1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 3, 2001
AMONG
EFTC CORPORATION,
K*TEC ELECTRONICS HOLDING CORPORATION,
▇▇▇▇▇▇-▇▇▇▇ FUNDING II, L.L.C.
AND
EXPRESS EMS CORPORATION
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TABLE OF CONTENTS
PAGE
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ARTICLE I. THE MERGERS................................................................................................2
Section 1.1 Certificate of Incorporation and Bylaws of Parent..................................................2
Section 1.2 The EFTC Merger....................................................................................2
Section 1.3 The K*TEC Merger...................................................................................3
Section 1.4 Effective Time of the Mergers......................................................................3
Section 1.5 Closing............................................................................................3
Section 1.6 Effect of the Mergers..............................................................................3
Section 1.7 Certificate of Incorporation, Bylaws and Organizational Documents of the Surviving Entities........4
Section 1.8 Directors and Officers of the Surviving Entities...................................................4
Section 1.9 Contribution of Stock of EFTC and Units of TBF II to Parent Sub by Parent..........................4
Section 1.10 Tax Consequences...................................................................................4
ARTICLE II. CONVERSION OF SECURITIES..................................................................................5
Section 2.1 Conversion of EFTC Capital Stock...................................................................5
Section 2.2 Conversion of TBF II Units.........................................................................5
Section 2.3 Cancellation of Parent Stock.......................................................................7
Section 2.4 Exchange ..........................................................................................7
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF EFTC..................................................................10
Section 3.1 Organization of EFTC..............................................................................10
Section 3.2 EFTC Capital Structure............................................................................10
Section 3.3 Authority; No Conflict; Required Filings and Consents.............................................11
Section 3.4 SEC Filings; Financial Statements.................................................................12
Section 3.5 No Undisclosed Liabilities........................................................................13
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Section 3.6 Absence of Certain Changes or Events..............................................................13
Section 3.7 Taxes.............................................................................................13
Section 3.8 Properties........................................................................................14
Section 3.9 Intellectual Property.............................................................................15
Section 3.10 Agreements, Contracts and Commitments.............................................................15
Section 3.11 Litigation........................................................................................15
Section 3.12 Environmental Matters.............................................................................15
Section 3.13 Employee Benefit Plans............................................................................16
Section 3.14 Compliance With Laws..............................................................................17
Section 3.15 Tax Matters.......................................................................................17
Section 3.16 Customers and Suppliers...........................................................................18
Section 3.17 Labor Matters.....................................................................................18
Section 3.18 Insurance.........................................................................................18
Section 3.19 Opinion of Financial Advisor......................................................................18
Section 3.20 No Existing Discussions...........................................................................18
Section 3.21 EFTC Rights Plan..................................................................................18
Section 3.22 FCPA..............................................................................................18
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TBF II AND K*TEC.......................................................19
Section 4.1A Organization and Qualification of TBF II..........................................................19
Section 4.2A Authorization.....................................................................................19
Section 4.3A Capitalization of TBF II..........................................................................19
Section 4.4A No Conflict.......................................................................................19
Section 4.5A Operations; No Assets or Liabilities..............................................................20
Section 4.6A Tax Matters.......................................................................................20
Section 4.7A Compliance With Laws..............................................................................20
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Section 4.8A Taxes.............................................................................................20
Section 4.1B Organization of K*TEC.............................................................................21
Section 4.2B K*TEC Capital Structure...........................................................................22
Section 4.3B Authority; No Conflict; Required Filings and Consents.............................................22
Section 4.4B Financial Statements..............................................................................23
Section 4.5B No Undisclosed Liabilities........................................................................24
Section 4.6B Absence of Certain Changes or Events..............................................................24
Section 4.7B Properties........................................................................................24
Section 4.8B Intellectual Property.............................................................................24
Section 4.9B Agreements, Contracts and Commitments.............................................................25
Section 4.10B Litigation........................................................................................26
Section 4.11B Environmental Matters.............................................................................27
Section 4.12B Employee Benefit Plans............................................................................27
Section 4.13B Compliance With Laws..............................................................................30
Section 4.14B Tax Matters.......................................................................................30
Section 4.15B Labor Matters.....................................................................................30
Section 4.16B Insurance.........................................................................................31
Section 4.17B No Existing Discussions...........................................................................31
Section 4.18B Section 203 of the DGCL Not Applicable............................................................31
Section 4.19B Customers and Suppliers...........................................................................31
Section 4.20B FCPA..............................................................................................31
ARTICLE V. COVENANTS.................................................................................................31
Section 5.1 Conduct of Business...............................................................................31
Section 5.2 Cooperation; Notice; Cure.........................................................................33
Section 5.3 No Solicitation...................................................................................34
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Section 5.4 Joint Proxy Statement/Prospectus; Registration Statement..........................................34
Section 5.5 Continued Listing by EFTC.........................................................................36
Section 5.6 Access to Information.............................................................................36
Section 5.7 Shareholders Meeting/Consent......................................................................36
Section 5.8 Legal Conditions to Merger........................................................................36
Section 5.9 Public Disclosure.................................................................................37
Section 5.10 Nonrecognition Exchange...........................................................................38
Section 5.11 Affiliate Agreements..............................................................................38
Section 5.12 Nasdaq Listing....................................................................................38
Section 5.13 Stock Plans.......................................................................................38
Section 5.14 Brokers or Finders................................................................................40
Section 5.15 Post-Merger Corporate Governance..................................................................40
Section 5.16 EFTC Registration Rights Agreement................................................................40
Section 5.17 Conveyance Taxes..................................................................................40
Section 5.18 Stockholder Litigation............................................................................41
Section 5.19 Employee Benefits; Severance......................................................................41
Section 5.20 Audited K*TEC Financial Statements................................................................41
ARTICLE VI. CONDITIONS TO MERGER.....................................................................................41
Section 6.1 Conditions to Each Party's Obligation to Effect the Mergers.......................................41
Section 6.2 Additional Conditions to Obligations of EFTC......................................................42
Section 6.3 Additional Conditions to Obligations of TBF II....................................................43
ARTICLE VII. TERMINATION AND AMENDMENT...............................................................................44
Section 7.1 Termination.......................................................................................44
Section 7.2 Effect of Termination.............................................................................44
Section 7.3 Fees and Expenses.................................................................................45
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Section 7.4 Amendment.........................................................................................45
Section 7.5 Extension; Waiver.................................................................................45
ARTICLE VIII. MISCELLANEOUS..........................................................................................45
Section 8.1 Effect of Action or Knowledge of ▇▇▇▇▇▇-▇▇▇▇ or ▇▇▇▇▇▇-▇▇▇▇ Nominees..............................45
Section 8.2 Approval of Special Committee.....................................................................46
Section 8.3 Nonsurvival of Representations, Warranties and Agreements.........................................46
Section 8.4 Notices...........................................................................................46
Section 8.5 Interpretation....................................................................................47
Section 8.6 Counterparts......................................................................................47
Section 8.7 Entire Agreement; No Third Party Beneficiaries....................................................48
Section 8.8 Governing Law.....................................................................................48
Section 8.9 Assignment........................................................................................48
EXHIBITS
Exhibit A Certificate of Incorporation of Parent
Exhibit B Bylaws of Parent
Exhibit C Form of EFTC Affiliate Agreement
Exhibit D Form of K*TEC Affiliate Agreement
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TABLES OF DEFINED TERMS
CROSS REFERENCE
TERMS IN AGREEMENT
Acquisition Proposal Section 5.3(a)
Affiliate Section 5.11
Affiliate Agreement(s) Section 5.11
Agreement Preamble
Audited K*TEC Balance Sheet Section 5.20
Bankruptcy and Equity Exception Section 3.3(a)
Balance Sheet Date Section 4.4B(a)
CBCA Section 1.2(a)
Certificate(s) of Merger Section 1.4
Certificates Section 2.4(b)
Closing Section 1.5
Closing Date Section 1.5
Code Preamble
Controlled Entity Section 4.12B(a)(ii)
DGCL Section 1.2(b)
EFTC Preamble
EFTC Agreements Section 3.3(b)
EFTC Balance Sheet Section 3.4(b)
EFTC Common Stock Section 2.1
EFTC Disclosure Schedule Article III
EFTC Employee Plans Section 3.13(a)
EFTC Employees Section 5.19(a)
EFTC Exchange Ratio Section 2.1(c)
EFTC Material Adverse Effect Section 3.1
EFTC Material Contracts Section 3.10(a)
EFTC Merger Section 1.2(a)
EFTC Merger Sub Section 1.2(b)
EFTC Preferred Stock Section 3.2(a)
EFTC Registration Rights Agreement Section 5.16
EFTC Reincorporation Merger Section 1.2(a)
EFTC Rights Plan Section 3.2(b)
EFTC SEC Reports Section 3.4(a)
EFTC Stock Option Section 5.13(a)
EFTC Stock Plans Section 3.2(a)
EFTC Shareholders' Meeting Section 5.4(c)
EFTC Sub Section 1.2(a)
EFTC Surviving Corporation Section 1.6
EFTC Tax Representation Letters Section 6.2(c)
Effective Time Section 1.4
Environmental Law Section 3.12(b)
ERISA Section 3.13(a)
ERISA Affiliate Section 3.13(a)
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CROSS REFERENCE
TERMS IN AGREEMENT
Exchange Act Section 3.3(c)
Exchange Agent Section 2.4(a)
Exchange Fund Section 2.4(a)
FCPA Section 3.22
Governmental Entity Section 3.3(c)
Hazardous Substance Section 3.12(c)
IRS Section 3.7(b)
Joint Proxy Statement/Prospectus Section 5.4(a)
K*TEC Preamble
K*TEC Agreements Section 4.3B(b)
TBF II Units Preamble
K*TEC Disclosure Schedule Section 4.8A(d)
K*TEC Employee Plans Section 4.12B(b)(i)
K*TEC Employees Section 5.19(a)
K*TEC Financial Statements Section 4.4B(a)
K*TEC Material Adverse Effect Section 4.1B
K*TEC Material Contracts Section 4.9B(a)
K*TEC Merger Section 1.3
K*TEC Stock Option Section 5.13(b)
K*TEC Stock Plans Section 4.2B(a)
K*TEC Sub Section 1.3
K*TEC Surviving Entity Section 1.6
K*TEC Tax Representation Letters Section 6.3(e)
Material Lease(s) Section 3.8(a)
Mergers Section 1.3
Order Section 5.8(b)
Outside Date Section 7.1(b)
Parent Preamble
Parent Common Stock Section 2.1(c)
Parent Registration Rights Agreement Section 5.16
Parent Sub Preamble
Pre-Purchase K*TEC Plans Section 4.12B(a)(i)
Registration Statement Section 5.4(a)
Rule 145 Section 5.11
SEC Section 3.3(c)
Securities Act Section 2.4(j)
Series A Preferred Stock Section 3.2(a)
Special Committee Preamble
Subsidiary Section 3.1
Surviving Entities Section 1.6
Tax Section 3.7(a)
Taxes Section 3.7(a)
TBF Preamble
TBF II Preamble
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CROSS REFERENCE
TERMS IN AGREEMENT
▇▇▇▇▇▇-▇▇▇▇ Section 8.1(a)
▇▇▇▇▇▇-▇▇▇▇ Nominees Section 8.1(a)
Third Party Section 5.3(a)
Unaudited K*TEC Balance Sheet Section 4.4B(a)
Warrants Section 3.2(b)
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Agreement"),
dated as of May 3, 2001, by and among EFTC CORPORATION, a Colorado corporation
("EFTC"), K*TEC ELECTRONICS HOLDING CORPORATION, a Delaware corporation
("K*TEC"), ▇▇▇▇▇▇-▇▇▇▇ FUNDING II, L.L.C., a Delaware limited liability company
("TBF II"), and EXPRESS EMS CORPORATION, a newly-formed Delaware corporation
with nominal capitalization, the issued and outstanding capital stock of which
is nominally owned by EFTC ("Parent").
WHEREAS, EFTC, K*TEC and Parent entered in the Agreement and Plan of
Merger, dated May 2, 2001 (the "Merger Agreement"), and desire to amend and
restate such agreement to substitute K*TEC's sole stockholder as a party to the
K*TEC Merger (as defined in Section 1.3);
WHEREAS, ▇▇▇▇▇▇-▇▇▇▇ Funding, L.L.C. ("TBF"), owns a controlling
interest in EFTC and TBF II is an affiliate of TBF and owns all of the
outstanding capital stock of K*TEC;
WHEREAS, because of the ownership of such interests in EFTC, TBF II and
K*TEC by affiliated entities the board of directors of EFTC formed a special
committee (the "Special Committee") to evaluate a proposal by K*TEC to combine
the businesses of EFTC and K*TEC;
WHEREAS, the Boards of Directors of EFTC and K*TEC and the Special
Committee and the sole member of TBF II deem it advisable and in the best
interests of each entity and its respective stockholders or member that EFTC and
TBF II combine in order to advance the interests of EFTC and TBF II and their
respective shareholders or member;
WHEREAS, Parent has determined to reincorporate EFTC in Delaware by
merging it with and into a newly formed wholly-owned Delaware subsidiary of EFTC
following the combination of EFTC and TBF II;
WHEREAS, the combination of EFTC and TBF II shall be effected by the
terms of this Agreement through (i) a merger of a wholly-owned subsidiary of
Parent with and into EFTC and (ii) a merger of another wholly-owned subsidiary
of Parent with and into TBF II, such that EFTC and TBF II become wholly-owned
subsidiaries of Parent and the shareholders of EFTC and the member of TBF II
become shareholders of Parent;
WHEREAS, immediately after the consummation of such mergers of EFTC and
K*TEC all outstanding stock of EFTC and membership units of TBF II ("TBF II
Units") (as the surviving entities in the mergers) will be transferred by Parent
to a newly formed entity ("Parent Sub") in exchange for shares of common stock
of Parent Sub, so that, after giving effect to the transaction, (x) Parent Sub
is a direct wholly-owned subsidiary of Parent and (y) TBF II and EFTC (as the
surviving corporations in the mergers) are direct wholly-owned subsidiaries of
Parent Sub, respectively;
WHEREAS, for Federal income tax purposes, it is intended that (i) the
EFTC Merger (as defined in Section 1.2) shall qualify as a reorganization
described in Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and/or, taken together with the
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K*TEC Merger, as a transfer of property described in Section 351 of the Code to
Parent by holders of EFTC Common Stock and (as defined in Section 2.1) and TBF
II Units (as defined in Section 2.2) (ii) the K*TEC Merger, taken together with
the EFTC Merger, shall qualify as a transfer of property described in Section
351 of the Code to Parent by holders of TBF II Units and EFTC Common Stock and
(iii) the EFTC Reincorporation Merger (as defined in Section 1.2) shall
constitute a "reorganization" under Section 368(a)(1)(F) of the Code;
WHEREAS, for accounting purposes, it is intended that the transactions
contemplated by this Agreement shall be accounted for as a reorganization of
entities under common control;
WHEREAS, TBF, ▇▇▇▇▇▇-▇▇▇▇ Funding III, L.L.C. ("TBF III") and EFTC have
entered into an agreement dated the date hereof, pursuant to which, among other
things, TBF has agreed to convert into shares of EFTC Common Stock, all
outstanding shares of Series B Convertible Preferred Stock of EFTC and the
Senior Subordinated Convertible Note due June 30, 2006 of EFTC, on or before May
31, 2001; and
WHEREAS, the Special Committee and the Boards of Directors of EFTC and
K*TEC and the sole member of TBF II have approved this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I.
THE MERGERS
SECTION 1.1 CERTIFICATE OF INCORPORATION AND BYLAWS OF PARENT. EFTC
shall cause the Certificate of Incorporation and Bylaws of Parent to be amended
prior to the Effective Time (as defined in Section 1.4) to be substantially in
the form of Exhibit A and Exhibit B hereto, respectively. From the date hereof
until the Effective Time, EFTC shall consult with TBF II prior to causing or
permitting Parent to take any action and shall not cause or permit Parent to
take any action inconsistent with the provisions of this Agreement without the
written consent of TBF II.
SECTION 1.2 THE EFTC MERGER.
(a) The EFTC Merger. EFTC shall cause Parent to form a wholly-owned
subsidiary named EFTC Acquisition Corp. ("EFTC Sub") under the laws of the State
of Colorado. EFTC will cause Parent to cause EFTC Sub to execute and deliver
this Agreement. Upon the terms and subject to the provisions of this Agreement,
and in accordance with the Colorado Business Corporation Act ("CBCA"), EFTC Sub
will merge with and into EFTC (the "EFTC Merger") at the Effective Time. EFTC
Sub will be formed solely to facilitate the EFTC Merger and will conduct no
business or activity other than in connection with the EFTC Merger.
