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AGREEMENT AND PLAN OF MERGER
AMONG
FLEXTRONICS INTERNATIONAL LTD.
SLALOM ACQUISITION CORP.
AND
THE DII GROUP, INC.
NOVEMBER 22, 1999
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TABLE OF CONTENTS
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ARTICLE I THE MERGER...........................................................1
1.1 THE MERGER...............................................................1
1.2 TIMING OF THE MERGER.....................................................2
1.3 EFFECT OF THE MERGER.....................................................2
1.4 EFFECT ON CAPITAL STOCK..................................................3
1.5 SURRENDER OF CERTIFICATES................................................4
1.6 DIRECTOR OF PARENT.......................................................6
1.7 TAX AND ACCOUNTING CONSEQUENCES..........................................7
1.8 TAKING OF NECESSARY ACTION; FURTHER ACTION...............................8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY..........................8
2.1 ORGANIZATION AND GOOD STANDING...........................................8
2.2 SUBSIDIARIES AND OTHER INTERESTS.........................................8
2.3 CERTIFICATE OF INCORPORATION AND BYLAWS..................................8
2.4 AUTHORITY................................................................9
2.5 COMPANY CAPITAL STRUCTURE...............................................10
2.6 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK...............................11
2.7 SEC FILINGS; COMPANY FINANCIAL STATEMENTS...............................12
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS....................................13
2.9 TAXES...................................................................15
2.10 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES............................17
2.11 INTELLECTUAL PROPERTY...................................................18
2.12 COMPLIANCE WITH LAW; PERMITS; RESTRICTIONS..............................19
2.13 LITIGATION..............................................................19
2.14 EMPLOYEE BENEFIT PLANS..................................................19
2.15 ENVIRONMENTAL MATTERS...................................................23
2.16 AGREEMENTS, CONTRACTS AND COMMITMENTS...................................25
2.17 CHANGE OF CONTROL PAYMENTS..............................................26
2.18 INSURANCE...............................................................26
2.19 CUSTOMERS AND SUPPLIERS.................................................27
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2.20 INVENTORY...............................................................27
2.21 RELATED PARTIES.........................................................28
2.22 DISCLOSURE..............................................................28
2.23 BOARD APPROVAL..........................................................29
2.24 FAIRNESS OPINION........................................................29
2.25 BROKERS' AND FINDERS' FEES..............................................29
2.26 AFFILIATES..............................................................29
2.27 POOLING OF INTERESTS....................................................29
2.28 NO EXISTING DISCUSSIONS.................................................30
2.29 DGCL SECTION 203 NOT APPLICABLE.........................................30
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...........30
3.1 ORGANIZATION............................................................30
3.2 SUBSIDIARIES AND OTHER INTERESTS........................................30
3.3 CERTIFICATE OF INCORPORATION AND BYLAWS.................................30
3.4 AUTHORITY...............................................................31
3.5 PARENT AND MERGER SUB CAPITAL STRUCTURE.................................32
3.6 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK...............................33
3.7 SEC FILINGS; PARENT FINANCIAL STATEMENTS................................33
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS....................................35
3.9 TAXES...................................................................36
3.10 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES............................37
3.11 INTELLECTUAL PROPERTY...................................................38
3.12 COMPLIANCE WITH LAW; PERMITS; RESTRICTIONS..............................38
3.13 LITIGATION..............................................................39
3.14 EMPLOYEE BENEFIT PLANS..................................................40
3.15 ENVIRONMENTAL MATTERS...................................................41
3.16 INSURANCE...............................................................42
3.17 CUSTOMERS AND SUPPLIERS.................................................43
3.18 INVENTORY...............................................................43
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3.19 INVENTORY...............................................................43
3.20 DISCLOSURE..............................................................44
3.21 BOARD APPROVAL..........................................................44
3.22 BROKERS' AND FINDERS' FEES..............................................44
3.23 AFFILIATES..............................................................44
3.24 POOLING OF INTERESTS....................................................44
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME................................44
4.1 CONDUCT OF BUSINESS.....................................................44
4.2 COOPERATION.............................................................49
ARTICLE V ADDITIONAL AGREEMENTS...............................................49
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT;
ANTITRUST AND CERTAIN OTHER FILINGS....................................49
5.2 MEETING OF COMPANY STOCKHOLDERS.........................................50
5.3 MEETING OF PARENT SHAREHOLDERS..........................................52
5.4 CONFIDENTIALITY; ACCESS TO INFORMATION; STANDSTILL......................53
5.5 NO SOLICITATION.........................................................54
5.6 PUBLIC DISCLOSURE.......................................................55
5.7 REASONABLE EFFORTS; NOTIFICATION........................................56
5.8 THIRD PARTY CONSENTS....................................................57
5.9 STOCK OPTIONS, WARRANTS, ESPP AND EMPLOYEE BENEFITS.....................57
5.10 FORM S-8................................................................59
5.11 NASDAQ QUOTATION........................................................59
5.12 INDEMNIFICATION; INSURANCE.............................................59
5.13 AFFILIATE AGREEMENTS....................................................60
5.14 LETTER OF COMPANY'S ACCOUNTANTS.........................................60
5.15 LETTER OF PARENT'S ACCOUNTANTS..........................................61
5.16 TAKEOVER STATUTES.......................................................61
5.17 STOCKHOLDER LITIGATION..................................................61
5.18 POOLING ACCOUNTING......................................................61
5.19 RIGHTS AGREEMENT........................................................61
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ARTICLE VI CONDITIONS TO THE MERGER..........................................62
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER............62
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY.........................63
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB.......64
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER................................65
7.1 TERMINATION.............................................................65
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION............................67
7.3 FEES AND EXPENSES.......................................................67
7.4 AMENDMENT...............................................................68
7.5 EXTENSION; WAIVER.......................................................68
ARTICLE VIII GENERAL PROVISIONS...............................................69
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES..........................69
8.2 NOTICES.................................................................69
8.3 INTERPRETATION; CERTAIN DEFINED TERMS...................................69
8.4 COUNTERPARTS............................................................71
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES.............................71
8.6 SEVERABILITY............................................................71
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE....................................72
8.8 GOVERNING LAW...........................................................72
8.9 RULES OF CONSTRUCTION...................................................72
8.10 ASSIGNMENT..............................................................72
8.11 DISCLOSURE LETTER.......................................................72
8.12 WAIVER OF JURY TRIAL....................................................72
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INDEX OF EXHIBITS
Exhibit A Form of Company Option Agreement
Exhibit B Form of Company Voting Agreement
Exhibit C Form of Parent Voting Agreement
Exhibit D Form of Company Affiliate Agreement
Exhibit E Form of Parent Affiliate Agreement
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of November 22, 1999, among Flextronics International Ltd., a Singapore
company ("Parent"), Slalom Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and The Dii Group, Inc., a
Delaware corporation ("Company").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware Law, Parent and Company intend to enter into a
business combination transaction.
B. The Merger (as defined in Section 1.1) is intended to be treated as a
tax-free reorganization pursuant to the provisions of Section 368(a)(1)(A) of
the Code. The Merger is intended to be treated as a "pooling of interests" for
accounting and financial reporting purposes.
C. The respective Boards of Directors of Parent and Company have: (i)
determined that the Merger is advisable and fair to, and in the best interests
of, Parent and Company and their respective stockholders, (ii) approved this
Agreement, the Merger and the other transactions contemplated by this Agreement,
and (iii) determined to recommend that the respective shareholders of Parent and
Company adopt and approve this Agreement and approve the Merger.
D. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, Company
shall execute and deliver a Company Option Agreement in favor of Parent in
substantially the form attached hereto as Exhibit A (the "Company Option
Agreement"). The Board of Directors of Company has approved the Company Option
Agreement.
E. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, certain
executive officers and directors of Company are entering into voting agreements
in substantially the form attached hereto as Exhibit B (the "Company Voting
Agreements").
F. Concurrently with the execution of this Agreement, and as a condition
and inducement to Company's willingness to enter into this Agreement, certain
executive officers and directors of Parent are entering into voting agreements
in substantially the form attached hereto as Exhibit C (the "Parent Voting
Agreements").
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined herein) and subject to
and upon the terms and conditions of this Agreement and the applicable
provisions of Delaware Law, Merger Sub shall be merged with and into Company
(the "Merger"), the separate corporate
existence of Merger Sub shall cease and Company shall continue as the surviving
corporation, and Company as the surviving corporation will become a wholly-owned
subsidiary of Parent. Company as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation."
1.2 Timing of the Merger.
(a) Effective Time. Subject to the provisions of this Agreement, the
parties hereto shall cause the Merger to be consummated by filing a certificate
of merger, in such form as is required by the relevant provisions of Delaware
Law, with the Secretary of State of the State of Delaware in accordance with the
relevant provisions of Delaware Law (the "Certificate of Merger"). The effective
time (the "Effective Time") shall occur upon the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware or on such other
date as may be agreed in writing by Company and Parent and specified in the
Certificate of Merger, and shall occur as soon as practicable on or after the
Closing (as herein defined).
(b) Closing. The closing of the Merger (the "Closing") shall take place at
the offices of Fenwick & West LLP, Two Palo Alto Square, Palo Xxxx, Xxxxxxxxxx
00000, on April 3, 2000; or if each of the conditions set forth in Article VI
shall not then have been satisfied or waived, as soon as practicable thereafter
(but not more than two (2) business days after the satisfaction or waiver of
each of such conditions), or at such other time, date and location as the
parties hereto agree in writing (the "Closing Date"); provided, that Parent
shall be entitled, by written notice to Company, to specify that the Closing
Date shall be such other date as may be specified in such written notice (which
other date shall be after January 31, 2000 and before April 3, 2000, and shall
be not less than five business days after the date of such notice), if each of
the conditions set forth in Article VI (other than the conditions set forth in
Sections 6.1(f), 6.2(d), 6.3(e) and the last sentence of each of Sections 6.2(a)
and 6.3(a)) shall have been satisfied or waived at or before the date of such
notice, in which case the Closing Date shall be such date as may be specified in
such written notice.
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, at the Effective Time all
the property, rights, privileges, powers and franchises of Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities, and
duties of Company and Merger Sub shall become the liabilities of the Surviving
Corporation.
(a) Certificate of Incorporation. At the Effective Time, the Certificate of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation.
(b) Bylaws. At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation.
(c) Directors and Officers of Surviving Corporation. The initial directors
of the Surviving Corporation shall be the directors of Merger Sub immediately
prior to the Effective Time, until their respective successors are duly elected
or appointed and qualified. The initial
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officers of the Surviving Corporation shall be the officers of Merger Sub
immediately prior to the Effective Time, until their respective successors are
duly appointed.
1.4 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Parent, Merger Sub, Company or the holders of any of the
following securities:
(a) Conversion of Company Common Stock. Each share of common stock, par
value $0.01 per share, of Company (the "Company Common Stock") that is issued
and outstanding immediately prior to the Effective Time, other than any shares
of Company Common Stock to be canceled pursuant to Section 1.4(d), will be
canceled and extinguished and automatically converted (subject to Sections
1.4(c) and 1.4(f)) into the right to receive, and shall be exchangeable for .805
(the "Exchange Ratio") of an ordinary share, par value S$0.01 per share, in the
capital of Parent (the "Parent Ordinary Shares").
(b) Stock Options; Employee Stock Purchase Plans. At the Effective Time,
all options and other rights to purchase or receive Company Common Stock then
outstanding under Company's 1993 Stock Option Plan, 1994 Stock Incentive Plan,
KMOS Semiconductor, Inc. 1989 Stock Option Plan, KMOS Semiconductor, Inc. 1990
Non-Qualified Stock Option Plan, OAC Acquisition Corp. 1992 Stock Option/Stock
Issuance Plan, Orbit Semiconductor, Inc. 1994 Stock Incentive Plan and any
options that were not granted under any such plans (collectively, the "Company
Stock Option Plans") shall be assumed by Parent in accordance with Section 5.9
of this Agreement. Rights outstanding under Company's 1994 Employee Stock
Purchase Plan (the "ESPP") and Company's 1997 Non-Employee Directors' Stock
Compensation Plan (the "Directors' Stock Plan") shall be treated as set forth in
Sections 5.9(c) and 5.9(d) of this Agreement.
(c) Fractional Shares. No fraction of a Parent Ordinary Share will be
issued by virtue of the Merger, but in lieu thereof, each holder of shares of
Company Common Stock who would otherwise be entitled to a fraction of a Parent
Ordinary Share (after aggregating all fractional Parent Ordinary Shares that
otherwise would be received by such holder) shall be entitled to receive an
amount of cash (rounded to the nearest whole cent) equal to the product of (i)
such fraction, multiplied by (ii) the last sale price of one Parent Ordinary
Share on the last trading day prior to the Effective Time, as reported on the
Nasdaq Stock Market.
(d) Cancellation of Company-Owned and Parent-Owned Stock and Preferred
Stock. Each share of Company Common Stock held by Company or owned by Merger
Sub, Parent or any direct or indirect wholly-owned subsidiary of Company or of
Parent immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(e) Capital Stock of Merger Sub. Each share of Common Stock, par value
$0.01 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued, fully paid and
nonassessable share of Common Stock, $0.01 par value per share, of the Surviving
Corporation. Each certificate evidencing ownership of shares of the Common Stock
of Merger Sub shall evidence ownership of such shares of capital stock of the
Surviving Corporation.
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(f) Adjustments to Exchange Ratio. If, between the date hereof and the
Effective Time Parent (i) recapitalizes either through a split-up of its
outstanding shares into a greater number of shares, or through a combination of
its outstanding shares into a lesser number of shares, or (ii) reorganizes,
reclassifies or otherwise changes its outstanding shares into the same or a
different number of shares of other classes (other than through a split-up or
combination of shares provided for in the previous clause), or (iii) declares a
dividend on its outstanding shares payable in shares or securities convertible
into shares, the Exchange Ratio will be adjusted appropriately so as to maintain
the proportionate interests of the stockholders of Company in the outstanding
Parent Ordinary Shares.
(g) Restricted Stock. If any shares of Company Common Stock that are
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition providing that
such shares may be forfeited or repurchased by Company upon any termination of
the stockholders' employment, directorship, consulting or other relationship
with Company (and/or any affiliate of Company) under the terms of any restricted
stock purchase agreement or other agreement with Company that does not by its
terms provide that such repurchase option, risk of forfeiture or other condition
lapses upon consummation of the Merger ("Company Restricted Stock"), then the
Parent Ordinary Shares issued upon the conversion of such shares of Company
Common Stock in the Merger will, to the extent permitted by applicable law,
continue to be unvested and subject to the same repurchase options, risks of
forfeiture or other conditions following the Effective Time, and the
certificates representing such Parent Ordinary Shares may accordingly be marked
with appropriate legends noting such repurchase options, risks of forfeiture or
other conditions. Company shall take all actions that may be necessary to ensure
that, from and after the Effective Time, Parent is, to the extent permitted by
applicable law, entitled to exercise any such repurchase option or other right
set forth in any such restricted stock purchase agreement or other agreement
other than with respect to any such repurchase option, risk of forfeiture or
other condition that by its terms lapses upon consummation of the Merger. A
listing of the holders of Company Restricted Stock, together with the number of
shares of Company Restricted Stock held by each, is set forth on Part 1.4(g) of
the Company Disclosure Letter.
1.5 Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust company reasonably
acceptable to Company to act as the exchange agent (the "Exchange Agent") in the
Merger pursuant to an exchange agent agreement reasonably acceptable to Company.
(b) Provision of Share Certificates for Parent Ordinary Shares and Cash.
Promptly, and in no event later than the tenth (10th) business day, after the
Effective Time, Parent shall make available to the Exchange Agent for exchange
in accordance with this Article I, certificates representing the Parent Ordinary
Shares issuable pursuant to Section 1.4 in exchange for outstanding shares of
Company Common Stock, and cash in an amount sufficient for payment of cash in
lieu of fractional shares pursuant to Section 1.4(c) and any dividends or
distributions to which holders of shares of Company Common Stock may be entitled
pursuant to Section 1.5(d) (such Parent Ordinary Shares and cash being referred
to herein as the "Exchange Fund").
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(c) Exchange Procedures. Promptly after the Effective Time, Parent shall
cause the Exchange Agent to mail to each holder of record (as of the Effective
Time) of a certificate or certificates ("Certificates"), which immediately prior
to the Effective Time represented outstanding shares of Company Common Stock
whose shares were converted into the right to receive Parent Ordinary Shares
pursuant to Section 1.4, (i) a letter of transmittal in customary form (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 contain such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing Parent Ordinary Shares, cash in lieu of
any fractional shares pursuant to Section 1.4(c) and any dividends or other
distributions pursuant to Section 1.5(d). Upon surrender of Certificates 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 completed
and validly executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive in exchange therefor, and the
Exchange Agent shall deliver to the holders, certificates representing the
number of whole Parent Ordinary Shares into which their shares of Company Common
Stock were converted at the Effective Time, payment in lieu of fractional shares
which such holders have the right to receive pursuant to Section 1.4(c) and any
dividends or distributions payable pursuant to Section 1.5(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, to evidence ownership of the number of whole Parent
Ordinary Shares into which such shares of Company Common Stock shall have been
so converted, and the right to receive an amount in cash in lieu of the issuance
of any fractional shares in accordance with Section 1.4(c) and any dividends or
distributions payable pursuant to Section 1.5(d). No interest shall be paid or
will accrue on any cash payable to holders of Certificates pursuant to the
provisions of this Article I.
(d) Distributions With Respect to Unexchanged Share Certificates. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Ordinary Shares with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates
with respect to the Parent Ordinary Shares represented thereby until the holders
of record of such Certificates shall surrender such Certificates. Subject to
applicable law, following surrender of any such Certificates, the Exchange Agent
shall deliver to the record holders thereof, without interest, certificates
representing whole Parent Ordinary Shares issued in exchange therefor along with
payment in lieu of fractional shares pursuant to Section 1.4(c) hereof and the
amount of any such dividends or other distributions with a record date after the
Effective Time and theretofore paid with respect to such whole Parent Ordinary
Shares.
(e) Transfers of Ownership. If requests are received for certificates
representing Parent Ordinary Shares to be issued in a name other than that in
which the Certificates surrendered in exchange therefor are registered, it will
be a condition of the issuance thereof that the Certificates so surrendered will
be properly endorsed and accompanied by proper forms for transfer of the Parent
Ordinary Shares represented thereby and such other documents as may be required
by the Exchange Agent or Parent, as the case may be, and that the persons
requesting such issue will have paid to Parent or any agent designated by it any
transfer or other taxes required by reason of the transfer of such Parent
Ordinary Shares to such persons, or
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established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(f) Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing Parent Ordinary Shares into which the shares of Company Common
Stock represented by such Certificates were converted pursuant to Section 1.4,
cash for fractional shares, if any, as may be required pursuant to Section
1.4(c) and any dividends or distributions payable pursuant to Section 1.5(d);
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance of such certificates representing Parent Ordinary
Shares, cash and other distributions, require the owner of such lost, stolen or
destroyed Certificates to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against Parent, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
(g) No Further Ownership Rights in Company Common Stock. All Parent
Ordinary Shares issued in accordance with the terms hereof (including any cash
paid in lieu of fractional shares pursuant to Section 1.4(c)) shall be deemed to
have been issued in full satisfaction of all rights pertaining to the shares of
Company Common Stock represented by the Certificates surrendered therefor, and
there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If after the Effective Time
Certificates are presented to the Surviving Corporation for any reason, except
as otherwise provided by law, they shall be canceled and exchanged as provided
in this Article I, subject to Section 1.5(h).
(h) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the stockholders of Company for 180 days after the
Effective Time shall be delivered to Parent, upon demand, and any stockholders
of Company who have not previously complied with Section 1.5(c) shall thereafter
look only to Parent for payment of their claim for Parent Ordinary Shares, any
cash in lieu of fractional Parent Ordinary Shares and any dividends or
distributions with respect to Parent Ordinary Shares.
(i) No Liability. Notwithstanding anything to the contrary in this Section
1.5, neither the Exchange Agent, Parent, the Surviving Corporation nor any party
hereto shall be liable to a holder of Parent Ordinary Shares or Company Common
Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
1.6 Director of Parent.
(a) Parent shall take all actions necessary to cause the election and
appointment of Xxxxxx Xxxxxx, or such person as may be selected by Xx. Xxxxxx
with the consent of Parent, which consent shall not be unreasonably withheld,
provided that such person is not be an employee of Company or any of its
subsidiaries (the "Company Nominee"), to the Board of Directors of Parent (the
"Parent Board"), and his election to the position of Deputy Chairman, as of the
Effective Time.
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(b) The Company Nominee shall hold his position as a member of the Parent
Board, and as Deputy Chairman, for a term of three (3) years if permitted by
Singapore law or the Articles and Memorandum of Association of Parent. If such
term is not permitted by Parent's Articles and Memorandum of Association and
applicable law, the Company Nominee shall hold such position until the next
Annual General Meeting of the shareholders of Parent, and Parent shall use all
reasonable efforts to cause the Company Nominee to be nominated and re-elected
at such Annual General Meeting to serve as a member of the Parent Board, unless
he shall decline or be unable to serve, until his resignation or removal or the
election or appointment of his successor in the manner provided by Parent's
charter documents and applicable law.
1.7 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that the Merger shall constitute a
non-taxable reorganization within the meaning of Section 368(a)(1)(A) of the
Code.
(b) Neither Parent nor Merger Sub nor the Surviving Corporation will report
the Merger or take any other action for tax purposes inconsistent with treatment
of the Merger as a reorganization within the meaning of Section 368 of the Code,
to the full extent permitted by the Code.
