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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
May 10, 1999
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Date of report (Date of earliest event reported)
ACT Manufacturing, Inc.
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(Exact name of Registrant as specified in its charter)
Massachusetts 0-25560 04-2777507
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(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
2 Cabot Road
Hudson, Massachusetts 01749
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(Address of Principal Executive Offices)
(978) 568-0105
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Registrant's telephone number, including area code
Exhibit Index Located on Page 3
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Item 5. Other Events
On May 10, 1999, ACT Manufacturing, Inc. ("ACT"), EAST Acquisition Corp.,
a Delaware corporation and wholly-owned subsidiary of ACT ("Merger Sub") and CMC
Industries, Inc., a Delaware corporation ("CMC") entered into an Agreement and
Plan of Merger and Reorganization (the "Merger Agreement"), providing for the
merger (the "Merger") of Merger Sub with and into CMC, after which the separate
corporate existence of Merger Sub shall cease and CMC shall continue as the
surviving corporation and a wholly-owned subsidiary of ACT.
Pursuant to the Merger Agreement, at the effective time of the Merger (the
"Effective Time"), each share of common stock of CMC ("CMC Common Stock") issued
and outstanding immediately prior to the Effective Time (other than treasury
shares) will be converted automatically into the right to receive 0.50 of a
share of the common stock of ACT ("ACT Common Stock"). The consummation of the
Merger is subject to various conditions precedent, including approval of the
stockholders of both ACT and CMC and various state and Federal regulatory
agencies, as well as other customary conditions. The Merger Agreement is
attached hereto as Exhibit 2.1 and is hereby incorporated by reference.
John A. Pino, ACT's President, Chief Executive Officer and Chairman of the
Board of Directors and certain trusts for Mr. Pino's benefit, collectively
holders of approximately 55% of the outstanding ACT Common Stock, and certain
stockholders of CMC holding approximately 29% of the outstanding CMC Common
Stock have agreed to vote in favor of the approval of the Merger Agreement. The
voting agreements are attached hereto as Exhibits 99.2 and 99.3, respectively,
and are hereby incorporated by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
Exhibit No. Description
2.1 Agreement and Plan of Merger and Reorganization dated May 10,
1999, by and among ACT Manufacturing, Inc., EAST Acquisition Corp.
and CMC Industries, Inc.
99.1 Joint Press Release of ACT Manufacturing, Inc. and CMC Industries,
Inc., dated May 10, 1999.
99.2 Voting Agreement dated May 10, 1999, by and among ACT
Manufacturing, Inc., EAST Acquisition Corp., and certain
stockholders of CMC Industries, Inc.
99.3 Voting Agreement dated May 10, 1999, by and among CMC Industries,
Inc. and certain stockholders of ACT Manufacturing, Inc.
1
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACT MANUFACTURING, INC.
Date: May 14, 1999 By: /s/ John A. Pino
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John A. Pino
President and Chief
Executive Officer
2
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EXHIBIT INDEX
Exhibit No. Description
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2.1 Agreement and Plan of Merger and Reorganization dated May 10,
1999, by and among ACT Manufacturing, Inc., EAST Acquisition Corp.
and CMC Industries, Inc.
99.1 Joint Press Release of ACT Manufacturing, Inc. and CMC Industries,
Inc., dated May 10, 1999.
99.2 Voting Agreement dated May 10, 1999, by and among ACT
Manufacturing, Inc., EAST Acquisition Corp., and certain
stockholders of CMC Industries, Inc.
99.3 Voting Agreement dated May 10, 1999, by and among CMC Industries,
Inc. and certain stockholders of ACT Manufacturing, Inc.
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
ACT MANUFACTURING, INC.,
EAST ACQUISITION CORP.
and
CMC INDUSTRIES, INC.
Dated as of May 10, 1999
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ARTICLE I -- THE MERGER...........................................................................................2
SECTION 1.01. The Merger......................................................................................2
SECTION 1.02. Effective Time..................................................................................2
SECTION 1.03. Effect of the Merger............................................................................2
SECTION 1.04. Certificate of Incorporation; By-Laws...........................................................2
SECTION 1.05. Directors and Officers..........................................................................3
SECTION 1.06. Effect on Capital Stock.........................................................................3
SECTION 1.07. Exchange of Certificates........................................................................4
SECTION 1.08. No Further Ownership Rights in WEST Common Stock................................................6
SECTION 1.09. Lost, Stolen or Destroyed Certificates..........................................................6
SECTION 1.10. Tax and Accounting Consequences.................................................................6
SECTION 1.11. Taking of Necessary Action; Further Action......................................................6
ARTICLE II -- REPRESENTATIONS AND WARRANTIES OF WEST..............................................................7
SECTION 2.01. Organization....................................................................................7
SECTION 2.02. Capital Structure...............................................................................8
SECTION 2.03. Obligations With Respect to Capital Stock.......................................................8
SECTION 2.04. Authority.......................................................................................9
SECTION 2.05. Section 203 of Delaware Law Not Applicable.....................................................10
SECTION 2.06. SEC Filings; WEST Financial Statements.........................................................11
SECTION 2.07. Absence of Certain Changes or Events...........................................................12
SECTION 2.08. Taxes..........................................................................................12
SECTION 2.09. Intellectual Property..........................................................................13
SECTION 2.10. Compliance; Permits; Restrictions..............................................................15
SECTION 2.11. Litigation.....................................................................................16
SECTION 2.12. Brokers' and Finders' Fees.....................................................................16
SECTION 2.13. Employee Benefit Plans.........................................................................16
SECTION 2.14. Absence of Liens and Encumbrances; Condition of Equipment......................................18
SECTION 2.15. Environmental Matters..........................................................................18
SECTION 2.16. Labor Matters..................................................................................19
SECTION 2.17. Agreements, Contracts and Commitments..........................................................20
SECTION 2.18. Pooling of Interests...........................................................................21
SECTION 2.19. Change of Control Payments.....................................................................21
SECTION 2.20. Statements; Proxy Statement/Prospectus.........................................................21
SECTION 2.21. Board Approval.................................................................................22
SECTION 2.22. Fairness Opinion...............................................................................22
SECTION 2.23. Minute Books...................................................................................22
SECTION 2.24. Order, Commitment and Returns..................................................................22
SECTION 2.25. Customers......................................................................................23
SECTION 2.26. Suppliers......................................................................................23
SECTION 2.27. Inventory......................................................................................23
SECTION 2.28. Restrictions on Business Activities............................................................23
SECTION 2.29. Interested Party Transactions..................................................................23
SECTION 2.30. Insurance......................................................................................24
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SECTION 2.31. Vote Required..................................................................................24
SECTION 2.32. Receivables....................................................................................24
SECTION 2.33. Real Property..................................................................................24
SECTION 2.34. Representations Complete.......................................................................25
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF EAST AND MERGER SUB.............................................25
SECTION 3.01. Organization...................................................................................26
SECTION 3.02. Capital Structure..............................................................................26
SECTION 3.03. Obligations With Respect to Capital Stock......................................................27
SECTION 3.04. Authority......................................................................................27
SECTION 3.05. SEC Filings: EAST Financial Statements........................................................28
SECTION 3.06. Absence of Certain Changes or Events...........................................................30
SECTION 3.07. Taxes..........................................................................................30
SECTION 3.08. Compliance; Permits; Restrictions..............................................................31
SECTION 3.09. Litigation.....................................................................................31
SECTION 3.10. Brokers' and Finders' Fees.....................................................................31
SECTION 3.11. Absence of Liens and Encumbrances..............................................................32
SECTION 3.12. Pooling of Interests...........................................................................32
SECTION 3.13. Change of Control Payments.....................................................................32
SECTION 3.14. Statements; Proxy Statements/Prospectus........................................................32
SECTION 3.15. Board Approval.................................................................................33
SECTION 3.16. Fairness Opinion...............................................................................33
SECTION 3.17. Vote Required..................................................................................33
SECTION 3.18. Representations Complete.......................................................................33
ARTICLE IV -- CONDUCT OF BUSINESS PENDING THE MERGER.............................................................33
SECTION 4.01 Conduct of Business of WEST and EAST............................................................33
SECTION 4.02. Conduct of Business of WEST....................................................................35
SECTION 4.03. Conduct of Business of EAST....................................................................37
SECTION 4.03. No Solicitation................................................................................37
ARTICLE V -- ADDITIONAL INFORMATION..............................................................................39
SECTION 5.01. Proxy Statement/Prospectus; Registration Statement; Other Filings..............................39
SECTION 5.02. Meetings of Stockholders.......................................................................40
SECTION 5.03. Access to Information; Confidentiality.........................................................40
SECTION 5.04. Consents, Approvals............................................................................41
SECTION 5.05. Stock Options..................................................................................41
SECTION 5.06. WEST Employee Stock Purchase Plan..............................................................42
SECTION 5.07. WEST Affiliate Agreements......................................................................43
SECTION 5.08. EAST Affiliate Agreements......................................................................43
SECTION 5.09. Indemnification and Insurance..................................................................43
SECTION 5.10. Notification of Certain Matters................................................................45
SECTION 5.11. Further Action.................................................................................45
SECTION 5.12. Public Announcements...........................................................................45
SECTION 5.13. Listing of EAST Common Stock...................................................................45
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SECTION 5.14. Conveyance Taxes...............................................................................45
SECTION 5.15. Accountants' Letters...........................................................................46
SECTION 5.16. Pooling Accounting Treatment...................................................................46
SECTION 5.17. Pooling Letters................................................................................46
SECTION 5.18. Voting Agreement...............................................................................46
SECTION 5.19. Tax-Free Reorganization........................................................................47
SECTION 5.20. Board of Directors of EAST.....................................................................47
SECTION 5.21. Form S-8.......................................................................................47
SECTION 5.22. WEST Retirement Plans...........................................................................47
SECTION 5.23. Past Service Credit.............................................................................47
ARTICLE VI -- CONDITIONS TO THE MERGER...........................................................................47
SECTION 6.01. Conditions to Obligation of Each Party to Effect the Merger....................................47
SECTION 6.02. Additional Conditions to Obligations of EAST and Merger Sub....................................49
SECTION 6.03. Additional Conditions to Obligation of WEST....................................................50
ARTICLE VII -- TERMINATION.......................................................................................51
SECTION 7.01. Termination....................................................................................51
SECTION 7.02. Notice of Termination; Effect of Termination...................................................53
SECTION 7.03. Fees and Expenses..............................................................................54
ARTICLE VIII -- GENERAL PROVISIONS...............................................................................54
SECTION 8.01. Effectiveness of Representations, Warranties and Agreements....................................54
SECTION 8.02. Notices........................................................................................55
SECTION 8.03. Certain Definitions............................................................................56
SECTION 8.04. Amendment......................................................................................56
SECTION 8.05. Waiver.........................................................................................56
SECTION 8.06. Headings.......................................................................................56
SECTION 8.07. Severability...................................................................................57
SECTION 8.08. Entire Agreement...............................................................................57
SECTION 8.09. Assignment.....................................................................................57
SECTION 8.10. Parties in interest............................................................................57
SECTION 8.11. Failure or Indulgence Not Waiver, Remedies Cumulative..........................................57
SECTION 8.12. Governing Law..................................................................................57
SECTION 8.13. Counterparts...................................................................................58
SECTION 8.14. Interpretation.................................................................................58
SECTION 8.15. Rules of Construction..........................................................................58
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Exhibits: Exhibit A: Form of WEST Voting Agreement
Exhibit B: Form of EAST Voting Agreement
Exhibit C: Form of WEST Affiliate Agreement
Exhibit D: Form of EAST Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of May 10, 1999
(this "Agreement"), among ACT MANUFACTURING, INC., a Massachusetts corporation
("EAST"), EAST ACQUISITION CORP., a Delaware corporation and a wholly-owned
subsidiary of EAST ("Merger Sub"), and CMC INDUSTRIES, INC., a Delaware
corporation ("WEST").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of EAST, Merger Sub and WEST have each
determined that it is advisable and in the best interests of their respective
stockholders for EAST to enter into a business combination with WEST upon the
terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors of
EAST, Merger Sub and WEST have each approved the merger (the "Merger") of Merger
Sub with and into WEST in accordance with the applicable provisions of Delaware
General Corporation Law ("Delaware Law"), and upon the terms and subject to the
conditions set forth herein;
WHEREAS, pursuant to the Merger, each outstanding share of WEST's common
stock, $.01 par value (the "WEST Common Stock"), shall be converted into the
right to receive the Merger Consideration (as defined in Section 1.07(b)), upon
the terms and subject to the conditions set forth herein;
WHEREAS, EAST, Merger Sub and WEST intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder, and to cause the Merger to
qualify as a reorganization under the provisions of Section 368(a) of the Code;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to EAST's and WEST's willingness to enter into this
Agreement, respectively, the Chief Executive Officer of WEST and certain other
affiliates of WEST shall enter into a Voting Agreement in substantially the form
attached hereto as Exhibit A (the "WEST Voting Agreement"), and the Chief
Executive Officer of EAST shall enter into a Voting Agreement in substantially
the form attached hereto as Exhibit B (the "EAST Voting Agreement" and,
collectively with the WEST Voting Agreement, the "Voting Agreements");
WHEREAS, EAST, Merger Sub and WEST desire to make certain representations
and warranties and other agreements in connection with the Merger; and
WHEREAS, for accounting purposes, it is intended that the transactions
contemplated hereby shall be accounted for as a pooling of interests under U.S.
generally accepted accounting principles ("GAAP");
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NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, EAST,
Merger Sub and WEST hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.
(a) Effective Time. At the Effective Time (as defined in Section
1.02), and subject to and upon the terms and conditions of this Agreement, the
Certificate of Merger filed in connection herewith (the "Certificate of Merger")
and Delaware Law, Merger Sub shall be merged with and into WEST, the separate
corporate existence of Merger Sub shall cease, and WEST shall continue as the
surviving corporation. WEST as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated
pursuant to Section 7.01 and subject to the satisfaction or waiver of each of
the conditions set forth in Article VI, the consummation of the Merger will take
place as promptly as practicable (and in any event within two business days)
after satisfaction or waiver of each of the conditions set forth in Article VI,
at the offices of Testa, Hurwitz & Thibeault, LLP, High Street Tower, 125 High
Street, Boston, Massachusetts 02110, unless another date, time or place is
agreed to in writing by the parties hereto.
SECTION 1.02. Effective Time. As promptly as practicable after the
satisfaction or waiver of each of the conditions set forth in Article VI, the
parties hereto shall cause the Merger to be consummated by filing the
Certificate of Merger in accordance with the relevant provisions of Delaware
Law, together with any required related certificates, with the Secretary of
State of the State of Delaware, in such form as required by, and executed in
accordance with, the relevant provisions of Delaware Law (the time of such
filing being the "Effective Time").
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of WEST and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of WEST and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.04. Certificate of Incorporation; By-Laws .
(a) Certificate of Incorporation. Unless otherwise determined by
EAST prior to the Effective Time, at the Effective Time, the Certificate of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by Delaware Law and such
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Certificate of Incorporation; provided, however, that the Certificate of
Incorporation of the Surviving Corporation shall be amended so that the name of
the Surviving Corporation is "CMC Industries, Inc.."
(b) By-Laws. Unless otherwise determined by EAST prior to the
Effective Time, at the Effective Time, the By-Laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by Delaware Law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.06. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, WEST
or the holders of any of the following securities:
(a) Conversion of Securities. Each share of WEST Common Stock issued
and outstanding immediately prior to the Effective Time (excluding any shares of
WEST Common Stock to be canceled pursuant to Section 1.06(b)) shall be
converted, subject to Section 1.06(e), into the right to receive 0.50 of a share
(the "Exchange Ratio") of validly issued, fully paid and nonassessable shares of
common stock of EAST, $.01 par value per share ("EAST Common Stock").
(b) Cancellation. Each share of WEST Common Stock held in the
treasury of WEST and each share of WEST Common Stock owned by EAST, Merger Sub
or any direct or indirect wholly-owned subsidiary of WEST or EAST immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, cease to be outstanding, be canceled
and retired without payment of any consideration therefor.
(c) Stock Options; Employee Stock Purchase Plan. All options to
purchase WEST Common Stock then outstanding under WEST's Amended and Restated
1990 Equity Incentive Plan (the "WEST Stock Option Plan") shall be assumed by
EAST in accordance with Section 5.05. In accordance with the terms of WEST's
1996 Employee Stock Purchase Plan (the "WEST Employee Stock Purchase Plan") all
rights to purchase WEST Common Stock then outstanding under the WEST Employee
Stock Purchase Plan shall terminate in accordance with Section 5.06 prior to the
Effective Time.
(d) Capital Stock of Merger Sub. Each share of common stock, $.01
par value per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, $.01 par value per share, of
the Surviving Corporation. Each stock certificate of
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Merger Sub evidencing ownership of any such shares shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
EAST Common Stock or WEST Common Stock), reorganization, recapitalization or
other like change with respect to EAST Common Stock or WEST Common Stock
occurring after the date hereof and prior to the Effective Time.
(f) Fractional Shares. No fraction of a share of EAST Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of WEST
Common Stock who would otherwise be entitled to a fraction of a share of EAST
Common Stock (after aggregating all fractional shares of EAST Common Stock to be
received by such holder) shall receive from EAST an amount of cash (rounded to
the nearest whole cent), without interest, equal to the product of (i) such
fraction, multiplied by (ii) the closing price of a share of EAST Common Stock
on the trading day immediately prior to the Effective Time, as reported on the
Nasdaq National Market ("Nasdaq").
SECTION 1.07. Exchange of Certificates.
(a) Exchange Agent. Promptly, but in no event more than ten (10)
business days, after the Effective Time, EAST shall supply, or shall cause to be
supplied, to or for the account of a bank or trust Company designated by EAST
(the "Exchange Agent"), in trust for the benefit of the holders of WEST Common
Stock, for exchange in accordance with this Article I, through the Exchange
Agent, certificates evidencing the EAST Common Stock issuable pursuant to
Section 1.06 in exchange for outstanding shares of WEST Common Stock immediately
prior to the Effective Time.
(b) Exchange Procedures. Promptly, but in no event more than ten
(10) business days, after the Effective Time, EAST will instruct the Exchange
Agent to mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time evidenced outstanding shares of WEST
Common Stock whose shares were converted into the right to receive shares of
EAST Common Stock pursuant to Section 1.06 (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon receipt of the
Certificates by the Exchange Agent and shall be in such form and have such other
provisions as EAST may reasonably specify) and (ii) instructions to effect the
surrender of the Certificates in exchange for the certificates evidencing shares
of EAST Common Stock and cash in lieu of any fractional shares. Upon surrender
of a Certificate for cancellation to the Exchange Agent or to such other agent
or agents as may be appointed by EAST, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to promptly
receive in exchange therefor (A) certificates evidencing that number of whole
shares of EAST Common Stock which such holder has the right to receive pursuant
to Section 1.06, (B) any dividends or other distributions to which such holder
is entitled pursuant to Section 1.07(c), and (C) cash in lieu of fractional
shares of EAST Common Stock to which such holder is entitled
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pursuant to Section 1.06(f) (the EAST Common Stock, dividends, distributions and
the cash described in this clause (C) being, collectively, the "Merger
Consideration"), and the Certificate so surrendered shall forthwith be canceled.
Until so surrendered, each outstanding Certificate that, prior to the Effective
Time, represented shares of WEST Common Stock will be deemed from and after the
Effective Time, for all corporate purposes, other than the payment of dividends,
to evidence the ownership of the number of full shares of EAST Common Stock into
which such shares of WEST Common Stock shall have been so converted and the
right to receive an amount in cash in lieu of the issuance of any fractional
shares in accordance with Section 1.06 and any dividends or distributions
payable pursuant to Section 1.07(c).
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to EAST Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate until the holder of such Certificate shall surrender such
Certificate. Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of EAST Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of any such
dividends or other distributions with a record date after the Effective Time
theretofore payable (but for the provisions of this Section 1.07(c)) with
respect to such whole shares of EAST Common Stock.
(d) Transfers of Ownership. If any certificate for shares of EAST
Common Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to EAST or any person designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of
EAST Common Stock in any name other than that of the registered holder of the
Certificate surrendered, or established to the satisfaction of EAST or any agent
designated by it that such tax has been paid or is not payable.
(e) No Liability. Notwithstanding anything to the contrary in this
Section 1.07, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to any holder of WEST Common Stock or EAST Common Stock
for any amount delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) Withholding Rights. EAST, the Surviving Corporation and the
Exchange Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of WEST
Common Stock such amounts as EAST, the Surviving Corporation or the Exchange
Agent is required to deduct and withhold with respect to the making of such
payment under the Code or any provision of state, local, provincial or foreign
tax law. To the extent that amounts are so withheld, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the shares of WEST Common Stock in respect of which such deduction and
withholding was made by EAST, the Surviving Corporation or the Exchange Agent.
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SECTION 1.08. No Further Ownership Rights in WEST Common Stock. The Merger
Consideration delivered upon the surrender for exchange of shares of WEST Common
Stock in accordance with the terms hereof shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of WEST Common Stock.
