APPENDIX A
CONFORMED COPY
================================================================
AGREEMENT AND PLAN OF MERGER
among
ELECTRONIC FAB TECHNOLOGY CORP.,
CURRENT MERGER CORP.
and
CURRENT ELECTRONICS, INC.
January 15, 1997
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TABLE OF CONTENTS
Page
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I MERGER . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 The Closing . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effective Time . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Certain Tax Positions . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Taking of Necessary Action; Further Action
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II SURVIVING CORPORATION . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Articles of Incorporation . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Bylaws . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Directors . . . . . . . . . . . . . . . .
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2.4 Officers . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III EFFECT OF MERGER ON CAPITAL STOCK OF
MERGER SUB
AND TARGET . . . . . . . . . . . . . . . . . . . . . 2
3.1 Effect on Capital Stock . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Exchange of Certificates . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 No Further Ownership Rights in Target
Common
Stock . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Lost, Stolen or Destroyed Certificates . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Stock Subject to Conditions . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TARGET .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Organization, Standing and Power . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Capitalization; Shareholders . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Subsidiaries . . . . . . . . . . . . . . .
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4.4 Due Authorization . . . . . . . . . . . .
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4.5 Financial Statements . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.6 Absence of Certain Changes . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7 Liabilities . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8 Litigation . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.9 Restrictions on Business Activities . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.10 Governmental Authorization . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.11 Contracts and Commitments . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.12 Title to Property . . . . . . . . . . . .
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4.13 Intellectual Property . . . . . . . . . .
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4.14 Environmental Matters . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.15 Taxes . . . . . . . . . . . . . . . . . .
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4.16 Employee Benefit Plans . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.17 Employee Matters . . . . . . . . . . . . .
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4.18 Interested Party Transactions . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.19 Insurance . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.20 Compliance With Laws . . . . . . . . . . .
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4.21 Major Customers . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.22 Suppliers . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.23 Inventory . . . . . . . . . . . . . . . .
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95
4.24 Product Warranty and Product Liability . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.25 Minutes Books . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.26 Brokers' and Finders' Fees . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.27 Section 60.835 of OBCA Not Applicable . .
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4.28 Proxy Statement . . . . . . . . . . . . .
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4.29 Regulation D Offering . . . . . . . . . .
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4.30 Disclosure . . . . . . . . . . . . . . . .
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT
AND
MERGER SUB . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Organization, Standing and Power . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Capitalization . . . . . . . . . . . . . .
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5.3 Due Authorization . . . . . . . . . . . .
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5.4 SEC Documents; Financial Statements . . .
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5.5 Absence of Certain Changes . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.6 Compliance with Laws . . . . . . . . . . .
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5.7 Board Approval . . . . . . . . . . . . . .
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5.8 Brokers' and Finders' Fees . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI CONDUCT PRIOR TO EFFECTIVE TIME . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 Conduct of Business of Target . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 No Solicitation; Acquisition Proposals . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Notice of Breach . . . . . . . . . . . . .
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ARTICLE VII ADDITIONAL COVENANTS . . . . . . . . . . .
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7.1 Proxy Statement . . . . . . . . . . . . .
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7.2 Meetings of Shareholders . . . . . . . . .
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7.3 Access to Information . . . . . . . . . .
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7.4 Confidentiality . . . . . . . . . . . . .
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7.5 Publicity . . . . . . . . . . . . . . . .
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7.6 Filings; Cooperation . . . . . . . . . . .
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7.7 Employment Matters . . . . . . . . . . . .
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7.8 Director Nominees . . . . . . . . . . . .
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7.9 Further Assurances . . . . . . . . . . . .
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7.10 Certain Tax Matters . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII CONDITIONS PRECEDENT . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Conditions to Obligations of Each Party to
Effect the Merger . . . . . . . . . . . . . . . . . . . .
23
8.2 Additional Conditions to Obligations of
Target
to Effect the Merger . . . . . . . . . . . . . . . . 23
8.3 Additional Conditions to the Obligations
of
Parent and Merger Sub to Effect the Merger . . . . . . .
24
ARTICLE IX RESTRICTIONS ON TRANSFER . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.1 Legends . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.2 Notice of Proposed Dispositions . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE X TERMINATION, AMENDMENT AND WAIVER . . . .
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10.1 Termination . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 Effect of Termination . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Amendment . . . . . . . . . . . . . . . .
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10.4 Extension; Waiver . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE XI GENERAL PROVISIONS . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.1 Survival of Representations and Warranties
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
A-ii
96
11.2 Notices . . . . . . . . . . . . . . . . .
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11.3 Interpretation . . . . . . . . . . . . . .
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11.4 Counterparts . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.5 Entire Agreement; Nonassignability;
Parties in
Interest . . . . . . . . . . . . . . . . . . . . . . 28
11.6 Severability . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.7 Remedies Cumulative; No Waiver . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.8 Governing Law . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.9 Rules of Construction . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.10 Expenses. . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.11 Attorneys Fees . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
A-iii
97
EXHIBITS
Exhibit 7.7A Consulting Agreement
Exhibit 7.7B Employment Agreement
Exhibit 8.2(c) Opinion of Counsel to Parent
Exhibit 8.2(e) Registration Rights Agreement
Exhibit 8.3(c) Opinion of Counsel to Target and
Shareholders of CEWI
Exhibit 8.3(g) Indemnification Agreement
Exhibit 8.3(h) Tax Letter
SCHEDULES
Schedule 3.1(b)-1
Schedule 3.1(b)-2
Schedule 8.2(f)
Target Disclosure Schedule
Parent Disclosure Schedule
▇-▇▇
▇▇
INDEX OF DEFINED TERMS
Page
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1994 Audit Fees . . . . . . . . . . . . . . . . . . . . . .
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AA . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Adjusted Debt Amount . . . . . . . . . . . . . . . . . . .
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Agreement . . . . . . . . . . . . . . . . . . . . . . . . .
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Annual Financial Statements . . . . . . . . . . . . . . . .
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business combination . . . . . . . . . . . . . . . . . . .
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Cash Amount . . . . . . . . . . . . . . . . . . . . . . . .
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CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . .
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CEWI . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Certificates . . . . . . . . . . . . . . . . . . . . . . .
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Closing . . . . . . . . . . . . . . . . . . . . . . . . . .
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Closing Date . . . . . . . . . . . . . . . . . . . . . . .
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Code . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Combined Equity . . . . . . . . . . . . . . . . . . . . . .
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Confidential Information . . . . . . . . . . . . . . . . .
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COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Debt . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Designees . . . . . . . . . . . . . . . . . . . . . . . . .
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Dissenting Shares . . . . . . . . . . . . . . . . . . . . .
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Effective Time . . . . . . . . . . . . . . . . . . . . . .
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Environmental Law . . . . . . . . . . . . . . . . . . . . .
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ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . .
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ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . .
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environment . . . . . . . . . . . . . . . . . . . . . . . .
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Governmental Entity . . . . . . . . . . . . . . . . . . . .
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Hewitson Consulting Agreements . . . . . . . . . . . . . .
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Holder . . . . . . . . . . . . . . . . . . . . . . . . . .
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Indemnification Agreement . . . . . . . . . . . . . . . . .
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Intellectual Property . . . . . . . . . . . . . . . . . . .
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Interim Target Financial Statements . . . . . . . . . . . .
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Inventory . . . . . . . . . . . . . . . . . . . . . . . . .
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include . . . . . . . . . . . . . . . . . . . . . . . . . .
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includes . . . . . . . . . . . . . . . . . . . . . . . . .
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including . . . . . . . . . . . . . . . . . . . . . . . . .
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knowledge . . . . . . . . . . . . . . . . . . . . . . . . .
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Lien . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Material Adverse Effect . . . . . . . . . . . . . . . . . .
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Materials of Environmental Concern . . . . . . . . . . . .
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Merger . . . . . . . . . . . . . . . . . . . . . . . . . .
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Merger Consideration . . . . . . . . . . . . . . . . . . .
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multiemployer plan . . . . . . . . . . . . . . . . . . . .
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material . . . . . . . . . . . . . . . . . . . . . . . . .
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made available . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Sub Common Stock . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
no action . . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
NASD . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
OBCA . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A-v
99
Parent . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Parent Balance Sheet Date . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Parent Common Stock . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Parent Disclosure Schedule . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Parent Financial Statements . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Parent SEC Documents . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Parent Shareholders Meeting . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Parent Stock Option Plans . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Per Share Cash Amount . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Proprietary Information . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Proxy Statement . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Purchase Agreement . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
prohibited transaction . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
release . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
reportable event . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Registration Rights Agreement . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Restricted Securities . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECURITIES ACT . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Shareholders . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Stock Amount . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Stock Price Amount . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Surviving Corporation . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Target . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Target Authorizations . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Target Common Stock . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Target Disclosure Schedule . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Target Employee Plans . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Tax authority . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Tax Return . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Team Bonuses . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Third Party Intellectual Property Rights . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Voting Agreement . . . . . . . . . . . . . . . . . . . . .
. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
A-vi
100
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this
"Agreement"),
dated as of
January 15, 1997, is among ELECTRONIC FAB TECHNOLOGY CORP.,
a
Colorado
corporation ("Parent"), CURRENT MERGER CORP., an Oregon
corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and
CURRENT
ELECTRONICS,
INC., an Oregon corporation ("Target").
RECITALS
A. The Boards of Directors of Parent and
Target
have determined
that a business combination between Parent and Target is in
the
best interests
of their respective companies and shareholders, and
accordingly
have approved
this Agreement and the merger provided for herein whereupon
Target shall merge
with and into Merger Sub upon the terms, and subject to the
conditions, set
forth herein. In addition, each shareholder of Target has
approved this
Agreement and the merger provided for herein.
B. The merger is intended to qualify, for
federal
income tax
purposes, as a tax-free reorganization within the meaning
of
Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
C. Parent, Merger Sub and Target desire to
make
certain
representations, warranties and agreements in connection
with
the merger.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing,
and
of the
representations, warranties, covenants and agreements
contained
herein, the
parties hereto agree as follows:
ARTICLE I
MERGER
1.1 The Merger. Subject to the terms and
conditions of this
Agreement, at the Effective Time (as defined in Section
1.3),
Target shall be
merged with and into Merger Sub in accordance herewith and
the
separate
corporate existence of Target shall thereupon cease (the
"Merger"). Merger Sub
shall be the surviving corporation in the Merger and,
therefore,
is sometimes
hereinafter referred to as "Surviving Corporation." The
Merger
shall have the
effects specified in Section 60.497 of the Oregon Business
Corporation Act (the
"OBCA").
1.2 The Closing. Subject to the terms and
conditions of this
Agreement, the closing of the Merger (the "Closing") shall
take
place (a) at
the offices of Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., local time, within
three
business days
following the day on which the conditions set forth in
Article
VIII shall be
fulfilled or waived in accordance herewith or (b) at such
other
time, date or
place as Parent and Target agree. The date on which the
Closing
occurs is
hereinafter referred to as the "Closing Date."
1.3 Effective Time. If all the conditions to
the
Merger set forth
in Article VIII shall have been fulfilled or waived in
accordance herewith and
this Agreement shall not have been terminated as provided
in
Article X, the
parties hereto shall cause Articles of Merger meeting the
requirements of
Section 60.494 of the OBCA to be properly executed and duly
filed in accordance
with the OBCA on the Closing Date. The Merger shall become
effective at the
time when the Articles of Merger are so filed or at such
later
time that the
parties hereto agree and is designated in such Articles of
Merger (the
"Effective Time").
101
1.4 Certain Tax Positions. The parties hereto
intend the Merger
to qualify, and will take the position for tax purposes
that the
Merger
qualifies, as a non-taxable reorganization under Sections
368(a)(1)(A) and
(a)(2)(D) of the Code. Neither party hereto nor any
affiliate
thereof will
take any action that would cause the Merger not to qualify
as a
reorganization
under those sections.
1.5 Taking of Necessary Action; Further
Action.
If, at any time
after the Effective Time, any further action is necessary
or
desirable to carry
out the purposes of this Agreement and to vest Surviving
Corporation with full
right, title and possession to all assets, property,
rights,
privileges, powers
and franchises of Target and Merger Sub, the officers and
directors of Target
and Merger Sub are fully authorized in the name of their
respective
corporations or otherwise to take, and will take, all such
lawful and necessary
action consistent with this Agreement.
ARTICLE II
SURVIVING CORPORATION
2.1 Articles of Incorporation. The Articles
of
Incorporation of
Merger Sub in effect immediately prior to the Effective
Time
shall be the
Articles of Incorporation of Surviving Corporation until
duly
amended in
accordance with applicable law, except that Article I of
the
Articles of
Incorporation of Surviving Corporation shall be amended to
read
as follows:
"The name of the corporation is 'Current Electronics,
Inc.'"
2.2 Bylaws. The Bylaws of Merger Sub in
effect
immediately prior
to the Effective Time shall be the Bylaws of Surviving
Corporation until duly
amended in accordance with applicable law.
2.3 Directors. The directors of Merger Sub
immediately prior to
the Effective Time shall be the directors of Surviving
Corporation until their
respective successors are duly elected or appointed and
qualified.
2.4 Officers. The officers of Merger Sub
immediately prior to the
Effective Time shall be the officers of Surviving
Corporation
until their
respective successors are duly elected or appointed and
qualified.
ARTICLE III
EFFECT OF MERGER ON CAPITAL STOCK
OF MERGER SUB AND TARGET
3.1 Effect on Capital Stock. At the Effective
Time, by virtue of
the Merger and without any action on the part of Merger
Sub,
Target or the
holders of any of the following securities all of the
following
shall occur:
(a) Cancellation of Target Common
Stock
Owned by Parent
or Target. All shares of Common Stock, $.01 par value, of
Target ("Target
Common Stock") that are owned by Target, and all shares of
Target Common Stock
owned by Parent, Merger Sub or any other subsidiary of
Parent
immediately prior
to the Effective Time shall be canceled.