(c) It is intended by the parties hereto that the Merger be treated as a
pooling of interests for accounting purposes. Upon the written request of
Parent, Merger Sub and Company shall enter into an amendment to this Agreement
providing that in lieu of the Merger of Merger Sub with and into Company as
contemplated by this Article I, the structure of the transactions contemplated
by this Agreement would be modified so that Parent may effect an acquisition of
all of the outstanding Company Common Stock directly, or by an affiliate of
Parent or a trust established by Parent or an affiliate thereof, or may effect a
merger of Company with or into any other subsidiary or affiliate of Parent, in
each case on the terms specified in such written request of Parent; provided
that (a) the holders of Company Common Stock and holders of Company Options are
not and will not be adversely affected in any way thereby; (b) the transaction
provided for in such amendment qualifies as a tax free reorganization pursuant
to Internal Revenue Code Section 368(a) and that Company's stockholders shall
not incur any tax liability as a result thereof or with respect thereto; (c) the
transaction provided for in such amendment may be accounted for as a pooling of
interests under GAAP; (d) the transaction does not impose any additional
requirements or obligations upon Company (other than obligations arising after
the Effective Time) or adversely affect the ability of any of Company, Parent or
Merger Sub to satisfy the conditions to Closing by the scheduled Closing Date
set forth in Article VI hereof; and (e) the transaction shall not have any other
adverse affect on Company, its employees or operations prior to the Effective
Time or on Company's stockholders. In any proceeding in which there shall be any
dispute between Parent and Company as to whether any transaction meets the
criteria set forth in clauses (a) through (e) of the preceding sentence, Parent
shall have the burden of proof.
1.8 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors
7
of Parent, Company and Merger Sub will take all such lawful and necessary or
desirable action. Parent shall cause Merger Sub to perform all of its
obligations relating to this Agreement and the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date of this Agreement and as of the Closing Date, Company
represents and warrants to Parent and Merger Sub, subject to the exceptions
specifically disclosed in writing (and referencing the specific representation
qualified thereby or to which exceptions specific references are made herein) in
the disclosure letter delivered by Company to Parent dated as of the date hereof
and certified by a duly authorized officer of Company (the "Company Disclosure
Letter"), as follows:
2.1 Organization and Good Standing. Company and each of its subsidiaries
(a) is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized; (b) has the corporate or
other power and authority to own, lease and operate its assets and property and
to carry on its business as now being conducted; and (c) except as would not be
material to Company, is duly qualified or licensed to do business in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary.
2.2 Subsidiaries and Other Interests. Other than the entities identified in
Part 2.2 of the Company Disclosure Letter, neither Company nor any of the other
entities identified in Part 2.2 of the Company Disclosure Letter owns any
capital stock of, or any equity interest of any nature in, any corporation,
partnership, joint venture arrangement or other business entity. Neither Company
nor any of its subsidiaries has agreed or is obligated to make, or is bound by
any written, oral or other agreement, contract, subcontract, lease, binding
understanding, instrument, note, option, warranty, purchase order, license,
sublicense, insurance policy, benefit plan or legally binding commitment or
undertaking of any nature, as in effect as of the date hereof under which it may
become obligated to make any future investment in or capital contribution to any
other entity. Neither Company, nor any of its subsidiaries, has, at any time,
been a general partner of any general partnership, limited partnership or other
entity. Part 2.2 of the Company Disclosure Letter indicates the jurisdiction of
organization of each entity listed therein and Company's direct or indirect
equity interest therein.
2.3 Certificate of Incorporation and Bylaws. Company has delivered to
Parent a true and correct copy of: (a) the Certificate of Incorporation and
Bylaws of Company, as amended to date and as in full force in effect; and (b)
Company's minute book containing all records of all proceedings, consents,
actions and meetings during the past three (3) years of Company's stockholders,
Board of Directors and any committees of the Board of Directors (other than
minutes of the November 8, 1999 and November 20, 1999 meetings of the Board of
Directors of Company). Neither Company nor any of its subsidiaries is in
violation of any of the provisions of its Certificate of Incorporation or Bylaws
or equivalent governing instruments.
8
2.4 Authority.
(a) Company has all requisite corporate power and authority to enter into
this Agreement and the Company Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject to approval by the
stockholders of Company. The execution and delivery of this Agreement and the
Company Option Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Company, subject, in the case of consummation of the Merger, only
to the approval and adoption of this Agreement and the approval of the Merger by
Company's stockholders. A vote of the holders of outstanding shares of the
Company Common Stock representing a majority of all votes entitled to be cast on
the matter is sufficient for Company's stockholders to approve and adopt this
Agreement and approve the Merger. This Agreement and the Company Option
Agreement have each been duly executed and delivered by Company and, assuming
the due authorization, execution and delivery by Parent and Merger Sub, each
constitutes the valid and binding obligation of Company, enforceable against
Company in accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws affecting the rights of creditors generally
and general principles of equity. The execution and delivery of this Agreement
and the Company Option Agreement by Company does not, and the performance of
this Agreement and the Company Option Agreement by Company will not, (i)
conflict with or violate the Certificate of Incorporation or Bylaws of Company
or the equivalent organizational documents of any of its subsidiaries, (ii)
subject to obtaining the approval and adoption of this Agreement and the
approval of the Merger by Company's stockholders as contemplated in Section 5.2
and compliance with the requirements set forth in Section 2.4(b) below, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Company or any of its subsidiaries or by which Company or any of its
subsidiaries or any of their respective properties is bound or affected, or
(iii) result in any material breach of or constitute a material default (or an
event that with notice or lapse of time or both would become a material default)
under, or impair Company's rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a material lien or
Encumbrance on any of the material properties or assets of Company or any of its
subsidiaries pursuant to, any Company Contract (as defined in Section 2.16) or
any other material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, concession, or other instrument or obligation to
which Company or any of its subsidiaries is a party or by which Company or any
of its subsidiaries or its or any of their respective assets are bound or
affected. Part 2.4 of the Company Disclosure Letter lists all consents, waivers
and approvals under any Company Contract or any other of Company's or any of its
subsidiaries' agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby,
which, if individually or in the aggregate not obtained, could reasonably be
expected to result in a material loss of benefits to Company, Parent or the
Surviving Corporation as a result of the Merger.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required to be obtained or
made by Company in connection with the execution and delivery of this Agreement
or the consummation of the Merger, except (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which Company is
qualified to do business, (ii) the filing of the Proxy Statement/Prospectus (as
defined
9
in Section 2.22) with the SEC in accordance with the Exchange Act, (iii) as may
be required under applicable federal, foreign and state securities (or related)
laws and under the HSR Act, and the corresponding laws of any foreign country,
and (iv) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not be material to Company or
Parent or have a material adverse effect on the ability of the parties hereto to
consummate the Merger.
2.5 Company Capital Structure.
(a) Stock. The authorized capital stock of Company consists of (i)
90,000,000 shares of Company Common Stock, par value $0.01 per share, of which
there were 38,266,719 shares issued and outstanding as of November 19, 1999,
including shares held in treasury, and (ii) 5,000,000 shares of Preferred Stock,
par value $0.01 per share, of which no shares are issued or outstanding. All
outstanding shares of Company Common Stock are duly authorized, validly issued,
fully paid and nonassessable and are not subject to preemptive rights created by
statute, the Certificate of Incorporation or Bylaws of Company or any agreement
or document to which Company is a party or by which it is bound. As of November
19, 1999, there are 1,647,000 shares of Company Common Stock held in treasury by
Company.
(b) Options and Warrants. As of November 19, 1999, Company had reserved an
aggregate of 8,590,492 shares of Company Common Stock for issuance pursuant to
the Company Stock Option Plans (including shares subject to outstanding options
or other outstanding rights). Stock options and unvested performance shares
granted under the Company Stock Option Plans are respectively referred to in
this Agreement as "Company Options" and "Performance Shares." As of November 19,
1999, there were outstanding Company Options to purchase an aggregate of
3,392,492 shares of Company Common Stock and rights to acquire 561,000 shares of
Company Common Stock upon the vesting of Performance Shares pursuant to the
Company Stock Option Plans. As of November 19, 1999, there were no warrants
outstanding to purchase any shares of Company Common Stock. As of November 19,
1999, there were available an aggregate of 543,562 shares of Company Common
Stock for issuance pursuant to Company's ESPP. All shares of Company Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Part 2.5
of the Company Disclosure Letter lists for each holder of Company Options or
Performance Shares as of November 19, 1999: (i) the name of such holder; (ii)
the exercise price of the Company Options; (iii) the vesting schedule for the
Company Options and the Performance Shares; and (iv) whether the exercisability
of the Company Options or the vesting of the Performance Shares will be
accelerated in any way by the transactions contemplated by this Agreement and
the extent of acceleration, if any.
(c) Compliance with Legal Requirements. All outstanding shares of Company
Common Stock, all outstanding Company Options, all Performance Shares and all
outstanding shares of capital stock of each subsidiary of Company have been
issued and granted in compliance with (i) all applicable securities laws and, to
the knowledge of Company, all other applicable Legal Requirements and (ii) all
material requirements set forth in applicable agreements or instruments.
10
(d) Vesting Acceleration. There are no commitments or agreements of any
character to whichCompany is bound obligating Company to accelerate the vesting
of any Company Options or Performance Shares as a result of the Merger.
(e) Option Records. Company has made available to Parent accurate, current
and complete copies of the Company Stock Option Plans and any other stock option
plans pursuant to which Company has granted stock options or other rights that
are currently outstanding and the form of all stock option agreements or other
agreements evidencing such options or rights.
(f) Ownership of Subsidiaries. All of the outstanding capital stock of, or
other ownership interests in, each subsidiary of Company is owned by Company,
directly or indirectly, free and clear of any Encumbrance and free of any other
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other ownership interests). There
are no issued or outstanding securities exchangeable or convertible into or
exercisable for equity securities or other ownership interests of any of the
Company's subsidiaries.
2.6 Obligations With Respect to Capital Stock.
(a) Except as set forth in Sections 2.5(a) and 2.5(b), there are no equity
securities of, or partnership interests or similar ownership interests in,
Company, or any securities exchangeable or convertible into or exercisable for
such equity securities, partnership interests or similar ownership interests,
issued, reserved for issuance or outstanding.
(b) Except as set forth in Sections 2.5(b), there are no subscriptions,
options, warrants, calls, rights (including preemptive rights), commitments or
agreements of any character to which Company or any of its subsidiaries is a
party or by which it is bound obligating Company or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase,
redeem or otherwise acquire, or cause the repurchase, redemption or acquisition
of, any shares of capital stock, partnership interests or similar ownership
interests of Company or any of its subsidiaries or obligating Company or any of
its subsidiaries to grant, extend, accelerate the vesting of or enter into any
such subscription, option, warrant, equity security, call, right, commitment or
agreement.
(c) Except as contemplated by or disclosed elsewhere in this Agreement,
there are no registration rights and there is no voting trust, proxy, rights
plan, antitakeover plan or other agreement or understanding to which Company is
a party or by which it is bound with respect to any equity security of any class
of Company or with respect to any equity security, partnership interest or
similar ownership interest of any class of any of its subsidiaries. Stockholders
of Company will not be entitled to dissenters' or appraisal rights under
applicable state law in connection with the Merger.
2.7 SEC Filings; Company Financial Statements.
(a) SEC Filings Generally. Company has filed all forms, reports and
documents required to be filed by Company with the SEC since January 1, 1997 and
has made available to Parent such forms, reports and documents in the form filed
with the SEC. All such
11
required forms, reports and documents (including those that Company may file
subsequent to the date hereof) are referred to herein as the "Company SEC
Reports." As of their respective dates, the Company SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Reports and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading except to
the extent corrected by a subsequently filed Company SEC Report (except that
inaccuracies or omissions in Company SEC Reports filed prior to the date of this
Agreement may be corrected only by other Company SEC Reports filed prior to the
date of this Agreement). Taken as a whole, the Company SEC Reports do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except to the extent corrected prior to the date of this Agreement
by a subsequently filed Company SEC Report (except inaccuracies or omissions in
Company SEC Reports filed prior to the date of this Agreement may be corrected
only by other Company SEC Reports filed prior to the date of this Agreement).
None of Company's subsidiaries is required to file any forms, reports or other
documents with the SEC. Each of the Company SEC Reports included, as exhibits
thereto, all documents required to be filed as exhibits to such Company SEC
Report under the rules and regulations of the SEC, except to the extent filed
prior to the date of this Agreement in a subsequently filed Company SEC Report.
All agreements filed by Company as exhibits to Company SEC Reports, as displayed
on the World Wide Web via the XXXXX Service, conform to the agreements as
executed by all parties thereto and are in full force and effect as so filed,
except those which have expired in accordance with their terms or have been
revised as disclosed in the Company SEC Reports.
(b) Publicly Reported Financial Statements. Each of the consolidated
financial statements (including, in each case, any related notes thereto)
contained in the Company SEC Reports (the "Company Financials"), including each
Company SEC Report filed after the date hereof until the Closing, (i) complied
as to form in all material respects with the published rules and regulations of
the SEC with respect thereto, (ii) was prepared in accordance with GAAP applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and (iii) fairly presented in all material
respects the consolidated financial position of Company and its subsidiaries as
at the respective dates thereof and the consolidated results of Company's
operations and cash flows for the periods indicated, except to the extent
corrected by a subsequently filed Company SEC Report (except that inaccuracies
or omissions in Company SEC Reports filed prior to the date of this Agreement
may be corrected only by other Company SEC Reports filed prior to the date of
this Agreement), and except that the unaudited interim financial statements may
not contain footnotes and were or are subject to normal and recurring year-end
adjustments. The balance sheet of Company contained in Company SEC Reports as of
January 3, 1999 is hereinafter referred to as the "Company Balance Sheet." Since
January 1, 1997, there has been no change in Company's accounting policies
except as described in the notes to the Company Financials. Since the date of
the Company Balance Sheet, neither Company nor any of its subsidiaries has
incurred any liabilities (absolute, accrued, contingent or otherwise) which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Company and its subsidiaries taken as a
whole, except for
12
(i) liabilities incurred since the date of the Company Balance Sheet in the
ordinary course of business consistent with past practices, (ii) liabilities
incurred in connection with this Agreement, and (iii) liabilities specifically
disclosed in Company SEC Reports filed with the SEC prior to the date of this
Agreement.
(c) Interim Financial Statements. Company has delivered to Parent copies of
Company's unaudited consolidated balance sheet as of October 3, 1999 and income
statement and statement of cash flows for the nine months ended October 3, 1999
(the "Company Interim Financial Statements"). The Company Interim Financial
Statements: (i) are in accordance with the books and records of Company; (ii)
fairly present in all material respects Company's consolidated financial
condition at the date therein indicated and the consolidated results of
operations for the period therein specified; and (iii) have been prepared in
accordance with GAAP applied on a consistent basis (except that the Company
Interim Financial Statements may not contain footnotes required by GAAP and may
be subject to normal and recurring year-end adjustments).
(d) Amendments. Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.8 Absence of Certain Changes or Events. Since the date of the Company
Balance Sheet, Company and each of its subsidiaries has carried on its business
in the ordinary course consistent with past practices, and except as
specifically and expressly disclosed in the Company SEC Reports filed with the
SEC prior to the date of this Agreement, since the date of the Company Balance
Sheet there has not been:
(a) any change in the financial condition, properties, assets, liabilities,
business, results of operations or prospects of Company, which change by itself
or in conjunction with all other such changes, whether or not arising in the
ordinary course of business, has had or can reasonably be expected to have a
Company Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of
Company's or any of its subsidiaries' capital stock, or any purchase, redemption
or other acquisition by Company of any of Company's capital stock or any other
securities of Company or its subsidiaries, or any options, warrants, calls or
rights to acquire any such shares or other securities except for repurchases
from employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, other than transactions among
Company and its subsidiaries;
(c) any split, combination or reclassification of any of Company's or any
of its subsidiaries' capital stock;
(d) any granting by Company or any of its subsidiaries of any increase in
compensation or fringe benefits to any of their officers or employees (except
for increases in compensation to employees that are not officers or directors of
Company, in the ordinary course
13
of business consistent with prior practice), or any payment by Company or any of
its subsidiaries of any bonus to any of their officers or employees (except for
payments made to employees that are not listed on Part 2.8(d) of the Company
Disclosure Letter in the ordinary course of business consistent with prior
practice, and payments of bonuses to the employees listed on Part 2.8(d) of the
Company Disclosure Letter in the amounts specified thereon, or any granting by
Company or any of its subsidiaries of any increase in severance or termination
pay (except for grants made to employees that are not listed on Part 2.8(d) of
the Company Disclosure Letter in the ordinary course of business consistent with
prior practice) or any entry by Company or any of its subsidiaries into, or
material modification or amendment of, any currently effective employment,
severance, termination, change-of-control or indemnification agreement or any
agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving Company of the
nature contemplated hereby;
(e) any material change or alteration in the policy of Company relating to
the granting of stock options to its employees, directors and consultants;
(f) any purchase or sale or other disposition, or any agreement or other
legally binding arrangement for the purchase, sale or other disposition, of any
of the properties or assets of Company or any of its subsidiaries, other than
purchases and sales of inventory and equipment in the ordinary course of
business consistent with past practice;
(g) any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the properties, assets or business of Company
or any subsidiary;
(h) any material change by Company in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP (or the
applicability thereof);
(i) any material contingent liability incurred by Company or any of its
subsidiaries as guarantor or otherwise with respect to the obligations of others
or any cancellation of any material debt or claim owing to, or waiver of any
material right of, Company or any of its subsidiaries;
(j) any material obligation or liability of any nature, whether accrued,
absolute or contingent, incurred by Company other than obligations and
liabilities incurred in the ordinary course of business consistent with past
practice;
(k) any payment or discharge of a material Encumbrance or liability of
Company which was not shown in the Company Interim Financial Statements or which
was not incurred in the ordinary course of business thereafter;
(l) any revaluation by Company of any of its assets, including, without
limitation, writing off notes or accounts receivable other than in the ordinary
course of business;
(m) any material contract entered into by Company or any of its
subsidiaries, other than in the ordinary course of business and as provided to
Parent, or any material amendment or termination of, or default under, any
material contract to which Company or any of its subsidiaries is a party or by
which it or any of them is bound;
14
(n) any obligation or liability incurred by Company to any of its officers,
directors or stockholders, or any loans or advances made to any of its officers,
directors, stockholders or affiliates, except normal compensation and expense
allowances payable to officers;
(o) any other material transaction entered into by Company or any of its
subsidiaries other than transactions in the ordinary course of business; or
(p) any agreement or understanding whether in writing or otherwise, for
Company or any of its subsidiaries to take any of the actions specified in
paragraphs (a) through (o) above.
2.9 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax" or
"Taxes" refers to (i) any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and (ii) any liability for payment of any amounts of the
type described in clause (i) as a result of being a member of an affiliated
consolidated, combined or unitary group.
(b) Tax Returns and Audits.
(i) Company and each of its subsidiaries have timely filed all
federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") relating to Taxes required to be filed
by or on behalf of Company and each of its subsidiaries with any Tax
authority, such Returns are true, correct and complete in all material
respects, and Company and each of its subsidiaries have paid all Taxes
shown to be due on such Returns;
(ii) Company and each of its subsidiaries have withheld with respect
to its employees all material (A) federal and state income taxes, (B) Taxes
pursuant to the Federal Insurance Contribution Act ("FICA"), (C) Taxes
pursuant to the Federal Unemployment Tax Act ("FUTA") and other material
Taxes required to be withheld;
(iii) Neither Company nor any of its subsidiaries has been delinquent
in the payment of any material Tax nor is there any material Tax deficiency
outstanding, proposed or assessed against Company or any of its
subsidiaries, nor has Company or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extending the period
for the assessment or collection of any material Tax;
(iv) No audit or other examination of any Return of Company or any of
its subsidiaries by any Tax authority is presently in progress, nor has
Company or any of its subsidiaries been notified of any request for such an
audit or other examination;
15
(v) No material adjustment relating to any Returns filed by Company or
any of its subsidiaries has been proposed in writing formally or informally
by any Tax authority to Company or any of its subsidiaries or any
representative thereof;
(vi) Neither Company nor any of its subsidiaries has any liability for
unpaid Taxes which has not been accrued for or reserved on the Company
Balance Sheet, whether asserted or unasserted, contingent or otherwise,
which is material to Company, other than any liability for unpaid Taxes
that may have accrued since the date of the Company Balance Sheet in
connection with the operation of the business of Company and its
subsidiaries in the ordinary course, including, without limitation, as a
result of acquisitions;
(vii) There is no contract, agreement, plan or arrangement to which
Company is a party, including but not limited to the provisions of this
Agreement and the agreements entered into in connection with this
Agreement, covering any employee or former employee of Company or any of
its subsidiaries that, individually or collectively, would be reasonably
likely to give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code; there is
no contract, agreement, plan or arrangement to which Company is a party or
by which it is bound to compensate any individual for excise taxes paid
pursuant to Section 4999 of the Code;
(viii) Neither Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by Company;
(ix) Neither Company nor any of its subsidiaries is party to or has
any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement;
(x) Except as may be required as a result of the Merger, Company and
its subsidiaries have not been and will not be required to include any
adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or Section 263A of the Code or any comparable
provision under state or foreign Tax laws as a result of transactions,
events or accounting methods employed prior to the Closing;
(xi) None of Company's or its subsidiaries' assets are tax exempt use
property within the meaning of Section 168(h) of the Code.