At the Effective Time, the stock transfer books of WEST shall be closed, and
there shall be no further registration of transfers of WEST Common Stock
outstanding immediately prior to the Effective Time thereafter on the records of
WEST or on the records of the Surviving Corporation. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
SECTION 1.09. Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of EAST
Common Stock as may be required pursuant to Section 1.06; provided, however,
that EAST may, in its sole discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against EAST, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
SECTION 1.10. Tax and Accounting Consequences. It is intended by the
parties hereto that the Merger shall (i) constitute a reorganization within the
meaning of Section 368 of the Code and (ii) qualify for accounting treatment as
a pooling of interests under GAAP. The parties hereto hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
SECTION 1.11. Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title, interest and possession in, to or under all assets, property,
rights, privileges, powers and franchises of WEST and Merger Sub, the officers
and directors of WEST and Merger Sub are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary action, so long as such action is consistent with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF WEST
When used in this Agreement with respect to WEST or any of its
subsidiaries, or EAST or any of its subsidiaries, as the case may be, the term
"Material Adverse Effect" means any change or effect that, individually or in
the aggregate, is or is reasonably likely to be materially adverse to the
business, assets (including intangible assets) and liabilities, financial
condition, properties, or results of operations of WEST and its subsidiaries or
EAST and its subsidiaries, as the case may be, in each case taken as a whole,
provided, however, that any adverse change or effect that is proximately caused
by general economic conditions or conditions affecting the
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electronics manufacturing services industry generally shall not be taken into
account in determining whether there has been or is reasonably likely to be a
"Material Adverse Effect."
In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge after reasonable inquiry of executive officers and
directors of such party, as well as such other officers and employees as is set
forth in the preamble to such party's Disclosure Schedule.
WEST hereby represents and warrants to EAST and Merger Sub that, except as
set forth in the written disclosure schedule previously delivered by WEST to
EAST (the "WEST Disclosure Schedule"):
SECTION 2.01. Organization. Each of WEST and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, has the corporate power to own, lease
and operate its property and to carry on its business as now being conducted and
as currently proposed to be conducted, and is duly qualified to do business and
in good standing as a foreign corporation in each jurisdiction in which the
failure to be so qualified and in good standing could reasonably be expected to
have a Material Adverse Effect on WEST. WEST has delivered to EAST a true and
complete list of all of WEST's subsidiaries, together with the jurisdiction of
incorporation of each subsidiary. WEST has delivered or made available a true
and correct copy of the Restated Certificate of Incorporation (the "Restated
Certificate") and Amended and Restated Bylaws of WEST and similar governing
instruments of its subsidiaries, each as amended to date, to counsel for EAST.
Neither WEST nor any of its subsidiaries is in violation of any of the
provisions of its certificate of incorporation or bylaws or equivalent
organizational documents. Other than as specified in Section 2.01 of the WEST
Disclosure Schedule, WEST has no subsidiaries. Except as disclosed in the WEST
Disclosure Schedule, WEST is the owner of all outstanding shares of capital
stock of each of its subsidiaries and all such shares are duly authorized,
validly issued, fully paid and nonassessable. All of the outstanding shares of
capital stock of each such subsidiary are owned by WEST free and clear of all
liens, charges, restrictions, claims or encumbrances or rights of any nature
whatsoever. There are no outstanding subscriptions, options, warrants, puts,
calls, rights, exchangeable or convertible securities or other commitments or
agreements of any character relating to the issued or unissued capital stock or
other securities of any such subsidiary, or otherwise obligating WEST or any
such subsidiary to issue, transfer, sell, purchase, redeem or otherwise acquire
any such securities. Except as disclosed in the WEST Disclosure Schedule, WEST
does not directly or indirectly own of record or beneficially any equity or
similar interest in, or any interest convertible or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity.
SECTION 2.02. Capital Structure. The authorized capital stock of WEST
consists of 15,000,000 shares of Common Stock, par value $.01 per share, of
which there were 7,681,798 shares issued and outstanding as of March 31, 1999
(the "Capitalization Date") and 5,000,000 shares of Preferred Stock, par value
$.01 per share, of which no shares were issued or outstanding as of the
Capitalization Date. Since the Capitalization Date, no shares of WEST capital
stock have been issued other than pursuant to options to acquire such shares
under the
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WEST Stock Option Plan or the WEST Employee Stock Purchase Plan outstanding as
of the Capitalization Date and set forth in the WEST Disclosure Schedule. All
outstanding shares of WEST Common Stock are duly authorized, validly issued,
fully paid and non-assessable and are not subject to preemptive rights or rights
of first refusal created by statute, the Restated Certificate or Bylaws of WEST
or any agreement or document to which WEST is a party or by which it is bound.
As of the Capitalization Date, WEST had reserved (i) an aggregate of 1,865,617
shares of Common Stock, net of exercises, for issuance to employees, consultants
and non-employee directors pursuant to the WEST Stock Option Plan, under which
options as of the Capitalization Date were outstanding for an aggregate of
1,577,527 shares and no shares were subject to outstanding stock purchase
rights, and (ii) 716,394 shares of Common Stock for issuance to employees
pursuant to the WEST Employee Stock Purchase Plan, of which, as of the
Capitalization Date, 246,570 shares had been issued. All shares of WEST Common
Stock subject to issuance as aforesaid, upon issuance in accordance with the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable
and will not be subject to preemptive rights or rights of first refusal created
by statute, the Restated Certificate or Bylaws of WEST or any agreement or
document to which WEST is a party or by which it is bound. Section 2.02 of the
WEST Disclosure Schedule lists as of the Capitalization Date each and every
outstanding option or other agreement to acquire shares of WEST Common Stock,
the name of the holder of such option or other agreement, the number of shares
subject to such option or other agreement, the exercise price of such option or
other agreement, the number of shares as to which such option or other agreement
will have vested at such date and whether the exercisability of such option or
other agreement will be accelerated in any way by the transactions contemplated
by this Agreement or for any other reason, and indicates the extent of
acceleration, if any. Since the Capitalization Date, WEST has not issued or
granted any option, warrant or other agreement to acquire shares of WEST capital
stock other than pursuant to the WEST Stock Option Plan or the WEST Employee
Stock Purchase Plan in the ordinary course of business consistent with past
practice.
SECTION 2.03. Obligations With Respect to Capital Stock. Except as set
forth in Section 2.02, there are no equity securities of any class of WEST, or
any securities exchangeable or convertible into or exercisable for such equity
securities, issued, reserved for issuance or outstanding. Except for securities
WEST owns, directly or indirectly through one or more subsidiaries, there are no
equity securities of any class of any subsidiary of WEST, or any security
exchangeable or convertible into or exercisable for such equity securities,
issued, reserved for issuance or outstanding. Except as set forth in Section
2.02, there are no options, warrants, equity securities, calls, rights
(including preemptive rights), commitments or agreements of any character to
which WEST or any of its subsidiaries is a party or by which WEST or any of its
subsidiaries are bound obligating WEST or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem
or otherwise acquire, or cause the repurchase, redemption or acquisition, of any
shares of capital stock of WEST or any of its subsidiaries or obligating WEST or
any of its subsidiaries to grant, extend, accelerate the vesting of, change the
price of, or otherwise amend or enter into any such option, warrant, equity
security, call, right, commitment or agreement. There are no registration rights
agreements or understandings and, to the knowledge of WEST, there are no voting
trusts, proxies or other agreements or understandings, with respect to any
equity security of any class of WEST or with respect to any equity security of
any class of any of its subsidiaries. The terms of the
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WEST Stock Option Plan permit the assumption or substitution of options to
purchase EAST Common Stock as provided in this Agreement, without the consent or
approval of the holders of such securities, the WEST stockholders, or otherwise
and without any acceleration of the exercise schedule or vesting provisions in
effect for those options. The current "Purchase Period" (as defined in the WEST
Employee Stock Purchase Plan) commenced under the WEST Employee Stock Purchase
Plan on March 1, 1999 and will end as provided in Section 5.06 of this
Agreement, and except for the purchase rights granted on such commencement date
to participants in the current Purchase Period, there are no other purchase
rights or options outstanding under the WEST Employee Stock Purchase Plan. True
and complete copies of all agreements and instruments relating to or issued
under the WEST Stock Option Plans and the WEST Employee Stock Purchase Plan have
been made available to legal counsel for EAST and such agreements and
instruments have not been amended, modified or supplemented, and there are no
agreements to amend, modify or supplement such agreements or instruments in any
case from the form made available to EAST.
SECTION 2.04. Authority.
(a) WEST 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 WEST, subject only to the approval of the Merger
and this Agreement by WEST's stockholders and the filing and recordation of the
Certificate of Merger pursuant to Delaware Law. This Agreement has been duly
executed and delivered by WEST and constitutes the valid and binding obligation
of WEST, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy and other similar laws affecting the rights and
remedies of creditors generally and general principles of equity. The execution
and delivery of this Agreement by WEST does not, and the performance of this
Agreement will not, (i) conflict with or violate the Restated Certificate or
Bylaws of WEST or the equivalent organizational documents of any of its
subsidiaries, (ii) subject to obtaining the approval of WEST's stockholders of
the Merger as contemplated in Section 5.02 and compliance with the requirements
set forth in Section 2.04(b) below, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to WEST or any of its
subsidiaries or by which its or any of their respective properties or assets is
bound or affected, or (iii) result in any breach of or constitute a default
(with or without notice or lapse of time or both) under, or impair WEST's rights
or alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the properties or assets of
WEST or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, collective
bargaining agreement or other instrument or obligation to which WEST or any of
its subsidiaries is a party or by which WEST or any of its subsidiaries or its
or any of their respective properties or assets are bound or affected, except,
with respect to clauses (ii) and (iii), for any such conflicts, violations,
defaults or other occurrences that could not reasonably be expected to have a
Material Adverse Effect on WEST or the Surviving Corporation. Section 2.04 of
the WEST Disclosure Schedule lists all consents, waivers and approvals under any
of WEST's or any of its subsidiaries' agreements, contracts, licenses, leases or
other agreements or instruments required to be obtained in connection with the
consummation
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of the transactions contemplated hereby, the failure to obtain which could
reasonably be expected to have a Material Adverse Effect on WEST or the
Surviving Corporation.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, local or foreign or other governmental
authority or instrumentality ("Governmental Entity") is required by or with
respect to WEST or any of its subsidiaries in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing of a Form S-4 Registration Statement (or such
other or successor form as shall be appropriate) (the "Registration Statement")
with the Securities and Exchange Commission ("SEC") in accordance with the
Securities Act of 1933, as amended (the "Securities Act") pursuant to which the
shares of EAST Common Stock to be issued in the Merger will be registered with
the SEC, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, (iii) the filing of the Proxy Statement (as
defined in Section 2.20) with the SEC in accordance with the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), (iv) the filing of a Current
Report on Form 8-K with the SEC, (v) the filing of a Notification and Report
Form for Certain Mergers and Acquisitions with the Federal Trade Commission (the
"FTC") and the Department of Justice (the "DOJ") in accordance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (vi) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws and the laws of any foreign country and (vii) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, could not reasonably be expected to have a Material Adverse
Effect on WEST, the Surviving Corporation or EAST or have a material adverse
effect on, or materially alter or delay, the ability of the parties to
consummate the Merger.
SECTION 2.05. Section 203 of Delaware Law Not Applicable. The Board of
Directors of WEST has taken all actions so that the restrictions contained in
Section 203 of the Delaware Law applicable to a "business combination" (as
defined in Section 203) will not apply to the execution, delivery or performance
of this Agreement or to the consummation of the Merger or the other transactions
contemplated by this Agreement.
SECTION 2.06. SEC Filings; WEST Financial Statements.
(a) WEST has filed all forms, reports and documents required to be
filed with the SEC since December 9, 1993, and has made available to EAST such
forms, reports and documents in the form filed with the SEC and, prior to the
Effective Time, will have made available to EAST copies of any additional forms,
reports and documents filed with the SEC prior to the Effective Time. All such
required forms, reports and documents (including those that WEST may file
subsequent to the date hereof) are referred to herein collectively as the "WEST
SEC Reports." In addition, WEST has made available to EAST all exhibits to the
WEST SEC Reports filed prior to the date hereof, and will promptly make
available to EAST all exhibits to any additional WEST SEC Reports filed prior to
the Effective Time. All documents required to be filed as exhibits to the WEST
SEC Reports have been so filed, and all material contracts so filed as exhibits
are in full force and effect, except those which have expired in accordance with
their terms or whose failure to be so could not reasonably be expected to have a
Material Adverse
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Effect on WEST or the Surviving Corporation, and neither WEST nor any of its
subsidiaries is in default thereunder, except where any such default has not
resulted in and is not reasonably expected to result in any Material Adverse
Effect on WEST. As of their respective filing dates, the WEST SEC Reports (i)
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such WEST SEC Reports, and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of WEST's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the WEST SEC Reports (the
"WEST Financials"), including any WEST SEC Reports filed after the date hereof
until the Closing, (w) were complete and correct in all material respects as of
their respective dates, (x) complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as of their respective dates, (y) was prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved and consistent with each other (except as may be indicated in the notes
thereto or, in the case of unaudited interim financial statements, as may be
permitted by the SEC on Form 10-Q under the Exchange Act) and (z) fairly
presented the consolidated financial position of WEST and its subsidiaries as at
the respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were subject to normal and recurring year-end adjustments
which were not material in amount. There has been no material change in WEST
accounting policies except as described in the notes to the WEST Financials. The
balance sheet of WEST contained in the WEST SEC Report for the quarter ended
January 31, 1999 is hereinafter referred to as the "WEST Balance Sheet." Neither
WEST nor any of its subsidiaries has any obligations or liabilities (absolute,
accrued, contingent or otherwise) of any nature required to be disclosed on a
balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition of WEST
and its subsidiaries taken as a whole, except liabilities (i) provided for in
the WEST Balance Sheet, (ii) incurred since the date of the WEST Balance Sheet
in the ordinary course of business consistent with past practice, or (iii) which
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on WEST.
(c) WEST has heretofore made available to EAST a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by WEST with the SEC pursuant
to the Securities Act or the Exchange Act.
SECTION 2.07. Absence of Certain Changes or Events. Since the date of the
WEST Balance Sheet, WEST has conducted its business in the ordinary course
consistent with past practice and there has not been: (i) any Material Adverse
Effect on WEST (whether or not covered by insurance), (ii) any material change
by WEST in its accounting methods, principles
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or practices, except as required by concurrent changes in GAAP, (iii) any
revaluation by WEST of any of its or any of its subsidiaries' assets having a
Material Adverse Effect on WEST, including, without limitation, writing down the
value of inventory or writing off notes or accounts receivable other than in the
ordinary course of business consistent with past practice or as required by
concurrent changes in GAAP; (iv) any acquisition, sale or transfer of any
material asset of WEST or any of its subsidiaries other than in the ordinary
course of business and consistent with past practice; (v) any declaration,
setting aside, or payment of a dividend or other distribution with respect to
the shares of WEST, or any direct or indirect redemption, purchase or other
acquisition by WEST of any of its shares of capital stock; (vi) any contract
entered into by WEST or any of its subsidiaries, other than in the ordinary
course of business and as made available to EAST, or any amendment or
termination of, or default under, any contract to which WEST or any of its
subsidiaries is a party or by which it is bound which could reasonably be
expected to result in a Material Adverse Effect on WEST; or (vii) any agreement
by WEST or any of its subsidiaries to do any of the things described in the
preceding clauses (i) through (vi) (other than negotiations with EAST and its
representatives regarding the transactions contemplated by this Agreement).
SECTION 2.08. Taxes. WEST and each of its subsidiaries has filed all tax
returns required to be filed by any of them and has paid (or WEST has paid on
its behalf) all taxes required to be paid (whether or not shown on such
returns), and the most recent financial statements contained in the WEST SEC
Reports reflect an adequate reserve for all taxes of WEST and its subsidiaries
accrued through the date of such financial statements. WEST is not a party to
any agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of (a) any "excess parachute
payments" within the meaning of Section 280G of the Code in connection with the
transactions contemplated by this Agreement (without regard to the exception in
Section 280G(b)(4)) or (b) any other amount for which a deduction would be
disallowed under Section 162(m) or Section 404 of the Code. WEST has not agreed
to make any adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise, and WEST will not be required to make any such
adjustment as a result of the transactions contemplated by this agreement. WEST
is not and has not ever been a "United States real property holding corporation"
within the meaning of Section 897(c)(2) of the Code. WEST has never filed a
consent pursuant to Section 341(f) of the Code (or any corresponding provision
of state, local or foreign law) relating to collapsible corporations, or agreed
to have Section 341(f)(2) of the Code (or any corresponding provision of state,
local or foreign law) apply to the disposition of any asset owned by it. WEST is
not (and has not ever been) a party to a tax-sharing agreement and has not
assumed the liability of any other person for taxes. WEST has not ever been a
member of a group of corporations filing a consolidated, unitary or combined
return other than a group of which WEST is the parent. No issues have been
raised (and are currently pending) by any taxing authority in connection with
any of the returns of WEST and no deficiencies for any taxes have been proposed,
asserted or assessed against WEST or any of its subsidiaries. No waivers of
statutes of limitation with respect to any tax returns have been given by or
requested from WEST. No power of attorney has been granted by WEST, and is
currently in force, with respect to any matter relating to taxes. None of the
returns filed or required to be filed by WEST contains or will contain a
disclosure statement under former Section 6661 or Section 6662 of the Code or
any similar provision of any state, local or foreign law. For the purpose of
this Agreement, the term "tax" shall include all Federal, state,
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local and foreign income, profits, franchise, gross receipts, payroll, sales,
employment, unemployment insurance, use, property, withholding, excise and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts.
SECTION 2.09. Intellectual Property.
(a) Definitions. For all purposes of this Agreement, the following
terms shall have the following respective meanings:
(i) "Technology" shall mean any or all of the following: (1)
works of authorship including, without limitation, computer programs,
source code and executable code, whether embodied in software, firmware or
otherwise, documentation, designs, files, records, and data; (2)
inventions (whether or not patentable), improvements, and technology; (3)
proprietary and confidential information, including technical data and
customer and supplier lists, trade secrets and know-how; (4) databases,
data compilations and collections and technical data; (5) logos, trade
names, trade dress, trademarks, service marks, World Wide Web addresses
and domain names, tools, methods and processes; and all instantiations of
the foregoing in any form and embodied in any media.
(ii) "Intellectual Property Rights" shall mean any or all of
the following and all rights in, arising out of, or associated therewith:
(1) all United States and foreign patents and utility models and
applications therefor and all reissues, divisions, re-examinations,
renewals, extensions, provisionals, continuations and
continuations-in-part thereof, and equivalent or similar rights anywhere
in the world in inventions and discoveries including without limitation
invention disclosures ("Patents"); (2) all trade secrets and other rights
in know how and confidential or proprietary information; (3) all
copyrights, copyright registrations and applications therefor, and mask
works and mask work registrations and applications therefor, and all other
rights corresponding thereto throughout the world ("Copyrights"); (4) all
rights in World Wide Web addresses and domain names and applications and
registrations therefor, all trade names, logos, common law trademarks and
service marks, trademark and service mark registrations and applications
therefor and all goodwill associated therewith throughout the world
("Trademarks"); and (5) any similar, corresponding or equivalent rights to
any of the foregoing anywhere in the world.
(iii) "WEST Intellectual Property" shall mean any Technology
or Intellectual Property Rights including the WEST Registered Intellectual
Property Rights (as defined below) that are owned by WEST.
(iv) "Registered Intellectual Property Rights" shall mean all
United States, international and foreign: (1) Patents, including
applications therefor; (2) registered Trademarks, applications to register
Trademarks, including intent-to-use applications, or other registrations
or applications related to Trademarks; (3) Copyrights registrations and
applications to register Copyrights; and (4) any other Intellectual
Property Right that is the subject of an application, certificate, filing,
registration or other
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document issued by, filed with, or recorded by, any state, government or
other public legal authority at any time.
(b) Section 2.09(b) of the WEST Disclosure Schedule lists all
Registered Intellectual Property Rights owned by, filed in the name of, or
applied for by WEST (the "WEST Registered Intellectual Property Rights") and
lists any proceedings or actions before any court, tribunal (including the
Untied States Patent and Trademark Office (the "PTO") or equivalent authority
anywhere in the world) related to any WEST Intellectual Property Rights,
including any WEST Registered Intellectual Property Rights.
(c) Other than inbound "shrink-wrap" and similar publicly available
commercial binary code end-user licenses, the contracts, licenses, sublicenses
and agreements of WEST set forth in Section 2.09(c) of the WEST Disclosure
Schedule include all material contracts, licenses, sublicenses and agreements to
which WEST is a party with respect to, or pursuant to which WEST is authorized
to use, any Intellectual Property Right.
(d) WEST and its subsidiaries own, or have the right to use, sell or
license all Technology and Intellectual Property Rights that are used in, or
necessary or required for, the conduct of their respective businesses as
presently conducted or as currently proposed to be conducted by WEST and its
subsidiaries. The operation of the business of WEST and its subsidiaries as it
currently is conducted or is proposed to be conducted by WEST and its
subsidiaries, including but not limited to the development, use, import,
manufacture and sale of the products, technology or services of WEST and its
subsidiaries, does not infringe or misappropriate any Intellectual Property
Right of any person, and WEST has not received notice from any person claiming
that any such product, technology or service of WEST infringes or
misappropriates any Intellectual Property Right of any person (nor does WEST
have knowledge of any basis therefor).
(e) To WEST's knowledge, no person is infringing or misappropriating
any WEST Intellectual Property Right.
(f) WEST and its subsidiaries have taken all reasonable steps to
protect WEST's and its subsidiaries' rights in confidential information and
trade secrets of WEST and its subsidiaries or provided by any other person to
WEST or its subsidiaries. Without limiting the foregoing, WEST and its
subsidiaries have, and enforce, a policy requiring each employee, consultant and
contractor to execute a proprietary information, confidentiality and assignment
agreement, substantially in the form attached hereto as Section 2.09(f) of the
WEST Disclosure Schedule, and all current and former employees, consultants and
contractors of WEST and its subsidiaries have executed such an agreement.