(b) EFTC Reincorporation Merger. EFTC will form a wholly-owned
subsidiary named EFTC Merger Sub, Inc. ("EFTC Merger Sub") under the laws of
Delaware. Upon the
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terms and subject to the provisions of this Agreement, and in accordance with
the CBCA and the Delaware General Corporation Law (the "DGCL"), EFTC will merge
with and into EFTC Merger Sub ("EFTC Reincorporation Merger") following the
Effective Time (as defined in Section 1.4) for the sole purpose of changing its
jurisdiction of incorporation from Colorado to Delaware and with no other
changes. EFTC Merger Sub will be formed solely to facilitate the EFTC
Reincorporation Merger and will conduct no business or activity other than in
connection with the EFTC Reincorporation Merger. As a result of the EFTC
Reincorporation Merger, the separate corporate existence of EFTC shall cease and
EFTC Merger Sub shall continue as the surviving corporation. Upon becoming
effective, the EFTC Reincorporation Merger shall have the effects set forth in
the CBCA and the DGCL. In this Agreement, for all times following the effective
time of the EFTC Reincorporation Merger, the term "EFTC" shall refer to EFTC
Merger Sub.
SECTION 1.3 THE K*TEC MERGER. EFTC shall cause Parent to form a
wholly-owned subsidiary named K*TEC Acquisition Corp. ("K*TEC Sub") under the
laws of the State of Delaware. EFTC will cause Parent to cause K*TEC Sub to
execute and deliver this Agreement. Upon the terms and subject to the provisions
of this Agreement, and in accordance with the DGCL, K*TEC Sub will merge with
and into TBF II (the "K*TEC Merger" and together with the EFTC Merger, the
"Mergers") at the Effective Time. K*TEC Sub will be formed solely to facilitate
the K*TEC Merger and will conduct no business or activity other than in
connection with the K*TEC Merger.
SECTION 1.4 EFFECTIVE TIME OF THE MERGERS. Subject to the provisions of
this Agreement, a certificate of merger with respect to each Merger in such form
as is required by the relevant provisions of the CBCA and the DGCL
(individually, a "Certificate of Merger" with respect to one of the Mergers, and
collectively with respect to both Mergers, the "Certificates of Merger") shall
be duly prepared, executed and acknowledged and thereafter delivered to the
Secretary of State of the State of Colorado for filing, as provided in the CBCA
with respect to the EFTC Merger, and the Secretary of State of the State of
Delaware for filing, as provided in the DGCL with respect to the K*TEC Merger,
as early as practicable on the Closing Date (as defined in Section 1.5). Each
Merger shall become effective at such time as is specified in its Certificate of
Merger (the time at which both Mergers have become fully effective being
hereinafter referred to as the "Effective Time").
SECTION 1.5 CLOSING. The closing of the Mergers (the "Closing") will
take place at such time and place to be agreed upon by the parties hereto, on a
date to be specified by TBF II and EFTC, which shall be no later than the second
business day after satisfaction or, if permissible, waiver of the conditions set
forth in Article VI (the "Closing Date"), unless another date is agreed to in
writing by TBF II and EFTC.
SECTION 1.6 EFFECT OF THE MERGERS. As a result of the EFTC Merger, the
separate corporate existence of EFTC Sub shall cease and EFTC shall continue as
the surviving corporation (the "EFTC Surviving Corporation"). As a result of the
K*TEC Merger, the separate corporate existence of K*TEC Sub shall cease and TBF
II shall continue as the surviving entity (the "K*TEC Surviving Entity" and
together with the EFTC Surviving Corporation, the "Surviving Entities"). Upon
becoming effective, the Mergers shall have the effects set forth in the CBCA and
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
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at the Effective Time, (i) all properties, rights, privileges and powers of EFTC
and EFTC Sub shall vest in the EFTC Surviving Corporation, and all debts,
liabilities and duties of EFTC and EFTC Sub shall become the debts, liabilities
and duties of the EFTC Surviving Corporation and (ii) all properties, rights,
privileges and powers of TBF II and K*TEC Sub shall vest in the K*TEC Surviving
Entity, and all debts, liabilities and duties of TBF II and K*TEC Sub shall
become the debts, liabilities and duties of the K*TEC Surviving Entity.
SECTION 1.7 CERTIFICATE OF INCORPORATION, BYLAWS AND ORGANIZATIONAL
DOCUMENTS OF THE SURVIVING ENTITIES. At the Effective Time, (i) the Articles of
Incorporation and Bylaws of the EFTC Surviving Corporation shall be amended to
be identical to the Articles of Incorporation and Bylaws, respectively, of EFTC
Sub as in effect immediately prior to the Effective Time (except that the name
of the EFTC Surviving Corporation shall be "EFTC Operating Corporation"), in
each case until duly amended in accordance with applicable law, and (ii)
organizational and operating documents of the K*TEC Surviving Entity shall be
amended to be substantially identical to the Certificate of Formation and
Amended and Restated Limited Liability Company Agreement of TBF II (the "TBF II
LLC Agreement"), as in effect immediately prior to the Effective Time (except
that the name of the K*TEC Surviving Entity shall be K*TEC Operating Company,
L.L.C.), in each case until duly amended in accordance with applicable law.
SECTION 1.8 DIRECTORS AND OFFICERS OF THE SURVIVING ENTITIES.
(a) EFTC Surviving Corporation. At the Effective Time, the initial
directors of the EFTC Surviving Corporation, to hold office in accordance with
the Articles of Incorporation and Bylaws of the EFTC Surviving Corporation will
be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇. The officers of EFTC
immediately prior to the Effective Time shall be the initial officers of the
EFTC Surviving Corporation, each to hold office in accordance with the Articles
of Incorporation and Bylaws of the EFTC Surviving Corporation.
(b) K*TEC Surviving Entity. At the Effective Time, the sole member of
the K*TEC Surviving Entity, in accordance with the limited liability company
agreement of the K*TEC Surviving Entity, will be Parent. The officers of K*TEC
immediately prior to the Effective Time shall be the initial officers of the
K*TEC Surviving Entity, each to hold office in accordance with the limited
liability company agreement of the K*TEC Surviving Entity.
SECTION 1.9 CONTRIBUTION OF STOCK OF EFTC AND UNITS OF TBF II TO PARENT
SUB BY PARENT. Immediately following the Effective Time, all outstanding units
of the K*TEC Surviving Entity and stock of the EFTC Surviving Corporation will
be transferred by Parent to a newly formed Delaware corporation, Parent Sub
Corp. ("Parent Sub"), in exchange for shares Parent Sub, so that, after giving
effect to the transaction, (x) Parent Sub is a direct wholly-owned subsidiary of
Parent and (y) the K*TEC Surviving Entity and the EFTC Surviving Corporation are
direct wholly-owned subsidiaries of Parent Sub.
SECTION 1.10 TAX CONSEQUENCES. It is intended by the parties hereto
that (i) the EFTC Merger shall qualify as a reorganization described in Section
368(a) of the Code and/or taken together with the K*TEC Merger, as a transfer of
property described in Section 351 of the Code to Parent by holders of EFTC
Common Stock and TBF II Units, (ii) the K*TEC Merger, taken
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together with the EFTC Merger, shall qualify as a transfer of property described
in Section 351 of the Code to Parent by holders of TBF II Units and EFTC Common
Stock and (iii) the EFTC Reincorporation Merger shall constitute a
"reorganization" under Section 368(a)(1)(F) of the Code. The parties hereto
adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3 of the United States Income Tax Regulations.
ARTICLE II.
CONVERSION OF SECURITIES
SECTION 2.1 CONVERSION OF EFTC CAPITAL STOCK. At the Effective Time, by
virtue of the EFTC Merger and without any action on the part of any of the
parties hereto or the holders of any shares of Common Stock, par value $0.01 per
share, of EFTC ("EFTC Common Stock") or common stock of EFTC Sub:
(a) Capital Stock of EFTC Sub. Each issued and outstanding share of
the common stock, par value $0.01 per share, of EFTC Sub shall be converted into
and become one fully paid and nonassessable share of Common Stock, par value
$0.01 per share, of the EFTC Surviving Corporation.
(b) Cancellation of Treasury Stock and K*TEC-Owned Stock. All shares
of EFTC Common Stock that are owned by EFTC as treasury stock and any shares of
EFTC Common Stock owned by TBF II or any wholly-owned Subsidiary (as defined in
Section 3.1) of TBF II shall be cancelled and retired and shall cease to exist
and no stock of Parent or other consideration shall be delivered in exchange
therefor.
(c) Exchange Ratio for EFTC Common Stock. Subject to Section 2.4(e),
each issued and outstanding share of EFTC Common Stock (other than shares to be
cancelled in accordance with Section 2.1(b)) shall be converted into the right
to receive 0.25 shares (the "EFTC Exchange Ratio") of Common Stock, par value
$0.01 per share, of Parent ("Parent Common Stock"). All such shares of EFTC
Common Stock, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any ownership
or other rights with respect thereto, except the right to receive the shares of
Parent Common Stock and an amount equal to certain dividends and other
distributions described in Section 2.4(c), without interest, upon the surrender
of such certificate in accordance with Section 2.4.
SECTION 2.2 CONVERSION OF TBF II UNITS. At the Effective Time, by
virtue of the K*TEC Merger and without any action on the part of any of the
parties hereto or the holders of any TBF II Units or common stock of K*TEC Sub:
(a) Capital Stock of K*TEC Sub. All of the issued and outstanding
shares of the common stock, par value $0.01 per share, of K*TEC Sub shall, in
the aggregate, be converted into and become all of the outstanding units and/or
membership interests of the K*TEC Surviving Entity.
(b) [Intentionally left blank.]
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(c) Exchange of TBF II Units. Subject to Section 2.2(d), all of the
issued and outstanding TBF II Units shall be converted into the right to receive
15,127,174 shares of Parent Common Stock in the aggregate. All such TBF II
Units, when so converted, shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and the holder of such units
shall cease to have any ownership or other rights with respect thereto, except
the right to receive the shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock to be issued or paid in consideration
therefor and an amount equal to certain dividends and other distributions
described in Section 2.4(c), in each case upon the surrender of such certificate
in accordance with Section 2.4 and without interest.
(d) Adjustment to Number of Shares Received for TBF II Units. The
number of shares of Parent Common Stock to be received by TBF III in the K*TEC
Merger will be subject to adjustment as set forth in this Section 2.2(d). To the
extent and only to the extent that the Net Tangible Assets of K*TEC set forth on
the Unaudited K*TEC Balance Sheet dated as of December 31, 2000 (as defined in
Section 4.4B(a)) exceeds the Net Tangible Assets set forth on Audited K*TEC
Balance Sheet (as defined in Section 5.21) by more than $5,000,000 (such excess,
the "Net Tangible Assets Shortfall"), the aggregate number of shares of Parent
Common Stock for which all issued and outstanding shares of TBF II Units shall
be converted into the right to receive shall be a number equal to (i) (A)
15,127,174 minus (ii) (A) the amount of the Net Tangible Assets Shortfall
divided by (B) $11; provided, that, no further adjustment to the number of
shares of Parent Common Stock to be issued in exchange for TBF II Units will be
made hereunder to the extent the Net Tangible Assets Shortfall exceeds
$20,000,000. By way of example, if the Net Tangible Assets on the Unaudited
K*TEC Balance Sheet exceeded the Net Tangible Assets on the Audited K*TEC
Balance Sheet by $10,000,000, the Net Tangible Assets Shortfall would be
$5,000,000, and the number of shares of Parent Common Stock to be issued in
exchange for TBF II Units would be adjusted such that the aggregate number of
shares of Parent Common Stock for which all outstanding shares of TBF II Units
would be converted, would be reduced by (i) 5,000,000 divided by (ii) 11, or
454,545 shares. "Net Tangible Assets" means, at any date, (a) the Total Assets
of K*TEC at such date (other than investments in and moneys due from an
Affiliate of K*TEC other than its Subsidiaries) minus (b) Total Liabilities of
K*TEC at such date, excluding, however, from the determination of the Total
Assets of K*TEC at such date, (a) all goodwill, organizational expenses,
research and development expenses, trademarks, trade names, copyrights, patents,
patent applications, licenses, rights in any of the foregoing, and other similar
intangibles (b) all prepaid expenses, deferred charges or unamortized debt
discount and expense, (c) securities not readily marketable, (d) cash held in a
sinking or other analogous fund established for the purpose of redemption,
retirement, defeasance or prepayment of any stock or indebtedness, (e) any
write-up in the book value of any asset resulting from a revaluation thereof and
(f) any items not included in clauses (a) through (e) above but treated as
intangibles in conformity with GAAP. "Total Assets" of K*TEC means, at any date,
the total assets of K*TEC and its Subsidiaries at such date determined on a
consolidated basis in conformity with GAAP. "Total Liabilities" of K*TEC means,
at any date, all obligations that, in conformity with GAAP, would be included in
determining total liabilities as shown on the liabilities side of a consolidated
balance sheet of K*TEC and its Subsidiaries at such date.
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SECTION 2.3 CANCELLATION OF PARENT STOCK. At the Effective Time, by
virtue of the Mergers and without any action on the part of any holder of any
capital stock of EFTC or Parent or the member of TBF II, each share of Parent
Common Stock issued and outstanding immediately prior to the Effective Time
shall be surrendered and cancelled, and the amount paid by EFTC for the shares
of Parent Common Stock held by it shall be returned by Parent to it.
SECTION 2.4 EXCHANGE. The procedures for exchanging certificates which
prior to the Effective Time represented shares of EFTC Common Stock and for
exchanging TBF II Units for certificates representing Parent Common Stock
pursuant to the Mergers are as follows:
(a) Exchange Agent. As of the Effective Time, Parent shall deposit
with a bank or trust company designated by TBF II and EFTC (the "Exchange
Agent"), for the benefit of the holders of shares of EFTC Common Stock and TBF
II Units outstanding immediately prior to the Effective Time, for exchange in
accordance with this Section 2.4, through the Exchange Agent, certificates
representing the shares of Parent Common Stock and cash in lieu of fractional
shares (such shares of Parent Common Stock and cash in lieu of fractional
shares, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund"), issuable pursuant to Sections
2.1 and 2.2 in exchange for shares of EFTC Common Stock and TBF II Units
outstanding immediately prior to the Effective Time.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of EFTC Common Stock (collectively, the
"Certificates") whose shares were converted pursuant to Section 2.1 into the
right to receive shares of Parent Common Stock (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as EFTC
and TBF II may reasonably specify) and (ii) instructions for effecting the
surrender of the Certificates in exchange for certificates representing shares
of Parent Common Stock (plus cash in lieu of fractional shares, if any, of
Parent Common Stock as provided below). As soon as practicable after the
Effective Time, Parent will cause the Exchange Agent to issue a certificate to
TBF III for the shares of Parent Common Stock issuable in conversion of the TBF
II Units pursuant to Section 2.2. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
a certificate representing that number of whole shares of Parent Common Stock,
the amount of any cash payable in lieu of fractional shares of Parent Common
Stock and an amount equal to certain dividends and other distributions which
such holder has the right to receive pursuant to the provisions of this Article
II, and the Certificate so surrendered shall immediately be cancelled. In the
event of a transfer of ownership of EFTC Common Stock prior to the Effective
Time which is not registered in the transfer records of EFTC a certificate
representing the number of shares of Parent Common Stock issuable and any
amounts payable in accordance with this Agreement may be issued and paid to a
transferee if the Certificate representing such EFTC Common Stock is presented
to the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid.
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(c) Distributions With Respect to Unexchanged Shares. No amount in
respect of dividends or other distributions declared or made after the Effective
Time with respect to Parent Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock the holder thereof is entitled to receive
in respect thereof and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to subsection (e) below until the holder of
record of such Certificate shall surrender such Certificate to Parent in
accordance herewith. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the record holder of
the certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Parent Common Stock
to which such holder is entitled pursuant to subsection (e) below and an amount
equal to the amount of dividends or other distributions with a record date after
the Effective Time previously paid with respect to whole shares of Parent Common
Stock, and (ii) at the appropriate payment date, an amount equal to the amount
of dividends or other distributions with a record date after the Effective Time
but prior to surrender and a payment date subsequent to surrender payable with
respect to whole shares of Parent Common Stock, in each case without interest.
