
the Merger Agreement, incur any capital expenditures that, in the aggregate, are
in excess of $1,000,000.
OTHER AGREEMENTS. The Company, Purchaser and Parent have agreed to take
all reasonable action necessary to comply promptly with all legal requirements
that may be imposed on such party with respect to the Offer, the Merger and the
transactions contemplated by the Merger Agreement and Stockholders Agreement
(including furnishing all information required under the HSR Act (as defined in
the Merger Agreement) and in connection with approvals of or filings with any
other governmental entity) and to promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or their Subsidiaries in connection with the Offer, the Merger and
the transactions contemplated by the Merger Agreement and Stockholders
Agreement; provided, however, that Parent need not agree with the Department of
Justice or any other governmental entity to hold separate, sell or otherwise
dispose of any Subsidiary of Parent or the Company or assets or properties of
any of the foregoing. Without limiting the generality or effect of the
foregoing, each of the Company, Parent and Purchaser will, and will cause its
Subsidiaries to, take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any governmental entity or other public or
private third party, required to be obtained or made by the Company, Parent or
any of their Subsidiaries in connection with the Offer, the Merger, the Merger
Agreement, the Stockholders Agreement or the taking of any action contemplated
thereby.
NO SOLICITATION. The Company has agreed that until the termination of the
Merger Agreement, neither the Company or any of its Subsidiaries, nor any of
their respective officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its Subsidiaries) (such officers,
directors, employees, representatives, agents, affiliates, investment bankers,
attorneys and accountants being referred to herein, collectively, as
"Representatives"), will, directly or indirectly, initiate, solicit or encourage
(including by way of furnishing information or assistance to any person making,
or as a result thereof may reasonably be expected to lead to, any Acquisition
Proposal (as defined below)), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal, or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, and neither the Company nor any of its Subsidiaries will
authorize or permit any of its Representatives to take any such action, and the
Company shall as soon as possible notify Parent orally and in writing of all of
the relevant details relating to, and all material aspects of, all inquiries and
proposals which it or any of its Subsidiaries or any of their respective
Representatives may receive relating to any of such matters and, if such inquiry
or proposal is in writing, the Company shall as soon as possible deliver to
Parent a copy of such inquiry or proposal; provided, however, that nothing in
the Merger Agreement prohibits the Board of Directors of the Company from:
(i) furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited written,
bona fide Acquisition Proposal and, in respect of which, in the case of an
Acquisition Proposal involving the payment of cash, such person or entity
has, in the reasonable and good faith opinion of the Board or its
Representatives, the necessary funds or written commitments therefor if,
and only to the extent that, (A) the Board determines in good faith (after
consultation with and based upon the advice of its financial advisor) that
such Acquisition Proposal may reasonably be
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<PAGE> 10
expected, if consummated, to result in a transaction more favorable to the
Stockholders from a financial point of view than the transaction
contemplated by the Merger Agreement and the Board determines in good faith
after consultation with and based upon the advice of independent legal
counsel (who may be the Company's regularly engaged independent legal
counsel) that such action is necessary for the Board to comply with its
fiduciary duties to the Stockholders under applicable law, (B) prior to
taking any such action, the Company (x) provides reasonable notice to
Parent to the effect that it is taking such action, describes to Parent in
reasonable detail the identity of the offeror and the terms and conditions
of such Acquisition Proposal, and furnishes Parent a copy of any written
material submitted by the offeror and (y) receives from such person or
entity an executed confidentiality agreement in customary form, and (C) the
Company shall as promptly and continuously as possible advise Parent as to
all of the relevant details relating to, and all material aspects, of any
such discussions or negotiations, or
(ii) failing to make or withdrawing or modifying its recommendation
referred to in the Merger Agreement if there exists an Acquisition Proposal
and the Board, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent counsel), determines in good faith that such action is
necessary for the Board to comply with its fiduciary duties to the
Stockholders under applicable law.
For purposes of the Merger Agreement, "Acquisition Proposal" shall mean any
proposal to do any of the following (other than the transactions between the
Company, Parent and Purchaser contemplated by the Merger Agreement) involving
the Company or any of its Subsidiaries: (i) any merger, consolidation, share
exchange, recapitalization, business combination, or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of 25% or more of the assets of the Company and its Subsidiaries, taken as a
whole, in a single transaction or series of transactions; (iii) any tender offer
or exchange offer for 25% or more of the outstanding shares of capital stock of
the Company or the filing of a registration statement under the Securities Act
of 1933, as amended, in connection therewith; or (iv) any public announcement of
a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
FEES AND EXPENSES. The Merger Agreement provides that, except as described
below, all costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated by the Merger Agreement will be paid by the
party incurring such expense. The Company has agreed to pay Purchaser a
termination fee in immediately available funds equal to $6,000,000 upon the
termination of the Merger Agreement, and as a condition of such termination of
the Merger Agreement, if any of the events set forth below occurs (each, a
"Trigger Event"): (i) the Board shall have withdrawn or adversely modified, or
taken a public position materially inconsistent with, its approval or
recommendation of the Offer, the Merger, the Merger Agreement or the
Stockholders Agreement; or (ii) an Acquisition Proposal has been recommended or
accepted by the Company or the Company shall have entered into an agreement
(other than a confidentiality agreement) with respect to an Acquisition
Proposal. Any amount of the termination fee not paid when due will bear interest
at the rate of 9% per annum from the date due through and including the date
paid.
CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the obligation
of each party to effect the Merger is subject to the satisfaction, prior to the
Closing Date (as defined in the Merger Agreement), of the following conditions:
(i) the Merger Agreement and the Merger shall have been approved and adopted by
the affirmative vote of the holders of a majority of the Shares entitled to vote
thereon if such vote is required by applicable law; provided, that Parent and
Purchaser shall vote all Shares purchased pursuant to the Offer or the
Stockholders Agreement in favor of the Merger, (ii) the waiting period (and any
extension thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired, and (iii) no temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect, provided, however, that prior to
invoking this condition, each party shall use all commercially reasonable
efforts to have any such decree, ruling, injunction or order vacated.
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The obligations of Parent and Purchaser to effect the Merger are subject to
the satisfaction of the following conditions, any or all of which may be waived
in whole or in part by Parent and Purchaser:
(i) Purchaser shall have accepted for payment and become obligated to
pay for a number of Shares tendered in the Offer such that, after such
acceptance and payment, Parent and its affiliates shall own the outstanding
Shares satisfying the 90% Tender Condition or shall have elected to either
(x) waive the 90% Tender Condition in favor of the Majority Tender
Condition or (y) terminate the Offer and pursue the Cash Merger; (ii) the
representations and warranties of the Company set forth in the Merger
Agreement shall be true and correct in all material respects as of the date
of the Merger Agreement and as of the Closing Date; (iii) the Company shall
have performed in all material respects all obligations required to be
performed by it under the Merger Agreement at or prior to the Closing Date;
(iv) all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and all material
licenses, permits, consents, approvals, authorizations, qualifications and
orders of other third parties as are necessary in connection with the
transactions contemplated by the Merger Agreement shall have been obtained;
and (v) there shall not have occurred any material adverse change in the
business, operations, assets or condition (financial or otherwise) of the
Company.
If the Merger is to be effected as a result of Parent's and Purchaser's
election to terminate the Offer and require the Company to solicit Stockholder
approval of the Cash Merger, the obligations of Parent and Purchaser to effect
the Merger are also subject to the satisfaction of the conditions to the Offer
(except for the 90% Tender Condition). For a description of such conditions, see
"Certain Conditions to the Offer" below.
TERMINATION. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
Stockholders or Parent: (a) by mutual written consent of the Company and Parent,
or mutual action of their respective Boards of Directors; (b) by either the
Company or Parent prior to the consummation of the Offer (i) if there has been a
material breach (for purpose of this clause, a material breach by the Company is
defined as a breach or series of breaches the result of which impairs the value
of the Company or could reasonably be expected to impair the value of the
Company by more than $3,000,000 in the aggregate) of any representation,
warranty, covenant or agreement on the part of the other set forth in the Merger
Agreement which breach has not been cured within 10 business days following
receipt by the breaching party of notice of such breach, or (ii) if any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become final and
non-appealable; (c) by either the Company or Parent, if the Merger shall not
have been consummated on or before July 31, 1998; provided, that such right to
terminate the Merger Agreement is not available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or before such date; (d) by
Parent in the event an Acquisition Proposal has been made to the Company and the
Company shall fail to reaffirm its approval or recommendation of the Offer, the
Merger, the Merger Agreement and the Stockholders Agreement on or before the
fifth business day following the date on which such Acquisition Proposal shall
have been made; (e) subject to the provisions regarding the alternatives
available if the Majority Tender Condition and all other conditions to the Offer
(other than the 90% Tender Condition) are satisfied, by Parent or the Company,
if the Offer terminates, is withdrawn, abandoned or expires by reason of the
failure to satisfy any condition of the Offer, except by reason solely of the
failure to satisfy the 90% Tender Condition when the Majority Tender Condition
is satisfied; (f) if Parent and Purchaser have elected to terminate the Offer
and pursue the Cash Merger, by the Company, if the Offer shall have expired or
shall have been withdrawn or terminated without any Shares being purchased by
Purchaser thereunder on or prior to the 90th day after the date of commencement
of the Offer; or (g) by Parent or the Company in the event that a Trigger Event
has occurred (but the Company may not terminate the Merger Agreement in such
event until it has paid to Parent the termination fee). In the event of
termination of the Merger Agreement by either the Company or Parent as provided
therein, the Merger Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Purchaser or the Company, or
their respective affiliates, officers, directors or stockholders, except as
provided in the Merger Agreement in respect of confidential information, the
termination fee and existing breaches of the Merger Agreement.
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INDEMNIFICATION. The Merger Agreement provides that the Company shall, and
from and after the Effective Time, Parent and the Surviving Corporation shall,
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date of the Merger Agreement or who becomes prior to the
Effective Time, an officer, director, employee or agent of the Company or any of
its Subsidiaries (each individually an "Indemnified Party" and, collectively,
the "Indemnified Parties") against all losses, claims, damages, costs, expenses
(including reasonable attorneys' fees and expenses), liabilities or judgments or
amounts that are paid in settlement with the approval of the indemnifying party
of or in connection with any threatened or actual claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer, employee
or agent of the Company or any of its Subsidiaries, whether pertaining to any
matter existing or occurring at or prior to the Effective Time and whether
asserted or claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities"), including all Indemnified Liabilities based in whole or in part
on, or arising in whole or in part out of, or pertaining to the Merger Agreement
or the transactions contemplated thereby, in each case to the full extent a
corporation is permitted under the DGCL to indemnify its own directors or
officers as the case may be. Without limiting the foregoing, in the event any
such claim, action, suit, proceeding or investigation is brought against any
Indemnified Parties (whether arising before or after the Effective Time), (i)
the Indemnified Parties may retain counsel satisfactory to them and the Company
(or them and the Surviving Corporation after the Effective Time) and the Company
(or after the Effective Time, the Surviving Corporation) shall pay all fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; and (ii) the Company (or after the Effective Time, the
Surviving Corporation) will use all reasonable efforts to assist in the vigorous
defense of any such matter, provided that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent. Any Indemnified Party wishing to claim indemnification under
the Merger Agreement, upon learning of any such claim, action, suit, proceeding
or investigation, shall notify the Company or the Surviving Corporation as the
case may be (but the failure so to notify shall not relieve a party from any
liability which it may have under the Merger Agreement except to the extent such
failure prejudices such party), and shall to the extent required by the DGCL
deliver to the Company (or after the Effective Time, the Surviving Corporation)
the undertaking contemplated by Section 145(e) of the DGCL. The Indemnified
Parties as a group may retain only one law firm to represent them with respect
to each such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two or
more Indemnified Parties. The Company, Parent and Purchaser agree that all
rights to indemnification, including provisions relating to advances of expenses
incurred in defense of any action or suit, existing in favor of the Indemnified
Parties with respect to matters occurring through the Effective Time, shall
survive the Merger and shall continue in full force and effect for a period of
not less than six years from the Effective Time; provided, however, that all
rights to indemnification in respect of any Indemnified Liabilities asserted or
made within such period shall continue until the disposition of such Indemnified
Liabilities.
Prior to the Effective Time, the Company shall purchase a policy of
directors' and officers' liability insurance to be in effect for not less than
six years after the Effective Time, providing for claims made coverage
substantially equivalent in scope and content to the coverage provided in the
Company's current policies of directors' and officers' liability insurance, and
the premiums therefor shall be prepaid in full provided that the Company shall
not pay an annual premium for such insurance in excess of 150% of the last
annual premium paid by the Company prior to the date of the Merger Agreement,
and provided further, that the Company shall consult with Parent prior to the
purchase of such insurance or the purchase or renewal of any directors' and
officers' liability insurance and offer Parent the opportunity to elect to
purchase such insurance on behalf of the Company.
AMENDMENT. Subject to applicable law, the Merger Agreement may be amended,
modified or supplemented only by written agreement of Parent, Purchaser and the
Company at any time prior to the Effective Time with respect to any of the terms
contained therein; provided, however, that after the Merger Agreement is
approved by the Stockholders, no such amendment or modification shall reduce the
amount or change the form of consideration to be delivered to the Stockholders
or the manner in which it will be paid.
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ASSIGNMENT. Neither the Merger Agreement nor any of the rights, interests
or obligations thereunder shall be assigned by any of the parties thereto
(whether by operation of law or otherwise) without the prior written consent of
the other parties, except that Purchaser may assign, in its sole discretion, any
or all of its rights, interests and obligations thereunder to any newly formed,
direct wholly owned subsidiary of Parent.
TIMING. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Purchaser has agreed to
cause the Merger to be consummated in accordance with the terms set forth above,
there can be no assurance as to the timing of the Merger.
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer, the Purchaser is not required to accept for payment or, subject to
any applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after expiration or termination of the Offer), to pay
for any Shares tendered, and may postpone the acceptance for payment or, subject
to the restriction referred to above, payment for any Shares tendered, and may
amend (subject to terms of the Merger Agreement) or terminate the Offer (whether
or not any Shares have theretofore been purchased or paid for) if, (i) there has
not been validly tendered and not withdrawn prior to the time the Offer shall
otherwise expire a number of Shares which constitutes 90% of the Shares
outstanding on a fully diluted basis on the date of purchase ("on a fully
diluted basis" having the following meaning, as of any date: the number of
shares outstanding, together with Shares the Company may be then required to
issue pursuant to obligations outstanding at that date under employee stock
option, employee stock purchase or other benefit plans or otherwise); (ii) all
material regulatory and related approvals have not been obtained or made on
terms reasonably satisfactory to Purchaser; (iii) any applicable waiting periods
under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer; or (iv) at any time on or after the date of the Merger
Agreement and before acceptance for payment of, or payment for, such Shares any
of the following events shall occur:
(A) There shall have been threatened, instituted or pending any
action, proceeding, application or counterclaim by or before any court or
governmental, regulatory or administrative agency, authority or tribunal,
domestic, foreign or supranational (other than actions, proceedings,
applications or counterclaims filed or initiated by Purchaser), which (i)
seeks to challenge the acquisition by Purchaser of the Shares, restrain,
prohibit or delay the making or consummation of the Offer or the Merger or
any other merger or business combination involving Purchaser or any of its
affiliates and the Company or any of its subsidiaries, prohibit the
performance of any of the contracts or other agreements entered into by
Purchaser or any of its affiliates in connection with the acquisition of
the Company or the Shares, or obtain any material damages in connection
with any of the foregoing, (ii) seeks to make the purchase of or payment
for, some or all of the Shares pursuant to the Offer, the Merger or
otherwise, illegal, (iii) seeks to impose limitations on the ability of
Purchaser or the Company or any of their respective affiliates or
subsidiaries effectively to acquire or hold, or requiring Purchaser, the
Company or any of their respective affiliates or subsidiaries to dispose of
or hold separate, any portion of the assets or the business of Purchaser or
its affiliates or the Company or its subsidiaries, or impose limitations on
the ability of Purchaser, the Company or any of their respective affiliates
or subsidiaries to continue to conduct, own or operate all or any portion
of their businesses and assets as heretofore conducted, owned or operated,
(iv) seeks to impose or may result in material limitations on the ability
of Purchaser or any of its affiliates to exercise full rights of ownership
of the Shares purchased by them, including, without limitation, the right
to vote the Shares purchased by them on all matters properly presented to
the Stockholders, or the right to vote any shares of capital stock of any
subsidiary directly or indirectly owned by the Company, (v) is reasonably
likely to result in a material diminution in the benefits expected to be
derived by Purchaser as a result of the transactions contemplated by the
Offer, including the Merger, (vi) seeks to impose voting, procedural, price
or other requirements in addition to those under Delaware law and federal
securities law, (each as in effect on the date of the Offer to Purchase) or
any material condition to the Offer that is unacceptable (in its reasonable
judgment) to Purchaser or (vii) challenges or adversely and materially
affects the financing of the Offer;
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(B) There shall have been formally proposed, sought, promulgated,
enacted, entered, made applicable to the Offer or the Merger, or enforced
by any domestic, foreign or supranational government or any governmental,
administrative or regulatory authority or agency or by any court or
tribunal, domestic, foreign or supernational, any statute, rule,
regulation, judgment, decree, order or injunction that might result in any
of the consequences referred to in clauses (i) through (vii) of paragraph
(A) above;
(C) There shall have occurred any of the following which, in the good
faith judgment of Parent and Purchaser, make it inadvisable to proceed with
the Offer and acceptance for payment of, and payment for, the Shares: (1)
any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the over-the-counter
market in the United States, (2) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States, (3)
the commencement of a war or other international or national calamity,
directly or indirectly involving the United States, (4) any limitations
(whether or not mandatory) imposed by any governmental authority on, or any
event which might have material adverse significance with respect to, the
nature or extension of credit or further extension of credit by banks or
other lending institutions, (5) any significant adverse change in equity or
debt markets in the United States which shall be continuing as of the
expiration of the Offer, or (6) in the case of any of the foregoing, a
material acceleration or worsening thereof;
(D) The representations and warranties of the Company contained in the
Merger Agreement (without giving effect to any "Material Adverse Effect,"
"materiality" or similar qualifications contained therein) shall not be
true and correct in all material respects (for purpose of this clause, a
failure of the representations and warranties to be true and correct in all
material respects shall mean a failure or series of failures the result of
which impairs the value of the Company or could reasonably be expected to
impair the value of the Company by more than $3,000,000) as of the date of
the consummation of the Offer as though made on and as of such date except
(1) for changes specifically permitted by the Merger Agreement and (2) that
those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date;
(E) The obligations of the Company contained in the Merger Agreement
(without giving effect to any "Material Adverse Effect," "materiality" or
similar qualifications contained therein) shall not have been performed or
complied with in all material respects by the Company;
(F) The Merger Agreement shall have been terminated in accordance with
its terms;
(G) Prior to the purchase of Shares pursuant to the Offer, an
Acquisition Proposal for the Company exists and the Board shall have
withdrawn or materially modified or changed (including by amendment of this
Schedule 14D-9) in a manner adverse to Purchaser its recommendation of the
Offer, the Merger Agreement or the Merger;
(H) Any person or group (other than Parent and Purchaser) shall have
entered into a definitive agreement or agreement in principle with the
Company with respect to a merger, consolidation or other business
combination with the Company; or
(I) The Company shall have suffered a material adverse change in its
business, operations, assets or condition (financial or otherwise).
The foregoing conditions are for the sole benefit of Purchaser and its
affiliates and may be asserted by Purchaser regardless of the circumstances
(other than any action or inaction by Parent, Purchaser or any of their
affiliates) giving rise to any such condition or may be waived by Purchaser, in
whole or in part, from time to time in its sole discretion, except as otherwise
provided in the Agreement. The failure by Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right and may be asserted at any time and
from time to time. Any reasonable determination by Purchaser concerning any of
the events described in the Merger Agreement shall be final and binding.
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STOCKHOLDERS AGREEMENT
The following is a summary of the material terms of the Stockholders
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text of the Stockholders Agreement, a copy of which has been filed with the
Commission as Exhibit 2 hereto and is incorporated herein by reference.
TENDER OF SHARES. Immediately after the execution of the Merger Agreement,
Parent, Purchaser and each of the Selling Stockholders entered into the
Stockholders Agreement. Upon the terms and subject to the conditions of such
agreement, the Selling Stockholders have severally agreed to validly tender,
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer, the respective number of
Shares owned beneficially by them and additional Shares acquired by such Selling
Stockholders after the date of such agreement and prior to termination of such
agreement.
VOTING. Each Selling Stockholder has agreed that during the period
commencing on the date of the Stockholders Agreement and continuing until the
first to occur of the Effective Time or termination of the Merger Agreement in
accordance with its terms, at any meeting of the Stockholders, however called,
or in connection with any written consent of the Stockholders, such Selling
Stockholder will vote (or cause to be voted) the Shares held of record or
beneficially by such stockholder, and pursuant to the Stockholders Agreement
grants to Parent an irrevocable proxy to vote such shares (i) in favor of the
Merger, the execution and delivery by the Company of the Merger Agreement and
the approval of the terms thereof and each of the other actions contemplated by
the Merger Agreement and the Stockholders Agreement and any actions required in
furtherance thereof; (ii) against any action or agreement that would result in a
breach in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or the
Stockholders Agreement; and (iii) except as otherwise agreed to in writing in
advance by Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C) (1) any change in a majority of the persons who constitute
the Board; (2) any change in the present capitalization of the Company or any
amendment of the Company's certificate of incorporation or bylaws; (3) any other
material change in the Company's corporate structure or business; or (4) any
other action which, in the case of each of the matters referred to in clauses
(C)(1), (2), (3) or (4), is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by the Stockholders Agreement and the
Merger Agreement. The Selling Stockholders further agreed not to enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions and agreements described above.
MCNAMEE EMPLOYMENT AGREEMENT
Frederick G. McNamee, III, the Company's President and Chief Executive
Officer, has entered into an employment agreement with Parent, to be effective
as of the Effective Time (the "McNamee Employment Agreement"), under which Mr.
McNamee will be employed as Senior Vice President -- Hadco Phoenix of Parent.
The McNamee Employment Agreement is qualified in its entirety by reference by
the full text thereof, which has been filed with the Commission as Exhibit 3
hereto and is incorporated herein by reference. The term of his employment will
commence on the Effective Time and continue for a period of two years, unless
earlier terminated as set forth in the McNamee Employment Agreement. Under the
McNamee Employment Agreement, Mr. McNamee will receive a base salary of $235,000
per year (subject to increases granted at the discretion of Parent's chief
executive officer), plus options to purchase 40,000 shares of Parent common
stock at fair market value and other benefits customarily enjoyed by other
senior executives of Parent, and will be eligible to participate in bonus
programs applicable to Parent's senior executives. If Mr. McNamee's employment
is terminated by Parent without cause (as defined in the McNamee Employment
Agreement) or is terminated by Mr. McNamee for good reason (as defined in the
McNamee Employment Agreement),
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Mr. McNamee will receive as severance his full base salary for the remainder of
the two-year employment term.
The McNamee Employment Agreement further provides that Mr. McNamee will
purchase from Parent, at the Effective Time, 40,000 shares of Parent common
stock at the market price at time of purchase, which shares will not be
registered under applicable securities laws. During his employment term, Mr.
McNamee may not compete against Parent of any of its subsidiaries or affiliates
with respect to the business of manufacturing or selling printed circuit boards
or other electronic interconnect products, or in the development of technologies
for such businesses. Moreover, during his employment term and for a period of
one year thereafter, Mr. McNamee may not solicit any persons or companies who
were customers, clients, suppliers or business patronage of Parent during or
prior to his employment term or of any of its predecessors, affiliates or
subsidiaries, or use any confidential information of Parent or its subsidiaries,
and may not solicit for any purpose the employment of any employees of Parent or
any of its subsidiaries or affiliates.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS WITH RESPECT THEIR SHARE AND
OPTION HOLDINGS
To the knowledge of the Company, as of January 31, 1998, the current
directors and executive officers of the Company, as a group, beneficially owned,
directly or indirectly, 861,117 Shares (which amount includes options to
purchase Shares which will become immediately exercisable in connection with the
Offer), representing approximately 10.4% of the outstanding Shares on a fully
diluted basis.
The directors and executive officers of the Company will be entitled to
receive, in the Offer and the Merger, aggregate cash consideration equal to
approximately $10,960,946 for their Shares and in settlement of their Options as
contemplated by the Merger Agreement. The following table sets forth certain
information as to the Shares and Options held by the Company's current directors
and executive officers:
<TABLE>
<CAPTION>
DOLLAR
AMOUNT AT OPTIONS
OWNED OFFER CONVERTED DOLLAR TOTAL CASH
NAME SHARES PRICE TO CASH AMOUNT(1) CONSIDERATION(2)
- ---------------------------- -------- ---------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Joseph G. Andersen.......... 317 $ 7,576 145,000 $1,715,750 $ 1,723,326
James Buchanan.............. 0 0 100,000 $ 590,000 $ 590,000
Angelo A. DeCaro, Jr........ 0 0 5,000 $ 53,250 $ 53,250
E. Townes Duncan............ 0 0 5,000 $ 42,000 $ 42,000
Robert W. Heller............ 0 0 5,000 $ 42,000 $ 42,000
Albert I. Irato............. 0 0 5,000 $ 53,250 $ 53,250
Michael F. Jarko............ 60,000 $1,434,000 5,000 $ 53,250 $ 1,487,250
Robert A. Kosciusko......... 0 0 21,000 $ 199,400 $ 199,400
Steven N. Lach.............. 0 0 50,000 $ 263,750 $ 263,750
John W. Maddux.............. 27,300 $ 652,470 20,000 $ 178,000 $ 830,470
Frederick G. McNamee, III... 0 0 400,000 $5,510,000 $ 5,510,000
John W. Nance............... 2,500 $ 59,750 5,000 $ 53,250 $ 113,000
David C. Wetmore............ 0 0 5,000 $ 53,250 $ 53,250
------- ---------- ------- ---------- ----------
Total............. 90,117 $2,153,796 771,000(3) $8,807,150 $ 10,960,946
======= ========== ======= ========== ==========
</TABLE>
- ---------------
(1) Aggregate offer less aggregate exercise price.
(2) Excluding aggregate exercise price.
(3) In accordance with the terms of the Stock Purchase Plans, upon the
publication of the announcement of the Offer all options issued under such
plans vested immediately and are exercisable.
OTHER MATTERS
APPRAISAL RIGHTS. No appraisal rights are available to Stockholders in
connection with the Offer. However, if the Merger is consummated, a Stockholder
will have certain rights under Section 262 of the DGCL ("Section 262") to
dissent and demand appraisal of, and payment in cash for the fair value of, that
Stockholder's Shares. Those rights, if the statutory procedures are complied
with, could lead to a judicial
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<PAGE> 17
determination of the fair value (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to
dissenting Stockholders for their Shares. Any judicial determination of the fair
value of Shares could be based upon considerations other than or in addition to
the Offer Price and the market value of the Shares, including asset values and
the investment value of the Shares. The value so determined could be more or
less than the Offer Price or the Merger Consideration.
If a Stockholder who demands appraisal under Section 262 fails to perfect,
or effectively withdraws or loses, his right to appraisal, as provided in the
DGCL, the Shares of that Stockholder will be converted into the Merger
Consideration in accordance with the Merger Agreement. A Stockholder may
withdraw his demand for appraisal by delivering to Purchaser a written
withdrawal of such demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Section 262 for perfecting
appraisal rights may result in the loss of those rights.
GOING PRIVATE TRANSACTIONS. Rule 13-e-3 under the Exchange Act is
applicable to certain "going-private" transactions. Purchaser does not believe
that Rule 13e-3 will be applicable to the Merger, unless, among other things,
the Merger is completed more than one year after the termination of the Offer.
If applicable, Rule 13e-3 would require, among other things, that certain
financial information regarding the Company and certain information regarding
the fairness of the Merger and the consideration offered to minority
Stockholders prior to consummation of the Merger.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Both the Board of the Company and a committee of independent,
disinterested directors of the Company have unanimously approved the Offer, the
Merger and the other transactions contemplated by the Merger Agreement, have
unanimously determined that the Offer, the Merger and the other transactions
contemplated by the Merger Agreement are advisable, fair to and in the best
interests of the Stockholders and unanimously recommend that the Stockholders
accept the Offer and tender their Shares.
A copy of a letter to all Stockholders dated February 20, 1998
communicating the recommendation of the Board is filed as Exhibit 4 hereto and
is incorporated herein by reference.
(b) BACKGROUND OF THE TRANSACTION: PAST CONTRACTS, TRANSACTIONS AND
NEGOTIATIONS WITH PARENT AND PURCHASER
Frederick G. McNamee, III, Chairman, Chief Executive Officer and President
of the Company, and Andrew E. Lietz, Chief Executive Officer and President of
Parent, have known each other for a number of years and have discussed
informally from time to time a possible strategic transaction between the two
companies. These discussions did not result in any formal action by either
company.
In November 1996, January 1997 and September 1997, the Company was
approached by three separate parties regarding a possible strategic transaction
with the Company. Mr. McNamee and Joseph G. Andersen, the Company's Vice
President--Finance and Chief Financial Officer, held informal meetings with each
such party. No terms of a possible transaction were proposed during these
meetings, nor did they lead to any more formal discussions.
At an industry conference in December 1997, Mr. Lietz approached Mr.
McNamee about the possibility of a transaction between the Company and Parent.
Mr. McNamee stated that any proposed transaction must provide significant value
to the Stockholders and make sense from a strategic perspective.
In mid-December 1997, Mr. Lietz and Timothy L. Losik, Parent's Senior Vice
President and Chief Financial Officer, traveled to Dallas where they met with
Mr. McNamee and Robert Heller, a member of the Company's Board of Directors. At
that time, approaches to valuation of the Company were discussed. Subsequently,
on December 30, 1997, the parties entered into a confidentiality agreement
pursuant to which Parent agreed to treat confidentially certain information
provided by the Company in connection with determining whether a transaction
between them would be desirable. The Company then assembled and sent to Parent
certain confidential information regarding the Company.
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<PAGE> 18
On December 19, 1997, the Company received a written offer from a strategic
buyer to acquire the Company's outstanding common stock. Mr. McNamee and Mr.
Andersen met with representatives of such buyer and its financial advisor to
discuss the offer and exchange information. The proposed transaction involved a
business combination structured as a pooling of interests, in which the Company
would be the surviving corporation. After discussions with certain of the
Company's directors who expressed concern over the adequacy of the price offered
and other proposed terms, the Company rejected the offer.
During the week of January 12, 1998, Mr. McNamee and Mr. Lietz had more
extensive discussions regarding the possibility of a transaction between the two
companies and involved their respective management teams. Telephone
conversations also took place between Mr. McNamee and Mr. Losik concerning the
data that would be required and the process that might be followed should the
discussions proceed further.
On January 26, 1998, representatives of Parent's financial advisor,
BancAmerica Robertson Stephens ("BARS"), met with Mr. McNamee in San Jose,
California to affirm Parent's desire to further explore a possible transaction
with the Company. In addition, Mr. McNamee and the representatives from BARS
discussed preliminarily various proposed terms for a possible transaction,
including a possible valuation range and the structure of a transaction.
On January 30, 1998, the Company engaged A.G. Edwards & Sons, Inc. ("A.G.
Edwards") as its exclusive financial advisor to render financial advice and
assistance in a possible transaction with Parent and, if necessary, other
interested parties. The terms of A.G. Edwards' engagement are described in Item
5 below.
On January 31, 1998, the Company sent to A.G. Edwards copies of the
information it had previously sent to Parent and other relevant data and
materials about the Company. During the week of February 2, 1998,
representatives of A.G. Edwards began their due diligence review of the Company
and held discussions with Company management.
On February 10, 1998, Messrs. McNamee and Andersen, representatives of A.G.
Edwards, Mr. Lietz and a representative of BARS met in Phoenix to discuss
proposed terms for Parent's acquisition of the Company. Mr. Lietz informed Mr.
McNamee that Parent's Board of Directors had authorized Parent's management to
enter into substantive negotiations with the Company and to continue its due
diligence review of the Company. BARS suggested a transaction structure
involving a cash tender offer by a wholly owned subsidiary of Parent for all of
the outstanding Shares followed by a merger to cash out any Shares that had not
been tendered. Mr. Lietz presented a preliminary valuation range for the
Company, subject to due diligence, and provided information demonstrating
Parent's financial condition and ability to meet its obligations under a tender
offer proposal. Mr. McNamee stated that he would present the matter to the
Board. Mr. Lietz further informed Mr. NcNamee that Parent's representatives
would need to conduct further due diligence before a specific price could be
proposed and a definitive agreement signed.
At the February 10 meeting, the Company agreed to grant Parent an exclusive
right to conduct further due diligence and not to solicit other offers through
midnight on February 15, 1998.
On February 11, 1998, the Company convened a special meeting of its Board
of Directors to discuss Parent's interest and preliminary price range. All
directors participated in person or by telephone. Also participating were
representatives of A.G. Edwards, the Company's legal counsel and Mr. Andersen.
The Board discussed the basic terms of a possible transaction with Parent and
reviewed information provided by A.G. Edwards. Mr. McNamee presented an overview
of relevant events related to the transaction and indicated that several
representatives of Parent were scheduled to arrive in Phoenix that day to
conduct further due diligence and negotiate the terms of a definitive agreement.
The Board did not take any formal action at this meeting, but generally
indicated its willingness to proceed as outlined. The directors agreed to
convene another meeting on Sunday, February 15 to consider the transaction
expected to be proposed by Parent (including price and terms).