(xii) Company has provided to Parent or its legal or accounting
representatives copies of all material foreign, federal and state income
tax and all state sales and use tax Returns for Company and each of its
subsidiaries filed for all periods which have been requested by Parent or
its representatives;
(xiii) There are no material Encumbrances on the assets of Company or
any subsidiary relating to or attributable to Taxes, other than
Encumbrances for Taxes not yet due and payable;
(xiv) None of Company or any of its subsidiaries (A) has been a member
of an affiliated group filing a consolidated federal income Return (other
than a group the
16
common parent of which was Company), or (B) has any liability or obligation
for the Taxes of any Person (other than any of Company and its
subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise; and
(xv) Neither Company nor any of its subsidiaries is subject to any
joint venture, partnership or other arrangement or contract that is treated
as a partnership for U.S. federal income tax purposes.
2.10 Title to Properties; Absence of Encumbrances.
(a) Part 2.10 of the Company Disclosure Letter lists each parcel of real
property owned by Company or any subsidiary and all real property leases to
which Company or any subsidiary is a party and each amendment thereto that is in
effect as of the date of this Agreement. All such current leases, and all
material leases of personal property, are in full force and effect, are valid
and effective in accordance with their respective terms, and afford Company and
each of its subsidiaries, in all material respects, peaceful and undisturbed
possession of the subject matter of the lease and there is not, under any of
such leases, any existing default or event of default (or event which with
notice or lapse of time, or both, would constitute a default) by Company or any
of its subsidiaries that would give rise to a claim against Company or any
subsidiary in an amount greater than $100,000.
(b) Company has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Encumbrances, except as reflected in the Company
Financials and except for liens for taxes not yet due and payable and such
Encumbrances or other imperfections of title, which are not material in
character, amount or extent, and which do not materially detract from the value,
or materially interfere with the present use, of the property subject thereto or
affected thereby.
(c) The plants, property and equipment of Company and its subsidiaries that
are used in the operations of their business are generally in good operating
condition and repair. All properties used in the operations of Company and its
subsidiaries are reflected in the Company Balance Sheet to the extent required
to be reflected under GAAP.
2.11 Intellectual Property.
(a) Title; Non-infringement. Company and each of its subsidiaries owns all
right, title and interest in, or has the right to use, sell or license all
patent applications, patents, trademark applications, trademarks, service marks,
trade names, copyright applications, copyrights, trade secrets, know-how,
technology, customer lists, proprietary processes and formulae, all source and
object code, algorithms, inventions, development tools and all documentation and
media constituting, describing or relating to the above, including, without
limitation, manuals, memoranda and records and other intellectual property and
proprietary rights used in or reasonably necessary or required for the conduct
of its respective business as presently conducted ("Company Intellectual
Property"). Set forth in Part 2.11 of the Company Disclosure Letter is a true
and complete list of all copyright and trademark registrations and applications
and
17
all patents and patent applications for Company Intellectual Property owned by
Company and each of its subsidiaries. To the knowledge of Company, each such
registration and patent is valid and subsisting. Company is not aware of any
material loss, cancellation, termination or expiration of any such copyrights,
trademarks, patents, registrations or applications. To the knowledge of Company,
the business of Company and its subsidiaries does not cause Company or any of
its subsidiaries to infringe or violate any of the patents, trademarks, service
marks, trade names, mask works, copyrights, trade secrets, proprietary rights or
other intellectual property of any other person, and neither Company nor any of
its subsidiaries has received any written claim or notice of infringement or
potential infringement of the intellectual property of any other person. Neither
the manufacture, marketing, sale or intended use of any product currently
licensed or sold by Company or currently under development by Company violates
any license or agreement between Company and any third party. Company and each
of its subsidiaries has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all material Company Intellectual Property. Company is not aware of
any infringement of any Company Intellectual Property by any third party. There
are no royalties, fees or other payments payable by Company or any of its
subsidiaries to any person by reason of the ownership, use, license, sale or
disposition of the Company Intellectual Property.
(b) Year 2000. Company has taken reasonable steps to ensure that its
material systems and technology will record, store, process, calculate and
present calendar dates falling before, on and after (and if applicable, spans of
time including) January 1, 2000 and February 29, 2000 and will calculate any
information dependent on or relating to such dates in the same manner, and with
the same functionality, data integrity and performance, as the systems and
technology record, store, process, calculate and present calendar dates on or
before December 31, 1999, or calculate any information dependent on or relating
to such dates (collectively, "Year 2000 Compliant"). Company has taken
reasonable steps to ensure that its systems, services and technology will lose
no functionality with respect to the introduction of records containing dates
falling on or after January 1, 2000 and February 29, 2000. All of Company's and
its subsidiaries' internal computer and technology systems and services which
are critical or material to the operation of its business are Year 2000
Compliant. The Company Intellectual Property owned by the Company or any
subsidiary is Year 2000 Compliant. Neither the Company Intellectual Property
owned by the Company or any subsidiary nor any of the Company's material systems
and technology used in the provision of its services or used in the operation or
management of its business contains any significant defect in connection with
processing data containing dates in leap years or in the year 2000 or any
preceding or following years.
2.12 Compliance with Law; Permits; Restrictions.
(a) Neither Company nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or in violation of any law, rule,
regulation, order, judgment or decree applicable to Company or any of its
subsidiaries or by which Company or any of its subsidiaries or any of their
respective properties is bound or affected. No investigation or review by any
Governmental Entity is pending or, to Company's knowledge, has been threatened
in a writing delivered to Company against Company or any of its subsidiaries,
nor, to Company's knowledge, has any Governmental Entity indicated an intention
to conduct an investigation of Company or
18
any of its subsidiaries with respect to any alleged violation in any material
respect of any law, rule, regulation, order, judgment or decree applicable to
Company or any of its subsidiaries.
(b) Company and its subsidiaries hold, to the extent legally required, all
permits, licenses, variances, exemptions, orders and approvals from governmental
authorities that are material to and required for the operation of the business
of Company as currently conducted (collectively, the "Company Permits"). Company
and its subsidiaries are in compliance in all material respects with the terms
of the Company Permits.
2.13 Litigation. There are no claims, suits, actions or proceedings pending
or, to the knowledge of Company, threatened against, relating to or affecting
Company or any of its subsidiaries, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that seeks
to restrain or enjoin the consummation of the transactions contemplated by this
Agreement or which could reasonably be expected, either singularly or in the
aggregate with all such claims, actions or proceedings, to have a Company
Material Adverse Effect or which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the Merger or any of the other transactions
contemplated hereby. No Governmental Entity has at any time challenged or
questioned in a writing delivered to Company the legal right of Company to
design, offer or sell any of its products or services in the present manner or
style thereof. As of the date hereof, to the knowledge of Company, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
will, or that would reasonably be expected to, cause or provide a bona fide
basis for a director or executive officer of Company to seek indemnification
from Company.
2.14 Employee Benefit Plans.
(a) Definitions. With the exception of the definitions of "Affiliate,"
"Employee" and "Employee Agreement" set forth in Section 2.14(a)(i), (v) and
(vi) below (which definitions shall apply only to this Section 2.14), for
purposes of this Agreement, the following terms shall have the meanings set
forth below:
(i) "Affiliate" shall mean any other person or entity under common
control with Company within the meaning of Section 414(b), (c), (m) or (o)
of the Code and the regulations issued thereunder;
(ii) "Company Employee Plan" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether written or unwritten, funded or unfunded,
including without limitation, each "employee benefit plan," within the
meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by Company or any
Affiliate for the benefit of any Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
19
(v) "Employee" shall mean any current, former, or retired employee,
officer, or director of Company or any Affiliate;
(vi) "Employee Agreement" shall mean each management, employment,
severance, consulting, relocation or similar agreement or contract between
Company or any Affiliate and any Employee or consultant that provides for
annual compensation to such Employee or consultant in excess of $150,000;
(vii) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended;
(ix) "IRS" shall mean the Internal Revenue Service;
(x) "Multiemployer Plan" shall mean any "Pension Plan" (as defined
below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(xi) "PBGC" shall mean the Pension Benefit Guaranty Corporation; and
(xii) "Pension Plan" shall mean each Company Employee Plan which is an
"employee pension benefit plan," within the meaning of Section 3(2) of
ERISA.
(b) List of Plans and Agreements. Part 2.14 of the Company Disclosure
Letter contains an accurate and complete list of each Company Employee Plan.
Company does not have any plan or commitment to establish any new Company
Employee Plan, to modify any Company Employee Plan (except to the extent
required by law or to conform any such Company Employee Plan to the requirements
of any applicable law, in each case as previously disclosed to Parent in
writing, or as required by this Agreement), or to enter into any Company
Employee Plan, nor does it have any intention or commitment to do any of the
foregoing.
(c) Documents. Company has provided to Parent: (i) correct and complete
copies of each Company Employee Plan including all amendments thereto and
written interpretations thereof; (ii) the most recent annual actuarial
valuations, if any, prepared for each Company Employee Plan; (iii) the three (3)
most recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Company Employee Plan or related trust (other than with
respect to employee welfare plans (as defined in Sections 3(1) of ERISA) for
which Company provided to Parent the two (2) most recent such annual reports);
(iv) if the Company Employee Plan is funded, the most recent annual and periodic
accounting of Company Employee Plan assets; (v) the most recent summary plan
description together with the summary of material modifications thereto, if any,
required under ERISA with respect to each Company Employee Plan; (vi) all IRS
determination, opinion, notification and advisory letters, and rulings relating
to Company Employee Plans; (vii) all material written agreements and contracts
relating to each Company Employee Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group insurance
contracts; and (viii) all written communications distributed to any
20
Employee or Employees relating to any Company Employee Plan and any proposed
Company Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material liability
to Company.
(d) Employee Plan Compliance. (i) Company and its subsidiaries have
performed in all material respects all obligations required to be performed by
them under, are not in default or violation of, and have no knowledge of any
default or violation by any other party to any Company Employee Plan, and each
Company Employee Plan has been established and maintained in all material
respects in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including but not limited to
ERISA or the Code; (ii) each Company Employee Plan intended to qualify under
Section 401(a) of the Code and each trust intended to qualify under Section
501(a) of the Code has either received a favorable determination letter from the
IRS with respect to each such Plan as to its qualified status under the Code or
has remaining a period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a determination letter and make any
amendments necessary to obtain a favorable determination and no event has
occurred which would adversely affect the status of such determination letter or
the qualified status of such Plan; (iii) no "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, which is
not otherwise exempt under Section 408 of ERISA, has occurred with respect to
any Company Employee Plan; (iv) there are no actions, suits or claims pending,
or, to the knowledge of Company, threatened or reasonably anticipated (other
than routine claims for benefits) against any Company Employee Plan or against
the assets of any Company Employee Plan; (v) subject to applicable law, each
Company Employee Plan can be amended, terminated or otherwise discontinued after
the Effective Time in accordance with its terms, without liability to Parent,
Company or any of its Affiliates (other than ordinary administration expenses
typically incurred in a termination event); (vi) there are no audits, inquiries
or proceedings pending or, to the knowledge of Company, threatened by the IRS or
DOL with respect to any Company Employee Plan; and (vii) neither Company nor any
Affiliate is subject to any penalty or tax with respect to any Company Employee
Plan under Section 402(i) of ERISA or Sections 4975 through 4980 of the Code.
(e) Pension Plans. Company does not now, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any Pension Plan
which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Company or any subsidiary
contributed to or been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Company Employee Plan provides, or
has any obligation to provide, retiree life insurance, retiree health or other
retiree employee welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable law, and Company has never represented,
promised or contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) or any other person that such
Employee(s) or other person would be provided with retiree life insurance,
retiree health or other retiree employee welfare benefit, except to the extent
required by law.
21
(h) COBRA; FMLA. Neither Company nor any subsidiary nor, to Company's
knowledge, any other Affiliate has, prior to the Effective Time, and in any
material respect, violated any of the health care continuation requirements of
COBRA, any material requirements of FMLA or any material provisions of any
similar provisions of state law applicable to its Employees, except where the
same would not have a Company Material Adverse Effect.
(i) Contributions. All contributions due from the Company and any Affiliate
with respect to any of the Company Employee Plans have been made or accrued on
the Company Balance Sheet or arose after the date of the Company Balance Sheet
in the ordinary course of business consistent with past practices including as a
result of acquisitions.
(j) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, or a related trust or loan, that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee, other than any such
effects or any restrictions resulting under applicable laws of Singapore from or
in connection with Parent's assumption of its obligations hereunder.
(k) Employment Matters. Company and each of its subsidiaries: (i) is in
compliance in all material respects with all applicable foreign, federal, state
and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to Employees; (ii) has withheld all amounts required by law or by
agreement to be withheld from the wages, salaries and other payments to
Employees; (iii) has properly classified independent contractors for purposes of
federal and applicable state tax laws, laws applicable to employee benefits and
other applicable laws; (iv) is not liable for any arrears of wages or any taxes
or any penalty for failure to comply with any of the foregoing; and (v) is not
liable for any material payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice), in each case, except where failure
to be in compliance, to withhold or to properly classify such withholding could
not reasonably be expected to result in a material liability to Company. Company
and its subsidiaries have good labor relations, and Company has no knowledge of
any facts indicating that the consummation of the transactions provided for
herein will have a material adverse effect on its labor relations, and has no
knowledge that any of its officers or management employees, or any significant
number or other employees, intends to leave its employ. There are no pending,
or, to Company's knowledge, threatened or reasonably anticipated material claims
or actions against Company under any worker's compensation policy or long-term
disability policy. To Company's knowledge, no Employee of Company has materially
violated any employment contract, nondisclosure agreement or noncompetition
agreement by which such Employee is bound due to such Employee being employed by
Company or disclosing to Company or using trade secrets or proprietary
information of any other person or entity.
22
(l) Labor. No work stoppage, labor strike or other material labor dispute
against Company is pending, threatened or reasonably anticipated. Company does
not know of any activities or proceedings of any labor union to organize any
Employees. There are no actions, suits, claims, labor disputes or grievances
pending, or, to the knowledge of Company, threatened or reasonably anticipated
relating to any labor, safety or discrimination matters involving any Employee,
including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, result in any material liability to Company. Neither
Company nor any of its subsidiaries has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act. Company is not
presently, nor has it been in the past, a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by Company. All employees of
the Company, and its United States Subsidiaries are legally permitted to be
employed by Company or such subsidiary in the United States of America.
2.15 Environmental Matters. To Company's knowledge:
(a) Compliance with Law. Each of Company, its subsidiaries and its
predecessors has complied and is in compliance in all material respects with all
Environmental, Health, and Safety Requirements. For purposes of this Agreement,
"Environmental, Health, and Safety Requirements" shall mean all statutes,
regulations, ordinances and other provisions having the force or effect of law,
all judicial and administrative orders and determinations, all contractual
obligations and all laws concerning public health and safety, worker health and
safety, and pollution or protection of the environment, including without
limitation all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or cleanup
of any Hazardous Materials, each as amended and as now or hereafter in effect.
"Hazardous Materials" means any toxic or hazardous substances, materials,
chemicals or wastes, pollutants, contaminants, toxic chemicals, petroleum
fractions, distillates, products or byproducts, asbestos, radioactive substances
and polychlorinated biphenyls, as those terms are defined in the following
statutes: the Comprehensive Environmental Response Compensation and Liability
Act ("CERCLA"), 42 U.S.C.ss.9601, et seq.; the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C.ss.6901, et seq.; the Toxic Substances Control
Act, 15 U.S.C.ss.2601, et seq.; the Clean Air Act, 42 U.S.C. ss.7401, et seq.;
the Clean Water Act, 33 U.S.C.ss.1251, et seq.; the Hazardous Materials
Transportation Authorization Act, 49 U.S.C.ss.5101, et seq.; and the
Occupational Safety and Health Act, 29 U.S.C.ss.651, et seq., or any related,
comparable or analogous law of the particular state, province or country in
which a particular Company facility is located.
(b) Neither Company, its subsidiaries nor their respective predecessors has
received any written or oral notice, report, demand, citation, request for
information, complaint or other information regarding any actual or alleged
violation of Environmental, Health, and Safety Requirements, or any liabilities
or potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), arising under Environmental, Health, and Safety Requirements.
Neither Company nor any of its subsidiaries is a potentially responsible party
under CERCLA, RCRA, or any similar law of the state, province or country in
which a Company facility is located. There have not been in the past, and are
not now, any Hazardous Materials on, under or migrating to or from any real
property owned or leased by it or any of its subsidiaries which could reasonably
be
23
expected to result in a material liability to Company. There have not been in
the past, and are not now, any aboveground tanks, underground tanks or
underground pipes, lines, connections or other improvements at, on or under any
real property owned or leased by it or any of its subsidiaries, including,
without limitation, treatment or storage tanks, sumps, or water, gas or oil
xxxxx, except in accordance with applicable Environmental, Health and Safety
Requirements. Company has not deposited, released, spilled, discharged or
disposed of Hazardous Materials on any real property owned or leased by it or
any of its subsidiaries, except in accordance with applicable Environmental
Health and Safety Requirements, which could reasonably be expected to result in
a material liability to Company.
(c) None of Company, its subsidiaries, or their respective predecessors has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including without limitation
any Hazardous Material, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance) in a manner
that violates any Environmental, Health and Safety Requirements or would give
rise to material liabilities, including any liability for response costs,
corrective action costs, personal injury, property damage, natural resources
damages, administrative or civil penalties or criminal fines or penalties, or
attorney fees, pursuant to any Environmental, Health, and Safety Requirements
which, in any case, could reasonably be expected to result in a material
liability to Company.
(d) Liability for Others. Neither Company, its subsidiaries nor its
predecessors has, either expressly or by operation of law, assumed, retained or
undertaken any liability, including without limitation any obligation for
corrective or remedial action, of any other person or entity relating to
Environmental, Health, and Safety Requirements other than in connection with any
acquisitions of the assets, businesses or operations of another person or
entity, or which could reasonably be expected to result in a material liability
to Company.
(e) Ongoing Compliance. Company has not received written notice of any
facts, events, conditions or systems relating to the past or present facilities,
properties or operations of any of Company, its subsidiaries, its and their
respective predecessors which could prevent ongoing or continued compliance in
all material respects with applicable Environmental, Health, and Safety
Requirements, give rise to any material obligations pursuant to Environmental,
Health, and Safety Requirements, or give rise to any administrative or civil
penalties or criminal fines or penalties or any other material liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental, Health, and Safety Requirements, including, without limitation,
any liabilities relating to onsite or offsite releases or threatened releases of
Hazardous Materials, personal injury, property damage or natural resources
damage.
2.16 Agreements, Contracts and Commitments. Neither Company nor any of its
subsidiaries is a party to or is bound by:
(a) any employment agreement, contract or commitment providing for annual
compensation in excess of $150,000 with any employee or member of Company's
Board of Directors, other than those that are terminable by Company or any of
its subsidiaries on no more than thirty days notice without liability or
financial obligation, except to the extent general
24
principles of wrongful termination law may limit Company's or any of its
subsidiaries' ability to terminate employees at will, or any consulting
agreement;
(b) any agreement of indemnification (other than indemnities of banks and
other financial institutions, financial advisers or underwriters or
indemnification provisions contained in any acquisition, disposition or similar
agreements or otherwise provided in the ordinary course of business), any
guaranty or any instrument evidencing indebtedness for borrowed money by way of
direct loan, sale of debt securities, purchase money obligation, conditional
sale, or otherwise, other than any such instruments between or among Company and
its subsidiaries or financing facilities and borrowings thereunder made
available to Company's subsidiaries, divisions and facilities to finance their
respective local or regional operations;
(c) any agreement, obligation or commitment containing covenants purporting
to limit or which effectively limit Company's or any of its subsidiaries'
freedom to compete in any material line of business or in any geographic area or
which would so limit Company or Surviving Corporation or any of its subsidiaries
or any employees of any thereof after the Effective Time or granting any
exclusive distribution or other exclusive rights;
(d) any agreement, contract or commitment currently in force relating to
the disposition or acquisition by Company or any of its subsidiaries after the
date of this Agreement of a material amount of assets not in the ordinary course
of business or pursuant to which Company has any material ownership interest in
any corporation, partnership, joint venture or other business enterprise other
than Company's subsidiaries;
(e) any supply agreement, manufacturing agreement or purchase order to
which Company or one of its subsidiaries is a party which (i) may not be
canceled by Company or its subsidiary, as the case may be, without penalty upon
notice of 30 days or less, and (ii) which is material to Company;
(f) any license agreement under which Company or any of its subsidiaries is
licensor; or under which Company or any of its subsidiaries is licensee (except
for standard "shrink wrap" licenses for off-the-shelf software products);
(g) any agreement by Company or any of its subsidiaries to encumber,
transfer or sell rights in or with respect to any Company Intellectual Property;
(h) any joint venture contract or arrangement or any other agreement that
involves a sharing of profits with other persons or the payment of royalties to
any other person;
(i) any agreement, contract or commitment relating to capital expenditures
and which involves future payments in excess of $500,000 and which is not made
in the ordinary course of business consistent with past practices; or
(j) any other agreement, contract or commitment currently in effect that is
material to Company's and its subsidiaries business, taken as a whole, as
presently conducted and proposed to be conducted.
25
Neither Company nor any of its subsidiaries, nor to Company's knowledge any
other party to any contracts or commitments to which Company or any of its
subsidiaries is a party or by which it is bound that are required to be
disclosed in the Company Disclosure Letter pursuant to clauses (a) through (j)
above or pursuant to Section 2.11 hereof or are required to be filed as exhibits
to any Company SEC Report (any such agreement, contract or commitment, a
"Company Contract"), is in breach, violation or default thereunder, and neither
Company nor any of its subsidiaries has received written notice that it has
breached, violated or defaulted under, any of the material terms or conditions
of any Company Contract, in such a manner as would permit any other party to
cancel or terminate such Company Contract, could reasonably be expected to cause
the loss of any material benefit or result in any material liability to the
Company or any subsidiary, or would permit any other party to seek material
damages or other remedies (for any or all of such breaches, violations or
defaults, in the aggregate). Each Company Contract is in full force and effect.