(d) No Further Ownership Rights in EFTC Common Stock and TBF II Units.
All shares of Parent Common Stock issued pursuant to Section 2.2(c) or issued
upon the surrender for exchange of Certificates in accordance with the terms
hereof (including any cash paid pursuant to subsection (c) or (e) of this
Section 2.4) shall be deemed to have been issued in full satisfaction of all
rights pertaining to the shares of EFTC Common Stock or theretofore represented
by such Certificates, and from and after the Effective Time there shall be no
further registration of transfers on the stock transfer books of the EFTC
Surviving Corporation or the K*TEC Surviving Entity, as the case may be, of the
shares of EFTC Common Stock, on the one hand, or the TBF II Units, on the other
hand, respectively, which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to one of the
Surviving Entities or Parent for any reason, such Certificates shall be
cancelled and exchanged as provided in this Section 2.4.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates representing TBF II Units or shares of EFTC Common
Stock, and such fractional share interests will not entitle the owner thereof to
vote or to any other rights of a stockholder of Parent. Notwithstanding any
other provision of this Agreement, each holder of shares of EFTC Common Stock
outstanding immediately prior to the Effective Time exchanged pursuant to the
EFTC Merger, who would otherwise have been entitled to receive a fraction of a
share of Parent Common Stock (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Parent Common
Stock multiplied by four times the average
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per share last trade price of EFTC Common Stock (as quoted on the Nasdaq Stock
Market) for the last ten (10) consecutive trading days prior to the Effective
Time.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the former shareholders of EFTC for 180 days
after the Effective Time shall be delivered to Parent upon demand, and any
former shareholder of EFTC who has not previously complied with this Section 2.4
shall thereafter look only to Parent for payment of such former shareholder's
claim for Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock and any amounts in respect of dividends or distributions with
respect to Parent Common Stock.
(g) No Liability. None of EFTC, TBF II, Parent or the Exchange Agent
shall be liable to any holder of shares of EFTC Common Stock or TBF II Units, as
the case may be, for any shares of Parent Common Stock (or cash in lieu of
fractional shares of Parent Common Stock or any dividends or distributions with
respect thereto) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Withholding Rights. Parent and each of the Surviving Entities
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to the holder of TBF II Units or any holder
of Certificates which prior to the Effective Time represented shares of EFTC
Common Stock or such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by Parent
or one of the Surviving Entities, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of EFTC Common Stock or TBF II Units, as the case may be,
in respect of which such deduction and withholding was made.
(i) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent or one of the Surviving Entities, the posting by such person of a bond in
such reasonable amount as Parent or such Surviving Entity may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of Parent Common Stock and any cash in lieu of
fractional shares, and unpaid dividends and distributions on shares of Parent
Common Stock deliverable in respect thereof pursuant to this Agreement.
(j) Affiliates. Notwithstanding anything herein to the contrary,
shares of Parent Common Stock shall not be exchanged for Certificates
surrendered for exchange by any Affiliate (as defined in Section 5.11) of EFTC
or issued in respect of cancelled TBF II Units until (i) Parent has received an
Affiliate Agreement (as defined in Section 5.11) from such Affiliate or (ii)
such date as such shares of Parent Common Stock are transferable under Rule
145(d) of the Securities Act of 1933, as amended (the "Securities Act").
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF EFTC
EFTC represents and warrants to TBF II and K*TEC that the statements
contained in this Article III are true and correct except as set forth herein
and in the disclosure schedule delivered by EFTC to TBF II on or before the date
of this Agreement (the "EFTC Disclosure Schedule"). The EFTC Disclosure Schedule
shall be arranged in paragraphs corresponding to the numbered and lettered
paragraphs contained in this Article III and the disclosure in any paragraph
shall qualify other paragraphs in this Article III only to the extent that it is
reasonably apparent from a reading of such disclosure that it also qualifies or
applies to such other paragraphs.
SECTION 3.1 ORGANIZATION OF EFTC. Each of EFTC and its Subsidiaries (as
defined below) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power to
own, lease and operate its property 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 as a foreign corporation or other entity in each
jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, properties, financial condition or results of
operations of EFTC and its Subsidiaries, taken as a whole (an "EFTC Material
Adverse Effect"). A true and correct copy of the Articles of Incorporation and
Bylaws of EFTC has been delivered to TBF II. Except as set forth in EFTC SEC
Reports (as defined in Section 3.4) filed prior to the date hereof, neither EFTC
nor any of its Subsidiaries directly or indirectly owns (other than ownership
interests in EFTC or in one or more of its Subsidiaries) any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any corporation, partnership, joint venture or other business association
or entity. As used in this Agreement, the word "Subsidiary" means, with respect
to any party, any corporation or other organization, whether incorporated or
unincorporated, of which (i) such party or any other Subsidiary of such party is
a general partner (excluding partnerships the general partnership interests of
which held by such party or any Subsidiary of such party do not have a majority
of the economic interests in such partnership) or (ii) at least a majority of
the securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
SECTION 3.2 EFTC CAPITAL STRUCTURE.
(a) The authorized capital stock of EFTC consists of 75,000,000
shares of Common Stock, $0.01 par value, and 5,000,000 shares of Preferred
Stock, $0.01 par value ("EFTC Preferred Stock"). The authorized EFTC Preferred
Stock consists of 45,000 shares of Series A Junior Participating Preferred Stock
("Series A Preferred Stock"), 15,000 shares of EFTC Series B Preferred Stock and
4,940,000 shares of Preferred Stock which have not been designated. As of April
23, 2001, (i) 15,980,989 shares of EFTC Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
14,233.333 shares of EFTC Series B Preferred Stock were issued and outstanding,
all of which are validly issued, fully paid and nonassessable, and (iii) no
shares of EFTC Common Stock were held in the treasury of EFTC or by Subsidiaries
of EFTC. The EFTC Disclosure Schedule shows the number of shares of EFTC Common
Stock reserved for future issuance pursuant to stock options granted and
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outstanding as of the date hereof and the plans under which such options were
granted (collectively, the "EFTC Stock Plans"). There are no obligations,
contingent or otherwise, of EFTC or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of EFTC Common Stock or the capital stock
of any Subsidiary or to provide funds to or make any material investment (in the
form of a loan, capital contribution or otherwise) in any such Subsidiary or any
other entity other than guarantees of bank obligations or indebtedness for
borrowed money of Subsidiaries entered into in the ordinary course of business
and other than any obligation the failure of which to perform or satisfy would
not have an EFTC Material Adverse Effect. All of the outstanding shares of
capital stock or other ownership interests of each of EFTC's Subsidiaries are
duly authorized, validly issued, fully paid and nonassessable and all such
shares are owned by EFTC or another Subsidiary of EFTC free and clear of all
security interests, liens, claims, pledges, agreements, limitations in EFTC's
voting rights, charges or other encumbrances of any nature.
(b) Except as set forth in this Section 3.2 or as reserved for future
grants of options under the EFTC Stock Plans and except for the preferred stock
purchase rights issued and issuable under the Rights Agreement dated as of
February 25, 1999, as amended on March 30, 2000 and July 14, 2000, between EFTC
and Computershare Trust Company, Inc. (the "EFTC Rights Plan"), conversion
rights under the Senior Convertible Note due June 30, 2006, conversion rights
under the EFTC Series B Preferred Stock, options to purchase an aggregate of
4,640,242 shares of EFTC Common Stock held by current and former directors,
officers and employees of EFTC, and the Warrants to purchase an aggregate of
525,000 shares of EFTC Common Stock, issued to ▇▇▇▇▇▇ ▇▇▇▇▇ Capital, LLC and
Durham Capital Corporation (the "Warrants"), (i) there are no shares of capital
stock of any class of EFTC, or any security exchangeable into or exercisable for
such equity securities, issued, reserved for issuance or outstanding; (ii) there
are no options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which EFTC or any of its Subsidiaries is a party
or by which it is bound obligating EFTC or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other ownership interests of EFTC or any of its Subsidiaries or
obligating EFTC or any of its Subsidiaries to grant, extend, accelerate the
vesting of or enter into any such option, warrant, equity security, call, right,
commitment or agreement; and (iii) to the best knowledge of EFTC, there are no
voting trusts, proxies or other voting agreements or understandings with respect
to the shares of capital stock of EFTC. All shares of EFTC Common Stock subject
to issuance as specified in this Section 3.2 are duly authorized and, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be validly issued, fully paid and nonassessable.
SECTION 3.3 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) EFTC has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement by EFTC have been duly
authorized by all necessary corporate action on the part of EFTC, subject only
to the approval and adoption of this Agreement and the EFTC Merger by EFTC's
stockholders under the CBCA. This Agreement has been duly executed and delivered
by EFTC and constitutes the valid and binding obligations of EFTC, enforceable
in accordance with
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its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles (the "Bankruptcy
and Equity Exception").
(b) The execution and delivery of this Agreement by EFTC does not,
and the consummation of the transactions contemplated by this Agreement will
not, (i) conflict with, or result in any violation or breach of, any provision
of the Articles of Incorporation or Bylaws of EFTC or any of its Subsidiaries,
(ii) conflict with or violate any permit, concession, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to EFTC or any of
its Subsidiaries or any of its or their properties or assets, or (iii) result in
a breach of any of the terms, conditions or provisions of, or constitute a
default under, or permit the acceleration of rights under or termination of any
indenture, mortgage, deed or trust, credit agreement, note or other
indebtedness, or any other material agreement of EFTC or any of its Subsidiaries
(collectively, the "EFTC Agreements") except in the case of (ii) or (iii) for
any such conflicts, violations, defaults, terminations, cancellations or
accelerations which (x) would not, individually or in the aggregate, have an
EFTC Material Adverse Effect or (y) would not substantially impair or delay the
consummation of the EFTC Merger.
(c) 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 EFTC or any of its Subsidiaries in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby or thereby, except for (i) the filing of a
Certificate of Merger with respect to the EFTC Merger with the Delaware
Secretary of State, (ii) the filing of the Joint Proxy Statement/Prospectus (as
defined in Section 3.16 below) with the Securities and Exchange Commission (the
"SEC") in accordance with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Securities Act, (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state securities laws and the laws of any foreign country and (iv)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not (x) have an EFTC Material Adverse Effect or
(y) substantially impair or delay the consummation of the EFTC Merger.
SECTION 3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) EFTC has filed and made available to TBF II all forms, reports
and documents required to be filed by EFTC with the SEC since January 1, 1998
(collectively, the "EFTC SEC Reports"). The EFTC SEC Reports (i) at the time
filed, complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated in
such EFTC SEC Reports or necessary in order to make the statements in such EFTC
SEC Reports, in the light of the circumstances under which they were made, not
misleading. None of EFTC's Subsidiaries is required to file any forms, reports
or other documents with the SEC.
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(b) Each of the consolidated financial statements (including, in each
case, any related notes) of EFTC contained in the EFTC SEC Reports complied as
to form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
Form 10-Q under the Exchange Act) and fairly presented the consolidated
financial position of EFTC and its Subsidiaries as of the dates and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount. The unaudited balance sheet of EFTC as of March 31, 2001
is referred to herein as the "EFTC Balance Sheet."
SECTION 3.5 NO UNDISCLOSED LIABILITIES. Except as disclosed in the EFTC
SEC Reports filed prior to the date hereof, and except for normal or recurring
liabilities incurred since March 31, 2001 in the ordinary course of business
consistent with past practices, EFTC and its Subsidiaries do not have any
liabilities, either accrued, contingent or otherwise, including, but not limited
to, contractual obligations and this Agreement (whether or not required to be
reflected in financial statements in accordance with generally accepted
accounting principles), and whether due or to become due, which would,
individually or in the aggregate, have an EFTC Material Adverse Effect.
SECTION 3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the EFTC SEC Reports filed prior to the date hereof, since the date of the
EFTC Balance Sheet, EFTC and its Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been (i) any damage, destruction or loss (whether
or not covered by insurance) with respect to EFTC or any of its Subsidiaries
which would have an EFTC Material Adverse Effect; (ii) any material change by
EFTC in its accounting methods, principles or practices to which TBF II has not
previously consented in writing; or (iii) any other action or event that would
have required the consent of TBF II pursuant to Section 5.1 of this Agreement
had such action or event occurred after the date of this Agreement other than
such actions or events that, individually or in the aggregate, have not had or
would have an EFTC Material Adverse Effect.
SECTION 3.7 TAXES.
(a) For the purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all federal, state, local and foreign taxes, assessments
and other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment insurance,
social security, business license, occupation, business organization, stamp,
environmental, property taxes, or other taxes, fees, charges or assessments of
any kind whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts. For purposes of this Agreement, "Taxes" also
includes any obligations under any agreements or arrangements with any other
person with respect to Taxes of such other person (including pursuant to Treas.
Reg.
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Section 1.1502-6 or comparable provisions of state, local or foreign tax law)
and including any liability for Taxes of any predecessor entity.
(b) EFTC and each of its Subsidiaries have (i) filed all federal,
state, local and foreign Tax returns and reports required to be filed by them
prior to the date of this Agreement (taking into account all applicable
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clauses (i), (ii) or (iii) for any such
filings, payments or accruals that would not, individually or in the aggregate,
have an EFTC Material Adverse Effect. Neither the Internal Revenue Service (the
"IRS") nor any other taxing authority has asserted any claim for Taxes, or to
the actual knowledge of the executive officers of EFTC, is threatening to assert
any claims for Taxes, which claims, individually or in the aggregate, would have
an EFTC Material Adverse Effect. EFTC and each of its Subsidiaries have withheld
or collected and paid over to the appropriate governmental authorities (or are
properly withholding for such payment) all Taxes required by law to be withheld
or collected, except for amounts that would not, individually or in the
aggregate, have an EFTC Material Adverse Effect. Neither EFTC nor any of its
Subsidiaries has made an election under Section 341(f) of the Code. There are no
liens for Taxes upon the assets of EFTC or any of its Subsidiaries (other than
liens for Taxes that are not yet due or delinquent or that are being contested
in good faith by appropriate proceedings), except for liens that would not,
individually or in the aggregate, have an EFTC Material Adverse Effect.
(c) Neither EFTC nor any of its Subsidiaries is or has been a member
of an affiliated group of corporations filing a consolidated federal income tax
return (or a group of corporations filing a consolidated, combined or unitary
income tax return under comparable provisions of state, local or foreign tax
law) for any taxable period beginning on or after the taxable period ending
December 31, 1997, other than a group the common parent of which is or was EFTC
or any Subsidiary of EFTC.
(d) Neither EFTC nor any of its Subsidiaries has any obligation under
any agreement or arrangement with any other person (other than EFTC or its
Subsidiaries) with respect to Taxes of such other person (including pursuant to
Treas. Reg. Section 1.1502-6 or comparable provisions of state, local or foreign
tax law) and including any liability for Taxes of any predecessor entity, except
for obligations that would not, individually or in the aggregate, have an EFTC
Material Adverse Effect.
SECTION 3.8 PROPERTIES.
(a) Neither EFTC nor any of its Subsidiaries is in default under any
leases for real property providing for the occupancy, in each case, of
facilities in excess of 20,000 square feet (collectively "Material Lease(s)"),
except where the existence of such defaults, individually or in the aggregate,
would not have an EFTC Material Adverse Effect.
(b) With respect to each item of real property that EFTC or any of
its Subsidiaries owns, except for such matters that, individually or in the
aggregate, would not have an EFTC Material Adverse Effect: (i) EFTC or its
Subsidiary has good and clear record and marketable title to such property,
insurable by a recognized national title insurance company at standard
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rates, free and clear of any security interest, easement, covenant or other
restriction, except for recorded easements, covenants and other restrictions
which do not materially impair the current uses or occupancy of such property;
and (ii) the improvements constructed on such property are in good condition,
and all mechanical and utility systems servicing such improvements are in good
condition, free in each case of material defects.
SECTION 3.9 INTELLECTUAL PROPERTY. EFTC owns, or is licensed or
otherwise possesses legally enforceable rights to use, all trademarks, trade
names, service marks, copyrights, and any applications for such trademarks,
trade names, service marks and copyrights, know-how, computer software programs
or applications and tangible or intangible proprietary information or material
that are necessary to conduct the business of EFTC as currently conducted,
subject to such exceptions that, individually and in the aggregate, would not
have an EFTC Material Adverse Effect. EFTC has no knowledge of any assertion or
claim challenging the validity of any of such intellectual property.
