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AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
SANMINA CORPORATION
SUN ACQUISITION SUBSIDIARY, INC.
AND
SCI SYSTEMS, INC.
DATED AS OF JULY 13, 2001
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ARTICLE I MERGER...............................................................................1
1.1 The Merger...................................................................1
1.2 Effective Time; Closing......................................................1
1.3 Effect of the Merger.........................................................2
1.4 Certificate of Incorporation; Bylaws.........................................2
1.5 Directors and Officers.......................................................2
1.6 Effect on Capital Stock......................................................2
1.7 Surrender of Certificates....................................................3
1.8 No Further Ownership Rights in Company Common Stock..........................5
1.9 Lost, Stolen or Destroyed Certificates.......................................5
1.10 Tax Consequences.............................................................6
1.11 Taking of Necessary Action; Further Action...................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY...........................................6
2.1 Organization and Qualification; Subsidiaries.................................6
2.2 Certificates of Incorporation and Bylaws.....................................7
2.3 Capitalization...............................................................7
2.4 Authority Relative to this Agreement.........................................9
2.5 No Conflict; Required Filings and Consents...................................9
2.6 Compliance; Permits; Restrictions............................................10
2.7 SEC Filings; Company Financial Statements....................................11
2.8 No Undisclosed Liabilities...................................................11
2.9 Absence of Certain Changes or Events.........................................11
2.10 Absence of Litigation........................................................12
2.11 Environmental Matters........................................................12
2.12 Employee Matters and Benefit Plans...........................................13
2.13 S-4; Proxy Statements........................................................17
2.14 Restrictions on Business Activities..........................................18
2.15 Title to Property; Condition of Equipment....................................18
2.16 Taxes........................................................................19
2.17 Brokers......................................................................21
2.18 Intellectual Property........................................................21
2.19 Agreements, Contracts and Commitments........................................21
2.20 Insurance....................................................................22
2.21 Opinion of Financial Advisor.................................................22
2.22 Board Approval...............................................................22
2.23 Vote Required................................................................22
2.24 No Ownership of Parent Common Stock..........................................22
2.25 State Takeover Statutes......................................................22
2.26 Product Warranty.............................................................23
2.27 Inventory....................................................................23
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2.28 Questionable Payments........................................................23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB............................24
3.1 Organization and Qualification; Subsidiaries.................................24
3.2 Certificates of Incorporation and Bylaws.....................................25
3.3 Capitalization...............................................................25
3.4 Authority Relative to this Agreement.........................................27
3.5 No Conflict..................................................................27
3.6 Compliance; Permits; Restrictions............................................28
3.7 SEC Filings; Financial Statements............................................28
3.8 No Undisclosed Liabilities...................................................29
3.9 Absence of Certain Changes or Events.........................................29
3.10 Absence of Litigation........................................................29
3.11 Environmental Matters........................................................29
3.12 Employee Matters and Benefit Plans...........................................30
3.13 S-4; Joint Proxy Statement/Prospectus........................................32
3.14 Restrictions on Business Activities..........................................32
3.15 Title to Property; Condition of Equipment....................................33
3.16 Taxes........................................................................33
3.17 Brokers......................................................................35
3.18 Parent Intellectual Property.................................................35
3.19 Agreements, Contracts and Commitments........................................35
3.20 Insurance....................................................................36
3.21 Opinion of Financial Advisor.................................................36
3.22 Board Approval...............................................................36
3.23 Vote Required................................................................36
3.24 No Ownership of Company Common Stock.........................................36
3.25 State Takeover Statutes......................................................37
3.26 Product Warranty.............................................................37
3.27 Inventory....................................................................37
3.28 Questionable Payments........................................................37
3.29 Interim Operations of Merger Sub.............................................37
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.................................................37
4.1 Conduct of Business..........................................................37
4.2 Conduct Affecting the Status of the Reorganization...........................40
4.3 Parent Name..................................................................40
ARTICLE V ADDITIONAL AGREEMENTS................................................................40
5.1 Joint Proxy Statement/Prospectus; S-4; Other Filings.........................40
5.2 Meetings of Company Stockholders and Parent Stockholders.....................41
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5.3 Non-Disclosure; Access to Information........................................43
5.4 No Solicitation..............................................................44
5.5 Public Disclosure............................................................45
5.6 Reasonable Efforts; Notification.............................................46
5.7 Third Party Consents.........................................................47
5.8 Stock Options and Company ESPP...............................................47
5.9 Form S-8.....................................................................48
5.10 Indemnification..............................................................48
5.11 NASDAQ Listing...............................................................49
5.12 Company Affiliate Restrictions...............................................49
5.13 Regulatory Filings; Reasonable Efforts.......................................49
5.14 Company Representatives on Parent Board of Directors.........................49
5.15 Rights Agreements............................................................50
ARTICLE VI CONDITIONS TO THE MERGER............................................................50
6.1 Conditions to Obligations of Each Party to Effect the Merger.................50
6.2 Additional Conditions to Obligations of Company..............................51
6.3 Additional Conditions to the Obligations of Parent and Merger Sub............51
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER..................................................52
7.1 Termination..................................................................52
7.2 Notice of Termination; Effect of Termination.................................54
7.3 Fees and Expenses............................................................54
7.4 Amendment....................................................................55
7.5 Extension; Waiver............................................................56
ARTICLE VIII GENERAL PROVISIONS................................................................56
8.1 Non-Survival of Representations and Warranties...............................56
8.2 Notices......................................................................57
8.3 Interpretation; Knowledge....................................................58
8.4 Counterparts.................................................................58
8.5 Entire Agreement; Third Party Beneficiaries..................................58
8.6 Severability.................................................................58
8.7 Other Remedies; Specific Performance.........................................58
8.8 Governing Law................................................................58
8.9 Rules of Construction........................................................59
8.10 Assignment...................................................................59
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INDEX OF EXHIBITS
Exhibit A-1 Form of Company Voting Agreement
Exhibit A-2 Form of Parent Voting Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made and
entered into as of July 13, 2001, among Sanmina Corporation, a Delaware
corporation ("PARENT"), Sun Acquisition Subsidiary, Inc., a Delaware corporation
and a wholly owned subsidiary of Parent ("MERGER SUB") and SCI Systems, Inc., a
Delaware corporation ("COMPANY").