(b) Conversion of Target Common
Stock.
(i) Each issued and
outstanding
share of Target
Common Stock (other than Dissenting Shares (as defined in
Section 3.1(f)) shall
be converted into the right to receive cash or cash and
shares
of Common Stock,
$.01 par value, of Parent ("Parent Common Stock") in
accordance
with this
Section 3.1(b). The consideration to be received by the
holders
of Target
Common Stock pursuant to the Merger is hereinafter referred
to
as the "Merger
Consideration." The aggregate Merger Consideration to be
received by all
shares of Target Common Stock (assuming there are no
Dissenting
Shares) shall
be equal to $3,370,000, adjusted as provided in
A-2
102
Section 3.1(c)(as so adjusted, the "Cash Amount"), and the
Stock
Amount (as
defined in Section 3.1(b)(ii)). Subject to Section 3.1(c),
(A)
each
shareholder of Target Common Stock listed on Schedule
3.1(b)-1
shall be
entitled to receive with respect to the shares of Target
Common
Stock held by
it an amount of cash equal to the Per Share Cash Amount (as
defined in Section
3.1(b)(ii)) times the number of shares of Target Common
Stock so
held, and (B)
each shareholder of Target Common Stock listed on Schedule
3.1(b)-2 shall be
entitled to receive with respect to the shares of Target
Common
Stock held by
the him the portion of the Cash Amount not to be received
by the
shareholders
of Target Common Stock pursuant to clause (A) and the Stock
Amount, such cash
and shares of Parent Common Stock included in the Stock
Amount
to be allocated
among such shareholders pro rata in accordance with the
number
of shares of
Target Common Stock so held.
(ii) The "Per Share Cash
Amount"
shall be equal to
the sum of the Cash Amount and the Stock Price Amount (as
defined in this
Section 3.1(b)(ii)) divided by 30,000 (adjusted to reflect
fully
the effect of
any stock split, reverse stock split, stock dividend
(including
any dividend or
distribution of securities convertible into target Common
Stock), subdivision,
reclassification, combination, exchange, reorganization,
recapitalization or
other similar transaction with respect to Target Common
Stock
occurring after
the date hereof and prior to the date of determination).
The
"Stock Price
Amount" shall be equal to the last closing sale price of
Parent
Common Stock on
the Nasdaq National Market on the trading day immediately
preceding the Closing
Date times the Stock Amount. The "Stock Amount" shall be
1,980,000 shares of
Parent Common Stock (adjusted to reflect fully the effect
of any
stock split,
reverse stock split, stock dividend (including any dividend
or
distribution of
securities convertible into Parent Common Stock or Target
Common
Stock),
subdivision, reclassification, combination, exchange,
reorganization,
recapitalization or other similar transaction with respect
to
Parent Common
Stock or Target Common Stock occurring after the date
hereof and
prior to date
of determination).
(c) Adjustments to Merger
Consideration.
(i) The Cash Amount will be
$3,370,000 (A)
increased by the amount by which the interest bearing
indebtedness for borrowed
money of Target ("Debt") as of the Effective Time is less
than
the Adjusted
Debt Amount (as defined in this Section 3.1(c)(i)), (B)
reduced
by the amount
by which Debt as of the Effective Time exceeds the Adjusted
Debt
Amount and (C)
if the total combined stockholders' equity of Target and
Current
Electronics
(Washington), Inc., a Washington corporation ("CEWI"), as
of the
Effective Time
("Combined Equity") is less than $4.0 million, reduced or
increased, as the
case may be, by the amount by which the total shareholders'
equity of Target as
of the Effective Time ("Equity") is less or more than
$3,715,000. For purposes
of the foregoing calculation, (x) "Adjusted Debt Amount"
shall
be $2.0 million,
increased by the amount of any bonuses (not to exceed
$180,000)
paid to
Target's leadership team pursuant to Section 6.1(b)(vi)
hereof
(the "Team
Bonuses") and by the amount of any additional Debt
outstanding
as of the
Effective Time that has been authorized by Parent under
Section
3(c)(ii), (y)
Equity and Combined Equity shall be determined without
deduction
for (i) the
amount of any Team Bonuses, (ii) the fees and expenses of
the
accountants of
conducting the audit of the 1994 fiscal year of Target and
CEWI
requested by
Parent (the "1994 Audit Fees"), (iii) any writedown or
writeoff
of leasehold
improvements of Target's Newberg, Oregon facility or any
reserves relating to
any move from such facility of Target's operations that is
contemplated by
Parent, or (iv) such other reserves, writedowns or
adjustments
as may be
approved in writing by Parent, and (z) Equity and Combined
Equity shall be
reduced (regardless of when paid or accrued) by (i) the
amount
of any legal and
accounting fees and expenses incurred by CEWI or Target, as
the
case may be,
with their present counsel and accountants that relate to
the
transactions
contemplated by this Agreement and the Purchase Agreement
(as
defined in
Section 8.1(d)) and any other similar expenses that relate
to
the
representation of the interests of the present shareholders
of
CEWI or Target
with respect to such transactions (other than the 1994
Audit
Fees), and (ii)
the amount of any fees and expenses incurred to Pacific
Crest
Securities, Inc.
as contemplated by the letter agreement identified in
Section
4.26 of this
Agreement. Any Debt owed by CEWI to Target, and any Debt
owed
by Target to
CEWI, shall be ignored in determining the Adjusted Debt
Amount
and the amount
of Debt outstanding. For the avoidance of doubt, the term
Debt
shall not
include the then outstanding balances of two accounts
payable
owed by CEWI to
Allied Signal in the approximate amounts of $676,000 and
$180,000 as of
December 31, 1996. The amount of Debt outstanding, the
Adjusted
Debt Amount
and the amount of Equity as of the Effective Time shall be
determined as
provided in Section 3(c)(iv).
A-3
103
(ii) Target may request that
Parent
consent to an
increase in the Adjusted Debt Amount to permit borrowings
by
Target to fund
actual or expected increased sales volumes and related
working
capital and
capital equipment requirements. Such request may be made
by
giving written
notice to Parent, accompanied by appropriate information
supporting such
request. Parent shall respond to any such request
promptly, and
shall not
unreasonably withhold its consent where such borrowings
would be
necessary to
fund working capital and capital equipment requirements
prudently required in
connection with increases in product sales by Target.
(iii) Target shall prepare and
submit to Parent,
not later than five days prior to the Closing Date, a
written
estimate of the
Cash Amount as of the Closing Date. The estimate shall be
based
upon the books
and records of Target and shall be accompanied by (A) a
statement setting forth
in reasonable detail the calculation of the estimate and
(B) a
certificate
signed by Target confirming that the estimate was
calculated in
accordance with
this Article I. Target shall also deliver to Parent such
other
information as
may be reasonably requested by Parent to verify the
estimate of
the Cash Amount
provided. The amount paid at the Closing based upon the
Cash
Amount under
Section 3.1(b) shall be equal to the estimate provided by
Target, absent
reasonable objection by Parent, in which event the amount
paid
at the Closing
shall be equal to such reasonable amount as may be
specified by
Parent. Within
30 days after the Closing Date, Parent shall deliver to the
Representative (as
defined in the Indemnification Agreement to be delivered
pursuant to Section
8.3(g)) a statement calculating the Cash Amount as of the
Closing Date in
accordance with this Section 3.1. Such calculation shall
be
made in accordance
with generally accepted accounting principles consistently
applied, except as
otherwise specified herein. Parent's statement and report
shall
be final and
binding on the parties unless the Representative delivers a
notice to Parent
disputing any matter including in such statement and
stating the
Representative's position with respect to the disputed
matter.
If the
Representative delivers such notice and the parties are
unable
to resolve all
disputed matters within 30 additional days, Parent or the
Representative may
elect to submit the disputed matter to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Co.,
independent
certified public accountants ("AA"), for determination.
The
determination of
all disputed matters pursuant to the preceding sentence
shall be
final and
binding on the parties and the fees and expenses of AA
shall be
borne by Parent
and the shareholders of Target receiving shares of Parent
Common
Stock in the
Merger (the "Shareholders") in proportion to the amount by
which
the
determination of all matters varies from the positions of
Parent
and the
Shareholders on all matters. Promptly following the
determination of matters
by AA, Parent shall pay to the Shareholders or the
Shareholders
shall pay to
Parent, as appropriate, the amount, if any, determined to
have
been overpaid or
underpaid at the Closing.
(d) Fractional Shares. No fraction
of a
share of Parent
Common Stock will be issued, but in lieu thereof each
holder of
shares of
Target Common Stock who would otherwise be entitled to a
fraction of a share of
Parent Common Stock (after aggregating all fractional
shares of
Parent Common
Stock to be received by such holder) shall receive from
Parent
an additional
share of Parent Common Stock.
(e) Capital Stock of Merger Sub.
Each
issued and
outstanding share of Common Stock, $.01 par value, of
Merger Sub
("Merger Sub
Common Stock") shall be unaffected by the Merger and shall
remain issued and
outstanding.
(f) Dissenting Shares. All issued
and
outstanding shares
of Target Common Stock of any holder who has properly
exercised
his dissenters'
rights with respect thereto in accordance with Sections
60.551
et sec. of the
OBCA and who, as of the Effective Time, has not effectively
withdrawn or lost
such rights (the "Dissenting Shares") will not be converted
into
the right to
receive the Merger Consideration pursuant to Section 3.1(b)
or
any other amount
otherwise payable to such holder hereunder, and the holder
thereof will have
such rights as are granted by the OBCA only. If, after the
Effective Time, any
such holder effectively withdraws or loses such rights, the
holder's Dissenting
Shares thereupon will be treated as if they had been
converted,
at the
Effective Time, into the right to receive the Merger
Consideration and any
other amount otherwise payable to such holder hereunder,
without
interest
thereon. Target will give Parent prompt notice of any
payment
demand received
by Target for any shares of Target Common Stock, any
withdrawal
of such demands
and any other document or instrument received by Target in
connection
therewith. Parent will have the right to participate in
all
negotiations
A-4
104
and proceedings with respect to any such demand and Target
will
not, except
with the prior written consent of Parent, make any payment
with
respect to, or
settle or offer to settle, any such demand.
3.2 Exchange of Certificates.
(a) Exchange; Payment. At the
Closing and
against
surrender to Parent by any holder of record of a
certificate or
certificates
that prior to the Effective Time represented shares of
Target
Common Stock (the
"Certificates"), Parent shall cause to be paid or delivered
to
the holder of
record of such Certificates, without interest thereon, the
Merger Consideration
to be received by such holder as specified in Section 3.1.
Notwithstanding
anything in the foregoing to the contrary, Certificates may
be
surrendered
after the Closing, but until so surrendered, Parent shall
not
cause to be paid
or delivered to the holder of record of such Certificates
the
shares or cash
amounts referred to in the previous sentence and each
outstanding Certificate
that prior to the Effective Time represented shares of
Target
Common Stock will
be deemed from and after the Effective Time, for all
corporate
purposes, other
than the payment of dividends, to evidence the right to
receive
the Merger
Consideration, the right to receive an additional share of
Parent Common Stock
in lieu of the issuance of any fractional shares in
accordance
with Section
3.1(d) and the right to receive unpaid dividends and
distributions, if any,
that such holder has the right to receive in respect of
such
Parent Common
Stock, after giving effect to any required withholding tax,
in
each case
without interest thereon. The shares represented by the
Certificates
surrendered to Parent shall forthwith be canceled. The
risk of
loss and title
to the Certificates shall pass only upon receipt by Parent
of
the Certificates.
(b) Distributions with respect to
Unexchanged Shares. No
dividends or other distributions with respect to Parent
Common
Stock with a
record date after the Effective Time will be paid to the
holder
of any
Certificate until such Certificate is surrendered for
exchange
as provided
herein. Subject to applicable law, following surrender of
any
such
Certificate, there shall be paid to the holder of the
certificates representing
whole shares of Parent Common Stock issued in exchange
therefor,
without
interest, at the time of such surrender, the amount of
dividends
or other
distributions with a record date after the Effective Time
theretofore payable
(but for the provisions of this Section 3.2(b)) with
respect to
such shares of
Parent Common Stock and not paid, less the amount of any
withholding taxes that
may be required thereon.
(c) Transfers. At or after the
Effective
Time, there
shall be no transfers on the stock transfer books of Target
of
the shares of
Target Common Stock that were outstanding immediately prior
to
the Effective
Time. If, at or after the Effective Time, Certificates are
presented to the
Surviving Corporation, they shall be canceled and exchanged
for
certificates of
shares of Parent Common Stock deliverable in respect
thereof
pursuant to this
Agreement in accordance with the procedures set forth in
this
Article III.
Certificates surrendered for exchange by any person shall
not be
exchanged
until Parent has received confirmation of the continued
accuracy
of the
Investor Questionnaire and the Investor Letter,
Indemnification
Agreement and
Registration Rights Agreement (each as defined in Section
8.3)
from such
person.
(d) No Liability. Notwithstanding
anything to the
contrary in this Section 3.2, neither the Surviving
Corporation
nor any party
hereto shall be liable to any person for any amount
properly
paid to a public
official pursuant to any applicable abandoned property,
escheat
or similar law.
3.3 No Further Ownership Rights in Target
Common
Stock. All
shares of Parent Common Stock issued upon surrender for
exchange
of shares of
Target Common Stock in accordance with the terms hereof
(including any
additional share of Parent Common Stock issued in lieu of
fractional shares)
shall be deemed to have been issued in full satisfaction of
all
rights
pertaining to such shares of Target Common Stock, and there
shall be no further
registration of transfers on the records of Surviving
Corporation of shares of
Target Common Stock which were outstanding immediately
prior to
the Effective
Time. If, after the Effective Time, Certificates are
presented
to Surviving
Corporation for any reason, they shall be canceled and
exchanged
as provided in
this Article III.
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3.4 Lost, Stolen or Destroyed Certificates.