SECTION 3.10 AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) EFTC has not breached, or received in writing any claim or notice
that it has breached, any of the terms or conditions of any material agreement,
contract or commitment filed as an exhibit to the EFTC SEC Reports ("EFTC
Material Contracts") in such a manner as, individually or in the aggregate,
would have an EFTC Material Adverse Effect. Each EFTC Material Contract that has
not expired by its terms is in full force and effect.
(b) Without limiting Section 3.10(a), each of the management
contracts to which EFTC is a party and each of EFTC's Material Leases (i) is
valid and binding in accordance with its terms and is in full force and effect,
(ii) neither EFTC nor any of its Subsidiaries is in default in any material
respect thereof, nor does any condition exist that with notice or lapses of time
or both would constitute a material default thereunder, and (iii) no party has
given any written or (to the knowledge of EFTC) oral notice of termination or
cancellation thereof or that such party intends to assert a breach thereof, or
seek to terminate or cancel, any such agreement, contract or lease, in each case
as a result of the transactions contemplated hereby, subject to such exceptions
that, individually and in the aggregate, would have an EFTC Material Adverse
Effect.
SECTION 3.11 LITIGATION. Except as described in the EFTC SEC Reports
filed prior to the date hereof, there is no action, suit or proceeding, claim,
arbitration or investigation against EFTC pending or as to which EFTC has
received any written notice of assertion, which, individually or in the
aggregate, would have an EFTC Material Adverse Effect or a material adverse
effect on the ability of EFTC to consummate the transactions contemplated by
this Agreement.
SECTION 3.12 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the EFTC SEC Reports filed prior to the
date hereof and except for such matters that, individually or in the aggregate,
would not have an EFTC Material Adverse Effect: (i) EFTC and its Subsidiaries
have complied with all applicable Environmental Laws (as defined in Section
3.12(b)); (ii) the properties currently owned or operated by EFTC and its
Subsidiaries (including soils, groundwater, surface water, buildings or other
structures)
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are not contaminated with any Hazardous Substances (as defined in Section
3.12(c)); (iii) the properties formerly owned or operated by EFTC or any of its
Subsidiaries were not contaminated with Hazardous Substances during the period
of ownership or operation by EFTC or any of its Subsidiaries; (iv) neither EFTC
nor its Subsidiaries are subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (v) neither EFTC nor any
of its Subsidiaries has been associated with any release or threat of release of
any Hazardous Substance; (vi) neither EFTC nor any of its Subsidiaries has
received any notice, demand, letter, claim or request for information alleging
that EFTC or any of its Subsidiaries may be in violation of or liable under any
Environmental Law; (vii) neither EFTC nor any of its Subsidiaries is subject to
any orders, decrees, injunctions or other arrangements with any Governmental
Entity or is subject to any indemnity or other agreement with any third party
relating to liability under any Environmental Law or relating to Hazardous
Substances; and (viii) there are no circumstances or conditions involving EFTC
or any of its Subsidiaries that could reasonably be expected to result in any
claims, liability, investigations, costs or restrictions on the ownership, use
or transfer of any property of EFTC or any of its Subsidiaries pursuant to any
Environmental Law.
(b) As used herein, the term "Environmental Law" means any federal,
state, local or foreign law, regulation, order, decree, permit, authorization,
opinion, common law or agency requirement relating to: (A) the protection,
investigation or restoration of the environment, health and safety, or natural
resources, (B) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance or (C) noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to persons or property.
(c) As used herein, the term "Hazardous Substance" means any
substance that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which is the subject
of regulatory action by any Governmental Entity pursuant to any Environmental
Law.
SECTION 3.13 EMPLOYEE BENEFIT PLANS.
(a) For purposes of this Agreement, the "EFTC Employee Plans" shall
mean all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus,
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar employee benefit plans, and all
unexpired severance agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of EFTC or any trade or business
(whether or not incorporated) which is under common control with EFTC within the
meaning of Section 414 of the Code (an "ERISA Affiliate"), or any Subsidiary of
EFTC (together, the "EFTC Employee Plans"). EFTC has listed in Section 3.13 of
the EFTC Disclosure Schedule all EFTC Employee Plans other plans that are
"employee welfare benefit plans" within the meaning of Section 3(1) of ERISA.
(b) With respect to each EFTC Employee Plan, EFTC has made available
to K*TEC, a true and correct copy of (i) the most recent annual report (Form
5500) filed with the IRS, (ii) such EFTC Employee Plan and all amendments
thereto, (iii) each trust agreement and group
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annuity contract, if any, and all amendments thereto relating to such EFTC
Employee Plan and (iv) the most recent actuarial report or valuation relating to
an EFTC Employee Plan subject to Title IV of ERISA.
(c) With respect to the EFTC Employee Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of EFTC, there exists no
condition or set of circumstances in connection with which EFTC could be subject
to any liability that would have an EFTC Material Adverse Effect under ERISA,
the Code or any other applicable law.
(d) With respect to the EFTC Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with generally accepted accounting principles, on the financial
statements of EFTC, except for obligations which, individually or in the
aggregate, would have an EFTC Material Adverse Effect.
(e) Except as disclosed in the EFTC SEC Reports filed prior to the
date of this Agreement, and except as provided for in this Agreement, neither
EFTC nor any of its Subsidiaries is a party to any oral or written (i) agreement
with any officer or other key employee of EFTC or any of its Subsidiaries, the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving EFTC of the nature contemplated
by this Agreement, (ii) agreement with any officer of EFTC providing any term of
employment or compensation guarantee extending for a period longer than one year
from the date hereof and for the payment of compensation in excess of $100,000
per annum, or (iii) agreement or plan, including any stock option plan, stock
appreciation right plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, the vesting of the benefits of which
will be accelerated or the funding of benefits of which will be required, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
SECTION 3.14 COMPLIANCE WITH LAWS. EFTC has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which, individually or in the aggregate, have
not had and would not have an EFTC Material Adverse Effect.
SECTION 3.15 TAX MATTERS.
(a) To the best knowledge of EFTC, after consulting with its tax
advisors, neither EFTC nor any of its Affiliates (as defined in Section 5.11)
other than TBF or any of its Affiliates (as to which no representation or
warranty is made) has taken or agreed to take any action which would (i) prevent
the EFTC Merger from qualifying as a reorganization described in Section 368(a)
of the Code and/or, taken together with the K*TEC Merger, as a transfer of
property described in Section 351 of the Code to Parent by holders of EFTC
Common Stock and TBF II Units or (ii) prevent the K*TEC Merger, taken with the
EFTC Merger, from qualifying as a transfer of property described in Section 351
of the Code to Parent by holders of TBF II Units and EFTC Common Stock.
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(b) To the best knowledge of EFTC, none of the stockholders of EFTC,
other than TBF (as to which no representation or warranty is made) have a
present plan, intention or arrangement to sell or otherwise dispose of Parent
Common Stock received in the EFTC Merger.
SECTION 3.16 CUSTOMERS AND SUPPLIERS. The EFTC Disclosure Schedule
lists the names and addresses of EFTC's top ten customers and suppliers for the
six-month period ended March 31, 2001. Except as disclosed in the EFTC
Disclosure Schedule, EFTC has not received any actual written notice that any
such customer or supplier intends to discontinue or materially alter its
relationship with EFTC.
SECTION 3.17 LABOR MATTERS. Except as disclosed in the EFTC SEC Reports
filed prior to the date hereof, neither EFTC nor any of its Subsidiaries is a
party to or otherwise bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor,
as of the date hereof, is EFTC or any of its Subsidiaries the subject of any
material proceeding asserting that EFTC or any of its Subsidiaries has committed
an unfair labor practice or is seeking to compel it to bargain with any labor
union or labor organization nor, as of the date of this Agreement, is there
pending or, to the knowledge of the executive officers of EFTC, threatened, any
material labor strike, dispute, walkout, work stoppage, slow-down or lockout
involving EFTC or any of its Subsidiaries.
SECTION 3.18 INSURANCE. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by EFTC or any of its Subsidiaries are with
reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of EFTC and its Subsidiaries and their respective
properties and assets, and are in character and amount at least equivalent to
that carried by persons engaged in similar businesses and subject to the same or
similar perils or hazards, except for any such failures to maintain insurance
policies that, individually or in the aggregate, would not have an EFTC Material
Adverse Effect.
SECTION 3.19 OPINION OF FINANCIAL ADVISOR. The financial advisor of the
Special Committee, ▇.▇. ▇▇▇▇▇▇ H&Q, a division of Chase Securities Inc., has
delivered to the Special Committee an opinion as to fairness to the holders of
EFTC Common Stock other than TBF from a financial point of view.
SECTION 3.20 NO EXISTING DISCUSSIONS. As of the date hereof, EFTC is
not engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to an Acquisition Proposal (as defined in Section 5.3).
SECTION 3.21 EFTC RIGHTS PLAN. Under the terms of the EFTC Rights Plan,
neither the execution of this Agreement nor the transactions contemplated hereby
or thereby, will cause a Distribution Date to occur or cause the rights issued
pursuant to the EFTC Rights Plan to become exercisable, and all such rights
shall become non-exercisable at the Effective Time.
SECTION 3.22 FCPA. EFTC has complied in all material respects with the
United States Foreign Corrupt Practices Act of 1977, as amended (the "FCPA"), in
obtaining any consents, licenses, approvals, authorizations, rights, and
privileges in connection with the conduct of its business and has otherwise
conducted its business in compliance with all material respects with
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the FCPA. EFTC's internal management and accounting practices and controls are
adequate to ensure compliance in all material respects with the FCPA.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF TBF II AND K*TEC
A. Each of K*TEC and TBF II represent and warrant, jointly and severally, to
EFTC that the statements contained in this Article IV.A are true and correct
except as set forth herein.
Section 4.1A Organization and Qualification of TBF II. TBF II is a
limited liability company, duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite limited liability
company power and authority to own, operate or lease the properties and assets
now owned, operated or leased by it and to carry on its business as currently
conducted by it. True and complete copies of the certificate of formation of TBF
II and the Amended and Restated Limited Liability Company Agreement of TBF II
dated as of October 18, 2000 have been made available by TBF II for review by
EFTC.
Section 4.2A Authorization TBF II has all necessary limited liability
company power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. The execution and delivery of this Agreement by TBF
II and the performance of its obligations hereunder has been duly and validly
authorized by the sole member of TBF II, no other action on the part of TBF II
or its member being necessary. This Agreement has been duly and validly executed
and delivered by TBF II and is a legal, valid and binding obligation of TBF II,
enforceable against TBF II in accordance with its terms, except as the
enforceability thereof may be limited by (a) applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or similar laws in effect
which affect the enforcement of creditors' rights generally or (b) general
principles of equity.
Section 4.3A Capitalization of TBF II. TBF III is the sole member of
TBF II and holds 230,000,000 TBF II Units which represent one hundred percent
(100%) of the issued and outstanding membership interests in TBF II. Other than
the TBF II Units held by TBF III, no other person owns or holds any equity
interest of TBF II, any interest in the profits or losses of TBF II, or any
rights to receive distributions from TBF II. There are no outstanding
subscriptions, calls, commitments, warrants or options for the purchase of TBF
II Units, nor are there any other commitments of any kind for the granting or
issuance of additional TBF II Units. Each of the TBF II Units that are issued
and outstanding are duly authorized, validly issued, fully paid and
nonassessable and are free of any preemptive or other similar rights.
Section 4.4A No Conflict. The execution, delivery and performance of
this Agreement by TBF II and the consummation of the transactions contemplated
hereby do not and will not (a) violate or conflict with TBF II LLC Agreement,
(b) conflict with or violate in any material respect any law or other rule or
regulation applicable to TBF II or any of its Subsidiaries, or (c) violate,
conflict with, result in any material breach of, or constitute a material
default (or event which with the giving of notice or lapse of time, or both,
would become a material default) under, or result in or give to others any
rights of termination, amendment, acceleration or cancellation under, or result
in the creation of any lien or other encumbrance or restriction on TBF II Units
or on any of the assets or properties of TBF II or any of its Subsidiaries
pursuant to,
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any material contract or material license to which TBF II or any Subsidiary is a
party or by which any of their assets or properties is bound.
Section 4.5A Operations; No Assets or Liabilities. Other than the
ownership of 23,000,000 shares of common stock of K*TEC (the "K*TEC Shares") and
its contractual rights under the agreements set forth on Schedule 4.5A of the
K*TEC Disclosure Schedule, TBF II has no assets of any kind. Except as set forth
on Schedule 4.5A of the K*TEC Disclosure Schedule, TBF II is not a party to any
written or oral contract, lease, understanding, commitment, arrangement, or
other agreement. TBF II does not own and has never owned any real property or
intellectual property. TBF II currently conducts, and in the past has conducted,
no operations other than holding the K*TEC Shares, and neither currently nor in
the past, has retained any employees. There are no liabilities of TBF II,
whether absolute, accrued, contingent or otherwise, and whether due or to become
due, other than those arising under the agreements set forth on the K*TEC
Disclosure Schedule.
Section 4.6A Tax Matters. To the best knowledge of TBF II, after
consulting with its tax advisors, neither TBF II nor any of its Affiliates (as
defined in Section 5.12) has taken or agreed to take any action which would (i)
prevent the K*TEC Merger, taken together with the EFTC Merger, from qualifying
as a transfer of property described in Section 351 of the Code to Parent by
holders of TBF II Units and EFTC Common Stock or (ii) prevent the EFTC Merger
from qualifying as a reorganization described in Section 368(a) of the Code
and/or taken together with the K*TEC Merger, as a transfer of property described
in Section 351 of the Code to Parent by holders of EFTC Common Stock and TBF II
Units. To the best knowledge of TBF II, the sole member of TBF II has no present
plan, intention or arrangement to sell or otherwise dispose of the shares of
Parent Common Stock received in the K*TEC Merger.
Section 4.7A Compliance With Laws. Except as set forth on the K*TEC
Disclosure Schedule, TBF II has at all times complied with, is not in violation
of, and has not received any notices of violation with respect to, any federal,
state or local statute, law or regulation with respect to the conduct of its
business, or the ownership or operation of its business, except for failures to
comply or violations which, individually or in the aggregate, have not had and
would not have a K*TEC Material Adverse Effect.
Section 4.8A Taxes
(a) TBF II and each of its Subsidiaries have (i) filed all federal,
state, local and foreign Tax returns and reports required to be filed by them
prior to the date of this Agreement (taking into account all applicable
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clauses (i), (ii) or (iii) for any such
filings, payments or accruals that would not, individually or in the aggregate,
have a K*TEC Material Adverse Effect. Neither the IRS nor any other taxing
authority has asserted any claim for Taxes, or to the actual knowledge of the
executive officers of TBF II or K*TEC, is threatening to assert any claims for
Taxes against TBF II or any of its Subsidiaries, which claims, individually or
in the aggregate, would have a K*TEC Material Adverse Effect. TBF II and each of
its Subsidiaries have withheld or collected and paid over to the appropriate
governmental authorities (or are properly holding for such payment) all
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Taxes required by law to be withheld or collected, except for amounts that would
not, individually or in the aggregate, have a K*TEC Material Adverse Effect.
Neither TBF II nor any of its Subsidiaries has made an election under Section
341(f) of the Code. There are no liens for Taxes upon the assets of TBF II or
any of its Subsidiaries (other than liens for Taxes that are not yet due or
delinquent or that are being contested in good faith by appropriate
proceedings), except for liens that would not, individually or in the aggregate,
have a K*TEC Material Adverse Effect.
(b) TBF II has not been a member of (i) an affiliated group of
corporations filing a consolidated federal income tax return or (ii) a group of
corporations filing a consolidated, combined or unitary income tax return under
comparable provisions of state, local or foreign tax law (any such group, an
"Affiliated Group") for any taxable period beginning on or after the date of its
formation, other than a group the common parent of which is or was TBF II. No
Subsidiary of TBF II has been a member of an Affiliated Group for any taxable
period beginning on or after December 31, 1997, other than a group the common
parent of which is or was TBF II or any Subsidiary of TBF II, except for K*TEC,
which previously was a member of an Affiliated Group the parent of which was
Kent Electronics Corporation.