RECITALS
A. Whereas, the Board of Directors of each of Parent, Merger Sub and
Company have determined that it is in the best interests of each corporation and
their respective stockholders that the Company and Parent enter into a strategic
business combination transaction by means of the merger of Merger Sub with and
into the Company (the "MERGER") and, in furtherance thereof, have approved the
Merger and declared the Merger advisable;
B. Whereas, pursuant to the Merger, the outstanding shares of common
stock of Company will be converted into shares of common stock of Parent at the
rate set forth herein; and
C. Whereas, for federal income tax purposes, it is intended that the
Merger will qualify as a reorganization within the meaning of Section 368 (a) of
the Internal Revenue Code of 1986, as amended (the "CODE"); and
D. Whereas, concurrently with the execution of this Agreement, and as
an inducement to Parent's and Company's willingness to enter into this
Agreement, (i) certain affiliates of Company are entering into Voting Agreements
in substantially the form attached hereto as Exhibit A-1 (the "COMPANY VOTING
AGREEMENTS") and (ii) certain affiliates of Parent are entering into Voting
Agreements substantially the form attached hereto as Exhibit A-2 (the "PARENT
VOTING Agreements").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) 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 (the "SURVIVING
CORPORATION").
1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
the Certificate of Merger (the "CERTIFICATE OF MERGER") with the Secretary of
State of the State of Delaware in accordance with the relevant provisions of the
Delaware General Corporation Law (the "DGCL" or "DELAWARE LAW") (the time of
such filing (or such later time as may be agreed in writing by Company and
Parent and
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specified in the Certificate of Merger) being the "EFFECTIVE TIME")
as soon as practicable on or after the Closing Date (as hereinafter defined).
Unless the context otherwise requires, the term "AGREEMENT" as used herein
refers collectively to this Agreement and Plan of Reorganization and the
Certificate of Merger. The closing of the Merger (the "CLOSING") shall take
place at the offices of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, 650 Page Mill Road, Palo Alto, California, at a time and date to be
specified by the parties, which shall be no later than the second business day
after the satisfaction or waiver of the conditions set forth in Article VI, or
at such other time, date and location as the parties hereto agree in writing
(the "CLOSING DATE").
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
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
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
debts, liabilities and duties of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS. 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 until thereafter amended as provided by law and such Certificate of
Incorporation of the Surviving Corporation; provided, however, that at the
Effective Time the Certificate of Incorporation of the Surviving Corporation
shall be amended so that the name of the Surviving Corporation shall be "Sun,
Inc." The Bylaws of Merger Sub, as in effect immediately prior to the Effective
Time, shall be, at the Effective Time, the Bylaws of the Surviving Corporation
until thereafter amended.
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation immediately following the Effective Time shall be the directors of
Merger Sub, until their respective successors are duly elected or appointed and
qualified. The initial officers of the Surviving Corporation shall be the
officers of Company immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, Company or the holders
of any of the following securities:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Common
Stock, $0.10 par value per share, of Company (the "COMPANY COMMON STOCK") issued
and outstanding immediately prior to the Effective Time, other than any shares
of Company Common Stock to be canceled pursuant to Section 1.6(b), will be
canceled and extinguished and automatically converted (subject to Section
1.6(f)) into the right to receive 1.36 (the "EXCHANGE RATIO") validly issued,
fully paid and nonassessable shares of Common Stock, $0.01 par value per share,
of Parent (the "PARENT COMMON STOCK") upon surrender of the certificate
representing such share of Company Common Stock in the manner provided in
Section 1.7 (or in the case of a lost, stolen or destroyed certificate, upon
delivery of an affidavit (and bond, if required) in the manner provided in
Section 1.9). If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company, then the shares of
Parent Common Stock issued in exchange for such shares of Company Common Stock
will
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also be unvested and/or subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Parent Common Stock may accordingly be marked with appropriate legends. Company
shall take all action that may be necessary to ensure that, from and after the
Effective Time, Parent is entitled to exercise any such repurchase option or
other right set forth in any such restricted stock purchase agreement or other
agreement.
(b) CANCELLATION OF PARENT-OWNED AND COMPANY-HELD 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.
(c) STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLANS. At the
Effective Time, all options to purchase Company Common Stock then outstanding
under Company's 1994 Stock Incentive Plan, 2000 Stock Incentive Plan and
Directors Deferred Compensation Plan (collectively, the "COMPANY STOCK OPTION
PLANS") shall be assumed by Parent in accordance with Section 5.8 hereof. Rights
outstanding under Company's Employee Stock Purchase Plan shall be treated as set
forth in Section 5.8.
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock,
$0.001 par value per share, of Merger Sub (the "MERGER SUB COMMON STOCK") issued
and outstanding immediately prior to the Effective Time shall be converted into
one validly issued, fully paid and nonassessable share of Common Stock, $0.001
par value per share, of the Surviving Corporation. Each certificate evidencing
ownership of shares of Merger Sub Common Stock shall evidence ownership of such
shares of capital stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), reorganization,
recapitalization, reclassification or other like change with respect to Parent
Common Stock or Company Common Stock occurring on or after the date hereof and
prior to the Effective Time.