No Company Contract has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Company or any of
its subsidiaries, any acquisition of material property by Company or any of its
subsidiaries or the conduct of business by Company as currently conducted.
2.17 Change of Control Payments. Part 2.17 of the Company Disclosure Letter
sets forth each plan or agreement pursuant to which any amounts may become
payable (whether currently or in the future) to current or former officers and
directors of Company as a result of or in connection with the Merger or as a
result of termination of service or employment following the Merger.
2.18 Insurance. Company and each of its subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting business or owning assets similar to those of Company and its
subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies have been paid and Company and its subsidiaries are otherwise in
compliance in all material respects with the terms of such policies and bonds.
To the knowledge of Company, there has been no threatened termination of, or
material premium increase with respect to, any of such policies.
2.19 Customers and Suppliers.
(a) Customers. Neither Company nor any of its subsidiaries has outstanding
material disputes concerning its goods and/or services with any customer who, in
the nine months ended October 3, 1999, was one of the twenty (20) largest
sources of revenues for Company, based on amounts paid (a "Company Significant
Customer") and Company has no knowledge of any material dissatisfaction on the
part of any Company Significant Customer. No current Company Significant
Customer has notified Company that it does not intend to continue as a customer
of Company or its subsidiaries after the Closing or that such customer intends
to terminate or materially modify existing contracts or arrangement with Company
or subsidiaries. Part 2.19(a) of the Company Disclosure Letter lists each
Company Significant Customer.
(b) Accounts Receivable. Part 2.19(b) of the Company Disclosure Letter
provides an accurate and complete breakdown and aging of the accounts receivable
and notes
26
receivable of Company and its subsidiaries as of November 19, 1999, categorized
by period of aging (30, 60, 90 or 120 more days, and indicating which
receivables are subject to asserted warranty claims). Such accounts receivable
arose in the ordinary course of business and have been collected or are
collectible in the book amounts thereof, less allowances for doubtful accounts
and warranty returns determined in accordance with the past practices of
Company.
(c) Suppliers. Neither Company nor its subsidiaries have any outstanding
material disputes concerning goods or services provided by any supplier who, in
the nine months ended October 3, 1999, was one of the twenty (20) largest
suppliers of goods and services to Company, based on amounts paid for products
not readily available from another source ("Significant Supplier"). Company has
not received any written notice of a termination or interruption of any existing
contracts or arrangements with any Significant Suppliers. Company and its
subsidiaries have access, on reasonable terms, to all goods and services
reasonably necessary to them to carry on their business as currently conducted
and Company has no knowledge of any reason why Company and its subsidiaries will
not continue to have such access on reasonable terms subject to general industry
conditions relating to availability of components. No Significant Supplier has
notified Company or any of its subsidiaries that it will stop or materially
decrease the rate of supplying materials, products or services to Company. Part
2.19(c) of the Company Disclosure Letter lists each Significant Supplier.
(d) Warranties and Product Returns. Company's obligations to its customers
with respect to defects in materials or workmanship is limited to an obligation
to repair or replace the product in question. Since January 3, 1999, Company has
not had any of its products returned by a customer except for normal warranty
returns consistent with past history and those returns that would not result in
a reversal of any revenue by Company.
2.20 Inventory. The inventory of Company and its subsidiaries reflected in
the Company Interim Financial Statements (the "Inventory") was valued at cost
(determined on a first-in, first-out basis) or market, whichever is lower. The
Inventory is in all material respects of good and merchantable quality and is
readily usable and salable in the ordinary course of Company's businesses,
except for items of obsolete materials and materials of below standard quality,
substantially all of which have been written down to realizable market value, or
for which adequate reserves have been provided, in the Company Interim Financial
Statements. For Inventory manufactured to customer specifications effectively
rendering the Inventory salable only to that customer, the terms of the sales
contracts applicable thereto require the customer to acquire such Inventory (to
the extent of the quantity limits specified in such sales contracts) if it is
manufactured and delivered in accordance with such sales contracts.
2.21 Related Parties. Except as disclosed in Part 2.21 of the Company
Disclosure Letter or in Company's Proxy Statement dated March 31, 1999 relating
to its 1999 Annual Meeting of Stockholders, there are no undischarged contracts
or agreements or other material transactions between Company or any of its
subsidiaries, on the one hand, and any director or officer of Company or any of
their respective Related Persons (as defined below), on the other hand, and no
director or officer of the Company or any of their respective Related Persons
have any interest in any of the assets of Company or any of its subsidiaries, in
each case, which would be required to be disclosed pursuant to Item 404 of
Regulation S-K. Except as set forth in the Company SEC Reports, since the date
of Company's last proxy statement filed with the SEC, no
27
event has occurred as of the date of this Agreement that would be required to be
reported by Company pursuant to Item 404 of Regulation S-K promulgated by the
SEC. No director or officer of Company or any of their respective Related
Persons has any claim, charge, action or cause of action against Company or any
of its Subsidiaries, except for claims for accrued vacation pay, accrued
benefits under the Company Benefit Plans, claims for compensation, expense
reimbursement and similar obligations. "Related Persons" means each other member
of such individual's Family who is directly or indirectly controlled by such
individual. "Family" of an individual includes (A) such individual, (B) the
individual's spouse, siblings, or ancestors, (C) any lineal descendant of such
individual, or their siblings, or ancestors or (D) a trust for the benefit of
any of the foregoing.
2.22 Disclosure. The information supplied by Company for inclusion in the
Form S-4 (or any similar successor form thereto) Registration Statement to be
filed by Parent with the SEC in connection with the issuance of Parent Ordinary
Shares in the Merger (the "Registration Statement") shall not at the time the
Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The information supplied by Company
for inclusion in the proxy statement/prospectus to be sent to the stockholders
of Company in connection with the meeting of Company's stockholders to consider
the approval and adoption of this Agreement and the approval of the Merger (the
"Company Stockholders' Meeting") and to the shareholders of Parent in connection
with the meeting of Parent's shareholders to consider the approval of the
issuance of the Parent Ordinary Shares pursuant to the Merger (the "Parent
Shareholders' Meeting") (such proxy statement/prospectus as amended or
supplemented is referred to herein as the "Proxy Statement/Prospectus") shall
not, on the date the Proxy Statement/Prospectus is mailed to Company's
stockholders or Parent's shareholders, at the time of the Company Stockholders'
Meeting or the Parent's Shareholder Meeting, respectively, or as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not false or misleading; or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders' Meeting which has become false or
misleading. The Proxy Statement/Prospectus will comply as to form in all
material respects with the provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. If at any time prior to the Effective
Time any event relating to Company or any of its affiliates, officers or
directors should be discovered by Company which is required to be set forth in
an amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, Company shall promptly inform Parent. Notwithstanding the
foregoing, Company makes no representation or warranty with respect to any
information supplied by Parent or Merger Sub which is contained in any of the
foregoing documents.
2.23 Board Approval. The Board of Directors of Company has, as of the date
of this Agreement, unanimously determined (a) that the Merger is advisable and
fair to, and in the best interests of Company and its stockholders, and (b) to
recommend that the stockholders of Company approve and adopt this Agreement and
approve the Merger.
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2.24 Fairness Opinion. Company's Board of Directors has received written
opinions from its financial advisors, Xxxxxxx Xxxxx Xxxxxx Inc. and Broadview
International LLC, dated as of the date hereof, to the effect that the Exchange
Ratio is fair to Company's stockholders from a financial point of view, and have
delivered to Parent a copy of such opinions.
2.25 Brokers' and Finders' Fees. Except for fees payable to Xxxxxxx Xxxxx
Barney Inc. and Broadview International LLC pursuant to engagement letters dated
October 18, 1999, copies of which have been provided to Parent, Company has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
2.26 Affiliates. Part 2.26 of the Company Disclosure Letter is a complete
list of those persons who may be deemed to be, in Company's reasonable judgment,
affiliates of Company within the meaning of Rule 145 promulgated under the
Securities Act (each, a "Company Affiliate").
2.27 Pooling of Interests. To the knowledge of Company, based on
consultation with its independent accountants, neither Company nor any of its
directors, officers, affiliates or stockholders has taken or agreed to take any
action which would preclude Parent's ability to account for the Merger as a
pooling of interests. Company is autonomous and has not been a subsidiary or
division or another corporation or other entity since May 21, 1993. Since
December 31, 1996, Company has not (a) paid any dividends or effected any other
distributions to its stockholders other than distributions to Company's
stockholders paid solely in shares of Company Common Stock, (b) reacquired or
purchased any Shares of its capital stock, (c) changed any of its equity
interests, or (d) sold significant assets in contemplation of a merger.
2.28 No Existing Discussions. As of the date hereof, Company is not
engaged, directly or indirectly, in any discussion or negotiations with any
other party with respect to any Company Acquisition Proposal (as defined in
Section 5.5).
2.29 DGCL Section 203 Not Applicable. The Board of Directors of Company has
taken all actions on its part required so that (a) the restrictions contained in
Section 203 of the Delaware General Corporation Law applicable to a "business
combination" (as defined in such Section 203) will not apply to the Company's
execution, delivery or performance of this Agreement or to the consummation of
the Merger or the other transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As of the date of this Agreement and as of the Closing Date, Parent and
Merger Sub represent and warrant to Company, subject to the exceptions
specifically disclosed in writing (and referencing the specific representation
qualified thereby or to which exceptions specific references are made herein) in
the disclosure letter delivered by Parent to Company dated as of the date hereof
and certified by a duly authorized officer of Parent (the "Parent Disclosure
Letter"), as follows:
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3.1 Organization. Parent and each of its subsidiaries (including Merger
Sub) (a) is a corporation duly organized and validly existing under the laws of
the jurisdiction in which it is organized; (b) has the corporate or other power
and authority to own, lease and operate its assets and property and to carry on
its business as now being conducted; and (c) except as would not be material to
Parent, is duly qualified or licensed to do business in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary.
3.2 Subsidiaries and Other Interests. Other than the entities identified in
Part 3.2 of the Parent Disclosure Letter, neither Parent nor any of the other
entities identified in Part 3.2 of the Parent Disclosure Letter owns any capital
stock of, or any equity interest of any nature in, any corporation, partnership,
joint venture arrangement or other business entity, except for passive
investments not exceeding five percent (5%) of any entity's ownership in equity
interests of companies as part of the cash management program of Parent. Neither
Parent nor any of its subsidiaries has agreed or is obligated to make, or is
bound by any written, oral or other agreement, contract, subcontract, lease,
binding understanding, instrument, note, option, warranty, purchase order,
license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature, as in effect as of the date hereof
under which it may become obligated to make any future investment in or capital
contribution to any other entity. Neither Parent, nor any of its subsidiaries,
has, at any time, been a general partner of any general partnership, limited
partnership or other entity. Part 3.2 of the Parent Disclosure Letter indicates
the jurisdiction of organization of each entity listed therein and Parent's
direct or indirect equity interest therein.
3.3 Certificate of Incorporation and Bylaws. Parent has delivered or made
available to Company a true and correct copy of: (a) the Articles of Association
and Memorandum of Association of Parent, as amended to date and as in full force
in effect; and (b) Parent's minute book containing all records of all
proceedings, consents, actions and meetings during the past three (3) years of
the Parent shareholders, Board of Directors and any committees of the Board of
Directors. Neither Parent nor any of its subsidiaries is in violation of any of
the provisions of its Articles of Association or Memorandum of Association or
equivalent governing instruments.
3.4 Authority.
(a) Parent has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby, subject
to approval by the shareholders of Parent. Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, subject, in the case of consummation of the Merger, only to the approval
and adoption of this Agreement and the approval of the Merger by Parent's
shareholders. The affirmative vote of the holders of a majority of the issued
shares of Parent present in person or by proxy, attorney or representative at
the Parent Shareholders' Meeting is sufficient to approve the issuance of Parent
Ordinary Shares pursuant to the Merger. Parent, as the sole stockholder of
Merger Sub, has acted by written consent to approve the Merger and the adoption
of this Agreement by Merger Sub, which consent Parent and Merger Sub represent
and warrant constitutes the requisite approval of
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the Merger and this Agreement by Merger Sub. This Agreement has been duly
executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by Company, constitutes the valid and
binding obligations of Parent and Merger Sub, respectively, enforceable against
Parent and Merger Sub in accordance with its terms, except as enforceability may
be limited by bankruptcy and other similar laws affecting the rights of
creditors generally and general principles of equity. The execution and delivery
of this Agreement by Parent and Merger Sub do not, and the performance of this
Agreement by Parent and Merger Sub will not, (i) conflict with or violate the
Articles of Association or Memorandum of Association of Parent or the
Certificate of Incorporation or Bylaws of Merger Sub or the equivalent
organizational documents of any of Parent's subsidiaries, (ii) subject to
compliance with the requirements set forth in Section 3.4(b) below, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Parent or any of its subsidiaries or by which any of their respective
properties is bound or affected, or (iii) result in any material breach of or
constitute a material default (or an event that with notice or lapse of time or
both would become a material default) under, or impair Parent's rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a material lien or Encumbrance on any of the material properties or
assets of Parent or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise,
concession or other instrument or obligation, in each case that is material to
Parent, to which Parent or any of its subsidiaries is a party or by which Parent
or any of its subsidiaries or any of their respective properties are bound or
affected. Part 3.4 of the Parent Disclosure Letter lists all consents, waivers
and approvals under Parent's or any of its subsidiaries' agreements, contracts,
licenses or leases required to be obtained in connection with the consummation
of the transactions contemplated hereby, which, if individually or in the
aggregate not obtained, could reasonably be expected to result in a material
loss of benefits to Parent or the Surviving Corporation as a result of the
Merger.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required to be obtained or
made by Parent or Merger Sub in connection with the execution and delivery of
this Agreement or the consummation of the Merger, except (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, (ii)
the filing of the Registration Statement and the Proxy Statement/Prospectus with
the SEC in accordance with the Securities Act and the Exchange Act, and the
effectiveness of the Registration Statement, (iii) as may be required under
applicable federal, foreign and state corporate and securities (or related) laws
and under the HSR Act and the corresponding laws of any foreign country, there
being no consents, approvals or other such matters required under the securities
laws of Singapore except for filings to notify of the allotment of the Parent
Ordinary Shares and except for filings to comply with relevant securities laws
in the event that any shares in the capital of Parent are offered to the public
in Singapore pursuant to this Agreement, and (iv) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made would not be material to Parent or Company or have a material adverse
effect on the ability of the parties hereto to consummate the Merger.
3.5 Parent and Merger Sub Capital Structure.
(a) Shares. The authorized share capital of Parent consists of (i) two
hundred fifty million (250,000,000) Parent Ordinary Shares, par value S$0.01 per
share, of which there
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were 57,177,536 shares issued and outstanding as of November 19, 1999. All
outstanding Parent Ordinary Shares are duly authorized, validly issued, fully
paid and nonassessable and are not subject to preemptive rights created by
statute, the Articles of Association or Memorandum of Association of Parent or
any agreement or document to which Parent is a party or by which it is bound.
(b) Options and Warrants. As of November 19, 1999, Parent had reserved an
aggregate of 12,800,000 Parent Ordinary Shares for issuance pursuant to Parent's
1993 Share Option Plan, 1997 Interim Share Option Plan, 1998 Interim Share
Option Plan, 1999 Share Option Plan and non-plan options (the "Parent Equity
Plans"), including shares subject to outstanding options, and 400,000 Parent
Ordinary Shares for issuance pursuant to Parent's 1997 Employee Share Purchase
Plan. As of November 19, 1999, there were options outstanding to purchase an
aggregate of 6,389,704 Parent Ordinary Shares pursuant to the Parent Equity
Plans ("Parent Options") and purchase rights outstanding to purchase no more
than an aggregate of 293,277 Parent Ordinary Shares pursuant to Parent's 1997
Employee Share Purchase Plan. As of November 19, 1999, there were no warrants
outstanding to purchase Parent Ordinary Shares. All Parent Ordinary Shares
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, would be duly
authorized, validly issued, fully paid and nonassessable.
(c) Merger Sub. The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, $0.01 par value, 100 of which, as of the date
hereof, are issued and outstanding and are held by Parent. All of the
outstanding shares of Merger Sub's common stock have been duly authorized and
validly issued, and are fully paid and nonassessable. Merger Sub was formed for
the purpose of consummating the Merger and has no material assets or liabilities
except as necessary for such purpose.
(d) Due Issuance. The Parent Ordinary Shares to be issued in the Merger,
when issued in accordance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable and free and clear of any Encumbrances
whatsoever except Encumbrances created by the respective holders thereof.
3.6 Obligations With Respect to Capital Stock.
(a) Except as set forth in Sections 3.5(a) and (b), there are no equity
securities of, or partnership interests or similar ownership interests in,
Parent, or any securities exchangeable or convertible into or exercisable for
such equity securities, partnership interests or similar ownership interests,
issued, reserved for issuance or outstanding.
(b) Except for securities Parent owns free and clear of all claims and
Encumbrances, directly or indirectly through one or more subsidiaries, and
except for shares of capital stock or other similar ownership interests of
certain subsidiaries of Parent that are owned by certain nominee equity holders
as required by the applicable law of the jurisdiction of organization of such
subsidiaries, as of the date of this Agreement, there are no equity securities
of, or partnership interests or similar ownership interests in, any subsidiary
of Parent, or any security exchangeable or convertible into or exercisable for
such equity securities, partnership interests or similar ownership interests,
issued, reserved for issuance or outstanding.
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(c) Except as set forth in Section 3.5(b), there are no subscriptions,
options, warrants, calls, rights (including preemptive rights), commitments or
agreements of any character to which Parent or any of its subsidiaries is a
party or by which it is bound obligating Parent or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase,
redeem or otherwise acquire, or cause the repurchase, redemption or acquisition
of, any shares of capital stock, partnership interests or similar ownership
interests of Parent or any of its subsidiaries or obligating Parent or any of
its subsidiaries to grant, extend, accelerate the vesting of or enter into any
such subscription, option, warrants, call, right, commitment or agreement.
3.7 SEC Filings; Parent Financial Statements.
(a) SEC Filings Generally. Parent has filed all forms, reports and
documents required to be filed by Parent with the SEC since January 1, 1997, and
has made available to Company such forms, reports and documents in the form
filed with the SEC. All such required forms, reports and documents (including
those that Parent may file subsequent to the date hereof) are referred to herein
as the "Parent SEC Reports." As of their respective dates, the Parent SEC
Reports (i) were prepared in accordance with the requirements of the Securities
Act or the Exchange Act, as the case may be, and the rules and regulations of
the SEC thereunder applicable to such Parent SEC Reports, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Taken as
a whole, the Parent SEC Reports do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Parent's
subsidiaries is required to file any forms, reports or other documents with the
SEC. Each of the Parent SEC Reports included, as exhibits thereto, all documents
required to be filed or exhibits to such Parent SEC Report under the rules and
regulations of the SEC. All agreements filed by Parent as exhibits to the Parent
SEC Reports, as displayed on the World Wide Web via the XXXXX Service, conform
to the agreements as executed by all parties thereto and are in full force and
effect as so filed, except those which have expired in accordance with their
terms or have been revised as disclosed in the Parent SEC Reports.
(b) Publicly Reported Financial Statements. Each of the consolidated
financial statements (including, in each case, any related notes thereto)
contained in the Parent SEC Reports (the "Parent Financials"), including any
Parent SEC Reports filed after the date hereof until the Closing, (i) complied
as to form in all material respects with the published rules and regulations of
the SEC with respect thereto, (ii) was prepared in accordance with GAAP applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited interim financial
statements, as may be permitted by the SEC on Form 10-Q, 8-K or any successor
form under the Exchange Act), and (iii) fairly presented in all material
respects the consolidated financial position of Parent and its subsidiaries as
at the respective dates thereof and the consolidated results of Parent's
operations and cash flows for the periods indicated, except to the extent
corrected by a subsequently filed Parent SEC Report prior to the date of this
Agreement, and except that the unaudited interim financial statements may not
33
contain footnotes and were or are subject to normal and immaterial year-end
adjustments. The balance sheet of Parent contained in Parent SEC Reports as of
March 31, 1999 is hereinafter referred to as the "Parent Balance Sheet." Since
March 31, 1998, there has been no change in Parent's accounting policies except
as described in the notes to the Parent Financials. Since the date of the Parent
Balance Sheet, neither Parent nor any of its subsidiaries has incurred any
liabilities (absolute, accrued, contingent or otherwise) which are, individually
or in the aggregate, material to the business, results of operations or
financial condition of Parent and its subsidiaries taken as a whole, except for
(i) liabilities incurred since the date of the Parent Balance Sheet in the
ordinary course of business consistent with past practices, (ii) liabilities
incurred in connection with this Agreement, and (iii) liabilities specifically
disclosed in Parent SEC Reports filed prior to the date of this Agreement.
(c) Interim Financial Statements. Parent has delivered to Company copies of
Parent's unaudited consolidated balance sheet as of September 24, 1999 and
income statement and statement of cash flows for the six months ended September
24, 1999. Such financial statements: (i) are in accordance with the books and
records of Parent; (ii) fairly present in all material respects Parent's
consolidated financial condition at the date therein indicated and the
consolidated results of operations for the period therein specified; and (iii)
have been prepared in accordance with GAAP applied on a consistent basis (except
for the absence of any footnotes required by GAAP and may be subject to normal,
immaterial year end adjustments).