On February 11, 1998, Parent and its financial advisors and legal counsel
arrived in Phoenix to continue their due diligence review of the Company.
Parent's due diligence review continued through February 14 and included reviews
of documents, meetings with the Company's senior executives and A.G. Edwards,
and tours
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<PAGE> 19
of the Company's facilities in Phoenix, Austin and San Jose. Parent's legal
counsel also delivered an initial draft of the Merger Agreement to the Company's
legal counsel on February 11.
Late in the afternoon on February 13, 1998, the Company delivered to Parent
a report of its financial results for the second quarter ended January 31, 1998,
which were below analyst expectations. After consultation with Parent,
representatives of BARS informed representatives of A.G. Edwards that any
preliminary valuation range for the Company might have to be adjusted to reflect
the lower than expected earnings and that management of Parent would have to
consult with Parent's Board of Directors before continuing with negotiations for
the proposed transaction.
In the morning of February 15, 1998, representatives of BARS delivered to
Parent's Board of Directors valuation materials adjusted to reflect the
Company's lower than expected financial results. Later that day, Parent's Board
of Directors held a telephonic meeting to discuss the recent developments at the
Company and to discuss whether the proposed transaction would be possible in
light of this new information. After discussions with Parent's management
regarding the financial results and the preliminary due diligence findings,
Parent's Board of Directors authorized its senior management and advisors to
continue negotiations based on a lower valuation than previously anticipated.
On February 15, 1998, the Company's Board held a special meeting in
Phoenix, at which all directors were present. The directors discussed industry
matters, the Company's historical performance and prospects, the per Share
consideration that was likely to be offered by Parent, the ability of Parent to
pay cash for the Shares, the time schedule for the Offer and the Merger and
other relevant issues. The directors also reviewed a draft Merger Agreement and
Stockholders Agreement, as preliminarily negotiated. A.G. Edwards gave a formal
presentation on the proposed transaction and reviewed materials it prepared
which were previously provided to the Board. A.G. Edwards also indicated a price
above which, if asked, A.G. Edwards could render an affirmative opinion from a
financial point of view as to the fairness of the proposed transaction.
At the February 15 meeting, the Board established an acquisition committee
consisting of all outside (non-employee) directors, and the committee met to
consider the proposed transaction. The acquisition committee and the entire
Board each approved the transaction with Parent provided that the consideration
to be paid to the Stockholders met or exceeded a specified price point, and
directed management and A.G. Edwards to hold further discussions and negotiate
with Parent to achieve the best price available. The Board also determined that
the definitive agreement must allow for its termination by the Company if the
Company receives a more favorable, bona fide offer, subject to a reasonable
termination fee. The Company's directors unanimously approved the Merger
Agreement, the Stockholders Agreement, the Offer and the Merger, subject to
successful negotiation of the price and other requirements.
Parent's Board also met on February 15, 1998 and approved the transaction.
Late in the afternoon on February 15, 1998, representatives of A.G. Edwards
and BARS had a series of negotiations in which they discussed possible
valuations for the proposed transaction in light of the Company's second quarter
earnings and other terms. The discussions included a wide range of possible
valuations ($22.25 to $25.50 per Share), and A.G. Edwards, in consultation with
certain Company directors, negotiated with BARS throughout the evening. Late in
the evening on February 15, representatives of A.G. Edwards and BARS determined
that they would not be able to agree on the valuation of the Company. Early in
the morning on February 16, Mr. McNamee, Mr. Lietz and representatives of A.G.
Edwards and BARS continued the discussion regarding the offer price, and during
the course of the conversation they agreed to a valuation of $23.90 per Share.
On February 16, 1998, A.G. Edwards issued its opinion that, as of such date
and based upon and subject to certain matters stated therein, the per Share
consideration to be received by the Stockholders in the Offer and the Merger is
fair to the Stockholders from a financial point of view.
On February 16, 1998, the parties' attorneys finalized the Merger
Agreement, and such agreement was then executed. In the morning of February 17,
Parent and the Company issued a joint press release announcing publicly the
transaction. A copy of the press release has been filed with the Commission as
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<PAGE> 20
Exhibit 6 to this Schedule 14D-9. At the same time, the Company issued a press
release announcing its earnings for its second quarter ended January 31, 1998.
Reference is made to the Offer to Purchase for a description of the matters
considered by Parent in connection with the transaction.
REASONS FOR THE RECOMMENDATION OF THE BOARD OF DIRECTORS
At its February 15, 1998 meeting, discussed above, the Board of Directors
met to consider the Offer, the Merger and the other transactions contemplated by
the Merger Agreement. At such meeting, the Board unanimously: (i) determined
that each of the Merger Agreement, the Offer and the Merger is advisable, fair
to and in the best interests of the Stockholders; (ii) approved the execution,
delivery and performance of the Merger Agreement and the Stockholders Agreement
and the consummation of the transactions contemplated thereby, including the
Offer and the Merger; and (iii) resolved to recommend acceptance of the Offer,
approval and adoption of the Merger Agreement and approval of the Merger by the
holders of the Shares.
In so doing, the Board considered a number of factors, including the
factors discussed above and the following factors:
(i) The terms and conditions of the Merger Agreement and the
Stockholders Agreement, including (a) the proposed structure of the Offer
and Merger involving a cash tender offer for all outstanding Shares to be
followed by a merger for the same consideration (without any financing
condition or contingency) thereby enabling all the Stockholders to obtain
cash for their Shares concurrently at the earliest possible time, (b) the
high threshold of validly tendered Shares before Purchaser is required to
purchase the Shares tendered in the Offer and (c) the requirement that if
all of the conditions of the Offer other than the 90% Tender Condition are
satisfied, under certain circumstances Purchaser must either decrease the
minimum tender condition from 90% to at least a majority of the fully
diluted Shares or pursue a cash merger subject to approval by the
Stockholders, and (d) Parent's financial condition and ability to meet its
obligations under the Merger Agreement;
(ii) The business, results of operations, properties, financial
condition and competitive position of the Company and the nature of, and
current trends in, the industry in which the Company operates (including
anticipated greater competition from Asian manufacturers because of the
currency and financial problems currently affecting many countries in that
region), and the views expressed by Company management regarding such
matters as well as consideration of the Company's prospects if the Company
were to remain independent;
(iii) The fact that the Offer Consideration of $23.90 per Share was
significantly higher than the recent trading prices for the Shares (the
closing sale price on the last trading day before the transaction was
publicly announced and the highest closing sale price over the past two
months were each $16.875 per Share; the highest closing sale price over the
past three months was $19.250) and in excess of the highest closing sale
price for the Shares over the entire period of time the Shares have traded
on the Nasdaq National Market which began in March 1995 (such highest
closing sale price was $22.00 per Share on August 22, 1997; six months ago
it was $19.125, one year ago it was $12.50; two years ago it was $15.00;
and on the first day of trading on March 15, 1995 it was $11.375);
(iv) The fact that the $23.90 per share price to be received by the
Stockholders in the Offer and the Merger compares favorably to prices paid
in other similar transactions;
(v) The presentation by A.G. Edwards at the February 11 and February
15 Board meetings and the fairness opinion delivered by A.G. Edwards to the
Board to the effect that, as of the date of such opinion and subject to
certain matters stated therein, the $23.90 cash consideration to be
received by the Stockholders in the Offer and the Merger is fair to such
holders from a financial point of view;
(vi) Alternatives to the transaction, including other transaction
types and the possibility of remaining independent, as well as
consideration of the long-term and short-term interests of the
Stockholders;
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(vii) The conflicts of interest arising from the transaction involving
the Company's officers and directors, including consideration of existing
employment and transitional compensation agreements, stock option plans and
the McNamee Employment Agreement, and other change-of-control consequences;
(viii) The unanimous recommendation and approval of the transaction by
an acquisition committee consisting of all seven non-employee directors of
the Company;
(ix) The extensive negotiations between the Company and Parent and
their respective financial advisors, leading to the belief by the Board
that $23.90 per Share represented the highest price per Share that could be
negotiated with Parent.
(x) The views expressed by management and the Board's conclusion that
it was not likely that any other party would propose a transaction that was
more favorable to the Company and the Stockholders;
(xi) The fact that the Merger Agreement permits the Board, in the
exercise of its fiduciary duties, to furnish non-public information and
data, and enter into discussions and negotiations, in connection with an
unsolicited acquisition proposal and to recommend an unsolicited proposal
to the Stockholders under certain circumstances;
(xii) The fact that the Merger Agreement permits the Board, in the
exercise of its fiduciary duties, to terminate the Merger Agreement in
favor of an alternative acquisition proposal, and that the $6,000,000
termination fee payable by the Company represents approximately 3% of the
aggregate consideration to be paid in the Offer and the Merger;
(xiii) The availability in the Merger of appraisal rights under
Delaware law for dissenting Shares; and
(xiv) The Board's belief, based in part on the factors referred to
above, that the $23.90 per Share price reflects the current value inherent
in the Company and that the Stockholders' best interests would be best
served by accepting the Offer.
The foregoing discussion of the information and factors considered and
given weight by the Board is not intended to be exhaustive. In view of the
variety of factors considered by the Board, the Board did not find it practical
to, and did not, quantify or otherwise assign relative weights to the foregoing
factors or determine that any factor was of particular importance. In addition,
individual members of the Board may have given different weights to different
factors. The Board viewed its recommendation as being based on the totality of
the information presented to and considered by it under the circumstances.
OPINION OF FINANCIAL ADVISOR
The Board engaged A.G. Edwards to serve as its exclusive financial advisor
in connection with the Offer and to render an opinion as to the fairness from a
financial point of view to the holders of the outstanding Shares. A.G. Edwards
rendered its opinion on February 16, 1998 to the Board that, as of such date and
based upon and subject to certain matters stated therein, the consideration to
be received by the Stockholders in the Offer and the Merger is fair to the
Stockholders from a financial point of view. A copy of the opinion, dated
February 16, 1998, which sets forth the assumptions made, matters considered,
the scope and limitations of the review undertaken and the procedures followed
by A.G. Edwards is filed as Exhibit 5 hereto and is incorporated herein by
reference. Stockholders are urged to read the opinion carefully and in its
entirety for assumptions made, matters considered and limits of the review by
A.G. Edwards. Stockholders should note that the opinion expressed by A.G.
Edwards was provided for the benefit and use of the Board in its evaluation of
the Offer and does not constitute a recommendation to any Stockholder as to
whether such Stockholder should accept the Offer. No limitations were placed on
A.G. Edwards by the Board with respect to the investigations made or the
procedures followed in preparing and rendering its opinion.
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<PAGE> 22
BOARD PLANS IF THE OFFER IS UNSUCCESSFUL
It is expected that, if the Shares are not purchased by Purchaser in
accordance with the terms of the Offer and the Merger does not occur in
accordance with the Merger Agreement, the Company's current management, under
the general direction of the Board, will continue to manage the Company as an
ongoing business.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to an engagement letter dated January 30, 1998, the Company
retained A.G. Edwards to act as its exclusive financial advisor in the possible
sale of the Company. As part of its engagement, A.G. Edwards has provided
financial advice and assistance in connection with the Company's evaluation of
the Offer and the Merger and, if applicable, will provide financial advice and
assistance in connection with other unsolicited competing proposals for the
acquisition of the Company. Such advice and assistance includes advising the
Board on the financial aspects of a transaction involving a sale of the Company,
analyzing alternative transaction forms, performing valuation analyses,
attending Board meetings and assisting the Company in negotiating the financial
aspects of such a transaction. A.G. Edwards' engagement also provides for its
opinion as to the fairness, from a financial point of view, to the Stockholders
of such a transaction.
Under the engagement letter, the Company agreed to pay A.G. Edwards a fee
for its services, which fee differs depending on the outcome of its assignment.
If the transactions contemplated by the Merger Agreement are consummated without
other competing proposals for the Company being made, A.G. Edwards' fee will be
equal to 0.75% of the aggregate consideration to be paid in the Offer and the
Merger (or approximately $1,635,000), payable upon consummation of such
transactions. If a transaction involving the sale of the Company is consummated
in a competitive proposal environment, A.G. Edwards' fee will be equal to 1.00%
of the aggregate consideration to be paid to the Company or the Stockholders in
the transaction. A.G. Edwards is entitled to a fee for issuing its fairness
opinion (described above) equal to $350,000 which is credited against the
percentage fee described above. If no transaction involving the sale of the
Company is consummated, A.G. Edwards will charge the Company a "time and
efforts" advisory fee based upon its customary hourly rates which will not
exceed $50,000 per 30-day period. The Company has also agreed to reimburse A.G.
Edwards for its reasonable out-of-pocket expenses. The Company is required to
indemnify A.G. Edwards against certain liabilities, including liabilities under
the federal securities laws or relating to, or arising out of, A.G. Edwards'
engagement as financial advisor, except for instances involving A.G. Edwards'
gross negligence or willful misconduct. The engagement letter may be terminated
by either the Board or A.G. Edwards, with or without cause, upon written notice
to the other party, although A.G. Edwards will be entitled to its fee in the
event that within 12 months after such termination by the Board, a transaction
involving the sale of the Company is consummated with Parent, a buyer contacted
by A.G. Edwards at the Company's request during the term of A.G. Edwards'
engagement or a buyer that had proposed, or with which the Company held
discussions, regarding such a transaction during the term of A.G. Edwards'
engagement or within 12 months thereafter.
In the ordinary course of business, A.G. Edwards and its affiliates may
actively trade or hold the securities of the Company and Parent for their own
account or for the account of customers and, accordingly, may at any time hold a
long or short position in such securities.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations or
recommendations to the Stockholders with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Company's knowledge, except as described herein, no
transactions in the Shares have been effected during the past 60 days by the
Company or by an executive officer, director, affiliate or subsidiary of the
Company.
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(b) To the best of the Company's knowledge, all of its executive officers,
directors, affiliates or subsidiaries presently intend to tender into the Offer
any Shares which are held of record or beneficially owned by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company has not
undertaken any negotiations in response to the Offer, and no negotiations are
underway, which relate to or would result in (i) an extraordinary transaction
involving the Company, (ii) a purchase, sale or transfer of a material amount of
the assets of the Company, (iii) a tender offer from or other acquisition of
securities by or of the Company or (iv) a material change in the present
capitalization or dividend policy of the Company. Pursuant to the Merger
Agreement, however, and as described under the "Merger Agreement -- No
Solicitation" in Item 3(b)(2) above, the Company may, subject to certain
limitations, take certain actions in respect of proposed transactions necessary
for the directors of the Company to discharge their fiduciary obligations under
applicable law.
(b) Except as described in Item 3(b) and Item 4 above, there are presently
no transactions, Board resolutions, agreements in principle or signed contracts
in response to the Offer which relate to or would result in one or more of the
matters referred to in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Purchaser and Parent have informed the Company that, except as described in
this Item 8, based on a review of publicly available information concerning the
Company, but without any independent investigation thereof, neither entity is
aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by Purchaser's acquisition of Shares as contemplated herein
or of any approval or other action by any governmental, administrative of
regulatory agency or authority, domestic or foreign, that would be required for
the acquisition or ownership of Shares by Purchaser as contemplated herein.
Should any such approval or other action be required, Purchaser and Parent have
informed the Company that they currently contemplate that such approval or other
action will be sought, except as described below under "State Takeover Laws."
There can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, Purchaser could decline to accept for
payment or pay for any Shares tendered.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
The Company's Restated Certificate of Incorporation and Bylaws contain
provisions electing that the Company not be governed by Section 203 of the DGCL.
In addition, the Company's Board and an independent committee of the Board
consisting entirely of disinterested directors have each approved the Merger
Agreement and the transactions contemplated by it, including the Offer and the
Merger, excluding it from the "business combination" provisions of Section 203
of the DGCL and the Arizona Corporate Takeover Act (the "ACTA"). Similarly, the
definition of "control share acquisition" under the ACTA contains an exclusion
for certain acquisitions to which the subject corporation is a party, and the
Company is a party to the
22
<PAGE> 24
Merger Agreement which provides for the Offer and the Merger. Accordingly, the
Company believes that the restrictions of those statutes do not apply to the
transactions contemplated by the Offer, the Merger or the Merger Agreement.
The Company reserves the right to challenge the applicability or validity
of any state law purportedly applicable to the Offer or the Merger and nothing
in the Merger Agreement or any action taken by the Company in connection with
the Offer or the Merger is intended as a waiver of such right.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer,
the purchase of Shares under the Offer may be consummated following the
expiration of a 15-day waiting period following the filing by the Company and
Parent, respectively, of a Notification and Report Form with respect to the
Offer, unless either the Company or Parent receives a request for additional
information or documentary material from the Antitrust Division of the
Department of Justice (the "Antitrust Division") or the Federal Trade Commission
(the "FTC") or unless early termination of the waiting period is granted. The
Company expects to file a Notification and Report Form with respect to the Offer
as soon as practicable following commencement of the Offer. If, within the
initial 15-day waiting period, either the Antitrust Division or the FTC requests
additional information or documentary material from the Company concerning the
Offer, the waiting period will be extended and would expire at 11:59 p.m.,
Eastern Standard Time, on the tenth calendar day after the date of substantial
compliance by the Company with such request. Only one extension of the waiting
period pursuant to a request for additional information is authorized by the HSR
Act. Thereafter, such waiting period may be extended only by court order or with
the consent of the Company. In practice, complying with a request for additional
information or documentary material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of the transaction
while such negotiations continue. Moreover, the Merger Agreement generally
provides that the Offer may be extended for an aggregate period of not more than
90 days in the event that any condition to the Offer is not satisfied.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Parent or its
subsidiaries, or the Company or its subsidiaries. Private parties may also bring
legal action under certain circumstances. There can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such
challenge is made, of the result hereof.
MISCELLANEOUS. The Information Statement attached hereto as Schedule I is
being furnished in connection with the contemplated designation by Purchaser,
pursuant to the Merger Agreement, of certain persons to be appointed to the
Board of the Company other than at a meeting of Stockholders following the
purchase by Purchaser of Shares pursuant to the Offer.
Purchaser's Offer to Purchase and Letter of Transmittal describing the
Offer are included in the materials being sent to the Stockholders.
23
<PAGE> 25
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
Exhibit 1. Agreement and Plan of Merger dated as of February 16, 1998 among Parent,
Purchaser and the Company.
Exhibit 2. Stockholders Agreement dated as of February 16, 1998 among Parent, Purchaser and
the Stockholders named therein.
Exhibit 3. McNamee Employment Agreement.
Exhibit 4. Letter to Stockholders.*
Exhibit 5. Opinion of A.G. Edwards & Sons, Inc., dated February 16, 1998.*
Exhibit 6. Text of Joint Press Release, dated February 17, 1998.
Exhibit 7. Employment Offer Letter to Steven N. Lach.
Exhibit 8. 1987 Stock Option Plan (filed as Exhibit 10.10 to the Company's Registration
Statement on Form S-1 filed with the Commission on January 9, 1995).
Exhibit 9. Employee Stock Purchase Plan (filed as an exhibit to the Company's Registration
Statement on Form S-8 filed with the Commission on December 27, 1995).
Exhibit 10. 1996 Stock Option Plan (filed as an exhibit to the Company's Registration
Statement on Form S-8 filed with the Commission on August 11, 1997).
Exhibit 11. Form of Indemnification Agreement for Officers and Directors (filed as Exhibit
10.9 to the Company's Registration Statement on Form S-1 filed with the
Commission on January 9, 1995).
Exhibit 12. Employment Agreement between the Company and Frederick G. McNamee, III, dated as
of August 1, 1997 (filed with the Commission as Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the year ended July 31, 1997).
Exhibit 13. Letter to Frederick G. McNamee, III, Regarding Transitional Compensation dated
May 8, 1997, (filed with the Commission as Exhibit 10.26 to the Company's Annual
Report on Form 10-K for the year ended July 31, 1997).
Exhibit 14. Employment Offer Letter to James Buchanan accepted July 28, 1997, (filed as
Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year ended
July 31, 1997).
Exhibit 15. Letter to Joseph G. Andersen Regarding Transitional Compensation dated May 8,
1997, (filed as Exhibit 10.28 to the Company's Annual Report on Form 10-K for
the year ended July 31, 1997).
</TABLE>
- ---------------
* Included in the materials sent to Stockholders of the Company.
24
<PAGE> 26
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
<TABLE>
<S> <C>
CONTINENTAL CIRCUITS CORP.
Date: February 20, 1998 By: /s/ Frederick G. McNamee, III
-----------------------------------------------
Frederick G. McNamee, III
President and Chief Executive Officer
</TABLE>
25
<PAGE> 27
SCHEDULE I
CONTINENTAL CIRCUITS CORP.
3502 EAST ROESER ROAD
PHOENIX, AZ 85040
------------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
------------------------
This Information Statement is being mailed on or about February 20, 1998 as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Continental Circuits Corp., a Delaware corporation (the
"Company"), to the holders of shares of the Company's Common Stock, par value
$.01 per share (the "Shares"). Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in the Schedule 14D-9. This Information
Statement is being furnished in connection with the possible designation by
Hadco Corporation, a Massachusetts corporation ("Parent"), and the direct parent
of Hadco Acquisition Corp. II, a Delaware corporation ("Purchaser"), of persons
(the "Parent Designees") to the Board of Directors of the Company (the "Board").
Such designation is to be made pursuant to an Agreement and Plan of Merger dated
as of February 16, 1998 (the "Merger Agreement") among the Company, Parent and
Purchaser as more fully described in the Schedule 14D-9 accompanying this
Information Statement.
Pursuant to the Merger Agreement, among other things, Purchaser commenced a
cash tender offer on February 20, 1998 to purchase all of the issued and
outstanding Shares at a price of $23.90 per Share, net to the seller in cash, as
described in Purchaser's Offer to Purchase dated February 20, 1998 and the
related Letter of Transmittal (which Offer to Purchase and related Letter of
Transmittal together constitute the Offer). The Offer is scheduled to expire at
12:00 midnight, New York City time on March 19, 1998, unless extended. The Offer
is subject to, among other things, the condition that a number of Shares
representing at least 90% of the outstanding Shares on a fully diluted basis be
validly tendered prior to the expiration of the Offer and not withdrawn (the
"90% Tender Condition"), although Parent and Purchaser could, under certain
circumstances described in the Merger Agreement, either modify such condition to
reduce the minimum number of Shares being sought to a number of Shares that
constitutes at least a majority of the Shares outstanding on a fully diluted
basis on the date of purchase or terminate the Offer and pursue a cash merger.
The Merger Agreement also provides for the merger (the "Merger") of Purchaser
with and into the Company as soon as practicable after consummation of the Offer
(or, under certain circumstances, following termination of the Offer if the 90%
Tender Condition has not been satisfied). Following the consummation of the
Merger (the "Effective Time"), the Company will be the surviving corporation
(the "Surviving Corporation") and a wholly owned subsidiary of the Parent. In
the Merger, each Share issued and outstanding immediately prior to the Effective
Time (other than Shares held in the treasury of the Company or by Parent,
Purchaser, or any subsidiary of Parent or the Company, and other than Shares
held by stockholders who shall have demanded and perfected appraisal rights, if
any, under Delaware law) will be canceled and converted automatically into the
right to receive cash in an amount of $23.90, without interest, less any
required withholding taxes.
I-1
<PAGE> 28
The terms of the Merger Agreement, a summary of the events leading up to
the Offer and the execution of the Merger Agreement and other information
concerning the Offer and the Merger are contained in the Offer to Purchase and
in the Schedule 14D-9 of the Company with respect to the Offer, copies of which
are being delivered to stockholders of the Company contemporaneously herewith.
Certain other documents (including the Merger Agreement) were filed with the
Securities and Exchange Commission (the "Commission") as exhibits to the
Schedule 14D-9 and as exhibits to the Tender Offer Statement on Schedule 14D-1
of the Purchaser and Parent (the "Schedule 14D-1"). The exhibits to the Schedule
14D-9 and the Schedule 14D-1 may be examined at, and copies thereof may be
obtained from, the regional offices of and public reference facilities
maintained by the Commission (except that exhibits thereto cannot be obtained
from the regional offices of the Commission) in the manner set forth in Section
8 of the Offer to Purchase.
NO ACTION IS REQUIRED BY THE STOCKHOLDERS OF THE COMPANY IN CONNECTION WITH
THE DESIGNATION OF PARENT DESIGNEES TO THE BOARD. However, Section 14(f) of the
Exchange Act requires the mailing to the Company's stockholders (the
"Stockholders") of the information set forth in this Information Statement prior
to a change in a majority of the Company's directors otherwise than at a meeting
of the Stockholders.
The information contained in this Information Statement concerning Parent,
Purchaser and the Parent Designees has been furnished to the Company by such
persons, and the Company assumes no responsibility for the accuracy or
completeness of such information. The principal executive office of Parent and
Purchaser is located at 12A Manor Parkway, Salem, New Hampshire 03079.
RIGHT TO DESIGNATE DIRECTORS; PARENT DESIGNEES
The Merger Agreement provides that promptly upon the purchase by Parent or
any of its Subsidiaries pursuant to the Offer of such number of Shares which
represents at least 50.1% of the outstanding Shares on a fully diluted basis,
and from time to time thereafter, (i) Parent shall be entitled to designate such
number of directors, rounded up to the next whole number as will give Parent,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Board equal to the product of (x) the number of directors on the Board
(giving effect to any increase in the number of directors pursuant to the Merger
Agreement) and (y) the percentage that such number of Shares so purchased bears
to the aggregate number of Shares outstanding (but not more than 75%)(such
number being, the "Board Percentage"), and (ii) the Company shall, upon request
by Parent, promptly use its best efforts to satisfy the Board Percentage by (a)
increasing the size of the Board or (b) using its best efforts to secure the
resignations of such number of directors as is necessary to enable the Parent
Designees to be elected to the Board and shall cause the Parent Designees
promptly to be so elected; provided however, that in no event prior to the
Effective Time shall the number of Continuing Directors (defined below) be less
than one. At the request of Parent, the Company shall take, at the Company's
expense, all lawful action necessary to effect any such election, including,
without limitation, mailing to its Stockholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, unless
such information has previously been provided to the Stockholders in the
Schedule 14D-9.
Following the election or appointment of the Parent Designees pursuant to
the Merger Agreement and prior to the Effective Time, any amendment or
termination of the Merger Agreement, extension for the performance or waiver of
the obligations or other acts of Parent or Purchaser, action which might affect
the accuracy of the representations and warranties in the Merger Agreement, or
waiver of the Company's rights thereunder shall require the concurrence of a
majority of the directors of the Company then in office who are Continuing
Directors. The term "Continuing Director" means each member of the Board on the
date of the Merger Agreement who is a "disinterested director," as such term is
used in Arizona Revised Statutes Section 10-2741 and any successor to any
Continuing Director who was recommended to succeed such Continuing Director by a
majority of the Continuing Directors then on the Board, but shall not mean any
Parent Designee.
I-2
<PAGE> 29
Parent has advised the Company that it currently intends to designate one
or more of the persons listed below to serve as directors of the Company. The
Parent has advised the Company that each of such persons has consented to act as
a director of the Company, if so designated.
The following table sets forth the name, age, citizenship, present
principal occupation or employment and material occupation, positions, offices
or employment for the past five years of each of Parent's possible designees to
the Board. Unless otherwise indicated below, the business address of each such
person is 12A Manor Parkway, Salem, New Hampshire 03079. Unless otherwise
indicated below, each individual has held his position for more than five years.
Unless otherwise indicated below, each person is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AGE EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Andrew E. Lietz.......... 59 Director of Hadco Corporation since 1993; President and
Chief Executive Officer of Hadco Corporation since
October 1995; Chief Operating Officer and Vice
President of Hadco Corporation from July 1991 to
October 1995; Director Wyman-Gordon Company since
January 1998; Director of Energy North Natural Gas,
Inc. since February 1998; Director, President and
Assistant Secretary of Hadco Acquisition Corp. II since
February 1998.
Timothy P. Losik......... 38 Senior Vice President of Hadco Corporation and Chief
Financial Officer, Vice President and Treasurer of Hadco
Corporation since March 1994; Controller of Hadco
Corporation from June 1992 to March 1994; Corporate
Accounting Manager of Hadco Corporation from March 1988
to June 1992; Director, Vice President, Secretary and
Treasurer of Hadco Acquisition Corp. II since February
1998.
John D. Caruso, Jr....... 49 Senior Vice President of Hadco Corporation since
September 1997; Managing Director of Worldwide
Manufacturing at Cabletron Systems, a data
communications company, from 1990 to September 1997.
Christopher T. Senior Vice President of Hadco Corporation since
Mastrogiacomo............ 39 September 1997; Vice President of Hadco Corporation from
January 1997 to September 1997; Business Unit Manager
of Hadco Corporation from January 1994 to January 1997;
Manufacturing Manager of Hadco Corporation from March
1988 to January 1994.
Richard P. Saporito...... 43 Senior Vice President of Hadco Corporation since
September 1997 and Vice President of Hadco Corporation
since December 1991.
Michael K. Sheehy........ 50 Senior Vice President of Hadco Corporation since
September 1997; Vice President of Hadco Corporation
from March 1995 to September 1997; Vice President of
Kendall Square Research Corp. from January 1991 to
November 1994.
</TABLE>
I-3
<PAGE> 30
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AGE EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Robert E. Snyder......... 57 Senior Vice President of Hadco Corporation since
September 1997; Managing Director of Asian Operations
of Zycon Corporation from January 1996 to September
1997; Vice President of Zycon Corporation from February
1990 to January 1996.
Patricia Randall......... 47 General Counsel of Hadco Corporation since January 1998;
partner in the law firm of Berlin, Hamilton & Dahmen,
LLP from 1980 through January 1998.
</TABLE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
GENERAL
The outstanding voting securities of the Company as of January 31, 1998
consisted of 7,290,343 Shares, with 989,200 Shares reserved for issuance
pursuant to outstanding stock options granted by the Company to key employees
and directors. Each Share is entitled to one vote.
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Shares as of January 31, 1998, with respect to: (i) each person
known by the Company to beneficially own more than five percent of the
outstanding Shares; (ii) each director of the Company; (iii) each of the
executive officers named in the Summary Compensation Table set forth herein; and
(iv) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
-------------------
IDENTITY OF STOCKHOLDER OR GROUP NUMBER PERCENT
- -------------------------------------------------------------------------- ------- -------
<S> <C> <C>
Joseph G. Andersen........................................................ 1,983(2) *
Angelo A. DeCaro, Jr...................................................... 0 --
E. Townes Duncan.......................................................... 0 --
Robert W. Heller.......................................................... 0 --
Mark R. Hollinger(3)...................................................... 296 *
Albert A. Irato........................................................... 0 --
Michael F. Jarko.......................................................... 60,000 *
John W. Maddux............................................................ 27,300 *
Frederick G. McNamee, III................................................. 100,000(2) 1.4%
John W. Nance............................................................. 2,500 *
Lee A. Small(4)........................................................... 40,000 *
David C. Wetmore.......................................................... 0 --
Neuberger & Berman LLC.................................................... 742,200 10.2%
605 Third Avenue
New York, New York 10158(5)
The Prudential Insurance Company of America............................... 377,200 5.2%
751 Broad Street
Newark, New Jersey 07102(6)
Dresdner RCM Global Investors LLC......................................... 719,900 9.9%
Dresdner 4 Embarcadero Center
Suite 3000 San Francisco, California 94111(7)
</TABLE>
I-4
<PAGE> 31
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
-------------------
IDENTITY OF STOCKHOLDER OR GROUP NUMBER PERCENT
- -------------------------------------------------------------------------- ------- -------
<S> <C> <C>
Dresdner Bank AG.......................................................... 719,900 9.9%
Jurgen-Ponto-Platz 1
60301 Frankfurt, Germany(8)
FMR Corp.................................................................. 766,450 10.6%
82 Devonshire Street
Boston, Massachusetts 02109(9)
All directors and executive officers as a group (13 persons).............. 232,079 3.1%
</TABLE>
- ---------------
* Less than 1.0%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally includes voting or
investment power with respect to securities. In accordance with SEC rules,
shares which may be acquired upon exercise of stock options which are
currently exercisable or which become exercisable within 60 days of the
table are deemed beneficially owned by the optionee. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons or entities named in the table above have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned
by them. The Merger Agreement provides that, upon the Effective Time, each
holder of a then outstanding option to purchase Shares, whether or not then
exercisable, shall receive the Option Consideration (as defined in the
Merger Agreement) for each such option, but this table does not reflect such
fact or the acceleration of options resulting from the Merger Agreement. The
number of options held by current executive officers and directors is set
forth in Schedule 14D-9. In accordance with the terms of the Stock Purchase
Plans, upon the publication of the announcement of the Offer all options
issued under such plans vested immediately and are exercisable.
(2) Indicates certain shares may be acquired upon exercise of employee incentive
stock options; 1,666 shares by Mr. Andersen and 100,000 shares by Mr.
McNamee.
(3) Mr. Hollinger terminated employment on August 16, 1997.
(4) Mr. Small terminated employment on July 25, 1997.
(5) Derived from a Schedule 13G dated February 11, 1998 filed by Neuberger &
Berman LLC ("Neuberger") pursuant to the Securities Exchange Act of 1934, as
amended (the "1934 Act") 1934 Act. The Schedule 13G states that Neuberger is
a broker or dealer registered under Section 15 of the 1934 Act and an
investment advisor registered under Section 203 of the 1940 Act, and that
Neuberger has "shared power to make decisions whether to retain or dispose
of securities of many unrelated clients" but "does not, however have any
economic interest in the securities of those clients" as "[t]he clients are
the actual owners of the securities and have the sole right to receive and
the power to direct the receipt of dividends from or proceeds from the sales
of such securities."
