<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ZYCON CORPORATION
(NAME OF SUBJECT COMPANY)
HADCO ACQUISITION CORP.
HADCO CORPORATION
(BIDDERS)
COMMON STOCK, $.001 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
989852-10-8
(CUSIP NUMBER)
------------------------
ANDREW E. LIETZ
CHIEF EXECUTIVE OFFICER
HADCO CORPORATION
12A MANOR PARKWAY
SALEM, NEW HAMPSHIRE 03079
(603) 898-8000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
COPIES TO:
STEPHEN A. HURWITZ, ESQ.
GEORGE W. LLOYD, ESQ.
TESTA, HURWITZ & THIBEAULT, LLP
HIGH STREET TOWER
125 HIGH STREET
BOSTON, MA 02110
------------------------
DECEMBER 4, 1996
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
CALCULATION OF FILING FEE
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<TABLE>
<S> <C>
Transaction Valuation* Amount of Filing Fee
$212,853,600 $42,570.12
</TABLE>
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* Estimated for purposes of calculating the amount of the filing fee only. The
amount assumes the purchase of the 11,056,000 shares of common stock, $.001
par value (the "Shares") outstanding at December 4, 1996, plus 769,200 Shares
issuable upon the exercise of options outstanding at December 4, 1996, at
$18.00 per Share in cash.
[ ] 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.
<TABLE>
<S> <C>
Amount Previously Paid: None Filing Party: Not Applicable
Form or Registration No: Not Applicable Date Filed: Not Applicable
</TABLE>
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<PAGE> 2
SCHEDULE 14D-1 AND 13D
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CUSIP NO.
989852-10-8
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<TABLE>
<C> <S> <C>
1 NAME OF REPORTING PERSONS
Hadco Acquisition Corp.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Applied For
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f)
N/A [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,754,296*
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES
N/A [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
57%*
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10 TYPE OF REPORTING PERSON
CO
</TABLE>
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* On December 4, 1996, Hadco Corporation, a Massachusetts corporation
("Parent"), and Hadco Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Purchaser"), entered into a Stockholders
Agreement (the "Stockholders Agreement") with certain stockholders
(collectively, the "Selling Stockholders") of Zycon Corporation (the
"Company"), pursuant to which the Selling Stockholders agreed to sell to
Purchaser an aggregate of 6,754,296 shares of common stock, $.001 par value
per share, of the Company beneficially owned by them (representing
approximately 57% of the Shares outstanding calculated on a fully-diluted
basis). Pursuant to the Stockholders Agreement, the Selling Stockholders have
agreed to validly tender pursuant to Purchaser's offer to purchase all of the
outstanding Shares which are owned of record or beneficially by them. Upon
certain circumstances, Parent also has the right to acquire from Selling
Stockholders all of their Shares. The Stockholder Agreement is described more
fully in Section 12 of the Offer to Purchase dated December 11, 1996.
2
<PAGE> 3
SCHEDULE 14D-1 AND 13D
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CUSIP NO.
989852-10-8
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<TABLE>
<C> <S> <C>
1 NAME OF REPORTING PERSONS
Hadco Corporation
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
94-2348052
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE 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)
N/A [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
The Commonwealth of Massachusetts
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,754,296*
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES
N/A [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
57%*
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10 TYPE OF REPORTING PERSON
CO
</TABLE>
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* The footnote on page 2 is incorporated by reference herein.
3
<PAGE> 4
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 is filed by Hadco
Corporation, a Massachusetts corporation ("Parent"), and Hadco Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of Parent
("Purchaser"), relating to the offer by Purchaser to purchase all outstanding
shares of Common Stock, $.001 par value per share (the "Shares"), of Zycon
Corporation (the "Company"), a Delaware corporation, at $18.00 per Share, net to
the seller in cash, on the terms and subject to the conditions set forth in the
Offer to Purchase, dated December 11, 1996 (the "Offer to Purchase"), and in the
related Letter of Transmittal and any amendments or supplements thereto, copies
of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively (which
collectively constitute the "Offer").
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D with respect to the acquisition by Parent and Purchaser of
beneficial ownership of 6,754,296 shares pursuant to the Stockholders Agreement
dated December 4, 1996 among Parent, Purchaser, the Company and certain
stockholders of the Company. The item numbers and responses thereto below are in
accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Zycon Corporation, a Delaware
corporation. The address of the Company's principal executive offices is 445 El
Camino Real, Santa Clara, California 95050.
(b) The information set forth on the cover page and under "Introduction" in
the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d), (g) This Statement is filed by Purchaser and Parent. The
information set forth on the cover page, under "Introduction," in Section 9 and
in Schedule I of the Offer to Purchase is incorporated herein by reference.
(e)-(f) During the last five years, neither Purchaser or Parent nor, to
their knowledge, any of the persons listed in Schedule I (Directors and
Executive Officers) to the Offer to Purchase, (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) has been a party 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.
ITEM 3. PAST CONTACTS, TRANSACTIONS, OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) The information set forth in Section 11 of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth under "Introduction" and in Sections 9, 11
and 12 of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in Section 10 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 Section 12 of the Offer to Purchase is
incorporated herein by reference.
(f)-(g) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
4
<PAGE> 5
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)-(b) The information set forth under "Introduction" and in Sections 9,
11 and 12 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 under "Introduction" and in Sections 9, 11, 12
and 13 of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth under "Introduction" and in Section 16 of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth under "Introduction" and in Sections 11 and
12 of the Offer to Purchase is incorporated herein by reference.
(b)(c) and (e) The information set forth in Section 15 of the Offer to
Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase dated December 11, 1996.
(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) Text of Press Release dated December 5, 1996.
(a)(8) Form of Summary Advertisement dated December 11, 1996.
(b) Commitment Letter dated December 3, 1996 from The First National Bank of
Boston to Parent.
(c)(1) Agreement and Plan of Merger dated as of December 4, 1996, among Parent,
Purchaser and the Company.
(c)(2) Stockholders Agreement dated December 4, 1996 among Parent, Purchaser and
the Selling Stockholders.
(c)(3) Noncompetition and Nondisclosure Agreement dated December 4, 1996 by and
between Parent and Ronald H. Donati.
(d) None.
(e) Not applicable.
(f) None.
5
<PAGE> 6
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 11, 1996 HADCO ACQUISITION CORP.
By: /s/ TIMOTHY P. LOSIK
----------------------
Name: Timothy P. Losik
Title: Vice President
HADCO CORPORATION
By: /s/ TIMOTHY P. LOSIK
----------------------
Name: Timothy P. Losik
Title: Vice President
6
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
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<S> <C> <C>
(a)(1) Offer to Purchase dated December 11, 1996.....................................
(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) Text of Press Release dated December 5, 1996..................................
(a)(8) Form of Summary Advertisement dated December 11, 1996.........................
(b) Commitment Letter dated December 3, 1996 from The First National Bank of
Boston to Parent..............................................................
(c)(1) Agreement and Plan of Merger dated as of December 4, 1996 among Parent,
Purchaser and the Company.....................................................
(c)(2) Stockholders Agreement dated December 4, 1996 among Parent, Purchaser and the
Selling Stockholders..........................................................
(c)(3) Noncompetition and Nondisclosure Agreement dated December 4, 1996 by and
between Parent and Ronald H. Donati...........................................
</TABLE>
7
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ZYCON CORPORATION
AT
$18.00 NET PER SHARE
BY
HADCO ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
HADCO CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, JANUARY 9, 1997, UNLESS THE OFFER IS EXTENDED
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT
THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES
PURSUANT THERETO.
PARENT AND PURCHASER HAVE ENTERED INTO A STOCKHOLDERS AGREEMENT WITH
CERTAIN SELLING STOCKHOLDERS, PURSUANT TO WHICH, AMONG OTHER THINGS, SUCH
STOCKHOLDERS HAVE AGREED TO TENDER IN THE OFFER, AND PURCHASER HAS THE RIGHT TO
ACQUIRE, UPON THE TERMS AND SUBJECT TO THE CONDITIONS THEREOF, APPROXIMATELY 57%
OF THE COMPANY'S OUTSTANDING SHARES (CALCULATED ON A FULLY-DILUTED BASIS) AT THE
OFFER PRICE.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
WHICH CONSTITUTE AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED
IN THIS OFFER TO PURCHASE. SEE INTRODUCTION AND SECTIONS 1 AND 14 OF THIS OFFER
TO PURCHASE.
------------------------
IMPORTANT
Any stockholder wishing to tender all or a portion of that stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
manually signed facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, mail or deliver it and any other required documents to
the Depositary and either deliver the certificates for those Shares to the
Depositary along with the Letter of Transmittal or tender those Shares pursuant
to the procedures for book-entry transfer set forth in Section 3 hereof, or (2)
request his or her broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for the stockholder. Any stockholder whose
Shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact that broker, dealer, commercial bank,
trust company or other nominee if the stockholder wishes to tender such Shares.
Any stockholder who wishes to tender Shares and whose certificates
representing those Shares are not immediately available or who cannot comply
with the procedure for book-entry transfer on a timely basis should tender those
Shares by following the procedures for guaranteed delivery set forth in Section
3 hereof.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their addresses and telephone numbers set forth
on the back cover of this Offer to Purchase. Requests for additional copies of
this Offer to Purchase, the Letter of Transmittal and other related materials
may be directed to the Information Agent or to brokers, dealers, commercial
banks and trust companies.
------------------------
The Dealer Manager for the Offer is:
ROBERTSON, STEPHENS & COMPANY LLC
December 11, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
INTRODUCTION.......................................................................... 3
1. Terms of the Offer............................................................... 4
2. Acceptance for Payment and Payment............................................... 6
3. Procedure for Tendering Shares................................................... 7
4. Withdrawal Rights................................................................ 10
5. Certain Federal Income Tax Consequences of the Offer and the Merger.............. 10
6. Price Range of the Shares; Dividends on the Shares............................... 12
7. Effect of the Offer on the Market for the Shares, Stock Exchange Listing and
Exchange Act Registration, and Margin Securities................................. 12
8. Certain Information Concerning the Company....................................... 13
9. Certain Information Concerning Purchaser and Parent.............................. 15
10. Source and Amount of Funds....................................................... 18
11. Background of the Offer.......................................................... 19
12. Purpose of the Offer and the Merger; Plans for the Company;
the Merger Agreement; the Stockholders Agreement;
Noncompetition and Nondisclosure Agreement; Other Matters........................ 20
13. Dividends and Distributions...................................................... 30
14. Certain Conditions of the Offer.................................................. 31
15. Certain Legal Matters............................................................ 33
16. Fees and Expenses................................................................ 35
17. Miscellaneous.................................................................... 35
SCHEDULE I -- Directors and Executive Officers........................................ S-1
</TABLE>
2
<PAGE> 3
To the Holders of Common Stock of Zycon Corporation:
INTRODUCTION
Hadco Acquisition Corp. ("Purchaser"), a Delaware corporation and a
wholly-owned subsidiary of Hadco Corporation ("Parent"), a Massachusetts
corporation, hereby offers to purchase all of the outstanding shares of common
stock, $.001 par value (the "Shares"), of Zycon Corporation (the "Company"), a
Delaware corporation, at a purchase price of $18.00 per Share (the "Offer
Price"), net to the seller in cash, 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").
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of December 4, 1996 (the "Merger Agreement") among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, for the commencement
of the Offer by Purchaser and further provides that after the purchase of Shares
pursuant to the Offer, subject to the satisfaction or waiver of certain
conditions, Purchaser will be merged with and into the Company (the "Merger"),
with the Company surviving the Merger as a wholly-owned subsidiary of Parent
(the "Surviving Corporation"). At the effective time of the Merger (the
"Effective Time"), each outstanding Share (other than Shares held in the
Company's treasury or by a wholly-owned subsidiary of the Company, Shares owned
by Parent, or any other wholly-owned subsidiary of Parent and Shares owned by
stockholders who shall have properly exercised their appraisal rights under
Delaware law) will be converted into the right to receive the Offer Price (or
any greater amount paid pursuant to the Offer) in cash, without interest (the
"Merger Consideration").
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE COMPANY AND ITS STOCKHOLDERS ("STOCKHOLDERS"), HAS APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT INCLUDING
THE OFFER AND THE MERGER, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND
TENDER ALL OF THEIR SHARES PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES WHICH CONSTITUTE AT LEAST A MAJORITY OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM
TENDER CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTIONS 1 AND 14.
The Company has informed Purchaser that, at the close of business on
December 3, 1996, 11,056,000 Shares were issued and outstanding and 1,100,000
Shares were reserved for issuance pursuant to stock option plans, of which
769,200 Shares are subject to outstanding stock options granted by the Company
to key employees and directors (the "Company Stock Options").
Concurrently with the execution of the Merger Agreement, Parent and
Purchaser entered into a Stockholders Agreement dated December 4, 1996 (the
"Stockholders Agreement") with certain stockholders of the Company (the "Selling
Stockholders") owning, in the aggregate, 6,754,296 Shares (or approximately 57%
of the outstanding Shares calculated on a fully-diluted basis (as defined in the
Merger Agreement)). Pursuant to the Stockholders Agreement, the Selling
Stockholders have agreed to validly tender pursuant to the Offer and not
withdraw all Shares which are owned of record or beneficially by them prior to
the Expiration Date. The tender of the Shares by the Selling Stockholders will
be sufficient to satisfy the Minimum Tender Condition. Pursuant to the
Stockholders Agreement. Parent has the right to acquire from the Selling
Stockholders at the Offer Price the aggregate number of Shares set forth
opposite each Selling Stockholder's name on Schedule I to the Stockholders
Agreement, if (i) the Offer is terminated, abandoned or withdrawn by Parent or
Purchaser (whether due to the failure of any of the conditions set forth in the
Offer or otherwise), (ii) the Offer is consummated but Purchaser has not
accepted for payment and paid for the Shares or (iii) the Merger
3
<PAGE> 4
Agreement is terminated in accordance with its terms. Subject to certain
conditions specified in the Stockholders Agreement, such right is exercisable in
whole but not in part for the 90-day period following the first to occur of the
foregoing events.
The consummation of the Merger is subject to the satisfaction or waiver of
a number of conditions, including, if required, the approval of the Merger by
the requisite vote or consent of the Stockholders. Under the Delaware General
Corporation Law (the "DGCL"), the stockholder vote necessary to approve the
Merger will be the affirmative vote of at least a majority of the outstanding
Shares, including Shares held by Purchaser and its affiliates. If, upon the
terms and subject to the conditions of the Offer, Purchaser purchases all of the
Shares owned by the Selling Stockholders, Purchaser will have the votes required
to approve the Merger without the affirmative vote of any other Stockholder of
the Company. Furthermore, if Purchaser acquires at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, Purchaser will be able to effect the
Merger pursuant to the "short-form" merger provisions of Section 253 of the
DGCL, without prior notice to, or any action by, any other Stockholder. In that
event, Purchaser intends to effect the Merger as promptly as practicable
following the purchase of Shares in the Offer. See Section 12.
The Merger Agreement is 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.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer or
the Merger. Purchaser will pay all charges and expenses of Robertson, Stephens &
Company LLC ("Robertson Stephens & Company), as the dealer manager (the "Dealer
Manager"), The First National Bank of Boston, as the depositary (the
"Depositary"), and MacKenzie Partners, Inc., as the information agent (the
"Information Agent") incurred in connection with the Offer. See Section 16.
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 any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) all
Shares that are validly tendered and not withdrawn in accordance with Section 4
prior to the Expiration Date. As used in the Offer, the term "Expiration Date"
means 12:00 midnight, New York City time, on Thursday, January 9, 1997, unless
and until Purchaser, in accordance with the terms of the Offer and the Merger
Agreement, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" means the latest time and date
at which the Offer, as so extended, expires. As used in this Offer to Purchase,
"business day" has the meaning set forth in Rule 14d-1(c)(6) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
In the event that the Offer is not consummated, Purchaser may seek to
acquire Shares through open-market purchases, privately negotiated transactions
or otherwise, upon such terms and conditions and at such prices as it shall
determine, which may be more or less than the Offer Price and could be for cash
or other consideration.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Tender Condition and the expiration or termination of all waiting
periods imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). The Offer also is subject to certain other conditions
set forth in Section 14. Subject to the terms of the Merger Agreement, Purchaser
expressly reserves the right (but will not be obligated) to waive any or all of
the conditions of the Offer. Subject to the terms of the Merger Agreement, if by
the Expiration Date any or all of the conditions of the Offer are not satisfied
or waived, Purchaser reserves the right (but shall not be obligated) to (i)
extend the period during which the Offer is open and, subject to the rights of
tendering Stockholders to withdraw their Shares, retain all tendered Shares
until the Expiration Date, (ii) waive any or all of the conditions of the Offer
and, subject to complying with applicable rules and regulations of the
4
<PAGE> 5
Commission, accept for payment or purchase all validly tendered Shares and not
extend the Offer, or (iii) terminate the Offer and not accept for payment any
Shares and return promptly all tendered Shares to tendering Stockholders.
Subject to the terms of the Merger Agreement described above, Purchaser
expressly reserves the right, subject to applicable law, to extend the period of
time during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement of such
extension. There can be no assurance that Purchaser will exercise its right to
extend the Offer. Purchaser also expressly reserves the right, subject to
applicable law (including applicable rules of the Commission) and the terms of
the Merger Agreement, at any time or from time to time, (i) to delay acceptance
for payment of, or payment for, any Shares, regardless of whether the Shares
were theretofore accepted for payment, or to terminate the Offer and not accept
for payment or pay for any Shares not theretofore accepted for payment or paid
for, upon the occurrence of any of the conditions specified in Section 14 by
giving oral or written notice of such delay in payment or termination to the
Depositary, and (ii) to waive any conditions or otherwise amend the Offer in any
respect, by giving oral or written notice to the Depositary. Any extension,
delay in payment, termination or amendment will be followed as promptly as
practicable by public announcement, the announcement in the case of an extension
to be issued no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date. Without limiting the manner
in which Purchaser may choose to make any public announcement, Purchaser will
have no obligation to publish, advertise or otherwise communicate any such
announcement, other than by issuing a release to the Dow Jones News Service or
as otherwise required by law. The reservation by Purchaser of the right to delay
acceptance for payment of or payment for Shares is subject to the provisions of
Rule 14e-1(c) under the Exchange Act, which requires that Purchaser pay the
consideration offered or return the Shares deposited by or on behalf of
Stockholders promptly after the termination or withdrawal of the Offer.
Purchaser may not delay acceptance for payment of, or payment for (except as
provided in clause (i) of the third sentence of this paragraph), any Shares upon
the occurrence of any of the conditions specified in Section 14, beyond the time
permitted by applicable law, without extending the period during which the Offer
is open.
Pursuant to the terms of the Merger Agreement, without the prior written
consent of the Company, Purchaser has agreed not to (and Parent has agreed to
cause Purchaser not to) (i) decrease or change the form of consideration payable
in the Offer or decrease the number of Shares sought pursuant to the Offer, (ii)
change in any material respect the conditions to the Offer, (iii) impose
additional material conditions to the Offer, (iv) waive the Minimum Tender
Condition, (v) extend the Expiration Date of the Offer except that (a) Purchaser
may extend the Expiration Date as required by law, (b) Purchaser may extend the
expiration date of the Offer for up to ten (10) business days after the initial
Expiration Date (or for longer periods (not to exceed 90 calendar days from the
date of commencement) in the event that any condition to the Offer is not
satisfied), and (c) Purchaser may extend the Offer one or more times for an
aggregate period of 15 days (not to exceed 90 calendar days from the date of
commencement for any reason other than those in the immediately preceding clause
(a) or (b), or (vi) amend any term of the Offer in any manner adverse to holders
of Shares; provided, however, that, except as set forth above and subject to
applicable legal requirements, Purchaser may waive any other condition to the
Offer in its sole discretion; and provided, further, that the Offer may be
extended in connection with an increase in the consideration to be paid pursuant
to the Offer so as to comply with applicable rules and regulations of the
Commission. Assuming the prior satisfaction or waiver of the conditions of the
Offer, Purchaser will accept for payment, and pay for, in accordance with the
terms of the Offer, all Shares validly tendered and not withdrawn pursuant to
the Offer promptly after the Expiration Date.
The Commission has announced that, under its interpretation of Rules
14d-4(c) and 14d-6(d) under the Exchange Act, material changes in the terms of a
tender offer or information concerning a tender offer may require that the
tender offer be extended so that it remains open a sufficient period of time to
allow security holders to consider such material changes or information in
deciding whether or not to tender or withdraw their securities. The minimum
period during which an offer must remain
5
<PAGE> 6
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 percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the terms or information. If Purchaser decides to
increase or, subject to the consent of the Company, to decrease the
consideration in the Offer, to make a change in the percentage of Shares sought
or to change or waive the Minimum Tender Condition and if, at the time that
notice of any such change is first published, sent or given to Stockholders, the
Offer is scheduled to expire at any time earlier than the tenth business day
after (and including) the date of that notice, the Offer will be extended at
least until the expiration of that period of ten business days.
The Company has provided Purchaser with its stockholder list and security
position listings for the purpose of disseminating the Offer to Stockholders.
This Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company stockholder list
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. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Merger Agreement and
the Offer (including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), Purchaser will accept for
payment (and thereby purchase) and pay for, up to an aggregate of 11,825,200
Shares which are validly tendered prior to the Expiration Date (and not properly
withdrawn), promptly after the later to occur of: (i) the Expiration Date and
(ii) the date of satisfaction or waiver of all the conditions to the Offer set
forth in this Offer to Purchase. Subject to the applicable rules of the
Commission, Purchaser expressly reserves the right to delay acceptance for
payment of or payment for Shares pending receipt of any regulatory approval
specified in Section 15 or in order to comply, in whole or in part, with any
other applicable law or government regulation. See Sections 14 and 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
such Shares or a timely Book-Entry Confirmation with respect to the Shares, if
such procedure is available, into the Depositary's account at the Book-Entry
Transfer Facilities (as defined in Section 3) pursuant to the procedures set
forth in Section 3, (ii) the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed with all required signature guarantees or
an Agent's Message (as defined below) in connection with a book-entry transfer,
and (iii) all other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility (as defined in Section 3) to and received by the Depositary
and forming part of a Book-Entry Confirmation, which states that such Book-Entry
Transfer Facility has received an express acknowledgment from the participant in
such Book-Entry Transfer Facility tendering the Share that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal, and
that Purchaser may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment and thereby purchased Shares validly tendered and not properly withdrawn
if, as and when Purchaser gives oral or written notice to the Depositary of
Purchaser's acceptance of such Shares for payment. Payment for Shares accepted
pursuant to the Offer will be made by deposit of the purchase price with the
Depositary, which will act as agent for tendering Stockholders for the purpose
of receiving payment from Purchaser and transmitting payment to tendering
Stockholders. Upon the deposit of funds with the Depositary for the purpose of
making payments to tendering Stockholders, 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. Purchaser will pay any
stock transfer taxes incident to the transfer to it of validly
6
<PAGE> 7
tendered Shares, except as otherwise provided in the Letter of Transmittal, as
well as any charges and expenses of the Depositary and the Information Agent.
Under no circumstances will interest accrue on the consideration to be paid for
the Shares by Purchaser, regardless of any delay in making such payment.
If any tendered Shares are not accepted for any reason pursuant to the
terms and conditions of the Offer or if certificates are submitted for more
Shares than are tendered, certificates for the Shares not purchased or tendered
will be returned pursuant to the instructions of the tendering Stockholder
without expense to the tendering Stockholder (or, in the case of Shares
delivered by book-entry transfer into the Depositary's account at a Book-Entry
Transfer Facility pursuant to the procedures set forth in Section 3, the Shares
will be credited to an account maintained at the appropriate Book-Entry Transfer
Facility) as promptly as practicable following the expiration, termination or
withdrawal of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Share pursuant to the Offer, Purchaser will pay the increased
consideration for all the Shares purchased pursuant to the Offer, whether or not
the Shares were tendered prior to the increase in consideration.
Purchaser reserves the right to transfer or assign, in whole at any time,
or in part from time to time, to Parent or one or more wholly owned subsidiaries
of Parent, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, provided that any such transfer or assignment will not
relieve 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.
3. PROCEDURE FOR TENDERING SHARES
Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
either (i) a Letter of Transmittal (or a manually signed facsimile), properly
completed and duly executed, with any required signature guarantees 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 prior to the Expiration Date and either (a) certificates representing
Shares must be received by the Depositary at any such address prior to the
Expiration Date or (b) the Shares must be delivered pursuant to the procedures
for book-entry transfer set forth below and a Book-Entry Confirmation must be
received by the Depositary prior to the Expiration Date or (ii) the tendering
Stockholder must comply with the guaranteed delivery procedures set forth below.
No alternative, conditional or contingent tenders will be accepted.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (each, a "Book-Entry Transfer Facility" and, collectively, the
"Book-Entry Transfer Facilities") for purposes of the Offer within two business
days after the date of this Offer to Purchase, and any financial institution
that is a participant in any of the Book-Entry Transfer Facilities' systems may
make book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer the Shares into the Depositary's account at the Book-Entry Transfer
Facility in accordance with that Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of the Shares may be effected through
book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed with any required signature guarantees or an Agent's Message
in connection with a book-entry delivery of Shares, 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
prior to the Expiration Date, or the tendering Stockholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at a Book-Entry Transfer
Facility as described above is referred to as a "Book-Entry Confirmation."
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE
BOOK-ENTRY TRANSFER
7
<PAGE> 8
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY OF THE LETTER OF TRANSMITTAL
TO THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by a registered holder
(which term, for purposes of this Section, includes any participant in any of
the Book-Entry Transfer Facilities' systems whose name appears on a security
position listing as the owner of the Shares) of 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 (b) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loans
associations and brokerage houses) 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 (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of
the Letter of Transmittal. If the certificates representing 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 returned to a person other than the
registered holder of the certificates surrendered, then the tendered
certificates representing Shares must be endorsed or accompanied by appropriate
stock powers, in each case signed exactly as the name or names of the registered
holder or owners appear on the certificates, with the signatures on the
certificates or stock powers guaranteed as described above and as provided in
the Letter of Transmittal. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a Stockholder wishes to tender Shares pursuant to
the Offer and the Stockholder's certificates are not immediately available or
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, the Shares may nevertheless be tendered, if all the following
guaranteed delivery procedures are complied with:
(i) the 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 Purchaser with this Offer
to Purchase, 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 all tendered Shares
and/or, together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile) and any required signature
guarantees or Agent's Message in connection with a Book-Entry Transfer
Facility and any other documents required by the Letter of Transmittal, are
received by the Depositary within three NASDAQ/National Market System
trading days after the date of execution of the Notice of Guaranteed
Delivery.
THE NOTICE OF GUARANTEED DELIVERY MAY BE DELIVERED BY HAND OR TRANSMITTED
BY TELEGRAM, FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST INCLUDE
AN ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN THE NOTICE OF
GUARANTEED DELIVERY.
IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED
FACSIMILE) IS RECEIVED BY THE DEPOSITARY.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE
TENDERING STOCKHOLDER. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Notwithstanding any other provision of this Offer to Purchase, payment for
Shares accepted for payment pursuant to the Offer in all cases will be made only
after timely receipt by the Depositary of
8
<PAGE> 9
certificates for (or Book-Entry Confirmation with respect to) the Shares, and a
Letter of Transmittal (or a manually signed facsimile), properly completed and
duly executed, with any required signature guarantees (or in the case of a
book-entry transfer, an Agent's Message) and all other documents reqired by the
Letter of Transmittal.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING OF 31% OF THE PAYMENTS MADE TO STOCKHOLDERS WITH RESPECT TO THE
PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, A STOCKHOLDER MUST
PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER IDENTIFICATION NUMBER AND
CERTIFY THAT HE IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SEE
INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL AND SECTION 5 BELOW.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination shall be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of counsel, be unlawful
and reserves the absolute right to waive any defect or irregularity in any
tender of Shares. Subject to the terms of the Merger Agreement, Purchaser also
reserves the absolute right to waive or amend any or all of the conditions of
the Offer. Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and its instructions) will be final and
binding on all parties. No tender of Shares will be deemed to have been validly
made, until all defects and irregularities have been cured or waived. None of
Purchaser, Parent, the Dealer Manager, 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.
Appointment as Proxy. By executing a Letter of Transmittal, a tendering
Stockholder irrevocably appoints designees of Purchaser as his attorneys-in-fact
and proxies, with full power of substitution, in the manner set forth in the
Letter of Transmittal, to the full extent of the Stockholder's rights with
respect to the Shares tendered by the Stockholder and purchased by Purchaser and
with respect to any and all other Shares, rights or other securities issued or
issuable in respect of those Shares, on or after the date of the Offer. All such
powers of attorney and proxies will be considered coupled with an interest in
the tendered Shares. Such appointment will be effective when, and only to the
extent that, Purchaser accepts the Shares for payment. Upon acceptance for
payment, all prior powers of attorney and proxies given by the Stockholder with
respect to the Shares (and any other Shares, rights or other securities so
issued in respect of such purchased Shares) will be revoked, without further
action, and no subsequent powers of attorney and proxies may be given (and, if
given, will not be deemed effective) by the Stockholder. The designees of
Purchaser will be empowered to exercise all voting and other rights of the
Stockholder with respect to such Shares (and any other Shares, rights or
securities so issued in respect of such purchased Shares) as they in their sole
discretion may deem proper, including, without limitation, in respect of any
annual or special meeting of the Stockholders, or any adjournment or
postponement of any such meeting, or in connection with any action by written
consent in lieu of any such meeting or otherwise (including any such meeting or
action by written consent to approve the Merger). Purchaser reserves the
absolute right to require that, in order for Shares to be validly tendered,
immediately upon Purchaser's acceptance for payment of the Shares, Purchaser
must be able to exercise full voting and other rights with respect to the Shares
(and any Shares, rights or other securities so issued in respect of such
purchased Shares), including voting at any meeting of Stockholders then
scheduled.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering Stockholder's acceptance of the terms and conditions of
the Offer, as well as the tendering Stockholder's representation and warranty to
Purchaser that (a) such Stockholder has a net long position in the Shares being
tendered within the meaning of Rule 14e-4 under the Exchange Act and (b) the
tender of such Shares complies with Rule 14e-4. It is a violation of Rule 14e-4
for a person,
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<PAGE> 10
directly or indirectly, to tender Shares for such person's own account unless,
at the time of tender, the person so tendering (i) has a net long position equal
to or greater than the amount of (x) Shares tendered or (y) other securities
immediately convertible into or exchangeable or exercisable for the Shares
tendered and such person will acquire such Shares for tender by conversion,
exchange or exercise and (ii) will cause such Shares to be delivered in
accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. Purchaser's acceptance for payment of Shares tendered pursuant
to the Offer will constitute a binding agreement between the tendering
Stockholder and Purchaser upon the terms and conditions of the Offer.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser as provided in this Offer to Purchase, may
also be withdrawn at any time after February 8, 1997. If Purchaser extends the
Offer, is delayed in its purchase of or payment for Shares, or is unable to
purchase or pay for Shares for any reason then, without prejudice to the rights
of Purchaser, tendered Shares may be retained by the Depositary on behalf of
Purchaser and may not be withdrawn, except to the extent that tendering
Stockholders are entitled to withdrawal rights as set forth in this Section 4.
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the provisions of Rule 14e-1(c)
under the Exchange Act, which requires Purchaser to pay the consideration
offered or to return Shares deposited by or on behalf of Stockholders promptly
after the termination or withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic 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. Any
such notice of withdrawal must specify the name of the persons who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered the Shares.
If certificates evidencing Shares have been delivered or otherwise identified to
the Depositary then, prior to the release of the certificates, the tendering
Stockholder must also submit the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn, and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution (except in
the case of Shares tendered for the account of an Eligible Institution). If
Shares have been tendered pursuant to the procedure for book-entry transfer set
forth in Section 3, the notice of withdrawal must specify the name and number of
the account at the applicable Book-Entry Transfer Facility to be credited with
the withdrawn Shares. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding on all parties.
No withdrawal of Shares will be deemed to have been made properly until all
defects and irregularities have been cured or waived. None of Parent, Purchaser,
the Dealer Manager, 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 failing to give such
notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 above.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted into the right to receive the Merger
Consideration in the Merger (including any cash amounts
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<PAGE> 11
received by dissenting Stockholders pursuant to the exercise of appraisal
rights). This discussion is based upon the provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), the applicable Treasury Regulations
promulgated and proposed thereunder, judicial authority and administrative
rulings and practice. Legislative, judicial or administrative authorities or
interpretations are subject to change, possibly on a retroactive basis, at any
time and therefore could alter or modify the statements and conclusions set
forth below. It is assumed that (i) the Shares are held as "capital assets"
within the meaning of Section 1221 of the Code (i.e., property held for
investment) and (ii) the Company is not a "collapsible corporation" within the
meaning of Section 341 of the Code. This discussion does not address all aspects
of federal income taxation that may be relevant to a particular Stockholder in
light of such Stockholder's personal investment circumstances, or those
Stockholders subject to special treatment under the federal income tax laws (for
example, life insurance companies, tax-exempt organizations, foreign
corporations and nonresident alien individuals) or to Stockholders who acquired
their Shares through the exercise of employee stock options or other
compensation arrangements. In addition, the discussion does not address any
aspect of foreign, state, local or estate and gift taxation that may be
applicable to a Stockholder.
Consequences of the Offer and the Merger to Stockholders. The receipt of
the Offer Price and the Merger Consideration (including any cash amounts
received by dissenting Stockholders pursuant to the exercise of appraisal
rights) will be a taxable transaction for federal income tax purposes (and also
may be a taxable transaction under applicable state, local and other income tax
laws). In general, for federal income tax purposes, a Stockholder will recognize
gain or loss equal to the difference between his adjusted tax basis in the
Shares sold pursuant to the Offer or converted to cash in the Merger and the
amount of cash received therefor. Gain or loss must be determined separately for
each block of Shares (i.e., Shares acquired at the same cost in a single
transaction) sold pursuant to the Offer or converted to cash in the Merger. Such
gain or loss will be capital gain or loss and will be long-term gain or loss,
if, on the date of sale (or, if applicable, the date of the Merger) the Shares
were held for more than one year.
Backup Tax Withholding. Under the Code, a Stockholder may be subject, under
certain circumstances, to "backup withholding" at a 31% rate with respect to
payments made in connection with the Offer or the Merger. Backup withholding
generally applies if the Stockholder (i) fails to furnish his social security
number or other taxpayer identification number ("TIN"), (ii) furnishes an
incorrect TIN, (iii) fails properly to report interest or dividends or (iv)
under certain circumstances, fails to provide a certified statement, signed
under the penalties of perjury, that the TIN provided is his correct number and
that he is not subject to backup withholding. Backup withholding is not an
additional tax but merely an advance payment, which may be refunded to the
extent it results in an overpayment of tax. Certain persons generally are exempt
from backup withholding, including corporations and financial institutions.
Certain penalties apply for failure to furnish correct information and for
failure to include the reportable payments in income. Each Stockholder should
consult with his own tax advisor as to his qualifications for exemption from
withholding and the procedure for obtaining such exemption.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE OFFER
AND THE MERGER TO THEM IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
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<PAGE> 12
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 (the "Company 10-K"), the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 1996 (the "Company 10-Q")
and information supplied to Purchaser by the Company, the Shares commenced
trading on the NASDAQ/National Market System under the trading symbol "ZCON" on
September 28, 1995. The Company has never paid cash dividends on the Shares. The
following table sets forth, for the periods indicated, the high and low closing
bid prices per Share reported by NASDAQ/National Market System:
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1995:
Third Quarter (from September 28, 1995).................... $15.00 $12.25
Fourth Quarter............................................. 13.25 10.00
1996:
First Quarter.............................................. 14.63 10.00
Second Quarter............................................. 16.75 8.63
Third Quarter.............................................. 12.00 8.63
Fourth Quarter (through December 4, 1996).................. 16.13 8.75
</TABLE>
On December 4, 1996, the last full trading day before the public
announcement of Purchaser's intention to acquire the Shares, the last reported
sale price on the NASDAQ/NMS was $16.00 per Share. On December 10, 1996, the
last full trading day before the commencement of the Offer, the last reported
sale price on the NASDAQ/National Market System was $51.50 per Share.
Stockholders are urged to obtain current market quotations for the Shares.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION, AND MARGIN SECURITIES
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of holders
of Shares, which could adversely affect the liquidity and market value of the
remaining Shares held by stockholders other than Purchaser. Purchaser cannot
predict whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for, or
marketability of, the Shares or whether such reduction would cause future market
prices to be greater or less than the Offer Price.
The extent of the public market for the Shares and, according to the
published guidelines of the National Association of Securities Dealers, the
continued trading of the Shares on the NASDAQ/National Market System, after
commencement of the Offer, will depend upon the number of holders of Shares
remaining at such time, the interest in maintaining a market in such Shares on
the part of securities firms, the possible termination of registration of such
Shares under the Exchange Act, as described below, and other factors.
The Shares are currently registered under the Exchange Act. Such
registration 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
300 or more holders of record. Termination of the registration of the Shares
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of Shares and to the Commission and would
make certain of the provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b), the requirement of furnishing a
proxy statement pursuant to Section 14(a) in connection with a stockholders'
meeting and the related requirement of an annual report to stockholders, and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Shares. Furthermore,
"affiliates" of the Company and persons holding "restricted securities" of the
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<PAGE> 13
Company may be deprived of the ability to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933 (the "Securities Act"). If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be "margin securities," or eligible for listing or NASDAQ
reporting. Purchaser intends to seek to cause the Company to terminate
registration of the Shares under the Exchange Act as soon after consummation of
the Offer as the requirements for termination of registration of the Shares are
met.