(d) Amendments. Parent has heretofore furnished to Company a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
3.8 Absence of Certain Changes or Events. Since the date of the Parent
Balance Sheet, Parent and each of its subsidiaries has carried on its business
in the ordinary course consistent with past practices, and except as
specifically and expressly disclosed in the Parent SEC Reports filed with the
SEC prior to the date of this Agreement, since the date of the Parent Balance
Sheet there has not been:
(a) any change in the financial condition, properties, assets, liabilities,
business, results of operations or prospects of Parent, which change by itself
or in conjunction with all other such changes, whether or not arising in the
ordinary course of business, has had or can reasonably be expected to have a
Parent Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of Parent's
or any of its subsidiaries' capital stock, or any purchase, redemption or other
acquisition by Parent of any of Parent's capital stock or any other securities
of Parent or its subsidiaries or any options, warrants, calls or rights to
acquire any such shares or other securities except for repurchases from
employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements;
34
(c) any split, combination or reclassification of any of Parent's or any of
its subsidiaries' capital stock;
(d) any material change or alteration in the policy of Parent relating to
the granting of stock options to its employees, directors and consultants;
(e) any revaluation by Parent of any of its assets, including, without
limitation, writing off notes or accounts receivable other than in the ordinary
course of business;
(f) any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the properties, assets or business of Parent
or any subsidiary;
(g) any material change by Parent in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP;
(h) any material contingent liability incurred by Parent or any of its
subsidiaries as guarantor or otherwise with respect to the obligations of others
or any cancellation of any material debt or claim owing to, or waiver of any
material right of, Parent or any of its subsidiaries;
(i) any material obligation or liability of any nature, whether accrued,
absolute or contingent, incurred by Parent other than (A) obligations and
liabilities which could not reasonably be expected to have a Parent Material
Adverse Effect and (B) obligations and liabilities incurred in the ordinary
course of business consistent with past practice;
(j) any material payment or discharge of a material Encumbrance or
liability of Parent which was not shown in the Parent Interim Financial
Statements or which was not incurred in the ordinary course of business
thereafter; or
(l) any agreement or understanding whether in writing or otherwise, for
Parent or any of its subsidiaries to take any of the actions specified in
paragraphs (a) through (k) above.
3.9 Taxes.
(a) Parent and each of its subsidiaries have timely filed all Returns
relating to Taxes required to be filed by or on behalf of Parent and each of its
subsidiaries with any Tax authority, such Returns are true, correct and complete
in all material respects, and Parent and each of its subsidiaries have paid all
Taxes shown to be due on such Returns;
(b) Parent and each of its subsidiaries have withheld with respect to its
employees all material (i) federal and state income taxes, (ii) Taxes pursuant
to FICA, (iii) Taxes pursuant to FUTA and other material Taxes required to be
withheld;
(c) Neither Parent nor any of its subsidiaries has been delinquent in the
payment of any material Tax nor is there any material Tax deficiency
outstanding, proposed or assessed against Parent or any of its
subsidiaries, nor has Parent or any of its subsidiaries
35
executed any unexpired waiver of any statute of limitations on or extending the
period for the assessment or collection of any material Tax;
(d) No audit or other examination of any Return of Parent or any of its
subsidiaries by any Tax authority is presently in progress, nor has Parent or
any of its subsidiaries been notified of any request for such an audit or other
examination;
(e) No material adjustment relating to any Returns filed by Parent or any
of its subsidiaries has been proposed in writing formally or informally by any
Tax authority to Parent or any of its subsidiaries or any representative
thereof;
(f) Neither Parent nor any of its subsidiaries has any liability for unpaid
Taxes which has not been accrued for or reserved on the Parent Balance Sheet,
whether asserted or unasserted, contingent or otherwise, which is material to
Parent, other than any liability for unpaid Taxes that may have accrued since
the date of the Parent Balance Sheet in connection with the operation of the
business of Parent and its subsidiaries in the ordinary course;
(g) Neither Parent nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Parent;
(h) Neither Parent nor any of its subsidiaries is party to or has any
obligation under any tax-sharing, tax indemnity or tax allocation agreement or
arrangement;
(i) Except as may be required as a result of the Merger, Parent and its
subsidiaries have not been and will not be required to include any adjustment in
Taxable income for any Tax period (or portion thereof) pursuant to Section 481
or Section 263A of the Code or any comparable provision under state or foreign
Tax laws as a result of transactions, events or accounting methods employed
prior to the Closing;
(j) None of Parent's or its subsidiaries' assets are tax exempt use
property within the meaning of Section 168(h) of the Code;
(k) There are no material Encumbrances on the assets of Parent or any
subsidiary relating to or attributable to Taxes, other than Encumbrances for
Taxes not yet due and payable; and
(l) None of Parent or any of its subsidiaries (A) has been a member of an
affiliated group filing a consolidated federal income Return (other than a group
the common parent of which was Parent), or (B) has any liability or obligation
for the Taxes of any Person (other than any of Parent and its subsidiaries)
under Treasury Regulations Section 1.1502-6 (or any similar provision of state,
local or foreign law), as a transferee or successor, by contract, or otherwise.
36
3.10 Title to Properties; Absence of Encumbrances.
(a) All real estate leases to which Parent or any of its subsidiaries is a
party, and all material leases of personal property, are in full force and
effect, are valid and effective in accordance with their respective terms, and
afford Parent and each of its subsidiaries, in all material respects, peaceful
and undisturbed possession of the subject matter of the lease and there is not,
under any of such leases, any existing default or event of default (or event
which with notice or lapse of time, or both, would constitute a default) by
Parent or any of its subsidiaries that would give rise to a claim against Parent
or any subsidiary in an amount greater than $100,000.
(b) Parent has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Encumbrances, except as reflected in the Parent
Financials and except for liens for taxes not yet due and payable and such
Encumbrances or other imperfections of title, which are not material in
character, amount or extent, and which do not materially detract from the value,
or materially interfere with the present use, of the property subject thereto or
affected thereby.
(c) The plants, property and equipment of Parent and its subsidiaries that
are used in the operations of their business are generally in good operating
condition and repair. All properties used in the operations of Parent and its
subsidiaries are reflected in the Parent Balance Sheet to the extent required to
be reflected under GAAP.
3.11 Intellectual Property.
(a) Title; Non-infringement. Parent and each of its subsidiaries owns all
right, title and interest in, or has the right to use, sell or license all
patent applications, patents, trademark applications, trademarks, service marks,
trade names, copyright applications, copyrights, trade secrets, know-how,
technology, customer lists, proprietary processes and formulae, all source and
object code, algorithms, inventions, development tools and all documentation and
media constituting, describing or relating to the above, including, without
limitation, manuals, memoranda and records and other intellectual property and
proprietary rights used in or reasonably necessary or required for the conduct
of its respective business as presently conducted ("Parent Intellectual
Property"). To the knowledge of Parent, each copyright and trademark
registration and each patent for Parent Intellectual Property owned by Parent
and each of its subsidiaries is valid and subsisting. Parent is not aware of any
material loss, cancellation, termination or expiration of any such copyrights,
trademarks, patents, registrations or applications therefor. To the knowledge of
Parent, the business of Parent and its subsidiaries does not cause Parent or any
of its subsidiaries to infringe or violate any of the patents, trademarks,
service marks, trade names, mask works, copyrights, trade secrets, proprietary
rights or other intellectual property of any other person, and neither Parent
nor any of its subsidiaries has received any written claim or notice of
infringement or potential infringement of the intellectual property of any other
person. Neither the manufacture, marketing, sale or intended use of any product
currently licensed or sold by Parent or currently under development by Parent
violates any license or agreement between Parent and any third party. Parent and
each of its subsidiaries has taken reasonable and practicable steps designed to
safeguard and maintain the
37
secrecy and confidentiality of, and its proprietary rights in, all material
Parent Intellectual Property. Parent is not aware of any infringement of any
Parent Intellectual Property by any third party. There are no royalties, fees or
other payments payable by Parent or any of its subsidiaries to any person by
reason of the ownership, use, license, sale or disposition of the Parent
Intellectual Property.
(b) Year 2000. Parent has taken reasonable steps to ensure that its
material systems and technology is Year 2000 Compliant. Parent has taken
reasonable steps to ensure that its systems, services and technology will lose
no functionality with respect to the introduction of records containing dates
falling on or after January 1, 2000 and February 29, 2000. All of Parent's and
its subsidiaries' internal computer and technology systems and services which
are critical or material to the operation of its business are Year 2000
Compliant. The Parent Intellectual Property owned by Parent or any subsidiary is
Year 2000 Compliant. Neither the Parent Intellectual Property owned by Parent or
any subsidiary nor any of Parent's material systems and technology used in the
provision of its services or used in the operation or management of its business
contains any significant defect in connection with processing data containing
dates in leap years or in the year 2000 or any preceding or following years.
3.12 Compliance with Law; Permits; Restrictions.
(a) Neither Parent nor any of its subsidiaries is, in any material respect,
in conflict with, or in default or in violation of (i) any law, rule,
regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which Parent or any of its subsidiaries or any of their
respective properties is bound or affected, or (ii) any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for conflicts, violations and
defaults that (individually or in the aggregate) would not cause Parent to lose
any material benefit or incur any material liability. No investigation or review
by any Governmental Entity is pending or, to Parent's knowledge, has been
threatened in a writing delivered to Parent against Parent or any of its
subsidiaries, nor, to Parent's knowledge, has any Governmental Entity indicated
an intention to conduct an investigation of Parent or any of its subsidiaries
with respect to any alleged violation of any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries. There is no
material agreement, judgment, injunction, order or decree binding upon Parent or
any of its subsidiaries which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of Parent or
any of its subsidiaries, any acquisition of material property by Parent or any
of its subsidiaries or the conduct of business by Parent as currently conducted.
(b) Parent and its subsidiaries hold, to the extent legally required, all
permits, licenses, variances, exemptions, orders and approvals from governmental
authorities that are material to and required for the operation of the business
of Parent as currently conducted (collectively, the "Parent Permits"). Parent
and its subsidiaries are in compliance in all material respects with the terms
of the Parent Permits.
3.13 Litigation. There are no claims, suits, actions or proceedings pending
or, to the knowledge of Parent, threatened against, relating to or affecting
Parent or any of its subsidiaries,
38
before any court, governmental department, commission, agency, instrumentality
or authority, or any arbitrator that seeks to restrain or enjoin the
consummation of the transactions contemplated by this Agreement or which could
reasonably be expected, either singularly or in the aggregate with all such
claims, actions or proceedings, to have a Parent Material Adverse Effect or
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the Merger or any of the other transactions contemplated hereby. No
Governmental Entity has at any time challenged or questioned in a writing
delivered to Parent the legal right of Parent to design, offer or sell any of
its products or services in the present manner or style thereof. As of the date
hereof, to the knowledge of Parent, no event has occurred, and no claim, dispute
or other condition or circumstance exists, that will, or that would reasonably
be expected to, cause or provide a bona fide basis for a director or executive
officer of Parent to seek indemnification from Parent.
3.14 Employee Benefit Plans.
(a) Definitions. With the exception of the definitions of "Affiliate,"
"Employee" and "Employee Agreement" set forth in Section 3.14(a)(i), (v) and
(vi) below (which definitions shall apply only to this Section 3.14), for
purposes of this Agreement, the following terms shall have the meanings set
forth below:
(i) "Affiliate" shall mean any other person or entity under common
control with Parent within the meaning of Section 414(b), (c), (m) or (o)
of the Code and the regulations issued thereunder;
(ii) "Parent Employee Plan" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether written or unwritten, funded or unfunded,
including without limitation, each "employee benefit plan," within the
meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by Parent or any
Affiliate for the benefit of any Employee;
(iii) "Employee" shall mean any current, former, or retired employee,
officer, or director of Parent or any Affiliate;
(iv) "Employee Agreement" shall mean each management, employment,
severance, consulting, relocation, repatriation, expatriation, visas, work
permit or similar agreement or contract between Parent or any Affiliate and
any Employee or consultant that provides for annual compensation to such
Employee or consultant in excess of $150,000;
(b) Employee Plan Compliance. (i) Parent and its subsidiaries have
performed in all material respects all obligations required to be performed by
them under, are not in default or violation of, and have no knowledge of any
default or violation by any other party to any Parent Employee Plan, and each
Parent Employee Plan has been established and maintained in all material
respects in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including but not limited to
ERISA or the Code; (ii) each Parent Employee Plan intended to qualify under
Section 401(a) of the Code and each trust
39
intended to qualify under Section 501(a) of the Code has either received a
favorable determination letter from the IRS with respect to each such Plan as to
its qualified status under the Code or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a determination letter and make any amendments necessary to obtain a favorable
determination and no event has occurred which would adversely affect the status
of such determination letter or the qualified status of such Plan; (iii) no
"prohibited transaction," within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, which is not otherwise exempt under Section 408
of ERISA, has occurred with respect to any Parent Employee Plan; (iv) there are
no actions, suits or claims pending, or, to the knowledge of Parent, threatened
or reasonably anticipated (other than routine claims for benefits) against any
Parent Employee Plan or against the assets of any Parent Employee Plan; (v)
there are no audits, inquiries or proceedings pending or, to the knowledge of
Parent, threatened by the IRS or DOL with respect to any Parent Employee Plan;
and (vi) neither Parent nor any Affiliate is subject to any penalty or tax with
respect to any Parent Employee Plan under Section 402(i) of ERISA or Sections
4975 through 4980 of the Code.
(c) Pension Plans. Parent does not now, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any Pension Plan
which is subject to Title IV of ERISA or Section 412 of the Code.
(d) Multiemployer Plans. At no time has Parent or any subsidiary
contributed to or been requested to contribute to any Multiemployer Plan.
(e) No Post-Employment Obligations. No Parent Employee Plan provides, or
has any obligation to provide, retiree life insurance, retiree health or other
retiree employee welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable statute, and Parent has never represented,
promised or contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) or any other person that such
Employee(s) or other person would be provided with retiree life insurance,
retiree health or other retiree employee welfare benefit, except to the extent
required by statute.
(f) COBRA; FMLA. Neither Parent nor any subsidiary nor, to Parent's
knowledge, any other Affiliate has, prior to the Effective Time, and in any
material respect, violated any of the health care continuation requirements of
COBRA, any material requirements of FMLA or any material provisions of any
similar provisions of state law applicable to its Employees, except where the
same would not have a Parent Material Adverse Effect.
(g) Contributions. All contributions due from the Parent and any Affiliate
with respect to any of the Parent Employee Plans have been made or accrued on
the Parent Balance Sheet or arose after the date of the Parent Balance Sheet in
the ordinary course of business consistent with past practices including as a
result of acquisitions.
3.15 Environmental Matters. To Parent's knowledge:
(a) Compliance with Law. Each of Parent, its subsidiaries and its
predecessors has complied and is in compliance in all material respects with all
Environmental, Health, and Safety Requirements.
40
(b) Neither Parent, its subsidiaries nor their respective predecessors has
received any written or oral notice, report, demand, citation, request for
information, complaint or other information regarding any actual or alleged
violation of Environmental, Health, and Safety Requirements, or any liabilities
or potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), arising under Environmental, Health, and Safety Requirements.
Neither Parent nor any of its subsidiaries is a potentially responsible party
under CERCLA, RCRA, or any similar law of the state, province or country in
which a Parent facility is located. There have not been in the past, and are not
now, any Hazardous Materials on, under or migrating to or from any real property
owned or leased by it or any of its subsidiaries which could reasonably be
expected to result in a material liability to Parent. There have not been in the
past, and are not now, any aboveground tanks, underground tanks or underground
pipes, lines, connections or other improvements at, on or under any real
property owned or leased by it or any of its subsidiaries, including, without
limitation, treatment or storage tanks, sumps, or water, gas or oil xxxxx,
except in accordance with applicable Environmental, Health and Safety
Requirements. Parent has not deposited, released, spilled, discharged or
disposed of Hazardous Materials on any real property owned or leased by it or
any of its subsidiaries, except in accordance with applicable Environmental
Health and Safety Requirements, which could reasonably be expected to result in
a material liability to Parent.
(c) None of Parent, its subsidiaries, or their respective predecessors has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including without limitation
any Hazardous Material, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance) in a manner
that violates any Environmental, Health and Safety Requirements or would give
rise to material liabilities, including any liability for response costs,
corrective action costs, personal injury, property damage, natural resources
damages, administrative or civil penalties or criminal fines or penalties, or
attorney fees, pursuant to any Environmental, Health, and Safety Requirements
which, in any case, could reasonably be expected to result in a material
liability to Parent.
(d) Liability for Others. Neither Parent, its subsidiaries nor its
predecessors has, either expressly or by operation of law, assumed, retained or
undertaken any liability, including without limitation any obligation for
corrective or remedial action, of any other person or entity relating to
Environmental, Health, and Safety Requirements other than in connection with any
acquisitions of the assets, businesses or operations of another person or
entity, or which could reasonably be expected to result in a material liability
to Parent.
(e) Ongoing Compliance. Parent has not received written notice of any
facts, events, conditions or systems relating to the past or present facilities,
properties or operations of any of Parent, its subsidiaries, its and their
respective predecessors which could prevent ongoing or continued compliance in
all material respects with applicable Environmental, Health, and Safety
Requirements, give rise to any material obligations pursuant to Environmental,
Health, and Safety Requirements, or give rise to any administrative or civil
penalties or criminal fines or penalties or any other material liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental, Health, and Safety Requirements, including, without limitation,
any liabilities relating to onsite or offsite releases or threatened releases of
Hazardous Materials, personal injury, property damage or natural resources
damage.
41
3.16 Insurance. Parent and each of its subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting business or owning assets similar to those of Parent and its
subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies have been paid and Parent and its subsidiaries are otherwise in
compliance in all material respects with the terms of such policies and bonds.
To the knowledge of Parent, there has been no threatened termination of, or
material premium increase with respect to, any of such policies.
3.17 Customers and Suppliers
(a) Customers. Neither Parent nor any of its subsidiaries has outstanding
material disputes concerning its goods and/or services with any customer who, in
the nine months ended September 25, 1999, was one of the fifteen (15) largest
sources of revenues for Parent, based on amounts paid (a "Parent Significant
Customer") and Parent has no knowledge of any material dissatisfaction on the
part of any Parent Significant Customer.
(b) Suppliers. Neither Parent nor its subsidiaries have any outstanding
material disputes concerning goods or services provided by any supplier who, in
the nine months ended September 25, 1999, was one of the fifteen (15) largest
suppliers of goods and services to Parent, based on amounts paid for products
not readily available from another source ("Parent Significant Supplier").
Parent has not received any written notice of a termination or interruption of
any existing contracts or arrangements with any Parent Significant Suppliers.
Parent and its subsidiaries have access, on reasonable terms, to all goods and
services reasonably necessary to them to carry on their business as currently
conducted and Parent has no knowledge of any reason why Parent and its
subsidiaries will not continue to have such access on reasonable terms subject
to general industry conditions relating to availability of components. No Parent
Significant Supplier has notified Parent or any of its subsidiaries that it will
stop or materially decrease the rate of supplying materials, products or
services to Parent.
(c) Warranties and Product Returns. Parent's obligations to its customers
with respect to defects in materials or workmanship is generally limited to an
obligation to repair or replace the product in question. Since March 31, 1999,
Parent has not had any of its products returned by a customer except for normal
warranty returns consistent with past history and those returns that would not
result in a reversal of any material revenue by Parent.
3.18 Inventory. The inventory of Parent and its subsidiaries reflected in
the Parent Interim Financial Statements (the "Parent Inventory") was valued at
cost (determined on a first-in, first-out basis) or market, whichever is lower.
The Parent Inventory is in all material respects of good and merchantable
quality and is readily usable and salable in the ordinary course of Parent's
businesses, except for items of obsolete materials and materials of below
standard quality, substantially all of which have been written down to
realizable market value, or for which adequate reserves have been provided, in
the Parent Interim Financial Statements. For Parent Inventory manufactured to
customer specifications effectively rendering the Parent Inventory salable only
to that customer, the terms of the sales contracts applicable thereto generally
require the customer to acquire such Parent Inventory (to the extent of the
quantity
42
limits specified in such sales contracts) if it is manufactured and delivered in
accordance with such sales contracts.
3.19 Disclosure. The information supplied by Parent for inclusion in the
Registration Statement shall not at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the Securities Act
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The information supplied by Parent for inclusion in the Proxy
Statement/Prospectus shall not, on the date the Proxy Statement/Prospectus is
mailed to Company's stockholders or Parent's shareholders, at the time of the
Company Stockholders' Meeting or the Parent Shareholders' Meeting or as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not false or misleading, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders' Meeting or the Parent Shareholders'
Meeting which has become false or misleading. The Registration Statement will
comply as to form in all material respects with the provisions of the Securities
Act and the rules and regulations thereunder. If at any time prior to the
Effective Time, any event relating to Parent or any of its affiliates, officers
or directors should be discovered by Parent which is required to be set forth in
an amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, Parent shall promptly inform Company. Notwithstanding the
foregoing, Parent makes no representation or warranty with respect to any
information supplied by Company which is contained in any of the foregoing
documents.
3.20 Board Approval. The Board of Directors of Parent has, as of the date
of this Agreement, determined (a) that the Merger is advisable and fair to, and
in the best interests of Parent, its shareholders and Merger Sub, and (b) to
recommend that the shareholders of Parent approve the issuance of the Parent
Ordinary Shares pursuant to the Merger and adopt this Agreement.
3.21 Brokers' and Finders' Fees. Parent has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
3.23 Affiliates. Part 3.23 of the Parent Disclosure Letter is a complete
list of those persons who may be deemed to be, in Parent's reasonable judgment,
affiliates of Parent within the meaning of Rule 145 promulgated under the
Securities Act (each a "Parent Affiliate").