If any
Certificate is
lost, stolen or destroyed, the Exchange Agent shall issue
in
exchange for such
lost, stolen or destroyed Certificate, upon the making of
an
affidavit of that
fact by the holder thereof, such shares of Parent Common
Stock
(and cash in
lieu of fractional shares) as may be required pursuant to
Section 3.1, except
that Parent may, in its discretion and as a condition
precedent
to the issuance
thereof, require the owner of such lost, stolen or
destroyed
Certificates to
deliver a bond in such sum as it may reasonably direct as
indemnity against any
claim that may be made against Parent, Surviving
Corporation or
the Exchange
Agent with respect to the Certificates alleged to have been
lost, stolen or
destroyed.
3.5 Stock Subject to Conditions. All shares
of
Parent Common
Stock that are received in the Merger in exchange for
shares of
Target Common
Stock, which, under agreements with Target, are unvested
and
which, by their
terms, do not terminate due to the Merger will also be
unvested,
and the
certificates evidencing such shares will be marked with
appropriate legends.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
TARGET
Except as disclosed in a document of even date
herewith
and delivered
by Target to Parent prior to the execution and delivery of
this
Agreement and
referring to the representations and warranties in this
Agreement (the "Target
Disclosure Schedule"), Target represents and warrants to
Parent
and Merger Sub
as follows:
4.1 Organization, Standing and Power. Target
is a
corporation
duly organized and validly existing under the laws of the
State
of Oregon, has
the full corporate power to own its properties and to carry
on
its business as
now being conducted and as proposed to be conducted and is
duly
qualified to do
business and is in good standing in each jurisdiction in
which
the failure to
be so qualified and in good standing would have a Material
Adverse Effect (as
defined in Section 11.3) on Target. Target has delivered
to
Parent a true and
correct copy of its Articles of Incorporation and Bylaws,
each
as amended to
date. Target is not in violation of any of the provisions
of
its Articles of
Incorporation or Bylaws or equivalent organizational
documents.
4.2 Capitalization; Shareholders.
(a) The authorized capital stock of
Target
consists of
2,000,000 shares of Target Common Stock and 1,000,000
shares of
Preferred
Stock, $.01 par value, of which there are issued and
outstanding
30,000 shares
of Target Common Stock and no shares of Preferred Stock.
There
are no other
outstanding shares of capital stock or other securities of
Target and no
outstanding subscriptions, options, warrants, puts, calls,
purchase or sale
rights, exchangeable or convertible securities or other
commitments or
agreements of any nature relating to the capital stock or
other
securities of
Target, or otherwise obligating Target to issue, transfer,
sell,
purchase,
redeem or otherwise acquire such stock or securities. All
outstanding shares
of Target Common Stock are duly authorized, validly issued,
fully paid and
non-assessable and are free and clear of any mortgage,
pledge,
lien,
encumbrance, charge or other security interest (a "Lien"),
except Liens created
by or imposed upon the holders thereof, and are not subject
to
preemptive
rights or rights of first refusal created by statute, the
Articles of
Incorporation or Bylaws of Target or any agreement to which
Target is a party
or by which it is bound. There are no contracts,
commitments or
agreements
relating to voting, purchase or sale of Target's capital
stock
(i) between or
among Target and any of its shareholders and (ii) to the
Target's knowledge,
between or among any of Target's shareholders, except for
the
shareholders
named in Schedule 4.2 of the Target Disclosure Schedule.
(b) Schedule 4.2 of the Target
Disclosure
Schedule sets
forth a true and complete list of the names of all the
record
holders of Target
Common Stock, together with the number of shares of Target
Common Stock held by
each such holder. Except as set forth in Schedule 4.2 of
the
Target Disclosure
Schedule, each holder so listed that is an individual is a
competent adult or
nonprofit corporation and is the record and the beneficial
owner
of all shares
or other equity securities so listed in his or her name,
with
the sole right to
vote, dispose of, and receive
A-6
106
dividends or distributions with respect to such shares.
Except
as set forth in
Schedule 4.2 of the Target Disclosure Schedule, each holder
so
listed that is
an entity is the record and the beneficial owner of all
shares
or other equity
securities so listed in its name, has the sole right to
vote,
dispose of, and
receive dividends or distributions with respect to such
shares,
has the full
power and authority, and has or will be fully empowered and
authorized as of
the Effective Time, to consummate the matters contemplated
to be
consummated by
such holder herein.
4.3 Subsidiaries. Target does not directly or
indirectly own any
equity or similar interest in, or any interest convertible
or
exchangeable or
exercisable for, any equity or similar interest in, any
corporation,
partnership, joint venture or other business association or
entity.
4.4 Due Authorization.
(a) Target has the full 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 Target, subject only to the
approval of the
Merger by Target's shareholders as contemplated by Section
7.2.
This Agreement
has been duly executed and delivered by Target and
constitutes
the valid and
binding obligation of Target enforceable against Target in
accordance with its
terms. The execution and delivery of this Agreement by
Target
do not, and the
consummation of the transactions contemplated hereby will
not,
(i) conflict
with or violate any provision of the Articles of
Incorporation
or Bylaws of
Target, (ii) violate or conflict with any permit, order,
license, decree,
judgment, statute, law, ordinance, rule or regulation
applicable
to Target or
the properties or assets of Target, or (iii) result in any
breach or violation
of, or constitute a default (with or without notice or
lapse of
time, or both)
under, or give rise to a right of termination, cancellation
or
acceleration of,
or result in the creation of any Lien on any of the
properties
or assets of
Target pursuant to or require the consent or approval of
any
party to any
mortgage, indenture, lease, contract or other agreement or
instrument, bond,
note, concession or franchise applicable to Target or any
of its
properties or
assets, except, in the case of this clause (iii) only,
where
such conflict,
violation, default, termination, cancellation or
acceleration
would not have
and could not reasonably be expected to have a Material
Adverse
Effect on
Target or prevent the consummation of the transactions
contemplated hereby. No
consent, approval, order or authorization of, or
registration,
declaration or
filing with, any court, administrative agency or commission
or
other
governmental authority or instrumentality ("Governmental
Entity") is required
by or with respect to Target in connection with the
execution
and delivery of
this Agreement or the consummation of the transactions
contemplated hereby,
except for the filing of the Articles of Merger as provided
in
Section 1.3 and
such other consents, authorizations, filings, approvals and
registrations
which, if not obtained or made, would not have a Material
Adverse Effect on
Target or prevent the consummation of transactions
contemplated
hereby.
(b) All holders of Target Common
Stock
have approved, by
written consent or otherwise, this Agreement and the Merger
in
accordance with
applicable law, and no other consent or approval of any
holder
of Target Common
Stock or other equity securities of Target is required for
Target to execute
and deliver this Agreement and consummate the transaction
contemplated hereby.
By virtue of such approval, no holder of Target Common
Stock or
other equity
securities of Target has any right to dissent and obtain
payment
for such
holder's shares under applicable law.
4.5 Financial Statements. Target has
heretofore
delivered to
Parent true and complete copies of audited balance sheet,
and
the related
statements of operations and stockholders' equity and of
cash
flows at
September 30, 1996 on a combined basis with CEWI, with
separate
disclosure of
the balance sheet and income and retained earnings of
Target
(the "Annual
Financial Statements"), with an opinion of Target's
independent
public
accountants. Target also has heretofore delivered to
Parent
true copies of the
unaudited balance sheet of Target at November 30, 1996 and
the
related
unaudited statements of income for the two months then
ended
(the "Interim
Target Financial Statements"). The Annual Financial
Statements
and the Interim
Target Financial Statements were prepared in accordance
with
generally accepted
accounting principles applied on a basis consistent
throughout
the periods
indicated and consistent with each other (except as
indicated in
the notes
thereto and, in the case of the
A-7
107
Interim Target Financial Statements, that no notes are
included)
and fairly
present the consolidated financial condition and operating
results of Target
(combined with CEWI to the extent applicable) at the dates
and
during the
periods indicated therein, subject, in the case of the
Interim
Target Financial
Statements, to normal, recurring year-end audit
adjustments.
4.6 Absence of Certain Changes. Except as
specifically permitted
by this Agreement or as set forth in Schedule 4.6 of the
Target
Disclosure
Schedule, since September 30, 1996, Target has conducted
its
business in the
ordinary course consistent with past practice and there has
not
occurred:
(a) any change, event or condition
(whether covered by
insurance) that has resulted in, or might reasonably be
expected
to result in,
a Material Adverse Effect on Target;
(b) any sale, lease or other transfer
or
disposition of
any property or asset of Target, except for the sale of
inventory in the
ordinary course of business;
(c) any change in accounting methods,
practices or
policies (including any change in depreciation or
amortization
policies or
rates) by Target or any revaluation by Target of any of its
assets, except as
described in the notes to the Annual Financial Statements;
(d) any declaration, setting aside,
or
payment of any
dividend or other distribution to Target's shareholders, or
any
direct or
indirect redemption, retirement, purchase or other
acquisition
by Target of any
of its capital stock or other securities or options,
warrants or
other rights
to acquire capital stock;
(e) any entering into, amendment or
termination of, or
default under, by Target of any contract to which Target is
a
party or by which
it is bound other than in the ordinary course of business
and as
provided to
Parent;
(f) any damage, destruction or loss
(whether or not
covered by insurance) to the properties and assets of
Target;
(g) any commitment or transaction
(including any capital
expenditure, capital financing or sale of assets) by Target
for
any amount that
requires or could require payments in excess of $50,000
with
respect to any
individual contract or a series of related contracts;
(h) any Lien on any asset allowed to
exist
by Target;
(i) any cancellation of any debt or
waiver
or release of
any right or claim by Target;
(j) any payment, discharge or
satisfaction
of any claim,
liability or obligation by Target, other than as reflected
or
reserved against
in the Annual Financial Statements or the Interim Target
Financial Statements
or in the ordinary course of business consistent with past
practice;
(k) to Target's knowledge, any labor
dispute, litigation
or governmental investigation affecting the business or
financial condition of
Target;
(l) any issuance or sale of capital
stock
or other
securities, exchangeable or convertible securities,
options,
warrants, puts,
calls or other rights to acquire capital stock or other
securities of Target;
(m) any indebtedness for borrowed
money
incurred, assumed
or guaranteed by Target;
(n) any loan or advance (other than
advances to employees
in the ordinary course of business for travel and
entertainment
in accordance
with past practice) to any person;
A-8
108
(o) any increase in any salary, wage,
benefit or other
remuneration payable or to become payable to any current or
former officer,
director, employee or agent of Target or any bonus or
severance
payment or
arrangement made to, for or with any officer, director,
employee
or agent of
Target or any supplemental retirement plan or other program
or
special
remuneration for any officer, director, employee or agent
of
Target, except for
(i) the Team Bonuses and (ii) normal salary or wage
increases
relating to
periodic performance reviews and annual bonuses consistent
with
past practice
of Target where such increases or bonuses are not given to
Target's
shareholders or their relations or members of the
leadership
team of Target or
CEWI;
(p) any grant of credit to any
customer on
terms or in
amounts more favorable than those which have been extended
to
such customer in
the past, any other change in the terms of any credit
heretofore
extended or
any other change in the policies or practices of Target
with
respect to the
granting of credit;
(q) any delay in the payment of any
trade
or other
payables other than in the ordinary course of business
consistent with past
practice; or
(r) any agreement, whether in writing
or
otherwise, by
Target to do any of the foregoing.
4.7 Liabilities. Except as set forth in the
Annual
Financial
Statements, the Interim Target Financial Statements,
Schedule
4.7 of the Target
Disclosure Schedule or any other Schedule of the Target
Disclosure Schedule and
except for liabilities or obligations arising in the
ordinary
course and
consistent with past practice and those incurred in
connection
herewith, Target
does not have any liability or obligation of any nature,
whether
due or to
become due, fixed or contingent.
4.8 Litigation. There is no private or
governmental action, suit,
proceeding, claim, arbitration or investigation pending
before
any agency,
court or tribunal, foreign or domestic, or, to the
knowledge of
Target,
threatened against Target or any of its assets and
properties or
any of its
officers or directors (in their capacities as such) that,
individually or in
the aggregate, could reasonably be expected to have a
Material
Adverse Effect
on Target. There is no judgment, decree or order against
Target, or, to the
knowledge of Target, any of its directors or officers (in
their
capacities as
such), that could prevent consummation of the transactions
contemplated by this
Agreement, or that could reasonably be expected to have a
Material Adverse
Effect on Target.
4.9 Restrictions on Business Activities.
There is
no material
agreement, judgment, injunction, order or decree binding
upon
Target which has
or reasonably could be expected to have the effect of
prohibiting or materially
impairing any current or proposed business practice of
Target,
any acquisition
of property by Target or the conduct of business by Target
as
currently
conducted or as proposed to be conducted by Target.
4.10 Governmental Authorization. Target has
obtained each federal,
state, county, local or foreign governmental consent,
license,
permit, grant,
or other authorization that are necessary for Target to own
or
lease, operate
and use its respective assets and properties and to carry
on
business as
currently conducted or as proposed to be conducted
(collectively
"Target
Authorizations"), Target has performed and fulfilled its
obligations under the
Target Authorizations, and all the Target Authorizations
are in
full force and
effect, except where the failure to obtain or have any of
such
Target
Authorizations could not reasonably be expected to have a
Material Adverse
Effect on Target.