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 such Shares. Depending upon factors similar to those
described above regarding listing and market quotations, the Shares might no
longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive offices
located at 445 El Camino Real, Santa Clara, California 95050. According to the
Company's Annual Report on Form 10-K, the Company is a leading manufacturer of
high quality, complex multilayer printed circuit boards for original equipment
manufacturers ("OEMs") and contract manufacturers of sophisticated electronic
equipment. The Company's principal customers serve diverse market segments
including data communications, telecommunications, advanced storage systems,
workstations, servers and personal computers. The Company utilizes advanced
manufacturing and engineering capabilities to assist customers in the early
phases of new product design, allowing the Company to build long-term
relationships, maintain technological leadership and capitalize on prototype and
volume manufacturing opportunities. Since April 1, 1988, the Company has
invested in excess of $95 million in facilities and equipment, resulting in one
of the largest and most modern independent printed circuit board manufacturing
facilities in the United States. The Company believes that its substantial
investment in facilities and equipment enhances its ability to meet the
time-to-market and time-to-volume requirements of its customers.
Set forth below is certain selected consolidated financial information,
with respect to the Company and its subsidiaries excerpted from the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995 and the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1996. 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 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 should be obtainable in the manner set forth below under
"Available Information."
13
<PAGE> 14
ZYCON CORPORATION AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE DATA)
CONSOLIDATED INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------ ----------------------
1993 1994 1995 1995 1996
-------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net sales.................................. $139,529 $149,151 $180,944 $ 127,524 $158,649
Income from operations..................... 9,356 7,758 16,602 9,240 13,659
Interest expense, net...................... 1,821 1,986 1,716 1,478 975
Net income................................. 7,347 5,675 7,477 3,150 7,413
Pro forma net income per share............. $ .52 $ .39 $ .97 $ .54 $ .67
</TABLE>
CONSOLIDATED BALANCE SHEET DATA:
<TABLE>
<CAPTION>
AT DECEMBER 31, AT
----------------- SEPTEMBER 30,
1994 1995 1996
------- ------- -------------
<S> <C> <C> <C>
Working capital............................................... $ (830) $13,033 $ 12,428
Total assets.................................................. 68,463 94,975 142,514
Total assets less excess cost of assets acquired over book
value....................................................... 68,463 94,975 136,984
Total liabilities............................................. 43,664 39,074 78,552
Stockholders' equity.......................................... 24,799 55,901 63,962
</TABLE>
Certain Company Projections. During the course of discussions among Parent,
Purchaser and the Company that led to the execution of the Merger Agreement (see
Section 11 below), the Company provided Purchaser and Parent with certain
non-public business and financial information about the Company. The information
included income and cash flow statements which projected for the Company and its
subsidiaries, on a consolidated basis, (i) for the fiscal year ending December
31, 1996, (a) net sales of approximately $219.2 million, (b) earnings before
interest, taxes, depreciation and amortization of approximately $29.3 million,
(c) net income of approximately $9.6 million, and (d) earnings per share of
$.86; and (ii) for the fiscal year ending December 31, 1997 (a) net sales of
approximately $283.7 million, (b) earnings before interest, taxes, depreciation
and amortization of approximately $41.2 million, (c) net income of approximately
$15.8 million, and (d) earnings per share of $1.41.
The Company does not as a matter of course make public any projections as
to future performance or earnings, and the projections set forth above are
included in this Offer to Purchase only because the information was provided to
Purchaser and Parent. The projections were not prepared with a view to public
disclosure or for compliance with the published guidelines of the Commission or
the guidelines established by the American Institute of Certified Public
Accountants regarding projections or forecasts. The Company has advised
Purchaser and Parent that its internal financial forecasts (upon which the
projections provided to Parent were based in part) are, in general, prepared
solely for internal use and capital budgeting and other management decisions,
and are subjective in many respects and thus susceptible to interpretations and
periodic revision based on actual experience and business developments. None of
the Company, Purchaser or Parent or their respective financial advisors, or any
of their respective directors or officers, assumes any responsibility for the
accuracy of any of the projections. Because the estimates and assumptions
underlying the projections are inherently subject to significant economic and
competitive uncertainties and contingencies which are difficult or impossible to
predict accurately and are beyond the Company's, Purchaser's and Parent's
control, there can be no assurance that the projections will be realized.
Accordingly, it is expected that
14
<PAGE> 15
there will be differences between actual and projected results, and actual
results may be materially higher or lower than those projected.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance with the requirements of the
Exchange Act, the Company files periodic reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. The Company is required to disclose in such proxy statements
certain information, as of particular dates, concerning the Company's directors
and officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company. Such reports, proxy statements and other
information may be inspected at the Commission's office at 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection and
copying at the regional offices of the Commission located at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7
World Trade Center, 13th Floor, New York, New York 10048. Copies may be obtained
upon payment of the Commission's prescribed fees by writing to its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material can also
be obtained at the office of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006-1506. In addition, the
Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained in this Offer to Purchase has been taken from
or is based upon publicly available documents on file with the Commission and
other publicly available information. Although Purchaser and Parent do not have
any knowledge that any such information is untrue, neither Purchaser nor 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 PURCHASER AND PARENT
Purchaser, a Delaware corporation, was organized to acquire all of the
outstanding Shares pursuant to the Offer and the Merger and has not conducted
any unrelated activities since its organization. All of the outstanding capital
stock of Purchaser is owned directly by Parent. Parent, a Massachusetts
corporation, is a leading independent manufacturer of high density double-sided
and complex multilayer printed circuits and backplane assemblies used in the
computer, telecommunications and industrial automation industries, including
process control systems, automotive electronics and electronic instrumentation.
The Company's customers include large, medium and small OEM's of electronic
systems, as well as independent sub-contract manufacturers. The principal
executive offices of Purchaser and Parent are located at 12A Manor Parkway,
Salem, New Hampshire 03079.
Except as described in this Offer to Purchase, during the last five years,
none of Purchaser, Parent, or, to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I hereto (i) has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
(ii) was a party 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 director and
executive officer of Purchaser and Parent are set forth in Schedule I hereto.
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries excerpted from Parent's Annual Report on
Form 10-K for the fiscal year ended October 28, 1995 and Parent's Quarterly
Report on Form 10-Q for the fiscal quarter ended July 27, 1996. More
comprehensive financial information is included in such reports and other
documents filed
15
<PAGE> 16
by Parent with the Commission, and the following summary is qualified in its
entirety by reference to such reports and other documents and all of 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."
HADCO CORPORATION
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
CONSOLIDATED INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
--------------------------------------- -------------------
OCTOBER 30, OCTOBER 29, OCTOBER 28, JULY 29, JULY 27,
1993 1994 1995 1995 1996
----------- ----------- ----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales................................ $ 189,494 $ 221,570 $ 265,168 $192,214 $252,799
Income from operations................... 13,710 16,482 33,906 22,933 37,142
Interest income (expense), net........... (769) (48) 1,132 783 689
Net income............................... 8,227 9,943 21,374 14,348 23,079
Net income per share..................... $ 0.76 $ 0.93 $ 1.98 $ 1.34 $ 2.08
</TABLE>
CONSOLIDATED BALANCE SHEET DATA:
<TABLE>
<CAPTION>
JULY 27,
1996
OCTOBER 29, OCTOBER 28, -----------
1994 1995
----------- ----------- (UNAUDITED)
<S> <C> <C> <C>
Working capital.......................... $ 31,829 $ 41,043 $ 41,366
Total assets............................. 126,326 162,991 196,218
Total liabilities........................ 48,886 62,217 66,571
Stockholders' investment................. 77,440 100,774 129,647
</TABLE>
On November 20, 1996, Parent issued the following press release:
HADCO Corporation (NASDAQ:HDCO) today announced that net income for the
fiscal quarter ended October 26, 1996, was $8.9 million, or $.81 per share, on
net sales of $97.9 million. Net income for the fiscal year was $32.0 million, or
$2.89 per share, on net sales of $350.7 million.
In comparison, net income for the fourth quarter of fiscal 1995 was $7.0
million, or $.63 per share, on $73.0 million of net sales. Net income for fiscal
1995 was $21.4 million, or $1.98 per share, on $265.2 million of net sales.
Bookings for the fourth quarter of fiscal 1996 were $102.0 million, up
26.1% from $80.9 million in the fourth quarter of fiscal 1995. Bookings for
fiscal 1996 were $363.4 million, up 20.1% from $302.5 million during fiscal
1995. Total backlog at the end of the fourth quarter of fiscal 1996 was $77.7
million, up from $70.5 million at the end of the fourth quarter of fiscal 1995.
Total backlog at the end of the third quarter of fiscal 1996 was $74.7 million.
Hadco Corporation is a leading supplier of electronic interconnect products
and services. Markets served include original equipment manufacturers and
contract assemblers in the computer, telecommunications, automotive, medical
instruments, and industrial automation sectors of the electronics industry.
Hadco's wide range of services and products provide a singular solution to the
industry's accelerating time-to-market requirements. Hadco offers extensive
printed circuit design and engineering services, dedicated quick turn-around
prototype and development fabrication, complex technology volume production
fabrication, backplane assemblies and added-value sub-assemblies as well as a
complete array of assembly capabilities. The Company operates six facilities in
the United States.
16
<PAGE> 17
Hadco Corporation's press releases are available through Company News
On-Call by fax, 800-758-5804, PIN#390325, or on the Internet at
http://www.hadco.com:8080/
The figures are as follows:
HADCO CORPORATION
CONSOLIDATED SUMMARY STATEMENTS OF INCOME
(ALL DOLLAR AMOUNTS, EXCEPT PER SHARE DATA, IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
------------------------- -------------------------
OCTOBER 26, OCTOBER 28, OCTOBER 26, OCTOBER 28,
1996 1995 1996 1995
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net Sales............................. $ 97,886 $ 72,954 $ 350,685 $ 265,168
Gross Profit.......................... 23,324 19,402 86,148 64,495
Operating Income...................... 14,390 10,973 51,532 33,906
Income Before Provision for Income
Taxes............................... 14,650 11,322 52,481 35,038
Net Income............................ 8,935 7,026 32,014 21,374
Net Income Per Common and Common
Equivalent Share.................... $ .81 $ .63 $ 2.89 $ 1.98
Weighted Average Common and Common
Equivalent Shares Outstanding....... 11,007,536 11,123,720 11,083,942 10,806,435
Cash, Cash Equivalents and
Short-term Investments.............. $ 42,187 $ 36,474
Other Current Assets.................. 71,374 57,085
Net Property, Plan and Equipment...... 103,735 67,692
-------- --------
Other Assets.......................... 2,205 1,740
-------- --------
$ 219,501 $ 162,991
======== ========
Current Liabilities................... $ 70,000 $ 52,516
Other Liabilities..................... 10,660 9,701
Stockholders' Investment.............. 138,841 100,774
-------- --------
$ 219,501 $ 162,991
======== ========
</TABLE>
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act. In accordance with the requirements of the
Exchange Act, Parent files periodic reports, proxy statements and other
information with the Commission under the Exchange Act relating to its business,
financial condition and other matters. Parent is required to disclose in such
proxy statements certain information, as of particular dates, concerning
Parent's directors and officers, their remuneration, stock options granted to
them, the principal shareholders of Parent's securities and any material
interest of such persons in transactions with Parent. Such reports, proxy
statements and other information may be inspected at the Commission's office at
450 Fifth Street, N.W., Washington, D.C. 20549, and also should be available for
inspection and copying at the regional offices of the Commission located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and 7 World Trade Center, 13th floor, New York, New York
10048. Copies may be obtained upon payment of the Commission's prescribed fees
by writing to its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. Such material can also be obtained at the office of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006-1506. In addition, the Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
Except as described in this Offer to Purchase, (i) none of Parent,
Purchaser or, to the best knowledge of Purchaser and Parent, any of the persons
listed in Schedule I hereto or any associate or majority-owned subsidiary of any
such person, beneficially owns or has a right to acquire any equity
17
<PAGE> 18
security of the Company and (ii) none of Parent, Purchaser, or, to the best
knowledge of Parent and Purchaser, 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.
Except as described in this Offer to Purchase, (i) none of Parent,
Purchaser or, to the best knowledge of Parent and Purchaser, any of the persons
listed in Schedule I has any contract, arrangement, understanding or
relationship (whether or not legally enforceable) with any other person with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies and (ii) there have been no contacts, negotiations or
transactions between Parent and Purchaser or any of their respective
subsidiaries or, to the best knowledge of Parent and Purchaser, any of the
persons listed in Schedule I hereto, 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.
10. SOURCE AND AMOUNT OF FUNDS
Purchaser estimates that the total amount of funds required to consummate
the Offer and the Merger, to pay related fees and expenses and to pay
outstanding indebtedness of the Company which may become due as a result of the
Offer and the Merger is approximately $250 million. Purchaser expects to obtain
these funds in the form of capital contributions and/or loans from Parent.
Parent expects to use approximately $25 million of its cash and has received a
commitment letter, dated December 3, 1996 (the "Bank Commitment Letter"), from
The First National Bank of Boston ("Bank of Boston") to provide either senior
revolving credit or senior revolving credit and term debt facilities, in each
case for up to $250 million (i) to finance the purchase of the Shares pursuant
to the Offer and the Merger, (ii) to refinance the Company's existing bank
credit agreements, and (iii) for working capital and other general corporate
purposes. Consummation of such financing is subject to, among other things, the
negotiation, execution and delivery of definitive documentation consistent with
the Bank Commitment Letter and the term sheets attached thereto. There can be no
assurance that the terms described in the Bank Commitment Letter will be
contained in such definitive agreements or that such definitive agreements will
not contain additional provisions.
The Bank Commitment Letter and the term sheets attached thereto provide two
alternatives for the credit facilities consisting of either (i) a $250 million
five-year revolving credit facility ("Facility A") or (ii) a $200 million
revolving credit facility and a $50 million term loan term facility ("Facility
B"). Facility A or Facility B are referred to individually as a "Credit
Facility".
The Credit Facility will contain a sublimit for letters of credit that will
be determined. Parent has agreed to assist Bank of Boston in achieving the
syndication of the Credit Facility. The Credit Facility will be guaranteed by
the Parent's subsidiaries. Loans under a Credit Facility and the guarantees will
not be secured.
The Credit Facilities will bear interest at the London InterBank Offered
Rate plus the Applicable Margin per annum. The Applicable Margin ranges from 50
to 112.5 basis points depending on the ratio of funded debt to earnings before
interest, taxes, depreciation and amortization. The Credit Facility will
terminate in 5 years and any amount outstanding under a revolving credit
facility will be due in full at that time. The principal of any term loan is
payable in equal amounts in 20 consecutive quarters.
It is presently anticipated that funds borrowed would be repaid from
internally generated funds of Parent and the Company or with the proceeds of
subsequent issuances of equity, debt securities or convertible debt securities.
The margin regulations promulgated by the Federal Reserve Board place
restrictions on the amount of credit that may be extended for the purposes of
purchasing margin stock (including the
18
<PAGE> 19
Shares) if such credit is secured directly or indirectly by margin stock.
Purchaser believes that the financing of the acquisition of the Shares will be
in full compliance with or not subject to the margin regulations.
11. BACKGROUND OF THE OFFER
In mid-September 1996, Ronald H. Donati, President and Chief Executive
Officer of the Company, and Robert M. Wallace, the principal of Gateway
Advisors, Inc., the Company's financial advisor, and a director of the Company,
contacted and met with representatives of Parent to discuss whether Parent would
have any interest in acquiring the Company. During late September and early
October 1996, Parent studied public information and performed independent
research regarding the Company. Parent also continued discussions with
representatives of the Company.
In mid-October, a representative of Robertson, Stephens & Company, Parent's
financial advisor met with Mr. Wallace to discuss the Company's goals with
respect to the timing of a possible transaction, access to additional
information with respect to the Company and other procedural matters. At that
meeting, Mr. Wallace indicated that the Company wanted assurances that Parent
was seriously interested in exploring the possibility of an acquisition before
the Company would furnish additional confidential information regarding the
Company and further access to the Company's facilities.
In late October, representatives of Parent and Parent's financial advisor
met with representatives of the Company and its financial advisor at the
Company's Santa Clara facility to conduct a tour of the Company's facility.
Parent subsequently entered into a confidentiality agreement with the Company.
Parent was given certain projected financial information regarding the Company.
On November 19 representatives of Parent and its financial advisor met with
Mr. Wallace to discuss preliminary ranges of prices that Parent and the Company
might be willing to consider, but no agreements were reached. Over the course of
the next week, representatives of Parent and its financial advisor and the
Company and its financial advisor had further telephone discussions regarding
valuation.
On November 27, Parent orally expressed a willingness to offer $16.00 per
share, subject to certain conditions, and representatives of the Company and its
financial advisor indicated to Parent that the Company was willing to furnish
additional confidential information regarding the Company and further access to
the Company's facilities.
On November 29, representatives of the Company informed Parent that
circumstances had changed and representatives of the Company could not at that
time give Parent additional confidential information regarding the Company or
further access to the Company's facilities.
On November 30, Parent sent a letter to Mr. Donati reaffirming Parent's
interest in acquiring the Company.
On December 2, Parent learned that the Company had signed a merger
agreement with affiliates of Hicks, Muse, Tate & Furst Incorporated ("HMTF") and
that certain stockholders of the Company had entered into a stockholders
agreement with such affiliates. Subject to the terms of those agreements, the
Company had agreed to be acquired by such affiliates of HMTF for $16.25 per
share.
On December 3, Parent sent a letter to the Board of Directors of the
Company offering to purchase the Company for $17 per share in cash subject to a
selective due diligence review of the Company, reaching agreement on the terms
of a merger agreement with the Company and a stockholders agreement with the
Selling Stockholders on terms substantially similar to those contained in the
agreements with the affiliates of HMTF, and Mr. Donati's entering into a
noncompetition, nonsolicitation and nondisclosure agreement with Parent in form
and substance satisfactory to Parent. This letter also indicated that, following
completion of its selective due diligence investigation of the Company, Parent
might be willing to pay more than $17 per share. Beginning later in the day on
19
<PAGE> 20
December 3 and continuing through the following day, representatives of Parent
and its financial advisor were furnished additional confidential information
regarding the Company and access to the Company's facilities and certain of its
employees and advisors.
Late in the day on December 4, Parent offered to acquire the Company for
$18 per share on the terms set forth in the Merger Agreement and the
Stockholders Agreement, and subject to Mr. Donati's agreement to the terms of
the Noncompetition and Nondisclosure Agreement. This offer was accepted by the
Board of Directors of the Company, the Selling Stockholders and Mr. Donati.
Simultaneously with the acceptance of Parent's offer by the Board of Directors
of the Company, the Company terminated the merger agreement in accordance with
its terms with the affiliates of HMTF.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; THE STOCKHOLDERS AGREEMENT; THE NONCOMPETITION AND NONDISCLOSURE
AGREEMENT; OTHER MATTERS
Purpose of the Offer and the Merger. The purpose of the Offer and the
Merger is to enable Purchaser to acquire, in one or more transactions, control
of the Company and the entire equity interest in the Company. The Offer is
intended to increase the likelihood that the Merger will be completed promptly.
Parent regards the acquisition of the Company as an attractive opportunity
to acquire a significant and well-established business. Parent believes that the
increased scale of the combined businesses will enable Parent to compete more
effectively in interconnect products both domestically and internationally. See
"Plans for the Company" below.
Plans for the Company. Parent believes that combining its business and the
operations of the Company will strengthen its position as a leading independent
manufacturer of printed circuit boards and backplane assemblies. Parent also
believes that it and the Company have complementary strengths that will benefit
both companies' customers.
Parent intends to maintain the Company as an operating unit. Parent also
intends, from time to time after completion of the Offer, to evaluate and review
the Company's operations and the potential opportunities for rationalization and
the achievement of synergies with Parent's operations, and to consider what, if
any, changes would be desirable in light of the results of such evaluations and
reviews. Parent has been informed that Mr. Donati intends to resign on or before
the Effective Time.
Except as noted in this Offer to Purchase, Purchaser and Parent have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation or sale or transfer
of a material amount of assets involving the Company or any subsidiary, or any
other material changes in the Company's capitalization, dividend policy,
corporate structure or business.
THE MERGER AGREEMENT.
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement, which is incorporated by reference and a copy of which
has been filed with the Commission as an exhibit to the Schedule 14D-1. The
Merger Agreement may be examined, and copies obtained, as set forth in Section 8
above.
The Offer. The Merger Agreement provides for the commencement of the Offer.
Without the prior written consent of the Company, Purchaser has agreed not to
(and Parent has agreed to cause Purchaser not to) (i) decrease or change the
form of consideration payable in the Offer or decrease the number of Shares
sought pursuant to the Offer, (ii) change, in any material respect, the
conditions to the Offer, (iii) impose additional material conditions to the
Offer (iv) extend the Expiration Date of the Offer except that (a) Purchaser may
extend the Expiration Date as required by law, (b) Purchaser
20
<PAGE> 21
may extend the Expiration Date for up to 10 business days after the initial
Expiration Date (or for longer periods (not to exceed 90 calendar days from the
date of commencement) in the event that any condition to the Offer is not
satisfied or waived) and (c) Purchaser may extend the Offer one or more times
for an aggregate period of 15 days (not to exceed 90 calendar days from the date
of commencement for any reason other than those in the immediately preceding
clause (a) or (b), (v) waive the Minimum Tender Condition (as defined in the
Merger Agreement) or (vi) amend any term of the Offer in any manner materially
adverse to holders of Shares; provided, however, that, except as set forth above
and subject to applicable legal requirements, Purchaser may waive any other
condition to the Offer in its sole discretion; and provided further, that the
Offer may be extended in connection with an increase in the consideration to be
paid pursuant to the Offer so as to comply with applicable rules and regulations
of the Commission. Assuming the prior satisfaction or waiver of the conditions
to the Offer, Purchaser shall accept for payment, and pay for, in accordance
with the terms of the Offer, all Shares validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after the Expiration Date.
Board Representation. The Merger Agreement provides that promptly upon the
purchase by Parent or any of its subsidiaries pursuant to the Offer of such
number of Shares which represent 50.1% of the outstanding Shares (on a fully
diluted basis), and from time to time thereafter, (i) Parent shall be entitled
to designate such number of directors ("Parent's Designees"), rounded up to the
next whole number as will give Parent, subject to compliance with Section 14(f)
of the Exchange Act, representation on the Board equal to the product of (x) the
number of directors on the Board (giving effect to any increase in the number of
directors pursuant to the Merger Agreement) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the "Board Percentage"), and (ii) the Company
shall, upon request by Parent, promptly satisfy the Board Percentage by (x)
increasing the size of the Board or (y) using its best efforts to secure the
resignations of such number of directors as is necessary to enable Parent's
Designees to be elected to the Board and to cause Parent's Designees promptly to
be so elected. At the request of Parent, the Company shall take, at the
Company's expense, all lawful action necessary to effect any such election,
including, without limitation, mailing to the Company's Stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, unless such information has been previously provided to
the Company's Stockholders in the Schedule 14D-9. Following the election or
appointment of Parent's Designees pursuant to the Merger Agreement and prior to
the Effective Time of the Merger, any amendment or termination of the Merger
Agreement, extension for the performance or waiver of the obligations or other
acts of Parent or Purchaser, action which might affect the accuracy of the
representations and warranties in the Merger Agreement or waiver of the
Company's rights thereunder shall require the concurrence of a majority of the
directors of the Company then in office who are directors on the date of the
Merger Agreement.
Effects of the Merger. The Merger Agreement provides that, upon the terms
and subject to the conditions set forth in the Merger Agreement and in
accordance with the DGCL, Purchaser will be merged with and into the Company at
the Effective Time. Each of the parties shall use its respective reasonable best
efforts to cause the Merger to occur as promptly as possible (subject to the
limitations contained in the Merger Agreement). At the Effective Time, the
separate corporate existence of Purchaser shall cease, and the Company shall
continue as the Surviving Corporation and a wholly owned subsidiary of Parent.
Each share of the capital stock of Purchaser issued and outstanding immediately
prior to the Effective Time shall be converted into and become one fully paid
and nonassessable share of Common Stock, par value $.01 per share, of the
Surviving Corporation. Each Share and all other shares of capital stock of the
Company that are owned by the Company and all shares and other shares of capital
stock of the Company owned by Parent, Purchaser or any other wholly owned
Subsidiary of Parent (as defined in the Merger Agreement) or the Company shall
be canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor. The Merger will become effective
upon the filing of a certificate of merger
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("Certificate of Merger") with the Secretary of State of the State of Delaware
or at such time thereafter as is provided in the Certificate of Merger.
Company Stock Options. The Merger Agreement provides that, by the Effective
Time, each holder of a then-outstanding option to purchase Shares under the
Company's 1993 Long Term Equity Incentive Plan and the Stock Option Plan for
Directors (collectively, the "Stock Option Plans"), whether or not then
exercisable (the "Options"), shall, in settlement thereof, receive for each
Share subject to such Option an amount (subject to any applicable withholding
tax) in cash equal to the difference between the Merger Consideration and the
per Share exercise price of such Option to the extent such difference is a
positive number (such amount being hereinafter referred to as, the "Option
Consideration"); provided, however, that with respect to any person subject to
Section 16(a) of the Exchange Act, any such amount shall be paid as soon as
practicable after the first date payment can be made without liability to such
person under Section 16(b) of the Exchange Act. Upon receipt of the Option
Consideration, the Option shall be canceled. The surrender of an Option to the
Company in exchange for the Merger Consideration shall be deemed a release of
any and all rights the holder had or may have had in respect of such Option.
Prior to the Effective Time, the Company shall obtain all necessary consents or
releases from holders of Options under the Stock Option Plans and to take all
such other lawful action as may be necessary to give effect to the transactions
contemplated by the foregoing described provisions of the Merger Agreement. All
Stock Option Plans shall terminate as of the Effective Time and the provisions
in any other plan, program or arrangement providing for the issuance or grant of
any other interest in respect of the capital stock of the Company or any
Subsidiary thereof shall be canceled as of the Effective Time, and the Company
shall take all action necessary to ensure that following the Effective Time no
participant in the Stock Option Plans or other plans, programs or arrangements
shall have any right thereunder to acquire equity securities of the Company, the
Surviving Corporation or any subsidiary thereof and to terminate all such plans.
Stockholder Meeting. The Merger Agreement provides that the Company will,
as soon as practicable following the acceptance for payment of and payment for
Shares by Purchaser in the Offer, duly call, give notice of, convene and hold a
Company Stockholders Meeting (as defined in the Merger Agreement) for the
purpose of approving the Merger Agreement and the transactions contemplated
thereby. At the Company Stockholders Meeting, Parent shall cause all of the
Shares then owned by Parent and Purchaser to be voted in favor of the Merger. As
soon as practicable following the acceptance for payment of and payment for
Shares, the Company and Parent shall prepare and file with the Commission a
preliminary proxy statement, together with a form of proxy for the purpose of
distributing the Proxy Statement (as defined in the Merger Agreement). The
Company has agreed to use its best efforts to respond to all Commission comments
with respect to such Proxy Statement and to cause such Proxy Statement to be
mailed to the Company's Stockholders at the earliest practicable date. Parent,
Purchaser and the Company will cooperate with each other in the preparation of
the Proxy Statement. Without limiting the generality or effect of the foregoing,
Parent and Purchaser will furnish to the Company the information relating to
Parent or Purchaser required under the Exchange Act and the rules and
regulations thereunder to be set forth in the Proxy Statement.
If Purchaser, or any other Subsidiary of Parent, acquires at least 90% of
the outstanding Shares in the Offer, at the request of Purchaser, all parties to
the Merger Agreement will take all necessary actions to cause the Merger to
become effective as soon as practicable after the expiration of the Offer,
without a meeting of the Stockholders, in accordance with Section 253 of the
DGCL.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties which do not survive the Effective
Time. These include representations and warranties by the Company with respect
to, among other things, (i) organization, standing and power, (ii) capital
structure, (iii) authority; no violations; consents and approvals, (iv)
Commission documents, (v) information supplied, (vi) compliance with applicable
laws, (vii) litigation, (viii) taxes, (ix) pension and benefit plans; ERISA, (x)
absence of certain changes or events, (xi) no undisclosed material liabilities,
(xii) vote required, (xiii) labor matters, (xiv) intangible property,
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(xv) environmental matters, (xvi) real property, (xvii) insurance, (xviii) board
recommendation, (xix) material contracts, (xx) related party transactions, (xxi)
indebtedness and (xxii) liens.
Parent and Purchaser also have made certain representations and warranties
with respect to, among other things, (i) organization, standing and power, (ii)
authority; no violations; consents and approvals, (iii) information supplied,
(iv) board recommendation, (v) financing and (vi) changes in financing.
Conduct of Business Pending the Merger. The Company has agreed that during
the period from the date of the Merger Agreement and continuing until the
Effective Time (except as expressly contemplated or permitted by the Merger
Agreement, or consented to by Parent in writing) the Company and its
Subsidiaries shall carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, and shall use
reasonable efforts to preserve intact its present business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business will not be impaired in any
material respect at the Effective Time. The Company has further agreed that
during each period it shall not, nor shall it permit any of its Subsidiaries to:
(i) declare or pay any dividends on or make other distributions in respect of
any of its capital stock; (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock; (iii)
repurchase or otherwise acquire, or permit any subsidiary to purchase or
otherwise acquire, any shares of its capital stock; (iv) grant any options,
warrants or rights to purchase shares or amend or reprice any Options; (v)
issue, deliver or sell, or authorize or propose to issue, deliver or sell, any
shares of its capital stock of any class or series, any Company Voting Debt (as
defined in the Merger Agreement) or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, Company Voting Debt or
convertible securities other than (a) the issuance of Shares upon the exercise
of Options granted under Stock Option Plans which were outstanding on December
4, 1996, or in satisfaction of stock grants or stock based awards made prior to
December 4, 1996 pursuant to Stock Option Plans or based upon any individual
agreements such as employment agreements or executive termination agreements (in
each such case, as in effect on December 4, 1996; and (b) issuances by a
wholly-owned subsidiary of its capital stock to its parent; (vi) amend or
propose to amend its or any subsidiary's certificate of incorporation or Bylaws;
(vii) acquire or agree to acquire by merger or consolidation or purchase a
substantial equity interest in or substantial portion of assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof; (viii) other than dispositions in the
ordinary course of business consistent with past practice which are not
material, individually or in the aggregate, to such party and its subsidiaries
taken as a whole, the Company shall not, nor shall it permit any of its
subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to
sell, lease (whether such lease is an operating or capital lease), any of its
assets; (ix) authorize, recommend, propose or announce an intention to adopt a
plan of complete or partial dissolution except as permitted by the Merger
Agreement; (x) take or agree or commit to take any action that would make
inaccurate in any material respect any of the representations or warranties or
covenants contained in the Merger Agreement or cause any of the conditions to
the Merger to not be satisfied in all material respects; (xi) except as
specifically described in the Merger Agreement (a) grant any increases in the
compensation of any of its directors, officers or key employees, (b) pay or
agree to pay any pension, retirement allowance or other employee benefit not
required or contemplated by any existing employee benefit plan or pension plan
to any such director, officer or key employee, whether past or present, (c)
enter into any new, or materially amend any existing employment, severance or
termination agreement with any such director, officer or key employee, or (d)
except as may be required to comply with applicable law, become obligated under
any new employee benefit plan or pension plan or amend any existing plan or
arrangement if such amendment would have the effect of materially enhancing any
benefits thereunder; (xii) except as specifically described in the Merger
Agreement, assume or incur any indebtedness or guarantee any indebtedness, or
issue or sell any debt securities or warrants or rights to acquire any debt
securities or enter into any lease or create any mortgages, liens or security
interests on Company property or enter
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<PAGE> 24
into any "keep well" or other agreement to maintain the financial condition of
another person; (xiii) except as specifically described in the Merger Agreement
enter into, modify, rescind, terminate, waive, release or otherwise amend in any
material respect any of the terms of any contract specified in the Merger
Agreement; (xiv) fail to provide Parent with copies of all filings made by the
Company with the Commission or any other governmental entity in connection with
this Agreement; (xv) take any action, other than in the ordinary course of
business consistent with past practice or as required by the Commission or by
law, to effect any material change in any of its accounting policies, procedures
and practices; or (xvi) except as described in the Merger Agreement, incur any
capital expenditures that, in the aggregate are in excess of $1,000,000.
Other Agreements. The Company, Purchaser and Parent have agreed to take all
reasonable actions necessary to comply promptly with all legal requirements that
may have been imposed on such party with respect to the Offer, the Merger and
the transactions contemplated by the Merger Agreement (including furnishing all
information required under the HSR Act and in connection with approvals of or
filings with any other governmental entity) and to promptly cooperate with and
furnish information to each other in connection with any such requirements
imposed upon any of them or their subsidiaries in connection with the Offer, the
Merger and the transactions contemplated by the Merger Agreement. Without
limiting the generality or effect of the foregoing, each of the Company, Parent
and Purchaser will, and will cause its subsidiaries to, take all reasonable
actions necessary to obtain (and will cooperate with each other in obtaining)
any consent, authorization, order or approval of, or any exemption by, any
governmental entity or other public or private third party, required to be
obtained or made by the Company, Parent or any of their subsidiaries in
connection with the Offer, the Merger, the Merger Agreement, the Stockholder
Agreement or the taking of any action contemplated hereby or thereby; provided,
however, that Parent need not agree with the Department of Justice or any other
governmental entity to hold separate, sell or otherwise dispose of any
subsidiary of Parent or the Company or assets or properties of any of the
foregoing, in each case, which the Parent determines, in good faith, would
materially affect the value of the acquisition as a whole to Parent.
No Solicitation. Until the termination of the Merger Agreement, neither the
Company or any of its Subsidiaries, nor any of their respective officers,
directors, employees, representatives, agents or affiliates (including, without
limitation, any investment banker, attorney or accountant retained by the
Company or any of its subsidiaries) (such officers, directors, employees,
representatives, agents, affiliates, investment bankers, attorneys and
accountants being referred to herein, collectively, as "Representatives"), will,
directly or indirectly, initiate, solicit or encourage (including by way of
furnishing information or assistance to any person making, or as a result
thereof may reasonably be expected to lead to, any Acquisition Proposal (as
defined below)), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal, or enter into or maintain or continue discussions
or negotiate with any person or entity in furtherance of such inquiries or to
obtain an Acquisition Proposal or agree to or endorse any Acquisition Proposal,
and neither the Company nor any of its Subsidiaries will authorize or permit any
of its Representatives to take any such action, and the Company shall notify
Parent orally (within one business day) and in writing (as promptly as
practicable) of all of the relevant details relating to, and all material
aspects of, all inquiries and proposals which it or any of its subsidiaries or
any of their respective Representatives may receive relating to any of such
matters and, if such inquiry or proposal is in writing, the Company shall
deliver to Parent a copy of such inquiry or proposal promptly; provided,
however, that nothing in the Merger Agreement prohibits the Board from:
(i) furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited written,
bona fide Acquisition Proposal and in respect of which such person or
entity has, or in the reasonable and good faith opinion of the Board or its
Representatives, will have the necessary funds or commitments therefor if,
and only to the extent that, (A) the Board, after consultation with and
based upon the advice of independent legal counsel (who may be the
Company's regularly engaged independent legal counsel), determines in
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good faith that such action is necessary for the Board to comply with its
fiduciary duties to stockholders under applicable law, (B) prior to taking
such action, the Company (x) provides reasonable prior notice to Parent to
the effect that is taking such action and (y) receives from such person or
entity an executed confidentiality agreement in reasonably customary form,
and (C) the Company shall, unless prohibited by its fiduciary duty to its
stockholders, promptly and continuously advise Parent as to all of the
relevant details relating to, and all material aspects, of any such
discussions or negotiations, or
(ii) failing to make or withdrawing or modifying its recommendation of
the Merger Agreement if there exists an Acquisition Proposal and the Board,
after consultation with and based upon the advice of independent legal
counsel (who may be the Company's regularly engaged independent counsel),
determines in good faith that such action is necessary for the Board to
comply with its fiduciary duties to stockholders under applicable law.
For purposes of the Merger Agreement and this Offer, "Acquisition Proposal"
shall mean any of the following (other than the transactions between the
Company, Parent and Sub) involving the Company or any of its Subsidiaries: (i)
any merger, consolidation, share, exchange, recapitalization, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 10% or more of the assets of
the Company and its Subsidiaries, taken as a whole, in a single transaction or
series of transactions; (iii) any tender offer or exchange offer for 10% or more
of the outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act in connection therewith; or (iv)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
Fees and expenses. The Merger Agreement provides that, except as described
below, all costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated by the Merger Agreement will be paid by the
party incurring the expenses. The Company has agreed to pay Purchaser a fee in
immediately available funds equal to $3,000,000 upon the termination of the
Merger Agreement, and as a condition of such termination of the Merger
Agreement, if any of the events set forth below shall have occurred (each a
"Trigger Event"): (i) the Board shall have withdrawn or adversely modified or
taken a public position materially inconsistent with its approval or
recommendation of the Offer, the Merger, the Merger Agreement or the
Stockholders Agreement; or (ii) an Acquisition Proposal has been recommended or
accepted by the Company or the Company shall have entered into an Agreement
(other than a confidentiality agreement) with respect to an Acquisition
Proposal.