(f) FRACTIONAL SHARES. No fraction of a share of Parent Common
Stock 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 share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock that otherwise would be received by such holder) shall
receive from Parent an amount of cash (rounded to the nearest whole cent) equal
to the product obtained by multiplying (i) such fraction, by (ii) the average of
the closing price of Parent Common Stock on the Nasdaq National Market
("NASDAQ") for the five trading days immediately preceding the trading day on
which the Effective Time occurs.
1.7 SURRENDER OF CERTIFICATES.
(a) Exchange Agent. Parent shall designate Wells Fargo
Shareowner Services, the transfer agent for Parent's Common Stock, to act as the
exchange agent (the "EXCHANGE AGENT") in the Merger.
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(b) PARENT TO PROVIDE COMMON STOCK. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for exchange
in accordance with this Article I, the shares of Parent Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock, and cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.6(f) and any dividends or distributions to which holders
of shares of Company Common Stock may be entitled pursuant to Section 1.7(d).
(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 (the "CERTIFICATES"), which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive
shares of Parent Common Stock pursuant to Section 1.6, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.7(d), (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 containing 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 shares
of Parent Common Stock, cash in lieu of any fractional shares pursuant to
Section 1.6(f) and any dividends or other distributions pursuant to Section
1.7(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 certificates representing the number of whole
shares of Parent Common Stock that such holder has a right to receive pursuant
to Section 1.6(a), payment in lieu of fractional shares which such holders have
the right to receive pursuant to Section 1.6(f) and any dividends or
distributions payable pursuant to Section 1.7(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, subject to Section 1.7(d) as to the payment of dividends or other
distributions, to evidence only the right to receive the number of full shares
of Parent Common Stock issuable in exchange for such shares of Company Common
Stock pursuant to Section 1.6(a) and the right to receive an amount in cash in
lieu of the issuance of any fractional shares in accordance with Section 1.6(f)
and any dividends or distributions payable pursuant to Section 1.7(d).
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates
with respect to the shares of Parent Common Stock issuable in exchange therefor
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 the number of whole shares of Parent
Common Stock issued in exchange therefor along with payment in lieu of
fractional shares pursuant to Section 1.6(f) hereof and the amount of any such
dividends or other distributions with a record date after the Effective Time
payable with respect to such whole shares of Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If certificates representing
shares of Parent Common Stock are 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
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surrendered will be properly endorsed and otherwise in proper form for transfer
and that the persons requesting such exchange will have paid to Parent or any
agent designated by it any transfer or other taxes required by reason of the
issuance of certificates representing shares of Parent Common Stock in any name
other than that of the registered holder of the Certificates surrendered, or
established to the reasonable satisfaction of Parent or any agent designated by
it that such tax has been paid or is not payable.
(f) REQUIRED WITHHOLDING. Each of the Exchange Agent, Parent,
and the Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Code or under any provision of
state, local or foreign tax law or under any other applicable legal requirement.
To the extent such amounts are so deducted or withheld, such amounts shall be
treated for all purposes under this Agreement as having been paid to the person
to whom such amounts would otherwise have been paid.
(g) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation
nor any party hereto shall be liable to a holder of shares of Parent Common
Stock or Company Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.6(f) and 1.7(d)) shall be
deemed to have been issued and paid in full satisfaction of all rights
pertaining to such shares of Company Common Stock. At the Effective Time: (i)
all shares of Company Common Stock outstanding immediately prior to the
Effective Time shall automatically be cancelled and retired and cease to exist,
and all holders of Certificates representing shares of Company Common Stock that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of Company other than the rights expressly provided in
this Agreement and (ii) 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,
they shall be canceled and exchanged as provided in this Article I.
1.9 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 the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.6, cash for fractional shares, if any, as may be required pursuant to Section
1.6(f) and any dividends or distributions payable pursuant to Section 1.7(d);
PROVIDED, HOWEVER, that Parent may, in its discretion and as a condition
precedent to the issuance of such certificates representing shares of Parent
Common Stock, 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.
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1.10 TAX CONSEQUENCES. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Treasury Regulations.
1.11 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 of
Surviving Corporation and Parent, acting for and on behalf of the Company and
Merger Sub, shall be fully authorized to take all such lawful and necessary
action. Parent shall cause Merger Sub to perform all of its obligations relating
to this Agreement and the transactions contemplated thereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Merger Sub, subject to
such exceptions as are specifically disclosed in writing in the disclosure
letter delivered by Company to Parent on or prior to the date of this Agreement
and certified by a duly authorized officer of Company (the "COMPANY DISCLOSURE
SCHEDULE"), as follows (it being understood that disclosure in one instance is
sufficient for all purposes if the context thereof is reasonably evident and it
being understood that disclosure of an item is not to be construed as an
admission of any fact):
2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of Company, its domestic subsidiaries and its foreign
subsidiaries incorporated under the laws of Canada or Mexico (the "COMPANY
DESIGNATED FOREIGN SUBSIDIARIES") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its business as it is now
being conducted. Company has delivered to Parent a complete and correct list of
all of Company's direct and indirect subsidiaries as of the date of this
Agreement, indicating the jurisdiction of organization of each subsidiary and
Company's equity interest therein. Each of Company, its domestic subsidiaries
and each of the Company Designated Foreign Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, consents, certificates,
approvals, variances, exemptions and orders ("APPROVALS") necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business and the business of its subsidiaries as it is now being
conducted, except where the failure to have such Approvals would not,
individually or in the aggregate, have a Material Adverse Effect on Company.