3.24 Pooling of Interests. To the knowledge of Parent, based on
consultation with its independent accountants, neither Parent nor any of its
directors, officers, affiliates or stockholders has taken or agreed to take any
action which would preclude Parent's ability to account for the Merger as a
pooling of interests. Parent is autonomous and has not been a subsidiary or
division of another corporation or other entity since December 31, 1993. Since
December 31, 1996, Parent has not (a) paid any dividends or effected any other
distributions to its stockholders other than distributions to Parent's
shareholders paid solely in Parent Ordinary
43
Shares, (b) reacquired or purchased any of its sales, (c) changed any of its
equity interests, or (d) sold significant assets in contemplation of a merger.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business. During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement pursuant
to its terms or the Effective Time, Parent and Company each agrees as to itself
and its respective subsidiaries, to carry on its (and its subsidiaries')
business in the usual, regular and ordinary course, in substantially the same
manner as heretofore conducted and in compliance in all material respects with
all applicable laws and regulations, pay its debts and taxes when due subject to
good faith disputes over such debts or taxes, pay or perform its other
obligations when due, and use all reasonable efforts (and in any event no less
than would be consistent with its past practices), to (i) preserve intact its
(and its subsidiaries') present business organization, (ii) keep available the
services of its present officers and key employees and (iii) preserve its
relationships with customers, suppliers, licensors, licensees and others with
which it has business dealings. In addition, Company will promptly notify
Parent, and Parent will promptly notify Company, of any material event involving
its respective business or operations, and of any event that could reasonably be
expected to have a Material Adverse Effect.
(a) In addition, except as permitted by the terms of this Agreement, and
except as provided in Part 4.1 of the Company Disclosure Letter, without the
prior written consent of Parent, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Company shall not do any of the
following and shall not permit its subsidiaries to do any of the following:
(i) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of any options or restricted stock or reprice
options granted under any employee, consultant, director or other stock
plans 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 or employment agreements in effect as of the date of
this Agreement;
(ii) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements in effect, or policies existing, on
the date hereof and as previously disclosed in the Company Disclosure
Letter, or adopt any new severance plan;
(iii) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Company
Intellectual Property other than such extensions, amendments or
modifications as would be necessary to maintain the term or status of the
Company Intellectual Property;
(iv) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for, any capital stock;
44
(v) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of its capital stock, except repurchases of unvested shares at cost
in connection with the termination of the employment relationship with any
employee pursuant to stock option or purchase agreements in effect on the
date hereof;
(vi) Issue, deliver, sell, authorize, pledge or otherwise encumber any
shares of capital stock or any securities convertible into shares of
capital stock, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or any securities convertible into shares of
capital stock, or enter into other agreements or commitments of any
character obligating it to issue any such shares or convertible securities,
other than (a) the issuance, delivery and/or sale of shares of Company
Common Stock pursuant to the exercise of Company Options or upon the
vesting of Performance Shares, outstanding on the date of this Agreement,
(b) the issuance, delivery and/or sale of shares of Company Common Stock
issuable to participants in the ESPP consistent with the terms thereof, (c)
the issuance of shares of Company Common Stock under the Directors' Stock
Plan, or the grant of options to acquire shares of Company Common Stock
outside of any Company Stock Option Plan to newly hired employees that are
not officers or directors of Company on terms consistent with past grants,
provided that (1) the vesting of such options does not accelerate in
connection with the Merger or any of the other transactions contemplated
hereby, (2) such options vest over a four-year period, with not more than
twenty-five percent (25%) in the first year, (3) the exercise price of such
option is not less than the fair market value of Company Common Stock on
the date of grant, and (4) the number of shares subject to such option is
consistent with the past practice of Company.
(vii) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
(viii) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof; or otherwise acquire or agree to acquire any assets (other than
inventory and other items in the ordinary course of business), except for
any such acquisitions involving aggregate consideration (including assumed
indebtedness) of not more than $1,000,000, or enter into any material joint
ventures, strategic partnerships or alliances;
(ix) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate,
to Company and its subsidiaries' business, taken as a whole, except sales
of inventory and obsolete equipment in the ordinary course of business
consistent with past practice;
(x) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Company, enter into any "keep well" or other agreement to maintain any
financial statement condition or enter into any arrangement having the
economic effect of any of the foregoing other than (i) in connection with
the financing of ordinary course trade payables consistent with past
practice or (ii) pursuant to existing credit
45
facilities, as in effect on the date of this Agreement, in the ordinary
course of business consistent with past practice;
(xi) (A) Enter into any employment contract or collective bargaining
agreement except offer letters in the ordinary course of business
consistent with past practice with new employees who are terminable "at
will", (B) pay or agree to pay any special bonus or special remuneration to
any director or employee other than (1) to employees that are not officers
or directors of Company in the ordinary course of business consistent with
past practice, and (2) payments of bonuses to the employees listed on Part
2.8(d) of the Company Disclosure Letter pursuant to bonus criteria
specified thereon, (C) increase the salaries or wage rates or fringe
benefits (including rights to severance or indemnification) payable, or to
become payable to its directors, officers, employees or consultants other
than increases in salary to employees that are not officers of Company in
the ordinary course of business, consistent with past practice, (D) grant
any additional severance or termination pay to, or enter into any
employment or severance agreements with, any employees or officers except
to employees that are not officers of Company in the ordinary course of
business, consistent with past practice, or (E) 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;
(xii) Make any payments outside of the ordinary course of business in
excess of $5.0 million in the aggregate, other than pursuant to those
certain letter agreements dated October 18, 1999 between Company and
Xxxxxxx Xxxxx Xxxxxx Inc. and Broadview International LLC, respectively;
(xiii) Except as disclosed in Part 4.1 of the Company Disclosure
Letter pursuant to any other clause of this Section 4.1(a), enter into,
amend, modify or terminate any Company Contract or any agreement, contract
or obligation which, if in effect on the date of this Agreement, would be a
Company Contract;
(xiv) Enter into or amend any agreements pursuant to which any other
party is granted exclusive marketing or other exclusive rights of any type
or scope with respect to any of its products or technology;
(xv) Except as required by GAAP, revalue any of its assets or make any
change in accounting methods, principles or practices;
(xvi) Take any actions that could prevent Parent from being able to
account for the Merger as a pooling of interests whether or not otherwise
permitted by the provisions of this Article IV (provided that if, prior to
the taking of such actions, representatives of the independent auditors of
both Parent and Company have stated that a proposed action would not
prevent Parent from being able to account for the Merger as a pooling of
interests, such action shall not be deemed to breach this clause (xvi);
(xvii) Initiate, compromise or settle any material litigation or
arbitration proceeding (other than as a result of a breach of this
Agreement by Parent), except that Company may compromise or settle
litigation or arbitration if the terms of such settlement do not require
46
payment by Company and its subsidiaries of in excess of $1.5 million and do
not impose any other material obligations on Company and its subsidiaries;
(xviii) Except as contemplated by Section 5.19, amend the Rights
Agreement or take any action with respect to, or make any determination
under, the Rights Agreement;
(xix) Take or agree in writing or otherwise to take, any of the
actions described in clauses (i) through (xviii) above, or any action which
would make any of its representations or warranties contained in this
Agreement untrue or incorrect or prevent it from performing or cause it not
to perform its covenants hereunder.
(b) In addition, except as permitted by the terms of this Agreement, and
except as provided in Part 4.1 of the Parent Disclosure Letter, without the
prior written consent of Company, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Parent shall not do any of the
following and shall not permit its subsidiaries to do any of the following:
(i) waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of any options or restricted stock or reprice
options granted under any employee, consultant, director or other stock
plans 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 or employment agreements in effect as of the date of
this Agreement;
(ii) grant any severance or termination pay to any officer or employee
except pursuant to written agreements in effect, or policies existing, on
the date hereof, or adopt any new severance plan;
(iii) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for, any capital stock; provided, that,
subject to Section 1.4(f) above, Parent may effect a bonus issue of its
Ordinary Shares in the manner contemplated in its proxy statement dated
July 30, 1999 with respect to its Annual General Meeting on August 27,
1999;
(iv) purchase, redeem or otherwise acquire, directly or indirectly,
any shares of its capital stock, except repurchases of unvested shares at
cost in connection with the termination of the employment relationship with
any employee pursuant to stock option or purchase agreements in effect on
the date hereof;
(v) issue, deliver, sell, authorize, pledge or otherwise encumber any
shares or any securities convertible into shares, or subscriptions, rights,
warrants or options to acquire any shares or any securities convertible
into shares, or enter into other agreements or commitments of any character
obligating it to issue any such shares or convertible securities, other
than (A) the grant of Parent Options, (B) the issuance, delivery and/or
sale of Parent Ordinary Shares pursuant to the exercise of Parent Options,
(C) the issuance, delivery and/or sale of Parent Ordinary Shares issuable
to participants under Parent's 1997 Employee Share Purchase
47
Plan consistent with the terms thereof, and the (D) the issuance of Parent
Ordinary Shares in connection with acquisitions, joint ventures, strategic
partnerships and strategic alliances other than issuance that would require
approval by Parent's shareholders.
(vi) cause, permit or propose any amendments to its Articles of
Association or Memorandum of Association;
(vii) acquire or agree to acquire, by merging or consolidating with,
or by purchasing all or a majority of the equity interests in, or all or
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization
or division thereof, in each case where the same could reasonably be
expected to prevent or materially delay the Merger;
(viii) revalue any of its assets or, except as required by GAAP, make
any change in accounting methods, principles or practices;
(ix) take any actions that could prevent it from being able to account
for the Merger as a pooling of interests whether or not otherwise permitted
by the provisions of this Article IV (provided that if, prior to the taking
of such actions, representatives of the independent auditors of both
Company and Parent have stated that a proposed action would not prevent
Company from being able to account for the Merger as a pooling of
interests, such action shall not be deemed to breach this clause (ix)); or
(x) take or agree in writing or otherwise to take, any of the actions
described in clauses (i) through (ix) above, or any action which would make
any of its representations or warranties contained in this Agreement untrue
or incorrect or prevent it from performing or cause it not to perform its
covenants hereunder.
4.2 Cooperation. Subject to compliance with applicable law, from the date
hereof until the Effective Time, each of Parent and Company 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 this Agreement, the Merger and
the transactions contemplated hereby and thereby.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement;
Antitrust and Certain Other Filings.
(a) As promptly as practicable after the execution of this Agreement,
Company and Parent will prepare and file with the SEC the Proxy
Statement/Prospectus, and Parent will prepare and file with the SEC the
Registration Statement in which the Proxy Statement/Prospectus will be included
as a prospectus. Each of Company and Parent will respond to any comments of the
SEC, and will use all reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing; provided, however, that Parent shall have no obligation to agree to
account for the Merger as a
48
"purchase" in order to cause the Registration Statement to become effective.
Each of Company and Parent will cause the Proxy Statement/Prospectus to be
mailed to its respective stockholders and at the earliest practicable time after
the Registration Statement is declared effective by the SEC.
(b) As promptly as practicable after the date of this Agreement, each of
Company and Parent will prepare and file (i) with the United States Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice Notification and Report Forms relating to the transactions contemplated
herein as required by the HSR Act, as well as comparable pre-merger notification
forms required by the merger notification or control laws and regulations of any
other applicable jurisdiction, as agreed to by the parties, including such
filings as may be required under the European Community Merger Regulation (the
"Antitrust Filings") and (ii) any other filings required to be filed by it under
the Exchange Act, the Securities Act or pursuant to any other Legal Requirement
relating to the Merger and the transactions contemplated by this Agreement (the
"Other Filings").
(c) Company and Parent each shall promptly supply the other with any
information which may be required in order to effectuate any filings pursuant to
this Section 5.1. Each of Company and Parent will notify the other promptly upon
the receipt of any comments from the SEC or its staff or any other government
officials in connection with any filing made pursuant hereto and of any request
by the SEC or its staff or any other government officials for amendments or
supplements to the Registration Statement, the Proxy Statement/Prospectus or any
Antitrust Filings or Other Filings or for additional information and will supply
the other with copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Registration
Statement, the Proxy Statement/Prospectus, the Merger or any Antitrust Filing or
Other Filing. Each of Company and Parent will cause all documents that it is
responsible for filing with the SEC or other Governmental Entity under this
Section 5.1 to comply in all material respects with all applicable requirements
of law and the rules and regulations promulgated thereunder.
(d) Whenever any event occurs which is required to be set forth in an
amendment or supplement to the Proxy Statement/Prospectus, the Registration
Statement or any Antitrust Filing or Other Filing, Company or Parent, as the
case may be, will promptly inform the other of such occurrence and cooperate in
filing with the SEC or any other Governmental Entity, as applicable, and, if
necessary or advisable, mailing to stockholders of Company and/or shareholders
of Parent, such amendment or supplement.
5.2 Meeting of Company Stockholders.
(a) Promptly after the date hereof, Company will take all action necessary
in accordance with Delaware Law and its Certificate of Incorporation and Bylaws
to convene the Company Stockholders' Meeting to be held as promptly as
practicable, and in any event (to the extent permissible under applicable law)
within 45 days after the declaration of effectiveness of the Registration
Statement, for the purpose of voting upon approval and adoption of this
Agreement and approval of the Merger. Subject to Section 5.2(c), Company will
use all reasonable efforts to solicit from its stockholders proxies in favor of
the adoption and approval of
49
this Agreement and the approval of the Merger and will take all other action
necessary or advisable to secure the vote or consent of its stockholders
required under the rules of Nasdaq or Delaware Law in connection with obtaining
such approvals. Company shall not postpone or adjourn (other than for the
absence of a quorum) the Company Stockholders' Meeting without the consent of
Parent, which shall not be unreasonably withheld. Company shall ensure that the
Company Stockholders' Meeting is called, noticed, convened, held and conducted,
and subject to Section 5.2(c) that all proxies solicited by Company in
connection with the Company Stockholders' Meeting are solicited, in compliance
with the Delaware Law, its Certificate of Incorporation and Bylaws, the rules of
Nasdaq and all other applicable Legal Requirements. Company's obligation to
call, give notice of, convene and hold the Company Stockholders' Meeting in
accordance with this Section 5.2(a) shall not be limited to or otherwise
affected by the commencement, disclosure, announcement or submission to Company
of any Company Acquisition Proposal (as defined in Section 5.5), or by any
withdrawal, amendment or modification of the recommendation of the Board of
Directors of Company with respect to this Agreement or the Merger.
(b) Subject to Section 5.2(c): (i) the Board of Directors of Company shall
unanimously recommend that Company's stockholders vote in favor of and adopt and
approve this Agreement and approve the Merger at the Company Stockholders'
Meeting; (ii) the Proxy Statement/Prospectus shall include a statement to the
effect that the Board of Directors of Company has unanimously recommended that
Company's stockholders vote in favor of and adopt and approve this Agreement and
the Merger at the Company Stockholders' Meeting; and (iii) neither the Board of
Directors of Company nor any committee thereof shall (A) withdraw, amend or
modify, or propose or resolve to withdraw, amend or modify in a manner adverse
to Parent, the unanimous recommendation of the Board of Directors of Company
that Company's stockholders vote in favor of and adopt and approve this
Agreement and the Merger or (B) approve or recommend, or indicate publicly its
intention to approve or recommend, any Company Acquisition Transaction or
Company Acquisition Proposal (as defined in Section 5.5). For purposes of this
Agreement, said recommendation of the Board of Directors shall be deemed to have
been modified in a manner adverse to Parent if said recommendation shall no
longer be unanimous.
(c) Nothing in this Agreement shall prevent the Board of Directors of
Company from withholding, withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger, omitting such recommendation from the
Proxy Statement/Prospectus, or approving or recommending any Company Superior
Offer, if (i) a Company Superior Offer (as defined below) is made to Company and
is not withdrawn, (ii) Company shall have provided written notice to Parent (a
"Notice of Company Superior Offer") advising Parent that Company has received a
Company Superior Offer, specifying all of the material terms and conditions of
such Company Superior Offer and identifying the person or entity making such
Company Superior Offer, (iii) Parent shall not have, within five (5) business
days of Parent's receipt of the Notice of Company Superior Offer, made an offer
that the Company Board by a majority vote determines in its good faith judgment
(based on the written advice of its financial adviser) to be at least as
favorable to Company's stockholders as such Company Superior Offer (it being
agreed that the Board of Directors of Company shall convene a meeting to
consider any such offer by Parent promptly following the receipt thereof), (iv)
the Board of Directors of Company concludes in good faith, after consultation
with its outside
50
counsel, that, in light of such Company Superior Offer, the withholding,
withdrawal, amendment or modification of such recommendation, omitting such
recommendation from the Proxy Statement/Prospectus, or approving or recommending
a Company Superior Offer, is required in order for the Board of Directors of
Company to comply with its fiduciary obligations to Company's stockholders under
applicable law, and (v) Company shall not have violated any of the restrictions
set forth in Section 5.5 or this Section 5.2. Company shall provide Parent with
at least three (3) business days prior notice (or such lesser prior notice as
provided to the members of Company's Board of Directors) of any meeting of
Company's Board of Directors at which Company's Board of Directors considers, or
is reasonably expected to consider, any Company Acquisition Proposal to
determine whether such Company Acquisition Proposal is a Company Superior Offer.
Subject to applicable laws, nothing contained in this Section 5.2 shall limit
Company's obligation to hold and convene the Company Stockholders' Meeting
(regardless of whether the unanimous recommendation of the Board of Directors of
Company shall have been withdrawn, amended or modified).
For purposes of this Agreement "Company Superior Offer" shall mean a bona
fide written offer made by a third party to consummate any of the following
transactions: (i) a merger or consolidation involving Company pursuant to which
the stockholders of Company immediately preceding such transaction will hold
less than 50% of the equity interest in the surviving or resulting entity of
such transaction or (ii) the acquisition by any person or group (including by
way of a tender offer or an exchange offer or a two step transaction involving a
tender offer followed with reasonable promptness by a cash-out merger involving
Company), directly or indirectly, of ownership of 100% of the then outstanding
shares of capital stock of Company, on terms that the Board of Directors of
Company determines, in its reasonable good faith judgment (based on the written
advice of a financial adviser of nationally recognized reputation) to be more
favorable to the Company Stockholders than the terms of the Merger; provided,
however, that any such offer shall not be deemed to be a "Company Superior
Offer" if any financing required to consummate the transaction contemplated by
such offer is not committed, or if such offer is subject to any material
contingency as to the availability of financing (unless in the reasonable
judgment of Company's Board of Directors, it is unlikely that such contingency
will not be satisfied).
(d) Nothing contained in this Agreement shall prohibit Company or its Board
of Directors from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act if,
in the good faith judgment of the Board of Directors of Company, after
consultation with outside counsel, failure so to disclose would be inconsistent
with its obligations under applicable law.
5.3 Meeting of Parent Shareholders.
(a) Promptly after the date hereof, Parent will take all action necessary
in accordance with the Companies Act, Chapter 50 of Singapore and its Articles
of Association to convene the Parent Shareholders' Meeting to be held as
promptly as practicable, and in any event (to the extent permissible under
applicable law) within 45 days after the declaration of effectiveness of the
Registration Statement. Parent will use all reasonable efforts to solicit from
its shareholders proxies in favor of the issuance of Parent Ordinary Shares
pursuant to the Merger, and will take all other action necessary or advisable to
secure the vote or consent of its
51
shareholders required by the rules of Nasdaq or Singapore law to obtain such
approvals. Notwithstanding anything to the contrary contained in this Agreement,
Parent may, with the consent of the meeting, adjourn the Parent Shareholders'
Meeting to the extent necessary to ensure that any necessary supplement or
amendment to the Proxy Statement/Prospectus is provided to Parent Shareholders
in advance of a vote on the issuance of Parent Ordinary Shares pursuant to the
Merger, or, if as of the time for which the Parent Shareholders' Meeting is
originally scheduled (as set forth in the Proxy Statement/Prospectus) there are
insufficient Parent Ordinary Shares represented (either in person or by proxy)
to constitute a quorum necessary to conduct the business of the Parent
Shareholders' Meeting. Parent shall ensure that the Parent Shareholders' Meeting
is called, noticed, convened, held and conducted, that all proxies solicited by
Parent in connection with the Parent Shareholders' Meeting are solicited in
compliance with Singapore law, its Articles of Association, the rules of Nasdaq
and all other applicable legal requirements. Parent's obligation to call, give
notice, or convene and hold the Parent Shareholders' Meeting in accordance with
this Section 5.3(a) shall not be limited to or otherwise affected by any
withdrawal, amendment or modification of the recommendation of the Board of
Directors of Parent with respect to the issuance of Parent Ordinary Shares
pursuant to the Merger.
(b) (i) the Board of Directors of Parent shall recommend that Parent
Shareholders vote in favor of the issuance of the Parent Ordinary Shares
pursuant to the Merger, (ii) the Proxy Statement/Prospectus shall include a
statement to the effect that the Board of Directors of Parent has recommended
that Parent shareholders vote in favor of such matters at the Parent
Shareholders' Meeting, and (iii) neither the Board of Directors of Parent nor
any committee thereof shall withdraw, amend or modify, or propose to resolve to
withdraw, amend or modify in a manner adverse to Company, the recommendation of
the Board of Directors of Parent that Parent shareholders vote in favor of such
matters. For purposes of this Agreement, said recommendation of the Board of
Directors shall be deemed to have been modified in a manner adverse to Company
if said recommendation shall no longer be unanimous, provided that, for all
purposes of this Agreement, an action by any Board of Directors or committee
thereof shall be unanimous if each member of such Board of Directors or
committee has approved such action other than (i) any such member who has
appropriately abstained from voting on such matter because of an actual or
potential conflict of interest and (ii) any such member who is unable to vote in
connection with such action as a result of death or disability.
