<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
and
AMENDMENT NO. 1
TO
SCHEDULE 13D
Under the Securities Exchange Act of 1934
------------------------
SMARTFLEX SYSTEMS, INC.
(Name of Subject Company)
------------------------
SATURN ELECTRONICS & ENGINEERING, INC.
SSI ACQUISITION CORP.
(Bidders)
------------------------
COMMON STOCK, $.0025 PAR VALUE
(Title of Class of Securities)
83169K 10 8
(CUSIP Number of Class of Securities)
------------------------
MR. WALLACE K. TSUHA, JR.
SATURN ELECTRONICS & ENGINEERING, INC.
255 REX BOULEVARD
AUBURN HILLS, MICHIGAN 48326
(248) 853-5724
(Name, Address And Telephone Number of Persons Authorized
to Receive Notices and Communications on Behalf of Bidders)
COPIES TO:
DONALD J. KUNZ
HONIGMAN MILLER SCHWARTZ AND COHN
2290 FIRST NATIONAL BUILDING
DETROIT, MICHIGAN 48226
------------------------
JULY 6, 1999
(Date of Event Which Requires Filing Statement on Schedule 13D)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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<S> <C>
$70,643,517 $14,128.70
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</TABLE>
* For purposes of calculating amount of filing fee only. The amount assumes the
purchase of 6,493,994 shares of common stock, $.0025 par value, of the
Company (the "Shares"), at a price per Share of $10.50 in cash. Such number
of shares represents all the Shares outstanding as of July 6, 1999. The
amount also includes the amount paid to holders of Company stock options in
connection with the transaction.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent
of the value of the aggregate Shares purchased.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $14,128.70
Filing Party: SSI Acquisition Corp.
Form or Registration No.: Schedule 14D-1 and Schedule 13D
Date Filed: July 13, 1999
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<PAGE> 2
<TABLE>
<S> <C>
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1 NAMES OF REPORTING PERSONS
Saturn Electronics & Engineering, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCES OF FUNDS
BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f) [ ]
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6 CITIZEN OR PLACE OF ORGANIZATION
Michigan
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
534,808* (Common Stock)
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
7.9%**
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10 TYPE OF REPORTING PERSON
CO
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</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
SSI Acquisition Corp.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCES OF FUNDS
BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or
2(f) [ ]
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6 CITIZEN OR PLACE OF ORGANIZATION
Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
534,808*(Common Stock)
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
7.9%**
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10 TYPE OF REPORTING PERSON
CO
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</TABLE>
<PAGE> 4
<TABLE>
<C> <C> <C> <S>
- ----------------------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
Wallace K. Tsuha, Jr.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [
]
(b) [X]
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3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------
4 SOURCES OF FUNDS
BK, PF
- ----------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or
2(f) [ ]
- ----------------------------------------------------------------------------------------------
6 CITIZEN OR PLACE OF ORGANIZATION
U.S.
- ----------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
536,308***(Common Stock)
- ----------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [
]
- ----------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
8.0%**
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10 TYPE OF REPORTING PERSON
IN
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</TABLE>
* On July 6, 1999, Saturn Electronics & Engineering, Inc. (the "Parent") and
SSI Acquisition Corp., a wholly owned subsidiary of the Parent (the
"Purchaser"), entered into Stock Tender and Voting Agreements (the
"Stockholder Agreements") with certain stockholders (the "Stockholders") of
Smartflex Systems, Inc. (the "Company"), who beneficially own 534,808 shares
of common stock, $.0025 par value, of the Company (the "Shares") in the
aggregate, or approximately 7.9% of the Shares outstanding as of July 6,
1999. Under the Stockholder Agreements, each Stockholder has agreed to
validly tender the Shares beneficially owned by it, as well as any Shares
subsequently acquired by it, into the Offer (as defined below), and not to
withdraw such Shares from the Offer. The Purchaser's right to purchase the
Shares subject to the Stockholder Agreements is reflected in Rows 7 and 9 of
each of the tables above. Pursuant to the Stockholder Agreements, each
Stockholder has also delivered an irrevocable proxy to the Parent and
certain of the Parent's affiliates to vote the Shares subject to the
Stockholder Agreements in favor of the Merger (as defined in the Offer to
Purchase), the adoption by the Company of the Agreement and Plan of Merger
dated as of July 6, 1999 among the Purchaser, the Parent and the Company
(the "Merger Agreement"), and the approval of the terms thereof and each of
the other transactions contemplated by the Merger Agreement, and have agreed
to vote against (a) any action or agreement that would result in a breach of
any covenant or any representation or warranty or any other obligation or
agreement of the Company under or pursuant to the Merger Agreement and (b)
any action or agreement that would impede, interfere with, delay, postpone
or attempt to discourage the Merger or the Offer. The Merger Agreement and
the Stockholder Agreements are described more fully in Section 12 ("The
Merger Agreement and The Stockholder Agreements") of the Offer to Purchase
dated July 14, 1999 (the "Offer to Purchase"), filed as Exhibit (a)(1)
hereto.
** Based on a representation of the Company in the Merger Agreement.
*** Includes 1,500 Shares directly owned by Wallace K. Tsuha, Jr., and 534,808
Shares beneficially owned by Wallace K. Tsuha, Jr., as the chairman and
majority shareholder of the Parent, pursuant to the Purchaser's right to
purchase the Shares subject to the Stockholder Agreements.
<PAGE> 5
This Schedule 14D-1 Tender Offer Statement and Schedule 13D (this
"Statement") relates to the offer by SSI Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Saturn
Electronics & Engineering, Inc., a Michigan corporation (the "Parent"), to
purchase all issued and outstanding shares of common stock, $.0025 par value
(the "Shares"), of Smartflex Systems, Inc. a Delaware corporation (the
"Company"), at $10.50 per Share (the "Offer Price"), net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer").
Copies of the Offer to Purchase and the Letter of Transmittal are annexed hereto
as Exhibits (a)(1) and (a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Smartflex Systems, Inc., a Delaware
corporation, which has its principal executive offices at 14312 Franklin Avenue,
Tustin, California 92781.
(b) The information set forth in the Introduction of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is being filed by the Purchaser, a Delaware
corporation, the Parent, a Michigan corporation, and Wallace K. Tsuha, Jr., an
individual and the President, Chief Executive Officer, Chairman and shareholder
of the Parent, for purposes of Schedule 14D-1 and Schedule 13D. Information
concerning the principal business and the address of the principal offices of
the Applicable Persons is set forth in Section 9 ("Certain Information
Concerning the Purchaser and the Parent") of the Offer to Purchase and is
incorporated herein by reference. The names, business addresses, present
principal occupations or employment, material occupations, positions, offices or
employments during the last five years and citizenship of the directors and
executive officers of the Applicable Persons are set forth in Schedule I
("Directors and Executive Officers of the Parent and the Purchaser") to the
Offer to Purchase and are incorporated herein by reference.
(e) and (f) The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and the Parent") and Section 16 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 8
("Certain Information Concerning the Company"), Section 11 ("Contacts with the
Company; Background of the Offer"), Section 12 ("The Merger Agreement and the
Stockholder Agreements") and Section 13 ("Purpose of the Offer; Plans for the
Company") of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction and Section 13
("Purpose of the Offer; Plans for the Company") of the Offer to Purchase is
incorporated herein by reference.
i
<PAGE> 6
(f) and (g) The information set forth in the Introduction, Section 7
("Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange
Act Registration; Margin Regulations") and Section 13 ("Purpose of the Offer;
Plans for the Company") of the Offer to Purchase is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 9
("Certain Information Concerning the Purchaser and the Parent"), Section 12
("The Merger Agreement and The Stockholder Agreements") and Section 13 ("Purpose
of the Offer; Plans for the Company") of the Offer to Purchase is incorporated
herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S
SECURITIES.
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Purchaser and the Parent"), Section 11 ("Contacts
with the Company; Background of the Offer"), Section 12 ("The Merger Agreement
and the Stockholder Agreements") and Section 13 ("Purpose of the Offer; Plans
for the Company") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and in Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 ("Contacts with the Company;
Background of the Offer"), Section 12 ("The Merger Agreement and the Stockholder
Agreements") and Section 13 ("Purpose of the Offer; Plans for the Company") of
the Offer to Purchase is incorporated herein by reference.
(b)-(c), (e) The information set forth in Section 16 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Merger Agreement and the Stockholder Agreements, copies of
which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and (c)(3) through
(c)(13), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated July 14, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
ii
<PAGE> 7
(a)(7) Form of Summary Advertisement dated July 14, 1999.
(a)(8) Text of Press Release dated July 7, 1999 issued by the Company.
(b)(1) Commitment Letter, dated July 2, 1999, from Comerica Bank to Parent.
(c)(1) Agreement and Plan of Merger dated as of July 6, 1999 among the
Parent, the Purchaser and the Company.
(c) (2) Confidentiality Agreement, dated February 2, 1999, as amended on
February 3, 1999, between Parent and the Company.
(c) (3) Stock Tender and Voting Agreement with William L. Healey.
(c) (4) Stock Tender and Voting Agreement with William E. Bendush.
(c) (5) Stock Tender and Voting Agreement with Alan V. King.
(c) (6) Stock Tender and Voting Agreement with William A. Klein.
(c) (7) Stock Tender and Voting Agreement with Gary E. Liebl.
(c) (8) Stock Tender and Voting Agreement with Anthony R. W. Richardson.
(c) (9) Stock Tender and Voting Agreement with John W. Hohener.
(c) (10) Stock Tender and Voting Agreement with Richard D. Bell.
(c) (11) Stock Tender and Voting Agreement with James Cogan.
(c) (12) Stock Tender and Voting Agreement with Christopher Rollison.
(c) (13) Stock Tender and Voting Agreement with Cheryl Moreno.
(d) None.
(e) Not applicable.
(f) None.
iii
<PAGE> 8
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: July 14, 1999
SATURN ELECTRONICS & ENGINEERING, INC.
By: /s/ WALLACE K. TSUHA, JR.
------------------------------------
Name: Wallace K. Tsuha, Jr.
Title: President
SSI ACQUISITION CORP.
By: /s/ WALLACE K. TSUHA, JR.
------------------------------------
Name: Wallace K. Tsuha, Jr.
Title: President
/s/ WALLACE K. TSUHA JR.
--------------------------------------
Wallace K. Tsuha Jr.
iv
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
(a)(1) Offer to Purchase dated July 14, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated July 14, 1999.
(a)(8) Text of Press Release dated July 7, 1999 issued by the
Company.
(b)(1) Commitment Letter, dated July 2, 1999, from Comerica Bank to
Parent.
(c)(1) Agreement and Plan of Merger dated as of July 6, 1999 among
the Parent, the Purchaser and the Company.
(c)(2) Confidentiality Agreement, dated February 2, 1999, as
amended on February 3, 1999, between Parent and the Company.
(c)(3) Stock Tender and Voting Agreement with William L. Healey.
(c)(4) Stock Tender and Voting Agreement with William E. Bendush.
(c)(5) Stock Tender and Voting Agreement with Alan V. King.
(c)(6) Stock Tender and Voting Agreement with William A. Klein.
(c)(7) Stock Tender and Voting Agreement with Gary E. Liebl.
(c)(8) Stock Tender and Voting Agreement with Anthony R. W.
Richardson.
(c)(9) Stock Tender and Voting Agreement with John W. Hohener.
(c)(10) Stock Tender and Voting Agreement with Richard D. Bell.
(c)(11) Stock Tender and Voting Agreement with James Cogan.
(c)(12) Stock Tender and Voting Agreement with Christopher Rollison.
(c)(13) Stock Tender and Voting Agreement with Cheryl Moreno.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
v
<PAGE> 1
EXHIBIT 99(a)(1)
OFFER TO PURCHASE FOR CASH
ALL ISSUED AND OUTSTANDING SHARES OF COMMON STOCK
OF
SMARTFLEX SYSTEMS, INC.
AT
$10.50 NET PER SHARE
BY
SSI ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
SATURN ELECTRONICS & ENGINEERING, INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, AUGUST 11, 1999,
UNLESS THE OFFER IS EXTENDED.
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THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER DATED
AS OF JULY 6, 1999 AMONG SATURN ELECTRONICS & ENGINEERING, INC. (THE "PARENT"),
SSI ACQUISITION CORP. (THE "PURCHASER") AND SMARTFLEX SYSTEMS, INC. (THE
"COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND
FOUND ADVISABLE THE MERGER AGREEMENT, THE OFFER AND THE MERGER REFERRED TO
HEREIN, UNANIMOUSLY DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER THEIR SHARES (AS DEFINED HEREIN).
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
A MAJORITY OF THE OUTSTANDING SHARES AND RIGHTS TO ACQUIRE SHARES AT THE TIME OF
ACCEPTANCE FOR PAYMENT. SEE SECTIONS 1 AND 15 BELOW FOR ADDITIONAL TERMS AND
CONDITIONS OF THE OFFER.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal or a
facsimile copy thereof in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal or such facsimile, or, in the case of a book-entry transfer effected
pursuant to the procedure set forth in Section 2, an Agent's Message (as defined
herein), and any other required documents, to the Depositary (as defined herein)
and either deliver the certificates for such Shares to the Depositary along with
the Letter of Transmittal or facsimile or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 2 or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such stockholder. A stockholder having Shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such stockholder desires to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply in a
timely manner with the procedure for book-entry transfer, or who cannot deliver
all required documents to the Depositary prior to the expiration of the Offer,
may tender such Shares by following the procedure for guaranteed delivery set
forth in Section 2.
<PAGE> 2
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
or any other tender offer materials may be directed to Georgeson Shareholder
Communications Inc., who is acting as the Information Agent, at its address and
telephone numbers set forth on the back cover of this Offer to Purchase.
Additional copies of this Offer to Purchase, the Letter of Transmittal, the
Notice of Guaranteed Delivery and other related materials may be obtained from
the Information Agent or from brokers, dealers, commercial banks, trust
companies and other nominees.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON SHAREHOLDER COMMUNICATIONS INC. LOGO
July 14, 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION................................................ 1
THE TENDER OFFER............................................ 3
1. Terms of the Offer...................................... 3
2. Procedure for Tendering Shares.......................... 4
3. Withdrawal Rights....................................... 7
4. Acceptance for Payment and Payment...................... 7
5. Certain Federal Income Tax Consequences................. 8
6. Price Range of the Shares; Dividends on the Shares...... 10
7. Effect of the Offer on the Market for the Shares; Stock
Quotation; Exchange Act Registration; Margin
Regulations............................................. 10
8. Certain Information Concerning the Company.............. 12
9. Certain Information Concerning the Purchaser and the
Parent.................................................... 13
10. Source and Amount of Funds.............................. 14
11. Contacts with the Company; Background of the Offer...... 14
12. The Merger Agreement and the Stockholder Agreements..... 15
13. Purpose of the Offer; Plans for the Company............. 24
14. Dividends and Distributions............................. 24
15. Certain Conditions of the Offer......................... 24
16. Certain Legal Matters................................... 25
17. Fees and Expenses....................................... 27
18. Miscellaneous........................................... 27
SCHEDULE I--Directors and Executive Officers of the
Purchaser and the Parent.................................. 29
</TABLE>
<PAGE> 4
To the Holders of Common Stock of Smartflex Systems, Inc.:
INTRODUCTION
SSI Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Saturn Electronics & Engineering, Inc., a Michigan
corporation (the "Parent"), hereby offers to purchase all issued and outstanding
shares of common stock, $.0025 par value (the "Shares"), of Smartflex Systems,
Inc., a Delaware corporation (the "Company"), at $10.50 per Share (the "Offer
Price"), net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
Tendering stockholders whose Shares are registered in their own name and
who tender Shares directly to the Depositary (as defined below) will not be
obligated to pay brokerage fees or commissions to the Purchaser or the
Depositary or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Stockholders who hold their Shares through a bank or broker should check with
such institution as to whether they charge any service fees. The Purchaser will
pay the fees and expenses of BankBoston, N.A., which is acting as the Depositary
(the "Depositary"), and Georgeson Shareholder Communications Inc., which is
acting as Information Agent (the "Information Agent"), in connection with the
Offer. See Section 17.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
A MAJORITY OF THE OUTSTANDING SHARES AND RIGHTS TO ACQUIRE SHARES AT THE TIME OF
ACCEPTANCE FOR PAYMENT (THE "MINIMUM CONDITION").
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND FOUND
ADVISABLE THE MERGER AGREEMENT, THE OFFER AND THE MERGER REFERRED TO HEREIN,
UNANIMOUSLY DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER
THEIR SHARES.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of July 6, 1999 (the "Merger Agreement") among the Parent, the Purchaser and
the Company. Following the satisfaction or waiver of certain conditions,
including approval by stockholders of the Company, if such approval is required
by applicable law, the Purchaser will be merged with and into the Company, with
the Company surviving the merger (as such, the "Surviving Corporation") as a
wholly owned subsidiary of the Parent (the "Merger"). At the effective time of
the Merger (the "Effective Time"), each outstanding Share (other than Shares
owned by the Company or by the Parent, the Purchaser or any other direct or
indirect wholly owned subsidiary of the Parent or the Company, or Shares with
respect to which appraisal rights are properly exercised under Delaware law
("Dissenting Shares")) will be converted into the right to receive the Offer
Price in cash, without interest (the "Merger Consideration"). See Section 12.
In the event the Purchaser acquires 90% or more of the outstanding Shares
pursuant to the Offer or otherwise, the Purchaser would be able to effect the
Merger pursuant to the short-form merger provisions of the Delaware General
Corporation Law ("DGCL"), without prior notice to, or any action by, any other
stockholder of the Company. In such event, the Purchaser is required to effect
the Merger without prior notice to, or any action by, any other stockholder of
the Company, promptly after its acceptance for payment of Shares tendered into
the Offer. In the Merger Agreement, the Parent, the Purchaser and the Company
have agreed that the Purchaser may extend the Offer for one or more periods not
to exceed 30 days in the aggregate without the prior written consent of the
Company. If immediately after the expiration of the Offer at least a majority
but less than 90% of the outstanding Shares on a fully-diluted basis have been
tendered in the Offer and not withdrawn, then the parties have agreed that the
Purchaser will purchase all Shares tendered pursuant to the Offer and the
Company will promptly convene a special meeting of the stockholders of the
Company for the purpose of considering the Merger and taking action on the
Merger Agreement and the transactions contemplated thereby (the "Transactions").
The Company has agreed, as soon as practicable after the
1
<PAGE> 5
consummation of the Offer, to file a proxy statement relating to the Merger with
the Securities and Exchange Commission (the "Commission"). See Section 12.
The Purchaser and the Parent have entered into Stock Tender and Voting
Agreements each dated as of July 6, 1999 (the "Stockholder Agreements") with
certain stockholders of the Company (the "Stockholders"), including all of its
directors and executive officers, who own 299,933 outstanding Shares in the
aggregate on the date of the Merger Agreement, representing approximately 5% of
the outstanding Shares. Under the Stockholder Agreements, each Stockholder
agreed, among other things, to validly tender the Shares beneficially owned by
it, as well as any Shares subsequently acquired by it. In addition, each
Stockholder agreed to vote its Shares in favor of the Merger, the adoption by
the Company of the Merger Agreement and the approval of the terms thereof and
each of the other transactions contemplated by the Merger Agreement, and agreed
to vote against (a) any action or agreement that would result in a breach of any
covenant or any representation or warranty or any other obligation or agreement
of the Company under or pursuant to the Merger Agreement and (b) any action or
agreement that would impede, interfere with, delay, postpone or attempt to
discourage the Merger or the Offer. Each Stockholder also agreed, without
limiting the foregoing, to consult with the Parent and vote all Shares
beneficially owned by it in such manner as is determined by the Parent to be in
compliance with the provisions of the Stockholder Agreements. The Stockholder
Agreements are more fully described in Section 12. Pursuant to the Stockholder
Agreements, each Stockholder has delivered to the Parent, contemporaneously with
the execution of its Stockholder Agreement, an irrevocable proxy (each an
"Irrevocable Proxy") pursuant to which each Stockholder irrevocably appointed
Wallace K. Tsuha, Jr., Jereen G. Trudell and the Parent, as its proxies and
attorneys-in-fact to exercise the proxy to vote the Shares in the foregoing
manner at any time until the earlier to occur of the valid termination of the
Merger Agreement or the Effective Time.
SG Cowen Securities Corporation ("Cowen"), investment banker to the
Company, has delivered to the Board of Directors of the Company its written
opinion dated July 6, 1999 that, as of such date and based upon and subject to
the matters set forth therein, the consideration to be received by the
stockholders of the Company (other than the Purchaser and its affiliates) in the
Offer and the Merger is fair to such stockholders from a financial point of
view. Such opinion is set forth in full as an exhibit to the Company's
Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to stockholders of the Company concurrently herewith.
The Company has represented and warranted to the Purchaser that, as of July
6, 1999, there were 6,493,994 Shares issued and outstanding, and 994,502 Shares
reserved for issuance upon exercise of outstanding options to purchase Shares
granted under the Company Stock Option Plans (as defined in the Merger
Agreement) or otherwise (the "Company Stock Options"). As provided in the Merger
Agreement, all outstanding Company Stock Options on the effective date of the
Merger will become fully vested and will be cancelled. The holders of such
Company Stock Options will be entitled to receive from the Company a cash
payment equal to the product of (i) the number of Shares previously subject to
such option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per Share previously subject to such option.
As of July 6, 1999, the Minimum Condition would be satisfied if the
Purchaser acquired 3,744,249 Shares.
The Merger Agreement and the Stockholder Agreements are more fully
described in Section 12. Certain Federal income tax consequences of the sale of
Shares pursuant to the Offer and the exchange of Shares for the Merger
Consideration pursuant to the Merger are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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<PAGE> 6
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), the Purchaser will accept for payment and pay, as promptly as
practicable after the Expiration Date, for all Shares validly tendered prior to
the Expiration Date and not theretofore properly withdrawn in accordance with
Section 3. The term "Expiration Date" means 12:00 Midnight, New York City time,
on Wednesday, August 11, 1999, unless and until (i) the Purchaser, in its sole
discretion (but subject to the terms of the Merger Agreement), or (ii) the
Purchaser and the Company, shall have extended the period of time during which
the Offer is open, in which event the term "Expiration Date" shall mean the
latest time and date at which the Offer, as so extended by the Purchaser, or by
the Purchaser and the Company, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition. See Section 15. If such conditions are not satisfied prior to
the Expiration Date, the Purchaser reserves the right (but shall not be
obligated), subject to the terms of the Merger Agreement, to (i) decline to
purchase any of the Shares tendered and terminate the Offer, (ii) waive any of
the conditions to the Offer, to the extent permitted by applicable law, and,
subject to complying with applicable rules and regulations of the Commission,
purchase all Shares validly tendered or (iii) extend the Offer and, subject to
the right of stockholders to withdraw Shares until the Expiration Date, retain
the Shares tendered during the period or periods for which the Offer is
extended.
Subject to the Merger Agreement, including the restrictions discussed
below, and the applicable rules and regulations of the Commission, the Purchaser
reserves the right, in its sole discretion, at any time and from time to time,
and regardless of whether any of the events set forth in Section 15 have
occurred or been determined by the Purchaser to have occurred, to (a) subject to
the limitation described below, extend the period of time during which the Offer
is open, and thereby delay acceptance for payment of any Shares, by giving oral
or written notice of such extension and delay to the Depositary or (b) waive any
condition or amend the Offer in any other respect by giving oral or written
notice of such waiver or amendment to the Depositary. During any such extension,
all Shares previously tendered and not properly withdrawn will remain subject to
the Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares. See Section 3. Under no circumstances will interest be
paid on the purchase price for tendered Shares, whether or not the Purchaser
exercises its right to extend the Offer. In the Merger Agreement, the Parent,
the Purchaser and the Company have agreed that the Purchaser may extend the
Offer for one or more periods not to exceed 30 days in the aggregate without the
prior written consent of the Company. In addition, the Purchaser has agreed in
the Merger Agreement that it will not, without the express written consent of
the Company, (i) reduce the maximum number of Shares subject to the Offer, (ii)
reduce the Offer Price or change or waive the Minimum Condition, (iii) add to or
modify the conditions set forth in Section 15, (iv) extend the Offer, except as
provided above, or (v) change the form of consideration payable in the Offer.
The rights reserved by the Purchaser in the two preceding paragraphs are in
addition to the Purchaser's rights pursuant to Section 15. There can be no
assurance that the Purchaser will exercise its right to extend the Offer. Any
extension, amendment, delay, waiver or termination will be followed as promptly
as practicable by public announcement. In the case of an extension, Rule
14e-1(d) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires that the announcement be issued no later than the earlier of (i)
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date, or (ii) the first opening of the Nasdaq National
Market of the Nasdaq Stock Market ("Nasdaq") on the next business day after the
previously scheduled Expiration Date, in accordance with the public announcement
requirements of Rule 14e-1 under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to
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<PAGE> 7
the Dow Jones News Service. As used in this Offer to Purchase, "business day"
has the meaning set forth in Rule 14d-1 under the Exchange Act.
If the Offer is extended, or if the Purchaser (whether before or after its
acceptance for payment of Shares) is delayed in its acceptance for payment of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 3. However, the ability of
the Purchaser to delay the payment for Shares that the Purchaser has accepted
for payment is limited by Rule 14e-1 under the Exchange Act, which requires that
a bidder pay the consideration offered or return the securities deposited by or
on behalf of holders of securities promptly after the termination or withdrawal
of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in the percentage of
securities sought or any dealer solicitation fee, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. With respect to a change in price or a change in the
percentage of securities sought, a minimum period of 10 business days is
generally required to allow for adequate dissemination of such information to
stockholders.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition and the other conditions set forth in Section 15. Subject to the terms
and conditions contained in the Merger Agreement, the Purchaser reserves the
right (but shall not be obligated) to waive any or all such conditions.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of the Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (i) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees or, in
the case of a book-entry transfer, an Agent's Message (as defined below), and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase, and either certificates for tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered pursuant to
the procedure for book-entry transfer set forth below (and a Book-Entry
Confirmation (as defined below) received by the Depositary), in each case prior
to the Expiration Date, or (ii) the tendering stockholder must comply with the
guaranteed delivery procedure set forth below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
Book-Entry Transfer Facility's system may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase
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<PAGE> 8
prior to the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedure described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at the Book-Entry Transfer
Facility as described above is referred to herein as a "Book-Entry
Confirmation."
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (i) the Letter of Transmittal is signed by the registered holder
of Shares (which, for purposes of this Section, includes any participant in the
Book-Entry Transfer Facility's system whose name appears on a security position
listing as the owner of the Shares) tendered therewith and such registered
holder has not completed either the box entitled "Special Delivery Instructions"
or the box entitled "Special Payment Instructions" on the Letter of Transmittal
or (ii) such Shares are tendered for the account of a firm that is a participant
in the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not tendered or not accepted for payment are to be issued to a person other than
the registered holder of the certificates surrendered, the tendered certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders or owners appear
on the certificates, with the signatures on the certificates or stock powers
guaranteed as described above. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day," for purposes of the preceding
sentence, is any day on which the Nasdaq National Market is open for
business.
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<PAGE> 9
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for such Shares (or a timely
Book-Entry Confirmation of a transfer of such Shares as described in Section 2),
(ii) a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees or, in the case of a book-entry
transfer, an Agent's Message, and (iii) any other documents required by the
Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations are actually received by the Depositary. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID BY THE PURCHASER ON THE PURCHASE PRICE OF THE SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above
(including through delivery of an Agent's Message), the tendering stockholder
will irrevocably appoint designees of the Purchaser as such stockholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by the Purchaser and with respect to any and all other
Shares or other securities or rights issued or issuable in respect of such
Shares on or after the date hereof. All such proxies shall be considered
irrevocable and coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts for payment Shares tendered by such stockholder as provided herein. Upon
such acceptance for payment, all prior powers of attorney and proxies given by
such stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney and
proxies may be given (and, if given, will not be deemed effective). The
designees of the Purchaser will thereby be empowered to exercise all voting and
other rights with respect to such Shares or other securities or rights in
respect of any annual, special or adjourned meeting of the Company's
stockholders, or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting and other rights
with respect to such Shares and other securities or rights, including voting at
any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in any tender with respect to any particular Shares,
whether or not similar defects or irregularities are waived in the case of other
Shares. No tender of Shares will be deemed to have been validly made until all
defects or irregularities relating thereto have been cured or waived. None of
the Purchaser, the Parent, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. The Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding on all parties.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must provide the Depositary with such stockholder's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalty of perjury that such TIN is correct and that such stockholder is
not subject to backup withholding. Certain stockholders (including, among
others, all corporations and certain foreign individuals
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<PAGE> 10
and entities) are not subject to backup withholding. If a stockholder does not
provide its correct TIN or fails to provide the certifications described above,
the Internal Revenue Service ("IRS") may impose a penalty on such stockholder
and payment of cash to such stockholder pursuant to the Offer may be subject to
backup withholding of 31%. All stockholders surrendering Shares pursuant to the
Offer should complete and sign the main signature form and the Substitute Form
W-9 included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and the
Depositary). Noncorporate foreign stockholders should complete and sign the main
signature form and a Form W-8, Certificate of Foreign Status, a copy of which
may be obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after September 10, 1999.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and must specify
the name of the person having tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry delivery set forth in Section 2, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by again following one
of the procedures described in Section 2 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, the Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and pay, as promptly as
practicable after the Expiration Date, for all Shares validly tendered prior to
the Expiration Date and not properly withdrawn in accordance with Section 3. Any
determination concerning the satisfaction of such terms and conditions will be
within the discretion of the Purchaser, and such determination will be final and
binding on all tendering stockholders. See Sections 1 and 15. The Purchaser
expressly reserves the right, in its sole discretion, to delay acceptance for
payment of or payment for Shares in order to comply in whole or in part with any
applicable law. Any such delays will be effected in compliance with Rule
14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay
for or return tendered Shares promptly after the termination or withdrawal of
the Offer).
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In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2), (ii) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and (iii) any
other documents required by the Letter of Transmittal. The per Share
consideration paid to any stockholder pursuant to the Offer will be the highest
per Share consideration paid to any other stockholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser and
not properly withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Shares. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders whose Shares have been
accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE
PURCHASER ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering stockholders, the Purchaser's obligation to make such
payment shall be satisfied and tendering stockholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. The Purchaser will pay
stock transfer taxes with respect to the transfer and sale to it or its order
pursuant to the Offer, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, as well as any charges and expenses of the Depositary and
the Information Agent.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, the certificates for such Shares will be
returned, and if certificates are submitted for more Shares than are tendered,
new certificates for the Shares not tendered will be sent, in each case without
expense, to the tendering stockholder (or, in the case of Shares delivered by
book-entry transfer of such Shares into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedure set forth in Section 2,
such Shares will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of the
Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to the Parent, or to one or more direct or indirect wholly
owned subsidiaries of the Parent, the right to purchase Shares tendered pursuant
to the Offer. Any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Sales of Shares pursuant to the Offer (and the receipt of cash by
stockholders of the Company pursuant to the Merger) will be taxable transactions
for Federal income tax purposes under the Internal Revenue Code of 1986, as
amended (the "Code"), and may also be taxable transactions under applicable
state, local, foreign and other tax laws. Generally, for federal income tax
purposes, a tendering stockholder will generally recognize gain or loss equal to
the difference between the amount of cash received by the stockholder pursuant
to the Offer (or pursuant to the Merger) and the aggregate tax basis in the
Shares tendered by the stockholder and
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<PAGE> 12
purchased pursuant to the Offer (or converted pursuant to the Merger). Gain or
loss will be calculated separately for each block of Shares tendered and
purchased pursuant to the Offer (or converted pursuant to the Merger).
In general, cash received in respect of Dissenting Shares, if any, will
result in the recognition of capital gain or loss to the beneficial owner of
such Shares. Any such beneficial owner should consult such owner's tax advisor
in that regard.
If tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by the tendering stockholder will be capital gain or
loss, which will be long-term capital gain or loss if the tendering
stockholder's holding period for the Shares exceeds one year. Long-term capital
gains recognized by a tendering individual stockholder will generally be taxed
at a maximum federal income tax rate of 20%. The ability to deduct capital
losses is subject to limitations.
A stockholder (other than certain exempt stockholders including, among
others, all corporations) that tenders Shares may be subject to 31% backup
withholding unless the stockholder provides its TIN and certifies that such
number is correct or properly certifies that it is awaiting a TIN and certifies
as to no loss of exemption from backup withholding and otherwise complies with
the applicable requirements of the backup withholding rules. A stockholder that
does not furnish its correct TIN or that does not otherwise establish a basis
for an exemption from backup withholding may be subject to a penalty imposed by
the IRS. Each stockholder should complete and sign the Substitute Form W-9
included as part of the Letter of Transmittal so as to provide the information
and certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and the
Depositary).
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY
NOT BE APPLICABLE WITH RESPECT TO SHARES RECEIVED AS COMPENSATION OR WITH
RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER THE
CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF
SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES, SUCH AS PERSONS WHO HOLD THEIR
SHARES AS A HEDGE OR AS PART OF A HEDGING, STRADDLE, CONVERSION OR OTHER RISK
REDUCTION TRANSACTION. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION
AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE
OFFER AND THE MERGER.
9
<PAGE> 13
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded on Nasdaq and prices reflecting such trading are
published by the National Association of Securities Dealers, Inc. under the
symbol "SFLX." The following table sets forth, for each of the periods
indicated, the high and low sales prices per Share as reported in publicly
available sources for the periods indicated.
<TABLE>
<CAPTION>
SALES PRICE
----------------
HIGH LOW
------ ------
<S> <C> <C>
1997
First Quarter............................................... $18.00 $10.25
Second Quarter.............................................. 15.25 9.25
Third Quarter............................................... 12.25 9.50
Fourth Quarter.............................................. 12.00 8.75
1998
First Quarter............................................... 11.63 8.00
Second Quarter.............................................. 12.25 5.75
Third Quarter............................................... 12.00 5.63
Fourth Quarter.............................................. 9.00 5.50
1999
First Quarter............................................... 8.25 3.38
Second Quarter (through July 13, 1999)...................... 9.94 2.50
</TABLE>
On July 1, 1999, the last full day of trading before the Company publicly
announced that it had engaged an investment banker in connection with the
potential sale of the Company, the reported closing sale price of the Shares on
the Nasdaq National Market was $4 3/4 per Share. On July 13, 1999, the last full
day of trading before the commencement of the Offer, the reported last sale
price of the Shares on the Nasdaq National Market was $9.94 per Share.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
Since its inception, the Company has not declared or paid any dividends on
shares of its capital stock.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
The Purchaser intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met. If registration
of the Shares is not terminated prior to the Merger, the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
Market for the Common Shares. The purchase of Shares pursuant to the Offer
will reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of Nasdaq for continued designation
for the Nasdaq National Market. To maintain such designation, a security must
substantially meet one of two maintenance standards. The first maintenance
standard requires that (i) there be at least 750,000 publicly held shares, (ii)
the publicly held shares have a market value of at least $5 million, (iii) the
issuer have net tangible assets of at least $4 million, (iv) there be at least
400 stockholders of round lots, (v) the minimum bid price per share be at least
$1.00 and (vi) there be at least two registered and active market makers. The
second maintenance standard requires that (i) the issuer have either (A) a
market capitalization of at least $50 million or (B) total assets and total
revenue of at least $50 million each for the most recently completed fiscal year
or two of the last three most recently completed fiscal years, (ii) there be at
least 1,100,000 shares publicly held, (iii) the publicly held shares have
10
<PAGE> 14
a market value of at least $15 million, (iv) the minimum bid price per share be
at least $5.00, (v) there be at least 400 stockholders of round lots and (vi)
there be at least four registered and active market makers.
If these standards for continued designation for the Nasdaq National Market
are not met, the Shares might nevertheless continue to be included in the Nasdaq
SmallCap Market. Continued inclusion in the Nasdaq SmallCap Market, however,
would require that (i) there be at least 300 round lot holders, (ii) there be at
least 500,000 publicly held shares, (iii) the publicly held shares have a market
value of at least $1 million, (iv) there be at least two registered and active
market makers, of which one may be entering stabilizing bids and (v) the issuer
have either (A) net tangible assets of at least $2 million, (B) market
capitalization of at least $35 million or (C) net income of at least $500,000 in
the most recently completed fiscal year or in two of the last three most
recently completed fiscal years. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10% of the Shares are not
considered as being publicly held for the purpose of determining whether either
of the Nasdaq listing criteria were met. According to the Company, as of July 6,
1999, there were approximately 83 holders of record of Shares and 6,493,994
Shares outstanding.
If the purchase of Shares pursuant to the Offer causes the Shares to no
longer meet the requirements for continued inclusion in the Nasdaq National
Market or the Nasdaq SmallCap Market as a result of a reduction in the number or
market value of publicly held Shares or the number of round lot holders or
otherwise, as the case may be, the market for Shares could be adversely
affected. It is possible that the Shares would continue to trade in the
over-the-counter market and that price quotations would be reported by other
sources. The extent of the public market for the Shares and the availability of
such quotations, however, would depend upon the number of holders of Shares
remaining at such time, the interests in maintaining a market in Shares on the
part of securities firms, the possible termination of registration of the Shares
under the Exchange Act, as described below, and other factors.
Exchange Act Registration. Registration of the Shares under the Exchange
Act may be terminated upon application of the Company to the Commission if the
Shares are neither listed on a national securities exchange nor held by 500 or
more holders of record. Termination of registration of the Shares under the
Exchange Act would, subject to Section 15(d) of the Exchange Act, substantially
reduce the information required to be furnished by the Company to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the shortswing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy or information statement pursuant to Section 14(a) or (c) of
the Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to apply for termination of registration of the Shares
under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
trading of the Shares will cease to be reported on Nasdaq and the registration
of the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers. If registration of Shares under the Exchange Act were terminated,
the Shares would no longer be "margin securities" or be eligible for Nasdaq
reporting.
11
<PAGE> 15
8. CERTAIN INFORMATION CONCERNING THE COMPANY
General. The Company is a Delaware corporation with its principal
executive offices at 14312 Franklin Avenue, Tustin, California 92781, telephone
no. (714) 838-8737. According to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998 (the "Annual Report"), the Company is a
technology leader in electronics manufacturing services, providing a diverse
range of services to customers to achieve their product realization needs. These
services include product, Application Specific Integrated Circuits, software and
Radio Frequency design; modeling, and package/enclosure management; and the
precision assembly of comprehensive advanced interconnect solutions, utilizing
precision surface mount and Direct-Chip-Attach technologies. Prototype through
high volume manufacturing of electronic circuit board and box build services is
provided through nine facilities worldwide for customers in the Americas, Europe
and Asia. The Company believes it is a leading supplier of advanced surface
mount technology, Chip-On-Flex, and Flip-Chip-On-Flex assemblies to the hard
disk drive ("HDD") and non-HDD markets.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company excerpted or
derived from the information contained in the Annual Report, as well as from the
information contained in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999, which are incorporated herein by reference. More
comprehensive financial information is included in such reports and other
documents filed by the Company with the Commission, and the following summary is
qualified in its entirety by reference to such reports and such other documents
and all the financial information (including any related notes) contained
therein. Such reports and other documents should be available for inspection and
copies thereof should be obtainable in the manner set forth below under
"Available Information."
SMARTFLEX SYSTEMS, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
------------------ --------------------------------
1999 1998 1998 1997 1996
------- ------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................................ $23,152 $37,005 $107,601 $133,347 $146,100
Operating income (loss)..................... 316 263 967 (6,795) 10,446
Net income (loss)........................... (4,854) 828 1,516 (4,129) 7,157
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
------------ ------------------
1999 1998 1997
------------ ------- -------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $25,415 $32,719 $33,640
Total assets................................................ 86,365 72,291 81,906
Long-Term obligations....................................... 15,341 5,526 1,689
Total stockholders' equity.................................. 46,166 51,019 49,089
</TABLE>
Available Information. The Company is subject to the reporting
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Certain information as of particular
dates concerning the Company's directors and officers, their remuneration, the
principal holders of the Company's securities and any material interest of such
persons in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's stockholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located in the Northwestern Atrium Center, 500 West
Madison Street (Suite 1400), Chicago,
12
<PAGE> 16
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies should be obtainable, by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a World Wide
Web site on the internet at http://www.sec.gov that contains reports and certain
other information regarding registrants that file electronically with the
Commission. Such information should also be on file at The Nasdaq Stock Market,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Company Information. The information concerning the Company contained
herein has been taken from or based upon publicly available documents on file
with the Commission and other publicly available information. Although the
Purchaser and the Parent do not have any knowledge that any such information is
untrue, neither the Purchaser nor the Parent takes any responsibility for the
accuracy or completeness of such information or for any failure by the Company
to disclose events that may have occurred and may affect the significance or
accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT
The Purchaser, a Delaware corporation and a wholly owned subsidiary of the
Parent, was organized in June 1999 to facilitate the Parent's acquisition of
control of, and the entire equity interest in, the Company upon the successful
completion of the Merger. The principal offices of the Purchaser are located at
255 Rex Boulevard, Auburn Hills, Michigan 48326, telephone no. (248) 853-5724.
All outstanding shares of capital stock of the Purchaser are owned by the
Parent. The Purchaser does not have any significant assets or liabilities and
has not engaged in activities other than those incidental to its formation and
capitalization, its execution of the Merger Agreement and preparation of the
Offer and the Merger. Because the Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding the
Purchaser is available.
The Parent, a Michigan corporation, has its principal office located at 255
Rex Boulevard, Auburn Hills, Michigan 48326, telephone no. (248) 853-5724. The
Parent is a privately-held company providing electronic, electromechanical and
electrical systems for automotive and nonautomotive applications.
Neither the Parent, nor the Purchaser are subject to the reporting
requirements of the Exchange Act and, therefore, they do not file reports or
other information with the Commission relating to their business, financial
condition or other matters.
Except as described in this Offer to Purchase, neither the Parent nor the
Purchaser (together, the "Purchasing Entities") nor, to the best knowledge of
the Purchasing Entities, any of the persons listed in Schedule I (or any
associate or majority owned subsidiary of the Purchasing Entities or any of the
persons so listed), beneficially owns any equity security of the Company, and
none of the Purchasing Entities or, to the best knowledge of the Purchasing
Entities, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days. Wallace K. Tsuha, Jr., President, Chief Executive Officer and Chairman
of the Company, directly owns 1,500 Shares. Gene R. Smith, Jr., Executive Vice
President, Business Management, of the Company, sold 1,000 Shares on May 24,
1999 for $3.58 per Share in a market transaction.
Except as described in this Offer to Purchase, (i) there have not been any
contacts, transactions or negotiations between the Purchasing Entities, any of
their respective subsidiaries or, to the best knowledge of the Purchasing
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the
Commission and (ii) none of the Purchasing Entities or, to the best knowledge of
the Purchasing Entities, any of the persons listed in Schedule I has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
Except as described in this Offer to Purchase, during the last five years,
none of the Purchasing Entities or, to the best knowledge of the Purchasing
Entities, any of the persons listed in Schedule I (i) has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
(ii) was a party
13
<PAGE> 17
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, Federal or state securities laws or finding any violation of such
laws. The name, business address, present principal occupation or employment,
five year employment history and citizenship of each of the directors and
executive officers of the Purchaser and the Parent are set forth in Schedule I.
10. SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned upon any financing arrangement. The Parent
estimates that the total amount of funds required by the Purchaser to acquire
the tendered Shares pursuant to the Offer, to consummate the Merger under the
Merger Agreement, to refinance any indebtedness of the Company which may become
payable as a result of the Offer and the Merger, to pay holders of Company Stock
Options in connection with the Offer and Merger and to pay estimated fees and
expenses related to the Offer and the Merger will be approximately $73.5
million. The Purchaser expects to obtain all funds needed to consummate the
Offer and the Merger from contributions from Parent. Parent expects to obtain
funds for its distribution to the Purchaser pursuant to a Credit Agreement to be
entered into in accordance with a financing commitment letter (the "Commitment
Letter") dated July 2, 1999 from Comerica Bank, as administrative agent (the
"Agent") for several lenders (the "Lenders"). Pursuant to the Commitment Letter,
Comerica Bank has agreed to provide Parent a $125,000,000 secured revolving
credit facility for general corporate purposes, including the acquisition of the
stock of the Company, subject to customary fees.
The Commitment Letter is subject to customary conditions. The credit
facility will be guaranteed by all wholly-owned subsidiaries of Parent or all
wholly-owned subsidiaries of Parent will be co-obligors of the credit facility,
and will be secured by a security interest in substantially all tangible and
intangible assets of Parent and its wholly-owned subsidiaries.
The credit facility will have a maturity of three years from the date of
closing of the Facility, and will bear interest, at the Parent's option, at (i)
the higher of (A) Comerica Bank's prime rate or (B) the federal funds rate plus
100 basis points, plus the Applicable Margin (as defined in the Commitment
Letter) or (ii) Comerica Bank's Eurodollar rate, plus the Applicable Margin.
The Commitment Letter also includes an obligation on the part of the
Company to indemnify the Lenders against certain liabilities. The foregoing
summary of the Commitment Letter is qualified in its entirety by references to
the text of the Commitment Letter, which is filed with the Commission as an
exhibit to the Tender Offer Statement on Schedule 14D-1 (the "Tender Offer
Statement") filed by the Parent and the Purchaser.
It is currently anticipated that the indebtedness incurred in connection
with the Offer and the Merger will be repaid from current funds, and additional
funds generated internally by the Parent and its subsidiaries after the Merger,
and through other sources that may be available from time to time.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
In July 1997, the Parent inquired of the Company's management as to the
Company's desire to conduct discussions concerning an acquisition by the Parent
of the Company or other strategic initiative. Corporate marketing brochures and
general product and service information of the Parent and the Company were
exchanged. The Company's management indicated that it had no desire to enter
into any such discussions at that time.
During 1998, the Parent contacted the Company's executive management
several times and reinforced the Parent's desire to explore strategic
initiatives. The Company's management informed the Parent that it did not wish
to consider a merger or sale, but that the Company would be willing to consider
collaborating on a program if incremental value for the Company could be
created. The Parent and the Company discussed the pursuit of a catalyst program,
but no such program was ever pursued by them.
In January 1999, the Parent again contacted the Company and expressed its
desire to meet with the Company's management to explore areas of mutual benefit.
The Company's executive management agreed to
14
<PAGE> 18
such a meeting. A mutual confidentiality agreement was signed by the parties on
February 2, 1999 and amended on February 3, 1999.
The initial meeting between the Parent and the Company's executive
management was held on February 25, 1999. Financial and strategic information
was exchanged and the Parent and the Company concluded that further discussions
were warranted.
In early March, 1999, the Parent's business development representative and
representatives of the Company met to explore possible opportunities. The
meeting was exploratory in nature and generally provided each party with a
better understanding of the other's capabilities and expectations.
In late March, the Parent received information from the Company's
management that the Company's Board of Directors had instructed the Company's
management to cease discussions with the Parent because prolonged discussions
would be a management distraction and dilute management's efforts to improve the
Company's operations.
On April 22, 1999, the Parent sent the Company's Chief Executive Officer an
unsolicited letter of interest to explore a possible combination of the Parent
and the Company in a negotiated transaction. Shortly thereafter, the Company
expressed its willingness to have a group of the Company's directors meet with
representatives of the Parent so that the Parent could express its interest to
that group.
On May 18, 1999, representatives of the Parent met with two of the members
of the Board of Directors of the Company and with the Company's legal counsel to
review the Parent's proposal. The representatives of the Company indicated that
the Company's Board of Directors would consider the Parent's proposal and inform
the Parent as to whether the Company had any interest in pursuing it. The
following week, the Company informed the Parent that it would engage an
investment banking firm to explore and evaluate the Company's strategic
alternatives. On June 11, the Parent received notice that a meeting could take
place among the Parent, the Company's management and the Company's investment
banker.
On June 16, 1999, representatives of the Parent, the Company and the
Company's advisors met. The Company reviewed its financial forecast and
discussed management's confidence levels, customer program assumptions and
comparable transactions. The Parent's executive emphasized that based on the
information reviewed and the market comparables, a range of $8.00 to $10.00 per
fully diluted Share appeared to be the appropriate valuation. The meeting
adjourned with both sides agreeing that none of the representatives had the
authority to negotiate an agreement, and that the matter should be resolved by
the Parent's chief executive officer and the Company's lead Board of Directors
representative.
On June 21, 1999, the Parent sent the Company's Chairman a letter which
indicated that a combination of the parties could be accomplished in which the
Company's common shares would be valued at $9.00 per Share.
On June 22, the Parent's Chief Executive Officer and the Company's lead
Board representative agreed to continue to explore a business combination on the
assumption that the price per Share would be in the range of $10.00 to $12.00.
After their discussion, they verbally agreed to a price per Share of $10.50.
Later on June 22, 1999, the Parent sent the Company's Chairman a letter
confirming the price per Share of $10.50.
From noon on June 28, 1999 through noon on July 1, 1999, representatives of
the Parent and the Company met to conduct in-depth discussions concerning a
merger, to commence negotiating a definitive agreement, and to commence due
diligence.
On July 1, 1999, the Parent's Board of Directors approved the acquisition
of the Company for a price of $10.50 per Share.
12. THE MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENTS
The following is a summary of certain provisions of the Merger Agreement
and the Stockholder Agreements. This summary is qualified in its entirety by
reference to the Merger Agreement and the Stockholder Agreements which are
incorporated by reference and copies of which have been filed with the
15
<PAGE> 19
Commission as exhibits to the Tender Offer Statement. The Merger Agreement and
the Stockholder Agreements may be examined and copies may be obtained at the
places set forth in Section 8 of this Offer to Purchase under "Available
Information."
(A) THE MERGER AGREEMENT
The Offer. The Merger Agreement provides that if none of the events set
forth in Section 15 shall have occurred or is existing, the Purchaser will
commence the Offer as promptly as reasonably practicable after the date of the
Merger Agreement, but in no event later than five business days after the date
thereof. The obligation of the Purchaser to accept for payment and pay for
Shares tendered pursuant to the Offer is subject to the condition that at least
a majority of the Company's outstanding shares (calculated on a fully diluted
basis) be tendered and not withdrawn (the "Minimum Condition") and the other
conditions set forth in Section 15. Pursuant to the Merger Agreement, the
Purchaser expressly reserves the right to waive any such condition, to increase
the price per Share payable in the Offer, and to make any other changes in the
terms and conditions of the Offer; provided, however, that, without the prior
written consent of the Company, no change may be made (i) which decreases the
price per Share payable in the Offer or which changes or waives the Minimum
Condition, (ii) which changes the form of consideration payable in the Offer,
(iii) which extends the period that the Offer is outstanding for one or more
periods not to exceed 30 days in the aggregate, (iv) which reduces the maximum
number of Shares to be purchased in the Offer or (v) which imposes conditions
other than those set forth in Section 15.
Company Action. The Merger Agreement provides that, subject to the
conditions thereof, the Company has approved of and consented to the Offer. The
Board of Directors of the Company, at a meeting duly called and held on July 6,
1999, has unanimously (i) determined that the Merger Agreement and the
Stockholder Agreements, and the Transactions, including, without limitation, the
Offer, the Merger and the tender of the Shares pursuant to the Stockholder
Agreements, are fair to and in the best interests of the stockholders of the
Company, (ii) approved and adopted the Merger Agreement and the Stockholders
Agreement, and the Transactions, including, without limitation, the Offer, the
Merger and the tender of the Shares pursuant to the Stockholder Agreements,
(iii) taken all action to render the provisions of the Company's stockholder
rights plan and of Section 203 of the DGCL inapplicable to the Offer, the Merger
and the Stockholder Agreements, and (iv) recommended that the stockholders of
the Company accept the Offer and approve and adopt the Merger Agreement and the
Transactions, including, without limitation, the Merger.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with the DGCL, at the Effective
Time, the Purchaser will be merged with and into the Company. As a result of the
Merger, the separate corporate existence of the Purchaser will cease and the
Company will continue as the Surviving Corporation, and shall continue to be
governed by the laws of the State of Delaware. The Merger Agreement provides
that the Parent, the Purchaser and the Company shall use their reasonable best
efforts to consummate the Merger as soon as practicable.
Pursuant to the Merger Agreement, at the Effective Time, each Share issued
and outstanding immediately prior to the Effective Time (other than any Shares
held by the Purchaser, the Parent or any direct or indirect wholly owned
subsidiary of the Parent or the Company, which will be canceled and retired
without any conversion thereof and no payment or distribution shall be made with
respect thereto, or Shares that are owned by stockholders, if any, who are
entitled to and who properly exercise dissenter's rights under the DGCL) shall
be canceled and shall be converted automatically into the right to receive an
amount equal to the Merger Consideration, payable, without interest, to the
holder of such Shares, upon surrender in accordance with the Merger Agreement,
of the certificate that formerly evidenced such Shares. In addition, at the
Effective Time, each share of common stock of the Purchaser issued and
outstanding immediately prior to the Effective Time will be converted into and
exchanged for one validly issued, fully paid and nonassessable share of Common
Stock, $.0025 par value, of the Surviving Corporation.
The Merger Agreement provides that each outstanding option to purchase
Shares granted under the Company Stock Option Plans (as defined in the Merger
Agreement) or otherwise will be canceled at the Effective Time, and each holder
of a canceled option (whether issued pursuant to a Company Stock Option Plan or
otherwise) will be entitled to receive, at the Effective Time or as soon as
practicable thereafter, from
16
<PAGE> 20
the Company, in consideration for the cancellation of such option, an amount in
cash equal to the product of (i) the number of Shares previously subject to such
option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per Share previously subject to such option.
The Merger Agreement provides that the Certificate of Incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, will be the
Certificate of Incorporation of the Surviving Corporation, and that the By-Laws
of the Purchaser, as in effect immediately prior to the Effective Time, will be
the By-Laws of the Surviving Corporation, in each case, until amended in
accordance with applicable law. The Merger Agreement also provides that the
directors of the Purchaser immediately prior to the Effective Time will be the
initial directors of the Surviving Corporation and that the officers of the
Purchaser immediately prior to the Effective Time will be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
Special Stockholders' Meeting. Immediately after the expiration of the
Offer, subject to the conditions thereof, if at least a majority of the
outstanding shares on a fully-diluted basis have been tendered in the Offer and
not withdrawn, unless the Purchaser is able to conduct a "short-form" merger
without stockholder approval under the DGCL, then the Purchaser will purchase
all Shares tendered pursuant to the Offer and the Company will promptly, in
accordance with applicable law and its Certificate of Incorporation and Bylaws,
(i) duly call, give notice of, convene and hold a special meeting of its
stockholders as soon as practicable following the expiration of the Offer for
the purpose of considering and taking action on the Merger Agreement and the
Transactions (the "Special Stockholders' Meeting") and (ii) subject to certain
provisions of the Merger Agreement, (a) include in the proxy statement to be
prepared in connection with such meeting (the "Proxy Statement") the unanimous
recommendation of the Board of Directors of the Company that the stockholders of
the Company approve and adopt the Merger Agreement and the Transactions,
including without limitation, the Merger and (b) use its best efforts to obtain
such approval and adoption.