Conditions to the Merger. Pursuant to the Merger Agreement, the obligation
of each party to effect the Merger is subject to the satisfaction, prior to the
proposed Effective Time, of the following conditions: (i) the Merger Agreement
and the Merger shall have been adopted by the affirmative vote of the holders of
a majority of the Shares entitled to vote thereon if such vote is required by
applicable law; provided, that Parent and Purchaser shall vote all Shares
purchased pursuant to the Offer or the Stockholders' Agreement in favor of the
Merger, (ii) the waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have been terminated or shall have expired, (iii)
no temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect,
provided, however, that prior to invoking this condition, each party shall use
all commercially reasonable efforts to have any such decree, ruling, injunction
or order vacated.
The obligations of Parent and Purchaser to effect the Merger are subject to
the satisfaction of the following conditions, any or all of which may be waived
in whole or in part by Parent and Purchaser: (i) Purchaser shall have accepted
for payment and become obligated to pay for the Shares tendered in the Offer
such that, after such acceptance and payment, Parent and its affiliates shall
own, at consummation of the Offer, a majority of the outstanding Shares, (ii)
the representations and warranties of the Company set forth in the Merger
Agreement shall be true and correct in all material respects as of the date of
the Merger Agreement and as of the Closing Date (as defined in the Merger
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Agreement) (iii) the Company shall have performed in all material respects all
obligations required to be performed by it under the Merger Agreement at or
prior to the Closing Date, and all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and all
material licenses, permits, consents, approvals, authorizations, qualifications
and orders of other third parties as are necessary in connection with the
transactions contemplated hereby shall have been obtained.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent, by: (a) mutual written consent of the
Company and Parent, or mutual action of their respective Boards of Directors;
(b) either the Company or Parent prior to the consummation of the Offer (i) if
there has been a material breach (for purpose of this clause, a material breach
is defined as a breach or series of breaches the result of which impairs the
value of the Company or could reasonably be expected to impair the value of the
Company by more than $1.75 million in the aggregate) of any representation,
warranty, covenant or agreement on the part of the other set forth in the Merger
Agreement which breach has not been cured within three business days following
receipt by the breaching party of notice of such breach, or (ii) if any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become final and
non-appealable; (c) either the Company or Parent, if the Merger shall not have
been consummated on or before June 30, 1997 provided, that such right to
terminate the Merger Agreement is not available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or before such date; (d) by
Parent in the event an Acquisition Proposal (as defined in the Merger Agreement)
has been made to the Company and the Company shall fail to reaffirm its approval
or recommendation of the Offer, the Merger, the Merger Agreement and the
Stockholders Agreement on or before the fifth business day following the date on
which such Acquisition Proposal shall have been made; (e) Parent, if the Offer
terminates, is withdrawn, abandoned or expires by reason of the failure to
satisfy any condition of the Offer; (f) the Company, if the Offer shall have
expired or has been withdrawn or terminated without any Shares being purchased
by Purchaser thereunder on or prior to the 120th day after the date of
commencement of the Offer; (g) by the Company, if on or prior to 5:00 p.m.
Pacific Standard Time on December 4, 1996, the Company gives written notice to
Parent of its intention to terminate the Merger Agreement pursuant to its terms
and (A) at or prior to such time either (1) the Company has not received the
Fairness Opinion (as defined in the Merger Agreement) pursuant to the Merger
Agreement, or (2) the Company has received a bona fide Acquisition Proposal (as
defined in the Merger Agreement), and (B) in each case, the Company has paid the
Termination Fee (as defined in the Merger Agreement) by wire transfer to an
account of Parent no later than Noon Pacific Standard Time on December 5, 1996.
The parties acknowledge that if the Company fails to either provide the notice
by the time set forth above or pay the Termination Fee by the time set forth
above, the Company's right pursuant to the Merger Agreement to terminate the
Merger Agreement shall become null and void; or (h) the Company or Parent in the
event that a Trigger Event has occurred. In the event of termination of the
Merger Agreement by either the Company or Parent as provided therein, the Merger
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Purchaser or the Company, or their respective
affiliates, officers, directors or stockholders, except as provided in the
Merger Agreement.
Indemnification. The Merger Agreement provides that from and after the time
Purchaser purchases Shares pursuant to the Offer through and including the
Effective Time (without regard to the termination of the Merger Agreement),
neither Parent nor Purchaser will take any action, nor permit any action to be
taken, which would change or amend the provisions of the Certificate of
Incorporation or By-laws of the Company in effect on the date of the Merger
Agreement relating to limitation of liability or indemnification inconsistent
with its obligations under the Merger Agreement or eliminate or make any
modification in the Company's existing director's and officer's insurance
inconsistent with its obligations under the Merger Agreement, and that from and
after the Effective
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Time all rights to indemnification existing as of the date of the Merger
Agreement in favor of individuals who at or prior to the Effective Time were
directors or officers of the Company or any of its Subsidiaries as set forth in
the Certificate of Incorporation or By-laws of the Company shall survive the
Merger with respect to matters existing or occurring at or prior to the
Effective Time and shall continue in full force and effect for a period of six
years following the Effective Time.
The Merger Agreement provides that the Company shall, and from and after
the Effective Time, the Surviving Corporation shall, indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date of
the Merger Agreement or who becomes prior to the Effective Time, an officer or
director of, or agent, attorney or advisor to, the Company or any of its
subsidiaries (each individually an "Indemnified Party" and, collectively, the
"Indemnified Parties") against all losses, claims, damages, costs, expenses
(including attorneys' fees and expenses), liabilities or judgments or amounts
that are paid in settlement with the approval of the Indemnifying Party as a
result of or in connection with any threatened or actual claim, action, suit,
proceeding or investigation based, in whole or in part, on or arising in whole
or in part out of the fact that such person is or was a director or officer of,
or agent, attorney or advisor to, the Company or any of its subsidiaries or out
of or in connection with activities in such capacity, whether pertaining to any
matter existing or occurring at or prior to the Effective Time and whether
asserted or claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities"), including all Indemnified Liabilities based in whole or in part
on, or arising in whole or in part out of, or pertaining to the Merger Agreement
or the transactions contemplated thereby, in each case to the full extent a
corporation is permitted under the DGCL to indemnify any such person. Without
limiting the foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Parties (whether arising before
or after the Effective Time), (i) the Indemnified Parties may retain counsel
satisfactory to them and the Company (or them and the Surviving Corporation
after the Effective Time) and the Company shall pay all fees and expenses of
such counsel for the Indemnified Parties promptly as statements therefor are
received; and (ii) the Company (or after the Effective Time, the Surviving
Corporation) will use all reasonable efforts to assist in the vigorous defense
of any such matter, provided that neither the Company nor the Surviving
Corporation shall not be liable for any settlement effected without its prior
written consent. Any Indemnified Party wishing to claim indemnification under
the Merger Agreement, upon learning of any such claim, action, suit, proceeding
or investigation, shall notify the Company or the Surviving Corporation as the
case may be (but the failure so to notify shall not relieve a party from any
liability which it may have under the Merger Agreement except to the extent such
failure prejudices such party), and shall to the extent required by the DGCL
deliver to the Company the undertaking contemplated by Section 145(e) of the
DGCL. The Indemnified Parties as a group may retain only one law firm to
represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. The Company,
Parent and Purchaser agree that all rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action or
suit, existing in favor of the Indemnified Parties with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided, however, that all rights to indemnification in
respect of any Indemnified Liabilities asserted or made within such period shall
continue until the disposition of such Indemnified Liabilities.
For a period of two years after the Effective Time, Surviving Corporation
shall cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company and its Subsidiaries
(provided that Parent may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous in any material respect to the Indemnified Parties) with respect to
matters arising before the Effective Time, provided that Parent shall not be
required to pay an annual premium for such insurance in excess of 150% of the
last annual premium paid by the Company prior to the date hereof, but in such
case shall purchase as much coverage as possible for such amount.
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Amendment. Subject to applicable law, the Merger Agreement may be amended,
modified or supplemented only by written agreement of Parent, Purchaser and the
Company at any time prior to the Effective Time with respect to any of the terms
contained therein; provided, however, that after the Merger Agreement is
approved by the Company's Stockholders, no such amendment or modification shall
reduce the amount or change the form of consideration to be delivered to the
Stockholders of the Company.
Assignment. Neither the Merger Agreement nor any of the rights, interests
or obligations thereunder shall be assigned by any of the parties thereto
(whether by operation of law or otherwise) without the prior written consent of
the other parties, except that Purchaser may assign, in its sole discretion, any
or all of its rights, interests and obligations thereunder to any newly-formed
direct wholly-owned subsidiary of Parent.
Timing. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Purchaser has agreed to
cause the Merger to be consummated on the terms set forth above, there can be no
assurance as to the timing of the Merger.
Delaware Law. The Company's Board has approved the Merger Agreement and the
transactions contemplated by it, including the Offer and the Merger, for
purposes of Section 203 of the DGCL. Accordingly, the restrictions of Section
203 do not apply to the transactions contemplated by the Offer or the Merger
Agreement. Section 203 of the DGCL prevents an "interested stockholder"
(generally, a stockholder owning 15% or more of a corporation's outstanding
voting stock or an affiliate or associate of that stockholder) from engaging in
a "business combination" (defined to include a merger and certain other
transactions) with a Delaware corporation for a period of three years following
the date on which the stockholder became a interested stockholder, unless (i)
prior to that date, the corporation's board of directors approved either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder, (ii) upon consummation of the transaction
that resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the corporation's voting stock
outstanding at the time the transaction commenced (excluding shares owned by
certain employee stock plans and persons who are directors and also officers of
the corporation) or (iii) on or subsequent to that date, the business
combination is approved by the corporation's board of directors and authorized
at an annual or special meeting of stockholders, and not by written consent, by
the affirmative vote of at least 66 2/3% of the outstanding voting stock not
owned by the interested stockholder. As described above, Section 203 of the DGCL
does not apply to the transactions contemplated by the Merger Agreement,
including the Offer and the Merger.
THE STOCKHOLDERS AGREEMENT
The following is a summary of the material terms of the Stockholders
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The Purchase
Agreement may be examined, and copies thereof may be obtained, as set forth in
Section 8 above.
Tender of Shares. Immediately after the execution of the Merger Agreement,
Parent, Purchaser and each of the Selling Stockholders entered into the
Stockholders Agreement. Upon the terms and subject to the conditions of such
agreement, the Selling Stockholders have severally agreed to validly tender and
not to withdraw pursuant to and in accordance with the terms of the Offer, not
later than the fifth business day after commencement of the Offer, the
respective number of Shares owned beneficially by them. Each Selling Stockholder
has further agreed that the transfer to Purchaser in the Offer of his or its
Shares will pass to and unconditionally vest in Purchaser good and valid title
to such Shares.
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Stock Option. In order to induce Parent and Purchaser to enter into the
Merger Agreement, each of the Selling Stockholders has granted to Parent an
irrevocable option (each a "Stock Purchase Option" and collectively, the "Stock
Purchase Options") to purchase their Shares (the "Option Shares") at a purchase
price per share equal to the Offer Price. Pursuant to the Stockholders
Agreement, if (i) the Offer is terminated, abandoned or withdrawn by Parent or
Purchaser (whether due to the failure of any of the conditions set forth in the
Offer or otherwise), (ii) the Offer is consummated but Purchaser has not
accepted for payment and paid for the aggregate number of Shares owned by the
Selling Stockholders, or (iii) the Merger Agreement is terminated in accordance
with its terms, the Stock Purchase Options will, in any such case, become
exercisable, in whole but not in part, upon the first to occur of any such event
and continuing until the date which is 90 days after the date of the occurrence
of such event, so long as: (i) all waiting periods under the HSR Act, required
for the purchase of the Option Shares upon such exercise shall have expired or
been waived, and (ii) there shall not be in effect any preliminary or final
injunction or other order issued by any court or governmental, administrative or
regulatory agency or authority prohibiting the exercise of the Stock Options
pursuant to the Stockholders Agreement. In the event that Parent elects to
exercise the Stock Options, Parent must send a written notice (the "Notice") to
the Selling Stockholders identifying the place and date (not less than two nor
more than 20 business days from the date of the Notice) for the closing of such
purchase.
In addition, Parent has agreed that, if it exercises the Stock Purchase
Options pursuant to the Stockholders Agreement, it, within 30 calendar days
after the date of such exercise, will offer to all other stockholders of the
Company the opportunity to sell their Shares to Parent upon the equivalent terms
and conditions provided with respect to exercise of the Stock Purchase Options.
Voting. Each Selling Stockholder has agreed that during the period
commencing on the date of the Stockholders Agreement and continuing until the
first to occur of the Effective Time or termination of the Merger Agreement in
accordance with its terms, at any meeting of the Stockholders or in connection
with any written consent of the Stockholders, such Selling Stockholder will vote
(or cause to be voted) the Shares held of record or beneficially by such
stockholder, (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other actions contemplated by the Merger Agreement and the Stockholders
Agreement and any actions required in furtherance thereof; (ii) against any
action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or the Stockholders Agreement; and (iii)
except as otherwise agreed to in writing in advance by Parent, against the
following actions (other than the Merger and the transactions contemplated by
the Merger Agreement): (a) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or its
subsidiaries; (b) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (c) (1) any
change in a majority of the persons who constitute the Board; (2) any change in
the present capitalization of the Company or any amendment of the Company's
certificate of incorporation or bylaws; (3) any other material change in the
Company's corporate structure or business; or (4) any other action which, in the
case of each of the matters referred to in clauses c (1), (2) (3) or (4), is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or materially adversely affect the Merger and the transaction
contemplated by the Stockholders Agreement and the Merger Agreement. The Selling
Stockholders further agreed not to enter into any agreement or understanding
with any person or entity the effect of which would be inconsistent or violative
of the provisions and agreements described above.
Termination. The Stockholders Agreement provides that if the Company
terminated the Merger Agreement pursuant to the provision allowing the Company
to terminate the Merger Agreement on or prior to 5:00 p.m. Pacific Standard Time
on December 4, 1996, each Selling Stockholder would have been required to pay
Parent a fee in immediately available funds equal to the product of $.40 and the
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number of Shares set forth opposite such Selling Stockholder's name on Schedule
1 thereto and upon the receipt by Parent of all such payments, the Stockholders
Agreement would have terminated.
NONCOMPETITION AND NONDISCLOSURE AGREEMENT
At the insistence of Parent and to induce Parent to enter into the Merger
Agreement, an agreement relating to noncompetition, nondisclosure and other
matters was entered into by Parent and Ronald H. Donati, (the "Noncompetition
and Nondisclosure Agreement"). The following is a summary of the material terms
of the Noncompetition and Nondisclosure Agreement. This summary is not a
complete description of the terms thereof and is qualified in its entirety by
reference to the full text thereof, a copy of which has been filed as an exhibit
to the Schedule 14D-1. Pursuant to the Noncompetition and Nondisclosure
Agreement, Mr. Donati has agreed that: (i) during the term of his employment
with the Company and for three years thereafter he will not engage in any
competitive business activity; (ii) during the term of his employment with the
Company and for three years thereafter he will not solicit or do business with
any customer of the Company or any potential customer of the Company with whom
he has had contact; (iii) during the term of his employment with the Company and
for three years thereafter he will not solicit or entice away any employee of
the Company; and (iv) he will not reveal any trade secrets or confidential
information of or about the Company.
OTHER MATTERS
Appraisal Rights. No appraisal rights are available to Stockholders in
connection with the Offer. However, if the Merger is consummated, a Stockholder
will have certain rights under Section 262 of the DGCL to dissent and demand
appraisal of, and payment in cash for the fair value of, that Stockholder's
Shares. Those rights, if the statutory procedures are complied with, could lead
to a judicial determination of the fair value (excluding any value arising from
the accomplishment or expectation of the Merger) required to be paid in cash to
dissenting Stockholders for their Shares. Any judicial determination of the fair
value of Shares could be based upon considerations other than or in addition to
the Offer Price and the market value of the Shares, including asset values and
the investment value of the Shares. The value so determined could be more or
less than the Offer Price or the Merger Consideration.
If a Stockholder who demands appraisal under Section 262 of the DGCL fails
to perfect, or effectively withdraws or loses, his right to appraisal, as
provided in the DGCL, the Shares of that Stockholder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A Stockholder may
withdraw his demand for appraisal by delivering to Purchaser a written
withdrawal of such demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of those rights.
Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. Purchaser does not believe that Rule
13e-3 will be applicable to the Merger, unless, among other things, the Merger
is completed more than one year after the termination of the Offer. If
applicable, Rule 13e-3 would require, among other things, that certain financial
information regarding the Company and certain information regarding the fairness
of the Merger and the consideration offered to minority Stockholders be filed
with the Commission and disclosed to minority Stockholders prior to consummation
of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS
The Company has informed Parent that it has not paid any dividends to date.
In the Merger Agreement, the Company agreed that during the period from the date
of the Merger Agreement and continuing until the Effective Time it will not, and
it will not permit any of its subsidiaries to: (i) declare or pay any dividends
on or make other distributions in respect of any of its capital stock;
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(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (iii) repurchase or otherwise
acquire, or permit any subsidiary to purchase or otherwise acquire, any shares
of its capital stock; (iv) grant any options, warrants or rights to purchase
shares or amend or reprice any Options; (v) issue, deliver or sell, or authorize
or propose to issue, deliver or sell, any shares of its capital stock of any
class or series, any Company Voting Debt (as defined in the Merger Agreement) or
any securities convertible into, or any rights, warrants or options to acquire,
any such shares, Company Voting Debt or convertible securities other than (A)
the issuance of Shares upon the exercise of Options granted under Stock Option
Plans which were outstanding on December 4, 1996, or in satisfaction of stock
grants or stock based awards made prior to December 4, 1996 pursuant to Stock
Option Plans or based upon any individual agreements such as employment
agreements or executive termination agreements (in each such case, as in effect
on December 4, 1996), and (B) issuances by a wholly-owned subsidiary of its
capital stock to its parent.
14. CERTAIN CONDITIONS OF THE OFFER
The Merger Agreement provides that, notwithstanding any other provision of
the Offer, Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c) under
the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after expiration or termination of the Offer), to pay
for any Shares tendered, and may postpone the acceptance for payment or, subject
to the restriction referred to above, payment for any Shares tendered, and may
amend or terminate the Offer (whether or not any Shares have theretofore been
purchased or paid for) if, (i) there have not been validly tendered and not
withdrawn prior to the time the Offer shall otherwise expire a number of Shares
which constitutes a majority of the Shares outstanding on a fully-diluted basis
on the date of purchase ("on a fully-diluted basis" having the following
meaning, as of any date: the number of Shares outstanding, together with Shares
of the Company may be then required to issue pursuant to obligations outstanding
at that date under employee stock option or other benefit plans or otherwise);
(ii) all material regulatory and related approvals have not been obtained or
made on terms reasonably satisfactory to Purchaser; (iii) any applicable waiting
periods under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer; (iv) the debt financing sources for Purchaser shall not
(other than as a result of Parent's or Purchaser's failure to use its reasonable
best efforts to obtain the same) have provided the applicable debt financing to
Purchaser pursuant to the financing commitments with respect thereto previously
delivered to the Company by Purchaser; or (v) at any time on or after the date
of the Merger Agreement and before acceptance for payment of, or payment for,
such Shares any of the following events shall occur or shall be deemed by
Purchaser to have occurred:
(A) Except for an action entitled Katz v. Donati, et al. filed in the
Santa Clara County Superior Court on or about December 3, 1996 (the "Katz
Complaint"), there shall have been threatened, instituted or pending any
action, proceeding, application or counterclaim by or before any court or
governmental, regulatory or administrative agency, authority or tribunal,
domestic, foreign or supranational (other than actions, proceedings,
applications or counterclaims filed or initiated by Purchaser), which (i)
seeks to challenge the acquisition by Purchaser of the Shares, restrain,
prohibit or delay the making or consummation of the Offer or the Merger or
any other merger or business combination involving Purchaser or any of its
affiliates and the Company or any of its subsidiaries, prohibit the
performance of any of the contracts or other agreements entered into by
Purchaser or any of its affiliates in connection with the acquisition of
the Company or the Shares, or obtain any damages in connection with any of
the foregoing, (ii) seeks to make the purchase of or payment for, some or
all of the Shares pursuant to the Offer, the Merger or otherwise, illegal,
(iii) seeks to impose limitations on the ability of Purchaser or the
Company or any of their respective affiliates or subsidiaries effectively
to acquire or hold, or requiring Purchaser, the Company or any of their
respective affiliates or subsidiaries to dispose of or hold separate, any
portion of the assets or the business of Purchaser or its affiliates or the
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Company or its subsidiaries, or impose limitations on the ability of
Purchaser, the Company or any of their respective affiliates or
subsidiaries to continue to conduct, own or operate all or any portion of
their businesses and assets as heretofore conducted, owned or operated,
(iv) seeks to impose or may result in material limitations on the ability
of Purchaser or any of its affiliates to exercise full rights of ownership
of the Shares purchased by them, including, without limitation, the right
to vote the Shares purchased by them on all matters properly presented to
the stockholders of the Company, or the right to vote any shares of capital
stock of any subsidiary directly or indirectly owned by the Company, (v) is
reasonably likely to result in a material diminution in the benefits
expected to be derived by Purchaser as a result of the transactions
contemplated by the Offer, including the Merger, (vi) seeks to impose
voting, procedural, price or other requirements in addition to those under
Delaware Law and federal securities laws (each as in effect on the date of
the Offer to Purchase) or any material condition to the Offer that is
unacceptable (in its reasonable judgment) to Purchaser or (vii) challenges
or adversely and materially affects the financing of the Offer;
(B) There shall have been proposed, sought, promulgated, enacted,
entered, enforced or deemed applicable to the Offer or the Merger by any
domestic, foreign or supranational government or any governmental,
administrative or regulatory authority or agency or by any court or
tribunal, domestic, foreign or supranational, any statute, rule,
regulation, judgment, decree, order or injunction that might, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (vii) of paragraph (A) above;
(C) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (2) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (3) any material adverse change (or
any existing or threatened condition, event or development involving a
prospective material adverse change) in United States or any other currency
exchange rates or a suspension of, or a limitation on, the markets
therefor, (4) the commencement of a war, armed hostilities or other
international or national calamity, directly or indirectly involving the
United States, (5) any limitations (whether or not mandatory) imposed by
any governmental authority on, or any event which might have material
adverse significance with respect to, the nature or extension of credit or
further extension of credit by banks or other lending institutions, (6) any
significant adverse change in securities or financial markets in the United
States or abroad, including, without limitation, a decline of at least 10
percent in either the Dow Jones Average of Industrial Stocks or the
Standard & Poor's 500 Index from that existing at the close of business on
November 27, 1996, or (7) in the case of any of the foregoing, a material
acceleration or worsening thereof;
(D) the representations and warranties of the Company contained in the
Merger Agreement (without giving effect to any "Material Adverse Effect",
"materiality" or similar qualifications contained therein) shall not be
true and correct in all material respects (for purpose of this clause, a
failure of the representations and warranties to be true and correct in all
material respects shall mean a failure or series of failures the result of
which impairs the value of the Company or could reasonably be expected to
impair the value of the Company by more than $1.75 million) as of the date
of the consummation of the Offer as though made on and as of such date
except (1) for changes specifically permitted by the Merger Agreement and
(2) that those representations and warranties which address matters only as
of a particular date shall remain true and correct as of such date;
(E) the obligations of the Company contained in the Merger Agreement
(without giving effect to any "Material Adverse Effect", "materiality" or
similar qualifications contained therein) shall not have been performed or
complied with in all material respects by the Company;
(F) the obligations of the Company under Section 6.11 of the Merger
Agreement shall not have been complied with in all respects;
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(G) the Merger Agreement shall have been terminated in accordance with
its terms;
(H) prior to the purchase of Shares pursuant to the Offer, an
Acquisition Proposal for the Company exists and the Board shall have
withdrawn or materially modified or changed (including by amendment of the
Schedule 14D-9) in a manner adverse to Purchaser its recommendation of the
Offer, the Merger Agreement or the Merger; or
(I) any person or group shall have entered into a definitive agreement
or agreement in principle with the Company with respect to a merger,
consolidation or other business combination with the Company.
The foregoing conditions are for the sole benefit of Purchaser and its
affiliates and may be asserted by Purchaser regardless of the circumstances
(other than any action or inaction by Parent, Purchaser or any of their
affiliates) giving rise to any such condition or may be waived by Purchaser, in
whole or in part, from time to time in its sole discretion, except as otherwise
provided in the Agreement. The failure by Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right and may be asserted at any time and
from time to time. Any reasonable determination by Purchaser concerning any of
the events described herein shall be final and binding.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, but without any independent
investigation, neither Purchaser nor 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
Purchaser's acquisition of Shares as contemplated in this Offer to Purchase or
of any approval or other action by any governmental authority that would be
required for the acquisition or ownership of Shares by Purchaser as contemplated
in this Offer to Purchase. Should any such approval or other action be required,
Purchaser and Parent presently 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 15, 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
other actions were not taken or in order to obtain any such approval or other
action. If certain types of adverse action are taken with respect to the matters
discussed below, Purchaser could decline to accept for payment or pay for any
Shares tendered. See Section 14 above for certain conditions to the Offer.
Certain Litigation Relating to the Offer. On or about December 3, 1996, a
purported class action complaint was filed in the Superior Court of the State of
California for the County of Santa Clara on behalf of all holders of the Shares
against the Company, Ronald H. Donati, John D. Dunning, Joseph V. Brechel, Hal
D. Cooksey, Jim A. Summers, and Robert M. Wallace. The plaintiff has alleged
that the directors of the Company breached their fiduciary duties to holders of
the Shares by entering into an agreement with an affiliate of HMTF that makes it
impossible for other persons to bid effectively for the Company. The plaintiff
has also alleged that the consideration offered by HMTF pursuant to that
agreement to holders of the Shares was an unfair price. The complaint sought
various remedies, including an injunction to prevent consummation of the
proposed merger and compensatory damages in an unspecified amount. The Company
has informed Parent that the agreement with HMTF has been terminated. Parent
believes this suit is without merit and, if the Offer is consummated, intends
vigorously to defend against this suit.
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State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in those 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
acquirer from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that the laws were applicable
only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owners of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval of either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company has represented in the Merger Agreement that the Board
has approved, among other things, the Merger Agreement, the Stockholders
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, and such approval constitutes approval of the foregoing for purposes of
Section 203 of the DGCL.
Based on information supplied by the Company and the Company's
representations in the Merger Agreement, Purchaser does not believe that any
state takeover statues apply to the Offer or the Merger. Neither Purchaser nor
Parent has currently complied with any state takeover statute or regulation.
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 that 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, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and 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, Purchaser
may not be obligated to accept for payment or pay for any Shares tendered
pursuant to the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar-day waiting period following the filing by Purchaser of a
Notification and Report Form with respect to the Offer, unless Purchaser
receives a request for additional information or documentary material from the
Antitrust Division or the FTC or unless early termination of the waiting period
is granted. Such filing will be made on or about December 13, 1996 and such
waiting period would expire at 11:59 p.m. on December 28, 1996. If, within the
initial 15-day waiting period, either the Antitrust Division or the FTC requests
additional information or documentary material from Purchaser concerning the
Offer, the waiting period will be extended and would expire 11:59 p.m., New York
City time, on the tenth calendar day after the date of substantial compliance by
Purchaser with such request. Only one extension of the waiting period pursuant
to a request for additional information is authorized by the HSR Act.
Thereafter, the waiting period may be extended only by court order or with the
consent of Purchaser. In practice, complying with a request for additional
information or documentary material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of the transaction
while the negotiations continue. For information regarding the obligations of
the Company, Parent and Purchaser in this regard, see "The Merger
Agreement-Other Agreements" in Section 12.
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The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Purchaser or its
subsidiaries, or the Company 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 on antitrust grounds will not be made
or, if such a challenge is made, of the result of that challenge. See Section 14
for certain conditions to the Offer, including conditions with respect to
litigation.
16. FEES AND EXPENSES
Robertson, Stephens & Company LLC is acting as a Dealer Manager in
connection with the Offer and has provided certain financial advisory services
to Parent in connection with the proposed acquisition of the Company. Parent has
agreed to pay Robertson, Stephens & Company LLC a fee of (a) $75,000, which
became payable upon the delivery of a fairness opinion by Robertson, Stephens &
Company to Parent, (b) $75,000, which will become payable upon publication of or
reference to such fairness opinion in a proxy statement or registration
statement filed with the Commission, and (c) approximately $2.0 million which
will become payable upon the acquisition by Parent of a majority of the
outstanding Shares, to which fee the fees paid pursuant to (a) and (b) above
shall be credited. In addition, Parent has agreed to reimburse Robertson,
Stephens & Company LLC for all out-of-pocket expenses incurred by Robertson,
Stephens & Company LLC, including the reasonable fees of its counsel (which
expenses, other than legal expenses and expenses relating to Robertson, Stephens
& Company acting as Dealer Manager in connection with the Offer, shall not
exceed $25,000 per quarter without the prior consent of Parent), and to
indemnify Robertson, Stephens & Company and certain related persons against
certain liabilities and expenses, including certain liabilities under the
federal securities laws. In the ordinary course of its business, Robertson,
Stephens & Company and its affiliates may actively trade in the Shares for its
own account and for the account of its customers, and accordingly, may at any
time hold a long or short position in the Shares.
Purchaser has retained MacKenzie Partners, Inc. to act as the Information
Agent, and The First National Bank of Boston to act as the Depositary, in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for its services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the federal securities laws.
Except as set forth above, Purchaser will not pay any fees or commissions
to any broker or dealer or other person for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will be reimbursed by Purchaser for customary mailing and handling expenses
incurred by them in forwarding the offering materials to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of the jurisdiction. However, Purchaser may,
in its discretion, take such action as it may deem necessary to make the Offer
in any jurisdiction and extend the Offer to holders of Shares in that
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers that are licensed under the laws of the jurisdiction.
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Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule
14d-1 under the Exchange Act containing certain additional information with
respect to the Offer. The Schedule and any amendments to the Schedule, including
exhibits, may be examined and copies may be obtained from the principal office
of the Commission in the manner set forth in Section 9 above (except that they
will not be available at the regional offices of the Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, THE INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
December 11, 1996 HADCO ACQUISITION CORP.
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PURCHASER AND PARENT
A. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Purchaser. Unless
otherwise indicated below, the business address of each such person is 12A Manor
Parkway, Salem, New Hampshire 03079. Unless otherwise indicated below, each
person is a citizen of the United States.
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT
BUSINESS ADDRESS HISTORY
- ---------------- ------------------------------------------------------------------------
<S> <C>
Andrew E. Lietz Director of Hadco Corporation since 1993; President and Chief Executive
Officer of Hadco Corporation since October 1995; Chief Operating Officer
and Vice President of Hadco Corporation from July 1991 to October 1995;
Director, President and Assistant Secretary of Hadco Acquisition Corp.
since December 1996.
Timothy P. Losik Chief Financial Officer, Vice President and Treasurer of Hadco
Corporation since March 1994; Controller of Hadco Corporation from June
1992 to March 1994; Corporate Accounting Manager of Hadco Corporation
from March 1988 to June 1992; Director, Vice President, Secretary and
Treasurer of Hadco Acquisition Corp. since December 1996.
</TABLE>
S-1
<PAGE> 38
B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, the business address of each such person is 12A Manor
Parkway, Salem, New Hampshire 03079. Unless otherwise indicated below, each
individual has held his positions for more than the past five years. Unless
otherwise indicated below, each person is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------- ---------------------------------------------------------------------
<S> <C>
Horace H. Irvine Chairman of the Board of Hadco Corporation since 1966.
Andrew E. Lietz Director of Hadco Corporation since 1993; President and Chief
Executive Officer of Hadco Corporation since October 1995; Chief
Operating Officer and Vice President of Hadco Corporation from July
1991 to October 1995.
Timothy P. Losik Chief Financial Officer, Vice President and Treasurer of Hadco
Corporation since March 1994; Controller of Hadco Corporation from
June 1992 to March 1994; Corporate Accounting Manager of Hadco
Corporation from March 1988 to June 1992.
James R. Griffin Vice President of Hadco Corporation since August 1991.
Kenneth L. Ogle Vice President of Hadco Corporation since December 1990.
Richard P. Saporito Vice President of Hadco Corporation since December 1991.
James C. Hamilton Clerk of Hadco Corporation; partner in the law firm of Berlin,
Hamilton, & Dahmen, LLP Mr. Hamilton's business address is 73 Tremont
Street, Boston, Massachusetts.
Lawrence Coolidge Director of Hadco Corporation since 1995; President and private
trustee of Loring, Wolcott & Coolidge, a fiduciary services provider,
since 1962; Associate of Loring, Wolcott & Coolidge Fiduciary
Advisors, a registered investment advisor, since 1994. Mr. Coolidge's
business address is 230 Congress Street, Boston, Massachusetts.
J. Stanley Hill Director of Hadco Corporation; President of Digiplan Inc., a private
consultant to the computer users' industry. Mr. Hill's business
address is 5011 Lake Avenue, #205, White Bear Lake, Minnesota.
John O. Irvine Director of Hadco Corporation; President of Little Mountain
Bancshares Inc. Mr. Irvine's business address is Monticello,
Minnesota.
Mikael Salovaara Director of Hadco Corporation since 1995; Founding Partner of
Greycliff Partners, an investment advisor, since December 1991. Mr.
Salovaara's business address is 345 Park Avenue, New York, New York.
John F. Smith Director of Hadco Corporation since 1995; President of PerSeptive
Biosystems, Inc. since July 1996. President of MYCOS International,
Inc., a property development corporation, since April 1993; Senior
Vice President and Chief Operating Officer of Digital Equipment
Corporation, a computer company, from 1991 to 1993. Mr. Smith's
business address is 500 Old Connecticut Path, Framingham,
Massachusetts.
Oliver O. Ward Director of Hadco Corporation; Founder, Chairman of the Board, Chief
Executive Officer and President of Germanium Power Devices Corp., a
manufacturer and marketer of germanium semiconductors, since 1973.
Mr. Ward's business address is Box 3065, Andover, Massachusetts.
</TABLE>
S-2
<PAGE> 39
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------- ---------------------------------------------------------------------
<S> <C>
Patrick Sweeney Director of Hadco Corporation since 1991; Consultant to Hadco
Corporation since 1995; President and Chief Executive Officer of
Hadco Corporation from 1991 to 1995. Mr. Sweeney is a citizen of
Ireland and his business address is 5 Deacon Hunt Drive, Acton,
Massachusetts.
John E. Pomeroy Director of Hadco Corporation since September 1996; President and
Chief Executive Officer of Dover Technologies, a subsidiary of Dover
Corporation, since 1987. Mr. Pomeroy's business address is One Marine
Midland Plaza, Binghamton, New York.
James C. Taylor Director of Hadco since December 1996; Advisory Director at Downer &
Company, an investment banking firm, since 1995; Managing Director of
Burns Fry Limited, an investment banking firm from 1988 to 1994. Mr.
Taylor's business address is 211 Congress Street, Boston,
Massachusetts.
</TABLE>
S-3
<PAGE> 40
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, 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 his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
THE FIRST NATIONAL BANK OF BOSTON
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand:
Shareholder Services Division (617) 575-2232 BancBoston Trust Company
P.O. Box 1889 or of New York
Mail Stop 45-02-53 (617) 575-2233 55 Broadway, Third Floor
Boston, Massachusetts 02105 New York, New York
(617) 575-3120
Confirm Facsimile by Telephone: By Overnight Courier:
(617) 575-3120 The First National Bank of
(For Confirmation Only) Boston
Shareholder Services Division
150 Royall Street
Mail Stop: 45-02-53
Canton, Massachusetts 02021
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at the addresses and telephone numbers listed below.
Additional copies of this Offer to Purchase, the Letter of Transmittal and other
tender offer materials may be obtained from the Information Agent as set forth
below and will be furnished promptly at Purchaser's expense. 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:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
ROBERTSON, STEPHENS & COMPANY LLC
555 California Street
San Francisco, CA 94104
(800) 989-3494, ext. 8110
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
ZYCON CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED DECEMBER 11, 1996
BY
HADCO ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
HADCO CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT
NEW YORK CITY TIME, ON THURSDAY, JANUARY 9, 1997, UNLESS THE OFFER IS EXTENDED
The Depositary For the Offer is:
THE FIRST NATIONAL BANK OF BOSTON
<TABLE>
<CAPTION>
By Facsimile
By Mail: Transmission: By Hand:
<S> <C> <C>
Shareholder Services Division (617) 575-2232 BancBoston Trust Company
P.O. Box 1889 or of New York
Mail Stop: 45-02-53 (617) 575-2233 55 Broadway, Third Floor
Boston, Massachusetts 02105 New York, New York
Confirm Receipt of Notice of By Overnight Courier:
Guaranteed Delivery by Telephone:
The First National Bank of Boston
(617) 575-3120 Shareholder Services Division
(For Confirmation Only) 150 Royall Street
Mail Stop: 45-02-53
Canton, Massachusetts 02021
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares of Zycon
Corporation (the "Stockholders") if certificates evidencing Shares
("Certificates") are to be forwarded with this Letter of Transmittal or if
delivery of Shares is to be made by book-entry transfer to an account maintained
by The First National Bank of Boston (the "Depositary") at The Depository Trust
Company and the Philadelphia Depository Trust Company (each a "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase (as defined below).
Stockholders whose Certificates are not immediately available or who cannot
deliver either their Certificates for, or a Book-Entry Confirmation (as defined
in Section 3 of the Offer to Purchase) with respect to, their Shares and all
other required documents to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) may tender their Shares according
to the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase. See Instruction 2 hereof. Delivery of documents to a Book-Entry
Transfer Facility does not constitute delivery to the Depositary.