4.11 Contracts and Commitments. Except as set
forth
in Schedule
4.11 of the Target Disclosure Schedule, Target is not a
party to
any oral or
written (a)(i) obligation for borrowed money, (ii)
obligation
evidenced by
bonds, debentures, notes or other similar instruments,
(iii)
obligation to pay
the deferred purchase price of property or services (other
than
trade accounts
arising in the ordinary course of business), (iv)
obligation
under capital
leases, (v) debt of others secured by a Lien on its
property,
(vi) guaranty of
liabilities or obligations of others, (vii) agreement under
which Target is
obligated to make or expects to receive payments in excess
of
$50,000 or (viii)
agreement granting any person a Lien on any of its
properties or
assets (except
purchase money security interests created in the ordinary
course
of business
consistent with past practice); (b)(i) employment agreement
or
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109
collective bargaining agreement or (ii) agreements that
limits
the right of
Target, or any of its employees to compete in any line of
business; or (c)
agreement which, after giving effect to the transactions
contemplated hereby,
purports to restrict or bind Parent or any of its
subsidiaries,
other than
Surviving Corporation, in any respect. True and complete
copies
of all
agreements described in Schedule 4.11 of the Target
Disclosure
Schedule or any
other section thereto have been delivered to Parent.
Target has
fulfilled, or
taken all actions necessary to enable it to fulfill when
due,
its obligations
under each of such agreements. All parties thereto have
complied in all
material respects with the provisions thereof and no party
is in
breach or
violation of, or in default (with or without notice or
lapse of
time, or both)
under such agreements. With respect to such agreements,
Target
has not
received any notice of termination, cancellation or
acceleration
or any notice
of breach, violation or default thereof.
4.12 Title to Property. Except as set forth in
Schedule 4.12 of
the Target Disclosure Schedule, Target has good and
marketable
title to all of
its respective properties and assets, or in the case of
leased
properties and
assets, valid leasehold interests in such properties, free
and
clear of any
Lien. The plants, property and equipment of Target that
are
used in the
operations of its business are in good operating condition
and
repair. All
plants, property and equipment have been well maintained
and
conform (to
Target's knowledge) with all applicable ordinances,
regulations
and zoning and
other laws and do not encroach on the property of others.
There
is no pending
or, to Target's knowledge, threatened change in any such
ordinance, regulation
or zoning or other law, and there is no pending or, to
Target's
knowledge,
threatened condemnation of any such building, machinery or
equipment. The
properties and assets of Target include all rights,
properties,
interests in
properties and assets necessary to permit Surviving
Corporation
to conduct its
business as currently conducted or as proposed to be
conducted.
Schedule 4.12
of the Target Disclosure Schedule identifies each parcel of
real
property owned
or leased by Target.
4.13 Intellectual Property.
(a) Target owns, or is licensed or
otherwise possesses
legally enforceable rights to use, all patents, trademarks,
trade names,
service marks, copyrights, and any applications therefor,
maskworks, net lists,
schematics, technology, know-how, trade secrets, inventory,
ideas, algorithms,
processes, computer software programs or applications (in
both
source code and
object code form), and tangible or intangible proprietary
information or
material ("Intellectual Property") that are used or
proposed to
be used in the
business of Target as currently conducted or as proposed to
be
conducted,
except to the extent that the failure to have such rights
has
not and could not
reasonably be expected to have a Material Adverse Effect on
Target.
(b) Schedule 4.13 of the Target
Disclosure
Schedule lists
(i) all patents and patent applications and all registered
and
unregistered
trademarks, trade names and service marks, registered and
unregistered
copyrights, and maskworks, which Target considers to be
material
to its
business and included in the Intellectual Property,
including
the jurisdictions
in which each such Intellectual Property right has been
issued
or registered or
in which any application for such issuance and registration
has
been filed,
(ii) all material licenses, sublicenses and other
agreements as
to which Target
is a party and pursuant to which any person is authorized
to use
any
Intellectual Property, and (iii) all material licenses,
sublicenses and other
agreements as to which Target is a party and pursuant to
which
Target is
authorized to use any third party patents, trademarks or
copyrights, including
software ("Third Party Intellectual Property Rights"), in
each
case which are
incorporated in, are, or form a part of any product or
service
of Target.
(c) To the knowledge of Target, there
is
no unauthorized
use, disclosure, infringement or misappropriation of any
Intellectual Property
rights of Target, any trade secret material to Target, or
any
Third Party
Intellectual Property Right, by any third party, including
any
employee or
former employee of Target. Target has not entered into any
agreement to
indemnify any other person against any charge of
infringement of
any
Intellectual Property, other than indemnification
provisions
contained in
purchase orders arising in the ordinary course of business.
▇-▇▇
▇▇▇
(▇) Target is not, and will not be as
a
result of the
execution and delivery of this Agreement or the performance
of
Target's
obligations under this Agreement be, in breach of any
license,
sublicense or
other agreement relating to the Intellectual Property or
Third
Party
Intellectual Property Rights, the breach of which could
have a
Material Adverse
Effect on Target.
(e) All patents, registered
trademarks,
service marks and
copyrights held by Target are valid and subsisting. Target
(i)
has not been
sued in any suit, action or proceeding which involves a
claim of
infringement
of any patents, trademarks, service marks, copyrights or
violation of any trade
secret or other proprietary right of any third party or
(ii) has
not brought
any action, suit or proceeding for infringement of
Intellectual
Property or
breach of any license or agreement involving Intellectual
Property against any
third party. The manufacture, marketing, licensing or sale
of
the products and
services of Target does not infringe any patent, trademark,
service ▇▇▇▇,
copyright, trade secret or other proprietary right of any
third
party.
(f) Target has secured valid written
assignments from all
consultants and employees who contributed to the creation
or
development of
Intellectual Property of the rights to such contributions
that
Target does not
already own by operation of law.
(g) Target has taken all reasonable
and
appropriate steps
to protect and preserve the confidentiality of all
Intellectual
Property not
otherwise protected by patents, or patent applications or
copyright
("Confidential Information"). All use, disclosure or
appropriation of
Confidential Information owned by Target by or to a third
party
has been
pursuant to the terms of a written agreement with such
third
party. All use,
disclosure or appropriation of Confidential Information not
owned by Target has
been pursuant to the terms of a written agreement with the
owner
of such
Confidential Information, or is otherwise lawful.
4.14 Environmental Matters.
(a) Target has complied with, and is
in
compliance with,
all Environmental Laws (as defined in this Section 4.14(a))
applicable to its
business, properties and assets. Target has, and Target
has
provided to Parent
true and complete copies of, all permits, approvals,
registrations, licenses
and other authorizations required by any Governmental
Entity
pursuant to any
Environmental Law applicable to its business, properties
and
assets, the
absence of which would have a Material Adverse Effect on
Target.
There is no
pending or, to Target's knowledge, threatened civil or
criminal
litigation,
written notice of violation, formal administrative
proceeding,
or
investigation, inquiry or information request by any
Governmental Entity,
relating to any Environmental Law to which Target is a
party or,
to Target's
knowledge, threatened to be made a party. For purposes of
this
Agreement,
"Environmental Law" means any federal, state or local law,
statute, rule or
regulation or the common law relating to the environment or
occupational health
and safety, including any statute, regulation or order
pertaining to (i)
treatment, storage, disposal, generation and transportation
of
industrial,
toxic or hazardous substances or solid or hazardous waste;
(ii)
air, water and
noise pollution; (iii) groundwater and solid contamination;
(iv)
the release or
threatened release into the environment of industrial,
toxic or
hazardous
substances, or solid or hazardous waste, including without
limitation
emissions, discharges, injections, spills, escapes or
dumping of
pollutants,
contaminants or chemicals; (v) the protection of wild life,
marine sanctuaries
and wetlands, including without limitation all endangered
and
threatened
species; (vi) storage tanks, vessels and containers; (vii)
underground and
other storage tanks or vessels, abandoned, disposed or
discarded
barrels,
containers and other closed receptacles; (viii) health and
safety of employees
and other persons; and (ix) manufacture, processing, use,
distribution,
treatment, storage, disposal, transportation or handling of
pollutants,
contaminants, chemicals or industrial, toxic or hazardous
substances or oil or
petroleum products or solid or hazardous waste. As used
herein,
the terms
"release" and "environment" have the meanings set forth in
the
federal
Comprehensive Environmental Compensation, Liability and
Response
Act of 1980
("CERCLA").
(b) There have been no releases of
any
Materials of
Environmental Concern (as defined in this Section 4.14(b))
into
the environment
at any parcel of real property or any facility presently or
formerly owned by
Target or by Target at any parcel of real property or any
facility presently or
formerly leased, operated or
A-11
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controlled by Target. With respect to any such releases of
Materials of
Environmental Concern, Target has given all required
notices to
government
authorities, copies of which have been provided to Parent.
Target is not aware
of any releases of Materials of Environmental Concern at
parcels
of real
property or facilities other than those presently or
formerly
owned, leased,
operated or controlled by Target that could reasonably be
expected to have an
impact on the real property or facilities owned, leased,
operated or controlled
by Target. For purposes of this Agreement, "Materials of
Environmental
Concern" means any chemicals, pollutants or contaminants,
hazardous substances
(as such term is defined under CERCLA), solid wastes and
hazardous wastes (as
such terms are defined under the Federal Resources
Conservation
and Recovery
Act), toxic materials, oil or petroleum and petroleum
products.
(c) Set forth in Schedule 4.14 of the
Target Disclosure
Schedule is a list of all environmental reports,
investigations
and audits in
the possession of Target with respect to the operations of,
or
real property
leased by Target (whether conducted by or on behalf of
Target or
a third party
and whether done at the initiative of Target or directed by
a
Governmental
Entity or other third party). True and complete copies of
each
such report, or
the results of each such investigation or audit, have been
provided to Parent.
(d) Target is not aware of any
material
environmental
liability arising out of the utilization by Target of any
solid
and hazardous
waste transporter or treatment, storage and disposal
facility.
4.15 Taxes. Target, and any consolidated,
combined,
unitary or
aggregate group for Tax (as defined in this Section 4.15)
purposes of which
Target is or has been a member have timely filed all Tax
Returns
(as defined in
this Section 4.15) required to be filed by it taking into
account extensions of
due dates, have paid all Taxes shown thereon to be due and
has
provided
adequate accruals in accordance with generally accepted
accounting principles
in its financial statements for any Taxes that have not
been
paid, whether
shown as being due on any Tax returns. Target has withheld
and
paid over all
Taxes required to have been withheld and paid over
(including
any estimated
taxes), and has complied with all information reporting and
backup withholding
requirements, including maintenance of required records
with
respect thereto,
in connection with amounts paid or owing to any employee,
creditor, independent
contractor, or other third party. Target does not have any
liability under
Treasury Regulation Section 1.1502-6 or any analogous
state,
local or foreign
law by reason of having been a member of any consolidated,
combined or unitary
group. Target does not have any liability under Treasury
Regulation Section
1.1502-6 or any analogous state, local or foreign law by
reason
of having been
a member of any consolidated, combined or unitary group.
Except
as disclosed
in Schedule 4.15 of the Target Disclosure Schedule, (a) no
material claim for
Taxes has become a Lien against the property of Target or
is
being asserted
against Target other than Liens for Taxes not yet due and
payable, (b) no audit
of any Tax Return of Target is being conducted by a Tax
authority, (c) no Tax
authority is now asserting, or to the knowledge of Target,
threatening to
assert against Target any deficiency or claim for
additional
Taxes, and there
are no requests for information from a Tax authority
currently
outstanding that
could affect the Taxes of Target, (d) no extension of the
statute of
limitations on the assessment of any Taxes has been granted
by
Target and is
currently in effect, (e) Target has not entered into any
compensatory
agreements with respect to the performance of services
which
payment thereunder
would result in a nondeductible expense pursuant to
Sections
162(m) or 280G of
the Code, (f) no action has been taken that would have the
effect of deferring
any liability for Taxes for Target from any period prior to
the
Effective Date
to any period after the Effective Date, (g) Target has
never
been included in
an affiliated group of corporations, within the meaning of
Section 1504 of the
Code, (h) Target is not (nor has it ever been) a party to
any
Tax sharing
agreement, (i) no consent under Section 341(f) of the Code
has
been filed with
respect to Target, (j) Target has not disposed of any
property
that has been
accounted for under the installment method, (k) Target is
not a
party to any
interest rate swap, currency swap or similar transaction,
(l)
Target is not a
United States real property holding corporation within the
meaning of Section
897(c)(2) of the Code, (m) Target is not subject to any
joint
venture,
partnership or other arrangement or contract that is
treated as
a partnership
for federal income tax purposes, (n) Target has not made
any of
the foregoing
elections and is not required to apply any of the foregoing
rules under any
comparable state or local income tax provisions, and (o)
the
transactions
contemplated herein are not subject to the tax withholding
provisions of
Section 3406 of the Code, or of Subchapter A of Chapter 3
of the
Code, or of
any other provision of law. Target will not be required to
include any
material adjustment in Taxable income for any Tax period
(or
portion thereof)
ending after
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112
the Effective Time attributable to adjustments made prior
to the
Merger
pursuant to Section 481 or 263A of the Code or any
comparable
provision of any
state or foreign Tax law. Schedule 4.15 of the Target
Disclosure Schedule
contains accurate and complete information with respect to:
(w)
all material
tax elections in effect with respect to Target, (x) the
current
tax basis of
the assets of Target, (y) the current and accumulated
earnings
and profits of
Target, and (z) the tax credit carry overs of Target. As
used
herein, "Tax"
(and, with correlative meaning, "Taxes" and "Taxable")
means (i)
any net
income, alternative or add-on minimum tax, gross income,
gross
receipts, sales,
use, ad valorem, transfer, franchise, profits, license,
withholding, payroll,
employment, excise, severance, stamp, business and
occupations,
occupation,
premium, property, environmental or windfall profit tax,
custom,
duty, or other
tax, governmental fee or other like assessment or charge of
any
kind
whatsoever, together with any interest or any penalty,
addition
to tax or
additional amount imposed by any Governmental Entity (a
"Tax
authority")
responsible for the imposition of any such tax (domestic or
foreign), (ii) any
liability for the payment of any amounts of the type
described
in clause (i) as
a result of being a member of an affiliated, consolidated,
combined or unitary
group for any Taxable period and (iii) any liability for
the
payment of any
amounts of the type described in clause (i) or (ii) as a
result
of any express
or implied obligation to indemnify any other person. As
used
herein, "Tax
Return" shall mean any return, statement, report or form
(including, without
limitation,) estimated Tax returns and reports, withholding
Tax
returns and
reports and information reports and returns required to be
filed
with respect
to Taxes. Target is in full compliance with all terms and
conditions of any
Tax exemptions or other Tax-sharing agreement or order of a
foreign government
and the consummation of the Merger shall not have any
adverse
effect on the
continued validity and effectiveness of such Tax exemptions
or
other
Tax-sharing agreement or order.