(6) Derived from a Schedule 13G dated February 10, 1998 filed by the Prudential
Insurance Company of America ("Prudential") pursuant to the 1934 Act. The
Schedule 13G states that Prudential is an insurance company as defined in
Section 3(a)(19) of 1934 Act and an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940 (the "1940 Act"), that
Prudential "may have direct or indirect voting and/or investment discretion"
over the shares of the Company's stock, and that the shares "were acquired
in the ordinary course of business, and not with the purpose or effect of
changing or influencing control" of the Company
(7) Derived from a Schedule 13G dated January 30, 1998 jointly filed by Dresdner
RCM Global Investors LLC ("RCM"), RCM Limited L.P. ("RCM Limited") and RCM
General Corporation ("RCM General") pursuant to the 1934 Act. The Schedule
13G states that RCM is an investment advisor registered under Section 203 of
the 1940 Act, that RCM Limited is the managing agent of RCM, and that RCM
General is the general partner of RCM Limited.
(8) Derived from a Schedule 13G dated January 30, 1998 filed by Dresdner Bank AG
("Dresdner") pursuant to the 1934 Act. The Schedule 13G states that Dresdner
is the parent of RCM, an investment
I-5
<PAGE> 32
advisor registered under Section 203 of the 1940 Act, and that Dresdner "has
beneficial ownership of the securities reported on this Schedule 13G only to
the extent that Dresdner may be deemed to have beneficial ownership of
securities deemed beneficially owned by RCM."
(9) Derived from a Schedule 13G dated January 10, 1998 filed by FMR Corp.
("FMR"), Edward C. Johnson 3d and Abigail P. Johnson pursuant to the 1934
Act. The Schedule 13G states that FMR is the parent of Fidelity Management &
Research Company ("Fidelity"), an investment advisor registered under
Section 203 of the 1940 Act, and that Mr. Johnson 3d owns 12.0% and Abigail
Johnson owns 24.5% of the aggregate outstanding stock of FMR. Mr. Johnson
3d, FMR, through its control of Fidelity, and the Fidelity funds each has
sole power to dispose of the Shares owned by the funds. The power to vote
the Shares owned by the funds resides with the funds' Board of Trustees.
Parent and Purchaser have entered into a Stockholders Agreement dated
February 16, 1998 (the "Stockholders Agreement"), with Frederick G. McNamee,
III, James Buchanan, Steven N. Lach and Jerome Wilson (the "Selling
Stockholders"), pursuant to which, among other things, the Selling Stockholders
have agreed to tender the Shares beneficially owned by them in the Offer
(approximately 7.0% of the Company's outstanding Shares calculated on a fully
diluted basis).
THE BOARD OF DIRECTORS
PARENT DESIGNEES
As of the date of this Information Statement, Parent has not determined who
will be Parent Designees. However, Parent Designees shall be elected from among
the individuals identified hereinabove. None of the Parent Designees or their
associates is a director of, or holds any position with, the Company. Mr. Lietz,
President and Chief Executive Officer of Parent and President of Purchaser, owns
1,000 Shares which were acquired in open market purchases in December, 1996. To
the best knowledge of the Company, none of the other Parent Designees or their
associates beneficially owns any equity securities of the Company or has been
involved in any transaction with the Company or any of its directors or
executive officers that are required to be discussed pursuant to the rules and
regulations of the Commission.
CURRENT DIRECTORS
The Company's Restated Certificate of Incorporation provides that the Board
shall be divided into three classes with each class holding office for a
three-year term. Directors are assigned to each class in accordance with a
resolution or resolutions adopted by the Board. Newly created directorships
resulting from any increase in the authorized number of directors or any
vacancies in the Board resulting from death, resignation, disqualification,
removal from office or other cause shall be filled by a majority vote of the
directors remaining in office, even if less than a quorum, and directors so
chosen shall hold office for a term expiring at the annual stockholders meeting
at which the term of the class to which they have been elected expires.
The Company's Restated Certificate of Incorporation provides that the
number of directors which shall constitute the whole Board shall be not less
than three nor more than nine and shall be fixed exclusively by one or more
resolutions adopted from time to time by the Board. The authorized number of
directors is currently set at nine. There is one vacancy on the Board.
The Board is currently comprised of eight directors and is classified into
three classes: directors with terms expiring in 1998 are Frederick G. McNamee,
III and David C. Wetmore; directors with terms expiring in 1999 are Angelo A.
DeCaro, Jr., Albert I. Irato and John W. Nance; and directors with terms
expiring in 2000 are Michael F. Jarko, E. Townes Duncan and Robert W. Heller.
Certain information about the Company's directors is set forth below:
ANGELO A. DECARO, JR., 46, was elected as a Director of the Company on September
7, 1995 to fill a vacancy on the Board. Since July 1995, Mr. DeCaro has been
President, Chief Executive Officer and a Director of XeTel Corporation, Austin,
Texas, an assembler of electronic cards, and from 1993 through July 1995, he was
President, Chief Operating Officer and a Director of that company. Prior to that
time, Mr. DeCaro was Director of Operations -- Printed Wiring Board Products and
Services at the IBM circuit board facility in
I-6
<PAGE> 33
Austin, Texas from 1992 to 1993, and Plant Manager of the same facility from
1989 to 1992. From 1974 through 1989, Mr. DeCaro served IBM in various other
management capacities.
E. TOWNES DUNCAN, 44, was elected to the Board on December 12, 1997, and is
President of Solidus, LLC, a private investment firm, since January 1997. Mr.
Duncan has been a Director of Comptronix Corporation, a provider of electronics
contract manufacturing services, since April 1988, and has served as its
Chairman of the Board and Chief Executive Officer since November 1993.
Comptronix Corporation filed a petition for Chapter 11 protection in August 1996
and completed the sale of all of its assets in November 1996. Mr. Duncan was a
Vice President of Massey Burch Investment Group, Inc., a venture capital firm,
from 1985 to November 1993. Mr. Duncan is also a director of: J. Alexander's
Corporation, an owner and operator of restaurants in eight states; Corporate
Family Solutions, an operator of employer-sponsored child care centers; and
Sirrom Capital Corporation, a specialty finance company.
ROBERT W. HELLER, 51, was elected to the Board on December 12, 1997, and is
Chief Executive Officer of MiTech Research and Development, Inc., a startup
company involved in the environmental clean up business, since September 1996.
Mr. Heller held a variety of management positions with Advance Circuits, Inc.
("ACI") a manufacturer of printed circuit boards, from January 1977 to September
1996. Mr. Heller's positions with ACI included Chief Executive Officer from 1991
to September 1996, President and Chief Operating Officer from 1987 to 1991,
Executive Vice President from 1981 to 1987, and Vice President of Manufacturing
from January 1977 to 1981. Mr. Heller was also Chairman of the Board of ACI in
1994 and 1995. ACI was purchased by Johnson Matthey in September 1995. Mr.
Heller is also a director of: Reuter Manufacturing, Inc., a contract
manufacturer of precision machined products and assemblies; Capri, Inc., a
software provider; Fieldworks, Inc., a technology company that manufactures and
markets lap top computers; and various other non-public companies.
ALBERT A. IRATO, 59, was elected as a Director of the Company on September 7,
1995, to fill a vacancy on the Board. Since 1992, Mr. Irato has been President
and Chief Executive Officer of Hypercom, Inc. Phoenix, Arizona, a manufacturer
of electronic point of sale systems. From 1985 until 1992, Mr. Irato served in
various management capacities at American Express Corp., most recently as Senior
Vice President.
MICHAEL F. JARKO, 60, was a Director of the Company from 1978 to 1987 and
re-elected to the Board in December 1988. Prior to his retirement in 1987, Mr.
Jarko was President and owner of Jarko Associates, a Phoenix-based
manufacturers' representative company. From 1977 to July 1987, all marketing
services for the Company were provided by Jarko Associates. In July 1987,
substantially all of the Jarko employees who were devoting their efforts
exclusively to marketing the Company's products were hired by the Company.
FREDERICK G. MCNAMEE, III, 40 has been President and Chief Executive Officer of
the Company since September 1994, Director since November 11, 1994, and Chairman
of the Board since December 16, 1994. Mr. McNamee spent the past 15 years with
IBM in Austin, Texas in a variety of circuit board manufacturing positions. He
most recently was manager of the IBM circuit board facility in Austin from
November 1992 to September 1994 during its transition from a captive
manufacturer with sales solely to IBM to a significant merchant manufacturer
with sales to other OEMs. From 1989 to 1992, Mr. McNamee served as Volume
Production Manager of the IBM facility in Austin.
JOHN W. NANCE, 61, was a Director from 1975 to 1987 and was re-elected to the
Board in December 1993. Prior to his retirement in 1993, Mr. Nance was the
Manager of Large Systems Business Planning for Bull-HN Worldwide Information
Systems in Phoenix for three years and a forecasting/business analyst for
Bull-HN for the preceding two years.
DAVID C. WETMORE, 49, was elected to the Board in December 1995. Mr. Wetmore has
been Managing Director of The Updata Group, Inc., a Holmdel, New Jersey
investment banking firm, since November 20, 1995. From November 1992, to
November 1995, Mr. Wetmore was the Chief Operating Officer of Legent Corp., a
publicly traded systems software company in Herndon, Virginia. From February
1988 to November 1992, he was the Chairman of the Board, Chief Executive Officer
and President of Goal Systems International, a systems software company in
Columbus, Ohio that began public trading of its stock in 1989. Mr. Wetmore is
also a director of the following entities: Walker Interactive Systems, a
publicly traded application software company in San Francisco, California;
Nationwide Investing Foundation, a Columbus, Ohio registered public investment
company, and various other non-public companies.
I-7
<PAGE> 34
EXECUTIVE OFFICERS OF THE COMPANY
Executive officers of the Company are elected by the Board to serve until
their successors are elected and qualified. The following table sets forth
certain information about the Company's current executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- -----------------------------------------------
<S> <C> <C>
Frederick G. McNamee, III..... 40 Chairman of the Board, President and Chief
Executive Officer
Joseph G. Andersen............ 40 Vice President -- Finance, Chief Financial
Officer, Secretary and Treasurer
James Buchanan................ 50 Vice President -- Sales and Marketing
Robert A. Kosciusko........... 48 Vice President -- Human Resources
Steven N. Lach................ 36 Vice President -- Operations
John W. Maddux................ 59 Vice President -- Quality and Engineering
</TABLE>
MR. MCNAMEE joined the Company as President and Chief Executive Officer in
September 1994, and has served as a Director since November 11, 1994, and as
Chairman of the Board since December 16, 1994. He spent the previous 15 years
with IBM in Austin, Texas in a variety of circuit board manufacturing positions.
He was manager of the IBM circuit board facility in Austin from November 1992 to
September 1994 during its transition from a captive manufacturer with sales
solely to IBM to a significant merchant manufacturer with sales to other OEMs.
From 1989 to 1992, Mr. McNamee served as Volume Production Manager of the IBM
facility in Austin.
MR. ANDERSEN joined the Company on September 3, 1996 as Vice
President -- Finance, Chief Financial Officer, Secretary and Treasurer. Mr.
Andersen served as Vice President and Chief Financial Officer of Comptronix
Corp., a Brentwood, Tennessee-based printed circuit board assembler with
operations in the United States and Mexico, from July 1994 to August 1996, and
as Director of Accounting from July 1993 to July 1994. Prior to July 1993, he
served in a variety of senior financial management positions with Augat, Inc., a
manufacturer of connectors, chip carriers and board testers.
MR. BUCHANAN joined the Company as Vice President -- Sales and Marketing on July
28, 1997. Before joining the Company, Mr. Buchanan served as Vice President of
Sales and Marketing for Hadco Corporation, a supplier of advanced electronic
interconnect products and services based in New Hampshire, from January 1997 to
July 1997. From April 1991 to January 1997, Mr. Buchanan was Vice President of
Sales of Zycon Corp., a California based competitor of Hadco Corporation which
was acquired by Hadco Corporation in January 1997. Mr. Buchanan began his career
with Zycon in 1984 and held several sales and marketing positions.
MR. KOSCIUSKO has served the Company as Vice President -- Human Resources since
August 1995 and as Director of Human Resources from February 1991 until August
1995. From 1984 to 1991, he was Human Resources Manager for Ringier
International, a printing company.
MR. LACH joined the Company as Vice President -- Operations on October 21, 1997.
Before joining the Company, Mr. Lach served as Manager of Manufacturing for Via
Systems, a manufacturer of printed circuit boards located in Richmond, Virginia,
from December 1996 to October 1997. Mr. Lach joined AT&T Corp. in Richmond,
Virginia in February 1995 and was employed by AT&T until the Richmond facility
was spun off to Lucent Technologies Inc. in September 1995. Mr. Lach was then
employed by Lucent from September 1995 until the Richmond facility was sold to
Via Systems in December 1996. Prior to February 1995, Mr. Lach was Operations
Manager of Hadco-Owego from June 1991 to February 1995, and held several
positions with Parlex Nevada of Carson City, Nevada, including Plant Manager
from June 1990 to May 1991 and Operations Manager from October 1986 to June
1990.
MR. MADDUX has been the Vice President -- Quality and Engineering of the Company
since 1981. He joined the Company in 1979 as Manager of Quality Control. He also
served as a Director of the Company from November 1989 through November 1994.
Prior to 1979, Mr. Maddux served 19 years in manufacturing capacities relating
to circuit boards with General Electric Company and Honeywell Information
Systems in Phoenix, Arizona.
I-8
<PAGE> 35
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board held a total of seven meetings during the Company's fiscal year
ended July 31, 1997. No director attended fewer than 75% of the aggregate of all
meetings of the Board and any committee on which such director served during the
period of such service. The Board currently has an Audit Committee, a
Compensation Committee and a Nominating Committee.
The Audit Committee currently consists of Messrs. Nance and DeCaro, and met
two times in fiscal 1997. Mr. Michael O. Flatt was a member of the Audit
Committee until his resignation as a Director of the Company effective November
10, 1997. The Audit Committee reviews the financial affairs and procedures of
the Company with management and meets the Company's auditors to review financial
statements and procedures.
The Compensation Committee currently consists of Messrs. Jarko, Irato and
Wetmore, and met three times in fiscal 1997. The Compensation Committee reviews
the Company's executive compensation programs and makes specific compensation
recommendations to the Board with respect to the salaries, bonuses and benefit
plans for the Company's executive officers.
The Nominating Committee currently consists of Messrs. McNamee and Jarko,
and did not meet in fiscal 1997. Mr. Michael O. Flatt was a member of the
Nominating Committee until his resignation as a Director of the Company
effective November 10, 1997. The Nominating Committee makes recommendations to
the Board regarding nominations of persons to be directors of the Company.
DIRECTOR COMPENSATION
Directors who are not employees of the Company currently receive $10,000
per year plus $1,000 per meeting attended ($2,000 for a nonemployee Chairman of
the Board), plus $500 per committee meeting attended, plus reimbursement for
reasonable expenses incurred in attending meetings. Officers are elected
annually by and serve at the discretion of the Board. There are no family
relationships among any of the officers and directors. In calendar year 1997,
the Company granted each non-employee director options to purchase 5,000 shares
at fair market value on the date of grant which become exercisable to the extent
of 1,000 shares on the anniversary dates of the date of grant.
I-9
<PAGE> 36
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table sets forth, with respect to the years ended July 31,
1997, 1996 and 1995, compensation awarded to, earned by or paid to (i) the Chief
Executive Officer of the Company, (ii) the three most highly compensated
executive officers who were serving as executive officers of the Company at July
31, 1997 whose total salary and bonus for fiscal 1997 exceeded $100,000, and
(iii) one additional person who served as an executive officer during fiscal
1997 whose total salary and bonus for such year exceeded $100,000 ("Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
----------------------------------------- UNDERLYING
FISCAL OTHER ANNUAL OPTIONS/SARs ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($) (2)(#) COMPENSATION(3)
- ------------------------------ ------ --------- ----------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Frederick G. McNamee, III..... 1997 188,462 20,000 (4) 50,000 3,460
Chairman of the Board 1996 178,365 20,000 (4) 0 2,356
President and Chief 1995 154,807 95,000 (4) 200,000 2,044
Executive Officer
John W. Maddux................ 1997 150,769 10,000 (4) 0 3,032
Vice President -- Quality 1996 140,962 0 (4) 20,000 3,231
and Engineering 1995 125,000 15,000 (4) 0 3,060
Mark R. Hollinger(5).......... 1997 140,096 10,000 (4) 40,000 2,667
Vice President -- Operations 1996 125,097 0 (4) 20,000 2,744
1995 84,811 15,000 (4) 20,000 2,254
Lee A. Small(6)............... 1997 174,462 0 (4) 0 3,001
Vice President -- Sales and 1996 163,731 0 (4) 20,000 3,631
Marketing 1995 150,000 20,000 (4) 0 3,457
Joseph G. Andersen(7)......... 1997 132,693 20,000 (4) 125,000 1,966
Vice President -- Finance
Secretary and Treasurer
</TABLE>
- ---------------
(1) Bonus earned in respect of indicated fiscal year and paid in subsequent
fiscal year.
(2) Consists entirely of stock options.
(3) Employer matching contributions pursuant to the Company's 401(k) plan and
life insurance premiums paid by the Company in the amount of $108 per month
in fiscal 1997, $108 per month in fiscal 1996 and $108 per month in fiscal
1995.
(4) Auto allowance in an amount less than 10% of the total annual salary and
bonus.
(5) Mr. Hollinger terminated employment on August 16, 1997.
(6) Mr. Small terminated employment on July 25, 1997.
(7) Mr. Andersen commenced employment on September 3, 1996.
Two executive officers not included in the Summary Compensation Table are
James Buchanan, Vice-President -- Sales and Marketing who accepted an offer of
employment with the Company on July 28, 1997 and Steven N. Lach,
Vice-President -- Operations who accepted an offer of employment with the
Company on October 16, 1997. Messrs. Buchanan and Lach's base compensation is
$170,000 and $150,000, respectively, in the Company's 1998 fiscal year.
I-10
<PAGE> 37
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
The following table sets forth for each Named Executive Officer certain
information concerning individual grants of stock options during the 1997 fiscal
year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZED
------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF RATES OF ANNUAL STOCK
SECURITIES % OF TOTAL OPTIONS/ PRICE APPRECIATION
UNDERLYING SARs GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS/SARs EMPLOYEES PRICE EXPIRATION ---------------------
NAME GRANTED IN FISCAL YEAR ($/Sh) DATE 5%($) 10%($)
- ----------------------------- ------------ ------------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Frederick G. McNamee, III.... 50,000(3) 11.6% $13.25 5/20/2007 $416,700 $1,056,000
Joseph G. Andersen(6)........ 75,000(4) 17.3% $10.63 8/02/2003 $324,500 $ 756,400
50,000(3) 11.6% $13.25 5/20/2007 $416,700 $1,056,000
Mark R. Hollinger(7)......... 40,000(3)(5) 9.3% $13.25 5/20/2007 $333,400 $ 844,820
John W. Maddux............... 0 0 0 0 0 0
Lee A. Small(8).............. 0 0 0 0 0 0
</TABLE>
- ---------------
(1) Consists entirely of stock options.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% or 10% compounded
annually from the date the respective options were granted to their
expiration date and are not presented to forecast possible future
appreciation, if any, in the price of the Shares. The potential realizable
value of the foregoing options is calculated by assuming that the market
price of the underlying security appreciates at the indicated rate for the
entire term of the option and that the option is exercised at the exercise
price and sold on the lst day of its term at the appreciated price.
(3) The option may be exercised for 20% of the underlying stock beginning on May
20, 1998, for another 20% beginning on May 20, 1999, for another 20%
beginning on May 20, 2000, for another 20% beginning on May 20, 2001, and
for the final 20% beginning on May 20, 2002.
(4) The option may be exercised for 40% of the underlying stock beginning on
August 2, 1999, for another 20% beginning on August 2, 2000, for another 20%
beginning on August 2, 2001, and for the final 20% beginning on August 2,
2002.
(5) Canceled in connection with termination of employment on August 16, 1997.
(6) Mr. Andersen commenced employment on September 3, 1996.
(7) Mr. Hollinger terminated employment on August 16, 1997.
(8) Mr. Small terminated employment on July 25, 1997.
Two executive officers not included in the executive compensation tables,
Messrs. Buchanan and Lach, were granted stock options for 75,000 and 50,000
underlying Shares, respectively, in calendar year 1997.
I-11
<PAGE> 38
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE(1)
The following table sets forth information with respect to each Named
Executive Officer concerning option exercises during the last fiscal year and
the number and value of options outstanding at the end of the last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARs IN-THE-MONEY OPTIONS/SARs
AT FISCAL YEAR END AT FISCAL YEAR END
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- ---- ------------------------- ----------------------------
<S> <C> <C>
Frederick G. McNamee, III...................... 60,000/190,000 $915,000/$1,372,500
Joseph G. Andersen(3).......................... 0/125,000 $0/ $852,750
Mark R. Hollinger(4)........................... 0/ 80,000 $0/ $585,000
John W. Maddux................................. 0/ 20,000 $0/ $305,000
Lee A. Small(5)................................ 0/ 20,000 $0/ $305,000
</TABLE>
- ---------------
(1) No SARs are outstanding.
(2) Value is based on the difference between the exercise price of such options
and the closing price of the Company's Shares on the Nasdaq National Market
on July 31, 1997 of $18.50 per share.
(3) Mr. Andersen commenced employment on September 3, 1996.
(4) Mr. Hollinger terminated employment on August 16, 1997.
(5) Mr. Small terminated employment on July 25, 1997.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT,
AND CHANGE IN CONTROL ARRANGEMENTS
Frederick G. McNamee, III entered into an employment agreement with the
Company dated August 1, 1997 replacing his previous agreement with the Company
dated August 25, 1994, pursuant to which he is employed as Chairman of the
Board, President and Chief Executive Officer. Under the agreement, Mr. McNamee
is entitled to an annual base salary of $235,000 per year, plus an incentive
bonus to be based on an incentive compensation program for key employees to be
designed by the Company's Compensation Committee and presented to the Company's
Board for review. In addition, the Company agreed to grant Mr. McNamee options
to purchase 150,000 shares the Company's common stock at fair market value on
the date the Agreement was executed, which options are exercisable to the extent
of 2,500 on August 31, 1997, and so long as Mr. McNamee is employed by the
Company, an additional 2,500 on the last day of each calendar month thereafter.
The agreement provides for an employment term of two years commencing on August
1, 1997, which term shall automatically renew for additional one year terms
until notice of non-renewal by either party.
Mr. McNamee also entered into a transitional compensation agreement with
the Company dated May 8, 1997, pursuant to which he shall be entitled to
severance benefits in the event of a change of control of the Company during the
term of his employment. If a change in control of the Company occurs during the
term of Mr. McNamee's employment, and his employment with the Company is
terminated within 24 months after such change in control, he shall be entitled
to base salary, other earned or accrued compensation, and other benefits
depending on the reason for such termination. The agreement terminates on
December 31, 1998 unless extended pursuant to the terms thereof.
Mr. McNamee has entered into an Employment Agreement with Parent, to become
effective following the transactions contemplated by the Merger Agreement, which
will supersede the employment agreement and transitional compensation agreement
described above. See Item 3(b) in Schedule 14D-9.
Joseph G. Andersen accepted an employment offer letter from the Company on
September 3, 1996, pursuant to which he is employed as Vice
President -- Finance, Chief Financial Officer, Secretary and Treasurer. The
letter grants Mr. Andersen a base salary of $150,000 plus a monthly car
allowance and other
I-12
<PAGE> 39
customary benefits. In addition, the Company granted Mr. Andersen options to
purchase 75,000 shares of the Company's common stock at fair market value on the
date of acceptance of the Company's offer of employment. The letter does not
specify an employment term.
Mr. Andersen also entered into a transitional compensation agreement with
the Company dated May 8, 1997, pursuant to which he shall be entitled to
severance benefits in the event of a change of control of the Company during the
term of his employment. If a change in control of the Company occurs during the
term of Mr. Andersen's employment, and his employment with the Company is
terminated within 18 months after such change in control, he shall be entitled
to base salary, other earned or accrued compensation, and other benefits
depending on the reason for such termination. The agreement terminates on
December 31, 1998 unless extended pursuant to the terms thereof.
James Buchanan accepted an employment offer letter from the Company on July
28, 1997, pursuant to which he is employed as Vice President -- Sales and
Marketing. The letter grants Mr. Buchanan a base salary of $170,000 plus a
monthly car allowance and a one-time signing bonus, and other customary
benefits. In addition, the Company granted Mr. Buchanan options to purchase
75,000 shares of the Company's common stock at fair market value on July 28,
1997. The letter states that if Mr. Buchanan's employment is terminated during
the first 12 months of his employment for any reason other than criminal
activity or ethical misconduct, he will receive 24 months of base salary from
the date of termination. The letter does not specify an employment term.
Steven N. Lach accepted an employment offer letter from the Company on
October 16, 1997, pursuant to which he is employed as Vice
President -- Operations. The letter grants Mr. Lach a base salary of $150,000
plus a signing bonus of $25,000, relocation assistance, a monthly car allowance
and other customary benefits. In addition, the Company granted to Mr. Lach
options to purchase 50,000 Shares at fair market value on the date of acceptance
of the Company's offer of employment. Mr. Lach is entitled to severance benefits
equal to 12 months of base salary if during the first 12 months of his
employment he is terminated for any reason other than cause related to criminal
activity or ethical misconduct. The letter does not specify an employment term.
The Company's 1987 Stock Option Plan and 1996 Stock Option Plan (the "Stock
Option Plans") each provides that in the event (a) of a merger, consolidation or
reorganization with another corporation in which the Company is not the
surviving corporation or (b) the Company agrees to be acquired, the Company is
subject to a non-negotiated takeover attempt, or there is a change in control of
the Company, all options outstanding and unexercised under the Stock Option
Plans shall immediately become exercisable. In accordance with the terms of the
Stock Option Plans, upon publication of the announcement of the Offer, all
options issued under such plans vested immediately and are exercisable.
The Company's 1987 Stock Option Plan provides that in the event of a
merger, consolidation or reorganization with another corporation in which the
Company is not the surviving corporation, appropriate provision may be made with
respect to outstanding and unexercised options to either (a) substitute on an
equitable basis appropriate shares of the surviving corporation or (b) cancel
such options upon payment of the fair market value of such options to the
respective holders.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Committee Role. The Compensation Committee of the Board (the "Committee")
reviews the Company's executive compensation programs and makes specific
compensation recommendations to the Board with respect to the salaries, bonuses
and benefit plans for the Company's officers and other salaried employees. The
Committee is composed of the individuals listed at the end of this report, each
of whom is not currently employed by the Company.
Compensation Philosophy. The Committee's objective is to develop a total
compensation program that is competitive in the marketplace and which provides
significant incentive to increase Stockholder value. The Committee reviews the
executive compensation policies with respect to market competitiveness of the
program and then determines what changes, if any, are appropriate in the
compensation program. Compensa-
I-13
<PAGE> 40
tion of the Company's executive officers currently consists of three key
elements: salary, bonus and stock options.
Base Salary. To determine the salary for executives, the Committee may
consult an executive search firm to ascertain competitive pay standard for the
industry. In reviewing executive salaries, the Committee considers management's
recommendations for the particular executive officer and the executive's
experience, expertise and demonstrated performance. Mr. McNamee's base salary
was set at $235,000. Base salary increases for executives other than Mr. McNamee
were approved by the Committee in August 1995 or in their initial employment
agreements.
Since the Company's initial public offering in March 1995, the Committee
has from time to time utilized an independent consultant who has provided data
regarding compensation practices in United States manufacturing companies.
Cash Bonuses. In making determinations to award incentive payments, the
Committee reviews a variety of Company performance measures as well as an
individual's objectives and accomplishments. The source and amount of the annual
incentives to be paid to the Company's executives is subjective, with
consideration to revenue, net income and other assessments unique to individual
executives such as manufacturing scrap rates, first pass yield, employee
turnover, days sales outstanding, inventory turnover and cycle times. No
specific weight is applied to any item individually; however, the annual
incentive payment for the Chief Executive Officer is set by employment contract
through fiscal 1997. See "Executive Compensation -- Employment Contracts,
Termination of Employment and Change in Control Arrangements."
Stock Options. Granting stock options is the Company's current method of
providing long-term incentive compensation opportunities to its executive
officers and other key employees, the Committee authorizes the issuance of all
stock options to executive officers and approves all other option grants. Stock
options allow the recipient to purchase shares of the Company's common stock
during a fixed period of time following the grant date at a specified price that
is not less that its fair market value on the grant date. The period has
typically been five years. The Company believes that this form of long-term
incentive is presently the best vehicle by which to link stockholder and
management interests, since value is provided to recipients only if the stock
price increases. The level of stock options granted is subjective and reflects
relative impact which a recipient is expected to have on future corporate
results. In making this determination, the Committee considers the number of
options held by the executive officer and the dilution effect new grants may
have on existing stockholders.
Section 162(m) of the Internal Revenue Code. The Committee has reviewed
the Company's compensation plans in light of changes to the Internal Revenue
Code relating to the disallowance of deductions for compensation in excess of
$1.0 million to certain executive officers. All compensation paid to executive
officers for fiscal 1997 is fully deductible. The Committee does not believe
that Section 162(m) limitations will be exceeded for compensation to be paid in
fiscal 1998.
COMPENSATION COMMITTEE DURING FISCAL 1997
Michael F. Jarko, Chairman Albert A. Irato David C. Wetmore
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, the Compensation Committee of the Board consisted of
Messrs. Jarko, Irato and Wetmore. Mr. Jarko was a Director of the Company from
1978 to 1987, and was re-elected to the Board in December 1988, Mr. Irato was
elected to the Board in September 1995, and Mr. Wetmore was elected to the Board
in December 1995. The Compensation Committee reviews the Company's executive
compensation programs and makes specific compensation recommendations to the
Board with respect to the salaries, bonuses and benefit plans for the Company's
officers and other salaried employees.
I-14
<PAGE> 41
CERTAIN TRANSACTIONS AND RELATIONSHIPS
WITH MANAGEMENT AND OTHERS
Registration of Common Stock. In August 1995, C.W. Jackson (a former
director of the Company) and others exercised their right to cause the Company
to register their Common Stock as provided in a Registration Rights Agreement
entered into with the Company in October 1993 in connection with the settlement
of certain litigation against the Company and certain of its officers and
directors. As a result of this exercise, in September 1995, the Company filed a
Registration Statement on Form S-1 pursuant to the Securities Act of 1933, as
amended, to register the stock beneficially owned by several stockholders,
including Mr. Jackson, John A. Carr (a former director of the Company), Michael
O. and Joanie L. Flatt, Michael F. Jarko, John W. Nance and John W. Maddux (the
Company's Vice President -- Quality and Engineering). The Registration Statement
was declared effective on October 2, 1995. The Company agreed to pay the
estimated $150,000 of expenses associated with this registration.
Indemnification Agreements. Delaware law authorizes a Delaware corporation
to eliminate or limit the personal liability of a director to the corporation
and its stockholders for monetary damages for breach of certain fiduciary duties
as a director. The Company believes that such a provision is beneficial in
attracting and retaining qualified directors, and accordingly its Restated
Certificate of Incorporation includes a provision eliminating liability for
monetary damages for any breach of fiduciary duty as a director, except: (1) for
any breach of the duty of loyalty to the Company or its stockholders; (2) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (3) for any transaction from which the director
derived an improper personal benefit; (4) for unlawful payments of dividends or
unlawful stock repurchases or redemptions as provided in Section 174 of the
Delaware General Corporation law. Thus, pursuant to Delaware law, directors of
the Company are not insulated from liability for breach of their duty of loyalty
(requiring that, in making a business decision, directors act in good faith and
in the honest belief that the action was taken in the best interests of the
corporation) or for claims arising under the federal securities laws. The
Company has entered into indemnity agreements with all of its directors and
officers for the indemnification of and advancing of expenses to such persons to
the full extent permitted by law.
For information on other material transactions between the Company and
management, please review the Schedule 14D-9.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons beneficially owning more than 10% of the
Company's Common Stock are required to report their initial ownership of Shares
and any subsequent changes in that ownership to the Commission. Specific due
dates for these reports have been established and the Company is required to
disclose any failure to file by these dates. The Company believes that all of
these filing requirements were satisfied during the fiscal year ended July 31,
1997, except that: (i) Michael F. Jarko, a Director of the Company, failed to
file one report with respect to one transaction, which transaction was reported
on a Form 5; (ii) Steven J. Walters, the controller of the Company and a former
reporting officer, failed to file on a timely basis one Form 4; (iii) Joseph G.
Andersen, the Vice President -- Finance, Chief Financial Officer, Secretary and
Treasurer of the Company, failed to file on a timely basis two Form 4s; (iv)
Frederick G. McNamee, III, the Chairman of the Board, President and Chief
Executive Officer of the Company failed to filed on a timely basis one Form 4;
and (v) Mark R. Hollinger, the former Vice President -- Operations of the
Company, failed to file on a timely basis one Form 4. In making these
disclosures, the Company has relied solely on written representations of its
directors, executive officers and holders of more than 10% of its Common Stock
and copies of the reports that they have filed with the Commission.