(g) WEST is not in breach of, and the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not constitute a breach of, (i) any contracts,
licenses, sublicenses or other agreements between WEST and any other person with
respect to any material WEST Intellectual Property or (ii) any contracts,
licenses, sublicenses or other agreements required to be listed in Section
2.09(c) of the WEST Disclosure Schedule, and to the knowledge of WEST, there is
not any dispute regarding the scope of any such agreement, or performance under
any such agreement including with
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respect to any payments to be made or received by WEST thereunder. Neither WEST
nor any of its subsidiaries has entered into any agreement to indemnify any
other person against any charge of infringement of any Intellectual Property
Right, other than agreements in the ordinary course of business consistent with
past practice.
SECTION 2.10. Compliance; Permits; Restrictions.
(a) Neither WEST nor any of its subsidiaries is in conflict with, or
in default or violation of (or have taken or failed to take any action which
with notice or lapse of time or both would become a default or violation), or
received notice of a violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to WEST or any of its subsidiaries or by which its
or any of their respective properties or assets is bound or affected, or (ii)
any note, bond, mortgage, indenture, collective bargaining agreement, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which WEST or any of its subsidiaries is a party or by which WEST or any of
its subsidiaries or its or any of their respective properties or assets is bound
or affected, except for any conflicts, defaults or violations which could not
reasonably be expected to have a Material Adverse Effect on WEST. No
investigation or review by any governmental or regulatory body or authority is
pending or, to WEST's knowledge, threatened against WEST or its subsidiaries,
nor has any governmental or regulatory body or authority indicated an intention
to conduct the same, other than, in each such case, those the outcome of which
could not reasonably be expected to have a Material Adverse Effect on WEST. All
leases of real property to which WEST is a party are in good standing and are
valid, binding and enforceable in accordance with their respective terms. There
does not exist a default (nor has an event occurred which with notice or lapse
of time or both would become a default) on the part of the landlord under any
such leases, except as could not reasonably be expected to have a Material
Adverse Effect on WEST.
(b) WEST and its subsidiaries hold all consents, permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to the operation of the business of WEST and its subsidiaries taken
as a whole (collectively, the "WEST Permits") and all of such WEST Permits are
in full force and effect. WEST and its subsidiaries are in compliance with the
terms of the WEST Permits, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect on WEST.
SECTION 2.11. Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or to WEST's knowledge, threatened, before
any agency, court, tribunal or Governmental Entity, foreign or domestic, against
WEST or any of its subsidiaries which could reasonably be expected to have a
Material Adverse Effect on WEST, or which in any manner challenges or seeks to
prevent, enjoin, alter or delay any of the transactions contemplated by this
Agreement. Nor has WEST or any of its subsidiaries received any notice or
assertion of such an action, suit, proceeding, claim, arbitration or
investigation.
SECTION 2.12. Brokers' and Finders' Fees. Except for fees payable to
BancBoston Robertson Stephens pursuant to the engagement letter dated February
22, 1999, WEST has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or
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agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
SECTION 2.13. Employee Benefit Plans.
(a) Section 2.13 of the WEST Disclosure Schedule lists, with respect
to WEST, any subsidiary of WEST and any trade or business (whether or not
incorporated) which is treated as a single employer with WEST (an "ERISA
Affiliate") within the meaning of Section 414(b), (c), (m) or (o) of the Code,
(i) all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) whether or not
such plans are subject to ERISA, (ii) each loan to a non-officer employee in
excess of $10,000, loans to officers and directors and any stock option, stock
purchase, phantom stock, and stock appreciation right, (iii) all supplemental
retirement, severance, sabbatical, medical, dental, vision care, disability,
employee relocation, cafeteria benefit (Code Section 125) or dependent care
(Code Section 129), life insurance or accident insurance, bonus, pension, profit
sharing, savings, deferred compensation or incentive plans, programs or
arrangements which are not employee benefit plans as otherwise covered under
clause (i) above, (iv) other fringe or employee benefit plans, programs or
arrangements that apply to senior management or overseas employees of WEST and
that do not generally apply to all employees, and (v) any current or former
employment or executive compensation or severance agreements (other than
pursuant to the WEST Stock Option Plan), written or otherwise, as to which
unsatisfied or potential obligations of WEST of greater than $100,000 exist for
the benefit of, or relating to, any present or former employee, consultant or
director of WEST (together, the "WEST Employee Plans").
(b) WEST has furnished to EAST a copy of each of the WEST Employee
Plans and related plan documents (including trust documents, insurance policies
or contracts) and has, with respect to each WEST Employee Plan which is subject
to ERISA reporting requirements, provided copies of the Form 5500 reports filed
for the last three plan years. Any WEST Employee Plan intended to be qualified
under Section 401(a) of the Code has either obtained from the Internal Revenue
Service a favorable determination letter as to its qualified status under the
Code, including all amendments to the Code effected by the Tax Reform Act of
1986 and subsequent legislation, or has applied to the Internal Revenue Service
for such a determination letter prior to the expiration of the remedial
amendment period under applicable Treasury Regulations or Internal Revenue
Service pronouncements in which to apply for such determination letter and to
make any amendments necessary to obtain a favorable determination. WEST has also
furnished EAST with the most recent Internal Revenue Service determination
letter issued with respect to each such WEST Employee Plan, and nothing has
occurred since the issuance of each such letter which could reasonably be
expected to cause the loss of the tax-qualified status of any WEST Employee Plan
subject to Code Section 401(a).
(c) (i) Other than continued health care coverage required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
none of the WEST Employee Plans promises or provides retiree medical or other
retiree welfare benefits to any person; (ii) there has been no "prohibited
transaction," as such term is defined in Section 406 of ERISA and Section 4975
of the Code, with respect to any WEST Employee Plan; (iii) each WEST Employee
Plan has been administered in accordance with its terms and in compliance
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with the requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code), except as could not reasonably be expected to
have, in the aggregate, a Material Adverse Effect on WEST, and WEST and each
subsidiary or ERISA Affiliate have performed all obligations required to be
performed by them under, are not in any respect in default under or violation
of, and have no knowledge of any default or violation by any other party to, any
of the WEST Employee Plans, which default or violation could reasonably be
expected to have a Material Adverse Effect on WEST; (iv) neither WEST nor any
subsidiary or ERISA Affiliate is subject to any liability or penalty under
Sections 4976 through 4980 of the Code or Title I of ERISA with respect to any
of the WEST Employee Plans; (v) all material contributions required to be made
by WEST or any subsidiary or ERISA Affiliate to any WEST Employee Plan have been
made on or before their due dates and a reasonable amount has been accrued for
contributions to each WEST Employee Plan for the current plan years; (vi) with
respect to each WEST Employee Plan, no "reportable event" within the meaning of
Section 4043 of ERISA (excluding any such event for which the thirty (30) day
notice requirement has been waived under the regulations to Section 4043 of
ERISA) nor any event described in Section 4062, 4063 or 4041 or ERISA has
occurred; (vii) no WEST Employee Plan is covered by, and neither WEST nor any
subsidiary or ERISA Affiliate has incurred or expects to incur any liability
under Title IV of ERISA or Section 412 of the Code, (viii) the Hourly Pension
Plan for employees of ITT Telecom Products Corporation (now known as WEST) at
Corinth (the "Hourly Pension Plan") is fully funded on a fully vested, plan
termination basis, and (ix) the percentage of Hourly Pension Plan assets
invested in employer stock has never exceeded 10 percent. With respect to each
WEST Employee Plan subject to ERISA as either an employee pension plan within
the meaning of Section 3(2) of ERISA or an employee welfare benefit plan within
the meaning of Section 3(1) of ERISA, WEST has prepared in good faith and timely
filed all requisite governmental reports (which were true and correct as of the
date filed) and WEST has properly and timely filed and distributed or posted all
notices and reports to employees required to be filed, distributed or posted
with respect to each such WEST Employee Plan, except in each case to the extent
that such failure to perform such action could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect on WEST. Other than routine claims
for benefits, no suit, administrative proceeding, action or other litigation has
been brought, or to the best knowledge of WEST is threatened, against or with
respect to any such WEST Employee Plan, including any audit or inquiry by the
IRS or United States Department of Labor. Neither WEST nor any WEST subsidiary
or other ERISA Affiliate is a party to, or has made any contribution to or
otherwise incurred any obligation under, any "multiemployer plan" as defined in
Section 3(37) of ERISA.
(d) With respect to each WEST Employee Plan, WEST and each of its
subsidiaries have complied in all material respects with (i) the applicable
health care continuation and notice provisions of COBRA and the proposed
regulations thereunder and (ii) the applicable requirements of the Family Leave
Act of 1993 and the regulations thereunder.
(e) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or other service
provider of WEST, any WEST subsidiary or any other ERISA Affiliate to severance
benefits or any other payment, except as expressly provided in this Agreement,
or (ii) accelerate the time of payment or vesting, or increase the amount of
compensation due to any such employee or service provider.
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(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by WEST, any WEST subsidiary or other
ERISA Affiliate relating to, or change in participation or coverage under, any
WEST Employee Plan which would materially increase the expense of maintaining
such Plan above the level of expense incurred with respect to that Plan for the
most recent fiscal year included in WEST's financial statements.
SECTION 2.14. Absence of Liens and Encumbrances; Condition of Equipment.
WEST and each of its subsidiaries has good and valid title to, or, in the case
of leased properties and assets, valid leasehold interests in, all of its
material tangible properties and assets, real, personal and mixed, used in its
business, free and clear of any mortgages, liens, pledges, charges or
encumbrances of any kind or character, except (i) as reflected in the WEST
Financials, (ii) for liens for property taxes not yet due and payable and (iii)
such imperfections of title and encumbrances, if any, which have not and could
not reasonably be expected to have a Material Adverse Effect on WEST. The
plants, properties and equipment of WEST and its subsidiaries that are used in
the operation of their businesses are in good operating condition and repair in
all material respects. All properties used in the operations of WEST and its
subsidiaries are reflected in the WEST Balance Sheet to the extent required by
GAAP. Section 2.14 of the WEST Disclosure Schedule identifies each parcel of
real property owned or leased by WEST or any of its subsidiaries and the
material terms of any such leases.
SECTION 2.15. Environmental Matters.
(a) Hazardous Material. Except as could not reasonably be expected
to have a Material Adverse Effect on WEST, no underground storage tanks and no
amount of any substance that has been designated by any Governmental Entity or
by applicable federal, state or local law, to be radioactive, toxic, hazardous
or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to said laws,
(a "Hazardous Material"), but excluding office and janitorial supplies, are
present, as a result of the actions of WEST or any of its subsidiaries, or, to
WEST's knowledge, as a result of any actions of any third party or otherwise,
in, on or under any property, including the land and the improvements, ground
water and surface water thereof, that WEST or any of its subsidiaries has at any
time owned, operated, occupied or leased.
(b) Hazardous Material Activities. Except as could not reasonably be
expected to have a Material Adverse Effect on WEST, neither WEST nor any of its
subsidiaries has transported, stored, used, manufactured, disposed of, released
or exposed its employees or others to Hazardous Materials in violation of any
law in effect on or before the Closing Date, nor has WEST or any of its
subsidiaries disposed of, transported, sold, or manufactured any product
containing a Hazardous Material (collectively "Hazardous Material Activities")
in violation of any rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect prior to or as of the date hereof to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity.
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(c) Permits. WEST and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "WEST
Environmental Permits") necessary for the conduct of WEST's and its
subsidiaries' Hazardous Material Activities and other businesses of WEST and its
subsidiaries as such activities and businesses are currently being conducted,
except where the failure to so hold could not reasonably be expected to have a
Material Adverse Effect on WEST, and are in compliance in all material respects
with all terms and conditions thereof.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to
WEST's knowledge, threatened concerning any WEST Environmental Permit, Hazardous
Material or any Hazardous Material Activity of WEST or any of its subsidiaries.
WEST is not aware of, and has not received notice of, any fact or circumstance
which could involve WEST or any of its subsidiaries in any environmental
litigation, impose upon WEST or any of its subsidiaries any environmental
liability that could reasonably be expected to have a Material Adverse Effect on
WEST, or which could reasonably be expected to interfere with or prevent
continued compliance with the WEST Environmental Permits or any rule, code,
regulation, law, order, injunction or decree relating to any Hazardous Material
or Hazardous Material Activity.
SECTION 2.16. Labor Matters. Except as set forth in Section 2.16 of the
WEST Disclosure Schedule, none of WEST's or its subsidiaries' employees are
unionized and, to WEST's knowledge, there are no activities or proceedings of
any labor union to organize any employees of WEST or any of its subsidiaries.
There are, and have been, no strikes, or material slowdowns, work stoppages or
lockouts, or threats thereof, by or with respect to any employees of WEST or any
of its subsidiaries. WEST and its subsidiaries are and have been in compliance
with all applicable laws regarding employment practices, terms and conditions of
employment, and wages and hours (including, without limitation, ERISA, WARN or
any similar state or local law).
SECTION 2.17. Agreements, Contracts and Commitments. Except as set
forth in Section 2.17 of the WEST Disclosure Schedule, neither WEST nor any
of its subsidiaries is a party to or is bound by, whether written or oral:
(a) any collective bargaining agreements;
(b) any bonus, deferred compensation, incentive compensation,
pension, profit-sharing or retirement plans, or any other employee benefit plans
or arrangements;
(c) any employment or consulting agreement, contract or commitment
with any officer or director level employee, not terminable by WEST or any of
its subsidiaries on thirty (30) days notice without liability;
(d) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, 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;
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(e) any agreement of indemnification or guaranty not entered into in
the ordinary course of business;
(f) any agreement, contract or commitment containing any covenant
limiting the freedom of WEST or any of its subsidiaries to engage in any line of
business, compete with any person or do business in any geographic area;
(g) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $100,000 and not
cancelable;
(h) any agreement, contract or commitment currently in force
relating to the disposition or acquisition of assets not in the ordinary course
of business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise;
(i) any mortgages, capital leases, indentures, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit, other than any such agreements
and instruments entered into after the date hereof in the ordinary course of
business consistent with past practice; or
(j) any other agreement, contract or commitment (excluding real and
personal property leases) which involve payment by WEST or any of its
subsidiaries under any such agreement, contract or commitment of $100,000 or
more in the aggregate which is not cancelable without penalty within thirty (30)
days, other than any such agreements and instruments entered into after the date
hereof in the ordinary course of business consistent with past practice.
Neither WEST nor any of its subsidiaries, nor to WEST's knowledge, any
other party to a WEST Contract (as defined below), has breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted
under, any of the terms or conditions of any of the agreements, contracts or
commitments to which WEST or any of its subsidiaries is a party or by which any
of them is bound of the type described in clauses (a) through (j) above (any
such agreement, contract or commitment, a "WEST Contract") in such manner as
would permit any other party to cancel or terminate any such WEST Contract, or
would permit any other party to seek damages, which could reasonably be expected
to have a Material Adverse Effect on WEST.
SECTION 2.18. Pooling of Interests. To the knowledge of WEST, based on
consultation with its independent accountants, neither WEST nor any of its
subsidiaries or affiliates, nor any of their respective directors, officers or
stockholders has taken or agreed to take any action which would interfere with
EAST's ability to account for the Merger as a pooling of interests or would
prevent the Merger from constituting a transaction qualifying as a
reorganization under Section 368(a) of the Code. To WEST's knowledge, there are
no agreements, plans or other circumstances relating to WEST or any of its
subsidiaries or affiliates that would prevent the Merger from qualifying under
Section 368(a) of the Code.
SECTION 2.19. Change of Control Payments. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachutes, bonus or otherwise) becoming due
to any officer, director or employee of WEST or
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any of its subsidiaries, (ii) increase any benefits otherwise payable by WEST or
any of its subsidiaries or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
SECTION 2.20. Statements; Proxy Statement/Prospectus. The information
supplied by WEST for inclusion in the Registration Statement shall not at the
time the Registration Statement (including any amendments or supplements
thereto) is filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading in light of the circumstances under which
they were made. The information supplied by WEST for inclusion in the proxy
statement/prospectus to be sent to the stockholders of WEST and the stockholders
of EAST in connection with the meeting of WEST's stockholders to consider the
approval of this Agreement and the Merger (the "WEST Stockholders' Meeting") and
in connection with the meeting of EAST's stockholders to consider the approval
of this Agreement and the Merger and the issuance of shares of EAST Common Stock
pursuant to the terms of the Merger (the "EAST Stockholders' Meeting") (such
proxy statement/prospectus as amended or supplemented is referred to herein as
the "Proxy Statement") shall not, on the date the Proxy Statement is first
mailed to WEST's stockholders and EAST's stockholders, at the time of the WEST
Stockholders' Meeting and the EAST Stockholders' Meeting and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
false or misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the WEST Stockholders' Meeting or the EAST Stockholders' Meeting
which has become false or misleading. The Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder. If at any time prior to the Effective Time, any
event or information should be discovered by WEST which should be set forth in
an amendment to the Registration Statement or a supplement to the Proxy
Statement, WEST shall promptly inform EAST. Notwithstanding the foregoing, WEST
makes no representation or warranty with respect to any information supplied by
EAST or Merger Sub which is contained in any of the foregoing documents.
SECTION 2.21. Board Approval. The Board of Directors of WEST has, as of
the date of this Agreement, unanimously (i) approved this Agreement and the
Merger, (ii) determined that the Merger is fair to, and in the best interests of
WEST and its stockholders, and (iii) determined to recommend that the
stockholders of WEST approve this Agreement and the consummation of the Merger.
SECTION 2.22. Fairness Opinion. WEST has received an opinion from
BancBoston Robertson Stephens, dated as of the date hereof, to the effect that
as of the date hereof, the Exchange Ratio is fair to WEST's stockholders from a
financial point of view and promptly after a written copy of such opinion is
delivered to WEST, WEST will deliver to EAST a copy of such opinion.
<PAGE>
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SECTION 2.23. Minute Books. The minute books of WEST and its subsidiaries
made available to counsel for EAST are the only minute books of WEST and contain
a reasonable record, in all material respects, of all meetings of directors (or
committees thereof) and stockholders or actions by written consent since 1993 of
WEST.
SECTION 2.24. Order, Commitment and Returns. The aggregate of all accepted
and unfilled orders for the sale of merchandise entered into by WEST or any of
its subsidiaries does not exceed an amount which can reasonably be expected to
be filled in the ordinary course of business on a schedule which will maintain
satisfactory customer relationships, and the aggregate of all contracts or
commitments for the purchase of products by WEST and all of its subsidiaries
does not exceed an amount which is reasonable for the anticipated volumes of
their businesses (all of which orders, contracts and commitments were made in
the ordinary course of business). There are no asserted claims to return
merchandise of WEST or any of its subsidiaries by reason of alleged
overshipments, defective merchandise, breach of warranty or otherwise except for
normal returns in the ordinary course of business consistent with past practice.
Except as could not reasonably be expected to have a Material Adverse Effect on
WEST or the Surviving Corporation, WEST does not know or have reason to believe
that either the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby will result in any cancellations or
withdrawals of accepted and unfilled orders for the sale of merchandise.
SECTION 2.25. Customers. Except as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on WEST or the
Surviving Corporation, neither WEST nor any of its subsidiaries has received any
notice from any customer that such customer will not continue as a customer of
WEST, such subsidiary, Merger Sub or EAST after the Effective Time or that any
such customer intends to terminate or materially modify any contract, purchase
order or other commitment for the purchase of goods such customer may have with
WEST or such subsidiary.
SECTION 2.26. Suppliers. Except as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on WEST or the
Surviving Corporation, neither WEST nor any of its subsidiaries has received any
notice from any supplier to WEST or its subsidiaries that such supplier will not
continue as a supplier of WEST, such subsidiary, Merger Sub or EAST after the
Effective Time or that any such supplier intends to terminate or materially
modify any contract, supply order or other commitment for the sale of goods such
supplier may have with WEST or such subsidiary.
SECTION 2.27. Inventory. The inventory set forth in the WEST Balance Sheet
were properly stated therein at the lesser of cost or fair market value
determined in accordance with GAAP consistently maintained and applied by WEST.
All of WEST's and its subsidiaries' inventory is owned free and clear of all
liens, charges, restrictions, claims or encumbrances. WEST's and its
subsidiaries' inventory is of good and merchantable quality and is useable and
salable in the ordinary course of WEST's and its subsidiaries' businesses
consistent with past practice, except for items of obsolete materials and
materials of below standard quality, all of which have been written down to
realizable market value or for which adequate reserves have been provided, as of
the date hereof, in the WEST Balance Sheet and, following the date hereof,
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in the WEST Balance Sheet or otherwise in the WEST SEC Reports, in each case, in
a manner consistent with past practice.
SECTION 2.28. Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon WEST or any of its
subsidiaries which has the effect of prohibiting or materially impairing any
current or future business practice of WEST or any of its subsidiaries, any
acquisition of property by WEST or any of its subsidiaries or the conduct of
business by WEST or any of its subsidiaries as currently conducted, or as
currently proposed to be conducted, by WEST or any of its subsidiaries.
SECTION 2.29. Interested Party Transactions. Except as disclosed in the
WEST SEC Reports, neither WEST nor any of its subsidiaries is indebted to any
director, officer, employee or agent of WEST or any of its subsidiaries (except
for amounts due as normal salaries and bonuses and in reimbursement of ordinary
expenses), and no such person is indebted to WEST or any of its subsidiaries,
and there have been no other transactions of the type required to be disclosed
pursuant to Items 402(h) and 404 of Regulation S-K under the Securities Act and
the Exchange Act since July 31, 1998.