4.16 Employee Benefit Plans.
(a) Schedule 4.16 of the Target
Disclosure
Schedule
lists, with respect to Target, and any trade or business
(whether or not
incorporated) which is treated as a single employer with
Target
(an "ERISA
Affiliate") within the meaning of Section 414(b), (c), (m)
or
(o) of the Code,
(i) all material employee benefit plans (as defined in
Section
3(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")), (ii)
each loan to a non-officer employee in excess of $50,000,
loans
to officers and
directors and any stock option, stock purchase, phantom
stock,
stock
appreciation right, supplemental retirement, severance,
sabbatical, medical,
dental, vision care, disability, employee relocation,
cafeteria
benefit (Code
Section 125) or dependent care (Code Section 129), life
insurance or accident
insurance plans, programs or arrangements, (iii) all bonus,
pension, profit
sharing, savings, deferred compensation or incentive plans,
programs or
arrangements, (iv) other fringe or employee benefit plans,
programs or
arrangements that apply to senior management and that do
not
generally apply to
all employees, and (v) any current or former employment or
executive
compensation or severance agreements, written or otherwise,
as
to which
unsatisfied obligations of greater than $50,000 remain for
the
benefit of, or
relating to, any present or former employee, consultant or
director
(collectively, the "Target Employee Plans").
(b) Target has furnished to Parent a
copy
of each of the
Target Employee Plans and related plan documents (including
trust documents,
insurance policies or contracts, employee booklets, summary
plan
descriptions
and other authorizing documents, and, to the extent still
in its
possession,
any material employee communications relating thereto) and
has,
with respect to
each Target Employee Plan which is subject to ERISA
reporting
requirements,
provided copies of the Form 5500, including all schedules
attached thereto and
actuarial reports, if any, filed for the last three Plan
years.
Any Target
Employee Plan intended to be qualified under Sections
401(a) or
501(c)(9) of
the Code has either obtained from the Internal Revenue
Service a
favorable
determination letter as to its qualified status under the
Tax
Reform Act of
1986 and subsequent legislation, or has applied to the
Internal
Revenue Service
for such a determination letter prior to the expiration of
the
requisite period
under applicable Treasury Regulations or Internal Revenue
Service
pronouncements in which to apply for such determination
letter
and to make any
amendments necessary to obtain a favorable determination.
Target
has also
furnished Parent with the most recent Internal Revenue
Service
determination
letter issued with respect to each such Target Employee
Plan
(and nothing has
occurred since the issuance of each such letter which could
reasonably be
expected to cause the loss of the tax-qualified status of
any
Target Employee
Plan subject to Code Section 401(a)), and all prohibited
transaction exemptions
(or requests for such exemptions), private letter rulings,
opinions,
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information letters or compliance statements issued with
respect
to any plan
described in Section 4.16(a) by the Internal Revenue
Service,
the Department of
Labor or the Pension Benefit Guaranty Corporation.
(c) (i) None of the Target Employee
Plans
promises or
provides retiree medical or other retiree welfare benefits
to
any person; (ii)
there has been no "prohibited transaction," as such term is
defined in Section
406 of ERISA and Section 4975 of the Code, with respect to
any
Target Employee
Plan, which could reasonably be expected to have, in the
aggregate, a Material
Adverse Effect; (iii) each Target Employee Plan has been
administered in
accordance with its terms and in compliance with the
requirements prescribed by
any and all statutes, rules and regulations (including
ERISA and
the Code),
except as would not have a Material Adverse Effect on
Target,
and Target and
each ERISA Affiliate have performed all obligations
required to
be performed by
them under, are not in any respect in default under or
violation
of, and have
no knowledge of any default or violation by any other party
to,
any of the
Target Employee Plans, which default or violation could
reasonably be expected
to have a Material Adverse Effect on Target; (iv) neither
Target
nor any ERISA
Affiliate is subject to any liability or penalty under
Sections
4976 through
4980 of the Code or Title I of ERISA with respect to any of
the
Target Employee
Plans which have a Material Adverse Effect on any such
parties;
(v) all
material contributions required to be made by Target or any
ERISA Affiliate to
any Target Employee Plan have been made on or before its
due
dates and a
reasonable amount has been accrued for contributions to
each
Target Employee
Plan for the current plan years; (vi) with respect to each
Target Employee
Plan, no "reportable event" within the meaning of Section
4043
of ERISA
(excluding any such event for which the 30-day notice
requirement has been
waived under the regulations to Section 4043 of ERISA) nor
any
event described
in Section 4062, 4063 or 4041 of ERISA has occurred; and
(vii)
no Target
Employee Plan is covered by, and neither Target nor any
ERISA
Affiliate has
incurred or expects to incur any liability under Title IV
of
ERISA or Section
412 of the Code. With respect to each Target Employee Plan
subject to ERISA as
either an employee pension plan within the meaning of
Section
3(2) of ERISA or
an employee welfare benefit plan within the meaning of
Section
3(1) of ERISA,
Target has prepared in good faith and timely filed all
requisite
governmental
reports (which were true and correct as of the date filed)
and
has properly and
timely filed and distributed or posted all notices and
reports
to employees
required to be filed, distributed or posted with respect to
each
such Target
Employee Plan except where the failure to timely file,
distribute or post such
documents would not, in the aggregate, have a Material
Adverse
Effect on
Target. No suit, administrative proceeding, action or
other
litigation has
been brought, or to the knowledge of Target, is threatened,
against or with
respect to any such Target Employee Plan, including any
audit or
inquiry by the
Internal Revenue Service or United States Department of
Labor.
Neither Target
nor any ERISA Affiliate is a party to, or has made any
contribution to or
otherwise incurred any obligation under, any "multiemployer
plan" as defined in
Section 3(37) of ERISA.
(d) With respect to each Target
Employee
Plan, Target has
complied with (i) the applicable health care continuation
and
notice provisions
of the Consolidated Omnibus Budget Reconciliation Act of
1985
("COBRA") and the
proposed regulations thereunder and (ii) the applicable
requirements of the
Family and Medical Leave Act of 1993 and the regulations
thereunder, except to
the extent that such failure to comply would not, in the
aggregate, have a
Material Adverse Effect on Target.
(e) The execution and delivery of
this
Agreement and the
consummation of the transactions contemplated hereby will
not
(i) entitle any
current or former employee or other service provider or any
director of Target,
or any ERISA Affiliate to severance benefits or any other
payment (including
unemployment compensation, golden parachute, bonus or
otherwise), (ii) increase
any benefits otherwise payable or (iii) accelerate the time
of
payment or
vesting, or increase the amount of compensation due any
such
employee, service
provider or director.
(f) There has been no amendment to,
written
interpretation or announcement (whether or not written) by
Target, or any ERISA
Affiliate relating to, or change in participation or
coverage
under, any Target
Employee Plan which would materially increase the expense
of
maintaining such
Plan above the level of expense incurred with respect to
that
Plan for the most
recent fiscal year included in the Annual Financial
Statements.
4.17 Employee Matters. Schedule 4.17 of the
Target
Disclosure
Schedule lists all employees of Target and the remuneration
and
benefits to
which such employees are entitled. Schedule 4.17 also
lists all
employment
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contracts and collective bargaining agreements, and all
pension,
bonus, profit
sharing, or other agreements or arrangements providing for
employee
remuneration or benefits to which Target is a party or by
which
it is bound;
all of these contracts and arrangements are in full force
and
effect, and
neither Target nor any other party is in default under
them.
There have been
no claims of defaults and, to Target's knowledge there are
no
facts or
conditions which if continued, or on notice, will result in
a
default under
these contracts or arrangements. There is no pending or,
to
Target's
knowledge, threatened labor dispute, strike, or work
stoppage
that would have a
Material Adverse Effect on Target. Target is in compliance
in
all respects
with all current applicable laws and regulations respecting
employment,
discrimination in employment, terms and conditions of
employment, wages, hours
and occupational safety and health and employment
practices, and
are not
engaged in any unfair labor practice. There are no pending
claims against
Target under any workers compensation plan or policy or for
long
term
disability. Target does not have any obligations under
COBRA
with respect to
any former employees or qualifying beneficiaries
thereunder.
4.18 Interested Party Transactions. Except as
disclosed in
Schedule 4.18 of the Target Disclosure Schedule, Target is
not
indebted to any
shareholder, director, officer, employee or agent of Target
(except for amounts
due as normal salaries and bonuses and in reimbursement of
ordinary expenses),
and no such person is indebted to Target, and there have
been no
other
transactions of the type required to be disclosed pursuant
to
Items 402 and 404
of Regulation S-K under the Securities Act of 1933, as
amended,
and the
Securities Exchange Act of 1934, as amended.
4.19 Insurance. Target has policies of
insurance
and bonds of the
type and in amounts customarily carried by persons
conducting
businesses or
owning assets similar to those of Target. Schedule 4.19 of
the
Target
Disclosure Schedule sets forth a true and complete listing
of
all such
policies, including in each case applicable coverage
limits,
deductibles and
policy expiration dates. There is no material claim
pending
under any of such
policies or bond as to which Target has received a denial,
or,
to Target's
knowledge, which coverage has been questioned, denied or
disputed by the
underwriters of such policies or bonds. All premiums due
and
payable under all
such policies and bonds have been paid and Target is
otherwise
in compliance in
all material respects with the terms of such policies and
bonds.
Target has no
knowledge of any threatened termination of, or material
premium
increase with
respect to, any of such policies. Each policy or bond is
legal,
valid,
binding, enforceable and in full force and effect and will
continue to be
legal, valid, binding, enforceable and in full force and
effect
following the
consummation of the transactions contemplated hereby.
4.20 Compliance With Laws. Target has complied
with, is not in
violation of, and has not received any notices of violation
with
respect to,
any federal, state, local or foreign statute, law or
regulation
with respect to
the conduct of its business, or the ownership or operation
of
its business,
except for such violations or failures to comply as could
not be
reasonably
expected to have a Material Adverse Effect on Target.
4.21 Major Customers. Schedule 4.21 of the
Target
Disclosure
Schedule contains a list of the customers of Target for
each of
the two most
recent fiscal years, which individually accounted for more
than
five percent of
the total dollar amount of net sales, showing the total
dollar
amount of net
sales to each such customer during each such year. Target
has
no knowledge or
information of any facts indicating, nor any other reason
to
believe, that any
of the customers listed in such Schedule 4.21 will not
continue
to be customers
of Target after the Closing at substantially the same level
of
purchases.
4.22 Suppliers. As of the date hereof, no
supplier
of Target has
indicated to Target that it will stop, or decrease the rate
of,
supplying
materials, products or service to Target. Target has not
knowingly breached,
so as to provide a benefit to Target that was not intended
by
the parties, any
agreement with, or engaged in any fraudulent conduct with
respect to, any
customer or supplier of Target.
4.23 Inventory. All inventories of raw
materials,
work-in process
and finished goods (including all such in transit) of
Target,
together with
related packaging materials (collectively, "Inventory"),
reflected in the
Interim Target Financial Statements consist of a quality
and
quantity usable
and saleable in the ordinary course of
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115
business, have commercial values at least equal to the
value
shown on such
balance sheet or are subject to purchase obligations by
customers or suppliers
at such value and is valued in accordance with generally
accepted accounting
principles at the lower of cost (on a first in first out
basis)
or market. All
Inventory purchased since the date of such balance sheet
consists of a quality
and quantity usable and saleable in the ordinary course of
business. Except as
set forth in Schedule 4.23 of the Target Disclosure
Schedule,
all Inventory is
located on premises owned or leased by Target. All work-in
process contained
in Inventory constitutes items in process of production
pursuant
to contracts
or open orders taken in the ordinary course of business,
from
regular customers
of Target with no recent history of credit problems with
respect
to Target;
neither Target nor any such customer is in material breach
of
the terms of any
obligation to the other, and, based on Target's knowledge
or
what Target
reasonably should know, valid grounds exist for any
counterclaim
or set-off of
amounts billable to such customers upon the completion of
orders
to which
work-in-process relates. All work-in process is of a
quality
ordinarily
produced in accordance with the requirements of the orders
to
which such
work-in-process is identified, and will require no rework
with
respect to work
performed prior to Closing.
4.24 Product Warranty and Product Liability.
Schedule 4.24 of the
Target Disclosure Schedule contains a true and complete
copy of
Target's
standard warranty or warranties for its manufacturing
services.
There has been
no variation from such warranties, except as set forth in
Schedule 4.24 of the
Target Disclosure Schedule. Except as stated therein,
there are
no warranties,
commitments or obligations with respect to Target's
performance
of services.
Schedule 4.24 of the Target Disclosure Schedule contains a
description of all
product liability claims and similar claims, actions,
litigation
and other
proceedings relating to services rendered, which are
presently
pending or, to
Target's knowledge, threatened, or which have been asserted
or
commenced
against Target within the last five years, in which a party
thereto either
requests injunctive relief (whether temporary or permanent)
or
alleges damages
(whether or not covered by insurance). There are no
defects in
Target's
manufacturing services that would adversely affect
performance
of products
Target manufactures or create an unusual risk of injury to
persons or property.
Target's manufacturing services have been designed or
performed
so as to meet
and comply with all governmental standards and
specifications
currently in
effect, and have received all governmental approvals
necessary
to allow its
performance.
4.25 Minutes Books. The minute books of Target
made
available to
Parent contain true and complete summaries of all meetings
of
directors and
shareholders or actions by written consent since the time
of
incorporation of
Target, and reflect all transactions referred to in such
minutes
accurately in
all material respects.