Each of Company, its domestic subsidiaries and each of the Company Designated
Foreign Subsidiaries is in compliance with the terms of the Approvals and is
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, either individually
or in the aggregate, have a Material Adverse Effect on Company. Other than
wholly owned subsidiaries, Company does not directly or indirectly own any
material equity or similar interest in, or any interest convertible or
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exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business, association or
entity.
(b) Each of the foreign subsidiaries of Company that are
incorporated under the laws of countries other than Canada or Mexico (the
"COMPANY OTHER FOREIGN SUBSIDIARIES") is, to the Company's knowledge, a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted. Each of the Company Other Foreign
Subsidiaries is, to the Company's knowledge, is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business and the business of its subsidiaries as it
is now being conducted, except where the failure to have such Approvals would
not, individually or in the aggregate, have a Material Adverse Effect (as
defined in Section 8.3(b)) on Company. Each of the Company Other Foreign
Subsidiaries is, to the Company's knowledge, in compliance with the terms of the
Approvals and is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that would not, either
individually or in the aggregate, have a Material Adverse Effect on Company.
2.2 CERTIFICATES OF INCORPORATION AND BYLAWS. The Company has
previously furnished to Parent a complete and correct copy of the Certificate of
Incorporation and Bylaws of Company, as amended to date. Such Certificate of
Incorporation, Bylaws and equivalent organizational documents of Company and
each of its subsidiaries are in full force and effect. Neither Company nor any
of its subsidiaries is in violation of any of the provisions of its respective
Certificate of Incorporation or Bylaws or equivalent organizational documents,
except for any violation which would not reasonably be expected to have a
Material Adverse Effect on Company.
2.3 CAPITALIZATION.
(a) The authorized capital stock of Company consists of
500,000,000 shares of Company Common Stock, $0.10 par value per share, and
500,000 shares of Preferred Stock, without par value ("COMPANY PREFERRED
STOCK"). At the close of business on June 30, 2001:
(i) 147,024,974 shares of Company Common Stock were
issued and outstanding;
(ii) 884,045 shares of Company Common Stock were held
in treasury by Company or by subsidiaries of Company;
(iii) 9,037,200 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding options to purchase
Company Common Stock under the Company Stock Option Plans;
(iv) 4,890,234 shares of Company Common Stock were
available for future grant under the Company Stock Option Plans;
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(v) 500,000 shares of Company Common Stock were
reserved for issuance under the Company's United States and International
Employee (Stock Purchase Plans (collectively, the "COMPANY ESPP") in the
Purchase Period (as defined in the Company ESPP) ended June 30, 2001;
(vi) 500,000 shares of Company Common Stock were
available for future sale under the Company ESPP;
(vii) 10,225,858 shares of Company Common Stock were
reserved for issuance upon conversion of Company's 3% Convertible Subordinated
Notes due 2007 (the "COMPANY CONVERTIBLE NOTES"); and
(viii) 146,990,574 shares of Company Common Stock
reserved for issuance upon exercise of the rights (the "COMPANY RIGHTS")
distributed to holders of Company Common Stock pursuant to the Rights Agreement
dated December 20, 2000 between Company and Mellon Investor Services LLC, as
Rights Agent, the "COMPANY RIGHTS AGREEMENT").
(b) As of the date hereof, no shares of Company Preferred
Stock are issued and outstanding.
(c) No change in such capitalization has occurred between June
30, 2001 and the date hereof except (x) the issuance of shares of Company
Common Stock pursuant to the exercise of outstanding options or warrants or (y)
the cancellation of unvested options for Common Stock held by, or the repurchase
of unvested shares of Common Stock from, directors, employees, consultants or
other service providers of Company pursuant to the terms of their stock option,
stock purchase or stock restriction agreements. 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.
(d) Except as set forth in Section 2.3 of the Company
Disclosure Schedule, as of the date of this Agreement, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of Company or any of
its subsidiaries that obligate Company or any of its subsidiaries to issue or
sell any shares of capital stock of, or other equity interests in, 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 option, warrant
or other right, agreement, arrangement or commitment.
(e) 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, shall be duly authorized,
validly issued, fully paid and nonassessable.
(f) There are no obligations, contingent or otherwise, of
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any shares of Company Common Stock or the capital stock of any subsidiary,
except the repurchase of unvested shares of Company Common Stock from directors,
employees, consultants or other service providers of Company pursuant to the
terms of their stock option, stock purchase or stock restriction agreements, or
to provide funds to or
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<PAGE> 14
make any investment (in the form of a loan, capital contribution or otherwise)
in any such subsidiary or any other entity.
(g) All of the outstanding shares of capital stock of each of
Company's domestic direct or indirect subsidiaries and Designated Foreign
Subsidiaries, and to Company's knowledge, of each of Company's direct or
indirect Other Foreign Subsidiaries, are duly authorized, validly issued, fully
paid and nonassessable and, except for de minimis numbers of shares of certain
foreign subsidiaries required to be held by individuals to satisfy local law
requirements (as indicated in the Company Disclosure Schedule), all such shares
are owned by Company or another subsidiary free and clear of all security
interests, liens, claims, pledges, agreements, limitations in Company's voting
rights, charges or other encumbrances of any nature whatsoever.
(h) The Company Disclosure Schedule lists for each person who
held options or warrants to acquire shares of Company Common Stock as of June
30, 2001, the name of the holder of such option or warrant, the exercise price
of such option or warrant, the number of shares as to which such option or
warrant had vested as of June 30, 2001 for such option or warrant and whether
the exercisability of such option or warrant will be accelerated in any way by
the transactions contemplated by this Agreement, and indicates the extent of
acceleration, if any.