(c) Neither TBF II nor any of its Subsidiaries has any obligation under
any agreement or arrangement with any other person (other than TBF II or its
Subsidiaries) with respect to Taxes of such other person (including pursuant to
Treas. Reg. Section 1.1502-6 or comparable provisions of state, local or foreign
tax law) and including any liability for Taxes of any predecessor entity, except
for obligations that would not, individually or in the aggregate, have a K*TEC
Material Adverse Effect.
(d) TBF II and K*TEC represent and warrant, jointly and severally, to
EFTC that the statements contained in this Article IV.B are true and correct,
except as set forth in the disclosure schedule delivered herewith to EFTC on or
before the date of this Agreement (the "K*TEC Disclosure Schedule"). The K*TEC
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article IV and the disclosure
in any paragraph shall qualify other paragraphs in this Article IV only to the
extent that it is reasonably apparent from a reading of such document that it
also qualifies or applies to such other paragraphs. Unless the context otherwise
requires, references to K*TEC in this Article IV also refer to the assets,
business and operations of Kent Electronics Corporation that were acquired by
K*TEC in October 2000 prior to their acquisition by K*TEC to the extent relevant
to the assets, liabilities and operations of K*TEC since such acquisition.
Section 4.1B Organization of K*TEC. Each of K*TEC and its Subsidiaries
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power to own, lease and
operate its property 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 as a foreign corporation or other entity in each jurisdiction in which
the failure to be so qualified would have a material adverse effect on the
business, properties, financial condition or results of operations of TBF II or
K*TEC and its Subsidiaries, taken as a whole (a "K*TEC Material Adverse
Effect"). A true and correct copy of the Certificate of Incorporation and Bylaws
of K*TEC has been delivered to EFTC. Except as set forth in the K*TEC Financial
Statements (as defined in Section 4.4B) filed prior to the date
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hereof, neither K*TEC nor any of its Subsidiaries directly or indirectly owns
(other than ownership interests in K*TEC or in one or more of its Subsidiaries)
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any corporation, partnership, joint venture or
other business association or entity.
Section 4.2B K*TEC Capital Structure
(a) The authorized capital stock of K*TEC consists of 30,000,000 shares
of common stock, $0.01 par value. As of the date hereof, 23,000,000 shares of
such common stock were issued and outstanding, all of which are validly issued,
fully paid and nonassessable. The K*TEC Disclosure Schedule shows the number of
shares of common stock of K*TEC reserved for future issuance pursuant to stock
options granted and outstanding as of the date hereof, the exercise price of
such options, and the plans under which such options were granted (collectively,
the "K*TEC Stock Plans"). There are no obligations, contingent or otherwise, of
K*TEC or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of common stock of K*TEC or the capital stock of any Subsidiary or to
provide funds to or make any material investment (in the form of a loan, capital
contribution or otherwise) in any such Subsidiary or any other entity other than
guarantees of bank obligations or indebtedness for borrowed money of
Subsidiaries entered into in the ordinary course of business and other than any
obligation the failure of which to perform or satisfy would not have a K*TEC
Material Adverse Effect. All of the outstanding shares of capital stock or other
ownership interests of each of K*TEC's Subsidiaries are duly authorized, validly
issued, fully paid and nonassessable and all such shares (other than directors'
qualifying shares in the case of foreign Subsidiaries) are owned by K*TEC or
another Subsidiary of K*TEC free and clear of all security interests, liens,
claims, pledges, agreements, limitations in K*TEC's voting rights, charges or
other encumbrances of any nature.
(b) Except as set forth in this Section 4.2B, the K*TEC Disclosure
Schedule or as reserved for future grants of options under the K*TEC Stock
Plans, (i) there are no shares of capital stock of any class of K*TEC, or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding; (ii) there are no options, warrants,
equity securities, calls, rights, commitments or agreements of any character to
which K*TEC or any of its Subsidiaries is a party or by which it is bound
obligating K*TEC or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
ownership interests of K*TEC or any of its Subsidiaries or obligating K*TEC or
any of its Subsidiaries to grant, extend, accelerate the vesting of or enter
into any such option, warrant, equity security, call, right, commitment or
agreement; and (iii) to the best knowledge of K*TEC, there are no voting trusts,
proxies or other voting agreements or understandings with respect to the shares
of capital stock of K*TEC. All shares of common stock of K*TEC subject to
issuance as specified in this Section 4.2B are duly authorized and, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be validly issued, fully paid and nonassessable.
Section 4.3B Authority; No Conflict; Required Filings and Consents
(a) K*TEC has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this
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Agreement by K*TEC have been duly authorized by all necessary corporate action
on the part of K*TEC, including the approval and adoption of this Agreement and
the K*TEC Merger by K*TEC's stockholders under the DGCL. This Agreement has been
duly executed and delivered by K*TEC and constitutes the valid and binding
obligations of K*TEC, enforceable in accordance with its terms, subject to the
Bankruptcy and Equity Exception.
(b) The execution and delivery of this Agreement by K*TEC does not, and
the consummation of the transactions contemplated by this Agreement will not,
(i) conflict with, or result in any violation or breach of, any provision of the
Certificate of Incorporation or Bylaws of K*TEC or any of its Subsidiaries, (ii)
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to K*TEC
or any of its Subsidiaries or any of its or their properties or assets, or (iii)
result in a breach of any of the terms, conditions or provisions of, or
constitute a default under, or permit the acceleration of rights under or
termination of any indenture, mortgage, deed or trust, credit agreement, note or
other indebtedness, or any other material agreement of K*TEC or any of its
Subsidiaries (collectively, the "K*TEC Agreements") except in the case of (ii)
or (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which (x) would not, individually or in the
aggregate, have a K*TEC Material Adverse Effect or (y) would not substantially
impair or delay the consummation of the K*TEC Merger.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to K*TEC or any of its Subsidiaries in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby or thereby, except for (i) the filing of a Certificate of Merger with
respect to the K*TEC Merger with the Delaware Secretary of State, (ii) the
filing of the Joint Proxy Statement/Prospectus with the SEC in accordance with
the Exchange Act and the Securities Act, (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state securities laws and the laws of any foreign country and (iv)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not (x) have a K*TEC Material Adverse Effect or
(y) substantially impair or delay the consummation of the K*TEC Merger.
Section 4.4B Financial Statements
(a) The K*TEC Disclosure Schedule contains copies of the unaudited
statement of assets and liabilities (the "Unaudited K*TEC Balance Sheet") of
K*TEC as of December 31, 2000, the unaudited statement of assets and liabilities
of K*TEC as of April 1, 2001 (the "Balance Sheet Date"), the unaudited results
of operations and cash flows of K*TEC for the period from October 10, 2000
through December 31, 2000, and the unaudited results of operations and cash
flows of K*TEC for the period December 31, 2000 through April 1, 2001
(collectively, the "K*TEC Financial Statements").
(b) Each of the K*TEC Financial Statements (including, in each case,
any related notes) of K*TEC was prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements)
and fairly presented the consolidated financial position of
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K*TEC and its Subsidiaries as of the dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount.
Section 4.5B No Undisclosed Liabilities. Except as disclosed in the
K*TEC Financial Statements or the K*TEC Disclosure Schedule, and except for
normal or recurring liabilities incurred since March 31, 2001 in the ordinary
course of business consistent with past practices, K*TEC and its Subsidiaries do
not have any liabilities, either accrued, contingent or otherwise (whether or
not required to be reflected in financial statements in accordance with
generally accepted accounting principles), and whether due or to become due,
which would, individually or in the aggregate, have a K*TEC Material Adverse
Effect.
Section 4.6B Absence of Certain Changes or Events. Except as disclosed
in the K*TEC Financial Statements and the K*TEC Disclosure Schedule, since the
Balance Sheet Date, K*TEC and its Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been (i) any damage, destruction or loss (whether
or not covered by insurance) with respect to K*TEC or any of its Subsidiaries
which would have a K*TEC Material Adverse Effect; (ii) any material change by
K*TEC in its accounting methods, principles or practices to which EFTC has not
previously consented in writing; or (iii) any other action or event that would
have required the consent of EFTC pursuant to Section 5.1 of this Agreement had
such action or event occurred after the date of this Agreement, other than such
actions or events that, individually or in the aggregate, have not had or would
not have a K*TEC Material Adverse Effect.
Section 4.7B Properties
(a) Neither K*TEC nor any of its Subsidiaries is in default under any
Material Leases, except where the existence of such defaults, individually or in
the aggregate, would not have a K*TEC Material Adverse Effect.
(b) With respect to each item of real property that K*TEC or any of its
Subsidiaries owns, except for such matters that, individually or in the
aggregate, would not have a K*TEC Material Adverse Effect: (i) K*TEC or its
Subsidiary has good and clear record and marketable title to such property,
insurable by a recognized national title insurance company at standard rates,
free and clear of any security interest, easement, covenant or other
restriction, except for recorded easements, covenants and other restrictions
which do not materially impair the current uses or occupancy of such property;
and (ii) the improvements constructed on such property are in good condition,
and all mechanical and utility systems servicing such improvements are in good
condition, free in each case of material defects.
Section 4.8B Intellectual Property. Except as set forth on the K*TEC
Disclosure Schedule, K*TEC owns, or is licensed or otherwise possesses legally
enforceable rights to use, all trademarks, trade names, service marks,
copyrights, and any applications for such trademarks, trade names, service marks
and copyrights, know-how, computer software programs or applications, and
tangible or intangible proprietary information or material that are necessary to
conduct the business of K*TEC as currently conducted, subject to such exceptions
that,
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individually and in the aggregate, would not have a K*TEC Material Adverse
Effect. K*TEC has no knowledge of any assertion or claim challenging the
validity of any of such intellectual property.
Section 4.9B Agreements, Contracts and Commitments
(a) The K*TEC Disclosure Schedule contains a complete and accurate list
of all leases, contracts and arrangements described below in clauses (i) through
(xi) below to which K*TEC is a party or relating primarily to K*TEC's business
("K*TEC Material Contracts")
(i) each contract or arrangement with any of the
customers of K*TEC listed on the K*TEC Disclosure
Schedule involving performance of services or
delivery of goods or materials to K*TEC of an amount
or value in excess of $100,000, other than purchase
orders received by K*TEC in the ordinary course of
business requiring K*TEC to perform services or
deliver goods;
(ii) each contract or arrangement with any of the
suppliers to K*TEC listed on the K*TEC Disclosure
Schedule involving performance of services or
delivery of goods or materials to K*TEC of an amount
or value in excess of $100,000, other than purchase
orders entered into by K*TEC in the ordinary course
of business for the purchase of services or goods by
K*TEC;
(iii) each note, debenture, other evidence of indebtedness,
guarantee, loan, letter of credit, surety bond or
financing agreement or instrument or other contract
for money borrowed, including any agreement or
commitment for future loans, credit or financing
entered into by K*TEC or by which K*TEC or any of its
properties or assets are bound;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sales agreement, and
other contract or arrangement affecting the ownership
of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property and
involving aggregate payments in excess of $100,000;
(v) each licensing agreement or other agreement with
respect to patents, trademarks, copyrights, or other
intellectual property and involving aggregate
payments in excess of $100,000, and each agreement
with current or former employees, consultants, or
contractors regarding the appropriation or the
nondisclosure of any Intellectual Property;
(vi) each collective bargaining agreement or other
agreement to or with any labor union or other
employee representative of a group of
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employees relating to wages, hours and other
conditions of employment;
(vii) each joint venture agreement, partnership agreement,
or limited liability company agreement or other
agreement (however named) involving a sharing of
profits, losses, costs or liabilities by K*TEC with
any other Person;
(viii) each agreement that commits capital expenditures
after the date hereof in an amount in excess of
$100,000;
(ix) each power of attorney which is currently effective
and outstanding;
(x) each agreement between K*TEC and any of its
Affiliates or Subsidiaries; and
(xi) each written warranty, guaranty or other similar
undertaking with respect to contractual performance
extended by K*TEC other than in the ordinary course
of business.
(b) True and correct copies of each written K*TEC Material Contract
have been delivered or made available to EFTC.
(c) Except as set forth on the K*TEC Disclosure Schedule, each of the
K*TEC Material Contracts listed on the K*TEC Disclosure Schedule: (i) is in full
force and effect, and (ii) represents the legally valid and binding obligation
of K*TEC and, to the knowledge of K*TEC, the other parties thereto, and is
enforceable against K*TEC and such parties in accordance with its terms. Except
as set forth on the K*TEC Disclosure Schedule, K*TEC is not in material breach
of any K*TEC Material Contract and to K*TEC's knowledge no condition exists or
event has occurred which, with notice or lapse of time or both, would constitute
a material default or a basis for force majeure or the claim of excusable delay
or nonperformance under such K*TEC Material Contracts, except for conditions
that would not, individually or in the aggregate, have a K*TEC Material Adverse
Effect.
(d) Except as set forth on the K*TEC Disclosure Schedule, there are no
renegotiations of, or, to K*TEC's knowledge, attempts to renegotiate, or
outstanding rights to renegotiate, any material amounts paid or payable to K*TEC
under current or completed K*TEC Material Contracts, with any Person or entity
having the contractual or statutory right to demand or require such
renegotiation. K*TEC has not received any written demand for such negotiation in
respect of any such K*TEC Contract.
Section 4.10B Litigation. Except as set forth in the K*TEC Disclosure
Schedule, there are no actions, suits, or other proceedings pending or, to the
knowledge of K*TEC, threatened against K*TEC or involving any of the properties
or assets of K*TEC, at law or in equity or before or by any foreign, federal,
state, municipal, or other governmental court, department, commission, board,
bureau, agency, or other instrumentality or person or any board of arbitration
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or similar entity that (i) involves a claimed amount equal to or greater than
$100,000, (ii) would reasonably be expected to result in the payment of damages
or settlement in an amount equal to or greater than $100,000, (iii) seeks
injunctive relief, or (iv) involves claims by a Governmental Authority against
any aspect of the assets, business or operations of K*TEC.
Section 4.11B Environmental Matters. Except as disclosed in the K*TEC
Disclosure Schedule and except for such matters that, individually or in the
aggregate, would not have a K*TEC Material Adverse Effect: (i) K*TEC and its
Subsidiaries have complied with all applicable Environmental Laws; (ii) the
properties currently owned or operated by K*TEC and its Subsidiaries (including
soils, groundwater, surface water, buildings or other structures) are not
contaminated with any Hazardous Substances; (iii) the properties formerly owned
or operated by K*TEC or any of its Subsidiaries were not contaminated with
Hazardous Substances during the period of ownership or operation by K*TEC or any
of its Subsidiaries; (iv) neither K*TEC nor its Subsidiaries are subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (v) neither K*TEC nor any of its Subsidiaries has been
associated with any release or threat of release of any Hazardous Substance;
(vi) neither K*TEC nor any of its Subsidiaries has received any notice, demand,
letter, claim or request for information alleging that K*TEC or any of its
Subsidiaries may be in violation of or liable under any Environmental Law; (vii)
neither K*TEC nor any of its Subsidiaries is subject to any orders, decrees,
injunctions or other arrangements with any Governmental Entity or is subject to
any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (viii)
there are no circumstances or conditions involving K*TEC or any of its
Subsidiaries that could reasonably be expected to result in any claims,
liability, investigations, costs or restrictions on the ownership, use or
transfer of any property of K*TEC or any of its Subsidiaries pursuant to any
Environmental Law.
Section 4.12B Employee Benefit Plans
(a) This Section 4.12B(a) sets forth K*TEC's representations and
warranties regarding employee benefit plans for periods prior to October 10,
2000:
(i) The K*TEC Disclosure Schedule lists each "employee benefit
plan" (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974 as amended ("ERISA") and any other employee
plan, program or arrangement maintained by K*TEC at any time during the
five (5) year period ending on October 10, 2000 which covered or had
covered any then current or former employees, consultants or directors
of K*TEC and pursuant to which K*TEC had any liability (whether fixed
or contingent) (the "Pre-Purchase K*TEC Plans"). True and correct
copies of each of the following, to the extent applicable, have been
made available to EFTC with respect to each Pre-Purchase K*TEC Plan:
the three most recent annual reports (Form 5500) filed with the
Internal Revenue Service the plan document the trust agreement, if any,
the most recent summary plan description if required by ERISA or the
Code, the most recent determination letter, if any, issued by the IRS
with respect to any Pre-Purchase K*TEC Plan intended to be qualified
under Section 401 of the Code. and any insurance policy, related to
such Pre-Purchase K*TEC Plan. Each Pre-
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Purchase K*TEC Plan has been administered and is in compliance in all
material respects With the terms of such plan and all applicable laws,
rules and regulations.