4.26 Brokers' and Finders' Fees. Except for
the
letter agreement,
dated August 23, 1996 between Target and Pacific Crest
Securities, Inc., Target
has not incurred, and will not incur, directly or
indirectly,
any liability for
brokerage or finders' fees or agents' commissions or
investment
bankers' fees
or any similar charges in connection with this Agreement or
any
transaction
contemplated hereby.
4.27 Section 60.835 of OBCA Not Applicable.
The
Board of Directors
of Target has taken all actions, including the approval of
the
Merger, so that
the restrictions contained in Section 60.835 of the OBCA
applicable to a
"business combination" (as defined in Section 60.825 of the
OBCA) will not
apply to the execution, delivery or performance of this
Agreement or the
consummation of the Merger or the other transactions
contemplated by this
Agreement.
4.28 Proxy Statement. The information supplied
by
Target for
inclusion in the proxy statement to be sent to the
shareholders
of Parent in
connection with the meeting of Parent's shareholders (the
"Parent Shareholders
Meeting") to consider the Merger (such proxy statement as
amended or
supplemented is referred to herein as the "Proxy
Statement")
shall not, on the
date the Proxy Statement is first mailed, at the time of
the
Parent
Shareholders Meeting and at the Effective Time, contain any
statement which, at
such time, is false or misleading with respect to any
material
fact, or omit to
state any material fact necessary in order to make the
statements made therein,
in light of the circumstances under which they are made,
not
false or
misleading; or omit to state any material fact necessary to
correct any
statement in any earlier communication with respect to the
solicitation of
proxies for the Parent Shareholders Meeting which has
become
false or
misleading.
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4.29 Regulation D Offering. To Target's
knowledge,
the information
provided to Parent by the holders of shares of Target
Common
Stock, which
information is set forth in each such holder's Voting
Agreement
(as defined in
Section 8.3(g)) delivered to Parent, is true and correct in
all
material
respects.
4.30 Disclosure. None of the representations
or
warranties made by
Target herein or in the Target Disclosure Schedule, or in
any
certificate
furnished by Target pursuant to this Agreement, when all
such
documents are
read together in their entirety, contain or will contain at
the
Effective Time
any untrue statement of a material fact, or omit or will
omit at
the Effective
Time to state any material fact necessary in order to make
the
statements
contained herein or therein, in the light of the
circumstances
under which
made, not misleading. Target has delivered or made
available
true and complete
copies of each document that has been requested by Parent
or its
counsel in
connection with their legal and accounting review of
Target.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER
SUB
Except as disclosed in a document of even date
herewith
and delivered
by Parent to Target prior to the execution and delivery of
this
Agreement and
referring to the representations and warranties in this
Agreement (the "Parent
Disclosure Schedule"), Parent and Merger Sub represent and
warrant to Target as
follows:
5.1 Organization, Standing and Power. Each of
Parent and its
subsidiaries, including Merger Sub, is a corporation duly
organized, validly
existing and in good standing under the laws of its
jurisdiction
of
organization, has the corporate power to own its properties
and
to carry on its
business as now being conducted and as proposed to be
conducted
and is duly
qualified to do business and is in good standing in each
jurisdiction in which
the failure to be so qualified and in good standing would
have a
Material
Adverse Effect on Parent. Merger Sub has not engaged in
any
business (other
than certain organizational matters) since the date of its
incorporation.
5.2 Capitalization. As of September 30, 1996,
the
authorized
capital stock of Parent consisted of 45,000,000 shares of
Parent
Common Stock
and 5,000,000 shares of Preferred Stock, $.01 par value, of
which there were
issued and outstanding 3,942,660 shares of Parent Common
Stock
and no shares of
Preferred Stock. There are no other outstanding shares of
capital stock or
other securities of Parent other than shares of Parent
Common
Stock issued
after September 30, 1996 upon the exercise of options
issued
under Parent's
1993 Incentive Stock Option Plan and its Stock Option Plan
for
Non-Employee
Directors (collectively, the "Parent Stock Option Plans")
and
other outstanding
stock options granted by Parent to its employees. The
authorized capital stock
of Merger Sub consists of 1,000 shares of Merger Sub Common
Stock, all of which
are issued and outstanding and are held by Parent. All
outstanding shares of
Parent and Merger Sub have been duly authorized, validly
issued,
fully paid and
are non-assessable and free and clear of any Lien, except
Liens
created by or
imposed upon the holders thereof. As of September 30,
1996,
Parent has
reserved (a) 405,000 shares of Parent Common Stock for
issuance
to employees,
directors and independent contractors pursuant to the
Parent
Stock Option
Plans, (b) 267,800 shares of Parent Common Stock for
issuance
pursuant to other
outstanding stock options granted to its employees. Other
than
this Agreement,
as disclosed in the immediately preceding sentence or as to
additional shares
to be authorized under employee benefit plans of Parent,
there
are no other
options, warrants, puts, calls, rights, exchangeable or
convertible securities
or other commitments or agreements of any nature to which
Parent
or Merger Sub
is a party or by which either of them is bound obligating
Parent
or Merger Sub
to issue, deliver, sell, repurchase or redeem, or cause to
be
issued,
delivered, sold, or repurchased, any shares of the capital
stock
of Parent or
Merger Sub or obligating Parent or Merger Sub to grant,
extend
or enter into
any such option, warrant, call, right, commitment or
agreement.
The shares of
Parent Common Stock to be issued pursuant to the Merger
will,
when issued, be
duly authorized, validly issued, fully paid, and
non-assessable.
5.3 Due Authorization. Parent and Merger Sub
have
the full
corporate power and authority to enter into this Agreement
and
to consummate
the transactions contemplated hereby. The execution and
delivery
of this
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Agreement and the consummation of the transactions
contemplated
hereby have
been duly authorized by all necessary corporate action on
the
part of Parent
and Merger Sub, subject only to the approval of the Merger
by
Parent's
shareholders as contemplated by Section 7.2. This
Agreement has
been duly
executed and delivered by Parent and Merger Sub and
constitutes
the valid and
binding obligations of Parent and Merger Sub. The
execution and
delivery of
this Agreement do not, and the consummation of the
transactions
contemplated
hereby will not, (a) conflict with or violate any provision
of
the Amended and
Restated Articles of Incorporation or Amended and Restated
Bylaws of Parent, as
amended, or equivalent charter documents of any of its
subsidiaries, as
amended, (b) violate or conflict with any permit, order,
license, decree,
judgment, statute, law, ordinance, rule or regulation
applicable
to Parent or
any of its subsidiaries or the properties or assets of
Parent or
any of its
subsidiaries, or (c) result in any breach or violation of,
or
constitute a
default (with or without notice or lapse of time, or both)
under, or give rise
to any right of termination, cancellation or acceleration
of, or
result in the
creation of any Lien on any of the properties or assets of
Parent or any of its
subsidiaries pursuant to any mortgage, indenture, lease,
contract or other
agreement or instrument, bond, note, concession or
franchise
applicable to
Parent or any of its subsidiaries or their properties or
assets,
except, in the
case of this clause (c) only, where such conflict,
violation,
default,
termination, cancellation or acceleration would not have
and
could not
reasonably be expected to have a Material Adverse Effect on
Parent. No
consent, approval, order or authorization of, or
registration,
declaration or
filing with, any Governmental Entity is required by or with
respect to Parent
or any of its subsidiaries in connection with the execution
and
delivery of
this Agreement by Parent and Merger Sub or the consummation
by
Parent and
Merger Sub of the transactions contemplated hereby, except
for
(i) the filing
of the Articles of Merger as provided in Section 1.3, (ii)
the
filing with the
Securities and Exchange Commission (the "SEC") and the
National
Association of
Securities Dealers, Inc. ("NASD") of the Proxy Statement
relating to the Parent
Shareholders Meeting, (iii) the filing of a Form 8-K with
the
SEC and NASD
within 15 days after the Closing Date, (iv) any filings as
may
be required
under applicable state securities laws and the securities
laws
of any foreign
country, and (v) such other consents, authorizations,
filings,
approvals and
registrations which, if not obtained or made, would not
have a
Material Adverse
Effect on Parent and would not prevent or materially alter
or
delay any of the
transactions contemplated by this Agreement.
5.4 SEC Documents; Financial Statements.
Parent
has furnished
Target with true and complete copies of its (a) Annual
Report on
Form 10-K for
the fiscal year ended December 31, 1995, as filed with the
SEC,
(b) Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1996,
June
30, 1996, and
September 30, 1996, as filed with the SEC, (c) proxy
statements
related to all
meetings of its shareholders (whether annual or special)
since
December 31,
1994, and (d) all other reports and registration statements
filed by Parent
with the SEC since December 31, 1994, except registration
statements on Form
S-8 relating to employee benefit plans (collectively, the
"Parent SEC
Documents"). As of their respective filing dates, the
Parent
SEC Documents
prepared in all material respects in accordance with the
requirements of the
Exchange Act or the Securities Act, as applicable, and the
rules
and
regulations of the SEC thereunder applicable to such Parent
SEC
Documents. As
of their respective filing dates, none of the Parent 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 made therein,
in light of the circumstances under which they were made,
not
misleading,
except to the extent corrected by a subsequently filed
Parent
SEC Document.
The financial statements of Parent, including the notes
thereto,
included in
the Parent SEC Documents (the "Parent Financial
Statements"),
complied as to
form in all material respects with applicable accounting
requirements and with
the published rules and regulations of the SEC with respect
thereto as of their
respective dates, and were prepared in accordance with
generally
accepted
accounting principles applied on a basis consistent
throughout
the periods
indicated and consistent with each other (except as may be
indicated in the
notes thereto or, in the case of unaudited statements
included
in Quarterly
Reports on Form 10-Q, as permitted by Form 10-Q of the
SEC), and
fairly present
the consolidated financial condition and operating results
of
Parent and its
subsidiaries at the dates thereof and during the periods
indicated therein
(subject, in the case of unaudited statements, to normal,
recurring year-end
audit adjustments).
5.5 Absence of Certain Changes. Except as
disclosed in the Parent
SEC Documents filed with the SEC prior to the date hereof,
since
September 30,
1996 (the "Parent Balance Sheet Date"), each of Parent and
its
subsidiaries has
conducted its business in the ordinary course consistent
with
past practice and
there has not
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occurred: (a) any change, event or condition (whether or
not
covered by
insurance) that has resulted in, or might reasonably be
expected
to result in,
a Material Adverse Effect on Parent or (b) any declaration,
setting aside, or
payment of a dividend or other distribution with respect to
the
shares of
Parent, or any direct or indirect redemption, retirement,
purchase or other
acquisition by Parent of any of its capital stock. Except
as
disclosed in such
Parent SEC Documents, Parent is not aware of any facts
which are
reasonably
likely to have a Material Adverse Effect on Parent.
5.6 Compliance with Laws. Each of Parent and
its
subsidiaries has
complied with, is not in violation of, and have not
received any
notices of
violation with respect to, any federal, state, local or
foreign
statute, law or
regulation with respect to the conduct of its business, or
the
ownership or
operation of its business, except for such violations or
failures to comply as
could not be reasonably expected to have a Material Adverse
Effect on Parent.
5.7 Board Approval. The Boards of Directors
of
Parent and Merger
Sub have (a) approved this Agreement and the Merger, (b)
determined that the
Merger is in the best interests of their respective
shareholders
and is on
terms that are fair to such shareholders and (c)
recommended
that the
shareholders of Parent and Merger Sub approve this
Agreement and
the Merger.
5.8 Brokers' and Finders' Fees. Parent has
not
incurred, and will
not incur, directly or indirectly, any liability for
brokerage
or finders' fees
or agents' commissions or investment bankers' fees or any
similar charges in
connection with this Agreement or any transaction
contemplated
hereby.
ARTICLE VI
CONDUCT PRIOR TO EFFECTIVE TIME
6.1 Conduct of Business of Target. Prior to
the
Effective Time,
except as expressly contemplated by this Agreement or as
agreed
in writing by
Parent:
(a) Affirmative Covenants. Target
will:
(i) carry on its business in
the
usual, regular
and ordinary course in substantially the same manner as
heretofore conducted
and use its best efforts to preserve intact its present
business
organizations,
keep available the services of its present officers and key
employees and
preserve its relationships with customers, suppliers,
distributors, licensors,
licensees, and others having business dealings with it, to
the
end that its
goodwill and ongoing businesses shall be unimpaired at the
Effective Time;
(ii) maintain insurance
coverages
and its books,
accounts and records in the usual manner consistent with
past
practice;
(iii) comply in all material
respects with all laws
and regulations of any Governmental Entity applicable to
it;
(iv) maintain and keep its
plants,
property and
equipment in good repair, working order and condition,
ordinary
wear and tear
excepted;
(v) perform in all material
respects its
obligations under all contracts and commitments to which it
is a
party or by
which it is bound;
(vi) notify Parent of any
event or
occurrence not
in the ordinary course of its business, and of any event
which
could have a
Material Adverse Effect on Target; or
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(vii) pay, consistent with past
practice, all
accounts payable that arise in the ordinary course of its
business except to
the extent that the amount owing is being duly contested by
Target and such
contest does not have a Material Adverse Effect on Target
and
adequate reserves
therefor are reflected on the Annual Financial Statements
or the
Interim Target
Financial Statements.