Proxy Statement. The Merger Agreement provides that, as soon as
practicable following the date of the consummation of the Offer, the Company
will file the Proxy Statement with the Commission under the Exchange Act, unless
not required under the applicable "short-form" merger provisions of the DGCL,
and the Company will use its best efforts to have the Proxy Statement cleared by
the Commission. The parties will cooperate with one another in this endeavor.
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
from the date of the Merger Agreement to the Effective Time, the Company will,
and will cause the Company's subsidiaries (the "Subsidiaries") and the officers,
directors, employees, auditors and other agents of the Company and the
Subsidiaries to, afford the officers, employees and agents of the Parent and the
Purchaser access at all reasonable times to the officers, employees, agents,
properties, offices, plants and other facilities, books and records of the
Company and each Subsidiary, will instruct its independent auditors to make
available its accountants' work papers to the officers, employees or agents of
the Parent and the Purchaser, and will furnish the Parent and the Purchaser with
all financial, operating and other data and information as the Parent or the
Purchaser, through its officers, employees or agents, may reasonably request.
All information obtained by the Parent or the Purchaser pursuant to the above
sentence will be kept confidential in accordance with the amended
Confidentiality Agreement between the Parent and the Company, a copy of which is
filed with the Commission as an exhibit to the Tender Offer Statement.
Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to the Parent and the
Purchaser with respect to, among other things, its organization and
qualification, the Subsidiaries, capitalization, authority, required filings and
consents, compliance with law, financial statements, the absence of certain
changes or events concerning the Company or any of the Subsidiaries since
December 31, 1998, the absence of litigation, employee benefit plans, labor
matters, information in the Tender Offer Statement, this Offer to Purchase and
such other documents, together with all supplements and amendments thereto
(collectively, the "Offer Documents"), the Schedule 14D-9 and the Proxy
Statement, real property matters, intellectual property matters, taxes,
environmental matters, material contracts, brokers and counsel, Year 2000
compliance and certain other matters. The Parent and the Purchaser have made
customary representations and warranties to the Company with respect to,
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<PAGE> 21
among other things, their organization, authority, no conflicts, required
filings and consents, financing for the Offer, information in the Offer
Documents and the Proxy Statement, and brokers.
Conduct of Business by the Company. Pursuant to the Merger Agreement, the
Company has agreed that, from the date of the Merger Agreement to the Effective
Time, unless the Parent shall otherwise agree in writing, the business of the
Company and the Subsidiaries will be conducted only in, and the Company and the
Subsidiaries will not take any action except in, the ordinary course of business
and in a manner consistent with past practice; and the Company will use its best
efforts to preserve substantially intact the business organization of the
Company and the Subsidiaries, to keep available the services of the current
officers, employees and consultants of the Company and the Subsidiaries and to
preserve the current relationships of the Company and the Subsidiaries with
customers, suppliers and other persons with which the Company or any Subsidiary
has significant business relationships.
Pursuant to the Merger Agreement, neither the Company nor any Subsidiary
will, from the date of the Merger Agreement to the Effective Time, directly or
indirectly do, or propose to do, any of the following without the prior written
consent of the Parent: (i) amend its Certificate of Incorporation or Bylaws or
equivalent organizational documents; (ii) issue, sell, pledge, dispose of,
grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or
encumbrance of (a) any shares of capital stock of any class of the Company or
any Subsidiary or any options, warrants, convertible securities or other rights
of any kind to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of the Company
or any Subsidiary (except for the issuance of a maximum of 994,502 Shares
issuable pursuant to stock options outstanding or any rights to purchase Shares
under the Company's 1995 Employee Stock Purchase Plan in effect on the date of
the Merger Agreement) or (b) any assets of the Company, any Subsidiary, except
for sales in the ordinary course of business and in a manner consistent with
past practice; (iii) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock; (iv) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(v)(1) acquire (including, without limitation, by merger, consolidation, or
acquisition of stock or assets or any other business combination) another entity
or any assets, (2) incur indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, pledge in respect of or otherwise as
an accommodation become responsible for the obligations of any person, or make
loans or advances, except in the ordinary course of business consistent with
past practice, but in no event shall there be more than $1,000,000 of
indebtedness outstanding at one time in addition to the total amount of
indebtedness outstanding as of the date of the Merger Agreement, (3) enter into
any contract or agreement other than purchases of inventory in the ordinary
course of business or contracts or agreements entered into in the ordinary
course of business consistent with past practice and which require payments by
the Company or the Subsidiaries in an aggregate amount of less than $100,000,
(4) terminate, cancel or permit any change in, or agree to any change in, any
Material Contract (as defined in the Merger Agreement), except in the ordinary
course of business consistent with past practice, (5) terminate, cancel or
permit any change in, or agree to any change in, any Affiliate Contract, Broker
Agreement or Attorney Engagement (as defined in the Merger Agreement), (6)
authorize any single capital expenditure which is above specified dollar
thresholds, or (7) enter into or amend any contract, agreement, commitment or
arrangement with respect to any matter set forth in this subparagraph (v); (vi)
increase the compensation of, or grant any severance or termination pay to,
directors, officers and employees (except for normal compensation increases
consistent with past practice for employees who are not officers); (vii) change
accounting policies or practices; (viii) make any tax election or settle or
compromise any material federal, state, local or foreign income tax liability;
(ix) pay, discharge or satisfy any claim, liability or obligation; or (x)
announce an intention, enter into any formal or informal agreement, or otherwise
make a commitment to do any of the foregoing.
No Solicitation of Transactions. Pursuant to the Merger Agreement, neither
the Company nor any Subsidiary shall, directly or indirectly, through any
officer, director, agent or otherwise, solicit, initiate or encourage the
submission of any proposal or offer from any person relating to the acquisition
or purchase of all or any material portion of the assets of, or any equity
interest in, the Company or any Subsidiary or any merger, consolidation,
business combination, reorganization, recapitalization or similar transaction
involving
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<PAGE> 22
the Company or any Subsidiary (each a "Competing Transaction") or participate in
any discussions or negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. The Company and each of the
Subsidiaries will cease and cause to be terminated any existing activities,
discussions or negotiations by or on its behalf with any other person conducted
prior to the execution of the Merger Agreement with respect to any Competing
Transaction and will promptly notify the Parent following receipt of any request
by any person relating to any possible Competing Transaction or information
concerning the Company. The Company agreed that it will not disclose any of the
terms of the Merger Agreement or the matters referred to therein to any other
prospective acquiror of the Company until the Effective Time or earlier if the
Merger Agreement is terminated in accordance with its terms, except to the
extent such disclosure is required by law or the regulations of Nasdaq. Nothing
contained in the Merger Agreement shall prohibit the Board of Directors of the
Company from furnishing information to, or entering into discussions or
negotiations with, any person in connection with an unsolicited (from the date
of the Merger Agreement) proposal involving a fully-financed (as represented by
such person) Competing Transaction which is made in writing by such person and
which, if consummated, would provide consideration per Share to the stockholders
of the Company in excess of the Offer Price (a "Superior Proposal"), if, and
only to the extent that, the Board of Directors of the Company determines in
good faith, based upon the advice of the SG Cowen Securities Corporation and the
written advice of its counsel, that such action is required for the Board of
Directors of the Company to comply with its fiduciary duties to stockholders
under the DGCL.
Employee Benefits Matters. The Merger Agreement provides that for a period
of one year from the Effective Time, the Parent shall, or shall cause the
Company or the Surviving Corporation to, maintain the Plans (as defined in the
Merger Agreement) (other than the Company Stock Option Plans and the Company's
1995 Employee Stock Purchase Plan and 1999 Key Employees Stock Ownership Plan)
which the Company maintains for the benefit of, or which are open to, a majority
of the employees of the Company on the terms in effect on the date of the Merger
Agreement, or such other plans, arrangements or programs as will provide
employees with benefits that in the aggregate are substantially equivalent to
those provided under the Plans (other than the Company Stock Option Plans and
the Company's 1995 Employee Stock Purchase Plan and 1999 Key Employees Stock
Ownership Plan) as in effect on the date of the Merger Agreement. In addition,
the Parent shall, or shall cause the Company or the Surviving Corporation to,
assume and agree to perform certain agreements and policies in the same manner
and to the same extent that the Company is required to perform such agreements
and policies.
Directors' and Officers' Indemnification and Insurance. The Merger
Agreement provides that the Articles of Incorporation and Bylaws of the
Surviving Corporation must contain provisions no less favorable with respect to
indemnification than are set forth in the Bylaws of the Company and these
provisions may 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, fiduciaries or agents of the Company, unless such
modification shall be required by law.
The Merger Agreement provides that the Company agrees, to the extent
permitted by Delaware Law, to indemnify and hold harmless, and, after the
Effective Time, the Surviving Corporation agrees to indemnify and hold harmless,
to the extent permitted by Delaware Law, each present and former director,
officer, employee, fiduciary and agent of the Company and each Subsidiary
(collectively, the "Indemnified Parties") against any costs and expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, criminal, administrative or investigative,
arising out of or pertaining to any action or omission in their capacity as an
officer, director, employee, fiduciary or agent, whether occurring before or
after the Effective Time, for a period of six years after the date of the Merger
Agreement. In the event of such claim, action, suit, proceeding or
investigation, (a) the Company or the Surviving Corporation, as the case may be,
shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to the
Company or the Surviving Corporation, promptly after statements therefor are
received and (b) the Company and the
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<PAGE> 23
Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that neither the Company nor the Surviving Corporation shall
be liable for any settlement effected without its written consent (which consent
will not be unreasonably withheld); provided further that neither the Company
nor the Surviving Corporation shall be obligated to pay the fees and expenses of
more than one counsel for all Indemnified Parties in any single action except to
the extent that two or more of such Indemnified Parties shall have conflicting
interests in the outcome of the action; and provided further that, in the event
that any claim for indemnification is asserted or made within such six-year
period, all rights to indemnification in respect of such claim shall continue
until the disposition of such claim.
The Merger Agreement provides that the Surviving Corporation shall use its
best efforts to maintain in effect for six years from the Effective Time, if
available, the current directors' and officers' liability insurance policies
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less favorable) with respect to matters
occurring on or prior to the Effective Time; provided, however, that in no event
shall the Surviving Corporation be required to expend more than an amount per
year equal to 150% of current annual premiums paid by the Company for such
insurance, which amount shall be increased by 5% for each year hereafter. The
Merger Agreement requires that any successor corporation or assignee of the
Company or the Surviving Corporation assume these insurance and indemnification
obligations.
Board Representation. The Merger Agreement provides that after the
purchase by the Purchaser of Shares pursuant to the Offer, the Parent will be
entitled to designate at its option up to that number of directors of the
Company's Board of Directors as will make the Parent's representation on the
Company's Board of Directors equal to the percentage of the outstanding Shares
held by the Parent or any of its subsidiaries and the Company shall, at such
time, increase the size of Board of Directors, or use its best efforts to secure
the resignation of directors, or both, as necessary to permit the Parent's
designees to be so elected to the Company's Board of Directors. However, in the
event that the Parent's designees are elected to the Board of Directors of the
Company, until the Effective Time, such Board of Directors shall have at least
two directors who are Continuing Directors. "Continuing Directors" means
directors of the Company on the date of the Merger Agreement. From and after the
time that the Parent's designees constitute a majority of the Board and prior to
the Effective Time, any amendment or termination of the Merger Agreement, any
extension of time for the performance of the obligations of the Purchaser or the
Parent, any waiver of rights of the Company under the Merger Agreement and
certain other actions may only be effected by the action of a majority of the
Continuing Directors.
Waiver. The Merger Agreement provides that, at any time prior to the
Effective Time, any party thereto may (i) extend the time for the performance of
any obligation or other act of any other party thereto, (ii) waive any
inaccuracy in the representations and warranties contained therein or in any
document delivered pursuant thereto and (iii) waive compliance with any
agreement or condition contained therein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
Conditions to the Merger. The Merger Agreement provides that if the
conditions set forth in Section 15 have been satisfied or, where permitted,
waived, 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: (i) the Merger Agreement and the Transactions, including, without
limitation, the Merger, shall have been approved and adopted by the affirmative
vote of the stockholders of the Company (unless the vote of stockholders is not
required by the DGCL); (ii) no foreign, United States or state governmental
authority, agency or commission shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order which is then in effect and has the effect of making
the acquisition of Shares by the Parent or the Purchaser or any affiliate of
either of them or the consummation of the Merger illegal or otherwise
restricting, preventing or prohibiting the consummation of the Transactions;
(iii) the Purchaser shall have purchased all Shares validly tendered and not
withdrawn pursuant to the Offer; provided, however, that this condition shall
only be applicable to the obligations of the Parent and the Purchaser if the
Purchaser's failure to purchase such Shares is not in breach of the Merger
Agreement or the terms of the Offer; and (iv) any waiting period applicable to
the consummation of the Merger under the Hart-Scott-Rodino Antitrust
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<PAGE> 24
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act") shall have expired or been terminated, and
consummation of the Merger shall not result in a violation of any applicable
material foreign antitrust or competition law, rule or regulation.
Termination. The Merger Agreement provides that it may be terminated and
the Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of the
Merger Agreement and the transactions contemplated thereby by the stockholders
of the Company:
(i) By mutual written consent duly authorized by the Boards of
Directors of the Parent, the Purchaser and the Company; or
(ii) By the Parent, the Purchaser or the Company if (a) the Effective
Time shall not have occurred on or before December 31, 1999; provided,
however, that the right to terminate the Merger Agreement under this
section shall not be available to any party whose failure to fulfill any
obligation under the Merger Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before such date or
(b) any court of competent jurisdiction in the United States or other
governmental authority shall have issued an order, decree, ruling or taken
any other action restraining, enjoining or otherwise prohibiting the Offer
or the Merger and such order, decree, ruling or other action shall have
become final and nonappealable; or
(iii) By the Parent, upon approval of its Board of Directors, if (a)
due to an occurrence or circumstance that would result in a failure to
satisfy any of the conditions set forth in Section 15, the Purchaser shall
have (1) failed to commence the Offer within 60 days following the date of
the Merger Agreement, (2) terminated the Offer without having accepted any
Shares for payment thereunder or (3) failed to pay for Shares pursuant to
the Offer within 90 days following the commencement of the Offer unless
such action or inaction under (1), (2) or (3) shall have been caused by or
resulted from the failure of the Parent or the Purchaser to perform in any
material respect any covenant or agreement of either of them contained in
the Merger Agreement or the material breach by the Parent or the Purchaser
of any representation or warranty of either of them contained in this
Agreement or (b) prior to the purchase of Shares pursuant to the Offer, the
Board of Directors of the Company or any committee thereof shall have
publicly withdrawn or modified in a manner adverse to the Purchaser or the
Parent or, after receipt of a proposal involving a Competing Transaction,
upon the request of the Parent, shall not have, within four business days
after receipt of the Parent's request, publicly reaffirmed its approval or
recommendation of the Offer, the Merger Agreement, the Merger, the
Stockholder Agreements or any other Transaction, or shall have recommended
another merger, consolidation, business combination, recapitalization,
reorganization or similar transaction involving, or acquisition of, the
Company or its assets, or another tender offer or exchange offer for
Shares, or shall have resolved to do any of the foregoing; or
(iv) By the Parent, upon approval of its Board of Directors, if the
Company shall have materially breached its obligations discussed under "No
Solicitation of Transactions" above; or
(v) By the Company, upon approval of the Board of Directors of the
Company, if Parent or Purchaser shall materially breach any of its
obligations under the Merger Agreement and shall fail to cure such breach
within ten days after written notice thereof from the Company or if due to
an occurrence or circumstance that would result in a failure to satisfy any
of the conditions set forth in Section 15, the Purchaser shall have (a)
failed to commence the Offer within 60 days following the date of the
Merger Agreement, (b) terminated the Offer without having accepted any
Shares for payment thereunder or (c) failed to pay for Shares pursuant to
the Offer within 90 days following the commencement of the Offer; unless
such action or inaction under (a), (b) and (c) shall have been caused by or
resulted from the failure of the Company to perform in any material respect
any covenant or agreement of it contained in the Merger Agreement or the
material breach by the Company of any representation or warranty of it
contained in the Merger Agreement; or
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<PAGE> 25
(vi) By the Company or the Parent, prior to the purchase of Shares
pursuant to the Offer, if the Board of Directors of the Company, in full
compliance with the provisions discussed in "No Solicitation of
Transactions" above, shall have approved the execution by the Company of a
definitive agreement relating to a Superior Proposal.
Effect of Termination. In the event of the termination of the Merger
Agreement pursuant to the foregoing, the Merger Agreement will then become void,
and there will be no liability on the part of any party thereto, except as set
forth in Sections 8.03 (Fees and Expenses) and 9.01 (Non-Survival of
Representations and Warranties) of the Merger Agreement. This, however, will not
relieve any party from liability for any breach of the Merger Agreement.
Fees and Expenses. The Merger Agreement provides that in the event that
(a) any person shall have commenced a tender or exchange offer for 25% or more
(or which, assuming the maximum amount of securities which could be purchased,
would result in any person beneficially owning 25% or more) of the then
outstanding Shares or otherwise publicly announced a Competing Transaction for
the direct or indirect acquisition of the Company or all or substantially all of
its assets and (1) the Board of Directors of the Company does not recommend
against the Competing Transaction, (2) the Offer shall have remained open for at
least 20 business days, (3) the Minimum Condition shall not have been satisfied
and (4) the Merger Agreement shall have been terminated; or (b) the Merger
Agreement is terminated pursuant to clauses (iii)(b), (iv) or (vi) under
"Termination" above; then, in any such event, the Company shall pay the Parent
promptly (but in no event later than one business day after the first of such
events shall have occurred) a fee of $2,500,000, in immediately available funds.
The Merger Agreement provides that all costs and expenses incurred in
connection with the Merger Agreement and the Transactions shall be paid by the
party incurring such expenses, whether or not any Transaction is consummated.
(B) THE STOCKHOLDER AGREEMENTS.
Each of the Stockholders of the Company listed on Schedule I to the Merger
Agreement, including all directors and executive officers of the Company, has
entered into a Stockholder Agreement with the Parent and the Purchaser.
Agreement to Tender. Pursuant to the Stockholder Agreements, each
Stockholder will tender all Shares beneficially owned by it pursuant to the
Offer within 10 business days of commencement of the Offer.
Voting and Irrevocable Proxy. Pursuant to the Stockholder Agreements, each
Stockholder will (i) vote all Shares beneficially owned by it in favor of the
Merger, (ii) vote all Shares beneficially owned by it against any action or
agreement that would result in a breach of any covenant or any representation or
warranty or any other obligation or agreement of the Company under or pursuant
to the Merger Agreement, (iii) vote all Shares beneficially owned by it against
any action or agreement that would impede, interfere with, delay, postpone or
attempt to discourage the Merger or the Offer, and (iv) without limiting the
foregoing, consult with the Parent and vote all Shares beneficially owned by it
in such manner as is determined by the Parent to be in compliance with this
paragraph. Pursuant to the Stockholder Agreements, each Stockholder will deliver
to the Parent contemporaneously with the execution of the Stockholder Agreement
an Irrevocable Proxy pursuant to which each Stockholder irrevocably appoints and
constitutes Wallace K. Tsuha, Jr., Jereen G. Trudell and the Parent to exercise
the proxy to vote the Shares in the foregoing manner at any time until the
earlier to occur of the valid termination of the Merger Agreement or the
Effective Time.
Termination. The Stockholder Agreements provide that they will terminate
on the earliest to occur of (a) the date on which the Purchaser accepts for
payment the Shares tendered in the Offer, so long as the Shares are so tendered
and not withdrawn, (b) the Effective Time and (c) the date of the termination of
the Merger Agreement in accordance with its terms. The Purchaser shall not
purchase the Shares subject to the Stockholder Agreements pursuant to the Offer
unless the Purchaser purchases pursuant to the Offer that number of Shares such
that the Minimum Condition is satisfied.
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Certain Covenants of Stockholder. Pursuant to the Stockholder Agreements,
each Stockholder agrees not to: (a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares; (b) grant any proxies,
deposit any Shares into a voting trust or enter into a voting agreement with
respect to any Shares; or (c) directly or indirectly through any agent or
otherwise, solicit, initiate or encourage the submission of any proposal or
offer from any person (other than the Parent or the Purchaser) relating to any
Competing Transaction, or participate in any discussions or negotiations
regarding, or furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any person (other than the Parent and the
Purchaser) to do or seek any of the foregoing. Pursuant to the Stockholder
Agreements, each Stockholder has agreed to cease and cause to be terminated any
existing activities, discussions or negotiations by or on its behalf with any
person (other than the Parent and the Purchaser) conducted prior to entering
into such agreement with respect to any Competing Transaction and agreed to
promptly notify the Parent following receipt of any request by any person (other
than the Parent or the Purchaser) relating to any possible Competing Transaction
or information concerning the Company. The Stockholder Agreements provide that
the Stockholder may, solely in his or her capacity as a member of the Board of
Directors of the Company, furnish information to, or enter into discussions or
negotiations with, any person in connection with an unsolicited proposal
involving a fully-financed (as represented by such person) Competing Transaction
which is made in writing by such person and which, if consummated, would provide
consideration per share of Common Stock to the stockholders of the Company in
excess of the Offer Price if, and only to the extent that, the Board of
Directors of the Company determines in good faith, based upon the advice of SG
Cowen Securities Corporation and the written advice of its counsel, that such
action is required for the Board of Directors of the Company to comply with its
fiduciary duties to stockholders under the DGCL.
(C) APPRAISAL RIGHTS
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company will
have certain rights under the DGCL to dissent and demand appraisal of, and to
receive payment in cash for the fair value of, their Shares. Such rights to
dissent, if the stockholder does not vote in favor of the Merger and complies
with certain statutory procedures, could lead to a judicial determination of the
fair value of the Shares (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their Shares. Such value could be less than, equal to, or
more than the Offer Price. In addition, such dissenting stockholders may be
entitled to receive payment of interest from the date of consummation of the
Merger on the amount determined to be the fair value of their Shares. In
determining the fair value of the Shares, a Delaware court would be required to
take into account all relevant factors. Accordingly, such determination could be
based upon considerations other than, or in addition to, the market value of the
Shares, including, among other things, asset values and earning capacity.
(D) RULE 13E-3
The Commission has adopted Rule 13e-3 under the Exchange Act that is
applicable to certain "going private" transactions and that may under certain
circumstances be applicable to the Merger following the purchase of Shares
pursuant to the Offer in which the Purchaser seeks to acquire any remaining
Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is
consummated within one year after the expiration or termination of the Offer and
the price paid in the Merger is not less than the price per Share paid pursuant
to the Offer. However, in the event that the Purchaser is deemed to have
acquired control of the Company pursuant to the Offer and if the Merger is
consummated more than one year after completion of the Offer or an alternative
acquisition transaction is effected whereby stockholders of the Company receive
consideration less than that paid pursuant to the Offer, in either case at a
time when the Shares are still registered under the Exchange Act, the Purchaser
may be required to comply with Rule 13e-3 under the Exchange Act. If applicable,
Rule 13e-3 would require, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
Merger or such alternative transaction and the consideration offered to minority
stockholders in the Merger or such alternative
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<PAGE> 27
transaction, be filed with the Commission and disclosed to stockholders prior to
consummation of the Merger or such alternative transaction. The purchase of a
substantial number of Shares pursuant to the Offer may result in the Company
being able to terminate its Exchange Act registration. See Section 7. If such
registration were terminated, Rule 13e-3 would be inapplicable to any such
future Merger or such alternative transaction.
13. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
Purpose of the Offer. The purpose of the Offer and the Merger is to enable
the Parent to acquire control of, and the entire equity interest in, the
Company. The Offer, as the first step in the acquisition of the Company, is
intended to facilitate the acquisition of all the Shares. The Parent will
consummate the Merger as soon as practicable following the consummation of the
Offer. The purpose of the Merger is to acquire all Shares not purchased pursuant
to the Offer or otherwise.
Plans for the Company. It is expected that, initially following the
Merger, the business and operations of the Company and its Subsidiaries will
continue without substantial change. The Parent intends to conduct a detailed
review of the Company and its Subsidiaries and their assets, corporate
structure, operations, properties, policies, management and personnel and to
consider, subject to the terms of the Merger Agreement, what, if any, changes
would be desirable in light of the circumstances then existing. The Parent
reserves the right to take such actions and make such changes as it deems
desirable. Such changes could include changes in the Company's business,
corporate structure, capitalization, dividend policy, Board of Directors or
management or personnel.
Except as otherwise described in this Offer to Purchase, the Purchaser and
the Parent have no current, definite plans or proposals that would relate to, or
result in, any extraordinary corporate transaction involving the Company, such
as a merger, reorganization or liquidation involving the Company or any of its
Subsidiaries, a sale or transfer of a material amount of assets of the Company
or any of its Subsidiaries, any change in the Company's capitalization or
dividend policy or any other material change in the Company's business,
corporate structure, present Board of Directors or management or personnel.
The Merger Agreement provides that the directors of the Purchaser, at the
effective time of the Merger, will be the initial directors of the Company after
the Merger. For the potential effects of the Offer and the Merger on the listing
of the Shares on Nasdaq and their registration under the Exchange Act, see
Section 7.
14. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that, prior to the Effective Time, without
the prior written consent of the Parent, neither the Company nor any Subsidiary
of the Company will directly or indirectly do, or propose to do, any of the
following: (i) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (a) any shares
of capital stock of any class of the Company or any Subsidiary, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or any Subsidiary
(except for the issuance of a maximum of 994,502 Shares issuable pursuant to
stock options outstanding on the date of the Merger Agreement and to the
issuance of shares pursuant to the Company's Employee Stock Purchase Plan) or
(b) any assets of the Company or any Subsidiary, except for sales in the
ordinary course of business and in a manner consistent with past practice; or
(ii) declare, set aside, make or pay any dividend or other distribution, payable
in cash, stock, property or otherwise, with respect to any of its capital stock.
15. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to the Purchaser's obligation to pay for or
return tendered Shares after the termination or withdrawal of the Offer), to pay
for any Shares tendered pursuant to the Offer if (i) the Minimum Condition shall
not have been satisfied, (ii) any applicable waiting period under
24
<PAGE> 28
the HSR Act shall not have expired or been terminated prior to the expiration of
the Offer, (iii) acceptance for payment and payment for the Shares tendered
would result in a violation of any applicable material foreign antitrust or
competition law, rule or regulation, or (iv) at any time on or after the date of
the Merger Agreement and prior to the expiration of the Offer, any of the
following conditions exist:
(a) there shall have been entered any order, preliminary or permanent
injunction, decree, judgment or ruling in any action or proceeding before
any court or governmental, administrative or regulatory authority or
agency, which makes illegal or otherwise directly or indirectly restrains
or prohibits or makes materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by the Parent, the
Purchaser or any other affiliate of the Parent, or the consummation of any
other transaction contemplated by the Merger Agreement;
(b) there shall have occurred any Material Adverse Effect (as defined
in the Merger Agreement) with respect to the Company;
(c) (i) the Board of Directors of the Company or any committee thereof
(x) shall have publicly withdrawn or modified in a manner adverse to the
Parent or the Purchaser the approval or recommendation of the Offer, the
Merger, the Stockholder Agreements or the Merger Agreement, (y) after the
Company's receipt of a proposal involving a Competing Transaction (as
defined in the Merger Agreement), shall have failed to reaffirm such
approval or recommendation upon request by the Parent within four business
days after the Company's receipt of Parent's request or (z) shall have
approved or recommended any takeover proposal or any other acquisition of
Shares other than the Offer and the Merger, or (ii) the Board of Directors
of the Company or any committee thereof shall have resolved to do any of
the foregoing;
(d) there shall have been any breach of warranty by the Company in the
Merger Agreement as a result of which, individually or in the aggregate,
there may reasonably be expected to occur a Material Adverse Effect with
respect to the Company;
(e) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any material
agreement or material covenant of the Company to be performed or complied
with by it under the Agreement;
(f) the Merger Agreement shall been terminated in accordance with its
terms; or
(g) the Purchaser and the Company shall have agreed (i) that the
Purchaser shall terminate the Offer or (ii) that the Purchaser shall
postpone the acceptance for payment of or payment for Shares thereunder
which, in the sole judgment of the Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by the
Parent or any of its affiliates) giving rise to any such condition, makes
it inadvisable to proceed with such acceptance for payment or payment.
The Merger Agreement provides that the foregoing conditions are for the
sole benefit of the Purchaser and the Parent and may be asserted by the
Purchaser or the Parent regardless of the circumstances giving rise to any such
condition or may be waived by the Purchaser or the Parent in whole or in part at
any time and from time to time in their sole discretion. The Merger Agreement
provides that the failure by the Parent or the Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS
Based on a review of publicly available filings made by the Company with
the Commission and other publicly available information concerning the Company,
neither the Purchaser nor the Parent is aware of any license or regulatory
permit that appears to be material to the business of the Company and its
subsidiaries, taken as a whole, that might be adversely affected by the
Purchaser's acquisition of Shares as contemplated herein or of any approval or
other action, except as otherwise described in this Section 16, by any
25
<PAGE> 29
governmental, administrative or regulatory agency or authority, domestic,
foreign or supernational, that would be required for the acquisition or
ownership of Shares by the Purchaser as contemplated herein. Should any such
approval or other action be required, the Purchaser and the Parent currently
contemplate that such approval or other action will be sought, except as
described below under "State Takeover Laws." While, except as otherwise
expressly described in this Section 16, the Purchaser does not presently intend
to delay the acceptance for payment of or payment for Shares tendered pursuant
to the Offer pending the outcome of any such matter, there can be no assurance
that any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of if such approvals were not obtained or such other actions
were not taken in order to obtain any such approval or other action. If certain
types of adverse action are taken with respect to the matters discussed below,
the Purchaser could, subject to the terms and conditions of the Merger
Agreement, decline to accept for payment or pay for any Shares tendered. See
Section 15 for certain conditions to the Offer.
State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. No Delaware takeover statute or similar statute or
regulation, including, without limitation, Section 203 the DGCL which the
Company has taken all action to render inapplicable to the Transactions, imposes
restrictions materially adversely affecting (or materially delaying) the
consummation of the Offer or the Merger or would, as a result of the Offer, the
Merger, the Transactions or the acquisition of securities of the Company by the
Parent or the Purchaser, (A) restrict or impair the ability of the Parent to
vote, or otherwise to exercise the rights of a stockholder with respect to,
securities of the Company or the Surviving Corporation that may be acquired or
controlled by the Parent or (B) entitle any stockholder to acquire securities of
the Company or the Surviving Corporation on a basis not available to the Parent.
A number of states throughout the United States have enacted takeover
statutes that purport, in varying degrees, to be applicable to attempts to
acquire securities of corporations that are incorporated or have assets,
stockholders, executive offices or places of business in such states. In Edgar
v. MITE Corp., the Supreme Court of the United States held that the Illinois
Business Takeover Act, which involved state securities laws that made the
takeover of certain corporations more difficult, imposed a substantial burden on
interstate commerce and therefore was unconstitutional. In CTS Corp. v. Dynamics
Corp. of America, however, the Supreme Court of the United States held that a
state may, as a matter of corporate law, and, in particular, those laws
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders; provided that such laws were applicable
only under certain conditions. Subsequently, a number of Federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside the state of enactment.
Based on information supplied by the Company and its own review, the Parent
and the Purchaser do not believe that any other state takeover statutes purport
to apply to the Offer or the Merger. Neither the Purchaser nor the Parent has
currently complied with any state takeover statute or regulation. The Purchaser
reserves the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer or the Merger and nothing in this Offer to
Purchase or any action taken in connection with the Offer or the Merger is
intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer or the
Merger, the Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and the Purchaser might
be unable to accept for payment or pay for Shares tendered pursuant to the
Offer, or be delayed in consummating the Offer or the Merger. In such case, the
Purchaser may not be obligated to accept for payment or pay for any Shares
tendered pursuant to the Offer. See Section 15.
U.S. Antitrust. Under the provisions of the HSR Act applicable to the
Offer, the acquisition of Shares under the Offer may be consummated following
the expiration of a 15-day waiting period following the filing by Parent of a
Premerger Notification and Report Form with respect to the Offer, unless Parent
receives a request for additional information or documentary material from the
Department of Justice, Antitrust Division
26
<PAGE> 30
(the "Antitrust Division") or the Federal Trade Commission ("FTC") or unless
early termination of the waiting period is granted. Parent expects to make such
a filing on July 15, 1999. If, within the initial 15-day waiting period, either
the Antitrust Division or the FTC requests additional information or documentary
material concerning the Offer, then the waiting period will be extended through
the tenth day after the date of substantial compliance by all parties receiving
such requests. Complying with a request for additional information or
documentary material can take a significant amount of time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger, or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of the
Company or its Subsidiaries or Parent or its subsidiaries. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
There can be no assurance that a challenge to the Offer, the consummation of the
Merger, or the sale of the Shares on antitrust grounds will not be made, or, if
such a challenge is made, of the result thereof.
If any applicable waiting period under the HSR Act applicable to the Offer
has not expired or been terminated prior to the Expiration Date, the Purchaser
will not be obligated to proceed with the Offer or the purchase of any Shares
not theretofore purchased pursuant to the Offer. See Section 15.
At any time before or after the Purchaser's purchase of Shares pursuant to
the Offer, an antitrust enforcement agency in jurisdictions other than the
United States could take such action under the applicable antitrust laws, if
any, as it deems necessary or desirable in the public interest. Private parties
may also be able to bring legal action under such antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer on such
antitrust grounds will not be made or, if such a challenge is made, of the
results thereof.
17. FEES AND EXPENSES
The Purchaser has retained Georgeson Shareholder Communications Inc. to act
as the Information Agent and BankBoston, N.A., to serve as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, be reimbursed
for certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
under the Federal securities laws.
Neither the Purchaser nor the Parent will pay any fees or commissions to
any broker or dealer or other person (other than the Information Agent) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies will be reimbursed by the
Purchaser upon request for customary mailing and handling expenses incurred by
them in forwarding material to their customers.
18. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither the Purchaser nor the Parent is aware of any jurisdiction
in which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or the Parent becomes aware of any state law that would limit the
class of offerees in the Offer, the Purchaser will amend the Offer and,
depending on the timing of such amendment, if any, will extend the Offer to
provide adequate dissemination of such information to holders of Shares prior to
the expiration of the Offer. In any jurisdiction where securities or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
27
<PAGE> 31
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT NOT CONTAINED HEREIN OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser or the Parent has filed with the Commission the Tender Offer
Statement pursuant to Rule 14d-3 under the Exchange Act, furnishing certain
additional information with respect to the Offer. In addition, the Company has
filed with the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the
Exchange Act setting forth its recommendation with respect to the Offer and the
reasons for such recommendation and furnishing certain additional related
information. Such Schedules and any amendments thereto, including exhibits,
should be available for inspection and copies should be obtainable in the manner
set forth in Sections 8 and 9 (except that they will not be available at the
regional offices of the Commission).
SSI ACQUISITION CORP.
July 14, 1999
28
<PAGE> 32
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER AND THE PARENT
1. GENERAL. SSI Acquisition Corp., a Delaware corporation (the
"Purchaser"), is a wholly owned subsidiary of Saturn Electronics & Engineering,
Inc., a Michigan corporation (the "Parent"). Information with regard to the
directors and executive officers of the Parent and the Purchaser is set forth in
Items 2 and 3 below, respectively. The principal address and current business
address for each of the entities described in this Item 1 is c/o Saturn
Electronics & Engineering, Inc., 255 Rex Boulevard, Auburn Hills, Michigan
48366.
2. DIRECTORS AND EXECUTIVE OFFICERS OF SATURN ELECTRONICS & ENGINEERING,
INC. The name, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers of
the Parent are set forth below. Unless otherwise indicated, the business address
of each such director and each such executive officer is c/o Saturn Electronics
& Engineering, Inc., 255 Rex Boulevard, Auburn Hills, Michigan 48326. All
executive officers listed below are citizens of the United States.
<TABLE>
<CAPTION>
POSITION WITH THE PARENT; PRINCIPAL
OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
Wallace K. Tsuha, Jr. Chief Executive Officer (1995 to present),
President (1985 to March 1995; December 1995
to present) and Chairman of the Board (1985
to present).
Donald J. Cowie Chief Financial Officer, Executive Vice
President, Treasurer and Assistant Secretary
(1996 to present). Group Vice President --
OEM of International Jensen Incorporated
(1993 to 1995).
Nick Najmolhoda Executive Vice President of Operations (1996
to present). Vice President of Electro
Mechanical of Parent (1995 to 1996).
Executive Vice President of Operations of
MascoTech Controls (1994 to 1995).
Gene R. Smith, Jr. Executive Vice President, Business Management
(1996 to present). Independent consultant
(1994 to 1996). Vice President -- Electronics
of Parent (1993 to 1994).
William T. Anderson Director of Parent. Vice President and
MascoTech Corporation Controller of MascoTech Corporation (1998 to
21001 VanBorn Road present). Vice President, Operational
Taylor, Michigan 48180 Accounting of MascoTech Corporation (1994 to
1998).
David E. Cole Director of Parent. Director of Office for
University of Michigan the Study of Automotive Transportation,
Transportation Research Institute University of Michigan (1975 to present).
2901 Baxter
Ann Arbor, Michigan 48109
Sherman L. Cruz Director of Parent. Independent consultant
970 Golfview (1996 to present). Chief Financial Officer of
Rochester Hills, Michigan 48307 Parent (1991 to 1996).
</TABLE>
29
<PAGE> 33
<TABLE>
<CAPTION>
POSITION WITH THE PARENT; PRINCIPAL
OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
Forest J. Farmer Director of Parent. Chairman and Chief
Trilium Teamologies, Inc. Executive Officer of The Farmer Group (1994
219 S. Main Street, Suite 300 to present). President of Chrysler Acustar
Royal Oak, Michigan 48067 (1988 to 1994).
Rick Inatome Director of Parent. Chairman of Inacom Corp.
Inacom Corp. (1991 to present).
1800 West Maple Road
Troy, Michigan 48084
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF SSI ACQUISITION CORP. The name of
each of the directors and executive officers of the Purchaser are set forth
below. The business address, present principal occupation or employment and
five-year employment history of such individuals are set forth above in Item 2
of this Schedule I. All directors and executive officers listed below are
citizens of the United States.
<TABLE>
<CAPTION>
POSITION WITH SSI ACQUISITION CORP.
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
Wallace K. Tsuha, Jr. Director and President.
Vice President, Treasurer and Chief Financial
Donald J. Cowie Officer.
Gene R. Smith, Jr. Vice President.
</TABLE>
30
<PAGE> 34
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
BANKBOSTON, N.A.
<TABLE>
<S> <C> <C>
By Overnight, Certified
By First Class Mail: By Hand: or Express Mail:
BankBoston, N.A. Securities Transfer & BankBoston, N.A.
ATTN: Corporate Actions Reporting Services, Inc. ATTN: Corporate Actions
P.O. Box 8029 c/o Boston EquiServe LP 150 Royall Street
Boston, MA 02266-8029 100 William Street, Galleria Canton, MA 02021
New York, NY 10038
By Facsimile Transmission:
(For Eligible Institutions only)
(781) 575-2233/2232
For Information or Confirmation:
(781) 575-3400
</TABLE>
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
or any other tender offer materials may be directed to the Information Agent at
the address and telephone numbers listed below. You may also contact your
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
Georgeson Shareholder Communications Inc. Logo
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800
All Others Call Toll Free (800) 223-2064
<PAGE> 1
EXHIBIT 99(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
SMARTFLEX SYSTEMS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 14, 1999
BY
SSI ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
SATURN ELECTRONICS & ENGINEERING, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, AUGUST 11, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
BANKBOSTON, N.A.
<TABLE>
<CAPTION>
By Overnight, Certified
By First Class Mail: By Hand: or Express Mail:
<S> <C> <C>
BankBoston, N.A. Securities Transfer & BankBoston, N.A.
ATTN: Corporate Actions Reporting Services, Inc. ATTN: Corporate Actions
P.O. Box 8029 c/o Boston 150 Royall Street
Boston, MA 02266-8029 EquiServe LP Canton, MA 02021
100 William Street,
Galleria
New York, NY 10038
By Facsimile Transmission:
(For Eligible Institutions only)
(781) 575-2233/2232
For Information or Confirmation:
(781) 575-3400
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL WHERE INDICATED AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined below) is utilized, if delivery of Shares
is to be made by book-entry transfer to an account maintained by the Depositary
at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to
the procedures set forth in Section 2 of the Offer to Purchase. Stockholders who
deliver Shares by book-entry transfer are referred to herein as "Book-Entry
Stockholders" and other stockholders are referred to herein as "Certificate
Stockholders."
<PAGE> 2
Stockholders whose certificates for Shares (the "Share Certificates") are
not immediately available or who cannot deliver either the Share Certificates
for, or a Book-Entry Confirmation (as defined below) with respect to, their
Shares and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares in accordance with the guaranteed delivery procedure set forth in
Section 2 of the Offer to Purchase. See Instruction 2. Delivery of documents to
the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures does not constitute delivery to the Depositary.
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS SHARE CERTIFICATE(S) TENDERED
NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
TOTAL NUMBER
SHARE OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
TOTAL SHARES
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to
the Depositary are being tendered hereby. See Instruction 4.
</TABLE>
[ ] CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
-----------------------------------------------------------------------------
The Depository Trust Company
Account Number
----------------------------------- Transaction Code Number
-----------------------------------
[ ]CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING; PLEASE
INCLUDE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY:
Name(s) of Registered Holder(s):
-----------------------------------------------------------------------------
Window Ticket Number (if any):
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------------------------------------------
Name of Institution that Guaranteed Delivery:
---------------------------------------------------------------------
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to SSI Acquisition Corp., a Delaware
corporation (the "Purchaser"), and a wholly owned subsidiary of Saturn
Electronics & Engineering, Inc., a Michigan corporation (the "Parent"), the
above-described shares of common stock, $.0025 par value (the "Shares"), of
Smartflex, Inc., a Delaware corporation (the "Company"), upon the Purchaser's
offer to purchase all issued and outstanding Shares at a price of $10.50 per
Share, net to the seller in cash, without interest, in accordance with the terms
and subject to the conditions set forth in the Purchaser's Offer to Purchase
dated July 14, 1999 (the "Offer to Purchase"), and this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), (i) the Purchaser will accept for payment and pay, as promptly as
practicable after the Expiration Date, for all Shares validly tendered herewith
prior to the Expiration Date and not properly withdrawn in accordance with the
terms of the Offer, and (ii) the undersigned hereby sells, assigns and transfers
to, or upon the order of, the Purchaser all right, title and interest in and to
all the Shares that are being tendered hereby and any and all non-cash
dividends, distributions (including, without limitation, distribution of
additional Shares) or rights declared, paid or distributed in respect of such
Shares on or after July 6, 1999 (collectively, "Distributions"), and irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares and all
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) deliver such
Share Certificates and all Distributions, or transfer ownership of such Shares
and all Distributions on the account books maintained by the Book-Entry Transfer
Facility, together, in any such case, with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Purchaser, (b) present
such Shares and all Distributions for transfer on the Company's books and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares and all Distributions, all in accordance with the terms of the
Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints Wallace K. Tsuha, Jr. and Jereen G. Trudell as proxies of the
undersigned, each with full power of substitution, to the full extent of the
undersigned's rights with respect to the Shares tendered by the undersigned and
accepted for payment by the Purchaser (and any and all Distributions). All such
proxies shall be considered coupled with an interest in the tendered Shares.
This appointment will be effective if, when, and only to the extent that, the
Purchaser accepts such Shares for payment pursuant to the Offer. Upon such
acceptance for payment, all prior proxies given by the undersigned with respect
to such Shares (and such other Shares and securities) will, without further
action, be revoked, and no subsequent proxies may be given nor any subsequent
written consent executed by the undersigned (and, if given or executed, will not
be deemed to be effective) with respect thereto. The designees of the Purchaser
named above will, with respect to the Shares and other securities for which the
appointment is effective, be empowered to exercise all voting and other rights
of the undersigned as they in their sole discretion may deem proper at any
annual or special meeting of the stockholders of the Company or any adjournment
or postponement thereof, by written consent in lieu of any such meeting or
otherwise, and the Purchaser reserves the right to require that, in order for
Shares or other securities to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of such Shares, the Purchaser must be able to
exercise full voting rights with respect to such Shares.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares (and all Distributions) and, when the same are accepted for payment by
the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances, and that the same will not be subject to any adverse claim. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the tendered Shares (and all
Distributions). In addition, the undersigned shall promptly remit and transfer
to
3
<PAGE> 4
the Depositary for the account of the Purchaser any and all Distributions in
respect of the Shares tendered hereby, accompanied by appropriate documentation
of transfer, and, pending such remittance and transfer or appropriate assurance
thereof, the Purchaser shall be entitled to all rights and privileges as owner
of each such Distribution and may withhold the entire purchase price of the
tendered Shares or deduct from such purchase price, the amount or value of such
Distribution as determined by the Purchaser in its sole discretion.
All authority conferred or agreed to be conferred pursuant to this Letter
of Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer,
including, without limitation, the undersigned's representation and warranty
that the undersigned owns the Shares being tendered.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and any accompanying documents, as appropriate) in the
name of, and deliver such check and/or return such certificates (and any
accompanying documents, as appropriate) to, the person or persons so indicated.
Please credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
Facility. The undersigned recognizes that the Purchaser has no obligation
pursuant to the Special Payment Instructions to transfer any Shares from the
name of the registered holder(s) thereof if the Purchaser does not accept for
payment any of the Shares so tendered.
4
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not accepted for
payment and/or the check for the purchase price of Shares accepted for payment
are to be issued in the name of someone other than the undersigned.
Issue check and/or certificate(s) to:
Name
- -------------------------------------------------------
(PLEASE PRINT)
Address
- -------------------------------------------------------
- -------------------------------------------------------
(INCLUDE ZIP CODE)
- -------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not accepted for
payment and/or the check for the purchase price of Shares accepted for payment
are to be sent to someone other than the undersigned, or to the undersigned at
an address other than that shown under "Description of Shares Tendered."
Mail check and/or certificate(s) to:
Name
- -------------------------------------------------------
(PLEASE PRINT)
Address
- -------------------------------------------------------
- -------------------------------------------------------
(INCLUDE ZIP CODE)
- -------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
5
<PAGE> 6
SIGN HERE
(ALSO SIGN AND COMPLETE SUBSTITUTE FORM W-9 BELOW)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:
- ------------------------------------------------------------------------------ ,
1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
- ---------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
- -----------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
- --------------------------------------------------------------------------------
Name and Title
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
- ---------------------------------------------------------------------------
Dated:
- ------------------------------------------------------------------------------ ,
1999
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal if (i) this Letter of Transmittal is signed by the
registered holder of Shares (which, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facility's system whose name appears on a
security position listing as the owner of the Shares) tendered herewith and such
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on this Letter
of Transmittal or (ii) such Shares are tendered for the account of a firm that
is a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5. If the certificates for Shares are registered in
the name of a person other than the signer of this Letter of Transmittal, or if
payment is to be made or certificates for Shares not tendered or not accepted
for payment are to be issued to a person other than the registered holder of the
certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as described
above. See Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by stockholders either if certificates are to be forwarded herewith or, unless
an Agent's Message (as defined below) is utilized, if delivery of Shares is to
be made pursuant to the procedures for book-entry transfer set forth in Section
2 of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth herein prior to the Expiration
Date and either (i) certificates for tendered Shares must be received by the
Depositary at one of such addresses prior to the Expiration Date or (ii) Shares
must be delivered pursuant to the procedures for book-entry transfer set forth
herein and a Book-Entry Confirmation (as defined in the Offer to Purchase) must
be received by the Depositary prior to the Expiration Date, or (b) the tendering
stockholder must comply with the guaranteed delivery procedures set forth below
and in Section 2 of the Offer to Purchase.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of this Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
If certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery. If a stockholder desires to tender Shares pursuant to the Offer
and such stockholder's Share Certificates are not immediately available or the
procedure for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Depositary prior to the
Expiration Date, such stockholder's tender may be effected if all the following
conditions are met: (a) such tender is made by or through an Eligible
Institution; (b) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser is received by the
Depositary, as provided in Section 2 of the Offer to Purchase, prior to the
Expiration Date; and (c) the Share Certificates for all tendered Shares, in
proper form for transfer (or a Book-Entry Confirmation with respect to such
Shares), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees, or,
in the case of a book-entry transfer, an Agent's Message, and any other
documents required by this Letter of Transmittal, are received by the Depositary
within three trading days after the date of execution of the Notice of
Guaranteed Delivery as provided in Section 2 of the Offer to Purchase. A
"trading day," for purposes of the preceding sentence, is any day on with the
Nasdaq National Market is open for business.
7
<PAGE> 8
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto.
4. Partial Tenders. (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If
fewer than all the Share Certificates submitted are to be tendered, fill in the
number of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In any such case, new Share Certificates for the remainder of the
Shares that were evidenced by the old Share Certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the acceptance for payment
of, and payment for, the Shares tendered herewith. All Shares represented by
Share Certificates delivered to the Depositary will be deemed to have been
tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
to, a person other than the registered holder(s). Signatures on such
certificates and stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered holder(s) appear on the
certificates. Signatures on such certificates and stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority so to act must be
submitted.
6. Stock Transfer Taxes. Except as provided in this Instruction 6, the
Purchaser will pay stock transfer taxes with respect to the transfer and sale of
Shares to the Purchaser or its order pursuant to the Offer. If, however, payment
of the purchase price is to be made to, or if certificates for Shares not
tendered or accepted for payment are to be registered in the name of, any
person(s) other than the registered holder(s), or if tendered certificates are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
8
<PAGE> 9
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of and/or certificates for Shares not tendered or not accepted for
payment are to be returned to, a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to a person other than the signer of this Letter of Transmittal or to
an address other than that shown above, the appropriate boxes on this Letter of
Transmittal must be completed.
8. Waiver of Conditions. The Purchaser reserves the absolute right in its
sole discretion to waive any of the specified conditions of the Offer, in whole
or in part, in the case of any Shares tendered.
9. 31% Backup Withholding; Substitute Form W-9. In order to avoid "backup
withholding" of Federal income tax on payments of cash pursuant to the Offer, a
stockholder surrendering Shares in the Offer must provide the Depositary with
such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalty of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. Certain
stockholders (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such stockholder and payment of cash to such stockholder pursuant
to the Offer may be subject to backup withholding of 31%. All stockholders
surrendering Shares pursuant to the Offer should complete and sign the main
signature form and the Substitute Form W-9 included as part of the Letter of
Transmittal to provide the information and certification necessary to avoid
backup withholding (unless an applicable exemption exists and is proved in a
manner satisfactory to the Purchaser and the Depositary). Noncorporate foreign
stockholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9" for
more instructions.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
10. Requests for Assistance or Additional Copies. Requests for additional
copies of the Offer to Purchase, this Letter of Transmittal, the Notice of
Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 and questions or requests for
assistance may be directed to the Information Agent at its address set forth
below.
11. Lost, Destroyed or Stolen Certificates. If any certificate
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Company's stock transfer agent, EquiServe, at (781)
575-3400. The stockholder will then be instructed as to the steps that must be
taken in order to replace
9
<PAGE> 10
the certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES,
OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ALL OTHER
REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE
EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY
THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR
BOOK-ENTRY TRANSFER, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY
THE DEPOSITARY, IN EACH CASE ON OR PRIOR TO THE EXPIRATION DATE, OR THE
TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR GUARANTEED DELIVERY.
10
<PAGE> 11
PAYOR'S NAME: BANKBOSTON, N.A., AS DEPOSITARY
<TABLE>
<C> <S> <C> <C>
SUBSTITUTE ----------------------------
FORM W-9 Social Security Number or
Part 1 -- PLEASE PROVIDE YOUR TAXPAYER ----------------------------
IDENTIFICATION NUMBER IN THE BOX AT RIGHT AND Employer
CERTIFY BY SIGNING AND DATING BELOW. Identification Number
DEPARTMENT OF THE TREASURY, Part 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
INTERNAL REVENUE SERVICE
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued for me) and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or (c) the IRS has notified me that I
am no longer subject to backup withholding.
</TABLE>
<TABLE>
<C> <S> <C> <C>
PAYOR'S REQUEST FOR TAXPAYER CERTIFICATION INSTRUCTIONS -- You must cross out item
IDENTIFICATION NUMBER (2) above if you have been notified by the IRS that
you are currently subject to backup withholding
because of underreporting interest or dividends on
your tax returns. However, if after being notified by
the IRS that you were subject to backup withholding
you received another notification from the IRS PART 3--
stating that you are no longer subject to backup Awaiting
withholding, do not cross out such item (2). TIN [ ]
Signature
---------------------------------------------
Date ------------------------------------------- ,
1999
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
11
<PAGE> 12
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld, but that such amounts
will be refunded to me if I then provide a Taxpayer Identification Number within
sixty (60) days.
Signature:
- ---------------------------------------------- Date:
- ----------------------------------------------
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone numbers below. Requests for additional copies
of the Offer to Purchase, the related Letter of Transmittal and all other tender
offer materials may be directed to the Information Agent. Copies will be
furnished promptly at the Purchaser's expense. No fees or commissions will be
paid to any broker or dealer or any other person (other than the Information
Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
Georgeson Shareholder Communications Inc. Logo
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800
All Others Call Toll Free (800) 223-2064
<PAGE> 1
EXHIBIT 99(a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
SMARTFLEX SYSTEMS, INC.
TO
SSI ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
SATURN ELECTRONICS & ENGINEERING, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, AUGUST 11, 1999,
UNLESS THE OFFER IS EXTENDED.
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates representing shares of common stock, $.0025 par
value (the "Shares"), of Smartflex Systems, Inc., a Delaware corporation (the
"Company"), are not immediately available or if the procedures for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase). This form may be delivered by
hand or transmitted by facsimile transmission or mailed to the Depositary and
must include a guarantee by an Eligible Institution (as defined in Section 2 of
the Offer to Purchase). See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
BANKBOSTON, N.A.