(i) Except as contemplated by this Agreement and the Company
Rights Agreement, there are no registration rights and no voting trusts,
proxies, shareholder rights plans, anti-takeover plans or other agreements or
understandings 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.
(j) The stockholders of Company will not be entitled to
dissenters' rights under the DGCL or any other applicable state law in
connection with the Merger.
2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Company has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and, subject to obtaining the approval of the
stockholders of Company of this Agreement and the Merger, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Company and the consummation by Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Company and no other corporate proceedings on the part of Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than, with respect to the Merger, the approval and adoption
of this Agreement and the approval of the Merger by holders of a majority of the
outstanding shares of Company Common Stock in accordance with the DGCL and the
Company's Certificate of Incorporation and Bylaws (the "COMPANY STOCKHOLDER
APPROVAL")). This Agreement has been duly and validly executed and delivered by
Company and, assuming the due authorization, execution and delivery by Parent
and Merger Sub, constitutes a legal and binding obligation of Company,
enforceable against Company in accordance with its terms.
2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Company
does not, and the performance of this Agreement by Company will not, (i)
conflict with or violate the Certificate of
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<PAGE> 15
Incorporation, Bylaws or equivalent organizational documents of Company or any
of its subsidiaries, (ii) subject to obtaining the Company Stockholder Approval
and compliance with the requirements set forth in Section 2.5(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 are bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair
Company's or any such subsidiaries' 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 lien or
encumbrance on any of the properties or assets of Company or any of its
subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise 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 properties
are bound or affected. The Company Disclosure Schedule lists all material
consents, waivers and approvals under any of Company's or any of its
subsidiaries' material agreements, contracts, licenses or leases required to be
obtained in connection with the consummation of the transactions contemplated
hereby.
(b) The execution and delivery of this Agreement by Company
does not, and the performance of this Agreement by Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a "GOVERNMENTAL ENTITY"), except (A) for
applicable requirements, if any, of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), state securities laws ("BLUE SKY LAWS"), the pre-merger
notification requirements (the "HSR APPROVAL") of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT") and of foreign
Governmental Entities and the rules and regulations thereunder, the rules and
regulations of the New York Stock Exchange ("NYSE"), and the filing of the
Certificate of Merger as required by the DGCL and (B) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent consummation of the Merger or
otherwise impair Company's ability to timely perform its obligations under this
Agreement.
2.6 COMPLIANCE; PERMITS; RESTRICTIONS. Neither Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) 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 (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise 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
properties is bound or affected, except for any conflicts, defaults or
violations which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Company. No investigation by any
governmental or regulatory body or authority is pending or, to the Company's
knowledge, threatened against Company or its subsidiaries, nor has any
governmental or regulatory body or authority indicated in writing an intention
to conduct the same.
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<PAGE> 16
2.7 SEC FILINGS; COMPANY FINANCIAL STATEMENTS.
(a) Company has made available to Parent a correct and
complete copy of each material form, report, schedule, registration statement
and definitive proxy statement filed by Company with the Securities and Exchange
Commission ("SEC") since July 1, 1999 (the "COMPANY SEC REPORTS"), which are all
the material forms, reports and documents required to be filed by Company with
the SEC since July 1, 1999. The Company SEC Reports (A) complied as to form in
all material respects 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 (B) 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 light of the
circumstances under which they were made, not misleading. None of Company's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Company SEC Reports,
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 United States generally accepted accounting principles ("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 Form 10-Q or Form 10-K under the Exchange Act) and (iii)
fairly presented the consolidated financial position of Company and its
subsidiaries as of the respective dates thereof and the consolidated results of
Company's operations and cash flows for the periods indicated, except that the
unaudited interim financial statements may not contain all footnotes and were or
are subject to year-end adjustments. The balance sheet of Company at March 25,
2001 (the "Company Balance Sheet Date") contained in Company SEC Reports is
hereinafter referred to as the "COMPANY BALANCE SHEET."
(c) Company has previously 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 NO UNDISCLOSED LIABILITIES. Neither Company nor any of its
subsidiaries has 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 (i) liabilities provided for in Company Balance Sheet, (ii)
liabilities incurred since the Company Balance Sheet Date in the ordinary course
of business consistent with past practices, which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Company or (iii) banking, accounting, legal and printing fees and expenses
associated with the Merger.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed on the
Company Disclosure Schedule, since the Company Balance Sheet Date, there has not
been: (i) any Material Adverse Effect on Company, (ii) 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
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<PAGE> 17
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 issuances of 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, (iii) any split, combination
or reclassification of any of Company's or any of its subsidiaries' capital
stock, (iv) any granting by Company or any of its subsidiaries of any material
increase in compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice,
or any payment by Company or any of its subsidiaries of any material bonus,
except for bonuses made in the ordinary course of business consistent with past
practice, or any granting by Company or any of its subsidiaries of any increase
in severance or termination pay or any entry by Company or any of its
subsidiaries into any currently effective employment, severance, termination 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, (v) entry by
Company or any of its subsidiaries into any licensing or other agreement with
regard to the acquisition or disposition of any material Intellectual Property
(as defined in Section 2.18) other than licenses in the ordinary course of
business consistent with past practice or any amendment or consent with respect
to any licensing agreement filed or required to be filed by Company with the
SEC, (vi) any material change by Company in its accounting methods, principles
or practices, except as required by concurrent changes in GAAP, or (vii) any
revaluation by Company of any of its assets, including, without limitation,
writing down the value of capitalized inventory or writing off notes or accounts
receivable other than in the ordinary course of business.