5.4 Confidentiality; Access to Information; Standstill.
(a) Confidentiality Agreement. The parties acknowledge that Company and
Parent have previously executed mutual Confidentiality Agreements, dated as of
August 9, 1999 and November 9, 1999 (the "Confidentiality Agreements"), and the
Standstill Agreement dated as of November 9, 1999 (the "Standstill Agreement"),
which Agreements will continue in full force and effect in accordance with their
respective terms.
(b) Access to Information. Company and Parent will each afford to the other
and its accountants, counsel and other representatives reasonable access during
normal business hours to its properties, books, records and personnel during the
period prior to the Effective Time to obtain all information concerning its
business, including the status of its product development efforts, properties,
results of operations and personnel, as such other party may reasonably
52
request and, during such period, each of Parent and Company shall (and shall
cause each of their respective subsidiaries to) furnish promptly to the other 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. Unless otherwise required by law, the parties will hold any
such information which is non-public in confidence in accordance with the
Confidentiality Agreements. No information or knowledge obtained in any
investigation pursuant to this Section 5.4 will affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.5 No Solicitation.
(a) Company and its subsidiaries will not, nor will they authorize or
permit any of their respective officers, directors, affiliates or employees or
any investment banker, attorney or other advisor or representative retained by
any of them to, directly or indirectly, (i) solicit, initiate, encourage or
induce the making, submission or announcement of any Company Acquisition
Proposal, (ii) propose, enter into or participate in any discussions or
negotiations regarding, or furnish to any person any non-public information with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes or may reasonably be expected to lead to, any
Company Acquisition Proposal, (iii) engage in discussions with any person with
respect to any Company Acquisition Proposal, except as to the existence of these
provisions, (iv) subject to Section 5.2(c), approve, endorse or recommend any
Company Acquisition Proposal, or (v) enter into any letter of intent or similar
document or any contract, agreement or commitment contemplating or otherwise
relating to any Company Acquisition Transaction (as defined below); provided,
however, that prior to the approval of this Agreement and the Merger at the
Company Stockholders' Meeting, this Section 5.5 shall not prohibit Company from
furnishing non-public information regarding Company and its subsidiaries to, or
entering into discussions with, any person or group who has submitted to Company
prior to the date of the Company Stockholders' Meeting (and not withdrawn) an
unsolicited, written, bona fide Company Acquisition Proposal that the Board of
Directors of Company reasonably concludes (based on the written advice of its
financial adviser) may constitute a Company Superior Offer if (A) neither
Company nor any representative of Company and its subsidiaries shall have
violated any of the restrictions set forth in this Section 5.5, (B) prior to the
date of the Company Stockholders' Meeting, the Board of Directors of Company
concludes in good faith, after consultation with its outside legal counsel, that
such action is required in order for the Board of Directors of Company to comply
with its fiduciary obligations to Company's stockholders under applicable
Delaware Law, (C) prior to furnishing any such non-public information to, or
entering into any such discussions with, such person or group, Company gives
Parent written notice of the identity of such person or group and all of the
material terms and conditions of such Company Acquisition Proposal and of
Company's intention to furnish non-public information to, or enter into
discussions with, such person or group, and Company receives from such person or
group an executed confidentiality agreement containing terms at least as
restrictive with regard to Company's confidential information as the
Confidentiality Agreement, (D) Company gives Parent at least three (3) business
days advance notice of its intent to furnish such non-public information or
enter into such discussions, and (E) contemporaneously with furnishing any such
non-public information to such person or group, Company furnishes such
non-public information to Parent (to the extent such non-public information has
not been previously furnished by Company to Parent). Company and its
53
subsidiaries will immediately cease any and all existing activities, discussions
or negotiations with any parties conducted heretofore with respect to any
Company Acquisition Proposal. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding two sentences
by any officer, director or employee of Company or any of its subsidiaries or
any investment banker, attorney or other advisor or representative of Company or
any of its subsidiaries shall be deemed to be a breach of this Section 5.5(a) by
Company.
(b) For purposes of this Agreement, "Company Acquisition Proposal" shall
mean any inquiry, offer or proposal (other than an offer or proposal by Parent)
regarding or relating to any acquisition, merger or other potential transaction
that if consummated would constitute a Company Acquisition Transaction. For the
purposes of this Agreement, "Company Acquisition Transaction" shall mean any
transaction or series of related transactions other than the transactions
contemplated by this Agreement involving: (A) any acquisition or purchase from
Company by any person or "group" (as defined under Section 13(d) of the Exchange
Act and the rules and regulations thereunder) of more than a 15% interest in the
total outstanding voting securities of Company or any of its subsidiaries or any
tender offer or exchange offer that if consummated would result in any person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) beneficially owning 15% or more of the total outstanding
voting securities of Company or any of its subsidiaries, or any merger,
consolidation, business combination or similar transaction involving Company
pursuant to which the stockholders of Company immediately preceding such
transaction would hold less than 85% of the equity interests in the surviving or
resulting entity of such transaction; (B) any sale, lease, exchange, transfer,
license, acquisition or disposition of more than 15% of the assets of Company;
or (C) any liquidation or dissolution of Company.
(c) In addition to the obligations of Company set forth in the preceding
Section 5.5(a), Company as promptly as practicable shall advise Parent orally
and in writing of any request for non-public information which Company
reasonably believes would lead to a Company Acquisition Proposal or of any
Company Acquisition Proposal, or any inquiry with respect to or which Company
reasonably believes would lead to any Company Acquisition Proposal, the material
terms and conditions of such request, Company Acquisition Proposal or inquiry,
and the identity of the person or group making any such request, Company
Acquisition Proposal or inquiry. Company will keep Parent informed as promptly
as practicable in all material respects of the status and details (including
material amendments or proposed amendments) of any such request, Company
Acquisition Proposal or inquiry.
5.6 Public Disclosure. Parent and Company will consult with each other, and
to the extent practicable, agree, before issuing any press release or otherwise
making any public statement with respect to the Merger, this Agreement or any
Company Acquisition Proposal and will not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by law or the rules of the Nasdaq National Market after reasonable efforts have
been made to consult with the other party before such public statement is
required to be made. The parties have agreed to the text of the joint press
release announcing the signing of this Agreement.
54
5.7 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including using reasonable efforts to accomplish the following:
(i) the taking of all reasonable acts necessary to cause the
conditions precedent set forth in Article VI to be satisfied,
(ii) the obtaining of all necessary actions, waivers, consents,
approvals, orders and authorizations from Governmental Entities and the
making of all necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to avoid any
suit, claim, action, investigation or proceeding by any Governmental
Entity,
(iii) the obtaining of all necessary consents, approvals or waivers
from third parties,
(iv) the defending of any suits, claims, actions, investigations or
proceedings, whether judicial or administrative, challenging this Agreement
or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed, and
(v) the execution or delivery of any additional instruments necessary
to consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement.
(b) Each of Company and Parent will give prompt notice to the other of (i)
any notice or other communication from any person alleging that the consent of
such person is or may be required in connection with the Merger, (ii) any notice
or other communication from any Governmental Entity in connection with the
Merger, or (iii) any litigation relating to, involving or otherwise affecting
Company, Parent or their respective subsidiaries that relates to, or that could
reasonably be expected to affect any party's ability to effect, the consummation
of the Merger. Company shall give prompt notice to Parent of any representation
or warranty made by it contained in this Agreement becoming untrue or
inaccurate, or any failure of Company to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement, in each case, such that the conditions set forth in
Section 6.3(a) or 6.3(b) would not be satisfied, provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement. Parent shall give prompt notice to Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent or Merger Sub to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or
55
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 6.2(a) or 6.2(b) would not be satisfied, provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
5.8 Third Party Consents. As soon as practicable following the date hereof,
Parent and Company will each use all reasonable efforts to obtain any consents,
waivers and approvals under any of its or its subsidiaries' respective
agreements, contracts, licenses or leases required to be obtained in connection
with the consummation of the transactions contemplated hereby.
5.9 Stock Options, Warrants, ESPP and Employee Benefits.
(a) At the Effective Time, each then outstanding Company Option whether or
not vested or exercisable at the Effective Time and regardless of the respective
exercise prices of the Company Options, will be assumed by Parent, and each
Performance Share that vests at the Effective Time will be converted into Parent
Ordinary Shares pursuant to Section 1.4. Each Company Option so assumed by
Parent under this Agreement will continue to have, and be subject to, the same
terms and conditions set forth in the applicable Company Stock Option Plan (and
any applicable stock option agreement for such Company Option and any applicable
agreement accelerating the vesting of such Company Option disclosed in the
Company Disclosure Letter) immediately prior to the Effective Time (including,
without limitation, any repurchase rights or vesting provisions and provisions
providing for exercisability following termination of employment) except as such
terms and conditions may be altered to comply with Singapore legal requirements,
and except further that (i) each Company Option will be exercisable (or will
become exercisable in accordance with its terms) for that number of whole Parent
Ordinary Shares equal to the product of the number of shares of Company Common
Stock that were issuable upon exercise of such Company Option immediately prior
to the Effective Time multiplied by the Exchange Ratio, rounded down to the
nearest whole number of Parent Ordinary Shares and (ii) in the case of Company
Options, the per share exercise price for the Parent Ordinary Shares issuable
upon exercise of such assumed Company Option will be equal to the quotient
determined by dividing the exercise price per share of Company Common Stock at
which such Company Option was exercisable immediately prior to the Effective
Time by the Exchange Ratio, rounded up to the nearest whole cent; provided that
if such calculation results in the exercise price being less than the par value
of a Parent Ordinary Share, the exercise price shall be the par value of a
Parent Ordinary Share. Each assumed Company Option shall be vested immediately
following the Effective Time as to the same percentage of the total number of
shares subject thereto as it was vested immediately prior to the Effective Time,
subject to acceleration in accordance with the terms thereof as disclosed in the
Company Disclosure Letter. Continuous employment with Company or its
subsidiaries shall be credited to the optionee for purposes of determining the
vesting of all Company Options after the Effective Time. Within twenty (20) days
after the Effective Time, Parent will issue to each person who immediately prior
to the Effective Time was a holder of an outstanding Company Option a document
evidencing the foregoing assumption thereof by Parent.
(b) It is intended that Company Options assumed by Parent shall qualify
following the Effective Time as incentive stock options as defined in Section
422 of the Code to
56
the extent such Company Options qualified as incentive stock options immediately
prior to the Effective Time and the provisions of this Section 5.9 shall be
applied consistent with such intent.
(c) At the Effective Time, each outstanding purchase right with respect to
the then open offering under the Company's ESPP (each an "Assumed Purchase
Right") shall be assumed by Parent. Each Assumed Purchase Right shall continue
to have, and be subject to, the terms and conditions set forth in the Company's
ESPP and the documents governing the Assumed Purchase Right, except as such
terms and conditions may be altered to comply with Singapore legal requirements,
and except further that the purchase price of the shares of Parent's Ordinary
Shares under the Assumed Purchase Right shall be the lesser of (i) the quotient
determined by the dividing 85% of the fair market value of the Company's Common
Stock on the Offering Date (as defined in the Company's ESPP) by the Exchange
Ratio and (ii) 85% of the last sale price of the Parent's Ordinary Shares on
Nasdaq on the last day of the offering that was open at the Effective Time (with
the number of shares rounded down to the nearest whole share and the Purchase
Price rounded up to the nearest whole cent; provided that if such calculation
results in the purchase price being less than the par value of a Parent Ordinary
Share, the purchase price shall be the par value of a Parent Ordinary Share).
The Assumed Purchase Rights shall be exercisable only for Parent Ordinary
Shares. The Company's ESPP shall terminate immediately following the purchase of
shares under the Assumed Purchase Rights.
(d) Effective immediately prior to the Effective Time, Company shall issue
a final pro rata number of shares of Company Common Stock to directors of
Company under Company's Directors' Stock Plan, it being understood that such
shares of Company Common Stock shall be deemed outstanding as of the Effective
Time for purposes of Section 1.4(a).
(e) Parent shall take all action necessary to reserve for issuance a
sufficient number of Parent Ordinary Shares for delivery upon exercise of the
Company Options and the Assumed Purchase Rights, and the vesting of Performance
Shares.
(f) As soon as practicable after the execution of this Agreement, Company
and Parent shall confer and work together in good faith to agree upon mutually
acceptable employee benefit and compensation arrangements in accordance with
this Section 5.17 (which may include terminating certain Company Employee Plans
(as defined in Section 2.14(a)(ii)) immediately prior to the Effective Time if
appropriate and to the extent permitted under applicable law).
(g) For a period of at least one year following the Effective Time, Parent
shall provide (or cause to be provided) benefits to any person who was employed
by Company or its subsidiaries immediately prior to the Effective Time and who
continues to be an employee of Parent or its subsidiaries ("Company Employees")
that are either no less favorable in the aggregate to the benefits provided to
similarly-situated employees of Parent or are generally equivalent to the
benefits provided under the Company Employee Plans in existence immediately
prior to the Effective Time. After the Effective Time, Parent shall grant (or
cause to be granted) to each Company Employee credit for all service with
Company prior to the Effective Time to the same extent as if such service had
been service with Parent for (i) all eligibility and vesting purposes under all
employee benefit plans, policies, programs and arrangements of Parent and any of
its subsidiaries that cover a Company Employee, and (ii) purposes of satisfying
any
57
preexisting condition exclusion or actively-at-work requirement that would
otherwise apply to such Company Employee under any medical, dental or other
welfare benefit plans, policies, programs and arrangements of Parent and any of
its subsidiaries that employ a Company Employee, to the extent that this clause
(ii) does not violate the applicable plan, policy, program or arrangement;
provided that Parent shall, to the extent permitted by the terms thereof and
applicable law, as soon as practicable, take all action, including effecting any
amendments to any such plan, policy, program or arrangement, as may be necessary
or appropriate to prevent such violation.
(h) Parent shall cause Surviving Corporation to assume, honor, maintain and
perform in accordance with their respective terms, without deductions,
counterclaims, interruptions or deferments (other than withholding under
applicable law), all employment and severance agreements and arrangements
disclosed on Part 5.9(h) of the Company Disclosure Letter, including any terms
thereof, which provides for the payment or acceleration of benefits to
employees, former employees or directors or former directors of Company upon or
in connection with a change of control of Company. Parent further agrees to
cause the Surviving Corporation to make any amendments to Company's Deferred
Compensation Plan necessary to ensure that the intent of such plan is fulfilled
despite the changes resulting from the Merger, such as, but not limited to, the
conversion of Company Common Stock to Parent Ordinary Shares.
(i) Parent shall cause Merger Sub and the Surviving Company to take all
actions prescribed by the Exchange Act and the rules and regulations thereunder,
including any SEC no-actions or interpretative letters issued thereunder, in
order to ensure that the exchange of Company Common Stock and Parent's
assumption of Company Options and obligations relating to unvested Performance
Shares in accordance with this Agreement will not be deemed to be a purchase or
sale of securities by any officer, director or employee of Company or any of its
subsidiaries for purpose of Section 16 under the Exchange Act.
5.10 Form S-8. Parent agrees to file a registration statement on Form S-8
for the Parent Ordinary Shares issuable with respect to assumed Company Options,
Performance Shares and Assumed Purchase Rights as soon as is reasonably
practicable after the Effective Time and shall maintain the effectiveness of
such registration statement thereafter for so long as any of such options or
other rights remain outstanding.
5.11 Nasdaq Quotation. Parent agrees to cause the Parent Ordinary Shares
issuable, and those required to be reserved for issuance, in connection with the
Merger, to be approved prior to the Effective Time for quotation on the Nasdaq
Stock Market, subject to official notice of issuance.
5.12 Indemnification; Insurance.
(a) Indemnification. From and after the Effective Time, Parent will (to the
extent permitted under all applicable laws), and will cause the Surviving
Corporation to, fulfill and honor in all respects the obligations of Company
pursuant to any indemnification agreements between Company and its directors,
officers, employees and other agents and representatives as of the Effective
Time (the "Indemnified Parties") and any indemnification provisions under
Company's Certificate of Incorporation or Bylaws as in effect on the date
hereof. The Certificate
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of Incorporation and Bylaws of the Surviving Corporation will contain provisions
with respect to exculpation and indemnification that are at least as favorable
to the Indemnified Parties as those contained in the Certificate of
Incorporation and Bylaws of Company as in effect on the date hereof, which
provisions will not be amended, repealed or otherwise modified for a period of
six (6) years from the Effective Time in any manner that would adversely affect
the rights thereunder of individuals who, immediately prior to the Effective
Time, were entitled to indemnification under the corresponding provision of the
Certificate of Incorporation and Bylaws of Company, unless such modification is
required by law.
(b) Insurance. For a period of six (6) years after the Effective Time,
Parent will cause the Surviving Corporation to maintain in effect, to the extent
available, directors' and officers' liability insurance, with respect to claims
arising from events or conditions occurring on or prior to the Effective Time,
including any claims relating to the Merger, covering those persons who are
currently covered by Company's directors' and officers' liability insurance
policy on terms comparable to those applicable to the current directors and
officers of Company; provided, however, that in no event will Parent or the
Surviving Corporation be required to expend in excess of 200% of the annual
premium currently paid by Company for such coverage (or such coverage as is
available for such 200% of such annual premium).
(c) Survival and Beneficiaries. This Section 5.12 shall survive the
consummation of the Merger, is intended to benefit Company, the Surviving
Corporation and each Indemnified Party, shall be binding on all successors and
assigns of the Surviving Corporation and Parent, and shall be enforceable by the
Indemnified Parties.
5.13 Affiliate Agreements. Company will use all reasonable efforts to
deliver or cause to be delivered to Parent, as promptly as practicable on or
following the date hereof, from each Company Affiliate an executed affiliate
agreement in substantially the form attached hereto as Exhibit C (the "Company
Affiliate Agreement"), each of which will be in full force and effect as of the
date thereof and as of the Effective Time. Parent will use all reasonable
efforts to deliver or cause to be delivered, as promptly as practicable on or
following the date hereof, from each Parent Affiliate an executed affiliate
agreement in substantially the form attached hereto as Exhibit D (the "Parent
Affiliate Agreement"), each of which will be in full force and effect as of the
date hereof and as of the Effective Time. Parent will be entitled to place
appropriate legends on the certificates evidencing any Parent Ordinary Shares to
be received by a Company Affiliate or Parent Affiliate pursuant to the terms of
this Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for the Parent Ordinary Shares, consistent with the terms of the
Company Affiliate Agreement or Parent Affiliate Agreement.
5.14 Letter of Company's Accountants. Company shall use all reasonable
efforts to cause to be delivered to Parent a letter of Deloitte & Touche LLP,
dated no more than two business days before the date on which the Registration
Statement becomes effective (and reasonably satisfactory in form and substance
to Parent), that is customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
5.15 Letter of Parent's Accountants. Parent shall use all reasonable
efforts to cause to be delivered to Company a letter of Xxxxxx Xxxxxxxx LLP,
dated no more than two business days
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before the date on which the Registration Statement becomes effective (and
reasonably satisfactory in form and substance to Company), that is customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
5.16 Takeover Statutes. If any takeover statute is or may become applicable
to the Merger or the other transactions contemplated by this Agreement, each of
Parent and Company and their respective Boards of Directors shall grant such
approvals and take such lawful actions as are necessary to ensure that the
Merger and such other transactions may be consummated as promptly as practicable
on the terms contemplated by this Agreement and otherwise act to eliminate or
minimize the effects of such statute and any regulations promulgated thereunder
on such transactions.
5.17 Stockholder Litigation. Each of Company and Parent shall give the
other the reasonable opportunity to participate in the defense of any
stockholder litigation against Company or Parent, as applicable, and its
directors relating to the transactions contemplated by this Agreement and the
Option Agreements.
5.18 Pooling Accounting. Each of Parent and Company shall use all
reasonable efforts to cause the Merger to be accounted for as a pooling of
interests. Parent will use its reasonable efforts to ensure that no person who
is a Parent Affiliate takes any action that would prevent Parent from accounting
for the Merger as a pooling of interests. Company will use all reasonable
efforts to ensure that no person who is a Company Affiliate takes any action
that would prevent Parent from accounting for the Merger as a pooling of
interests.
5.19 Rights Agreement. Company shall, within five (5) business days of the
date hereof, take all actions necessary, if any, such that, for all purposes
under the Rights Agreement dated as of May 4, 1993 between Company and Norwest
Bank Minnesota, N.A., as rights agent, neither Parent nor Merger Sub shall be
deemed an Acquiring Person (as defined in the Rights Agreement), the
Distribution Date (as defined in the Rights Agreement) shall not be deemed to
occur, and the Rights will not separate from the Company Common Stock, as a
result of Parent's or Merger Sub's entering into this Agreement, the Company
Option Agreement or the Company Voting Agreement or consummating the Merger
and/or the other transactions contemplated hereby or thereby. Company shall,
within five (5) business days of the date hereof, taken all necessary action, if
any, with respect to all of the outstanding Rights so that, immediately prior to
the Effective Time, (a) Company will not have any obligations under the Rights
or the Rights Agreement with respect to the Merger and/or the other transactions
contemplated hereby and (b) the holders of Rights will have no rights under the
Rights or the Rights Agreement with respect to the Merger and/or the other
transactions contemplated hereby.
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ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval. This Agreement shall have been approved
and adopted, and the Merger shall have been approved by a vote of holders of
outstanding shares of Company Common Stock representing a majority of all votes
entitled to be cast on the matter.
(b) Parent Shareholder Approval. The issuance of the Parent Ordinary Shares
pursuant to the Merger shall have been duly approved by the requisite majority
of the shareholders of Parent under applicable Nasdaq rules, Singapore laws and
Parent's Articles of Association.