(b) Negative Covenants. Target will
not
do any of the
things enumerated in Section 4.6. In addition, but without
limiting the
generality of the foregoing, Target will not:
(i) cause or permit any
amendments
to its
Articles of Incorporation or Bylaws or equivalent charter
documents;
(ii) accelerate, amend or
change
the period of
exercisability or vesting of options or other rights
granted
under its employee
stock plans or director stock plans or authorize cash
payments
in exchange for
any options or other rights granted under any of such
plans;
(iii) transfer to any person or
entity any rights
to its Intellectual Property;
(iv) enter into or amend any
agreements pursuant
to which any other party is granted exclusive marketing or
other
exclusive
rights of any type or scope with respect to any of its
products
or technology;
(v) enter into any operating
lease
providing for
payments in excess of an aggregate of $50,000;
(vi) adopt or amend any
employee
benefit or stock
purchase or option plan, or hire any new director level or
officer level
employee (other than in the ordinary course of business),
pay
any special bonus
or special remuneration to any employee or director, or
increase
the salaries
or wage rates of its employees, except for (A) the Team
Bonuses
and (B) normal
salary or wage increases relating to periodic performance
reviews and annual
bonuses consistent with past practices of Target where such
increases or
bonuses are not given to Target's shareholders or their
relations or members of
the leadership team of Target or CEWI;
(vii) commence a lawsuit other
than
(A) for the
routine collection of bills, (B) in such cases where it in
good
faith
determines that failure to commence suit would result in
the
material
impairment of a valuable aspect of its business, provided
that
it consults with
Parent prior to the filing of such a suit, or (C) for a
breach
of this
Agreement;
(viii) acquire or agree to
acquire by
merging or
consolidating with, or by purchasing 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, or
otherwise
acquire or
agree to acquire any assets, other than in the ordinary
course
of business
consistent with past practice;
(ix) other than in the
ordinary
course of
business, make or change any material election in respect
of
Taxes, adopt or
change any accounting method in respect of Taxes, file any
material Tax Return
or any amendment to a material Tax Return, enter into any
closing agreement,
settle any claim or assessment in respect of Taxes, or
consent
to any extension
or waiver of the limitation period applicable to any claim
or
assessment in
respect of Taxes;
(x) revalue any of its
assets,
including without
limitation writing down the value of inventory or writing
off
notes or accounts
receivable other than in the ordinary course of business;
(xi) take, or agree in writing
or
otherwise to
take, any other action that would make any of its
representations or warranties
contained in this Agreement untrue; or
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(xii) agree, whether in writing
or
otherwise, to do
any of the foregoing.
6.2 No Solicitation; Acquisition Proposals.
Subject to the
fiduciary duties of Target's Board of Directors under
applicable
law, as
advised by counsel, Target shall not, directly or
indirectly,
through any
officer, director, employee, representative, agent,
financial
advisor or
otherwise, solicit, initiate or encourage inquiries or
submission of proposals
or offers from any person relating to any sale of all or
any
portion of the
assets, business, properties of (other than immaterial or
insubstantial assets
or inventory in the ordinary course of business), or any
equity
interest in,
Target or any business combination with Target whether by
merger, purchase of
assets, tender offer or otherwise or participate in any
negotiation regarding,
or furnishing to any other person any information with
respect
to, or otherwise
cooperate in any way with, or assist in, facilitate or
encourage, any effort or
attempt by any other person to do or seek to do any of the
foregoing, and
Target will notify Parent immediately if any inquiries or
proposals are
received by, any information is requested from, or any
negotiations or
discussions are sought to be initiated or continued with
Target,
in each case
in connection with any of the foregoing. Target shall use
its
best efforts to
cause all confidential materials previously furnished to
any
third parties in
connection with any of the foregoing to be promptly
returned to
Target and
shall cease any negotiations conducted in connection
therewith
or otherwise
conducted with any such parties.
6.3 Notice of Breach. Each party hereto shall
promptly give
written notice to the others upon becoming aware of the
occurrence or, to its
knowledge, impending or threatened occurrence, of any event
that
could cause or
constitute a breach of any of its representations,
warranties or
covenants
hereunder.
ARTICLE VII
ADDITIONAL COVENANTS
7.1 Proxy Statement. As promptly as
practicable
after the
execution of this Agreement, Parent shall prepare and file
with
the SEC
preliminary proxy materials relating to the approval of the
Merger and the
transactions contemplated hereby by the shareholders of
Parent.
7.2 Meetings of Shareholders.
(a) Parent Shareholders Meeting. As
promptly as
practicable after the date hereof, Parent shall take all
action
necessary in
accordance with applicable law and its Articles of
Incorporation
and Bylaws to
convene the Parent Shareholders Meeting. Subject to
Section
7.1, Parent shall
use its reasonable efforts to solicit from shareholders
proxies
in favor of the
Merger and shall take all other action necessary or
advisable to
secure the
vote or consent of shareholders required to effect the
Merger.
The Board of
Directors of Parent shall recommend a vote in favor of the
Merger.
(b) Target Shareholders Meeting.
Target
shall take all
action necessary in accordance with applicable law and its
Articles of
Incorporation and Bylaws within 30 days after the date
hereof
either (i) to
obtain the written consent of the shareholders of Target to
this
Agreement and
the transactions contemplated hereby or (ii) to convene a
special meeting of
its shareholders and solicit from shareholders proxies in
favor
of the Merger.
In any event, Target shall take all action necessary or
advisable to secure the
vote or consent of shareholders required to effect the
Merger,
and subject to
the fiduciary duties of Target's Board of Directors under
applicable law, as
advised by counsel, the Board of Directors of Target shall
recommend a consent
or vote in favor of the Merger.
7.3 Access to Information. Target shall
afford
Parent and its
accountants, counsel and other representatives full access
during normal
business hours (and at such other times as the parties
hereto
agree) during the
period prior to the Effective Time to (a) all of Target's
properties, books,
contracts, commitments and records, and (b) all other
information concerning
the business, properties and personnel of Target as Parent
may
reasonably
request. Target agrees to provide to Parent and its
accountants, counsel and
other representatives copies of internal
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financial statements promptly upon request. Parent shall
cooperate with Target
with its due diligence review of Parent to the extent
necessary
to confirm the
accuracy of Parent's and Merger Sub's representations and
warranties. Subject
to compliance with applicable law, from the date hereof
until
the Effective
Time, each of Parent and Target shall confer on a regular
and
frequent basis
with one or more representatives of the other party to
report
operational
matters of materiality and the general status of ongoing
operations. No
information or knowledge obtained in any investigation
pursuant
to this
Section 7.3 shall affect or be deemed to modify any
representation or warranty
contained herein or the conditions to the obligations of
the
parties hereto to
consummate the Merger.
7.4 Confidentiality. The parties hereto will
treat
as
confidential and hold in confidence all information
concerning
the businesses
and affairs of Target and the business and affairs of
Parent and
Merger Sub
that is not already generally available to the public and
is not
otherwise
known to the party to whom it was disclosed on a non-
confidential basis
("Proprietary Information") and refrain from using any
Proprietary Information
except in furtherance of this Agreement or as required by
law.
For avoidance
of doubt, the letter agreement between Parent and Pacific
Crest
Securities
Inc., dated October 2, 1996, relating to the disclosure of
Target's
confidential information and Section 11 of letter
agreement,
dated December 18,
1996, among Target, CEWI and Parent shall cease to have any
further force or
effect.
7.5 Publicity. Target shall not, and shall
use its
reasonable
efforts to cause its shareholders not to, issue, or cause
or
permit to be
issued, any press release or otherwise make any public
statement
regarding the
terms of this Agreement or the transactions contemplated
hereby
without
Parent's prior written consent. Parent and Merger Sub
shall
consult with
Target before issuing any press release or otherwise making
any
public
statement regarding the terms of this Agreement or the
transactions
contemplated hereby, except as required by law or its other
legal obligations.
7.6 Filings; Cooperation. Parent and Target
shall
make, and cause
their affiliates to make, all necessary filings with
respect to
the Merger and
the other transactions contemplated hereby including those
required under the
Securities Act and the Exchange Act and the rules and
regulations thereunder,
and under applicable Blue Sky or similar securities laws,
and
shall use all
reasonable efforts to obtain required approvals and
clearances
with respect
thereto to (a) comply as promptly as practicable with all
governmental
requirements applicable to the transaction and (b) obtain
promptly all
necessary permits, orders and other consents of
Governmental
Entities and
consents of third parties necessary for the consummation of
the
Merger.
7.7 Employment Matters. At the Effective
Time,
Parent will enter
into consulting agreements with each of Messrs. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇▇ Consulting
Agreements"), which
Hewitson Consulting Agreements shall be substantially in
the
form attached
hereto as Exhibit 7.7A, and Parent will offer to enter into
an
employment
agreement with each member of the Target leadership team
identified and at the
same salary level as currently compensated as disclosed to
Parent, which
employment agreement shall be substantially in the form
attached
hereto as
Exhibit 7.7B. Target shall cause the employment
arrangements of
each person
that is related to a Target shareholder to be terminated
(other
than the
employment of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, which is to continue), such
terminations to be
effective at the Effective Time and without liability to
Target
in any respect.
7.8 Director Nominees. At the Effective Time,
Parent shall take
such action as is necessary in order to enable three
individuals
designated by
Target to be elected to Parent's Board of Directors (the
"Designees"). Target
has selected as the Designees Messrs. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇
▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
7.9 Further Assurances.
(a) Subject to the terms and
conditions
herein provided,
each of the parties hereto agrees to use all reasonable
efforts
to take, or
cause to be taken, all actions 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,
including using all reasonable efforts to obtain all
necessary
waivers,
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consents and approvals, to effect all necessary
registrations
and filings
(including, but not limited to, filings with all applicable
Governmental
Entities) and to lift any injunction or other legal bar to
the
Merger (and, in
such case, to proceed with the Merger as expeditiously as
possible).
(b) In case at any time after the
Effective Time any
further action is necessary or desirable to carry out the
purposes of this
Agreement, the proper officers and/or directors of Parent
and
the Surviving
Corporation shall take all such necessary action.
(c) Target and its shareholders shall
confirm and
represent to Parent, by signed certificates, such factual
matters as Parent may
reasonably request in order for Parent to confirm that the
Merger will qualify
as a nontaxable reorganization under Sections 368(a)(1)(A)
and
368(a)(2)(D) of
the Code.
7.10 Certain Tax Matters. Parent shall
continue at
least one
significant historical business line of Target, or shall
use at
least a
significant portion of Target's historical business assets
in a
business, in
each case within the meaning of Treasury Regulation Section
1.368-1(d).
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Obligations of Each Party to
Effect the Merger.
The respective obligations of each party hereto to
consummate
and effect this
Agreement and the transactions contemplated hereby shall be
subject to the
satisfaction at or prior to the Effective Time of each of
the
following
conditions, any of which may be waived, in writing, by
agreement
of the parties
hereto:
(a) This Agreement and the Merger
shall
have been
approved and adopted by the requisite vote of the holders
of
Parent Common
Stock and by the requisite vote of the holders of Target
Common
Stock.
(b) No temporary restraining order,
preliminary or
permanent injunction or other order issued by any court of
competent
jurisdiction or other legal or regulatory restraint or
prohibition preventing
the consummation of the Merger, nor any proceeding brought
by an
administrative
agency or commission or other governmental authority or
instrumentality,
domestic or foreign, seeking any of the foregoing, shall be
pending; nor shall
there be any action taken, or any statute, rule, regulation
or
order enacted,
entered, enforced or deemed applicable to the Merger, which
makes the
consummation of the Merger illegal.
(c) Parent, Target and Merger Sub and
their respective
subsidiaries, if any, shall have timely obtained from each
Governmental Entity
all approvals, waivers and consents, if any, necessary for
consummation of or
in connection with the Merger and the several transactions
contemplated hereby,
including such approvals, waivers and consents as may be
required under the
federal securities and state Blue Sky laws.
(d) Simultaneous with the occurrence
of
the Closing
hereunder, the Closing shall have occurred under the Share
Purchase Agreement,
dated as of January 15, 1997, among Parent and the
shareholders
of CEWI (the
"Purchase Agreement").
8.2 Additional Conditions to Obligations of
Target
to Effect the
Merger. The obligations of Target to consummate and effect
this
Agreement and
the transactions contemplated hereby shall be subject to
the
satisfaction at or
prior to the Effective Time of each of the following
conditions,
any of which
may be waived, in writing, by Target:
(a) Parent and Merger Sub shall have
performed and
complied in all material respects with all covenants,
obligations and
conditions of this Agreement required to be performed and
complied with by them
on
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or prior to the Effective Time and the representations and
warranties of Parent
and Merger Sub in this Agreement shall be true and correct
in
all material
respects (or in all respects in the case of any
representation
or warranty that
is qualified by its terms by a reference to Material
Adverse
Effect or
otherwise the concept of materiality) when made and on and
as of
the Effective
Time as though such representations and warranties were
made on
and as of such
date.
(b) Target shall have received a
certificate executed on
behalf of Parent by its Chief Financial Officer certifying
that
the conditions
specified in Section 8.2(a) have been fulfilled.
(c) Target shall have received a
legal
opinion of Holme
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to Parent, substantially in the
form
attached
hereto as Exhibit 8.2(c).
(d) The guaranties given by Messrs.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as contemplated by
that
certain Loan
Agreement between First Interstate Bank of Oregon, N.A. and
Target, dated May
30, 1996 shall have been terminated or Messrs. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall have been released
from
all liability
thereunder as a result of repayment of the related credit
facilities or
otherwise.
(e) Parent shall have executed and
delivered to the
holders of Target Common Stock an agreement with respect to
demand and
piggyback registration rights of such holders (the
"Registration
Rights
Agreement"), which Registration Rights Agreement shall be
substantially in the
form of Exhibit 8.2(e) attached hereto.
(f) Parent shall have granted to the
members of Target's
management identified on Schedule 8.2(f) the employee stock
options specified
in such schedule.
8.3 Additional Conditions to the Obligations
of
Parent and Merger
Sub to Effect the Merger. The obligations of Parent and
Merger
Sub to
consummate and effect this Agreement and the transactions
contemplated hereby
shall be subject to the satisfaction at or prior to the
Effective Time of each
of the following conditions, any of which may be waived, in
writing, by Parent:
(a) Target shall have performed and
complied in all
material respects with all covenants, obligations and
conditions
of this
Agreement required to be performed and complied with by it
on or
prior to the
Effective Time and the representations and warranties of
Target
in this
Agreement shall be true and correct in all material
respects (or
in all
respects in the case of any representation or warranty that
is
qualified by its
terms by a reference to Material Adverse Effect or
otherwise by
the concept of
materiality) when made and on and as of the Effective Time
as
though such
representations and warranties were made on and as of such
time.