I-15
<PAGE> 42
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION FILED HEREWITH
- ------------ -------------------------------------------------------------------- --------------
<S> <C> <C>
Exhibit 1. Agreement and Plan of Merger dated as of February 16, 1998 among X
Parent, Purchaser and the Company.
Exhibit 2. Stockholders Agreement dated as of February 16, 1998 among Parent, X
Purchaser and the Stockholders named therein.
Exhibit 3. McNamee Employment Agreement. X
Exhibit 4. Letter to Stockholders. X
Exhibit 5. Opinion of A.G. Edwards & Sons, Inc., dated February 16, 1998. X
Exhibit 6. Text of Joint Press Release, dated February 17, 1998. X
Exhibit 7. Employment Offer Letter to Steven N. Lach. X
Exhibit 8. 1987 Stock Option Plan (filed as Exhibit 10.10 to the Company's
Registration Statement on Form S-1 filed with the Commission on
January 9, 1995).
Exhibit 9. Employee Stock Purchase Plan (filed as an exhibit to the Company's
Registration Statement on Form S-8 filed with the Commission on
December 27, 1995).
Exhibit 10. 1996 Stock Option Plan (filed as an exhibit to the Company's
Registration Statement on Form S-8 filed with the Commission on
August 11, 1997).
Exhibit 11. Form of Indemnification Agreement for Officers and Directors (filed
as Exhibit 10.9 to the Company's Registration Statement on Form S-1
filed with the Commission on January 9, 1995).
Exhibit 12. Employment Agreement between the Company and Frederick G. McNamee,
III, dated as of August 1, 1997 (filed with the Commission as
Exhibit 10.21 to the Company's Annual Report on Form 10-K for the
year ended July 31, 1997).
Exhibit 13. Letter to Frederick G. McNamee, III, Regarding Transitional
Compensation dated May 8, 1997, (filed with the Commission as
Exhibit 10.26 to the Company's Annual Report on Form 10-K for the
year ended July 31, 1997).
Exhibit 14. Employment Offer Letter to James Buchanan accepted July 28, 1997,
(filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K
for the year ended July 31, 1997).
Exhibit 15. Letter to Joseph G. Andersen Regarding Transitional Compensation
dated May 8, 1997, (filed as Exhibit 10.28 to the Company's Annual
Report on Form 10-K for the year ended July 31, 1997).
</TABLE>
<PAGE> 1
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
AMONG
HADCO CORPORATION
HADCO ACQUISITION CORP. II
AND
CONTINENTAL CIRCUITS CORP.
DATED FEBRUARY 16, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
THE OFFER..............................................................................................1
1.1 The Offer.............................................................................1
1.2 Offer Documents.......................................................................3
1.3 Company Actions.......................................................................4
1.4 Directors.............................................................................5
ARTICLE II
THE MERGER..............................................................................................6
2.1 The Merger ...........................................................................6
2.2 Closing...............................................................................6
2.3 Effective Time of the Merger..........................................................6
2.4 Effects of the Merger.................................................................6
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES..................................................7
3.1 Effect on Capital Stock...............................................................7
(a) Capital Stock of Sub.................................................7
(b) Cancellation of Treasury Stock and
Parent-Owned Stock...................................................7
3.2 Conversion of Securities..............................................................7
3.3 Payment for Shares....................................................................8
(a) Paying Agent.........................................................8
(b) Payment Procedures...................................................8
(c) Termination of Payment Fund; Interest................................9
(d) No Liability.........................................................9
(e) Withholding Rights ..................................................9
3.4 Stock Transfer Books..................................................................10
3.5 Stock Options.........................................................................10
3.6 Dissenting Shares.....................................................................10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES..........................................................................11
4.1 Representations and Warranties of the Company.........................................11
(a) Organization, Standing and Power.....................................11
(b) Capital Structure....................................................11
(c) Authority; No Violations; Consents and Approvals.....................12
(d) SEC Documents........................................................14
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
(e) Information Supplied.................................................14
(f) Compliance with Applicable Laws......................................15
(g) Litigation...........................................................15
(h) Taxes................................................................15
(i) Pension And Benefit Plans; ERISA.....................................17
(j) Absence of Certain Changes or Events.................................19
(k) No Undisclosed Material Liabilities..................................19
(l) Vote Required........................................................19
(m) Labor Matters........................................................20
(n) Intangible Property..................................................20
(o) Environmental Matters................................................21
(p) Real Property........................................................23
(q) Insurance............................................................24
(r) Board Recommendation.................................................24
(s) Material Contracts...................................................25
(t) Related Party Transactions...........................................25
(u) Indebtedness.........................................................26
(v) Liens................................................................26
(w) Opinion of Financial Advisor.........................................26
4.2 Representations, Warranties, and Covenants of Parent and Sub..........................26
(a) Organization, Standing and Power.....................................26
(b) Authority; No Violations; Consents and Approvals.....................26
(c) Information Supplied.................................................27
(d) Board Recommendation.................................................28
(e) Financing............................................................28
(f) Interim Operations of Sub............................................28
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS...............................................................28
5.1 Covenants of the Company..............................................................28
(a) Ordinary Course......................................................28
(b) Dividends; Changes in Stock..........................................28
(c) Issuance of Securities...............................................28
(d) Governing Documents..................................................29
(e) No Solicitation......................................................29
(f) No Acquisitions......................................................30
(g) No Dispositions......................................................30
(h) SEC Filings..........................................................31
(i) No Dissolution, Etc..................................................31
(j) Other Actions........................................................31
(k) Certain Employee Matters.............................................31
(l) Indebtedness; Agreements.............................................31
(m) Accounting...........................................................32
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
(n) Capital Expenditures.................................................32
ARTICLE VI
ADDITIONAL AGREEMENTS...................................................................................32
6.1 Preparation of the Proxy Statement; Company Stockholders
Meeting; Merger without a Company Stockholders Meeting................................32
6.2 Access to Information.................................................................33
6.3 Legal Conditions to Merger............................................................33
6.4 Fees and Expenses.....................................................................33
6.5 Brokers or Finders....................................................................34
6.6 Indemnification; Directors' and Officers' Insurance...................................34
6.7 Reasonable Efforts....................................................................36
6.8 Conduct of Business of Sub............................................................36
6.9 Publicity.............................................................................36
ARTICLE VII
CONDITIONS PRECEDENT....................................................................................36
7.1 Conditions to Each Party's Obligation to Effect the Merger............................36
(a) Stockholder Approval.................................................36
(b) HSR Act..............................................................36
(c) No Injunctions or Restraints.........................................37
7.2 Conditions of Obligations of Parent and Sub...........................................37
(a) Payment for Shares...................................................37
(b) Representations and Warranties.......................................37
(c) Performance of Obligations of the Company............................37
(d) Consents, etc........................................................37
(e) No Material Adverse Change...........................................37
ARTICLE VIII
TERMINATION AND AMENDMENT...............................................................................38
8.1 Termination...........................................................................38
8.2 Effect of Termination.................................................................39
8.3 Amendment.............................................................................39
8.4 Extension; Waiver.....................................................................39
ARTICLE IX
GENERAL PROVISIONS......................................................................................39
9.1 Nonsurvival of Representations, Warranties and Agreements.............................39
9.2 Notices...............................................................................39
9.3 Interpretation........................................................................41
9.4 Counterparts..........................................................................41
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership.............................................................................41
9.6 Governing Law.........................................................................41
9.7 No Remedy in Certain Circumstances....................................................41
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
9.8 Assignment............................................................................42
9.9 Obligations of Sub....................................................................42
</TABLE>
iv
<PAGE> 6
Glossary of Defined Terms
Defined Terms Defined in Section
90% Tender Condition 1.1(c)
Acquisition Proposal 5.1(e)(ii)
Additional SEC Contracts 4.1(s)
Agreement preamble
Benefit Plans 4.1(i)(i)(A)
Board Percentage 1.4(a)
Cash Merger 1.1(c)
CERCLA 4.1(o)(i)(B)
Certificate of Merger 2.3
Certificates 3.3(b)
Closing 2.2
Closing Date 2.2
Code 3.3(e)
Company preamble
Company Common Stock preamble
Company Intangible Property 4.1(n)(i)
Company Intangible Property Licenses 4.1(n)(iii)
Company Litigation 4.1(g)
Company Order 4.1(g)
Company Permits 4.1(f)
Company SEC Documents 4.1(d)
Company Stockholder Approval 4.1(c)(iv)
Company Voting Debt 4.1(b)
Confidentiality Agreement 6.2
Constituent Corporations 2.1
Continuing Director 1.4(b)
Control 3.2(a)
Designated Person 6.4(c)
DGCL 2.1
Dissenting Shares 3.6
Effective Time 2.3
Employee Arrangements 4.1(i)(i)(B)
Environmental Costs and Liabilities 4.1(o)(i)(A)
Environmental Law 4.1(o)(i)(B)
Exchange Act 1.1(a)
Fairness Opinion 4.1(w)
GAAP 4.1(d)
Governmental Entity 4.1(c)(iv)
v
<PAGE> 7
Hazardous Material 4.1(o)(i)(C)
HSR Act 4.1(c)(iv)
Indebtedness 4.1(u)
Indemnified Parties 6.6
Indemnified Liabilities 6.6
Injunction 7.1(c)
Laws 4.1(c)(iii)
Majority Tender Condition 1.1(c)
Material Adverse Effect 4.1(a)
Material Contracts 4.1(s)
Material Employment Contracts 4.1(s)
Merger 2.1
Merger Consideration 3.2(a)
OSHA 4.1(o)(i)(B)
Offer 1.1(a)
Offer Consideration 1.1(a)
Offer Documents 1.2
Option Consideration 3.5(a)
Options 3.5(a)
Parent preamble
Paying Agent 3.3(a)
Payment Fund 3.3(a)
Preferred Stock 4.1(b)
Permitted Investments 3.3(a)
Proxy Statement 4.1(c)(iv)
Proxy Trigger Date 6.1(a)
Real Property 4.1(p)(i)
Real Property Leases 4.1(p)(ii)
Release 4.1(o)(i)(D)
Remedial Action 4.1(o)(i)(E)
Representatives 5.1(e)
SEC 1.1(b)
SEC Contracts 4.1(s)
Schedule 14D-1 1.2
Schedule 14D-9 1.3
Securities Act 4.1(d)
Shares preamble
Stock Option Plans 3.5(a)
Stock Purchase Plan 3.5(b)
Stockholders Agreement preamble
Sub preamble
Subsidiary 3.2(a)
Superior Proposal 5.1(e)(i)
Surviving Corporation 2.1
Termination Fee 6.4(b)
vi
<PAGE> 8
Trigger Event 6.4(b)
Violation 4.1(c)(iii)
WARN 4.1(m)(v)
vii
<PAGE> 9
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF Merger, dated as of February 16, 1998 (this
"Agreement"), is made and entered into by Hadco Corporation, a Massachusetts
corporation ("Parent"), Hadco Acquisition Corp. II, a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Sub"), and Continental Circuits
Corp., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have unanimously approved the acquisition of the Company by Parent, by
means of the merger of Sub with and into the Company, upon the terms and subject
to the conditions set forth in the Agreement;
WHEREAS, to effectuate the acquisition, Parent and the Company each
desire that Sub commence a cash tender offer to purchase all of the outstanding
shares of common stock, par value $.01 per share, of the Company ("Shares" or
"Company Common Stock"), upon the terms and subject to the conditions set forth
in this Agreement and the Offer Documents (as defined in Section 1.2), and the
Board of Directors of the Company has unanimously approved such tender offer and
agreed to recommend to its stockholders that they accept the tender offer and
tender their Company Common Stock pursuant thereto;
WHEREAS, as an inducement to Parent and Sub entering into this
Agreement (i) certain beneficial and record holders of the Company Common Stock
are entering into an agreement (the "Stockholders Agreement") providing for the
tender of their Shares pursuant to the Offer (as defined in Section 1.1) and
certain other matters with respect to their Shares and (ii) the Company has
approved the execution and delivery of the Stockholders Agreement by the parties
thereto; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger (as defined in Section 2.1) and also to prescribe various
conditions to consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer.
(a) Provided that none of the events set forth in Exhibit A
hereto shall have occurred and be continuing, as promptly as practicable (but in
any event not later than five
1
<PAGE> 10
business days after the public announcement of the execution and delivery of
this Agreement), Sub shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), an offer to
purchase (the "Offer") all outstanding shares of the Company Common Stock at a
price of $23.90 per share, net to the seller in cash (the "Offer
Consideration"). The obligations of Parent and Sub to commence the Offer,
consummate the Offer, accept for payment and pay for shares of Company Common
Stock validly tendered in the Offer and not withdrawn shall be subject only to
those conditions set forth on Exhibit A hereto.
(b) Parent and Sub expressly reserve the right to amend or
modify the terms of the Offer, except that, without the prior written consent of
the Company, Sub shall not (and Parent shall not cause Sub to) (i) decrease the
Offer Consideration or change the form of consideration therefor or decrease the
number of Shares sought pursuant to the Offer, (ii) change, in any material
respect, the conditions to the Offer, (iii) impose additional material
conditions to the Offer, (iv) waive the condition (sometimes called the "90%
Tender Condition") that there shall be validly tendered and not withdrawn prior
to the time the Offer expires a number of shares of Company Common Stock which
constitutes at least 90% of the Shares outstanding on a fully-diluted basis on
the date of purchase ("on a fully-diluted basis" having the following meaning,
as of any date: the number of shares of Company Common Stock outstanding,
together with Shares which the Company may be required to issue pursuant to
obligations outstanding at that date under stock option, stock purchase or
similar benefit plans, or otherwise); provided that Sub shall have the right, at
its option and without the Company's consent, to modify such condition to reduce
the minimum number of shares of Company Common Stock being sought to a number of
Shares that constitutes at least a majority of the Shares outstanding on a
fully-diluted basis on the date of purchase (the condition as so modified,
sometimes called the "Majority Tender Condition"), (v) extend the expiration
date of the Offer (except that Sub may extend the expiration date of the Offer
(a) as required by law, (b) for up to ten (10) business days after the initial
expiration date or for longer periods (not to exceed 90 calendar days from the
date of commencement of the Offer) in the event that any condition to the Offer
is not satisfied, or (c) for one or more times for an aggregate period of up to
15 days (not to exceed 90 calendar days from the date of commencement for any
reason other than those specified in the immediately preceding clause (a) or
clause (b))), or (vi) amend any term of the Offer in any manner materially
adverse to holders of shares of Company Common Stock; provided, however, that,
except as set forth above, Sub may waive any other condition to the Offer in its
sole discretion and, provided further, that the Offer may be extended in
connection with an increase in the consideration to be paid pursuant to the
Offer so as to comply with applicable rules and regulations of the United States
Securities and Exchange Commission (the "SEC"). Assuming the prior satisfaction
or waiver of the conditions to the Offer, Sub shall accept for payment, and pay
for, in accordance with the terms of the Offer, all shares of Company Common
Stock validly tendered and not withdrawn pursuant to the Offer as soon as
practicable after the expiration date thereof. The initial expiration date of
the Offer shall be twenty business days from the commencement; further provided,
however, that Sub shall extend the expiration date of the Offer for up to 30
additional days in the event and to the extent that the events in both clauses
(i) and (ii) below have occurred: (i) the conditions to the Offer are not
satisfied solely because the applicable waiting periods under the HSR Act have
not expired or been terminated;
2
<PAGE> 11
and (ii) the Company has made the required filing described in Section
4.1(c)(iv)(A) within 10 days of the date hereof.
(c) Parent, Sub and the Company agree that if the Majority
Tender Condition and all of the conditions to the Offer other than the 90%
Tender Condition shall have been satisfied as of the expiration date of the
Offer (as such expiration date may have been extended in accordance with Section
1.1(b)), then Parent and Sub shall either (i) waive the 90% Tender Condition and
substitute the Majority Tender Condition or (ii) terminate the Offer and require
the Company to solicit the approval of its stockholders for a cash merger (the
"Cash Merger") of the Company with Sub in accordance with Article II hereof, and
a Cash Merger shall be governed by the other provisions of this Agreement
relating to a Merger, Effective Time, Proxy Statement, Merger Consideration,
Closing Date and like terms, all of which shall apply to a Cash Merger, and in
such case each issued and outstanding share of the Company Common Stock, options
to acquire shares of Company Common Stock and shares of the capital stock of Sub
will be treated in accordance with Article III hereof. If pursuant to the
provisions of clause (ii) of the preceding sentence Parent and Sub elect to
terminate the Offer and pursue the Cash Merger, the Company and Parent shall
promptly undertake the actions contemplated by Section 6.1 hereof as if Sub had
accepted for payment and paid for Shares in the Offer, the obligations of Parent
and Sub to effect the Cash Merger shall be subject to Section 8 and to the
satisfaction of the conditions set forth on Exhibit A hereto and the Company and
its Subsidiaries shall continue to have the obligations in Section 5 and 6 and
to be subject to the conditions set forth in Sections 7.1 and 7.2 in respect of
the Cash Merger.
1.2 Offer Documents. As soon as practicable on the date of
commencement of the Offer, Parent and Sub shall file or cause to be filed with
the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with
respect to the Offer which shall contain the offer to purchase and related
letter of transmittal and other ancillary Offer documents and instruments
pursuant to which the Offer will be made (collectively with any supplements or
amendments thereto, the "Offer Documents") and shall contain (or shall be
amended in a timely manner to contain) all information which is required to be
included therein in accordance with the Exchange Act and the rules and
regulations thereunder and any other applicable law, and shall conform in all
material respects with the requirements of the Exchange Act and any other
applicable law; provided, however, that no agreement or representation hereby is
made or shall be made by Parent or Sub with respect to information supplied by
the Company expressly for inclusion in, or with respect to Company information
derived from the Company's public SEC filings that is included or incorporated
by reference in, the Offer Documents. Parent, Sub and the Company each agree
promptly to correct any information provided by them for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect and Sub further agrees to take all lawful action necessary
to cause the Offer Documents as so corrected to be filed promptly with the SEC
and to be disseminated to holders of Company Common Stock, in each case as and
to the extent required by applicable law. In conducting the Offer, Parent and
Sub shall comply in all material respects with the provisions of the Exchange
Act and any other applicable law. The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Offer Documents and any
amendments thereto prior to the filing thereof with the SEC.
3
<PAGE> 12
1.3 Company Actions. The Company hereby consents to the Offer and
represents that (a) its Board of Directors (at a meeting duly called and held)
has unanimously (i) determined that each of this Agreement, the Offer and the
Merger are fair to and in the best interests of the stockholders of the Company,
(ii) approved the execution, delivery and performance of this Agreement and the
Stockholders Agreement and the consummation of the transactions contemplated
hereby and thereby, including the Offer and the Merger, and a majority of the
members of the Board of Directors of the Company voting for such approval were
and are Continuing Directors (as defined in and for purposes of Section 11(b) of
the Company's Restated Certificate of Incorporation), and (iii) after
considering its fiduciary duties under applicable law upon the advice of
counsel, resolved to recommend acceptance of the Offer, approval and adoption of
this Agreement and approval of the Merger by the holders of Company Common
Stock, and (b) A.G. Edwards & Sons, Inc. ("Edwards") has delivered to the Board
of Directors of the Company its written opinion that the Offer Consideration to
be received by the holders of Company Common Stock in the Offer and in the
Merger is fair, from a financial point of view, to such holders. The Board of
Directors of the Company shall not withdraw, modify or amend its approval or
recommendation of the Offer, this Agreement, the Stockholders Agreement or the
Merger unless the Board of Directors of the Company shall conclude in good faith
upon the advice of counsel that such action is required under applicable law for
the discharge of such Board's fiduciary duties. The Company hereby consents to
the inclusion in the Offer Documents of the recommendation referred to in this
Section 1.3. The Company hereby agrees to file with the SEC simultaneously with
the filing by Parent and Sub of the Schedule 14D-1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing such
recommendations of the Board of Directors of the Company in favor of the Offer
and the Merger and otherwise complying with Rule 14d-9 under the Exchange Act.
The Schedule 14D-9 shall comply in all material respects with the Exchange Act
and any other applicable law and shall contain (or shall be amended in a timely
manner to contain) all information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations thereunder and
any other applicable law. The Company, Parent and Sub each agree promptly to
correct any information provided by them for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material respect
and the Company further agrees to take all lawful action necessary to cause the
Schedule 14D-9 as so corrected to be filed promptly with the SEC and
disseminated to the holders of Company Common Stock, in each case as and to the
extent required by applicable law. Parent, Sub and their counsel shall be given
a reasonable opportunity to review and comment on the Schedule 14D-9 and any
amendments thereto prior to the filing thereof with the SEC. In connection with
the Offer, the Company shall promptly furnish, or cause its transfer agent to
furnish, Parent with mailing labels, security position listings and all
available listings or computer files containing the names and addresses of the
record holders of the Company Common Stock as of the latest practicable date and
shall furnish, or cause its transfer agent to furnish, Parent with such
information and assistance (including updated lists of stockholders, mailing
labels and lists of security positions) as Parent or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Company Common Stock. Subject to the requirements of applicable law, and except
for such actions as are necessary to disseminate the Offer Documents and any
other documents necessary to consummate the Offer
4
<PAGE> 13
and the Merger, Parent and Sub and each of their affiliates, associates,
partners, employees, agents and advisors shall hold in confidence the
information contained in such labels and lists, shall use such information only
in connection with the Offer and the Merger, and, if this Agreement is
terminated, in accordance with its terms, shall deliver promptly to the Company
all copies of such information then in their possession or under their control.
1.4 Directors.
(a) Promptly upon the purchase pursuant to the Offer by
Parent or any of its subsidiaries of such number of shares of Company Common
Stock as represents at least 50.1% of the outstanding shares of Company Common
Stock (on a fully diluted basis), and from time to time thereafter, Parent shall
be entitled to designate such number of directors, rounded up to the next whole
number as will give Parent, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors of the Company equal to
the product of (x) the number of directors on the Board of Directors of the
Company (giving effect to any increase in the number of directors pursuant to
this Section 1.4) and (y) the percentage that such number of Shares so purchased
bears to the aggregate number of Shares outstanding (but not more than 75%)
(such number being, the "Board Percentage"), and the Company shall, upon request
by Parent, promptly use its best efforts to satisfy the Board Percentage by (i)
increasing the size of the Board of Directors of the Company or (ii) using its
best efforts to secure the resignations of such number of directors as is
necessary to enable Parent's designees to be elected to the Board of Directors
of the Company and shall cause Parent's designees promptly to be so elected;
provided that, in no event prior to the Effective Time shall the number of
Continuing Directors, as defined in Section 1.4(b) below, on the Board of
Directors be less than one. At the request of Parent, the Company shall take, at
the Company's expense, all lawful action necessary to effect any such election,
including, without limitation, mailing to its stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, unless such information has previously been provided to the
Company's stockholders in the Schedule 14D-9.
(b) Following the election or appointment of Parent's
designees pursuant to this Section 1.4 and prior to the Effective Time (as
defined in Section 2.3) of the Merger, any (i) amendment or termination of this
Agreement, (ii) extension for the performance or waiver of the obligations or
other acts of Parent or Sub, (iii) action which might affect the accuracy of the
representations and warranties under Article IV, or (iv) waiver of the Company's
rights hereunder shall require the concurrence of a majority of directors of the
Company then in office who are "Continuing Directors". The term "Continuing
Director" shall mean (i) each member of the Board of Directors of the Company on
the date hereof who is a "disinterested director," as such term is used in
Arizona Revised statutes Section 10-2741 and (ii) any successor to any
Continuing Director that was recommended to succeed such Continuing Director by
a majority of the Continuing Directors then on the Board of Directors, but shall
not mean any designee of Parent pursuant to this Section 1.4 or any successor to
such designee.
5
<PAGE> 14
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General Corporate
Law, as amended (the "DGCL"), Sub shall be merged (the "Merger") with and into
the Company at the Effective Time. At the Effective Time, the separate corporate
existence of Sub shall cease, and the Company shall continue as the surviving
corporation and a direct wholly owned subsidiary of Parent (Sub and the Company
are sometimes hereinafter referred to as "Constituent Corporations" and, as the
context requires, the Company is sometimes hereinafter referred to as the
"Surviving Corporation"), and shall continue under the name Hadco Phoenix, Inc.
2.2 Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., New York time, as soon as practicable following satisfaction or waiver of
the conditions set forth in Article VII (the "Closing Date"), at the offices of
Testa, Hurwitz & Thibeault, LLP, 125 High Street, Boston, MA 02110, unless
another date, time or place is agreed to in writing by the parties hereto.
2.3 Effective Time of the Merger. Subject to the provisions of
this Agreement, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, as provided in the DGCL, as soon as
practicable on or after the Closing Date. The Merger shall become effective upon
such filing or at such time thereafter as is provided in the Certificate of
Merger (the "Effective Time").
2.4 Effects of the Merger.
(a) The Merger shall have the effects as set forth in the
applicable provisions of the DGCL.
(b) The directors of Sub and the officers of the Company
immediately prior to the Effective Time shall, from and after the Effective
Time, be the initial directors and officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified, or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of Sub in the form
attached hereto as Exhibit B shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with the DGCL, except that the
name shall be changed to Hadco Phoenix, Inc.
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(d) The Bylaws of Sub in the form attached hereto as
Exhibit C shall be the Bylaws of the Surviving Corporation until thereafter
amended as provided by applicable law, the Certificate of Incorporation or the
Bylaws.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock or the holder of any capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock
of Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock and all other shares of capital stock of the
Company that are owned by the Company and all shares of Company Common Stock and
other shares of capital stock of the Company owned by Parent or Sub shall be
canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor.
3.2 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Sub, the Company or the holders
of any of the shares thereof:
(a) subject to the other provisions of this Section 3.2,
each share of Company Common Stock issued and outstanding immediately prior to
the Effective Time (excluding shares owned, directly or indirectly, by the
Company or any Subsidiary (as defined below) of the Company or by Parent, Sub or
any other Subsidiary of Parent and Dissenting Shares (as defined in Section
3.6)) shall be converted into the right to receive the Offer Consideration,
payable to the holder thereof, without any interest thereon, less any required
withholding taxes (the "Merger Consideration"), upon surrender and exchange of
the Certificates (as defined in Section 3.3). As used in this Agreement the word
"Subsidiary", with respect to any party, means any corporation, partnership,
joint venture or other organization, whether incorporated or unincorporated
which is, directly or indirectly, controlled by such party. For the purposes of
this definition, "control" means the possession of the power to direct or cause
the direction of management and policies of such corporation, partnership, joint
venture or other organization, whether through the ownership of voting
securities, by contract or otherwise.
(b) All such shares of Company Common Stock, when
converted as provided in Section 3.2(a), no longer shall be outstanding and
shall automatically be canceled and retired and
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shall cease to exist, and each Certificate previously evidencing Shares shall
thereafter represent only the right to receive the Merger Consideration. The
holders of Certificates previously evidencing Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to the
Company Common Stock except as otherwise provided herein or by law and, upon the
surrender of Certificates in accordance with the provisions of Section 3.3,
shall only represent the right to receive for their Shares, the Merger
Consideration, without any interest thereon.
3.3 Payment for Shares.
(a) Paying Agent. Prior to the Effective Time, Sub shall
appoint a United States bank or trust company reasonably acceptable to the
Company to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration, and Sub shall deposit or shall cause to be deposited with
the Paying Agent in a separate fund established for the benefit of the holders
of shares of Company Common Stock, for payment in accordance with this Article
III, through the Paying Agent (the "Payment Fund"), immediately available funds
in amounts necessary to make the payments pursuant to Section 3.2(a) and this
Section 3.3 to such holders (other than the Company or any Subsidiary of the
Company or Parent, Sub or any other Subsidiary of Parent, or holders of
Dissenting Shares). The Paying Agent shall, pursuant to irrevocable
instructions, pay the Merger Consideration out of the Payment Fund.
The Paying Agent shall invest portions of the Payment Fund as
Parent directs in obligations of or guaranteed by the United States of America,
in commercial paper obligations receiving the highest investment grade rating
from both Moody's Investors Services, Inc. and Standard & Poor's Ratings
Service, or in certificates of deposit, bank repurchase agreements or banker's
acceptances of commercial banks with capital exceeding $1,000,000,000
(collectively, "Permitted Investments"); provided, however, that the maturities
of Permitted Investments shall be such as to permit the Paying Agent to make
prompt payment to former holders of Company Common Stock entitled thereto as
contemplated by this Section. Parent and the Surviving Corporation shall cause
the Payment Fund to be promptly replenished to the extent of any losses incurred
as a result of Permitted Investments. All earnings on Permitted Investments
shall be paid to the Surviving Corporation. If for any reason (including losses)
the Payment Fund is inadequate to pay the amounts to which holders of shares of
Company Common Stock shall be entitled under this Section 3.3, Parent and the
Surviving Corporation shall in any event be liable for payment thereof. The
Payment Fund shall not be used for any purpose except as expressly provided in
this Agreement.
(b) Payment Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall instruct the Paying
Agent to mail to each holder of record (other than the Company or any Subsidiary
of the Company or Parent, Sub or any other Subsidiary of Parent) of a
Certificate or Certificates which, immediately prior to the Effective Time,
evidenced outstanding shares of Company Common Stock (the "Certificates"), (i) a
form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the
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Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent, and shall be in such form and have such other provisions,
including all required information regarding dissenters' rights, as the
Surviving Corporation reasonably may specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment therefor.
Upon surrender of a Certificate for cancellation to the Paying Agent together
with such letter of transmittal, duly executed, and such other customary
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be paid in cash an amount equal to the product of (x) the
number of shares of Company Common Stock represented by such Certificate and (y)
the Merger Consideration, and the Certificate so surrendered shall forthwith be
canceled. Absolutely no interest shall be paid or accrued on the Merger
Consideration payable upon the surrender of any Certificate. If payment is to be
made to a person other than the person in whose name the surrendered Certificate
is registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the surrendered Certificate or established to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.3(b), each
Certificate (other than Certificates representing Shares owned by Parent or any
subsidiary of Parent or held in the treasury of the Company) shall represent for
all purposes only the right to receive the Merger Consideration.
(c) Termination of Payment Fund; Interest. Any portion of
the Payment Fund which remains undistributed to the holders of Company Common
Stock for 180 days after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article III and the instructions set forth in the
letter of transmittal mailed to such holder after the Effective Time shall
thereafter look only to the Surviving Corporation for payment of the Merger
Consideration to which they are entitled. All interest accrued in respect of the
Payment Fund shall inure to the benefit of and be paid to the Surviving
Corporation.
(d) No Liability. Neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(e) Withholding Rights. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as the Surviving Corporation is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the "Code"), or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by the Surviving Corporation, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
which such deduction and withholding was made by the Surviving Corporation.
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<PAGE> 18
3.4 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. On or after the Effective Time, any certificates
presented to the Paying Agent or Parent for any reason shall be converted into
the Merger Consideration.
3.5 Stock Options. (a) At the earlier of (i) the Effective Time or
(ii) immediately prior to the expiration of the Offer (provided that the
settlement of the options below, when taken together with Shares tendered
immediately prior to such expiration, meets the 90% Tender Condition), each
holder of a then outstanding option to purchase Shares under the Company's 1987
Stock Option Plan and 1996 Stock Option Plan (collectively, the "Stock Option
Plans"), whether or not then exercisable (the "Options"), shall, in settlement
thereof, receive for each Share subject to such Option an amount (subject to any
applicable withholding tax) in cash equal to the difference between the Offer
Consideration and the per Share exercise price of such Option to the extent such
difference is a positive number (such amount being hereinafter referred to as,
the "Option Consideration"); provided, however, that with respect to any person
subject to Section 16(a) of the Exchange Act, any such amount shall be paid as
soon as practicable after the first date payment can be made without liability
to such person under Section 16(b) of the Exchange Act. Upon receipt of the
Option Consideration, the Option shall be canceled. The surrender of an Option
to the Company in exchange for the Option Consideration shall be deemed a
release of any and all rights the holder had or may have had in respect of such
Option. Prior to the expiration of the Offer, the Company shall obtain all
necessary written consents or releases from holders of Options under the Stock
Option Plans and take all such other lawful action as may be necessary to give
effect to the transactions contemplated by this Section 3.5. To the extent that
Parent is satisfied in its sole good faith discretion that the settlement of
Options will result in satisfaction of the 90% Tender Condition on the
expiration of the Offer and that all other conditions to the Offer have been
met, Parent will loan up to $13,000,000 for that purpose.
(b) The Company shall terminate the Company Employee Stock
Purchase Plan (the "Stock Purchase Plan") as of the Effective Time pursuant to
Article IX thereof and shall refund all payroll deductions for the current
Quarterly Investment Period (as defined in the Stock Purchase Plan). All Stock
Option Plans shall also terminate as of the Effective Time and the provisions in
any other plan, program or arrangement providing for the issuance or grant of
any other interest in respect of the capital stock of the Company or any
Subsidiary thereof shall be canceled as of the Effective Time. The Company shall
take all action necessary to ensure that following the Effective Time no
participant in the Stock Purchase Plan, any Stock Option Plan or other plans,
programs or arrangements shall have any right thereunder to acquire equity
securities of the Company, the Surviving Corporation or any Subsidiary thereof
and to terminate all such plans.