<TABLE>
<CAPTION>
By Overnight, Certified
By First Class Mail: By Hand: or Express Mail:
<S> <C> <C>
BankBoston, N.A. Securities Transfer BankBoston, N.A.
ATTN: Corporate Actions & Reporting ATTN: Corporate Actions
P.O. Box 8029 Services, Inc. 150 Royall Street
Boston, MA 02266-8029 c/o Boston EquiServe LP Canton, MA 02021
100 William Street,
Galleria
New York, NY 10038
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions only)
(781) 575-2233/2232
For Information or Confirmation:
(781) 575-3400
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A
VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to SSI Acquisition Corp., a Delaware
corporation (the "Purchaser"), and a wholly owned subsidiary of Saturn
Electronics & Engineering, Inc., a Michigan corporation, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated July 14,
1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, the number of Shares set
forth below pursuant to the guaranteed delivery procedures set forth in Section
2 of the Offer to Purchase.
Number of Shares:
---------------------------------------------------------------
Name(s) of Record Holder(s):
----------------------------------------------------
(Please Print)
Certificate Nos. (if available):
------------------------------------------------
Address(es):
--------------------------------------------------------------------
(Zip Code)
Area Code and Tel. No.:
---------------------------------------------------------
Check box if Shares will be tendered by book-entry transfer: [ ]
The Depository Trust Company Account Number:
------------------------------------
Signature(s):
-------------------------------------------------------------------
Dated:
--------------------------------------------------------------------------
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in Section 2
of the Offer to Purchase) of a transfer of such Shares, in any such case
together with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or, in the case of a
book entry Transfer, an Agent's Message (as defined in the Offer to Purchase),
and any other documents required by the Letter of Transmittal, within three
trading days after the date hereof. A "trading day," for purposes of the
preceding sentence, is any day on which the Nasdaq National Market is open for
business.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
Name of Firm:
-------------------------------------------------------------------
(Authorized signature)
Address:
------------------------------------------------------------------------
(Zip Code)
Title:
--------------------------------------------------------------------------
Area Code and Tel. No.:
---------------------------------------------------------
Dated:
-------------------------------------- , 1999
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
EXHIBIT 99(a)(4)
OFFER TO PURCHASE FOR CASH
ALL ISSUED AND OUTSTANDING SHARES OF COMMON STOCK
OF
SMARTFLEX SYSTEMS, INC.
AT
$10.50 NET PER SHARE
BY
SSI ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
SATURN ELECTRONICS & ENGINEERING, INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, AUGUST 11, 1999,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
July 14, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by SSI Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of Saturn Electronics &
Engineering, Inc., a Michigan corporation (the "Parent"), to act as Information
Agent in connection with the Purchaser's offer to purchase all issued and
outstanding shares of common stock, $.0025 par value (the "Shares"), of
Smartflex Systems, Inc., a Delaware corporation (the "Company"), at $10.50 per
Share (the "Offer Price"), net to the seller in cash, without interest, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
July 14, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase, dated July 14, 1999;
2. Letter of Transmittal to be used by stockholders of the Company
accepting the Offer;
3. The letter to stockholders of the Company from the Chairman and
Chief Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such client's instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
<PAGE> 2
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
WEDNESDAY, AUGUST 11, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of July 6, 1999 (the "Merger Agreement") among the Parent, the Purchaser and
the Company. Following the satisfaction or waiver of certain conditions,
including approval by stockholders of the Company, if such approval is required
by applicable law, the Purchaser will be merged with and into the Company, with
the Company surviving the merger (as such, the "Surviving Corporation") as a
wholly owned subsidiary of the Parent (the "Merger"). At the effective time of
the Merger (the "Effective Time"), each outstanding Share (other than Shares
owned by the Company or by the Parent, the Purchaser or any other direct or
indirect wholly owned subsidiary of the Parent or the Company or Shares with
respect to which appraisal rights are properly exercised under Delaware law)
will be converted into the right to receive the Offer Price in cash, without
interest (the "Merger Consideration"). See Section 12 of the Offer to Purchase.
In the event the Purchaser acquires 90% or more of the outstanding Shares
at the time of acceptance for payment pursuant to the Offer or otherwise, the
Purchaser would be able to effect the Merger pursuant to the short-form merger
provisions of the Delaware General Corporation Law, without prior notice to, or
any action by, any other stockholder of the Company. In such event, the
Purchaser is required to effect the Merger without prior notice to, or any
action by, any other stockholder of the Company, promptly after its acceptance
for payment of Shares tendered into the Offer. In the Merger Agreement, the
Parent, the Purchaser and the Company have agreed that the Purchaser may extend
the Offer for one or more periods not to exceed 30 days in the aggregate without
the prior written consent of the Company. If immediately after the expiration of
the Offer at least a majority of the outstanding Shares on a fully-diluted basis
have been tendered in the Offer and not withdrawn, then the parties have agreed
that the Purchaser will purchase all Shares tendered pursuant to the Offer and
the Company will promptly convene a special meeting of the stockholders of the
Company for the purpose of considering and taking action on the Merger Agreement
and the transactions contemplated thereby. The Company has agreed, as soon as
practicable after the expiration of the Offer, to file a proxy statement
relating to the Merger with the Securities and Exchange Commission, if less than
90% of the Shares have been tendered.
The Purchaser and the Parent have entered into Stock Tender and Voting
Agreements each dated as of July 6, 1999 (the "Stockholder Agreements") with
certain stockholders of the Company (the "Stockholders"), including all of its
directors and executive officers, who own 299,933 outstanding Shares in the
aggregate on the date of the Merger Agreement, representing approximately 5% of
the outstanding Shares. Under the Stockholder Agreements, each Stockholder
agreed, among other things, to validly tender the Shares beneficially owned by
it, as well as any Shares subsequently acquired by it. In addition, each
Stockholder agreed to vote its Shares in favor of the Merger, the adoption by
the Company of the Merger Agreement and the approval of the terms thereof and
each of the other transactions contemplated by the Merger Agreement, and agreed
to vote against (a) any action or agreement that would result in a breach of any
covenant or any representation or warranty or any other obligation or agreement
of the Company under or pursuant to the Merger Agreement and (b) any action or
agreement that would impede, interfere with, delay, postpone or attempt to
discourage the Merger or the Offer. Each Stockholder also agreed, without
limiting the foregoing, to consult with the Parent and vote all Shares
beneficially owned by it in such manner as is determined by the Parent to be in
compliance with the provisions of the Stockholder Agreements. The Stockholder
Agreements are more fully described in Section 12 of the Offer to Purchase.
Pursuant to the Stockholder Agreements, each Stockholder has delivered to the
Parent, contemporaneously with the execution of its Stockholder Agreement, an
irrevocable proxy pursuant to which each Stockholder irrevocably appointed
Wallace K. Tsuha, Jr., Jereen G. Trudell and the Parent as its proxies and
attorneys-in-fact to exercise the proxy to vote the Shares in the foregoing
manner at any time until the earlier to occur of the valid termination of the
Merger Agreement or the Effective Time.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
A MAJORITY OF THE OUTSTANDING SHARES, CALCULATED ON A FULLY DILUTED BASIS, AT
THE TIME OF ACCEPTANCE FOR PAYMENT.
2
<PAGE> 3
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND FOUND
ADVISABLE THE MERGER AGREEMENT, THE OFFER AND THE MERGER, UNANIMOUSLY DETERMINED
THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), the Purchaser will accept for payment and pay, as promptly as
practicable after the Expiration Date, for all Shares validly tendered prior to
the Expiration Date and not theretofore properly withdrawn in accordance with
Section 3 of the Offer to Purchase. The term "Expiration Date" means 12:00
Midnight, New York City time, on Wednesday, August 11, 1999, unless and until
(i) the Purchaser, in its sole discretion (but subject to the terms of the
Merger Agreement), or (ii) the Purchaser and the Company, shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, or by the Purchaser and the Company, shall expire.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered to the Purchaser and not
properly withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by BankBoston, N.A. (the "Depositary") of
(i) certificates for such Shares (or a timely Book-Entry Confirmation of a
transfer of such Shares as described in Section 2 of the Offer to Purchase),
(ii) a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or, in the case of a
book-entry transfer, effected pursuant to the procedure set forth in Section 2
of the Offer to Purchase, an Agent's Message (as defined in the Offer to
Purchase), and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID BY THE PURCHASER ON THE PURCHASE PRICE OF THE SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's certificates for Shares are not immediately available or the
procedure for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Depositary prior to the
Expiration Date, such stockholder's tender may be effected by following the
guaranteed delivery procedures specified in Section 2 of the Offer to Purchase.
Neither the Purchaser nor the Parent will pay any fees or commissions to
any broker or dealer or other person (other than the Information Agent and the
Depositary as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. However, you will be
reimbursed upon request for customary mailing and handling expenses incurred by
you in forwarding the enclosed offering materials to your customers.
The Purchaser will pay stock transfer taxes with respect to the transfer
and sale of Shares to it or its order pursuant to the Offer, except as otherwise
provided in Instruction 6 to the Letter of Transmittal.
Questions and requests for assistance or for additional copies of the
enclosed material may be directed to the Information Agent at the address and
telephone numbers set forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
GEORGESON SHAREHOLDER COMMUNICATIONS
INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY AFFILIATE THEREOF OR AUTHORIZE YOU OR ANY OTHER PERSON
TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF
ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
EXHIBIT 99(a)(5)
OFFER TO PURCHASE FOR CASH
ALL ISSUED AND OUTSTANDING SHARES OF COMMON STOCK
OF
SMARTFLEX SYSTEMS, INC.
AT
$10.50 NET PER SHARE
BY
SSI ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
SATURN ELECTRONICS & ENGINEERING, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, AUGUST 11, 1999,
UNLESS THE OFFER IS EXTENDED.
July 14, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated July 14, 1999
(the "Offer to Purchase"), and a related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the "Offer")
relating to an offer by SSI Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Saturn Electronics & Engineering,
Inc., a Michigan corporation (the "Parent"), to purchase all issued and
outstanding shares of common stock, $.0025 par value (the "Shares"), of
Smartflex Systems, Inc., a Delaware corporation (the "Company"), at $10.50 per
Share (the "Offer Price"), net to the seller in cash, without interest, upon the
terms and subject to the conditions set forth in the Offer. Also enclosed is the
Letter to Stockholders of the Company from the Chairman and Chief Executive
Officer of the Company accompanied by the Company's Solicitation/Recommendation
Statement on Schedule 14D-9.
We are the holder of record of Shares held by us for your account. A tender
of such Shares can be made only by us as the holder of record and pursuant to
your instructions. The Letter of Transmittal is furnished to you for your
information only and cannot be used to tender Shares held by us for your
account.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is invited to the following:
1. The tender price is $10.50 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer.
2. The Offer is being made for all issued and outstanding Shares.
3. The Offer is being made pursuant to the Agreement and Plan of Merger
dated as of July 6, 1999 (the "Merger Agreement") among the Parent, the
Purchaser and the Company. Following the satisfaction or waiver of certain
conditions, including approval by stockholders of the Company, if such approval
is required by applicable law, the Purchaser will be merged with and into the
Company, with the Company surviving the merger (as such, the "Surviving
Corporation") as a wholly owned subsidiary of the Parent (the "Merger"). At the
effective time of the Merger (the "Effective Time"), each outstanding Share
(other than Shares owned by the Company or by the Parent, the Purchaser or any
other direct or indirect wholly owned subsidiary
<PAGE> 2
of the Parent or the Company or Shares with respect to which appraisal rights
are properly exercised under Delaware law) will be converted into the right to
receive the Offer Price in cash, without interest (the "Merger Consideration").
4. In the event the Purchaser acquires 90% or more of the outstanding
Shares at the time of acceptance for payment pursuant to the Offer or otherwise,
the Purchaser would be able to effect the Merger pursuant to the short-form
merger provisions of the Delaware General Corporation Law, without prior notice
to, or any action by, any other stockholder of the Company. In such event, the
Purchaser is required to effect the Merger without prior notice to, or any
action by, any other stockholder of the Company, promptly after its acceptance
for payment of Shares tendered into the Offer. In the Merger Agreement, the
Parent, the Purchaser and the Company have agreed that the Purchaser may extend
the Offer for one or more periods not to exceed 30 days in the aggregate without
the prior written consent of the Company. If immediately after the expiration of
the Offer at least a majority of the outstanding Shares on a fully-diluted basis
have been tendered in the Offer and not withdrawn, then the parties have agreed
that the Purchaser will purchase all Shares tendered pursuant to the Offer and
the Company will promptly convene a special meeting of the stockholders of the
Company for the purpose of considering and taking action on the Merger Agreement
and the transactions contemplated thereby. The Company has agreed, as soon as
practicable after the expiration of the Offer, to file a proxy statement
relating to the Merger with the Securities and Exchange Commission, if less than
90% of the Shares have been tendered.
5. The Purchaser and the Parent have entered into Stock Tender and Voting
Agreements each dated as of July 6, 1999 (the "Stockholder Agreements") with
certain stockholders of the Company (the "Stockholders"), including all of its
directors and executive officers, who own 299,933 outstanding Shares in the
aggregate on the date of the Merger Agreement, representing approximately 5% of
the outstanding Shares. Under the Stockholder Agreements, each Stockholder
agrees, among other things, to validly tender the Shares beneficially owned by
it, as well as any Shares subsequently acquired by it. In addition, each
Stockholder agreed to vote its Shares in favor of the Merger, the adoption by
the Company of the Merger Agreement and the approval of the terms thereof and
each of the other transactions contemplated by the Merger Agreement, and agreed
to vote against (a) any action or agreement that would result in a breach of any
covenant or any representation or warranty or any other obligation or agreement
of the Company under or pursuant to the Merger Agreement and (b) any action or
agreement that would impede, interfere with, delay, postpone or attempt to
discourage the Merger or the Offer. Each Stockholder also agreed, without
limiting the foregoing, to consult with the Parent and vote all Shares
beneficially owned by it in such manner as is determined by the Parent to be in
compliance with the provisions of the Stockholder Agreements. The Stockholder
Agreements are more fully described in Section 12 of the Offer to Purchase.
Pursuant to the Stockholder Agreements, each Stockholder has delivered to the
Parent, contemporaneously with the execution of its Stockholder Agreement, an
irrevocable proxy pursuant to which each Stockholder irrevocably appointed
Wallace K. Tsuha, Jr., Jereen G. Trudell and the Parent as its proxies and
attorneys-in-fact to exercise the proxy to vote the Shares in the foregoing
manner at any time until the earlier to occur of the valid termination of the
Merger Agreement or the Effective Time.
6. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
A MAJORITY OF THE OUTSTANDING SHARES, CALCULATED ON A FULLY DILUTED BASIS, AT
THE TIME OF ACCEPTANCE FOR PAYMENT.
7. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND FOUND
ADVISABLE THE MERGER AGREEMENT, THE OFFER AND THE MERGER, UNANIMOUSLY DETERMINED
THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
8. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Wednesday, August 11, 1999, unless the Offer is extended by the
Purchaser. Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchaser will accept for payment and pay, as
promptly as practicable after the Expiration Date, for all Shares validly
tendered prior to the Expiration Date and not theretofore properly withdrawn in
2
<PAGE> 3
accordance with Section 3 of the Offer to Purchase. The term "Expiration Date"
means 12:00 Midnight, New York City time, on Wednesday, August 11, 1999, unless
and until (i) the Purchaser, in its sole discretion (but subject to the terms of
the Merger Agreement), or (ii) the Purchaser and the Company, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, or by the Purchaser and the Company, shall
expire. For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser and
not properly withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Shares. In all cases, payment for Shares accepted for payment pursuant to the
Offer will be made only after timely receipt by BankBoston, N.A. (the
"Depository") of (i) certificates for such shares (or a timely Book-Entry
Confirmation of a transfer of such Shares as described in Section 2 of the Offer
to Purchase), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer effected pursuant to the procedure set
forth in Section 2 of the Offer to Purchase, an Agent's Message (as defined in
the Offer to Purchase), and (iii) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to Shares are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID BY THE PURCHASER ON THE PURCHASE PRICE OF
THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
9. The Purchaser will pay any stock transfer taxes with respect to the
transfer and sale of Shares to it or its order pursuant to the Offer, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Neither the
Purchaser nor the Parent is aware of any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser or the Parent becomes aware of any
state law that would limit the class of offerees in the Offer, the Purchaser
will amend the Offer and, depending on the timing of such amendment, if any,
will extend the Offer to provide adequate dissemination of such information to
holders of Shares prior to the expiration of the Offer. In any jurisdiction
where securities or other laws require the offer to be made by a licensed broker
or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
If you wish to have us tender any of or all your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
set forth below. An envelope to return your instructions to us is enclosed. If
you authorize tender of your Shares, all such Shares will be tendered unless
otherwise specified below.
YOUR INSTRUCTIONS TO US SHOULD BE FORWARDED PROMPTLY TO PERMIT US TO SUBMIT
A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
3
<PAGE> 4
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL ISSUED AND OUTSTANDING SHARES OF COMMON STOCK
OF
SMARTFLEX SYSTEMS, INC.
The undersigned acknowledges receipt of your letter enclosing the Offer to
Purchase, dated July 14, 1999, of SSI Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Saturn Electronics & Engineering, Inc., a
Michigan corporation, and the related Letter of Transmittal, relating to shares
of common stock, $.0025 par value (the "Shares"), of Smartflex Systems, Inc., a
Delaware corporation.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned on the terms and conditions set forth
in such Offer to Purchase and the related Letter of Transmittal.
NUMBER OF SHARES TO BE TENDERED* SIGN HERE
SHARES:
---------------------------------- -------------------------------
Dated:
--------------------- , 1999 -------------------------------
Signature(s)
-------------------------------
-------------------------------
-------------------------------
Please print name(s)
-------------------------------
-------------------------------
Address
-------------------------------
Area Code and Telephone Number
-------------------------------
Tax Identification or
Social Security Number
- -------------------------
* Unless otherwise indicated, it will be assumed that all your Shares are to be
tendered.
<PAGE> 1
EXHIBIT 99(a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU)
TO GIVE THE PAYER.--Social security numbers have nine digits separated by two
hyphens: i.e., 000-00-0000. Employee identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF--
- ----------------------------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals The actual owner of the account or,
(joint account) if combined funds, the first
individual on the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state
law
5. Sole proprietorship The owner(4)
- ----------------------------------------------------------------------
GIVE THE EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ----------------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or The legal entity(4)
pension trust
8. Corporate The corporation
9. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt organization
account
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a
state or local government,
school district, or prison)
that receives agricultural
program payments.
</TABLE>
- ------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
- ------------------------------------------------------------------
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Card, at the local
Social Administration office, or Form SS-4, Application for Employer
Identification Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from withholding include:
- - An organization exempt from tax under Section 501(a), an individual retirement
account (IRA), or a custodial account under Section 403(b)(7), if the account
satisfies the requirements of Section 401(f)(2).
- - The United States or a state thereof, the District of Columbia, a possession
of the United States, or a political subdivision or wholly-owned agency or
instrumentality of any one or more of the foregoing.
- - An international organization or any agency or instrumentality thereof.
- - A foreign government and any political subdivision, agency or instrumentality
thereof.
Payees that may be exempt from backup withholding include:
- - A corporation.
- - A financial institution.
- - A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a).
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- - A middleman known in the investment community as a nominee or who is listed in
the most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
- - A futures commission merchant registered with the Commodity Futures Trading
Commission.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends generally exempt from backup
withholding include:
- - Payments to nonresident aliens subject to withholding under Section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
- - Section 404(k) payments made by an ESOP.
Payments of interest generally exempt from backup withholding include:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- - Payments described in Section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid to you.
Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see the regulations under sections 6041, 6041A,
6042, 6044, 6045, 6049, 6050A and 6050N.
EXEMPT PAYEES DESCRIBED ABOVE MUST FILE FORM W-9 OR A SUBSTITUTE FORM W-9 TO
AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER,
FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE
FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
PRIVACY ACT NOTICE.--Section 6109 requires you to provide your correct taxpayer
identification number to payers, who much report the payments to the IRS. The
IRS uses the number for identification purposes and may also provide this
information to various government agencies for tax enforcement or litigation
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to payer. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish
your taxpayer identification number to a payer, you are subject to a penalty of
$50 for each such failure unless your failure is due to reasonable cause and not
to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
EXHIBIT 99(a)(7)
FORM OF SUMMARY ADVERTISEMENT
DATED JULY 14, 1999.
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is being made solely by the Offer to Purchase
and the related Letter of Transmittal and is being made to all holders of
Shares. The Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with any such state statute.
If, after such good faith effort, the Purchaser cannot comply with such state
statute, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) any holders of Shares in such state. In any jurisdiction whose
securities, "blue sky" or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed made on behalf of the Purchaser by
or one or more registered brokers or dealers that are licensed under the laws of
such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SMARTFLEX SYSTEMS, INC.
AT
$10.50 NET PER SHARE
BY
SSI ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
SATURN ELECTRONICS & ENGINEERING, INC.
SSI Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Saturn Electronics & Engineering, Inc., a Michigan
corporation (the "Parent"), is offering to purchase all issued and outstanding
shares of common stock, $.0025 par value (the "Shares"), of Smartflex Systems,
Inc., a Delaware corporation (the "Company"), at $10.50 per Share (the "Offer
Price"), net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in the Offer to Purchase and in the related Letter
of Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, AUGUST 11, 1999,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn prior to the expiration of the Offer at least
a majority of the outstanding Shares, calculated on a fully diluted basis, at
the time of acceptance for payment (the "Minimum Condition").
The Board of Directors of the Company has unanimously approved and found
advisable the Merger Agreement, the Offer and the Merger, unanimously determined
that the terms of the Offer and the Merger are
<PAGE> 2
fair to, and in the best interests of, the stockholders of the Company, and
unanimously recommends that the stockholders of the Company accept the Offer and
tender their Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of July 6, 1999 (the "Merger Agreement") among the Parent, the Purchaser and
the Company. Following the satisfaction or waiver of certain conditions,
including approval by stockholders of the Company, if such approval is required
by applicable law, the Purchaser will be merged with and into the Company, with
the Company surviving the merger (as such, the "Surviving Corporation") as a
wholly owned subsidiary of the Parent (the "Merger"). At the effective time of
the Merger (the "Effective Time"), each outstanding Share (other than Shares
owned by the Company or by the Parent, the Purchaser or any other direct or
indirect wholly owned subsidiary of the Parent or the Company or Shares with
respect to which appraisal rights are properly exercised under Delaware law)
will be converted into the right to receive the Offer Price in cash, without
interest (the "Merger Consideration"). The Merger Agreement is more fully
described in the Offer to Purchase.
In the Merger Agreement, the Parent, the Purchaser and the Company have
agreed that the Purchaser may extend the Offer for one or more periods not to
exceed 30 days in the aggregate without the prior written consent of the
Company. If immediately after the expiration of the Offer at least a majority of
the outstanding Shares on a fully-diluted basis have been tendered in the Offer
and not withdrawn, then the parties have agreed that the Purchaser will purchase
all Shares tendered pursuant to the Offer and the Company, unless not required
by law, will promptly convene a special meeting of the stockholders of the
Company for the purpose of considering and taking action on the Merger Agreement
and the transactions contemplated thereby. The Company has agreed, as soon as
practicable following the date of the consummation of the Offer, to file a proxy
statement relating to the Merger with the Securities and Exchange Commission
(the "Commission") unless at least 90% of the Shares have been tendered and not
withdrawn.
The Purchaser and the Parent have entered into Stock Tender and Voting
Agreements each dated as of July 6, 1999 (the "Stockholder Agreements") with
certain stockholders of the Company (the "Stockholders"), including all of its
directors and executive officers, who own 299,933 outstanding Shares in the
aggregate on the date of the Merger Agreement, representing approximately 5% of
the outstanding Shares on the date of the Merger Agreement. Under the
Stockholder Agreements, each Stockholder agreed, among other things, to validly
tender the Shares beneficially owned by it, as well as any Shares subsequently
acquired by it. In addition, each Stockholder agreed to vote its Shares in favor
of the Merger, the adoption by the Company of the Merger Agreement and the
approval of the terms thereof and each of the other transactions contemplated by
the Merger Agreement, and agreed to vote against (a) any action or agreement
that would result in a breach of any covenant or any representation or warranty
or any other obligation or agreement of the Company under or pursuant to the
Merger Agreement and (b) any action or agreement that would impede, interfere
with, delay, postpone or attempt to discourage the Merger or the Offer. Each
Stockholder also agreed, without limiting the foregoing, to consult with the
Parent and vote all Shares beneficially owned by it in such manner as is
determined by the Parent to be in compliance with the provisions of the
Stockholder Agreements. Pursuant to the Stockholder Agreements, each Stockholder
has delivered to the Parent, contemporaneously with the execution of its
Stockholder Agreement, an irrevocable proxy pursuant to which each Stockholder
irrevocably appointed Wallace K. Tsuha, Jr., Jereen G. Trudell and the Parent as
its proxies and attorneys-in-fact to exercise the proxy to vote the Shares in
the foregoing manner at any time until the earlier to occur of the valid
termination of the Merger Agreement or the Effective Time. The Stockholder
Agreements are more fully described in the Offer to Purchase.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), the Purchaser will accept for payment and pay, as promptly as
practicable after the Expiration Date, for all Shares validly tendered prior to
the Expiration Date and not theretofore properly withdrawn in accordance with
Section 3 of the Offer to Purchase. The term "Expiration Date" means 12:00
Midnight, New York City time, on Wednesday, August 11, 1999, unless and until
(i) the Purchaser, in its sole discretion (but subject to the terms of the
Merger Agreement), or (ii) the Purchaser and the Company, shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, or by the Purchaser and the Company, shall expire.
<PAGE> 3
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser and
not properly withdrawn as, if and when the Purchaser gives oral or written
notice to BankBoston, N.A. (the "Depositary") of the Purchaser's acceptance for
payment of such Shares. Upon the terms and subject to the conditions of the
Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from the Purchaser and transmitting payment to tendering stockholders whose
Shares have been accepted for payment. Under no circumstances will interest be
paid by the Purchaser on the purchase price of the Shares, regardless of any
extension of the Offer or any delay in making such payment.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2 of the Offer to Purchase), (ii) a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
Subject to the Merger Agreement, including the restrictions discussed
below, and the applicable rules and regulations of the Securities and Exchange
Commission, the Purchaser reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether any of the conditions to
the Merger set forth in the Merger Agreement have occurred or been determined by
the Purchaser to have occurred, to (a) subject to the limitation described
below, extend the period of time during which the Offer is open, and thereby
delay acceptance for payment of any Shares, by giving oral or written notice of
such extension and delay to the Depositary, or (b) waive any condition or amend
the Offer in any other respect by giving oral or written notice of such waiver
or amendment to the Depositary. During any such extension, all Shares previously
tendered and not properly withdrawn will remain subject to the Offer, subject to
the right of a tendering stockholder to withdraw such stockholder's Shares. In
the Merger Agreement, the Parent, the Purchaser and the Company have agreed that
the Purchaser may extend the Offer for one or more periods not to exceed 30 days
in the aggregate without the prior written consent of the Company. In addition,
the Purchaser has agreed in the Merger Agreement that it will not, without the
express written consent of the Company, (i) reduce the maximum number of Shares
subject to the Offer, (ii) reduce the Offer Price, (iii) add to or modify the
conditions to the Merger set forth in the Merger Agreement, (iv) extend the
Offer, except as provided above, or (v) change the form of consideration payable
in the Offer.
The rights reserved by the Purchaser in the preceding paragraph are in
addition to the Purchaser's rights pursuant to Section 15 of the Offer to
Purchase. There can be no assurance that the Purchaser will exercise its right
to extend the Offer. Any extension, amendment, delay, waiver or termination will
be followed as promptly as practicable by public announcement, such announcement
to be issued no later than the earlier of (i) 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date, or (ii)
the first opening of the Nasdaq National Market of the Nasdaq Stock Market on
the next business day after the previously scheduled Expiration Date. If the
Offer is extended, or if the Purchaser (whether before or after its acceptance
for payment of Shares) is delayed in its acceptance for payment of or payment
for Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described below and in the Offer to Purchase.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn pursuant to the
procedures set forth below at any time prior to the Expiration Date and, unless
theretofore accepted for payment and paid for by the Purchaser pursuant to the
Offer, may also be withdrawn at any time after September 10, 1999. For a
withdrawal to be effective, a written or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of the Offer to Purchase and must specify the name of
the person having tendered the Shares to be withdrawn, the number of Shares to
be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates for
<PAGE> 4
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered by an Eligible Institution, the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry delivery set
forth in Section 2 of the Offer to Purchase, any notice of withdrawal must also
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares and otherwise comply with the
Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 2 of
the Offer to Purchase at any time prior to the Expiration Date. All questions as
to the form and validity (including time of receipt) of notices of withdrawal
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. None of the Purchaser, the Parent, the Depositary,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of the Shares. The Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read before any decision is made with
respect to the Offer.
Questions and requests for assistance or additional copies of the Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery or any
other tender offer materials may be directed to the Information Agent at the
address and telephone numbers listed below. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
Georgeson Shareholder Communications Inc. Logo
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800
All Others Call Toll Free (800) 223-2064
July 14, 1999
<PAGE> 1
EXHIBIT 99(a)(8)
FOR IMMEDIATE RELEASE
CONTACT:
WILLIAM HEALEY (CEO, SMARTFLEX)
JOHN HOHENER (CFO, SMARTFLEX)
714-838-8737
SATURN ELECTRONICS AND ENGINEERING, INC.
TO ACQUIRE SMARTFLEX SYSTEMS, INC.
TUSTIN, CALIFORNIA -- JULY 7, 1999--SMARTFLEX SYSTEMS, INC. (NASDAQ:
SFLX) announced today that it has entered into a definitive agreement pursuant
to which all of the outstanding shares of common stock of Smartflex Systems,
Inc. ("Smartflex") will be acquired by Saturn Electronics & Engineering, Inc.
("Saturn"). Under the agreement, which has been approved unanimously by
Smartflex's board of directors, Saturn will commence a tender offer for all
outstanding shares of common stock of Smartflex for $10.50 per share in cash.
The tender offer will be followed by a merger in which any shares not acquired
by Saturn in the tender offer will be acquired for the same amount of cash in
the merger. The directors and executive officers of Smartflex, who own
approximately 5% of the outstanding shares of Smartflex, have agreed to tender
their shares and to vote in favor of the merger.
The tender offer will commence no later than Wednesday, July 14, 1999,
and will be conditioned on a majority of the outstanding shares of Smartflex
being tendered as well as other customary conditions. SG Cowen Securities
Corporation has acted as financial advisor to Smartflex in connection with the
transaction.
Based in Tustin, California and founded in 1985, Smartflex is an
electronics manufacturing services (EMS) expert in precision, automated
manufacturing. The services of Smartflex optimize and accelerate product
realization - the process from product concept through volume manufacturing. For
the 12 months ended December 31, 1998, Smartflex achieved net earnings after
taxes of $1.5 million on sales of approximately $107 million.
Specializing in precision interconnect-based packaging enables
Smartflex to design and manufacture significantly smaller products at reduced
cost. Smartflex's specialty manufacturing skills allow the company to help its
telecommunications, computer, and medical electronics customers meet their goals
of smaller packaging, reduced cost, and faster delivery to the
<PAGE> 2
marketplace. Smartflex serves customers worldwide from its factories and
technology centers in Cebu, Philippines; Monterrey and Guadalajara, Mexico;
Singapore; West Long Branch, New Jersey; Hudson, New Hampshire; and Santa Clara,
Fremont, and Tustin, California. For more information about Smartflex, visit its
website at www.smartflex.com.
Saturn, whose corporate headquarters are located in Auburn Hills,
Michigan, is a privately-held company providing electronic and electromechanical
systems for automotive and non-automotive applications. Since its inception in
1985, Saturn has filled a niche in the electronics marketplace by offering
innovative products and solutions to Fortune 500 firms. Saturn is well known for
its flexible and high-reliability manufacturing, and is positioned as a
full-service global supplier to the automotive, commercial and defense markets.
Saturn's worldwide facilities include its headquarters, Innovation Center (Tech
Center), sales offices and manufacturing facilities in Auburn Hills, Rochester
Hills, Oxford, and Coopersville, Michigan; Rocky Mount, North Carolina; Marks,
Mississippi; Juarez and Monterrey, Mexico.
William L. Healey, President, Chief Executive Officer and Chairman of
the Board of Smartflex, commented, "The extensive sales, service and
manufacturing resources of Saturn are extremely complementary with those of
Smartflex. We feel confident that these synergies will fuel the growth of the
Smartflex business to a new level."
Wallace K. Tsuha (pronounced "su ha"), founder, President and Chief
Executive Officer of Saturn, was quoted to say "Smartflex has become a
recognized technical leader in precision automated manufacturing and specialty
electronic manufacturing services. It is known for its design, engineering and
prototyping expertise. We are excited about the growth prospects this proposed
acquisition adds to Saturn's position as a full-service global supplier. The
merger of our two businesses will enhance our growth prospects and provide a
viable electronics platform to build upon in the automotive, commercial,
telecommunications, medical and defense markets," added Tsuha.
"The acquisition fits our strategic plans of product diversification,
global growth, and expansion into other markets. Our combined strengths will
provide opportunities for new technologies, exceptional engineering
capabilities, expanded global presence, and expertise in a more diversified
marketplace," added Tsuha.
2
<PAGE> 3
Saturn is a high-growth company with industry recognition for quality
and competitiveness. It is driven by a strong corporate culture of providing
customers with high-quality, competitive products with innovation being at the
heart of its success. Working in a team environment, employees are recognized
and encouraged to contribute to the growth and success of the company. For more
information, visit Saturn's website at www.saturnee.com.
This release contains forward-looking statements, including each statement of
management's opinions, expectations, plans, and objectives for future operations
that involve risks and uncertainties. Actual results could differ materially
from these expectations as a result of various factors, and therefore we caution
investors against ascribing undue weight thereto. The factors include, but are
not limited to, the ability to effectively identify, investigate, conclude,
integrate and manage acquisitions or large-scale projects, to manage the
transition of manufacturing operations, qualification of manufacturing
processes, efficient utilization of manufacturing facilities and financial
resources, the ability to retain and attract qualified personnel, international
currency fluctuations, and future financial, economic, competitive and market
conditions and their potential direct or indirect effect, including
cancellations of orders included in backlog. These and other factors are also
discussed in Smartflex Systems' 10-K, 10-Q and other filings made previously or
from time to time with the Securities and Exchange Commission.
3
<PAGE> 1
EXHIBIT 99(b)(1)
[COMERICA BANK LETTERHEAD]
July 2, 1999
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Ladies and Gentlemen:
We are pleased to advise that, subject to the terms and conditions set
forth in this commitment letter ("Commitment"), Comerica Bank ("Comerica")
agrees to provide Saturn Electronics & Engineering, Inc. and/or any of its
subsidiaries (the "Company") with financing (the "Financing") in the aggregate
principal amount of up to One Hundred Twenty-Five Million Dollars
($125,000,000). The Financing will consist of a revolving credit facility, which
will include a $3,000,000 swingline and $5,000,000 in Letter of Credit
availability.
Comerica will also act as Structuring, Documentation Agent and
Administrative Agent for the Financing (in such capacity, "Agent"), with
customary rights and responsibilities to be set forth in the applicable loan
documentation. No other agents shall be appointed without Comerica's approval.
Capitalized terms used in this Commitment, and not otherwise defined in
the body of this letter, shall have the meanings given them in the Summary of
Terms and Conditions dated July 1, 1999 attached to this Commitment as Exhibit A
("Summary of Terms and Conditions").
I. SPECIFIC TERMS AND CONDITIONS OF THE FINANCING.
The specific terms and conditions of the Financing, including
without limitation, the description and purpose of each facility, the facility
amounts, the maturity dates, the applicable interest rates, amortization,
affirmative and negative covenants and the required loan and collateral
documentation and other terms and conditions, are set forth in the Summary of
Terms and Conditions.
<PAGE> 2
Saturn Electronics & Engineering, Inc.
July 2, 1999
Page 2
II. CONDITIONS TO FINANCING.
The willingness of Comerica to provide the Financing and the
closing of the Financing is subject to the satisfaction by the Company and its
subsidiaries or affiliates, on or before the date of closing under this
Commitment ("Closing"), of the following additional conditions:
A. Execution of Loan Documents: The negotiation, execution and delivery
of a loan agreement, promissory notes, guaranties, security agreements, stock
pledges, mortgages and collateral and other documentation reasonably
satisfactory to Comerica and its counsel, containing, subject to the Summary of
Terms and Conditions, customary conditions, covenants, warranties, remedies and
other provisions including, without limitation, the conditions, covenants,
warranties and provisions described herein and in the Summary of Terms and
Conditions;
B. Acquisition: Comerica's receipt of satisfactory evidence confirming
the completion of a successful tender offer by a subsidiary of Company for the
voting securities of Smartflex Systems, Inc. ("Target") and the acceptance of
such tender offer by the holders of a majority of such outstanding voting
securities (or such greater amount as may be required by the constituent
documents of the Target to approve the merger of such subsidiary with the
Target), prior to or concurrently with the Closing on terms consistent with the
Summary of Terms and Conditions and the materials provided to Comerica by the
Company prior to the date hereof, and otherwise satisfactory to Comerica, in its
reasonable discretion;
C. Other Closing Documents: Comerica's receipt of satisfactory evidence
of (1) all governmental, third party and/or other approvals, permits,
registrations and the like, necessary or appropriate in connection with the
Financing or any transaction contemplated thereby, (2) the corporate approvals
by the Company and its subsidiaries or affiliates, as applicable, of the loan
agreement, guaranties and other loan and collateral documents, instruments and
transactions contemplated hereby, (3) customary opinions of legal counsel for
Company, covering such matters as reasonably required by, and otherwise in form
and content satisfactory to, Comerica and its counsel, and (4) such additional
information, audits, reports and other requirements requested by Comerica as a
result of its continuing due diligence (which is ongoing);
D. Material Adverse Change: There shall have been no material adverse
change in the condition (financial or otherwise), properties, business, results
or operations of either Company and its subsidiaries or the Target from the
condition shown in the financial
<PAGE> 3
Saturn Electronics & Engineering, Inc.
July 2, 1999
Page 3
information delivered to Comerica prior to the date hereof; nor shall any
omission, inconsistency, inaccuracy, or any change in presentation or accounting
standards which renders such financial statements materially misleading have
been determined by Comerica to exist;
E. Payment of Fees and Expenses: Company shall have paid to Comerica
all fees and expenses required to be paid on or before the Closing under the
terms of this Commitment or any separate fee letter ("Fee Letter") in effect
between Company and Comerica, from time to time;
F. Material Changes in Markets: There shall not have occurred after the
date of this Commitment a material adverse change in the market for syndicated
bank credit facilities, subordinated debt or junior capital, or a material
disruption of, or a material adverse change in, financial, banking or capital
market conditions (domestic or foreign), in each case as determined by Comerica
in its sole discretion.
III. SYNDICATION.
A. Right to Syndicate; Company Obligations. Comerica reserves the
right, before or after the closing under this Commitment, to syndicate the
Financing by allocating or assigning percentages of the Financing (including its
rights and obligations under this Commitment) thereof to other banks or
financial institutions (collectively, with Comerica, the "Banks") selected by
Comerica and approved by the Company, such approval not to be unreasonably
withheld, conditioned or delayed. The Company agrees to exercise good faith,
diligent efforts to cooperate with Comerica in such syndication efforts (and to
cause the Target to do so), including without limitation providing financial and
other information to prospective Banks, responding to inquiries and other
requests received from prospective Banks, providing assistance in the
preparation of a confidential information memorandum and other syndication
materials, and hosting, with Comerica, of one or more meetings with prospective
lenders. You further agree to refrain from engaging in any additional or other
financings for the acquisition (except as described in this letter or in the
Summary of Terms and Conditions) during such syndication process unless
otherwise agreed to by Comerica.
B. Control of Syndication. It is understood and agreed that Comerica,
after consultation with you, will manage and control all aspects of the
syndication, including decisions as to the selection of proposed lenders and any
titles offered to proposed lenders, when commitments will be accepted and the
final allocations of the commitments among the lenders. It is understood that no
other lender participating in the Financing will receive compensation from you
outside the terms of this letter in order to obtain its commitment. It is also
understood
<PAGE> 4
Saturn Electronics & Engineering, Inc.
July 2, 1999
Page 4
and agreed that the amount and distribution of the fees among the lenders will
be at the sole discretion of Comerica and that any syndication prior to
execution of definitive documentation will reduce the commitment of Comerica.
C. Successful Syndication. Comerica shall be entitled, after
consultation with you, to change the pricing, terms and/or structure of the
Financing if Comerica determines, in its reasonable discretion, that such
changes are necessary or advisable to insure a successful syndication of the
Financing; provided, however, that the total amount of the Financing remains
unchanged. It is understood that Comerica's commitment hereunder is expressly
subject to the agreements in this paragraph.
D. Reliance on Financial Information. Company hereby represents and
warrants that (a) all information other than the preliminary or final
projections (the "Information") that has been or will be made available to
Comerica by Company or any of its representatives, with respect to Information
furnished to Comerica prior to the date of commencement of the syndication of
the Financing, as supplemented from time to time prior to such date, is or will
be complete and correct in all material respects and does not or will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make such statements contained therein not materially
misleading in light of the circumstances under which such statements are made
and (b) the projections that have been or will be made available to Comerica by
the Company or any of its representatives have been or will be prepared in good
faith based upon assumptions you believe to be reasonable. It is understood
that, in arranging and syndicating the financing, Comerica may use and rely on
the Information and such Projections without independent verification.
IV. GENERAL.
A. Comerica's Fees and Expenses: Whether or not the Closing of the
Financing occurs under this Commitment, Company shall pay to Comerica, in
addition to the fees required under any Fee Letter in effect from time to time,
all of Comerica's reasonable costs and expenses, including, by way of
description and not limitation, reasonable attorney fees and advances, appraisal
and accounting fees, lien search fees, environmental audit fees, and required
travel costs, incurred by Comerica in connection with this Commitment, and the
negotiation, consummation and/or closing of the loans contemplated hereby.
B. Indemnification. Company agrees to indemnify and hold Comerica, and
its shareholders, directors, agents, officers, employees, attorneys,
subsidiaries and affiliates,
<PAGE> 5
Saturn Electronics & Engineering, Inc.
July 2, 1999
Page 5
harmless from and against any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of action, and reasonable
costs and expenses (including reasonable attorneys fees) incurred, suffered,
sustained or required to be paid by reason of or resulting from the transactions
contemplated hereby or which otherwise result from the Financing, other than as
a result of Comerica's gross negligence or willful or wanton misconduct.
C. Non-assignability; Termination. This Commitment is provided for the
sole benefit of the Company, is not intended to create any rights in favor of
and may not be relied upon by any third party, and shall not be transferable or
assignable by the Company by operation of law, or otherwise, and may be
terminated at the option of Comerica if the Company shall fail to comply with
any of the terms and conditions hereof, or in the event at any time prior to the
Closing of the Financing of a filing by or against the Company or the Target or
any of its subsidiaries or affiliates, of a petition in bankruptcy or insolvency
or for reorganization or for the appointment of a receiver, trustee or custodian
or the making by the Company or any of its subsidiaries or affiliates, of an
assignment for the benefit of creditors or the filing of a petition for
arrangement, or other similar proceedings.
D. No Effect on Loan Documents. Until the Closing hereunder, this
Commitment shall not amend, modify or otherwise affect, in any manner
whatsoever, any existing loan agreements, loan documents, any existing credit
facilities provided by Comerica (with or without any other party) to the Company
(or any of its subsidiaries or affiliates), or any loan, collateral or other
document or instrument executed in connection therewith.
E. Entire Agreement: Amendment. This Commitment (including the Summary
of Terms and Conditions) and the Fee Letter contain the entire agreement of
Comerica as of the date hereof with respect to the Financing and are not subject
to or supplemented by any previous correspondence or communications (verbal or
written) between the Company and Comerica or any other document not expressly
referenced herein. No change in this Commitment shall be binding upon the
parties unless expressed in writing and signed by them. The provisions of
Sections IV.A, B. and G. shall survive the expiration or other termination of
this Commitment.
F. Closing. Closing on the Financing must occur on or before September
1, 1999 (the "Required Consummation Date"). If not closed on or before the
Required Consummation Date, this Commitment shall elapse and Comerica shall have
no further obligation to provide its portion of the Financing under this
Commitment or any other obligation.
<PAGE> 6
Saturn Electronics & Engineering, Inc.
July 2, 1999
Page 6
G. Nondisclosure. You are not authorized to show or circulate this
letter to any other person or entity (other than your legal and financial
advisors in connection with your evaluation thereof) until such time as you have
accepted this letter as provided in the immediately succeeding paragraph at
which time you may show a copy of this letter and the Summary of Terms and
Conditions (but not the Fee Letter) to the Target and its respective legal and
financial advisors in connection with your proposal for the acquisition
contemplated hereby (except that, notwithstanding the foregoing, you may make
such public disclosures, as, and to the extent, you are required by law, in the
opinion of your counsel, to make). If this letter is not accepted by you as
provided in the immediately succeeding paragraph, you are to immediately return
this letter (and any copies hereof) to the undersigned.
H. Acceptance. This Commitment, if accepted by or for the benefit of
the Company, must be accepted in its entirety and without modification, and may
be accepted only by its return of a copy of this letter duly executed as set
forth below. If not so accepted and returned on or before Comerica's close of
business on July 15, 1999, this Commitment and the offer to provide Financing
contained herein shall be deemed withdrawn and of no further force and effect,
and Comerica shall have no obligations whatsoever to provide the Financing set
forth herein.
COMERICA BANK
By: /s/ David B. Marvin
---------------------------------
Its: First Vice President
---------------------------------
ACCEPTED AND AGREED on July 6 1999:
SATURN ELECTRONICS & ENGINEERING, INC.
By: /s/ W. Tsuha
---------------------------------
Its: President
---------------------------------
<PAGE> 7
CONFIDENTIAL SATURN ELECTRONICS & ENGINEERING, INC.
================================================================================
SUMMARY OF TERMS AND CONDITIONS
$125,000,000 CREDIT FACILITY FOR
SATURN ELECTRONICS & ENGINEERING, INC.
JULY 2, 1999
<TABLE>
<S> <C>
I. GENERAL PROVISIONS.
AGENT AND ARRANGER: Comerica Bank ("Comerica" or "Agent"), to be Structuring, Documentation, and
Administrative Agent.
PROPOSED
INITIAL COMMITMENT: Comerica Bank to underwrite as Agent a $125,000,000 Secured Revolving Credit
Facility.
LENDERS' MINIMUM
COMMITMENT AMOUNT: $10,000,000
SYNDICATION, UPFRONT AND
ADMINISTRATIVE AGENT FEE: As detailed in Agency Fee Letter.
II. LOAN FACILITY; SPECIFIC TERMS.
REVOLVING CREDIT
FACILITY: $125,000,000 Secured Revolving Credit Facility.
BORROWER: Saturn Electronics & Engineering, Inc. ("Company").
FACILITY DESCRIPTION: Three Year Secured Revolving Credit Facility, with advances and
readvances available from time to time and to allow issuance of up to $5,000,000 in
Letters of Credit with maturities not to exceed the maturity of the Revolving Credit
Facility.
PURPOSE: General corporate purposes, including working capital and acquisition of stock of
Smartflex Systems, Inc.
MATURITY DATE: Three years from closing of the Facility. Company may request one-year renewals
based upon loan documentation requirements at each anniversary of the Facility,
subject to approval by Lenders.
LETTERS OF CREDIT: Availability under the Revolving Credit to include up to $5,000,000 in the aggregate
in Letters of Credit by the Agent, with pro-rata risk participation from the Banks.
Maturity of individual Letters of Credit will not exceed the maturity of the Revolving
Credit Facility.
Nonrefundable letter of credit fee (calculated on a per annum basis) payable
annually in advance, in accordance with the Applicable Margin. A Facing Fee on each
Letter of Credit of 12.5 basis points, to be payable annually in advance to the Agent.
SECURITY: First perfected security interest in or mortgage on all assets of the Company, tangible
and intangible, whether now owned or hereafter acquired. Pledge of 100% of stock of
all domestic subsidiaries.
BORROWING OPTIONS: The Company's Borrowing Options for advances under the Revolving Credit shall
include a Eurodollar Rate and a Base Rate plus the Applicable Margin. The Applicable
Margin shall be governed by a pricing grid.
</TABLE>
- --------------------------------------------------------------------------------
COMERICA BANK, AS AGENT (I) [COMERICA LOGO]
<PAGE> 8
CONFIDENTIAL SATURN ELECTRONICS & ENGINEERING, INC.
================================================================================
<TABLE>
<S> <C>
Base Rate shall refer to the higher of I) Agent's prime rate, or ii) the federal funds rate plus
100 basis points, plus the Applicable Margin.
Eurodollar Rate means Comerica Bank's Eurodollar rate which will be adjusted for reserves and other
regulatory requirements, plus the Applicable Margin.
Interest Periods Eurodollar Rate - Interest periods of 1, 2, 3 and 6 months.
Interest Payments Interest payable on the first day of each calendar quarter for Base Rate Advances in
respect of the prior quarter's advances and on the last day of each interest
period for other Advances (and every three months for six month interest periods).
Customary provisions protecting Banks in the event of unavailability of funding, illegality,
increased costs, breakage and funding losses and indemnification.
DRAWDOWNS: Base Rate - Minimum draw of $250,000 with same day notice.
Eurodollar Rate - Minimum draw of $1,000,000 and additional increments of $500,000 with three
(3) business days notice.
SWING LINE: Comerica will provide from time to time up to $3,000,000 of Facility under a Swing Line available
to the Company. The Swing Line is provided as an accommodation to the Company
and the additional Banks to handle daily activity with minimum draws and payments of $50,000.
Advances under the Swing Line shall be at the Base Rate plus the Applicable Margin, or rate
quoted by Bank and accepted by Company and shall reduce availability under the Revolving Credit
Facility.
The Swing Line lender shall not be obligated to make any advances under the Swing Line after the
occurrence and during the continuation of a Default or an Event of Default. All lenders will be
required to fund a pro-rata share of any outstandings under the Swing Line at the Agent's option
after the occurrence of a Default or an Event of Default or if any Swing Line advance is outstanding
for more than 30 days.
PREPAYMENT: Base Rate loans may be prepaid on same day notice.
Eurodollar Rate loans are subject to prepayment penalty if repaid before the end of the respective
Interest Period.
FACILITY FEE: Annual fee payable on the Revolving Credit Commitment Amount, payable quarterly in arrears. The
Facility Fee shall be governed by a pricing grid.
TERMINATION OR
REDUCTION OF
COMMITMENTS: The Company may reduce the Revolving Credit Facility commitment in amounts of at least $5,000,000
or terminate it in its entirety at any time on five (5) business days notice, subject to customary
yield protection and payment provisions.
III. OTHER STANDARD PROVISIONS
GUARANTIES: Facility will be covered by guaranties of all Subsidiaries of the Company (existing and
future). All guaranties to be secured by a first lien and security interest in or mortgage
on all assets, tangible and intangible, whether now owned or hereafter acquired.
REPRESENTATIONS Customary for credit agreements of this nature, with respect to the Company and its
AND WARRANTIES: subsidiaries including but not limited to:
</TABLE>
- --------------------------------------------------------------------------------
COMERICA BANK, AS AGENT (II) [COMERICA LOGO]
<PAGE> 9
CONFIDENTIAL SATURN ELECTRONICS & ENGINEERING, INC.
================================================================================
<TABLE>
<S> <C> <C>
1. Corporate existence
2. Corporate and governmental authorization; no
contravention; binding effect
3. No encumbrances
4. Accuracy of information
5. No material adverse change in the financial condition
of Company or Smartflex Systems, Inc.
6. Environmental matters
7. Compliance with laws, including ERISA
8. No material litigation
9. Existence, incorporation, etc. of subsidiaries
10. Payment of taxes
11. Full disclosure
12. Satisfactory Y2K assessment.
CONDITIONS TO Customary in credit agreements of this nature, including but not limited to:
BORROWING: 1. Absence of default
2. Accuracy of representations and warranties
3. Negotiation and execution of satisfactory closing
documentation
4. Closing of acquisition of Smartflex Systems, Inc. on
terms satisfactory to the Agent.
5. No material changes to the financial condition or
audited financial statements for fiscal year 1998 for
the Company or Smartflex Systems, Inc.
COVENANTS: Customary in credit agreements of this nature, with respect to the Company and its
subsidiaries, including but not limited to:
1. Annual year end audited financial statements and direct Company prepared quarterly and
monthly financial statements and financial projections on an annual basis. Company
prepared Consolidating financial statements on a quarterly and annual basis, with
financial information for each subsidiary. Additional information including but not limited
to quarterly compliance certificate and officer's statement as to no event of default.
2. Payment of obligations
3. Maintenance of property; insurance coverage
4. Conduct of business; maintenance of existence
5. Compliance with laws, including ERISA and environmental regulations
6. Inspection of property, books and records
7. Restrictions on liens and other indebtedness
8. Limitations on guaranties
9. Limitations on consolidations, mergers, acquisitions and sales of assets
10. Limitations on Investments, loans and advances
11. Limitations on use of proceeds
12. Limitation on distributions and dividends
13. No negative pledges
14. Immediate notice of material litigation
15. Limitations on transactions with affiliates
16. Limitation on capital expenditures
Major Financial
Covenants Consolidated Financial Covenants including Funded Debt to EBITDA, Debt to Capitalization, and
Fixed Charge Coverage Ratio to be determined.
Financial covenant levels and definitions to be negotiated. Except as otherwise agreed, all
financial covenant definitions shall be based on GAAP, and shall be tested on a quarterly basis.
</TABLE>
- --------------------------------------------------------------------------------
COMERICA BANK, AS AGENT (III) [COMERICA LOGO]
<PAGE> 10
CONFIDENTIAL SATURN ELECTRONICS & ENGINEERING, INC.
================================================================================
<TABLE>
<S> <C>
All loan documents shall be prepared by and satisfactory in form and substance to Agent and
Agent's counsel and subject to consistency with this Term Sheet.
EVENTS OF DEFAULT: Customary in credit agreements of this nature, including but not limited to the
following:
1. Failure to pay any interest, principal, or fees payable
under the Agreement when due
2. Failure to meet covenants
3. Representations or warranties false in any material
respect when made
4. Cross default to other Indebtedness of the Company or
its subsidiaries
5. Change of ownership or control
6. Other usual defaults with respect to the Company or its
subsidiaries, including but not limited to insolvency,
bankruptcy, ERISA and judgment defaults.