<PAGE> 2
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY,
AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution:
------------------------------------------
Check Box of Book-Entry Transfer Facility:
<TABLE>
<S> <C>
[ ] The Depository Trust [ ] Philadelphia Depository
Company Trust Company
</TABLE>
Account Number:
- --------------------------------------------------------------------------------
Transaction Code Number:
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE 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 Which Guaranteed Delivery:
------------------------------------------------------------
If delivered by book-entry transfer, check box of applicable Book-Entry
Tranfer Facility:
<TABLE>
<S> <C>
[ ] The Depository Trust [ ] Philadelphia Depository
Company Trust Company
</TABLE>
Account Number:
- --------------------------------------------------------------------------------
Transaction Code Number:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE REPRESENTED NUMBER OF
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATE BY SHARES
APPEAR(S) ON THE CERTIFICATE(S) NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total Shares
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Stockholders delivering Shares by Book-Entry Transfer.
------------------------------------------------------------------------------------------------------------------------------
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to the Depositary are
being tendered. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Hadco Acquisition Corp. ("Purchaser"), a
Delaware corporation and a wholly-owned subsidiary of Hadco Corporation, the
above-described shares of common stock, $.001 par value (the "Shares"), of Zycon
Corporation, a Delaware corporation (the "Company"), for $18.00 per Share, net
to the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated December 11, 1996 (the "Offer to Purchase"), receipt
of which is hereby acknowledged, and in this Letter of Transmittal (which
together constitute the "Offer"). The undersigned understands that Purchaser
reserves the right to transfer or assign, in whole or from time to time in part,
to any newly formed direct wholly-owned subsidiary of Hadco Corporation, the
right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer or prejudice the rights of tendering Stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered with this Letter of Transmittal in accordance with the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms or conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to, or upon the order of,
Purchaser all right, title and interest in and to all of the Shares that are
being tendered hereby and any and all other Shares, rights or other securities
issued or issuable in respect of such Shares on or after December 4, 1996 (a
"Distribution") 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 any Distributions), with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver Certificates evidencing such Shares (and any Distributions), or
transfer ownership of such Shares (and all Distributions) on the account books
maintained by a Book-Entry Transfer Facility together, in any such case, with
all accompanying evidences of transfer and authenticity to, or upon the order
of, Purchaser, upon receipt by the Depositary as the undersigned's agent of the
purchase price with respect to such Shares, (ii) present such Shares (and any
Distributions) for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and subject to
the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to all
Shares tendered hereby and accepted for payment and paid for by Purchaser (and
any Distributions), including without limitation, the right to vote such Shares
(and any Distributions) is such manner as each such attorney and proxy or his
substitute shall, in his sole discretion, deem proper. All such powers of
attorney and proxies, being deemed to be irrevocable, shall be considered
coupled with an interest in the Shares tendered with this Letter of Transmittal.
Such appointment will be effective when, and only to the extent that, Purchaser
accepts such Shares for payment. Upon such acceptance for payment, all prior
powers of attorney and proxies given by the undersigned with respect to such
Shares (and any Distributions) will be revoked, without further action, and no
subsequent powers of attorneys and proxies may be given with respect thereto
(and, if given, will be deemed ineffective). The designees of Purchaser will,
with respect to the Shares (and any Distributions) for which such appointment is
effective, be empowered to exercise all voting and other rights of the
undersigned with respect to such Shares (and any Distributions) as they in their
sole discretion may deem proper. Purchaser reserves the absolute right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the acceptance for payment of such Shares, Purchaser or its designees are
able to exercise full voting rights with respect to such Shares (and any
Distributions), including voting at any meeting of Stockholders then scheduled.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators 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.
<PAGE> 4
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions) and that, when the same are accepted for
payment and paid for by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and that the Shares tendered hereby (and any Distributions)
will not be subject to any adverse claim. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of Shares tendered hereby (and any Distributions). In addition, the
undersigned shall promptly remit and transfer to the Depositary for the account
of Purchaser any and all Distributions issued to the undersigned on or after
December 4, 1996 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 any such Distributions and may withhold the entire
purchase price or deduct from the purchase price the amount of value thereof, as
determined by Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
instructions to this Letter of Transmittal will constitute a binding agreement
between the undersigned and the Purchaser with respect to such Shares upon the
terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Purchaser may not be required to accept for payment
any of the Shares tendered hereby.
Unless otherwise indicated in this Letter of Transmittal under "Special
Payment Instructions," please issue the check for the purchase price and return
any Certificates evidencing Shares not tendered or not 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 return any
Certificates evidencing Shares not tendered or not 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 Payment Instructions" and the "Special Delivery Instructions"
are completed, please issue the check for the purchase price and return any such
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and return such Certificates (and accompanying documents, as appropriate)
to the person(s) so indicated. Unless otherwise indicated in this Letter of
Transmittal under "Special Payment Instructions," in the case of a book-entry
delivery of Shares, please credit the account maintained at the Book-Entry
Transfer Facility indicated above with respect to any Shares not accepted for
payment. The undersigned recognizes that Purchaser has no obligation pursuant to
the "Special Payment Instructions" to transfer any Shares from the name of the
registered holder if the Purchaser does not accept for payment any of the
Shares, respectively, tendered hereby.
<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 the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned, or if Shares delivered by book-entry transfer that are
not accepted for payment are to be returned by credit for an account
maintained at a Book-Entry Transfer Facility, other than to the account
indicated above.
Issue Check/Certificate(s) to:
Name:
----------------------------------------------------
(PLEASE TYPE OR PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
Credit unpurchased Shares delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below:
<TABLE>
<S> <C>
[ ] The Depository [ ] Philadelphia Depository
Trust Company Trust Company
</TABLE>
(Check One)
------------------------------------------------------
( ________ / ________ / ________ Account Number)
------------------------------------------------------------
------------------------------------------------------------
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 the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned
or the undersigned at an address other than that shown above.
Mail Check/Certificate(s) to:
Name:
----------------------------------------------------
(PLEASE TYPE OR PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
------------------------------------------------------------
<PAGE> 6
IMPORTANT
STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
FORM W-9 ON REVERSE
_______________________________________________________________________________
SIGNATURE(S) OF STOCKHOLDER(S)
Dated: ________________, 199__
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Certificate(s) for the Shares or on a security position listing or by
person(s) authorized to become registered holder(s) by any certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, agents, officers of corporations
or others acting in a fiduciary or representative capacity, please provide the
following information. See Instruction 5.)
Name(s): ______________________________________________________________________
(Please Type or Print)
Capacity (Full Title): ________________________________________________________
(See Instruction 5)
Address: ______________________________________________________________________
(Include a Zip Code)
Area code and Telephone Number: _______________________________________________
(Home)
_______________________________________________
(Business)
Taxpayer Identification
or Social Security No.: _____________________________________________________
(Complete Substitute Form W-9 on Reverse)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
(Authorized Signature(s))
_______________________________________________________________________________
(Name)
_______________________________________________________________________________
(Name of Firm)
_______________________________________________________________________________
_______________________________________________________________________________
(Address Including Zip Code)
_______________________________________________________________________________
(Area Code and Telephone Number)
Dated: ________________, 199__
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, no
signature guarantee is required on this Letter of Transmittal (a) if this Letter
of Transmittal is signed by the registered holder(s) (which term, for the
purposes of this document, includes any participant in any of the Book-Entry
Facilities' systems whose name appears on a security position listing as the
owner of the Shares) of Shares tendered herewith and such registered holders has
not completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on this Letter of Transmittal or (b) if
such Shares are tendered for the account of a financial institution (including
most commercial banks, savings and loan associations and brokerage houses) 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 (an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5. If the Certificates 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 delivered to, or Certificates evidencing unpurchased Shares are
to be issued or returned to, a person other than the registered holder, then the
tendered Certificates must be endorsed or accompanied by duly executed stock
powers, in either case signed exactly as the name or names of the registered
owner or owners appear on the Certificates, with the signatures on the
Certificates or stock powers guaranteed by an Eligible Institution as provided
in this Letter of Transmittal. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
Stockholders if Certificates evidencing Shares are to be forwarded with this
Letter of Transmittal or if delivery of Shares is to be made pursuant to the
procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase. For a Stockholder to validly tender Shares pursuant to the Offer,
either (a) a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantees and
any other required documents, must be received by the Depositary at one of its
addresses set forth in this Letter of Transmittal on or prior to the Expiration
Date and either (i) Certificates for tendered Shares must be received by the
Depositary at one of those addresses on or prior to the Expiration Date or (ii)
Shares must be delivered pursuant to the procedures for book-entry transfer set
forth in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must
be received by the Depositary on or prior to the Expiration Date or (b) the
tendering Stockholder must comply with the guaranteed delivery procedures set
forth below and in Section 3 of the Offer to Purchase.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer on or prior to the Expiration
Date may tender their Shares by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) tender
must be made by or through an Eligible Institution, (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by Purchaser, must be received by the Depositary prior to the
Expiration Date, and (iii) Certificates representing all tendered Shares in
proper form for transfer, or a Book-Entry Confirmation with respect to all the
tendered Shares, together with a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in Section 2 of the Offer
to Purchase) in connection with a book-entry transfer and any other documents
required by this Letter of Transmittal, must be received by the Depositary
within (a), in the case of Shares, three NASDAQ/National Market System trading
days after the date of such Notice of Guaranteed Delivery or (b), in the case of
Rights, a period ending on the later of (1) three trading days after the date of
execution of such Notice of Guaranteed Delivery or (2) three business days (as
defined in the Offer to Purchase) after the date certificates for Rights are
distributed to Stockholders of the Company or the Rights Agent, all as provided
in Section 3 of the Offer to Purchase. Stockholders may not extend the foregoing
time period for delivery of Rights to the Depositary by providing a second
Notice of Guaranteed Delivery with respect to such Rights. If Certificates are
forwarded separately to the Depositary, a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile) must accompany each
delivery.
The method of delivery of Certificates, this Letter of Transmittal and any
other required documents, is at the option and sole risk of the tendering
Stockholder and the delivery will be deemed made 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.
<PAGE> 8
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 a facsimile), waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal is
inadequate, the information required under "Description of Shares Tendered"
should be listed on a separate signed schedule attached to this Letter of
Transmittal.
4. PARTIAL TENDERS. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary with this Letter of Transmittal are to
be tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, a new Certificate for the
remainder of the Shares that were evidenced by your old certificate(s) will be
sent, without expense, to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Payment Instructions" or
the box entitled "Special Delivery Instructions" on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares represented by
Certificate(s) delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all the owners must sign this Letter of Transmittal.
If any of the 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 or any Certificates or instruments of
transfer are signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, that person should so indicate when signing, and
proper evidence satisfactory to the Purchaser of that person's authority to so
act must be submitted.
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 instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on the Certificates or
instruments of transfer 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 Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures on
the Certificate(s) or instruments of transfer must be guaranteed by an Eligible
Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, the Purchaser
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or (in the circumstances permitted hereby)
if Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person 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 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.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificate(s) listed in this Letter of
Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and Certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent and
Certificates are to be returned to someone 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 should be completed. If any tendered Shares
are not purchased for any reason and the Shares are delivered by Book-Entry
Transfer Facility, the Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility.
<PAGE> 9
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Information Agent at its address or telephone
number set forth below and requests for additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or brokers, dealers, commercial banks and
trust companies and such materials will be furnished at Purchaser's expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser (subject to certain limitations in the Merger Agreement (as defined in
the Offer to Purchase)), in whole or in part, at any time or from time to time,
in the Purchaser's sole discretion.
10. BACKUP WITHHOLDING TAX. Each tendering Stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is provided under "Important Tax Information" below
and to certify that the Stockholder is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering Stockholder to a penalty and 31% backup federal income tax withholding
on the payment of the purchase price for the Shares. 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, the tendering Stockholder should check the
box in Part III of the Substitute Form W-9 and sign and date both the Substitute
Form W-9 and the "Certificate of Awaiting Taxpayer Identification Number." If
the Stockholder has indicated in the box in Part III that a TIN has been applied
for and the Depositary is not provided with a TIN by the time of payment, the
Depositary will withhold 31% of all payments of the purchase price, if any, made
thereafter pursuant to the Offer until a TIN is provided to the Depositary.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Company's transfer agent, The First National Bank of Boston. The holders will
then be instructed as to the procedure to be followed in order to replace the
Certificate(s). 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 MANUALLY SIGNED FACSIMILE
(TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ANY
OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
<PAGE> 10
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Stockholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payer) with
such Stockholder's correct TIN on Substitute Form W-9 below. If such Stockholder
is an individual, the TIN is his social security number. 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, the Stockholder should so indicate on the
Substitute Form W-9. See Instruction 10. If the Depositary is not provided with
the correct TIN, the Stockholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to the Stockholder
with respect to Shares purchased pursuant to the Offer may be subject to backup
federal income tax withholding at a 31% rate.
Certain Stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing "exempt" across the
face of, and by signing and dating, the Substitute Form W-9. In order for a
foreign individual to qualify as an exempt recipient, that Stockholder must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Forms for such statements can be obtained from the
Depositary. See the enclosed Guidelines for Certificates of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the Stockholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a Stockholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that the Stockholder is awaiting a TIN) and that (1) the Stockholder
has not been notified by the Internal Revenue Service that he is subject to
backup withholding as a result of failure to report all interest or dividends or
(2) the Internal Revenue Service has notified the Stockholder that he is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered 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.
<PAGE> 11
- --------------------------------------------------------------------------------
PAYER'S NAME: THE FIRST NATIONAL BANK OF BOSTON
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- PLEASE PROVIDE YOUR TIN PART III -- Social Security
IN THE BOX AT RIGHT AND CERTIFY Number OR Employer Identification
Form W-9 BY SIGNING AND DATING BELOW Number (If awaiting TIN write
Department of the Treasury "Applied For")
Internal Revenue Service
--------------------------------------------------------------------
Payer's Request for
Taxpayer Identification
Number (TIN)
PART II -- For Payees exempt from backup withholding, see the
enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 and complete as instructed therein.
- ------------------------------------------------------------------------------------------------------
</TABLE>
Certifications -- Under penalties of perjury, I certify that:
(1) The Number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (IRS) that I am subject to
backup withholding as a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
Certification Instructions -- You must cross out item (2) above if
you have been notified by the IRS that you are subject to backup
withholding because of underreporting interest or dividends on your
tax return. However, if after being notified by the IRS that you are
subject to backup withholding, you receive another notification from
the IRS that you are no longer subject to backup withholding, do not
cross out item (2). (Also see instructions in the enclosed
guidelines).
- --------------------------------------------------------------------------------
SIGNATURE: DATE: ____________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
<PAGE> 12
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE
"APPLIED FOR" IN THE BOX IN PART III OF THE SUBSTITUTE FORM W-9.
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 payments of the purchase price pursuant to the Offer made to me
thereafter will be withheld until I provide a number.
Signature: Date:
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, NY 10010
Call Collect (212) 929-5500
or
CALL TOLL FREE (800) 322-2885
The Dealer Manager for the Offer is:
ROBERTSON, STEPHENS & COMPANY LLC
555 California Street
San Francisco, CA 94104
Toll Free (800) 989-3494, ext. 8110
December 11, 1996
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
ZYCON CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 9, 1997 UNLESS THE OFFER IS EXTENDED
This Notice of Guaranteed Delivery or a notice substantially equivalent
hereto must be used to accept the Offer (as defined below) if certificates
representing the common stock, $.001 par value (the "Shares"), of Zycon
Corporation, a Delaware corporation (the "Company"), 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 First
National Bank of Boston (the "Depositary") prior to the Expiration Date (as
defined in the Offer to Purchase). This Notice of Guaranteed Delivery may be
delivered by hand or transmitted by facsimile transmission or mail to the
Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
THE FIRST NATIONAL BANK OF BOSTON
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand:
Shareholder Services Division (617) 575-2232 BancBoston Trust Company
P.O. Box 1889 or of New York
Mail Stop 45-02-53 (617) 575-2233 55 Broadway, Third Floor
Boston, Massachusetts 02105 New York, New York
(617) 575-3120
Confirm Facsimile by Telephone: By Overnight Courier:
(617) 575-3120 The First National Bank of
(For Confirmation Only) Boston
Shareholder Services Division
150 Royall Street
Mail Stop: 45-02-53
Canton, Massachusetts 02021
</TABLE>
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via a facsimile transmission to
a number other than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery 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.
The Eligible Institution that completes this form must communicate the
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.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Hadco Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Hadco Corporation, a Massachusetts
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated December 11, 1996 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which together constitute the "Offer"), receipt
of each of which is hereby acknowledged, the number of Shares indicated below
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
Number of Shares:
Certificate Nos. (if available):
- ------------------------------------------------------
Check ONE box if Shares will be tendered by book-entry transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
Dated: , 199__
Name(s) of Record Holder(s):
- ------------------------------------------------------
- ------------------------------------------------------
(Please Type or Print)
Address(es)
- ------------------------------------------------------
(Zip Code)
Area Code and Tel. No.:
Signature(s)
- ------------------------------------------------------
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an Eligible Institution (as such term is defined in
Section 3 of the Offer to Purchase), hereby guarantees to deliver to the
Depositary the certificates representing the Shares tendered hereby, in proper
form for transfer, or a Book-Entry Confirmation (as defined in Section 3 of the
Offer to Purchase) with respect to such Shares, in either case together with a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), with any required signature guarantees or an Agent's Message
(as defined in Section 2 in the Offer to Purchase) in connection with a
book-entry transfer, and any other documents required by the Letter of
Transmittal, in the case of Shares, within three NASDAQ/National Market System
trading days after the date hereof.
<TABLE>
<S> <C>
Name of Firm:
---------------------------------- ------------------------------------------------
(Authorized Signature)
Address: Name:
---------------------------------------- ------------------------------------------
(Please Type or Print)
(Zip Code) Area Code and Tel. No.: Title:
-------------- -----------------------------------------
Date:
-----------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH YOUR
LETTER OF TRANSMITTAL.
<PAGE> 1
ROBERTSON, STEPHENS & COMPANY LLC
555 California Street
San Francisco, California 94104
Toll Free (800) 989-3494, ext. 8110
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ZYCON CORPORATION
AT
$18.00 NET PER SHARE
BY
HADCO ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
HADCO CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JANUARY 9, 1997, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks, December 11, 1996
Trust Companies and Other Nominees:
We have been appointed by Hadco Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly-owned subsidiary of Hadco Corporation, to act as
Dealer Manager in connection with Purchaser's offer to purchase for cash all of
the outstanding shares of common stock, $.001 par value (the "Shares"), of Zycon
Corporation, a Delaware corporation (the "Company"), for $18.00 per Share, net
to the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated December 11, 1996 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed
materials to those of your clients for whose accounts you hold Shares registered
in your name or in the name of your nominee.
Enclosed for your information and forwarding to your clients are copies of
the following documents:
1. Offer to Purchase dated December 11, 1996.
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients. Manually signed facsimile copies of the Letter
of Transmittal may be used to tender Shares.
3. A letter to stockholders of the Company from Ronald H. Donati,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to
stockholders of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if neither of the two procedures for tendering Shares set forth
in the Offer to Purchase can be completed on a timely basis.
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to The First National Bank of Boston,
the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 9, 1997, UNLESS THE
OFFER IS EXTENDED.
<PAGE> 2
Please note the following:
1. The tender price is $18.00 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not
properly withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase) a majority of the outstanding Shares on a fully diluted basis and
certain other conditions. See the Introduction and Sections 1 and 14 of the
Offer to Purchase.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. However, backup federal income tax
withholding at a rate of 31% may be required, unless an exemption is
provided or unless the required tax identification information is provided.
See Instruction 10 of the Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, January 9, 1997, unless the Offer is extended.
6. The board of directors of the Company has unanimously determined
that the Offer and the Merger (as defined in the Offer to Purchase) are
fair to, and in the best interests of, the Company and its stockholders,
has approved the Merger Agreement (as defined in the Offer to Purchase) and
the transactions contemplated by the Merger Agreement, including the Offer
and the Merger, and recommends that the Company's stockholders accept the
Offer and tender all their Shares pursuant thereto.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) certificates for such
Shares (the "Certificates") pursuant to the procedures set forth in Section
3 of the Offer to Purchase, or a timely Book-Entry Confirmation (as defined
in the Offer to Purchase) with respect to such Shares, and (b) the Letter
of Transmittal (or a manually signed facsimile thereof), properly completed
and duly executed with any required signature guarantees or an Agent's
Message (as defined in the Offer to Purchase) in connection with a book-
entry transfer, and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment may not be made to all tendering
stockholders at the same time depending upon when Certificates are actually
received by the Depositary.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) and any
required signature guarantees or other required documents should be sent to the
Depositary and (ii) Certificates representing the tendered Shares or a timely
Book-Entry Confirmation should be delivered to the Depositary in accordance with
the instructions set forth in the Letter of Transmittal and the Offer to
Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender may be
effected by following the guaranteed delivery procedures specified in Section 3
of the Offer to Purchase.
Neither the Purchaser nor Hadco Corporation will pay any fees or
commissions to any broker or dealer or other person for soliciting tenders of
Shares pursuant to the Offer (other than the Dealer Manager, the Depositary and
the Information Agent as described in the Offer to Purchase). Purchaser will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients.
Purchaser will pay or cause to be paid any transfer taxes payable on the
transfer of Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
MacKenzie Partners, Inc., the Information Agent for the Offer, at 156 Fifth
Avenue, New York, New York 10010, (212) 929-5000 or to Robertson, Stephens &
Company LLC, the Dealer Manager for the Offer, at 555 California Street, San
Francisco, CA 94104, (800) 989-3494, ext. 8110.
Requests for copies of the enclosed materials may also be directed to the
Dealer Manager or to the Information Agent at the above addresses and telephone
numbers.
Very truly yours,
ROBERTSON, STEPHENS & COMPANY LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS THE AGENT OF PURCHASER, THE COMPANY, THE DEALER MANAGER,
THE DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ZYCON CORPORATION
AT
$18.00 NET PER SHARE
BY
HADCO ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
HADCO CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, JANUARY 9, 1997, UNLESS THE OFFER IS EXTENDED
December 11, 1996
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated December
11, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by Hadco Acquisition
Corp., a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of
Hadco Corporation, to purchase all the outstanding shares of common stock, $.001
par value (the "Shares"), of Zycon Corporation, a Delaware corporation (the
"Company") at a purchase price of $18.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer. Holders of
Shares whose certificates for such Shares (the "Certificates") are not
immediately available or who cannot deliver their Certificates and all other
required documents to the Depositary (the "Depositary") or complete the
procedures for book-entry transfer prior to the Expiration Date (as defined in
the Offer to Purchase) must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
We are (or our nominee is) 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 by you to tender Shares held
by us for your account.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $18.00 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not
properly withdrawn prior to the Expiration Date a majority of the
outstanding Shares and certain other conditions. See the Introduction and
Sections 1 and 14 of the Offer to Purchase.
3. The Offer is being made for all outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by
Purchaser pursuant to the Offer. However, backup federal income tax
withholding at a rate of 31% may be required, unless an exemption is
provided or unless the required taxpayer identification information is
provided. See Instruction 10 of the Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, January 9, 1997, unless the Offer is extended.
6. The board of directors of the Company has unanimously determined
that the Offer and the Merger (as defined in the Offer to Purchase) are
fair to, and in the best interests of, the Company and its stockholders,
has approved the Merger Agreement (as defined in the Offer to Purchase) and
the transactions contemplated by the Merger Agreement, including the Offer
and the Merger, and recommends that the Company's stockholders accept the
Offer and tender all of their Shares pursuant thereto.
<PAGE> 2
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) Certificates pursuant to
the procedures set forth in Section 3 of the Offer to Purchase, or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect
to such Shares, (b) the Letter of Transmittal (or a manually signed
facsimile), properly completed and duly executed with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer, and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment may
not be made to all tendering stockholders at the same time depending upon
when Certificates are actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified below. An
envelope to return your instructions to us is enclosed. Your instructions should
be forwarded to us in ample time to permit us to submit a tender on your behalf
prior to the expiration of the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser may,
in its discretion, take such action as it may deem necessary to make the Offer
to holders of Shares in any jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of Purchaser by one or more registered brokers or dealers that
are licensed under the laws of such jurisdiction.
Very truly yours,
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
COMMON STOCK
OF
ZYCON CORPORATION
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase dated December 11, 1996, and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the offer by Hadco
Acquisition Corp. , a Delaware corporation ("Purchaser") and a wholly-owned
subsidiary of Hadco Corporation, to purchase all outstanding shares of common
stock, par value $.001 per share (the "Shares"), of Zycon Corporation, a
Delaware corporation.
This will instruct you to tender to Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to be Tendered:
Date:
SIGN HERE
Signature(s): -------------------------------------------------------------
(Print Name(s)): ----------------------------------------------------------
(Print Address(es)): ------------------------------------------------------
(Area Code and Telephone Number(s)): --------------------------------------
(Taxpayer Identification or Social Security Number(s)): -------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer 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.
<TABLE>
<CAPTION>
==================================================================== ============================================================
GIVE THE GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF -- NUMBER OF --
==================================================================== ============================================================
<S> <C> <C> <C>
1. An individual's account The individual 8. A valid trust, estate, or Legal entity (Do not
pension trust furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in
the account title)(5)
2. Two or more individuals (joint The actual owner of the 9. Corporate The corporation
account) account or, if combined
funds, the first
individuals on the
account(1)
3. Husband and wife (joint account) The actual owner of the 10. Religious, charitable, or The organization
account, or, if joint educational organization
funds, either person(1) account
4. Custodian account of a minor The minor(2) 11. Partnership account held in The partnership
(Uniform Gift to Minors Act) the name of the business
5. Account in the name of guardian The ward, minor, or 12. Association, club, or other The organization
or committee for a designated incompetent person(3) tax-exempt organization
ward, minor, or incompetent
person
6. a. The usual revocable savings The grantor-trustee(1) 13. A broker or registered The broker or
trust account (grantor is nominee nominee
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
7. Sole proprietorship account The owner(4) 14. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
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.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
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.
<PAGE> 2
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 Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP
WITHHOLDING
The following is a list of payees potentially exempt from backup withholding:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision of a foreign government, or any agency or instrumentality
thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- All exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business 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.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
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, dividends, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR 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 which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. 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 (a)(7)
SALEM, N.H. -- (BUSINESS WIRE) -- Dec. 5, 1996 -- Hadco Corporation
(Nasdaq:HDCO) announced today that it agreed to acquire Zycon Corporation
(Nasdaq:ZCON) for approximately $205 million in cash, or $18.00 per share.
The acquisition of Zycon, a leading manufacturer of complex printed circuit
boards, will position Hadco as the largest interconnect circuit producer in the
United States and one of the top five manufacturers in the world.
Andy Lietz, Chief Executive Officer of Hadco, stated, "Our objective is to
take a leadership position in the world interconnect market. With the worldwide
proliferation of complex electronic products, the increased scale of operations
provided by the Hadco and Zycon combination will allow Hadco to offer the
greatest array of technologically advanced interconnect products in the world.
On a geographic basis, the acquisition of Zycon provides us with a significant
West Coast presence in volume high quality printed circuit board capability and
backplane assembly. The Malaysian operation gives us an entry into the Far East,
and Zycon's East Coast facility complements our quick-turn and design
capabilities. This acquisition is a key element in Hadco's long-term growth
strategy."
Ron Donati, President, Chief Executive Officer and Chairman of Zycon,
stated, "With the combination of Hadco and Zycon, we will unite the efforts of
two of the strongest and most technologically advanced interconnect
manufacturers in the United States. The companies will have the opportunity to
continue their research and technology development together, which will help
Hadco better serve the combined customer base. As a result, we believe Hadco
represents an excellent opportunity for our employees to benefit from the
additional growth prospects represented by this transaction."
Zycon and certain principal shareholders terminated, in accordance with its
terms, a previous agreement for sale of the stock at $16.25 per share. Under the
terms of the Hadco merger agreement, Hadco will offer to purchase all of the
outstanding shares of common stock of Zycon for $18.00 per share in cash.
Certain principal shareholders, owning approximately 60% of the company's
outstanding stock, have agreed to tender all of their shares to Hadco.
Headquartered in Santa Clara, Calif., Zycon manufactures high quality,
complex multilayer printed circuit boards for original equipment manufacturers
and contract manufacturers in such industries as data communications,
telecommunications, advanced storage systems, workstations, servers and personal
computers.
Headquartered in Salem, N.H., Hadco is a leading supplier of electronic
interconnect products and services. Markets served include original equipment
manufacturers and contract assemblers in the computer, telecommunications,
automotive, medical instruments, and industrial automation sectors of the
electronics industry.
Hadco's wide range of services and products provide a singular solution to
the industry's, accelerating time-to-market requirements. Hadco offers extensive
printed circuit design and engineering services, dedicated quick turn-around
prototype and development fabrication, complex technology volume production
fabrication, backplane assemblies and added-value sub-assemblies as well as a
complete array of assembly capabilities. The Company operates six facilities in
the United States.
Except for the historical information contained in this press release
(including pricing, revenue, earnings, and operating expectations) there may
<PAGE> 2
be forward looking statements that involve risks and uncertainties. Factors that
could cause actual results to differ materially include, but are not limited
to, general economic conditions, business conditions in the electronics
industry, demand for the company's products, and other risks and uncertainties
described in reports and other documents filed by the companies from time to
time with the Securities and Exchange Commission.
A conference call will take place at 10 A.M. EST on Dec. 5, 1996. Dial-in
number is 1-800-621-5170, reservation number 2245912. Replay will be available
until 5 P.M. Dec. 7, 1996 by calling 1-800-633-8284 using the reservation
number above.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated December
11, 1996 and the related Letter of Transmittal. The Offer is not being made to
(nor will tenders be accepted from or on behalf of) holders of Shares in a
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any jurisdiction
where the securities, blue sky 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 Robertson, Stephens & Company LLC or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ZYCON CORPORATION
AT
$18.00 NET PER SHARE
BY
HADCO ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
HADCO CORPORATION
Hadco Acquisition Corp., a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of Hadco Corporation, a Massachusetts corporation
("Parent"), is offering to purchase all outstanding shares of common stock,
$.001 par value (the "Shares"), of Zycon Corporation, a Delaware corporation
(the "Company"), at a price of $18.00 per Share (the "Offer Price"), net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated December 11, 1996 (the "Offer to Purchase") and the
related Letter of Transmittal (the "Letter of Transmittal") (which together
constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
The purpose of the Offer is to acquire for cash as many outstanding Shares
as possible as a first step in acquiring the entire equity interest in the
Company. Following consummation of the Offer, Purchaser intends to effect the
merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, JANUARY 9, 1997, UNLESS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH CONSTITUTE AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS. BENEFICIAL OWNERS OF APPROXIMATELY 57% OF THE TOTAL NUMBER OF
OUTSTANDING SHARES ON A FULLY-DILUTED BASIS HAVE AGREED TO TENDER ALL OF THEIR
SHARES PURSUANT TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of December 4, 1996 (the "Merger Agreement") among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, for the commencement
of the Offer by Purchaser and further provides that after the purchase of Shares
pursuant to the Offer, subject to the satisfaction or waiver of certain
conditions, Purchaser will be merged with and into the Company (the "Merger"),
with the Company surviving the Merger as a wholly-owned subsidiary of Parent. At
the effective time of the Merger, each outstanding Share (other than Shares held
in the Company's treasury or by any wholly-owned subsidiary of the Company,
Shares owned by Parent, Purchaser or any other wholly-owned subsidiary of Parent
and Shares owned by stockholders who shall have properly exercised their
appraisal rights under Delaware law) will be converted into the right to receive
$18.00 in cash or any greater amount paid pursuant to the Offer, without
interest.
<PAGE> 2
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT INCLUDING THE OFFER AND THE
MERGER, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
Purchaser and Parent have also entered into a Stockholders Agreement dated
December 4, 1996 (the "Stockholders Agreement") with certain stockholders of the
Company. Under the Stockholders Agreement, those stockholders have
unconditionally agreed to tender their Shares in the Offer and have granted an
irrevocable proxy to Parent to vote such Shares under certain circumstances and
have granted an option to Parent to purchase such Shares at the Offer Price
under certain circumstances.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares as, if and when Purchaser gives
oral or written notice to the Depositary (as defined in the Offer to Purchase)
of its acceptance of such Shares for payment pursuant to the Offer. Upon the
terms and subject to the conditions of the Offer, payment for Shares purchased
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
purposes of receiving payment from Purchaser and transmitting payment to
tendering stockholders whose Shares have theretofore been accepted for payment.
In all cases, payment for Shares purchased pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) certificates for such Shares
(or a timely Book-Entry Confirmation (as defined in Section 3 of the Offer to
Purchase) with respect to such Shares), (ii) the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed with
all required signature guarantees or an Agent's Message (as defined in Section 2
of the Offer to Purchase) in connection with a Book-Entry Transfer Facility (as
defined in Section 3 of the Offer to Purchase), and (iii) all other documents
required by the Letter of Transmittal. Under no circumstances will interest be
paid on the purchase price for Shares to be paid by Purchaser, regardless of any
delay in making such payment.
The term "Expiration Date" shall mean 12:00 midnight, New York City time,
on Thursday, January 9, 1997, unless and until Purchaser, in accordance with the
terms of the Offer and the Merger Agreement, 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
Purchaser, shall expire. Subject to the terms of the Merger Agreement and
applicable law, Purchaser expressly reserves the right, at any time or from time
to time, to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, or payment for, any Shares by giving oral or
written notice of such extension to the Depositary and by making a public
announcement of such extension. Purchaser shall not have any obligation to pay
interest on the purchase price for tendered Shares whether or not Purchaser
exercises its right to extend the period of time during which the Offer is open.
Any such extension will be followed by a public announcement thereof by no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of a tendering stockholder to withdraw such stockholder's Shares.
Without limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser will have no obligation to publish, advertise or
otherwise communicate any such announcement other than by issuing a release to
the Dow Jones News Service, or as otherwise may be required by law.
Except as otherwise provided in the Offer to Purchase, tenders of Shares
are irrevocable. Shares tendered pursuant to the Offer may be withdrawn any time
prior to the Expiration Date and, unless theretofore accepted for payment by
Purchaser as provided for in the Offer to Purchase, may also be withdrawn at any
time after February 8, 1997. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at its address set forth on the back cover of the
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder, if different from that of the
person who tendered such Shares. If certificates evidencing Shares have been
delivered or otherwise identified to the Depositary, then prior to the release
of such certificates, the tendering stockholder must also submit the serial
numbers shown on the particular certificates evidencing the Shares to be
withdrawn, and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution, as defined in Section 3 of the Offer to Purchase
(except in the case of Shares tendered for the account of an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in Section 3 of the Offer to Purchase, the notice
of withdrawal must specify the name and number of the account at the applicable
Book-Entry Transfer Facility to be credited with the withdrawn Shares. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by Purchaser, in its sole discretion, whose
determination shall be final and binding on all parties. Any Shares properly
withdrawn will be deemed not validly tendered for
<PAGE> 3
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 of the
Offer to Purchase.
The Offer to Purchase, the related Letter of Transmittal and, if required,
any other relevant materials will be mailed to record holders of Shares and will
be furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
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 by Purchaser.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) 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 CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and
other tender offer documents may be directed to the Information Agent or the
Dealer Manager as set forth below, and copies will be furnished promptly at
Purchaser's expense. Questions or requests for assistance may also be directed
to the Dealer Manager. Neither Purchaser nor Parent will pay any fees or
commissions to any broker or dealer or other person (other than the Information
Agent and the Dealer Manager) in connection with the solicitation of tenders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll Free (800) 322-2885
The Dealer Manager for the Offer is:
ROBERTSON, STEPHENS & COMPANY LLC
555 California Street
San Francisco, CA 94104
(800) 989-3494, ext. 8110
December 11, 1996
<PAGE> 1
Exhibit (b)
December 3, 1996
Hadco Corporation
12A Manor Parkway
Salem, NH 03709
Attn: Mr. Richard F. Gerrity
Gentlemen:
We are pleased to confirm the commitment of The First National Bank of
Boston, acting as a lender and agent (the "Bank"), subject to the terms and
conditions in this letter and in the Outlines referred to below, to provide
financing to Hadco Corporation (the "Borrower") in the form of revolving credit
or revolving credit and term debt to support the acquisition of all shares of
Zycon Corporation (the "Seller"), to refinance existing debt and for working
capital. Based on our discussions and on the financial statements, projections
and other information and documents previously furnished to us, we are enclosing
herewith two outlines (the "Outlines") which set forth, in the alternative, the
principal term son which we are willing to provide the proposed financing (the
letter, together with the Outlines, is referred to as the "Commitment Letter").
Although the Outlines set forth the principal terms of the financing, you
should understand that we reserve the right to propose terms in addition to
these terms which will not substantially change or alter the term so this
commitment and the enclosed materials. Moreover, the Outlines do not purport to
include all of the representations, warranties, defaults, definitions and other
terms which will be contained in the definitive documents for the transaction,
all of which must be satisfactory in form and substance to us and our counsel
and to you and your counsel prior to proceeding with the proposed financing.
Our willingness to proceed with the proposed financing is condition on
there being no material misstatements in or omissions from the materials which
have previously been furnished to us for our review and there being in our
judgment no material adverse change in the ability of the Borrower or any of the
Guarantors to perform its respective obligations described in the Outlines. In
addition, the proposed financing is subject to the condition that no material
changes in governmental regulation or policy affecting us or the Borrower or the
Guarantors occurs prior to the closing.