3.6 Dissenting Shares. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the
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Effective Time and which are held by stockholders who shall have not voted in
favor of the Merger or consented thereto in writing and who shall have demanded
properly in writing appraisal for such shares in accordance with Section 262 of
the DGCL (collectively, the "Dissenting Shares") shall not be converted into or
represent the right to receive the Merger Consideration. Such stockholders
instead shall be entitled to receive payment of the appraised value of such
shares of Company Common Stock held by them in accordance with the provisions of
such Section 262, except that all Dissenting Shares held by stockholders who
shall have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such shares of Company Common Stock under such
Section 262 shall thereupon be deemed to have been converted into and to have
become exchangeable, as of the Effective Time, for the right to receive, without
any interest thereon, the Merger Consideration upon surrender in the manner
provided in Section 3.3, of the Certificate or Certificates that, immediately
prior to the Effective Time, evidenced such shares of Company Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Sub that, except as set forth in the
schedules described in this Article IV (it being understood that any disclosed
matter, the import of which is fairly described on one schedule, shall be deemed
to be effective disclosure on all schedules for which its application is
reasonably apparent from such description).
(a) Organization, Standing and Power. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of incorporation,
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted, and is duly qualified and
in good standing to conduct business in each jurisdiction in which the business
it is conducting, or the operation, ownership or leasing of its properties,
makes such qualification necessary, other than in such jurisdictions where the
failure so to qualify could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect (as defined below) with respect to
the Company. The Company has heretofore made available to Parent complete and
correct copies of its and its Subsidiaries' respective Certificates of
Incorporation and Bylaws. All Subsidiaries of the Company and their respective
jurisdictions of incorporation or organization are identified on Schedule
4.1(a). As used in this Agreement: a "Material Adverse Effect" shall mean, with
respect to any party, the result of one or more events, changes or effects
which, individually or in the aggregate, would have a material adverse effect on
the business, operations, assets, condition (financial or otherwise) or
prospects of such party and its Subsidiaries, taken as a whole.
(b) Capital Structure. As of the date hereof, the
authorized capital stock of the Company consists of 20,000,000 Shares and
1,000,000 shares of Preferred Stock, $.01 par value ("Preferred Stock"). At the
close of business on the date of this Agreement: (i) 7,290,343 Shares
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were issued and outstanding; (ii) no shares of Preferred Stock were issued and
outstanding; (iii) 1,750,000 Shares were reserved for issuance pursuant to the
Stock Option Plans of which 989,200 Shares are subject to outstanding Options;
(iv) 200,000 Shares were reserved for issuance pursuant to the Stock Purchase
Plan; (v) except as set forth on Schedule 4.1(b) and except for the issuance of
Shares pursuant to the exercise of the Options, there are no employment,
executive termination or similar agreements providing for the issuance of
Shares; (vi) no Shares were held by the Company; and (vii) no bonds, debentures,
notes or other instruments or evidence of indebtedness having the right to vote
(or convertible into, or exercisable or exchangeable for, securities having the
right to vote) on any matters on which the Company stockholders may vote
("Company Voting Debt") were issued or outstanding. All outstanding Shares are
validly issued, fully paid and nonassessable and are not subject to preemptive
or other similar rights. No Shares are owned by any Subsidiary of the Company.
Except as set forth on Schedule 4.1(b), all outstanding shares of capital stock
of the Subsidiaries of the Company are owned by the Company or a direct or
indirect Subsidiary (other than shares of Subsidiaries held by nominees for
which the Company maintains beneficial ownership) of the Company, free and clear
of all liens, charges, encumbrances, claims and options of any nature. Except as
set forth in this Section 4.1(b) and except for changes resulting from the
exercise of Options or as contemplated by this Agreement, from and after the
date hereof there will be outstanding: (i) no shares of capital stock, Company
Voting Debt or other voting securities of the Company; (ii) no securities of the
Company or any Subsidiary of the Company convertible into, or exchangeable or
exercisable for, shares of capital stock, Company Voting Debt or other voting
securities of the Company or any Subsidiary of the Company; and (iii) no
options, warrants, calls, rights (including preemptive rights), commitments or
agreements to which the Company or any Subsidiary of the Company is a party or
by which it is bound, in any case obligating the Company or any Subsidiary of
the Company to issue, deliver, sell, purchase, redeem or acquire, or cause to be
issued, delivered, sold, purchased, redeemed or acquired, additional shares of
capital stock or any Company Voting Debt or other voting securities of the
Company or of any Subsidiary of the Company, or obligating the Company or any
Subsidiary of the Company to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. Set forth on Schedule 4.1(b) is a
list of all outstanding options, warrants and rights to purchase shares of
Company Common Stock and the exercise prices relating thereto. Except for the
Stockholders Agreement, there are not as of the date hereof and there will not
be at the Effective Time any stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or by which it is
bound relating to the voting of any shares of the capital stock of the Company
which will limit in any way the solicitation of proxies by or on behalf of the
Company from, or the casting of votes by, the stockholders of the Company with
respect to the Merger. There are no restrictions on the Company to vote the
stock of any of its Subsidiaries.
(c) Authority; No Violations; Consents and Approvals
(i) The restrictions of Section 203(a) of the
DGCL do not and will not apply to the Company or the transactions contemplated
in or by this Agreement or the Stockholders Agreement.
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(ii) The Company has all requisite corporate
power and authority to enter into this Agreement and, subject to the Company
Stockholder Approval (as defined in Section 4.1(c)(iv)), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been (A) duly
authorized by all necessary corporate action on the part of the Company,
subject, if required with respect to consummation of the Merger, to the Company
Stockholder Approval and (B) approved by a committee of "disinterested
directors" within the meaning of Section 10-2741 of the Arizona Revised
Statutes. A majority of the members of the Board of Directors of the Company
voting for the approval of this Agreement, the Merger and the transactions
contemplated hereby were and are Continuing Directors (as defined in and for
purposes of Section 11(b) of the Company's Restated Certificate of
Incorporation). This Agreement has been duly executed and delivered by the
Company and, subject, if required with respect to consummation of the Merger, to
the Company Stockholder Approval, and assuming that this Agreement constitutes
the valid and binding agreement of Parent and Sub, constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms
except that the enforcement hereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
(iii) The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by the Company will
not conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration (including pursuant to any put right) of any
obligation or the loss of a material benefit under, or the creation of a lien,
pledge, security interest or other encumbrance on assets or property, or right
of first refusal with respect to any asset or property (any such conflict,
violation, default, right of termination, cancellation or acceleration, loss,
creation or right of first refusal, a "Violation"), pursuant to any provision of
the Certificate of Incorporation or Bylaws of the Company or any of its
Subsidiaries or, except as to which requisite waivers or consents have been
obtained and, except as set forth on Schedule 4.1(c)(iii) hereto and assuming
the consents, approvals, authorizations or permits and filings or notifications
referred to in paragraph (iv) of this Section 4.1(c) are duly and timely
obtained or made and, if required, the Company Stockholder Approval has been
obtained, result in any Violation except for Violations that, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Company of (A) any loan or credit agreement, note, mortgage, deed
of trust, indenture, lease, Benefit Plan (as defined in Section 4.1(i)(i)),
Company Permit (as defined in Section 4.1(f)), or any other material agreement,
obligation, instrument, concession, franchise, or license, or (B) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any of its Subsidiaries or their respective properties or assets
(collectively, "Laws").
(iv) No consent, approval, order or authorization
of, or registration, declaration or filing with, notice to, or permit from any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"),
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is required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby, except
for: (A) the filing of a premerger notification and report form by the Company
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the expiration or termination of the applicable waiting period
thereunder; (B) the filing with the SEC of (x) a proxy statement (if required by
applicable law) in definitive form relating to a meeting of the holders of
Company Common Stock to approve the Merger (such proxy statement as amended or
supplemented from time to time being hereinafter referred to as the "Proxy
Statement"), (y) the Schedule 14D-9 in connection with the Offer, and (z) such
reports under and such other compliance with the Exchange Act and the rules and
regulations thereunder as may be required in connection with this Agreement and
the transactions contemplated hereby; (C) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware; (D) such filings
and approvals as may be required by any applicable state securities, "blue sky"
or takeover laws; and (E) the approval of this Agreement and the Merger by the
holders of a majority of the outstanding Shares ("Company Stockholder
Approval").
(d) SEC Documents. The Company has made available to
Parent a true and complete copy of each report, schedule, registration statement
and definitive proxy statement filed by the Company with the SEC prior to the
date of this Agreement (the "Company SEC Documents"), which are all the
documents (other than preliminary material) that the Company was required to
file with the SEC since such date. As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents, and none of the Company SEC Documents
contained, as of their respective dates, any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Company included in
the Company SEC Documents complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
Rule 10-01 of Regulation S-X of the SEC) and fairly present in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring adjustments, which will not be material, either
individually or in the aggregate) the consolidated financial position of the
Company and its consolidated Subsidiaries as of their respective dates and the
consolidated results of operations and the consolidated cash flows of the
Company and its consolidated Subsidiaries for the periods presented therein.
(e) Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) any of the Offer Documents will, at the time the Offer
Documents are first published, sent or given to holders of Company Common Stock,
and at any time they are amended or supplemented, contain any untrue statement
of a
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material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (ii) the Proxy Statement will, on the
date it is first mailed to the holders of the Company Common Stock or at the
time of the Company Stockholder Approval, not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the expiration date of the Offer or the Effective Time any event with respect to
the Company or any of its Subsidiaries, or with respect to other information
supplied by the Company for inclusion in the Offer Documents or the Proxy
Statement, shall occur which is required to be described in an amendment of, or
a supplement to, the Offer Documents or the Proxy Statement, as the case may be,
such event shall be so described, and such amendment or supplement shall be
promptly filed with the SEC and, as required by law, disseminated to the
stockholders of the Company. The Proxy Statement, insofar as it relates to the
Company or its Subsidiaries or other information supplied by the Company for
inclusion therein will comply as to form, in all material respects, with the
provisions of the Exchange Act or the rules and regulations thereunder.
(f) Compliance with Applicable Laws. The Company and its
Subsidiaries hold all material permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities necessary to enable them
to conduct their respective businesses (the "Company Permits"), and the Company
and its Subsidiaries are in material compliance with the terms of the Company
Permits. Except as disclosed in the Company SEC Documents, the businesses of the
Company and its Subsidiaries are not being conducted in material violation of
any law, ordinance or regulation of any Governmental Entity. As of the date of
this Agreement, no investigation or review by any Governmental Entity with
respect to the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened.
(g) Litigation. Except as disclosed in the Company SEC
Documents and on Schedule 4.1(g) attached hereto (i) there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary of the Company ("Company Litigation"),
and (ii) the Company and its Subsidiaries have no knowledge of any facts which
are reasonably likely to give rise to any Company Litigation which in the case
of (i) or (ii) is reasonably likely to have a Material Adverse Effect with
respect to the Company, nor is there any material judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against the
Company or any Subsidiary of the Company ("Company Order").
(h) Taxes.
(i) All Tax Returns required to be filed by or
with respect to the Company and each of its Subsidiaries have been duly and
timely filed, and all such Tax Returns are true, correct and complete in all
material respects. The Company and each of its Subsidiaries has duly and timely
paid (or there has been paid on its behalf) all Taxes that are due, or claimed
or
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asserted by any taxing authority to be due, from or with respect to it. With
respect to any period for which Taxes are not yet due with respect to the
Company or any Subsidiary, the Company and each of its Subsidiaries has made due
and sufficient current accruals for such Taxes in accordance with GAAP in the
most recent financial statements contained in the Company SEC Documents. The
Company and each of its Subsidiaries has made (or there has been made on its
behalf) all required estimated Tax payments sufficient to avoid any underpayment
penalties. The Company and each of its Subsidiaries has withheld and paid all
Taxes required by all applicable laws to be withheld or paid in connection with
any amounts paid or owing to any employee, creditor, independent contractor or
other third party.
(ii) There are no outstanding agreements,
waivers, or arrangements extending the statutory period of limitation applicable
to any claim for, or the period for the collection or assessment of, Taxes due
from or with respect to the Company or any of its Subsidiaries for any taxable
period. No audit or other proceeding by any court, governmental or regulatory
authority, or similar person is pending or threatened in regard to any Taxes due
from or with respect to the Company or any of the Subsidiaries or any Tax Return
filed by or with respect to the Company or any Subsidiary. No assessment of
Taxes is proposed against the Company or any of its Subsidiaries or any of their
assets.
(iii) No election under Section 338 of the Code
has been made or filed by or with respect to the Company or any of its
Subsidiaries. No consent to the application of Section 341(f)(2) of the Code (or
any predecessor provision) has been made or filed by or with respect to the
Company or any of its Subsidiaries or any of their assets. None of the Company
or any of its Subsidiaries has agreed to make any adjustment pursuant to Section
481(a) of the Code (or any predecessor provision) by reason of any change in any
accounting method, and there is no application pending with any taxing authority
requesting permission for any changes in any accounting method of the Company or
any of its Subsidiaries. None of the assets of the Company or any of its
Subsidiaries is or will be required to be treated as being owned by any person
(other than the Company or its Subsidiaries) pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately before the enactment of the Tax Reform Act of 1986.
(iv) None of the Company or any of its
Subsidiaries is a party to, is bound by, or has any obligation under, any Tax
sharing agreement, Tax allocation agreement or similar contract.
(v) There is no contract, agreement, plan or
arrangement covering any person that, individually or collectively, could give
rise to the payment of any amount that would not be deductible by the Company or
any of its Subsidiaries by reason of Section 162(m) or 280G of the Code.
(vi) Schedule 4.1(h) accurately sets forth (i)
the amount of all deferred intercompany gains for purposes of Treasury
Regulation section 1.1502-13 (including any
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predecessor regulation) with respect to the Company and its Subsidiaries; and
(ii) the amount of any excess loss account with respect to the stock of each of
the Subsidiaries for purposes of Treasury Regulation section 1.1502-19
(including any predecessor regulation).
(vii) "Code" shall mean the Internal Revenue Code
of 1986, as amended. "Taxes" shall mean all taxes, charges, fees, levies, or
other similar assessments or liabilities, including without limitation (a)
income, gross receipts, ad valorem, premium, excise, real property, personal
property, sales, use, transfer, withholding, employment, payroll, and franchise
taxes imposed by the United States of America, or by any state, local, or
foreign government, or any subdivision, agency, or other similar person of the
United States or any such government; and (b) any interest, fines, penalties,
assessments, or additions to taxes resulting from, attributable to, or incurred
in connection with any Tax or any contest, dispute, or refund thereof. "Tax
Returns" shall mean any report, return, or statement required to be supplied to
a taxing authority in connection with Taxes.
(i) Pension And Benefit Plans; ERISA.
(i) Schedule 4.1(i)(i) sets forth a complete and
correct list of:
(A) all "employee benefit plans", as
defined in Section 3(3) of ERISA, which the Company or any of its Subsidiaries
maintains or has any obligation or liability, contingent or otherwise ("Benefit
Plans"); and
(B) all employment or consulting
agreements, bonus or other incentive compensation, deferred compensation, salary
continuation during any absence from active employment for disability or other
reasons, severance, sick days, stock award, stock option, stock purchase,
tuition assistance, club membership, employee discount, employee loan, or
vacation pay agreements, policies or arrangements which the Company or any of
its Subsidiaries maintains or has any obligation or liability (contingent or
otherwise) with respect to any current or former officer, director or employee
of the Company or any of its Subsidiaries (the "Employee Arrangements").
(ii) With respect to each Benefit Plan and
Employee Arrangement, a complete and correct copy of each of the following
documents (if applicable) has been provided to Parent: (A) the most recent plan
and related trust documents, and all amendments thereto; (B) the most recent
summary plan description, and all related summaries of material modifications
thereto; (C) the most recent Form 5500 (including schedules and attachments);
(D) the most recent Internal Revenue Service determination letter; (E) the most
recent actuarial reports (including for purposes of Financial Accounting
Standards Board report no. 87, 106 and 112) and (F) each written employment,
consulting or individual severance or other compensation agreement, and all
amendments thereto.
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(iii) The Company and its Subsidiaries have not
during the preceding six years had any obligation or liability (contingent or
otherwise) with respect to a Benefit Plan which is described in Section 3(37),
4(b)(4), 4063 or 4064 of ERISA. The Company and its Subsidiaries have not
incurred nor reasonably expect to incur any liability under Title IV of ERISA
arising in connection with the termination of any plan covered or previously
covered by Title IV of ERISA.
(iv) The Benefit Plans and their related trusts
intended to qualify under Sections 401 and 501(a) of the Code, respectively, so
qualify. Any voluntary employee benefit association which provides benefits to
current or former employees of the Company and its Subsidiaries, or their
beneficiaries, is and has been qualified under Section 501(c)(9) of the Code.
(v) All contributions or other payments required
to have been made by the Company and its Subsidiaries to or under any Benefit
Plan or Employee Arrangement by applicable law or the terms of such Benefit Plan
or Employee Arrangement (or any agreement relating thereto) have been timely and
properly made. There has been no amendment to, written interpretation of or
announcement (whether or not written) by the Company or any of its Subsidiaries
relating to, or change in employee participation or coverage under, any Benefit
Plan or Employee Arrangement that would increase materially the expense of
maintaining such Benefit Plan or Employee Arrangement above the level of the
expense incurred in respect thereof for the fiscal year ended prior to the date
hereof.
(vi) The Benefit Plans and Employee Arrangements
have been maintained and administered in all material respects in accordance
with their terms and applicable laws.
(vii) There are no pending or, to the knowledge of
the Company and its Subsidiaries, threatened actions, claims or proceedings
against or relating to any Benefit Plan or Employee Arrangement other than
routine benefit claims by persons entitled to benefits thereunder.
(viii) The Company and its Subsidiaries do not
maintain or have an obligation to contribute to retiree life or retiree health
plans which provide for continuing benefits or coverage for current or former
officers, directors or employees of the Company or any of its Subsidiaries
except (A) as may be required under Part 6 of Title I of ERISA) and at the sole
expense of the participant or the participant's beneficiary or (B) a medical
expense reimbursement account plan pursuant to Section 125 of the Code. No tax
under Section 4980B or Section 4980D of the Code has been incurred in respect of
any Benefit Plan that is a group health plan, as defined in Section 5000(b)(1)
of the Code.
(ix) None of the assets of any Benefit Plan is
stock of the Company or any of its affiliates, or property leased to or jointly
owned by the Company or any of its affiliates.
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(x) Except as disclosed in Schedule 4.1(i)(x),
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (A) result in any payment becoming due to
any employee (current, former or retired) of the Company and its Subsidiaries,
(B) increase any benefits under any Benefit Plan or Employee Arrangement or (C)
result in the acceleration of the time of payment of, vesting of or other rights
with respect to any such benefits.
(xi) The Company and its Subsidiaries have no
liability (contingent or otherwise) under Section 4069 of ERISA by reason of a
transfer of an underfunded pension plan.
(j) Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed after November 1, 1997 or on
Schedule 4.1(j) hereto, since November 1, 1997 the business of the Company and
its Subsidiaries has been carried on only in the ordinary and usual course and
as of the date of this Agreement there has not been any material adverse change
(either individually or in the aggregate) in the business, operations, assets or
condition (financial or otherwise) of the Company.
(k) No Undisclosed Material Liabilities. To the Company's
knowledge, except as specifically and individually set forth on Schedule 4.1(k)
or the other schedules hereto (specific reference to which has been made on
Schedule 4.1(k)), there are no liabilities of the Company or any Subsidiary of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, that are material to the Company and its Subsidiaries
considered as a whole other than: (i) liabilities reflected on the Condensed
Consolidated Balance Sheets contained in the Quarterly Report on Form 10-Q for
the quarter ended November 1, 1997 (the "November 1 Balance Sheet"); and (ii)
liabilities under this Agreement.
(l) Vote Required. In the event that Section 253 of the
DGCL is inapplicable and unavailable to effectuate the Merger, the affirmative
vote of the holders of a majority of the outstanding shares of Company Common
Stock is the only vote of the holders of any class or series of the Company's
capital stock necessary (under Delaware law and the Company's Restated
Certificate of Incorporation or Bylaws) to approve the Merger and this Agreement
and the transactions contemplated hereby.
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(m) Labor Matters.
(i) Neither the Company nor any of its
Subsidiaries is a party to any labor or collective bargaining agreement, and no
employees of the Company or any of its Subsidiaries are represented by any labor
organization. Within the preceding three years, there have been no
representation or certification proceedings, or petitions seeking a
representation proceeding, pending or, to the knowledge of the Company,
threatened in writing to be brought or filed with the National Labor Relations
Board or any other labor relations tribunal or authority. Within the preceding
three years, to the knowledge of the Company, there have been no organizing
activities involving the Company and its Subsidiaries with respect to any group
of employees of the Company or any of its Subsidiaries.
(ii) There are no strikes, work stoppages,
slowdowns, lockouts, material arbitrations or material grievances or other
material labor disputes pending or threatened in writing against or involving
the Company or any of its Subsidiaries. There are no unfair labor practice
charges, grievances or complaints pending or, to the knowledge of the Company,
threatened in writing by or on behalf of any employee or group of employees of
the Company or any of its Subsidiaries.
(iii) Except as set forth on Schedule 4.1(m)(iii),
there are no material complaints, charges or claims against the Company or any
of its Subsidiaries pending or, to the knowledge of the Company, threatened to
be brought or filed with any governmental authority, arbitrator or court based
on, arising out of, in connection with, or otherwise relating to the employment
or termination of employment of any individual by the Company or any of its
Subsidiaries.
(iv) Each of the Company and its Subsidiaries is
in material compliance with all laws, regulations and orders relating to the
employment of labor, including all such laws, regulations and orders relating to
wages, hours, WARN (as defined below), collective bargaining, discrimination,
civil rights, safety and health, workers' compensation and the collection and
payment of withholding and/or social security taxes and any similar tax.
(v) There has been no "mass layoff" or "plant
closing" as defined by the Worker Adjustment Retraining and Notification Act, as
amended ("WARN"), with respect to the Company and its Subsidiaries within the
six (6) months prior to Closing.
(n) Intangible Property.
(i) Schedule 4.1(n) sets forth a list of each
material trademark, trade name, patent, service mark, brand mark, brand name,
computer program (other than standard off-the-shelf programs), database
purchased, licensed or acquired from third parties and copyright owned or used
in connection with the operation of the businesses of each of the Company and
its Subsidiaries as well as a list of all registrations thereof and pending
applications therefor, and each
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license or other contract relating thereto (collectively, the "Company
Intangible Property"). Except as set forth on Schedule 4.1(n), all of the
Company Intangible Property is in good standing and is owned by the Company or
its Subsidiaries free and clear of any and all liens, claims or encumbrances.
Except as set forth on Schedule 4.1(n), to the knowledge of the Company, the use
of the Company Intangible Property by the Company or its Subsidiaries does not,
in any material respect, conflict with, infringe upon, violate or interfere with
or constitute an appropriation of any right, title, interest or goodwill,
including, without limitation, any intellectual property right, trademark, trade
name, patent, service mark, brand mark, brand name, computer program, database,
industrial design, maskworks, copyright or any pending application therefor of
any other person and there have been no claims made and neither the Company nor
any of its Subsidiaries has received any notice of any claim or otherwise knows
that any of the Company Intangible Property is invalid or conflicts with the
asserted rights of any other person or has not been used or enforced or has
failed to be used or enforced in a manner that would result in the abandonment,
cancellation or unenforceability of any of the Company Intangible Property.
(ii) Each of the Company and its Subsidiaries
owns or has a right to use all material Company Intangible Property necessary
for the operation of its respective business and has not forfeited or otherwise
relinquished any material Company Intangible Property.
(iii) Each of the material licenses or other
contracts relating to the Company Intangible Property (collectively, the
"Company Intangible Property Licenses") is in full force and effect and is valid
and enforceable in accordance with its terms, and there is no material default
under any Company Intangible Property License either by the Company or any of
its Subsidiaries or, to the knowledge of the Company, by any other party
thereto.
(o) Environmental Matters.
(i) For purposes of this Agreement:
(A) "Environmental Costs and
Liabilities" means any and all losses, liabilities, obligations, damages, fines,
penalties, judgments, actions, claims, costs and expenses (including, without
limitation, fees, disbursements and expenses of legal counsel, experts,
engineers and consultants, the costs of investigation and feasibility studies
and costs to clean up, remove, treat, or in any other way address any Hazardous
Materials) arising from or under any Environmental Law.
(B) "Environmental Law" means any
applicable law relating to the use of natural resources, or regulating or
prohibiting Releases into any part of the natural environment, or pertaining to
the protection of natural resources, the environment and public and employee
health and safety including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA") (42 U.S.C. Section 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the
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Clean Air Act (33 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. Section 7401 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136 et seq.), and the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.) ("OSHA"), as well as the regulations
promulgated pursuant to any of the foregoing, and any such applicable state or
local laws, as such laws have been and may be amended or supplemented through
the Closing Date;
(C) "Hazardous Material" means any
substance, material or waste which is regulated by any public or governmental
authority in the jurisdictions in which the applicable party or its Subsidiaries
conducts business, or the United States, including, without limitation, any
material or substance which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste," "pollutant," "contaminant," "toxic waste" or "toxic substance"
under any provision of Environmental Law and shall also include, without
limitation, petroleum, petroleum products, asbestos, polychlorinated biphenyls
and radioactive materials;
(D) "Release" means any release, spill,
effluent, emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching, or migration into the indoor or outdoor environment, or
into or out of any property; and
(E) "Remedial Action" means all actions,
including, without limitation, any capital expenditures, required by a
governmental entity or required under any Environmental Law, or voluntarily
undertaken to (I) clean up, remove, treat, or in any other way ameliorate or
address any Hazardous Materials or other substance in the indoor or outdoor
environment; (II) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not endanger or threaten to
endanger the public health or welfare or the indoor or outdoor environment;
(III) perform pre-remedial studies and investigations or post-remedial
monitoring and care pertaining or relating to a Release; or (IV) bring the
applicable party into compliance with any Environmental Law.
Except as set forth in the SEC Documents or in Schedule 4.1(o):
(ii) The operations of the Company and its
Subsidiaries have been and, as of the Closing Date, will be, in compliance in
all material respects with all Environmental Laws;
(iii) The Company and its Subsidiaries have
obtained and will, as of the Closing Date, maintain all permits required under
applicable Environmental Laws for the continued operations of their respective
businesses, except such permits the lack of which would not materially impair
the ability of the Company and its Subsidiaries to continue operations;
(iv) The Company and its Subsidiaries are not
subject to any outstanding written orders or material contracts with any
Governmental Entity or other person respecting (A) Environmental Laws, (B)
Remedial Action or (C) any Release or threatened Release of a Hazardous
Material;
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(v) The Company and its Subsidiaries have not
received any written communication alleging, with respect to any such party, the
material violation of or material liability under any Environmental Law, which
violation or liability is outstanding;
(vi) Neither the Company nor any of its
Subsidiaries has any contingent liability in connection with the Release of any
Hazardous Material into the indoor or outdoor environment (whether on-site or
off-site) which would be reasonably likely to result in the Company and its
Subsidiaries incurring Environmental Costs and Liabilities in excess of
$500,000;
(vii) There is not now, nor to the knowledge of
the Company has there been in the past, on or in any property of the Company or
its Subsidiaries any of the following: (A) any underground storage tanks or
surface impoundments, (B) any asbestos-containing materials, or (C) any
polychlorinated biphenyls;
(viii) No judicial or administrative proceedings
are pending or, to the knowledge of the Company, threatened against the Company
and its Subsidiaries alleging the violation of or seeking to impose liability
pursuant to any Environmental Law and there are no investigations pending in
respect of which the Company has received notice or has knowledge and, to the
knowledge of the Company, there are no investigations threatened against the
Company or any of its Subsidiaries under Environmental Laws;
(ix) None of the exceptions set forth on Schedule
4.1(o) are reasonably likely to result in the Company and its Subsidiaries
incurring Environmental Costs and Liabilities in excess of $500,000 individually
or $1,000,000 in the aggregate; and
(x) The Company and its Subsidiaries have
provided Parent with copies of all environmentally related audits, assessments,
studies, reports, analyses, and results of investigations prepared within the
past five years by any third party or any similar material internally generated
report prepared within the past five years concerning any real property
currently or formerly owned, operated or leased by the Company or its
Subsidiaries.
(p) Real Property.
(i) Schedule 4.1(p)(i) sets forth all real
property owned by the Company ("Real Property"). The Subsidiaries own no real
property. All improvements located on the Real Property are owned by the
Company. The Company has heretofore delivered to Parent, true, correct and
complete copies of (i) all Real Property deeds, or other evidences of ownership
(including all modifications, amendments and supplements hereto) and (ii) all
title insurance policies in effect with respect to the Real Property. Except as
set forth on Schedule 4.1(p)(i), the Company has good and clear, record and
marketable fee simple title to the Real Property free and clear of all
mortgages, pledges, liens, easements, covenants, restrictions, claims, leases,
encumbrances and security interests. There are no condemnation, environmental,
zoning or land use regulation proceedings, either instituted or, to the best of
the Company's knowledge, planned to
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<PAGE> 32
be instituted, which would adversely affect the use or operation of the
Company's Real Property and the improvements thereto for their respective
intended uses and purposes, or the value of such properties, and the Company has
not received notice of any special assessment proceedings which would affect
such properties and assets.
(ii) Schedule 4.1(p)(ii) sets forth all leases,
subleases and other agreements (the "Real Property Leases") under which the
Company or any of its Subsidiaries uses or occupies or has the right to use or
occupy, now or in the future, any real property. The Company has heretofore
delivered to Parent true, correct and complete copies of all Real Property
Leases (including all modifications, amendments and supplements hereto). Each
Real Property Lease is valid, binding and in full force and effect, all rent and
other sums and charges payable by the Company and its Subsidiaries as tenants
thereunder are current, no termination event or condition or uncured default of
a material nature on the part of the Company or any such Subsidiary or, to the
Company's knowledge, the landlord, exists under any Real Property Lease, and,
except as set forth on Schedule 4.1(p)(ii), no event has occurred and is
continuing which, with due notice or lapse of time or both, would constitute a
default or event of default by the Company or any of its Subsidiaries or, to the
best of the Company's knowledge, by any other party thereto. Each of the Company
and its Subsidiaries has a good and valid leasehold interest in each parcel of
real property leased by it free and clear of all mortgages, pledges, liens,
easements, covenants, restrictions, claims, encumbrances and security interests,
except (i) those reflected or reserved against in the November 1 Balance Sheet;
(ii) taxes and general and special assessments not yet due and payable without
penalty and interest; (iii) superior rights of lessors' lenders as permitted by
such leases; and (iv) as set forth on Schedule 4.1(p)(ii). No other party holds
an option to purchase or lease any portion of the Real Property, and none of the
Real Property Leases may be terminated by any party except as provided in
accordance with their terms.
(q) Insurance. Set forth on Schedule 4.1(q) is a list and
description of insurance policies (including information on the premiums payable
in connection therewith and the scope and amount of the coverage and deductibles
provided thereunder) maintained by the Company or any of its Subsidiaries, which
policies have been issued by reputable and financially sound insurers and
provide adequate coverage for the operations conducted by the Company and its
Subsidiaries in accordance with customary industry practice.
(r) Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has by the vote of those directors
present (who constituted 100% of the directors then in office and of which a
majority of those voting were and are Continuing Directors (as defined in and
for purposes of Section 11(b) of the Company's Restated Certificated of
Incorporation) (i) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and the execution and
delivery of the Stockholders Agreement and the transactions contemplated
thereby, taken together, are fair to and in the best interests of the
stockholders of the Company and has approved the same, and (ii) resolved to
recommend that the holders of the shares of Company Common Stock approve this
Agreement and the transactions
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contemplated herein, including the Merger, and accept the Offer and tender their
shares of Company Common Stock pursuant thereto.
(s) Material Contracts. Each contract, agreement or other
document or instrument (collectively "SEC Contracts") to which the Company or
any of its Subsidiaries is a party that was required to be filed as an exhibit
to the Company's annual report on Form 10-K for the year ended July 31, 1997 was
so filed and, neither the Company nor any of its Subsidiaries (A) has entered
into, from and after July 31, 1997, any contract, agreement or other document or
instrument (other than this Agreement) that is required to be filed with the SEC
that has not been so filed on or before the date of this Agreement or any
amendment, modification or waiver under any contract, agreement or other
document or instrument that was previously so filed, which amendment,
modification or waiver is required to be so filed (collectively "Additional SEC
Contracts") or (B) except as listed on Schedule 4.1(s), is a party to any oral
or written agreement, plan or arrangement with any officer, director or employee
of the Company or of any Subsidiary of the Company (collectively "Material
Employment Contracts" and together with the SEC Contracts and Additional SEC
Contracts, the "Material Contracts") (1) the benefits of which are contingent,
or the terms of which are materially altered, upon the occurrence of a
transaction involving the Company of the nature of any of the transactions
contemplated by this Agreement, (2) providing severance benefits or other
benefits after the termination of employment regardless of the reason for such
termination of employment, (3) under which any person may receive payments
subject to the tax imposed by Section 4999 of the Code, or (4) any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement. Except as set
forth on Schedule 4.1(s), each Material Contract is a valid and binding
obligation of the Company and, to the Company's knowledge, each other party
thereto and is in full force and effect without amendment. Except as set forth
on Schedule 4.1(s), the Company and, to the Company's knowledge, each other
party thereto has performed all obligations required to be performed by it
through the date hereof under the Material Contracts and is not (with or without
lapse of time or giving notice, or both) in breach or default in any respect
thereunder.