ASSIGNMENT AND
PARTICIPATION Banks will have the right to sell participations in their loans or commitments with the
transferability of voting rights limited (except with respect to affiliates) to changes
in principal, rate, fees and term. Assignments, which must be in amounts of
at least $5,000,000, will be allowed (subject to administrative fee payable by assigning
Bank) with the consent of Company and Agent, such consent not to be unreasonably withheld
or delayed. No consent of the Company will be required after an Event of Default.
Participations and assignments will also be allowed within the Bank Group and to Banks' affiliates.
INDEMNIFICATION
AND EXPENSES: Company will indemnify the Banks, including but not limited to, following any event of default, against
all losses, liabilities, claims and damages relating to their loans, the Company's use of loan proceeds
or the commitments, including reasonable attorney's fees, except as such result from the indemnitees'
gross negligence or willful misconduct.
All fees and costs, including reasonable attorney fees, incurred by Agent in connection with negotiation
of the credit facilities, preparation of loan documents and closing and funding of the credit
facilities, and in connection with any amendments, revisions, consents, waivers or any
enforcement, preservation or protection of rights will be paid by the Company subject to the
terms outlined in the Agency Fee Letter.
MAJORITY BANKS: Any amendment, consent or waiver will require approval of 66 2/3% of the Banks'
aggregate commitments unless the commitments have been terminated in which case
it will be based on the Bank's aggregate loans outstanding, except that approval of all
Banks shall be required for changes in the amount of any Bank's commitment,
extensions of maturity, reductions of interest, principal, fees or release of guaranties and
certain specified matters.
GOVERNING LAW: State of Michigan
Agent reserves right, together with the Company, to determine final allocations
and when to close syndicate offering.
Closing on loan facilities subject to prior receipt by Agent of all necessary
legal opinions, and government and third party permits, licenses and approvals.
THE COMPANY SHALL ASSIST THE AGENT IN SYNDICATING THE FACILITY, AND SHALL
PROVIDE ALL INFORMATION REASONABLY REQUESTED BY THE BANKS IN MAKING A CREDIT
DECISION. THE COMPANY AND THE AGENT SHALL APPROVE ALL BANKS FOR PARTICIPATION IN
THE FACILITY, WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.
</TABLE>
- --------------------------------------------------------------------------------
COMERICA BANK, AS AGENT (IV) [COMERICA LOGO]
<PAGE> 11
CONFIDENTIAL SATURN ELECTRONICS & ENGINEERING, INC.
================================================================================
APPLICABLE MARGIN GRID
SATURN ELECTRONICS & ENGINEERING, INC.
$125,000,000 REVOLVING CREDIT FACILITY
(BASIS POINTS PER ANNUM)
<TABLE>
<CAPTION>
BASIS FOR PRICING LEVEL I LEVEL II LEVEL III LEVEL V*
<S> <C> <C> <C> <C>
Funded Debt/EBITDA <2.00:1.00 >2.00:1.00 >2.50:1.00
- -
but but >3.00:1.00
-
<2.50:1.00 <3.00:1.00
Eurocurrency Margin 150.00 175.00 200.00 225.00
Facility Fee 15.00 25.00 37.50 50.00
Base Rate Margin 0 0 0 25.00
All-in Drawn Spread 165.00 200.00 237.50 275.00
Letter of Credit Fees 150.00 175.00 200.00 225.00
==================================================================================================================
</TABLE>
* Anticipated initial level
- --------------------------------------------------------------------------------
COMERICA BANK, AS AGENT (V) [COMERICA LOGO]
<PAGE> 1
EXHIBIT 99(c)(1)
================================================================================
AGREEMENT AND PLAN OF MERGER
among
SATURN ELECTRONICS & ENGINEERING, INC.
SSI ACQUISITION CORP.
and
SMARTFLEX SYSTEMS, INC.
Dated as of July 6, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I.........................................................................................................2
SECTION 1.01. The Offer.................................................................................2
SECTION 1.02. Company Action............................................................................3
ARTICLE II........................................................................................................5
SECTION 2.01. The Merger................................................................................5
SECTION 2.02. Effective Time; Closing...................................................................5
SECTION 2.03. Effect of the Merger......................................................................5
SECTION 2.04. Articles of Incorporation; Bylaws.........................................................5
SECTION 2.05. Directors and Officers....................................................................6
SECTION 2.06. Conversion of Securities..................................................................6
SECTION 2.07. Employee and Director Stock Options.......................................................6
SECTION 2.08. Surrender of Shares; Stock Transfer Books.................................................7
ARTICLE III.......................................................................................................8
SECTION 3.01. Organization and Qualification; Subsidiaries..............................................8
SECTION 3.02. Articles of Incorporation and Bylaws......................................................9
SECTION 3.03. Capitalization............................................................................9
SECTION 3.04. Authority Relative to this Agreement.....................................................10
SECTION 3.05. No Conflict; Required Filings and Consents...............................................10
SECTION 3.06. Compliance...............................................................................11
SECTION 3.07. SEC Filings; Financial Statements........................................................11
SECTION 3.08. Absence of Certain Changes or Events.....................................................12
SECTION 3.09. Absence of Litigation....................................................................12
SECTION 3.10. Employee Benefit Plans...................................................................13
SECTION 3.11. Labor Matters............................................................................15
SECTION 3.12. Offer Documents; Schedule 14D-9; Proxy Statement.........................................15
SECTION 3.13. Tangible Property; Real Property and Leases..............................................16
SECTION 3.14. Trademarks, Patents and Copyrights.......................................................17
SECTION 3.15. Taxes....................................................................................17
SECTION 3.16. Environmental Matters....................................................................18
SECTION 3.17. Material Contracts.......................................................................18
SECTION 3.18. Brokers and Counsel......................................................................19
SECTION 3.19. Year 2000 Compliance.....................................................................19
ARTICLE IV.......................................................................................................20
SECTION 4.01. Corporate Organization...................................................................20
SECTION 4.02. Authority Relative to This Agreement.....................................................20
SECTION 4.03. No Conflict; Required Filings and Consents...............................................20
SECTION 4.04. Financing................................................................................21
SECTION 4.05. Offer Documents; Proxy Statement.........................................................21
SECTION 4.06. Brokers..................................................................................21
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V........................................................................................................22
SECTION 5.01. Conduct of Business by the Company Pending the Merger....................................22
ARTICLE VI.......................................................................................................24
SECTION 6.01. Special Shareholders' Meeting............................................................24
SECTION 6.02. Proxy Statement..........................................................................24
SECTION 6.03. Access to Information; Confidentiality...................................................24
SECTION 6.04. No Solicitation of Transactions..........................................................25
SECTION 6.05. Employee Benefits Matters; Employment Agreements.........................................25
SECTION 6.06. Directors' and Officers' Indemnification and Insurance...................................26
SECTION 6.07. Notification of Certain Matters..........................................................27
SECTION 6.08. Further Action; Reasonable Best Efforts..................................................27
SECTION 6.09. Public Announcements.....................................................................28
SECTION 6.10. Confidentiality Agreement................................................................28
SECTION 6.11 Financial Statements.....................................................................28
SECTION 6.12 SEC Reports..............................................................................28
SECTION 6.13 Customer Calls...........................................................................28
ARTICLE VII......................................................................................................29
SECTION 7.01. Conditions to the Merger.................................................................29
ARTICLE VIII.....................................................................................................29
SECTION 8.01. Termination..............................................................................29
SECTION 8.02. Effect of Termination....................................................................31
SECTION 8.03. Fees and Expenses........................................................................31
SECTION 8.04. Amendment................................................................................31
SECTION 8.05. Waiver...................................................................................32
ARTICLE IX.......................................................................................................32
SECTION 9.01. Non-Survival of Representations, Warranties and Agreements...............................32
SECTION 9.02. Notices..................................................................................32
SECTION 9.03. Certain Definitions......................................................................33
SECTION 9.04. Severability.............................................................................34
SECTION 9.05. Entire Agreement, Assignment.............................................................34
SECTION 9.06. Parties in Interest......................................................................34
SECTION 9.07. Specific Performance.....................................................................34
SECTION 9.08. Governing Law............................................................................35
SECTION 9.09. Headings.................................................................................35
SECTION 9.10. Counterparts; Facsimile..................................................................35
</TABLE>
ANNEX A Conditions to the Offer
SCHEDULE I
EXHIBIT A
ii
<PAGE> 4
Glossary of Defined Terms
<TABLE>
<CAPTION>
Location of
Defined Term Definition
------------ ----------
<S> <C>
affiliate....................................................................... ss. 9.03(a)
Affiliate Contract.............................................................. ss. 3.17
Agreement....................................................................... Preamble
Attorney Engagement............................................................. ss. 3.18
beneficial owner................................................................ ss. 9.03(b)
Blue Sky Laws................................................................... ss. 3.05(b)
Board ....................................................................... Recitals
Broker Agreement................................................................ ss. 3.18
business day.................................................................... ss. 9.03(c)
Certificate of Merger........................................................... ss. 2.02
Certificates.................................................................... ss. 2.08(b)
Code ....................................................................... ss. 3.10(a)
Company ....................................................................... Preamble
Competing Proposal.............................................................. ss. 8.03(a)(i)
Competing Transaction........................................................... ss. 6.04
Confidentiality Agreement....................................................... ss. 6.03(b)
control ....................................................................... ss. 9.03(d)
control by...................................................................... ss. 9.03(d)
Delaware Law.................................................................... Recitals
Disclosure Schedule............................................................. ss. 3.01
Effective Time.................................................................. ss. 2.02
Environmental Law............................................................... ss. 3.16(a)
ERISA ....................................................................... ss. 3.10(a)
Exchange Act.................................................................... ss. 1.02(b)
Fee ....................................................................... ss. 8.03(a)
GAAP ....................................................................... ss. 3.07(b)
Hazardous Substances............................................................ ss. 3.16(a)
HSR Act ....................................................................... ss. 3.05(b)
Indemnified Parties............................................................. ss. 6.06(b)
IRS ....................................................................... ss. 3.10(a)
Material Adverse Effect......................................................... ss. 3.01(a)
Material Contracts.............................................................. ss. 3.17
Merger ....................................................................... Recitals
Merger Consideration............................................................ ss. 2.06(a)
Minimum Condition............................................................... ss. 1.01(a)
1998 Balance Sheet.............................................................. ss. 3.07(c)
Offer ....................................................................... Recitals
Offer Documents................................................................. ss. 1.01(b)
Offer to Purchase............................................................... ss. 1.01(b)
Parent ....................................................................... Preamble
Paying Agent.................................................................... ss. 2.08(a)
Per Share Amount................................................................ Recitals
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
person ....................................................................... ss. 9.03(e)
Plans ....................................................................... ss. 3.10(a)
Proprietary Rights.............................................................. ss. 3.14
Proxy Statement................................................................. ss. 3.12
Purchaser....................................................................... Preamble
Schedule 14D-1.................................................................. ss. 1.01(b)
Schedule 14D-9.................................................................. ss. 1.02(b)
SEC ....................................................................... ss. 1.01(b)
SEC Reports..................................................................... ss. 3.07(a)
Securities Act.................................................................. ss. 3.07(a)
SG Cowen ....................................................................... ss. 1.02(a)
Shareholder Agreements.......................................................... Recitals
Shareholders.................................................................... Recitals
Shares ....................................................................... Recitals
Special Shareholders' Meeting................................................... ss. 6.01
Spread ....................................................................... ss. 2.07
Stock Option Plans.............................................................. ss. 2.07
Subsidiary...................................................................... ss. 3.01
subsidiary...................................................................... ss. 9.03(f)
Superior Proposal............................................................... ss. 6.04
Surviving Corporation........................................................... ss. 2.01
Transactions.................................................................... ss. 3.04
under common control with....................................................... ss. 9.03(d)
WARN ....................................................................... ss. 3.10(f)
Year 2000 Compliant............................................................. ss. 3.19
</TABLE>
ii
<PAGE> 6
AGREEMENT AND PLAN OF MERGER, dated as of July 6, 1999 (this
"Agreement"), among SATURN ELECTRONICS & ENGINEERING, INC., a corporation
organized under the laws of Michigan ("Parent"), SSI ACQUISITION CORP., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
SMARTFLEX SYSTEMS, INC., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Purchaser and the
Company have each unanimously determined that it is in the best interests of
their respective shareholders for Parent to acquire the Company upon the terms
and subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed
that Purchaser shall make a cash tender offer (the "Offer") to acquire all the
issued and outstanding shares of common stock, $.0025 par value, of the Company
(the "Shares") for U.S. $10.50 per Share (such amount being hereinafter referred
to as the "Per Share Amount") net to the seller in cash, upon the terms and
subject to the conditions of this Agreement and the Offer;
WHEREAS, the Board of Directors of the Company (the "Board"),
including all the disinterested directors on the Board, has unanimously approved
the making of the Offer and resolved and agreed to recommend that holders of
Shares tender their Shares pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the Boards
of Directors of Parent, Purchaser and the Company have each unanimously approved
the merger (the "Merger") of Purchaser with and into the Company in accordance
with the Business Corporation Act of the State of Delaware ("Delaware Law")
following the consummation of the Offer and upon the terms and subject to the
conditions set forth herein;
WHEREAS, to induce Parent and Purchaser to enter into this
Agreement, Parent has required that Purchaser and each of the shareholders of
the Company listed on Schedule I attached hereto (the "Shareholders") enter into
a Stock Tender and Voting Agreement, dated today's date (the "Shareholder
Agreements"), pursuant to which each Shareholder agrees, among other things, to
validly tender its Shares into, and not to withdraw its Shares from, the Offer,
and to vote its Shares in favor of the Merger, in each case subject to the terms
and conditions set forth therein; and
WHEREAS, also in furtherance of such acquisition, the Boards
of Directors of the Parent, the Purchaser and the Company have each unanimously
approved the execution, delivery and performance of the Shareholder Agreements
in accordance with applicable law.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Purchaser and the Company hereby agree as follows:
<PAGE> 7
ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Provided that this Agreement
shall not have been terminated in accordance with Section 8.01 and none of the
events set forth in Annex A hereto shall have occurred or be existing, Purchaser
shall commence the Offer as promptly as reasonably practicable after the date
hereof, but in no event later than five business days after the date hereof. The
obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject to the condition (the "Minimum
Condition") that at least the number of Shares that combined with the Shares
already owned by Parent, Purchaser or any of their affiliates shall constitute a
majority of the then outstanding Shares on a fully diluted basis (including,
without limitation, all Shares issuable upon the conversion of any convertible
securities or upon the exercise of any options, warrants or rights) shall have
been validly tendered and not withdrawn prior to the expiration of the Offer and
also shall be subject to the satisfaction of the other conditions set forth in
Annex A hereto. Purchaser expressly reserves the right to waive any such
condition, to increase the price per Share payable in the Offer, and to make any
other changes in the terms and conditions of the Offer; provided, however, that,
without the prior written consent of the Company, no change may be made which
decreases the price per Share payable in the Offer or which changes or waives
the Minimum Condition or which changes the form of consideration to be paid in
the Offer or which extends the period that the Offer is outstanding for one or
more periods not to exceed thirty days in the aggregate or which reduces the
maximum number of Shares to be purchased in the Offer or which imposes
conditions to the Offer in addition to those set forth in Annex A hereto. The
Per Share Amount shall, subject to applicable withholding of taxes, be paid net
to the seller in cash, upon the terms and subject to the conditions of the
Offer. Subject to the terms and conditions of the Offer (including, without
limitation, the Minimum Condition), Purchaser shall pay, as promptly as
practicable after expiration of the Offer, for all Shares validly tendered into
and not withdrawn from, the Offer.
(b) As soon as reasonably practicable on the date of
commencement of the Offer, Purchaser shall file with the Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 (together with
all amendments and supplements thereto, the "Schedule 14D-1") with respect to
the Offer and the other Transactions (as hereinafter defined), which shall have
been provided to the Company and to which the Company shall not have reasonably
objected. The Schedule 14D-1 shall contain or shall incorporate by reference an
offer to purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule 14D-1, the Offer
to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Each of Parent, Purchaser and the Company agree to correct promptly
any information provided by it for use in the Offer Documents which shall have
become false or misleading, and Parent and Purchaser further agree to take all
steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the
SEC and the other Offer Documents as so
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corrected to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws.
SECTION 1.02. Company Action. (a) The Company hereby approves
of and consents to the Offer and represents and warrants that (i) the Board, at
a meeting duly called and held on July 6, 1999, has unanimously (A) determined
that this Agreement, the Shareholder Agreements and the transactions
contemplated hereby and thereby, including, without limitation, each of the
Offer, the Merger and the tender of Shares pursuant to the Shareholder
Agreements, are fair to and in the best interests of the shareholders of the
Company, (B) approved and adopted this Agreement and the transactions,
including, without limitation, the Offer, the Merger and the tender of Shares
pursuant to the Shareholder Agreements, contemplated hereby and thereby, (C)
taken all action to render the provisions of the Rights Agreement, dated as of
July 17, 1996, between the Company and The First National Bank of Boston, as
Rights Agent, and of Section 203 of the Delaware Law inapplicable to the Offer,
the Merger and the Shareholder Agreements, and (D) recommend that the
shareholders of the Company accept the Offer and approve and adopt this
Agreement and the transactions, including, without limitation, the Merger,
contemplated hereby, and (ii) SG Cowen Securities Corporation ("SG Cowen") has
delivered to the Board an opinion to the effect that the consideration to be
received by the holders of Shares (other than Parent, Purchaser and their
affiliates) pursuant to each of the Offer and the Merger is fair to such holders
of Shares from a financial point of view, it being understood and acknowledged
that such opinion has been rendered to the Board and may only be relied upon by
the Board, the Company and any successors thereto. Subject only to the
provisions of Sections 6.04 and 8.01(e) below, the Company hereby consents to
the inclusion in the Offer Documents of the recommendation of the Board
described in the immediately preceding sentence; provided, however, that the
Board may withdraw such consent in the exercise of its fiduciary duties as
contemplated in Sections 6.04 and 8.01(e) below.
(b) As soon as reasonably practicable on the date of
commencement of the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing, subject
only to the provisions of Sections 6.04 and 8.01(d) below, the recommendation of
the Board described in Section 1.02(a) and shall disseminate the Schedule 14D-9
to the extent required by Rule 14d-9 promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and any other applicable federal
securities laws. Each of the Company, Parent and Purchaser agree to correct
promptly any information provided by it for use in the Schedule 14D-9 which
shall have become false or misleading, and the Company further agrees to take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Prior to the Company's filing of
the Schedule 14D-9, such Schedule shall have been provided to Purchaser and
Parent and shall not have been reasonably objected to.
(c) The Company shall promptly furnish Purchaser with mailing
labels containing the names and addresses of all record holders of Shares and
with security position listings of Shares held in stock depositories, each as of
a recent date, together with all other
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available listings and computer files containing names, addresses and security
position listings of record holders and beneficial owners of Shares. The Company
shall furnish Purchaser with such additional information, including, without
limitation, updated listings and computer files of shareholders, mailing labels
and security position listings, and such other assistance as Parent, Purchaser
or their agents may reasonably request. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer or the
Merger, Parent and Purchaser shall hold in confidence the information contained
in such labels, listings and files, shall use such information only in
connection with the Offer and the Merger and, if this Agreement shall be
terminated in accordance with Section 8.01, shall deliver to the Company, or
certify to the Company destruction of, all copies of such information then in
their possession.
(d) (i) The Company will, promptly following the purchase and
payment for by Purchaser of all Shares validly tendered and not withdrawn
pursuant to the Offer, take all actions necessary to cause persons designated by
Parent to become directors of the Company so that the total number of persons so
designated equals that number of directors, rounded up to the next whole number,
which represents the product of (x) the total number of directors on the Board
of Directors of the Company multiplied by (y) the percentage that the number of
Shares so accepted for payment and paid for plus any Shares beneficially owned
by Parent, Purchaser or their respective affiliates on the date when Parent so
accepts for payment and pays for any Shares pursuant to the Offer bears to the
number of Shares outstanding at the time of such acceptance for payment and
payment. In furtherance thereof, the Company will increase the size of its Board
of Directors, or use best efforts to secure the resignation of directors, or
both, as is necessary to permit Parent's designees to be elected to the
Company's Board of Directors; provided, however, prior to the Effective Time (as
defined in Section 2.2), subject to the provisions of Section 1.02(d)(ii), the
Company's Board of Directors shall always have at least two members who are
directors of the Company as of the date hereof (the "Continuing Directors"). At
such time, the Company, if so requested, will cause persons designated by Parent
to constitute at least the same percentage of each committee of the Company's
Board of Directors as determined above in this Section 1.02(d)(i). The Company's
obligations to appoint designees to its Board of Directors shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The
Company shall promptly take all actions required pursuant to such section and
rule in order to fulfill its obligations under this Section 1.02(d)(i). Parent
and Purchaser will supply the Company with all information which the Company
shall reasonably request with respect to nominees to the Company's Board of
Directors in order for the Company to make the filing required by Section 14(f)
of the Exchange Act. Except with respect to the information provided by Parent
or Purchaser pursuant to the immediately preceding sentence, the Company agrees
that none of the information attached to the Offer Documents pursuant to Section
14(f) or Rule 14f-1 shall contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.
(ii) Following the election or appointment of the designees of
Parent pursuant to Section 1.02(d)(i) and prior to the Effective Time, any
amendment or termination of this Agreement, extension for the performance of the
obligations or other acts of Parent and
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Purchaser under this Agreement, waiver of the rights of the Company under this
Agreement, or action taken by the Company pursuant to, or that is described in,
Article 8 and Sections 1.01(a), 6.06, 8.04 and 8.05, notwithstanding anything
herein to the contrary, will (if and to the extent that there are any then
serving Continuing Directors) require the approval of a majority of the
Continuing Directors. If, prior to the Effective Time, the number of Continuing
Directors is fewer than two, the remaining Continuing Director, if any, will be
entitled to appoint a director to fill the vacancy created and such appointee
will be a Continuing Director for the purpose of this Agreement. The Continuing
Directors may not be removed prior to the Effective Time except for cause.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with Delaware Law, at the
Effective Time (as hereinafter defined), Purchaser shall be merged with and into
the Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation"), and shall continue to
be governed by the laws of the State of Delaware.
SECTION 2.02. Effective Time; Closing. As promptly as
practicable after the satisfaction or, if permissible, waiver of the conditions
set forth in Article VII, the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger in substantially the form of
Exhibit A hereto, or in such other form as the parties shall otherwise agree
(the "Certificate of Merger"), with the Delaware Secretary of State, in such
form as is required by, and executed in accordance with the relevant provisions
of, Delaware Law (the date and time of such filings being, collectively, the
"Effective Time"). Prior to such filing, a closing shall be held at the offices
of Honigman Miller Schwartz and Cohn, 2290 First National Building, Detroit,
Michigan 48226, or such other place as the parties shall agree, for the purpose
of confirming the satisfaction or waiver, as the case may be, of the conditions
set forth in Article VII.
SECTION 2.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in 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 the Company and Purchaser shall vest in the Surviving Corporation,
and all debts, liabilities, obligations, restrictions, disabilities and duties
of the Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04. Articles of Incorporation; Bylaws. (a) The
Articles of Incorporation of Purchaser, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended as provided by
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applicable law and such Articles of Incorporation; provided, however, that, at
the Effective Time, Article I of the Articles of Incorporation of the Surviving
Corporation shall be amended to read as follows: "The name of the corporation is
Smartflex Systems, Inc. "
(b) The Bylaws of Purchaser, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the Articles of Incorporation of the
Surviving Corporation and such Bylaws.
SECTION 2.05. Directors and Officers. The directors of
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation, each to hold office in accordance with the
Articles of Incorporation and Bylaws of the Surviving Corporation, and the
officers of Purchaser 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 2.06. Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the Shares:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to Section
2.06(b)) shall be cancelled and shall be converted automatically into the
right to receive an amount equal to the Per Share Amount in cash (the
"Merger Consideration"), payable, without interest, to the holder of such
Share, upon surrender, in the manner provided in Section 2.08, of the
certificate that formerly evidenced such Share;
(b) Each Share owned by Purchaser, Parent or any direct or
indirect wholly owned subsidiary of Parent or of the Company immediately
prior to the Effective Time shall be cancelled and retired without any
conversion thereof and no payment or distribution shall be made with
respect thereto; and
(c) Each share of common stock, without par value, of
Purchaser 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, $.0025 par value per share, of the
Surviving Corporation.
SECTION 2.07. Employee and Director Stock Options. In accordance with
the terms of the Company's 1993 Equity Incentive Plan, 1994 Equity Incentive
Plan, 1995 Equity Incentive Plan and Acquisition Stock Plan (the "Stock Option
Plans"), each outstanding option to purchase Shares granted under the Stock
Option Plans shall, immediately prior to the Effective Time, become exercisable
regardless of the vesting schedule contained in any stock option agreement or in
any of the Stock Option Plans. Each outstanding option to purchase Shares
granted under the Stock Option Plans or otherwise shall be cancelled at the
Effective Time. In the event that any unexercised option is cancelled by the
Company, each holder of a cancelled option shall be entitled to receive, at the
Effective Time or as soon as practicable thereafter, from
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the Company, in consideration for the cancellation of such option, an amount in
cash equal to the product of (i) the number of Shares previously subject to such
option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per Share previously subject to such option (the "Spread").
SECTION 2.08. Surrender of Shares; Stock Transfer Books. (a)
Prior to the Effective Time, Purchaser shall designate a bank or trust company
to act as agent (the "Paying Agent") for the holders of Shares in connection
with the Merger to receive the funds to which holders of Shares shall become
entitled pursuant to Section 2.06(a), and at the Effective Time Purchaser shall
deposit with such Paying Agent an amount sufficient to pay the aggregate Merger
Consideration. Such funds shall be invested by the Paying Agent as directed by
the Surviving Corporation, provided that such investments shall be in
obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of America
or in commercial paper obligations rated A-1 or P-1 or better by Moody's
Investors Service, Inc. or Standard & Poor's Corporation, respectively.
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each person who was, at the Effective
Time, a holder of record of Shares entitled to receive the Merger Consideration
pursuant to Section 2.06(a) a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each Share formerly
evidenced by such Certificate, and such Certificate shall then be cancelled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such Certificate.
If payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered on the stock
transfer books of the Company, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such taxes either have been paid or are not applicable. In the
event any certificate representing Shares shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article II;
provided, however, the person to whom the Merger Consideration is paid shall, as
a condition precedent to the payment thereof, give the Surviving Corporation a
bond in such sum as it may direct or otherwise indemnify the Surviving
Corporation in a manner satisfactory to it against any claim that may be made
against the
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Surviving Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
(c) At any time following the sixth month after the
Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it any funds which had been made available to the
Paying Agent and not disbursed to holders of Shares (including, without
limitation, all interest and other income received by the Paying Agent in
respect of all funds made available to it) and, thereafter, such holders shall
be entitled to look only to the Surviving Corporation (subject to abandoned
property, escheat and other similar laws) only as general creditors thereof with
respect to any Merger Consideration that may be payable upon due surrender of
the Certificates held by them. Notwithstanding the foregoing, neither the
Surviving Corporation nor the Paying Agent shall be liable to any holder of a
Share for any Merger Consideration delivered in respect of such Share to a
public official pursuant to any abandoned property, escheat or other similar
law.
(d) At the close of business on the day of the Effective
Time, the stock transfer books of the Company shall be closed and, thereafter,
there shall be no further registration of transfers of Shares on the records of
the Company. From and after the Effective Time, the holders of Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares except as otherwise provided herein or by
applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser that:
SECTION 3.01. Organization and Qualification; Subsidiaries.
Each of the Company and each subsidiary of the Company (a "Subsidiary"), is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Material Adverse Effect (as defined below). The Company
and each Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. When used in connection with the
Company or any Subsidiary, the term "Material Adverse Effect" means any change
or changes, event(s), condition(s), development(s) or effect(s) that adversely
affects, or may be reasonably likely to adversely affect, individually or in the
aggregate, the business, operations, results of operations, properties,
condition, financial
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condition, cash flows, assets or liabilities (including, without limitation,
contingent liabilities) of the Company and the Subsidiaries taken as a whole and
the value of the Shares, in any case, by an amount equal to at least $2,500,000;
provided, however, that a Material Adverse Effect shall not include any adverse
effect resulting from general economic conditions or conditions generally
affecting the contract manufacturing market. A true and complete list of all the
Subsidiaries, together with the jurisdiction of incorporation of each Subsidiary
and the percentage of the outstanding capital stock (calculated on a fully
diluted basis) of each Subsidiary owned by the Company, each other Subsidiary
and any third party, is set forth in Section 3.01 of the Disclosure Schedule,
which has been delivered prior to the date of this Agreement by the Company to
Parent (the "Disclosure Schedule"). Except as disclosed in such Section 3.01,
the Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for any
equity or similar interest in, any corporation, partnership, joint venture or
other business association or entity.
SECTION 3.02. Articles of Incorporation and Bylaws. The
Company has heretofore furnished to Parent a complete and correct copy of the
Articles of Incorporation and the Bylaws or equivalent organizational documents,
each as amended to date, of the Company and each Subsidiary. Such Articles of
Incorporation, Bylaws and equivalent organization documents are in full force
and effect. Neither the Company nor any Subsidiary is in violation of any
provision of its Articles of Incorporation, Bylaws or equivalent organizational
documents.
SECTION 3.03. Capitalization. The authorized capital stock of
the Company consists of 5,000,000 shares of preferred stock (none of which is
issued and outstanding) and 25,000,000 Shares. As of the date hereof, (i)
6,493,994 Shares are issued and outstanding, all of which are validly issued,
fully paid and nonassessable, (ii) no Shares are held by the Subsidiaries or in
the Company's treasury, and (iii) 994,502 Shares are reserved for issuance
pursuant to stock options granted pursuant to the Company's Stock Option Plans
or otherwise. Except as set forth in this Section 3.03 or Section 3.03 of the
Disclosure Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any Subsidiary or obligating the Company or any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary (including, without limitation, any
securities which are convertible into or exchangeable for Shares of capital
stock of, or other equity interests in, the Company or any Subsidiaries). All
Shares subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Except as
set forth in Section 3.03 of the Disclosure Schedule, there are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Shares or any capital stock of any Subsidiary or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Subsidiary or any other person. Each
outstanding share of capital stock of each Subsidiary is duly authorized,
validly issued, fully paid and nonassessable and, except as set forth in Section
3.03 of the Disclosure Schedule, is owned free and clear of all liens and
encumbrances.
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SECTION 3.04. Authority Relative to this Agreement. Subject to
approval by the affirmative vote of the shareholders of the Company, the Company
has all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions, including,
without limitation, the Merger, contemplated hereby (the "Transactions"). The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and adoption
of this Agreement by the affirmative vote of the holders of a majority of the
outstanding Shares as required by Delaware Law and the Company's Certificate of
Incorporation, and the filing and recordation of the Certificate of Merger as
required by Delaware Law). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Purchaser, constitutes a legal, valid and binding
obligation of the Company.
SECTION 3.05. No Conflict; Required Filings and Consents.
Except as set forth in Section 3.05 of the Disclosure Schedule, (a) the
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Articles of Incorporation or Bylaws or equivalent organizational
documents of the Company or any Subsidiary, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to the Company or
any Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound or subject or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance of any nature on any property or asset of the Company or any
Subsidiary pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any property or asset of the Company or any Subsidiary is bound or
subject. Any costs and expenses which occur or are reasonably likely to occur as
a result of the failure to obtain the consent of the other parties to the
contracts and agreements listed in Section 3.05 of the Disclosure Schedule prior
to the Effective Time shall be borne by the Company and its Subsidiaries and
shall be considered in determining whether a Material Adverse Effect has
occurred.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with, or
notification to, any governmental or regulatory authority, domestic or foreign,
except (i) for applicable requirements, if any, of the Exchange Act, state
securities or "blue sky" laws ("Blue Sky Laws") and state takeover laws, the
premerger notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act") and the filing and recordation of the Certificate of
Merger as required by Delaware Law, and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Offer or the
Merger, or otherwise
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prevent the Company from performing its obligations under this Agreement, or
would not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.06. Compliance. Except as set forth in Section 3.06
of the Disclosure Schedule, neither the Company nor any Subsidiary is, in any
material respect, in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any
Subsidiary or by which any property or asset of the Company or any Subsidiary is
bound or subject or (ii) any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any property or asset of the Company or any Subsidiary is bound or
subject.
SECTION 3.07. SEC Filings; Financial Statements. (a) The
Company has filed all forms, reports and documents required to be filed by it
with the SEC in the past three years, and has heretofore delivered to Parent, in
the form filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal
years ended December 31, 1996, 1997 and 1998, respectively, (ii) its Quarterly
Reports on Form 10-Q for the periods ended (x) March 31, June 30 and September
30 in 1997 and in 1998, and (y) March 31, 1999, (iii) all proxy statements
relating to the Company's meetings of shareholders (whether annual or special)
held in the past three years and (iv) all other forms, reports and other
registration statements (other than Quarterly Reports on Form 10-Q not referred
to in clause (ii) above) filed by the Company with the SEC in the past three
years (the forms, reports and other documents referred to in clauses (i), (ii),
(iii) and (iv) above being referred to herein, collectively, as the "SEC
Reports"). The most recent SEC Report filed by the Company is its Quarterly
Report on Form 10-Q for the period ended March 31, 1999. The SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act of 1933,
as amended (the "Securities Act"), and the Exchange Act, as the case may be, and
the rules and regulations promulgated thereunder and (ii) did not, at the time
they were filed, 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 made therein, in the light of the circumstances under which
they were made, not misleading. No Subsidiary is required to file any form,
report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the SEC Reports was prepared from the
books and records of the Company in accordance with generally accepted
accounting principles applied on a consistent basis ("GAAP") throughout the
periods indicated (except as may be indicated in the notes thereto and except,
in the case of unaudited statements, as may be permitted under the Exchange Act)
and each fairly presents the consolidated financial position, results of
operations and changes in shareholders' equity and cash flows of the Company and
the consolidated Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
financial statements, to normal year-end audit adjustments).
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at December 31, 1998
including the notes thereto (the "1998 Balance Sheet"), or as reflected on the
consolidated balance sheet of the
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Company and the consolidated Subsidiaries as at May 31, 1999 or in Section 3.07
of the Disclosure Schedule, neither the Company nor any Subsidiary has any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise) which would be required to be reflected on a balance sheet, or in the
notes thereto, prepared in accordance with GAAP.
SECTION 3.08. Absence of Certain Changes or Events. Since
December 31, 1998, except as set forth in Section 3.08 of the Disclosure
Schedule or as contemplated by this Agreement or disclosed in any SEC Report
filed since December 31, 1998 and prior to the date of this Agreement, the
Company and the Subsidiaries have conducted their businesses only in the
ordinary course and in a manner consistent with past practice and, since
December 31, 1998, there has not been (i) any Material Adverse Effect with
respect to the Company, (ii) any damage, destruction or loss (whether or not
covered by insurance) with respect to any property or asset of the Company or
any Subsidiary and having, individually or in the aggregate, a Material Adverse
Effect with respect to the Company, (iii) any material change by the Company in
its accounting methods, principles or practices, with respect to the Company
(iv) any revaluation by the Company of any asset (including, without limitation,
any writing down of the value of inventory or writing off of notes or accounts
receivable), other than in the ordinary course of business consistent with past
practice, (v) any failure by the Company to revalue any asset in accordance with
GAAP consistent with past practice, (vi) any entry by the Company or any
Subsidiary into any commitment or transaction material to the Company and the
Subsidiaries taken as a whole, (vii) any declaration, setting aside or payment
of any dividend or distribution in respect of any capital stock of the Company
or any redemption, purchase or other acquisition of any of its securities,
(viii) other than as set forth in any contracts (as in effect on the date
hereof) referred to in Section 3.10, any increase in or establishment of any
bonus, insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any officers or key employees
of the Company or any Subsidiary, except customary increases in compensation to
employees generally incurred in the ordinary course of business consistent with
past practice, (ix) any entering into, renewal, modification or extension of,
any material contract, arrangement or agreement with any affiliate of the
Company, or (x) any entering into, renewal, modification or extension of, any
contract, arrangement or agreement with any other party having, individually or
in the aggregate, a Material Adverse Effect with respect to the Company.
SECTION 3.09. Absence of Litigation. Except as set forth in
Section 3.09 of the Disclosure Schedule or as disclosed in the SEC Reports filed
prior to the date of this Agreement, there is no claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary, or any property or asset of the Company or any
Subsidiary, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, which (i) the amount in
controversy is or could reasonably be expected to be at least $50,000, (ii)
seeks to, or is reasonably likely to, delay or prevent the consummation of any
Transaction or (iii) which, if adversely determined against the Company would
limit, in any material respect, the Company's ability to conduct its business as
currently conducted. As of the date hereof, except as set forth in Section 3.09
of the Disclosure Schedule, neither the Company nor any Subsidiary nor any
property or asset of the Company or any Subsidiary is subject to any order,
writ, judgment, injunction, decree, determination or award. Except as set forth
in Section 3.09 of the Disclosure
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Schedule, the Company and each Subsidiary has notified its insurance companies,
in accordance with the terms and conditions of its insurance policies, of any
pending or, to the knowledge of the Company, threatened litigation, and no
insurance company has denied coverage, reserved its rights to deny coverage or
otherwise advised the Company or any of its Subsidiaries of any defenses
available to such insurance company to deny coverage for any such pending or, to
the knowledge of the Company, threatened litigation.
SECTION 3.10. Employee Benefit Plans. (a) Section 3.10 of the
Disclosure Schedule contains a true and complete list of (i) all employee
benefit plans (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other benefit
plans, programs or arrangements, and all employment, termination, severance or
other contracts or agreements to which the Company or any Subsidiary is a party,
with respect to which the Company or any Subsidiary has any obligation or which
are maintained, contributed to or sponsored by the Company or any Subsidiary for
the benefit of any current or former employee, officer or director of the
Company or any Subsidiary and (ii) each employee benefit plan for which the
Company or any Subsidiary could incur liability under Title IV of ERISA, or in
respect of which the Company or any Subsidiary remains secondarily liable under
Section 4204 of ERISA (collectively, the "Plans"). Except as set forth in
Section 3.10 of the Disclosure Schedule, no Plan is a "defined benefit plan"
within the meaning of Section 3(35) of ERISA and no Plan is subject to Title IV
of ERISA. Each Plan is in writing and the Company has previously furnished
Parent with a true and complete copy of each Plan and a true and complete copy
of each material document prepared in connection with each such Plan, including,
without limitation, (i) a copy of each trust or other funding arrangement, (ii)
each summary plan description and summary of material modifications, (iii) the
most recently filed Internal Revenue Service ("IRS") Form 5500, (iv) the most
recently received IRS determination letter for each such Plan, and (v) the most
recently prepared financial statement in connection with each such Plan. Except
as set forth in Section 3.10 of the Disclosure Schedule, neither the Company nor
any Subsidiary has any express or implied commitment (i) to create, incur
liability with respect to or cause to exist any other employee benefit plan,
program or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Plan, other than with respect to a modification, change or
termination required by ERISA or the Internal Revenue Code of 1986, as amended
(the "Code").
(b) Except as disclosed in Section 3.10 of the Disclosure
Schedule, none of the Plans (i) provides for the payment of separation,
severance, termination or similar-type benefits to any person, (ii) obligates
the Company or any Subsidiary to pay separation, severance, termination or other
benefits as a result of any Transaction or (iii) obligates the Company or any
Subsidiary to make any payment or provide any benefit that could be subject to a
tax under Section 4999 of the Code. Except as disclosed in Section 3.10 of the
Disclosure Schedule, none of the Plans provides for or promises retiree medical,
disability or life insurance
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<PAGE> 19
benefits to any current or former employee, officer or director of the Company
or any Subsidiary.
(c) Except as set forth in Section 3.10 of the Disclosure
Schedule, each Plan which is intended to be qualified under Section 401(a) or
401(k) of the Code has received a favorable determination letter from the IRS
that such Plan is so qualified, and each trust established in connection with
any Plan which is intended to be exempt from federal income taxation under
Section 501(a) of the Code has received a determination letter from the IRS that
such trust is so exempt. To the knowledge of the Company, no fact or event has
occurred since the date of any such determination letter from the IRS that could
adversely affect the qualified status of any such Plan or the exempt status of
any such trust. Each trust maintained or contributed to by the Company or any
Subsidiary which is intended to be qualified as a voluntary employees'
beneficiary association exempt from federal income taxation under Sections
501(a) and 501(c)(9) of the Code has received a favorable determination letter
from the IRS that it is so qualified and so exempt, and, to the knowledge of the
Company, no fact or event has occurred since the date of such determination by
the IRS that could adversely affect such qualified or exempt status.
(d) There has been no prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Plan. Neither the Company nor any Subsidiary is currently liable or has
previously incurred any liability for any tax or penalty arising under Section
4971, 4972, 4979, 4980 or 4980B of the Code or Section 502(c) of ERISA, and no
fact or event exists which could give rise to any such liability. Neither the
Company nor any Subsidiary has incurred any liability under, arising out of or
by operation of Title IV of ERISA, including, without limitation, any liability
in connection with (i) the termination or reorganization of any employee pension
benefit plan subject to Title IV of ERISA or (ii) the withdrawal from any
Multiemployer Plan or Multiple Employer Plan, and no fact or event exists which
could give rise to any such liability.
(e) To the knowledge of the Company, each Plan is now and
has been operated in all respects in accordance with the requirements of all
applicable laws, including, without limitation, ERISA and the Code, and the
Company and each Subsidiary have performed all obligations required to be
performed by them under, are not in any respect in default under or in violation
of, and have no knowledge of any default or violation by any party to, any Plan.
All contributions, premiums or payments required to be made with respect to any
Plan have been timely made ,are fully deductible for income tax purposes and no
such deduction previously claimed has been challenged by any government entity.
The 1998 Balance Sheet reflects an accrual of all amounts of employer
contributions and premiums accrued but unpaid with respect to the Plans.
(f) The Company and the Subsidiaries have not incurred
any liability under, and have complied in all material respects with, the Worker
Adjustment Retraining Notification Act and the regulations promulgated
thereunder ("WARN") and do not reasonably expect to incur any such liability as
a result of actions taken or not taken prior to the Effective Time. Section
3.10(f) of the Disclosure Schedule lists (i) all the employees terminated or
laid off by the
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Company or any Subsidiary during the 90 days prior to the date hereof and (ii)
all the employees of the Company or any Subsidiary who have experienced a
reduction in hours of work of more than 50% during any month during the 90 days
prior to the date hereof and describes all notices given by the Company and the
Subsidiaries in connection with WARN. The Company will, by written notice to
Parent and Purchaser, update Section 3.10(f) of the Disclosure Schedule to
include any such terminations, layoffs and reductions in hours from the date
hereof through the Effective Time and will provide Parent and Purchaser with any
related information which they may reasonably request.
SECTION 3.11. Labor Matters. Except as set forth in Section
3.11 of the Disclosure Schedule, (i) there are no controversies pending or, to
the knowledge of the Company, threatened between the Company or any Subsidiary,
on the one hand, and any of their respective employees or former employees, on
the other hand; (ii) neither the Company nor any Subsidiary is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or any Subsidiary, nor, to the knowledge of the
Company, are there any activities or proceedings of any labor union to organize
any such employees; (iii) neither the Company nor any Subsidiary has breached or
otherwise failed to comply with any provision of any such agreement or contract
and there are no grievances outstanding against the Company or any Subsidiary
under any such agreement or contract; (iv) there are no unfair labor practice
complaints pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary before the National Labor Relations Board or any
current union representation questions involving employees of the Company or any
Subsidiary; and (v) there is no strike, slowdown, work stoppage or lockout, or,
to the knowledge of the Company, threat thereof, by or with respect to any
employees of the Company or any Subsidiary. Section 3.11 of the Disclosure
Letter sets forth an accurate and complete list of all agreements or
arrangements with employees, consultants (excluding attorneys and investment
banking firms) and agents of the Company or any Subsidiary, including (without
limitation, employment, consulting, severance, stay-bonus, termination or other
agreements or arrangements) where the total compensation to any such employee,
consultant or agent under any such agreement or arrangement (or series of
related agreements or arrangements) exceeds $100,000 in any year.
SECTION 3.12. Offer Documents; Schedule 14D-9; Proxy
Statement. Neither the Schedule 14D-9 nor any information supplied by the
Company for inclusion in the Offer Documents shall, at the respective times the
Schedule 14D-9, the Offer Documents, or any amendments or supplements thereto
are filed with the SEC or are first published, sent or given to shareholders of
the Company, as the case may be, 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 made therein, in the light of the circumstances
under which they are made, not misleading. In the event that Purchaser has not
designated a majority of the members of the Board pursuant to the terms of
Section 1.02(d) above and a shareholder vote is required, neither the
information supplied by the Company for inclusion in the proxy statement to be
sent to the shareholders of the Company in connection with the Special
Shareholders' Meeting (as defined in Section 6.01 hereof), nor the information
statement to be sent to shareholders of the Company in connection with the
Merger (such proxy or information statement, as amended or
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supplemented, being referred to herein as the "Proxy Statement") shall not, at
the date the Proxy Statement (or any amendment or supplement thereto) is first
mailed to shareholders of the Company, at the time of the Special Shareholders'
Meeting, if applicable and at the Effective Time, be false or misleading with
respect to any material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Special Shareholders' Meeting which shall
have become false or misleading. The Schedule 14D-9 and the Proxy Statement
shall comply in all material respects as to form with the requirements of the
Exchange Act and the rules and regulations thereunder. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information which is supplied in writing by Parent or Purchaser or which is
excerpted from or derived from public sources other than the Company's public
filings with the SEC.
SECTION 3.13. Tangible Property; Real Property and Leases. (a)
The Company and the Subsidiaries have good and marketable title to all their
tangible properties and assets, free and clear of all liens and encumbrances,
with only such exceptions as are set forth in Section 3.13 of the Disclosure
Schedule, and subject to (i) liens for taxes, assessments or governmental
charges not yet due, (ii) liens incident to construction, common carriers, and
public warehouse storage, which are either not delinquent or are being contested
in good faith by the Company by appropriate proceedings and as to which
appropriate reserves have been established on the 1998 Balance Sheet, (iii)
liens or deposits in connection with workers' compensation, unemployment, or
other insurance, social security laws, or to secure customs' duties, public or
statutory obligations in lieu of surety, stay or appeal bonds, or to secure
performance of contracts or bids (other than contracts for the payment of money
borrowed), or deposits required by law or governmental regulations or by any
court order, decree, judgment or rule as condition to the transaction of
business or the exercise of any right, privilege or license or (iv) other liens
or deposits of a like nature made in the ordinary course of business.
(b) No parcel of real property owned or leased by the
Company or any Subsidiary is subject to any governmental decree or order to be
sold nor is being condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefor, nor, to the
knowledge of the Company, has any such condemnation, expropriation or taking
been proposed or threatened.
(c) All leases of real property leased for the use or
benefit of the Company or any Subsidiary to which the Company or any Subsidiary
is a party having a term in excess of ten years or requiring rental payments in
excess of U.S. $100,000 during the period of the lease and all amendments and
modifications thereto are in full force and effect and have not been modified or
amended, and there exists no default under any such lease by the Company or any
Subsidiary, nor any event which with notice or lapse of time or both would
reasonably be expected to constitute a default thereunder by the Company or any
Subsidiary, nor, to the knowledge of the Company, does there exist any default,
or any event which with notice or lapse of time or both would reasonably be
expected to constitute a default thereunder, by any other party to any such
lease. Section 3.13 of the Disclosure Schedule sets forth an accurate and
complete list of each
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parcel of real property owned or leased by the Company or any Subsidiary and of
the leases and other documents described in the immediately preceding sentence,
and accurate and complete copies of each such lease and other documents have
been provided to the Parent.
SECTION 3.14. Trademarks, Patents and Copyrights. Except as
set forth in Section 3.14 of the Disclosure Schedule, the Company and the
Subsidiaries own or possess adequate licenses or other valid rights to use all
material patents, patent rights, trademarks, trademark rights, trade names,
trade dress, trade name rights, copyrights, servicemarks, trade secrets,
applications for trademarks and for servicemarks, mask works, know-how and other
proprietary rights and information (collectively, "Proprietary Rights") used or
held for use in connection with the business of the Company and the Subsidiaries
as conducted since June 30, 1997, as currently conducted or as contemplated to
be conducted, and the Company is unaware of any assertion or claim challenging
the validity of any of such Proprietary Rights. Except as set forth in Section
3.14 of the Disclosure Schedule, the conduct of the business of the Company and
the Subsidiaries did not, does not and will not conflict in any way with any
Proprietary Rights of any third party that, individually or in the aggregate,
would have a Material Adverse Effect with respect to the Company. Except as set
forth in Section 3.14 of the Disclosure Schedule, there are no infringements of
any Proprietary Rights owned by or licensed by or to the Company or any
Subsidiary. Except as set forth in Section 3.14 of the Disclosure Schedule,
neither the Company nor any Subsidiary has licensed or otherwise permitted the
use by any third party of any Proprietary Rights.
SECTION 3.15. Taxes. The Company and the Subsidiaries have
filed all federal, state, local and foreign tax returns and reports (as defined
below) required to be filed by them and have paid and discharged all taxes (as
defined below) that have become due as of the date hereof, other than such
payments as are being contested in good faith by appropriate proceedings and
other than such payments as to which adequate reserves are set forth on the 1998
Balance Sheet. Neither the IRS nor any other taxing authority or agency,
domestic or foreign, is now asserting or, to the knowledge of the Company,
threatening to assert against the Company or any Subsidiary any deficiency or
claim for additional taxes or interest thereon or penalties in connection
therewith. To the knowledge of the Company's management, no tax return or
taxable period of the Company is under examination by any taxing authority, and
Company has not received written notice of any pending audit by any taxing
authority. Except as set forth on Schedule 3.15 of the Disclosure Schedule, the
Company is not a party to any agreement or contract which would result in
payment of any "excess parachute payment" within the meaning of Section 280G of
the Code. The Company has not been and is not a United States real property
holding company (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code). Neither
the Company nor any Subsidiary has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any federal, state, county, municipal or foreign income tax which is currently
in effect. The accruals and reserves for taxes reflected in the 1998 Balance
Sheet are adequate to cover all taxes accruable through such date (including
interest and penalties, if any, thereon) in accordance with GAAP. Neither the
Company nor any Subsidiary has made an election under Section 341(f) of the Code
or agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset owned by the Company or any of the Subsidiaries. For
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purposes of this Agreement, "taxes" shall mean all taxes or other like
assessments including, without limitation, income, withholding, gross receipts,
excise, real or personal property, asset, sales, use, license, payroll,
transaction, capital, net worth and franchise taxes imposed by or payable to any
federal, state, county, local or foreign government, taxing authority,
subdivision or agency thereof, including interest, penalties, additions to tax
or additional amounts thereto. For purposes of this Agreement, "tax return"
shall mean any report, return, declaration or other information required to be
supplied to a taxing authority in connection with taxes. The Transactions,
including the Offer and the Merger, will not cause any change in the taxes
payable by any Subsidiary of the Company.
SECTION 3.16. Environmental Matters. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i) "Hazardous
Substances" means (A) any asbestos or asbestos-containing material, petroleum
and petroleum products, including crude oil and any fractions thereof, natural
gas, natural gas liquids, synthetic gas, polychlorinated biphenyls or radon; (B)
any pollutant or contaminant; or (C) any substance with respect to which a
federal, state or local agency requires environmental investigation, monitoring,
reporting or remediation; and (ii) "Environmental Law" means any federal, state,
foreign, county or local law relating to (A) releases or threatened releases of
Hazardous Substances or materials containing Hazardous Substances; (B) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances; or (C)
otherwise relating to pollution of the environment or the protection of human
health.
(b) Except as described in Section 3.16 of the Disclosure
Schedule: (i) neither the Company or any of its Subsidiaries, nor any of their
operations, have violated any applicable Environmental Law; (ii) the Company and
each Subsidiary has all material permits and licenses required under any
applicable Environmental Law and is in compliance with all such permits and
licenses; (iii) the soils, surface and ground waters at the properties owned or
leased, currently or in the past, by the Company and each Subsidiary are not
contaminated with any Hazardous Substance; (iv) neither the Company nor any
Subsidiary has received any notice of violation of liability under any
Environmental Law which liability remains unresolved; (v) true, correct and
complete copies of all environmental surveys, reports, assessments and similar
materials which were prepared by or on behalf of the Company, any of its
Subsidiaries or any affiliate of either the Company or any Subsidiary, have been
made available to Parent; and (vi) neither the Company nor any Subsidiary has
contractually assumed any liability of any other person involving Hazardous
Substances or Environmental Laws. Any costs which occur or are reasonably likely
to occur relating to the matters reflected in Section 3.16 of the Disclosure
Schedule shall be borne by the Company and its Subsidiaries and, to the extent
such costs are in excess of $50,000, such excess shall be considered in
determining whether a Material Adverse Effect has occurred.
SECTION 3.17. Material Contracts. Each contract or agreement
to which the Company or any of the Subsidiaries is a party that is material to
the Company or any Subsidiary (a "Material Contract"), or that is between the
Company or any Subsidiary, on the one hand, and any director, officer or
affiliate of the Company, on the other hand (an "Affiliate Contract") is in full
force and effect and is enforceable against the parties thereto (including the
Company and
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the Subsidiaries) in accordance with its terms and no condition or state of
facts exists that, with notice or the passage of time, or both, would constitute
a material default by the Company or any Subsidiary or, to the knowledge of the
Company, any third party under such Material Contracts. The Company or the
applicable Subsidiary and, to the knowledge of the Company, any third party
thereto, has duly complied in all material respects with the provision of each
Material Contract to which it is a party. An accurate and complete list of each
Material Contract and each Affiliate Contract is set forth in Section 3.17 of
the Disclosure Schedule, and accurate and complete copies of each Material
Contract and each Affiliate Contract have been provided to the Parent. The term
Material Contract shall include any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation (or any series of related agreements,
lease, contracts, notes, mortgages, indentures, arrangements or other
obligations) entered into by the Company or any of its Subsidiaries (i) of a
nature which would be required to be included as an Exhibit in a registration
statement filed with the SEC under the Securities Act, pursuant to Item
601(b)(10) of Regulation S-K (other than this Agreement); (ii) which involves
the leasing or rental of any significant portion of the real property currently
utilized by the Company or any of the Subsidiaries; (iii) under which the
Company or any Subsidiary has incurred or may incur indebtedness for borrowed
money; (iv) under which the Company or any Subsidiary is leasing any equipment
or other tangible personal property; or (v) which requires the Company or any of
its Subsidiaries to expend funds in excess of $100,000 in any one-year period
and which is not terminable at will by the Company or its Subsidiary, other than
those which relate to the purchase of inventory by the Company or any of its
Subsidiary, each of which shall only be deemed a Material Contract in the event
that it requires the Company or any of its Subsidiaries to expend funds in
excess of $1,000,000 in any one-year period and which is not terminable at will
by the Company or its Subsidiary.