It is agreed that the Bank shall act as agent for the syndication of the
credit facilities which are to be provided under the terms of this Commitment
Letter. As agent, the Bank will manage all aspects of the syndication,
including, without limitation, lender selection, communication with and
invitations to prospective syndicate lenders, preparation of syndication
materials, acceptance of commitments and the final allocations of the
commitments among the syndicate lenders. It is agreed that the amount and
distribution of the participation fees among the syndicate lenders will be at
the Bank's sole discretion. To assist the Bank in its syndication efforts, you
agree promptly to provide, and to cause your advisers to provide, to the Bank
and the other syndicate
<PAGE> 2
lenders upon request all information reasonably deemed necessary by them to
complete the syndication successfully, including, but not limited to, all
information and projections prepared by you or your advisers on your behalf or
by the Seller's management related to the contemplated transactions. You further
agree to actively assist the Bank in achieving a syndication which is
satisfactory to the Bank.
By your signature below, you agree to pay all reasonable out-of-pocket
costs and expenses incurred by the Bank in connection with this Commitment
Letter, the transactions contemplated hereby and the Bank's ongoing due
diligence in connection therewith (the "Expense") (including, without
limitation, reasonable attorneys' fees and expenses; reasonable asset evaluation
expenses, reasonable commercial finance examination expenses, and other
reasonable charges and disbursements and any other reasonable out-of-pocket
costs and expenses) whether or not such transactions are consummated.
By your signature below, you further agree on behalf of yourself and the
Guarantors to indemnify and hold harmless the Bank and its officers, directors,
employees, affiliates, agents and controlling persons from and against any and
all losses, claims, damages and liabilities to which any such person may become
subject arising out of, or in connection with, this Commitment Letter, the
transactions contemplated hereby or any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any of such
indemnified persons is a party thereto, and to reimburse each of such
indemnified persons, from time to time upon their demand, for any reasonable
legal or other expenses incurred in connection with investigating or defending
any of the foregoing, whether or not the transactions contemplated hereby are
consummated, provided that the foregoing indemnity will not, as to any
indemnified person, apply to losses, claims, damages, liabilities or related
expenses to the extent that they have been determined by a court of competent
jurisdiction by final order to arise from the bad faith, willful misconduct or
gross negligence of such indemnified person.
Until such time as you have agreed to the term so this Commitment Letter by
signing in the space provided below and we have received a signed copy thereof
from you together with your deposit as required below, the terms of this
Commitment Letter may not be disclosed by you to the Seller or to any other
person (including any other lender bidding for the financing contemplated by
this Commitment Letter) other than your employees, officers, accountants,
attorneys, and other advisors and then only in connection with the transactions
contemplated hereby and on a confidential basis.
In accordance with the terms of the confidentiality agreement already
entered into by and between us, the Bank agrees to keep any information
delivered or made available by you to it confidential from anyone other than the
Bank's employees, officers, attorneys and other advisors who are or are expected
to become engaged in evaluating, approving, structuring or administering the
Facility or rendering legal advice in connection therewith, PROVIDED that
nothing herein or in that confidentiality agreement shall prevent the Bank from
disclosing such information (a) to prospective members of the lending syndicate,
(b) upon the order of any court of administrative agency or upon the request of
<PAGE> 3
any administrative agency or authority, (c) upon the request or demand of any
regulatory agency or authority, (d) to the extent that such information has been
publicly disclosed other than as a result of a disclosure by the Bank, (e)
otherwise as required by law.
This letter is issued with the specific understanding that, except as
specifically set forth in the preceding paragraphs, it is not intended to give
rise to any legal liability on the part of either you or the Bank and that the
proposal set forth herein shall be considered withdrawn if for any reason you
fail to return to the Bank's head office in Boston, Massachusetts by 10:30 a.m.
(Boston time) on December 4, 1996 (the "Expiration Date") the enclosed copy of
this letter signed by you, together with the $100,000 commitment fee/deposit
referred to in the Outlines which shall be nonrefundable.
If the foregoing is in accordance with your understanding, please accept
this letter in the space indicated below and return it to us on or prior to
Expiration Date. This letter supersedes all of our prior letters and
communications to you regarding the subject matter of this letter.
Very truly yours,
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Jeffrey G. Millman
------------------------------
Jeffrey G. Millman
Vice President
Accepted and Agreed to this
_____ day of December, 1996
HADCO CORPORATION
By: /s/ Timothy P. Losik
------------------------
Title: Vice President
<PAGE> 4
Hadco Cooperation
-----------------
Outline of Terms and Conditions
$250,000,000 Senior Revolving Credit Facilities
December 3, 1996
================================================================================
BORROWER: Hadco Corporation (the "Borrower"). Any subsidiaries of the
Borrower will become either co-borrowers or guarantors.
AGENT: The First National Bank of Boston ("BankBoston" or the
"Agent").
LENDERS: BankBoston and others to be identified by the Agent.
CREDIT FACILITIES: $250,000,000 Revolving Credit Facility (the "Revolver").
Sub-limit for Letters of Credit to be determined.
USE OF PROCEEDS: To finance the purchase of 100% of the shares of "Zorro"
(the "Seller"), to refinance existing debt, and for working
capital and other general corporate purposes, including
Permitted Acquisitions.
CLOSING DATE: The date of the initial loan, but no later than January 31,
1997.
MATURITY: The commitments will terminate and any amount outstanding
under the Revolver will be due in full five years from the
Closing Date.
<TABLE>
INTEREST RATES: Interest Rates shall be Eurodollar Rate plus an Applicable
Margin, determined quarterly according to the following
Pricing Grid:
<CAPTION>
Funded Debt/ Commitment
Level EBITDA Eurodollar Fee
----- ------------ ---------- ----------
<S> <C> <C> <C>
I. > = 2.5x 112.5 bp 37.5 bp
II. > = 2.0x 87.5 bp 27.5 bp
III. > = 1.5x 62.5 pb 22.5 bp
IV. < 1.5x 50.0 bp 20.0 pb
</TABLE>
EBITDA will be calculated on a rolling four quarter basis
and will include EBITDA of the acquired company as if the
acquisition had occurred at the beginning of such four
quarter period.
<PAGE> 5
COMMITMENT FEE: A fee on the unused portion of the Revolver payable
quarterly in arrears at a rate per annum determined
according to the above Pricing Grid.
L/C ISSUING BANKS: The First National Bank of Boston.
LETTER OF CREDIT
FEE: A per annum fee equal to the Applicable
Eurodollar Margin, payable on the face amount of each
outstanding letter of credit quarterly in advance. Fees to
be shared by the Lenders on a pro rata basis. Letters of
credit issued under the Revolver shall count as utilization
for all purposes, including the commitment fee calculation.
An additional 0.125% p.a. shall be paid to the Issuing Bank
as a fronting fee, in addition to customary administrative
fees.
INTEREST PAYMENTS: Interest shall be payable quarterly in arrears for Alternate
Base Rate loans and the earlier of quarterly or at the end
of each interest prior for Eurodollar loans. Alternate Base
Rate will be defined as the higher of the Base Rate
announced by the Agent from time to time or the Federal
Funds Rate plus 1/2%. Eurodollar loans will be available for
1, 2, 3 or 6 month periods. Customary provisions regarding
breakage costs, reserves, regulatory requirements, taxes,
illegality, etc., shall apply. The credit agreement will
restrict the number of Eurodollar loans which may be
outstanding at any one time.
DEFAULT RATES: 2% per annum above the highest rates shown above.
CLOSING FEE: 0.25% of the total amount of the Facilities, payable to the
Agent at Closing.
DEPOSIT: A deposit of $100,000 will be paid to the Agent upon the
Borrower's acceptance of this proposal. Such deposit will be
credited toward the Closing Fee, but shall be non-refundable
unless the Agent fails to deliver a commitment or to close
the Facilities contemplated hereby on substantially the
terms outlined herein.
AGENT'S FEE: An annual fee of $50,000, payable annually in advance
commencing at Closing.
CALCULATIONS: Interest on Alternate Base Rate loans shall be payable based
on actual days and a 365/366 day year. Fees as well as
interest on Eurodollar loans shall be payable based on
actual days and a 360-day year.
<PAGE> 6
INTEREST RATE
PROTECTION: The Borrower will be required to maintain interest rate
hedging agreements in amounts and with terms acceptable to
the Agent.
YIELD PROTECTION: Customary yield protection provisions regarding capital
adequacy, reserves, taxes, regulatory changes, etc.
VOLUNTARY
PREPAYMENTS: Permitted, subject to payment of normal breakage costs, if
any, in the case of Eurodollar loans.
CANCELLATION: The Borrower shall have the right, on 7 days' prior written
notice, to cancel the undrawn portion of the facilities in
whole or part, provided that any partial cancellations shall
be in a minimum amount of $10,000,000 and integral multiples
of $5,000,000.
GUARANTEES: All subsidiaries of the Borrower.
REPRESENTATIONS
AND WARRANTIES: Usual and customary for facilities of this type, including
but not limited to, organization, authority, financial
statements, material contracts, environmental matters,
absence of material adverse change, absence of material
litigation, absence of default or unmatured default, no
conflict with agreements, payment of taxes and certain
business-specific matters.
FINANCIAL
COVENANTS: Usual and customary for facilities of this type based on
your current business plan reviewed by us. Financial tests
mutually acceptable to Borrower and Agent would include,
without limitation, the following:
1. Maximum Funded Debt to trailing 4 quarters EBITDA of
2.75:1 stepping down over the life of the Facilities.
2. Minimum EBIT/Interest Coverage of 3.0:1 first year,
stepping up over the life of the Facilities.
<PAGE> 7
3. Minimum Tangible Net Worth, to be defined, increasing
by 50% of Consolidated Net Income for the relevant
fiscal period plus 100% of the net proceeds of equity
securities issued by the Borrower or any warrants or
subscription rights for any equity securities issued by
the Borrower.
4. Yearly limitations on Capital Expenditures to be
determined.
OPERATING
COVENANTS: Usual and customary for transactions of this type, including
without limitation, restrictions on indebtedness, guarantees
and other liabilities (other than certain permitted baskets
to be determined), liens, acquisitions, investments,
dividends and other distributions, mergers, sale of assets,
subsidiary distributions, voluntary payments of other debt,
derivative contracts, affiliate transactions, negative
pledges, etc. Standard affirmative covenants regarding
payment of claims and taxes, conduct of business, compliance
with laws and contracts, ERISA compliance, etc. Such other
terms and conditions as may be necessary, in the reasonable
judgment of the Agent, to complete a successful syndication
of the Facilities. The Agent reserves the right to conduct
commercial finance examinations, if deemed necessary.
FINANCIAL REPORTS: Financial information to include audited annual and
unaudited quarterly consolidating and consolidated financial
statements, including no default certificate and
calculations demonstrating compliance with all covenants.
EVENTS OF DEFAULTS: Usual and customary for facilities of this
type, including but not limited to, failure to pay any
interest or principal when due, failure to comply with
covenants, inaccurate or false representations or
warranties, cross defaults, change of control, judgment
defaults, ERISA, bankruptcy and insolvency.
CLOSING CONDITIONS: Closing shall be conditioned upon the satisfaction of the
following conditions precedent and other conditions
customary to transactions of this type or reasonably
required by the Agent
1. The Borrower shall have successfully completed the
acquisition of the Seller on substantially the same
terms and conditions presented to the Agent in the due
diligence material received to date. No waiver by the
Borrower or its nominee of any term or conditions
deemed by the Agent to be material.
<PAGE> 8
2. No material adverse change in the business, assets,
financial condition, income or prospects of the
Borrower or any of its subsidiaries, or in the
Borrower's ability to complete the proposed
acquisition.
3. Unused debt capacity, after giving effect to the
proposed acquisition, including the stock purchase and
the refinancing of any debt, shall be greater than an
amount to be determined.
4. No material misstatements in or omissions from the
materials previously furnished to the Agent for its
review. The Agent must be satisfied that any financial
statements delivered to it fairly present the business
and financial condition of Borrower and its
subsidiaries, and that there has been no material
adverse change in the assets, business, financial
condition, income or prospects of such persons since
the date of the most recent financial information
delivered to the Agent.
5. The Agent's receipt of satisfactory evidence of
appropriate corporate and other approval of all
proposed transactions as well as opinions of counsel,
general corporate, local and regulatory, satisfactory
to it as to, among other things, the due consummation
of the transactions, legality, validity and binding
effect of all loan and related documents, and the
absence of any violation of any law, regulation or
contract applicable to the parties to the loan
transaction.
6. The absence of any litigation or other proceeding the
result of which might impair or prevent the
consummation of the transactions contemplated or have a
material adverse effect on the Borrower or any of its
subsidiaries.
7. The absence of any default of any material contract or
agreement of the Borrower or any of its subsidiaries.
8. No material changes in governmental regulation or
policy affecting the Agent or Lenders involved in this
transaction, the Borrower or any of its subsidiaries
occurs prior to the Closing Date.
9. No material adverse changes to the syndication market
for credit facilities of these type and no disruptions
or material adverse changes in financial, banking or
capital markets that
<PAGE> 9
would have an adverse effect on such syndication
market, in each case as determined by the Agent.
10. The absence of any litigation or other proceeding the
result of which might impair or prevent the
consummation of the transactions contemplated or have a
material adverse effect on the Borrower or any of its
subsidiaries.
11. The absence of any default of any material contract or
agreement of the Borrower or any of its subsidiaries.
12. No material changes in governmental regulation or
policy affecting the Agent or Lenders involved in this
transaction, the Borrower or any of its subsidiaries
occurs prior to the Closing Date.
13. No material adverse changes to the syndication market
for credit facilities of these type and no disruptions
or material adverse changes in financial, banking or
capital markets that would have an adverse effect on
such syndication market, in each case as determined by
the Agent.
PERMITTED
ACQUISITIONS: Acquisitions that satisfy all of the following conditions
will not require prior bank approval:
a) Target company in a line of business substantially
similar to the Borrower's existing business.
b) Target company shows positive historical net income
(before adjustments)
c) Borrower or its wholly-owned subsidiaries will own 100%
of the operating assets of the acquired businesses.
d) Borrower is in compliance with all covenants prior to
the acquisition, and demonstrate pro forma compliance
after giving effect to the acquisition, and
EXPENSES: All out-of-pocket expenses incurred by the Agent in
connection with the syndication and documentation of the
proposed Facilities (including fees and expenses of legal
counsel, asset appraisers and examiners and environmental
consultants) will be for the account of the Borrower.
SYNDICATION: Management of the Borrower agrees to assist the Agent in its
syndication efforts including, upon our reasonable request,
assistance in the preparation of a confidential information
memorandum, attending bank meetings, and general assistance
and support in the syndication process.
<PAGE> 10
INDEMNIFICATION: The Borrower shall indemnify the Agent and Lenders against
all losses, liabilities, claims, damages or expenses
relating to their loans, the loan documents, the Borrower's
use of loan proceeds or the commitments, including but not
limited to attorneys and other professional fees and
settlement costs.
GOVERNING LAW: The Commonwealth of Massachusetts
AGENT'S COUNSEL: Bingham, Dana & Gould
DEFINITIONS: EBIT is defined as consolidated net income before payment or
provision for interest expense and federal, state and local
income taxes for the Borrower and its subsidiaries,
excluding (i) non-recurring items such as gains on sale of
assets or extraordinary items; (ii) earnings from
discontinued businesses; and (iii) any non-cash gains used
in determining net income.
EBITDA is defined as consolidated net income before
depreciation, amortization, all other non-cash charges,
payment or provision for interest expense and federal, state
and local income taxes for the Borrower and its
subsidiaries, excluding (i) non-recurring items such as
gains on sale of assets or extraordinary items; (ii)
earnings from discontinued businesses; and (iii) any
non-cash gains used in determining net income.
FUNDED DEBT is defined as, the sum of (i) the principal
amount of all Loans and accrued, but unpaid, interest
thereon and (ii) all other interest bearing Indebtedness
outstanding during such period.
TOTAL INTEREST is defined as the aggregate liability of the
Borrower for interest on Indebtedness, whether expensed or
capitalized including payments consisting of interest in
respect of Capitalized Leases.
<PAGE> 11
HADCO CORPORATION
-----------------
Outline of Terms and Conditions
$250,000,000 Senior Credit Facilities
December 3, 1996
- --------------------------------------------------------------------------------
BORROWER: Hadco Corporation (the "Borrower"). Any subsidiaries of the
Borrower will become either co-borrowers or guarantors.
AGENT: The First National Bank of Boston ("BankBoston" or the
"Agent").
LENDERS: BankBoston and others to be identified by the Agent.
CREDIT FACILITIES: $250,000,000 in total aggregate amount, comprised of:
a) $200,000,000 Revolving Credit Facility (the
"Revolver"). Sub-limit for Letters of Credit to be
determined.
b) $50,000,000 Term Loan (the "Term Loan")
USE OF PROCEEDS: To finance the purchase of 100% of the shares of "Zorro"
(the "Seller"), to refinance existing debt, and for working
capital and other general corporate purposes, including
Permitted Acquisitions.
CLOSING DATE: The date of the initial loan, but no later than January 31,
1997.
MATURITY: The commitments will terminate 5 years from the Closing
Date.
AMORTIZATION: a) Any amount outstanding under the Revolver will be due in
full at Maturity.
<TABLE>
b) The Term Loan will be payable in 20 consecutive calendar
quarters, starting the first calendar quarter after closing,
according to the following schedule:
<CAPTION>
Amount
------
<S> <C>
Year One $10,000,000
Year Two $10,000,000
Year Three $10,000,000
Year Four $10,000,000
Year Five $10,000,000
</TABLE>
<PAGE> 12
<TABLE>
INTEREST RATES: Interest rates shall be Eurodollar Rate plus an Applicable
Margin, determined quarterly according to the following
Pricing Grid:
<CAPTION>
Level Funded Debt/ Eurodollar Comm. Fee
----- ------------ ---------- ---------
EBITDA
------
<S> <C> <C> <C>
I. > = 2.5x 112.5 bp 37.5 bp
II. > = 2.0x 87.5 bp 27.5 bp
III. > = 1.5x 62.5 bp 20.0 bp
IV. < = 1.5x 50.0 bp 20.0 bp
</TABLE>
EBITDA will be calculated on a rolling four quarter basis
and will include EBITDA of the acquired company as if the
acquisition had occurred at the beginning of such four
quarter period.
COMMITMENT FEE: A fee on the unused portion of the Revolver payable
quarterly in arrears at a rate per annum determined
according to the above Pricing Grid.
L/C ISSUING BANKS: The First National Bank of Boston.
LETTER OF
CREDIT FEE: A per annum fee equal to the Applicable Eurodollar Margin,
payable on the face amount of each outstanding letter of
credit quarterly in advance. Fees to be shared by the
Lenders on a pro rata basis. Letters of credit issued under
the Revolver shall count as utilization for all purposes,
including the commitment fee calculation. An additional
0.125% p.a. shall be paid to the Issuing Bank as a fronting
fee, in addition to customary administrative fees.
INTEREST PAYMENTS: Interest shall be payable quarter in arrears for Alternate
Base Rate loans and the earlier of quarterly or at the end
of each interest period for Eurodollar loans. Alternate Base
Rate will be defined as the higher of the Base Rate
announced by the Agent from time to time or the Federal
Funds Rate plus 1/2%. Eurodollar loans will be available for
1, 2, 3 or 6 month periods. Customary provisions regarding
breakage costs, reserves, regulatory requirements, taxes,
illegality, etc. shall apply. The credit agreement will
restrict the number of Eurodollar loans which may be
outstanding at any one time.
DEFAULT RATES: 2% per annum above the highest rates shown above.
CLOSING FEE: 0.25% of the total amount of the Facilities, payable to the
Agent at Closing.
<PAGE> 13
DEPOSIT: A deposit of $100,000 will be paid to the Agent upon the
Borrower's acceptance of this proposal. Such deposit will be
credited toward the Closing Fee, but shall be non-refundable
unless the Agent fails to deliver a commitment or to close
the Facilities contemplated hereby on substantially the
terms outlined herein.
AGENT'S FEE: An annual fee of $50,000, payable annually in advance
commencing at Closing.
CALCULATIONS: Interest on Alternate Base Rate loans shall be payable based
on actual days and a 365/366 day year. Fees as well as
interest on Eurodollar loans shall be payable based on
actual days and a 360 day year.
INTEREST RATE
PROTECTION: The Borrower will be required to maintain interest rate
hedging agreements in amounts and with terms acceptable to
the Agent.
YIELD PROTECTION: Customary yield protection provisions regarding capital
adequacy, reserves, taxes, regulatory changes, etc.
VOLUNTARY
PREPAYMENTS: Permitted, subject to payment of normal breakage costs, if
any, in the case of Eurodollar loans.
CANCELLATION: The Borrower shall have the right, on 7 days' prior written
notice, to cancel the undrawn portion of the facilities in
whole or in part, provided that any partial cancellations
shall be in a minimum amount of $10,000,000 and integral
multiples of $5,000,000.
GUARANTEES: All subsidiaries of the Borrower.
REPRESENTATIONS
AND WARRANTIES: Usual and customary for facilities of this type, including
but not limited to, organization, authority, financial
statements, material contracts, environmental matters,
absence of material adverse change, absence of material
litigation, absence of default or unmatured default, no
conflict with agreements, payment of taxes and certain
business-specific matters.
<PAGE> 14
FINANCIAL
COVENANTS: Usual and customary for facilities of this type based on
your current business plan reviewed by us. Financial tests
mutually acceptable to Borrower and Agent would include,
without limitation, the following:
1. Maximum Funded Debt to trailing 4 quarters EBITDA of
2.75:1 stepping down over the life of the Facilities.
2. Minimum EBIT/Interest Coverage of 3.0:1 first year,
stepping up over the life of the Facilities.
3. Minimum Tangible Net Worth, to be defined, increasing
by 50% of Consolidated Net Income for the relevant
fiscal period plus 100% of the net proceeds of equity
securities issued by the Borrower or any warrants or
subscription rights for any equity securities issued by
the Borrower.
4. Yearly limitations on Capital Expenditures to be
determined.
OPERATING
COVENANTS: Usual and customary for transactions of this type, including
without limitation, restrictions on indebtedness, guarantees
and other liabilities (other than certain permitted baskets
to be determined), liens, acquisitions, investments,
dividends and other distributions, mergers, sales of assets,
subsidiary distributions, voluntary payments of other debt,
derivative contracts, affiliate transactions, negative
pledges, etc. Standard affirmative covenants regarding
payment of claims and taxes, conduct of business, compliance
with laws and contracts, ERISA compliance, etc. Such other
terms and conditions as may be necessary, in the reasonable
judgment of the Agent, to complete a successful syndication
of the Facilities. The Agent reserves the right to conduct
commercial finance examinations, if deemed necessary.
FINANCIAL REPORTS: Financial information to include audited annual and
unaudited quarterly consolidating and consolidated financial
statements, including no default certificate and
calculations demonstrating compliance with all covenants.
EVENTS OF DEFAULTS: Usual and customary for facilities of this
type, including but not limited to, failure to pay any
interest or principal when due, failure to comply with
covenants, inaccurate or false representations or
warranties, cross defaults, change of control, judgment
defaults, ERISA, bankruptcy and insolvency.
<PAGE> 15
CLOSING CONDITIONS: Closing shall be conditioned upon the satisfaction of the
following conditions precedent and other conditions
customary to transactions of this type or reasonably
required by the Agent:
1. The Borrower shall have successfully completed the
acquisition of the Seller on substantially the same
terms and conditions presented to the Agent in the due
diligence material received to date. No waiver by the
Borrower or its nominee of any term or conditions
deemed by the Agent to be material.
2. No material adverse change in the business, assets,
financial condition, income or prospects of the
Borrower or any of its subsidiaries, or in the
Borrower's ability to complete the proposed
acquisition.
3. Unused debt capacity, after giving effect to the
proposed acquisition, including the stock purchase and
the refinancing of any debt, shall be greater than an
amount to be determined.
4. No material misstatements in or omissions from the
materials previously furnished to the Agent for its
review. The Agent must be satisfied that nay financial
statements delivered to it fairly present the business
and financial condition of Borrower and its
subsidiaries, and that there has been no material
adverse change in the assets, business, financial
condition, income or prospects of such persons since
the date of the most recent financial information
delivered to the Agent.
5. The Agent's receipt of satisfactory evidence of
appropriate corporate and other approval of all
proposed transactions as well as opinions of counsel,
general corporate, local and regulatory, satisfactory
to it as to, among other things, the due consummation
of the transactions, legality, validity and binding
effect of all loan and related documents, and the
absence of any violation of any law, regulation or
contract applicable to the parties to the loan
transaction.
6. The absence of any litigation or other proceeding the
result of which might impair or prevent the
consummation of the transactions contemplated or have a
material adverse effect on the Borrower or any of its
subsidiaries.
7. The absence of any default of any material contract or
agreement of the Borrower or any of its subsidiaries.
<PAGE> 16
8. No material changes in governmental regulation or
policy affecting the Agent or Lenders involved in this
transaction, the Borrower or any of its subsidiaries
occurs prior to the Closing Date.
9. No material adverse changes to the syndication market
for credit facilities of these type and no disruptions
or material adverse changes in financial, banking or
capital markets that would have an adverse effect on
such syndication market, in each case as determined by
the Agent.
PERMITTED
ACQUISITIONS: Acquisitions that satisfy all of the following conditions
will not require prior bank approval:
a) Target company in a line of business substantially
similar to the Borrower's existing business,
b) Target company shows positive historical net income
(before adjustments),
c) Borrower or its wholly-owned subsidiaries will own 100%
of the operating assets of the acquired businesses,
d) Borrower is in compliance with all covenants prior to
the acquisition, and demonstrate pro forma compliance
after giving effect to the acquisition, and
EXPENSES: All out-of pocket expenses incurred by the Agent in
connection with the syndication and documentation of the
proposed Facilities (including fees and expenses of legal
counsel, asset appraisers and examiners and environmental
consultants) will be for the account of the Borrower.
SYNDICATION: Management of the Borrower agrees to assist the Agent in its
syndication efforts including, upon our reasonable request,
assistance in the preparation of a confidential information
memorandum, attending bank meetings, and general assistance
and support in the syndication process.
ASSIGNMENTS AND
PARTICIPATIONS: Lenders will be permitted to grant participations or
assignments of their loans and commitments. Any Lender will
be permitted to assign a portion of the Facilities to
another lending institution in minimum amounts of $5
million, subject to consent of the Borrower (so long as no
Default exists) and Agent, which consent will not be
unreasonably withheld.
<PAGE> 17
VOTING RIGHTS: Lenders holding at least a majority of all of the
outstanding commitments under the Facilities for all
amendments and waivers; provided that the following shall
require 100% of the Lenders: (1) increase in commitments;
(2) decreases in interest rates; (3) postponement of
scheduled amortization, commitment reductions or final
maturity; (4) release of substantial portions of the
collateral and (5) changes in the number of percentage of
required Lenders for any consent, amendment or waiver.
INDEMNIFICATION: The borrower shall indemnify the Agent and Lenders against
all losses, liabilities, claims, damages or expenses
relating to their loans, the loan documents, the Borrower's
use of loan proceeds or the commitments, including but not
limited to attorneys and other professional fees and
settlement costs.
GOVERNING LAW: The Commonwealth of Massachusetts.
AGENT'S COUNSEL: Bingham, Dana & Gould.
<PAGE> 18
DEFINITIONS:
EBIT is defined as consolidated net income before payment or
provision for interest expense and federal, state and local
income taxes for the Borrower and its subsidiaries,
excluding (i) non-recurring items such as gains on sale of
assets or extraordinary items; (ii) earnings from
discontinued businesses; and (iii) any non-cash gains used
in determining net income.
EBITDA is defined as consolidated net income before
depreciation, amortization, all other non-cash charges,
payment or provision for interest expense and federal, state
and local income taxes for the Borrower and its
subsidiaries, excluding (i) non-recurring items such as
gains on sale of assets or extraordinary items; (ii)
earnings from discontinued businesses; and (iii) any
non-cash gains used in determining net income.
FUNDED DEBT is defined as, the sum of (i) the principal
amount of all Loans and accrued, but unpaid, interest
thereon and (ii) all other interest bearing Indebtedness
outstanding during such period.
TOTAL INTEREST is defined as the aggregate liability of the
Borrower for interest on Indebtedness, whether expensed or
capitalized including payments consisting of interest in
respect of Capitalized Leases.
<PAGE> 1
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
by and
among
HADCO CORPORATION
HADCO ACQUISITION CORP.
and
ZYCON CORPORATION
dated December 4, 1996
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I
THE OFFER ......................................................................1
1.1 The Offer.............................................................1
1.2 Offer Documents.......................................................2
1.3 Company Actions.......................................................3
1.4 Directors.............................................................4
ARTICLE II
THE MERGER .....................................................................5
2.1 The Merger............................................................5
2.2 Closing...............................................................5
2.3 Effective Time of the Merger..........................................5
2.4 Effects of the Merger.................................................5
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES..........................6
3.1 Effect on Capital Stock...............................................6
3.2 Conversion of Securities..............................................6
3.3 Payment for Shares....................................................7
3.4 Stock Transfer Books..................................................9
3.5 Stock Options.........................................................9
3.6 Dissenting Shares....................................................10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES.................................................10
4.1 Representations and Warranties of the Company........................10
(a) Organization, Standing and Power.................................10
(b) Capital Structure................................................11
(c) Authority; No Violations; Consents and Approvals.................12
(d) SEC Documents....................................................13
(e) Information Supplied.............................................14
(f) Compliance with Applicable Laws..................................14
(g) Litigation.......................................................15
(h) Taxes............................................................15
(i) Pension and Benefit Plans; ERISA.................................16
(j) Absence of Certain Changes or Events.............................18
(k) No Undisclosed Material Liabilities..............................18
(l) Vote Required....................................................18
(m) Labor Matters....................................................18
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(n) Intangible Property..............................................19
(o) Environmental Matters............................................20
(p) Real Property....................................................22
(q) Insurance........................................................23
(r) Board Recommendation.............................................23
(s) Material Contracts...............................................23
(t) Related Party Transactions.......................................24
(u) Indebtedness.....................................................24
(v) Liens............................................................24
4.2 Representations, Warranties, and Covenants of Parent and Sub.........24
(a) Organization, Standing and Power.................................25
(b) Authority; No Violations; Consents and Approvals.................25
(c) Information Supplied.............................................26
(d) Board Recommendation.............................................26
(e) Financing........................................................26
(f) Changes in Financing.............................................26
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS......................................26
5.1 Covenants of the Company.............................................27
(a) Ordinary Course..................................................27
(b) Dividends; Changes in Stock......................................27
(c) Issuance of Securities...........................................27
(d) Governing Documents..............................................27
(e) No Solicitation..................................................27
(f) No Acquisitions..................................................29
(g) No Dispositions..................................................29
(h) SEC Filings......................................................29
(i) No Dissolution, Etc..............................................29
(j) Other Actions....................................................29
(k) Certain Employee Matters.........................................29
(l) Indebtedness; Agreements.........................................30
(m) Accounting.......................................................30
(n) Capital Expenditures.............................................30
ARTICLE VI
ADDITIONAL AGREEMENTS..........................................................30
6.1 Preparation of the Proxy Statement; Company
Stockholders Meeting; Merger without a Company
Stockholders Meeting.................................................30
6.2 Access to Information................................................31
6.3 Legal Conditions to Merger...........................................31
6.4 Fees and Expenses....................................................32
6.5 Brokers or Finders...................................................32
6.6 Indemnification; Directors' and Officers' Insurance..................33
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
6.7 Best Efforts.........................................................34
6.8 Conduct of Business of Sub...........................................34
6.9 Publicity............................................................35
6.10 Opinion of Financial Advisor.........................................35
6.11 Limitation on the Company's Legal and Investment Banking Fees........35
ARTICLE VII
CONDITIONS PRECEDENT...........................................................35
7.1 Conditions to Each Party's Obligation to Effect the Merger...........35
(a) Stockholder Approval.............................................35
(b) HSR Act..........................................................35
(c) No Injunctions or Restraints.....................................36
7.2 Conditions of Obligations of Parent and Sub..........................36
(a) Payment for Shares...............................................36
(b) Representations and Warranties...................................36
(c) Performance of Obligations of the Company........................36
(d) Consents, etc....................................................36
ARTICLE VIII
TERMINATION AND AMENDMENT......................................................36
8.1 Termination..........................................................37
8.2 Effect of Termination................................................38
8.3 Amendment............................................................38
8.4 Extension; Waiver....................................................38
ARTICLE IX
GENERAL PROVISIONS.............................................................38
9.1 Nonsurvival of Representations, Warranties and Agreements............38
9.2 Notices..............................................................39
9.3 Interpretation.......................................................40
9.4 Counterparts.........................................................40
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership..40
9.6 Governing Law........................................................40
9.7 No Remedy in Certain Circumstances...................................40
9.8 Assignment...........................................................41
</TABLE>
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<PAGE> 5
Glossary of Defined Terms
-------------------------
Defined Terms Defined in Section
- ------------- ------------------
Acquisition Proposal...................................................5.1(e)
Agreement............................................................preamble
Benefit Plans....................................................4.1(i)(i)(A)
Board Percentage.......................................................1.4(a)
CERCLA...........................................................4.1(p)(i)(B)
Certificate of Merger.....................................................2.3
Certificates...........................................................3.3(b)
Closing...................................................................2.2
Closing Date..............................................................2.2
Code...................................................................3.3(e)
Company..............................................................preamble
Company Common Stock.................................................preamble
Company Intangible Property.........................................4.1(o)(i)
Company Intangible Property Licenses..............................4.1(o)(iii)
Company Litigation.....................................................4.1(g)
Company Order..........................................................4.1(g)
Company Permits........................................................4.1(f)
Company SEC Documents..................................................4.1(d)
Company Stockholder Approval......................................4.1(c)(iii)
Company Voting Debt....................................................4.1(b)
Confidentiality Agreement.................................................6.2
Constituent Corporations..................................................2.1
Continuing Director....................................................1.4(b)
Control................................................................3.2(a)
Designated Person......................................................6.4(c)
DGCL......................................................................1.3
Dissenting Shares.........................................................3.6
Effective Time............................................................2.3
Employee Arrangements............................................4.1(i)(i)(B)
Environmental Costs and Liabilities..............................4.1(p)(i)(A)
Environmental Law................................................4.1(p)(i)(B)
Exchange Act...........................................................1.1(a)
GAAP...................................................................4.1(d)
Governmental Entity...............................................4.1(c)(iii)
Hazardous Material...............................................4.1(p)(i)(C)
HSR Act...........................................................4.1(c)(iii)
Indebtedness...........................................................4.2(v)
Indemnified Parties.......................................................6.6
Indemnified Liabilities...................................................6.6
Injunction.............................................................7.1(c)
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<PAGE> 6
ISRA.............................................................4.1(p)(i)(B)
Laws...............................................................4.1(c)(ii)
Material Adverse Effect................................................4.1(a)
Material Contracts.....................................................4.1(t)
Material Employment Contracts..........................................4.1(t)
Merger....................................................................2.1
Merger Consideration...................................................3.2(a)
OSHA.............................................................4.1(p)(i)(B)
Offer..................................................................1.1(a)
Offer Consideration....................................................1.1(a)
Offer Documents...........................................................1.2
Option Consideration......................................................3.5
Options...................................................................3.5
Parent...............................................................preamble
Paying Agent...........................................................3.3(a)
Payment Fund..............................................................3.3
Preferred Stock........................................................4.1(b)
Permitted Investments..................................................3.3(a)
Proxy Statement...................................................4.1(c)(iii)
Real Property Leases...............................................4.1(q)(ii)
Release..........................................................4.1(p)(i)(D)
Remedial Action..................................................4.1(p)(i)(E)
Representative.........................................................5.1(e)
SEC....................................................................1.1(b)
SEC Contracts..........................................................4.1(t)
Schedule 14D-1 (1.2)......................................................1.3
Schedule 14D-9............................................................1.3
Securities Act.........................................................4.1(d)
Shares...............................................................preamble
Stock Option Plans........................................................3.5
Stockholders Agreement...............................................preamble
Sub..................................................................preamble
Subsidiary.............................................................3.2(a)
Surviving Corporation.....................................................2.1
Trigger Event..........................................................6.4(b)
Violation..........................................................4.1(c)(ii)
WARN................................................................4.1(n)(v)
-v-
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 4, 1996 (this
"Agreement"), is made and entered into by Hadco Corporation, a Massachusetts
corporation ("Parent"), Hadco Acquisition Corp., a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Sub"), and Zycon Corporation, a
Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have unanimously approved the acquisition of the Company by Parent, by means of
the merger of Sub with and into the Company, upon the terms and subject to the
conditions set forth in the Agreement;
WHEREAS, to effectuate the acquisition, Parent and the Company each desire
that Sub commence a cash tender offer to purchase all of the outstanding shares
of common stock, par value $.001 per share, of the Company ("Shares" or "Company
Common Stock"), upon the terms and subject to the conditions set forth in this
Agreement and the Offer Documents (as defined in Section 1.2), and the Board of
Directors of the Company has unanimously approved such tender offer and agreed
to recommend to its stockholders that they accept the tender offer and tender
their Company Common Stock pursuant thereto;
WHEREAS, as an inducement to Parent and Sub entering into this Agreement
(i) certain beneficial and record holders of the Company Common Stock are
entering into an agreement (the "Stockholders Agreement") providing for the
tender of their Shares pursuant to the Offer (as defined in Section 1.1) and
certain other matters with respect to their Shares and (ii) the Company has
approved the execution and delivery of the Stockholders Agreement by the parties
thereto; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger (as defined in Section 2.1) and also to prescribe various
conditions to consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
THE OFFER
1.1 THE OFFER. (a) Provided that none of the events set forth in EXHIBIT A
hereto shall have occurred and be continuing, as promptly as practicable (but in
any event not later than five business days after the public announcement of the
execution and delivery of this Agreement), Sub shall commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), an offer to purchase (the "Offer") all outstanding shares of
the Company Common Stock at a price of $18.00 per share, net to the seller in
cash (the
<PAGE> 8
"Offer Consideration"). The obligations of Parent and Sub to commence the Offer,
consummate the Offer, accept for payment and pay for shares of Company Common
Stock validly tendered in the Offer and not withdrawn shall be subject only to
those conditions set forth on EXHIBIT A hereto.