(t) Related Party Transactions. Except as set forth on
Schedule 4.1(t) hereto, no director, officer, partner, employee, "affiliate" or
"associate" (as such terms are defined in Rule 12b-2 under the Exchange Act) of
the Company or any of its Subsidiaries (i) has outstanding any indebtedness or
other similar obligations to the Company or any of its Subsidiaries; (ii) to the
knowledge of the Company, owns any direct or indirect interest of any kind in,
or is a director, officer, employee, partner, affiliate or associate of, or
consultant or lender to, or borrower from, or has the right to participate in
the management, operations or profits of, any person or entity which is (1) a
competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor
of the Company or any of its Subsidiaries, (2) engaged in a business related to
the business of the Company or any of its Subsidiaries or (3) participating in
any transaction to which the Company or any of its Subsidiaries is a party or
(iii) is otherwise a party to any contract, arrangement or understanding with
the Company or any of its Subsidiaries.
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<PAGE> 34
(u) Indebtedness. Except as set forth on Schedule 4.1(u),
or reflected in the SEC Documents or the Company's financial statements provided
to Parent, neither the Company nor any of its Subsidiaries has any outstanding
indebtedness for borrowed money or representing the deferred purchase price of
property or services or similar liabilities or obligations, including any
guarantee in respect thereof ("Indebtedness"), or is a party to any agreement,
arrangement or understanding providing for the creation, incurrence or
assumption thereof.
(v) Liens. Except as set forth on Schedule 4.1(v) or
reflected in the SEC Documents or in the Company's financial statements provided
to Parent, neither the Company nor any of its Subsidiaries has granted, created
or suffered to exist with respect to any of its assets, any mortgage, pledge,
charge, hypothecation, collateral assignment, lien (statutory or otherwise),
encumbrance or security agreement of any kind or nature whatsoever.
(w) Opinion of Financial Advisor. The Company has received
the opinion (the "Fairness Opinion") of Edwards to the effect that, as of the
date hereof, the Offer Consideration to be received by the holders of Company
Common Stock in the Offer and the Merger Consideration to be received by the
holders of Company Common Stock in the Merger is fair from a financial point of
view to such holders, a signed, true and complete copy of which opinion has been
delivered to Parent.
4.2 Representations, Warranties, and Covenants of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its state of incorporation or organization, has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing to
conduct business in each jurisdiction in which the business it is conducting, or
the operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure so to qualify
would not have a Material Adverse Effect with respect to Parent. Parent and Sub
have heretofore made available to the Company complete and correct copies of
their respective Articles of Organization, Certificate of Incorporation and
Bylaws.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Sub. This
Agreement has been duly executed and delivered by each of Parent and Sub and
assuming this Agreement constitutes the valid and binding agreement of the
Company, constitutes a valid and binding obligation of Parent and Sub
enforceable in accordance with its
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<PAGE> 35
terms except that the enforcement hereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (b) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
(ii) The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by each of Parent
and Sub will not result in any Violation (as defined in Section 4.1(c)(iii))
pursuant to any provision of the respective Articles of Organization or
Certificate of Incorporation or Bylaws of Parent or Sub or, except as to which
requisite waivers or consents have been obtained and assuming the consents,
approvals, authorizations or permits and filings or notifications referred to in
paragraph (iii) of this Section 4.2(b) are duly and timely obtained or made and,
if required, the Company Stockholder Approval has been obtained, result in any
Violation of any loan or credit agreement, note, mortgage, indenture, lease, or
other agreement, obligation, instrument, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Parent or Sub or their respective properties or assets, which would have a
Material Adverse Effect on Parent.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, notice to, or permit from any
Governmental Entity, is required by or with respect to Parent or Sub in
connection with the execution and delivery of this Agreement by each of Parent
and Sub or the consummation by each of Parent or Sub of the transactions
contemplated hereby, except for: (A) filings under the HSR Act; (B) the filing
with the SEC of (x) the Schedule 14D-1 in connection with the commencement and
consummation of the Offer and (y) such reports under and such other compliance
with the Exchange Act and the rules and regulations thereunder, as may be
required in connection with this Agreement and the transactions contemplated
hereby; (C) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware; and (D) such filings and approvals as may be required
by any applicable state securities, "blue sky" or takeover laws.
(c) Information Supplied. None of the information supplied
or to be supplied by Parent or Sub for inclusion or incorporation by reference
in (i) the Schedule 14D-9 will, at the time the Schedule 14D-9 is filed with the
SEC, and at any time it is amended or supplemented, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the Proxy
Statement will, at the date it is first mailed to the Company's stockholders or
at the time of the Company Stockholder Approval, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event with respect to Parent or Sub, or with respect to
information supplied by Parent or Sub for inclusion in the Schedule 14D-9 or the
Proxy Statement, shall occur which is required to be described in an amendment
of, or a supplement to, such documents, such event shall be so described to the
Company.
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(d) Board Recommendation. The Boards of Directors of the
Parent and Sub at meetings duly called and held, have by the unanimous vote of
their directors determined that each of the Offer and the Merger is fair to and
in the best interests of Parent and Sub and have approved the same.
(e) Financing. Parent has sufficient available credit
under existing bank facilities, and will cause Sub to have sufficient financial
resources, to consummate the Offer and the Merger and the respective
transactions contemplated thereby.
(f) Interim Operations of Sub. Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby. Sub is a wholly-owned
subsidiary of Parent.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company. During the period from the date of
this Agreement and continuing until the Effective Time, the Company agrees as to
the Company and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement, or to the extent that Parent shall otherwise
consent in writing):
(a) Ordinary Course. Each of the Company and its
Subsidiaries shall carry on its businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and shall use
all reasonable efforts to preserve intact its present business organizations,
keep available the services of its current officers and employees and preserve
its relationships with customers, suppliers and others having business dealings
with it to the end that its goodwill and ongoing business shall not be impaired
in any material respect at the Effective Time.
(b) Dividends; Changes in Stock. The Company shall not,
nor shall it permit any of its Subsidiaries to: (i) declare or pay any dividends
on or make other distributions in respect of any of its capital stock; (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) repurchase or otherwise
acquire, or permit any Subsidiary to purchase or otherwise acquire, any shares
of its capital stock, except as required by the terms of its securities
outstanding on the date hereof, as contemplated by this Agreement or as
contemplated by employee benefit and dividend reinvestment plans as in effect on
the date hereof.
(c) Issuance of Securities. The Company shall not, nor
shall it permit any of its Subsidiaries to, (i) grant any options, warrants or
rights, to purchase shares of Company Common
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Stock, (ii) amend or reprice any Option, any Stock Option Plan or the Stock
Purchase Plan, or (iii) issue, deliver or sell, or authorize or propose to
issue, deliver or sell, any shares of its capital stock of any class or series,
any Company Voting Debt or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, Company Voting Debt or
convertible securities, other than: (A) the issuance of Shares upon the exercise
of Options granted under Stock Option Plans which are outstanding on the date
hereof, or in satisfaction of stock grants or stock based awards made prior to
the date hereof pursuant to Stock Option Plans required by any individual
agreements such as employment agreements or executive termination agreements (in
each such case, as in effect on the date hereof); and (B) issuances by a
wholly-owned Subsidiary of its capital stock to its parent.
(d) Governing Documents. The Company shall not amend or
propose to amend its Certificate of Incorporation or Bylaws.
(e) No Solicitation. From and after the date hereof until
the termination of this Agreement, neither the Company nor any of its
Subsidiaries, nor any of their respective officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
Subsidiaries) (such officers, directors, employees, representatives, agents,
affiliates, investment bankers, attorneys and accountants being referred to
herein, collectively, as "Representatives"), will, directly or indirectly,
initiate, solicit or encourage (including by way of furnishing information or
assistance to any person making, or as a result thereof may reasonably be
expected to lead to, any Acquisition Proposal (as defined below)), or take any
other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal,
or enter into or maintain or continue discussions or negotiate with any person
or entity in furtherance of such inquiries or to obtain an Acquisition Proposal
or agree to or endorse any Acquisition Proposal, and neither the Company nor any
of its Subsidiaries will authorize or permit any of its Representatives to take
any such action, and the Company shall as soon as possible notify Parent orally
and in writing of all of the relevant details relating to, and all material
aspects of, all inquiries and proposals which it or any of its Subsidiaries or
any of their respective Representatives may receive relating to any of such
matters and, if such inquiry or proposal is in writing, the Company shall as
soon as possible deliver to Parent a copy of such inquiry or proposal; provided,
however, that nothing contained in this Section 5.1(e) shall prohibit the Board
of Directors of the Company from:
(i) furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an unsolicited
written, bona fide Acquisition Proposal and, in respect of which, in the case of
an Acquisition Proposal involving the payment of cash, such person or entity
has, in the reasonable and good faith opinion of the Board of Directors or its
Representatives, the necessary funds or written commitments therefor if, and
only to the extent that, (A) the Board of Directors of the Company determines in
good faith (after consultation with and based upon the advice of its financial
advisor) that such Acquisition Proposal may reasonably be expected, if
consummated, to result in a transaction more favorable to the
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Company's stockholders from a financial point of view than the transaction
contemplated by this Agreement and the Board of Directors determines in good
faith, after consultation with and based upon the advice of independent legal
counsel (who may be the Company's regularly engaged independent legal counsel),
that such action is necessary for the Board of Directors of the Company to
comply with its fiduciary duties to stockholders under applicable law, (B) prior
to taking such action, the Company (x) provides reasonable notice to Parent to
the effect that it is taking any such action, describes to Parent in reasonable
detail the identity of the offeror and the terms and conditions of such
Acquisition Proposal, and furnishes Parent a copy of any written material
submitted by the offeror and (y) receives from such person or entity an executed
confidentiality agreement in customary form, and (C) the Company shall as
promptly and continuously as possible advise Parent as to all of the relevant
details relating to, and all material aspects, of any such discussions or
negotiations, or
(ii) failing to make or withdrawing or modifying
its recommendation referred to in Section 1.3 if there exists an Acquisition
Proposal and the Board of Directors of the Company, after consultation with and
based upon the advice of independent legal counsel (who may be the Company's
regularly engaged independent legal counsel), determines in good faith that such
action is necessary for the Board of Directors of the Company to comply with its
fiduciary duties to stockholders under applicable law.
For purposes of this Agreement, "Acquisition Proposal" shall mean any
proposal to do any of the following (other than the transactions between the
Company, Parent and Sub contemplated hereunder) involving the Company or any of
its Subsidiaries: (i) any merger, consolidation, share exchange,
recapitalization, business combination, or other similar transaction; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 25% or
more of the assets of the Company and its Subsidiaries, taken as a whole, in a
single transaction or series of transactions; (iii) any tender offer or exchange
offer for 25% or more of the outstanding shares of capital stock of the Company
or the filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
(f) No Acquisitions. The Company shall not, nor shall it
permit any of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof.
(g) No Dispositions. Other than dispositions in the
ordinary course of business consistent with past practice which are not
material, individually or in the aggregate, to such party and its Subsidiaries
taken as a whole, the Company shall not, nor shall it permit any of its
Subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to
sell, lease (whether such lease is an operating or capital lease), encumber or
otherwise dispose of, any of its assets.
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(h) SEC Filings. The Company shall promptly provide Parent
(or its counsel) with copies of all filings made by the Company with the SEC or
any other state or federal Governmental Entity in connection with this Agreement
and the transactions contemplated hereby.
(i) No Dissolution, Etc. Except as otherwise permitted or
contemplated by this Agreement, the Company shall not, nor shall it permit any
of its Subsidiaries to, authorize, recommend, propose or announce an intention
to adopt a plan of complete or partial liquidation or dissolution of the Company
or any of its Subsidiaries.
(j) Other Actions. Except as contemplated by this
Agreement, the Company will not nor will it permit any of its Subsidiaries to
take or agree or commit to take any action that is reasonably likely to result
in any of the Company's representations or warranties hereunder being untrue in
any material respect or in any of the Company's covenants hereunder or any of
the conditions to the Merger not being satisfied in all material respects.
(k) Certain Employee Matters. The Company and its
Subsidiaries shall not (without the prior written consent of Parent): (i) grant
any increases in the compensation of any of its directors, officers or key
employees; (ii) pay or agree to pay any pension, retirement allowance or other
employee benefit not required or contemplated by any of the existing Benefit
Plans or Employee Arrangements as in effect on the date hereof to any such
director, officer or key employee, whether past or present; (iii) enter into any
new, or materially amend any existing, employment or severance or termination
agreement with any such director, officer or key employee; or (iv) except as may
be required to comply with applicable law, become obligated under any new
Benefit Plan or Employee Arrangement, which was not in existence on the date
hereof, or amend any such plan or arrangement in existence on the date hereof if
such amendment would have the effect of materially enhancing any benefits
thereunder.
(l) Indebtedness; Agreements. (i) Except as set forth on
Schedule 5.1(l)(i), the Company shall not, nor shall the Company permit any of
its Subsidiaries to, assume or incur (which shall be deemed to include both
entering into credit agreements, lines of credit or similar arrangements and any
borrowings under existing credit agreements, lines of credit or similar
arrangements) any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of such party or any of its Subsidiaries or
guarantee any debt securities of others or enter into any lease (whether such
lease is an operating or capital lease) or create any mortgages, liens, security
interests or other encumbrances on the property of the Company or any of its
Subsidiaries in connection with any indebtedness thereof, or enter into any
"keep well" or other agreement or arrangement to maintain the financial
condition of another person.
(ii) The Company shall not, nor shall the Company
permit any of its Subsidiaries to, enter into, modify, rescind, terminate,
waive, release or otherwise amend in any material respect any of the terms or
provisions of any Material Contract.
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(m) Accounting. The Company shall not take any action,
other than in the ordinary course of business, consistent with past practice or
as required by the SEC or by law, with respect to accounting policies,
procedures and practices.
(n) Capital Expenditures. Except for the capital
expenditures set forth on Schedule 5.1(n), the Company and its Subsidiaries
shall not incur any capital expenditures that, in the aggregate, are in excess
of $1,000,000.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of the Proxy Statement; Company Stockholders
Meeting; Merger without a Company Stockholders Meeting.
(a) As soon as practicable following the acceptance for
payment of and payment for shares of Company Common Stock by Sub in the Offer,
the Company and Parent shall prepare and file with the SEC the Proxy Statement.
The Company shall use its best efforts to respond to all SEC comments with
respect to the Proxy Statement and to cause the Proxy Statement to be mailed to
the Company's stockholders at the earliest practicable date. The Company, Parent
and Sub, shall take all reasonable actions necessary or advisable to cause the
Merger to be approved by shareholders and to effect the Merger.
(b) The Company will, as soon as practicable following the
Proxy Trigger Date, duly call, give notice of, convene and hold the Company
Stockholders Meeting for the purpose of approving this Agreement and the
transactions contemplated hereby. At the Company Stockholders Meeting, Parent
shall cause all of the shares of Company Common Stock then owned by Parent and
Sub and any of their Subsidiaries or affiliates to be voted in favor of the
Merger.
(c) Notwithstanding the foregoing clauses (a) and (b), in
the event that Parent or any other Subsidiary of Parent shall acquire at least
90% of the outstanding shares of Company Common Stock in the Offer, the parties
hereto agree, at the request of Sub, to take all necessary and appropriate
action to cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
(d) Parent shall (i) cause Sub promptly to submit this
Agreement and the transactions contemplated hereby for approval and adoption by
its parent by written consent of sole stockholder; (ii) cause the shares of
capital stock of Sub to be voted for adoption and approval of this Agreement and
the transactions contemplated hereby; and (iii) cause to be taken all additional
actions necessary for Sub to adopt and approve this Agreement and the
transactions contemplated hereby.
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6.2 Access to Information. Upon reasonable notice, the Company
shall (and shall cause each of its Subsidiaries to) afford to the officers,
employees, accountants, counsel and other Representatives of Parent (including
potential financing sources and their employees, accountants, counsel and other
representatives), continuing access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to Parent, (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to SEC requirements and (b) all other
information concerning its business, properties and personnel as Parent may
reasonably request. The Confidentiality Agreement between Parent and the Company
(the "Confidentiality Agreement") shall apply with respect to information
furnished thereunder or hereunder and any other activities contemplated thereby.
6.3 Legal Conditions to Merger. Each of the Company, Parent and
Sub will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on such party with respect to the Offer, the
Merger and the transactions contemplated by the Stockholders Agreement
(including furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them or any of their Subsidiaries
in connection with the Offer, the Merger and the transactions contemplated by
the Stockholders Agreement; provided, however, that Parent need not so comply if
required by the Department of Justice or any other Governmental Entity to hold
separate, sell or otherwise dispose of any Subsidiary of Parent or the Company
or assets or properties of any of the foregoing. Each of the Company, Parent and
Sub will, and will cause its Subsidiaries to, take all reasonable actions
necessary to obtain (and will cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party, required to be
obtained or made by the Company, Parent or any of their Subsidiaries in
connection with the Offer, the Merger, the Stockholders Agreement or the taking
of any action contemplated hereby or thereby.
6.4 Fees and Expenses.
(a) Except as otherwise provided in this Section 6.4 and
except with respect to claims for damages incurred as a result of the breach of
this Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense.
(b) The Company agrees to pay, by delivery of a certified
or cashier's check, or, if requested by Parent, by wire transfer to an account
designated by Parent, Parent a fee in immediately available funds equal to
$6,000,000 (the "Termination Fee") prior to the termination of this Agreement
under Section 8.1(g), if any of the events set forth below occurs (each, a
"Trigger Event"):
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(i) the Board of Directors of the Company shall
have withdrawn or adversely modified, or taken a public position materially
inconsistent with, its approval or recommendation of the Offer, the Merger, this
Agreement or the Stockholders Agreement; or
(ii) An Acquisition Proposal has been recommended
or accepted by the Company or the Company shall have entered into an agreement
(other than a confidentiality agreement as contemplated by Section 5.1(e)) with
respect to an Acquisition Proposal.
(c) Any amounts due under this Section 6.4 that are not
paid when due shall bear interest at the rate of 9% per annum from the date due
through and including the date paid.
6.5 Brokers or Finders.
(a) The Company represents, as to itself, its Subsidiaries
and its affiliates, that no agent, broker, investment banker, financial advisor
or other firm or person is or will be entitled to any broker's or finders fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except Edwards, whose fees and expenses will be
paid by the Company in accordance with the Company's agreements with such firm
(copies of which have been delivered by the Company to Parent prior to the date
of this Agreement).
(b) Parent represents, as to itself, its Subsidiaries and
its affiliates, that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any broker's or finders fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except BancAmerica Robertson Stephens, whose
fees and expenses will be paid by Parent in accordance with Parent's agreements
with such firm.
6.6 Indemnification; Directors' and Officers' Insurance.
(a) The Company shall, and from and after the Effective
Time, the Parent and Surviving Corporation shall, indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer, director,
employee or agent of the Company or any of its Subsidiaries (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees and expenses), liabilities or judgments or amounts
that are paid in settlement with the approval of the indemnifying party of or in
connection with any threatened or actual claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director, officer, employee or agent of
the Company or any of its Subsidiaries whether pertaining to any matter existing
or occurring at or prior to the Effective Time and whether asserted or claimed
prior to, or at or after, the Effective Time ("Indemnified Liabilities"),
including all Indemnified Liabilities based in whole or in part on, or arising
in whole or in part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent a corporation is permitted
under the DGCL to indemnify its own directors or officers as the case may be
(and Parent and the Surviving Corporation, as the case may be, will pay expenses
in
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advance of the final disposition of any such action or proceeding to each
Indemnified Party to the full extent permitted by law). Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Parties (whether arising before
or after the Effective Time), (i) the Indemnified Parties may retain counsel
satisfactory to them and the Company (or them and the Surviving Corporation
after the Effective Time) and the Company (or after the Effective Time, the
Surviving Corporation) shall pay all fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; and (ii) the
Company (or after the Effective Time, the Surviving Corporation) will use all
reasonable efforts to assist in the vigorous defense of any such matter,
provided that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its prior written consent. Any Indemnified
Party wishing to claim indemnification under this Section 6.6, upon learning of
any such claim, action, suit, proceeding or investigation, shall notify the
Company (or after the Effective Time, the Surviving Corporation) (but the
failure so to notify shall not relieve a party from any liability which it may
have under this Section 6.6 except to the extent such failure prejudices such
party), and shall to the extent required by the DGCL deliver to the Company (or
after the Effective Time, the Surviving Corporation) the undertaking
contemplated by Section 145(e) of the DGCL. The Indemnified Parties as a group
may retain only one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties. The Company, Parent and Sub agree that all rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action or suit, existing in favor of the Indemnified Parties with respect to
matters occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided, however, that all rights to indemnification in
respect of any Indemnified Liabilities asserted or made within such period shall
continue until the disposition of such Indemnified Liabilities.
(b) Prior to the Effective Time, the Company shall
purchase a policy of directors' and officers' liability insurance to be in
effect for not less than six years after the Effective Time, providing for
claims made type coverage substantially equivalent in scope and content to the
coverage provided in the Company's current policies of directors' and officers'
liability insurance, and the premiums therefor shall be prepaid in full with
respect to matters arising before the Effective Time; provided that the Company
shall not pay an annual premium for such insurance in excess of 150% of the last
annual premium therefor paid by the Company prior to the date hereof; and
provided further, that the Company shall consult with Parent prior to the
purchase of such insurance or the purchase or renewal of any directors' and
officers' liability insurance and offer Parent the opportunity to elect to
purchase such insurance on behalf of the Company.
(c) The provisions of this Section 6.6 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party, his
heirs and his personal representatives and shall be binding on all successors
and assigns of Sub, the Company and the Surviving Corporation.
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6.7 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Stockholders Agreement, subject, as applicable, to the Company
Stockholder Approval, including cooperating fully with the other party, and
including by provision of information and making of all necessary filings in
connection with, among other things, approvals under the HSR Act. In case at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals, immunities and
franchises of either of the Constituent Corporations, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
6.8 Conduct of Business of Sub. During the period of time from the date
of this Agreement to the Effective Time, Sub shall not engage in any activities
of any nature except as provided in or contemplated by this Agreement.
6.9 Publicity. The parties will consult with each other and will
mutually agree upon any press release or public announcement pertaining to the
Offer and the Merger and shall not issue any such press release or make any such
public announcement prior to such consultation and agreement, except as may be
required by applicable law or by obligations arising under the Company's listing
agreement with NASDAQ, in which case the party proposing to issue such press
release or make such public announcement shall use reasonable efforts to consult
in good faith with the other party before issuing any such press release or
making any such public announcement.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote of the holders of a
majority of the Shares entitled to vote thereon if such vote is required by
applicable law; provided that the Parent and Sub shall vote all Shares purchased
pursuant to the Offer or the Stockholders Agreement in favor of the Merger.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
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(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect; provided, however,
that prior to invoking this condition, each party shall use all commercially
reasonable efforts to have any such decree, ruling, injunction or order vacated.
7.2 Conditions of Obligations of Parent and Sub. The obligations of
Parent and Sub to effect the Merger are subject to the satisfaction of the
following conditions, any or all of which may be waived in whole or in part by
Parent and Sub:
(a) Payment for Shares. Sub shall have (i) accepted for
payment and become obligated to pay for a number of shares of Company Common
Stock tendered in the Offer such that, after such acceptance and payment, Parent
and its affiliates shall own the outstanding shares of the Company Common Stock
satisfying the 90% Tender Condition or (ii) elected under 1.1(c)(i) or (ii) to
do a Cash Merger or waived the 90% Tender Condition in favor of the Majority
Tender Condition.
(b) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement, and Parent shall have received a
certificate signed on behalf of the Company by the chief executive officer and
by the chief financial officer of the Company to such effect.
(c) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and Parent
shall have received a certificate signed on behalf of the Company by the chief
executive officer and by the chief financial officer of the Company to such
effect.
(d) Consents, etc. All licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and all
material licenses, permits, consents, approvals, authorizations, qualifications
and orders of other third parties as are necessary in connection with the
transactions contemplated hereby shall have been obtained.
(e) No Material Adverse Change. There shall not have occurred
any material adverse change in the business, operations, assets or condition
(financial or otherwise) of the Company.
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ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent:
(a) by mutual written consent of the Company and Parent, or
by mutual action of their respective Boards of Directors;
(b) by either the Company or Parent prior to the consummation
of the Offer (i) if there has been a material breach (for purpose of this
clause, a material breach by the Company shall mean a breach or series of
breaches the result of which impairs the value of the Company or could
reasonably be expected to impair the value of the Company by more than
$3,000,000 in the aggregate) of any representation, warranty, covenant or
agreement on the part of the other set forth in this Agreement which breach has
not been cured within 10 business days following receipt by the breaching party
of notice of such breach, or (ii) if any permanent injunction or other order of
a court or other competent authority preventing the consummation of the Merger
shall have become final and non-appealable;
(c) by either the Company or Parent if the Merger shall not
have been consummated on or before July 31, 1998; provided, that the right to
terminate this Agreement under this Section 8.1(c) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Merger to occur on or before such
date;
(d) by Parent in the event an Acquisition Proposal has been
made to the Company and the Company shall fail to reaffirm its approval or
recommendation of the Offer, the Merger, this Agreement and the Stockholders
Agreement on or before the fifth business day following the date on which such
Acquisition Proposal shall have been made;
(e) subject to the provisions of Section 1.1(c), by Parent or
Company, if the Offer terminates, is withdrawn, abandoned or expires by reason
of the failure to satisfy any condition set forth in Exhibit A hereto, except
solely by reason of the failure to satisfy the 90% Tender Condition when the
Majority Tender Condition is satisfied;
(f) except if Section 1.1(c) is applicable and Parent and Sub
shall have elected to terminate the Offer and pursue the Cash Merger, by the
Company, if the Offer shall have expired or have been withdrawn, abandoned or
terminated without any shares of Company Common Stock being purchased by Sub
thereunder on or prior to the 90th day after the date of commencement of the
Offer pursuant to section 1.2 hereof, or;
38
<PAGE> 47
(g) by Parent or the Company in the event that a Trigger Event
has occurred under Section 6.4(b), but the parties acknowledge that the Company
may not terminate this Agreement under this Section 8.1(g) until it has paid the
Termination Fee as contemplated by Section 6.4(b).
8.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
affiliates, officers, directors or shareholders except (i) with respect to this
Section 8.2, the second sentence of Section 6.2, and Section 6.4, and (ii) for
any breach by a party hereto of any of its representations or warranties, or of
any of its covenants or agreements as set forth in this Agreement except as
provided in Section 9.7.
8.3 Amendment. Subject to applicable law and Section 1.4(b) hereof,
this Agreement may be amended, modified or supplemented only by written
agreement of Parent, Sub and the Company at any time prior to the Effective Date
with respect to any of the terms contained herein; provided, however, that,
after this Agreement is approved by the Company's stockholders, no such
amendment or modification shall reduce the amount or change the form of
consideration to be delivered to the stockholders of the Company or the manner
in which it will be paid.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed and subject to Section 1.4(b)
hereof: (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto; (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto; and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such rights.
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Article III, and Section 6.6
hereof. The Confidentiality Agreement shall survive the execution and delivery
of this Agreement, and the provisions of the Confidentiality Agreement shall
apply to all information and material delivered by any party hereunder.
9.2 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered
39
<PAGE> 48
personally, telegraphed or telecopied or, if mailed, five business days after
the date of mailing to the following address or telecopy number, or to such
other address or addresses as such person may subsequently designate by notice
given hereunder:
(a) if to Parent or Sub, to:
Hadco Corporation
12A Manor Parkway
Salem, NH 03079
Attn: Timothy P. Losik
Telephone: (603) 898-8000
Telecopy: (603) 893-0025
with a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Stephen A. Hurwitz
George W. Lloyd
Telephone: (617) 248-7000
Telecopy: (617) 248-7100
(b) if to the Company, to:
Continental Circuits Corp.
3502 E. Roeser Road
Phoenix, AZ 85040
Attn: Chief Executive Officer
Telephone: (602) 268-3461
Telecopy: (602) 232-9157
40
<PAGE> 49
with copies to:
Quarles & Brady
One East Camelback
Suite 400
Phoenix, AZ 85012
Attention: P. Robert Moya
Telephone: (602) 230-5500
Telecopy: (602) 230-5598
9.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents, glossary of defined terms and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the word "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (together with the Confidentiality Agreement, the
Stockholders Agreement and any other documents and instruments referred to
herein) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and, except as provided in Section 6.6, is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
9.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
9.7 No Remedy in Certain Circumstances. Each party agrees that, should
any court or other competent authority hold any provision of this Agreement or
part hereof to be null, void or unenforceable, or order any party to take any
action inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any way be
affected or impaired thereby, unless the foregoing inconsistent action or the
failure to take an action constitutes a material breach of this Agreement or
makes the Agreement impossible to perform in which case this Agreement shall
terminate pursuant to Article VIII hereof. Except as otherwise
41
<PAGE> 50
contemplated by this Agreement, to the extent that a party hereto took an action
inconsistent herewith or failed to take action consistent herewith or required
hereby pursuant to an order or judgment of a court or other competent authority,
such party shall incur no liability or obligation unless such party did not in
good faith seek to resist or object to the imposition or entering of such order
or judgment.
9.8 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that Sub may assign, in its sole discretion, any or all of its
rights, interests and obligations hereunder to any newly-formed direct
wholly-owned Subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
9.9 Obligations of Sub. Parent shall cause Sub or any assignee of Sub
to, and Parent hereby unconditionally guarantees that Sub or any such assignee
shall, duly and timely perform each and every obligation of Sub or any such
assignee hereunder.
42
<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
HADCO CORPORATION
By: /s/ Andrew E. Lietz
-----------------------------------------
Name: Andrew E. Lietz
---------------------------------------
Title: Chief Executive Officer
--------------------------------------
HADCO ACQUISITION CORP. II
By: /s/ Andrew E. Lietz
-----------------------------------------
Name: Andrew E. Lietz
---------------------------------------
Title: Chief Executive Officer
--------------------------------------
CONTINENTAL CIRCUITS CORP.
By: /s/ Frederick G. McNamee, III
-----------------------------------------
Name: Frederick G. McNamee, III
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
43
<PAGE> 52
EXHIBIT A
The capitalized terms used in this Exhibit A shall have the respective
meanings given to such terms in the Agreement and Plan of Merger, dated as of
February 16, 1998, among Hadco Corporation, Hadco Acquisition Corp. II and
Continental Circuits Corp. (the "Merger Agreement") to which this Exhibit A is
attached.
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered Shares promptly after
expiration or termination of the Offer), to pay for any Shares tendered, and may
postpone the acceptance for payment or, subject to the restriction referred to
above, payment for any Shares tendered, and may amend (subject to Section 1.1(b)
of the Merger Agreement) or terminate the Offer (whether or not any Shares have
theretofore been purchased or paid for) if, (i) there has not been validly
tendered and not withdrawn prior to the time the Offer shall otherwise expire a
number of Shares which constitutes at least 90% of the Shares outstanding on a
fully-diluted basis on the date of purchase ("on a fully-diluted basis" having
the following meaning, as of any date: the number of Shares outstanding,
together with Shares the Company may be then required to issue pursuant to
obligations outstanding at that date under stock option, stock purchase or other
benefit plans or otherwise); (ii) all material regulatory and related approvals
have not been obtained or made on terms reasonably satisfactory to Sub; (iii)
any applicable waiting periods under the HSR Act shall not have expired or been
terminated prior to the expiration of the Offer; or (iv) at any time on or after
the date of the Merger Agreement and before acceptance for payment of, or
payment for, such Shares any of the following events shall occur:
(A) There shall have been threatened, instituted or pending any action,
proceeding, application or counterclaim by or before any court or governmental,
regulatory or administrative agency, authority or tribunal, domestic, foreign or
supranational (other than actions, proceedings, applications or counterclaims
filed or initiated by Sub), which (i) seeks to challenge the acquisition by Sub
of the Shares, restrain, prohibit or delay the making or consummation of the
Offer or the Merger or any other merger or business combination involving Sub or
any of its affiliates and the Company or any of its subsidiaries, prohibit the
performance of any of the contracts or other agreements entered into by Sub or
any of its affiliates in connection with the acquisition of the Company or the
Shares, or obtain any material damages in connection with any of the foregoing,
(ii) seeks to make the purchase of or payment for, some or all of the Shares
pursuant to the Offer, the Merger or otherwise, illegal, (iii) seeks to impose
limitations on the ability of Sub or the Company or any of their respective
affiliates or subsidiaries effectively to acquire or hold, or requiring Sub, the
Company or any of their respective affiliates or subsidiaries to dispose of or
hold separate, any portion of the assets or the business of Sub or its
affiliates or the Company or its
A-1
<PAGE> 53
subsidiaries, or impose limitations on the ability of Sub, the Company or any of
their respective affiliates or subsidiaries to continue to conduct, own or
operate all or any portion of their businesses and assets as heretofore
conducted, owned or operated, (iv) seeks to impose or may result in material
limitations on the ability of Sub or any of its affiliates to exercise full
rights of ownership of the Shares purchased by them, including, without
limitation, the right to vote the Shares purchased by them on all matters
properly presented to the stockholders of the Company, or the right to vote any
shares of capital stock of any subsidiary directly or indirectly owned by the
Company, (v) is reasonably likely to result in a material diminution in the
benefits expected to be derived by Sub as a result of the transactions
contemplated by the Offer, including the Merger, (vi) seeks to impose voting,
procedural, price or other requirements in addition to those under Delaware Law
and federal securities laws (each as in effect on the date of the Offer to
Purchase) or any material condition to the Offer in any such case which is
unacceptable (in its reasonable judgment) to Sub or (vii) challenges or
adversely and materially affects the financing of the Offer;
(B) There shall have been formally proposed, sought, promulgated,
enacted, entered or made applicable to the Offer or the Merger or enforced by
any domestic, foreign or supranational government or any governmental,
administrative or regulatory authority or agency or by any court or tribunal,
domestic, foreign or supranational, any statute, rule, regulation, judgment,
decree, order or injunction that might result in any of the consequences
referred to in clauses (i) through (vii) of paragraph (A) above;
(C) There shall have occurred any of the following which, in the good
faith judgment of the Parent and Sub, make it inadvisable to proceed with the
Offer and acceptance for payment of, and payment for, the Shares (1) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the United
States, (2) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (3) the commencement of a
war, armed hostilities or other international or national calamity, directly or
indirectly involving the United States, (4) any limitations (whether or not
mandatory) imposed by any governmental authority on, or any event which might
have material adverse significance with respect to, the nature or extension of
credit or further extension of credit by banks or other lending institutions,
(5) any significant adverse change in the equity or debt markets in the United
States which shall be continuing as of the expiration of the Offer, or (6) in
the case of any of the foregoing, a material acceleration or worsening thereof;
(D) The representations and warranties of the Company contained in the
Merger Agreement (without giving effect to any "Material Adverse Effect",
"materiality" or similar qualifications contained therein) shall not be true and
correct in all material respects (for purpose of this clause, a failure of the
representations and warranties to be true and correct in all material respects
shall mean a failure or series of failures the result of which impairs the value
of the Company or could reasonably be expected to impair the value of the
Company by more than $3,000,000 as of the date of the consummation of the Offer
as though made on and as of such date except (1) for changes specifically
permitted by the Merger Agreement and (2) that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date;
A-2
<PAGE> 54
(E) The obligations of the Company contained in the Merger Agreement
(without giving effect to any "Material Adverse Effect", "materiality" or
similar qualifications contained therein) shall not have been performed or
complied with in all material respects by the Company;
(F) The Merger Agreement shall have been terminated in accordance with
its terms;
(G) Prior to the purchase of Shares pursuant to the Offer, an
Acquisition Proposal for the Company exists and the Board shall have withdrawn
or materially modified or changed (including by amendment of the Schedule 14D-9)
in a manner adverse to Sub its recommendation of the Offer, the Merger Agreement
or the Merger;
(H) Any person or group (other than Parent and Sub) shall have entered
into a definitive agreement or agreement in principle with the Company with
respect to a merger, consolidation or other business combination with the
Company; or
(I) The Company shall have suffered a material adverse change in its
business, operations, assets or condition (financial or otherwise).