SECTION 2.30. Insurance. WEST and each of its subsidiaries have policies
of insurance and bonds of the type and in amounts customarily carried by persons
conducting businesses or owning assets similar to those of WEST and its
subsidiaries. There is no claim pending under any of such policies or bonds as
to which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds. All premiums due and payable under all such policies and
bonds have been paid and WEST and its subsidiaries are otherwise in compliance
in all material respects with terms of such policies and bonds. WEST has no
knowledge of any threatened termination of, or premium increase with respect to,
any of such policies.
SECTION 2.31. Vote Required. The affirmative vote of the holders of a
majority of the shares of WEST Common Stock outstanding on the record date set
for the WEST Stockholders' Meeting is the only vote of the holders of any of
WEST's capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
SECTION 2.32. Receivables. All accounts, notes receivable and other
receivables (other than receivables collected since the date of the WEST Balance
Sheet) reflected on the WEST Balance Sheet are, and all accounts and notes
receivable arising from or otherwise relating to the business of WEST and its
subsidiaries at the Closing Date will be, valid, genuine and fully collectible
in the aggregate amount thereof, subject to normal and customary trade
discounts, less, as of the date hereof, any reserves for doubtful accounts
recorded on the WEST Balance Sheet and, following the date hereof, any reserves
for doubtful accounts recorded on the WEST Balance Sheet or otherwise in the
WEST SEC Reports. All accounts, notes receivable and other receivables arising
out of or relating to the business of WEST and its subsidiaries at the date of
the WEST Balance Sheet have been included in the WEST Balance Sheet in
accordance with GAAP applied on a consistent basis.
SECTION 2.33. Real Property.
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(a) WEST has good, marketable and clear record, indefeasible, fee
simple title to the real property, including all easements, rights of way,
privileges, licenses and other rights benefiting or appurtenant thereto
described on Section 2.33 of the WEST Disclose Schedule (the "Real Property").
Section 2.33 of the WEST Disclose Schedule also describes and lists any
mortgage, lien, pledge, charge, reservation, restriction, restrictive covenant,
limitation, condition of record, right of first refusal, option to purchase,
lease, security interest, defect in title, easement, or encumbrance of any kind
with respect to the Real Property (collectively, "Liens"). There are no Liens
that interfere with the use or maintenance of the Real Property or the
buildings, structures and improvements thereon, or which would require the
removal of an existing building, structure or improvement on the Real Property,
except those that could not reasonably be expected to have a Material Adverse
Effect on WEST.
(b) The buildings, structures and all other improvements on the Real
Property and owned or leased by WEST under the leases described in Section 2.33
of the WEST Disclosure Schedule have no material defects, are in good operating
condition and repair and have been reasonably maintained consistent with
standards generally followed in the industry (giving due account to the age and
length of use of same, ordinary wear and tear excepted), are suitable for their
present uses, are structurally sound (including without limitation the roofs
thereof) and have been constructed and are currently in compliance with all
applicable laws, codes, ordinances, rules, regulations and permits, except as
could not reasonably be expected to have a Material Adverse Effect on WEST.
(c) None of the buildings, structures or improvements on the Real
Property encroach upon property of another person or entity, and no structure of
any other person and/or entity encroaches upon any portion of the Real Property.
(d) There are no condemnation or eminent domain proceedings or
proceedings similar thereto pending or, to the best of WEST's knowledge,
proposed or threatened against all or any part of the Real Property.
(e) All of the Real Property including, but not limited to,
driveways, fences, subsurface sewage disposal systems and parking areas on the
Real Property are located in all material respects within the boundary lines of
the Real Property and do not encroach upon or under the property of any other
person or entity.
(f) The Real Property and the present use thereof are not in
violation of or out of conformity with (i) any applicable land use laws,
statutes, ordinances, rules, regulations or permits or orders of any local,
state, federal or foreign authorities or any other governmental entity having
jurisdiction over the Real Property or (ii) any Liens affecting the Real
Property, except as could not reasonably be expected to have a Material Adverse
Effect on WEST.
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SECTION 2.34. Representations Complete. None of the representations or
warranties made by WEST herein or in any Schedule hereto, including the WEST
Disclosure Schedule, or certificates furnished by WEST pursuant to this
Agreement, or the WEST SEC Reports, when all such documents are read together in
their entirety, contains or will contain at the Effective Time any untrue
statement of a material fact, or omits or will omit at the Effective Time to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EAST AND MERGER SUB
EAST and Merger Sub hereby, jointly and severally, represent and warrant
to WEST that, except as set forth in the written disclosure schedule previously
delivered by EAST to WEST (the "EAST Disclosure Schedule"):
SECTION 3.01. Organization. Each of EAST and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, has the corporate power to own, lease
and operate its property and to carry on its business as now being conducted and
as currently proposed to be conducted, and is duly qualified to do business and
in good standing as a foreign corporation in each jurisdiction in which the
failure to be so qualified and in good standing could reasonably be expected to
have a Material Adverse Effect on EAST. EAST has delivered to WEST a true and
complete list of all of EAST's subsidiaries, together with the jurisdiction of
incorporation of each subsidiary. EAST has delivered or made available a true
and correct copy of the Restated Articles of Organization ("Restated Articles")
and Amended and Restated Bylaws of EAST and similar governing instruments of its
subsidiaries, each as amended to date, to counsel for WEST. Neither EAST nor any
of its subsidiaries is in violation of any of the provisions of its articles of
organization or bylaws or equivalent organizational documents. Other than as
specified in the EAST Disclosure Schedule, EAST has no subsidiaries. EAST is the
owner of all outstanding shares of capital stock of each of its subsidiaries and
all such shares are duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock of each such
subsidiary are owned by EAST free and clear of all liens, charges, restrictions,
claims or encumbrances or rights of any nature whatsoever. There are no
outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable
or convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of any such
subsidiary, or otherwise obligating EAST or any such subsidiary to issue,
transfer, sell, purchase, redeem or otherwise acquire any such securities.
Except as disclosed in the EAST Disclosure Schedule, EAST does not directly or
indirectly own of record or beneficially any equity or similar interest in, or
any interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
SECTION 3.02. Capital Structure. The authorized capital stock of EAST
consists of 30,000,000 shares of Common Stock, par value $.01 per share, of
which there were 9,092,146
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shares issued and outstanding as of the Capitalization Date and 5,000,000 shares
of Preferred Stock, par value $.01 per share, of which no shares were issued or
outstanding as of the Capitalization Date. The authorized capital stock of
Merger Sub consists of 1,000 shares of Common Stock, par value $0.01 per share,
all of which, as of the Capitalization Date, were issued and outstanding and
held by EAST. All outstanding shares of the Common Stock of EAST and Merger Sub
are duly authorized, validly issued, fully paid and non-assessable and are not
subject to preemptive rights or rights of first refusal created by statute, the
Restated Articles or Bylaws of EAST or any agreement or document to which EAST
is a party or by which it is bound. As of the Capitalization Date, EAST had
reserved an aggregate of 2,040,664 shares of Common Stock, for issuance to
employees, consultants and non-employee directors pursuant to EAST's 1993
Incentive Stock Option Plan, 1995 Stock Plan and 1995 Non-Employee Director
Stock Option Plan, (collectively, the "EAST Stock Option Plans"), under which
options as of the Capitalization Date were outstanding for an aggregate of
1,207,364 shares. All shares of the Common Stock of EAST subject to issuance as
aforesaid, upon issuance in accordance with the terms and conditions specified
in the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable and will not be subject to
preemptive rights or rights of first refusal created by statute, the Restated
Articles or Bylaws of EAST or any agreement or document to which EAST is a party
or by which it is bound.
SECTION 3.03. Obligations With Respect to Capital Stock. Except as set
forth in Section 3.02, there are no equity securities of any class of EAST, or
any securities exchangeable or convertible into or exercisable for such equity
securities, issued, reserved for issuance or outstanding as of the
Capitalization Date. Except for securities EAST owns, directly or indirectly
through one or more subsidiaries, there are no equity securities of any class of
any subsidiary of EAST, or any security exchangeable or convertible into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in Section 3.02, as of the Capitalization Date
there are no options, warrants, equity securities, calls, rights (including
preemptive rights), commitments or agreements or any character to which EAST or
any of its subsidiaries is a party or by which EAST or any of its subsidiaries
are bound obligating EAST or any of its subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition, of any shares of
capital stock of EAST or any of its subsidiaries or obligating EAST or any of
its subsidiaries to grant, extend, accelerate the vesting of, change the price
of, or otherwise amend or enter into any such option, warrant, equity security,
call, right, commitment or agreement. Except as disclosed in the EAST SEC
Reports, there are no registration rights agreements or understandings and, to
the knowledge of EAST, there are no voting trusts, proxies or other agreements
or understandings with respect to any equity security of any class of EAST or
with respect to any equity security of any class of any of its subsidiaries.
SECTION 3.04. Authority.
(a) Each of EAST and Merger 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 EAST and Merger Sub, subject
only to the approval of the Merger by EAST's stockholders and
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the filing and recordation of the Certificate of Merger pursuant to Delaware
Law. This Agreement has been duly executed and delivered by each of EAST and
Merger Sub and constitutes the valid and binding obligation of each of EAST and
Merger Sub, enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy and other similar laws affecting the rights and
remedies of creditors generally and general principles of equity. The execution
and delivery of this Agreement by each of EAST and Merger Sub does not, and the
performance of this Agreement by each of EAST and Merger Sub will not, (i)
conflict with or violate the Restated Articles or Bylaws of EAST or the
Certificate of Incorporation or Bylaws of Merger Sub or the equivalent
organizational documents of any of its other subsidiaries, (ii) subject to
obtaining the approval of the Merger of EAST's stockholders as contemplated in
Section 5.02 and compliance with the requirements set forth in Section 3.04(b)
below, conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to EAST or any of its subsidiaries (including Merger Sub) or
by which its or any of their respective properties or assets is bound or
affected, or (iii) result in any breach of or constitute a default (with or
without notice or lapse of time or both) under, or impair EAST's rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of EAST or
any of its subsidiaries (including Merger Sub) pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which EAST or any of its subsidiaries
(including Merger Sub) is a party or by which EAST or any of its subsidiaries
(including Merger Sub) or its or any of their respective properties or assets
are bound or affected, except, with respect to clauses (ii) and (iii), for any
such conflicts, violations, defaults or other occurrences that could not
reasonably be expected to have a Material Adverse Effect on EAST. Section 3.04
of the EAST Disclosure Schedule lists all consents, waivers and approvals under
any of EAST's or any of its subsidiaries' agreements, contracts, licenses,
leases or other agreements or instruments required to be obtained in connection
with the consummation of the transactions contemplated hereby, the failure to
obtain which could reasonably be expected to have a Material Adverse Effect on
EAST.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to EAST or any of its subsidiaries (including Merger Sub) in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for (i) the filing of the
Registration Statement with the SEC in accordance with the Securities Act, (ii)
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware, (iii) the filing of the Proxy Statement with the SEC in accordance
with the Exchange Act, (iv) the filing of a Current Report on Form 8-K with the
SEC, (v) the listing of the EAST Common Stock on Nasdaq, (vi) the filing of a
Notification and Report Form for Certain Mergers and Acquisitions with the FTC
and DOJ in accordance with the HSR Act, (vii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws and the laws of any foreign country
and (viii) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, could not reasonably be expected
to have a Material Adverse Effect on WEST or EAST or have a material adverse
effect on, or materially alter or delay, the ability of the parties to
consummate the Merger.
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SECTION 3.05. SEC Filings: EAST Financial Statements.
(a) EAST has filed all forms, reports and documents required to be
filed with the SEC since March 30, 1995, and has made available to WEST such
forms, reports and documents in the form filed with the SEC and, prior to the
Effective Time, will have made available to WEST copies of any additional forms,
reports and documents filed with the SEC prior to the Effective Time. All such
required forms, reports and documents (including those that EAST may file
subsequent to the date hereof) are referred to herein collectively as the "EAST
SEC Reports." In addition, EAST has made available to WEST all exhibits to the
EAST SEC Reports filed prior to the date hereof, and will promptly make
available to WEST all exhibits to any additional EAST SEC Reports filed prior to
the Effective Time. All documents required to be filed as exhibits to the EAST
SEC Reports have been so filed, and all material contracts so filed as exhibits
are in full force and effect, except those which have expired in accordance with
their terms or whose failure to be so could not reasonably be expected to have a
Material Adverse Effect on EAST, and neither EAST nor any of its subsidiaries is
in default thereunder, except where any such default has not resulted in and is
not reasonably expected to result in any Material Adverse Effect on EAST. As of
their respective filing dates, the EAST SEC Reports (i) complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC thereunder applicable to
such EAST SEC Reports, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. None of EAST's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the EAST SEC Reports (the
"EAST Financials"), including any EAST SEC Reports filed after the date hereof
until the Closing, (w) were complete and correct in all material respects as of
their respective dates, (x) complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as of their respective dates, (y) was prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved and consistent with each other (except as may be indicated in the notes
thereto or, in the case of unaudited interim financial statements, as may be
permitted by the SEC on Form 10-Q under the Exchange Act) and (z) fairly
presented the consolidated financial position of EAST and its subsidiaries as at
the respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were subject to normal and recurring year-end adjustments
which were not material in amount. There has been no material change in EAST
accounting policies except as described in the notes to the EAST Financials. The
balance sheet of EAST contained in the EAST SEC Report for the year ended
December 31, 1998 is hereinafter referred to as the "EAST Balance Sheet."
Neither EAST nor any of its subsidiaries has any obligations or liabilities
(absolute, accrued, contingent or otherwise) of any nature required to be
disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually or
in the aggregate, material to the business, results of operations or financial
condition of EAST
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and its subsidiaries taken as a whole, except liabilities (i) provided for in
the EAST Balance Sheet, (ii) incurred since the date of the EAST Balance Sheet
in the ordinary course of business consistent with past practice, or (iii) which
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on EAST.
(c) EAST has heretofore made available to WEST a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by EAST with the SEC pursuant
to the Securities Act or the Exchange Act.
SECTION 3.06. Absence of Certain Changes or Events. Since the date of the
EAST Balance Sheet, there has not been: (i) any Material Adverse Effect on EAST
(whether or not covered by insurance), (ii) any material change by EAST in its
accounting methods, principles or practices, except as required by concurring
changes in GAAP, (iii) any revaluation by EAST of any of its or any of its
subsidiaries' assets having a Material Adverse Effect on EAST, including,
without limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business consistent
with past practice or as required by concurrent changes in GAAP, (iv) any
acquisition, sale or transfer of any material asset of EAST or any of its
subsidiaries other than in the ordinary course of business and consistent with
past practice; (v) any declaration, setting aside, or payment of a dividend or
other distribution with respect to the shares of EAST, or any direct or indirect
redemption, purchase or other acquisition by EAST of any of its shares of
capital stock; or (vi) any agreement by EAST or any of its subsidiaries to do
any of the things described in the preceding clauses (i) through (v) (other than
negotiations with WEST and its representatives regarding the transactions
contemplated by this Agreement).
SECTION 3.07. Taxes. EAST and each of its subsidiaries has filed all tax
returns required to be filed by any of them and has paid (or EAST has paid on
its behalf) all taxes required to be paid (whether or not shown on such
returns), and the most recent financial statements contained in the EAST SEC
Reports reflect an adequate reserve for all taxes of EAST and its subsidiaries
accrued through the date of such financial statements. EAST is not a party to
any agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of (a) any "excess parachute
payments" within the meaning of Section 280G of the Code in connection with the
transactions contemplated by this Agreement (without regard to the exception in
Section 280G(b)(4)) or (b) any other amount for which a deduction would be
disallowed under Section 162(m) or Section 404 of the Code. EAST has not agreed
to make any adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise, and EAST will not be required to make any such
adjustment as a result of the transactions contemplated by this agreement. EAST
is not and has not ever been a "United States real property holding corporation"
within the meaning of Section 897(c)(2) of the Code. EAST has never filed a
consent pursuant to Section 341(f) of the Code (or any corresponding provision
of state, local or foreign law) relating to collapsible corporations, or agreed
to have Section 341(f)(2) of the Code (or any corresponding provision of state,
local or foreign law) apply to the disposition of any asset owned by it. EAST is
not (and has not ever been) a party to a tax-sharing agreement and has not
assumed the liability of any other person for taxes. EAST has not ever been a
member of a group of corporations filing a consolidated,
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unitary or combined return other than a group of which EAST is the parent. No
issues have been raised (and are currently pending) by any taxing authority in
connection with any of the returns of EAST and no deficiencies for any taxes
have been proposed, asserted or assessed against EAST or any of its
subsidiaries. No waivers of statutes of limitation with respect to any tax
returns have been given by or requested from EAST. No power of attorney has been
granted by EAST, and is currently in force, with respect to any matter relating
to taxes. None of the returns filed or required to be filed by EAST contains or
will contain a disclosure statement under former Section 6661 or Section 6662 of
the Code or any similar provision of any state, local or foreign law.
SECTION 3.08. Compliance; Permits; Restrictions.
(a) Neither EAST nor any of its subsidiaries is in conflict with, or
in default or violation of (or have taken or failed to take any action which
with notice or lapse of time or both would become a default or violation), or
received notice of violation of (i) any law, rule, regulation, order, judgment
or decree applicable to EAST or any of its subsidiaries or by which its or any
of their respective properties or assets is bound or affected, or (ii) any note,
bond, mortgage, indenture, collective bargaining agreement, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
EAST or any of its subsidiaries is a party or by which EAST or any of its
subsidiaries or its or any of their respective properties or assets is bound or
affected, except for any conflicts, defaults or violations which could not
reasonably be expected to have a Material Adverse Effect on EAST. No
investigation or review by any governmental or regulatory body or authority is
pending or, to EAST's knowledge, threatened against EAST or its subsidiaries,
nor has any governmental or regulatory body or authority indicated an intention
to conduct the same, other than, in each such case, those the outcome of which
could not reasonably be expected to have a Material Adverse Effect on EAST. All
leases of real property to which EAST is a party are in good standing and are
valid, binding and enforceable in accordance with their respective terms. There
does not exist a default (nor has an event occurred which with notice or lapse
of time or both would become a default) on the part of the landlord under any
such lease, except as could not reasonably be expected to have a Material
Adverse Effect on EAST.
(b) EAST and its subsidiaries hold all consents, permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to the operation of the business of EAST and its subsidiaries taken
as a whole (collectively, the "EAST Permits") and all of such EAST Permits are
in full force and effect. EAST and its subsidiaries are in compliance with the
terms of the EAST Permits, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect on EAST.
SECTION 3.09. Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or, to EAST's knowledge, threatened,
before any agency, court, tribunal or Governmental Entity, foreign or domestic,
against EAST or any of its subsidiaries which could reasonably be expected to
have a Material Adverse Effect on EAST, or which in any manner challenges or
seeks to prevent, enjoin, alter or delay any of the transactions contemplated
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by this Agreement. Nor has EAST or any of its subsidiaries received any notice
or assertion of such an action, suit, proceeding, claim, arbitration or
investigation.
SECTION 3.10. Brokers' and Finders' Fees. Except for fees payable to BT
Alex. Brown pursuant to an engagement letter dated March 11, 1999, EAST has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or investment bankers' fees or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
SECTION 3.11. Absence of Liens and Encumbrances. EAST and each of its
subsidiaries has good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all of its material tangible
properties and assets, real, personal and mixed, used in its business, free and
clear of any mortgages, liens, pledges, charges, or encumbrances of any kind or
character, except (i) as reflected in the EAST Financials, (ii) for liens for
property taxes not yet due and payable and (iii) such imperfections of title and
encumbrances, if any, which have not and could not reasonably be expected to
have a Material Adverse Effect on EAST.
SECTION 3.12. Pooling of Interests. To the knowledge of EAST, based on
consultation with its independent accountants, neither EAST nor any of its
subsidiaries or affiliates, nor any of their respective directors, officers or
stockholders has taken or agreed to take any action which would interfere with
EAST's ability to account for the Merger as a pooling of interests or would
prevent the Merger from constituting a transaction qualifying as a
reorganization under Section 368(a) of the Code. To EAST's knowledge, there are
no agreements, plans, or other circumstances relating to EAST or any of its
subsidiaries or affiliates that would prevent the Merger from qualifying under
Section 368(a) of the Code.
SECTION 3.13. Change of Control Payments. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachutes, bonus, or otherwise) becoming due
to any officer, director or employee of EAST or any of its subsidiaries, (ii)
increase any benefits otherwise payable by EAST or any of its subsidiaries or
(iii) result in the acceleration of the time of payment or vesting of any such
benefits.
SECTION 3.14. Statements; Proxy Statements/Prospectus. The information
supplied by EAST and Merger Sub for inclusion in the Registration Statement
shall not at the time the Registration Statement (including any amendments or
supplements thereto) is filed with the SEC and at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading in light of the
circumstances under which they were made. The information supplied by EAST and
Merger Sub for inclusion in the Proxy Statement to be sent to the stockholders
of EAST and the stockholders of WEST in connection with the EAST Stockholders'
Meeting and in connection with the WEST Stockholders' Meeting shall not, on the
date the Proxy Statement is first mailed to EAST's stockholders and WEST's
stockholders, at the time of the WEST Stockholders' Meeting and the EAST
Stockholders'
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Meeting and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not false or misleading; or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the EAST Stockholders' Meeting
or the WEST Stockholders' Meeting which has become false or misleading. The
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder. If at
any time prior to the Effective Time, any event or information should be
discovered by EAST or Merger Sub which should be set forth in an amendment to
the Registration Statement or a supplement to the Proxy Statement, EAST or
Merger Sub shall promptly inform WEST. Notwithstanding the foregoing, EAST and
Merger Sub make no representation or warranty with respect to any information
supplied by WEST which is contained in any of the foregoing documents.