2.10 ABSENCE OF LITIGATION. Section 2.10 of the Company Disclosure
Schedule lists all material claims, actions, suits or proceedings pending or, to
the knowledge of Company, threatened against Company or any of its subsidiaries
or any properties or rights of Company or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign.
2.11 ENVIRONMENTAL MATTERS. (a) Definitions. For the purposes of this
Agreement, the following terms shall have the meanings set forth below:
(i) "ENVIRONMENTAL LAWS" shall mean all applicable
and enforceable laws, directives, guidance, rules, regulations, orders,
treaties, statutes, and codes promulgated by any Governmental Entity which
prohibit, regulate or control any Hazardous Material or any Hazardous Material
Activity, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the Resource Recovery and
Conservation Act of 1976, the Occupational Safety and Health Act, the Federal
Water Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act, the Clean Water Act, all as amended to date and any
jurisdiction relating to Hazardous Materials or Hazardous Materials Activity;
(ii) "ENVIRONMENTAL PERMITS" shall mean all permits,
licenses, registrations, clearances, consents, approvals and other
authorizations that are required for the operation of the business of the
Company and its subsidiaries under Environmental Laws;
(iii) "HAZARDOUS MATERIALS" shall mean any material
or substance that is prohibited or regulated by any Environmental Law or that
has been designated by any Governmental
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<PAGE> 18
Entity to be radioactive, toxic, hazardous or otherwise a danger to health,
reproduction or the environment; and
(iv) "HAZARDOUS MATERIALS ACTIVITY" shall mean the
transportation, transfer, recycling, storage, use, treatment, manufacture,
removal, remediation, release, exposure of others to, sale, or distribution of
any Hazardous Material or any product or waste containing a Hazardous Material,
or product manufactured with Ozone depleting substances.
(b) The Company and its subsidiaries have obtained all
applicable Environmental Permits and are and have been in compliance in all
material respects with such Environmental Permits and any conditions placed
thereon, except to the extent that the failure to obtain or comply with
Environmental Permits could not reasonably be expected to have a Material
Adverse Effect on Company.
(c) The Company and its subsidiaries have not disposed of,
released, discharged or emitted any Hazardous Materials into the soil or
groundwater at any properties owned or leased at any time by the Company or any
of its subsidiaries, or at any other property, or exposed any employee or other
individual to any Hazardous Materials or any workplace or environmental
condition in such a manner as would result in any material liability or material
clean-up obligation of any kind or nature to the Company or any of its
subsidiaries.
(d) No Hazardous Materials are present in, on, or under any
properties owned, leased or used at any time by the Company or its subsidiaries
so as to give rise to any material liability or material clean-up obligation
under any Environmental Laws.
2.12 EMPLOYEE MATTERS AND BENEFIT PLANS.
(a) DEFINITIONS. With the exception of the definition of
Affiliate set forth in Section 2.12(a)(i) below (such definition shall only
apply to this Section 2.12 and Section 3.12), 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 or Parent, as the case may be, within the
meaning of Section 414(b), (c), (m) or (o) of the Code and the regulations
thereunder;
(ii) "COBRA" shall mean the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended;
(iii) "COMPANY EMPLOYEE PLAN" shall mean any plan,
program, policy, practice, contract, agreement or other arrangement providing
for compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written, unwritten or otherwise,
funded or unfunded, including without limitation, each "EMPLOYEE BENEFIT PLAN,"
within the meaning of Section 3(3) of ERISA (as defined below) 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 (as defined below), or with
respect to which Company or any Affiliate has or may have any liability or
obligation;
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<PAGE> 19
(iv) "DOL" shall mean the United States Department of
Labor;
(v) "EMPLOYEE" shall mean any current, former, or
retired employee, officer, or director of Parent, Company or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall refer to each
management, employment, severance, consulting or similar agreement between
Company or any Affiliate and any Employee of Company;
(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) "INTERNATIONAL EMPLOYEE PLAN" shall mean each
Company Employee Plan or Parent Employee Plan(as such term is defined in Section
3.12), as the case may be, that has been adopted or maintained by Parent,
Company or any Affiliate, or with respect to which Parent, Company or any
Affiliate will have any liability, for the benefit of Employees who perform
services outside the United States;
(x) "IRS" shall mean the United States Internal
Revenue Service;
(xi) "MULTIEMPLOYER PLAN" shall mean any "PENSION
PLAN" (as defined below) which is a "multiemployer plan," as defined in Section
3(37) of ERISA; and
(xii) "PENSION PLAN" shall refer to each Company
Employee Plan or Parent Employee Plan which is an "employee pension benefit
plan," within the meaning of Section 3(2) of ERISA.
(b) The Company Disclosure Schedule contains an accurate and
complete list of each Company Employee Plan, International Employee Plan and
each Employee Agreement. Company does not have any plan or commitment to
establish any new Company Employee Plan, International Employee Plan or Employee
Agreement, to modify any Company Employee Plan, International Employee Plan or
Employee Agreement (except to the extent required by law or to conform any such
Company Employee Plan, International Employee Plan or Employee Agreement to the
requirements of any applicable law, in each case as previously disclosed to
Parent in writing, or as required by this Agreement or as required to maintain
tax qualification), or to adopt or enter into any Company Employee Plan,
International Employee Plan or Employee Agreement nor does it have any intention
or commitment to do any of the foregoing.