SECTION 3.18. Brokers and Counsel. No broker, finder or
investment banker (other than SG Cowen) is entitled to any brokerage, finder's
or other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct copy of all agreements among the
Company or any of its Subsidiaries, on the one hand, and SG Cowen (the "Broker
Agreement") or Stradling Yocca Carlson & Rauth on the other hand (the "Attorney
Engagement") pursuant to which such firms would be entitled to any payment
relating to the Transactions.
SECTION 3.19. Year 2000 Compliance. All computer software,
computerized systems, manufacturing equipment and other systems owned or used by
the Company or any Subsidiary, or licensed by the Company or any Subsidiary, as
licensor or as licensee, other than any shrinkwrap software available to retail
customers, and each product sold by the Company, is "Year 2000 Compliant" (as
hereinafter defined), except as disclosed in Section 3.19 of the Disclosure
Schedule. For purposes of this Agreement, "Year 2000 Compliant" shall mean (i)
all such software and systems shall operate in 4-digit year format and, in all
material respects, without errors in the recognition, calculation and processing
of date data relating to century recognition, leap years, single and
multi-century formulae, date values and interfaces of date-related
functionality's; (ii) all date processing shall be conducted in a four-digit
year format and all date sorting that includes a "year field" or "year category"
shall be based upon a four-digit
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year format; and (iii) any date arithmetic programs or calculators in the
software shall operate in all material respects in accordance with the related
user documentation in the Year 2000, and the years following, without degrading
functionality or performance. The Company and each Subsidiary have taken
appropriate steps to obtain assurances from customers, vendors, suppliers and
licensors as to their Year 2000 Compliance.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent
and warrant to the Company that:
SECTION 4.01. Corporate Organization. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the requisite
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would not,
individually or in the aggregate, have a material adverse effect on the business
or operations of Parent and Purchaser and their respective subsidiaries, taken
as a whole.
SECTION 4.02. Authority Relative to This Agreement. Each of
Parent and Purchaser has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Purchaser and the consummation by Parent and Purchaser of the
Transactions have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of Parent or Purchaser are
necessary to authorize this Agreement or to consummate the Transactions (other
than with respect to the Merger, the filing and recordation of the Certificate
of Merger as required by Delaware Law). This Agreement has been duly and validly
executed and delivered by Parent and Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Purchaser enforceable against each
of Parent and Purchaser in accordance with its terms.
SECTION 4.03. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Parent and Purchaser do not, and
the performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of Incorporation or Bylaws (or equivalent
documents) of either Parent or Purchaser, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Parent or Purchaser or
by which any property or asset of either of them is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of Parent
or Purchaser pursuant to, any note, bond, mortgage, indenture,
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contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or Purchaser is a party or by which Parent or
Purchaser or any property or asset of either of them is bound or subject.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange Act,
Blue Sky Laws and state takeover laws, the HSR Act and filing and recordation of
the Certificate of Merger as required by Delaware Law and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the Offer
or the Merger, or otherwise prevent Parent or Purchaser from performing their
respective obligations under this Agreement.
SECTION 4.04. Financing. Parent has, or has commitments to obtain,
sufficient funds to permit Purchaser to acquire all the outstanding Shares in
the Offer and the Merger, evidence of which has been provided to the Company.
SECTION 4.05. Offer Documents; Proxy Statement. The Offer
Documents will not, at the time the Offer Documents are filed with the SEC or
are first published, sent or given to shareholders of the Company, as the case
may be, 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 made therein, in the light of the circumstances under which they are
made, not misleading. The information supplied by Parent for inclusion in the
Proxy Statement and the information statement to be sent to the Company's
shareholders will not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to shareholders of the Company, at the time
of the Special Shareholders' Meeting, if applicable, and at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it is made, is false or misleading with respect to any material
fact, or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Special Shareholders' Meeting which shall
have become false or misleading. Notwithstanding the foregoing, Parent and
Purchaser make no representation or warranty with respect to any information
supplied by the Company or any of its representatives which is contained in any
of the foregoing documents or the Offer Documents. The Offer Documents shall
comply in all material respects as to form with the requirements of the Exchange
Act and the rules and regulations thereunder.
SECTION 4.06. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the
Merger. The Company covenants and agrees that, between the date of this
Agreement and the Effective Time, unless Parent shall otherwise agree in
writing, the businesses of the Company and the Subsidiaries shall be conducted
only in, and the Company and the Subsidiaries shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice; and the Company shall use its best efforts to preserve substantially
intact the business organization of the Company and the Subsidiaries, to keep
available the services of the current officers, employees and consultants of the
Company and the Subsidiaries and to preserve the current relationships of the
Company and the Subsidiaries with customers, suppliers and other persons with
which the Company or any Subsidiary has significant business relations. By way
of amplification and not limitation, except as contemplated by this Agreement or
by Section 5.01 of the Disclosure Schedule, neither the Company nor any
Subsidiary shall, between the date of this Agreement and the Effective Time,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Parent:
(a) amend or otherwise change its Articles of Incorporation or Bylaws
or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (i) any
shares of capital stock of any class of the Company or any Subsidiary, or
any options, warrants, convertible securities or other rights of any kind
to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of the
Company or any Subsidiary (except for the issuance of a maximum of 994,502
Shares issuable pursuant to stock options outstanding or any rights to
purchase Shares under the Company's 1995 Employee Stock Purchase Plan in
effect on the date hereof) or (ii) any material assets of the Company or
any Subsidiary, except for sales in the ordinary course of business and in
a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization or
any division thereof or any assets; (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, pledge in respect of or otherwise as an accommodation become
responsible
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for the obligations of any person, or make any loans or advances, except in
the ordinary course of business and consistent with past practice, but in
no event shall there be more than $1,000,000 of indebtedness outstanding at
any one time in addition to the total amount of indebtedness outstanding as
of the date of this Agreement; (iii) enter into any contract or agreement
which is outside of the ordinary course of business, consistent with past
practice, or which requires payments by the Company or the Subsidiaries in
an aggregate amount of more than U.S. $100,000, other than contracts or
agreements relating to the purchase of inventory by the Company or the
Subsidiaries in the ordinary course of business, which contracts or
agreements will not be subject to such $100,000 limitation; (iv) terminate,
cancel or permit any change in, or agree to any change in, any Material
Contract, except in the ordinary course of business consistent with past
practice; (v) terminate, cancel or permit any change in, or agree to any
change in, any Affiliate Agreement, Broker Agreement or Attorney
Engagement; (vi) other than the proposed capital expenditures described in
Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital
expenditure which is in excess of U.S. $100,000 or capital expenditures
which are, in the aggregate, in excess of U.S. $250,000 for the Company and
the Subsidiaries taken as a whole; or (vii) enter into or amend any
contract, agreement, commitment or arrangement with respect to any matter
set forth in this Section 5.01(e);
(f) increase the compensation payable or to become payable to its
directors, officers or employees, except for normal increases consistent
with past practices in salaries or wages of employees of the Company or any
Subsidiary who are not officers of the Company, or grant any severance or
termination pay to, or enter into any employment, severance, termination,
stay-bonus or similar agreement with, any director, officer or other
employee of the Company or any Subsidiary, or establish, adopt, enter into
or amend any collective bargaining, bonus, profit sharing, thrift,
compensation (including any sales compensation plan), stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee, or
communicate to employees, accrue any benefits under or otherwise implement
the Company's 1999 Executive Incentive Plan;
(g) take any action, other than (i) reasonable and usual actions in
the ordinary course of business and consistent with past practice or (ii)
as required by the SEC, with respect to accounting policies or procedures
(including, without limitation, procedures with respect to the payment of
accounts payable and collection of accounts receivable);
(h) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(i) pay, discharge or satisfy any material claim, liability or
obligation (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, of
liabilities reflected or reserved against in the 1998 Balance Sheet or
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subsequently incurred in the ordinary course of business and consistent
with past practice or incurred in connection with the Transactions; or
(j) announce an intention, enter into any formal or informal
agreement, or otherwise make a commitment, to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Special Shareholders' Meeting. The Company,
acting through the Board, shall, in accordance with applicable law and the
Company's Articles of Incorporation and Bylaws, unless not required under
applicable "short-form" merger provisions of Delaware Law, (i) duly call, give
notice of, convene and hold a special meeting of its shareholders as soon as
practicable following consummation of the Offer for the purpose of considering
and taking action on this Agreement and the transactions contemplated hereby
(the "Special Shareholders' Meeting") and (ii) subject to the provisions of
Sections 6.04 and 8.01 below, (A) include in the Proxy Statement the unanimous
recommendation of the Board that the shareholders of the Company approve and
adopt this Agreement and the Transactions, including, without limitation, the
Merger and (B) use its best efforts to obtain such approval and adoption. At the
Special Shareholders' Meeting (or by consent if a shareholders meeting is not
required), Parent and Purchaser shall cause all Shares then owned by them and
their subsidiaries to be voted in favor of the approval and adoption of this
Agreement and the Transactions, including, without limitation, the Merger.
SECTION 6.02. Proxy Statement. As soon as practicable
following consummation of the Offer, the Company shall file the Proxy Statement
with the SEC under the Exchange Act, unless not required under applicable
"short-form" merger provisions of Delaware Law, and shall use its best efforts
to have the Proxy Statement cleared by the SEC. Parent, Purchaser and the
Company shall cooperate with each other in the preparation of the Proxy
Statement, and the Company shall notify Parent promptly of the receipt of any
comments of the SEC with respect to the Proxy Statement and of any requests by
the SEC for any amendment or supplement thereto or for additional information
and shall provide to Parent promptly copies of all correspondence between the
Company or any representative of the Company and the SEC. The Company shall give
Parent and its counsel the opportunity to review the Proxy Statement prior to
its being filed with the SEC and shall give Parent and its counsel the
opportunity to review all amendments and supplements to the Proxy Statement and
all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC. Each of the Company,
Parent and Purchaser agrees to use its best efforts, after consultation with the
other parties hereto, to respond promptly to all such comments of and requests
by the SEC and to cause the Proxy Statement and all required amendments and
supplements thereto to be mailed to the holders of Shares entitled to vote at
the Special Shareholders' Meeting at the earliest practicable time.
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SECTION 6.03. Access to Information; Confidentiality. (a) From
the date hereof to the Effective Time, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and the Subsidiaries to, afford the officers, employees and agents of
Parent and Purchaser access at all reasonable times to the officers, employees,
agents, properties, offices, plants and other facilities, books and records of
the Company and each Subsidiary, shall instruct its independent auditors to make
available its accountants' work papers to the officers, employees and agents of
Parent and Purchaser, and shall furnish Parent and Purchaser with all financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request.
(b) All information obtained by Parent or Purchaser pursuant to this
Section 6.04 shall be kept confidential, by Purchaser, by Parent and by any
other party which is to be afforded access pursuant to Section 6.03(a), in
accordance with the confidentiality agreement, dated February 2, 1999, as
amended on February 3, 1999 (the "Confidentiality Agreement"), between Parent
and the Company.
SECTION 6.04. No Solicitation of Transactions. Neither the
Company nor any Subsidiary shall, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any person relating to any acquisition or purchase of
all or any material portion of the assets of, or any equity interest in (other
than pursuant to the exercise of options outstanding on the date hereof), the
Company or any Subsidiary or any merger, consolidation, business combination,
reorganization, recapitalization or similar transaction involving the Company or
any Subsidiary (each a "Competing Transaction") or participate in any
discussions or negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. The Company and each of its
Subsidiaries will cease and cause to be terminated any existing activities,
discussions or negotiations by or on its behalf with any other person conducted
heretofore with respect to any Competing Transaction and will promptly notify
Parent following receipt of any request by any person relating to any possible
Competing Transaction or information concerning the Company. The Company agrees
that it will not disclose any of the terms of this Agreement or the matters
referred to herein to any other prospective acquiror of the Company until the
Effective Time or earlier if this Agreement is terminated in accordance with its
terms, except to the extent such disclosure is contemplated by this Agreement or
is otherwise required by law or the regulations of the Nasdaq Stock Market.
Nothing contained in this Section 6.04 shall prohibit the Board from furnishing
information to, or entering into discussions or negotiations with, any person in
connection with an unsolicited (from the date of this Agreement) proposal
involving a fully-financed (as represented by such person) Competing Transaction
which is made in writing by such person and which, if consummated, would provide
consideration per Share to the shareholders of the Company in excess of the Per
Share Amount (a "Superior Proposal"), if, and only to the extent that, the Board
determines in good faith, based upon the advice of SG Cowen and the written
advice of Stradling Yocca Carlson & Rauth, that such action is required for the
Board to comply with its fiduciary duties to shareholders under Delaware Law.
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SECTION 6.05. Employee Benefits Matters; Employment Agreements. For a
period of one year from the Effective Time, Parent shall, or shall cause the
Company or the Surviving Corporation to, maintain the Plans (other than the
Stock Option Plans, the Company's 1995 Employee Stock Purchase Plan and the
Company's 1999 Key Employees Stock Ownership Plan) which the Company maintains
for the benefit of, or which are open to, a majority of the employees of the
Company on the terms in effect on the date hereof, or such other plans,
arrangements or programs as will provide employees with benefits that in the
aggregate are substantially equivalent to those provided under the Plans (other
than the Stock Option Plans, the Company's 1995 Employee Stock Purchase Plan and
the Company's 1999 Key Employees Stock Ownership Plan) as in effect on the date
hereof. In addition, Parent shall, or shall cause the Surviving Corporation to,
assume and agree to perform those agreements and policies listed in Schedule
6.05 of the Disclosure Schedule in the same manner and to the same extent that
the Company is required to perform such agreements and policies as of the date
hereof, and Parent shall not, and shall cause the Surviving Corporation to not,
withdraw or modify the obligations of Parent or the Surviving Corporation
thereunder, as the case may be, without obtaining the prior consent of the other
party or parties thereto, or the current beneficiaries thereof.
SECTION 6.06. Directors' and Officers' Indemnification and Insurance.
(a) The Articles of Incorporation and Bylaws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in Article VII of the Bylaws of the Company,
which provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would affect
adversely the rights thereunder of individuals who at the Effective Time were
directors, officers, employees, fiduciaries or agents of the Company, unless
such modification shall be required by law. Any determinations made pursuant to
Section 3 of Article VII of the Bylaws of the Company with respect to the
appropriateness of indemnification shall be made in good faith.
(b) The Company shall, to the extent permitted by Delaware Law,
indemnify and hold harmless, and, after the Effective Time, the Surviving
Corporation shall, to the extent permitted by Delaware Law, indemnify and hold
harmless, each present and former director, officer, employee, fiduciary and
agent of the Company and each Subsidiary (collectively, the "Indemnified
Parties") against all costs and expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and settlement amounts
paid in connection with any claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action or
omission in their capacity as an officer, director, employee, fiduciary or
agent, whether occurring before or after 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) the Company or the Surviving Corporation, as
the case may be, shall pay the reasonable fees and expenses of counsel selected
by the Indemnified Parties, which counsel shall be reasonably satisfactory to
the Company or the Surviving Corporation, promptly after statements therefor are
received and (ii) the Company and the Surviving Corporation shall cooperate in
the defense of any such matter; provided, however, that neither the Company nor
the Surviving Corporation shall be liable for any settlement effected without
its written consent (which consent shall not be
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unreasonably withheld); provided further that neither the Company nor the
Surviving Corporation shall be obligated pursuant to this Section 6.06(b) to pay
the fees and expenses of more than one counsel for all Indemnified Parties in
any single action except to the extent that two or more of such Indemnified
Parties shall have conflicting interests in the outcome of such action; and
provided further that, in the event that any claim for indemnification is
asserted or made within such six-year period, all rights to indemnification in
respect of such claim shall continue until the disposition of such claim.
(c) Prior to the Effective Time the Company shall, and
after the Effective Time the Surviving Corporation shall, make reasonable
advances to the Indemnified Parties to cover expenses for which such Indemnified
Parties would otherwise be entitled to indemnification pursuant to this Section
6.06, subject to receipt of an undertaking by the Indemnified Parties to
reimburse the Company for all such amounts advanced if it is subsequently
determined that the Company is not required to indemnify such Indemnified Party.
(d) The Surviving Corporation shall use its best efforts
to maintain in effect for six years from the Effective Time, if available, the
current directors' and officers' liability insurance policies maintained by the
Company (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which are
not materially less favorable) with respect to matters occurring on or prior to
the Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 6.06(d) more than an
amount per year equal to 150% of current annual premiums paid by the Company for
such insurance, which amount shall be increased by 5% for each year hereafter.
(e) In the event the Company or the Surviving Corporation
or any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the Company
or the Surviving Corporation, as the case may be, or at Parent's option, Parent,
shall assume the obligations set forth in this Section 6.06.
SECTION 6.07. Notification of Certain Matters. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which causes any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect and (ii) any
failure of the Company, Parent or Purchaser, as the case may be, to comply with
or satisfy any material covenant, condition or agreement to be complied with or
satisfied by it hereunder.
SECTION 6.08. Further Action; Reasonable Best Efforts. Upon
the terms and subject to the conditions hereof (including, without limitation,
Section 6.04), each of the parties hereto shall (i) make promptly its respective
filings, and thereafter make any other required submissions, under the HSR Act
with respect to the Transactions and (ii) use its reasonable best
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efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the Transactions,
including, without limitation, using its reasonable best efforts to obtain all
licenses, permits (including, without limitation, environmental permits),
consents, approvals, authorizations, qualifications and orders of governmental
authorities and parties to contracts with the Company and the Subsidiaries as
are necessary for the consummation of the Transactions and to fulfill the
conditions to the Offer and the Merger. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party to this
Agreement shall use their reasonable best efforts to take all such action.
SECTION 6.09. Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or any Transaction
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by law or any listing
agreement with a national securities exchange or The Nasdaq Stock Market to
which Parent or the Company is a party.
SECTION 6.10. Confidentiality Agreement. Upon the acceptance for
payment of Shares pursuant to the Offer, the Confidentiality Agreement shall be
deemed to have terminated without further action by the parties thereto.
SECTION 6.11 Financial Statements. As soon as they are made
available to senior management of the Company, the Company shall make available
to Parent copies of all internally generated monthly, quarterly and annual
financial statements, consisting of consolidated balance sheets, and statements
of income and of cash flows.
SECTION 6.12 SEC Reports. The Company shall timely file all
quarterly, annual and other reports and information required to be filed by it
with the SEC under the Exchange Act for all periods through and including the
Effective Time and, promptly after making such filing, shall provide Parent with
an accurate and complete copy thereof. The delivery to Parent of copies of any
such reports and information shall constitute a representation and warranty by
the Company to Parent that such report or information was prepared in accordance
with the requirements of the Exchange Act and did not, at the time it was filed,
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 made
therein, in light of the circumstances in which they were made, not misleading.
SECTION 6.13 Customer Calls. The Company shall, and shall
cause each of its Subsidiaries and the officers, directors, employees and agents
of the Company and its Subsidiaries to, participate with Parent in visiting and
communicating with customers of the Company and its Subsidiaries, as reasonably
requested by Parent prior to the Effective Time.
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to 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:
(a) Shareholder Approval. This Agreement and the Transactions,
including, without limitation, the Merger, shall have been approved and
adopted by the affirmative vote of the shareholders of the Company (unless
the vote of the shareholders is not required by Delaware Law);
(b) No Order. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making the acquisition of
Shares by Parent or Purchaser or any affiliate of either of them or the
consummation of the Merger illegal or otherwise restricting, preventing or
prohibiting consummation of the Transactions;
(c) Offer. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer; provided, however, that this condition shall only be applicable to
the obligations of Parent or Purchaser if Purchaser's failure to purchase
such Shares is not in breach of this Agreement or the terms of the Offer;
and
(d) HSR Act and Foreign Antitrust Laws. Any waiting period
(and any extension thereof) applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated, and consummation
of the Merger shall not result in a violation of any applicable material
foreign antitrust or competition law, rule or regulation.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the shareholders of the
Company:
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(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company; or
(b) By Parent, Purchaser or the Company if (i) the Effective
Time shall not have occurred on or before December 31, 1999; provided,
however, that the right to terminate this Agreement under this Section
8.01(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date or (ii) any
court of competent jurisdiction in the United States or other governmental
authority shall have issued an order, decree, ruling or taken any other
action restraining, enjoining or otherwise prohibiting the Offer or the
Merger and such order, decree, ruling or other action shall have become
final and nonappealable; or
(c) By Parent, upon approval of its Board of Directors, if (i)
due to an occurrence or circumstance that would result in a failure to
satisfy any condition set forth in Annex A hereto, Purchaser shall have (A)
failed to commence the Offer within 60 days following the date of this
Agreement, (B) terminated the Offer without having accepted any Shares for
payment thereunder or (C) failed to pay for Shares pursuant to the Offer
within 90 days following the commencement of the Offer; unless such action
or inaction under (A), (B) or (C) shall have been caused by or resulted
from the failure of Parent or Purchaser to perform in any material respect
any covenant or agreement of either of them contained in this Agreement or
the material breach by Parent or Purchaser of any representation or
warranty of either of them contained in this Agreement or (ii) prior to the
purchase of Shares pursuant to the Offer, the Board or any committee
thereof shall have publicly withdrawn or modified in a manner adverse to
Purchaser or Parent or, after receipt of a proposal involving a Competing
Transaction, upon the request of Parent, shall not have, within four
business days after receipt of Parent's request, publicly reaffirmed, its
approval or recommendation of the Offer, this Agreement, the Merger, the
Shareholder Agreements or any other Transaction, or shall have recommended
another merger, consolidation, business combination, recapitalization,
reorganization or similar transaction involving, or acquisition of, the
Company or its assets, or another tender offer or exchange offer for
Shares, or shall have resolved to do any of the foregoing; or
(d) By the Parent, upon approval of its Board of Directors, if
the Company shall have materially breached its obligations under Section
6.04 above; or
(e) By the Company, upon approval of the Board, if Parent or
Purchaser shall materially breach any of its obligations hereunder and
shall fail to cure such breach within ten days after written notice thereof
from the Company or if due to an occurrence or circumstance that would
result in a failure to satisfy any of the conditions set forth in Annex A
hereto, Purchaser shall have (A) failed to commence the Offer within 60
days following the date of this Agreement, (B) terminated the Offer without
having accepted any Shares for payment thereunder or (C) failed to pay for
Shares pursuant to the Offer within 90 days following the commencement of
the Offer, unless such action or inaction under (A), (B), and (C) shall
have been caused by or resulted from the failure of the
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Company to perform in any material respect any covenant or agreement of it
contained in this Agreement or the material breach by the Company of any
representation or warranty of it contained in this Agreement; or
(f) by the Company or Parent, prior to the purchase of Shares
pursuant to the Offer, if the Board, in full compliance with the
provisions of Section 6.04 above, shall have approved the execution by
the Company of a definitive agreement relating to a Superior Proposal.
SECTION 8.02. Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void, and there shall be no liability on the part of any party hereto,
except as set forth in Sections 8.03 and 9.01, and nothing herein shall relieve
any party from liability for any breach hereof.
SECTION 8.03. Fees and Expenses. (a) In the event that
(i) any person shall have commenced a tender or exchange offer
for 25% or more (or which, assuming the maximum amount of securities which
could be purchased, would result in any person beneficially owning 25% or
more) of the then outstanding Shares or otherwise publicly announced a
Competing Transaction for the direct or indirect acquisition of the Company
or all or substantially all of its assets and (w) the Board does not
recommend against the Competing Transaction, (x) the Offer shall have
remained open for at least 20 business days, (y) the Minimum Condition
shall not have been satisfied and (z) this Agreement shall have been
terminated pursuant to Section 8.01; or
(ii) this Agreement is terminated (x) pursuant to Section 8.01(c)(ii)
or (y) pursuant to Section 8.01(d) or (z) pursuant to Section 8.01(f);
then, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of U.S. $2,500,000 (the "Fee"), which amount shall be payable in
immediately available funds.
(b) Except as set forth above, all costs and expenses incurred in
connection with this Agreement and the Transactions shall be paid by the party
incurring such expenses, whether or not any Transaction is consummated.
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 the approval and adoption of this Agreement and the transactions
contemplated hereby by the shareholders of the Company, no amendment may be made
which would reduce the amount or change the type of consideration into which
each Share shall be converted upon consummation of the Merger. This Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.
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<PAGE> 37
SECTION 8.05. Waiver. At any time prior to the Effective Time,any
party hereto may (i) extend the time for the performance of any obligation or
other act of any other party hereto, (ii) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Articles II and IX and in Section 6.06 shall survive the Effective Time
indefinitely and those set forth in Section 8.03 and Article IX shall survive
termination indefinitely.
SECTION 9.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
facsimile, by United States express mail (postage prepaid, return receipt
requested) or by overnight courier guaranteeing next business day delivery to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
9.02):
if to Parent or Purchaser:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, President,
Chief Executive Officer and Chairman of the Board
Facsimile: (248) 853-2645
with a copy to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
32
<PAGE> 38
if to the Company:
Smartflex Systems, Inc.
14312 Franklin Avenue
Tustin, California 92781
Attention: William Healey, President,
Chief Executive Officer and Chairman of the Board
Facsimile: (714) 838-3130
with a copy to:
Stradling Yocca Carson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
SECTION 9.03. Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any Shares;
(c) "business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power
33
<PAGE> 39
to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation, a
"person" as defined in Section 13(d)(3) of the Exchange Act), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government; and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled by
such person, directly or indirectly, through one or more intermediaries.
SECTION 9.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05. Entire Agreement, Assignment. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes, except as set forth in Sections 6.03(b) and 6.10,
all prior agreements and undertakings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof; provided, however,
the third full paragraph of page 3 of the Confidentiality Agreement shall not be
deemed to reduce or modify the Company's obligations with respect to any
representation or warranty made pursuant to this Agreement. This Agreement shall
not be assigned by operation of law or otherwise, except that Parent and
Purchaser may assign all or any of their rights and obligations hereunder to any
affiliate of Parent provided that no such assignment shall relieve the assigning
party of its obligations hereunder if such assignee does not perform such
obligations.
SECTION 9.06. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, 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 6.06 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.07. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
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<PAGE> 40
SECTION 9.08. Governing Law. The Merger and the rights of the
shareholders of the Company, this Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws.
SECTION 9.09. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.10. Counterparts; Facsimile. This Agreement may be
executed in one or more counterparts (including by facsimile signature), each of
which shall be an original and all of which, when taken together, shall be one
and the same agreement.
35
<PAGE> 41
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SATURN ELECTRONICS &
ENGINEERING, INC.
Attest:
/s/ Jereen G. Trudell By: /s/ W. Tsuha
- ---------------------------------- ------------------------------------
Name: Jereen G. Trudell Name: Wallace K. Tsuha, Jr.
Title: President, Chief Executive
Officer and Chairman of the
Board
SSI ACQUISITION CORP.
Attest:
/s/ Jereen G. Trudell By: /s/ W. Tsuha
- ---------------------------------- ------------------------------------
Name: Jereen G. Trudell Name: Wallace K. Tsuha, Jr.
Title: President, Chief Executive
Officer and Chairman of the
Board
SMARTFLEX SYSTEMS, INC.
Attest:
/s/ John Hohener By: /s/ William L. Healey
- ---------------------------------- ------------------------------------
Name: John Hohener Name: William L. Healey
Title: President
36
<PAGE> 42
ANNEX A
Conditions to the Offer
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied, (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer,
(iii) acceptance for payment of and payment for Shares tendered would result in
a violation of any applicable material foreign antitrust or competition law,
rule or regulation, or (iv) at any time on or after the date of this Agreement,
and prior to the acceptance for payment of Shares, any of the following
conditions shall exist:
(a) there shall have been entered any order, preliminary or
permanent injunction, decree, judgment or ruling in any action or
proceeding before any court or governmental, administrative or regulatory
authority or agency, which makes illegal or otherwise directly or
indirectly restrains or prohibits or makes materially more costly the
making of the Offer, the acceptance for payment of, or payment for, any
Shares by Parent, Purchaser or any other affiliate of Parent, or the
consummation of any other Transaction;
(b) there shall have occurred any Material Adverse Effect with
respect to the Company;
(c) (i) the Board or any committee thereof (x) shall have
publicly withdrawn or modified in a manner adverse to Parent or Purchaser
the approval or recommendation of the Offer, the Merger, the Shareholder
Agreements or the Agreement, (y) after the Company's receipt of a proposal
involving a Competing Transaction, shall have failed to reaffirm such
approval or recommendation upon request by Parent within four business days
after the Company's receipt of Parent's request or (z) shall have approved
or recommended any takeover proposal or any other acquisition of Shares
other than the Offer and the Merger, or (ii) the Board or any committee
thereof shall have resolved to do any of the foregoing;
(d) there shall have been any breach of warranty by, the
Company in the Agreement as a result of which, individually or in the
aggregate, there is, or may reasonably be expected to occur a Material
Adverse Effect with respect to the Company;
(e) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under the Agreement;
37
<PAGE> 43
(f) the Agreement shall have been terminated in accordance with its
terms; or
(g) Purchaser and the Company shall have agreed (i) that Purchaser
shall terminate the Offer or (ii) that Purchaser shall postpone the
acceptance for payment of or payment for Shares thereunder which, in the
sole judgment of Purchaser, in any such case, and regardless of the
circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
38
<PAGE> 44
SCHEDULE I
William Healey
William Bendush
Alan King
William Klein
Gary Liebl
Anthony Richardson
John Hohener
Richard Bell
James Cogan
Christopher Rollison
Cheryl Moreno
39
<PAGE> 1
EXHIBIT 99(c)(2)
SMARTFLEX SYSTEMS, INC.
14312 FRANKLIN AVENUE
TUSTIN, CALIFORNIA 92781-2085
February 3, 1999
Steve Fogolini
Director of New Business Development
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Dear Steve:
We have your fax of February 2, 1999 with which you forwarded the
Confidentiality Agreement executed by you on behalf of Saturn. This letter will
supplement the Confidentiality Agreement, which I have signed and am returning
to you with this letter. The enclosed signed counterpart of the Confidentiality
Agreement is subject to your concurrence with the supplemental provision set
forth below, which will be deemed to be added to the Confidentiality Agreement
as if set forth therein:
Each party agrees that, for a period of two (2) years from the
date of this agreement, unless such shall have been specifically
invited in writing by the other party, neither it nor its respective
affiliates (as such term is defined under the Securities Exchange Act
of 1934, as amended (the "1934 Act")) or representatives will, in any
manner, directly or indirectly, (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in
or in any way assist any other person to effect or seek, offer or
propose (whether publicly or otherwise) to effect or participate in (i)
any acquisition of any securities (or beneficial ownership thereof) or
assets of the other or any of the other's subsidiaries; (ii) any tender
or exchange offer, merger or other business combination involving the
other or any of the other's subsidiaries; (iii) any recapitalization,
restructuring, liquidation, dissolution or other extraordinary
transaction with respect to the other or any of the other's
subsidiaries; or (iv) any "solicitation" of "proxies" (as such terms
are used in the proxy rules of the Securities and Exchange Commission)
or consents to vote any voting securities of the other; (b) form, join
or in any way participate in a "group" (as defined under the 1934 Act);
(c) otherwise act, alone or in concert with others, to seek to control
or influence the management, Board of Directors or policies of the
other; (d) take any action which might force the other to make a public
announcement regarding any of the types of matters set forth in (a)
above; or (e) enter into any discussions or arrangements with any third
party with respect to any of the foregoing. Each party also agrees
during such period not to request the other (or its directors,
officers, employees or agents), directly or indirectly, to amend or
waive any provision of this paragraph (including this sentence).
<PAGE> 2
February 3, 1999
Page 2
If you agree, please sign a copy of this letter and return it to me, at
which point the Confidentiality Agreement will be fully effective.
Very truly yours,
SMARTFLEX SYSTEMS, INC.
/s/ William L. Healey
William L. Healey,
Chairman, President and CEO
SATURN ELECTRONICS & ENGINEERING, INC.
By: /s/ Steve Fogolini
-------------------------------------
Steve Fogolini,
Director of New Business Development
<PAGE> 3
Bill Healey
Smartflex Systems Inc.
FAX 714-838-3130
February 2, 1999
Attn.: Bill Healey
RE: Confidentiality Agreement
Dear : Bill
In connection with the evaluation of a possible transaction involving
Smartflex Systems Inc. (the "Company") and Saturn Electronics & Engineering,
Inc. ("Saturn"), the Company and Saturn are prepared to furnish to each other
certain confidential and proprietary records and information regarding their
respective businesses. All such records and information, including, but not
limited to, all information or documentation developed, created or acquired by
the receiving party, are hereinafter collectively referred to as "Confidential
Information."
Each party acknowledges and agrees that it is imperative that all
Confidential Information remain confidential. Accordingly, by signing below,
each party agrees to be bound by the terms of this agreement. To maintain the
confidentiality of the Confidential Information, each party agrees:
(1) Not to use or allow the use for any purpose of any Confidential
Information or notes, summaries or other material derived by the receiving party
from the Confidential Information, except to determine whether the parties
desire to enter into a transaction.
(2) Not to disclose or allow disclosure to others of any Confidential
Information or memoranda, notes and other writings prepared by the receiving
party based thereon, except to such persons necessary to enable the receiving
party to determine whether the parties desire to enter into a transaction (it
being understood that such persons who need to know such information for the
purpose of such determination shall be informed by the receiving party of the
confidential nature of such information, shall be directed by the receiving
party to treat such information confidentially and shall be informed that by
receiving such information they are agreeing to be bound by this agreement);
(3) Except copies to such persons necessary to carry out the purpose
stated in (1) above, not to make or allow to be made copies of any Confidential
Information except as the other party may specifically authorize in writing; and
<PAGE> 4
(4)Not to disclose or allow disclosure to persons that the Confidential
Information has been made available to the receiving party, or that the
receiving party has reviewed any Confidential Information, or that the Company
and Saturn may be considering a transaction or have had, are having or propose
to have any discussions with respect thereto.
For purposes of this agreement, the term "Confidential Information"
shall not include information which (a) becomes generally available to the
public other than as a result of a disclosure by the receiving party, (b) was
available to the receiving party on a non-confidential basis prior to its
disclosure to the receiving party by the other party, or (c) becomes available
to the receiving party on a non-confidential basis from a source other than the
other party when such source is entitled to make the disclosure to the receiving
party.
Either party may elect at any time to terminate further access by the
receiving party to Confidential Information. In such event, or in the event a
transaction is not effected between the Company and Saturn, each party agrees to
promptly upon the request of the other party return all Confidential Information
and to destroy all memoranda, notes and other writings prepared by the receiving
party based thereon. The obligation of the parties to maintain the
confidentiality of the Confidential Information, and to not use the Confidential
Information except as provided in this agreement, shall continue for a period of
two (2) years from the date of this agreement except with regard to any
Confidential Information that, after the date hereof, through no action on the
part of the receiving party, becomes generally available to the public.
Each party further agrees that, without the other party's prior written
consent, that party will not, for a period of eighteen (18) months from the date
hereof, directly or indirectly solicit for employment or employ any person who
is now employed by the other party in an executive or management level position
or otherwise considered a key employee; provided, however, that neither party
shall be prohibited from employing any person who (a) contacts the party on his
or her own initiative, or (b) responds to general advertisement or general
recruiting efforts.
In the event that the receiving party shall be legally compelled to
disclose any Confidential Information or to report any information contained in
any Confidential Information, the receiving party agrees to provide the other
party with prompt written notice of such request or requirement. The other party
may then protest any such disclosure, seek an appropriate protective order,
waive the receiving party's compliance with the provisions of this agreement, or
a combination of the foregoing. It is further agreed that after the provision of
such prompt written notice, if, absent a protective order or the receipt of a
waiver hereunder, the receiving party is in the written opinion of counsel,
compelled to disclose or report information concerning the other party, the
receiving party may disclose or report such information without liability
hereunder; provided, however, that the receiving party shall give the other
party advance written notice of the information to be disclosed or reported.
It is further understood and agreed that no failure or delay by either
party in exercising any rights, powers or privileges hereunder shall operate as
a waiver hereof, nor shall any single or partial exercise of any rights, powers
or privileges preclude any other or further exercise thereof or the exercise of
any right, power or privilege hereunder. Each party agrees that money damages
would not be a sufficient remedy for any breach of this agreement by the other
party,
2
<PAGE> 5
and that in addition to all other remedies either party shall be entitled to
specific performance and injunctive or other equitable relief as a remedy for
any such breach.
This agreement shall be governed by and construed in accordance with
the laws of the State of Michigan. This agreement may be amended or modified
only by a written amendment duly executed by the parties. This agreement will
have a term commencing on the date of this letter and ending two (2) years from
the date of this letter.
If you are in agreement with the foregoing, please sign and return one
copy of this letter which shall constitute our agreement with respect to the
subject matter of this letter.
Very truly yours,
SATURN ELECTRONICS & ENGINEERING, INC.
By /s/ Steve Fogolini
--------------------------------------------------------
Steve Fogolini, Director of New Business Development
ACCEPTED AND AGREED THIS 2 DAY OF Feb , 1999:
By /s/ William L. Healey
---------------------------------------------------------
President, Smartflex Systems Inc.
3
<PAGE> 1
EXHIBIT 99(c)(3)
STOCK TENDER AND VOTING AGREEMENT
STOCK TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of July
6, 1999 by and among William L. Healey ("Stockholder"), Saturn Electronics &
Engineering, Inc., a Michigan corporation ("Saturn"), and SSI Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Saturn ("Merger Sub").
RECITALS
A. Concurrently herewith Saturn, Merger Sub and Smartflex Systems,
Inc., a Delaware corporation ("Smartflex"), are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which
Merger Sub agrees to make a tender offer (the "Offer") for all of the
outstanding shares of common stock, $.0025 par value (the "Common Stock") of
Smartflex, at a price of $10.50 per share (the "Offer Price"), in cash,
following which Smartflex will be merged with and into Merger Sub, with
Smartflex as the Surviving Corporation (the "Merger").
B. Stockholder beneficially owns (as defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as
of the date hereof, 250,379 shares of Common Stock (the "Existing Shares",
together with any shares of Common Stock beneficial ownership of which is
acquired by Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares").
C. As a condition to their willingness to enter into the Merger
Agreement, Saturn and Merger Sub have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
D. Saturn and Merger Sub have entered into the Merger Agreement in
reliance on Stockholder's representations, warranties, covenants and agreement
hereunder.
THEREFORE, the parties agree as follows:
1. Agreement to Tender and Vote; Irrevocable Proxy.
1.1 Tender. Stockholder agrees to validly tender all Shares
beneficially owned by it pursuant to the Offer within ten business days
of commencement of the Offer, and not withdraw any such Shares, except
to the extent that the tender of shares (including Shares acquired
after the date hereof) pursuant to the Offer would subject Stockholder
to liability under Section 16(b) of the Exchange Act.
1.2 Voting. Stockholder hereby agrees that, during the time
this Agreement is in effect, at any meeting of the stockholders of
Smartflex, however called, and in any action by consent of the
stockholders of Smartflex, Stockholder will: (a) vote all Shares
beneficially owned by it in favor of the Merger; (b) vote all Shares
beneficially owned by it against any action or agreement that would
result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the
Merger Agreement; (c) vote all Shares beneficially owned by it against
<PAGE> 2
any action or agreement that would impede, interfere with, delay,
postpone or attempt to discourage, the Merger or the Offer including,
but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but
not limited to, a merger, other business combination, reorganization,
consolidation, recapitalization, dissolution or liquidation involving
Smartflex, (ii) a sale or transfer of a material amount of assets of
Smartflex or any of its subsidiaries, (iii) any change in the board of
directors of Smartflex, (iv) any material change in the capitalization
of Smartflex, (v) any change in the charter, by-laws or other
organizational or constitutive documents of Smartflex, or (vi) any
other material change in the corporate structure or business of
Smartflex; and (d) without limiting the foregoing, consult with Saturn
and vote all Shares beneficially owned by it in such manner as is
determined by Saturn to be in compliance with the provisions of this
Section 1.2. Stockholder acknowledges receipt and review of a copy of
the Merger Agreement. Notwithstanding the foregoing, Stockholder may
take any action in his or her role as a director or officer of
Smartflex as permitted under Sections 6.04 and 8.01(e) of the Merger
Agreement. This Agreement is intended to bind Stockholder only with
respect to the specific matters set forth herein and shall not prohibit
the Stockholder from acting in accordance with his or her fiduciary
duties to Smartflex.
1.3. Irrevocable Proxy. Contemporaneously with the execution
of this Agreement: (i) Stockholder will deliver to Saturn a proxy in
the form attached hereto as Exhibit A, which will be irrevocable to the
fullest extent permitted by law (the "Proxy"), with respect to all
Shares owned of record by Stockholder; and (ii) Stockholder will cause
to be delivered to Saturn additional Proxies executed on behalf of each
record owner of any Shares owned beneficially (but not owned of record)
by Stockholder.
2. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Saturn and Merger Sub as follows:
2.1 Ownership of Shares. On the date hereof the Existing
Shares are all of the Shares currently beneficially owned by Stockholder. On the
Closing Date, the Shares will constitute all of the shares of Common Stock owned
beneficially by Stockholder. Stockholder does not have any rights to acquire any
additional shares of Common Stock other than pursuant to options issued under
the Stock Option Plans (as defined in the Merger Agreement), Stockholder
currently has with respect to the Existing Shares, and at Closing will have with
respect to the Shares, good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by this Agreement and other than restrictions on transfer
under applicable, Federal and State securities laws).
2.2 Power; Binding Agreement. Stockholder has the full legal
capacity, right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution and delivery of
this Agreement by Stockholder will not violate any agreement, contract or
arrangement to which Stockholder is a party or is bound, including, without
limitation, any voting agreement, stockholders agreement or voting trust. This
Agreement has been duly executed and delivered by Stockholder and constitutes a
legal, valid and binding agreement of Stockholder, enforceable in accordance
with its terms. Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the
2
<PAGE> 3
transactions contemplated hereby will (a) other than filings required under the
federal or state securities laws, require any consent or approval of or filing
with any Governmental or other regulatory body, or (b) constitute a violation
of, conflict with or constitute, a default under (i) any law, rule or regulation
applicable to Stockholder, or (ii) any order, judgment or decree by which
Stockholder is bound.
2.3. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby exclusive of any commission or finder's
fees referred to in the Merger Agreement.
3. Representations and Warranties of Saturn and Merger Sub. Saturn and
Merger Sub, jointly and severally, represent and warrant to Stockholder as
follows:
3.1 Authority. Each of Saturn and Merger Sub has full legal
right, power and authority to enter into and perform all of its obligations
under this Agreement. The execution and delivery of this Agreement by Saturn and
Merger Sub will not violate the charter, bylaws or other organizational or
constitutive documents of Saturn or Merger Sub, or any other agreement, contract
or arrangement to which Saturn or Merger Sub is a party or is bound. This
Agreement has been duly executed and delivered by each of Saturn and Merger Sub
and constitutes a legal, valid and binding agreement of Saturn and Merger Sub,
enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Saturn or Merger Sub of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, or (b) constitute a violation of,
conflict with or constitute a default under (i) any law, rule or regulation
applicable to Saturn or Merger Sub, or (ii) any order, judgment or decree to
which Saturn or Merger Sub is bound.
3.2. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fee from Saturn or Merger Sub in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission or
finder's fees referred to in the Merger Agreement.
4. Termination. This Agreement (other than the provisions of Sections
5, 6 and 19 which will survive any termination of this Agreement), will
terminate on the earliest to occur of (a) the date on which Merger Sub accepts
for payment the Shares tendered in the Offer, so long as the Shares are so
tendered and not withdrawn, (b) the Effective Time (as defined in the Merger
Agreement), and (c) simultaneously with the termination of the Merger Agreement
in accordance with its terms.
5. Expenses. Except as provided in Section 19, each party hereto will
pay all of its expenses in connection with the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of its counsel
and other advisers. The provisions of this Section 5 will survive the Closing
hereunder.
6. Confidentiality. Stockholder recognizes that successful consummation
of the transactions contemplated by this Agreement may be dependent upon
confidentiality with respect to these matters. In this connection, pending
public disclosure, Stockholder agrees that it will not disclose or discuss these
matters with anyone (other than officers, directors, legal
3
<PAGE> 4
counsel and advisors of Stockholder or Smartflex, if any) not a party to this
Agreement, without prior written consent of Saturn, except as provided herein or
in the Merger Agreement and except for filings required pursuant to the Exchange
Act, and the rules and regulations thereunder or disclosures Stockholder's legal
counsel advises in writing are necessary in order to fulfill Stockholder's
obligations imposed by law, in which event Stockholder will give prompt prior
notice of such disclosure to Saturn and cooperate with Saturn in obtaining a
protective order or in limiting such disclosure.
7. Certain Covenants of Stockholder.
7.1 Except in accordance with the provisions of this
Agreement, Stockholder agrees, while this Agreement is in effect, not to,
directly or indirectly:
(a) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a voting
trust or enter into a voting agreement with respect to any Shares; or
(c) solicit, initiate or encourage the submission of any
proposal or offer from any person (other than Saturn or Merger Sub) relating to
any acquisition or purchase of all or any material portion of the assets of, or
any equity interest in (other than pursuant to the exercise of options
outstanding on the date hereof), Smartflex or any subsidiary of Smartflex, or
any merger, consolidation, business combination, reorganization,
recapitalization or similar transaction involving Smartflex or any subsidiary of
Smartflex (each a "Competing Transaction"), or participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise, cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any person (other than
Saturn and Merger Sub) to do or seek any of the foregoing, Stockholder will
cease and cause to be terminated any existing activities, discussions or
negotiations by or on its behalf with any person (other than Saturn and Merger
Sub) conducted heretofore with respect to any Competing Transaction and will
promptly notify Saturn following receipt of any request by any person (other
than Saturn or Merger Sub) relating to any possible Competing Transaction or
information concerning Smartflex. Nothing contained herein will prohibit
Stockholder, solely in his capacity as an officer or as a member of the board of
directors of Smartflex (the "Board"), from furnishing information to, or
entering into discussions or negotiations with, any person (other than Saturn
and Merger Sub) in connection with an unsolicited proposal involving a
fully-financed (as represented by such person) Competing Transaction which is
made in writing by such person (other than Saturn and Merger Sub) and which, if
consummated, would provide consideration per share, of Common Stock to the
stockholders of Smartflex in excess of the Offer Price if, and only to the
extent that, the Board determines in good faith, based upon the advice of SG
Cowen Securities Corporation and the written advice of Stradling Yocca Carlson &
Rauth, that such action is required for the Board to comply with its fiduciary
duties to stockholders under Delaware law.
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<PAGE> 5
7.2 Stockholder agrees, while this Agreement is in effect, to
notify Saturn promptly of the number of any shares of Common Stock beneficial
ownership of which is acquired by Stockholder after the date hereof.
8. Legend and Stop Transfer Instructions. Immediately after the
execution of this Agreement (and from time to time prior to the termination of
this Agreement), Stockholder will cause Smartflex to provide for each
certificate representing Shares beneficially owned by Stockholder to bear a
legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE STOCK TENDER
AND VOTING AGREEMENT AND ARE SUBJECT TO THE IRREVOCABLE PROXY
REFERRED TO THEREIN, EACH DATED AS OF JULY 6, 1999, AS SUCH
AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AND COPIES OF
WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), Stockholder will cause Smartflex to
require the transfer agent for its Common Stock to make a notation in its
records prohibiting the transfer of any of the Shares, except in accordance with
the terms and conditions of this Agreement.
9. Survival of Representation and Warranties. Except as expressly set
forth herein, none of the representations, warranties, covenants and agreements
made by Stockholder, Saturn or Merger Sub in this Agreement will survive the
Closing hereunder.
10. Notices. All notices or other communication required or permitted
hereunder will be in writing, will be given by hand delivery, U.S. Express Mail
(return receipt requested), overnight courier guaranteeing next business day
delivery, or facsimile, and will be deemed duly given when received, addressed
as follows,
If to Saturn or Merger Sub:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, Jr., President,
Chief Executive Officer and Chairman of the Board
Facsimile: (248) 853-2645
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<PAGE> 6
With copies to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Stockholder:
William L. Healey
27682 Pinestrap Circle
Laguna Hills, California 92653
Facsimile: (949) 831-6656
With copies to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
11. Entire Agreement; Amendment. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the party against
whom such modification, amendment, alteration or supplement is sought to be
enforced.
12. Assigns. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and
personal representatives, but neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign any or all of its rights and obligations hereunder to Saturn or any
direct or indirect wholly-owned subsidiary of Saturn without the consent of
Stockholder or Company, but no such transfer will relieve Merger Sub of its
obligations under this Agreement if such subsidiary does not perform the
obligations of Merger Sub hereunder.
13. Governing Law; Jurisdiction; and Consent to Service. Except as
expressly set forth below, this Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In addition, each of Stockholder, Merger Sub and Saturn hereby agrees that any
dispute arising out of this Agreement will be heard in the United States
<PAGE> 7
District Court for the Central District of California and, in connection
therewith, each party to this Agreement hereby consents to the jurisdiction of
such courts and agrees that any service of process in connection with any
dispute arising out of this Agreement or the Merger may be given to any other
party hereto by certified mail, return receipt requested, at the respective
addresses set forth in Section 10 above.
14. Injunctive Relief. The parties agree that in the event of a breach
of any provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party will be entitled
to obtain in any court of competent jurisdiction a decree of specific
performance or to enjoin the continuing breach of such provision, in each case
without the requirement that a bond be posted, as well as to obtain damages for
breach of this Agreement. By seeking or obtaining such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
15. Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts (including by facsimile signature), each of which
will be deemed to be an original and all of which together will constitute one
and the same document.
16. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision will be interpreted
to be only so broad as is enforceable.
17. Further Assurances. Each party hereto will execute and deliver such
additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. Third Party Beneficiaries. Nothing in this Agreement, expressed or
implied, will be construed to give any person other than the parties hereto any
legal or equitable right, remedy or claim under or by reason of this Agreement
or any provision contained herein.
19. Legal Expenses. In the event any legal proceeding is commenced by
any party to this Agreement to enforce or recover damages for any breach of the
provisions hereof, the prevailing party in such legal proceeding will be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees. The provisions of this Section
19 will survive the Closing hereunder.
20. Amendment and Modification. This Agreement may be amended, modified
and supplemented only by a written document executed by Saturn, Merger Sub and
Stockholder.
[Remainder of page intentionally left blank.]
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<PAGE> 8
IN WITNESS WHEREOF, Saturn and Merger Sub have caused this Agreement to
be executed by their duly authorized officers, and Stockholder has duly executed
this Agreement, as of the date and year first above written.
"SATURN"
SATURN ELECTRONICS &
ENGINEERING, INC.
By: /s/ W. Tsuha
---------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President,
Chief Executive Officer and
Chairman of the Board
"MERGER SUB"
SSI ACQUISITION CORP.
By: /s/ W. Tsuha
----------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President
"STOCKHOLDER"
/s/ William L. Healey
---------------------------------------
Name: William L. Healey
8
<PAGE> 9
EXHIBIT A
Form Of Irrevocable Proxy
The undersigned stockholder of Smartflex Systems, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Wallace K. Tsuha, Jr., Jereen Trudell and
Saturn Electronics & Engineering, Inc. ("Saturn"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the issued and outstanding shares of capital stock of Smartflex owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy and (ii) any and all other shares of
capital stock of Smartflex which the undersigned may acquire after the date
hereof (the shares of the capital stock of Smartflex referred to in (clauses (i)
and (ii) of the immediately preceding sentence are collectively referred to as
the "Shares"). Upon the execution hereof all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with a Stock Tender and Voting Agreement, dated as of the date
hereof, among Saturn, SSI Acquisition Corp. and the undersigned (the "Stock
Tender Agreement"), and is granted in consideration of Saturn entering into the
Agreement and Plan of Merger, dated as of the date hereof, among Saturn, SSI
Acquisition Corp. and Smartflex (the "Merger Agreement"). Capitalized terms used
but not otherwise defined in this proxy have the meanings ascribed to such terms
in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the earlier to occur
of the valid termination of the Merger Agreement pursuant to Section 8.01
thereof or the Effective Time at any meeting of the stockholders of Smartflex,
however called, or in any written action by consent of stockholders of
Smartflex: (a) in favor of the Merger; (b) against any action or agreement that
would result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the Merger
Agreement; or (c) against any action or agreement that would impede, interfere
with, delay, postpone, or attempt to discourage the Merger or the Offer
including, but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but not
limited to, a merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a sale or
transfer of a material amount of assets of Smartflex or any of its subsidiaries,
(iii) any change in the board of directors of Smartflex, (iv) any material
change in the capitalization of Smartflex, (v) any change in the charter,
by-laws or other organizational or constitutive documents of Smartflex, or (v)
any other material change in the corporate structure or business of Smartflex.
This proxy will be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Shares).
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<PAGE> 10
Any term or provision of this proxy which is invalid or unenforceable,
in any jurisdiction will, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this proxy or affecting the
validity or enforceability of any of the terms or provisions of this proxy in
any other jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.
This proxy will terminate immediately upon the earlier of the valid
termination of the Merger Agreement pursuant to Section 8.01 thereof or the
Effective Time.
Dated: July 6, 1999
- ---------------------------
Name: William L. Healey
Number of shares of Common Stock owned of record as of the date of this
proxy: 164,879
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<PAGE> 1
EXHIBIT 99(c)(4)
STOCK TENDER AND VOTING AGREEMENT
STOCK TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of July
6, 1999 by and among William E. Bendush ("Stockholder"), Saturn Electronics &
Engineering, Inc., a Michigan corporation ("Saturn"), and SSI Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Saturn ("Merger Sub").
RECITALS
A. Concurrently herewith Saturn, Merger Sub and Smartflex Systems,
Inc., a Delaware corporation ("Smartflex"), are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which
Merger Sub agrees to make a tender offer (the "Offer") for all of the
outstanding shares of common stock, $.0025 par value (the "Common Stock") of
Smartflex, at a price of $10.50 per share (the "Offer Price"), in cash,
following which Smartflex will be merged with and into Merger Sub, with
Smartflex as the Surviving Corporation (the "Merger").