(c) Registration Statement Effective; Proxy Statement. The SEC shall have
declared the Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose, and no similar proceeding in respect
of the Proxy Statement/Prospectus, shall have been initiated or threatened in
writing by the SEC.
(d) No Order; HSR Act. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger or otherwise limiting or
restricting Parent's conduct or operation of the business of Company and its
subsidiaries following the Merger in a manner that could reasonably be expected
to have a Parent Material Adverse Effect. All waiting periods, if any, under the
HSR Act and the European Community Merger Regulation relating to the
transactions contemplated hereby will have expired or terminated early and all
material foreign antitrust approvals required to be obtained prior to the Merger
in connection with the transactions contemplated hereby shall have been
obtained.
(e) Approvals. Other than the filing provided for by Section 1.2(a), 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 or obtain is reasonably likely to have a Company
Material Adverse Effect or Parent Material Adverse Effect shall have been filed,
been obtained or occurred.
(f) Tax Opinions. Parent and Company shall each have received written
opinions from their respective tax counsel (Fenwick & West LLP and Xxxxxx,
Xxxxxx-Xxxxxxx, Colt & Mosle LLP, respectively), in form and substance
reasonably satisfactory to them, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and such
opinions shall not have been withdrawn. The parties to this Agreement agree to
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make such reasonable representations as requested by such counsel for the
purpose of rendering such opinions.
(g) Nasdaq Listing. The Parent Ordinary Shares to be issued in the Merger
shall have been approved for quotation on the Nasdaq Stock Market subject to
notice of issuance.
6.2. Additional Conditions to Obligations of Company. The obligation of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. Each representation and warranty of
Parent and Merger Sub contained in this Agreement (i) shall have been true and
correct in all material respects as of the date of this Agreement and (ii) shall
be true and correct in all material respects on and as of the Closing Date with
the same force and effect as if made on the Closing Date (except, in the case of
clause (ii), for breaches, inaccuracies and omissions of such representations
and warranties which have neither had nor reasonably would be expected to have a
Material Adverse Effect on Parent (it being understood that, for purposes of
determining the accuracy of such representations and warranties, (1) all
"Material Adverse Effect" qualifications and other qualifications based on the
word "material" or similar phrases contained in such representations and
warranties shall be disregarded, and (2) any update of or modification to the
Parent Disclosure Letter made or purported to have been made after the execution
of this Agreement shall be disregarded). Company shall have received a
certificate with respect to the foregoing signed on behalf of Parent by an
authorized officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them on or prior to the
Closing Date, and Company shall have received a certificate to such effect
signed on behalf of Parent by an authorized officer of Parent.
(c) Material Adverse Effect. No Parent Material Adverse Effect shall have
occurred since the date of this Agreement and be continuing.
(d) Opinion of Accountants.
(i) Parent shall have received from Xxxxxx Xxxxxxxx LLP, independent
auditors for Parent, a letter dated the Closing Date (which may contain
customary qualifications and assumptions), to the effect that Xxxxxx
Xxxxxxxx LLP concurs with Parent's management conclusion that Parent may
account for the Merger as a pooling of interests under Accounting
Principles Board Opinion No. 16, and Company shall have received a copy of
such letter.
(ii) Company shall have received from Deloitte & Touche LLP,
independent public accountants for Company, a letter dated the Closing Date
(which may contain customary qualifications and assumptions), to the effect
that Deloitte & Touche LLP concurs with Company's management conclusion
that no conditions exist related to Company that would preclude Parent from
accounting for the Merger as a pooling of interests under Accounting
Principles Board Opinion No. 16.
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6.3 Additional Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. The representations and warranties of
Company contained in this Agreement (i) shall have been true and correct in all
material respects as of the date of this Agreement and (ii) shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as if made on and as of the Closing Date (except, for (1)
breaches, inaccuracies and omissions of such representations and warranties (A)
contained in Section 2.8(a), which shall be true and correct as of the date of
this Agreement and shall be true and correct in all material respect is on and
as of January 31, 2000, or (B) with respect to any representation or warranty
which have neither had nor reasonably would be expected to have a Material
Adverse Effect on Company, or, (2) in the case of clause (ii), which directly
result from actions taken with the prior written consent, or taken at the
written direction of Parent, it being understood that, for purposes of
determining the accuracy of such representations and warranties, (1) all
"Material Adverse Effect" qualifications and other qualifications based on the
word "material" or similar phrases contained in such representations and
warranties shall be disregarded, and (2) any update of or modification to the
Company Disclosure Letter made or purported to have been made after the
execution of this Agreement shall be disregarded). Parent shall have received a
certificate with respect to the foregoing signed on behalf of Company by an
authorized officer of Company.
(b) Agreements and Covenants. Company shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by an authorized officer of Company.
(c) Material Adverse Effect. No Company Material Adverse Effect shall have
occurred since the date of this Agreement and prior to January 31, 2000.
(d) Opinion of Accountants.
(i) Parent shall have received from Xxxxxx Xxxxxxxx LLP, independent
auditors for Parent, a letter dated the Closing Date (which may contain
customary qualifications and assumptions), to the effect that Xxxxxx
Xxxxxxxx LLP concurs with Parent's management conclusion that Parent may
account for the Merger as a pooling of interests under Accounting
Principles Board Opinion No. 16.
(ii) Company shall have received from Deloitte & Touche LLP,
independent public accountants for Company, a letter dated the Closing Date
(which may contain customary qualifications and assumptions), to the effect
that Deloitte & Touche LLP concurs with Company's management conclusion
that no conditions exist related to Company that would preclude Parent from
accounting for the Merger as a pooling of interests under Accounting
Principles Board Opinion No. 16, and Parent shall have received a copy of
such letter.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the requisite approvals of
the stockholders of Company or shareholders of Parent:
(a) by mutual written consent duly authorized by the Boards of Directors of
Parent and Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by the date that six (6) months after the date of this Agreement
(the "Outside Date"), for any reason; provided, however, that the Outside Date
shall be extended to the date that is nine (9) months after the date of this
Agreement upon written notice of either party to the other party, which notice
shall be delivered on or within ten (10) days before the date that is six (6)
months after the date of this Agreement if any of the conditions specified in
Section 6.1(d) have not been satisfied on the date of such notice; and provided,
further, that the right to terminate or extend this Agreement under this Section
7.1(b) shall not be available to any party whose action or failure to act has
been a principal cause of or resulted in the failure of the Merger to occur on
or before such date and such action or failure to act constitutes a breach of
this Agreement;
(c) by either Company or Parent if a Governmental Entity shall have issued
an order, decree or ruling or taken any other action, in any case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and nonappealable;
(d) by either Company or Parent if the required approval of the Merger by
the stockholders of Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
the Company Stockholders duly convened therefor or at any adjournment thereof;
provided, however, that the right to terminate this Agreement under this Section
7.1(d) shall not be available to Company where the failure to obtain approval of
the Company's stockholders shall have been caused by (i) the action or failure
to act of Company and such action or failure to act constitutes a material
breach by Company of this Agreement or (ii) a breach of any Company Voting
Agreements by any party thereto other than Parent;
(e) by either Company or Parent if the required approval of the
shareholders of Parent contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
the shareholders of Parent duly convened therefor or at any adjournment thereof;
provided, however, that the right to terminate this Agreement under this Section
7.1(e) shall not be available to Parent where the failure to obtain the Parent
shareholder approval shall have been caused by (i) the action or failure to act
of the Parent and such action or failure to act constitutes a material breach by
Parent of this Agreement or (ii) a breach of any Parent Voting Agreement by any
party thereto other than Company;
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(f) by Parent (at any time prior to the adoption and approval of this
Agreement and the Merger by the required vote of the stockholders of Company) if
a Company Triggering Event (as defined below) shall have occurred.
(g) by Company, upon a breach of any representation, warranty, covenant or
agreement on the part of Parent or Merger Sub set forth in this Agreement, or if
any representation or warranty of Parent or Merger Sub shall have become untrue,
in either case such that the conditions set forth in Section 6.2(a) or Section
6.2(b) would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become untrue, provided that if such
inaccuracy in Parent's or Merger Sub's representations and warranties or breach
by Parent or Merger Sub is curable by Parent or Merger Sub through the exercise
of its reasonable efforts, then Company may not terminate this Agreement under
this Section 7.1(g) prior to the Outside Date for 30 days after delivery of
written notice from Company to Parent or Merger Sub, as the case may be, of its
breach, provided Parent or Merger Sub continues to exercise all reasonable
efforts to cure its breach (it being understood that Company may not terminate
this Agreement pursuant to this paragraph (g) if such breach by Parent or Merger
Sub is cured prior to the Outside Date during such 30 day period, or if Company
shall have materially breached this Agreement); or
(h) by Parent, upon a breach of any representation, warranty, covenant or
agreement on the part of Company set forth in this Agreement, or if any
representation or warranty of Company shall have become untrue, in either case
such that the conditions set forth in Section 6.3(a) or Section 6.3(b) would not
be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue, provided that if such inaccuracy in
Company's representations and warranties or breach by Company is curable by
Company through the exercise of its reasonable efforts, then Parent may not
terminate this Agreement under this Section 7.1(h) prior to the Outside Date for
30 days after delivery of written notice from Parent to Company of such breach,
provided Company continues to exercise all reasonable efforts to cure such
breach (it being understood that Parent may not terminate this Agreement
pursuant to this paragraph (h) if such breach by Company is cured prior to the
Outside Date during such 30 day period, or if Parent shall have materially
breached this Agreement).
For the purposes of this Agreement, a "Company Triggering Event" shall be
deemed to have occurred if: (i) the Board of Directors of Company or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its unanimous recommendation in favor of
the adoption and approval of the Agreement or the approval of the Merger; (ii)
Company shall have failed to include in the Proxy Statement/Prospectus the
unanimous recommendation of the Board of Directors of Company in favor of the
adoption and approval of the Agreement and the approval of the Merger; (iii) the
Board of Directors of Company fails to reaffirm its unanimous recommendation in
favor of the adoption and approval of the Agreement and the approval of the
Merger within 10 business days after Parent requests in writing that such
recommendation be reaffirmed at any time following the public announcement of a
Company Acquisition Proposal; (iv) the Board of Directors of Company or any
committee thereof shall have approved or publicly recommended any Company
Acquisition Proposal; (v) Company shall have entered into any letter of intent
or similar document or any agreement, contract or commitment accepting any
Company Acquisition
65
Proposal; (vi) a tender or exchange offer relating to securities of Company
shall have been commenced by a person or entity unaffiliated with Parent and
Company shall not have sent to its securityholders pursuant to Rule 14e-2
promulgated under the Exchange Act, within ten (10) business days after such
tender or exchange offer is first published sent or given, a statement
disclosing that Company recommends rejection of such tender or exchange offer;
or (vii) for any reason Company fails to call and hold the Company Stockholders'
Meeting by the Outside Date (provided that such failure shall not constitute a
Company Triggering Event if, at the Outside Date, Company would be entitled to
terminate this Agreement under Section 7.1(b), 7.1(c), 7.1(e) or pursuant to the
Merger7.1(g)).
7.2 Notice of Termination; Effect of Termination. Any termination of this
Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (a) as set forth
in Section 5.4(a), this Section 7.2, Section 7.3 and Article 8, each of which
shall survive the termination of this Agreement, and (b) that nothing herein
shall relieve any party from liability for any willful breach of this Agreement.
No termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreements and Standstill Agreement, all of
which obligations shall survive termination of this Agreement in accordance with
their terms.
7.3 Fees and Expenses.
(a) General. 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 Merger is consummated; provided,
however, that Parent and Company shall share equally all fees and expenses,
other than attorneys' and accountants fees and expenses, incurred in relation to
the printing and filing (with the SEC) of the Proxy Statement/Prospectus
(including any preliminary materials related thereto) and the Registration
Statement (including financial statements and exhibits) and any amendments or
supplements thereto.
(b) Termination Fee. In the event that this Agreement is terminated by
Parent or Company, as applicable, pursuant to Sections 7.1(b), (d) or (f),
Company shall promptly, but in no event later than two days after the date of
such termination, pay Parent a fee equal to three percent (3%) of the value of
the Company Equity Value, in immediately available funds (the "Company
Termination Fee"); provided, that in the case of termination under Section
7.1(b) or 7.1(d), such payment shall be made only if (A) following the date
hereof and prior to the termination of this Agreement, a third party has
publicly announced a Company Acquisition Proposal, (B) the failure to consummate
the Merger by the Outside Date is principally due to action or failure to act by
Company, and such action or failure to act constitutes a breach of this
Agreement, and (C) within twelve (12) months following the termination of this
Agreement a Company Acquisition (as defined below) is consummated or Company
enters into an agreement providing for a Company Acquisition (in which case such
payment shall be made promptly, but in no event later than two days after the
consummation of such Company Acquisition or the entry by Company into such
agreement). Company acknowledges that the agreements contained in this Section
7.3(b) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent would not enter into this Agreement;
accordingly, if
66
Company fails to pay in a timely manner the amounts due pursuant to this Section
7.3(b) , and, in order to obtain such payment, Parent makes a claim that results
in a judgment against Company for the amounts set forth in this Section 7.3(b),
Company shall pay to Parent its reasonable costs and expenses (including
reasonable attorneys' fees and expenses) in connection with such suit, together
with interest on the amounts set forth in this Section 7.3(b) at the prime rate
of The Chase Manhattan Bank in effect on the date such payment was required to
be made. Payment of the fees described in this Section 7.3(b) shall not be in
lieu of damages incurred in the event of a willful breach of this Agreement. For
the purposes of this Agreement "Company Acquisition" shall mean any of the
following transactions (other than the transactions contemplated by this
Agreement); (i) a merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Company pursuant to
which the stockholders of Company immediately preceding such transaction hold
less than fifty percent (50%) of the aggregate equity interests in the surviving
or resulting entity of such transaction, (ii) a sale or other disposition by
Company of assets representing in excess of fifty percent (50%) of the aggregate
fair market value of Company's business immediately prior to such sale or (iii)
the acquisition by any person or group (including by way of a tender offer or an
exchange offer or issuance by Company), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership of shares representing in
excess of fifty percent (50%) of the voting power of the then outstanding shares
of capital stock of Company.
In no event shall Company be required to make a payment pursuant to this
Section 7.2 to the extent that such payment, together with the aggregate
proceeds (without offset for any amounts paid or withheld for taxes) received by
Parent in respect of the Option and any Option Shares (each as defined in the
Company Option Agreement), prior to the time of such payment, exceeds or would
exceed 3.5% of the Company Equity Value.
For the purposes of this Agreement, "Company Equity Value" means the
product of the average closing price of Company Common Stock on the Nasdaq
National Market over the five (5) trading days prior to the date of termination
pursuant to Sections 7.1(b), (d), or (f), and the sum of: (A) all shares of
Company Common Stock that are outstanding as of the date of termination; (B) all
shares of Company Common Stock issuable upon conversion of all shares of capital
stock that is convertible into shares of Company Common Stock; and (C) all
shares of Company Common Stock issuable upon conversion of all options and
warrants to acquire Company Common Stock that are outstanding as of the date of
termination.
7.4 Amendment. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of Parent and Company.
7.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations and
warranties of Company, Parent and Merger Sub contained in this Agreement shall
terminate at the Effective Time, and only the covenants that by their terms
survive the Effective Time shall survive the Effective Time. The obligations of
Parent and Company pursuant to Sections 5.4(a), 7.3 and 7.4, and this Article
VIII, shall survive the termination of this Agreement.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
If to Parent or Merger Sub, to: If to Company, to:
FLEXTRONICS INTERNATIONAL LTD. THE DII GROUP, INC.
0000 Xxxxxxx Xxxxx 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000 Niwot, Colorado 80503
Attention: Chief Executive Officer Attention: Chief Executive Officer
Telecopy No.: (000) 000-0000 Telecopy No.: (000) 000-0000
with a copy to: with a copy to:
Fenwick & West LLP Xxxxxx, Xxxxxx-Xxxxxxx, Colt & Mosle LLP
Two Palo Alto Square 000 Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx Attention: Xxxxxxx X. Xxxxxxxx
Facsimile Number: (000) 000-0000 Facsimile Number: (000) 000-0000
8.3 Interpretation; Certain Defined Terms. When a reference is made in this
Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement
unless otherwise indicated. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The 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. When reference is made herein to "the business
of" an entity, such reference shall be deemed to include the business of all
direct and indirect subsidiaries of such entity. Reference to the subsidiaries
of an entity shall be deemed to include all direct and indirect subsidiaries of
such entity. For the purposes of this Agreement, the following definitions
apply:
(a) "Code" means the Internal Revenue Code of 1986, as amended;
(b) "Delaware Law" means the General Corporation Law of the State of
Delaware;
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(c) "Encumbrances" means any lien, pledge, hypothecation, charge, mortgage,
security interest, encumbrance, claim, infringement, interference, option, right
of first refusal, preemptive right, community property interest or restriction
of any nature (including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction on
the receipt of any income derived from any asset, any restriction on the use of
any asset and any restriction on the possession, exercise or transfer of any
other attribute of ownership of any asset);
(d) "Exchange Act" means the Securities Exchange Act of 1934, as amended;
(e) "GAAP" means United States generally accepted accounting principles;
(f) "Governmental Entity" means any court, administrative agency or
commission or other governmental authority or instrumentality of any nation or
subdivision of any nation;
(g) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended;
(h) "knowledge" means with respect to a party hereto, with respect to any
matter in question, that any of the officers of such party has actual knowledge
of such matter, after reasonable inquiry of such matter;
(i) "Legal Requirements" means any law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Entity (as defined
above);
(j) "Material Adverse Effect" when used in connection with an entity means
any change, event, violation, inaccuracy, circumstance or effect that is or is
reasonably likely to be materially adverse to, (A) the business, assets
(including intangible assets), capitalization, financial condition or results of
operations of such entity taken as a whole with its subsidiaries, (B) the
ability of such person to perform its obligations under this Agreement and to
consummate the transactions provided for hereunder, or (C) the ability of such
entity to conduct its business as presently conducted (except for changes,
events, circumstances or effects that are caused solely by (i) conditions
affecting the U.S. or world economy, (ii) conditions affecting the electronics
manufacturing services industry as a whole, (iii) the pendency or announcement
of this Agreement or the transactions contemplated hereby, to the extent
attributable to the pendency or announcement of this Agreement or the
transactions contemplated hereby, (iv) changes in the market price or trading
volume of such entity's capital stock or (v) actions taken by Company with the
prior written consent of Parent or at Parent's written direction; provided that
any party asserting that any change, event, circumstance or effect is or has
been caused solely by one or more of the conditions or events described in the
preceding clauses (i) through (iv) shall bear the burden of proof in any
proceeding with respect to establishing such assertion). "Company Material
Adverse Effect" means a Material Adverse Effect with respect to Company and its
subsidiaries, and "Parent Material Adverse Effect" means Material Adverse Effect
with respect to Parent and its Subsidiaries.
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(k) "person" shall mean any individual, corporation (including any
non-profit corporation), general partnership, limited partnership, limited
liability partnership, joint venture, estate, trust, company (including any
limited liability company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity;
(l) "SEC" means the United States Securities and Exchange Commission;
(m) "Securities Act" means the Securities Act of 1933, as amended; and
(n) "subsidiary" of a specified entity means any corporation, partnership,
limited liability company, joint venture or other legal entity which the
specified entity controls, or of which the specified entity (either alone or
through or together with any other subsidiary) owns, directly or indirectly, 50%
or more of the stock or other equity or partnership interests the holders of
which are generally entitled to vote for the election of the Board of Directors
or other governing body of such corporation or other legal entity.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Letter
and the Parent Disclosure Letter (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality and Standstill Agreements shall continue in full force and
effect until the Closing and shall survive any termination of this Agreement;
and (b) except for the provisions of Sections 1.4, 1.5, 5.9(h) and 5.12, are not
intended to confer upon any other person any rights or remedies hereunder.
8.6 Severability. In the event that any provision of this Agreement or the
application thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or
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injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
Any litigation or dispute resolution proceeding among the parties relating to
this Agreement will take place in County of New Castle, Delaware. The parties
consent to the personal jurisdiction of and the venue in the state and federal
courts within such county.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Any purported assignment in
violation of this Section shall be void.
8.11 Disclosure Letter. Notwithstanding anything in the Company Disclosure
Letter or the Parent Disclosure Letter to the contrary, nothing in the Company
Disclosure Letter or the Parent Disclosure Letter shall be deemed adequate to
disclose an exception to a representation or warranty made herein unless the
disclosure identifies the exception with particularity and describes the
relevant facts in reasonable detail; provided, that a particular matter need
only be disclosed once in such manner so long as it is cross-referenced wherever
else applicable in the Company Disclosure Letter or the Parent Disclosure
Letter, as the case may be, in a manner sufficiently clear to identify to which
representation or warranty an exception is being made or unless it is apparent
from the express disclosure made on the Company Disclosure Letter or Parent
Disclosure Letter, as applicable, that an exception is being made to such
representation or warranty.
8.12 WAIVER OF JURY TRIAL. EACH OF PARENT, COMPANY AND MERGER SUB HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
FLEXTRONICS INTERNATIONAL LTD.
Signature: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Printed Name: Xxxxxxx X. Xxxxx
Title: Chairman and Chief Executive Officer
SLALOM ACQUISITION CORP.
Signature: /s/ Xxxxxx X.X. Xxxxx
----------------------------------
Printed Name: Xxxxxx X.X. Xxxxx
Title: Chief Executive Officer
THE DII GROUP, INC.
Signature: /s/ Xxxxxx Xxxxxx
----------------------------------
Printed Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
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