(c) Documents. Company has provided to Parent correct and
complete copies of: (i) all material documents embodying each Company Employee
Plan, International Employee Plan and each Employee Agreement including, without
limitation, all amendments thereto and all related trust documents; (ii) the
most recent annual actuarial valuations, if any, prepared for each Company
Employee Plan; (iii) the two (2) 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; (iv) if
Company Employee Plan is funded, the most recent annual
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<PAGE> 20
and periodic accounting of Company Employee Plan assets; (v) the most recent
summary plan description together with the most recent summary(ies) 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; (vii) all agreements and contracts relating to each Company Employee
Plan, International Employee Plan and Employee Agreement, including, but not
limited to, administrative service agreements, group annuity contracts and group
insurance contracts, if any; (viii) all communications material to any 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; (ix) all material correspondence to or from any governmental agency
relating to any Company Employee Plan; (x) all material COBRA forms and related
notices (or such forms and notices as required under comparable law); (xi) all
policies pertaining to fiduciary liability insurance covering the fiduciaries
for each Company Employee Plan; (xii) discrimination tests for each Company
Employee Plan for the three (3) most recent plan years; and (xiii) all
registration statements, annual reports (Form 10-K and all attachments thereto)
and prospectuses prepared in connection with each Company Employee Plan.
(d) EMPLOYEE PLAN COMPLIANCE. (i) The Company has performed in
all material respects all obligations required to be performed by it under, is
not in default or violation of, and has no knowledge of any default or violation
by any other party with respect to each 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, opinion, notification and/or advisory
letter, as applicable, from the IRS with respect to each such Company Employee
Plan as to its qualified status under the Code, including all amendments to the
Code effected by the Tax Reform Act of 1986 and subsequent legislation, or has a
remaining period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified status of each
such Company Employee Plan; (iii) no "prohibited transaction" within the meaning
of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise
exempt under Section 4975 of the Code or Section 408 of ERISA (or any
administrative class exemption issued thereunder), 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 anticipated (other than routine
claims for benefits) against any Company Employee Plan or against the assets of
any Company Employee Plan; (v) except as disclosed on the Company Disclosure
Schedule each Company Employee Plan can be amended, terminated or otherwise
discontinued after the Effective Time, without material liability to Company,
Parent or any of its Affiliates (other than ordinary administration expenses);
(vi) there are no audits, inquiries or proceedings pending or, to the knowledge
of Company or any Affiliates, 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
502(i) of ERISA or Sections 4975 through 4980 of the Code.
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<PAGE> 21
(e) PENSION PLANS. Except as disclosed on the Company
Disclosure Schedule, neither Company nor any Affiliate has 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) COLLECTIVELY BARGAINED, MULTIEMPLOYER AND MULTIPLE
EMPLOYER PLANS. Neither Company nor any Affiliate contributes to or is obligated
to contribute to any Multiemployer Plan. Neither Company nor any Affiliate has
established or maintains, sponsors, participates in or contributes to any
multiple employer plans, or to any plan described in Section 413 of the Code.
(g) NO POST-EMPLOYMENT OBLIGATIONS. Except as set forth on the
Company Disclosure Schedule, no Company Employee Plan provides, or
reflects or represents any liability to provide retiree health to any person for
any reason, except as may be required by COBRA or other applicable statute, 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 health, except to the extent required by statute.
(h) HEALTH CARE COMPLIANCE. Neither Company nor any Affiliate
has, prior to the Effective Time, in any material respect, violated any of
the health care continuation requirements of COBRA, the requirements of FMLA,
the requirements of the Health Insurance Portability and Accountability Act of
1996, the requirements of the Women's Health and Cancer Rights Act of 1998, the
requirements of the Newborns' and Mothers' Health Protection Act of 1996 or any
amendment to each such act or any similar provisions of state law applicable to
its Employees.
(i) EFFECT OF TRANSACTION.
(i) 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, Employee Agreement, 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.
(ii) No payment, compensation or benefit which will
or may be made by Parent, Company or their respective Affiliates with respect to
any Employee or any other "disqualified individual" in connection with the
consummation of the transaction contemplated hereby will be characterized as a
"parachute payment," within the meaning of Section 280G(b)(2) of the Code as a
result of the Merger or the other transactions contemplated by this Agreement.
(j) EMPLOYMENT MATTERS. The Company Disclosure Schedule lists
all current officers and directors of Company. The Company, each of its domestic
subsidiaries, each Company Designated Foreign Subsidiary and, to the Company's
knowledge, each Company Other Foreign Subsidiary (i) is in compliance in all
material respects with all applicable 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
(including any immigration laws with respect to the same); (ii) has withheld and
reported all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to Employees;
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<PAGE> 22
(iii) is not liable for any arrears of wages or any taxes or any penalty for
failure to comply with any of the foregoing; and (iv) is not liable for any
payment to any trust or other fund governed by or maintained by or on behalf of
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). There are no pending or threatened
in writing claims or actions against Company under any workers compensation
policy or long-term disability policy. Each person who is acting or has acted as
a consultant to Company is acting or has acted as an "independent contractor"
and could not, based on the facts and circumstances of his or her consultancy,
reasonably be deemed to be or have been "employed" with Company. The Company
Disclosure Schedule also sets forth all outstanding offers of employment by the
Company, whether written or oral, made to any prospective executive or
managerial-level employee, which offer has not been rejected by the offeree.
(k) LABOR. Except as set forth in the Company Disclosure
Schedule, no work stoppage or labor strike 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 relating to any labor, safety or discrimination matters
involving any Employee, including, without limitation, charges of unfair labor
practices or discrimination complaints, except for such action, suits, claims,
labor disputes or grievances which, if adversely determined, would not,
individually or in the aggregate, result in any Material Adverse Effect on
Company. Company and its subsidiaries have not engaged in any unfair labor
practices within the meaning of the National Labor Relations Act. The 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.