The foregoing conditions are for the sole benefit of Sub and its
affiliates and may be asserted by Sub regardless of the circumstances (other
than any action or inaction by Parent, Sub or any of their affiliates) giving
rise to any such condition or may be waived by Sub, in whole or in part, from
time to time in its sole discretion, except as otherwise provided in the
Agreement. The failure by Sub at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right and may be asserted at any time and from time to
time. Any reasonable determination by Sub concerning any of the events described
herein shall be final and binding.
A-3
<PAGE> 55
EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SURVIVING CORPORATION,
a Delaware Corporation
* * * * * *
FIRST. The name of the corporation is Continental Circuits Corp. (the
"Corporation").
SECOND. The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, Wilmington, Delaware. The name of its
registered agent at such address is CT Corporation System.
THIRD. The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
FOURTH. The total number of shares of stock which the Corporation shall
have authority to issue is 3,000 shares of Common Stock with a par value of One
Cent ($.01) per share.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware:
A. The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal the By-Laws of the Corporation.
B. Elections of directors need not be by written ballot unless the
By-Laws of the Corporation shall so provide.
C. The books of the Corporation may be kept at such place within or
without the State of Delaware as the By-Laws of the Corporation may
provide or as may be designated from time to time by the Board of
Directors of the Corporation.
<PAGE> 56
-2-
SEVENTH. The Corporation eliminates the personal liability of each
member of its Board of Directors to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided, however,
that, to the extent provided by applicable law, the foregoing shall not
eliminate the liability of a director (i) for any breach of such director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any
transaction from which such director derived an improper personal benefit. No
amendment to or repeal of this provision shall apply to or have any effect on
the liability or alleged liability of any director for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
EIGHTH. The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon a stockholder
herein are granted subject to this reservation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 57
EXHIBIT C
AMENDED AND RESTATED
BY-LAWS OF
SURVIVING CORPORATION
*****************
A DELAWARE CORPORATION
Dated: February __, 1998
<PAGE> 58
<TABLE>
<S> <C>
ARTICLE I MEETINGS OF STOCKHOLDERS..............................................................................1
SECTION 1. PLACE OF MEETINGS......................................................................................1
SECTION 2. ANNUAL MEETING.........................................................................................1
SECTION 3. SPECIAL MEETINGS.......................................................................................1
SECTION 4. NOTICE OF MEETINGS.....................................................................................1
SECTION 5. VOTING LIST............................................................................................2
SECTION 6. QUORUM.................................................................................................2
SECTION 7. ADJOURNMENTS...........................................................................................2
SECTION 8. ACTION AT MEETINGS.....................................................................................2
SECTION 9. VOTING AND PROXIES.....................................................................................3
SECTION 10. ACTION WITHOUT MEETING................................................................................3
ARTICLE II DIRECTORS............................................................................................3
SECTION 1. NUMBER, ELECTION, TENURE AND QUALIFICATION.............................................................3
SECTION 2. ENLARGEMENT............................................................................................3
SECTION 3. VACANCIES..............................................................................................4
SECTION 4. RESIGNATION AND REMOVAL................................................................................4
SECTION 5. GENERAL POWERS.........................................................................................4
SECTION 6. CHAIRMAN OF THE BOARD..................................................................................4
SECTION 7. PLACE OF MEETINGS......................................................................................4
SECTION 8. REGULAR MEETINGS.......................................................................................4
SECTION 9. SPECIAL MEETINGS.......................................................................................4
SECTION 10. QUORUM, ACTION AT MEETING, ADJOURNMENTS...............................................................5
SECTION 11. ACTION BY CONSENT.....................................................................................5
SECTION 12. TELEPHONIC MEETINGS...................................................................................5
SECTION 13. COMMITTEES............................................................................................5
SECTION 14. COMPENSATION..........................................................................................6
ARTICLE III OFFICERS............................................................................................6
SECTION 1. ENUMERATION............................................................................................6
SECTION 2. ELECTION...............................................................................................6
SECTION 3. TENURE.................................................................................................6
SECTION 4. PRESIDENT..............................................................................................7
SECTION 5. VICE-PRESIDENTS........................................................................................7
SECTION 6. SECRETARY..............................................................................................7
SECTION 7. ASSISTANT SECRETARIES..................................................................................8
SECTION 8. TREASURER..............................................................................................8
SECTION 9. ASSISTANT TREASURERS...................................................................................8
SECTION 10. BOND..................................................................................................8
ARTICLE IV NOTICES..............................................................................................9
SECTION 1. DELIVERY...............................................................................................9
SECTION 2. WAIVER OF NOTICE.......................................................................................9
ARTICLE V INDEMNIFICATION.......................................................................................9
i
</TABLE>
<PAGE> 59
<TABLE>
<S> <C>
SECTION 1. ACTIONS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION...............................................9
SECTION 2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.........................................................10
SECTION 3. SUCCESS ON THE MERITS.................................................................................10
SECTION 4. SPECIFIC AUTHORIZATION................................................................................10
SECTION 5. ADVANCE PAYMENT.......................................................................................10
SECTION 6. NON-EXCLUSIVITY.......................................................................................11
SECTION 7. INSURANCE.............................................................................................11
SECTION 8. CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES...........................................11
SECTION 9. SEVERABILITY..........................................................................................11
SECTION 10. INTENT OF ARTICLE....................................................................................11
ARTICLE VI CAPITAL STOCK.......................................................................................11
SECTION 1. CERTIFICATES OF STOCK.................................................................................11
SECTION 2. LOST CERTIFICATES.....................................................................................12
SECTION 3. TRANSFER OF STOCK.....................................................................................12
SECTION 4. RECORD DATE...........................................................................................12
SECTION 5. REGISTERED STOCKHOLDERS...............................................................................13
ARTICLE VII CERTAIN TRANSACTIONS...............................................................................13
SECTION 1. TRANSACTIONS WITH INTERESTED PARTIES..................................................................13
SECTION 2. QUORUM................................................................................................14
ARTICLE VIII GENERAL PROVISIONS................................................................................14
SECTION 1. DIVIDENDS.............................................................................................14
SECTION 2. RESERVES..............................................................................................14
SECTION 3. CHECKS................................................................................................14
SECTION 4. FISCAL YEAR...........................................................................................14
SECTION 5. SEAL..................................................................................................14
ARTICLE IX AMENDMENTS..........................................................................................15
Addendum
Register of Amendments to the By-Laws
ii
</TABLE>
<PAGE> 60
SURVIVING CORPORATION
* * * * *
AMENDED AND RESTATED
BY-LAWS
* * * * *
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders shall be
held at such place within or without the State of Delaware as may be fixed from
time to time by the board of directors or the chief executive officer, or if not
so designated, at the registered office of the corporation.
Section 2. Annual Meeting. Annual meetings of stockholders shall be
held on the second Tuesday of March in each year if not a legal holiday, and if
a legal holiday, then on the next secular day following, at 10:00 a.m., or at
such other date and time as shall be designated from time to time by the board
of directors or the chief executive officer, at which meeting the stockholders
shall elect by a plurality vote a board of directors and shall transact such
other business as may properly be brought before the meeting. If no annual
meeting is held in accordance with the foregoing provisions, the board of
directors shall cause the meeting to be held as soon thereafter as convenient,
which meeting shall be designated a special meeting in lieu of annual meeting.
Section 3. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, may, unless otherwise prescribed by statute or by the
certificate of incorporation, be called by the board of directors or the chief
executive officer and shall be called by the chief executive officer or
secretary at the request in writing of a majority of the board of directors, or
at the request in writing of stockholders owning a majority in amount of the
entire capital stock of the corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at any special meeting shall be limited to matters relating
to the purpose or purposes stated in the notice of meeting.
Section 4. Notice of Meetings. Except as otherwise provided by law,
written notice of each meeting of stockholders, annual or special, stating the
place, date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given not less
than ten or more than sixty days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
Section 5. Voting List. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of
<PAGE> 61
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city or town where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 6. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except as otherwise provided by statute, the
certificate of incorporation or these by-laws. Where a separate vote by a class
or classes is required, a majority of the outstanding shares of such class or
classes, present in person or represented by proxy, shall constitute a quorum
entitled to take action with respect to that vote on that matter. If no quorum
shall be present or represented at any meeting of stockholders, such meeting may
be adjourned in accordance with Section 7 hereof, until a quorum shall be
present or represented.
Section 7. Adjournments. Any meeting of stockholders may be adjourned
from time to time to any other time and to any other place at which a meeting of
stockholders may be held under these by-laws, which time and place shall be
announced at the meeting, by a majority of the stockholders present in person or
represented by proxy at the meeting and entitled to vote (whether or not a
quorum is present), or, if no stockholder is present or represented by proxy, by
any officer entitled to preside at or to act as secretary of such meeting,
without notice other than announcement at the meeting. At such adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting, provided that a quorum either was present at the original
meeting or is present at the adjourned meeting. If the adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 8. Action at Meetings. When a quorum is present at any meeting,
the affirmative vote of the holders of a majority of the stock present in person
or represented by proxy, entitled to vote and voting on the matter (or where a
separate vote by a class or classes is required, the affirmative vote of the
majority of shares of such class or classes present in person or represented by
proxy at the meeting) shall decide any matter (other than the election of
directors) brought before such meeting, unless the matter is one upon which by
express provision of law, the certificate of incorporation or these by-laws, a
different vote is required, in which case such express provision shall govern
and control the decision of such matter. The stock of holders who abstain from
voting on any matter shall be deemed not to have been voted on such matter.
Directors shall be elected by a
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plurality of the votes of the shares present in person or represented by proxy
at the meeting, entitled to vote and voting on the election of directors.
Section 9. Voting and Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote for each share of capital stock having
voting power held of record by such stockholder. Each stockholder entitled to
vote at a meeting of stockholders, or to express consent or dissent to corporate
action in writing without a meeting, may authorize another person or persons to
act for him by proxy, but no such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period.
Section 10. Action Without Meeting. Any action required to be taken at
any annual or special meeting of stockholders, or any action which may be taken
at any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be (1) signed and dated by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and (2) delivered to
the corporation within sixty days of the earliest dated consent by delivery to
its registered office in the State of Delaware (in which case delivery shall be
by hand or by certified or registered mail, return receipt requested), its
principal place of business, or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE II
DIRECTORS
Section 1. Number, Election, Tenure and Qualification. The number of
directors which shall constitute the whole board shall be not less than one.
Within such limit, the number of directors shall be determined by resolution of
the board of directors or by the stockholders at the annual meeting or at any
special meeting of stockholders. The directors shall be elected at the annual
meeting or at any special meeting of the stockholders, except as provided in
Section 3 of this Article, and each director elected shall hold office until his
successor is elected and qualified, unless sooner displaced. Directors need not
be stockholders.
Section 2. Enlargement. The number of the board of directors may be
increased at any time by vote of a majority of the directors then in office.
Section 3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and
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the directors so chosen shall hold office until the next annual election and
until their successors are duly elected and shall qualify, unless sooner
displaced. If there are no directors in office, then an election of directors
may be held in the manner provided by statute. In the event of a vacancy in the
board of directors, the remaining directors, except as otherwise provided by law
or these by-laws, may exercise the powers of the full board until the vacancy is
filled.
Section 4. Resignation and Removal. Any director may resign at any time
upon written notice to the corporation at its principal place of business or to
the chief executive officer or secretary. Such resignation shall be effective
upon receipt unless it is specified to be effective at some other time or upon
the happening of some other event. Any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors, unless otherwise
specified by law or the certificate of incorporation.
Section 5. General Powers. The business and affairs of the corporation
shall be managed by its board of directors, which may exercise all powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
Section 6. Chairman of the Board. If the board of directors appoints a
chairman of the board, he shall, when present, preside at all meetings of the
stockholders and the board of directors. He shall perform such duties and
possess such powers as are customarily vested in the office of the chairman of
the board or as may be vested in him by the board of directors.
Section 7. Place of Meetings. The board of directors may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 8. Regular Meetings. Regular meetings of the board of directors
may be held without notice at such time and at such place as shall from time to
time be determined by the board; provided that any director who is absent when
such a determination is made shall be given prompt notice of such determination.
A regular meeting of the board of directors may be held without notice
immediately after and at the same place as the annual meeting of stockholders.
Section 9. Special Meetings. Special meetings of the board may be
called by the chief executive officer, secretary, or on the written request of
two or more directors, or by one director in the event that there is only one
director in office. Two days' notice to each director, either personally or by
telegram, cable, telecopy, commercial delivery service, telex or similar means
sent to his business or home address, or three days' notice by written notice
deposited in the mail, shall be given to each director by the secretary or by
the officer or one of the directors calling the meeting. A notice or waiver of
notice of a meeting of the board of directors need not specify the purposes of
the meeting.
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Section 10. Quorum, Action at Meeting, Adjournments. At all meetings of
the board a majority of directors then in office, but in no event less than one
third of the entire board, shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by law or by the certificate of
incorporation. For purposes of this section, the term "entire board" shall mean
the number of directors last fixed by the stockholders or directors, as the case
may be, in accordance with law and these by-laws; provided, however, that if
less than all the number so fixed of directors were elected, the "entire board"
shall mean the greatest number of directors so elected to hold office at any one
time pursuant to such authorization. If a quorum shall not be present at any
meeting of the board of directors, a majority of the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 11. Action by Consent. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
Section 12. Telephonic Meetings. Unless otherwise restricted by the
certificate of incorporation or these by-laws, members of the board of directors
or of any committee thereof may participate in a meeting of the board of
directors or of any committee, as the case may be, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
Section 13. Committees. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution designating such committee or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep
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regular minutes of its meetings and make such reports to the board of directors
as the board of directors may request. Except as the board of directors may
otherwise determine, any committee may make rules for the conduct of its
business, but unless otherwise provided by the directors or in such rules, its
business shall be conducted as nearly as possible in the same manner as is
provided in these by-laws for the conduct of its business by the board of
directors.
Section 14. Compensation. Unless otherwise restricted by the
certificate of incorporation or these by-laws, the board of directors shall have
the authority to fix from time to time the compensation of directors. The
directors may be paid their expenses, if any, of attendance at each meeting of
the board of directors and the performance of their responsibilities as
directors and may be paid a fixed sum for attendance at each meeting of the
board of directors and/or a stated salary as director. No such payment shall
preclude any director from serving the corporation or its parent or subsidiary
corporations in any other capacity and receiving compensation therefor. The
board of directors may also allow compensation for members of special or
standing committees for service on such committees.
ARTICLE III
OFFICERS
Section 1. Enumeration. The officers of the corporation shall be chosen
by the board of directors and shall be a president, a secretary and a treasurer
and such other officers with such titles, terms of office and duties as the
board of directors may from time to time determine, including a chairman of the
board, one or more vice-presidents, and one or more assistant secretaries and
assistant treasurers. If authorized by resolution of the board of directors, the
chief executive officer may be empowered to appoint from time to time assistant
secretaries and assistant treasurers. Any number of offices may be held by the
same person, unless the certificate of incorporation or these by-laws otherwise
provide.
Section 2. Election. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a president, a secretary and a
treasurer. Other officers may be appointed by the board of directors at such
meeting, at any other meeting, or by written consent.
Section 3. Tenure. The officers of the corporation shall hold office
until their successors are chosen and qualify, unless a different term is
specified in the vote choosing or appointing him, or until his earlier death,
resignation or removal. Any officer elected or appointed by the board of
directors or by the chief executive officer may be removed at any time, with or
without cause, by the affirmative vote of a majority of the board of directors
or a committee duly authorized to do so, except that any officer appointed by
the chief executive officer may also be removed at any time, with or without
cause, by the chief executive officer. Any vacancy occurring in any office of
the
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corporation may be filled by the board of directors, at its discretion. Any
officer may resign by delivering his written resignation to the corporation at
its principal place of business or to the chief executive officer or the
secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
Section 4. President. The president shall be the chief operating
officer of the corporation. He shall also be the chief executive officer unless
the board of directors otherwise provides. If no chief executive officer shall
have been appointed by the board of directors, all references herein to the
"chief executive officer" shall be to the president. The president shall, unless
the board of directors provides otherwise in a specific instance or generally,
preside at all meetings of the stockholders and the board of directors, have
general and active management of the business of the corporation and see that
all orders and resolutions of the board of directors are carried into effect.
The president shall execute bonds, mortgages, and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
Section 5. Vice-Presidents. In the absence of the president or in the
event of his or her inability or refusal to act, the vice-president, or if there
be more than one vice-president, the vice-presidents in the order designated by
the board of directors or the chief executive officer (or in the absence of any
designation, then in the order determined by their tenure in office) shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. The
vice-presidents shall perform such other duties and have such other powers as
the board of directors or the chief executive officer may from time to time
prescribe.
Section 6. Secretary. The secretary shall have such powers and perform
such duties as are incident to the office of secretary. The secretary shall
maintain a stock ledger and prepare lists of stockholders and their addresses as
required and shall be the custodian of corporate records. The secretary shall
attend all meetings of the board of directors and all meetings of the
stockholders and record all the proceedings of the meetings of the corporation
and of the board of directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the board of directors, and shall perform such other duties
as may be from time to time prescribed by the board of directors or chief
executive officer, under whose supervision the secretary shall be. The secretary
shall have custody of the corporate seal of the corporation and the secretary,
or an assistant secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by his or her
signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his or her signature.
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Section 7. Assistant Secretaries. The assistant secretary, or if there
be more than one, the assistant secretaries in the order determined by the board
of directors, the chief executive officer or the secretary (or if there be no
such determination, then in the order determined by their tenure in office),
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors, the chief executive officer or the secretary may from time to time
prescribe. In the absence of the secretary or any assistant secretary at any
meeting of stockholders or directors, the person presiding at the meeting shall
designate a temporary or acting secretary to keep a record of the meeting.
Section 8. Treasurer. The treasurer shall perform such duties and shall
have such powers as may be assigned to him or her by the board of directors or
the chief executive officer. In addition, the treasurer shall perform such
duties and have such powers as are incident to the office of treasurer. The
treasurer shall have the custody of the corporate funds and securities and shall
keep full and accurate accounts of receipts and disbursements in books belonging
to the corporation and shall deposit all moneys and other valuable effects in
the name and to the credit of the corporation in such depositories as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, taking proper vouchers
for such disbursements, and shall render to the chief executive officer and the
board of directors, when the chief executive officer or board of directors so
requires, an account of all his or her transactions as treasurer and of the
financial condition of the corporation.
Section 9. Assistant Treasurers. The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, the chief executive officer or the treasurer (or if there be
no such determination, then in the order determined by their tenure in office),
shall, in the absence of the treasurer or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the treasurer
and shall perform such other duties and have such other powers as the board of
directors, the chief executive officer or the treasurer may from time to time
prescribe.
Section 10. Bond. If required by the board of directors, any officer
shall give the corporation a bond in such sum and with such surety or sureties
and upon such terms and conditions as shall be satisfactory to the board of
directors, including without limitation a bond for the faithful performance of
the duties of his office and for the restoration to the corporation of all
books, papers, vouchers, money and other property of whatever kind in his
possession or under his control and belonging to the corporation.
ARTICLE IV
NOTICES
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Section 1. Delivery. Whenever, under the provisions of law, or of the
certificate of incorporation or these by-laws, written notice is required to be
given to any director or stockholder, such notice may be given by mail,
addressed to such director or stockholder, at his address as it appears on the
records of the corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Unless written notice by mail is required by law, written notice
may also be given by telegram, cable, telecopy, commercial delivery service,
telex or similar means, addressed to such director or stockholder at his address
as it appears on the records of the corporation, in which case such notice shall
be deemed to be given when delivered into the control of the persons charged
with effecting such transmission, the transmission charge to be paid by the
corporation or the person sending such notice and not by the addressee. Oral
notice or other in-hand delivery (in person or by telephone) shall be deemed
given at the time it is actually given.
Section 2. Waiver of Notice. Whenever any notice is required to be
given under the provisions of law or of the certificate of incorporation or of
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
INDEMNIFICATION
Section 1. Actions other than by or in the Right of the Corporation.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceedings, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. Actions by or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to
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procure a judgment in its favor by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery of the State of Delaware or such other court shall
deem proper.
Section 3. Success on the Merits. To the extent that any person
described in Section 1 or 2 of this Article V has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in said
Sections, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
Section 4. Specific Authorization. Any indemnification under Section 1
or 2 of this Article V (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of any person described in said Sections is proper in the
circumstances because he has met the applicable standard of conduct set forth in
said Sections. Such determination shall be made (1) by the board of directors by
a majority vote of directors who were not parties to such action, suit or
proceeding (even though less than a quorum), or (2) if there are no
disinterested directors or if a majority of disinterested directors so directs,
by independent legal counsel (who may be regular legal counsel to the
corporation) in a written opinion, or (3) by the stockholders of the
corporation.
Section 5. Advance Payment. Expenses incurred in defending a pending or
threatened civil or criminal action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of any person
described in said Section to repay such amount if it shall ultimately be
determined that he or she is not entitled to indemnification by the corporation
as authorized in this Article V.
Section 6. Non-Exclusivity. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other Sections of this Article
V shall not be deemed exclusive of any other rights to which those provided
indemnification or advancement of expenses may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office.
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Section 7. Insurance. The board of directors may authorize, by a vote
of the majority of the full board, the corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this Article V.
Section 8. Continuation of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article V shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 9. Severability. If any word, clause or provision of this
Article V or any award made hereunder shall for any reason be determined to be
invalid, the provisions hereof shall not otherwise be affected thereby but shall
remain in full force and effect.
Section 10. Intent of Article. The intent of this Article V is to
provide for indemnification and advancement of expenses to the fullest extent
permitted by Section 145 of the General Corporation Law of Delaware. To the
extent that such Section or any successor section may be amended or supplemented
from time to time, this Article V shall be amended automatically and construed
so as to permit indemnification and advancement of expenses to the fullest
extent from time to time permitted by law.
ARTICLE VI
CAPITAL STOCK
Section 1. Certificates of Stock. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman or vice-chairman of the board of directors,
or the president or a vice-president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by such holder in the corporation. Any or
all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue. Certificates may be issued for partly
paid shares and in such case upon the face or back of the certificates issued to
represent any such partly paid shares, the total amount of the consideration to
be paid therefor, and the amount paid thereon shall be specified.
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Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to give
reasonable evidence of such loss, theft or destruction, to advertise the same in
such manner as it shall require and/or to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen or
destroyed or the issuance of such new certificate.
Section 3. Transfer of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares, duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and proper evidence of compliance with other conditions to rightful
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 4. Record Date. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the board of directors may fix a record date, which
shall not precede the date upon which the resolution fixing the record date is
adopted by the board of directors, and which shall not be more than sixty days
nor less then ten days before the date of such meeting. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for the adjourned meeting.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day before the day on which notice is given, or, if
notice is waived, at the close of business on the day before the day on which
the meeting is held. In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the board of directors may fix a record date, which shall not precede
the date upon which the resolution fixing the record date is adopted by the
board of directors, and which shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the board of
directors. If no record date is fixed, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the board of directors is required by statute,
shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the corporation as provided
in Section 10 of Article I. If no record date is fixed and prior action by the
board of directors is required, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the date on which the board of directors adopts the
resolution taking such prior action. In order that the corporation may determine
the stockholders entitled to receive payment
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of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix a record date, which shall not precede the date
upon which the resolution fixing the record date is adopted, and which shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
resolution relating to such purpose.
Section 5. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
ARTICLE VII
CERTAIN TRANSACTIONS
Section 1. Transactions with Interested Parties. No contract or
transaction between the corporation and one or more of its directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the board or committee thereof
which authorizes the contract or transaction or solely because his or their
votes are counted for such purpose, if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the board of
directors or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified, by the board of directors, a
committee thereof, or the stockholders.
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Section 2. Quorum. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, if any, may be declared by the board of directors at any regular or
special meeting or by written consent, pursuant to law. Dividends may be paid in
cash, in property, or in shares of the capital stock, subject to the provisions
of the certificate of incorporation.
Section 2. Reserves. The directors may set apart out of any funds of
the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve.
Section 3. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 4. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 5. Seal. The board of directors may, by resolution, adopt a
corporate seal. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the word "Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise. The seal may be altered from time to time by the board
of directors.
ARTICLE IX
AMENDMENTS
These by-laws may be altered, amended or repealed or new by-laws may be
adopted by the stockholders or by the board of directors, when such power is
conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors provided,
however, that in the case of a regular or special meeting of stockholders,
notice of such alteration, amendment, repeal or adoption of new by-laws be
contained in the notice of such meeting.
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Register of Amendments to the By-laws
Date Section Affected Change
- --------------------------------------------------------------------------------
15
<PAGE> 1
EXHIBIT 2
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT dated as of February 16, 1998 among HADCO
CORPORATION, a Massachusetts corporation ("Parent"), HADCO ACQUISITION CORP. II,
a Delaware corporation and a direct wholly-owned subsidiary of Parent ("Sub"),
and the other parties signatory hereto (each a "Stockholder", and collectively,
the "Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, Sub and CONTINENTAL CIRCUITS CORP., a Delaware corporation
(the "Company"), are entering into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement";
capitalized terms used and not defined herein have the respective meanings
ascribed to them in the Merger Agreement), pursuant to which Sub will be merged
with and into the Company (the "Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company desire
that, as soon as practicable (and not later than five business days) after the
public announcement of the execution and delivery of the Merger Agreement, Sub
commence a cash tender offer to purchase all outstanding shares of Company
Common Stock (as defined in Section 1), including all of the Shares (as defined
in Section 2) owned beneficially by the Stockholders; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholders agree, and the Stockholders
have agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities Beneficially
Owned by a Person shall include securities Beneficially Owned by all other
Persons with whom such Person would constitute a "group" within the meaning of
Section 13(d)(3) of the Exchange Act.
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<PAGE> 2
(b) "Company Common Stock" shall mean at any time the common
stock, $.01 par value, of the Company.
(c) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
2. Tender of Shares.
(a) Each Stockholder hereby agrees to validly tender pursuant
to and in accordance with the terms of the Offer, not later than the fifth
business day after commencement of the Offer pursuant to Section 1.1 of the
Merger Agreement and Rule 14d-2 under the Exchange Act, (i) the number of shares
of Company Common Stock set forth opposite such Stockholder's name on Schedule I
hereto (the "Existing Shares"), and (ii) any additional shares of Company Common
Stock acquired by such Stockholder after the date hereof and prior to the
termination of this Agreement whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise Beneficially Owned by
him or it (the "Additional Shares" and, together with the Existing Shares, the
"Shares"). Each Stockholder hereby acknowledges and agrees that the Sub's
obligation to accept for payment and pay for Shares in the Offer, including the
Shares Beneficially Owned by such Stockholder, is subject to the terms and
conditions of the Offer.
(b) Each Stockholder hereby agrees to permit Parent and Sub to
publish and disclose in the Offer Documents and, if Company Stockholder Approval
is required under applicable law, the Proxy Statement (including all documents
and schedules filed with the SEC) his or its identity and ownership of Company
Common Stock and the nature of his or its commitments, arrangements and
understandings under this Agreement.
3. Provisions Concerning Company Common Stock.
(a) Each Stockholder hereby agrees that during the period
commencing on the date hereof and continuing until the first to occur of the
Effective Time or termination of the Merger Agreement in accordance with its
terms, at any meeting of the holders of Company Common Stock, however called, or
in connection with any written consent of the holders of Company Common Stock,
such Stockholder shall vote (or cause to be voted) the Shares held of record or
Beneficially Owned by such Stockholder, whether issued, heretofore owned or
hereafter acquired, (i) in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement and this
Agreement and any actions required in furtherance thereof and hereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or this Agreement; and (iii) except as
otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or its
Subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its Subsidiaries, or a
2
<PAGE> 3
reorganization, recapitalization, dissolution or liquidation of the Company or
its Subsidiaries; (C) (1) any change in a majority of the persons who constitute
the board of directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Certificate of
Incorporation or Bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action which, in the case of
each of the matters referred to in clauses (C) (1), (2), (3) or (4), is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or materially adversely affect the Merger and the transactions
contemplated by this Agreement and the Merger Agreement. Such Stockholder shall
not enter into any agreement or understanding with any person or entity the
effect of which would be inconsistent or violative of the provisions and
agreements contained in this Section 3.
(b) Each Stockholder hereby grants to Parent a proxy to vote
the Shares of such Stockholder as indicated in Section 3(a). Each Stockholder
intends such proxy to be irrevocable and coupled with an interest and will take
such further action or execute such other instruments as may be necessary to
effectuate the intent of this proxy and hereby revokes any proxy previously
granted by Stockholder with respect to such Shares.
4. Other Covenants, Representations and Warranties. Each
Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is either (i) the
record and Beneficial Owner of, or (ii) the Beneficial Owner but not the record
holder of, the number of Shares set forth opposite such Stockholder's name on
Schedule I hereto. On the date hereof, the Existing Shares set forth opposite
such Stockholder's name on Schedule I hereto constitute all of the Shares owned
of record or Beneficially Owned by such Stockholder. Such Stockholder has sole
voting power and sole power to issue instructions with respect to the matters
set forth in Sections 2 and 3 hereof, sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to agree to all
of the matters set forth in this Agreement, in each case with respect to all of
the Existing Shares set forth opposite such Stockholder's name on Schedule I
hereto, with no limitations, qualifications or restrictions on such rights,
subject to applicable securities laws and the terms of this Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any other voting agreement, stockholders agreement or voting trust. This
Agreement has been duly and validly executed and delivered by such Stockholder
and constitutes a valid and binding agreement of such Stockholder, enforceable
against such Stockholder in accordance with its terms. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of which
such Stockholder is trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by such stockholder of the
transactions contemplated hereby. If such Stockholder is married and such
Stockholder's Shares constitute community property, this Agreement has been duly
authorized, executed and delivered by, and
3
<PAGE> 4
constitutes a valid and binding agreement of, such Stockholder's spouse,
enforceable against such person in accordance with its terms.
(c) No Conflicts. (A) No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated hereby
and (B) none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the provisions
hereof shall (1) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which such Stockholder is a
party or by which such Stockholder or any of such Stockholder's properties or
assets may be bound or (2) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to such Stockholder or
any of such Stockholder's properties or assets.
(d) No Encumbrances. Except as applicable in connection with
the transactions contemplated by Sections 2 and 3 hereof, such Stockholder's
Shares and the certificates representing such Shares are now, and at all times
during the term hereof will be, held by such Stockholder, or by a nominee or
custodian for the benefit of such Stockholder, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder.
(e) No Finder's Fees. No broker, investment banker, financial
adviser or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
(f) No Solicitation. No Stockholder shall, in his or its
capacity as such, directly or indirectly, solicit (including by way of
furnishing information) or respond to any inquiries or the making of any
proposal by any person or entity (other than Parent or any affiliate of Parent)
with respect to the Company that constitutes an Acquisition Proposal. If any
Stockholder receives any such inquiry or proposal, then such Stockholder shall
immediately inform Parent of the terms and conditions, if any, of such inquiry
or proposal and the identity of the person making such proposal. Each
Stockholder will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing.