SECTION 3.15. Board Approval. The Board of Directors of EAST has, as of
the date of this Agreement, unanimously (i) approved this Agreement and the
Merger, (ii) determined that the Merger is fair to, and in the best interests
of, EAST and its stockholders, and (iii) determined to recommend that the
stockholders of EAST approve this Agreement and the consummation of the Merger.
SECTION 3.16. Fairness Opinion. EAST has received an opinion from BT Alex.
Brown, dated as of the date hereof, to the effect that as of the date hereof,
the Exchange Ratio is fair to EAST's stockholders from a financial point of view
and, promptly after a written copy of such opinion is delivered to EAST, EAST
will deliver to WEST a copy of such opinion.
SECTION 3.17. Vote Required. The affirmative vote of the holders of a
majority of the shares of EAST Common Stock outstanding on the record date set
for the EAST Stockholders' Meeting is the only vote of the holders of any of
EAST's capital stock necessary to approve this Agreement and the transactions
contemplated thereby.
SECTION 3.18. Representations Complete. None of the representations or
warranties made by EAST or Merger Sub herein or in any Schedule hereto,
including the EAST Disclosure Schedule, or certificates furnished by EAST or
Merger Sub pursuant to this Agreement, or the EAST SEC Reports, when all such
documents are read together in their entirety, contains or will contain at the
Effective Time any untrue statement of a material fact, or omits or will omit at
the Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
For purposes of this Article IV, WEST shall include WEST and each of its
subsidiaries and EAST shall include EAST and each of its subsidiaries.
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SECTION 4.01. Conduct of Business of WEST and EAST. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Effective Time, WEST and EAST
agree, except to the extent expressly contemplated by this Agreement or that the
other party shall otherwise consent to in writing, to carry on its business in
the usual, regular and ordinary course, in substantially the same manner as
heretofore conducted, to pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform other material obligations
when due, and use its commercially reasonable efforts consistent with past
practice and policies to preserve intact its present business organization, keep
available the services of its present officers and employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others with which it has business dealings. In furtherance of the foregoing and
subject to applicable law, each of WEST and EAST agree to use its commercially
reasonable efforts to promptly notify the other of any event or occurrence not
in the ordinary course of business, and of any event which could reasonably be
expected to have a Material Adverse Effect. Without limiting the foregoing,
without the prior written consent of the other, neither WEST nor EAST shall do,
cause, or permit any of the following, and neither WEST nor EAST shall permit
its subsidiaries to do any of the following:
(a) amend or otherwise change its Restated Certificate or Restated
Articles, as the case may be, or By-Laws;
(b) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary may
declare and pay a dividend to its parent, (ii) split, combine or reclassify any
of its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of its subsidiaries, or propose to do
any of the foregoing;
(c) other than pursuant to agreements existing as of the date hereof
and set forth in the EAST Disclosure Schedule or the WEST Disclosure Schedule,
as the case may be, accelerate, amend or change the period (or permit any
acceleration, amendment or change) of exercisability or vesting of options or
other rights granted under the WEST Employee Plans or EAST's employee stock
plans (including, without limitation, the WEST Stock Option Plans, the EAST
Stock Option Plans and the WEST Employee Stock Purchase Plan) or authorize cash
payments in exchange for any options or other rights granted under any of such
plans, other than changing the plan period of the WEST Employee Stock Purchase
Plan in accordance with Section 5.06;
(d) take or allow to be taken or fail to take any act or omission
which would jeopardize the treatment of the Merger as a pooling of interests for
accounting purposes under GAAP; or
(e) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.01(a) through (d) above, or any action which
would make any of its representations
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or warranties contained in this Agreement untrue or incorrect such that the
conditions to closing in Section 6.02(a) and 6.03(a), as the case may be, would
not be satisfied or prevent it from performing or cause it not to perform its
covenants hereunder such that the conditions to closing in Section 6.02(b) and
6.03(b), as the case may be, would not be satisfied or result in any of the
conditions to the Merger set forth herein not being satisfied.
SECTION 4.02. Conduct of Business of WEST. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, except as expressly
contemplated by this Agreement, WEST shall not do, cause or permit, nor permit
its subsidiaries to do, any of the following, without the prior written consent
of EAST:
(a) issue, sell, pledge, dispose of or encumber, or authorize or
propose the issuance, sale, pledge, disposition or encumbrance of, or purchase
or propose the purchase of, any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire
any shares of capital stock, or any other ownership interest (including, without
limitation, any phantom interest) (except for the issuance of shares of WEST
Common Stock issuable pursuant to the exercise of employee stock options under
the WEST Stock Option Plans or pursuant to rights to purchase shares under the
WEST Employee Stock Purchase Plan, which options or rights, as the case may be,
are outstanding on the date hereof);
(b) sell, pledge, lease, license, dispose of or encumber any of its
properties or assets (except for (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice and (ii) dispositions of
obsolete or worthless assets);
(c) sell, lease, license, or sublicense or otherwise dispose of or
transfer to any person or entity any WEST IP Rights or amend or modify in a
manner materially adverse to WEST or the Surviving Corporation any existing
agreements with respect to any WEST IP Rights or WEST IP Rights Agreements;
(d) (i) acquire or agree to acquire (by merger, consolidation, or
acquisition of stock or assets or by any other manner) any corporation,
partnership or other business organization or division thereof or any
significant amount of assets, individually or in the aggregate, other than in
the ordinary course of business consistent with past practice or acquire or
agree to acquire any equity securities of any such entity; (ii) incur any
indebtedness for borrowed money or issue or sell any debt securities or warrants
or other rights to acquire any debt securities or assume, guarantee (other than
guarantees of bank debt of its subsidiaries entered into in the ordinary course
of business) or endorse or otherwise as an accommodation become responsible for,
the obligations of any person, or make any loans, advances or capital
contributions to, or investments in, any other person, except in the ordinary
course of business consistent with past practice; (iii) enter into or amend any
material contract or agreement other than in the ordinary course of business
consistent with past practice, or violate, amend or otherwise modify any
contract which violation, amendment, modification or waiver could reasonably be
expected to have a Material Adverse Effect on WEST; (iv) authorize any capital
expenditures or purchase of fixed assets which are, in the aggregate, in excess
of $100,000, taken
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as a whole; or (v) enter into or amend any contract, agreement, commitment or
arrangement to effect any of the matters prohibited by this Section 4.02(d);
(e) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees who
are not officers in the ordinary course of business consistent with past
practice, or grant any severance or termination pay to, or enter into any
employment or severance agreement with, any director, officer or other employee,
except for severance or termination payments to employees who are not officers
in the ordinary course of business consistent with past practice as set forth in
Section 4.02(e) of the WEST Disclosure Schedule, or establish, adopt, enter into
or amend any Employee Plan or hire any new officer or director level employee or
pay any special bonus or special remuneration to any employee or director;
(f) take any action, other than as required by GAAP, to change
accounting policies or procedures (including, without limitation, procedures
with respect to revenue recognition, capitalization of software development
costs, valuation of inventory or assets, payments of accounts payable and
collection of accounts receivable) or revalue any of its assets, including
without limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business consistent
with past practice;
(g) make or change any material tax election inconsistent with past
practice or settle or compromise any material federal, state, local or foreign
tax liability, claim or assessment or agree to an extension or waiver of a
statute of limitations for any assessment of any tax, except to the extent the
amount of any such settlement has been reserved for on its most recent WEST SEC
Report;
(h) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice other than amounts in connection with this
Agreement and other than liabilities adequately reflected or reserved against in
the WEST Financial Statements;
(i) except as may be required by law or as could not reasonably be
expected to have a Material Adverse Effect on WEST or the Surviving Corporation,
take any action to terminate or amend any of the WEST Employee Plans other than
in connection with the Merger;
(j) enter into any material partnership arrangements, joint
development agreements, strategic alliances or operating leases;
(k) materially reduce the amount of insurance coverage provided by
existing insurance policies;
(l) commence a lawsuit other than (i) for the routine collection of
bills, or (ii) in such cases where it in good faith determines that failure to
commence suit would result in the material impairment of a valuable aspect of
its business, provided that it consults with EAST prior to the filing of such a
suit;
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(m) enter into or amend any transaction or agreement with any
director, executive officer, or affiliate of WEST; or
(n) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.02(a) through (m) above.
SECTION 4.03. Conduct of Business of EAST.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, except as expressly contemplated by this Agreement, EAST shall
not do, cause or permit, nor permit its subsidiaries to do, the following,
without the prior consent of WEST: issue or sell any shares of capital stock of
any class (except for (i) the issuance of shares of EAST Common Stock issuable
under the East Stock Option Plans and (ii) the issuance of up to an aggregate of
1,817,540 shares of EAST Common Stock; provided, that in the case of this clause
(ii), such issuance (x) does not require the filing by EAST of a registration
statement under the Securities Act which could reasonably be expected to
materially affect the ability of EAST to, or could reasonably be expected to
delay by a period of more than fifteen (15) business days EAST's ability to,
consummate the Merger, (y) does not require stockholder approval and (z) is not
made to any affiliates of EAST).
SECTION 4.04. No Solicitation.
From the date of this Agreement until the earlier of the Effective Time or
the termination of this Agreement pursuant to Article VII, WEST and its
subsidiaries will not, directly or indirectly through their officers, directors,
employees, agents or otherwise, (i) solicit, initiate or encourage any Takeover
Proposal (defined below) or (ii) engage in negotiations with, or disclose any
nonpublic information relating to WEST or any of its subsidiaries to, or afford
access to the properties, books or records of WEST or any of its subsidiaries
to, any person that has indicated to WEST that it may be considering making, or
that has made, a Takeover Proposal or whose efforts to formulate a Takeover
Proposal would knowingly or could reasonably be expected to be assisted thereby;
provided, nothing herein shall prohibit WEST's Board of Directors from taking
and disclosing to WEST's stockholders a position with respect to an unsolicited
tender or exchange offer pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act. Notwithstanding the immediately preceding sentence, if an
unsolicited Takeover Proposal, or an unsolicited written expression of interest
that WEST reasonably expects to lead to a Takeover Proposal, shall be received
by the Board of Directors of WEST, then, to the extent the Board of Directors of
WEST believes in good faith (after consultation with its financial advisor) (i)
that such Takeover Proposal would, if consummated, result in a transaction more
favorable to WEST's stockholders from a financial point of view than the
transaction contemplated by this Agreement and (ii) after reasonable inquiry by
WEST, that the third party making such Takeover Proposal is financially capable
of consummating such Takeover Proposal (any Takeover Proposal meeting such
conditions being referred to in this Agreement as a "Superior Proposal") and the
Board of Directors of WEST determines in good faith after consultation with
outside legal counsel that it is necessary for the Board of Directors of WEST to
comply with its fiduciary duties to stockholders under applicable law, WEST and
its officers, directors, employees,
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investment bankers, financial advisors, attorneys, accountants and other
representatives retained by it may furnish in connection therewith information
and take such other actions as are consistent with the fiduciary obligations of
WEST's Board of Directors, and such actions shall not be considered a breach of
this Section 4.04 or any other provisions of this Agreement, provided that (A)
upon each such determination WEST notifies EAST of such determination by the
WEST Board of Directors and provides EAST with a true and complete copy of the
Superior Proposal received from such third party, if the Superior Proposal is in
writing, or a written summary of all material terms and conditions thereof
(including the identity of the person initiating the Superior Proposal), if it
is not in writing, (B) WEST provides EAST (simultaneously with the time that
such documents are provided to such third party) with all documents containing
or referring to non-public information of WEST that are supplied to such third
party, to the extent not previously supplied by WEST to EAST and (C) WEST
provides such non-public information to any such third party pursuant to a
non-disclosure agreement at least as restrictive as to confidential information
as the Confidentiality Agreement (as defined in Section 5.03). WEST shall not,
and shall not permit any of its officers, directors, employees (acting on behalf
of WEST) or other representatives to agree to or endorse any Takeover Proposal
unless WEST shall have terminated this Agreement pursuant to Section 7.01(g) and
paid EAST all amounts payable to EAST pursuant to Section 7.03(b).
Notwithstanding anything in this Agreement to the contrary, WEST shall not
accept or recommend to its stockholders, or enter into any agreement concerning,
a Superior Proposal for a period of not less than 48 hours after EAST's receipt
of a true and complete copy of such Superior Proposal, if the Superior Proposal
is in writing, or a written summary of all material terms and conditions
thereof, if it is not in writing. WEST will immediately notify EAST after
receipt of any Takeover Proposal or any notice that any person is considering
making a Takeover Proposal or any request for non-public information relating to
WEST or any of its subsidiaries or for access to the properties, books or
records of WEST or any of its subsidiaries by (i) any person that has indicated
to WEST that it may be considering making, or that has made, a Takeover
Proposal, or (ii) any person whose efforts to formulate a Takeover Proposal
would knowingly or could reasonably be expected to be assisted thereby and who
could reasonably be expected to make a Takeover Proposal (such notice to include
the identity of such person or persons) and will keep EAST fully informed of the
status and material details of any such Takeover Proposal notice, request or any
correspondence or communications related thereto and shall provide EAST with a
true and complete copy of such Takeover Proposal notice or request or
correspondence or communications related thereto, if it is in writing, or a
complete written summary thereof, if it is not in writing. WEST shall
immediately cease and cause to be terminated any existing discussions or
negotiations with any parties (other than EAST and Merger Sub) conducted
heretofore with respect to any Takeover Proposal. WEST shall ensure that the
officers, directors and employees of WEST and its subsidiaries and any
investment banker or other advisor or representative retained by WEST are aware
of the restrictions described in this Section 4.04, and shall be responsible for
any breach of this Section 4.04 by such officers, directors, employees, bankers,
advisors and representatives. For purposes of this Agreement, "Takeover
Proposal" means any offer or proposal for, or any indication of interest in, a
merger or other business combination involving WEST or the acquisition of 20% or
more of the outstanding shares of capital stock of WEST, or the sale or transfer
of any significant portion of the assets of WEST, other than the transactions
contemplated by this Agreement.
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Proxy Statement/Prospectus; Registration Statement; Other
Filings. As promptly as practicable after the execution of this Agreement, WEST
and EAST will prepare and file with the SEC, the Proxy Statement and, as
promptly as practicable following receipt of SEC comments thereon, EAST will
prepare and file with the SEC the Registration Statement in which the Proxy
Statement will be included as a prospectus. Each of WEST and EAST will respond
to any comments of the SEC, will use commercially reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing (provided, however, that EAST shall have no
obligation to agree to account for the Merger as a "purchase" in order to cause
the Registration Statement to become effective) and will cause the Proxy
Statement to be mailed to its stockholders at the earliest practicable time. As
promptly as practicable after the date of this Agreement, WEST and EAST will
prepare and file any other filings required under the Exchange Act, the
Securities Act or any other federal, foreign or Blue Sky laws relating to the
Merger and the transactions contemplated by this Agreement (the "Other
Filings"). Each party will notify the other party promptly upon the receipt of
any comments from the SEC or its staff and of any request by the SEC or its
staff or any other governmental officials for amendments or supplements to the
Registration Statement, the Proxy Statement or any Other Filing or for
additional information and will supply the other party with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Registration Statement, the Proxy Statement, the
Merger or any Other Filing. The Proxy Statement, the Registration Statement and
the Other Filings shall comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement, the Registration Statement or any Other
Filing, WEST or EAST, as the case may be, will promptly inform the other party
of such occurrence and cooperate in filing with the SEC or its staff or any
other government officials, and/or mailing to stockholders of WEST and EAST,
such amendment or supplement. The Proxy Statement shall also include the
recommendations of (i) the Board of Directors of WEST in favor of the Merger and
this Agreement (except that the Board of Directors of WEST may withdraw, modify
or refrain from making such recommendations to the extent that the Board of
Directors of WEST believes in good faith that a Superior Proposal has been made,
or upon advice of its outside legal counsel, shall determine that to include
such recommendation or not withdraw such recommendation if previously included
would constitute a breach of the Board's fiduciary duties under applicable law),
and (ii) the Board of Directors of EAST in favor of the Merger and this
Agreement (except that the Board of Directors of EAST may withdraw, modify or
refrain from making such recommendations to the extent that the Board of
Directors of EAST, upon advice of its outside legal counsel, shall determine
that to include such recommendation or not withdraw such recommendation if
previously included would constitute a breach of the Board's fiduciary duties
under applicable law).
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SECTION 5.02. Meetings of Stockholders. Promptly after the date hereof,
WEST will take all action necessary in accordance with Delaware Law and its
Restated Certificate and Bylaws to convene the WEST Stockholders' Meeting to be
held as promptly as practicable, and in any event if permitted by applicable law
within 45 days after the declaration of effectiveness of the Registration
Statement, for the purpose of voting upon the Merger and this Agreement.
Promptly after the date hereof, EAST will take all action necessary in
accordance with Massachusetts Law and its Restated Articles and Bylaws to
convene the EAST Stockholders' Meeting to be held as promptly as practicable,
and in any event if permitted by applicable law within 45 days after the
declaration of effectiveness of the Registration Statement, for the purpose of
voting upon the Merger and this Agreement. EAST and WEST will consult with each
other and will use their commercially reasonable efforts to hold their
respective Stockholders' Meetings on the same day. Promptly after the date
hereof, EAST and WEST will each use its commercially reasonable efforts to
solicit from its stockholders proxies in favor of the approval of this Agreement
and the approval of the issuance of shares of EAST Common Stock pursuant to the
terms of the Merger, as the case may be, and will take all other action
necessary or advisable to secure the vote or consent of their respective
stockholders required by the rules of the National Association of Securities
Dealers, Inc. or Delaware or Massachusetts Law to obtain such approvals, except
to the extent that the Board of Directors of such party, upon advice of its
outside legal counsel, shall determine that doing so would cause the Board of
Directors of such party to breach its fiduciary duties under applicable law.
SECTION 5.03. Access to Information; Confidentiality.
(a) Upon reasonable notice and subject to restrictions contained in
confidentiality agreements to which such party is subject, WEST and EAST shall
each (and shall cause each of their subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of the other,
reasonable access, during the period prior to the earlier of the Effective Time
or the termination of this Agreement under Article VII, to all its properties,
books, contracts, commitments and records and, during such period, WEST and EAST
each shall (and shall cause each of their subsidiaries to) furnish promptly to
the other all information concerning its business, properties and personnel as
such other party may reasonably request, and each shall make available to the
other the appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business, properties and personnel
as either party may reasonably request. The parties acknowledge that each of
EAST and WEST have previously executed a Confidentiality Agreement, dated
September 8, 1998 (the "Confidentiality Agreement"), which Confidentiality
Agreement shall continue in full force and effect in accordance with its terms.
Each party shall keep such information confidential in accordance with the terms
of the Confidentiality Agreement.
(b) WEST shall provide to EAST and EAST shall provide to WEST
promptly as available drafts and printers' proofs of their respective Forms 10-Q
for the quarter ended April 30, 1999 and March 31, 1999, respectively.
(c) No information or knowledge obtained in any investigation
pursuant to this Section 5.03 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.
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SECTION 5.04. Consents; Approvals.
(a) WEST and EAST shall promptly apply for or otherwise seek, and
shall each use their commercially reasonable efforts to obtain all consents,
waivers, approvals, authorizations or orders (including, without limitation, all
United States and foreign governmental and regulatory rulings and approvals),
and WEST and EAST shall make all filings (including, without limitation, all
filings with United States and foreign governmental or regulatory agencies),
required in connection with the authorization, execution and delivery of this
Agreement by WEST and EAST and the consummation by them of the transactions
contemplated hereby. WEST and EAST shall use commercially reasonable efforts to
obtain all necessary consents, waivers and approvals under any of its material
contracts in connection with the Merger for the assignment thereof or otherwise.
WEST and EAST shall furnish all information required to be included in the Proxy
Statement and the Registration Statement, or for any application or other filing
to be made pursuant to the rules and regulations of any United States or foreign
governmental body in connection with the transactions contemplated by this
Agreement. The parties hereto will consult and cooperate with one another in
connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to HSR or any other
federal, state or foreign antitrust or fair trade law.
(b) Each of EAST and WEST shall use all reasonable efforts to
resolve such objections, if any, as may be asserted by any Governmental Entity
with respect to the transactions contemplated by this Agreement under HSR, the
Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade
Commission Act, as amended, and any other Federal, state or foreign statutes,
rules, regulations, orders or decrees that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade (collectively, "Antitrust Laws"). Each of EAST and WEST shall use all
commercially reasonable efforts to take such action as may be required to cause
the expiration of the notice periods under the HSR or other Antitrust Laws with
respect to such transactions as promptly as possible after the execution of this
Agreement.
(c) Notwithstanding anything to the contrary in Section 5.04(a) or
(b), (i) neither EAST nor any of its subsidiaries shall be required to divest
any of their respective businesses, product lines or assets, or to take or agree
to take any other action or agree to any limitation, that could reasonably be
expected to have a Material Adverse Effect on EAST or of EAST combined with the
Surviving Corporation after the Effective Time, or (ii) neither WEST nor its
subsidiaries shall be required to divest any of their respective businesses,
product lines or assets, or to take or agree to take any other action or agree
to any limitation, that could reasonably be expected to have a Material Adverse
Effect on WEST.
SECTION 5.05. Stock Options.