(ii) K*TEC did not contribute to any "multi-employer plan"
(within the meaning of Section 3(37) of ERISA) and neither K*TEC nor
any entity that, together with K*TEC, was treated as a single employer
under Code Section 414(b), (c), (m) or (o) or ERISA Section 4001 (a)
(14) or 4001(b) ("Controlled Entity") had incurred any withdrawal
liability with respect to any multi-employer plan. Neither K*TEC nor
any Controlled Entity maintained or sponsored or had any liability
(whether fixed or contingent) under any pension benefit plan which was
a defined benefit plan which was or had been subject to Title IV of
ERISA.
(iii) No "prohibited transaction," as such term is used in
Section 406 of ERISA or Section 4975 of the Code, and no litigation or
administrative or other proceeding involving any Pre-Purchase K*TEC
Plans had occurred or, to the knowledge of K*TEC, was threatened where
an adverse determination would have a K*TEC Material Adverse Effect.
(iv) In connection with the consummation of the transactions
contemplated by the purchase agreement pursuant to which Kent
Electronics Corporation sold its stock of K*TEC on October 10, 2000, no
payments of money or other property, acceleration of benefits or
provision of other rights were made under such purchase agreement,
under any agreement contemplated therein, under any Pre-Purchase K*TEC
Plan or under any agreement with any employee of K*TEC that would have
been reasonably likely to be nondeductible under Section 280G,
162(a)(i) or 404 of the Code, whether or not some other subsequent
action or event would be required to cause such payment, acceleration
or provision to be triggered. No Pre-Purchase K*TEC Plan provided
retiree medical or retiree life insurance benefits to any present or
former K*TEC employee, and K*TEC was not contractually or otherwise
obligated (whether or not in writing) to provide any present or former
K*TEC employee with life insurance or medical benefits upon retirement
or termination of employment, other than as required by the provisions
of Sections 601 through 608 of ERISA and Section 4908B of the Code.
(v) Each Pre-Purchase K*TEC Plan which had at any time been
intended to qualify under Section 401 (a) of the Code, and each
associated trust which at any time had been intended to be exempt from
taxation pursuant to Section 501(a) of the Code, was the subject of a
favorable determination, opinion or approval letter from the IRS
regarding its qualification or exemption from taxation, as applicable,
under such section. To the knowledge of K*TEC, no event or omission had
occurred which would have caused any such Pre-Purchase K*TEC Plan to
lose its qualification under the applicable Code Section.
(vi) None of K*TEC nor any Controlled Entity had announced any
plan or legally binding commitment to create any additional
Pre-Purchase K*TEC Plan which was intended to cover employees or former
employees of K*TEC or any
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Controlled Entity or to amend or modify any then existing Pre-Purchase
K*TEC Plan to provide for additional benefits.
(vii) No event had occurred in connection with which K*TEC,
any Controlled Entity or any Pre-Purchase K*TEC Plan, directly or
indirectly, could be subject to any liability which would have had a
K*TEC Material Adverse Effect (A) under any statute, regulation or
governmental order relating to any Pre-Purchase K*TEC Plan or (B)
pursuant to any obligation of K*TEC or any Controlled Entity to
indemnify any person against liability incurred under any such statute,
regulation or order as they relate to the Pre-Purchase K*TEC Plans.
(viii) All contributions required to be made by Kent
Electronics Corporation, K*TEC or any Controlled Entity with respect to
any Pre-Purchase K*TEC Plan due as of any date; through and including
October 10, 2000 were made when due.
(b) This Section 4.12B(b) sets forth K*TEC's representations and
warranties regarding employee benefit plans for all periods from October 10,
2000:
(i) For purposes of this Agreement, the "K*TEC Employee Plans"
shall mean all employee benefit plans (as defined in Section 3(3) of
ERISA) and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar
employee benefit plans, and all unexpired severance agreements, written
or otherwise, for the benefit of, or relating to, any current or former
employee of K*TEC or any ERISA Affiliate of K*TEC, or any Subsidiary of
K*TEC (together, the "K*TEC Employee Plans"). K*TEC has listed in
Section 4.12B of the K*TEC Disclosure Schedule all K*TEC Employee
Plans.
(ii) With respect to each K*TEC Employee Plan, K*TEC has made
available to EFTC, a true and correct copy of (A) the most recent
annual report (Form 5500) filed with the IRS, (B) such K*TEC Employee
Plan and all amendments thereto, (C) each trust agreement and group
annuity contract, if any, and all amendments thereto relating to such
K*TEC Employee Plan and (D) the most recent actuarial report or
valuation relating to a K*TEC Employee Plan subject to Title IV of
ERISA.
(iii) With respect to the K*TEC Employee Plans, individually
and in the aggregate, no event has occurred, and to the knowledge of
K*TEC, there exists no condition or set of circumstances in connection
with which K*TEC could be subject to any liability that would have a
K*TEC Material Adverse Effect under ERISA, the Code or any other
applicable law.
(iv) With respect to the K*TEC Employee Plans, individually
and in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no
unfunded benefit obligations which have not been accounted for by
reserves, or otherwise properly footnoted in
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accordance with generally accepted accounting principles, on the
financial statements of K*TEC, except for obligations which,
individually or in the aggregate, would have a K*TEC Material Adverse
Effect.
(v) Except as disclosed in the K*TEC Disclosure Schedule, and
except as provided for in this Agreement, neither K*TEC nor any of its
Subsidiaries is a party to any oral or written (A) agreement with any
officer or other key employee of K*TEC or any of its Subsidiaries, the
benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving K*TEC of the
nature contemplated by this Agreement, (B) agreement with any officer
of K*TEC providing any term of employment or compensation guarantee
extending for a period longer than one year from the date hereof or for
the payment of compensation in excess of $100,000 per annum, or (C)
agreement or plan, including any stock option plan, stock appreciation
right plan, restricted stock plan or stock purchase plan, any of the
benefits of which will be increased, the vesting of the benefits of
which will be accelerated or the funding of benefits of which will be
required, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
Section 4.13B Compliance With Laws. Except as set forth on the K*TEC
Disclosure Schedule, K*TEC has at all times complied with, is not in violation
of, and has not received any notices of violation with respect to, any federal,
state or local statute, law or regulation with respect to the conduct of its
business, or the ownership or operation of its business, except for failures to
comply or violations which, individually or in the aggregate, have not had and
would not have a K*TEC Material Adverse Effect.
Section 4.14B Tax Matters
(a) To the best knowledge of TBF II, after consulting with its tax
advisors, neither TBF II nor any of its Affiliates (as defined in Section 5.12)
has taken or agreed to take any action which would (i) prevent the K*TEC Merger,
taken together with the EFTC Merger, from qualifying as a transfer of property
described in Section 351 of the Code to Parent by holders of TBF II Units and
EFTC Common Stock or (ii) prevent the EFTC Merger from qualifying as a
reorganization described in Section 368(a) of the Code and/or taken together
with the K*TEC Merger, as a transfer of property described in Section 351 of the
Code to Parent by holders of EFTC Common Stock and TBF II Units.
(b) To the best knowledge of K*TEC, none of the stockholders of K*TEC
as a group have a present plan, intention or arrangement to sell or otherwise
dispose of the shares of Parent Common Stock received in the K*TEC Merger.
Section 4.15B Labor Matters. Except as disclosed in the K*TEC
Disclosure Schedule, neither K*TEC nor any of its Subsidiaries is a party to or
otherwise bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor, as of
the date hereof, is K*TEC or any of its Subsidiaries the subject of any
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material proceeding asserting that K*TEC or any of its Subsidiaries has
committed an unfair labor practice or is seeking to compel it to bargain with
any labor union or labor organization nor, as of the date of this Agreement, is
there pending or, to the knowledge of the executive officers of K*TEC,
threatened, any material labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving K*TEC or any of its Subsidiaries.
Section 4.16B Insurance. All material fire and casualty, general
liability, business interruption, product liability, workers' compensation and
sprinkler and water damage insurance policies and other forms of insurance
maintained by K*TEC or any of its Subsidiaries are with reputable insurance
carriers, provide full and adequate coverage for all normal risks incident to
the business of K*TEC and its Subsidiaries and their respective properties and
assets, and are in character and amount at least equivalent to that carried by
persons engaged in similar businesses and subject to the same or similar perils
or hazards, except for any such failures to maintain insurance policies that,
individually or in the aggregate, would not have a K*TEC Material Adverse
Effect.
Section 4.17B No Existing Discussions. As of the date hereof, K*TEC is
not engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to an Acquisition Proposal.
Section 4.18B Section 203 of the DGCL Not Applicable. The restrictions
contained in Section 203 of the DGCL applicable to a "business combination" (as
defined in Section DGCL 203) will not apply to the authorization, execution,
delivery or performance of this Agreement by K*TEC or the consummation of the
K*TEC Merger by K*TEC. No other "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation is applicable
to K*TEC or (by reason of K*TEC's participation therein) the K*TEC Merger or the
other transactions contemplated by this Agreement.
Section 4.19B Customers and Suppliers. The K*TEC Disclosure Schedule
lists the names and addresses of K*TEC's top ten (10) customers and suppliers
for the six-month period ended March 31, 2001. Except as disclosed on the K*TEC
Disclosure Schedule, K*TEC has not received any actual written notice that any
such customer or supplier intends to discontinue or materially alter its
relationship with K*TEC.
Section 4.20B FCPA. K*TEC has complied in all material respects with
the FCPA, in obtaining any consents, licenses, approvals, authorizations,
rights, and privileges in connection with the conduct of its business and has
otherwise conducted its business in compliance with all material respects with
the FCPA. K*TEC's internal management and accounting practices and controls are
adequate to ensure compliance in all material respects with the FCPA.
ARTICLE V.
COVENANTS
SECTION 5.1 CONDUCT OF BUSINESS. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, EFTC, TBF II and K*TEC each agrees as to itself
and its respective Subsidiaries (except to the extent that the other party shall
otherwise consent in writing) to carry on its business in the usual,
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regular and ordinary course in substantially the same manner as previously
conducted, to pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, to pay or perform its other obligations when due, and,
to the extent consistent with such business, use all reasonable efforts
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
key employees and preserve its relationships with customers, suppliers,
distributors, and others having business dealings with it. Except as expressly
contemplated by this Agreement, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, EFTC, TBF II and K*TEC each shall not (and shall not
permit any of its respective Subsidiaries to), without the written consent of
the other party:
(a) Accelerate, amend or change the period of exercisability of options
or restricted stock granted under any employee stock plan of such party or
authorize cash payments in exchange for any options granted under any of such
plans except as required by the terms of such plans or any related agreements
(including severance agreements) in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service to such
party;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock, membership interests or
securities convertible into shares of its capital stock or membership interests,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or
membership interests or other convertible securities, other than (i) the grant
of options consistent with past practices to employees or directors, which
options represent in the aggregate the right to acquire no more than 500,000
shares (net of cancellations) of EFTC Common Stock or common stock of K*TEC, as
the case may be, (ii) the issuance of shares of EFTC Common Stock or common
stock of K*TEC, as the case may be, pursuant to the exercise of options or
warrants outstanding on the date of this Agreement, and (iii) the issuance of
capital stock under the EFTC Rights Plan if required by the terms thereof;
(d) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership or
other business organization or division, or otherwise acquire or agree to
acquire any assets (other than inventory and other immaterial assets, in each
case in the ordinary course of business);
(e) Sell, lease, license or otherwise dispose of any of its material
properties or assets, except for transactions (including sales, leases, licenses
or dispositions of inventory and other immaterial assets) in the ordinary course
of business;
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(f) Without the prior consent of the other party, which will not be
unreasonably withheld, (i) increase or agree to increase the compensation
payable or to become payable to its officers or employees, except for increases
in salary or wages of employees (other than officers) in accordance with past
practices, (ii) grant any additional severance or termination pay to, or enter
into any employment or severance agreements with, any employees or officers,
(iii) enter into any collective bargaining agreement (other than as required by
law or extensions to existing agreements in the ordinary course of business),
(iv) establish, adopt, enter into or amend any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, trust, fund,
policy or arrangement for the benefit of any directors, officers or employees;
(g) Amend or propose to amend its limited liability company agreement,
certificate of formation, Articles or Certificate of Incorporation, Bylaws or
other organizational documents except as contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money other than as allowed
under (i) that certain Credit Agreement, dated as of March 30, 2000, by and
among EFTC, The Bank of America and the lenders identified therein or (ii) that
certain Credit Agreement, dated as of January 26, 2001, by and among K*TEC and
certain of its subsidiaries and Citicorp USA, Inc. and the lenders and issuers
party thereto;
(i) Take any action that would or is reasonably likely to result in a
material breach of any provision of this Agreement or in any of its
representations and warranties set forth in this Agreement being untrue on and
as of the Closing Date;
(j) Make or rescind any material express or deemed election relating to
Taxes, settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes,
or make any material change to any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its federal income tax return for the taxable year ending
December 31, 2000, except as may be required by applicable law;
(k) Settle any litigation relating to the transactions contemplated
hereby other than any settlement which would not (i) have an EFTC Material
Adverse Effect (if settled by EFTC), a K*TEC Material Adverse Effect (if settled
by K*TEC) or a material adverse effect on the business, properties, financial
condition or results of operations of Parent (if settled by either EFTC or
K*TEC) or (ii) adversely effect the consummation of the transactions
contemplated hereby; or
(l) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (k) above.
SECTION 5.2 COOPERATION; NOTICE; CURE. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of EFTC, TBF
II and K*TEC shall confer on a regular and frequent basis with one or more
representatives of the other party to report on the general status of ongoing
operations and shall promptly provide the other party or its counsel with copies
of all filings made by such party with any Governmental Entity in connection
with
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this Agreement, the Mergers and the transactions contemplated hereby and
thereby. Each of EFTC, TBF II and K*TEC shall promptly notify the other in
writing of, and will use all commercially reasonable efforts to cure before the
Closing Date, any event, transaction or circumstance, as soon as practical after
it becomes known to such party, that causes or will cause any covenant or
agreement of EFTC, TBF II or K*TEC under this Agreement to be breached or that
renders or will render untrue any representation or warranty of EFTC, TBF II or
K*TEC contained in this Agreement. No notice given pursuant to this paragraph
shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein.
SECTION 5.3 NO SOLICITATION.
(a) EFTC, TBF II and K*TEC each shall not, directly or indirectly,
through any officer, director, employee, financial advisor, representative or
agent of such party (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transaction involving such party
or any of its Subsidiaries, other than the transactions contemplated by this
Agreement (any of the foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions with any person (or group of persons) other than EFTC, TBF II or
K*TEC or their respective affiliates (a "Third Party") concerning, or provide
any non-public information to any person or entity relating to, any Acquisition
Proposal, or (iii) agree to or recommend any Acquisition Proposal; provided,
however, that nothing contained in this Agreement shall prevent EFTC or its
Board of Directors from complying with Rule 14e-2 promulgated under the Exchange
Act with regard to an Acquisition Proposal.
(b) EFTC, TBF II and K*TEC shall each notify the other party
immediately after receipt by EFTC, TBF II or K*TEC (or any of their advisors) of
any Acquisition Proposal or any request for nonpublic information in connection
with an Acquisition Proposal or for access to the properties, books or records
of such party by any person or entity that informs such party that it is
considering making, or has made, an Acquisition Proposal. Such notice shall be
made orally and in writing and shall indicate in reasonable detail the identity
of the offeror and the terms and conditions of such proposal, inquiry or
contact.
SECTION 5.4 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) As promptly as practical after the execution of this Agreement,
EFTC and TBF II shall prepare and file with the SEC a joint proxy
statement/prospectus (the "Joint Proxy Statement/Prospectus") and a registration
statement on Form S-4 (the "Registration Statement") in which the Joint Proxy
Statement/Prospectus will be included as a prospectus, provided that EFTC and
TBF II may delay the filing of the Registration Statement until approval of the
Joint Proxy Statement/Prospectus by the SEC. EFTC and TBF II shall use all
reasonable efforts to cause the Registration Statement to become effective as
soon after such filing as practical. The Joint Proxy Statement/Prospectus shall
include the recommendation of the Board of Directors of EFTC in favor of
adoption of this Agreement and the EFTC Merger.
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(b) EFTC and TBF II shall make all necessary filings with respect to
the Merger under the Securities Act, the Exchange Act, applicable state blue sky
laws and the rules and regulations thereunder.