(g) Restriction on Transfer, Proxies and Non-Interference.
Except as applicable in connection with the transactions contemplated by
Sections 2 and 3 hereof, no Stockholder shall, directly or indirectly: (i) offer
for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose
of, or enter into any contract, option or other arrangement or
4
<PAGE> 5
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
such Stockholder's Shares or any interest therein; (ii) grant any proxies or
powers of attorney, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares; or (iii) take any action that would
make any representation or warranty of such Stockholder contained herein untrue
or incorrect or have the effect of preventing or disabling such Stockholder from
performing such Stockholder's obligations under this Agreement.
(h) Waiver of Appraisal Rights. Each Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger that such
Stockholder may have.
(i) Reliance by Parent. Such Stockholder understands and
acknowledges that Parent and Sub are entering into the Merger Agreement in
reliance upon such Stockholder's execution and delivery of this Agreement.
(j) Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement.
5. Stop Transfer. Each Stockholder agrees with, and covenants to,
Parent that such Stockholder shall not request that the Company and, the Company
agrees that it will not, register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of such Stockholder's
Shares, unless such transfer is made in compliance with this Agreement
(including the provisions of Section 2 hereof). In the event of a stock dividend
or distribution, or any change in the Company Common Stock by reason of any
stock dividend, split-up, recapitalization, combination, exchange of shares or
the like, the term "Shares" shall be deemed to refer to and include the Shares
as well as all such stock dividends and distributions and any shares into which
or for which any or all of the Shares may be changed or exchanged.
6. Termination. This Agreement shall terminate upon the
termination of the Merger Agreement in accordance with its terms by Parent.
7. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director of the Company makes any agreement or
understanding herein in his or her capacity as such director. Each Stockholder
signs solely in his or her capacity as the record and Beneficial Owner of, or
the trustee of a trust whose beneficiaries are the Beneficial Owners of, such
Stockholder's Shares.
8. Confidentiality. The Stockholders recognize that the successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, each Stockholder hereby agrees
not to disclose or discuss such matters with anyone not a party to
5
<PAGE> 6
this Agreement (other than such Stockholder's counsel and advisors, if any)
without the prior written consent of Parent, except for filings required
pursuant to the Exchange Act and the rules and regulations thereunder or
disclosures such Stockholder's counsel advises are necessary in order to fulfill
such Stockholder's obligations imposed by law, in which event such Stockholder
shall give prior notice of such proposed disclosure to Parent as promptly as
practicable so as to enable Parent to seek a protective order from a court of
competent jurisdiction with respect thereto.
9. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to such Stockholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including, without limitation, such Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations under this
Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
party, provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations hereunder
if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated, with
respect to any one or more Stockholders, except upon the execution and delivery
of a written agreement executed by the relevant parties hereto; provided that
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any stockholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added stockholder shall be treated as a
"Stockholder" for all purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery or telecopy, or
by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any courier service, such as Federal Express, providing proof
of delivery. All communications hereunder shall be delivered to the respective
parties at the following addresses:
If to Stockholder: At the addresses set forth on Schedule I
hereto with
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<PAGE> 7
copies to: Quarles & Brady
One East Camelback Road
Suite 400
Phoenix, Arizona 85012-1649
Attention: P. Robert Moya
Telephone: (602) 230-5500
Telecopy: (602) 230-5598
If to Parent: Hadco Corporation
12A Manor Parkway
Salem, N.H. 03079
Attention: Timothy P. Losik
Telephone: (603) 898-8000
Telecopy: (603) 893-0025
copy to: Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Stephen A. Hurwitz
George W. Lloyd
Telephone: (617) 248-7000
Telecopy: (617) 248-7100
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.
(f) Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
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<PAGE> 8
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Court of Chancery in the State of Delaware in any
action, suit or proceeding arising in connection with this Agreement, and agrees
that any such action, suit or proceeding shall be brought only in such court
(and waives any objection based on forum non conveniens or any other objection
to venue therein); provided, however, that such consent to jurisdiction is
solely for the purpose referred to in this paragraph (l) and shall not be deemed
to be a general submission to the jurisdiction of said court or in the State of
Delaware other than for such purposes. Each party hereto hereby waives any right
to a trial by jury in connection with any such action, suit or proceeding.
(m) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
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<PAGE> 9
IN WITNESS WHEREOF, Parent, Sub and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
HADCO CORPORATION
By: /s/ Andrew E. Lietz
------------------------------
Name: Andrew E. Lietz
----------------------------
Title: Chief Executive Officer
---------------------------
HADCO ACQUISITION CORP. II
By: /s/ Andrew E. Lietz
------------------------------
Name: Andrew E. Lietz
----------------------------
Title: Chief Executive Officer
---------------------------
/s/ Frederick G. McNamee, III
---------------------------------
Frederick G. McNamee, III
/s/ Steven N. Lach
---------------------------------
Steven N. Lach
/s/ James Buchanan
---------------------------------
James Buchanan
/s/ Jerome Wilson
---------------------------------
Jerome Wilson
9
<PAGE> 10
AGREED TO AND ACKNOWLEDGED
(with respect to Section 5):
CONTINENTAL CIRCUITS CORP.
By: /s/ Frederick G. McNamee, III
-------------------------------
Frederick G. McNamee, III
President and Chief Executive Officer
10
<PAGE> 11
SCHEDULE I
<TABLE>
<CAPTION>
STOCKHOLDER SHARES OPTIONS
- ----------- ------ -------
<S> <C> <C>
Frederick G. McNamee, III 0 400,000
c/o Continental Circuits Corp.
5020 S. 36th Street
Phoenix, Arizona 85040
Steven N. Lach 0 50,000
c/o Continental Circuits Corp.
5020 S. 36th Street
Phoenix, Arizona 85040
James Buchanan 0 100,000
c/o Continental Circuits Corp.
5020 S. 36th Street
Phoenix, Arizona 85040
Jerome Wilson 0 30,000
c/o Continental Circuits Corp.
5020 S. 36th Street
Phoenix, Arizona 85040
</TABLE>
11
<PAGE> 1
EXHIBIT 3
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), to be effective as of the
Effective Time (as defined in an Agreement and Plan of Merger (the "Acquisition
Agreement") dated as of the date hereof (as it may be amended) among Hadco
Corporation, a Massachusetts corporation ("Hadco"), Hadco Acquisition Corp. II,
a Delaware corporation ("Sub"), and Continental Circuits Corp., a Delaware
corporation ("Continental")), by and between Hadco and Frederick G. McNamee,
III, an individual ("Employee").
Whereas, Employee is currently the chief executive officer and
president of Continental; and
Whereas, the Acquisition Agreement contemplates the acquisition by Sub
of all of the outstanding capital stock of Continental, with a subsequent merger
of Sub into Continental, and the renaming of the Surviving Corporation (as
defined in the Acquisition Agreement) to be Hadco Phoenix, Inc. ("Hadco
Phoenix"); and
Whereas, in connection with the acquisition, Employee has agreed to
serve as an employee of Hadco upon the terms and conditions set forth herein.
Now, therefore, in consideration of the premises and for good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES. Hadco agrees to employ Employee on a
full-time basis, subject to the terms and conditions provided herein, and
Employee agrees to accept such full-time employment upon said terms and
conditions. Employee's initial title shall be Senior Vice President, Hadco
Phoenix, in which capacity Employee shall have general responsibility for the
activities and operations of Hadco Phoenix and all of its direct wholly-owned
subsidiaries, subject to the direction and control of Hadco's chief executive
officer. Although Employee understands that his duties will include a
substantial amount of business travel, during the entire term of employment, he
shall be based in the Phoenix, Arizona, area, unless otherwise agreed between
the parties in the future. Employee's employment shall be subject to the
standard terms, conditions, and policies applicable to all Hadco employees, as
such terms, conditions and policies may exist from time to time.
2. TERM. The term of employment under this Agreement (the "Term") shall
commence on the Effective Time and shall continue for a period of two years,
unless earlier terminated as set forth in Section 5 below.
3. COMPENSATION.
a. BASE SALARY. Hadco agrees to pay Employee a base salary, before
deducting all applicable withholdings, at the annual rate of $235,000
(the "Base Salary"), which shall be payable in accordance with Hadco's
standard executive payroll policies as they may be revised from time to
time. The Base Salary may be increased during the Term hereof at the
discretion of the chief executive officer of Hadco.
b. BONUS. Employee shall be eligible to participate in the bonus
programs of Hadco applicable to senior executives, as such programs may
exist from time to time.
c. STOCK OPTIONS. Employee shall be granted non-qualified stock
options to purchase 40,000 shares of Hadco common stock, pursuant to
and subject to the terms and provisions of Hadco's Non-Qualified Stock
Option Plan of November 29, 1995, at the fair market value of such
stock as of the last business day immediately preceding the Effective
Time. Such option shall be evidenced by a Stock Option Agreement in the
form customarily utilized by Hadco for such grants.
<PAGE> 2
-2-
d. BENEFITS. Employee shall be accorded such benefits as are
customarily enjoyed by senior executives of Hadco.
4. INVESTMENT. Employee agrees to purchase from Hadco, on the Effective
Time, 40,000 shares of Hadco common stock at the fair market value of such stock
(measured as the average between the high and low trading prices of Hadco's
common stock on the last business day immediately preceding the Effective Time),
which shares will not have been registered under the Securities Act of 1933, as
amended. Employee understands and agrees that such shares will not be salable on
the open market, and Employee represents and warrants that he is purchasing such
shares for investment purposes and not with a view to distribution, and that he
is an "Accredited Investor" (as such term is defined in Regulation D of the
Securities Act of 1933, as amended). Employee agrees that certificates
representing such shares shall bear appropriate restrictive legends, and further
agrees that the shares may be subject to a stop transfer order until such time
as transfer of the shares may be effected without violation of state or federal
securities laws.
5. SEVERANCE. If, during the Term hereof, Employee's employment is
terminated by Hadco without cause, or is terminated by Employee for Good Reason
(as defined herein), Employee shall be paid his full Base Salary for the
remainder of the Term. For purposes of this Agreement, the following definitions
shall apply:
(a) CAUSE. Hadco shall have "cause" to terminate
Employee's employment in the event of (i) Employee's willful
and continued failure to substantially perform his duties
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for
substantial performance is delivered by Hadco which demand
specifically identifies the manner in which Employee has not
substantially performed his duties, or (ii)(x) Employee shall
have been guilty of any act or acts of dishonesty constituting
a felony, or (y) Employee shall have violated any provision of
any confidentiality, nondisclosure, assignment of invention,
noncompetition or similar agreement entered into by him in
connection with his employment by Hadco. For purposes of this
subsection, no act or failure to act on the part of Employee
shall be deemed "willful" unless done or omitted to be done by
Employee not in good faith and without reasonable belief that
his action or omission was in the best interest of Hadco.
(b) GOOD REASON. "Good Reason" shall mean, without
Employee's consent, the occurrence of the following:
(i) any significant diminution in Employee's
position, duties, responsibilities, power,
title or office;
(ii) any reduction in Employee's annual base
salary; or
(iii) any requirement by Hadco that the
location at which Employee performs his
principal duties be outside a radius of 30
miles from Phoenix.
6. NON-COMPETITION; NON-SOLICITATION.
a. NON-COMPETE. Employee agrees that he will not,
during the Term, directly or indirectly, engage in (whether as an
officer, employee, consultant, director, proprietor, agent, partner or
otherwise) or have any ownership interest in, or participate in the
financing, operation, management or control of, any person, firm,
corporation or business that engages in competition with Hadco or any
of its subsidiaries or affiliates in the business of manufacture or
sale of printed circuit boards or of other electronic interconnect
products, or in the development of technologies for such businesses.
The territory to which this restriction shall apply shall be worldwide.
It is agreed that ownership of no more than 1% of the outstanding
voting stock of a publicly traded corporation shall not constitute a
violation of this provision.
b. CONFIDENTIAL INFORMATION. Employee acknowledges that
Employee may receive, or contribute to the production of, Confidential
Information. For purposes of this Agreement, Employee
<PAGE> 3
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agrees that "Confidential Information" shall mean information or
material proprietary to Hadco or any of its direct or indirect
subsidiaries or designated as Confidential Information by Hadco and not
generally known by non-Hadco personnel, which Employee develops or of
or to which Employee may obtain knowledge or access through or as a
result of Employee's relationship with Hadco or any of its direct or
indirect subsidiaries (including information conceived, originated,
discovered or developed in whole or in part by Employee). Confidential
Information includes, but is not limited to, the following types of
information and other information of a similar nature (whether or not
reduced to writing) related to Hadco's business: discoveries,
inventions, ideas, concepts, research, development, processes,
procedures, "know-how", formulae, marketing techniques and materials,
marketing and development plans, business plans, customer names and
other information related to customers, price lists, pricing policies,
methods of operation, financial information, employee compensation, and
computer programs and systems. Confidential Information also includes
any information described above which Hadco or any of its direct or
indirect subsidiaries obtains from another party and which Hadco treats
as proprietary or confidential, or designates as Confidential
Information, whether or not owned by or developed by Hadco. Employee
acknowledges that the Confidential Information derives independent
economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use. Information
publicly known without breach of this Agreement that is generally
employed by the trade at or after the time Employee first learns of
such information, or generic information or knowledge which Employee
would have learned in the course of similar employment or work
elsewhere in the trade, shall not be deemed part of the Confidential
Information. Employee further agrees:
(1) To furnish Hadco on demand, at any time during or
after employment, a complete list of the names and addresses of all
present, former and potential suppliers, customers and other contacts
gained while an employee of Hadco in Employee's possession, whether or
not in the possession or within the knowledge of Hadco.
(2) That all notes, memoranda, electronic storage,
documentation and records in any way incorporating or reflecting any
Confidential Information shall belong exclusively to Hadco, and
Employee agrees to turn over all copies of such materials in Employee's
control to Hadco upon request or upon termination of Employee's
employment with Hadco.
(3) That while employed by Hadco and thereafter
Employee will hold in confidence and not directly or indirectly reveal,
report, publish, disclose or transfer any of the Confidential
Information to any person or entity, or utilize any of the Confidential
Information for any purpose, except in the course of Employee's work
for Hadco.
(4) That any idea in whole or in part conceived of or
made by Employee during the term of his employment, consulting, or
similar relationship with Hadco which relates directly or indirectly to
Hadco's current or planned lines of business and is made through the
use of any of the Confidential Information or any of Hadco equipment,
facilities, trade secrets or time, or which results from any work
performed by Employee for Hadco, shall belong exclusively to Hadco and
shall be deemed a part of the Confidential Information for purposes of
this Agreement. Employee hereby assigns and agrees to assign to Hadco
all rights in and to such Confidential Information whether for purposes
of obtaining patent or copyright protection or otherwise. Employee
shall acknowledge and deliver to Hadco, without charge to Hadco (but at
its expense) such written instruments and do such other acts, including
giving testimony in support of Employee's authorship or inventorship,
as the case may be, necessary in the opinion of Hadco to obtain patents
or copyrights or to otherwise protect or vest in Hadco the entire right
and title in and to the Confidential Information.
c. NON-SOLICITATION. During the Term and for a period of one
year thereafter, Employee agrees that he shall not (for the purpose of
or which results in competition with Hadco or any of its affiliates or
subsidiaries) either solicit any persons or companies who were
customers, clients, suppliers or business patronage of Hadco during the
Term or prior thereto or of any of its predecessors, affiliates or
<PAGE> 4
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subsidiaries or use any Confidential Information; nor will he solicit
for any purpose the employment of any employees of Hadco or any of its
affiliates or subsidiaries during the Term or for a period of one year
thereafter.
d. INJUNCTIONS. It is agreed that the restrictions contained
in this Section 6 are reasonable, but it is recognized that damages in
the event of the breach of any of the restrictions will be difficult or
impossible to ascertain; and, therefore, Employee agrees that, in
addition to and without limiting any other right or remedy Hadco may
have, Hadco shall have the right to an injunction against Employee
issued by a court of competent jurisdiction enjoining any such breach
without showing or proving any actual damage to Hadco.
e. PART OF CONSIDERATION. Employee also agrees, acknowledges,
covenants, represents and warrants that he is fully and completely
aware that, and further understands that, the foregoing restrictive
covenants are an essential part of the consideration for Hadco entering
into this Agreement and that Hadco is entering into this Agreement in
full reliance on these acknowledgments, covenants, representations and
warranties.
f. TIME AND TERRITORY REDUCTION. If the period of time and/or
territory described above are held to be in any respect an unreasonable
restriction, it is agreed that the court so holding may reduce the
territory to which the restriction pertains or the period of time in
which it operates or may reduce both such territory and such period, to
the minimum extent necessary to render such provision enforceable.
g. APPLICABILITY TO SUBSIDIARIES. As used in this Section,
Hadco shall mean and include Hadco Corporation and all or its direct or
indirect subsidiaries.
h. SURVIVAL. The obligations described in this Section 6 shall
survive any termination of this Agreement, except for a termination
under Section 14 hereof, or any termination of the employment
relationship created hereunder.
7. GOVERNING LAW AND VENUE. Arizona law shall govern the construction
and enforcement of this Agreement and the parties agree that any litigation
pertaining to this Agreement shall be in courts located in Maricopa County,
Arizona.
8. CONSTRUCTION. The language in all parts of this Agreement shall in
all cases be construed as a whole according to its fair meaning and not strictly
for nor against any party. The Section headings contained in this Agreement are
for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. All terms used in one number or gender shall
be construed to include any other number or gender as the context may require.
The parties agree that each party has reviewed this Agreement and has had the
opportunity to have counsel review the same and that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not apply in the interpretation of this Agreement or any amendment or any
exhibits thereof.
9. NONDELEGABILITY OF EMPLOYEE'S RIGHTS AND HADCO ASSIGNMENT RIGHTS.
The obligations, rights and benefits of Employee hereunder are personal and may
not be delegated, assigned or transferred in any manner whatsoever, nor are such
obligations, rights or benefits subject to involuntary alienation, assignment or
transfer. This Agreement shall be assigned automatically to any entity merging
with or acquiring Hadco or its business.
10. SEVERABILITY. If any term or provision of this Agreement is
declared by a court of competent jurisdiction to be invalid or unenforceable for
any reason, this Agreement shall remain in full force and effect, and either (a)
the invalid or unenforceable provision shall be modified to the minimum extent
necessary to make it valid and enforceable or (b) if such a modification is not
possible, this Agreement shall be interpreted as if such invalid or
unenforceable provision were not a part hereof.
11. ATTORNEYS' FEES. Except as otherwise provided herein, if any party
hereto institutes an action or other
<PAGE> 5
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proceeding to enforce any rights arising out of this Agreement, the party
prevailing in such action or other proceeding shall be paid all reasonable costs
and attorneys' fees by the non-prevailing party, such fees to be set by the
court and not by a jury and to be included in any judgment entered in such
proceeding.
12. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed duly given, upon receipt, if either personally
delivered, sent by certified mail, return receipt requested, or sent by a
nationally-recognized overnight courier service, addressed to the parties as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
IF TO HADCO: Hadco Corporation
12A Manor Parkway
Salem, NH
Attention: Chief Executive Officer
With a copy to: Testa, Hurwitz &Thibeault, LLP
Attention: Stephen A. Hurwitz
125 High Street
Boston, MA 02110
IF TO EMPLOYEE: Frederick G. McNamee, III
Hadco Phoenix Inc.
3502 East Roeser Road
Phoenix, AZ 85040
</TABLE>
or to such other address as either party may provide to the other in accordance
with this Section.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof (i.e., Employee's
employment by Hadco) and supersedes all prior or contemporaneous employment
agreements and understandings or agreements in regard to Employee's employment.
Employee hereby acknowledges and agrees that as of the Effective Time the
Employment Agreement dated as of August 1, 1997 by and between Continental and
Employee and the letter agreement dated May 8, 1997 by and between Continental
and Employee and any all other agreements between Continental and Employee are
hereby terminated and shall be of no further force or effect, except that all
confidentiality obligations and non-disclosure obligations of Employee to
Continental shall nonetheless survive. No modification or addition to this
Agreement shall be valid unless in writing, specifically referring to this
Agreement and signed by all parties hereto. No waiver of any rights under this
Agreement shall be valid unless in writing and signed by the party to be charged
with such waiver. No waiver of any term or condition contained in this Agreement
shall be deemed or construed as a further or continuing waiver of such term or
condition, unless the waiver specifically provides otherwise.
14. OTHER PROVISIONS. The parties agree that if the Acquisition
Agreement terminated under Section 8.1 thereof, this Agreement shall be null and
void with no liability by any party to any other party by reason of this
Agreement becoming so null and void.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
February 15, 1998.
HADCO: EMPLOYEE:
Hadco Corporation.
a Massachusetts corporation
By: ______________________________ _________________________________
Frederick G. McNamee, III
Title: ____________________________
<PAGE> 1
Exhibit 4
[CONTINENTAL CIRCUTIS CORP. LOGO]
February 20, 1998
Dear Stockholder:
We are pleased to report that, on February 16, 1998, Continental Circuits
Corp. (the "Company") entered into a merger agreement with Hadco Corporation
("Hadco") and one of its wholly owned subsidiaries that provides for the
acquisition of the Company by Hadco at a price of $23.90 per share net to the
seller in cash. Under the terms of the proposed transaction, today the Hadco
subsidiary is commencing a cash tender offer to purchase all outstanding shares
of the Company's common stock for $23.90 per share. Following successful
completion of the tender offer in which at least 90% of the outstanding common
stock on a fully diluted basis has been validly tendered, the Hadco subsidiary
will be merged into the Company and all shares not purchased in the tender offer
will be converted into the right to receive $23.90 per share in cash in the
merger. However, as described in the accompanying materials, if at least a
majority, but less than 90%, of the outstanding shares have been tendered and
all other conditions to the tender offer are satisfied, then Hadco will be
required to either (i) amend its offer and purchase all shares that are tendered
or (ii) terminate the tender offer without purchasing any shares thereunder,
and, in either case, the Company will prepare proxy materials, call a special
stockholders' meeting and solicit stockholder approval of the merger.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE HADCO TENDER OFFER AND
UNANIMOUSLY DETERMINED THAT THE TERMS OF THE TENDER OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT ALL COMPANY
STOCKHOLDERS TENDER THEIR SHARES IN THE HADCO TENDER OFFER.
In arriving at its recommendations, the Board of Directors gave careful
consideration to a number of factors. These factors included the opinion dated
February 16, 1998 of A.G. Edwards & Sons, Inc., ("A.G. Edwards"), financial
advisor to the Company, to the effect that, as of that date and based upon and
subject to certain matters stated in the opinion, the cash consideration of
$23.90 per share to be received by the Company's stockholders in the tender
offer and the merger is fair from a financial point of view to such
stockholders.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is
Hadco's Offer to Purchase and related materials, including a Letter of
Transmittal for use in tendering shares. We urge you to read carefully the
enclosed materials, including A.G. Edwards' opinion which is attached to the
Schedule 14D-9.
The management and directors of Continental Circuits Corp. thank you for
the support you have given the Company.
Sincerely,
/S/ FREDERICK G. MCNAMEE, III
-------------------------------
FREDERICK G. MCNAMEE, III
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 1
EXHIBIT 5
[A.G. EDWARDS & SONS, INC. LETTERHEAD]
February 16, 1998
Board of Directors
Continental Circuits Corp.
3502 East Roeser Road
Phoenix, AZ 85040
Members of the Board:
You have requested our opinion as to the fairness, from a financial point
of view to the stockholders of the common stock, with $.01 par value (the
"Shares"), of Continental Circuits Corp. ("Continental"), of the Transaction
Consideration (as hereinafter defined) to be received by the stockholders of
Continental in the proposed tender offer for the stock of Continental and in the
merger (collectively, the "Transaction") of a direct wholly owned subsidiary of
Hadco Corporation ("Hadco") with and into Continental, pursuant to the Agreement
and Plan of Merger by and among Hadco and Continental dated February 16, 1998
(the "Definitive Agreement").
Pursuant to the Definitive Agreement, each of the Shares will be converted
into the right to receive cash in the amount of $23.90 per Share, paid in the
manner set forth in the Definitive Agreement (the "Transaction Consideration").
A.G. Edwards & Sons, Inc. ("Edwards"), as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. We are familiar with Continental through prior underwriting and
financial advisory engagements as well as having acted as Continental's
financial advisor in connection with, and having participated in, certain of the
negotiations leading to the Definitive Agreement, and will receive a fee for our
services, a significant portion of which is contingent upon the consummation of
the Transaction. We are not aware of any present or contemplated relationship
between Edwards, Continental, Continental's directors and officers or its
stockholders, or between Edwards and Hadco, its directors and officers or its
stockholders which, in our opinion, would affect our ability to render a fair
and independent opinion in this matter.
In connection with this opinion, we have among other things:
(i) reviewed the Definitive Agreement dated as of February 16, 1998;
(ii) reviewed Continental's audited financial statements for the three
fiscal years ended July 31, 1997;
(iii) reviewed certain unaudited internal financial information of
Continental for the six month period ended January 31, 1998;
(iv) reviewed certain other financial analyses and forecasts for
Continental, either prepared by the management of Continental or
prepared by securities research analysts and confirmed as
reasonable and appropriate by the management of Continental
(collectively, the "Financial Forecasts");
(v) held discussions with members of the management of Continental
regarding the past and current business operations, financial
condition and future prospects for Continental, as well as other
matters;
<PAGE> 2
Continental Circuits Corp.
February 16, 1998
Page 2
[A.G. EDWARDS & SONS, INC. LOGO]
(vi) compared certain financial information for Continental with similar
information for certain other companies the securities of which are
publicly traded;
(vii) reviewed the financial terms of certain recent business
combinations in the printed circuit board, electronic
manufacturing services, and flexible circuit industries; and
(viii) performed such other studies and analyses as we considered
appropriate.
In preparing our opinion, we have assumed and relied upon the accuracy and
completeness of all financial and other information that was supplied or
otherwise made available to us by Continental. We have not been engaged to, and
therefore we have not verified, the accuracy or completeness of any such
information. We have assumed that the Financial Forecasts reflect the best
currently available estimates and judgments of the management of Continental as
to the expected future financial performance of Continental, and we have not
independently verified such information or assumptions nor do we express any
opinion with respect thereto. We have not made any independent valuation or
appraisal of the assets of the liabilities of Continental, nor have we been
furnished with any such appraisals.
In rendering our opinion, we have also assumed that the Transaction will be
consummated on the terms contained in the Definitive Agreement, without any
waiver of any material terms or conditions by the Company. We have not reviewed
any proxy or information statements or similar documents that may be prepared
for use in connection with the Transaction.
Our opinion is necessarily based on economic, market and other conditions
as in effect on, and the information made available to us as of, the date
hereof. Our opinion as expressed herein, in any event, is limited to the
fairness, from a financial point of view, to the stockholders of the Transaction
Consideration to be received by the stockholders of Continental in the
Transaction and does not constitute a recommendation to any stockholders of
Continental as to whether such stockholders should tender their shares or as to
how to vote at a stockholders' meeting held in connection with the Transaction.
It is understood that this letter is for the benefit and use of the Board
of Directors of Continental and may not be summarized, excerpted from or
otherwise publicly referred to without our prior written consent except that
this opinion may be included in its entirety in Continental's
Solicitation/Recommendation Statement on Schedule 14D-9 or in a proxy statement
to the stockholders of Continental as contemplated by the Definitive Agreement.
Based upon and subject to the foregoing it is our opinion that, as of the
date hereof, the Transaction Consideration is fair, from a financial point of
view, to the stockholders of Continental.
Very truly yours,
A.G. EDWARDS & SONS, INC.
/S/ DOUGLAS E. REYNOLDS
DOUGLAS E. REYNOLDS
Managing Director
<PAGE> 1
EXHIBIT 6
<TABLE>
<CAPTION>
CONTACTS
<S> <C> <C>
Frederick G. McNamee, III Joseph G. Andersen Eugene Heller/Glenn
President & CEO Chief Financial Officer Schoenfield
(602) 268-3461 (602) 268-3461 Silverman Heller Associates
(310) 208-2550
</TABLE>
FOR IMMEDIATE RELEASE
CONTINENTAL CIRCUITS CORP. ANNOUNCES
MERGER AGREEMENT
PHOENIX, ARIZONA (February 17, 1998)-Continental Circuits Corp. (Nasdaq:
CCIR) announced today that its Board of Directors has accepted the offer of
Hadco Corporation (Nasdaq: HDCO) to acquire Continental Circuits for $23.90 per
share, or approximately $185 million in cash, plus the assumption of
approximately $33 million of debt. As a result of the transaction, it is
anticipated that Continental Circuits will become a wholly owned subsidiary of
Hadco, and will operate as a stand-alone division. A.G. Edwards & Sons served as
financial advisor to Continental Circuits on the transaction.
Headquartered in Salem, New Hampshire, Hadco is the largest manufacturer
of advanced electronic interconnect products in North America. Hadco offers a
wide array of sophisticated manufacturing, engineering and systems integration
services to meet its customers' electronic interconnect needs. Hadco's
principal products are complex multilayer rigid printed circuits and backplane
assemblies. Hadco's customers are a diverse group of original equipment
manufacturers and contract manufacturers in the computing, data
communications/telecommunications and industrial automation industries,
including process controls, automotive, medical and instrumentation.
Hadco operates ten facilities, with nine facilities in the United States and one
facility in Malaysia.
Frederick G. McNamee, III, Chairman, President and Chief Executive
Officer of Continental Circuits, stated, "With the combination of Hadco and
Continental Circuits, we will unite the efforts of two of the stronger and more
technologically advanced interconnect manufacturers in North America. The
companies will have the opportunity to continue their research and technology
development together, which will help Hadco better serve the combined customer
base. In addition, we believe Hadco represents an excellent opportunity for our
employees to benefit from the additional growth prospects in the electronics
industry."
Andrew E. Lietz, Chief Executive Officer of Hadco, stated, "Our objective
is to enhance our leadership position in the global interconnect market. With
the worldwide proliferation of complex electronic products, the increased scale
of operations provided by the Hadco and
<PAGE> 2
Continental Circuits combination will allow Hadco to offer the greatest array
of technologically advanced interconnect products in the world. On a geographic
basis, the acquisition of Continental Circuits provides us with a significant
Southwest presence in volume and quick-turn prototype production of high
quality printed circuit board capability. Regarding customer base, Continental
Circuits has developed many long term relationships with leading companies in
the electronic industry that will be very complementary to Hadco's customer
base. The acquisition is a key element in Hadco's long-term growth strategy."
Headquartered in Phoenix, Arizona, Continental Circuits manufactures
complex multilayered circuit boards and flexible circuits used in sophisticated
electronic equipment produced by leaders in the computer, communications,
instrumentation and industrial control industries, including original equipment
manufacturers and contract assemblers.
A conference call will take place at 10:00 a.m. EST on February 17, 1998.
This conference call will be held in conjunction with combined quarterly
conference call for both Hadco and Continental Circuits. The dial-in number is
415-904-7331. Replay will be available until 11:00 a.m. EST on February 19,
1998 by calling 1-800-633-8284, PIN#3798064, or on the Internet at
http://www.hadco.com:8080/
The statements contained in this release regarding serving the integration
of the combined companies, leadership position of the combined companies,
ability of the combined companies to service the combined customer base and
benefits to employees of Continental Circuits resulting from the transaction
constitute "forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Potential risks and
uncertainties include, but are not limited to, such factors as the possible
intervention of regulatory authorities, general economic conditions, business
conditions in the electronics industries, the demand for the products of the
combined companies, the ability of the companies to consummate the transaction,
manage growth, and effectively integrate the acquisition into their existing
operations, and other risks and uncertainties described in reports and other
documents filed by Continental Circuits from time to time with the Securities
and Exchange Commission. Any of the assumptions could prove inaccurate, and
therefore can be no assurance that the forward-looking information will prove
to be accurate.
<PAGE> 1
EXHIBIT 7
[CONTINENTAL CIRCUITS CORP. LETTERHEAD]
September 26, 1997
Mr. Steve N. Lach
9804 Brookemoor Place
Glen Allen, VA 23060
Dear Steve:
I am very pleased to offer you the position of VP of Operations. Your annual
base salary will be $150,000.00. In addition, you will be eligible for the
following:
1. Monthly car allowance of $650.00.
2. 50,000 Stock Options at the market value price on the date of the
acceptance of this offer.
3. Signing bonus of $25,000.00.
4. Per our 1998 Business Plan total incentive bonus for 1998 will be a target
bonus of $50K with an upper limit of 80% of base wages.
5. Three (3) weeks vacation.
6. 401K Plan at 50% match after completing six months of employment.
7. Medical, dental, and life insurance coverage for you and your eligible
dependents as of your first day of employment. Premiums for medical and
dental insurance will be paid by the Company.
8. You will be eligible for a performance review as of July 31, 1998.
9. Full relocation which will include a home buy out provision. A copy of the
full relocation policy will be sent by Associates Relocation Service.
10. We will arrange for two house hunting trips for you and your spouse.
11. Continental will be responsible for your temporary living expenses in
Phoenix until such time as you are able to relocate into your new home.
12. If, during the first 12 months of employment should you be terminated, for
any reason except causes related to criminal activity or ethical
misconduct, you will receive twelve (12) months of base salary from the
date of termination.
I believe you would be a great asset to C3 and I look forward to working with
you in the near future. Feel free to call me with any questions.
Sincerely,
/s/ Rick McNamee
Rick McNamee
President and CEO