B. Stockholder beneficially owns (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), as of the date hereof, 17,875 shares of Common Stock (the "Existing
Shares", together with any shares of Common Stock beneficial ownership of which
is acquired by Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares").
C. As a condition to their willingness to enter into the Merger
Agreement, Saturn and Merger Sub have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
D. Saturn and Merger Sub have entered into the Merger Agreement in
reliance on Stockholder's representations, warranties, covenants and agreement
hereunder.
THEREFORE, the parties agree as follows:
1. Agreement to Tender and Vote; Irrevocable Proxy.
1.1 Tender. Stockholder agrees to validly tender all Shares
beneficially owned by it pursuant to the Offer within ten business days
of commencement of the Offer, and not withdraw any such Shares, except
to the extent that the tender of shares (including Shares acquired
after the date hereof) pursuant to the Offer would subject Stockholder
to liability under Section 16(b) of the Exchange Act.
1.2 Voting. Stockholder hereby agrees that, during the time this
Agreement is in effect, at any meeting of the stockholders of
Smartflex, however called, and in any action by consent of the
stockholders of Smartflex, Stockholder will: (a) vote all Shares
beneficially owned by it in favor of the Merger; (b) vote all Shares
beneficially owned by it against any action or agreement that would
result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the
Merger Agreement; (c) vote all Shares beneficially owned by it against
<PAGE> 2
any action or agreement that would impede, interfere with, delay,
postpone or attempt to discourage, the Merger or the Offer including,
but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but
not limited to, a merger, other business combination, reorganization,
consolidation, recapitalization, dissolution or liquidation involving
Smartflex, (ii) a sale or transfer of a material amount of assets of
Smartflex or any of its subsidiaries, (iii) any change in the board of
directors of Smartflex, (iv) any material change in the capitalization
of Smartflex, (v) any change in the charter, by-laws or other
organizational or constitutive documents of Smartflex, or (vi) any
other material change in the corporate structure or business of
Smartflex; and (d) without limiting the foregoing, consult with Saturn
and vote all Shares beneficially owned by it in such manner as is
determined by Saturn to be in compliance with the provisions of this
Section 1.2. Stockholder acknowledges receipt and review of a copy of
the Merger Agreement. Notwithstanding the foregoing, Stockholder may
take any action in his or her role as a director or officer of
Smartflex as permitted under Sections 6.04 and 8.01(e) of the Merger
Agreement. This Agreement is intended to bind Stockholder only with
respect to the specific matters set forth herein and shall not prohibit
the Stockholder from acting in accordance with his or her fiduciary
duties to Smartflex.
1.3. Irrevocable Proxy. Contemporaneously with the execution
of this Agreement: (i) Stockholder will deliver to Saturn a proxy in
the form attached hereto as Exhibit A, which will be irrevocable to the
fullest extent permitted by law (the "Proxy"), with respect to all
Shares owned of record by Stockholder; and (ii) Stockholder will cause
to be delivered to Saturn additional Proxies executed on behalf of each
record owner of any Shares owned beneficially (but not owned of record)
by Stockholder.
2. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Saturn and Merger Sub as follows:
2.1 Ownership of Shares. On the date hereof the Existing Shares
are all of the Shares currently beneficially owned by Stockholder. On the
Closing Date, the Shares will constitute all of the shares of Common Stock owned
beneficially by Stockholder. Stockholder does not have any rights to acquire any
additional shares of Common Stock other than pursuant to options issued under
the Stock Option Plans (as defined in the Merger Agreement), Stockholder
currently has with respect to the Existing Shares, and at Closing will have with
respect to the Shares, good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by this Agreement and other than restrictions on transfer
under applicable, Federal and State securities laws).
2.2 Power; Binding Agreement. Stockholder has the full legal
capacity, right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution and delivery of
this Agreement by Stockholder will not violate any agreement, contract or
arrangement to which Stockholder is a party or is bound, including, without
limitation, any voting agreement, stockholders agreement or voting trust. This
Agreement has been duly executed and delivered by Stockholder and constitutes a
legal, valid and binding agreement of Stockholder, enforceable in accordance
with its terms. Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the
2
<PAGE> 3
transactions contemplated hereby will (a) other than filings required under the
federal or state securities laws, require any consent or approval of or filing
with any Governmental or other regulatory body, or (b) constitute a violation
of, conflict with or constitute, a default under (i) any law, rule or regulation
applicable to Stockholder, or (ii) any order, judgment or decree by which
Stockholder is bound.
2.3. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby exclusive of any commission or finder's
fees referred to in the Merger Agreement.
3. Representations and Warranties of Saturn and Merger Sub. Saturn and
Merger Sub, jointly and severally, represent and warrant to Stockholder as
follows:
3.1 Authority. Each of Saturn and Merger Sub has full legal
right, power and authority to enter into and perform all of its obligations
under this Agreement. The execution and delivery of this Agreement by Saturn and
Merger Sub will not violate the charter, bylaws or other organizational or
constitutive documents of Saturn or Merger Sub, or any other agreement, contract
or arrangement to which Saturn or Merger Sub is a party or is bound. This
Agreement has been duly executed and delivered by each of Saturn and Merger Sub
and constitutes a legal, valid and binding agreement of Saturn and Merger Sub,
enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Saturn or Merger Sub of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, or (b) constitute a violation of,
conflict with or constitute a default under (i) any law, rule or regulation
applicable to Saturn or Merger Sub, or (ii) any order, judgment or decree to
which Saturn or Merger Sub is bound.
3.2. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fee from Saturn or Merger Sub in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission or
finder's fees referred to in the Merger Agreement.
4. Termination. This Agreement (other than the provisions of Sections
5, 6 and 19 which will survive any termination of this Agreement), will
terminate on the earliest to occur of (a) the date on which Merger Sub accepts
for payment the Shares tendered in the Offer, so long as the Shares are so
tendered and not withdrawn, (b) the Effective Time (as defined in the Merger
Agreement), and (c) simultaneously with the termination of the Merger Agreement
in accordance with its terms.
5. Expenses. Except as provided in Section 19, each party hereto will
pay all of its expenses in connection with the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of its counsel
and other advisers. The provisions of this Section 5 will survive the Closing
hereunder.
6. Confidentiality. Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to these matters. In this connection, pending
public disclosure, Stockholder agrees that it will not disclose or discuss these
matters with anyone (other than officers, directors, legal
3
<PAGE> 4
counsel and advisors of Stockholder or Smartflex, if any) not a party to this
Agreement, without prior written consent of Saturn, except as provided herein or
in the Merger Agreement and except for filings required pursuant to the Exchange
Act, and the rules and regulations thereunder or disclosures Stockholder's legal
counsel advises in writing are necessary in order to fulfill Stockholder's
obligations imposed by law, in which event Stockholder will give prompt prior
notice of such disclosure to Saturn and cooperate with Saturn in obtaining a
protective order or in limiting such disclosure.
7. Certain Covenants of Stockholder.
7.1 Except in accordance with the provisions of this
Agreement, Stockholder agrees, while this Agreement is in effect, not to,
directly or indirectly:
(a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares; or
(c) solicit, initiate or encourage the submission of
any proposal or offer from any person (other than Saturn or Merger Sub) relating
to any acquisition or purchase of all or any material portion of the assets of,
or any equity interest in (other than pursuant to the exercise of options
outstanding on the date hereof), Smartflex or any subsidiary of Smartflex, or
any merger, consolidation, business combination, reorganization,
recapitalization or similar transaction involving Smartflex or any subsidiary of
Smartflex (each a "Competing Transaction"), or participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise, cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any person (other than
Saturn and Merger Sub) to do or seek any of the foregoing, Stockholder will
cease and cause to be terminated any existing activities, discussions or
negotiations by or on its behalf with any person (other than Saturn and Merger
Sub) conducted heretofore with respect to any Competing Transaction and will
promptly notify Saturn following receipt of any request by any person (other
than Saturn or Merger Sub) relating to any possible Competing Transaction or
information concerning Smartflex. Nothing contained herein will prohibit
Stockholder, solely in his capacity as an officer or as a member of the board of
directors of Smartflex (the "Board"), from furnishing information to, or
entering into discussions or negotiations with, any person (other than Saturn
and Merger Sub) in connection with an unsolicited proposal involving a
fully-financed (as represented by such person) Competing Transaction which is
made in writing by such person (other than Saturn and Merger Sub) and which, if
consummated, would provide consideration per share, of Common Stock to the
stockholders of Smartflex in excess of the Offer Price if, and only to the
extent that, the Board determines in good faith, based upon the advice of SG
Cowen Securities Corporation and the written advice of Stradling Yocca Carlson &
Rauth, that such action is required for the Board to comply with its fiduciary
duties to stockholders under Delaware law.
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<PAGE> 5
7.2 Stockholder agrees, while this Agreement is in effect,
to notify Saturn promptly of the number of any shares of Common Stock beneficial
ownership of which is acquired by Stockholder after the date hereof.
8. Legend and Stop Transfer Instructions. Immediately after the
execution of this Agreement (and from time to time prior to the termination of
this Agreement), Stockholder will cause Smartflex to provide for each
certificate representing Shares beneficially owned by Stockholder to bear a
legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE STOCK TENDER
AND VOTING AGREEMENT AND ARE SUBJECT TO THE IRREVOCABLE PROXY
REFERRED TO THEREIN, EACH DATED AS OF JULY 6, 1999, AS SUCH
AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AND COPIES OF
WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), Stockholder will cause Smartflex to
require the transfer agent for its Common Stock to make a notation in its
records prohibiting the transfer of any of the Shares, except in accordance with
the terms and conditions of this Agreement.
9. Survival of Representation and Warranties. Except as expressly
set forth herein, none of the representations, warranties, covenants and
agreements made by Stockholder, Saturn or Merger Sub in this Agreement will
survive the Closing hereunder.
10. Notices. All notices or other communication required or
permitted hereunder will be in writing, will be given by hand delivery, U.S.
Express Mail (return receipt requested), overnight courier guaranteeing next
business day delivery, or facsimile, and will be deemed duly given when
received, addressed as follows,
If to Saturn or Merger Sub:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, Jr., President,
Chief Executive Officer and Chairman of the Board
Facsimile: (248) 853-2645
5
<PAGE> 6
With copies to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Stockholder:
William E. Bendush
27861 Horseshoe Bend
San Juan Capistrano, California 92675
Facsimile: (949) 493-3813
With copies to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
11. Entire Agreement; Amendment. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the party against
whom such modification, amendment, alteration or supplement is sought to be
enforced.
12. Assigns. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and
personal representatives, but neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign any or all of its rights and obligations hereunder to Saturn or any
direct or indirect wholly-owned subsidiary of Saturn without the consent of
Stockholder or Company, but no such transfer will relieve Merger Sub of its
obligations under this Agreement if such subsidiary does not perform the
obligations of Merger Sub hereunder.
13. Governing Law; Jurisdiction; and Consent to Service. Except as
expressly set forth below, this Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In addition, each of Stockholder, Merger Sub and Saturn hereby agrees that any
dispute arising out of this Agreement will be heard in the United States
6
<PAGE> 7
District Court for the Central District of California and, in connection
therewith, each party to this Agreement hereby consents to the jurisdiction of
such courts and agrees that any service of process in connection with any
dispute arising out of this Agreement or the Merger may be given to any other
party hereto by certified mail, return receipt requested, at the respective
addresses set forth in Section 10 above.
14. Injunctive Relief. The parties agree that in the event of a
breach of any provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party will be entitled
to obtain in any court of competent jurisdiction a decree of specific
performance or to enjoin the continuing breach of such provision, in each case
without the requirement that a bond be posted, as well as to obtain damages for
breach of this Agreement. By seeking or obtaining such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
15. Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts (including by facsimile signature), each
of which will be deemed to be an original and all of which together will
constitute one and the same document.
16. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision will be interpreted
to be only so broad as is enforceable.
17. Further Assurances. Each party hereto will execute and deliver
such additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. Third Party Beneficiaries. Nothing in this Agreement, expressed
or implied, will be construed to give any person other than the parties hereto
any legal or equitable right, remedy or claim under or by reason of this
Agreement or any provision contained herein.
19. Legal Expenses. In the event any legal proceeding is commenced by
any party to this Agreement to enforce or recover damages for any breach of the
provisions hereof, the prevailing party in such legal proceeding will be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees. The provisions of this Section
19 will survive the Closing hereunder.
20. Amendment and Modification. This Agreement may be amended,
modified and supplemented only by a written document executed by Saturn, Merger
Sub and Stockholder.
[Remainder of page intentionally left blank.]
7
<PAGE> 8
IN WITNESS WHEREOF, Saturn and Merger Sub have caused this Agreement to
be executed by their duly authorized officers, and Stockholder has duly executed
this Agreement, as of the date and year first above written.
"SATURN"
SATURN ELECTRONICS &
ENGINEERING, INC.
By: /s/ W. Tsuha
----------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President,
Chief Executive Officer and
Chairman of the Board
"MERGER SUB"
SSI ACQUISITION CORP.
By: /s/ W. Tsuha
----------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President
"STOCKHOLDER"
/s/ William E. Bendush
-------------------------------------------
Name: William E. Bendush
8
<PAGE> 9
EXHIBIT A
Form Of Irrevocable Proxy
The undersigned stockholder of Smartflex Systems, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Wallace K. Tsuha, Jr., Jereen Trudell and
Saturn Electronics & Engineering, Inc. ("Saturn"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the issued and outstanding shares of capital stock of Smartflex owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy and (ii) any and all other shares of
capital stock of Smartflex which the undersigned may acquire after the date
hereof (the shares of the capital stock of Smartflex referred to in (clauses (i)
and (ii) of the immediately preceding sentence are collectively referred to as
the "Shares"). Upon the execution hereof all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with a Stock Tender and Voting Agreement, dated as of the date
hereof, among Saturn, SSI Acquisition Corp. and the undersigned (the "Stock
Tender Agreement"), and is granted in consideration of Saturn entering into the
Agreement and Plan of Merger, dated as of the date hereof, among Saturn, SSI
Acquisition Corp. and Smartflex (the "Merger Agreement"). Capitalized terms used
but not otherwise defined in this proxy have the meanings ascribed to such terms
in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the earlier to occur
of the valid termination of the Merger Agreement pursuant to Section 8.01
thereof or the Effective Time at any meeting of the stockholders of Smartflex,
however called, or in any written action by consent of stockholders of
Smartflex: (a) in favor of the Merger; (b) against any action or agreement that
would result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the Merger
Agreement; or (c) against any action or agreement that would impede, interfere
with, delay, postpone, or attempt to discourage the Merger or the Offer
including, but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but not
limited to, a merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a sale or
transfer of a material amount of assets of Smartflex or any of its subsidiaries,
(iii) any change in the board of directors of Smartflex, (iv) any material
change in the capitalization of Smartflex, (v) any change in the charter,
by-laws or other organizational or constitutive documents of Smartflex, or (v)
any other material change in the corporate structure or business of Smartflex.
This proxy will be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Shares).
9
<PAGE> 10
Any term or provision of this proxy which is invalid or unenforceable,
in any jurisdiction will, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this proxy or affecting the
validity or enforceability of any of the terms or provisions of this proxy in
any other jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.
This proxy will terminate immediately upon the earlier of the valid
termination of the Merger Agreement pursuant to Section 8.01 thereof or the
Effective Time.
Dated: July 6, 1999
- -------------------------------
Name: William E. Bendush
Number of shares of Common Stock owned of record as of the date of this proxy: 0
10
<PAGE> 1
EXHIBIT 99(c)(5)
STOCK TENDER AND VOTING AGREEMENT
STOCK TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of July 6,
1999 by and among Alan V. King ("Stockholder"), Saturn Electronics &
Engineering, Inc., a Michigan corporation ("Saturn"), and SSI Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Saturn ("Merger Sub").
RECITALS
A. Concurrently herewith Saturn, Merger Sub and Smartflex Systems, Inc.,
a Delaware corporation ("Smartflex"), are entering into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), pursuant to which Merger
Sub agrees to make a tender offer (the "Offer") for all of the outstanding
shares of common stock, $.0025 par value (the "Common Stock") of Smartflex, at a
price of $10.50 per share (the "Offer Price"), in cash, following which
Smartflex will be merged with and into Merger Sub, with Smartflex as the
Surviving Corporation (the "Merger").
B. Stockholder beneficially owns (as defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as
of the date hereof, 21,875 shares of Common Stock (the "Existing Shares",
together with any shares of Common Stock beneficial ownership of which is
acquired by Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares").
C. As a condition to their willingness to enter into the Merger
Agreement, Saturn and Merger Sub have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
D. Saturn and Merger Sub have entered into the Merger Agreement in
reliance on Stockholder's representations, warranties, covenants and agreement
hereunder.
THEREFORE, the parties agree as follows:
1. Agreement to Tender and Vote; Irrevocable Proxy.
1.1 Tender. Stockholder agrees to validly tender all Shares
beneficially owned by it pursuant to the Offer within ten business days of
commencement of the Offer, and not withdraw any such Shares, except to the
extent that the tender of shares (including Shares acquired after the date
hereof) pursuant to the Offer would subject Stockholder to liability under
Section 16(b) of the Exchange Act.
1.2 Voting. Stockholder hereby agrees that, during the time this
Agreement is in effect, at any meeting of the stockholders of Smartflex,
however called, and in any action by consent of the stockholders of
Smartflex, Stockholder will: (a) vote all Shares beneficially owned by it
in favor of the Merger; (b) vote all Shares beneficially owned by it
against any action or agreement that would result in a breach of any
covenant or any representation or warranty or any other obligation or
agreement of Smartflex under or pursuant to the Merger Agreement; (c) vote
all Shares beneficially owned by it against
<PAGE> 2
any action or agreement that would impede, interfere with, delay, postpone
or attempt to discourage, the Merger or the Offer including, but not
limited to, (i) any corporate transaction not entered into in the ordinary
course of business (other than the Merger), including, but not limited to,
a merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a
sale or transfer of a material amount of assets of Smartflex or any of its
subsidiaries, (iii) any change in the board of directors of Smartflex, (iv)
any material change in the capitalization of Smartflex, (v) any change in
the charter, by-laws or other organizational or constitutive documents of
Smartflex, or (vi) any other material change in the corporate structure or
business of Smartflex; and (d) without limiting the foregoing, consult with
Saturn and vote all Shares beneficially owned by it in such manner as is
determined by Saturn to be in compliance with the provisions of this
Section 1.2. Stockholder acknowledges receipt and review of a copy of the
Merger Agreement. Notwithstanding the foregoing, Stockholder may take any
action in his or her role as a director or officer of Smartflex as
permitted under Sections 6.04 and 8.01(e) of the Merger Agreement. This
Agreement is intended to bind Stockholder only with respect to the specific
matters set forth herein and shall not prohibit the Stockholder from acting
in accordance with his or her fiduciary duties to Smartflex.
1.3. Irrevocable Proxy. Contemporaneously with the execution of this
Agreement: (i) Stockholder will deliver to Saturn a proxy in the form
attached hereto as Exhibit A, which will be irrevocable to the fullest
extent permitted by law (the "Proxy"), with respect to all Shares owned of
record by Stockholder; and (ii) Stockholder will cause to be delivered to
Saturn additional Proxies executed on behalf of each record owner of any
Shares owned beneficially (but not owned of record) by Stockholder.
2. Representations and Warranties of Stockholder. Stockholder represents
and warrants to Saturn and Merger Sub as follows:
2.1 Ownership of Shares. On the date hereof the Existing Shares are
all of the Shares currently beneficially owned by Stockholder. On the Closing
Date, the Shares will constitute all of the shares of Common Stock owned
beneficially by Stockholder. Stockholder does not have any rights to acquire any
additional shares of Common Stock other than pursuant to options issued under
the Stock Option Plans (as defined in the Merger Agreement), Stockholder
currently has with respect to the Existing Shares, and at Closing will have with
respect to the Shares, good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by this Agreement and other than restrictions on transfer
under applicable, Federal and State securities laws).
2.2 Power; Binding Agreement. Stockholder has the full legal
capacity, right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution and delivery of
this Agreement by Stockholder will not violate any agreement, contract or
arrangement to which Stockholder is a party or is bound, including, without
limitation, any voting agreement, stockholders agreement or voting trust. This
Agreement has been duly executed and delivered by Stockholder and constitutes a
legal, valid and binding agreement of Stockholder, enforceable in accordance
with its terms. Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the
2
<PAGE> 3
transactions contemplated hereby will (a) other than filings required under the
federal or state securities laws, require any consent or approval of or filing
with any Governmental or other regulatory body, or (b) constitute a violation
of, conflict with or constitute, a default under (i) any law, rule or regulation
applicable to Stockholder, or (ii) any order, judgment or decree by which
Stockholder is bound.
2.3. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby exclusive of any commission or finder's
fees referred to in the Merger Agreement.
3. Representations and Warranties of Saturn and Merger Sub. Saturn and
Merger Sub, jointly and severally, represent and warrant to Stockholder as
follows:
3.1 Authority. Each of Saturn and Merger Sub has full legal right,
power and authority to enter into and perform all of its obligations under this
Agreement. The execution and delivery of this Agreement by Saturn and Merger Sub
will not violate the charter, bylaws or other organizational or constitutive
documents of Saturn or Merger Sub, or any other agreement, contract or
arrangement to which Saturn or Merger Sub is a party or is bound. This Agreement
has been duly executed and delivered by each of Saturn and Merger Sub and
constitutes a legal, valid and binding agreement of Saturn and Merger Sub,
enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Saturn or Merger Sub of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, or (b) constitute a violation of,
conflict with or constitute a default under (i) any law, rule or regulation
applicable to Saturn or Merger Sub, or (ii) any order, judgment or decree to
which Saturn or Merger Sub is bound.
3.2. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fee from Saturn or Merger Sub in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission or
finder's fees referred to in the Merger Agreement.
4. Termination. This Agreement (other than the provisions of Sections 5,
6 and 19 which will survive any termination of this Agreement), will terminate
on the earliest to occur of (a) the date on which Merger Sub accepts for payment
the Shares tendered in the Offer, so long as the Shares are so tendered and not
withdrawn, (b) the Effective Time (as defined in the Merger Agreement), and (c)
simultaneously with the termination of the Merger Agreement in accordance with
its terms.
5. Expenses. Except as provided in Section 19, each party hereto will pay
all of its expenses in connection with the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of its counsel
and other advisers. The provisions of this Section 5 will survive the Closing
hereunder.
6. Confidentiality. Stockholder recognizes that successful consummation
of the transactions contemplated by this Agreement may be dependent upon
confidentiality with respect to these matters. In this connection, pending
public disclosure, Stockholder agrees that it will not disclose or discuss these
matters with anyone (other than officers, directors, legal
3
<PAGE> 4
counsel and advisors of Stockholder or Smartflex, if any) not a party to this
Agreement, without prior written consent of Saturn, except as provided herein or
in the Merger Agreement and except for filings required pursuant to the Exchange
Act, and the rules and regulations thereunder or disclosures Stockholder's legal
counsel advises in writing are necessary in order to fulfill Stockholder's
obligations imposed by law, in which event Stockholder will give prompt prior
notice of such disclosure to Saturn and cooperate with Saturn in obtaining a
protective order or in limiting such disclosure.
7. Certain Covenants of Stockholder.
7.1 Except in accordance with the provisions of this Agreement,
Stockholder agrees, while this Agreement is in effect, not to, directly or
indirectly:
(a) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a voting trust or
enter into a voting agreement with respect to any Shares; or
(c) solicit, initiate or encourage the submission of any
proposal or offer from any person (other than Saturn or Merger Sub) relating to
any acquisition or purchase of all or any material portion of the assets of, or
any equity interest in (other than pursuant to the exercise of options
outstanding on the date hereof), Smartflex or any subsidiary of Smartflex, or
any merger, consolidation, business combination, reorganization,
recapitalization or similar transaction involving Smartflex or any subsidiary of
Smartflex (each a "Competing Transaction"), or participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise, cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any person (other than
Saturn and Merger Sub) to do or seek any of the foregoing, Stockholder will
cease and cause to be terminated any existing activities, discussions or
negotiations by or on its behalf with any person (other than Saturn and Merger
Sub) conducted heretofore with respect to any Competing Transaction and will
promptly notify Saturn following receipt of any request by any person (other
than Saturn or Merger Sub) relating to any possible Competing Transaction or
information concerning Smartflex. Nothing contained herein will prohibit
Stockholder, solely in his capacity as an officer or as a member of the board of
directors of Smartflex (the "Board"), from furnishing information to, or
entering into discussions or negotiations with, any person (other than Saturn
and Merger Sub) in connection with an unsolicited proposal involving a
fully-financed (as represented by such person) Competing Transaction which is
made in writing by such person (other than Saturn and Merger Sub) and which, if
consummated, would provide consideration per share, of Common Stock to the
stockholders of Smartflex in excess of the Offer Price if, and only to the
extent that, the Board determines in good faith, based upon the advice of SG
Cowen Securities Corporation and the written advice of Stradling Yocca Carlson &
Rauth, that such action is required for the Board to comply with its fiduciary
duties to stockholders under Delaware law.
4
<PAGE> 5
7.2 Stockholder agrees, while this Agreement is in effect, to notify
Saturn promptly of the number of any shares of Common Stock beneficial ownership
of which is acquired by Stockholder after the date hereof.
8. Legend and Stop Transfer Instructions. Immediately after the execution
of this Agreement (and from time to time prior to the termination of this
Agreement), Stockholder will cause Smartflex to provide for each certificate
representing Shares beneficially owned by Stockholder to bear a legend in the
following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, EXCHANGED
OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
TERMS AND CONDITIONS OF THE STOCK TENDER AND VOTING AGREEMENT AND ARE
SUBJECT TO THE IRREVOCABLE PROXY REFERRED TO THEREIN, EACH DATED AS OF
JULY 6, 1999, AS SUCH AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AND
COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), Stockholder will cause Smartflex to
require the transfer agent for its Common Stock to make a notation in its
records prohibiting the transfer of any of the Shares, except in accordance with
the terms and conditions of this Agreement.
9. Survival of Representation and Warranties. Except as expressly set
forth herein, none of the representations, warranties, covenants and agreements
made by Stockholder, Saturn or Merger Sub in this Agreement will survive the
Closing hereunder.
10. Notices. All notices or other communication required or permitted
hereunder will be in writing, will be given by hand delivery, U.S. Express Mail
(return receipt requested), overnight courier guaranteeing next business day
delivery, or facsimile, and will be deemed duly given when received, addressed
as follows,
If to Saturn or Merger Sub:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, Jr., President,
Chief Executive Officer and Chairman of the Board
Facsimile: (248) 853-2645
5
<PAGE> 6
With copies to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Stockholder:
Alan V. King
14472 Oak Place
Saratoga, California 95070
Facsimile: (978) 428-5538
With copies to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
11. Entire Agreement; Amendment. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the party against
whom such modification, amendment, alteration or supplement is sought to be
enforced.
12. Assigns. This Agreement will be binding upon and inure to the benefit
of the parties hereto and their respective successors, assigns and personal
representatives, but neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto without the
prior written consent of the other parties, except that Merger Sub may assign
any or all of its rights and obligations hereunder to Saturn or any direct or
indirect wholly-owned subsidiary of Saturn without the consent of Stockholder or
Company, but no such transfer will relieve Merger Sub of its obligations under
this Agreement if such subsidiary does not perform the obligations of Merger Sub
hereunder.
13. Governing Law; Jurisdiction; and Consent to Service. Except as
expressly set forth below, this Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In addition, each of Stockholder, Merger Sub and Saturn hereby agrees that any
dispute arising out of this Agreement will be heard in the United States
6
<PAGE> 7
District Court for the Central District of California and, in connection
therewith, each party to this Agreement hereby consents to the jurisdiction of
such courts and agrees that any service of process in connection with any
dispute arising out of this Agreement or the Merger may be given to any other
party hereto by certified mail, return receipt requested, at the respective
addresses set forth in Section 10 above.
14. Injunctive Relief. The parties agree that in the event of a breach of
any provision of this Agreement, the aggrieved party may be without an adequate
remedy at law. The parties therefore agree that in the event of a breach of any
provision of this Agreement, the aggrieved party will be entitled to obtain in
any court of competent jurisdiction a decree of specific performance or to
enjoin the continuing breach of such provision, in each case without the
requirement that a bond be posted, as well as to obtain damages for breach of
this Agreement. By seeking or obtaining such relief, the aggrieved party will
not be precluded from seeking or obtaining any other relief to which it may be
entitled.
15. Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of counterparts (including by facsimile signature), each of which
will be deemed to be an original and all of which together will constitute one
and the same document.
16. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision will be interpreted
to be only so broad as is enforceable.
17. Further Assurances. Each party hereto will execute and deliver such
additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. Third Party Beneficiaries. Nothing in this Agreement, expressed or
implied, will be construed to give any person other than the parties hereto any
legal or equitable right, remedy or claim under or by reason of this Agreement
or any provision contained herein.
19. Legal Expenses. In the event any legal proceeding is commenced by any
party to this Agreement to enforce or recover damages for any breach of the
provisions hereof, the prevailing party in such legal proceeding will be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees. The provisions of this Section
19 will survive the Closing hereunder.
20. Amendment and Modification. This Agreement may be amended, modified
and supplemented only by a written document executed by Saturn, Merger Sub and
Stockholder.
[Remainder of page intentionally left blank.]
7
<PAGE> 8
IN WITNESS WHEREOF, Saturn and Merger Sub have caused this Agreement to be
executed by their duly authorized officers, and Stockholder has duly executed
this Agreement, as of the date and year first above written.
"SATURN"
SATURN ELECTRONICS &
ENGINEERING, INC.
By: /s/ W. Tsuha
----------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President,
Chief Executive Officer and
Chairman of the Board
"MERGER SUB"
SSI ACQUISITION CORP.
By: /s/ W. Tsuha
----------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President
"STOCKHOLDER"
/s/ Alan V. King
--------------------------------------------
Name: Alan V. King
8
<PAGE> 9
EXHIBIT A
Form Of Irrevocable Proxy
The undersigned stockholder of Smartflex Systems, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Wallace K. Tsuha, Jr., Jereen Trudell and
Saturn Electronics & Engineering, Inc. ("Saturn"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the issued and outstanding shares of capital stock of Smartflex owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy and (ii) any and all other shares of
capital stock of Smartflex which the undersigned may acquire after the date
hereof (the shares of the capital stock of Smartflex referred to in (clauses (i)
and (ii) of the immediately preceding sentence are collectively referred to as
the "Shares"). Upon the execution hereof all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted in
connection with a Stock Tender and Voting Agreement, dated as of the date
hereof, among Saturn, SSI Acquisition Corp. and the undersigned (the "Stock
Tender Agreement"), and is granted in consideration of Saturn entering into the
Agreement and Plan of Merger, dated as of the date hereof, among Saturn, SSI
Acquisition Corp. and Smartflex (the "Merger Agreement"). Capitalized terms used
but not otherwise defined in this proxy have the meanings ascribed to such terms
in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may exercise
this proxy, to vote the Shares at any time until the earlier to occur of the
valid termination of the Merger Agreement pursuant to Section 8.01 thereof or
the Effective Time at any meeting of the stockholders of Smartflex, however
called, or in any written action by consent of stockholders of Smartflex: (a) in
favor of the Merger; (b) against any action or agreement that would result in a
breach of any covenant or any representation or warranty or any other obligation
or agreement of Smartflex under or pursuant to the Merger Agreement; or (c)
against any action or agreement that would impede, interfere with, delay,
postpone, or attempt to discourage the Merger or the Offer including, but not
limited to, (i) any corporate transaction not entered into in the ordinary
course of business (other than the Merger), including, but not limited to, a
merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a sale or
transfer of a material amount of assets of Smartflex or any of its subsidiaries,
(iii) any change in the board of directors of Smartflex, (iv) any material
change in the capitalization of Smartflex, (v) any change in the charter,
by-laws or other organizational or constitutive documents of Smartflex, or (v)
any other material change in the corporate structure or business of Smartflex.
This proxy will be binding upon the heirs, successors and assigns of the
undersigned (including any transferee of any of the Shares).
9
<PAGE> 10
Any term or provision of this proxy which is invalid or unenforceable, in
any jurisdiction will, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this proxy or affecting the validity or
enforceability of any of the terms or provisions of this proxy in any other
jurisdiction. If any provision of this proxy is so broad as to be unenforceable,
the provision will be interpreted to be only so broad as is enforceable.
This proxy will terminate immediately upon the earlier of the valid
termination of the Merger Agreement pursuant to Section 8.01 thereof or the
Effective Time.
Dated: July 6, 1999
- ------------------------------------
Name: Alan V. King
Number of shares of Common Stock owned of record as of the date of this proxy:
14,000
10
<PAGE> 1
EXHIBIT 99(c)(6)
STOCK TENDER AND VOTING AGREEMENT
STOCK TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of July
6, 1999 by and among William A. Klein ("Stockholder"), Saturn Electronics &
Engineering, Inc., a Michigan corporation ("Saturn"), and SSI Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Saturn ("Merger Sub").
RECITALS
A. Concurrently herewith Saturn, Merger Sub and Smartflex Systems,
Inc., a Delaware corporation ("Smartflex"), are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which
Merger Sub agrees to make a tender offer (the "Offer") for all of the
outstanding shares of common stock, $.0025 par value (the "Common Stock") of
Smartflex, at a price of $10.50 per share (the "Offer Price"), in cash,
following which Smartflex will be merged with and into Merger Sub, with
Smartflex as the Surviving Corporation (the "Merger").
B. Stockholder beneficially owns (as defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as
of the date hereof, 15,875 shares of Common Stock (the "Existing Shares",
together with any shares of Common Stock beneficial ownership of which is
acquired by Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares").
C. As a condition to their willingness to enter into the Merger
Agreement, Saturn and Merger Sub have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
D. Saturn and Merger Sub have entered into the Merger Agreement in
reliance on Stockholder's representations, warranties, covenants and agreement
hereunder.
THEREFORE, the parties agree as follows:
1. Agreement to Tender and Vote; Irrevocable Proxy.
1.1 Tender. Stockholder agrees to validly tender all Shares
beneficially owned by it pursuant to the Offer within ten business days
of commencement of the Offer, and not withdraw any such Shares, except
to the extent that the tender of shares (including Shares acquired
after the date hereof) pursuant to the Offer would subject Stockholder
to liability under Section 16(b) of the Exchange Act.
1.2 Voting. Stockholder hereby agrees that, during the time
this Agreement is in effect, at any meeting of the stockholders of
Smartflex, however called, and in any action by consent of the
stockholders of Smartflex, Stockholder will: (a) vote all Shares
beneficially owned by it in favor of the Merger; (b) vote all Shares
beneficially owned by it against
<PAGE> 2
any action or agreement that would result in a breach of any covenant
or any representation or warranty or any other obligation or agreement
of Smartflex under or pursuant to the Merger Agreement; (c) vote all
Shares beneficially owned by it against any action or agreement that
would impede, interfere with, delay, postpone or attempt to discourage,
the Merger or the Offer including, but not limited to, (i) any
corporate transaction not entered into in the ordinary course of
business (other than the Merger), including, but not limited to, a
merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii)
a sale or transfer of a material amount of assets of Smartflex or any
of its subsidiaries, (iii) any change in the board of directors of
Smartflex, (iv) any material change in the capitalization of Smartflex,
(v) any change in the charter, by-laws or other organizational or
constitutive documents of Smartflex, or (vi) any other material change
in the corporate structure or business of Smartflex; and (d) without
limiting the foregoing, consult with Saturn and vote all Shares
beneficially owned by it in such manner as is determined by Saturn to
be in compliance with the provisions of this Section 1.2. Stockholder
acknowledges receipt and review of a copy of the Merger Agreement.
Notwithstanding the foregoing, Stockholder may take any action in his
or her role as a director or officer of Smartflex as permitted under
Sections 6.04 and 8.01(e) of the Merger Agreement. This Agreement is
intended to bind Stockholder only with respect to the specific matters
set forth herein and shall not prohibit the Stockholder from acting in
accordance with his or her fiduciary duties to Smartflex.
1.3. Irrevocable Proxy. Contemporaneously with the execution
of this Agreement: (i) Stockholder will deliver to Saturn a proxy in
the form attached hereto as Exhibit A, which will be irrevocable to the
fullest extent permitted by law (the "Proxy"), with respect to all
Shares owned of record by Stockholder; and (ii) Stockholder will cause
to be delivered to Saturn additional Proxies executed on behalf of each
record owner of any Shares owned beneficially (but not owned of record)
by Stockholder.
2. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Saturn and Merger Sub as follows:
2.1 Ownership of Shares. On the date hereof the Existing Shares
are all of the Shares currently beneficially owned by Stockholder. On the
Closing Date, the Shares will constitute all of the shares of Common Stock owned
beneficially by Stockholder. Stockholder does not have any rights to acquire any
additional shares of Common Stock other than pursuant to options issued under
the Stock Option Plans (as defined in the Merger Agreement), Stockholder
currently has with respect to the Existing Shares, and at Closing will have with
respect to the Shares, good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by this Agreement and other than restrictions on transfer
under applicable, Federal and State securities laws).
2.2 Power; Binding Agreement. Stockholder has the full legal
capacity, right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution and delivery of
this Agreement by Stockholder will not violate any agreement, contract or
arrangement to which Stockholder is a party or is bound, including, without
limitation, any voting agreement, stockholders agreement or voting trust. This
Agreement has been duly executed and delivered by Stockholder and constitutes a
legal, valid and binding agreement of Stockholder, enforceable in accordance
with its terms. Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the
2
<PAGE> 3
transactions contemplated hereby will (a) other than filings required under the
federal or state securities laws, require any consent or approval of or filing
with any Governmental or other regulatory body, or (b) constitute a violation
of, conflict with or constitute, a default under (i) any law, rule or regulation
applicable to Stockholder, or (ii) any order, judgment or decree by which
Stockholder is bound.
2.3. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby exclusive of any commission or finder's
fees referred to in the Merger Agreement.
3. Representations and Warranties of Saturn and Merger Sub. Saturn and
Merger Sub, jointly and severally, represent and warrant to Stockholder as
follows:
3.1 Authority. Each of Saturn and Merger Sub has full legal
right, power and authority to enter into and perform all of its obligations
under this Agreement. The execution and delivery of this Agreement by Saturn and
Merger Sub will not violate the charter, bylaws or other organizational or
constitutive documents of Saturn or Merger Sub, or any other agreement, contract
or arrangement to which Saturn or Merger Sub is a party or is bound. This
Agreement has been duly executed and delivered by each of Saturn and Merger Sub
and constitutes a legal, valid and binding agreement of Saturn and Merger Sub,
enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Saturn or Merger Sub of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, or (b) constitute a violation of,
conflict with or constitute a default under (i) any law, rule or regulation
applicable to Saturn or Merger Sub, or (ii) any order, judgment or decree to
which Saturn or Merger Sub is bound.
3.2. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fee from Saturn or Merger Sub in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission or
finder's fees referred to in the Merger Agreement.
4. Termination. This Agreement (other than the provisions of Sections
5, 6 and 19 which will survive any termination of this Agreement), will
terminate on the earliest to occur of (a) the date on which Merger Sub accepts
for payment the Shares tendered in the Offer, so long as the Shares are so
tendered and not withdrawn, (b) the Effective Time (as defined in the Merger
Agreement), and (c) simultaneously with the termination of the Merger Agreement
in accordance with its terms.
5. Expenses. Except as provided in Section 19, each party hereto will
pay all of its expenses in connection with the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of its counsel
and other advisers. The provisions of this Section 5 will survive the Closing
hereunder.
6. Confidentiality. Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to these matters. In this connection, pending
public disclosure, Stockholder agrees that it will not disclose or discuss these
matters with anyone (other than officers, directors, legal
3
<PAGE> 4
counsel and advisors of Stockholder or Smartflex, if any) not a party to this
Agreement, without prior written consent of Saturn, except as provided herein or
in the Merger Agreement and except for filings required pursuant to the Exchange
Act, and the rules and regulations thereunder or disclosures Stockholder's legal
counsel advises in writing are necessary in order to fulfill Stockholder's
obligations imposed by law, in which event Stockholder will give prompt prior
notice of such disclosure to Saturn and cooperate with Saturn in obtaining a
protective order or in limiting such disclosure.
7. Certain Covenants of Stockholder.
7.1 Except in accordance with the provisions of this Agreement,
Stockholder agrees, while this Agreement is in effect, not to, directly or
indirectly:
(a) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a voting
trust or enter into a voting agreement with respect to any Shares; or
(c) solicit, initiate or encourage the submission of any
proposal or offer from any person (other than Saturn or Merger Sub) relating to
any acquisition or purchase of all or any material portion of the assets of, or
any equity interest in (other than pursuant to the exercise of options
outstanding on the date hereof), Smartflex or any subsidiary of Smartflex, or
any merger, consolidation, business combination, reorganization,
recapitalization or similar transaction involving Smartflex or any subsidiary of
Smartflex (each a "Competing Transaction"), or participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise, cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any person (other than
Saturn and Merger Sub) to do or seek any of the foregoing, Stockholder will
cease and cause to be terminated any existing activities, discussions or
negotiations by or on its behalf with any person (other than Saturn and Merger
Sub) conducted heretofore with respect to any Competing Transaction and will
promptly notify Saturn following receipt of any request by any person (other
than Saturn or Merger Sub) relating to any possible Competing Transaction or
information concerning Smartflex. Nothing contained herein will prohibit
Stockholder, solely in his capacity as an officer or as a member of the board of
directors of Smartflex (the "Board"), from furnishing information to, or
entering into discussions or negotiations with, any person (other than Saturn
and Merger Sub) in connection with an unsolicited proposal involving a
fully-financed (as represented by such person) Competing Transaction which is
made in writing by such person (other than Saturn and Merger Sub) and which, if
consummated, would provide consideration per share, of Common Stock to the
stockholders of Smartflex in excess of the Offer Price if, and only to the
extent that, the Board determines in good faith, based upon the advice of SG
Cowen Securities Corporation and the written advice of Stradling Yocca Carlson &
Rauth, that such action is required for the Board to comply with its fiduciary
duties to stockholders under Delaware law.
4
<PAGE> 5
7.2 Stockholder agrees, while this Agreement is in effect, to
notify Saturn promptly of the number of any shares of Common Stock beneficial
ownership of which is acquired by Stockholder after the date hereof.
8. Legend and Stop Transfer Instructions. Immediately after the
execution of this Agreement (and from time to time prior to the termination of
this Agreement), Stockholder will cause Smartflex to provide for each
certificate representing Shares beneficially owned by Stockholder to bear a
legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE STOCK TENDER AND
VOTING AGREEMENT AND ARE SUBJECT TO THE IRREVOCABLE PROXY
REFERRED TO THEREIN, EACH DATED AS OF JULY 6, 1999, AS SUCH
AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AND COPIES OF WHICH
ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), Stockholder will cause Smartflex to
require the transfer agent for its Common Stock to make a notation in its
records prohibiting the transfer of any of the Shares, except in accordance with
the terms and conditions of this Agreement.
9. Survival of Representation and Warranties. Except as expressly
set forth herein, none of the representations, warranties, covenants and
agreements made by Stockholder, Saturn or Merger Sub in this Agreement will
survive the Closing hereunder.
10. Notices. All notices or other communication required or permitted
hereunder will be in writing, will be given by hand delivery, U.S. Express Mail
(return receipt requested), overnight courier guaranteeing next business day
delivery, or facsimile, and will be deemed duly given when received, addressed
as follows,
If to Saturn or Merger Sub:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, Jr., President,
Chief Executive Officer and Chairman of the Board
Facsimile: (248) 853-2645
5
<PAGE> 6
With copies to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Stockholder:
William A. Klein
101 Via Lido Sound
Newport Beach, California 92663
Facsimile: (949) 723-1034
With copies to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
11. Entire Agreement; Amendment. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the party against
whom such modification, amendment, alteration or supplement is sought to be
enforced.
12. Assigns. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and
personal representatives, but neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign any or all of its rights and obligations hereunder to Saturn or any
direct or indirect wholly-owned subsidiary of Saturn without the consent of
Stockholder or Company, but no such transfer will relieve Merger Sub of its
obligations under this Agreement if such subsidiary does not perform the
obligations of Merger Sub hereunder.
13. Governing Law; Jurisdiction; and Consent to Service. Except as
expressly set forth below, this Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In addition, each of Stockholder, Merger Sub and Saturn hereby agrees that any
dispute arising out of this Agreement will be heard in the United States
6
<PAGE> 7
District Court for the Central District of California and, in connection
therewith, each party to this Agreement hereby consents to the jurisdiction of
such courts and agrees that any service of process in connection with any
dispute arising out of this Agreement or the Merger may be given to any other
party hereto by certified mail, return receipt requested, at the respective
addresses set forth in Section 10 above.
14. Injunctive Relief. The parties agree that in the event of a
breach of any provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party will be entitled
to obtain in any court of competent jurisdiction a decree of specific
performance or to enjoin the continuing breach of such provision, in each case
without the requirement that a bond be posted, as well as to obtain damages for
breach of this Agreement. By seeking or obtaining such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
15. Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts (including by facsimile signature), each
of which will be deemed to be an original and all of which together will
constitute one and the same document.
16. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision will be interpreted
to be only so broad as is enforceable.
17. Further Assurances. Each party hereto will execute and deliver
such additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. Third Party Beneficiaries. Nothing in this Agreement, expressed
or implied, will be construed to give any person other than the parties hereto
any legal or equitable right, remedy or claim under or by reason of this
Agreement or any provision contained herein.
19. Legal Expenses. In the event any legal proceeding is commenced by
any party to this Agreement to enforce or recover damages for any breach of the
provisions hereof, the prevailing party in such legal proceeding will be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees. The provisions of this Section
19 will survive the Closing hereunder.
20. Amendment and Modification. This Agreement may be amended,
modified and supplemented only by a written document executed by Saturn, Merger
Sub and Stockholder.
[Remainder of page intentionally left blank.]
7
<PAGE> 8
IN WITNESS WHEREOF, Saturn and Merger Sub have caused this Agreement to
be executed by their duly authorized officers, and Stockholder has duly executed
this Agreement, as of the date and year first above written.
"SATURN"
SATURN ELECTRONICS &
ENGINEERING, INC.
By: /s/ W. Tsuha
-----------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President,
Chief Executive Officer and
Chairman of the Board
"MERGER SUB"
SSI ACQUISITION CORP.
By: /s/ W. Tsuha
-----------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President
"STOCKHOLDER"
/s/ William A. Klein
--------------------------------------------
Name: William A. Klein
8
<PAGE> 9
EXHIBIT A
Form Of Irrevocable Proxy
The undersigned stockholder of Smartflex Systems, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Wallace K. Tsuha, Jr., Jereen Trudell and
Saturn Electronics & Engineering, Inc. ("Saturn"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the issued and outstanding shares of capital stock of Smartflex owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy and (ii) any and all other shares of
capital stock of Smartflex which the undersigned may acquire after the date
hereof (the shares of the capital stock of Smartflex referred to in (clauses (i)
and (ii) of the immediately preceding sentence are collectively referred to as
the "Shares"). Upon the execution hereof all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with a Stock Tender and Voting Agreement, dated as of the date
hereof, among Saturn, SSI Acquisition Corp. and the undersigned (the "Stock
Tender Agreement"), and is granted in consideration of Saturn entering into the
Agreement and Plan of Merger, dated as of the date hereof, among Saturn, SSI
Acquisition Corp. and Smartflex (the "Merger Agreement"). Capitalized terms used
but not otherwise defined in this proxy have the meanings ascribed to such terms
in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the earlier to occur
of the valid termination of the Merger Agreement pursuant to Section 8.01
thereof or the Effective Time at any meeting of the stockholders of Smartflex,
however called, or in any written action by consent of stockholders of
Smartflex: (a) in favor of the Merger; (b) against any action or agreement that
would result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the Merger
Agreement; or (c) against any action or agreement that would impede, interfere
with, delay, postpone, or attempt to discourage the Merger or the Offer
including, but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but not
limited to, a merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a sale or
transfer of a material amount of assets of Smartflex or any of its subsidiaries,
(iii) any change in the board of directors of Smartflex, (iv) any material
change in the capitalization of Smartflex, (v) any change in the charter,
by-laws or other organizational or constitutive documents of Smartflex, or (v)
any other material change in the corporate structure or business of Smartflex.
This proxy will be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Shares).
9
<PAGE> 10
Any term or provision of this proxy which is invalid or unenforceable,
in any jurisdiction will, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this proxy or affecting the
validity or enforceability of any of the terms or provisions of this proxy in
any other jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.
This proxy will terminate immediately upon the earlier of the valid
termination of the Merger Agreement pursuant to Section 8.01 thereof or the
Effective Time.
Dated: July 6, 1999
- ---------------------------------
Name: William A. Klein
Number of shares of Common Stock owned of record as of the date of this proxy:
8,000
10
<PAGE> 1
EXHIBIT 99(c)(7)
STOCK TENDER AND VOTING AGREEMENT
STOCK TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of July
6, 1999 by and among Gary E. Liebl ("Stockholder"), Saturn Electronics &
Engineering, Inc., a Michigan corporation ("Saturn"), and SSI Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Saturn ("Merger Sub").
RECITALS
A. Concurrently herewith Saturn, Merger Sub and Smartflex Systems,
Inc., a Delaware corporation ("Smartflex"), are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which
Merger Sub agrees to make a tender offer (the "Offer") for all of the
outstanding shares of common stock, $.0025 par value (the "Common Stock") of
Smartflex, at a price of $10.50 per share (the "Offer Price"), in cash,
following which Smartflex will be merged with and into Merger Sub, with
Smartflex as the Surviving Corporation (the "Merger").
B. Stockholder beneficially owns (as defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as
of the date hereof, 15,875 shares of Common Stock (the "Existing Shares",
together with any shares of Common Stock beneficial ownership of which is
acquired by Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares").
C. As a condition to their willingness to enter into the Merger
Agreement, Saturn and Merger Sub have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
D. Saturn and Merger Sub have entered into the Merger Agreement in
reliance on Stockholder's representations, warranties, covenants and agreement
hereunder.
THEREFORE, the parties agree as follows:
1. Agreement to Tender and Vote; Irrevocable Proxy.
1.1 Tender. Stockholder agrees to validly tender all Shares
beneficially owned by it pursuant to the Offer within ten business days
of commencement of the Offer, and not withdraw any such Shares, except
to the extent that the tender of shares (including Shares acquired
after the date hereof) pursuant to the Offer would subject Stockholder
to liability under Section 16(b) of the Exchange Act.
1.2 Voting. Stockholder hereby agrees that, during the time
this Agreement is in effect, at any meeting of the stockholders of
Smartflex, however called, and in any action by consent of the
stockholders of Smartflex, Stockholder will: (a) vote all Shares
beneficially owned by it in favor of the Merger; (b) vote all Shares
beneficially owned by it against any action or agreement that would
result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the
Merger Agreement; (c) vote all Shares beneficially owned by it against
<PAGE> 2
any action or agreement that would impede, interfere with, delay,
postpone or attempt to discourage, the Merger or the Offer including,
but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but
not limited to, a merger, other business combination, reorganization,
consolidation, recapitalization, dissolution or liquidation involving
Smartflex, (ii) a sale or transfer of a material amount of assets of
Smartflex or any of its subsidiaries, (iii) any change in the board of
directors of Smartflex, (iv) any material change in the capitalization
of Smartflex, (v) any change in the charter, by-laws or other
organizational or constitutive documents of Smartflex, or (vi) any
other material change in the corporate structure or business of
Smartflex; and (d) without limiting the foregoing, consult with Saturn
and vote all Shares beneficially owned by it in such manner as is
determined by Saturn to be in compliance with the provisions of this
Section 1.2. Stockholder acknowledges receipt and review of a copy of
the Merger Agreement. Notwithstanding the foregoing, Stockholder may
take any action in his or her role as a director or officer of
Smartflex as permitted under Sections 6.04 and 8.01(e) of the Merger
Agreement. This Agreement is intended to bind Stockholder only with
respect to the specific matters set forth herein and shall not prohibit
the Stockholder from acting in accordance with his or her fiduciary
duties to Smartflex.
1.3. Irrevocable Proxy. Contemporaneously with the execution of
this Agreement: (i) Stockholder will deliver to Saturn a proxy in the
form attached hereto as Exhibit A, which will be irrevocable to the
fullest extent permitted by law (the "Proxy"), with respect to all
Shares owned of record by Stockholder; and (ii) Stockholder will cause
to be delivered to Saturn additional Proxies executed on behalf of each
record owner of any Shares owned beneficially (but not owned of record)
by Stockholder.
2. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Saturn and Merger Sub as follows:
2.1 Ownership of Shares. On the date hereof the Existing Shares
are all of the Shares currently beneficially owned by Stockholder. On the
Closing Date, the Shares will constitute all of the shares of Common Stock owned
beneficially by Stockholder. Stockholder does not have any rights to acquire any
additional shares of Common Stock other than pursuant to options issued under
the Stock Option Plans (as defined in the Merger Agreement), Stockholder
currently has with respect to the Existing Shares, and at Closing will have with
respect to the Shares, good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by this Agreement and other than restrictions on transfer
under applicable, Federal and State securities laws).
2.2 Power; Binding Agreement. Stockholder has the full legal
capacity, right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution and delivery of
this Agreement by Stockholder will not violate any agreement, contract or
arrangement to which Stockholder is a party or is bound, including, without
limitation, any voting agreement, stockholders agreement or voting trust. This
Agreement has been duly executed and delivered by Stockholder and constitutes a
legal, valid and binding agreement of Stockholder, enforceable in accordance
with its terms. Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the
2
<PAGE> 3
transactions contemplated hereby will (a) other than filings required under the
federal or state securities laws, require any consent or approval of or filing
with any Governmental or other regulatory body, or (b) constitute a violation
of, conflict with or constitute, a default under (i) any law, rule or regulation
applicable to Stockholder, or (ii) any order, judgment or decree by which
Stockholder is bound.
2.3. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby exclusive of any commission or finder's
fees referred to in the Merger Agreement.
3. Representations and Warranties of Saturn and Merger Sub. Saturn and
Merger Sub, jointly and severally, represent and warrant to Stockholder as
follows:
3.1 Authority. Each of Saturn and Merger Sub has full legal
right, power and authority to enter into and perform all of its obligations
under this Agreement. The execution and delivery of this Agreement by Saturn and
Merger Sub will not violate the charter, bylaws or other organizational or
constitutive documents of Saturn or Merger Sub, or any other agreement, contract
or arrangement to which Saturn or Merger Sub is a party or is bound. This
Agreement has been duly executed and delivered by each of Saturn and Merger Sub
and constitutes a legal, valid and binding agreement of Saturn and Merger Sub,
enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Saturn or Merger Sub of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, or (b) constitute a violation of,
conflict with or constitute a default under (i) any law, rule or regulation
applicable to Saturn or Merger Sub, or (ii) any order, judgment or decree to
which Saturn or Merger Sub is bound.