(b) Parent and Sub expressly reserve the right to amend or modify the
terms of the Offer, except that, without the prior written consent of the
Company, Sub shall not (and Parent shall not cause Sub to) (i) decrease the
Offer Consideration or change the form of consideration therefor or decrease the
number of Shares sought pursuant to the Offer, (ii) change, in any material
respect, the conditions to the Offer, (iii) impose additional material
conditions to the Offer, (iv) waive the condition that there shall be validly
tendered and not withdrawn prior to the time the Offer expires a number of
shares of Company Common Stock which constitutes a majority of the Shares
outstanding on a fully-diluted basis on the date of purchase ("on a
fully-diluted basis" having the following meaning, as of any date: the number of
shares of Company Common Stock outstanding, together with Shares which the
Company may be required to issue pursuant to obligations outstanding at that
date under employee stock option or similar benefit plans, or otherwise), (v)
extend the expiration date of the Offer (except that Sub may extend the
expiration date of the Offer (a) as required by law, (b) for up to ten (10)
business days after the initial expiration date or for longer periods (not to
exceed 90 calendar days from the date of commencement of the Offer) in the event
that any condition to the Offer is not satisfied), or (c) for one or more times
for an aggregate period of up to 15 days (not to exceed 90 calendar days from
the date of commencement for any reason other than those specified in the
immediately preceding clause (a) or clause (b)), or (vi) amend any term of the
Offer in any manner materially adverse to holders of shares of Company Common
Stock; PROVIDED, HOWEVER, that, except as set forth above, Sub may waive any
other condition to the Offer in its sole discretion and, PROVIDED FURTHER, that
the Offer may be extended in connection with an increase in the consideration to
be paid pursuant to the Offer so as to comply with applicable rules and
regulations of the United States Securities and Exchange Commission (the "SEC").
Assuming the prior satisfaction or waiver of the conditions to the Offer, Sub
shall accept for payment, and pay for, in accordance with the terms of the
Offer, all shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after the expiration date thereof.
The initial expiration date of the Offer shall be twenty business days from the
commencement of the Offer.
1.2 OFFER DOCUMENTS. As soon as practicable on the date of commencement of
the Offer, Parent and Sub shall file or cause to be filed with the SEC a Tender
Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with respect to the
Offer which shall contain the offer to purchase and related letter of
transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively with any supplements or amendments
thereto, the "Offer Documents") and shall contain (or shall be amended in a
timely manner to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable law, and shall conform in all material
respects with the requirements of the Exchange Act and any other applicable law;
PROVIDED, HOWEVER, that no agreement or representation hereby is made or shall
be made by Parent or Sub with respect to information supplied by the Company
expressly for
-2-
<PAGE> 9
inclusion in, or with respect to Company information derived from the Company's
public SEC filings that is included or incorporated by reference in, the Offer
Documents. Parent, Sub and the Company each agree promptly to correct any
information provided by them for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and Sub
further agrees to take all lawful action necessary to cause the Offer Documents
as so corrected to be filed promptly with the SEC and to be disseminated to
holders of Company Common Stock, in each case as and to the extent required by
applicable law. In conducting the Offer, Parent and Sub shall comply in all
material respects with the provisions of the Exchange Act and any other
applicable law. The Company and its counsel shall be given the opportunity to
review and comment on the Offer Documents and any amendments thereto prior to
the filing thereof with the SEC.
1.3 COMPANY ACTIONS. The Company hereby consents to the Offer and
represents that (a) its Board of Directors (at a meeting duly called and held)
has unanimously (i) determined that each of this Agreement, the Offer and the
Merger are fair to and in the best interests of the stockholders of the Company,
(ii) approved the execution, delivery and performance of this Agreement and the
Stockholders Agreement and the consummation of the transactions contemplated
hereby and thereby, including the Offer and the Merger, and such approval
constitutes approval of the foregoing for purposes of Section 203 of the
Delaware General Corporation Law, as amended (the "DGCL"), and (iii) after
considering its fiduciary duties under applicable law upon the advice of
counsel, resolved to recommend acceptance of the Offer, approval and adoption of
this Agreement and the Stockholders Agreement and approval of the Merger by the
holders of Company Common Stock, and (b) Needham & Company has delivered to the
Board of Directors of the Company its written opinion that the Offer
Consideration to be received by the holders of Company Common Stock in the Offer
is fair, from a financial point of view, to such holders. The Board of Directors
of the Company shall not withdraw, modify or amend its approval or
recommendation of the Offer, this Agreement, the Stockholders Agreement or the
Merger unless the Board of Directors of the Company shall conclude in good faith
upon the advice of counsel that such action is required under applicable law for
the discharge of such Board's fiduciary duties. The Company hereby consents to
the inclusion in the Offer Documents of the recommendation referred to in this
Section 1.3. The Company hereby agrees to file with the SEC simultaneously with
the filing by Parent and Sub of the Schedule 14D-1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing such
recommendations of the Board of Directors of the Company in favor of the Offer
and the Merger and otherwise complying with Rule 14d-9 under the Exchange Act.
The Schedule 14D-9 shall comply in all material respects with the Exchange Act
and any other applicable law and shall contain (or shall be amended in a timely
manner to contain) all information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations thereunder and
any other applicable law. The Company, Parent and Sub each agree promptly to
correct any information provided by them for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material respect
and the Company further agrees to take all lawful action necessary to cause the
Schedule 14D-9 as so corrected to be filed promptly with the SEC and
disseminated to the holders of Company Common Stock, in each case as and to the
extent required by applicable law. Parent, Sub and their counsel shall be given
an opportunity to
-3-
<PAGE> 10
review and comment on the Schedule 14D-9 and any amendments thereto prior to the
filing thereof with the SEC. In connection with the Offer, the Company shall
promptly furnish, or cause its transfer agent to furnish, Parent with mailing
labels, security position listings and all available listings or computer files
containing the names and addresses of the record holders of the Company Common
Stock as of the latest practicable date and shall furnish, or cause its transfer
agent to furnish, Parent with such information and assistance (including updated
lists of stockholders, mailing labels and lists of security positions) as Parent
or its agents may reasonably request in communicating the Offer to the record
and beneficial holders of Company Common Stock. Subject to the requirements of
applicable law, and except for such actions as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer and
the Merger, Parent and Sub and each of their affiliates, associates, partners,
employees, agents and advisors shall hold in confidence the information
contained in such labels and lists, shall use such information only in
connection with the Offer and the Merger, and, if this Agreement is terminated,
in accordance with its terms, shall deliver promptly to the Company all copies
of such information then in their possession or under their control.
1.4 DIRECTORS. (a) Promptly upon the purchase by Parent or any of its
subsidiaries of such number of shares of Company Common Stock which represents
at least 50.1% of the outstanding shares of Company Common Stock (on a fully-
diluted basis), and from time to time thereafter, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number as will
give Parent, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors of the Company equal to the product of
(x) the number of directors on the Board of Directors of the Company (giving
effect to any increase in the number of directors pursuant to this Section 1.4)
and (y) the percentage that such number of Shares so purchased bears to the
aggregate number of Shares outstanding (such number being, the "Board
Percentage"), and the Company shall, upon request by Parent, promptly satisfy
the Board Percentage by (i) increasing the size of the Board of Directors of the
Company or (ii) using its best efforts to secure the resignations of such number
of directors as is necessary to enable Parent's designees to be elected to the
Board of Directors of the Company and shall cause Parent's designees promptly to
be so elected. At the request of Parent, the Company shall take, at the
Company's expense, all lawful action necessary to effect any such election,
including, without limitation, mailing to its stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, unless such information has previously been provided to the
Company's stockholders in the Schedule 14D-9.
(b) Following the election or appointment of Parent's designees
pursuant to this Section 1.4 and prior to the Effective Time (as defined in
Section 2.3) of the Merger, any (i) amendment or termination of this Agreement,
(ii) extension for the performance or waiver of the obligations or other acts of
Parent or Sub, (iii) action which might affect the accuracy of the
representations and warranties under Article VI, or (iv) waiver of the Company's
rights thereunder shall require the concurrence of a majority of directors of
the Company then in office who are "Continuing Directors". The term "Continuing
Director" shall mean (i) each member of the Board of Directors of the Company on
the date hereof and (ii) any successor to any Continuing Director that was
recommended to succeed such Continuing Director by a majority of the Continuing
Directors then on the Board of Directors.
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<PAGE> 11
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL, Sub shall be merged (the
"Merger") with and into the Company at the Effective Time. At the Effective
Time, the separate corporate existence of Sub shall cease, and the Company shall
continue as the surviving corporation and a direct wholly-owned subsidiary of
Parent (Sub and the Company are sometimes hereinafter referred to as
"Constituent Corporations" and, as the context requires, the Company is
sometimes hereinafter referred to as the "Surviving Corporation"), and shall
continue under the name Zycon Corporation.
2.2 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.1, the closing of the Merger (the "Closing") shall take place at 10:00 a.m.,
New York time, as soon as practicable following satisfaction or waiver of the
conditions set forth in Article VII (the "Closing Date"), at the offices of
Testa, Hurwitz & Thibeault, LLP, 125 High Street, Boston, MA 02110, unless
another date, time or place is agreed to in writing by the parties hereto.
2.3 EFFECTIVE TIME OF THE MERGE. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware, as provided in the DGCL, as soon as practicable
on or after the Closing Date. The Merger shall become effective upon such filing
or at such time thereafter as is provided in the Certificate of Merger (the
"Effective Time").
2.4 EFFECTS OF THE MERGER. (a) The Merger shall have the effects as set
forth in the applicable provisions of the DGCL.
(b) The directors of Sub and the officers of the Company immediately
prior to the Effective Time shall, from and after the Effective Time, be the
initial directors and officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified, or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of the Company shall be amended
and restated in its entirety as set forth on EXHIBIT B hereto and, from and
after the Effective Time, such amended and restated Certificate of Incorporation
shall be the Certificate of Incorporation of the Surviving Corporation, until
duly amended in accordance with the terms thereof and the DGCL.
(d) The Bylaws of the Company shall be amended and restated in their
entirety as set forth on EXHIBIT C hereto and, from and after the Effective
Time, such amended
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<PAGE> 12
and restated Bylaws shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by applicable law, the Certificate of
Incorporation or the Bylaws.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of Company Common
Stock or the holder of any capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each share of the capital stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each share
of Company Common Stock and all other shares of capital stock of the Company
that are owned by the Company and all shares of Company Common Stock and other
shares of capital stock of the Company owned by Parent or Sub shall be canceled
and retired and shall cease to exist and no consideration shall be delivered or
deliverable in exchange therefor.
3.2 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of Sub, the Company or the holders of
any of the shares thereof:
(a) Subject to the other provisions of this Section 3.2, each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (excluding shares owned, directly or indirectly, by the Company or any
Subsidiary (as defined below) of the Company or by Parent, Sub or any other
Subsidiary of Parent and Dissenting Shares (as defined in Section 3.6)) shall be
converted into the right to receive the Offer Consideration, payable to the
holder thereof, without any interest thereon, less any required withholding
taxes (the "Merger Consideration"), upon surrender and exchange of the
Certificates (as defined in Section 3.3). As used in this Agreement the word
"Subsidiary", with respect to any party, means any corporation, partnership,
joint venture or other organization, whether incorporated or unincorporated
which is, directly or indirectly, controlled by such party. For the purposes of
this definition, "control" means the possession of the power to direct or cause
the direction of management and policies of such corporation, partnership, joint
venture or other organization, whether through the ownership of voting
securities, by contract or otherwise.
(b) All such shares of Company Common Stock, when converted as
provided in Section 3.2(a), no longer shall be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
Certificate previously evidencing Shares shall thereafter represent only the
right to receive the Merger Consideration. The holders of Certificates
previously evidencing Shares outstanding immediately prior to the Effective Time
shall cease to
-6-
<PAGE> 13
have any rights with respect to the Company Common Stock except as otherwise
provided herein or by law and, upon the surrender of Certificates in accordance
with the provisions of Section 3.3, shall only represent the right to receive
for their Shares, the Merger Consideration, without any interest thereon.
3.3 PAYMENT FOR SHARES. (a) Paying Agent. Prior to the Effective Time, Sub
shall appoint a United States bank or trust company (reasonably acceptable to
the Company) to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration, and Sub shall deposit or shall cause to be deposited with
the Paying Agent in a separate fund established for the benefit of the holders
of shares of Company Common Stock, for payment in accordance with this Article
III, through the Paying Agent (the "Payment Fund"), immediately available funds
in amounts necessary to make the payments pursuant to Section 3.2(a) and this
Section 3.3 to holders (other than the Company or any Subsidiary of the Company
or Parent, Sub or any other Subsidiary of Parent, or holders of Dissenting
Shares). The Paying Agent shall, pursuant to irrevocable instructions, pay the
Merger Consideration out of the Payment Fund.
The Paying Agent shall invest portions of the Payment Fund as Parent
directs in obligations of or guaranteed by the United States of America, in
commercial paper obligations receiving the highest investment grade rating from
both Moody's Investors Services, Inc. and Standard & Poor's Corporation, or in
certificates of deposit, bank repurchase agreements or banker's acceptances of
commercial banks with capital exceeding $1,000,000,000 (collectively, "Permitted
Investments"); PROVIDED, HOWEVER, that the maturities of Permitted Investments
shall be such as to permit the Paying Agent to make prompt payment to former
holders of Company Common Stock entitled thereto as contemplated by this
Section. Parent and the Surviving Corporation shall cause the Payment Fund to be
promptly replenished to the extent of any losses incurred as a result of
Permitted Investments. All earnings on Permitted Investments shall be paid to
the Surviving Corporation. If for any reason (including losses) the Payment Fund
is inadequate to pay the amounts to which holders of shares of Company Common
Stock shall be entitled under this Section 3.3, Parent and the Surviving
Corporation shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) PAYMENT PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall instruct the Paying Agent to
mail to each holder of record (other than the Company or any Subsidiary of the
Company or Parent, Sub or any other Subsidiary of Parent) of a Certificate or
Certificates which, immediately prior to the Effective Time, evidenced
outstanding shares of Company Common Stock (the "Certificates"), (i) a form of
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Paying Agent, and shall be in such form and have such
other provisions as the Surviving Corporation reasonably may specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment therefor. Upon surrender of a Certificate for cancellation to the
Paying Agent together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be paid in cash in an amount equal to the
product of (x) the number of shares of Company
-7-
<PAGE> 14
Common Stock represented by such Certificate and (y) the Merger Consideration,
and the Certificate so surrendered shall forthwith be canceled. Absolutely no
interest shall be paid or accrued on the Merger Consideration payable upon the
surrender of any Certificate. If payment is to be made to a person other than
the person in whose name the surrendered Certificate is registered, it shall be
a condition of payment that the Certificate so surrendered shall be promptly
endorsed or otherwise in proper form for transfer and that the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the surrendered
Certificate or established to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until surrendered in accordance
with the provisions of this Section 3.3(b), each Certificate (other than
Certificates representing Shares owned by Parent or any subsidiary of Parent or
held in the treasury of the Company) shall represent for all purposes only the
right to receive the Merger Consideration.
(c) TERMINATION OF PAYMENT FUND; INTEREST. Any portion of the Payment
Fund which remains undistributed to the holders of Company Common Stock for 180
days after the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any holders of Company Common Stock who have not theretofore
complied with this Article III and the instructions set forth in the letter of
transmittal mailed to such holder after the Effective Time shall thereafter look
only to the Surviving Corporation for payment of the Merger Consideration to
which they are entitled. All interest accrued in respect of the Payment Fund
shall inure to the benefit of and be paid to the Surviving Corporation.
(d) NO LIABILITY. Neither Parent nor the Surviving Corporation shall
be liable to any holder of shares of Company Common Stock for any cash from the
Payment Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(e) WITHHOLDING RIGHTS. The Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such amounts as the
Surviving Corporation is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by the Surviving Corporation, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by the Surviving Corporation.
3.4 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer books
of the Company shall be closed and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company. On or after the Effective Time, any certificates presented to the
Paying Agent or Parent for any reason shall be converted into the Merger
Consideration.
3.5 STOCK OPTIONS. At the Effective Time, each holder of a then outstanding
option to purchase Shares under the Company's 1993 Long-Term Equity Incentive
Plan and the Stock
-8-
<PAGE> 15
Option Plan for Directors (collectively, the "Stock Option Plans"), whether or
not then exercisable (the "Options"), shall, in settlement thereof, receive for
each Share subject to such Option an amount (subject to any applicable
withholding tax) in cash equal to the difference between the Offer Consideration
and the per Share exercise price of such Option to the extent such difference is
a positive number (such amount being hereinafter referred to as, the "Option
Consideration"); provided, however, that with respect to any person subject to
Section 16(a) of the Exchange Act, any such amount shall be paid as soon as
practicable after the first date payment can be made without liability to such
person under Section 16(b) of the Exchange Act. Upon receipt of the Option
Consideration, the Option shall be canceled. The surrender of an Option to the
Company in exchange for the Option Consideration shall be deemed a release of
any and all rights the holder had or may have had in respect of such Option.
Prior to the Effective Time, the Company shall obtain all necessary consents or
releases from holders of Options under the Stock Option Plans and take all such
other lawful action as may be necessary to give effect to the transactions
contemplated by this Section 3.5. All Stock Option Plans shall terminate as of
the Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any Subsidiary thereof shall be canceled as of
the Effective Time, and the Company shall take all action necessary to ensure
that following the Effective Time no participant in any Stock Option Plan or
other plans, programs or arrangements shall have any right thereunder to acquire
equity securities of the Company, the Surviving Corporation or any Subsidiary
thereof and to terminate all such plans.
3.6 DISSENTING SHARES. Notwithstanding any other provisions of this
Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such shares in
accordance with Section 262 of the DGCL (collectively, the "Dissenting Shares")
shall not be converted into or represent the right to receive the Merger
Consideration. Such stockholders instead shall be entitled to receive payment of
the appraised value of such shares of Company Common Stock held by them in
accordance with the provisions of such Section 262, except that all Dissenting
Shares held by stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such shares of Company
Common Stock under such Section 262 shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective Time, for
the right to receive, without any interest thereon, the Merger Consideration
upon surrender in the manner provided in Section 3.3, of the Certificate or
Certificates that, immediately prior to the Effective Time, evidenced such
shares of Company Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to Parent and Sub that, except as set forth in the schedule
corresponding to the sub paragraph number or letter below:
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(a) ORGANIZATION, STANDING AND POWER. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and in good
standing to conduct business in each jurisdiction in which the business it is
conducting, or the operation, ownership or leasing of its properties, makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify could not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect (as defined below) with respect to the
Company. The Company has heretofore made available to Parent complete and
correct copies of its and its Subsidiaries' respective Certificates of
Incorporation and Bylaws. All Subsidiaries of the Company and their respective
jurisdictions of incorporation or organization are identified on Schedule
4.1(a). As used in this Agreement: a "Material Adverse Effect" shall mean, with
respect to any party, the result of one or more events, changes or effects
which, individually or in the aggregate, would have a material adverse effect on
the business, operations, assets, condition (financial or otherwise) or
prospects of such party and its Subsidiaries, taken as a whole.
(b) CAPITAL STRUCTURE. As of the date hereof, the authorized capital
stock of the Company consists of 25,000,000 Shares and 25,000,000 shares of
Preferred Stock, $.001 par value ("Preferred Stock"). At the close of business
on the date of this Agreement: (i) 11,056,000 Shares were issued and
outstanding; (ii) no shares of Preferred Stock were issued and outstanding;
(iii) 1,000,000 Shares were reserved for issuance pursuant to the Stock Option
Plans of which 769,200 Shares are subject to outstanding Options; (iv) except
for the issuance of Shares pursuant to the exercise of the Options, there are no
employment, executive termination or similar agreements providing for the
issuance of Shares; (v) no Shares were held by the Company; and (vi) no bonds,
debentures, notes or other instruments or evidence of indebtedness having the
right to vote (or convertible into, or exercisable or exchangeable for,
securities having the right to vote) on any matters on which the Company
stockholders may vote ("Company Voting Debt") were issued or outstanding. All
outstanding Shares are validly issued, fully paid and nonassessable and are not
subject to preemptive or other similar rights. No Shares are owned by any
Subsidiary of the Company. Except as set forth on Schedule 4.1(b), all
outstanding shares of capital stock of the Subsidiaries of the Company are owned
by the Company or a direct or indirect Subsidiary (other than shares of
Subsidiaries held by nominees for which the Company maintains beneficial
ownership) of the Company, free and clear of all liens, charges, encumbrances,
claims and options of any nature. Except as set forth in this Section 4.1(b) and
except for changes resulting from the exercise of Options or as contemplated by
this Agreement, from and after the date hereof there will be outstanding: (i) no
shares of capital stock, Company Voting Debt or other voting securities of the
Company; (ii) no securities of the Company or any Subsidiary of the Company
convertible into, or exchangeable or exercisable for, shares of capital stock,
Company Voting Debt or other voting securities of the Company or any Subsidiary
of the Company; and (iii) no options, warrants, calls, rights (including
preemptive rights), commitments or agreements to which the Company or any
Subsidiary of the Company is a party or by which it is bound, in any case
obligating the Company or any Subsidiary of the Company to issue, deliver, sell,
purchase, redeem or acquire,
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or cause to be issued, delivered, sold, purchased, redeemed or acquired,
additional shares of capital stock or any Company Voting Debt or other voting
securities of the Company or of any Subsidiary of the Company, or obligating the
Company or any Subsidiary of the Company to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. The Company will not (i)
grant any options, warrants or rights to purchase shares of Company Common Stock
or (ii) amend or reprice any Option or Stock Option Plans, and set forth on
Schedule 4.1(b) is a list of all outstanding options, warrants and rights to
purchase shares of Company Common Stock and the exercise prices relating
thereto. Except for the Stockholders Agreement, there are not as of the date
hereof and there will not be at the Effective Time any stockholder agreements,
voting trusts or other agreements or understandings to which the Company is a
party or by which it is bound relating to the voting of any shares of the
capital stock of the Company which will limit in any way the solicitation of
proxies by or on behalf of the Company from, or the casting of votes by, the
stockholders of the Company with respect to the Merger. There are no
restrictions on the Company to vote the stock of any of its Subsidiaries.
(c) Authority; No Violations; Consents and Approvals
(i) The Company gave written notice of termination of the
Agreement and Plan of Merger (the "Prior Merger Agreement") dated as of November
30, 1996 among HMTF Acquisition Corp., PCB Acquisition Corp. and the Company
prior to 5:00 p.m. Pacific Time on December 4, 1996. Such termination was
validly given by the Company in accordance with the provisions of Section 8.1(g)
of the Prior Merger Agreement. The Company has given irrevocable instructions to
its bank to pay the termination fee required to be paid under such Section
8.1(g) and a representative of the Company's bank has given the Company oral
assurances that the amount will be paid to HMTF Acquisition Corp. prior to 9:00
a.m. Pacific Time on December 5, 1996. Subject only to HMTF Acquisition Corp.'s
receipt of such termination fee, the Prior Merger Agreement is void and of no
further effect.
(ii) The Company has all requisite corporate power and authority
to enter into this Agreement and, subject to the Company Stockholder Approval
(as defined in Section 4.1(c)(iv)), to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject, if required with respect
to consummation of the Merger, to the Company Stockholder Approval. This
Agreement has been duly executed and delivered by the Company and, subject, if
required with respect to consummation of the Merger, to the Company Stockholder
Approval, and assuming that this Agreement constitutes the valid and binding
agreement of Parent and Sub, constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms except that the enforcement
hereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Company will not
conflict with, or
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<PAGE> 18
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration (including pursuant to any put right) of any obligation or the loss
of a material benefit under, or the creation of a lien, pledge, security
interest or other encumbrance on assets or property, or right of first refusal
with respect to any asset or property (any such conflict, violation, default,
right of termination, cancellation or acceleration, loss, creation or right of
first refusal, a "Violation"), pursuant to any provision of the Certificate of
Incorporation or Bylaws of the Company or any of its Subsidiaries or, except as
to which requisite waivers or consents have been obtained and, except as set
forth on Schedule 4.1(c)(iii) hereto and assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in paragraph
(iii) of this Section 4.1(c) are duly and timely obtained or made and, if
required, the Company Stockholder Approval has been obtained, result in any
Violation except for Violations that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on the Company of
(A) any loan or credit agreement, note, mortgage, deed of trust, indenture,
lease, Company Employee Benefit Plan (as defined in Section 4.1(ii)), Company
Permit (as defined in Section 4.1(f)), or any other material agreement,
obligation, instrument, concession, franchise, or license, or (B) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any of its Subsidiaries or their respective properties or assets
(collectively, "Laws"). The Board of Directors of the Company has taken all
actions necessary under the DGCL, including approving the transactions
contemplated by this Agreement and the Stockholders Agreement, to ensure that
Section 203 of the DGCL does not, and will not, apply to the transactions
contemplated in this Agreement or the Stockholders Agreement.
(iv) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is required by
or with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, except for: (A) the filing
of a premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the expiration or termination of the applicable waiting period
thereunder; (B) the filing with the SEC of (x) a proxy statement (if required by
applicable law) in definitive form relating to a meeting of the holders of
Company Common Stock to approve the Merger (such proxy statement as amended or
supplemented from time to time being hereinafter referred to as the "Proxy
Statement"), (y) the Schedule 14D-9 in connection with the Offer, and (z) such
reports under and such other compliance with the Exchange Act and the rules and
regulations thereunder as may be required in connection with this Agreement and
the transactions contemplated hereby; (C) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware; (D) such filings
and approvals as may be required by any applicable state securities, "blue sky"
or takeover laws; and (E) the approval of this Agreement and the Merger by the
holders of a majority of the outstanding Shares ("Company Stockholder
Approval").
(d) SEC DOCUMENTS. The Company has made available to Parent a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement
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filed by the Company with the SEC prior to the date of this Agreement (the
"Company SEC Documents"), which are all the documents (other than preliminary
material) that the Company was required to file with the SEC since such date. As
of their respective dates, the Company SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Documents, and
none of the Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the Company SEC Documents complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and fairly present in accordance with applicable requirements of GAAP (subject,
in the case of the unaudited statements, to normal, recurring adjustments, which
will not be material, either individually or in the aggregate) the consolidated
financial position of the Company and its consolidated Subsidiaries as of their
respective dates and the consolidated results of operations and the consolidated
cash flows of the Company and its consolidated Subsidiaries for the periods
presented therein.
(e) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) any
of the Offer Documents will, at the time the Offer Documents are first
published, sent or given to holders of Company Common Stock, and at any time
they are amended or supplemented, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (ii) the Proxy Statement will, on the
date it is first mailed to the holders of the Company Common Stock or at the
time of the Company's Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the expiration date of the Offer or the Effective Time any event with respect to
the Company or any of its Subsidiaries, or with respect to other information
supplied by the Company for inclusion in the Offer Documents or the Proxy
Statement, shall occur which is required to be described in an amendment of, or
a supplement to, the Offer Documents or the Proxy Statement, as the case may be,
such event shall be so described, and such amendment or supplement shall be
promptly filed with the SEC and, as required by law, disseminated to the
stockholders of the Company. The Proxy Statement, insofar as it relates to the
Company or its Subsidiaries or other information supplied by the Company for
inclusion therein will comply as to form, in all material respects, with the
provisions of the Exchange Act or the rules and regulations thereunder.
(f) COMPLIANCE WITH APPLICABLE LAWS. The Company and its Subsidiaries
hold all material permits, licenses, variances, exemptions, orders, franchises
and approvals of all Governmental Entities necessary to enable them to conduct
their respective businesses (the
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<PAGE> 20
"Company Permits"), and the Company and its Subsidiaries are in material
compliance with the terms of the Company Permits. Except as disclosed in the
Company SEC Documents, the businesses of the Company and its Subsidiaries are
not being conducted in material violation of any law, ordinance or regulation of
any Governmental Entity. As of the date of this Agreement, no investigation or
review by any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, threatened.
(g) LITIGATION. Except as disclosed in the Company SEC Documents (i)
there is no suit, action or proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Subsidiary of the
Company ("Company Litigation"), and (ii) the Company and its Subsidiaries have
no knowledge (after due inquiry) of any facts which are reasonably likely to
give rise to any Company Litigation which in the case of (i) or (ii) is
reasonably likely to have a Material Adverse Effect with respect to the Company,
nor is there any material judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any
Subsidiary of the Company ("Company Order").
(h) TAXES. Except as set forth on Schedule 4.1(h) hereto:
(i) All Tax Returns required to be filed by or with respect to
the Company and each of its Subsidiaries have been duly and timely filed, and
all such Tax Returns are true, correct and complete in all material respects.
The Company and each of its Subsidiaries has duly and timely paid (or there has
been paid on its behalf) all Taxes that are due, or claimed or asserted by any
taxing authority to be due, from or with respect to it. With respect to any
period for which Taxes are not yet due with respect to the Company or any
Subsidiary, the Company and each of its Subsidiaries has made due and sufficient
current accruals for such Taxes in accordance with GAAP in the most recent
financial statements contained in the Company SEC Documents. The Company and
each of its Subsidiaries has made (or there has been made on its behalf) all
required estimated Tax payments sufficient to avoid any underpayment penalties.
The Company and each of its Subsidiaries has withheld and paid all Taxes
required by all applicable laws to be withheld or paid in connection with any
amounts paid or owing to any employee, creditor, independent contractor or other
third party.
(ii) There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitation applicable to any
claim for, or the period for the collection or assessment of, Taxes due from or
with respect to the Company or any of its Subsidiaries for any taxable period.
No audit or other proceeding by any court, governmental or regulatory authority,
or similar person is pending or threatened in regard to any Taxes due from or
with respect to the Company or any of the Subsidiaries or any Tax Return filed
by or with respect to the Company or any Subsidiary. No assessment of Taxes is
proposed against the Company or any of its Subsidiaries or any of their assets.
(iii) No election under Section 338 of the Code has been made or
filed by or with respect to the Company or any of its Subsidiaries. No consent
to the application of Section 341(f)(2) of the Code (or any predecessor
provision) has been made or filed by or with respect to the Company or any of
its Subsidiaries or any of their assets. None of the Company or
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<PAGE> 21
any of its Subsidiaries has agreed to make any adjustment pursuant to Section
481(a) of the Code (or any predecessor provision) by reason of any change in any
accounting method, and there is no application pending with any taxing authority
requesting permission for any changes in any accounting method of the Company or
any of its Subsidiaries. None of the assets of the Company or any of its
Subsidiaries is or will be required to be treated as being owned by any person
(other than the Company or its Subsidiaries) pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately before the enactment of the Tax Reform Act of 1986.
(iv) None of the Company or any of its Subsidiaries is a party
to, is bound by, or has any obligation under, any Tax sharing agreement, Tax
allocation agreement or similar contract.
(v) There is no contract, agreement, plan or arrangement covering
any person that, individually or collectively, could give rise to the payment of
any amount that would not be deductible by the Company or any of its
Subsidiaries by reason of Section 280G of the Code.
(vi) Schedule 4.1(h) accurately sets forth (i) the amount of all
deferred intercompany gains for purposes of Treasury Regulation section
1.1502-13 (including any predecessor regulation) with respect to the Company and
its Subsidiaries; and (ii) the amount of any excess loss account with respect to
the stock of each of the Subsidiaries for purposes of Treasury Regulation
section 1.1502-19 (including any predecessor regulation).
(vii) "Code" shall mean the Internal Revenue Code of 1986, as
amended. "Taxes" shall mean all taxes, charges, fees, levies, or other similar
assessments or liabilities, including without limitation (a) income, gross
receipts, ad valorem, premium, excise, real property, personal property, sales,
use, transfer, withholding, employment, payroll, and franchise taxes imposed by
the United States of America, or by any state, local, or foreign government, or
any subdivision, agency, or other similar person of the United States or any
such government; and (b) any interest, fines, penalties, assessments, or
additions to taxes resulting from, attributable to, or incurred in connection
with any Tax or any contest, dispute, or refund thereof. "Tax Returns" shall
mean any report, return, or statement required to be supplied to a taxing
authority in connection with Taxes.
(i) Pension and Benefit Plans; ERISA.
(i) Schedule 4.1(i)(i) sets forth a complete and correct list of:
(A) all "employee benefit plans", as defined in Section 3(3)
of ERISA, which Company or any of its Subsidiaries has any obligation or
liability, contingent or otherwise ("Benefit Plans"); and
(B) all employment or consulting agreements, bonus or other
incentive compensation, deferred compensation, salary continuation during any
absence from
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active employment for disability or other reasons, severance, sick days, stock
award, stock option, stock purchase, tuition assistance, club membership,
employee discount, employee loan, or vacation pay agreements, policies or
arrangements which Company or any of its Subsidiaries maintains or has any
obligation or liability (contingent or otherwise) with respect to any current or
former officer, director or employee of Company or any of its Subsidiaries (the
"Employee Arrangements").
(ii) With respect to each Benefit Plan and Employee Arrangement,
a complete and correct copy of each of the following documents (if applicable)
has been provided to Purchaser: (A) the most recent plan and related trust
documents, and all amendments thereto; (B) the most recent summary plan
description, and all related summaries of material modifications thereto; (C)
the most recent Form 5500 (including schedules and attachments); (D) the most
recent Internal Revenue Service determination letter; (E) the most recent
actuarial reports (including for purposes of Financial Accounting Standards
Board report no. 87, 106 and 112) and (F) each written employment, consulting or
individual severance or other compensation agreement, and all amendments
thereto.
(iii) Company and its Subsidiaries have not during the preceding
six years had any obligation or liability (contingent or otherwise) with respect
to a Benefit Plan which is described in Section 3(37), 4(b)(4), 4063 or 4064 of
ERISA.
(iv) The Benefit Plans and their related trusts intended to
qualify under Sections 401 and 501(a) of the Code, respectively, so qualify. Any
voluntary employee benefit association which provides benefits to current or
former employees of the Company and its Subsidiaries, or their beneficiaries, is
and has been qualified under Section 501(c)(9) of the Code.
(v) All contributions or other payments required to have been
made by Company and its Subsidiaries to or under any Benefit Plan or Employee
Arrangement by applicable law or the terms of such Benefit Plan or Employee
Arrangement (or any agreement relating thereto) have been timely and properly
made.
(vi) The Benefit Plans and Employee Arrangements have been
maintained and administered in all material respects in accordance with their
terms and applicable laws.
(vii) There are no pending or, to the knowledge of Company and
its Subsidiaries, threatened actions, claims or proceedings against or relating
to any Benefit Plan or Employee Arrangement other than routine benefit claims by
persons entitled to benefits thereunder.
(viii) Company and its Subsidiaries do not maintain or have an
obligation to contribute to retiree life or retiree health plans which provide
for continuing benefits or coverage for current or former officers, directors or
employees of the Company or any of its Subsidiaries except (A) as may be
required under Part 6 of Title I of ERISA and at the sole
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<PAGE> 23
expense of the participant or the participant's beneficiary or (B) a medical
expense reimbursement account plan pursuant to Section 125 of the Code.
(ix) None of the assets of any Benefit Plan is stock of the
Company or any of its affiliates, or property leased to or jointly owned by the
Company or any of its affiliates.
(x) Except as disclosed in Schedule 4.1(i)(x) or in connection
with equity compensation, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (A) result in
any payment becoming due to any employee (current, former or retired) of Company
and its Subsidiaries, (B) increase any benefits under any Benefit Plan or
Employee Arrangement or (C) result in the acceleration of the time of payment
of, vesting of or other rights with respect to any such benefits.
(xi) Company and its Subsidiaries have no liability (contingent
or otherwise) under Section 4069 of ERISA by reason of a transfer of an
underfunded pension plan.
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Company SEC Documents filed after September 30, 1996 or as contemplated by this
Agreement, since September 30, 1996, the business of the Company and its
Subsidiaries has been carried on only in the ordinary and usual course and there
has not been any material adverse changes (either individually or in the
aggregate) in the business, operations, assets, condition (financial or
otherwise) or prospects of the Company.
(k) NO UNDISCLOSED MATERIAL LIABILITIES. To the Company's knowledge,
except as specifically and individually set forth on Schedule 4.1(k) or the
other schedules hereto (specific reference to which has been made on Schedule
4.1(k)), there are no liabilities of the Company or any Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, that are material to the Company and its Subsidiaries considered as a
whole other than: (i) liabilities reflected on the Consolidated Condensed
Balance Sheet of the Company and its Subsidiaries contained in the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996 (the "September 30
Balance Sheet"); and (ii) liabilities under this Agreement.
(l) VOTE REQUIRED. In the event that Section 253 of the DGCL is
inapplicable and unavailable to effectuate the Merger, the affirmative vote of
the holders of a majority of the outstanding shares of Company Common Stock is
the only vote of the holders of any class or series of the Company's capital
stock necessary (under applicable law or otherwise) to approve the Merger and
this Agreement and the transactions contemplated hereby.
(m) Labor Matters.