(a) At the Effective Time, WEST's obligations with respect to each
outstanding option to purchase shares of WEST Common Stock (each, a "WEST
Option") under the WEST Stock Option Plan, whether vested or unvested, will be
assumed by EAST.
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Schedule 5.05 sets forth a true and complete list as of the Capitalization Date
of all holders of outstanding options under the WEST Stock Option Plan,
including the number of shares of WEST capital stock subject to each such
option, the exercise or vesting schedule, the exercise price per share and the
term of each such option. On the Closing Date, WEST shall deliver to EAST an
updated Schedule 5.05 hereto current as of a then recent date to be mutually
agreed upon. Each WEST Option so assumed by EAST under this Agreement shall
continue to have, and be subject to, the same terms and conditions set forth in
the WEST Stock Option Plan and the documents governing the outstanding options
under such Plan pursuant to which such WEST Option was issued as in effect
immediately prior to the Effective Time, except that (i) such WEST Option will
be exercisable for that number of whole shares of EAST Common Stock equal to the
product of the number of shares of WEST Common Stock that were issuable upon
exercise of such WEST Option immediately prior to the Effective Time multiplied
by the Exchange Ratio, rounded down to the nearest whole number of shares of
EAST Common Stock, and (ii) the per share exercise price for the shares of EAST
Common Stock issuable upon exercise of such assumed WEST Option will be equal to
the quotient determined by dividing the exercise price per share of WEST Common
Stock at which such WEST Option was exercisable immediately prior to the
Effective Time by the Exchange Ratio, and rounding the resulting exercise price
up to the nearest whole cent. Consistent with the terms of the WEST Stock Option
Plan and the documents governing the outstanding WEST Options under those Plans
and except as set forth in the WEST Disclosure Schedule, the Merger will not
terminate any of the WEST Options under such Plans or accelerate the
exercisability or vesting of the WEST Options or the shares of EAST Common Stock
which will be subject to those Options upon EAST's assumption of the WEST
Options in the Merger.
(b) It is the intention of the parties that WEST Options assumed by
EAST qualify following the Effective Time as incentive stock options as defined
in Section 422 of the Code ("ISO's") to the extent WEST Options qualified as
ISO's prior to the Effective Time.
(c) After the Effective Time, EAST will issue to each person who,
immediately prior to the Effective Time, was a holder of an outstanding WEST
Option, a document evidencing the foregoing assumption of such WEST Option by
EAST.
(d) EAST will reserve sufficient shares of EAST Common Stock for
issuance under this Section 5.05 hereof.
SECTION 5.06. WEST Employee Stock Purchase Plan. WEST shall take such
actions as are necessary to cause the Exercise Date (as such term is used in the
WEST Employee Stock Purchase Plan applicable to the then current Purchase Period
(as such term is used in the WEST Employee Stock Purchase Plan) to be the last
trading day on which the shares of EAST Common Stock are traded on Nasdaq
immediately prior to the Effective Time (the "Final WEST Purchase Date");
provided, that such change in the Purchase Date shall be conditioned upon the
consummation of the Merger. On the Final WEST Purchase Date, WEST shall apply
the funds credited as of such date under the WEST Stock Purchase Plan within
each participant's payroll withholdings account to the purchase of whole shares
of WEST Common Stock in accordance with the terms of the WEST Employee Stock
Purchase Plan.
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SECTION 5.07. WEST Affiliate Agreements. Set forth in Section 5.07 of the
WEST Disclosure Schedule is a list of those persons who may be deemed to be
"Affiliates" of WEST within the meaning of Rule 145 promulgated under the
Securities Act (a "WEST Affiliate") as of the date hereof. WEST will provide
EAST with such information and documents as EAST reasonably requests for
purposes of reviewing such list. WEST will use its commercially reasonable
efforts to deliver or cause to be delivered to EAST promptly after the execution
of this Agreement (and in each case at least thirty (30) days prior to the
Effective Time) from each WEST Affiliate an executed affiliate agreement in
substantially the form attached hereto as Exhibit C (the "WEST Affiliate
Agreements"), each of which is intended to be in full force and effect as of the
Effective Time. EAST and Merger Sub will be entitled to and will place
appropriate legends on the certificates evidencing any EAST Common Stock to be
received by a WEST Affiliate pursuant to the terms of this Agreement, and to
issue appropriate stop transfer instructions to the transfer agent for the EAST
Common Stock, consistent with the terms of the WEST Affiliate Agreements.
SECTION 5.08. EAST Affiliate Agreements. Set forth in Section 5.08 of the
EAST Disclosure Schedule is a list of those persons who may be deemed to be
"Affiliates" of EAST within the meaning of Rule 145 promulgated under the
Securities Act (an "EAST Affiliate") as of the date hereof. EAST will provide
WEST with such information and documents as WEST reasonably requests for
purposes of reviewing such list. EAST will use its commercially reasonable
efforts to deliver or cause to be delivered to WEST promptly after the execution
of this Agreement (and in each case at least thirty (30) days prior to the
Effective Time) from each EAST Affiliate an executed affiliate agreement in
substantially the form attached hereto as Exhibit D (the "EAST Affiliate
Agreements"), each of which is intended to be in full force and effect as of the
Effective Time. EAST and Merger Sub will be entitled to and will issue
appropriate stop transfer instructions to the transfer agent for the EAST Common
Stock, consistent with the terms of the EAST Affiliate Agreements.
SECTION 5.09. Indemnification and Insurance.
(a) From and after the Effective Time, EAST and the Surviving
Corporation will fulfill and honor in all material respects the obligations of
WEST pursuant to any indemnification agreements between WEST and its directors
and officers in effect on the date hereof in respect of acts or omissions
occurring on or prior to the Effective Time; provided, however, that such
obligations shall be subject to any limitation imposed from time to time under
applicable law. The Certificate of Incorporation and By-laws of the Surviving
Corporation will contain the provisions with respect to indemnification and
elimination of liability for monetary damages substantially similar to those set
forth in the Certificate of Incorporation and By-laws of WEST as of the date
hereof, which provisions will not be amended, repealed or otherwise modified for
a period of six years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who, at the Effective Time, were
directors, officers, employees or agents of WEST, unless such modification is
required by law.
(b) After the Effective Time, EAST and the Surviving Corporation
will, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director or officer of WEST (collectively, the
"Indemnified Parties") against any costs or
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expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages and liabilities in connection with any claim, action, suit,
proceeding or investigation to the extent arising out of or pertaining to any
action or omission in his or her capacity as a director or officer of WEST or
arising out of or pertaining to the transactions contemplated by this Agreement
occurring on or prior to the Effective Time for a period of six years after the
date hereof. In the event of any such claim, action, suit, proceeding or
investigation, (i) any counsel retained by the Indemnified Parties for any
period after the Effective Time will be reasonably satisfactory to the Surviving
Corporation and EAST, (ii) after the Effective Time, EAST and the Surviving
Corporation will pay the reasonable fees and expenses of such counsel, promptly
after statements therefor are received, provided, that the Indemnified Party to
whom such expenses are advanced provides an undertaking (without delivering a
bond or other security) to repay such advance if it is ultimately determined
that such person is not entitled to indemnification and (iii) EAST and the
Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that neither the Surviving Corporation nor EAST will be
liable for any settlement effected without its written consent; and provided,
further, that such indemnification shall be subject to any limitation imposed
from time to time under applicable law; and provided, further, that, in the
event that any claim or claims for indemnification are asserted or made within
such six-year period, all rights to indemnification in respect of any such claim
or claims will continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to any single action 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.
(c) For a period of six years after the Effective Time, EAST will
cause the Surviving Corporation to maintain in effect, if available, directors'
and officers' liability insurance in respect of acts or omissions occurring on
or prior to the Effective Time covering those persons who are currently covered
by WEST's directors' and officers' liability insurance policy on terms
substantially similar to those applicable to the current directors of EAST;
provided, however, that in no event will EAST or the Surviving Corporation be
required to expend in excess of 150% of the annual premium currently paid by
WEST, which amount has been disclosed to EAST, for such coverage and if EAST or
the Surviving Corporation is unable to obtain the insurance required by this
Section 5.09, it shall obtain as much coverage as is available for such 150% of
the annual premium.
(d) This Section 5.09 will survive the consummation of the Merger at
the Effective Time, and is intended to be for the benefit of, and shall be
enforceable by, each of WEST, the Surviving Corporation and the Indemnified
Parties and his or her heirs and representatives.
SECTION 5.10. Notification of Certain Matters. WEST shall give prompt
notice to EAST and Merger Sub, and EAST and Merger Sub shall give prompt notice
to WEST, of (i) the occurrence, or non-occurrence, of any event the effect of
which would be likely to cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate at or prior to the
Effective Time such that the conditions to closing in Section 6.02(a) and
6.03(a), as the case may be, would not be satisfied, and (ii) any failure of
WEST, EAST or Merger Sub, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be
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complied with or satisfied by it hereunder such that the conditions to closing
in Section 6.02(b) and 6.03(b), as the case may be, would not be satisfied;
provided, however, that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 5.11. Further Action. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use all commercially reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the Merger and the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals under any of its or its subsidiaries' agreements, contracts, licenses,
leases or other agreements, or from any Governmental Entity, and to effect all
necessary registrations and filings, and to otherwise satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement. Each
party hereto, at the reasonable request of another party hereto, will execute
and deliver such other instruments and do and perform such other acts and things
as may be necessary or desirable for effecting completely the consummation of
the transactions contemplated hereby.
SECTION 5.12. Public Announcements. EAST and WEST shall consult with each
other before issuing any press release or otherwise making any public statements
(whether or not in response to an inquiry) with respect to the Merger, this
Agreement or the transactions contemplated hereby and shall not issue any such
press release or make any such public statement without the prior consent of the
other party, which shall not be unreasonably withheld; provided, however, that a
party may, without the prior consent of the other party, issue such press
release or make such public statement as may after consultation with counsel be
required by law or by obligations pursuant to any listing agreement with any
national securities exchange or with the National Association of Securities
Dealers, Inc. if it has used reasonable efforts to consult with the other party.
SECTION 5.13. Listing of EAST Common Stock. EAST shall use its
commercially reasonable efforts to cause the shares of EAST Common Stock to be
issued in the Merger to be approved for listing on the Nasdaq National Market
prior to the Effective Time, subject to notice of issuance.
SECTION 5.14. Conveyance Taxes. EAST and WEST shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereby that are required or
permitted to be filed on or before the Effective Time.
SECTION 5.15. Accountants' Letters. Upon reasonable notice from EAST, WEST
shall use its commercially reasonable efforts to cause PricewaterhouseCoopers
LLP to deliver to EAST a letter covering such matters as are requested by EAST
and as are customarily addressed in accountant's "comfort" letters.
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SECTION 5.16. Pooling Accounting Treatment. Each of EAST and WEST shall
use commercially reasonable efforts to cause the business combination to be
effected by the Merger to be accounted for as a pooling of interests. Each of
EAST and WEST shall use commercially reasonable efforts not to, and to cause its
Affiliates not to, take any action that would adversely affect the ability of
EAST to treat the Merger as a pooling of interests under GAAP.
SECTION 5.17. Pooling Letters.
(a) WEST shall use all commercially reasonable efforts to cause to
be delivered to EAST a letter of PricewaterhouseCoopers LLP, dated on or prior
to the date of this Agreement and confirmed in writing two business days before
the date of the Proxy Statement, to the effect that WEST qualifies as an entity
that may be a party to a business combination for which the pooling of interest
method of accounting would be available and in a form reasonably satisfactory to
EAST and customary in scope and substance for letters delivered by independent
public accountants in connection with transactions of this type.
(b) EAST shall use all commercially reasonable efforts to cause to
be delivered to WEST a letter of Deloitte & Touche LLP, dated on or prior to the
date of this Agreement and confirmed in writing two business days before the
date of the Proxy Statement, regarding concurrence with EAST's management's
conclusion regarding appropriateness of pooling of interest accounting treatment
for the Merger under APB Opinion No. 16 if consummated in accordance with this
Agreement and in a form reasonably satisfactory to WEST and customary in scope
and substance for letters delivered by independent public accountants in
connection with transactions of this type.
SECTION 5.18. Voting Agreement. WEST shall use its commercially reasonable
efforts, on behalf of EAST and pursuant to the request of EAST, to cause each
WEST stockholder named in Schedule 5.18(a) to execute and deliver to EAST a
Voting Agreement in substantially the form of Exhibit A attached hereto
concurrently with the execution of this Agreement. WEST shall use its
commercially reasonable efforts to provide to EAST on the date hereof, a
schedule correctly stating on Schedule 5.18(a) the number of shares of WEST
Common Stock beneficially owned by each person listed. EAST shall use its
commercially reasonable efforts, on behalf of WEST and pursuant to the request
of WEST, to cause the President and Chief Executive Officer of EAST to execute
and deliver to WEST a Voting Agreement in substantially the form of Exhibit B
attached hereto concurrently with the execution of this Agreement. EAST shall
use its commercially reasonable efforts to provide to WEST on the date hereof, a
schedule correctly stating on Schedule 5.18(b) the number of shares of EAST
Common Stock beneficially owned by the President and Chief Executive Officer of
EAST.
SECTION 5.19. Tax-Free Reorganization. EAST and WEST will each use its
commercially reasonable efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368 of the Code. EAST and WEST will
each make available to the other party and their respective legal counsel copies
of all tax returns reasonably requested by the other party.
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SECTION 5.20. Board of Directors of EAST. EAST shall take all necessary
corporate action to appoint two non-employee designees of WEST reasonably
acceptable to EAST to the EAST Board of Directors as of the Effective Time, one
as a Class II Director and one as a Class III Director, whose terms will expire
upon the election and qualification of directors at the Annual Meeting of
Stockholders of EAST to be held in 2000 and 2001, respectively.
SECTION 5.21. Form S-8. EAST agrees to file a registration statement on
Form S-8 for the shares of EAST Common Stock issuable with respect to assumed
WEST Stock Options no later than five (5) business days after the Effective
Time. WEST shall cooperate and assist EAST in the preparation of such
Registration Statement.
SECTION 5.22. WEST Retirement Plans. WEST shall properly reflect any
contribution necessary to fully fund the Hourly Pension Plan on a termination
basis as of the date hereof on Section 5.22 of the WEST Disclosure Schedule. Any
and all defined contribution plans maintained by WEST or any ERISA Affiliate of
WEST, including but not limited to the Cortel Co. USA, Inc. (now known as WEST)
Profit Sharing Savings Plan and Trust for Salaried Employees, but excluding the
Pension Plan, shall be terminated by WEST immediately prior to the Effective
Time.
SECTION 5.23. Past Service Credit. For purposes of any seniority periods
or length of service requirements, waiting periods, vesting periods, or
differential benefits based on length of service in any such plan or policy of
EAST and/or its subsidiaries for which a WEST employee may be eligible after the
Effective Time, EAST and/or its subsidiaries, as the case may be, shall treat
service by such employee with WEST as though it had been service with EAST for
all purposes under any such plan or policy so long as this crediting of service
does not violate applicable laws or any term of the respective plan, agreement
or policy providing benefits, and to the extent applicable, is consistent with
the rules governing qualification under Section 401(a) of the Code.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions, any of which may be waived in writing by agreement of all parties
hereto:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued by the SEC and no proceedings for that
purpose, and no similar proceeding in respect of the Proxy Statement, shall have
been initiated or, to the knowledge of EAST or WEST, threatened by the SEC.
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(b) Stockholder Approval. This Agreement shall have been approved
and adopted, and the Merger shall have been approved and adopted, by the
requisite vote, under applicable law, by the stockholders of WEST and EAST,
respectively; and the issuance of shares of EAST Common Stock by virtue of the
Merger shall have been approved by the requisite vote under the rules of the
National Association of Securities Dealers, Inc. by the stockholders of EAST.
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition (an "Injunction") preventing the consummation of the Merger shall be
in effect, nor shall any proceeding brought by any administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; and there shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger, which makes the consummation of the
Merger illegal or prevents or prohibits the Merger.
(d) Tax Opinions. EAST and WEST shall have received substantially
identical written opinions of Testa, Hurwitz & Thibeault, LLP ("TH&T") and
Wilson Sonsini Goodrich & Rosati, P.C. ("WSG&R"), respectively, in form and
substance reasonably satisfactory to them to the effect that the Merger will
constitute a reorganization within the meaning of Section 368 of the Code, and
such opinions shall not have been withdrawn; provided, however, that if either
TH&T or WSG&R is unwilling to give the opinion required in this Section 6.01(d),
this condition may be satisfied by the other firm delivering such opinion to
both EAST and WEST. In rendering such opinions, counsel shall be entitled to
rely upon, among other things, reasonable assumptions as well as representations
of EAST, Merger Sub and WEST, and certain stockholders of WEST.
(e) Nasdaq Listing. The EAST Common Stock issuable to stockholders
of WEST pursuant to this Agreement and such other shares required to be reserved
in connection with the Merger shall have been approved for listing, subject to
notice of issuance, on Nasdaq.
(f) Opinion of Accountants. Each of EAST and WEST shall have
received letters from each of Deloitte & Touche LLP and PricewaterhouseCoopers
LLP, each dated within two (2) business days prior to the Effective Time,
regarding those firms' concurrence with EAST's managements' and WEST's
managements' conclusions as to the appropriateness of pooling of interest
accounting for the Merger under Accounting Principles Board Opinion No. 16, if
the Merger is consummated in accordance with this Agreement.
(g) Hart-Scott-Rodino Act. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated. All declarations and filings required to be made prior to the
Effective Time with, and all consents, approvals, authorizations and permits
required to be obtained prior to the Effective Time from, any Governmental
Entity in connection with the consummation of the Merger and the transactions
contemplated by this Agreement and the Certificate of Merger shall have been
made or obtained (as the case may be), except where the failure to obtain such
consents, approvals,
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authorizations and permits, individually or in the aggregate, could not
reasonably be expected, in the reasonable opinion of EAST, to result in a
Material Adverse Effect on EAST, Merger Sub or WEST or to materially adversely
affect or delay the consummation of the Merger.
SECTION 6.02. Additional Conditions to Obligations of EAST and Merger Sub.
The obligations of EAST and Merger Sub to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions,
any of which may be waived in writing by EAST:
(a) Representations and Warranties. The representations and
warranties of WEST contained in this Agreement shall be true and correct in all
respects on and as of the Effective Time, with the same force and effect as if
made on and as of the Effective Time, except for (i) changes contemplated by
this Agreement, (ii) those representations and warranties which address matters
only as of a particular date (which shall remain true and correct as of such
date) and (iii) in the case of those portions of representations and warranties
not explicitly qualified as to Material Adverse Effect, where the failure to be
true and correct, individually or in the aggregate, has not had (except as shall
have been cured) and could not reasonably be expected to have a Material Adverse
Effect on WEST, and EAST and Merger Sub shall have received a certificate to
such effect signed by the President and Chief Financial Officer of WEST;
(b) Agreements and Covenants. WEST shall have performed or complied
in all material respects with all agreements, covenants, obligations and
conditions required by this Agreement to be performed or complied with by it on
or prior to the Effective Time, and EAST and Merger Sub shall have received a
certificate to such effect signed by the President and Chief Financial Officer
of WEST;
(c) Consents Obtained. All consents, waivers, approvals or
authorizations of NationsBanc, N.A. (or such other bank providing a substitute
credit facility not less favorable to WEST) and all other consents, waivers,
approvals, authorizations or orders required to be obtained, and all filings
required to be made, by WEST for the authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by WEST, except (other than with
respect to NationsBanc, N.A. or such substitute lender) where the failure could
not reasonably be expected to have a Material Adverse Effect on WEST, EAST or
the Surviving Corporation or a material adverse effect on the ability of the
parties to consummate the Merger;
(d) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or other
inquiry that could reasonably be expected to result in such an action or
proceeding) by any Governmental Entity or administrative agency before any
Governmental Entity, administrative agency or court of competent jurisdiction,
nor shall there be in effect any judgment, decree, preliminary or permanent
injunction, temporary restraining order, or other order of any Governmental
Entity, administrative agency or court of competent jurisdiction, in either
case, (i) seeking to prohibit, limit or restrict EAST from exercising all
material rights and privileges pertaining to its ownership of the Surviving
Corporation or the ownership or operation by EAST or any of its subsidiaries of
all or a material portion of the business or assets of EAST or any of its
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subsidiaries, or (ii) seeking to prohibit, limit or restrict EAST's conduct or
operation of the business of WEST and its subsidiaries following the Merger, or
(iii) seeking to compel EAST or any of its subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of EAST, WEST or
any of their respective subsidiaries, as a result of the Merger or the
transactions contemplated by this Agreement;
(e) Material Adverse Change. Since the date of this Agreement, there
shall have been no Material Adverse Effect on WEST;
(f) WEST Affiliate Agreements. EAST shall have received from each
WEST Affiliate a WEST Affiliate Agreement, and each such WEST Affiliate
Agreement shall be in full force and effect; and
(g) Tax Certificate. WEST shall have delivered to EAST a clearance
certificate or similar document(s) which may be required by any tax authority to
relieve EAST of any obligation to withhold taxes in connection with the
transactions contemplated by this Agreement.