(c) The information to be supplied by EFTC for inclusion in the
Registration Statement pursuant to which shares of Parent Common Stock issued in
the Mergers will be registered under the Securities Act, shall not at the time
the Registration Statement is declared effective by the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be
stated in the Registration Statement or necessary in order to make the
statements in the Registration Statement, in light of the circumstances under
which they were made, not misleading. The information supplied by EFTC for
inclusion in the Joint Proxy Statement/Prospectus to be sent to the shareholders
of EFTC in connection with the meeting of EFTC's shareholders (the "EFTC
Shareholders' Meeting") to consider this Agreement and the Mergers shall not, on
the date the Joint Proxy Statement/Prospectus is first mailed to shareholders of
EFTC at the time of the EFTC Shareholders' Meeting and at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to any
material fact, omit to state any material fact necessary in order to make the
statements made in the Joint Proxy Statement/Prospectus 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 EFTC
Shareholders' Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to EFTC or any of its Affiliates (other
than ▇▇▇▇▇▇-▇▇▇▇ or any of its Affiliates), officers or directors should be
discovered by EFTC which should be set forth in an amendment to the Registration
Statement or a supplement to the Joint Proxy Statement/Prospectus, EFTC shall
promptly inform TBF II.
(d) The information to be supplied by TBF II for inclusion in the
Registration Statement shall not at the time the Registration Statement is
declared effective by the SEC contain any untrue statement of a material fact or
omit to state any material fact required to be stated in the Registration
Statement or necessary in order to make the statements in the Registration
Statement, in light of the circumstances under which they were made, not
misleading. The information to be supplied by TBF II for inclusion in the Joint
Proxy Statement/Prospectus shall not, on the date the Joint Proxy
Statement/Prospectus is first mailed to shareholders of EFTC, at the time of the
EFTC Shareholder's Meeting and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, omit to state
any material fact necessary in order to make the statements made in the Joint
Proxy Statement/Prospectus 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 EFTC Shareholders' Meeting
which has become false or misleading. If at any time prior to the Effective Time
any event relating to TBF II or any of its Affiliates, officers or directors
should be discovered by TBF II which should be set forth in an amendment to the
Registration Statement or a supplement to the Joint Proxy Statement/Prospectus,
TBF II shall promptly inform EFTC.
(e) ▇▇▇▇▇▇ Godward LLP shall provide an opinion addressed to EFTC,
dated as of the effective date of the Registration Statement and filed as
Exhibit 8.1 thereto, to the effect that
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(i) the EFTC Merger will be treated as a reorganization described in Section
368(a) of the Code and/or, taken together with the K*TEC Merger, as a transfer
of property to Parent described in Section 351 of the Code by holders of TBF II
Units and EFTC Common Stock, and (ii) the description in the Joint Proxy
Statement/Prospectus of the material federal income tax consequences of the EFTC
Merger is correct in all material respects. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to TBF II,
shall provide an opinion addressed to TBF II, dated as of the effective date of
the Registration Statement and filed as Exhibit 8.2 thereto, to the effect that
(i) the K*TEC Merger, taken together with the EFTC Merger, will be treated as a
transfer of property to Parent described in Section 351 of the Code by holders
of TBF II Units and EFTC Common Stock, and (ii) the description in the Joint
Proxy Statement/Prospectus of the material federal income tax consequences of
the K*TEC Merger is correct in all material respects. Each of the opinions
described herein shall be based on representation letters dated as of the
effective date of the Registration Statement and in form and substance
acceptable to the rendering counsel and executed by EFTC, TBF, TBF II, TBF III
and Parent.
SECTION 5.5 CONTINUED LISTING BY EFTC. EFTC agrees to continue the
listing of EFTC Common Stock on the Nasdaq Stock Market during the term of this
Agreement.
SECTION 5.6 ACCESS TO INFORMATION. Upon reasonable notice, EFTC, TBF II
and K*TEC shall each (and shall cause each of their respective Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its personnel, properties, books,
contracts, commitments and records and, during such period, each of EFTC, TBF II
and K*TEC shall, and shall cause each of their respective Subsidiaries to,
furnish promptly to the other (a) copies of monthly financial reports and
development reports, (b) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal securities laws and (c) all other information concerning
its business, properties and personnel as such other party may reasonably
request. No information or knowledge obtained in any investigation pursuant to
this Section 5.6 shall affect or be deemed to modify any representation or
warranty contained in this Agreement or the conditions to the obligations of the
parties to consummate the Merger.
SECTION 5.7 SHAREHOLDERS MEETING/CONSENT.
EFTC shall call a meeting of its shareholders to be held as promptly as
practicable for the purpose of voting upon this Agreement and the EFTC Merger.
Subject to Sections 5.3 and 5.4, EFTC shall, through its Special Committee and
Board of Directors, recommend to its shareholders adoption of this Agreement and
approval of such matters. Unless otherwise required to comply with the
applicable fiduciary duties of the Special Committee and Board of Directors of
EFTC, as determined by such directors in good faith after consultation with
outside legal counsel, EFTC shall use all reasonable efforts to solicit from its
shareholders proxies or consents in favor of such matters.
SECTION 5.8 LEGAL CONDITIONS TO MERGER.
(a) EFTC, TBF II and K*TEC shall each use all reasonable efforts to
(i) take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary and proper
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under applicable law to consummate and make effective the transactions
contemplated hereby as promptly as practicable, (ii) obtain from any
Governmental Entity or any other third party any consents, licenses, permits,
waivers, approvals, authorizations, or orders required to be obtained or made by
EFTC or TBF II or any of their Subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby including, without limitation, the Mergers,
and (iii) as promptly as practicable, make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement and the
Mergers required under (A) the Securities Act and the Exchange Act, and any
other applicable federal or state securities laws, and (B) any other applicable
law. EFTC, TBF II and K*TEC shall cooperate with each other in connection with
the making of all such filings, including providing copies of all such documents
to the non-filing party and its advisors prior to filing and, if requested, to
accept all reasonable additions, deletions or changes suggested in connection
therewith. EFTC and TBF II shall use their reasonable efforts to furnish to each
other all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable law (including all
information required to be included in the Joint Proxy Statement/Prospectus and
the Registration Statement) in connection with the transactions contemplated by
this Agreement.
(b) EFTC and TBF II agree, and shall cause each of their respective
Subsidiaries, to cooperate and to use their respective reasonable efforts to
obtain any government clearances required for Closing, to respond to any
government requests for information, and to contest and resist any action,
including any legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) (an "Order") that
restricts, prevents or prohibits the consummation of the Mergers or any other
transactions contemplated by this Agreement. The parties hereto will consult and
cooperate with one another, and consider in good faith the views of one another,
in connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to any federal, state or
foreign antitrust or fair trade law. EFTC, TBF II and K*TEC shall cooperate and
work together in any proceedings or negotiations with any Governmental Entity
relating to any of the foregoing. Notwithstanding anything to the contrary in
this Section 5.8, neither EFTC nor TBF II, nor any of their respective
Subsidiaries, shall be required to take any action that would reasonably be
expected to substantially impair the overall benefits expected, as of the date
hereof, to be realized from the consummation of the Mergers.
(c) Each of EFTC and TBF II shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, all reasonable efforts to obtain any
third party consents related to or required in connection with the Mergers.
SECTION 5.9 PUBLIC DISCLOSURE. EFTC and TBF II shall agree on the form
and content of the initial press release regarding the transactions contemplated
hereby and thereafter shall consult with each other before issuing, and use all
reasonable efforts to agree upon, any press release or other public statement
with respect to any of the transactions contemplated hereby and
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shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by law.
SECTION 5.10 NONRECOGNITION EXCHANGE. Neither EFTC nor TBF II nor any
of their respective Subsidiaries or other Affiliates shall take any action, or
fail to take any action, that would jeopardize the treatment of the EFTC Merger
as a reorganization described in Section 368(a) of the Code and/or taken
together with the K*TEC Merger as a transfer of property described in Section
351 of the Code to Parent by holders of EFTC Common Stock and TBF II Units.
Neither TBF II nor EFTC, nor any of their respective Subsidiaries or other
Affiliates shall take any action, or fail to take any action, that would
jeopardize the treatment of the K*TEC Merger taken together with the EFTC Merger
as a transfer of property described in Section 351 of the Code to Parent by
holders of TBF II Units or EFTC Common Stock. EFTC, TBF II and Parent shall
cause all tax returns relating to the Mergers to be filed on the basis of
treating the EFTC Merger as "reorganization" under Section 368(a) of the Code or
tax-free contributions under Section 351 of the Code and the K*TEC Merger, taken
together with the EFTC Merger, as a transfer of property described in Section
351 of the Code. Notwithstanding anything to the contrary contained in this
Agreement, this Section 5.10 shall survive without limitation.
SECTION 5.11 AFFILIATE AGREEMENTS. Upon the execution of this
Agreement, EFTC and TBF II will provide each other with a list of those persons
who are, in EFTC's or TBF II's respective reasonable judgment, "affiliates" of
EFTC or TBF II, respectively, within the meaning of Rule 145 (each such person
who is an "affiliate" of EFTC or TBF II within the meaning of Rule 145 is
referred to as an "Affiliate") promulgated under the Securities Act ("Rule
145"). EFTC and TBF II shall provide each other such information and documents
as the other party shall reasonably request for purposes of reviewing such list
and shall notify the other party in writing regarding any change in the identity
of its Affiliates prior to the Closing Date. EFTC and TBF II shall each use all
reasonable efforts to deliver or cause to be delivered to Parent by June 30,
2001 (and in any case prior to the Effective Time) from each of its Affiliates,
an executed Affiliate Agreement, in substantially the form of Exhibit C (with
respect to affiliates of EFTC) or Exhibit D (with respect to affiliates of TBF
II) attached hereto (each, an "Affiliate Agreement," and together, the
"Affiliate Agreements").
SECTION 5.12 NASDAQ LISTING. EFTC and TBF II shall cause Parent to
promptly prepare and submit to the Nasdaq Stock Market a listing application
covering the shares of Parent Common Stock to be issued in the Mergers and upon
exercise of EFTC Stock Options, the Warrants and K*TEC Stock Options, and shall
use all reasonable efforts to cause such shares to be approved for quotation on
the Nasdaq National Market, prior to the Effective Time.
SECTION 5.13 STOCK PLANS.
(a) At the Effective Time, each outstanding option to purchase shares
of EFTC Common Stock (an "EFTC Stock Option") under the EFTC Stock Plans,
whether vested or unvested, shall be deemed to constitute an option to acquire,
on the same terms and conditions as were applicable under such EFTC Stock Option
the same number of shares of Parent Common Stock as the holder of such EFTC
Stock Option would have been entitled to receive pursuant to the EFTC Merger had
such holder exercised such option in full immediately prior to the
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Effective Time (rounded downward to the nearest whole number), at a price per
share (rounded upward to the nearest whole cent) equal to (y) the aggregate
exercise price for the shares of EFTC Common Stock purchasable pursuant to such
EFTC Stock Option immediately prior to the Effective Time divided by (z) the
number of full shares of Parent Common Stock deemed purchasable pursuant to such
EFTC Stock Option in accordance with the foregoing.
(b) At or prior to the Effective Time, each of Parent, TBF II and
K*TEC will use commercially reasonable efforts to cause each outstanding option
to purchase shares of common stock of K*TEC (a "K*TEC Stock Option") under the
K*TEC Stock Plans, whether vested or unvested, to be cancelled and replaced with
an option to acquire, on the same terms and conditions as were applicable under
such K*TEC Stock Option, a number of shares of Parent Common Stock equal to (i)
the number of shares of common stock of K*TEC as the holder of such K*TEC Stock
Option would have been entitled to had such holder exercised such option in full
immediately prior to the Effective Time (rounded downward to the nearest whole
number), times (ii) .6577, at a price per share (rounded upward to the nearest
whole cent) equal to (y) the aggregate exercise price for the shares of common
stock of K*TEC purchasable pursuant to such K*TEC Stock Option immediately prior
to the Effective Time divided by (z) the number of full shares of Parent Common
Stock deemed purchasable pursuant to such K*TEC Stock Option in accordance with
the foregoing.
(c) As soon as practicable after the Effective Time, Parent shall
deliver to the participants in the EFTC Stock Plans and the K*TEC Stock Plans
appropriate notice setting forth such participants' rights pursuant thereto and
the grants pursuant to EFTC Stock Plans or K*TEC Stock Plans, as the case may
be, shall continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 5.13 after giving effect to the Mergers).
(d) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery under
EFTC Stock Plans and K*TEC Stock Plans assumed in accordance with this Section
5.13. As soon as practicable after the Effective Time, Parent shall file a
registration statement on Form S-8 (or any successor or other appropriate
forms), or another appropriate form with respect to the shares of Parent Common
Stock subject to such options and shall use its reasonable efforts to maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding.
(e) The Board of Directors of each of EFTC and K*TEC and TBF III
shall, prior to or as of the Effective Time, take all necessary actions,
pursuant to and in accordance with the terms of the EFTC Stock Plans and the
instruments evidencing the EFTC Stock Options, or the K*TEC Stock Plans and the
instruments evidencing the K*TEC Stock Options, as the case may be, to provide
for the conversion of the EFTC Stock Options and the K*TEC Stock Options into
options to acquire Parent Common Stock in accordance with this Section 5.13
without obtaining consent of the holders of the EFTC Stock Options or K*TEC
Stock Options in connection with such conversion.
(f) The Board of Directors of EFTC shall, prior to or as of the
Effective Time, take appropriate action to approve the deemed cancellation of
the EFTC Stock Options for purposes of Section 16(b) of the Exchange Act. The
Board of Directors of Parent shall, prior to or as of
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the Effective Time, take appropriate action to approve the deemed grant of
options to purchase Parent Common Stock under the EFTC Stock Options and the
K*TEC Stock Options (as converted pursuant to this Section 5.13) for purposes of
Section 16(b) of the Exchange Act.
SECTION 5.14 BROKERS OR FINDERS. Each of EFTC and TBF II represents, as
to itself, its Subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission, advisory or
similar fee in connection with any of the transactions contemplated by this
Agreement except ▇.▇. ▇▇▇▇▇▇ H&Q, a division of Chase Securities Inc., whose
fees and expenses will be paid by EFTC in accordance with EFTC's agreement with
such firm (a copy of which has been delivered by EFTC to K*TEC prior to the date
of this Agreement) and TC Management IV, L.L.C. and RCBA GP, L.L.C., each of
whose fees and expenses will be paid by K*TEC in accordance with K*TEC's
agreement with such firms (a copy of which has been delivered by K*TEC to EFTC
prior to the date of this Agreement); provided, that the aggregate amount of
fees paid by K*TEC to such firms does not exceed $750,000. Each of TBF II and
EFTC agrees to indemnify and hold the other harmless from and against any and
all claims, liabilities or obligations with respect to any such fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or any of its Affiliates.
SECTION 5.15 POST-MERGER CORPORATE GOVERNANCE. At the Effective Time,
the total number of persons serving on the Board of Directors of Parent shall be
nine (unless otherwise agreed in writing by EFTC and TBF II prior to the
Effective Time), all of whom shall consist of the members of the Board of
Directors of EFTC immediately prior to the EFTC Merger. In the event that, prior
to the Effective Time, any person so selected to serve on the Board of Directors
of Parent after the Effective Time is unable or unwilling to serve in such
position, the Board of Directors which selected such person shall designate
another of its members to serve in such person's stead in accordance with the
provisions of the immediately preceding sentence.
SECTION 5.16 EFTC REGISTRATION RIGHTS AGREEMENT. At the Effective Time,
EFTC and TBF II shall cause Parent to enter into a Registration Rights Agreement
(the "Parent Registration Rights Agreement") substantially similar to the
Registration Rights Agreement dated as of March 30, 2000, as amended, by and
among EFTC and certain stockholders of EFTC (the "EFTC Registration Rights
Agreement") pursuant to which Parent will provide registration rights to parties
to the EFTC Registration Rights Agreement (other than EFTC) and to the holders
of TBF II Units with respect to all shares of Parent Common Stock issued in the
EFTC Merger or the K*TEC Merger, or to be issued upon exercise or conversion of
any securities of EFTC issued in the EFTC Merger, on account of the EFTC
securities covered by the EFTC Registration Rights Agreement.
SECTION 5.17 CONVEYANCE TAXES. EFTC and TBF II shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees or any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time.