(i) Neither the Company nor any of its Subsidiaries is a party to
any labor or collective bargaining agreement, and no employees of Company or any
of its Subsidiaries are represented by any labor organization. Within the
preceding three years, there have been no representation or certification
proceedings, or petitions seeking a representation
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proceeding, pending or, to the knowledge of the Company, threatened in writing
to be brought or filed with the National Labor Relations Board or any other
labor relations tribunal or authority. Within the preceding three years, to the
knowledge of Company, there have been no organizing activities involving Company
and its Subsidiaries with respect to any group of employees of Company or any of
its Subsidiaries.
(ii) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor disputes
pending or threatened in writing against or involving Company or any of its
Subsidiaries. There are no unfair labor practice charges, grievances or
complaints pending or, to the knowledge of Company, threatened in writing by or
on behalf of any employee or group of employees of Company or any of its
Subsidiaries.
(iii) There are no material complaints, charges or claims against
Company or any of its Subsidiaries pending or, to the knowledge of Company,
threatened to be brought or filed with any governmental authority, arbitrator or
court based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment of any individual by Company or any of
its Subsidiaries.
(iv) Each of the Company and its Subsidiaries is in material
compliance with all laws, regulations and orders relating to the employment of
labor, including all such laws, regulations and orders relating to wages, hours,
WARN (as defined below), collective bargaining, discrimination, civil rights,
safety and health, workers' compensation and the collection and payment of
withholding and/or social security taxes and any similar tax except for
immaterial non-compliance.
(v) There has been no "mass layoff" or "plant closing" as defined
by the Worker Adjustment Retraining and Notification Act, as amended ("WARN"),
with respect to Company and its Subsidiaries within the six (6) months prior to
Closing.
(n) Intangible Property.
(i) Schedule 4.1(n) sets forth a list of each material trademark,
trade name, patent, service mark, brand mark, brand name, computer program,
database, industrial design and copyright owned, used or useful in connection
with the operation of the businesses of each of the Company and its Subsidiaries
as well as a list of all registrations thereof and pending applications
therefor, and each license or other contract relating thereto (collectively, the
"Company Intangible Property"). Except as set forth on Schedule 4.1(n), all of
the Company Intangible Property is in good standing and is owned by the Company
or its Subsidiaries free and clear of any and all liens, claims or encumbrances.
Except as set forth on Schedule 4.1(n), to the knowledge of the Company, the use
of the Company Intangible Property by the Company or its Subsidiaries does not,
in any material respect, conflict with, infringe upon, violate or interfere with
or constitute an appropriation of any right, title, interest or goodwill,
including, without limitation, any intellectual property right, trademark, trade
name, patent, service mark, brand mark, brand name, computer program, database,
industrial design, copyright or any pending
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application therefor of any other person and there have been no claims made and
neither the Company nor any of its Subsidiaries has received any notice of any
claim or otherwise knows that any of the Company Intangible Property is invalid
or conflicts with the asserted rights of any other person or has not been used
or enforced or has failed to be used or enforced in a manner that would result
in the abandonment, cancellation or unenforceability of any of the Company
Intangible Property.
(ii) Each of the Company and its Subsidiaries owns or has a right
to use all material Company Intangible Property necessary for the operation of
its respective business and has not forfeited or otherwise relinquished any
material Company Intangible Property.
(iii) Except as set forth on Schedule 4.1(n), each of the
material licenses or other contracts relating to the Company Intangible Property
(collectively, the "Company Intangible Property Licenses") is in full force and
effect and is valid and enforceable in accordance with its terms, and there is
no material default under any Company Intangible Property License either by the
Company or any of its Subsidiaries or, to the knowledge of the Company, by any
other party thereto.
(o) Environmental Matters.
(i) For purposes of this Agreement:
(A) "Environmental Costs and Liabilities" means any and all
losses, liabilities, obligations, damages, fines, penalties, judgments, actions,
claims, costs and expenses (including, without limitation, fees, disbursements
and expenses of legal counsel, experts, engineers and consultants and the costs
of investigation and feasibility studies and clean up, remove, treat, or in any
other way address any Hazardous Materials) arising from or under any
Environmental Law.
(B) "Environmental Law" means any applicable law regulating
or prohibiting Releases into any part of the natural environment, or pertaining
to the protection of natural resources, the environment and public and employee
health and safety including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA") (42 U.S.C. [section] 9601
ET SEQ.), the Hazardous Materials Transportation Act (49 U.S.C. [section] 1801
ET SEQ.), the Resource Conservation and Recovery Act (42 U.S.C. [section] 6901
ET SEQ.), the Clean Water Act (33 U.S.C. [section] 1251 ET SEQ.), the Clean Air
Act (33 U.S.C. [section] 7401 ET SEQ.), the Toxic Substances Control Act (15
U.S.C. [section] 7401 ET SEQ.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. [section] 136 ET SEQ.), and the Occupational Safety
and Health Act (29 U.S.C. [section] 651 ET SEQ.) ("OSHA") and the regulations
promulgated pursuant thereto, and any such applicable state or local statutes,
including, without limitation, the Industrial Site Recovery Act ("ISRA"), and
the regulations promulgated pursuant thereto, as such laws have been and may be
amended or supplemented through the Closing Date;
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(C) "Hazardous Material" means any substance, material or
waste which is regulated by any public or governmental authority in the
jurisdictions in which the applicable party or its Subsidiaries conducts
business, or the United States, including, without limitation, any material or
substance which is defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or "restricted hazardous
waste," "contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law and shall also include, without limitation, petroleum,
petroleum products, asbestos, polychlorinated biphenyls and radioactive
materials;
(D) "Release" means any release, spill, effluent, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching,
or migration into the indoor or outdoor environment, or into or out of any
property; and
(E) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a governmental entity or
required under any Environmental Law, or voluntarily undertaken to (I) clean up,
remove, treat, or in any other way ameliorate or address any Hazardous Materials
or other substance in the indoor or outdoor environment; (II) prevent the
Release or threat of Release, or minimize the further Release of any Hazardous
Material so it does not endanger or threaten to endanger the public health or
welfare of the indoor or outdoor environment; (III) perform pre-remedial studies
and investigations or post-remedial monitoring and care pertaining or relating
to a Release; or (IV) bring the applicable party into compliance with any
Environmental Law.
Except as set forth in the SEC Documents or Schedule 4.1(o):
(ii) The operations of the Company and its Subsidiaries have been
and, as of the Closing Date, will be, in compliance in all material respects
with all Environmental Laws;
(iii) The Company and its Subsidiaries have obtained and will, as
of the Closing Date, maintain all permits required under applicable
Environmental Laws for the continued operations of their respective businesses,
except such permits the lack of which would not materially impair the ability of
the Company and its Subsidiaries to continue operations;
(iv) The Company and its Subsidiaries are not subject to any
outstanding written orders or material contracts with any Governmental Entity or
other person respecting (A) Environmental Laws, (B) Remedial Action or (C) any
Release or threatened Release of a Hazardous Material;
(v) The Company and its Subsidiaries have not received any
written communication alleging, with respect to any such party, the violation of
or liability under any Environmental Law, which violation or liability is
outstanding;
(vi) Neither the Company nor any of its Subsidiaries has any
contingent liability in connection with the Release of any Hazardous Material
into the indoor or
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outdoor environment (whether on-site or off-site) which would
be reasonably likely to result in the Company and its Subsidiaries incurring
Environmental Costs and Liabilities in excess of $250,000;
(vii) There is not now, nor to the knowledge of the Company has
there been in the past, on or in any property of the Company or its Subsidiaries
any of the following: (A) any underground storage tanks or surface impoundments,
(B) any asbestos-containing materials, or (C) any polychlorinated biphenyls;
(viii) No judicial or administrative proceedings are pending or,
to the knowledge of the Company, threatened against the Company and its
Subsidiaries alleging the violation of or seeking to impose liability pursuant
to any Environmental Law and there are no investigations pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries under Environmental Laws;
(ix) None of the exceptions set forth on Schedule 4.1(o) are
reasonably likely to result in the Company and its Subsidiaries incurring
Environmental Costs and Liabilities in excess of $250,000 individually or
$500,000 in the aggregate; and
(x) The Company and its Subsidiaries have provided Parent with
copies of all environmentally related audits, assessments, studies, reports,
analyses, and results of investigations prepared within the past 5 years of any
real property currently or formerly owned, operated or leased by the Company or
its Subsidiaries that are in the possession, custody or control of the Company
or any of its Subsidiaries.
(p) Real Property.
(i) Neither the Company nor any of its Subsidiaries owns any real
property, other than Company's Malaysian subsidiary's interest, if any, in the
improvements located on the real property leased by such subsidiary.
(ii) Schedule 4.1(p)(ii) sets forth all leases, subleases and
other agreements (the "Real Property Leases") under which the Company or any of
its Subsidiaries uses or occupies or has the right to use or occupy, now or in
the future, any real property. The Company has heretofore delivered to Parent
true, correct and complete copies of all Real Property Leases (including all
modifications, amendments and supplements hereto). Each Real Property Lease is
valid, binding and in full force and effect, all rent and other sums and charges
payable by the Company and its Subsidiaries as tenants thereunder are current,
no termination event or condition or uncured default of a material nature on the
part of the Company or any such Subsidiary or, to the Company's knowledge, the
landlord, exists under any Real Property Lease. Each of the Company and its
Subsidiaries has a good and valid leasehold interest in each parcel of real
property leased by it free and clear of all mortgages, pledges, liens,
encumbrances and security interests, except (i) those reflected or reserved
against in the September 30 Balance Sheet; (ii) taxes and general and special
assessments not in default and payable without penalty
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and interest; (iii) superior rights of lessors' lenders as permitted by such
leases; and (iv) as set forth on Schedule 4.1(p)(ii).
(q) INSURANCE. Set forth on Schedule 4.1(q) is a list and description
of insurance policies (including information on the premiums payable in
connection therewith and the scope and amount of the coverage and deductibles
provided thereunder) maintained by the Company or any of its Subsidiaries which
policies have been issued by reputable and financially sound insurers and
provide adequate coverage for the operations conducted by the Company and its
Subsidiaries in accordance with customary industry practice.
(r) BOARD RECOMMENDATION. The Board of Directors of the Company,
at a meeting duly called and held, has by the vote of those directors present
(who constituted 100% of the directors then in office) (i) determined that this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, and the execution and delivery of the Stockholders Agreement and the
transactions contemplated thereby, taken together, are fair to and in the best
interests of the stockholders of the Company and has approved the same, and (ii)
resolved to recommend that the holders of the shares of Company Common Stock
approve this Agreement and the transactions contemplated herein, including the
Merger, and accept the Offer and tender their shares of Company Common Stock
pursuant thereto.
(s) MATERIAL CONTRACTS. Each contract, agreement or other document or
instrument (collectively "SEC Contracts") to which the Company or any of its
Subsidiaries is a party that was required to be filed as an exhibit to the
Company's annual report on Form 10-K for the year ended December 31, 1995 was so
filed and, neither the Company nor any of its Subsidiaries (A) has entered into,
from and after December 31, 1995, any contract, agreement or other document or
instrument (other than this Agreement) that is required to be filed with the SEC
that has not been so filed on or before the date of this Agreement or any
amendment, modification or waiver under any contract, agreement or other
document or instrument that was previously so filed, which amendment,
modification or waiver is required to be so filed (collectively "Additional SEC
Contracts") or (B) except as listed on Schedule 4.1(s), is a party to any oral
or written agreement, plan or arrangement with any officer, director or employee
of the Company or any Subsidiary of the Company (collectively "Material
Employment Contracts" and together with the SEC Contracts and Additional SEC
Contracts, the "Material Contracts") (1) the benefits of which are contingent,
or the terms of which are materially altered, upon the occurrence of a
transaction involving the Company of the nature of any of the transactions
contemplated by this Agreement, (2) providing severance benefits or other
benefits after the termination of employment regardless of the reason for such
termination of employment, (3) under which any person may receive payments
subject to the tax imposed by Section 4999 of the Code, or (4) any of the
benefits of which will be increased, or by vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement. Except as set
forth on Schedule 4.1(s), each Material Contract is a valid and binding
obligation of the parties thereto and is in full force and effect without
amendment. Except as set forth on Schedule 4.1(s), each party has performed all
obligations required to be performed by it through the date hereof under the
Material Contracts
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and is not (with or without lapse of time or giving notice, or both) in breach
or default in any respect thereunder.
(t) RELATED PARTY TRANSACTIONS. Except as set forth on Schedule 4.1(t)
hereto, no director, officer, partner, employee, "affiliate" or "associate" (as
such terms are defined in Rule 12b-2 under the Exchange Act) of the Company or
any of its Subsidiaries (i) has outstanding any indebtedness or other similar
obligations to the Company or any of its Subsidiaries; (ii) to the knowledge of
the Company, owns any direct or indirect interest of any kind in, or is a
director, officer, employee, partner, affiliate or associate of, or consultant
or lender to, or borrower from, or has the right to participate in the
management, operations or profits of, any person or entity which is (1) a
competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor
of the Company or any of its Subsidiaries, (2) engaged in a business related to
the business of the Company or any of its Subsidiaries or (3) participating in
any transaction to which the Company or any of its Subsidiaries is a party or
(iii) is otherwise a party to any contract, arrangement or understanding with
the Company or any of its Subsidiaries.
(u) INDEBTEDNESS. Except as set forth on Schedule 4.1(u), or reflected
in the SEC Documents or the Company's financial statements provided to Parent,
neither the Company nor any of its Subsidiaries has any outstanding indebtedness
for borrowed money or representing the deferred purchase price of property or
services or similar liabilities or obligations, including any guarantee in
respect thereof ("Indebtedness"), or is a party to any agreement, arrangement or
understanding providing for the creation, incurrence or assumption thereof.
(v) LIENS. Except as set forth on Schedule 4.1(v) or reflected in the
SEC Documents or in the Company's financial statements provided to Parent,
neither the Company nor any of its Subsidiaries has granted, created or suffered
to exist with respect to any of its assets, any mortgage, pledge, charge,
hypothecation, collateral assignment, lien (statutory or otherwise), encumbrance
or security agreement of any kind or nature whatsoever.
4.2 REPRESENTATIONS, WARRANTIES, AND COVENANTS OF PARENT AND SUB. Parent
and Sub represent and warrant and as provided in paragraphs (f), (g), or (h)
covenant to the Company as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation or organization, has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing to conduct
business in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure so to qualify
would not have a Material Adverse Effect with respect to Parent. Parent and Sub
have heretofore made available to the Company complete and correct copies of
their respective Certificates of Incorporation and Bylaws.
(b) AUTHORITY; NO VIOLATIONS; CONSENTS AND APPROVALS.
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(i) Each of Parent and Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parent and Sub. This Agreement
has been duly executed and delivered by each of Parent and Sub and assuming this
Agreement constitutes the valid and binding agreement of the Company,
constitutes a valid and binding obligation of Parent and Sub enforceable in
accordance with its terms except that the enforcement hereof may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by each of Parent and Sub
will not result in any Violation (as defined in Section 4.1(c)(ii)) pursuant to
any provision of the respective Articles or Certificates of Incorporation or
Bylaws of Parent or Sub or, except as to which requisite waivers or consents
have been obtained and assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in paragraph (iii) of this
Section 4.2(b) are duly and timely obtained or made and, if required, the
Company Stockholder Approval has been obtained, result in any Violation of any
loan or credit agreement, note, mortgage, indenture, lease, or other agreement,
obligation, instrument, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or Sub or their
respective properties or assets, which would have a Material Adverse Effect with
respect to Parent.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity, is required by or with respect to Parent or Sub in
connection with the execution and delivery of this Agreement by each of Parent
and Sub or the consummation by each of Parent or Sub of the transactions
contemplated hereby, except for: (A) filings under the HSR Act; (B) the filing
with the SEC of (x) the Schedule 14D-1 in connection with the commencement and
consummation of the Offer and (y) such reports under and such other compliance
with the Exchange Act and the rules and regulations thereunder, as may be
required in connection with this Agreement and the transactions contemplated
hereby; (C) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware; and (D) such filings and approvals as may be required
by any applicable state securities, "blue sky" or takeover laws.
(c) Information Supplied. None of the information supplied or to
be supplied by Parent or Sub for inclusion or incorporation by reference in (i)
the Schedule 14D-9 will, at the time the Schedule 14D-9 is filed with the SEC,
and at any time it is amended or supplemented, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (ii) the Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the time of the
Company Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be
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stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Parent or Sub, or with
respect to information supplied by Parent or Sub for inclusion in the Schedule
14D-9 or the Proxy Statement, shall occur which is required to be described in
an amendment of, or a supplement to, such documents, such event shall be so
described to the Company.
(d) BOARD RECOMMENDATION. The Boards of Directors of the Parent and
Sub at meetings duly called and held, has by the unanimous vote of their
directors determined that each of the Offer and the Merger is fair to and in the
best interests of Parent and Sub and has approved the same.
(e) FINANCING. Parent and Sub have delivered to the Company true and
complete copies of commitments obtained by Parent and Sub from third parties in
respect of the debt financing for the transactions contemplated hereby.
(f) CHANGES IN FINANCING. Parent and Sub will as promptly as
practicable notify the Company of any material fact, act or omission known to
either Parent or Sub which would reasonably be likely to affect the ability or
obligation of Bank of Boston or any other person providing debt financing
to provide the financing necessary to consummate the Offer or the Merger.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to the
Company and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement, or to the extent that Parent shall otherwise consent in
writing):
(a) ORDINARY COURSE. Each of the Company and its Subsidiaries shall
carry on its businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and shall use all
reasonable efforts to preserve intact its present business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall not be impaired in
any material respect at the Effective Time.
(b) DIVIDENDS; CHANGES IN STOCK. The Company shall not, nor shall it
permit any of its Subsidiaries to: (i) declare or pay any dividends on or make
other distributions in respect of any of its capital stock; (ii) split, combine
or reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; or (iii) repurchase or otherwise acquire, or
permit any Subsidiary to purchase or otherwise acquire, any shares of its
capital stock, except as required by
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the terms of its securities outstanding on the date hereof, as contemplated by
this Agreement or as contemplated by employee benefit and dividend reinvestment
plans as in effect on the date hereof.
(c) ISSUANCE OF SECURITIES. The Company shall not, nor shall it permit
any of its Subsidiaries to, (i) grant any options, warrants or rights, to
purchase shares of Company Common Stock, (ii) amend or reprice any Option or
Stock Option Plan, or (iii) issue, deliver or sell, or authorize or propose to
issue, deliver or sell, any shares of its capital stock of any class or series,
any Company Voting Debt or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, Company Voting Debt or
convertible securities, other than: (A) the issuance of Shares upon the exercise
of Options granted under Stock Option Plans which are outstanding on the date
hereof, or in satisfaction of stock grants or stock based awards made prior to
the date hereof pursuant to Stock Option Plans or based upon any individual
agreements such as employment agreements or executive termination agreements (in
each such case, as in effect on the date hereof); and (B) issuances by a
wholly-owned Subsidiary of its capital stock to its parent.
(d) GOVERNING DOCUMENTS. The Company shall not amend or propose to
amend its Certificate of Incorporation or Bylaws.
(e) NO SOLICITATION. From and after the date hereof until the
termination of this Agreement, neither the Company or any of its Subsidiaries,
nor any of their respective officers, directors, employees, representatives,
agents or affiliates (including, without limitation, any investment banker,
attorney or accountant retained by the Company or any of its Subsidiaries) (such
officers, directors, employees, representatives, agents, affiliates, investment
bankers, attorneys and accountants being referred to herein, collectively, as
"Representatives"), will, directly or indirectly, initiate, solicit or encourage
(including by way of furnishing information or assistance to any person making,
or as a result thereof may reasonably be expected to lead to, any Acquisition
Proposal), or take any other action to facilitate, any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, and neither the Company nor any of its Subsidiaries will
authorize or permit any of its Representatives to take any such action, and the
Company shall notify Parent orally (within one business day) and in writing (as
promptly as practicable) of all of the relevant details relating to, and all
material aspects of, all inquiries and proposals which it or any of its
Subsidiaries or any of their respective Representatives may receive relating to
any of such matters and, if such inquiry or proposal is in writing, the Company
shall deliver to Parent a copy of such inquiry or proposal promptly; provided,
however, that nothing contained in this Section 5.1(e) shall prohibit the Board
of Directors of the Company from:
(i) furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited written, bona
fide Acquisition Proposal and in respect of which such person or entity has, or
in the reasonable and good faith
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opinion of the Board of Directors or its Representatives, will have the
necessary funds or commitments therefor if, and only to the extent that, (A) the
Board of Directors of the Company, after consultation with and based upon the
advice of independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that such action is
necessary for the Board of Directors of the Company to comply with its fiduciary
duties to stockholders under applicable law, (B) prior to taking such action,
the Company (x) provides reasonable prior notice to Parent to the effect that it
is taking such action and (y) receives from such person or entity an executed
confidentiality agreement in reasonably customary form, and (C) the Company
shall, unless prohibited by its fiduciary duty to its stockholders, promptly and
continuously advise Parent as to all of the relevant details relating to, and
all material aspects, of any such discussions or negotiations, or
(ii) failing to make or withdrawing or modifying its
recommendation referred to in Section 4.1 if there exists an Acquisition
Proposal and the Board of Directors of the Company, after consultation with and
based upon the advice of independent legal counsel (who may be the Company's
regularly engaged independent counsel), determines in good faith that such
action is necessary for the Board of Directors of the Company to comply with its
fiduciary duties to stockholders under applicable law.
For purposes of this Agreement, "Acquisition Proposal" shall mean any of the
following (other than the transactions between the Company, Parent and Sub
contemplated hereunder) involving the Company or any of its Subsidiaries: (i)
any merger, consolidation, share exchange, recapitalization, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 10% or more of the assets of
the Company and its Subsidiaries, taken as a whole, in a single transaction or
series of transactions; (iii) any tender offer or exchange offer for 10% or more
of the outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act in connection therewith; or (iv)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
(f) NO ACQUISITIONS. The Company shall not, nor shall it permit any of
its Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof.
(g) NO DISPOSITIONS. Other than dispositions in the ordinary course of
business consistent with past practice which are not material, individually or
in the aggregate, to such party and its Subsidiaries taken as a whole, the
Company shall not, nor shall it permit any of its Subsidiaries to, sell, lease,
encumber or otherwise dispose of, or agree to sell, lease (whether such lease is
an operating or capital lease), encumber or otherwise dispose of, any of its
assets.
(h) SEC FILINGS. The Company shall promptly provide Parent (or its
counsel) with copies of all filings made by the Company with the SEC or any
other state or federal
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<PAGE> 34
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
(i) NO DISSOLUTION, ETC. Except as otherwise permitted or contemplated
by this Agreement, the Company shall not, nor shall it permit any of its
Subsidiaries to, authorize, recommend, propose or announce an intention to adopt
a plan of complete or partial liquidation or dissolution of the Company or any
of its Subsidiaries.
(j) OTHER ACTIONS. Except as contemplated by this Agreement, the
Company will not nor will it permit any of its Subsidiaries to take or agree or
commit to take any action that is reasonably likely to result in any of the
Company's representations or warranties hereunder being untrue in any material
respect or in any of the Company's covenants hereunder or any of the conditions
to the Merger not being satisfied in all material respects.
(k) CERTAIN EMPLOYEE MATTERS. The Company and its Subsidiaries shall
not (without the prior written consent of Parent): (i) grant any increases in
the compensation of any of its directors, officers or key employees; (ii) pay or
agree to pay any pension, retirement allowance or other employee benefit not
required or contemplated by any of the existing Company Benefit Plans or Company
Pension Plans as in effect on the date hereof to any such director, officer or
key employee, whether past or present; (iii) enter into any new, or materially
amend any existing, employment or severance or termination agreement with any
such director, officer or key employee; or (iv) except as may be required to
comply with applicable law, become obligated under any new Company Employee
Benefit Plan or Company Pension Plan, which was not in existence on the date
hereof, or amend any such plan or arrangement in existence on the date hereof if
such amendment would have the effect of materially enhancing any benefits
thereunder.
(l) INDEBTEDNESS; AGREEMENTS. (i) Except as set forth on Schedule
5.1(l)(i), the Company shall not, nor shall the Company permit any of its
Subsidiaries to, assume or incur (which shall not be deemed to include entering
into credit agreements, lines of credit or similar arrangements until borrowings
are made under such arrangements) any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or warrants
or rights to acquire any debt securities of such party or any of its
Subsidiaries or guarantee any debt securities of others or enter into any lease
(whether such lease is an operating or capital lease) or create any mortgages,
liens, security interests or other encumbrances on the property of the Company
or any of its Subsidiaries in connection with any indebtedness thereof, or enter
into any "keep well" or other agreement or arrangement to maintain the financial
condition of another person.
(ii) Except as set forth on Schedule 5.1(1)(ii) the Company shall
not, nor shall the Company permit any of its Subsidiaries to, enter into,
modify, rescind, terminate, waive, release or otherwise amend in any material
respect any of the terms or provisions of any Material Contract.
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<PAGE> 35
(m) ACCOUNTING. The Company shall not take any action, other than in
the ordinary course of business, consistent with past practice or as required by
the SEC or by law, with respect to accounting policies, procedures and
practices.
(n) CAPITAL EXPENDITURES. Except for the capital expenditures set
forth on Schedule 5.1(n), the Company and its Subsidiaries shall not incur any
capital expenditures that, in the aggregate, are in excess of $1,000,000.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 PREPARATION OF THE PROXY STATEMENT; COMPANY STOCKHOLDERS MEETING;
MERGER WITHOUT A COMPANY STOCKHOLDERS MEETING. (a) As soon as practicable
following the acceptance for payment of and payment for shares of Company Common
Stock by Sub in the Offer, the Company and Parent shall prepare and file with
the SEC the Proxy Statement. The Company shall use its best efforts to respond
to all SEC comments with respect to the Proxy Statement and to cause the Proxy
Statement to be mailed to the Company's stockholders at the earliest practicable
date.
(b) The Company will, as soon as practicable following the acceptance
for payment of and payment for shares of Company Common Stock by Sub in the
Offer, duly call, give notice of, convene and hold the Company Stockholders
Meeting for the purpose of approving this Agreement and the transactions
contemplated hereby. At the Company Stockholders Meeting, Parent shall cause all
of the shares of Company Common Stock then owned by Parent and Sub and any of
their Subsidiaries or affiliates to be voted in favor of the Merger.
(c) Notwithstanding the foregoing clauses (a) and (b), in the event
that Parent or any other Subsidiary of Parent shall acquire at least 90% of the
outstanding shares of Company Common Stock in the Offer, the parties hereto
agree, at the request of Sub, to take all necessary and appropriate action to
cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
(d) Parent shall (i) cause Sub promptly to submit this Agreement and
the transactions contemplated hereby for approval and adoption by its parent by
written consent of sole stockholder; (ii) cause the shares of capital stock of
Sub to be voted for adoption and approval of this Agreement and the transactions
contemplated hereby; and (iii) cause to be taken all additional actions
necessary for Sub to adopt and approve this Agreement and the transactions
contemplated hereby.
6.2 ACCESS TO INFORMATION. Upon reasonable notice, each of the Company or
Parent, as the case may be, shall (and shall cause each of its Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
Representatives of the other party (including, in the
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case of Parent and Sub, potential financing sources and their employees,
accountants, counsel and other representatives), access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such period, such party
shall (and shall cause each of its Subsidiaries to) furnish promptly to the
other party, (a) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to SEC
requirements and (b) all other information concerning its business, properties
and personnel as such other party may reasonably request. The Confidentiality
Agreement between Parent and the Company (the "Confidentiality Agreement") shall
apply with respect to information furnished thereunder or hereunder and any
other activities contemplated thereby.
6.3 LEGAL CONDITIONS TO MERGER. Each of the Company, Parent and Sub will
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on such party with respect to the Offer, the
Merger and the transactions contemplated by the Stockholders Agreement
(including furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them or any of their Subsidiaries
in connection with the Offer, the Merger and the transactions contemplated by
the Stockholders Agreement; provided, however, that Parent need not so comply if
required by the Department of Justice or any other Governmental Entity to hold
separate, sell or otherwise dispose of any Subsidiary of Parent or the Company
or assets or properties of any of the foregoing. Each of the Company, Parent and
Sub will, and will cause its Subsidiaries to, take all reasonable actions
necessary to obtain (and will cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party, required to be
obtained or made by the Company, Parent or any of their Subsidiaries in
connection with the Offer, the Merger, the Stockholders Agreement or the taking
of any action contemplated hereby or thereby.
6.4 FEES AND EXPENSES. (a) Except as otherwise provided in this Section 6.4
and except with respect to claims for damages incurred as a result of the breach
of this Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense.
(b) The Company agrees to pay Parent a fee in immediately available
funds equal to $3,000,000 (the "Termination Fee") as provided under Section
8.1(g).
(c) The Company agrees to pay Parent a fee in immediately available
funds equal to $3,000,000 upon the termination of this Agreement under Section
8.1(h), if any of the events set forth below occurs (each, a "Trigger Event"):
(i) the Board of Directors of the Company shall have withdrawn or
adversely modified, or taken a public position materially inconsistent with, its
approval or recommendation of the Offer, the Merger, this Agreement or the
Stockholders Agreement; or
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(ii) an Acquisition Proposal has been recommended or accepted by
the Company or the Company shall have entered into an agreement (other than a
confidentiality agreement as contemplated by Section 5.1(e)) with respect to an
Acquisition Proposal.
(d) Any amounts due under this Section 6.4 that are not paid when due
shall bear interest at the rate of 9% per annum from the date due through and
including the date paid.
6.5 BROKERS OR FINDERS. (a) The Company represents, as to itself, its
Subsidiaries and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any broker's
or finders fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except Robertson, Stephens &
Company, whose fees and expenses will be paid by the Company in accordance with
the Company's agreements with such firm (copies of which have been delivered by
the Company to Parent prior to the date of this Agreement).
(b) Parent represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor or other
firm or person is or will be entitled to any broker's or finders fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except Robertson, Stephens & Company, whose fees
and expenses will be paid by the Company in accordance with the Company's
agreements with such firm.
6.6 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) The Company
shall, and from and after the Effective Time, the Parent and Surviving
Corporation shall, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of, or agent, attorney or advisor to, the
Company or any of its Subsidiaries (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses (including reasonable attorneys' fees
and expenses), liabilities or judgments or amounts that are paid in settlement
with the approval of the indemnifying party of or in connection with any
threatened or actual claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director or officer of, or agent, attorney or advisor to, the
Company or any of its Subsidiaries whether pertaining to any matter existing or
occurring at or prior to the Effective Time and whether asserted or claimed
prior to, or at or after, the Effective Time ("Indemnified Liabilities"),
including all Indemnified Liabilities based in whole or in part on, or arising
in whole or in part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent a corporation is permitted
under the DGCL to indemnify its own directors or officers as the case may be
(and Parent and the Surviving Corporation, as the case may be, will pay expenses
in advance of the final disposition of any such action or proceeding to each
Indemnified Party to the full extent permitted by law). Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Parties (whether arising before
or after the Effective Time), (i) the Indemnified Parties may retain counsel
satisfactory to them and the Company (or them and the Surviving Corporation
after the Effective Time) and the Company (or after the Effective Time, the
Surviving Corporation) shall pay all fees and expenses of such counsel for the
Indemnified
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Parties promptly as statements therefor are received; and (ii) the Company (or
after the Effective Time, the Surviving Corporation) will use all reasonable
efforts to assist in the vigorous defense of any such matter, provided that
neither the Company nor the Surviving Corporation shall be liable for any
settlement effected without its prior written consent. Any Indemnified Party
wishing to claim indemnification under this Section 6.6, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify the Company
(or after the Effective Time, the Surviving Corporation) (but the failure so to
notify shall not relieve a party from any liability which it may have under this
Section 6.6 except to the extent such failure prejudices such party), and shall
to the extent required by the DGCL deliver to the Company (or after the
Effective Time, the Surviving Corporation) the undertaking contemplated by
Section 145(e) of the DGCL. The Indemnified Parties as a group may retain only
one law firm to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
The Company, Parent and Sub agree that all rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action or
suit, existing in favor of the Indemnified Parties with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided, however, that all rights to indemnification in
respect of any Indemnified Liabilities asserted or made within such period shall
continue until the disposition of such Indemnified Liabilities.
(b) For a period of two years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by the Company and its
Subsidiaries (provided that Parent may substitute therefor policies issued by
Insurers of comparable financial strength and integrity or of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous in any material respect to the Indemnified Parties) with respect to
matters arising before the Effective Time, provided that Parent shall not be
required to pay an annual premium for such insurance in excess of 150% of the
last annual premium paid by the Company prior to the date hereof, but in such
case shall purchase as much coverage as possible for such amount.
(c) The provisions of this Section 6.6 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his heirs and
his personal representatives and shall be binding on all successors and assigns
of Sub, the Company and the Surviving Corporation.
6.7 BEST EFFORTS. Subject to the terms and conditions of this Agreement,
each of the parties hereto agrees to use its best efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and the Stockholders
Agreement, subject, as applicable, to the Company Stockholder Approval,
including cooperating fully with the other party, including by provision of
information and making of all necessary filings in connection with, among other
things, approvals under the HSR Act. In case at any time after the Effective
Time, any further action is necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full title to all
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properties, assets, rights, approvals, immunities and franchises of either of
the Constituent Corporations, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
6.8 CONDUCT OF BUSINESS OF SUB. During the period of time from the date of
this Agreement to the Effective Time, Sub shall not engage in any activities of
any nature except as provided in or contemplated by this Agreement.
6.9 PUBLICITY. The parties will consult with each other and will mutually
agree upon any press release or public announcement pertaining to the Offer and
the Merger and shall not issue any such press release or make any such public
announcement prior to such consultation and agreement, except as may be required
by applicable law or by obligations arising under the Company's listing
agreement with NASDAQ, in which case the party proposing to issue such press
release or make such public announcement shall use reasonable efforts to consult
in good faith with the other party before issuing any such press release or
making any such public announcement.
6.10 OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
(the "Fairness Opinion") of Needham & Co. to the effect that, as of the date
thereof, the Offer Consideration to be received by the holders of Company Common
Stock in the Offer and the Merger Consideration to be received by the holders of
Company Common Stock in the Merger is fair from a financial point of view to
such holders, a signed, true and complete copy of which opinion has been
delivered to Parent.
6.11 LIMITATION ON THE COMPANY'S LEGAL AND INVESTMENT BANKING FEES. The
Company agrees that the legal fees and investment banking and/or consulting fees
(including, without limitation, the fees of Gateway Advisors and Needham & Co.)
incurred or to be incurred by the Company in connection with the transactions
contemplated hereby (excluding any fees arising as a result of any challenge to
this Agreement) shall in no event exceed $3,101,000 in the aggregate.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have
been approved and adopted by the affirmative vote of the holders of a majority
of the Shares entitled to vote thereon if such vote is required by applicable
law; PROVIDED that the Parent and Sub shall vote all Shares purchased pursuant
to the Offer or the Stockholders Agreement in favor of the Merger.
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(b) HSR ACT. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect; provided, however,
that prior to invoking this condition, each party shall use all commercially
reasonable efforts to have any such decree, ruling, injunction or order vacated.
7.2 CONDITIONS OF OBLIGATIONS OF PARENT AND SUB. The obligations of Parent
and Sub to effect the Merger are subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by Parent and
Sub:
(a) PAYMENT FOR SHARES. Sub shall have accepted for payment and become
obligated to pay for the shares of Company Common Stock tendered in the Offer
such that, after such acceptance and payment, Parent and its affiliates shall
own, at consummation of the Offer, a majority of the outstanding shares of the
Company Common Stock.
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer and by the chief
financial officer of the Company to such effect.
(c) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer and by the chief financial officer of the Company to such effect.
(d) CONSENTS, ETC. All licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and all
material licenses, permits, consents, approvals, authorizations, qualifications
and orders of other third parties as are necessary in connection with the
transactions contemplated hereby shall have been obtained.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent:
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(a) by mutual written consent of the Company and Parent, or by mutual
action of their respective Boards of Directors;
(b) by either the Company or Parent prior to the consummation of the
Offer (i) if there has been a material breach (for purpose of this clause, a
material breach shall mean a breach or series of breaches the result of which
impairs the value of the Company or could reasonably be expected to impair the
value of the Company by more than $1.75 million in the aggregate) of any
representation, warranty, covenant or agreement on the part of the other set
forth in this Agreement which breach has not been cured within three business
days following receipt by the breaching party of notice of such breach, or (ii)
if any permanent injunction or other order of a court or other competent
authority preventing the consummation of the Merger shall have become final and
non-appealable;
(c) by either the Company or Parent if the Merger shall not have been
consummated on or before June 30, 1997; provided, that the right to terminate
this Agreement under this Section 8.1(c) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of or resulted in the failure of the Merger to occur on or before such date;
(d) by Parent in the event an Acquisition Proposal has been made to
the Company and the Company shall fail to reaffirm its approval or
recommendation of the Offer, the Merger, this Agreement and the Stockholders
Agreement on or before the fifth business day following the date on which such
Acquisition Proposal shall have been made;
(e) by Parent, if the Offer terminates, is withdrawn, abandoned or
expires by reason of the failure to satisfy any condition set forth in EXHIBIT A
hereto;
(f) by the Company, if the Offer shall have expired or have been
withdrawn, abandoned or terminated without any shares of Company Common Stock
being purchased by Sub thereunder on or prior to the 120th day after the date of
commencement of the Offer pursuant to Section 1.2 hereof;
(g) by the Company, if on or prior to 5:00 p.m. Pacific Standard Time
on December 4, 1996, the Company gives written notice to Parent of its intention
to terminate this Agreement pursuant to this Section and (A) at or prior to such
time either (1) the Company has not received the Fairness Opinion under Section
6.10 or (2) the Company has received a bona fide Acquisition Proposal as defined
in paragraph 5.1(e), and (B) in each case, the Company has paid the Termination
Fee by wire transfer to an account of Parent no later than Noon Pacific Standard
Time on December 5, 1996. The parties acknowledge that if the Company fails to
either provide the notice by the time set forth above or pay the Termination Fee
by the time set forth above, the Company's right pursuant to this Section to
terminate this Agreement shall become null and void; or
(h) by Parent or Company in the event that a Trigger Event has
occurred under Section 6.4(c)(i) or (ii).