SECTION 6.03. Additional Conditions to Obligation of WEST. The obligation
of WEST to effect the Merger shall be subject to the satisfaction at or prior to
the Effective Time of the following conditions, any of which may be waived in
writing by WEST:
(a) Representations and Warranties. The representations and
warranties of EAST and Merger Sub contained in this Agreement shall be true and
correct in all respects on and as of the Effective Time, with the same force and
effect as if made on and as of the Effective Time, except for (i) changes
contemplated by this Agreement, (ii) those representations and warranties which
address matters only as of a particular date (which shall remain true and
correct as of such date) and (iii) in the case of those portions of
representations and warranties not explicitly qualified as to Material Adverse
Effect, where the failure to be true and correct, individually or in the
aggregate, has not had (except as shall have been cured) and could not
reasonably be expected to have a Material Adverse Effect on EAST and Merger Sub,
and WEST shall have received a certificate to such effect signed by the
President and Chief Financial Officer of EAST;
(b) Agreements and Covenants. EAST and Merger Sub shall have
performed or complied in all material respects with all agreements, covenants,
obligations and conditions required by this Agreement to be performed or
complied with by them on or prior to the Effective Time, and WEST shall have
received a certificate to such effect signed by the President and Chief
Financial Officer of EAST;
(c) Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by EAST and Merger Sub for the authorization, execution and delivery of
this Agreement and the consummation by them of the transactions contemplated
hereby shall have been obtained and made by EAST and Merger Sub, except where
the failure could not reasonably be expected to have a Material Adverse Effect
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on WEST, EAST or the Surviving Corporation or a material adverse effect on the
ability of the parties to consummate the Merger;
(d) Material Adverse Change. Since the date of this Agreement, there
shall have been no Material Adverse Effect on EAST; and
(e) EAST Affiliate Agreements. WEST shall have received from each
EAST Affiliate an EAST Affiliate Agreement, and each such EAST Affiliate
Agreement shall be in full force and effect.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, notwithstanding approval thereof by the
stockholders of WEST and EAST:
(a) by mutual written consent duly authorized by the Boards of
Directors of EAST and WEST; or
(b) by either EAST or WEST if the Closing shall not have occurred on
or before September 30, 1999 (the "End Date") (provided, that a later date may
be agreed upon in writing by the parties hereto and provided, further, that the
right to terminate this Agreement under this Section 7.01(b) shall not be
available to any party whose willful breach of this Agreement has been the cause
of or resulted in the failure of the Merger to occur on or before such date); or
(c) by either EAST or WEST if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued a non-appealable final order, decree or ruling or taken any other action,
in each case having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger; or
(d) by (i) EAST if the required approval of the stockholders of WEST
contemplated by this Agreement shall not have been obtained by reason of the
failure to obtain the requisite vote upon a vote taken at a meeting of
stockholders convened therefor or at any adjournment thereof or (ii) WEST if the
required approval of the stockholders of EAST contemplated by this Agreement
shall not have been obtained by reason of the failure to obtain the requisite
vote upon a vote taken at a meeting of stockholders convened therefor or at any
adjournment thereof; or
(e) by EAST, (i) upon a breach of any representation, warranty,
covenant or agreement on the part of WEST set forth in this Agreement, or if any
representation or warranty of WEST shall have become untrue, in either case such
that the conditions set forth in Section 6.02(a) or Section 6.02(b) would not be
satisfied as of the time of such breach or as of the time such representation or
warranty shall have become untrue, provided that if such
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inaccuracy in WEST's representations and warranties or breach by WEST is curable
by WEST through the exercise of its commercially reasonable efforts within
fifteen (15) business days of receipt by WEST of written notice thereof, EAST
may not terminate this Agreement under this Section 7.01(e)(i) during such
fifteen (15) business day period, so long as WEST continues to exercise such
commercially reasonable efforts or if such breach is cured, and provided further
that the right to terminate this Agreement by EAST under this Section 7.01(e)(i)
shall not be available to EAST where EAST is at that time in willful breach of
this Agreement; (ii) if the Board of Directors of WEST shall have withheld,
withdrawn, or modified its recommendation of this Agreement or the Merger in a
manner adverse to EAST or shall have resolved to do any of the foregoing,
provided that the right to terminate this Agreement by EAST under this Section
7.01(e)(ii) shall not be available to EAST where EAST is at that time in willful
breach of this Agreement, or (iii) for any reason WEST fails to call and hold
the WEST Stockholders' Meeting by the End Date and WEST is at that time in
willful breach of this Agreement, provided that the right to terminate this
Agreement by EAST under this Section 7.01(e)(iii) shall not be available to EAST
where EAST is at that time in willful breach of this Agreement;
(f) by WEST (i) upon a breach of any representation, warranty,
covenant or agreement on the part of EAST set forth in this Agreement, or if any
representation or warranty of EAST shall have become untrue, in either case such
that the conditions set forth in Section 6.03(a) or Section 6.03(b) would not be
satisfied as of the time of such breach or as of the time such representation or
warranty shall have become untrue, provided that if such inaccuracy in EAST's
representations and warranties or breach by EAST is curable by EAST through the
exercise of its commercially reasonable efforts within fifteen (15) business
days of receipt by EAST of written notice thereof, WEST may not terminate this
Agreement under this Section 7.01(f)(i) during such fifteen (15) business day
period, so long as EAST continues to exercise such commercially reasonable
efforts or if such breach is cured, and provided further that the right to
terminate this Agreement by WEST under this Section 7.01(f)(i) shall not be
available to WEST where WEST is at that time in willful breach of this
Agreement; (ii) if the Board of Directors of EAST shall have withheld, withdrawn
or modified its recommendation of this Agreement or the Merger in a manner
adverse to WEST or shall have resolved to do any of the foregoing, provided that
the right to terminate this Agreement by WEST under this Section 7.01(f)(ii)
shall not be available to WEST where WEST is at that time in willful breach of
this Agreement, or (iii) for any reason EAST fails to call and hold the EAST
Stockholders' Meeting by the End Date and EAST is at that time in willful breach
of this Agreement, provided that the right to terminate this Agreement by WEST
under this Section 7.01(f)(iii) shall not be available to WEST where WEST is at
that time in willful breach of this Agreement;
(g) by either WEST or EAST, if WEST shall have accepted a Superior
Proposal or if the Board of Directors of WEST recommends a Superior Proposal to
the stockholders of WEST; or
(h) by WEST, if there shall have occurred any Material Adverse
Effect with respect to EAST since the date of this Agreement; provided that if
such Material Adverse Effect is curable by EAST through the exercise of its
commercially reasonable efforts within fifteen (15) business days of receipt by
EAST of written notice thereof, WEST may not terminate this Agreement under this
Section 7.01(h) during such fifteen (15) business day period, so long as
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EAST continues to exercise such commercially reasonable efforts or if such
breach is cured and provided further that the right to terminate this Agreement
by WEST under this Section 7.01(h) shall not be available to WEST where WEST is
at that time in willful breach of this Agreement; or
(i) by EAST, if there shall have occurred any Material Adverse
Effect with respect to WEST since the date of this Agreement; provided that if
such Material Adverse Effect is curable by WEST through the exercise of its
commercially reasonable efforts within fifteen (15) business days of receipt by
WEST of written notice thereof, EAST may not terminate this Agreement under this
Section 7.01(i) during such fifteen (15) business day period, so long as WEST
continues to exercise such commercially reasonable efforts or if such breach is
cured and provided further that the right to terminate this Agreement by EAST
under this Section 7.01(i) shall not be available to EAST where EAST is at that
time in willful breach of this Agreement.
SECTION 7.02. Notice of Termination; Effect of Termination.
(a) Subject to Section 7.02(b), any termination of this Agreement
under Section 7.01 above will be effective immediately upon the delivery of
written notice of the terminating party to the other parties hereto. In the
event of the termination of this Agreement pursuant to Section 7.01, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of any party hereto or any of its respective affiliates,
directors, officers or stockholders except nothing herein shall relieve any
party from liability for any willful breach hereof. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, and in Section 5.03 (Confidentiality), Section 7.03
(Fees and Expenses) hereof, this Section 7.02 and Article VIII, all of which
obligations shall remain in full force and effect and survive termination of
this Agreement in accordance with its terms.
(b) Any termination of this Agreement by WEST pursuant to Sections
7.01(d) or 7.01(g) hereof shall be of no force or effect unless at or prior to
such termination WEST shall have paid to EAST any amounts payable pursuant to
Section 7.03(b).
SECTION 7.03. Fees and Expenses.
(a) Except as set forth in this Section 7.03, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (including, without limitation, the fees and expenses of its advisers,
accountants and legal counsel) shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that EAST
and WEST shall share equally all fees and expenses, other than attorneys' and
accountants' fees and expenses, incurred in relation to the printing and filing
of the Proxy Statement (including any preliminary materials related thereto) and
the Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto.
(b) WEST shall pay EAST a fee of $1,500,000 upon the earliest to
occur of the following events:
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(i) the termination of this Agreement by EAST pursuant to
Section 7.01(e), provided, however, with respect to Section 7.01(e)(i)
that prior to the occurrence of such breach, there shall have occurred a
Takeover Proposal; or
(ii) the termination of this Agreement by EAST or WEST
pursuant to Section 7.01(g); or
(iii) the termination of this Agreement by EAST pursuant to
Section 7.01(d) as a result of the failure to receive the requisite vote
for approval and adoption by the stockholders of WEST at the WEST
Stockholders' Meeting, if prior to such failure there shall have occurred
a Takeover Proposal.
(c) The fee payable pursuant to Section 7.03(b) shall be paid within
one business day after the first to occur of the events described in Sections
7.03(b)(i), (ii) and (iii).
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Effectiveness of Representations, Warranties and Agreements.
Except as otherwise provided in this Section 8.01, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.01, as the case may be, except that the agreements set
forth in Sections 5.03, 5.07, 5.08, 5.09, 5.16, 5.20, 7.02, 7.03 and this
Article VIII shall survive the Effective Time and Sections 5.03 and 7.03 shall
survive termination. The Confidentiality Agreement shall remain in full force
and effect and shall survive the Effective Time or termination of this Agreement
as provided therein.
SECTION 8.02. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally, three days after being
sent by registered or certified mail (postage prepaid, return receipt
requested), one day after dispatch by recognized overnight courier (provided
delivery is confirmed by the carrier) and upon transmission by telecopy,
confirmed received, to the parties at the following addresses (or at such other
address for a party as shall be specified by like changes of address):
(a) If to EAST or Merger Sub:
ACT Manufacturing, Inc.
2 Cabot Road
Hudson, MA 01749
Attn: President
Telephone No.: (978) 567-4000
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Facsimile No.: (978) 567-4099
With a copy to:
Testa, Hurwitz & Thibeault, LLP
High Street Tower
125 High Street
Boston, MA 02110
Attn: John A. Meltaus, Esq.
Telephone No.: (617) 248-7000
Facsimile No.: (617) 248-7100
(b) If to WEST:
CMC Industries, Inc.
4950 Patrick Henry Drive
Santa Clara, CA 95054
Attn: President
Telephone No.: (408) 982-9999
Facsimile No.: (408) 982-9922
With a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304-1050
Attn: Martin W. Korman, Esq.
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
SECTION 8.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates" shall have the meaning set forth in Rule 12b-2 of
the rules and regulations promulgated under the Securities and Exchange Act of
1934, as amended to date;
(b) "business day" means any day other than a day on which banks in
Boston, Massachusetts are required or authorized to be closed;
(c) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
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(d) "subsidiary" or "subsidiaries" of WEST, the Surviving
Corporation, EAST or any other person means any corporation, partnership, joint
venture or other legal entity of which WEST, the Surviving Corporation, EAST or
such other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, more than 50% of the stock
or other equity interests the holders of which are generally entitled to vote
for the election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 8.04. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Agreement and the Merger by the stockholders of WEST and EAST, no
amendment may be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.05. Waiver. At any time prior to the Effective Time, any party
hereto may, to the extent legally allowed, with respect to any other party
hereto, (a) extend the time for the performance of any of the obligations or
other acts, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 8.06. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.07. Severability. If any term or other provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as to reasonably effect the
intent of the parties hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall modify this Agreement so as to effect the original intent of the parties
as closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 8.08. Entire Agreement. This Agreement and the documents and
instruments and other agreements specifically referred to herein or delivered
pursuant hereto, including the Exhibits, the Schedules, and the WEST and EAST
Disclosure Schedules constitute the entire agreement, and supersede all prior
agreements and undertakings (other than the Confidentiality Agreement), both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
SECTION 8.09. Assignment. No party may assign this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other parties hereto.
<PAGE>
-56-
SECTION 8.10. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
other than Section 5.09 (which is intended to be for the benefit of the
Indemnified Parties and may be enforced by the Indemnified Parties), Section
5.21 (which is intended to be for the benefit of the two designees of WEST) and
Section 5.22 (which is intended to be for the benefit of the holders and future
holders of shares of EAST Common Stock issuable with respect to WEST Stock
Options).
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available and the exercise by a party of any one remedy will
not preclude the exercise of any other remedy.
SECTION 8.12. Governing Law. This agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws. Each of the parties hereto irrevocably consents
to the exclusive jurisdiction of any state or federal court within the State of
Delaware, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of Delaware for such
persons and waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction and such process.
SECTION 8.13. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 8.14. Interpretation. When a reference is made in this Agreement
to Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to
this Agreement unless otherwise indicated. The words "include," "includes" and
"including," when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean the information referred to has been made available if requested by the
party to whom such information is to be made available. The phrases "the date of
this Agreement," "the date hereof," and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to May 10, 1999. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION 8.15. Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing
<PAGE>
-57-
that ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
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IN WITNESS WHEREOF, EAST, Merger Sub and WEST have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
ACT MANUFACTURING, INC.
By: /s/ John A. Pino
--------------------------------------
John A. Pino
President and Chief Executive Officer
EAST ACQUISITION CORP.
By: /s/ John A. Pino
--------------------------------------
John A. Pino
President
CMC INDUSTRIES, INC.
By: /s/ Matthew G. Landa
--------------------------------------
Matthew G. Landa
President and Chief Executive Officer
<PAGE>
Exhibit 99.1
NEWS RELEASE
ACT MANUFACTURING, INC. ANNOUNCES
DEFINITIVE MERGER AGREEMENT WITH CMC INDUSTRIES, INC.
Hudson, Massachusetts, May 10, 1999--ACT Manufacturing, Inc. (Nasdaq:ACTM) and
CMC Industries, Inc. (Nasdaq:CMCI) today jointly announced they have signed a
definitive merger agreement.
Revenues of the combined companies for the last twelve months would have been
approximately $582 million, positioning the combined companies as the seventh
largest publicly-traded electronics contract manufacturer. Under the terms of
the agreement, each share of CMC Industries $0.01 par value common stock will be
exchanged for 0.5 shares of ACT Manufacturing $0.01 par value common stock. The
merger is subject to the approval of shareholders of both companies, as well as
other customary regulatory and other closing conditions. The merger is expected
to be accounted for as a pooling of interests. It is expected that the
transaction will be accretive in calendar year 2000.
Commenting on the merger, Mr. John A. Pino, Chairman and Chief Executive Officer
of ACT, said, "This merger addresses many of our strategic business development
objectives, provides a significant opportunity to increase value to our
shareholders and strengthens our ability to bring high quality, value-added
contract manufacturing services to our existing and future customers on a global
scale. CMC brings a West Coast presence with its Santa Clara, California
facility and provides low cost manufacturing alternatives in both its Corinth,
Mississippi and Hermosillo, Mexico operations. We have no overlapping customers
with CMC so the immediate diversification of our customer bases will be
significant. The combined company, which is double the scale of each
individually, creates several opportunities to leverage business development
with existing customers.
"Along with the future business development opportunities, the merger provides
numerous operational synergies. CMC uses the same manufacturing equipment and
systems platform as ACT. This should allow us to efficiently integrate all
operations and quickly provide a seamless organization with greater capabilities
and the ability to reap higher resource efficiencies."
"The combined company will have nearly one million square feet of capacity,
making it one of the true leaders in the global EMS marketplace. We also look
forward to the combined strength of the ACT and CMC management teams."
Mr. Matthew Landa, President and CEO of CMC, added, "ACT is an ideal merger
partner for CMC. ACT's focus on programs requiring high levels of engineering
expertise is consistent with CMC's long term strategic vision to develop the
most flexible engineering-driven operations in the most important OEM technology
centers in America. The combination allows for ACT's "front-end" high-technology
production centers in Hudson, Massachusetts and Atlanta, Georgia to be coupled
with CMC's technology production center in Silicon Valley and CMC's low cost
volume operations in Mississippi and Mexico.
"Additionally, ACT's Dublin, Ireland facility will provide a European solution
for CMC's current customer base. From a logistics and manufacturing cost
standpoint, the combined company will be well positioned in the key locations
around the world to provide complete product life cycle service in the most
flexible, responsive and cost-effective manner."
CMC also pre-released results for its quarter ended April 30, 1999 in a separate
press release today.
ACT Manufacturing, Inc., headquartered in Hudson, Massachusetts, provides value
added electronics manufacturing services for original equipment manufacturers
("OEMs") in the networking, computer, telecommunications, industrial and medical
equipment markets. The Company provides OEMs with complex printed circuit board
("PCB") assembly primarily utilizing advanced surface mount technology ("SMT"),
mechanical and molded cable harness assembly, electro-mechanical subassembly,
and total system assembly and integration. For further information, visit ACT's
home page at http://www.actmfg.com.
---------------------
Headquartered in Santa Clara, California, CMC Industries is a leading provider
of electronics manufacturing services to original equipment manufacturers in the
telecommunications, computer and electronic industries. The Company has
operations in Corinth, MS; Santa Clara, CA; Hermosillo, MX; Huntsville, AL and
Taipei, Taiwan. For further information, visit CMC's home page at
http://www.cmcmfg.com.
- ---------------------
This press release contains forward-looking statements subject to risks and
uncertainties that could cause actual results to differ materially from those
anticipated, including statements concerning the affects of the merger, expected
financial and operating results, synergies, growth of the customer base, future
customer shipments, and the plans and objectives of management. Those risks and
uncertainties include, among others: the risk of not integrating the CMC
business successfully; the inability to achieve expected synergies; costs
associated with the merger; the inability to close the merger in a timely
fashion; the inability to obtain approval of CMC's stockholders; the inability
to obtain governmental approvals for the merger; the effectiveness of managing
manufacturing processes; increased competition and its effects on pricing,
revenues and gross margins, and its customer base; future customer demand; the
Company's ability to timely complete, configure and ship products; and changes,
reductions, delays or cancellations of customer orders. In addition, the
Company's business and results of operations are subject to numerous additional
risks and uncertainties, including the short-term nature of customer orders,
customers' announcements and introductions of new products or new generations of
products, evolutions in the life cycles of customers' products, inventory
obsolescence, currency exchange rate movements, trends in the electronics
industry and changes or anticipated changes in economic conditions. For a more
detailed discussion of the risks and uncertainties of the Company's business,
please refer to the Company's periodic reports and registration statements filed
with the Securities and Exchange Commission, including the Company's annual
report on Form 10-K for the period ended December 31, 1998.
<PAGE>
Exhibit 99.2
WEST VOTING AGREEMENT
This WEST Voting Agreement dated as of May 10, 1999 (the "Agreement") by
and among ACT Manufacturing, Inc., a Massachusetts corporation ("EAST"), EAST
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of EAST
("Merger Sub"), and the stockholders who are signatories hereto (the "Major
Stockholders") of CMC Industries, Inc., a Delaware corporation ("WEST").
Capitalized terms not defined herein have the meanings assigned to them in the
Agreement and Plan of Merger and Reorganization (the "Merger Agreement") dated
the date hereof by and among EAST, Merger Sub and WEST.
WITNESSETH:
WHEREAS, pursuant to the Merger Agreement, Merger Sub will merge with and
into WEST (the "Merger"), with WEST continuing as the surviving corporation and
as a wholly owned subsidiary of EAST, on the terms and conditions set forth
therein; and
WHEREAS, to induce EAST to enter into the Merger Agreement, each of the
Major Stockholders, as principal stockholders of WEST, has agreed to enter into
this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions and covenants contained in this Agreement, the parties
hereby agree as follows:
ARTICLE I
COVENANTS
1.1 Covenants and Agreements. Each of the Major Stockholders hereby
covenants and agrees with EAST and Merger Sub as follows:
1.1(a) Cooperation. It shall cooperate fully with WEST, EAST and
Merger Sub in furnishing any information or performing any action reasonably
requested by any such party, which information or action is necessary or
appropriate for the efficient and successful consummation of the transactions
contemplated by the Merger Agreement. It shall use commercially reasonable
efforts to cause the Closing to occur at the earliest practical time.
1.1(b) Other Required Information. It shall furnish to WEST, EAST
and Merger Sub all information concerning itself and its subsidiaries and
affiliates, if applicable, as is required to be set forth in any application or
statement to be filed with any Governmental Entity in connection with the
transactions contemplated by the Merger Agreement or otherwise.
1.1(c) Publicity. Except as otherwise required by applicable law or
stock exchange or securities market regulations, it shall not issue any press
release or make any other public statement concerning the Merger without
obtaining the prior approval of EAST to the contents and the manner of
presentation and publication thereof.
<PAGE>
-2-
1.1(d) Restriction on Sales of WEST Common Stock and EAST Common
Stock. It agrees to comply with the restrictions on transfer of shares of WEST
Common Stock or EAST Common Stock set forth in that certain WEST Affiliate
Agreement of even date herewith. Notwithstanding that it may be permitted to
transfer shares of WEST Common Stock or EAST Common Stock in accordance with the
terms of the WEST Affiliate Agreement, it agrees not to transfer any such shares
unless each transferee to which any such shares, or any interest in any such
shares, is or may be transferred shall have executed a counterpart of this
Agreement and agreed in writing to hold such shares (or interest in such shares)
subject to all of the terms and provisions of this Agreement.