3.2. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fee from Saturn or Merger Sub in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission or
finder's fees referred to in the Merger Agreement.
4. Termination. This Agreement (other than the provisions of Sections
5, 6 and 19 which will survive any termination of this Agreement), will
terminate on the earliest to occur of (a) the date on which Merger Sub accepts
for payment the Shares tendered in the Offer, so long as the Shares are so
tendered and not withdrawn, (b) the Effective Time (as defined in the Merger
Agreement), and (c) simultaneously with the termination of the Merger Agreement
in accordance with its terms.
5. Expenses. Except as provided in Section 19, each party hereto will
pay all of its expenses in connection with the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of its counsel
and other advisers. The provisions of this Section 5 will survive the Closing
hereunder.
6. Confidentiality. Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to these matters. In this connection, pending
public disclosure, Stockholder agrees that it will not disclose or discuss these
matters with anyone (other than officers, directors, legal
3
<PAGE> 4
counsel and advisors of Stockholder or Smartflex, if any) not a party to this
Agreement, without prior written consent of Saturn, except as provided herein or
in the Merger Agreement and except for filings required pursuant to the Exchange
Act, and the rules and regulations thereunder or disclosures Stockholder's legal
counsel advises in writing are necessary in order to fulfill Stockholder's
obligations imposed by law, in which event Stockholder will give prompt prior
notice of such disclosure to Saturn and cooperate with Saturn in obtaining a
protective order or in limiting such disclosure.
7. Certain Covenants of Stockholder.
7.1 Except in accordance with the provisions of this
Agreement, Stockholder agrees, while this Agreement is in effect, not to,
directly or indirectly:
(a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares; or
(c) solicit, initiate or encourage the submission of
any proposal or offer from any person (other than Saturn or Merger Sub) relating
to any acquisition or purchase of all or any material portion of the assets of,
or any equity interest in (other than pursuant to the exercise of options
outstanding on the date hereof), Smartflex or any subsidiary of Smartflex, or
any merger, consolidation, business combination, reorganization,
recapitalization or similar transaction involving Smartflex or any subsidiary of
Smartflex (each a "Competing Transaction"), or participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise, cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any person (other than
Saturn and Merger Sub) to do or seek any of the foregoing, Stockholder will
cease and cause to be terminated any existing activities, discussions or
negotiations by or on its behalf with any person (other than Saturn and Merger
Sub) conducted heretofore with respect to any Competing Transaction and will
promptly notify Saturn following receipt of any request by any person (other
than Saturn or Merger Sub) relating to any possible Competing Transaction or
information concerning Smartflex. Nothing contained herein will prohibit
Stockholder, solely in his capacity as an officer or as a member of the board of
directors of Smartflex (the "Board"), from furnishing information to, or
entering into discussions or negotiations with, any person (other than Saturn
and Merger Sub) in connection with an unsolicited proposal involving a
fully-financed (as represented by such person) Competing Transaction which is
made in writing by such person (other than Saturn and Merger Sub) and which, if
consummated, would provide consideration per share, of Common Stock to the
stockholders of Smartflex in excess of the Offer Price if, and only to the
extent that, the Board determines in good faith, based upon the advice of SG
Cowen Securities Corporation and the written advice of Stradling Yocca Carlson &
Rauth, that such action is required for the Board to comply with its fiduciary
duties to stockholders under Delaware law.
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<PAGE> 5
7.2 Stockholder agrees, while this Agreement is in effect,
to notify Saturn promptly of the number of any shares of Common Stock beneficial
ownership of which is acquired by Stockholder after the date hereof.
8. Legend and Stop Transfer Instructions. Immediately after the
execution of this Agreement (and from time to time prior to the termination of
this Agreement), Stockholder will cause Smartflex to provide for each
certificate representing Shares beneficially owned by Stockholder to bear a
legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE STOCK TENDER
AND VOTING AGREEMENT AND ARE SUBJECT TO THE IRREVOCABLE PROXY
REFERRED TO THEREIN, EACH DATED AS OF JULY 6, 1999, AS SUCH
AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AND COPIES OF
WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), Stockholder will cause Smartflex to
require the transfer agent for its Common Stock to make a notation in its
records prohibiting the transfer of any of the Shares, except in accordance with
the terms and conditions of this Agreement.
9. Survival of Representation and Warranties. Except as expressly
set forth herein, none of the representations, warranties, covenants and
agreements made by Stockholder, Saturn or Merger Sub in this Agreement will
survive the Closing hereunder.
10. Notices. All notices or other communication required or
permitted hereunder will be in writing, will be given by hand delivery, U.S.
Express Mail (return receipt requested), overnight courier guaranteeing next
business day delivery, or facsimile, and will be deemed duly given when
received, addressed as follows,
If to Saturn or Merger Sub:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, Jr., President,
Chief Executive Officer and Chairman of the Board
Facsimile: (248) 853-2645
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<PAGE> 6
With copies to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Stockholder:
Gary E. Liebl
1082 Country Hills Drive
Santa Ana, California 92705
Facsimile: (714) 838-0296
With copies to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
11. Entire Agreement; Amendment. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the party against
whom such modification, amendment, alteration or supplement is sought to be
enforced.
12. Assigns. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and
personal representatives, but neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign any or all of its rights and obligations hereunder to Saturn or any
direct or indirect wholly-owned subsidiary of Saturn without the consent of
Stockholder or Company, but no such transfer will relieve Merger Sub of its
obligations under this Agreement if such subsidiary does not perform the
obligations of Merger Sub hereunder.
13. Governing Law; Jurisdiction; and Consent to Service. Except as
expressly set forth below, this Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In addition, each of Stockholder, Merger Sub and Saturn hereby agrees that any
dispute arising out of this Agreement will be heard in the United States
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<PAGE> 7
District Court for the Central District of California and, in connection
therewith, each party to this Agreement hereby consents to the jurisdiction of
such courts and agrees that any service of process in connection with any
dispute arising out of this Agreement or the Merger may be given to any other
party hereto by certified mail, return receipt requested, at the respective
addresses set forth in Section 10 above.
14. Injunctive Relief. The parties agree that in the event of a breach
of any provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party will be entitled
to obtain in any court of competent jurisdiction a decree of specific
performance or to enjoin the continuing breach of such provision, in each case
without the requirement that a bond be posted, as well as to obtain damages for
breach of this Agreement. By seeking or obtaining such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
15. Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts (including by facsimile signature), each of which
will be deemed to be an original and all of which together will constitute one
and the same document.
16. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision will be interpreted
to be only so broad as is enforceable.
17. Further Assurances. Each party hereto will execute and deliver
such additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. Third Party Beneficiaries. Nothing in this Agreement, expressed or
implied, will be construed to give any person other than the parties hereto any
legal or equitable right, remedy or claim under or by reason of this Agreement
or any provision contained herein.
19. Legal Expenses. In the event any legal proceeding is commenced by
any party to this Agreement to enforce or recover damages for any breach of the
provisions hereof, the prevailing party in such legal proceeding will be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees. The provisions of this Section
19 will survive the Closing hereunder.
20. Amendment and Modification. This Agreement may be amended,
modified and supplemented only by a written document executed by Saturn, Merger
Sub and Stockholder.
[Remainder of page intentionally left blank.]
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<PAGE> 8
IN WITNESS WHEREOF, Saturn and Merger Sub have caused this Agreement to
be executed by their duly authorized officers, and Stockholder has duly executed
this Agreement, as of the date and year first above written.
"SATURN"
SATURN ELECTRONICS &
ENGINEERING, INC.
By: /s/ W. Tsuha
--------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President,
Chief Executive Officer
` and Chairman of the Board
"MERGER SUB"
SSI ACQUISITION CORP.
By: /s/ W. Tsuha
--------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President
"STOCKHOLDER"
/s/ Gary E. Liebl
-----------------------------------------------
Name: Gary E. Liebl
8
<PAGE> 9
EXHIBIT A
Form Of Irrevocable Proxy
The undersigned stockholder of Smartflex Systems, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Wallace K. Tsuha, Jr., Jereen Trudell and
Saturn Electronics & Engineering, Inc. ("Saturn"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the issued and outstanding shares of capital stock of Smartflex owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy and (ii) any and all other shares of
capital stock of Smartflex which the undersigned may acquire after the date
hereof (the shares of the capital stock of Smartflex referred to in (clauses (i)
and (ii) of the immediately preceding sentence are collectively referred to as
the "Shares"). Upon the execution hereof all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with a Stock Tender and Voting Agreement, dated as of the date
hereof, among Saturn, SSI Acquisition Corp. and the undersigned (the "Stock
Tender Agreement"), and is granted in consideration of Saturn entering into the
Agreement and Plan of Merger, dated as of the date hereof, among Saturn, SSI
Acquisition Corp. and Smartflex (the "Merger Agreement"). Capitalized terms used
but not otherwise defined in this proxy have the meanings ascribed to such terms
in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the earlier to occur
of the valid termination of the Merger Agreement pursuant to Section 8.01
thereof or the Effective Time at any meeting of the stockholders of Smartflex,
however called, or in any written action by consent of stockholders of
Smartflex: (a) in favor of the Merger; (b) against any action or agreement that
would result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the Merger
Agreement; or (c) against any action or agreement that would impede, interfere
with, delay, postpone, or attempt to discourage the Merger or the Offer
including, but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but not
limited to, a merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a sale or
transfer of a material amount of assets of Smartflex or any of its subsidiaries,
(iii) any change in the board of directors of Smartflex, (iv) any material
change in the capitalization of Smartflex, (v) any change in the charter,
by-laws or other organizational or constitutive documents of Smartflex, or (v)
any other material change in the corporate structure or business of Smartflex.
This proxy will be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Shares).
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<PAGE> 10
Any term or provision of this proxy which is invalid or unenforceable,
in any jurisdiction will, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this proxy or affecting the
validity or enforceability of any of the terms or provisions of this proxy in
any other jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.
This proxy will terminate immediately upon the earlier of the valid
termination of the Merger Agreement pursuant to Section 8.01 thereof or the
Effective Time.
Dated: July 6, 1999
- --------------------------------
Name: Gary E. Liebl
Number of shares of Common Stock owned of record as of the date of this proxy:
8,000
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<PAGE> 1
EXHIBIT 99(c)(8)
STOCK TENDER AND VOTING AGREEMENT
STOCK TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of July
6, 1999 by and among Anthony R. W. Richardson ("Stockholder"), Saturn
Electronics & Engineering, Inc., a Michigan corporation ("Saturn"), and SSI
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Saturn ("Merger Sub").
RECITALS
A. Concurrently herewith Saturn, Merger Sub and Smartflex Systems,
Inc., a Delaware corporation ("Smartflex"), are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which
Merger Sub agrees to make a tender offer (the "Offer") for all of the
outstanding shares of common stock, $.0025 par value (the "Common Stock") of
Smartflex, at a price of $10.50 per share (the "Offer Price"), in cash,
following which Smartflex will be merged with and into Merger Sub, with
Smartflex as the Surviving Corporation (the "Merger").
B. Stockholder beneficially owns (as defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as
of the date hereof, 26,375 shares of Common Stock (the "Existing Shares",
together with any shares of Common Stock beneficial ownership of which is
acquired by Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares").
C. As a condition to their willingness to enter into the Merger
Agreement, Saturn and Merger Sub have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
D. Saturn and Merger Sub have entered into the Merger Agreement in
reliance on Stockholder's representations, warranties, covenants and agreement
hereunder.
THEREFORE, the parties agree as follows:
1. Agreement to Tender and Vote; Irrevocable Proxy.
1.1 Tender. Stockholder agrees to validly tender all Shares
beneficially owned by it pursuant to the Offer within ten business days
of commencement of the Offer, and not withdraw any such Shares, except
to the extent that the tender of shares (including Shares acquired
after the date hereof) pursuant to the Offer would subject Stockholder
to liability under Section 16(b) of the Exchange Act.
1.2 Voting. Stockholder hereby agrees that, during the time
this Agreement is in effect, at any meeting of the stockholders of
Smartflex, however called, and in any action by consent of the
stockholders of Smartflex, Stockholder will: (a) vote all Shares
beneficially owned by it in favor of the Merger; (b) vote all Shares
beneficially owned by it against any action or agreement that would
result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the
Merger Agreement; (c) vote all Shares beneficially owned by it against
<PAGE> 2
any action or agreement that would impede, interfere with, delay,
postpone or attempt to discourage, the Merger or the Offer including,
but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but
not limited to, a merger, other business combination, reorganization,
consolidation, recapitalization, dissolution or liquidation involving
Smartflex, (ii) a sale or transfer of a material amount of assets of
Smartflex or any of its subsidiaries, (iii) any change in the board of
directors of Smartflex, (iv) any material change in the capitalization
of Smartflex, (v) any change in the charter, by-laws or other
organizational or constitutive documents of Smartflex, or (vi) any
other material change in the corporate structure or business of
Smartflex; and (d) without limiting the foregoing, consult with Saturn
and vote all Shares beneficially owned by it in such manner as is
determined by Saturn to be in compliance with the provisions of this
Section 1.2. Stockholder acknowledges receipt and review of a copy of
the Merger Agreement. Notwithstanding the foregoing, Stockholder may
take any action in his or her role as a director or officer of
Smartflex as permitted under Sections 6.04 and 8.01(e) of the Merger
Agreement. This Agreement is intended to bind Stockholder only with
respect to the specific matters set forth herein and shall not prohibit
the Stockholder from acting in accordance with his or her fiduciary
duties to Smartflex.
1.3. Irrevocable Proxy. Contemporaneously with the execution
of this Agreement: (i) Stockholder will deliver to Saturn a proxy in
the form attached hereto as Exhibit A, which will be irrevocable to the
fullest extent permitted by law (the "Proxy"), with respect to all
Shares owned of record by Stockholder; and (ii) Stockholder will cause
to be delivered to Saturn additional Proxies executed on behalf of each
record owner of any Shares owned beneficially (but not owned of record)
by Stockholder.
2. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Saturn and Merger Sub as follows:
2.1 Ownership of Shares. On the date hereof the Existing
Shares are all of the Shares currently beneficially owned by Stockholder. On the
Closing Date, the Shares will constitute all of the shares of Common Stock owned
beneficially by Stockholder. Stockholder does not have any rights to acquire any
additional shares of Common Stock other than pursuant to options issued under
the Stock Option Plans (as defined in the Merger Agreement), Stockholder
currently has with respect to the Existing Shares, and at Closing will have with
respect to the Shares, good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by this Agreement and other than restrictions on transfer
under applicable, Federal and State securities laws).
2.2 Power; Binding Agreement. Stockholder has the full legal
capacity, right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution and delivery of
this Agreement by Stockholder will not violate any agreement, contract or
arrangement to which Stockholder is a party or is bound, including, without
limitation, any voting agreement, stockholders agreement or voting trust. This
Agreement has been duly executed and delivered by Stockholder and constitutes a
legal, valid and binding agreement of Stockholder, enforceable in accordance
with its terms. Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the
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<PAGE> 3
transactions contemplated hereby will (a) other than filings required under the
federal or state securities laws, require any consent or approval of or filing
with any Governmental or other regulatory body, or (b) constitute a violation
of, conflict with or constitute, a default under (i) any law, rule or
regulation applicable to Stockholder, or (ii) any order, judgment or decree by
which Stockholder is bound.
2.3. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby exclusive of any commission or finder's
fees referred to in the Merger Agreement.
3. Representations and Warranties of Saturn and Merger Sub. Saturn and
Merger Sub, jointly and severally, represent and warrant to Stockholder as
follows:
3.1 Authority. Each of Saturn and Merger Sub has full legal right,
power and authority to enter into and perform all of its obligations under this
Agreement. The execution and delivery of this Agreement by Saturn and Merger Sub
will not violate the charter, bylaws or other organizational or constitutive
documents of Saturn or Merger Sub, or any other agreement, contract or
arrangement to which Saturn or Merger Sub is a party or is bound. This Agreement
has been duly executed and delivered by each of Saturn and Merger Sub and
constitutes a legal, valid and binding agreement of Saturn and Merger Sub,
enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Saturn or Merger Sub of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, or (b) constitute a violation of,
conflict with or constitute a default under (i) any law, rule or regulation
applicable to Saturn or Merger Sub, or (ii) any order, judgment or decree to
which Saturn or Merger Sub is bound.
3.2. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fee from Saturn or Merger Sub in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission or
finder's fees referred to in the Merger Agreement.
4. Termination. This Agreement (other than the provisions of Sections
5, 6 and 19 which will survive any termination of this Agreement), will
terminate on the earliest to occur of (a) the date on which Merger Sub accepts
for payment the Shares tendered in the Offer, so long as the Shares are so
tendered and not withdrawn, (b) the Effective Time (as defined in the Merger
Agreement), and (c) simultaneously with the termination of the Merger Agreement
in accordance with its terms.
5. Expenses. Except as provided in Section 19, each party hereto will
pay all of its expenses in connection with the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of its counsel
and other advisers. The provisions of this Section 5 will survive the Closing
hereunder.
6. Confidentiality. Stockholder recognizes that successful consummation
of the transactions contemplated by this Agreement may be dependent upon
confidentiality with respect to these matters. In this connection, pending
public disclosure, Stockholder agrees that it will not disclose or discuss these
matters with anyone (other than officers, directors, legal
3
<PAGE> 4
counsel and advisors of Stockholder or Smartflex, if any) not a party to this
Agreement, without prior written consent of Saturn, except as provided herein
or in the Merger Agreement and except for filings required pursuant to the
Exchange Act, and the rules and regulations thereunder or disclosures
Stockholder's legal counsel advises in writing are necessary in order to
fulfill Stockholder's obligations imposed by law, in which event Stockholder
will give prompt prior notice of such disclosure to Saturn and cooperate with
Saturn in obtaining a protective order or in limiting such disclosure.
7. Certain Covenants of Stockholder.
7.1 Except in accordance with the provisions of this
Agreement, Stockholder agrees, while this Agreement is in effect, not to,
directly or indirectly:
(a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a voting
trust or enter into a voting agreement with respect to any Shares; or
(c) solicit, initiate or encourage the submission of
any proposal or offer from any person (other than Saturn or Merger Sub) relating
to any acquisition or purchase of all or any material portion of the
assets of, or any equity interest in (other than pursuant to the exercise of
options outstanding on the date hereof), Smartflex or any subsidiary of
Smartflex, or any merger, consolidation, business combination, reorganization,
recapitalization or similar transaction involving Smartflex or any subsidiary
of Smartflex (each a "Competing Transaction"), or participate in any
discussions or negotiations regarding, or furnish to any other person any
information with respect to, or otherwise, cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by
any person (other than Saturn and Merger Sub) to do or seek any of the
foregoing, Stockholder will cease and cause to be terminated any existing
activities, discussions or negotiations by or on its behalf with any person
(other than Saturn and Merger Sub) conducted heretofore with respect to
any Competing Transaction and will promptly notify Saturn following receipt of
any request by any person (other than Saturn or Merger Sub) relating to any
possible Competing Transaction or information concerning Smartflex. Nothing
contained herein will prohibit Stockholder, solely in his capacity as an
officer or as a member of the board of directors of Smartflex (the "Board"),
from furnishing information to, or entering into discussions or negotiations
with, any person (other than Saturn and Merger Sub) in connection with an
unsolicited proposal involving a fully-financed (as represented by such person)
Competing Transaction which is made in writing by such person (other than
Saturn and Merger Sub) and which, if consummated, would provide consideration
per share, of Common Stock to the stockholders of Smartflex in excess of the
Offer Price if, and only to the extent that, the Board determines in good
faith, based upon the advice of SG Cowen Securities Corporation and the
written advice of Stradling Yocca Carlson & Rauth, that such action is required
for the Board to comply with its fiduciary duties to stockholders under
Delaware law.
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<PAGE> 5
7.2 Stockholder agrees, while this Agreement is in effect, to
notify Saturn promptly of the number of any shares of Common Stock beneficial
ownership of which is acquired by Stockholder after the date hereof.
8. Legend and Stop Transfer Instructions. Immediately after the
execution of this Agreement (and from time to time prior to the termination of
this Agreement), Stockholder will cause Smartflex to provide for each
certificate representing Shares beneficially owned by Stockholder to bear a
legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE STOCK TENDER
AND VOTING AGREEMENT AND ARE SUBJECT TO THE IRREVOCABLE PROXY
REFERRED TO THEREIN, EACH DATED AS OF JULY 6, 1999, AS SUCH
AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AND COPIES OF
WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), Stockholder will cause Smartflex to
require the transfer agent for its Common Stock to make a notation in its
records prohibiting the transfer of any of the Shares, except in accordance with
the terms and conditions of this Agreement.
9. Survival of Representation and Warranties. Except as expressly set
forth herein, none of the representations, warranties, covenants and agreements
made by Stockholder, Saturn or Merger Sub in this Agreement will survive the
Closing hereunder.
10. Notices. All notices or other communication required or permitted
hereunder will be in writing, will be given by hand delivery, U.S. Express Mail
(return receipt requested), overnight courier guaranteeing next business day
delivery, or facsimile, and will be deemed duly given when received, addressed
as follows,
If to Saturn or Merger Sub:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, Jr., President,
Chief Executive Officer and Chairman of the Board
Facsimile: (248) 853-2645
5
<PAGE> 6
With copies to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Stockholder:
Anthony R. W. Richardson
29962 Hillsdale Terrace
San Juan Capistrano, California 92675
With copies to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
11. Entire Agreement; Amendment. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the party against
whom such modification, amendment, alteration or supplement is sought to be
enforced.
12. Assigns. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and
personal representatives, but neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign any or all of its rights and obligations hereunder to Saturn or any
direct or indirect wholly-owned subsidiary of Saturn without the consent of
Stockholder or Company, but no such transfer will relieve Merger Sub of its
obligations under this Agreement if such subsidiary does not perform the
obligations of Merger Sub hereunder.
13. Governing Law; Jurisdiction; and Consent to Service. Except as
expressly set forth below, this Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In addition, each of Stockholder, Merger Sub and Saturn hereby agrees that any
dispute arising out of this Agreement will be heard in the United States
District Court for the Central District of California and, in connection
therewith, each party to
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<PAGE> 7
this Agreement hereby consents to the jurisdiction of such courts and agrees
that any service of process in connection with any dispute arising out of this
Agreement or the Merger may be given to any other party hereto by certified
mail, return receipt requested, at the respective addresses set forth in
Section 10 above.
14. Injunctive Relief. The parties agree that in the event of a breach
of any provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party will be entitled
to obtain in any court of competent jurisdiction a decree of specific
performance or to enjoin the continuing breach of such provision, in each case
without the requirement that a bond be posted, as well as to obtain damages for
breach of this Agreement. By seeking or obtaining such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
15. Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts (including by facsimile signature), each of which
will be deemed to be an original and all of which together will constitute one
and the same document.
16. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision will be interpreted
to be only so broad as is enforceable.
17. Further Assurances. Each party hereto will execute and deliver such
additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. Third Party Beneficiaries. Nothing in this Agreement, expressed or
implied, will be construed to give any person other than the parties hereto any
legal or equitable right, remedy or claim under or by reason of this Agreement
or any provision contained herein.
19. Legal Expenses. In the event any legal proceeding is commenced by
any party to this Agreement to enforce or recover damages for any breach of the
provisions hereof, the prevailing party in such legal proceeding will be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees. The provisions of this Section
19 will survive the Closing hereunder.
20. Amendment and Modification. This Agreement may be amended, modified
and supplemented only by a written document executed by Saturn, Merger Sub and
Stockholder.
[Remainder of page intentionally left blank.]
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<PAGE> 8
IN WITNESS WHEREOF, Saturn and Merger Sub have caused this Agreement to
be executed by their duly authorized officers, and Stockholder has duly executed
this Agreement, as of the date and year first above written.
"SATURN"
SATURN ELECTRONICS &
ENGINEERING, INC.
By: /s/ W. Tsuha
------------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President,
Chief Executive Officer
and Chairman of the Board
"MERGER SUB"
SSI ACQUISITION CORP.
By: /s/ W. Tsuha
------------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President
"STOCKHOLDER"
/s/ A.R.W. Richardson
-----------------------------------------------------
Name: A.R.W. Richardson
8
<PAGE> 9
EXHIBIT A
Form Of Irrevocable Proxy
The undersigned stockholder of Smartflex Systems, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Wallace K. Tsuha, Jr., Jereen Trudell and
Saturn Electronics & Engineering, Inc. ("Saturn"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the issued and outstanding shares of capital stock of Smartflex owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy and (ii) any and all other shares of
capital stock of Smartflex which the undersigned may acquire after the date
hereof (the shares of the capital stock of Smartflex referred to in (clauses (i)
and (ii) of the immediately preceding sentence are collectively referred to as
the "Shares"). Upon the execution hereof all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with a Stock Tender and Voting Agreement, dated as of the date
hereof, among Saturn, SSI Acquisition Corp. and the undersigned (the "Stock
Tender Agreement"), and is granted in consideration of Saturn entering into the
Agreement and Plan of Merger, dated as of the date hereof, among Saturn, SSI
Acquisition Corp. and Smartflex (the "Merger Agreement"). Capitalized terms used
but not otherwise defined in this proxy have the meanings ascribed to such terms
in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the earlier to occur
of the valid termination of the Merger Agreement pursuant to Section 8.01
thereof or the Effective Time at any meeting of the stockholders of Smartflex,
however called, or in any written action by consent of stockholders of
Smartflex: (a) in favor of the Merger; (b) against any action or agreement that
would result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the Merger
Agreement; or (c) against any action or agreement that would impede, interfere
with, delay, postpone, or attempt to discourage the Merger or the Offer
including, but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but not
limited to, a merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a sale or
transfer of a material amount of assets of Smartflex or any of its subsidiaries,
(iii) any change in the board of directors of Smartflex, (iv) any material
change in the capitalization of Smartflex, (v) any change in the charter,
by-laws or other organizational or constitutive documents of Smartflex, or (v)
any other material change in the corporate structure or business of Smartflex.
This proxy will be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Shares).
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<PAGE> 10
Any term or provision of this proxy which is invalid or unenforceable,
in any jurisdiction will, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this proxy or affecting the
validity or enforceability of any of the terms or provisions of this proxy in
any other jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.
This proxy will terminate immediately upon the earlier of the valid
termination of the Merger Agreement pursuant to Section 8.01 thereof or the
Effective Time.
Dated: July 6, 1999
- -----------------------------------
Name: Anthony R.W. Richardson
Number of shares of Common Stock owned of record as of the date of this proxy:
2,000
10
<PAGE> 1
EXHIBIT 99(c)(9)
STOCK TENDER AND VOTING AGREEMENT
STOCK TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of July
6, 1999 by and among John W. Hohener ("Stockholder"), Saturn Electronics &
Engineering, Inc., a Michigan corporation ("Saturn"), and SSI Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Saturn ("Merger Sub").
RECITALS
A. Concurrently herewith Saturn, Merger Sub and Smartflex Systems,
Inc., a Delaware corporation ("Smartflex"), are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which
Merger Sub agrees to make a tender offer (the "Offer") for all of the
outstanding shares of common stock, $.0025 par value (the "Common Stock") of
Smartflex, at a price of $10.50 per share (the "Offer Price"), in cash,
following which Smartflex will be merged with and into Merger Sub, with
Smartflex as the Surviving Corporation (the "Merger").
B. Stockholder beneficially owns (as defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as
of the date hereof, 57,113 shares of Common Stock (the "Existing Shares",
together with any shares of Common Stock beneficial ownership of which is
acquired by Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares").
C. As a condition to their willingness to enter into the Merger
Agreement, Saturn and Merger Sub have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
D. Saturn and Merger Sub have entered into the Merger Agreement in
reliance on Stockholder's representations, warranties, covenants and agreement
hereunder.
THEREFORE, the parties agree as follows:
1. Agreement to Tender and Vote; Irrevocable Proxy.
1.1 Tender. Stockholder agrees to validly tender all Shares
beneficially owned by it pursuant to the Offer within ten business days
of commencement of the Offer, and not withdraw any such Shares, except
to the extent that the tender of shares (including Shares acquired
after the date hereof) pursuant to the Offer would subject Stockholder
to liability under Section 16(b) of the Exchange Act.
1.2 Voting. Stockholder hereby agrees that, during the time this
Agreement is in effect, at any meeting of the stockholders of
Smartflex, however called, and in any action by consent of the
stockholders of Smartflex, Stockholder will: (a) vote all Shares
beneficially owned by it in favor of the Merger; (b) vote all Shares
beneficially owned by it against any action or agreement that would
result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the
Merger Agreement; (c) vote all Shares beneficially owned by it against
<PAGE> 2
any action or agreement that would impede, interfere with, delay,
postpone or attempt to discourage, the Merger or the Offer including,
but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but
not limited to, a merger, other business combination, reorganization,
consolidation, recapitalization, dissolution or liquidation involving
Smartflex, (ii) a sale or transfer of a material amount of assets of
Smartflex or any of its subsidiaries, (iii) any change in the board of
directors of Smartflex, (iv) any material change in the capitalization
of Smartflex, (v) any change in the charter, by-laws or other
organizational or constitutive documents of Smartflex, or (vi) any
other material change in the corporate structure or business of
Smartflex; and (d) without limiting the foregoing, consult with Saturn
and vote all Shares beneficially owned by it in such manner as is
determined by Saturn to be in compliance with the provisions of this
Section 1.2. Stockholder acknowledges receipt and review of a copy of
the Merger Agreement. Notwithstanding the foregoing, Stockholder may
take any action in his or her role as a director or officer of
Smartflex as permitted under Sections 6.04 and 8.01(e) of the Merger
Agreement. This Agreement is intended to bind Stockholder only with
respect to the specific matters set forth herein and shall not prohibit
the Stockholder from acting in accordance with his or her fiduciary
duties to Smartflex.
1.3. Irrevocable Proxy. Contemporaneously with the execution
of this Agreement: (i) Stockholder will deliver to Saturn a proxy in
the form attached hereto as Exhibit A, which will be irrevocable to the
fullest extent permitted by law (the "Proxy"), with respect to all
Shares owned of record by Stockholder; and (ii) Stockholder will cause
to be delivered to Saturn additional Proxies executed on behalf of each
record owner of any Shares owned beneficially (but not owned of record)
by Stockholder.
2. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Saturn and Merger Sub as follows:
2.1 Ownership of Shares. On the date hereof the Existing
Shares are all of the Shares currently beneficially owned by Stockholder. On the
Closing Date, the Shares will constitute all of the shares of Common Stock owned
beneficially by Stockholder. Stockholder does not have any rights to acquire any
additional shares of Common Stock other than pursuant to options issued under
the Stock Option Plans (as defined in the Merger Agreement), Stockholder
currently has with respect to the Existing Shares, and at Closing will have with
respect to the Shares, good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by this Agreement and other than restrictions on transfer
under applicable, Federal and State securities laws).
2.2 Power; Binding Agreement. Stockholder has the full legal
capacity, right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution and delivery of
this Agreement by Stockholder will not violate any agreement, contract or
arrangement to which Stockholder is a party or is bound, including, without
limitation, any voting agreement, stockholders agreement or voting trust. This
Agreement has been duly executed and delivered by Stockholder and constitutes a
legal, valid and binding agreement of Stockholder, enforceable in accordance
with its terms. Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the
2
<PAGE> 3
transactions contemplated hereby will (a) other than filings required under the
federal or state securities laws, require any consent or approval of or filing
with any Governmental or other regulatory body, or (b) constitute a violation
of, conflict with or constitute, a default under (i) any law, rule or
regulation applicable to Stockholder, or (ii) any order, judgment or decree by
which Stockholder is bound.
2.3. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby exclusive of any commission or finder's
fees referred to in the Merger Agreement.
3. Representations and Warranties of Saturn and Merger Sub. Saturn and
Merger Sub, jointly and severally, represent and warrant to Stockholder as
follows:
3.1 Authority. Each of Saturn and Merger Sub has full legal
right, power and authority to enter into and perform all of its obligations
under this Agreement. The execution and delivery of this Agreement by Saturn and
Merger Sub will not violate the charter, bylaws or other organizational or
constitutive documents of Saturn or Merger Sub, or any other agreement, contract
or arrangement to which Saturn or Merger Sub is a party or is bound. This
Agreement has been duly executed and delivered by each of Saturn and Merger Sub
and constitutes a legal, valid and binding agreement of Saturn and Merger Sub,
enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Saturn or Merger Sub of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, or (b) constitute a violation of,
conflict with or constitute a default under (i) any law, rule or regulation
applicable to Saturn or Merger Sub, or (ii) any order, judgment or decree to
which Saturn or Merger Sub is bound.
3.2. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fee from Saturn or Merger Sub in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission or
finder's fees referred to in the Merger Agreement.
4. Termination. This Agreement (other than the provisions of Sections
5, 6 and 19 which will survive any termination of this Agreement), will
terminate on the earliest to occur of (a) the date on which Merger Sub accepts
for payment the Shares tendered in the Offer, so long as the Shares are so
tendered and not withdrawn, (b) the Effective Time (as defined in the Merger
Agreement), and (c) simultaneously with the termination of the Merger Agreement
in accordance with its terms.
5. Expenses. Except as provided in Section 19, each party hereto will
pay all of its expenses in connection with the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of its counsel
and other advisers. The provisions of this Section 5 will survive the Closing
hereunder.
6. Confidentiality. Stockholder recognizes that successful consummation
of the transactions contemplated by this Agreement may be dependent upon
confidentiality with respect to these matters. In this connection, pending
public disclosure, Stockholder agrees that it will not disclose or discuss these
matters with anyone (other than officers, directors, legal
3
<PAGE> 4
counsel and advisors of Stockholder or Smartflex, if any) not a party to this
Agreement, without prior written consent of Saturn, except as provided herein
or in the Merger Agreement and except for filings required pursuant to the
Exchange Act, and the rules and regulations thereunder or disclosures
Stockholder's legal counsel advises in writing are necessary in order to
fulfill Stockholder's obligations imposed by law, in which event Stockholder
will give prompt prior notice of such disclosure to Saturn and cooperate with
Saturn in obtaining a protective order or in limiting such disclosure.
7. Certain Covenants of Stockholder.
7.1 Except in accordance with the provisions of this
Agreement, Stockholder agrees, while this Agreement is in effect, not to,
directly or indirectly:
(a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares; or
(c) solicit, initiate or encourage the
submission of any proposal or offer from any person (other than Saturn or
Merger Sub) relating to any acquisition or purchase of all or any material
portion of the assets of, or any equity interest in (other than pursuant to the
exercise of options outstanding on the date hereof), Smartflex or any
subsidiary of Smartflex, or any merger, consolidation, business combination,
reorganization, recapitalization or similar transaction involving Smartflex or
any subsidiary of Smartflex (each a "Competing Transaction"), or participate in
any discussions or negotiations regarding, or furnish to any other person any
information with respect to, or otherwise, cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any person
(other than Saturn and Merger Sub) to do or seek any of the foregoing,
Stockholder will cease and cause to be terminated any existing activities,
discussions or negotiations by or on its behalf with any person (other than
Saturn and Merger Sub) conducted heretofore with respect to any Competing
Transaction and will promptly notify Saturn following receipt of any request
by any person (other than Saturn or Merger Sub) relating to any possible
Competing Transaction or information concerning Smartflex. Nothing contained
herein will prohibit Stockholder, solely in his capacity as an officer or as a
member of the board of directors of Smartflex (the "Board"), from furnishing
information to, or entering into discussions or negotiations with, any person
(other than Saturn and Merger Sub) in connection with an unsolicited proposal
involving a fully-financed (as represented by such person) Competing
Transaction which is made in writing by such person (other than Saturn and
Merger Sub) and which, if consummated, would provide consideration per share, of
Common Stock to the stockholders of Smartflex in excess of the Offer Price if,
and only to the extent that, the Board determines in good faith, based upon the
advice of SG Cowen Securities Corporation and the written advice of Stradling
Yocca Carlson & Rauth, that such action is required for the Board to comply with
its fiduciary duties to stockholders under Delaware law.
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<PAGE> 5
7.2 Stockholder agrees, while this Agreement is in effect, to
notify Saturn promptly of the number of any shares of Common Stock beneficial
ownership of which is acquired by Stockholder after the date hereof.
8. Legend and Stop Transfer Instructions. Immediately after the
execution of this Agreement (and from time to time prior to the termination of
this Agreement), Stockholder will cause Smartflex to provide for each
certificate representing Shares beneficially owned by Stockholder to bear a
legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE STOCK TENDER
AND VOTING AGREEMENT AND ARE SUBJECT TO THE IRREVOCABLE PROXY
REFERRED TO THEREIN, EACH DATED AS OF JULY 6, 1999, AS SUCH
AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AND COPIES OF
WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), Stockholder will cause Smartflex to
require the transfer agent for its Common Stock to make a notation in its
records prohibiting the transfer of any of the Shares, except in accordance with
the terms and conditions of this Agreement.
9. Survival of Representation and Warranties. Except as expressly set
forth herein, none of the representations, warranties, covenants and agreements
made by Stockholder, Saturn or Merger Sub in this Agreement will survive the
Closing hereunder.
10. Notices. All notices or other communication required or permitted
hereunder will be in writing, will be given by hand delivery, U.S. Express Mail
(return receipt requested), overnight courier guaranteeing next business day
delivery, or facsimile, and will be deemed duly given when received, addressed
as follows,
If to Saturn or Merger Sub:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, Jr., President,
Chief Executive Officer and Chairman of the Board
Facsimile: (248) 853-2645
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<PAGE> 6
With copies to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Stockholder:
John W. Hohener
21861 Via Del Lago
Trabuco Canyon, California 92679
With copies to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
11. Entire Agreement; Amendment. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the party against
whom such modification, amendment, alteration or supplement is sought to be
enforced.
12. Assigns. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and
personal representatives, but neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign any or all of its rights and obligations hereunder to Saturn or any
direct or indirect wholly-owned subsidiary of Saturn without the consent of
Stockholder or Company, but no such transfer will relieve Merger Sub of its
obligations under this Agreement if such subsidiary does not perform the
obligations of Merger Sub hereunder.
13. Governing Law; Jurisdiction; and Consent to Service. Except as
expressly set forth below, this Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In addition, each of Stockholder, Merger Sub and Saturn hereby agrees that any
dispute arising out of this Agreement will be heard in the United States
District Court for the Central District of California and, in connection
therewith, each party to
6
<PAGE> 7
this Agreement hereby consents to the jurisdiction of such courts and agrees
that any service of process in connection with any dispute arising out of this
Agreement or the Merger may be given to any other party hereto by certified
mail, return receipt requested, at the respective addresses set forth in
Section 10 above.
14. Injunctive Relief. The parties agree that in the event of a breach
of any provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party will be entitled
to obtain in any court of competent jurisdiction a decree of specific
performance or to enjoin the continuing breach of such provision, in each case
without the requirement that a bond be posted, as well as to obtain damages for
breach of this Agreement. By seeking or obtaining such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
15. Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts (including by facsimile signature), each of which
will be deemed to be an original and all of which together will constitute one
and the same document.
16. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision will be interpreted
to be only so broad as is enforceable.
17. Further Assurances. Each party hereto will execute and deliver such
additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. Third Party Beneficiaries. Nothing in this Agreement, expressed or
implied, will be construed to give any person other than the parties hereto any
legal or equitable right, remedy or claim under or by reason of this Agreement
or any provision contained herein.
19. Legal Expenses. In the event any legal proceeding is commenced by
any party to this Agreement to enforce or recover damages for any breach of the
provisions hereof, the prevailing party in such legal proceeding will be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees. The provisions of this Section
19 will survive the Closing hereunder.
20. Amendment and Modification. This Agreement may be amended, modified
and supplemented only by a written document executed by Saturn, Merger Sub and
Stockholder.
[Remainder of page intentionally left blank.]
7
<PAGE> 8
IN WITNESS WHEREOF, Saturn and Merger Sub have caused this Agreement to
be executed by their duly authorized officers, and Stockholder has duly executed
this Agreement, as of the date and year first above written.
"SATURN"
SATURN ELECTRONICS &
ENGINEERING, INC.
By: /s/ W. Tsuha
---------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President,
Chief Executive Officer and
Chairman of the Board
"MERGER SUB"
SSI ACQUISITION CORP.
By: /s/ W. Tsuha
---------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President
"STOCKHOLDER"
/s/ John Hohener
---------------------------------
Name: John Hohener
8
<PAGE> 9
EXHIBIT A
Form Of Irrevocable Proxy
The undersigned stockholder of Smartflex Systems, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Wallace K. Tsuha, Jr., Jereen Trudell and
Saturn Electronics & Engineering, Inc. ("Saturn"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the issued and outstanding shares of capital stock of Smartflex owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy and (ii) any and all other shares of
capital stock of Smartflex which the undersigned may acquire after the date
hereof (the shares of the capital stock of Smartflex referred to in (clauses (i)
and (ii) of the immediately preceding sentence are collectively referred to as
the "Shares"). Upon the execution hereof all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with a Stock Tender and Voting Agreement, dated as of the date
hereof, among Saturn, SSI Acquisition Corp. and the undersigned (the "Stock
Tender Agreement"), and is granted in consideration of Saturn entering into the
Agreement and Plan of Merger, dated as of the date hereof, among Saturn, SSI
Acquisition Corp. and Smartflex (the "Merger Agreement"). Capitalized terms used
but not otherwise defined in this proxy have the meanings ascribed to such terms
in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the earlier to occur
of the valid termination of the Merger Agreement pursuant to Section 8.01
thereof or the Effective Time at any meeting of the stockholders of Smartflex,
however called, or in any written action by consent of stockholders of
Smartflex: (a) in favor of the Merger; (b) against any action or agreement that
would result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the Merger
Agreement; or (c) against any action or agreement that would impede, interfere
with, delay, postpone, or attempt to discourage the Merger or the Offer
including, but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but not
limited to, a merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a sale or
transfer of a material amount of assets of Smartflex or any of its subsidiaries,
(iii) any change in the board of directors of Smartflex, (iv) any material
change in the capitalization of Smartflex, (v) any change in the charter,
by-laws or other organizational or constitutive documents of Smartflex, or (v)
any other material change in the corporate structure or business of Smartflex.
This proxy will be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Shares).
9
<PAGE> 10
Any term or provision of this proxy which is invalid or unenforceable,
in any jurisdiction will, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this proxy or affecting the
validity or enforceability of any of the terms or provisions of this proxy in
any other jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.
This proxy will terminate immediately upon the earlier of the valid
termination of the Merger Agreement pursuant to Section 8.01 thereof or the
Effective Time.
Dated: July 6, 1999
- ------------------------------
Name: John W. Hohener
Number of shares of Common Stock owned of record as of the date of this proxy:
30,613
10
<PAGE> 1
EXHIBIT 99(c)(10)
STOCK TENDER AND VOTING AGREEMENT
STOCK TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of July
6, 1999 by and among Richard D. Bell ("Stockholder"), Saturn Electronics &
Engineering, Inc., a Michigan corporation ("Saturn"), and SSI Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Saturn ("Merger Sub").
RECITALS
A. Concurrently herewith Saturn, Merger Sub and Smartflex
Systems, Inc., a Delaware corporation ("Smartflex"), are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger Agreement"),
pursuant to which Merger Sub agrees to make a tender offer (the "Offer") for all
of the outstanding shares of common stock, $.0025 par value (the "Common Stock")
of Smartflex, at a price of $10.50 per share (the "Offer Price"), in cash,
following which Smartflex will be merged with and into Merger Sub, with
Smartflex as the Surviving Corporation (the "Merger").
B. Stockholder beneficially owns (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), as of the date hereof, 75,649 shares of Common Stock (the "Existing
Shares", together with any shares of Common Stock beneficial ownership of which
is acquired by Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares").
C. As a condition to their willingness to enter into the Merger
Agreement, Saturn and Merger Sub have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
D. Saturn and Merger Sub have entered into the Merger Agreement
in reliance on Stockholder's representations, warranties, covenants and
agreement hereunder.
THEREFORE, the parties agree as follows:
1. Agreement to Tender and Vote; Irrevocable Proxy.
1.1 Tender. Stockholder agrees to validly tender all Shares
beneficially owned by it pursuant to the Offer within ten business days
of commencement of the Offer, and not withdraw any such Shares, except
to the extent that the tender of shares (including Shares acquired
after the date hereof) pursuant to the Offer would subject Stockholder
to liability under Section 16(b) of the Exchange Act.
1.2 Voting. Stockholder hereby agrees that, during the time
this Agreement is in effect, at any meeting of the stockholders of
Smartflex, however called, and in any action by consent of the
stockholders of Smartflex, Stockholder will: (a) vote all Shares
beneficially owned by it in favor of the Merger; (b) vote all Shares
beneficially owned by it against any action or agreement that would
result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the
Merger Agreement; (c) vote all Shares beneficially owned by it against
<PAGE> 2
any action or agreement that would impede, interfere with, delay,
postpone or attempt to discourage, the Merger or the Offer including,
but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but
not limited to, a merger, other business combination, reorganization,
consolidation, recapitalization, dissolution or liquidation involving
Smartflex, (ii) a sale or transfer of a material amount of assets of
Smartflex or any of its subsidiaries, (iii) any change in the board of
directors of Smartflex, (iv) any material change in the capitalization
of Smartflex, (v) any change in the charter, by-laws or other
organizational or constitutive documents of Smartflex, or (vi) any
other material change in the corporate structure or business of
Smartflex; and (d) without limiting the foregoing, consult with Saturn
and vote all Shares beneficially owned by it in such manner as is
determined by Saturn to be in compliance with the provisions of this
Section 1.2. Stockholder acknowledges receipt and review of a copy of
the Merger Agreement. Notwithstanding the foregoing, Stockholder may
take any action in his or her role as a director or officer of
Smartflex as permitted under Sections 6.04 and 8.01(e) of the Merger
Agreement. This Agreement is intended to bind Stockholder only with
respect to the specific matters set forth herein and shall not prohibit
the Stockholder from acting in accordance with his or her fiduciary
duties to Smartflex.
1.3. Irrevocable Proxy. Contemporaneously with the execution
of this Agreement: (i) Stockholder will deliver to Saturn a proxy in
the form attached hereto as Exhibit A, which will be irrevocable to the
fullest extent permitted by law (the "Proxy"), with respect to all
Shares owned of record by Stockholder; and (ii) Stockholder will cause
to be delivered to Saturn additional Proxies executed on behalf of each
record owner of any Shares owned beneficially (but not owned of record)
by Stockholder.
2. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Saturn and Merger Sub as follows:
2.1 Ownership of Shares. On the date hereof the Existing
Shares are all of the Shares currently beneficially owned by Stockholder. On the
Closing Date, the Shares will constitute all of the shares of Common Stock owned
beneficially by Stockholder. Stockholder does not have any rights to acquire any
additional shares of Common Stock other than pursuant to options issued under
the Stock Option Plans (as defined in the Merger Agreement), Stockholder
currently has with respect to the Existing Shares, and at Closing will have with
respect to the Shares, good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by this Agreement and other than restrictions on transfer
under applicable, Federal and State securities laws).
2.2 Power; Binding Agreement. Stockholder has the full legal
capacity, right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution and delivery of
this Agreement by Stockholder will not violate any agreement, contract or
arrangement to which Stockholder is a party or is bound, including, without
limitation, any voting agreement, stockholders agreement or voting trust. This
Agreement has been duly executed and delivered by Stockholder and constitutes a
legal, valid and binding agreement of Stockholder, enforceable in accordance
with its terms. Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the
2
<PAGE> 3
transactions contemplated hereby will (a) other than filings required under the
federal or state securities laws, require any consent or approval of or filing
with any Governmental or other regulatory body, or (b) constitute a violation
of, conflict with or constitute, a default under (i) any law, rule or regulation
applicable to Stockholder, or (ii) any order, judgment or decree by which
Stockholder is bound.
2.3. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby exclusive of any commission or finder's
fees referred to in the Merger Agreement.
3. Representations and Warranties of Saturn and Merger Sub.
Saturn and Merger Sub, jointly and severally, represent and warrant to
Stockholder as follows:
3.1 Authority. Each of Saturn and Merger Sub has full legal
right, power and authority to enter into and perform all of its obligations
under this Agreement. The execution and delivery of this Agreement by Saturn and
Merger Sub will not violate the charter, bylaws or other organizational or
constitutive documents of Saturn or Merger Sub, or any other agreement, contract
or arrangement to which Saturn or Merger Sub is a party or is bound. This
Agreement has been duly executed and delivered by each of Saturn and Merger Sub
and constitutes a legal, valid and binding agreement of Saturn and Merger Sub,
enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Saturn or Merger Sub of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, or (b) constitute a violation of,
conflict with or constitute a default under (i) any law, rule or regulation
applicable to Saturn or Merger Sub, or (ii) any order, judgment or decree to
which Saturn or Merger Sub is bound.
3.2. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fee from Saturn or Merger Sub in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission or
finder's fees referred to in the Merger Agreement.
4. Termination. This Agreement (other than the provisions of
Sections 5, 6 and 19 which will survive any termination of this Agreement), will
terminate on the earliest to occur of (a) the date on which Merger Sub accepts
for payment the Shares tendered in the Offer, so long as the Shares are so
tendered and not withdrawn, (b) the Effective Time (as defined in the Merger
Agreement), and (c) simultaneously with the termination of the Merger Agreement
in accordance with its terms.
5. Expenses. Except as provided in Section 19, each party hereto
will pay all of its expenses in connection with the transactions contemplated by
this Agreement, including, without limitation, the fees and expenses of its
counsel and other advisers. The provisions of this Section 5 will survive the
Closing hereunder.
6. Confidentiality. Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to these matters. In this connection, pending
public disclosure, Stockholder agrees that it will not disclose or discuss these
matters with anyone (other than officers, directors, legal
3
<PAGE> 4
counsel and advisors of Stockholder or Smartflex, if any) not a party to this
Agreement, without prior written consent of Saturn, except as provided herein or
in the Merger Agreement and except for filings required pursuant to the Exchange
Act, and the rules and regulations thereunder or disclosures Stockholder's legal
counsel advises in writing are necessary in order to fulfill Stockholder's
obligations imposed by law, in which event Stockholder will give prompt prior
notice of such disclosure to Saturn and cooperate with Saturn in obtaining a
protective order or in limiting such disclosure.
7. Certain Covenants of Stockholder.
7.1 Except in accordance with the provisions of this
Agreement, Stockholder agrees, while this Agreement is in effect, not to,
directly or indirectly:
(a) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a voting
trust or enter into a voting agreement with respect to any Shares; or
(c) solicit, initiate or encourage the submission of any
proposal or offer from any person (other than Saturn or Merger Sub) relating to
any acquisition or purchase of all or any material portion of the assets of, or
any equity interest in (other than pursuant to the exercise of options
outstanding on the date hereof), Smartflex or any subsidiary of Smartflex, or
any merger, consolidation, business combination, reorganization,
recapitalization or similar transaction involving Smartflex or any subsidiary of
Smartflex (each a "Competing Transaction"), or participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise, cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any person (other than
Saturn and Merger Sub) to do or seek any of the foregoing, Stockholder will
cease and cause to be terminated any existing activities, discussions or
negotiations by or on its behalf with any person (other than Saturn and Merger
Sub) conducted heretofore with respect to any Competing Transaction and will
promptly notify Saturn following receipt of any request by any person (other
than Saturn or Merger Sub) relating to any possible Competing Transaction or
information concerning Smartflex. Nothing contained herein will prohibit
Stockholder, solely in his capacity as an officer or as a member of the board of
directors of Smartflex (the "Board"), from furnishing information to, or
entering into discussions or negotiations with, any person (other than Saturn
and Merger Sub) in connection with an unsolicited proposal involving a
fully-financed (as represented by such person) Competing Transaction which is
made in writing by such person (other than Saturn and Merger Sub) and which, if
consummated, would provide consideration per share, of Common Stock to the
stockholders of Smartflex in excess of the Offer Price if, and only to the
extent that, the Board determines in good faith, based upon the advice of SG
Cowen Securities Corporation and the written advice of Stradling Yocca Carlson &
Rauth, that such action is required for the Board to comply with its fiduciary
duties to stockholders under Delaware law.
4
<PAGE> 5
7.2 Stockholder agrees, while this Agreement is in effect, to
notify Saturn promptly of the number of any shares of Common Stock beneficial
ownership of which is acquired by Stockholder after the date hereof.
8. Legend and Stop Transfer Instructions. Immediately after the
execution of this Agreement (and from time to time prior to the termination of
this Agreement), Stockholder will cause Smartflex to provide for each
certificate representing Shares beneficially owned by Stockholder to bear a
legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE STOCK TENDER
AND VOTING AGREEMENT AND ARE SUBJECT TO THE IRREVOCABLE PROXY
REFERRED TO THEREIN, EACH DATED AS OF JULY 6, 1999, AS SUCH
AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AND COPIES OF
WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), Stockholder will cause Smartflex to
require the transfer agent for its Common Stock to make a notation in its
records prohibiting the transfer of any of the Shares, except in accordance with
the terms and conditions of this Agreement.
9. Survival of Representation and Warranties. Except as expressly
set forth herein, none of the representations, warranties, covenants and
agreements made by Stockholder, Saturn or Merger Sub in this Agreement will
survive the Closing hereunder.
10. Notices. All notices or other communication required or
permitted hereunder will be in writing, will be given by hand delivery, U.S.
Express Mail (return receipt requested), overnight courier guaranteeing next
business day delivery, or facsimile, and will be deemed duly given when
received, addressed as follows,
If to Saturn or Merger Sub:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, Jr., President,
Chief Executive Officer and Chairman
of the Board
Facsimile: (248) 853-2645
5
<PAGE> 6
With copies to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Stockholder:
Richard D. Bell
44 Glen Echo
Dove Canyon, California 92679
With copies to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
11. Entire Agreement; Amendment. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the party against
whom such modification, amendment, alteration or supplement is sought to be
enforced.
12. Assigns. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and
personal representatives, but neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign any or all of its rights and obligations hereunder to Saturn or any
direct or indirect wholly-owned subsidiary of Saturn without the consent of
Stockholder or Company, but no such transfer will relieve Merger Sub of its
obligations under this Agreement if such subsidiary does not perform the
obligations of Merger Sub hereunder.