(b) Parent shall have received a
certificate, dated as of
the Effective Time, executed on behalf of Target by its
President and its Chief
Financial Officer certifying that the conditions specified
in
Section 8.3(a)
have been fulfilled.
(c) Parent shall have received a
legal
opinion from
Hershner, Hunter, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, LLP, legal
counsel to
Target,
substantially in form attached hereto as Exhibit 8.3(c).
(d) Parent shall have been furnished
with
evidence
satisfactory to it of the consent or approval of those
persons
whose consent or
approval shall be required in connection with the Merger
under
any material
contract of Target otherwise.
(e) There shall not have occurred any
Material Adverse
Effect on Target.
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124
(f) Parent shall have received
letters of
resignation,
effective as of the Effective Time, executed and tendered
by
each of the then
incumbent directors of Target.
(g) The Voting Agreement, dated the
date
hereof (the
"Voting Agreement"), among Messrs. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇
▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Target shall be in full force and
effect
as of the
Effective Time and Messrs. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ shall have performed and complied in all material
respects with all
covenants, obligations and conditions of the Voting
Agreement
required to be
performed or complied with by them. Messrs. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall have executed and delivered
to
Parent (i) a
certificate confirming the continued accuracy of the
representations and
warranties given by them under the Voting Agreement; (ii)
an
agreement with
respect to indemnification of Parent and Merger Sub with
respect
to breaches of
terms and conditions of this Agreement (the
"Indemnification
Agreement"), which
Indemnification Agreement shall be substantially in the
form of
Exhibit 8.3(g)
attached hereto; (iii) the Registration Rights Agreement;
and
(iv) the Hewitson
Consulting Agreements.
(h) Parent shall have received from
each
of the holders
of Target Common Stock who are receiving Parent Common
Stock in
the Merger a
letter substantially in the form of Exhibit 8.3(h) attached
hereto, and Parent
shall have confirmed, to its reasonable satisfaction, that
the
Merger will
qualify as a nontaxable reorganization under Sections
368(a)(1)(A) and
368(a)(2)(D) of the Code.
(i) All shareholders of Target
expressly
shall have
consented to the specific arrangement specified in Section
3.1(b) for the
conversion of their shares of Target Common Stock into
Merger
Consideration.
ARTICLE IX
RESTRICTIONS ON TRANSFER
9.1 Legends. Each certificate representing
shares
of Parent
Common Stock issued in connection with the Merger (the
"Restricted Securities")
shall bear a legend to the following effect:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE
SECURITIES LAWS.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED,
ASSIGNED,
PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH
RESTRICTIONS ON THE TRANSFERABILITY CONTAINED IN
AN
AGREEMENT RELATING
TO THE SECURITIES AND APPLICABLE FEDERAL AND STATE
SECURITIES LAWS AND
NO TRANSFER WILL BE RECOGNIZED UNLESS MADE IN
COMPLIANCE WITH SUCH
LAWS."
Any holder of Restricted Securities (a "Holder") who
disposes of
Restricted
Securities in accordance with Section 9.2 shall be entitled
to
have Parent
cause new unlegended certificates to be issued promptly to
the
Holder in
exchange for outstanding legended certificates representing
the
disposed shares
if (a) the opinion to counsel referred to in Section 9.2 is
to
the further
effect that such legend is not required in order to
establish
compliance with
any provisions of the Securities Act; (b) the transfer is
in
connection with a
transaction intended to comply with Rule 144 and Rule 145
as
promulgated by the
SEC under the Securities Act. as such Rules may be amended
from
time to time,
or any similar successor rule that may be promulgated by
the
SEC, or (c) an
appropriate registration statement with respect to such
Restricted Securities
has been filed by Parent with the SEC and has been declared
effective by the
SEC.
9.2 Notice of Proposed Dispositions. Each
Holder
of Restricted
Securities by acceptance thereof shall agree to comply in
all
respects with the
provisions of this Section 9.2. Prior to any proposed
disposition of any
Restricted Securities (unless there is in effect a
registration
statement under
the Securities Act covering such
A-25
125
proposed disposition and such disposition is made in
accordance
with such
registration statement) the holder thereof shall give
written
notice to Parent
of such Holder's intention to effect such disposition.
Each
such notice shall
describe the manner and circumstances of the proposed
disposition and shall be
accompanied by either (a) a written opinion of legal
counsel
addressed to
Parent and reasonably satisfactory in form and substance to
Parent, to the
effect that the proposed disposition of Restricted
Securities
may be effected
without registration of such Restricted Securities or (b) a
"no
action" letter
from the SEC to the effect that such disposition without
registration of such
Restricted Securities will not result in recommendation by
the
staff of the SEC
that enforcement action be taken with respect thereto,
whereupon
the Holder of
such Restricted Securities shall be entitled to transfer
such
Restricted
Securities in accordance with the terms of the notice
delivered
by the Holder
to Parent. The provisions of this Section 9.2 shall not
apply
to Restricted
Securities that are then freely tradeable pursuant to Rule
144(k) under the
Securities Act, as amended from time to time, or any
similar
successor rule
that may be promulgated by the SEC.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. At any time prior to the
Effective Time, whether
before or after approval of the matters presented in
connection
with the Merger
by the shareholders of Target and Parent, this Agreement
may be
terminated:
(a) by mutual consent of Parent and
Target;
(b) by either Parent or Target, if,
without fault of the
terminating party, the Closing shall not have occurred on
or
before April 30,
1997, or such later date as may be agreed upon in writing
by the
parties
hereto;
(c) by Parent, if any of the
conditions
specified in
Section 8.3 have not been satisfied or waived at such time
as
such condition is
no longer capable of satisfaction;
(d) by Target, if any of the
conditions
specified in
Section 8.2 have not been satisfied or waived at such time
as
such condition is
no longer capable of satisfaction;
(e) by either Parent or Target if the
other shall have
breached its respective representations, warranties or
other
obligations under
Articles IV through VII in any material respect and such
breach
continues for a
period of 10 days after receipt of notice of the breach
from the
non-breaching
party hereto.
10.2 Effect of Termination. In the event of
termination of this
Agreement as provided in Section 10.1, this Agreement shall
forthwith become
void and there shall be no liability or obligation on the
part
of Parent,
Merger Sub or Target or their respective officers,
directors,
shareholders or
affiliates, except to the extent that such termination
results
from the breach
by a party hereto of any of its representations, warranties
or
covenants set
forth in this Agreement; provided that, the provisions of
this
Section 10.2 and
Section 7.4 (Confidentiality) and Article XI (General
Provisions) shall remain
in full force and effect and survive any termination of
this
Agreement.
10.3 Amendment. The respective Boards of
Directors
of the parties
hereto may cause this Agreement to be amended at any time
by
execution of an
instrument in writing signed on behalf of each of the
parties
hereto; provided
that an amendment made subsequent to adoption of the
Agreement
by the
shareholders of Target or Merger Sub shall not (a) alter or
change the amount
or kind of consideration to be received on conversion of
the
Target Common
Stock, (b) alter or change any term of the Articles of
Incorporation of
Surviving Corporation to be effected by the Merger, or (c)
alter
or change any
of the terms and conditions of this Agreement if such
alteration
or change
would adversely affect the holders of Target Common Stock
or
Parent.
▇-▇▇
▇▇▇
▇▇.▇ ▇▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇. At any time prior to
the
Effective Time
any party hereto may, to the extent legally allowed, (a)
extend
the time for
the performance of any of the obligations or other acts of
the
other parties
hereto, (b) waive any inaccuracies in the representations
and
warranties made
to such party contained herein or in any document delivered
pursuant hereto and
(c) waive compliance with any of the agreements or
conditions
for the benefit
of such party 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
an instrument
in writing signed on behalf of such party.
ARTICLE XI
GENERAL PROVISIONS
11.1 Survival of Representations and
Warranties.
The
representations and warranties of Target in Sections 4.1 -
4.14
and 4.16 - 4.30
shall survive the Merger and continue in full force and
effect
for one year
after the Effective Time. All the other representations
and
warranties of
Target, including those in Section 4.15, shall survive the
Merger and continue
in full force and effect forever after the Effective Time
(subject to any
applicable statute of limitations). The representations
and
warranties of
Parent and Merger Sub shall not survive the Merger.
11.2 Notices. All notices and other
communications
hereunder shall
be in writing and shall be deemed given if delivered
personally
or by
commercial delivery service, or mailed by registered or
certified mail, return
receipt requested, or sent via facsimile, with confirmation
of
receipt, to the
parties at the following address or at such other address
for a
party as shall
be specified by notice hereunder:
(a) if to Parent or Merger Sub, to:
Electronic Fab Technology Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇-▇▇
▇▇▇
(▇) if to Target, to:
Current Electronics, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Hershner, Hunter, ▇▇▇▇▇▇▇, ▇▇▇▇▇
&
▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
11.3 Interpretation. When a reference is made
in
this Agreement to
Exhibits, Articles or Sections, such reference shall be to
an
Exhibit, Article
or Section to this Agreement unless otherwise indicated.
The
words "include,"
"includes" and "including" when used herein shall be deemed
in
each case to be
followed by the words "without limitation." The phrase
"made
available" in this
Agreement shall mean that the information referred to has
been
made available
if requested by the party hereto to whom such information
is to
be made
available. The table of contents and Article and Section
headings contained in
this Agreement are for reference purposes only and shall
not
affect in any way
the meaning or interpretation of this Agreement. In this
Agreement, any
reference to any event, change, condition or effect being
"material" with
respect to any entity or group of entities means any
material
event, change,
condition or effect related to the condition (financial or
otherwise),
properties, assets (including intangible assets),
liabilities,
business,
operations or results of operations of such entity or group
of
entities. In
this Agreement, any reference to a "Material Adverse
Effect"
with respect to
any entity or group of entities means any event, change or
effect that is
materially adverse to the condition (financial or
otherwise),
properties,
assets, liabilities, business, operations or results of
operations of such
entity and its subsidiaries, taken as a whole. In this
Agreement, any
reference to a party's "knowledge" means such party's
actual
knowledge after
due and diligent inquiry of officers, directors and other
employees of such
party reasonably believed to have knowledge of such
matters.
Whenever the
context may require, any pronoun shall include the
corresponding
masculine,
feminine and neuter forms.
11.4 Counterparts. This Agreement may be
executed
in one or more
counterparts, all of which shall be considered one and the
same
agreement and
shall become effective when one or more counterparts have
been
signed by each
of the parties hereto and delivered to the other parties
hereto,
it being
understood that all parties hereto need not sign the same
counterpart.
11.5 Entire Agreement; Nonassignability;
Parties in
Interest. This
Agreement and the documents and instruments and other
agreements
specifically
referred to herein or delivered pursuant hereto, including
the
Exhibits, the
Target Disclosure Schedule and the Parent Disclosure
Schedule
(a) constitute
the entire agreement among the parties hereto with respect
to
the subject
matter hereof and supersede all prior agreements and
understandings, both
written and oral, among the parties hereto with respect to
the
subject matter
hereof; (b) are not intended to confer upon any other
person any
rights or
remedies hereunder; and (c) shall not be assigned by
operation
of law or
otherwise except as otherwise specifically provided.
11.6 Severability. In the event that any
provision
of this
Agreement, or the application thereof, becomes or is
declared by
a court of
competent jurisdiction to be illegal, void or
unenforceable, the
remainder of
this Agreement will continue in full force and effect and
the
application of
such provision to other persons or circumstances will be
interpreted so as
reasonably to effect the intent of the parties hereto. The
parties hereto
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128
further agree to replace such void or unenforceable
provision of
this Agreement
with a valid and enforceable provision that will achieve,
to the
extent
possible, the economic, business and other purposes of such
void
or
unenforceable provision.
11.7 Remedies Cumulative; No Waiver. Except as
otherwise provided
herein, any and all remedies herein expressly conferred
upon a
party will be
deemed cumulative with and not exclusive of any other
remedy
conferred hereby,
or by law or equity upon such party, and the exercise by a
party
of any one
remedy will not preclude the exercise of any other remedy.
No
failure or delay
on the part of any party hereto in the exercise of any
right
hereunder shall
impair such right or be construed to be a waiver of, or
acquiescence in, any
breach of any representation, warranty or agreement herein,
nor
shall any
single or partial exercise of any such right preclude other
or
further exercise
thereof or of any other right.
11.8 Governing Law. This Agreement shall be
governed by and
construed in accordance with the laws of the State of
Oregon
(without regard to
the principles of conflicts of law thereof).
11.9 Rules of Construction. The parties hereto
agree that they
have been represented by counsel during the negotiation,
preparation and
execution of this Agreement and, therefore, waive the
application of any law,
regulation, holding or rule of construction providing that
ambiguities in an
agreement or other document will be construed against the
party
drafting such
agreement or document.
11.10 Expenses. Whether or not the Merger is
consummated, all costs
and expenses incurred in connection with this Agreement and
the
transactions
contemplated hereby (including, without limitation, the
fees and
expenses of
its advisers, accountants and legal counsel) shall be paid
by
the party
incurring such expense.
11.11 Attorneys Fees. In the event of any
proceeding
to enforce
this Agreement, the prevailing party shall be entitled to
receive from the
losing party all reasonable costs and expenses, including
the
reasonable fees
of attorneys, accountants and other experts, incurred by
the
prevailing party
in investigating and prosecuting (or defending) such action
at
trial or upon
any appeal.
IN WITNESS WHEREOF, Target, Parent and Merger Sub
have
caused this
Agreement to be executed and delivered by their respective
officers thereunto
duly authorized, all as of the date first written above.
ELECTRONIC FAB TECHNOLOGY
CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
CURRENT MERGER CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
CURRENT ELECTRONICS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
VP
-------------------------------