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8.2 EFFECT OF TERMINATION. In the event of termination of this Agreement by
either the Company or Parent as provided in Section 8.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of Parent, Sub or the Company or their respective affiliates, officers,
directors or shareholders except (i) with respect to this Section 8.2, the
second sentence of Section 6.2, and Section 6.4, and (ii) for any breach by a
party hereto of any of its representations or warranties, or of any of its
covenants or agreements as set forth in this Agreement except as provided in
Section 9.7.
8.3 AMENDMENT. Subject to applicable law, this Agreement may be amended,
modified or supplemented only by written agreement of Parent, Sub and the
Company at any time prior to the Effective Date with respect to any of the terms
contained herein; provided, however, that, after this Agreement is approved by
the Company's stockholders, no such amendment or modification shall reduce the
amount or change the form of consideration to be delivered to the stockholders
of the Company.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Boards of Directors,
may, to the extent legally allowed: (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto; and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. The failure of any party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
ARTICLE IX
GENERAL PROVISIONS
9.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of the
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Article III, and Section 6.6
hereof. The Confidentiality Agreement shall survive the execution and delivery
of this Agreement, and the provisions of the Confidentiality Agreement shall
apply to all information and material delivered by any party hereunder.
9.2 NOTICES. Any notice or communication required or permitted hereunder
shall be in writing and either delivered personally, telegraphed or telecopied
or sent by certified or registered mail, postage prepaid, and shall be deemed to
be given, dated and received when so delivered personally, telegraphed or
telecopied or, if mailed, five business days after the date of mailing to the
following address or telecopy number, or to such other address or addresses as
such person may subsequently designate by notice given hereunder:
(a) if to Parent or Sub, to:
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Hadco Corporation
12A Manor Parkway
Salem, NH 03079
Attention: Andrew E. Lietz
Telephone: (603) 898-8000
Telecopy: (603) 894-4795
with a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Stephen A. Hurwitz
George W. Lloyd
Telephone: (617) 248-7000
Telecopy: (617) 248-7100
(b) if to the Company, to:
Zycon Corporation
445 El Camino Real
Santa Clara, CA 95050
Attn: Ronald H. Donati
Telephone: (408) 241-9900
Telecopy: (408) 241-9527
with copies to:
David H. Melnick
Leland Parachini Steinberg Flinn Matzger & Melnick L.L.P.
333 Market Street, Suite 2700
San Francisco, CA 94105
Telephone: (415) 957-1800
Telecopy: (415) 974-1520
9.3 INTERPRETATION. When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents, glossary of defined terms and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the word
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is to be
made available.
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9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF OWNERSHIP.
This Agreement (together with the Confidentiality Agreement, the Stockholders
Agreement and any other documents and instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereto and, except as provided in Section 6.6, is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
9.6 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
9.7 NO REMEDY IN CERTAIN CIRCUMSTANCES. Each party agrees that, should any
court or other competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or required
hereby, the validity, legality and enforceability of the remaining provisions
and obligations contained or set forth herein shall not in any way be affected
or impaired thereby, unless the foregoing inconsistent action or the failure to
take an action constitutes a material breach of this Agreement or makes the
Agreement impossible to perform in which case this Agreement shall terminate
pursuant to Article VIII hereof. Except as otherwise contemplated by this
Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority, such
party shall incur no liability or obligation unless such party did not in good
faith seek to resist or object to the imposition or entering of such order or
judgment.
9.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties, except that Sub may assign, in its sole discretion, any or all of its
rights, interests and obligations hereunder to any newly-formed direct
wholly-owned Subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
HADCO CORPORATION
By: /s/ Andrew E. Lietz
-------------------------------
Name: Andrew E. Lietz
Title: President
HADCO ACQUISITION CORP.
By: /s/ Andrew E. Lietz
-------------------------------
Name: Andrew E. Lietz
Title: President
ZYCON CORPORATION
By: /s/ Ronald H. Donati
-------------------------------
Name: Ronald H. Donati
Title: President
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EXHIBIT A
---------
The capitalized terms used in this EXHIBIT A shall have the respective
meanings given to such terms in the Agreement and Plan of Merger, dated as of
December 4, 1996, among Hadco Corporation, Hadco Acquisition Corp. and Zycon
Corporation (the "Merger Agreement") to which this EXHIBIT A is attached.
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub shall not be required
to accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Sub's
obligation to pay for or return tendered Shares promptly after expiration or
termination of the Offer), to pay for any Shares tendered, and may postpone the
acceptance for payment or, subject to the restriction referred to above, payment
for any Shares tendered, and may amend or terminate the Offer (whether or not
any Shares have theretofore been purchased or paid for) if, (i) there have not
been validly tendered and not withdrawn prior to the time the Offer shall
otherwise expire a number of Shares which constitutes a majority of the Shares
outstanding on a fully-diluted basis on the date of purchase ("on a
fully-diluted basis" having the following meaning, as of any date: the number of
Shares outstanding, together with Shares the Company may be then required to
issue pursuant to obligations outstanding at that date under employee stock
option or other benefit plans or otherwise); (ii) all material regulatory and
related approvals have not been obtained or made on terms reasonably
satisfactory to Sub; (iii) any applicable waiting periods under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer;
(iv) the debt financing sources for Sub shall not (other than as a result of
Parent's or Sub's failure to use its reasonable best efforts to obtain the same)
have provided the applicable debt financing to Sub pursuant to the financing
commitments with respect thereto previously delivered to the Company by Sub; or
(v) at any time on or after the date of the Merger Agreement and before
acceptance for payment of, or payment for, such Shares any of the following
events shall occur or shall be deemed by Sub to have occurred:
(A) Except for an action entitled KATZ V. DONATI, ET AL. filed in the Santa
Clara County Superior Court on or about December 3, 1996, there shall have been
threatened, instituted or pending any action, proceeding, application or
counterclaim by or before any court or governmental, regulatory or
administrative agency, authority or tribunal, domestic, foreign or supranational
(other than actions, proceedings, applications or counterclaims filed or
initiated by Sub), which (i) seeks to challenge the acquisition by Sub of the
Shares, restrain, prohibit or delay the making or consummation of the Offer or
the Merger or any other merger or business combination involving Sub or any of
its affiliates and the Company or any of its subsidiaries, prohibit the
performance of any of the contracts or other agreements entered into by Sub or
any of its affiliates in connection with the acquisition of the Company or the
Shares, or obtain any damages in connection with any of the foregoing, (ii)
seeks to make the purchase of or payment for, some or all of the Shares pursuant
to the Offer, the Merger or otherwise, illegal, (iii) seeks to impose
limitations on the ability of Sub or the Company or any of their respective
affiliates or subsidiaries effectively to acquire or hold, or requiring Sub, the
Company or any of their respective affiliates or
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subsidiaries to dispose of or hold separate, any portion of the assets or the
business of Sub or its affiliates or the Company or its subsidiaries, or impose
limitations on the ability of Sub, the Company or any of their respective
affiliates or subsidiaries to continue to conduct, own or operate all or any
portion of their businesses and assets as heretofore conducted, owned or
operated, (iv) seeks to impose or may result in material limitations on the
ability of Sub or any of its affiliates to exercise full rights of ownership of
the Shares purchased by them, including, without limitation, the right to vote
the Shares purchased by them on all matters properly presented to the
stockholders of the Company, or the right to vote any shares of capital stock of
any subsidiary directly or indirectly owned by the Company, (v) is reasonably
likely to result in a material diminution in the benefits expected to be derived
by Sub as a result of the transactions contemplated by the Offer, including the
Merger, (vi) seeks to impose voting, procedural, price or other requirements in
addition to those under Delaware Law and federal securities laws (each as in
effect on the date of the Offer to Purchase) or any material condition to the
Offer that is unacceptable (in its reasonable judgment) to Sub or (vii)
challenges or adversely and materially affects the financing of the Offer;
(B) There shall have been proposed, sought, promulgated, enacted, entered,
enforced or deemed applicable to the Offer or the Merger by any domestic,
foreign or supranational government or any governmental, administrative or
regulatory authority or agency or by any court or tribunal, domestic, foreign or
supranational, any statute, rule, regulation, judgment, decree, order or
injunction that might, directly or indirectly, result in any of the consequences
referred to in clauses (i) through (vii) of paragraph (A) above;
(C) there shall have occurred (1) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or in
the over-the-counter market in the United States, (2) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (3) any material adverse change (or any existing or threatened
condition, event or development involving a prospective material adverse change)
in United States or any other currency exchange rates or a suspension of, or a
limitation on, the markets therefor, (4) the commencement of a war, armed
hostilities or other international or national calamity, directly or indirectly
involving the United States, (5) any limitations (whether or not mandatory)
imposed by any governmental authority on, or any event which might have material
adverse significance with respect to, the nature or extension of credit or
further extension of credit by banks or other lending institutions, (6) any
significant adverse change in securities or financial markets in the United
States or abroad, including, without limitation, a decline of at least 10
percent in either the Dow Jones Average of Industrial Stocks or the Standard &
Poor's 500 Index from that existing at the close of business on November 27,
1996, or (7) in the case of any of the foregoing, a material acceleration or
worsening thereof;
(D) the representations and warranties of the Company contained in the
Merger Agreement (without giving effect to any "Material Adverse Effect",
"materiality" or similar qualifications contained therein) shall not be true and
correct in all material respects (for purpose of this clause, a failure of the
representations and warranties to be true and correct in all material respects
shall mean a failure or series of failures the result of which impairs the value
of the
-A-2-
<PAGE> 48
Company or could reasonably be expected to impair the value of the Company by
more than $1.75 million) as of the date of the consummation of the Offer as
though made on and as of such date except (1) for changes specifically permitted
by the Merger Agreement and (2) that those representations and warranties which
address matters only as of a particular date shall remain true and correct as of
such date;
(E) the obligations of the Company contained in the Merger Agreement
(without giving effect to any "Material Adverse Effect", "materiality" or
similar qualifications contained therein) shall not have been performed or
complied with in all material respects by the Company;
(F) the obligations of the Company under Section 6.11 of the Merger
Agreement shall not have been complied with in all respects;
(G) the Merger Agreement shall have been terminated in accordance with its
terms;
(H) prior to the purchase of Shares pursuant to the Offer, an Acquisition
Proposal for the Company exists and the Board shall have withdrawn or materially
modified or changed (including by amendment of the Schedule 14D-9) in a manner
adverse to Sub its recommendation of the Offer, the Merger Agreement or the
Merger; or
(I) any person or group shall have entered into a definitive agreement or
agreement in principle with the Company with respect to a merger, consolidation
or other business combination with the Company.
The foregoing conditions are for the sole benefit of Sub and its affiliates
and may be asserted by Sub regardless of the circumstances (other than any
action or inaction by Parent, Sub or any of their affiliates) giving rise to any
such condition or may be waived by Sub, in whole or in part, from time to time
in its sole discretion, except as otherwise provided in the Agreement. The
failure by Sub at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right and may be asserted at any time and from time to time. Any reasonable
determination by Sub concerning any of the events described herein shall be
final and binding.
-A-3-
<PAGE> 1
Exhibit (c)(2)
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated December 4, 1996, is made and entered
into by and among HADCO CORPORATION, a Massachusetts corporation ("Parent"),
HADCO ACQUISITION CORP., a Delaware corporation and a direct wholly-owned
subsidiary of Parent ("Sub"), and the other parties signatory hereto (each a
"Stockholder", and collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, Sub and Zycon Corporation, a Delaware corporation (the "Company"), are
entering into an Agreement and Plan of Merger (as such agreement may hereafter
be amended from time to time, the "Merger Agreement"; capitalized terms used and
not defined herein have the respective meanings ascribed to them in the Merger
Agreement), pursuant to which Sub will be merged with and into the Company (the
"Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company desire that,
as soon as practicable (and not later than five business days) after the public
announcement of the execution and delivery of the Merger Agreement, Sub commence
a cash tender offer to purchase all outstanding shares of Company Common Stock
(as defined in Section 1), including all of the Shares (as defined in Section 2)
owned beneficially by the Stockholders; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholders agree, and the Stockholders
have agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" as within the meanings of Section 13(d)(3) of
the Exchange Act.
(b) "Company Common Stock" shall mean at any time the common stock,
$.001 par value, of the Company.
<PAGE> 2
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
2. Tender of Shares.
(a) Each Stockholder hereby agrees to validly tender (and not to
withdraw) pursuant to and in accordance with the terms of the Offer, not later
than the fifth business day after commencement of the Offer pursuant to Section
1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act, (i) the
number of shares of Company Common Stock set forth opposite such Stockholder's
name on Schedule I hereto (the "Existing Shares"), and (ii) any additional
shares of Company Common Stock acquired by such Stockholder after the date
hereof and prior to the termination of this Agreement whether upon the exercise
of options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of purchase, dividend, distribution or
otherwise Beneficially Owned by him or it (the "Additional Shares" and, together
with the Existing Shares, the "Shares"). Each Stockholder hereby acknowledges
and agrees that the Sub's obligation to accept for payment and pay for Shares in
the Offer, including the Shares Beneficially Owned by such Stockholder, is
subject to the terms and conditions of the Offer.
(b) The transfer by each Stockholder of his or its Shares to Sub in
the Offer shall pass to and unconditionally vest in Sub good and valid title to
the number of Shares set forth opposite such Stockholder's name on Schedule I
hereto and the Additional Shares, free and clear of all claims, liens,
restrictions, security interests, pledges, limitations and encumbrances
whatsoever.
(c) Each Stockholder hereby agrees to permit Parent and Sub to publish
and disclose in the Offer Documents and, if Company Stockholder Approval is
required under applicable law, the Proxy Statement (including all documents and
schedules filed with the SEC) his or its identity and ownership of Company
Common Stock and the nature of his or its commitments, arrangements and
understandings under this Agreement.
3. PROVISIONS CONCERNING COMPANY COMMON STOCK. (a) Each Stockholder hereby
agrees that during the period commencing on the date hereof and continuing until
the first to occur of the Effective Time or termination of the Merger Agreement
in accordance with its terms, at any meeting of the holders of Company Common
Stock, however called, or in connection with any written consent of the holders
of Company Common Stock, such Stockholder shall vote (or cause to be voted) the
Shares held of record or Beneficially Owned by such Stockholder, whether issued,
heretofore owned or hereafter acquired, (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
of the terms thereof and each of the other actions contemplated by the Merger
Agreement and this Agreement and any actions required in furtherance thereof and
hereof; (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement or this Agreement; and
(iii) except as otherwise agreed to in writing in advance by Parent, against
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<PAGE> 3
the following actions (other than the Merger and the transactions contemplated
by the Merger Agreement): (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or its
Subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its Subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its Subsidiaries; (C) (1) any
change in a majority of the persons who constitute the board of directors of the
Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or Bylaws; (3) any other
material change in the Company's corporate structure or business; or (4) any
other action which, in the case of each of the matters referred to in clauses C
(1), (2), (3) or (4), is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, or materially adversely affect the Merger and
the transactions contemplated by this Agreement and the Merger Agreement. Such
Stockholder shall not enter into any agreement or understanding with any person
or entity the effect of which would be inconsistent or violative of the
provisions and agreements contained in this Section 3.
(b) Each Stockholder hereby grants to Parent a proxy to vote the
Shares of such Stockholder as indicated in Section 3(a). Each Stockholder
intends such proxy to be irrevocable and coupled with an interest and will take
such further action or execute such other instruments as may be necessary to
effectuate the intent of this proxy and hereby revokes any proxy previously
granted by Stockholder with respect to such Shares.
4. OPTIONS. In order to induce Parent and Sub to enter into the Merger
Agreement, each of the Stockholders hereby grants to Parent an irrevocable
option (each, a "Stock Option" and collectively, the "Stock Options") to
purchase the number of Shares set forth opposite such Stockholder's name on
Schedule I hereto (the "Option Shares") at a purchase price per share equal to
the Offer Consideration (the "Purchase Price"). If (i) the Offer is terminated,
abandoned or withdrawn by Parent or Sub (whether due to the failure of any of
the conditions thereto or otherwise), (ii) the Offer is consummated but Sub has
not accepted for payment and paid for the aggregate number of Shares set forth
opposite each Stockholder's name on Schedule I hereto, or (iii) the Merger
Agreement is terminated in accordance with its terms, the Stock Options shall,
in any such case, become exercisable, in whole but not in part, upon the first
to occur of any such event and remain exercisable in whole but not in part until
the date which is 90 days after the date of the occurrence of such event, so
long as: (i) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), required for the purchase
of the Option Shares upon such exercise shall have expired or been waived, and
(ii) there shall not be in effect any preliminary or final injunction or other
order issued by any court or governmental, administrative or regulatory agency
or authority prohibiting the exercise of the Stock Options pursuant to this
Agreement. In the event that Parent wishes to exercise the Stock Options, Parent
shall send a written notice (the "Notice") to the Stockholders identifying the
place and date (not less than two nor more than 20 business days from the date
of the Notice) for the closing of such purchase.
Notwithstanding the foregoing, if Parent exercises the Stock Options
pursuant to this Section 4, Parent shall, within 30 calendar days after the date
of such exercise, offer to all other stockholders of the Company the opportunity
to sell their shares of Company Common
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<PAGE> 4
Stock to Parent upon the equivalent terms and conditions provided with respect
to exercise of the Stock Options in this Section 4.
5. OTHER COVENANTS, REPRESENTATIONS AND WARRANTIES. Each Stockholder hereby
represents and warrants to Parent as follows:
(a) OWNERSHIP OF SHARES. Such Stockholder is either (i) the record and
Beneficial Owner of, or (ii) the Beneficial Owner but not the record holder of,
the number of Shares set forth opposite such Stockholder's name on Schedule I
hereto. On the date hereof, the Existing Shares set forth opposite such
Stockholder's name on Schedule I hereto constitute all of the Shares owned of
record or Beneficially Owned by such Stockholder. Such Stockholder has sole
voting power and sole power to issue instructions with respect to the matters
set forth in Sections 2 and 3 hereof, sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to agree to all
of the matters set forth in this Agreement, in each case with respect to all of
the Existing Shares set forth opposite such Stockholder's name on Schedule I
hereto, with no limitations, qualifications or restrictions on such rights,
subject to applicable securities laws and the terms of this Agreement.
(b) POWER; BINDING AGREEMENT. Such Stockholder has the legal capacity,
power and authority to enter into and perform all of such Stockholder's
obligations under this Agreement. The Stockholders Agreement (the "Stockholders
Agreement") dated November 30, 1996 by and among HMTF Acquisition Corp., PCB
Acquisition Corp. and the other parties thereto has been terminated under
Section 7.1(a) thereof, subject only to the payment by each Stockholder to HMTF
Acquisition Corp. of the fee required to be paid under such Section 7.1(a) upon
termination of such Stockholders Agreement and each Stockholder agrees to pay
the fee required to be paid thereunder within one business day of the date
hereof. The execution, delivery and performance of this Agreement by such
Stockholder will not violate any other agreement to which such Stockholder is a
party including, without limitation, the Stockholders Agreement or any other
voting agreement, stockholders agreement or voting trust. This Agreement has
been duly and validly executed and delivered by such Stockholder and constitutes
a valid and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms. There is no beneficiary or holder of a
voting trust certificate or other interest of any trust of which such
Stockholder is trustee whose consent is required for the execution and delivery
of this Agreement or the consummation by such stockholder of the transactions
contemplated hereby.
(c) NO CONFLICTS. Except for (i) filings under the HSR Act, if
applicable, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for the
execution of this Agreement by such Stockholder and the consummation by such
Stockholder of the transactions contemplated hereby and (B) none of the
execution and delivery of this Agreement by such Stockholder, the consummation
by such Stockholder of the transactions contemplated hereby or compliance by
such Stockholder with any of the provisions hereof shall (1) conflict with or
result in any breach of any applicable organizational documents applicable to
such Stockholder, (2) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or
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<PAGE> 5
give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which such Stockholder is a party or by which such Stockholder or any of
such Stockholder's properties or assets may be bound, or (3) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of such Stockholder's properties or
assets.
(d) NO ENCUMBRANCES. Except as applicable in connection with the
transactions contemplated by Section 2 hereof, such Stockholder's Shares and the
certificates representing such Shares are now, and at all times during the term
hereof will be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder.
(e) NO FINDER'S FEES. No broker, investment banker, financial adviser
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Stockholder.
(f) NO SOLICITATION. No Stockholder shall, in his or its capacity as
such, directly or indirectly, solicit (including by way of furnishing
information) or respond to any inquiries or the making of any proposal by any
person or entity (other than Parent or any affiliate of Parent) with respect to
the Company that constitutes an Acquisition Proposal, except as permitted by
Section 5.1(e) of the Merger Agreement. If any Stockholder receives any such
inquiry or proposal, then such Stockholder shall promptly inform Parent of the
terms and conditions, if any, of such inquiry or proposal and the identity of
the person making such proposal. Each Stockholder will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing.
(g) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. Except as
applicable in connection with the transactions contemplated by Sections 2 and 3
hereof, no Stockholder shall, directly or indirectly: (i) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of such Stockholder's Shares or
any interest therein; (ii) grant any proxies or powers of attorney, deposit any
Shares into a voting trust or enter into a voting agreement with respect to any
Shares; or (iii) take any action that would make any representation or warranty
of such Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling such Stockholder from performing such Stockholder's
obligations under this Agreement.
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<PAGE> 6
(h) WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that such Stockholder
may have.
(i) RELIANCE BY PARENT. Such Stockholder understands and acknowledges
that Parent and Sub are entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
(j) FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
6. STOP TRANSFER. Each Stockholder agrees with, and covenants to, Parent
that such Stockholder shall not request that the Company and, the Company agrees
that it will not, register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of such Stockholder's
Shares, unless such transfer is made in compliance with this Agreement
(including the provisions of Section 2 hereof). In the event of a stock dividend
or distribution, or any change in the Company Common Stock by reason of any
stock dividend, split-up, recapitalization, combination, exchange of shares or
the like, the term "Shares" shall be deemed to refer to and include the Shares
as well as all such stock dividends and distributions and any shares into which
or for which any or all of the Shares may be changed or exchanged.
7. TERMINATION. (a) If the Company terminates the Merger Agreement pursuant
to Section 8.1(g) of the Merger Agreement, each Stockholder will pay Parent a
fee in immediately available funds equal to the product of $.40 and the number
of shares of Company Common Stock set forth opposite such Stockholder's name on
Schedule 1 hereto and upon the receipt by Parent of all such payments this
Agreement shall terminate.
(b) Except as otherwise provided herein, the covenants and agreements
contained in Sections 2 and 3 shall terminate upon the termination of the Merger
Agreement in accordance with its terms by Parent.
8. STOCKHOLDER CAPACITY. No person executing this Agreement who is or
becomes during the term hereof a director of the Company makes any agreement or
understanding herein in his or her capacity as such director. Each Stockholder
signs solely in his or her capacity as the record and Beneficial Owner of, or
the trustee of a trust whose beneficiaries are the Beneficial Owners of, such
Stockholder's Shares.
9. CONFIDENTIALITY. The Stockholders recognize that successful consummation
of the transactions contemplated by this Agreement may be dependent upon
confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, each Stockholder hereby agrees
not to disclose or discuss such matters with anyone not a party to this
Agreement (other than such Stockholder's counsel and advisors, if any) without
the prior written consent of Parent, except for filings required pursuant to the
Exchange Act and the rules and
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<PAGE> 7
regulations thereunder or disclosures such Stockholder's counsel advises are
necessary in order to fulfill such Stockholder's obligations imposed by law, in
which event such Stockholder shall give notice of such disclosure to Parent as
promptly as practicable so as to enable Parent to seek a protective order from a
court of competent jurisdiction with respect thereto.
10. Miscellaneous.
(a) ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Stockholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
that Parent may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of Parent, but no
such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Stockholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; provided that
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any stockholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added stockholder shall be treated as a
"Stockholder" for all purposes of this Agreement.
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
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<PAGE> 8
If to Stockholder: At the addresses set forth on Schedule I hereto
copies to: Leland, Parachini, Steinberg, Flina, Matzger & Melnick
333 Market Street, Suite 2700
San Francisco, California 94105
Telephone: (415) 957-1800
Telecopy: (415) 974-1520
Attention: David H. Melnick
If to Parent: Hadco Corporation
12A Manor Parkway
Salem, NH 03079
Attention: Andrew E. Lietz
Telephone: (603) 898-8000
Telecopy: (603) 894-4795
copies to: Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Stephen A. Hurwitz
George W. Lloyd
Telephone: (617) 248-7000
Telecopy: (617) 248-7100
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
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<PAGE> 9
(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to be
for the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) JURISDICTION. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Court of Chancery in the State of Delaware in any
action, suit or proceeding arising in connection with this Agreement, and agrees
that any such action, suit or proceeding shall be brought only in such court
(and waives any objection based on forum non conveniens or any other objection
to venue therein); provided, however, that such consent to jurisdiction is
solely for the purpose referred to in this paragraph (l) and shall not be deemed
to be a general submission to the jurisdiction of said court or in the State of
Delaware other than for such purposes. Each party hereto hereby waives any right
to a trial by jury in connection with any such action, suit or proceeding.
(m) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(n) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement.
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<PAGE> 10
IN WITNESS WHEREOF, Parent, Sub and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
HADCO CORPORATION
By: /s/ Andrew E. Lietz
-------------------------------
Name: Andrew E. Lietz
Title: President
HADCO ACQUISITION CORP.
By: /s/ Andrew E. Lietz
-------------------------------
Name: Andrew E. Lietz
Title: President
DONATI FAMILY TRUST
By: /s/ Ronald H. Donati
-------------------------------
Ronald H. Donati
Trustee
JOHN D. DUNNING
By: /s/ John D. Dunning
-------------------------------
John D. Dunning
BRECHEL FAMILY TRUST
By: /s/ Joseph V. Brechel
-------------------------------
Joseph V. Brechel
Trustee
-10-
<PAGE> 11
HAL D. COOKSEY
By: /s/ Hal D. Cooksey
-------------------------------
Hal D. Cooksey
ROBERT M. WALLACE
By: /s/ Robert M. Wallace
-------------------------------
Robert M. Wallace
JIM A. SUMMERS
By: /s/ Jim A. Summers
-------------------------------
Jim A. Summers
AGREED TO AND ACKNOWLEDGED
(with respect to Section 6):
ZYCON CORPORATION
By: /s/ Ronald H. Donati
-------------------------------
Name: Ronald H. Donati
Title: President
-11-
<PAGE> 12
<TABLE>
SCHEDULE 1 TO
STOCKHOLDERS AGREEMENT
----------------------
<CAPTION>
Name and Address of Stockholder: Number of Shares Owned
-------------------------------- ----------------------
<S> <C>
1. Donati Family Trust 5,076,122 shares
c/o Zycon Corporation
445 El Camino Real
Santa Clara, CA 95050
2. John D. Dunning 655,225 shares
445 El Camino Real
Santa Clara, CA 95050
3. Brechel Family Trust 610,449 shares
c/o Zycon Corporation
445 El Camino Real
Santa Clara, CA 95050
4. Hal D. Cooksey Separate Property Trust 300,000 shares
c/o Zycon Corporation and 100,000 options
445 El Camino Real
Santa Clara, CA 95050
5. Robert M. Wallace 5,000 options
c/o Gateway Advisors
1590 The Alameda #1C
San Jose, CA 95113
6. Jim A. Summers 2,500 shares
13841 Tamworth Avenue and 5,000 options
Saratoga, CA 95070
</TABLE>
<PAGE> 1
Exhibit (c)(3)
NONCOMPETITION AND NONDISCLOSURE AGREEMENT
THIS NONCOMPETITION AND NONDISCLOSURE AGREEMENT is made and entered into
this 4th day of December, 1996, by and between Ronald H. Donati (the
"Executive") and Hadco Corporation (hereinafter referred to as the "Parent"), a
corporation organized under the laws of the Commonwealth of Massachusetts.
WITNESSETH
WHEREAS, Parent and Hadco Acquisition Corp. ("Sub"), a wholly-owned
subsidiary of Parent, are prepared to enter into an Agreement and Plan of
Reorganization (the "Merger Agreement") whereby Parent and Sub would acquire all
of the outstanding common stock of Zycon Corporation (the "Company") and the
Company would become a wholly-owned subsidiary of the Parent;
WHEREAS, Executive is willing to execute this Agreement and to be bound by
the provisions hereof in order to induce Parent to enter into the Merger
Agreement; and
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree as follows:
1. During the period of his employment by the Company (the "Employment
Period"), Executive agrees that he will devote his full time and best efforts to
the business of the Company. Executive agrees that he will not, directly or
indirectly, alone or as a partner, representative, investor, agent, consultant,
officer, director, employee or stockholder of any entity, engage in any business
activity involving (a) the design, manufacturing, marketing, distribution or
sale of printed circuit boards, flexible circuits, and/or backplanes and
assemblies, or (b) contract manufacturing involving interconnect products
(collectively, the "Business") during the period of his employment by the
Company and for three years thereafter; PROVIDED that nothing herein shall
prevent Executive from owning up to 1% of any class of securities listed on a
national securities exchange (including the Nasdaq). Executive also agrees that
during the period of his employment by the Company and for three years
thereafter he will not, directly or indirectly, alone or as a partner,
representative, investor, agent, consultant, officer, director, employee or
stockholder of any entity, solicit or do business relating to the Business with
any customer of the Company or any potential customer of the Company with whom
he has had contact. Executive also agrees that he will not, directly or
indirectly, alone or as a partner, representative, investor, agent, consultant,
officer, director, employee or stockholder of any entity solicit, interfere with
or endeavor to entice away any employee of the Company during the period of his
employment by the Company and for three years thereafter. The period following
the termination of Executive's employment during which these restrictions apply
(the "Post-employment Period") shall be extended by the length of any period of
time during the Post-employment Period during which he is in violation of this
paragraph.
<PAGE> 2
-2-
2. Executive shall not at any time, whether during or after the Employment
Period, reveal to any person or entity any of the trade secrets or confidential
information concerning the organization, business or finances of the Company or
of any third party which the Company is under an obligation to keep confidential
(including but not limited to trade secrets or confidential information
respecting inventions, products, designs, methods, know-how, techniques,
systems, processes, software programs, works of authorship, customer lists,
projects, plans and proposals), except as may be required in the ordinary course
of performing his duties as an employee of the Company, and Executive shall keep
secret all matters entrusted to him and shall not use or attempt to use any such
information in any manner which may injure or cause loss or may be calculated to
injure or cause loss, whether directly or indirectly, to the Company. Further,
Executive agrees that during and after the Employment Period he shall not make,
use or permit to be used any notes, memoranda, reports, lists, records,
drawings, sketches, specifications, software programs, data, documentation or
other materials of any nature relating to any matter within the scope of the
business of the Company or concerning any of its dealings or affairs otherwise
than for the benefit of the Company, it being agreed that all of the foregoing
shall be and remain the sole and exclusive property of the Company, and that
immediately upon the termination of Executive's employment he shall deliver all
of the foregoing, and all copies thereof, to the Company, at its main office.
3. If at any time or times during Executive's employment he shall (either
alone or with others) make, conceive, create, discover, invent or reduce to
practice any invention, modification, discovery, design, development,
improvement, process, software program, work of authorship, documentation,
formula, data, technique, know-how, trade secret or intellectual property right
whatsoever or any interest therein (whether or not patentable or registrable
under copyright, trademark or similar statutes (including but not limited to the
Semiconductor Chip Protection Act) or subject to analogous protection) (herein
called "Developments") that (i) relates to the business of the Company or any
customer of or supplier to the Company or any of the products or services being
developed, manufactured or sold by the Company or which may be used in relation
therewith, (ii) results from tasks assigned to Executive by the Company or (iii)
results from the use of premises or personal property (whether tangible or
intangible) owned, leased or contracted for by the Company, then:
(a) such Developments and the benefits thereof are and shall
immediately become the sole and absolute property of the Company and its
assigns, as works made for hire or otherwise;
(b) Executive shall promptly disclose to the Company (or any persons
designated by it) each such Development;
(c) as may be necessary to ensure the Company's ownership of such
Developments, Executive hereby assigns any rights (including, but not
limited to, any copyrights and trademarks) he may have or acquire in the
Developments and benefits and/or rights resulting therefrom to the Company
and its assigns without further compensation; and
<PAGE> 3
-3-
(d) Executive shall communicate, without cost or delay, and without
disclosing to others the same, all available information relating thereto
(with all necessary plans and models) to the Company.
4. Executive shall, during and after the Employment Period, at the request
and cost of the Company, promptly sign, execute, make and do all such deeds,
documents, acts and things as the Company and its duly authorized agents may
reasonably require:
(a) to apply for, obtain, register and vest in the name of the Company
alone (unless the Company otherwise directs) letters patent, copyrights,
trademarks or other analogous protection in any country throughout the
world and when so obtained or vested to renew and restore the same; and
(b) to defend any judicial, opposition or other proceedings in respect
of such applications and any judicial, opposition or other proceedings or
petitions or applications for revocation of such letters patent, copyright,
trademark or other analogous protection.
In the event the Company is unable, after reasonable effort, to secure
his signature on any application for letters patent, copyright or trademark
registration or other documents regarding any legal protection relating to a
Development, whether because of his physical or mental incapacity or for any
other reason whatsoever, Executive hereby irrevocably designates and appoints
the Company and its duly authorized officers and agents as his agent and
attorney-in-fact, to act for and in his behalf and stead to execute and file any
such application or applications or other documents and to do all other lawfully
permitted acts to further the prosecution and issuance of letters patent,
copyright or trademark registrations or any other legal protection thereon with
the same legal force and effect as if executed by Executive.
5. Executive agrees that any breach of this Agreement by him will cause
irreparable damage to the Company and Parent and that in the event of such
breach the Company and Parent shall have, in addition to any and all remedies of
law, the right to an injunction, specific performance or other equitable relief
to prevent the violation of his obligations hereunder. Executive further agrees
and acknowledges that the post-employment non-competition provision set forth in
Paragraph 1 hereof, and the remedies set forth in this paragraph, are necessary
and reasonable to protect the business of the Company and Parent.
6. Executive understands that this Agreement does not create an obligation
on the Company or any other person or entity to continue his employment.
7. No claim of Executive against the Company or Parent shall serve as a
defense against the Company's or Parent's enforcement of any provision of this
Agreement.
8. Executive represents that the Developments identified in the pages, if
any, attached hereto as EXHIBIT A comprise all the unpatented and unregistered
copyrightable Developments which he has made, conceived or created prior to the
Employment Period, which
<PAGE> 4
-4-
Developments are excluded from this Agreement. Executive understands that it is
only necessary to list the title and purpose of such Developments but not
details thereof.
9. Executive hereby represents that, except as he has disclosed in writing
to the Company and Parent, he is not a party to, or bound by the terms of, any
agreement with or obligation to any previous employer or other party to refrain
from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. He further represents that his performance of all the terms
of this Agreement and as an employee of the Company does not and will not breach
any agreement or obligation to keep in confidence proprietary information,
knowledge or data acquired by him in confidence or in trust prior to or during
his employment with the Company, and he will not disclose to the Company or
induce the Company to use any confidential or proprietary information or
material belonging to any previous employer or others. Executive has not entered
into, and he agrees, he will not enter into, any agreement, either written or
oral, in conflict with the terms of this Agreement.
10. Any waiver by the Company or Parent of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of such provision or any other provision hereof.
11. Executive hereby agrees that each provision herein shall be treated as
a separate and independent clause, and the unenforceability of any one clause
shall in no way impair the enforceability of any of the other clauses herein.
Moreover, if one or more of the provisions contained in this Agreement shall for
any reason be held to be excessively broad as to scope, activity, subject or
otherwise so as to be unenforceable at law, such provision or provisions shall
be construed by the appropriate judicial body by limiting or reducing it or
them, so as to be enforceable to the maximum extent compatible with the
applicable law as it shall then appear.
12. Executive's obligations under this Agreement shall survive the
termination of his employment regardless of the manner of such termination and
shall be binding upon his heirs, executors, administrators and legal
representatives.
13. The term "Company" shall include Zycon Corporation and any of its
subsidiaries, subdivisions or affiliates. The Company and Parent shall have the
right to assign this Agreement to their successors and assigns, and all
covenants and agreements hereunder shall inure to the benefit of and be
enforceable by said successors or assigns.
14. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of California. Any claims or legal actions by one
party against the other arising out of the relationship between the parties
contemplated herein (whether or not arising under this Agreement) shall be
governed by the laws of the State of California and shall be commenced and
maintained in any state or federal court located in California, and both parties
hereby submit to the jurisdiction and venue of any such court.
<PAGE> 5
-5-
15. This Agreement shall become effective immediately upon the execution of
the Merger Agreement. This Agreement shall terminate and have no further force
or effect if the Merger Agreement shall be terminated pursuant to Section 8.1
thereof.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 6
-6-
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first written above, effective as of such date.
EXECUTIVE:
/s/ Ronald H. Donati
----------------------------------
Name (please print):
HADCO CORPORATION
By: Andrew E. Lietz
-------------------------------
Title: President
----------------------------
<PAGE> 7
EXHIBIT A
---------
Prior Developments
------------------
None