13. Governing Law; Jurisdiction; and Consent to Service. Except as
expressly set forth below, this Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In addition, each of Stockholder, Merger Sub and Saturn hereby agrees that any
dispute arising out of this Agreement will be heard in the United States
District Court for the Central District of California and, in connection
therewith, each party to
6
<PAGE> 7
this Agreement hereby consents to the jurisdiction of such courts and agrees
that any service of process in connection with any dispute arising out of this
Agreement or the Merger may be given to any other party hereto by certified
mail, return receipt requested, at the respective addresses set forth in Section
10 above.
14. Injunctive Relief. The parties agree that in the event of a
breach of any provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party will be entitled
to obtain in any court of competent jurisdiction a decree of specific
performance or to enjoin the continuing breach of such provision, in each case
without the requirement that a bond be posted, as well as to obtain damages for
breach of this Agreement. By seeking or obtaining such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
15. Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts (including by facsimile signature), each
of which will be deemed to be an original and all of which together will
constitute one and the same document.
16. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision will be interpreted
to be only so broad as is enforceable.
17. Further Assurances. Each party hereto will execute and deliver
such additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, will be construed to give any person other than the
parties hereto any legal or equitable right, remedy or claim under or by reason
of this Agreement or any provision contained herein.
19. Legal Expenses. In the event any legal proceeding is commenced
by any party to this Agreement to enforce or recover damages for any breach of
the provisions hereof, the prevailing party in such legal proceeding will be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees. The provisions of this Section
19 will survive the Closing hereunder.
20. Amendment and Modification. This Agreement may be amended,
modified and supplemented only by a written document executed by Saturn, Merger
Sub and Stockholder.
[Remainder of page intentionally left blank.]
7
<PAGE> 8
IN WITNESS WHEREOF, Saturn and Merger Sub have caused this Agreement to
be executed by their duly authorized officers, and Stockholder has duly executed
this Agreement, as of the date and year first above written.
"SATURN"
SATURN ELECTRONICS &
ENGINEERING, INC.
By: /s/ W. Tsuha
------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President,
Chief Executive Officer and
Chairman of the Board
"MERGER SUB"
SSI ACQUISITION CORP.
By: /s/ W. Tsuha
------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President
"STOCKHOLDER"
/s/ Richard D. Bell
------------------------------------------
Name: Richard D. Bell
8
<PAGE> 9
EXHIBIT A
Form Of Irrevocable Proxy
The undersigned stockholder of Smartflex Systems, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Wallace K. Tsuha, Jr., Jereen Trudell and
Saturn Electronics & Engineering, Inc. ("Saturn"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the issued and outstanding shares of capital stock of Smartflex owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy and (ii) any and all other shares of
capital stock of Smartflex which the undersigned may acquire after the date
hereof (the shares of the capital stock of Smartflex referred to in (clauses (i)
and (ii) of the immediately preceding sentence are collectively referred to as
the "Shares"). Upon the execution hereof all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with a Stock Tender and Voting Agreement, dated as of the date
hereof, among Saturn, SSI Acquisition Corp. and the undersigned (the "Stock
Tender Agreement"), and is granted in consideration of Saturn entering into the
Agreement and Plan of Merger, dated as of the date hereof, among Saturn, SSI
Acquisition Corp. and Smartflex (the "Merger Agreement"). Capitalized terms used
but not otherwise defined in this proxy have the meanings ascribed to such terms
in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the earlier to occur
of the valid termination of the Merger Agreement pursuant to Section 8.01
thereof or the Effective Time at any meeting of the stockholders of Smartflex,
however called, or in any written action by consent of stockholders of
Smartflex: (a) in favor of the Merger; (b) against any action or agreement that
would result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the Merger
Agreement; or (c) against any action or agreement that would impede, interfere
with, delay, postpone, or attempt to discourage the Merger or the Offer
including, but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but not
limited to, a merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a sale or
transfer of a material amount of assets of Smartflex or any of its subsidiaries,
(iii) any change in the board of directors of Smartflex, (iv) any material
change in the capitalization of Smartflex, (v) any change in the charter,
by-laws or other organizational or constitutive documents of Smartflex, or (v)
any other material change in the corporate structure or business of Smartflex.
This proxy will be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Shares).
9
<PAGE> 10
Any term or provision of this proxy which is invalid or unenforceable,
in any jurisdiction will, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this proxy or affecting the
validity or enforceability of any of the terms or provisions of this proxy in
any other jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.
This proxy will terminate immediately upon the earlier of the valid
termination of the Merger Agreement pursuant to Section 8.01 thereof or the
Effective Time.
Dated: July 6, 1999
- --------------------------------------
Name: Richard D. Bell
Number of shares of Common Stock owned of record as of the date of this proxy:
50,399
10
<PAGE> 1
EXHIBIT 99(c)(11)
STOCK TENDER AND VOTING AGREEMENT
STOCK TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of July
6, 1999 by and among James Cogan ("Stockholder"), Saturn Electronics &
Engineering, Inc., a Michigan corporation ("Saturn"), and SSI Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Saturn ("Merger Sub").
RECITALS
A. Concurrently herewith Saturn, Merger Sub and Smartflex
Systems, Inc., a Delaware corporation ("Smartflex"), are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger Agreement"),
pursuant to which Merger Sub agrees to make a tender offer (the "Offer") for all
of the outstanding shares of common stock, $.0025 par value (the "Common Stock")
of Smartflex, at a price of $10.50 per share (the "Offer Price"), in cash,
following which Smartflex will be merged with and into Merger Sub, with
Smartflex as the Surviving Corporation (the "Merger").
B. Stockholder beneficially owns (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), as of the date hereof, no shares of Common Stock (the "Existing Shares",
together with any shares of Common Stock beneficial ownership of which is
acquired by Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares").
C. As a condition to their willingness to enter into the Merger
Agreement, Saturn and Merger Sub have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
D. Saturn and Merger Sub have entered into the Merger Agreement
in reliance on Stockholder's representations, warranties, covenants and
agreement hereunder.
THEREFORE, the parties agree as follows:
1. Agreement to Tender and Vote; Irrevocable Proxy.
1.1 Tender. Stockholder agrees to validly tender all Shares
beneficially owned by it pursuant to the Offer within ten business days
of commencement of the Offer, and not withdraw any such Shares, except
to the extent that the tender of shares (including Shares acquired
after the date hereof) pursuant to the Offer would subject Stockholder
to liability under Section 16(b) of the Exchange Act.
1.2 Voting. Stockholder hereby agrees that, during the time
this Agreement is in effect, at any meeting of the stockholders of
Smartflex, however called, and in any action by consent of the
stockholders of Smartflex, Stockholder will: (a) vote all Shares
beneficially owned by it in favor of the Merger; (b) vote all Shares
beneficially owned by it against any action or agreement that would
result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the
Merger Agreement; (c) vote all Shares beneficially owned by it against
<PAGE> 2
any action or agreement that would impede, interfere with, delay,
postpone or attempt to discourage, the Merger or the Offer including,
but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but
not limited to, a merger, other business combination, reorganization,
consolidation, recapitalization, dissolution or liquidation involving
Smartflex, (ii) a sale or transfer of a material amount of assets of
Smartflex or any of its subsidiaries, (iii) any change in the board of
directors of Smartflex, (iv) any material change in the capitalization
of Smartflex, (v) any change in the charter, by-laws or other
organizational or constitutive documents of Smartflex, or (vi) any
other material change in the corporate structure or business of
Smartflex; and (d) without limiting the foregoing, consult with Saturn
and vote all Shares beneficially owned by it in such manner as is
determined by Saturn to be in compliance with the provisions of this
Section 1.2. Stockholder acknowledges receipt and review of a copy of
the Merger Agreement. Notwithstanding the foregoing, Stockholder may
take any action in his or her role as a director or officer of
Smartflex as permitted under Sections 6.04 and 8.01(e) of the Merger
Agreement. This Agreement is intended to bind Stockholder only with
respect to the specific matters set forth herein and shall not prohibit
the Stockholder from acting in accordance with his or her fiduciary
duties to Smartflex.
1.3. Irrevocable Proxy. Contemporaneously with the execution
of this Agreement: (i) Stockholder will deliver to Saturn a proxy in
the form attached hereto as Exhibit A, which will be irrevocable to the
fullest extent permitted by law (the "Proxy"), with respect to all
Shares owned of record by Stockholder; and (ii) Stockholder will cause
to be delivered to Saturn additional Proxies executed on behalf of each
record owner of any Shares owned beneficially (but not owned of record)
by Stockholder.
2. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Saturn and Merger Sub as follows:
2.1 Ownership of Shares. On the date hereof the Existing
Shares are all of the Shares currently beneficially owned by Stockholder. On the
Closing Date, the Shares will constitute all of the shares of Common Stock owned
beneficially by Stockholder. Stockholder does not have any rights to acquire any
additional shares of Common Stock other than pursuant to options issued under
the Stock Option Plans (as defined in the Merger Agreement), Stockholder
currently has with respect to the Existing Shares, and at Closing will have with
respect to the Shares, good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by this Agreement and other than restrictions on transfer
under applicable, Federal and State securities laws).
2.2 Power; Binding Agreement. Stockholder has the full legal
capacity, right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution and delivery of
this Agreement by Stockholder will not violate any agreement, contract or
arrangement to which Stockholder is a party or is bound, including, without
limitation, any voting agreement, stockholders agreement or voting trust. This
Agreement has been duly executed and delivered by Stockholder and constitutes a
legal, valid and binding agreement of Stockholder, enforceable in accordance
with its terms. Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the
2
<PAGE> 3
transactions contemplated hereby will (a) other than filings required under the
federal or state securities laws, require any consent or approval of or filing
with any Governmental or other regulatory body, or (b) constitute a violation
of, conflict with or constitute, a default under (i) any law, rule or regulation
applicable to Stockholder, or (ii) any order, judgment or decree by which
Stockholder is bound.
2.3. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby exclusive of any commission or finder's
fees referred to in the Merger Agreement.
3. Representations and Warranties of Saturn and Merger Sub.
Saturn and Merger Sub, jointly and severally, represent and warrant to
Stockholder as follows:
3.1 Authority. Each of Saturn and Merger Sub has full legal
right, power and authority to enter into and perform all of its obligations
under this Agreement. The execution and delivery of this Agreement by Saturn and
Merger Sub will not violate the charter, bylaws or other organizational or
constitutive documents of Saturn or Merger Sub, or any other agreement, contract
or arrangement to which Saturn or Merger Sub is a party or is bound. This
Agreement has been duly executed and delivered by each of Saturn and Merger Sub
and constitutes a legal, valid and binding agreement of Saturn and Merger Sub,
enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Saturn or Merger Sub of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, or (b) constitute a violation of,
conflict with or constitute a default under (i) any law, rule or regulation
applicable to Saturn or Merger Sub, or (ii) any order, judgment or decree to
which Saturn or Merger Sub is bound.
3.2. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fee from Saturn or Merger Sub in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission or
finder's fees referred to in the Merger Agreement.
4. Termination. This Agreement (other than the provisions of
Sections 5, 6 and 19 which will survive any termination of this Agreement), will
terminate on the earliest to occur of (a) the date on which Merger Sub accepts
for payment the Shares tendered in the Offer, so long as the Shares are so
tendered and not withdrawn, (b) the Effective Time (as defined in the Merger
Agreement), and (c) simultaneously with the termination of the Merger Agreement
in accordance with its terms.
5. Expenses. Except as provided in Section 19, each party hereto
will pay all of its expenses in connection with the transactions contemplated by
this Agreement, including, without limitation, the fees and expenses of its
counsel and other advisers. The provisions of this Section 5 will survive the
Closing hereunder.
6. Confidentiality. Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to these matters. In this connection, pending
public disclosure, Stockholder agrees that it will not disclose or discuss these
matters with anyone (other than officers, directors, legal
3
<PAGE> 4
counsel and advisors of Stockholder or Smartflex, if any) not a party to this
Agreement, without prior written consent of Saturn, except as provided herein or
in the Merger Agreement and except for filings required pursuant to the Exchange
Act, and the rules and regulations thereunder or disclosures Stockholder's legal
counsel advises in writing are necessary in order to fulfill Stockholder's
obligations imposed by law, in which event Stockholder will give prompt prior
notice of such disclosure to Saturn and cooperate with Saturn in obtaining a
protective order or in limiting such disclosure.
7. Certain Covenants of Stockholder.
7.1 Except in accordance with the provisions of this
Agreement, Stockholder agrees, while this Agreement is in effect, not to,
directly or indirectly:
(a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares; or
(c) solicit, initiate or encourage the submission of
any proposal or offer from any person (other than Saturn or Merger Sub) relating
to any acquisition or purchase of all or any material portion of the assets of,
or any equity interest in (other than pursuant to the exercise of options
outstanding on the date hereof), Smartflex or any subsidiary of Smartflex, or
any merger, consolidation, business combination, reorganization,
recapitalization or similar transaction involving Smartflex or any subsidiary of
Smartflex (each a "Competing Transaction"), or participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise, cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any person (other than
Saturn and Merger Sub) to do or seek any of the foregoing, Stockholder will
cease and cause to be terminated any existing activities, discussions or
negotiations by or on its behalf with any person (other than Saturn and Merger
Sub) conducted heretofore with respect to any Competing Transaction and will
promptly notify Saturn following receipt of any request by any person (other
than Saturn or Merger Sub) relating to any possible Competing Transaction or
information concerning Smartflex. Nothing contained herein will prohibit
Stockholder, solely in his capacity as an officer or as a member of the board of
directors of Smartflex (the "Board"), from furnishing information to, or
entering into discussions or negotiations with, any person (other than Saturn
and Merger Sub) in connection with an unsolicited proposal involving a
fully-financed (as represented by such person) Competing Transaction which is
made in writing by such person (other than Saturn and Merger Sub) and which, if
consummated, would provide consideration per share, of Common Stock to the
stockholders of Smartflex in excess of the Offer Price if, and only to the
extent that, the Board determines in good faith, based upon the advice of SG
Cowen Securities Corporation and the written advice of Stradling Yocca Carlson &
Rauth, that such action is required for the Board to comply with its fiduciary
duties to stockholders under Delaware law.
4
<PAGE> 5
7.2 Stockholder agrees, while this Agreement is in effect, to
notify Saturn promptly of the number of any shares of Common Stock beneficial
ownership of which is acquired by Stockholder after the date hereof.
8. Legend and Stop Transfer Instructions. Immediately after the
execution of this Agreement (and from time to time prior to the termination of
this Agreement), Stockholder will cause Smartflex to provide for each
certificate representing Shares beneficially owned by Stockholder to bear a
legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE STOCK TENDER
AND VOTING AGREEMENT AND ARE SUBJECT TO THE IRREVOCABLE PROXY
REFERRED TO THEREIN, EACH DATED AS OF JULY 6, 1999, AS SUCH
AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AND COPIES OF
WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), Stockholder will cause Smartflex to
require the transfer agent for its Common Stock to make a notation in its
records prohibiting the transfer of any of the Shares, except in accordance with
the terms and conditions of this Agreement.
9. Survival of Representation and Warranties. Except as expressly
set forth herein, none of the representations, warranties, covenants and
agreements made by Stockholder, Saturn or Merger Sub in this Agreement will
survive the Closing hereunder.
10. Notices. All notices or other communication required or
permitted hereunder will be in writing, will be given by hand delivery, U.S.
Express Mail (return receipt requested), overnight courier guaranteeing next
business day delivery, or facsimile, and will be deemed duly given when
received, addressed as follows,
If to Saturn or Merger Sub:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, Jr., President,
Chief Executive Officer and Chairman
of the Board
Facsimile: (248) 853-2645
5
<PAGE> 6
With copies to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Stockholder:
James Cogan
6865 Thornhill Drive
Oakland, California 94611
With copies to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
11. Entire Agreement; Amendment. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the party against
whom such modification, amendment, alteration or supplement is sought to be
enforced.
12. Assigns. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and
personal representatives, but neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign any or all of its rights and obligations hereunder to Saturn or any
direct or indirect wholly-owned subsidiary of Saturn without the consent of
Stockholder or Company, but no such transfer will relieve Merger Sub of its
obligations under this Agreement if such subsidiary does not perform the
obligations of Merger Sub hereunder.
13. Governing Law; Jurisdiction; and Consent to Service. Except as
expressly set forth below, this Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In addition, each of Stockholder, Merger Sub and Saturn hereby agrees that any
dispute arising out of this Agreement will be heard in the United States
District Court for the Central District of California and, in connection
therewith, each party to
6
<PAGE> 7
this Agreement hereby consents to the jurisdiction of such courts and agrees
that any service of process in connection with any dispute arising out of this
Agreement or the Merger may be given to any other party hereto by certified
mail, return receipt requested, at the respective addresses set forth in Section
10 above.
14. Injunctive Relief. The parties agree that in the event of a
breach of any provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party will be entitled
to obtain in any court of competent jurisdiction a decree of specific
performance or to enjoin the continuing breach of such provision, in each case
without the requirement that a bond be posted, as well as to obtain damages for
breach of this Agreement. By seeking or obtaining such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
15. Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts (including by facsimile signature), each
of which will be deemed to be an original and all of which together will
constitute one and the same document.
16. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision will be interpreted
to be only so broad as is enforceable.
17. Further Assurances. Each party hereto will execute and deliver
such additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, will be construed to give any person other than the
parties hereto any legal or equitable right, remedy or claim under or by reason
of this Agreement or any provision contained herein.
19. Legal Expenses. In the event any legal proceeding is commenced
by any party to this Agreement to enforce or recover damages for any breach of
the provisions hereof, the prevailing party in such legal proceeding will be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees. The provisions of this Section
19 will survive the Closing hereunder.
20. Amendment and Modification. This Agreement may be amended,
modified and supplemented only by a written document executed by Saturn, Merger
Sub and Stockholder.
[Remainder of page intentionally left blank.]
7
<PAGE> 8
IN WITNESS WHEREOF, Saturn and Merger Sub have caused this Agreement to
be executed by their duly authorized officers, and Stockholder has duly executed
this Agreement, as of the date and year first above written.
"SATURN"
SATURN ELECTRONICS &
ENGINEERING, INC.
By: /s/ W. Tsuha
------------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President,
Chief Executive Officer and
Chairman of the Board
"MERGER SUB"
SSI ACQUISITION CORP.
By: /s/ W. Tsuha
------------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President
"STOCKHOLDER"
/s/ James C. Cogan
------------------------------------------------
Name: James C. Cogan
8
<PAGE> 9
EXHIBIT A
Form Of Irrevocable Proxy
The undersigned stockholder of Smartflex Systems, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Wallace K. Tsuha, Jr., Jereen Trudell and
Saturn Electronics & Engineering, Inc. ("Saturn"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the issued and outstanding shares of capital stock of Smartflex owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy and (ii) any and all other shares of
capital stock of Smartflex which the undersigned may acquire after the date
hereof (the shares of the capital stock of Smartflex referred to in (clauses (i)
and (ii) of the immediately preceding sentence are collectively referred to as
the "Shares"). Upon the execution hereof all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with a Stock Tender and Voting Agreement, dated as of the date
hereof, among Saturn, SSI Acquisition Corp. and the undersigned (the "Stock
Tender Agreement"), and is granted in consideration of Saturn entering into the
Agreement and Plan of Merger, dated as of the date hereof, among Saturn, SSI
Acquisition Corp. and Smartflex (the "Merger Agreement"). Capitalized terms used
but not otherwise defined in this proxy have the meanings ascribed to such terms
in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the earlier to occur
of the valid termination of the Merger Agreement pursuant to Section 8.01
thereof or the Effective Time at any meeting of the stockholders of Smartflex,
however called, or in any written action by consent of stockholders of
Smartflex: (a) in favor of the Merger; (b) against any action or agreement that
would result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the Merger
Agreement; or (c) against any action or agreement that would impede, interfere
with, delay, postpone, or attempt to discourage the Merger or the Offer
including, but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but not
limited to, a merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a sale or
transfer of a material amount of assets of Smartflex or any of its subsidiaries,
(iii) any change in the board of directors of Smartflex, (iv) any material
change in the capitalization of Smartflex, (v) any change in the charter,
by-laws or other organizational or constitutive documents of Smartflex, or (v)
any other material change in the corporate structure or business of Smartflex.
This proxy will be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Shares).
9
<PAGE> 10
Any term or provision of this proxy which is invalid or unenforceable,
in any jurisdiction will, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this proxy or affecting the
validity or enforceability of any of the terms or provisions of this proxy in
any other jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.
This proxy will terminate immediately upon the earlier of the valid
termination of the Merger Agreement pursuant to Section 8.01 thereof or the
Effective Time.
Dated: July 6, 1999
- -------------------------------------------
Name: James Cogan
Number of shares of Common Stock owned of record as of the date of this proxy: 0
10
<PAGE> 1
EXHIBIT 99(c)(12)
STOCK TENDER AND VOTING AGREEMENT
STOCK TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of July
6, 1999 by and among Christopher Rollison ("Stockholder"), Saturn Electronics &
Engineering, Inc., a Michigan corporation ("Saturn"), and SSI Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Saturn ("Merger Sub").
RECITALS
A. Concurrently herewith Saturn, Merger Sub and Smartflex Systems,
Inc., a Delaware corporation ("Smartflex"), are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which
Merger Sub agrees to make a tender offer (the "Offer") for all of the
outstanding shares of common stock, $.0025 par value (the "Common Stock") of
Smartflex, at a price of $10.50 per share (the "Offer Price"), in cash,
following which Smartflex will be merged with and into Merger Sub, with
Smartflex as the Surviving Corporation (the "Merger").
B. Stockholder beneficially owns (as defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as
of the date hereof, 50,292 shares of Common Stock (the "Existing Shares",
together with any shares of Common Stock beneficial ownership of which is
acquired by Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares").
C. As a condition to their willingness to enter into the Merger
Agreement, Saturn and Merger Sub have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
D. Saturn and Merger Sub have entered into the Merger Agreement in
reliance on Stockholder's representations, warranties, covenants and agreement
hereunder.
THEREFORE, the parties agree as follows:
1. Agreement to Tender and Vote; Irrevocable Proxy.
1.1 Tender. Stockholder agrees to validly tender all Shares
beneficially owned by it pursuant to the Offer within ten business days
of commencement of the Offer, and not withdraw any such Shares, except
to the extent that the tender of shares (including Shares acquired
after the date hereof) pursuant to the Offer would subject Stockholder
to liability under Section 16(b) of the Exchange Act.
1.2 Voting. Stockholder hereby agrees that, during the time
this Agreement is in effect, at any meeting of the stockholders of
Smartflex, however called, and in any action by consent of the
stockholders of Smartflex, Stockholder will: (a) vote all Shares
beneficially owned by it in favor of the Merger; (b) vote all Shares
beneficially owned by it against any action or agreement that would
result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the
Merger Agreement; (c) vote all Shares beneficially owned by it against
<PAGE> 2
any action or agreement that would impede, interfere with, delay,
postpone or attempt to discourage, the Merger or the Offer including,
but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but
not limited to, a merger, other business combination, reorganization,
consolidation, recapitalization, dissolution or liquidation involving
Smartflex, (ii) a sale or transfer of a material amount of assets of
Smartflex or any of its subsidiaries, (iii) any change in the board of
directors of Smartflex, (iv) any material change in the capitalization
of Smartflex, (v) any change in the charter, by-laws or other
organizational or constitutive documents of Smartflex, or (vi) any
other material change in the corporate structure or business of
Smartflex; and (d) without limiting the foregoing, consult with Saturn
and vote all Shares beneficially owned by it in such manner as is
determined by Saturn to be in compliance with the provisions of this
Section 1.2. Stockholder acknowledges receipt and review of a copy of
the Merger Agreement. Notwithstanding the foregoing, Stockholder may
take any action in his or her role as a director or officer of
Smartflex as permitted under Sections 6.04 and 8.01(e) of the Merger
Agreement. This Agreement is intended to bind Stockholder only with
respect to the specific matters set forth herein and shall not prohibit
the Stockholder from acting in accordance with his or her fiduciary
duties to Smartflex.
1.3. Irrevocable Proxy. Contemporaneously with the execution
of this Agreement: (i) Stockholder will deliver to Saturn a proxy in
the form attached hereto as Exhibit A, which will be irrevocable to the
fullest extent permitted by law (the "Proxy"), with respect to all
Shares owned of record by Stockholder; and (ii) Stockholder will cause
to be delivered to Saturn additional Proxies executed on behalf of each
record owner of any Shares owned beneficially (but not owned of record)
by Stockholder.
2. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Saturn and Merger Sub as follows:
2.1 Ownership of Shares. On the date hereof the Existing
Shares are all of the Shares currently beneficially owned by Stockholder. On the
Closing Date, the Shares will constitute all of the shares of Common Stock owned
beneficially by Stockholder. Stockholder does not have any rights to acquire any
additional shares of Common Stock other than pursuant to options issued under
the Stock Option Plans (as defined in the Merger Agreement), Stockholder
currently has with respect to the Existing Shares, and at Closing will have with
respect to the Shares, good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by this Agreement and other than restrictions on transfer
under applicable, Federal and State securities laws).
2.2 Power; Binding Agreement. Stockholder has the full legal
capacity, right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution and delivery of
this Agreement by Stockholder will not violate any agreement, contract or
arrangement to which Stockholder is a party or is bound, including, without
limitation, any voting agreement, stockholders agreement or voting trust. This
Agreement has been duly executed and delivered by Stockholder and constitutes a
legal, valid and binding agreement of Stockholder, enforceable in accordance
with its terms. Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the
2
<PAGE> 3
transactions contemplated hereby will (a) other than filings required under the
federal or state securities laws, require any consent or approval of or filing
with any Governmental or other regulatory body, or (b) constitute a violation
of, conflict with or constitute, a default under (i) any law, rule or regulation
applicable to Stockholder, or (ii) any order, judgment or decree by which
Stockholder is bound.
2.3. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby exclusive of any commission or finder's
fees referred to in the Merger Agreement.
3. Representations and Warranties of Saturn and Merger Sub. Saturn and
Merger Sub, jointly and severally, represent and warrant to Stockholder as
follows:
3.1 Authority. Each of Saturn and Merger Sub has full legal
right, power and authority to enter into and perform all of its obligations
under this Agreement. The execution and delivery of this Agreement by Saturn and
Merger Sub will not violate the charter, bylaws or other organizational or
constitutive documents of Saturn or Merger Sub, or any other agreement, contract
or arrangement to which Saturn or Merger Sub is a party or is bound. This
Agreement has been duly executed and delivered by each of Saturn and Merger Sub
and constitutes a legal, valid and binding agreement of Saturn and Merger Sub,
enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Saturn or Merger Sub of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, or (b) constitute a violation of,
conflict with or constitute a default under (i) any law, rule or regulation
applicable to Saturn or Merger Sub, or (ii) any order, judgment or decree to
which Saturn or Merger Sub is bound.
3.2. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fee from Saturn or Merger Sub in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission or
finder's fees referred to in the Merger Agreement.
4. Termination. This Agreement (other than the provisions of Sections
5, 6 and 19 which will survive any termination of this Agreement), will
terminate on the earliest to occur of (a) the date on which Merger Sub accepts
for payment the Shares tendered in the Offer, so long as the Shares are so
tendered and not withdrawn, (b) the Effective Time (as defined in the Merger
Agreement), and (c) simultaneously with the termination of the Merger Agreement
in accordance with its terms.
5. Expenses. Except as provided in Section 19, each party hereto will
pay all of its expenses in connection with the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of its counsel
and other advisers. The provisions of this Section 5 will survive the Closing
hereunder.
6. Confidentiality. Stockholder recognizes that successful consummation
of the transactions contemplated by this Agreement may be dependent upon
confidentiality with respect to these matters. In this connection, pending
public disclosure, Stockholder agrees that it will not disclose or discuss these
matters with anyone (other than officers, directors, legal
3
<PAGE> 4
counsel and advisors of Stockholder or Smartflex, if any) not a party to this
Agreement, without prior written consent of Saturn, except as provided herein or
in the Merger Agreement and except for filings required pursuant to the Exchange
Act, and the rules and regulations thereunder or disclosures Stockholder's legal
counsel advises in writing are necessary in order to fulfill Stockholder's
obligations imposed by law, in which event Stockholder will give prompt prior
notice of such disclosure to Saturn and cooperate with Saturn in obtaining a
protective order or in limiting such disclosure.
7. Certain Covenants of Stockholder.
7.1 Except in accordance with the provisions of this
Agreement, Stockholder agrees, while this Agreement is in effect, not to,
directly or indirectly:
(a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares; or
(c) solicit, initiate or encourage the submission of
any proposal or offer from any person (other than Saturn or Merger Sub) relating
to any acquisition or purchase of all or any material portion of the assets of,
or any equity interest in (other than pursuant to the exercise of options
outstanding on the date hereof), Smartflex or any subsidiary of Smartflex, or
any merger, consolidation, business combination, reorganization,
recapitalization or similar transaction involving Smartflex or any subsidiary of
Smartflex (each a "Competing Transaction"), or participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise, cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any person (other than
Saturn and Merger Sub) to do or seek any of the foregoing, Stockholder will
cease and cause to be terminated any existing activities, discussions or
negotiations by or on its behalf with any person (other than Saturn and Merger
Sub) conducted heretofore with respect to any Competing Transaction and will
promptly notify Saturn following receipt of any request by any person (other
than Saturn or Merger Sub) relating to any possible Competing Transaction or
information concerning Smartflex. Nothing contained herein will prohibit
Stockholder, solely in his capacity as an officer or as a member of the board of
directors of Smartflex (the "Board"), from furnishing information to, or
entering into discussions or negotiations with, any person (other than Saturn
and Merger Sub) in connection with an unsolicited proposal involving a
fully-financed (as represented by such person) Competing Transaction which is
made in writing by such person (other than Saturn and Merger Sub) and which, if
consummated, would provide consideration per share, of Common Stock to the
stockholders of Smartflex in excess of the Offer Price if, and only to the
extent that, the Board determines in good faith, based upon the advice of SG
Cowen Securities Corporation and the written advice of Stradling Yocca Carlson &
Rauth, that such action is required for the Board to comply with its fiduciary
duties to stockholders under Delaware law.
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<PAGE> 5
7.2 Stockholder agrees, while this Agreement is in effect, to
notify Saturn promptly of the number of any shares of Common Stock beneficial
ownership of which is acquired by Stockholder after the date hereof.
8. Legend and Stop Transfer Instructions. Immediately after the
execution of this Agreement (and from time to time prior to the termination of
this Agreement), Stockholder will cause Smartflex to provide for each
certificate representing Shares beneficially owned by Stockholder to bear a
legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE STOCK TENDER
AND VOTING AGREEMENT AND ARE SUBJECT TO THE IRREVOCABLE PROXY
REFERRED TO THEREIN, EACH DATED AS OF JULY 6, 1999, AS SUCH
AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AND COPIES OF
WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), Stockholder will cause Smartflex to
require the transfer agent for its Common Stock to make a notation in its
records prohibiting the transfer of any of the Shares, except in accordance with
the terms and conditions of this Agreement.
9. Survival of Representation and Warranties. Except as expressly set
forth herein, none of the representations, warranties, covenants and agreements
made by Stockholder, Saturn or Merger Sub in this Agreement will survive the
Closing hereunder.
10. Notices. All notices or other communication required or permitted
hereunder will be in writing, will be given by hand delivery, U.S. Express Mail
(return receipt requested), overnight courier guaranteeing next business day
delivery, or facsimile, and will be deemed duly given when received, addressed
as follows,
If to Saturn or Merger Sub:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, Jr., President,
Chief Executive Officer and Chairman
of the Board
Facsimile: (248) 853-2645
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<PAGE> 6
With copies to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Stockholder:
Christopher Rollison
28902 Via Hacienda
San Juan Capistrano, California 92675
With copies to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
11. Entire Agreement; Amendment. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the party against
whom such modification, amendment, alteration or supplement is sought to be
enforced.
12. Assigns. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and
personal representatives, but neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign any or all of its rights and obligations hereunder to Saturn or any
direct or indirect wholly-owned subsidiary of Saturn without the consent of
Stockholder or Company, but no such transfer will relieve Merger Sub of its
obligations under this Agreement if such subsidiary does not perform the
obligations of Merger Sub hereunder.
13. Governing Law; Jurisdiction; and Consent to Service. Except as
expressly set forth below, this Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In addition, each of Stockholder, Merger Sub and Saturn hereby agrees that any
dispute arising out of this Agreement will be heard in the United States
District Court for the Central District of California and, in connection
therewith, each party to
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<PAGE> 7
this Agreement hereby consents to the jurisdiction of such courts and agrees
that any service of process in connection with any dispute arising out of this
Agreement or the Merger may be given to any other party hereto by certified
mail, return receipt requested, at the respective addresses set forth in Section
10 above.
14. Injunctive Relief. The parties agree that in the event of a breach
of any provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party will be entitled
to obtain in any court of competent jurisdiction a decree of specific
performance or to enjoin the continuing breach of such provision, in each case
without the requirement that a bond be posted, as well as to obtain damages for
breach of this Agreement. By seeking or obtaining such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
15. Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts (including by facsimile signature), each of which
will be deemed to be an original and all of which together will constitute one
and the same document.
16. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision will be interpreted
to be only so broad as is enforceable.
17. Further Assurances. Each party hereto will execute and deliver such
additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. Third Party Beneficiaries. Nothing in this Agreement, expressed or
implied, will be construed to give any person other than the parties hereto any
legal or equitable right, remedy or claim under or by reason of this Agreement
or any provision contained herein.
19. Legal Expenses. In the event any legal proceeding is commenced by
any party to this Agreement to enforce or recover damages for any breach of the
provisions hereof, the prevailing party in such legal proceeding will be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees. The provisions of this Section
19 will survive the Closing hereunder.
20. Amendment and Modification. This Agreement may be amended, modified
and supplemented only by a written document executed by Saturn, Merger Sub and
Stockholder.
[Remainder of page intentionally left blank.]
7
<PAGE> 8
IN WITNESS WHEREOF, Saturn and Merger Sub have caused this Agreement to
be executed by their duly authorized officers, and Stockholder has duly executed
this Agreement, as of the date and year first above written.
"SATURN"
SATURN ELECTRONICS &
ENGINEERING, INC.
By: /s/ W. Tsuha
----------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President,
Chief Executive Officer and
Chairman of the Board
"MERGER SUB"
SSI ACQUISITION CORP.
By: /s/ W. Tsuha
----------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President
"STOCKHOLDER"
/s/ Chris Rollison
----------------------------------------------
Name: Chris Rollison
8
<PAGE> 9
EXHIBIT A
Form Of Irrevocable Proxy
The undersigned stockholder of Smartflex Systems, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Wallace K. Tsuha, Jr., Jereen Trudell and
Saturn Electronics & Engineering, Inc. ("Saturn"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the issued and outstanding shares of capital stock of Smartflex owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy and (ii) any and all other shares of
capital stock of Smartflex which the undersigned may acquire after the date
hereof (the shares of the capital stock of Smartflex referred to in (clauses (i)
and (ii) of the immediately preceding sentence are collectively referred to as
the "Shares"). Upon the execution hereof all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with a Stock Tender and Voting Agreement, dated as of the date
hereof, among Saturn, SSI Acquisition Corp. and the undersigned (the "Stock
Tender Agreement"), and is granted in consideration of Saturn entering into the
Agreement and Plan of Merger, dated as of the date hereof, among Saturn, SSI
Acquisition Corp. and Smartflex (the "Merger Agreement"). Capitalized terms used
but not otherwise defined in this proxy have the meanings ascribed to such terms
in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the earlier to occur
of the valid termination of the Merger Agreement pursuant to Section 8.01
thereof or the Effective Time at any meeting of the stockholders of Smartflex,
however called, or in any written action by consent of stockholders of
Smartflex: (a) in favor of the Merger; (b) against any action or agreement that
would result in a breach of any covenant or any representation or warranty or
any other obligation or agreement of Smartflex under or pursuant to the Merger
Agreement; or (c) against any action or agreement that would impede, interfere
with, delay, postpone, or attempt to discourage the Merger or the Offer
including, but not limited to, (i) any corporate transaction not entered into in
the ordinary course of business (other than the Merger), including, but not
limited to, a merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a sale or
transfer of a material amount of assets of Smartflex or any of its subsidiaries,
(iii) any change in the board of directors of Smartflex, (iv) any material
change in the capitalization of Smartflex, (v) any change in the charter,
by-laws or other organizational or constitutive documents of Smartflex, or (v)
any other material change in the corporate structure or business of Smartflex.
This proxy will be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Shares).
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<PAGE> 10
Any term or provision of this proxy which is invalid or unenforceable,
in any jurisdiction will, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this proxy or affecting the
validity or enforceability of any of the terms or provisions of this proxy in
any other jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.
This proxy will terminate immediately upon the earlier of the valid
termination of the Merger Agreement pursuant to Section 8.01 thereof or the
Effective Time.
Dated: July 6, 1999
- -------------------------------------
Name: Christopher Rollison
Number of shares of Common Stock owned of record as of the date of this proxy:
22,042
10
<PAGE> 1
EXHIBIT 99(c)(13)
STOCK TENDER AND VOTING AGREEMENT
STOCK TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of July 6,
1999 by and among Cheryl Moreno ("Stockholder"), Saturn Electronics &
Engineering, Inc., a Michigan corporation ("Saturn"), and SSI Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Saturn ("Merger Sub").
RECITALS
A. Concurrently herewith Saturn, Merger Sub and Smartflex Systems, Inc.,
a Delaware corporation ("Smartflex"), are entering into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), pursuant to which Merger
Sub agrees to make a tender offer (the "Offer") for all of the outstanding
shares of common stock, $.0025 par value (the "Common Stock") of Smartflex, at a
price of $10.50 per share (the "Offer Price"), in cash, following which
Smartflex will be merged with and into Merger Sub, with Smartflex as the
Surviving Corporation (the "Merger").
B. Stockholder beneficially owns (as defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as
of the date hereof, 3,500 shares of Common Stock (the "Existing Shares",
together with any shares of Common Stock beneficial ownership of which is
acquired by Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares").
C. As a condition to their willingness to enter into the Merger
Agreement, Saturn and Merger Sub have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
D. Saturn and Merger Sub have entered into the Merger Agreement in
reliance on Stockholder's representations, warranties, covenants and agreement
hereunder.
THEREFORE, the parties agree as follows:
1. Agreement to Tender and Vote; Irrevocable Proxy.
1.1 Tender. Stockholder agrees to validly tender all Shares
beneficially owned by it pursuant to the Offer within ten business days of
commencement of the Offer, and not withdraw any such Shares, except to the
extent that the tender of shares (including Shares acquired after the date
hereof) pursuant to the Offer would subject Stockholder to liability under
Section 16(b) of the Exchange Act.
1.2 Voting. Stockholder hereby agrees that, during the time this
Agreement is in effect, at any meeting of the stockholders of Smartflex,
however called, and in any action by consent of the stockholders of
Smartflex, Stockholder will: (a) vote all Shares beneficially owned by it
in favor of the Merger; (b) vote all Shares beneficially owned by it
against any action or agreement that would result in a breach of any
covenant or any representation or warranty or any other obligation or
agreement of Smartflex under or pursuant to the Merger Agreement; (c) vote
all Shares beneficially owned by it against
<PAGE> 2
any action or agreement that would impede, interfere with, delay, postpone
or attempt to discourage, the Merger or the Offer including, but not
limited to, (i) any corporate transaction not entered into in the ordinary
course of business (other than the Merger), including, but not limited to,
a merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a
sale or transfer of a material amount of assets of Smartflex or any of its
subsidiaries, (iii) any change in the board of directors of Smartflex, (iv)
any material change in the capitalization of Smartflex, (v) any change in
the charter, by-laws or other organizational or constitutive documents of
Smartflex, or (vi) any other material change in the corporate structure or
business of Smartflex; and (d) without limiting the foregoing, consult with
Saturn and vote all Shares beneficially owned by it in such manner as is
determined by Saturn to be in compliance with the provisions of this
Section 1.2. Stockholder acknowledges receipt and review of a copy of the
Merger Agreement. Notwithstanding the foregoing, Stockholder may take any
action in his or her role as a director or officer of Smartflex as
permitted under Sections 6.04 and 8.01(e) of the Merger Agreement. This
Agreement is intended to bind Stockholder only with respect to the specific
matters set forth herein and shall not prohibit the Stockholder from acting
in accordance with his or her fiduciary duties to Smartflex.
1.3. Irrevocable Proxy. Contemporaneously with the execution of this
Agreement: (i) Stockholder will deliver to Saturn a proxy in the form
attached hereto as Exhibit A, which will be irrevocable to the fullest
extent permitted by law (the "Proxy"), with respect to all Shares owned of
record by Stockholder; and (ii) Stockholder will cause to be delivered to
Saturn additional Proxies executed on behalf of each record owner of any
Shares owned beneficially (but not owned of record) by Stockholder.
2. Representations and Warranties of Stockholder. Stockholder represents
and warrants to Saturn and Merger Sub as follows:
2.1 Ownership of Shares. On the date hereof the Existing Shares are
all of the Shares currently beneficially owned by Stockholder. On the Closing
Date, the Shares will constitute all of the shares of Common Stock owned
beneficially by Stockholder. Stockholder does not have any rights to acquire any
additional shares of Common Stock other than pursuant to options issued under
the Stock Option Plans (as defined in the Merger Agreement), Stockholder
currently has with respect to the Existing Shares, and at Closing will have with
respect to the Shares, good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by this Agreement and other than restrictions on transfer
under applicable, Federal and State securities laws).
2.2 Power; Binding Agreement. Stockholder has the full legal capacity,
right, power and authority to enter into and perform all of Stockholder's
obligations under this Agreement. The execution and delivery of this Agreement
by Stockholder will not violate any agreement, contract or arrangement to which
Stockholder is a party or is bound, including, without limitation, any voting
agreement, stockholders agreement or voting trust. This Agreement has been duly
executed and delivered by Stockholder and constitutes a legal, valid and binding
agreement of Stockholder, enforceable in accordance with its terms. Neither the
execution or delivery of this Agreement nor the consummation by Stockholder of
the
2
<PAGE> 3
transactions contemplated hereby will (a) other than filings required under the
federal or state securities laws, require any consent or approval of or filing
with any Governmental or other regulatory body, or (b) constitute a violation
of, conflict with or constitute, a default under (i) any law, rule or regulation
applicable to Stockholder, or (ii) any order, judgment or decree by which
Stockholder is bound.
2.3. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby exclusive of any commission or finder's
fees referred to in the Merger Agreement.
3. Representations and Warranties of Saturn and Merger Sub. Saturn and
Merger Sub, jointly and severally, represent and warrant to Stockholder as
follows:
3.1 Authority. Each of Saturn and Merger Sub has full legal right,
power and authority to enter into and perform all of its obligations under this
Agreement. The execution and delivery of this Agreement by Saturn and Merger Sub
will not violate the charter, bylaws or other organizational or constitutive
documents of Saturn or Merger Sub, or any other agreement, contract or
arrangement to which Saturn or Merger Sub is a party or is bound. This Agreement
has been duly executed and delivered by each of Saturn and Merger Sub and
constitutes a legal, valid and binding agreement of Saturn and Merger Sub,
enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Saturn or Merger Sub of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, or (b) constitute a violation of,
conflict with or constitute a default under (i) any law, rule or regulation
applicable to Saturn or Merger Sub, or (ii) any order, judgment or decree to
which Saturn or Merger Sub is bound.
3.2. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fee from Saturn or Merger Sub in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission or
finder's fees referred to in the Merger Agreement.
4. Termination. This Agreement (other than the provisions of Sections
5, 6 and 19 which will survive any termination of this Agreement), will
terminate on the earliest to occur of (a) the date on which Merger Sub accepts
for payment the Shares tendered in the Offer, so long as the Shares are so
tendered and not withdrawn, (b) the Effective Time (as defined in the Merger
Agreement), and (c) simultaneously with the termination of the Merger Agreement
in accordance with its terms.
5. Expenses. Except as provided in Section 19, each party hereto will pay
all of its expenses in connection with the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of its counsel
and other advisers. The provisions of this Section 5 will survive the Closing
hereunder.
6. Confidentiality. Stockholder recognizes that successful consummation
of the transactions contemplated by this Agreement may be dependent upon
confidentiality with respect to these matters. In this connection, pending
public disclosure, Stockholder agrees that it will not disclose or discuss these
matters with anyone (other than officers, directors, legal
3
<PAGE> 4
counsel and advisors of Stockholder or Smartflex, if any) not a party to this
Agreement, without prior written consent of Saturn, except as provided herein or
in the Merger Agreement and except for filings required pursuant to the Exchange
Act, and the rules and regulations thereunder or disclosures Stockholder's legal
counsel advises in writing are necessary in order to fulfill Stockholder's
obligations imposed by law, in which event Stockholder will give prompt prior
notice of such disclosure to Saturn and cooperate with Saturn in obtaining a
protective order or in limiting such disclosure.
7. Certain Covenants of Stockholder.
7.1 Except in accordance with the provisions of this Agreement,
Stockholder agrees, while this Agreement is in effect, not to, directly or
indirectly:
(a) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a voting trust or
enter into a voting agreement with respect to any Shares; or
(c) solicit, initiate or encourage the submission of any
proposal or offer from any person (other than Saturn or Merger Sub) relating to
any acquisition or purchase of all or any material portion of the assets of, or
any equity interest in (other than pursuant to the exercise of options
outstanding on the date hereof), Smartflex or any subsidiary of Smartflex, or
any merger, consolidation, business combination, reorganization,
recapitalization or similar transaction involving Smartflex or any subsidiary of
Smartflex (each a "Competing Transaction"), or participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise, cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any person (other than
Saturn and Merger Sub) to do or seek any of the foregoing, Stockholder will
cease and cause to be terminated any existing activities, discussions or
negotiations by or on its behalf with any person (other than Saturn and Merger
Sub) conducted heretofore with respect to any Competing Transaction and will
promptly notify Saturn following receipt of any request by any person (other
than Saturn or Merger Sub) relating to any possible Competing Transaction or
information concerning Smartflex. Nothing contained herein will prohibit
Stockholder, solely in his capacity as an officer or as a member of the board of
directors of Smartflex (the "Board"), from furnishing information to, or
entering into discussions or negotiations with, any person (other than Saturn
and Merger Sub) in connection with an unsolicited proposal involving a
fully-financed (as represented by such person) Competing Transaction which is
made in writing by such person (other than Saturn and Merger Sub) and which, if
consummated, would provide consideration per share, of Common Stock to the
stockholders of Smartflex in excess of the Offer Price if, and only to the
extent that, the Board determines in good faith, based upon the advice of SG
Cowen Securities Corporation and the written advice of Stradling Yocca Carlson &
Rauth, that such action is required for the Board to comply with its fiduciary
duties to stockholders under Delaware law.
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7.2 Stockholder agrees, while this Agreement is in effect, to notify
Saturn promptly of the number of any shares of Common Stock beneficial ownership
of which is acquired by Stockholder after the date hereof.
8. Legend and Stop Transfer Instructions. Immediately after the execution
of this Agreement (and from time to time prior to the termination of this
Agreement), Stockholder will cause Smartflex to provide for each certificate
representing Shares beneficially owned by Stockholder to bear a legend in the
following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, EXCHANGED
OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
TERMS AND CONDITIONS OF THE STOCK TENDER AND VOTING AGREEMENT AND ARE
SUBJECT TO THE IRREVOCABLE PROXY REFERRED TO THEREIN, EACH DATED AS OF
JULY 6, 1999, AS SUCH AGREEMENT MAY BE AMENDED FROM TIME TO TIME, AND
COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), Stockholder will cause Smartflex to
require the transfer agent for its Common Stock to make a notation in its
records prohibiting the transfer of any of the Shares, except in accordance with
the terms and conditions of this Agreement.
9. Survival of Representation and Warranties. Except as expressly set
forth herein, none of the representations, warranties, covenants and agreements
made by Stockholder, Saturn or Merger Sub in this Agreement will survive the
Closing hereunder.
10. Notices. All notices or other communication required or permitted
hereunder will be in writing, will be given by hand delivery, U.S. Express Mail
(return receipt requested), overnight courier guaranteeing next business day
delivery, or facsimile, and will be deemed duly given when received, addressed
as follows,
If to Saturn or Merger Sub:
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, Michigan 48326
Attention: Wallace K. Tsuha, Jr., President,
Chief Executive Officer and Chairman of the Board
Facsimile: (248) 853-2645
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With copies to:
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Donald J. Kunz, Esq.
Facsimile: (313) 465-7455
If to Stockholder:
Cheryl Moreno
1030 Road Runner Road
Anaheim, California 92807
With copies to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca, Esq.
Facsimile: (949) 725-4100
11. Entire Agreement; Amendment. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the party against
whom such modification, amendment, alteration or supplement is sought to be
enforced.
12. Assigns. This Agreement will be binding upon and inure to the benefit
of the parties hereto and their respective successors, assigns and personal
representatives, but neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto without the
prior written consent of the other parties, except that Merger Sub may assign
any or all of its rights and obligations hereunder to Saturn or any direct or
indirect wholly-owned subsidiary of Saturn without the consent of Stockholder or
Company, but no such transfer will relieve Merger Sub of its obligations under
this Agreement if such subsidiary does not perform the obligations of Merger Sub
hereunder.
13. Governing Law; Jurisdiction; and Consent to Service. Except as
expressly set forth below, this Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In addition, each of Stockholder, Merger Sub and Saturn hereby agrees that any
dispute arising out of this Agreement will be heard in the United States
District Court for the Central District of California and, in connection
therewith, each party to
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this Agreement hereby consents to the jurisdiction of such courts and agrees
that any service of process in connection with any dispute arising out of this
Agreement or the Merger may be given to any other party hereto by certified
mail, return receipt requested, at the respective addresses set forth in Section
10 above.
14. Injunctive Relief. The parties agree that in the event of a breach of
any provision of this Agreement, the aggrieved party may be without an adequate
remedy at law. The parties therefore agree that in the event of a breach of any
provision of this Agreement, the aggrieved party will be entitled to obtain in
any court of competent jurisdiction a decree of specific performance or to
enjoin the continuing breach of such provision, in each case without the
requirement that a bond be posted, as well as to obtain damages for breach of
this Agreement. By seeking or obtaining such relief, the aggrieved party will
not be precluded from seeking or obtaining any other relief to which it may be
entitled.
15. Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of counterparts (including by facsimile signature), each of which
will be deemed to be an original and all of which together will constitute one
and the same document.
16. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision will be interpreted
to be only so broad as is enforceable.
17. Further Assurances. Each party hereto will execute and deliver such
additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. Third Party Beneficiaries. Nothing in this Agreement, expressed or
implied, will be construed to give any person other than the parties hereto any
legal or equitable right, remedy or claim under or by reason of this Agreement
or any provision contained herein.
19. Legal Expenses. In the event any legal proceeding is commenced by any
party to this Agreement to enforce or recover damages for any breach of the
provisions hereof, the prevailing party in such legal proceeding will be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees. The provisions of this Section
19 will survive the Closing hereunder.
20. Amendment and Modification. This Agreement may be amended, modified
and supplemented only by a written document executed by Saturn, Merger Sub and
Stockholder.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, Saturn and Merger Sub have caused this Agreement to be
executed by their duly authorized officers, and Stockholder has duly executed
this Agreement, as of the date and year first above written.
"SATURN"
SATURN ELECTRONICS &
ENGINEERING, INC.
By: /s/ W. Tsuha
------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President,
Chief Executive Officer and
Chairman of the Board
"MERGER SUB"
SSI ACQUISITION CORP.
By: /s/ W. Tsuha
------------------------------------------
Name: Wallace K. Tsuha, Jr.
Its: President
"STOCKHOLDER"
/s/ Cheryl L. Moreno
------------------------------------------
Name: Cheryl L. Moreno
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EXHIBIT A
Form Of Irrevocable Proxy
The undersigned stockholder of Smartflex Systems, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Wallace K. Tsuha, Jr., Jereen Trudell and
Saturn Electronics & Engineering, Inc. ("Saturn"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the issued and outstanding shares of capital stock of Smartflex owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy and (ii) any and all other shares of
capital stock of Smartflex which the undersigned may acquire after the date
hereof (the shares of the capital stock of Smartflex referred to in (clauses (i)
and (ii) of the immediately preceding sentence are collectively referred to as
the "Shares"). Upon the execution hereof all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted in
connection with a Stock Tender and Voting Agreement, dated as of the date
hereof, among Saturn, SSI Acquisition Corp. and the undersigned (the "Stock
Tender Agreement"), and is granted in consideration of Saturn entering into the
Agreement and Plan of Merger, dated as of the date hereof, among Saturn, SSI
Acquisition Corp. and Smartflex (the "Merger Agreement"). Capitalized terms used
but not otherwise defined in this proxy have the meanings ascribed to such terms
in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may exercise
this proxy, to vote the Shares at any time until the earlier to occur of the
valid termination of the Merger Agreement pursuant to Section 8.01 thereof or
the Effective Time at any meeting of the stockholders of Smartflex, however
called, or in any written action by consent of stockholders of Smartflex: (a) in
favor of the Merger; (b) against any action or agreement that would result in a
breach of any covenant or any representation or warranty or any other obligation
or agreement of Smartflex under or pursuant to the Merger Agreement; or (c)
against any action or agreement that would impede, interfere with, delay,
postpone, or attempt to discourage the Merger or the Offer including, but not
limited to, (i) any corporate transaction not entered into in the ordinary
course of business (other than the Merger), including, but not limited to, a
merger, other business combination, reorganization, consolidation,
recapitalization, dissolution or liquidation involving Smartflex, (ii) a sale or
transfer of a material amount of assets of Smartflex or any of its subsidiaries,
(iii) any change in the board of directors of Smartflex, (iv) any material
change in the capitalization of Smartflex, (v) any change in the charter,
by-laws or other organizational or constitutive documents of Smartflex, or (v)
any other material change in the corporate structure or business of Smartflex.
This proxy will be binding upon the heirs, successors and assigns of the
undersigned (including any transferee of any of the Shares).
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<PAGE> 10
Any term or provision of this proxy which is invalid or unenforceable, in
any jurisdiction will, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this proxy or affecting the validity or
enforceability of any of the terms or provisions of this proxy in any other
jurisdiction. If any provision of this proxy is so broad as to be unenforceable,
the provision will be interpreted to be only so broad as is enforceable.
This proxy will terminate immediately upon the earlier of the valid
termination of the Merger Agreement pursuant to Section 8.01 thereof or the
Effective Time.
Dated: July 6, 1999
- -----------------------------
Name: Cheryl Moreno
Number of shares of Common Stock owned of record as of the date of this proxy: 0
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