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SECTION 5.18 STOCKHOLDER LITIGATION. Each of EFTC, TBF II and K*TEC
shall give the other the reasonable opportunity to participate in the defense of
any stockholder litigation against EFTC, TBF II or K*TEC, as applicable, and
their directors relating to the transactions contemplated hereby.
SECTION 5.19 EMPLOYEE BENEFITS; SEVERANCE
(a) For purposes of determining eligibility to participate, vesting,
entitlement to benefits and in all other respects where length of service is
relevant (except for pension benefit accruals) under any employee benefit plan
or arrangement covering employees of EFTC and its Subsidiaries ("EFTC
Employees") or employees of K*TEC and its Subsidiaries ("K*TEC Employees")
following the Effective Time, Parent shall cause such plans or arrangements to
recognize service credit for service with EFTC or K*TEC (as applicable) and any
of their respective Subsidiaries to the same extent such service was recognized
under the applicable employee benefit plans immediately prior to the Effective
Time.
(b) At the Effective Time, Parent shall assume and honor in
accordance with their terms the severance agreements and severance pay policies
identified in Section 5.19 of the EFTC Disclosure Schedule and Section 5.19 of
the K*TEC Disclosure Schedule.
(c) K*TEC agrees to use all reasonable efforts, including obtaining
any necessary employee consents, to prevent the automatic funding of any escrow,
trust or similar arrangement pursuant to any employment agreement, arrangement
or benefit plan that arises in connection with the execution of this Agreement
or the consummation of any of the transactions contemplated hereby.
SECTION 5.20 AUDITED K*TEC FINANCIAL STATEMENTS. As soon as practicable
following the date of this Agreement, K*TEC shall deliver to EFTC the audited
statement of assets and liabilities of K*TEC as of December 31, 2000 (the
"Audited K*TEC Balance Sheet").
ARTICLE VI.
CONDITIONS TO MERGER
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGERS. The respective obligations of each party to this Agreement to effect
the Mergers shall be subject to the satisfaction or waiver by each party prior
to the Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement and the EFTC Merger shall
have been approved in the manner required under the CBCA by the holders of the
issued and outstanding shares of capital stock of EFTC.
(b) Approvals. Other than the filing provided for by Sections 1.2(a)
and 1.4, all authorizations, consents, orders or approvals of, or declarations
or filings with, or expirations of waiting periods imposed by, any Governmental
Entity the failure of which to file, obtain or occur would have an EFTC Material
Adverse Effect or a K*TEC Material Adverse Effect shall have been filed, been
obtained or occurred.
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(c) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
(d) No Injunctions. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any order, executive order, stay,
decree, judgment or injunction or statute, rule, regulation which is in effect
and which has the effect of making the Mergers illegal or otherwise prohibiting
consummation of the Mergers.
(e) Nasdaq Listing. The shares of Parent Common Stock to be issued in
the Merger shall have been listed on the Nasdaq Stock Market.
SECTION 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF EFTC. The
obligation of EFTC to effect the EFTC Merger is subject to the satisfaction of
each of the following conditions prior to the Effective Time, any of which may
be waived in writing exclusively by EFTC:
(a) Representations and Warranties. The representations and
warranties of TBF II and K*TEC set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent such
representations speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, except for, (i) changes contemplated by this
Agreement and (ii) inaccuracies which, individually or in the aggregate, have
not had and would not have a K*TEC Material Adverse Effect or a material adverse
effect upon the consummation of the transactions contemplated hereby; and EFTC
shall have received a certificate signed on behalf of TBF II or K*TEC by the
chief executive officer and the chief financial officer of TBF II or K*TEC,
respectively, to such effect.
(b) Performance of Obligations of K*TEC. Each of TBF II and K*TEC
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and EFTC
shall have received a certificate signed on behalf of each of TBF II and K*TEC
by the chief executive officer and the chief financial officer of TBF II and
K*TEC, respectively, to such effect.
(c) Tax Opinion. ▇▇▇▇▇▇ Godward LLP shall have delivered an opinion
to EFTC, based upon representation letters, dated the Closing Date, in form and
substance acceptable to ▇▇▇▇▇▇ Godward LLP and executed by EFTC, TBF, TBF II,
TBF III and Parent (collectively, with the representation letters addressed to
▇▇▇▇▇▇ Godward LLP described in Section 5.4(e) hereof, the "EFTC Tax
Representation Letters") , to the effect that the EFTC Merger will be treated as
a reorganization described in Section 368(a) of the Code and/or, taken together
with the K*TEC Merger, as a transfer of property described in Section 351 of the
Code to Parent by holders of EFTC Common Stock and TBF II Units.
(d) Performance of Stockholder Agreement. Each of TBF and TBF III
shall have performed and complied in all material respects with its obligations
under the Stockholder Agreement, dated as of the date hereof, by and among EFTC,
Parent, TBF and TBF III, except insomuch as the failure to perform and comply
that would constitute a material adverse change in the transaction so
contemplated.
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(e) FIRPTA Certificate. Parent shall have received a statement issued
by TBF II, dated not more than thirty days prior to the date on which the K*TEC
Merger becomes effective, in accordance with Code Section 1445(b)(3) and
Treasury Regulation Sections 1.897-2(h) and 1.1445-2(c)(3), which certifies that
none of the TBF II Units exchanged for Parent Common Stock in the K*TEC Merger
is a US real property interest.
SECTION 6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF TBF II. The
obligations of TBF II to effect the K*TEC Merger are subject to the satisfaction
of each of the following conditions prior to the Effective Time, any of which
may be waived in writing exclusively by TBF II:
(a) Representations and Warranties. The representations and
warranties of EFTC set forth in this Agreement shall be true and correct as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date, except for, (i) changes contemplated by this
Agreement and (ii) inaccuracies which, individually or in the aggregate, have
not had and would not have an EFTC Material Adverse Effect, or a material
adverse effect upon the consummation of the transactions contemplated hereby;
and TBF II shall have received a certificate signed on behalf of EFTC by the
chief executive officer and the chief financial officer of EFTC to such effect.
(b) Performance of Obligations of EFTC. EFTC shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date; and TBF II shall have received a
certificate signed on behalf of EFTC by the chief executive officer and the
chief financial officer of EFTC to such effect.
(c) Amendment of EFTC Rights Plan. The EFTC Rights Plan will have
been amended such that there will be no triggering of any right or entitlement
of stockholders of EFTC thereunder as a result of the consummation of the
Mergers.
(d) Corporate Governance. EFTC shall have taken all actions necessary
so that not later than the Effective Time, the Certificate of Incorporation and
Bylaws of Parent shall have been amended to be substantially in the form of
Exhibit A and Exhibit B hereto.
(e) Tax Opinion. TBF II shall have received the opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, counsel to TBF II and K*TEC, based upon representation letters, dated
the Closing Date, in form and substance acceptable to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and
executed by EFTC, TBF, TBF II, TBF III and Parent (collectively, with the
representation letters addressed to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ described in Section
5.4(e), the "K*TEC Tax Representation Letters"), to the effect that the K*TEC
Merger, taken together with the EFTC Merger, will be treated as a transfer of
property described in Section 351 of the Code to Parent by holders of TBF II
Units and EFTC Common Stock.
(f) FIRPTA Certificate. Parent shall have received a statement issued
by EFTC, dated not more than thirty days prior to the date on which the EFTC
Merger becomes effective, in accordance with Code Section 1445(b)(3) and
Treasury Regulation Sections 1.897-2(h) and 1.1445-2(c)(3), which certifies that
none of the EFTC Common Stock exchanged for Parent Common Stock in the EFTC
Merger is a US real property interest.
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ARTICLE VII.
TERMINATION AND AMENDMENT
SECTION 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 7.1(b) through 7.1(h), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Mergers by the
stockholders of EFTC or the sole member of TBF II:
(a) by mutual written consent of EFTC and TBF II; or
(b) by either EFTC or TBF II if (i) the Mergers shall not have been
consummated by March 31, 2002 (the "Outside Date") and (ii) the right to
terminate this Agreement under this Section 7.1(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Mergers to occur on or before such
date); or
(c) by either EFTC or TBF II if a court of competent jurisdiction or
other Governmental Entity shall have issued a nonappealable final order, decree
or ruling or taken any other nonappealable final action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Mergers; or
(d) by either TBF II or EFTC if, at the EFTC Shareholders' Meeting
(including any adjournment or postponement), the requisite vote of the
shareholders of EFTC in favor of the approval and adoption of this Agreement and
the EFTC Merger shall not have been obtained; or
(e) by EFTC if the Net Tangible Assets Shortfall exceeds $20,000,000;
or
(f) by either EFTC or TBF II, if (A) there has been a breach of any
representation, warranty, covenant or agreement on the part of EFTC (with
respect to TBF II) or K*TEC or TBF II (with respect to EFTC), which breach (i)
will cause the conditions set forth in Section 6.2(a) or (b) (in the case of
termination by EFTC) or 6.3(a) or (b) (in the case of termination by TBF II) not
to be satisfied, and (ii) shall not have been cured within 20 business days
following receipt by the breaching party of written notice of such breach from
the other party; or (B) any event shall have occurred which makes it impossible
for the conditions set forth in Article VI hereof (other than Section 6.1(a),
6.1(e), 6.2(c) and 6.3(c)) to be satisfied, provided that any termination
pursuant to this clause (B) shall not be effective until 20 business days after
notice thereof is delivered by the party seeking to terminate to the other
party, and shall be automatically rescinded if (1) such condition is solely for
the benefit of the party receiving such notice and (2) such party, prior to such
20th business day, irrevocably waives satisfaction of such condition based on
such event.
SECTION 7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of EFTC, TBF II,
K*TEC, Parent or their respective officers, directors, stockholders or
Affiliates, except as set forth in Section 7.3 and except that such termination
shall not limit liability for a willful breach of this Agreement; provided that,
the
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provisions of Section 7.3 of this Agreement and any Confidentiality Agreements
shall remain in full force and effect and survive any termination of this
Agreement.
SECTION 7.3 FEES AND EXPENSES. All fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, whether or not the Mergers are
consummated.
SECTION 7.4 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Mergers by the shareholders of EFTC, but, after any such approval, no
amendment shall be made which by law requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto; provided, however, that this Agreement may be amended in writing without
obtaining the signatures of EFTC, TBF II, K*TEC or Parent solely for the purpose
of adding EFTC Sub and Merger Sub as parties to this Agreement.
SECTION 7.5 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained here. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.1 EFFECT OF ACTION OR KNOWLEDGE OF ▇▇▇▇▇▇-▇▇▇▇ OR ▇▇▇▇▇▇-▇▇▇▇
NOMINEES. Notwithstanding anything to the contrary contained in this Agreement,
for purposes of this Agreement (including, without limitation, Sections 6.3(a)
and 7.1(b));
(a) Representations and Warranties. No representation or warranty of
EFTC contained in this Agreement shall be deemed to be untrue, incorrect or
breached if (i) the failure of the representation or warranty to be true or
correct, or the breach of the representation or warranty, results from any act
or omission of (A) ▇▇▇▇▇▇-▇▇▇▇ Funding, L.L.C. or ▇▇▇▇▇▇-▇▇▇▇ Funding III,
L.L.C. (collectively, "▇▇▇▇▇▇-▇▇▇▇"), (B) any person or persons acting at the
request or direction of ▇▇▇▇▇▇-▇▇▇▇, or (C) any one or more officer(s),
director(s), employee(s) or representative(s) of ▇▇▇▇▇▇-▇▇▇▇ or its Affiliates
(including, without limitation, any one or more member(s) of the Board of
Directors of EFTC other than ▇▇▇▇▇ ▇. ▇▇▇▇ or the members of the Special
Committee) (each such officer, director, employee and representative referred to
in this clause (C) being referred to in this Agreement as a "▇▇▇▇▇▇-▇▇▇▇
Nominee"); or (ii) any facts or circumstances that constitute or give rise to
the untruth or inaccuracy in (or breach of) the representation or warranty were
known to ▇▇▇▇▇▇-▇▇▇▇ or any ▇▇▇▇▇▇-▇▇▇▇ Nominee at the time such representation
or warranty was made by EFTC.
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(b) Covenants and Agreements. EFTC shall not be deemed to have
breached any of its covenants or agreements contained in this Agreement if (i)
the breach of the covenant or agreement results from any act or omission of (A)
▇▇▇▇▇▇-▇▇▇▇, (B) any person or persons acting at the request or direction of
▇▇▇▇▇▇-▇▇▇▇, or (C) any one or more ▇▇▇▇▇▇-▇▇▇▇ Nominee(s); or (ii) any facts or
circumstances that constitute or give rise to such breach were known to
▇▇▇▇▇▇-▇▇▇▇ or any ▇▇▇▇▇▇-▇▇▇▇ Nominee at the time of or prior to the occurrence
of such breach and if, after ▇▇▇▇▇▇-▇▇▇▇ shall have become aware of such facts
and circumstances, ▇▇▇▇▇▇-▇▇▇▇ shall have failed promptly to advise the Special
Committee in writing of such facts or circumstances.
For purposes of this Section 8.1, ▇▇▇▇▇▇-▇▇▇▇ shall be deemed to have knowledge
of a fact or circumstance or act or omission if such fact or circumstance or act
or omission was formally considered at a meeting of the Board of Directors of
EFTC at which any ▇▇▇▇▇▇-▇▇▇▇ Nominee was present throughout such consideration
or included in any written materials provided to any such ▇▇▇▇▇▇-▇▇▇▇ Nominee.
SECTION 8.2 APPROVAL OF SPECIAL COMMITTEE. To the extent permitted by
applicable law, the approval of a majority of the members of the Special
Committee will be required to authorize each of the following actions (and none
of such actions will be valid unless approved by a majority of the members of
the Special Committee): (i) any termination of this Agreement by EFTC, (ii) any
agreement by EFTC to amend this Agreement, (iii) any extension of time for the
performance of any of the obligations or other acts of Parent, TBF II, K*TEC or
K*TEC Sub, and (iv) any waiver of compliance with or any waiver of any breach of
any of the representations, warranties, covenants or conditions contained in
this Agreement for the benefit of EFTC.
SECTION 8.3 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 1.6, 2.1, 2.2, 2.4, 5.10,
the EFTC Tax Representation Letters, the K*TEC Tax Representation Letters and
Article VIII, and the agreements of the Affiliates delivered pursuant to Section
5.12. The Confidentiality Agreement shall survive the execution and delivery of
this Agreement.
SECTION 8.4 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or one business day after sent by a recognized
overnight delivery service to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to EFTC, to
EFTC Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with copies to
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and to
▇▇▇▇▇▇ Godward LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to TBF II or K*TEC, to
K*TEC Electronics Holding Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 8.5 INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement", "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to May
3, 2001.
SECTION 8.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
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SECTION 8.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and all documents and instruments referred to herein (a) constitute
the entire agreement and supersedes all prior agreements (including the Merger
Agreement) and understandings, both written and oral , among the parties with
respect to the subject matter hereof and (b) are not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder; provided
that the Confidentiality Agreement shall remain in full force and effect until
the Effective Time. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, neither EFTC nor
K*TEC makes any other representations or warranties, and each hereby disclaims
any other representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement or
the transactions contemplated hereby, notwithstanding the delivery or disclosure
to the other or the other's representatives of any documentation or other
information with respect to any one or more of the foregoing.
SECTION 8.8 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.
SECTION 8.9 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties and any attempt to do so will be null and void ab
initio, except that each party hereto may collaterally assign its rights under
this Agreement to parties providing financing in connection with the
transactions contemplated hereby; provided, however, that the parties
acknowledge and agree that any such assignment (i) shall result in the assignee
obtaining the same (but not greater) rights than the assignor under this
Agreement (it being understood and agreed that the rights of any such assignee
shall be subject in all respects to this Agreement) and (ii) shall not relieve
the parties hereto of their respective duties or obligations under this
Agreement. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
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Signature Page for Agreement and Plan of Merger
IN WITNESS WHEREOF, EFTC, K*TEC and Parent have caused this Agreement
to be signed by their respective duly authorized officers as of the date first
written above.
EFTC CORPORATION
______________________________________
By:
Its:
K*TEC ELECTRONICS HOLDING CORPORATION
______________________________________
By:
Its:
▇▇▇▇▇▇-▇▇▇▇ FUNDING II, L.L.C.
______________________________________
By:
Its:
EXPRESS EMS CORPORATION
______________________________________
By:
Its:
S-1