1.1(e) Other Negotiations. It agrees to fully comply with the
provisions of Section 4.03 (No Solicitation) of the Merger Agreement.
1.1(f) Agreement to Vote Shares. At every meeting of the
stockholders of WEST held on or prior to the Expiration Date, and at every
adjournment thereof, and on every action or approval by written consent of the
stockholders of WEST, it shall vote all shares of WEST capital stock owned by
it: (i) in favor of approval and adoption of the Merger Agreement and the Merger
and any matter that could reasonably be expected to facilitate the Merger and
(ii) against approval of any proposal made in opposition to or competition with
consummation of the Merger (an "Opposing Proposal"). "Expiration Date" shall
mean the earlier of (i) such time as the Merger shall become effective in
accordance with the terms and provisions of the Merger Agreement and (ii) such
time as the Merger Agreement shall have been terminated pursuant to Article VII
thereof.
1.1(g) Agreement to Grant Proxy. It shall execute and deliver to
EAST within five days of EAST's written request therefor a valid and binding
irrevocable proxy in any form reasonably proposed by EAST granting EAST (or its
designees) the authority to vote its shares of capital stock of WEST in
accordance with and subject to the limitations of Section 1.1(f).
1.1(h) No Proxy Solicitations. Except as required by law, including,
if applicable, actions which it determines after consultation with counsel are
required pursuant to its fiduciary duties as a Director (as defined below) under
applicable law, it shall not, and will not permit any person under its control
to: (i) solicit proxies or become a "participant" in a "solicitation" (as such
terms are defined in Regulation 14A under the Exchange Act) with respect to an
Opposing Proposal; or (ii) initiate a stockholders' vote or action by consent of
WEST stockholders with respect to an Opposing Proposal.
1.1(i) Obligations as Director and/or Officer. If at any time prior
to the expiration of this Agreement, the Major Stockholder or a representative
of the Major Stockholder is also a member of the Board of Directors of WEST
("Director") or an officer of WEST, nothing in this Agreement shall limit or
restrict the Director or officer in acting in his or her capacity as a Director
or officer, as the case may be, of WEST and exercising his or her fiduciary
duties and responsibilities, it being agreed and understood that this Agreement
shall apply to the Major Stockholder solely in its capacity as a stockholder and
shall not apply to the Director's or officer's actions, judgments or decisions
as a Director or officer of WEST.
<PAGE>
-3-
1.1(j) No Proxies. It agrees not to grant any proxies (except
pursuant to Section 1.1(g) of this Agreement) or to enter into any agreement
(other than this Agreement) with respect to the voting of shares of WEST Common
Stock held by it that are inconsistent with or in conflict with the intent of
this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Major Stockholders. Each of the
Major Stockholders hereby represents and warrants to EAST and Merger Sub as
follows:
2.1(a) Existence and Power. If the Major Stockholder is a
corporation, partnership, limited liability company or trust, it is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization.
2.1(b) Authorization; Binding Agreement. The execution, delivery and
performance by the Major Stockholder, if it is a corporation, partnership,
limited liability company or trust, of this Agreement are within its corporate,
partnership, limited liability company or trust power and authority and have
been duly authorized by all necessary corporate, partnership, limited liability
company or trust action on the part of the Major Stockholder. This Agreement has
been duly executed and delivered by the Major Stockholder and constitutes a
valid and binding agreement of the Major Stockholder, enforceable against the
Major Stockholder in accordance with its terms.
2.1(c) Governmental Authorization. The execution, delivery and
performance by it of this Agreement does not require any action on its part by
or in respect of, or declaration, filing or registration with, any Governmental
Entity.
2.1(d) Non-Contravention. The execution, delivery and performance by
it of this Agreement does not and will not (i) if it is a corporation,
partnership, limited liability company or trust, contravene or conflict with its
organizational documents, or (ii) to its knowledge, contravene or conflict with
or constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to it.
2.1(e) Litigation. There is no action, suit, investigation or
proceeding (or to the knowledge of the Major Stockholder any basis therefor)
pending against or, to the knowledge of the Major Stockholder, threatened
against or affecting, the Major Stockholder or any of its respective properties
or assets before any court or aribitrator or any governmental body, agency,
official or authority that in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the transactions contemplated by this Agreement or the
Merger Agreement.
2.1(f) Finders' Fees. There is no investment banker, broker, finder
or other intermediary that has been retained by or is authorized to act on
behalf of the Major Stockholder who might be entitled to any fee or commission
from EAST, Merger Sub, WEST or any of their
<PAGE>
-4-
affiliates upon consummation of the transactions contemplated by this Agreement
or the Merger Agreement.
2.1(g) Ownership of Stock. The Major Stockholder is the record and
beneficial owner of the shares of WEST Common Stock set forth in the WEST
Affiliate Agreement, and owns all such shares free and clear of any and all
liens, pledges, charges, security interests, restrictions or encumbrances of any
kind or any rights of first refusal (other than in favor of WEST), voting
trusts, proxies or other arrangements or understandings, whether written or
oral, and the Major Stockholder has the sole and exclusive right and power to
exercise all voting rights and other rights with respect to such shares.
ARTICLE III
MISCELLANEOUS
3.1 Survival; Termination.
3.1(a) All representations and warranties in this Agreement shall
survive the Closing. Any investigation or other examination that may have been
made or may be made at any time by or on behalf of the party to whom
representations and warranties are made shall not limit, diminish or in any way
affect the representations and warranties in this Agreement, and the parties may
rely on the representations and warranties in this Agreement irrespective of any
information obtained by them by any investigation, examination or otherwise.
3.1(b) The covenants contained in Sections 1.1(a), 1.1(b), 1.1(c),
1.1(e), 1.1(f), 1.1(g) and 1.1(h) (but not any liability for any willful breach
thereof) shall terminate at the Effective Time. All other covenants contained in
this Agreement shall survive the Merger.
3.1(c) This Agreement shall terminate in all respects upon
termination of the Merger Agreement (but not any liability for any willful
breach hereof).
3.2 Specific Performance. Each of the parties to this Agreement hereby
acknowledges that the other party will have no adequate remedy at law if it
fails to perform any of its obligations under this Agreement. In such event,
each of the parties agrees that the other party shall have the right, in
addition to any other rights it may have (whether at law or in equity), to
specific performance of this Agreement.
3.3 Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon, shall inure to the benefit of and shall be enforceable by
the respective successors and permitted assigns of the parties hereto. Nothing
expressed or implied in this Agreement is intended or shall be construed to
confer upon or give any person, firm or corporation other than the parties
hereto, their permitted successors or assigns, and their respective stockholders
any rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby.
<PAGE>
-5-
3.4 Entire Agreement. This Agreement and the Merger Agreement (together
with the Exhibits and Schedules thereto and the other documents delivered
pursuant thereto) constitute the entire agreement between the parties and
supersede all prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof.
3.5 Amendment or Modification. At any time before or after the adoption of
the Merger Agreement by the stockholders of WEST or the approval of the
proposals contained in the Proxy Statement by the stockholders of EAST and WEST,
this Agreement may be amended or supplemented by additional agreements, articles
or certificates, in writing, as may be determined by the parties hereto to be
necessary, desirable or expedient to further the purposes of this Agreement, or
to clarify the intention of the parties hereto, or to add to or to modify the
covenants, terms or conditions hereof or to effect or facilitate any
governmental approval or acceptance of the Merger or of this Agreement or to
effect or facilitate the filing or recording of the Agreement or the
consummation of any of the transactions contemplated hereby or thereby.
3.6 No Waiver. The failure of any party hereto to enforce at any time any
of the provisions of this Agreement shall in no way be construed to be a waiver
of any such provision, nor in any way to affect the validity of this Agreement
or any part hereof or the right of such party thereafter to enforce each and
every such provision. No waiver of any breach of or non-compliance with this
Agreement shall be held to be a waiver of any other or subsequent breach or
non-compliance.
3.7 Assignability. This Agreement shall not be assignable by the Major
Stockholder, on the one hand, or EAST or Merger Sub, on the other hand, without
the prior written consent of EAST or Merger Sub, on the one hand, or the Major
Stockholder, on the other hand.
3.8 Headings and Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. Terms such as "herein", "hereof",
"hereinafter" refer to this Agreement as a whole and not to the particular
sentence or paragraph where they appear, unless the context otherwise requires.
Unless the context otherwise requires, (i) terms used in the plural include the
singular, and vice versa, (ii) words in the masculine gender include the
feminine, and vice versa and (iii) the word "it" includes references to natural
persons.
3.9 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given when received at the addresses set forth in the Merger
Agreement, in the case of EAST and Merger Sub, and the books and records of
WEST, in the case of the Major Stockholder, or to such other address as any
party may have furnished to the others in writing in accordance herewith, except
that notices of change of address shall only be effective upon receipt.
3.10 Law Governing. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
<PAGE>
-6-
3.11 Invalidity of Provisions. Each of the provisions contained in this
Agreement is distinct and severable and a declaration of invalidity or
unenforceability of any such provision or part thereof by a court of competent
jurisdiction shall not affect the validity or enforceability of any other
provision hereof.
3.12 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
<PAGE>
-7-
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties on the date first above written.
ACT MANUFACTURING, INC.
By: /s/ John A. Pino
----------------------------------
John A. Pino
President
EAST ACQUISITION CORP.
By: /s/ John A. Pino
----------------------------------
John A. Pino
President
MAJOR STOCKHOLDERS
/s/ David S. Lee
--------------------------------------
David S. Lee
/s/ Matthew G. Landa
--------------------------------------
Matthew G. Landa
/s/ Andrew J. Moley
--------------------------------------
Andrew J. Moley
/s/ Frederick Gibbs
--------------------------------------
Frederick Gibbs
/s/ M. Kenneth Oshman
--------------------------------------
M. Kenneth Oshman
/s/ Richard M. Moley
--------------------------------------
Richard M. Moley
<PAGE>
-8-
/s/ Ira Coron
--------------------------------------
Ira Coron
/s/ Charles Holloway
--------------------------------------
Charles Holloway
/s/ Jack O'Rear
--------------------------------------
Jack O'Rear
/s/ Lanny N. Lambert
--------------------------------------
Lanny N. Lambert
/s/ Karl Chang
--------------------------------------
Karl Chang
<PAGE>
Exhibit 99.3
EAST VOTING AGREEMENT
This EAST Voting Agreement dated as of May 10, 1999 (the "Agreement") by
and between CMC Industries, Inc., a Delaware corporation ("WEST"), and the
stockholder who is a signatory hereto (the "Major Stockholder") of ACT
Manufacturing, Inc., a Massachusetts corporation ("EAST"). Capitalized terms not
defined herein have the meanings assigned to them in the Agreement and Plan of
Merger and Reorganization (the "Merger Agreement") dated the date hereof by and
among EAST, EAST Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of EAST ("Merger Sub"), and WEST.
WITNESSETH:
WHEREAS, pursuant to the Merger Agreement, Merger Sub will merge with and
into WEST (the "Merger"), with WEST continuing as the surviving corporation and
as a wholly owned subsidiary of EAST, on the terms and conditions set forth
therein; and
WHEREAS, to induce WEST to enter into the Merger Agreement, the Major
Stockholder, as a principal stockholder of EAST, has agreed to enter into this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions and covenants contained in this Agreement, the parties
hereby agree as follows:
ARTICLE I
COVENANTS
1.1 Covenants and Agreements. The Major Stockholder hereby covenants and
agrees with WEST as follows:
1.1(a) Cooperation. He shall cooperate fully with WEST, EAST and
Merger Sub in furnishing any information or performing any action reasonably
requested by any such party, which information or action is necessary or
appropriate for the efficient and successful consummation of the transactions
contemplated by the Merger Agreement. He shall use commercially reasonable
efforts to cause the Closing to occur at the earliest practical time.
1.1(b) Other Required Information. He shall furnish to WEST, EAST
and Merger Sub all information concerning himself and his affiliates, if
applicable, as is required to be set forth in any application or statement to be
filed with any Governmental Entity in connection with the transactions
contemplated by the Merger Agreement or otherwise.
1.1(c) Publicity. Except as otherwise required by applicable law or
stock exchange or securities market regulations, he shall not issue any press
release or make any other public statement concerning the Merger without
obtaining the prior approval of WEST to the contents and the manner of
presentation and publication thereof.
<PAGE>
-2-
1.1(d) Restriction on Sales of EAST Common Stock. He agrees to
comply with the restrictions on transfer of shares of EAST Common Stock set
forth in that certain EAST Affiliate Agreement of even date herewith.
Notwithstanding that the Major Stockholder may be permitted to transfer shares
of EAST Common Stock in accordance with the terms of the EAST Affiliate
Agreement, the Major Stockholder agrees not to transfer any such shares unless
each transferee to which any such shares or any interest in any such shares, is
or may be transferred shall have executed a counterpart of this Agreement and
agreed in writing to hold such shares (or interest in such shares) subject to
all of the terms and provisions of this Agreement.
1.1(e) Agreement to Vote Shares. At every meeting of the
stockholders of EAST held on or prior to the Expiration Date, and at every
adjournment thereof, and on every action or approval by written consent of the
stockholders of EAST, he shall vote all shares of EAST capital stock owned by
him: (i) in favor of approval and adoption of the Merger Agreement and the
Merger and any matter that could reasonably be expected to facilitate the Merger
and (ii) against approval of any proposal made in opposition to or competition
with consummation of the Merger (an "Opposing Proposal"). "Expiration Date"
shall mean the earlier of (i) such time as the Merger shall become effective in
accordance with the terms and provisions of the Merger Agreement and (ii) such
time as the Merger Agreement shall have been terminated pursuant to Article VII
thereof.
1.1(f) Agreement to Grant Proxy. He shall execute and deliver to
WEST within five days of WEST's written request therefor a valid and binding
irrevocable proxy in any form reasonably proposed by WEST granting WEST (or its
designees) the authority to vote his shares of capital stock of EAST in
accordance with and subject to the limitation of Section 1.1(e).
1.1(g) No Proxy Solicitations. Except as required by law, including
actions which he determines after consultation with counsel are required
pursuant to his fiduciary duties as a Director (as defined below) under
applicable law, he shall not, and will not permit any person under his control
to: (i) solicit proxies or become a "participant" in a "solicitation" (as such
terms are defined in Regulation 14A under the Exchange Act) with respect to an
Opposing Proposal; or (ii) initiate a stockholders' vote or action by consent of
EAST stockholders with respect to an Opposing Proposal.
1.1(h) Obligations as Director and/or Officer. If at any time prior
to the expiration of this Agreement, the Major Stockholder or a representative
of the Major Stockholder is also a member of the Board of Directors of EAST
("Director") or an officer of EAST, nothing in this Agreement shall limit or
restrict the Director or officer in acting in his capacity as a director or
officer, as the case may be, of EAST and exercising his fiduciary duties and
responsibilities, it being agreed and understood that this Agreement shall apply
to the Major Stockholder solely in his capacity as a stockholder and shall not
apply to the Director's or officer's actions, judgments or decisions as a
director or officer of EAST.
1.1(i) No Proxies. The Major Stockholder agrees not to grant any
proxies (except pursuant to Section 1.1(f) of this Agreement) or to enter into
any agreement (other than this Agreement) with respect to the voting of shares
of EAST Common Stock held by him that are inconsistent with or in conflict with
the intent of this Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Major Stockholder. The Major
Stockholder hereby represents and warrants to WEST as follows:
2.1(a) Binding Agreement. This Agreement has been duly executed and
delivered by the Major Stockholder and constitutes a valid and binding agreement
of the Major Stockholder, enforceable against the Major Stockholder in
accordance with its terms.
2.1(b) Governmental Authorization. The execution, delivery and
performance by him of this Agreement does not require any action on his part by
or in respect of, or declaration, filing or registration with, any Governmental
Entity.
2.1(c) Non-Contravention. The execution, delivery and performance by
him of this Agreement does not require any acction on his part by or in respect
of, or declaration, filing or registration with, any Governmental Entity.
2.1(d) Litigation. There is no action, suit, investigation or
proceeding (or to the knowledge of the Major Stockholder any basis therefor)
pending against or, to the knowledge of the Major Stockholder, threatened
against or affecting, the Major Stockholder before any court or arbitrator or
any governmental body, agency, official or authority that in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement or the Merger Agreement.
2.1(e) Finders' Fees. There is no investment banker, broker, finder
or other intermediary that has been retained by or is authorized to act on
behalf of the Major Stockholder who might be entitled to any fee or commission
from EAST, WEST or any of their affiliates upon consummation of the transactions
contemplated by this Agreement or the Merger Agreement.
2.1(f) Ownership of Stock. The Major Stockholder is the record and
beneficial owner of the shares of EAST Common Stock set forth in the Affiliate
Agreement, and owns all such shares free and clear of any and all liens,
pledges, charges, security interests, restrictions or encumbrances of any kind
or any rights of first refusal (other than in favor of EAST), voting trusts,
proxies or other arrangements or understandings, whether written or oral, and
Major Stockholder has the sole and exclusive right and power to exercise all
voting rights and other rights with respect to such shares.
<PAGE>
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ARTICLE III
MISCELLANEOUS
3.1 Survival; Termination.
3.1(a) All representations and warranties in this Agreement shall
survive the Closing. Any investigation or other examination that may have been
made or may be made at any time by or on behalf of the party to whom
representations and warranties are made shall not limit, diminish or in any way
affect the representations and warranties in this Agreement, and the parties may
rely on the representations and warranties in this Agreement irrespective of any
information obtained by them by any investigation, examination or otherwise.
3.1(b) The covenants contained in Sections 1.1(a), 1.1(b), 1.1(c),
1.1(e), 1.1(f), and 1.1(g), (but not any liability for any willful breach
thereof) shall terminate at the Effective Time. All other covenants contained in
this Agreement shall survive the Merger.
3.1(c) This Agreement shall terminate in all respects upon
termination of the Merger Agreement (but not any liability for any willful
breach hereof).
3.2 Specific Performance. Each of the parties to this Agreement hereby
acknowledges that the other party will have no adequate remedy at law if it
fails to perform any of its obligations under this Agreement. In such event,
each of the parties agrees that the other party shall have the right, in
addition to any other rights it may have (whether at law or in equity), to
specific performance of this Agreement.
3.3 Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon, shall inure to the benefit of and shall be enforceable by
the respective successors and permitted assigns of the parties hereto. Nothing
expressed or implied in this Agreement is intended or shall be construed to
confer upon or give any person, firm or corporation other than the parties
hereto, their permitted successors or assigns, and their respective stockholders
any rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby.
3.4 Entire Agreement. This Agreement and the Merger Agreement (together
with the Exhibits and Schedules thereto and the other documents delivered
pursuant thereto) constitute the entire agreement between the parties and
supersede all prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof.
3.5 Amendment or Modification. At any time before or after the adoption of
the Merger Agreement by the stockholders of EAST or the approval of the
proposals contained in the Proxy Statement by the stockholders of EAST and WEST,
this Agreement may be amended or supplemented by additional agreements, articles
or certificates, in writing, as may be determined by the parties hereto to be
necessary, desirable or expedient to further the purposes of this Agreement, or
to clarify the intention of the parties hereto, or to add to or to modify the
covenants, terms or conditions hereof or to effect or facilitate any
governmental approval or
<PAGE>
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acceptance of the Merger or of this Agreement or to effect or facilitate the
filing or recording of the Agreement or the consummation of any of the
transactions contemplated hereby or thereby.
3.6 No Waiver. The failure of any party hereto to enforce at any time any
of the provisions of this Agreement shall in no way be construed to be a waiver
of any such provision, nor in any way to affect the validity of this Agreement
or any part hereof or the right of such party thereafter to enforce each and
every such provision. No waiver of any breach of or non-compliance with this
Agreement shall be held to be a waiver of any other or subsequent breach or
non-compliance.
3.7 Assignability. This Agreement shall not be assignable by WEST, on the
one hand, or the Major Stockholder, on the other hand, without the prior written
consent of the Major Stockholder, on the one hand, or WEST, on the other hand.
3.8 Headings and Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. Terms such as "herein", "hereof",
"hereinafter" refer to this Agreement as a whole and not to the particular
sentence or paragraph where they appear, unless the context otherwise requires.
Unless the context otherwise requires, (i) terms used in the plural include the
singular, and vice versa, (ii) words in the masculine gender include the
feminine, and vice versa and (iii) the word "it" includes references to natural
persons.
3.9 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given when received at the addresses set forth in the Merger
Agreement, in the case of WEST, and the books and records of EAST, in the case
of the Major Stockholder, or to such other address as any party may have
furnished to the others in writing in accordance herewith, except that notices
of change of address shall only be effective upon receipt.
3.10 Law Governing. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
3.11 Invalidity of Provisions. Each of the provisions contained in this
Agreement is distinct and severable and a declaration of invalidity or
unenforceability of any such provision or part thereof by a court of competent
jurisdiction shall not affect the validity or enforceability of any other
provision hereof.
3.12 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
<PAGE>
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties on the date first above written.
CMC INDUSTRIES, INC.
By: /s/ Matthew G. Landa
----------------------------------
Name: Matthew G. Landa
Title: President and Chief Executive
Officer
MAJOR STOCKHOLDER
/s/ John A. Pino
--------------------------------------
John A. Pino
JOHN A. PINO GRANTOR RETAINED
ANNUITY TRUST II DATED
AUGUST 16, 1996
By: /s/ John A. Pino
----------------------------------
Name: John A. Pino
Title: Trustee
1998 JOHN A. PINO GRANTOR
RETAINED ANNUITY TRUST DATED
JUNE 15, 1998
By: /s/ Douglas R. Ederle
----------------------------------
Name: Douglas R. Ederle
Title: Trustee