(l) INTERNATIONAL EMPLOYEE PLAN. Each International Employee
Plan of the Company or of one of the Company's foreign subsidiaries has been
established, maintained and administered in compliance in all material respects
with its terms and conditions and with the requirements prescribed by any and
all statutory or regulatory laws that are applicable to such International
Employee Plan, and no such International Employee Plan has any material unfunded
liabilities, that as of the Effective Time, will not be offset by insurance or
fully accrued.
(m) NO INTERFERENCE OR CONFLICT. To the knowledge of Company,
no stockholder, officer, employee or consultant of Company is obligated under
any contract or agreement subject to any judgement, decree or order of any court
or administrative agency that would interfere with such person's efforts to
promote the interests of Company or that would interfere with Company's
business, except for any interference that would not give rise to a Material
Adverse Effect on the Company.
2.13 S-4; PROXY STATEMENTS. None of the information supplied or to be
supplied by Company for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of the Parent Common Stock in or as a result of the
Merger (the "S-4") will, at the time the S-4 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; and (ii) the Joint
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Proxy Statement/Prospectus (the "JOINT PROXY STATEMENT/PROSPECTUS") to be filed
with the SEC by Company and Parent pursuant to Section 5.1 hereof will, at the
dates mailed to the stockholders of Company, at the times of the stockholder
meeting of Company (the "COMPANY STOCKHOLDERS' MEETING") and the stockholders of
the Parent (the "PARENT STOCKHOLDERS' MEETING") in connection with the
transactions contemplated hereby and 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 misleading. The Joint
Proxy Statement/Prospectus will comply as to form in all material respects with
the provisions of the Securities Act, Exchange Act and the rules and regulations
promulgated by the SEC 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 in the opinion of Company's counsel is
required to be set forth in an amendment to the S-4 or a supplement to the Joint
Proxy Statement/Prospectus, Company shall promptly inform Parent.
Notwithstanding any statement by the Parent and Merger Sub in this Agreement,
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.
2.14 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
judgment, injunction, order or decree binding upon Company 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 Company or any of
its subsidiaries, any acquisition of property by Company or any of its
subsidiaries or the conduct of business by Company or any of its subsidiaries as
currently conducted.
2.15 TITLE TO PROPERTY; CONDITION OF EQUIPMENT.
(a) Company has good and marketable fee simple title to all
real property owned by the Company ("OWNED REAL PROPERTY"). There are no parties
in possession of any portion of the Owned Real Property as lessees, sublessees,
assignees, tenants at sufferance or trespassers and there are no leases,
subleases, assignments, or operating agreements applicable to or affecting the
Owned Real Property.
(b) All leases or other occupancy agreements for the material
real property leased or otherwise occupied by the Company ("LEASED REAL
PROPERTY") afford Company peaceful and undisturbed possession of the Leased Real
Property. All leases for the Leased Real Property are in good standing, valid
and effective in accordance with their respective terms, and there is not, under
any of such leases or other occupancy agreements, any existing material default
or event of default (or any event which with notice or lapse of time, or both,
would constitute a material default).
(c) All of the improvements to the Owned Real Property and all
of the plants and structures of Company and its subsidiaries, except such as may
be under construction, are in good operating condition and repair, in all
material respects, ordinary wear and tear excepted. To its knowledge, Company is
not in violation of any zoning, building, safety or environmental ordinance,
regulation or requirement or other law or regulation applicable to the operation
of the Owned Real Property or the Leased Real Property except where such
violation would not give rise to a Material Adverse Effect, and Company has not
received any notice of such violation. Company has good and marketable title to
all of its assets (including real property) used in its business or as shown on
the Company Balance Sheet, free and clear of all mortgages, liens, charges,
encumbrances or restrictions
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(other than for Permitted Liens, as defined below), other than such assets as
were sold in the ordinary course of Company's business since the Company Balance
Sheet Date or which are subject to capitalized leases. "PERMITTED LIENS" means
any lien, mortgage, encumbrance or restriction which is (i) set forth on
Schedule 2.15 of the Company Disclosure Schedule or the Parent Disclosure
Schedule or (ii) reflected in the Company financial statements and is not in
excess of $1,000,000 and which does not materially detract from the value or
materially interfere with the use, as currently utilized, of the properties
subject thereto or affected thereby or otherwise materially impair the business
operations being conducted thereon.
(d) The material machinery and equipment (the "EQUIPMENT")
owned or leased by Company is (i) suitable for the uses to which it is currently
employed; (ii) in good operating condition (except for ordinary wear and tear);
and (iii) regularly and properly maintained in all material respects.
2.16 TAXES.
(a) DEFINITION OF TAXES. For the purposes of this Agreement,
"TAX" or "TAXES" refers to 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 any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS
(i) Company and each of its subsidiaries (to the
extent any such subsidiaries are required to file tax returns on a basis other
than as part of a consolidated group with Company) have timely filed (taking
into account applicable extensions) all material federal and state, local and
foreign returns, estimates, information statements and reports ("RETURNS")
relating to Taxes required to be filed by Company and each of such subsidiaries
with any Tax authority and such Returns, when filed, were true and correct in
all material respects.
(ii) There is no material Tax deficiency outstanding
which has been proposed or assessed in writing against Company or any of its
subsidiaries.
(iii) To the Company's knowledge, no audit or other
examination of any Return of Company or any of its subsidiaries by any Tax
authority is presently in progress. Neither Company nor any of its subsidiaries
has been notified of any request for such an audit or other examination, except
for any audit or other examination that would not be expected to have a Material
Adverse Effect on Company.
(iv) No adjustment relating to any Returns filed by
Company or any of its subsidiaries has been proposed in writing by any Tax
authority to Company or any of its subsidiaries or any representative thereof,
except for any adjustment that would not be expected to have a Material Adverse
Effect on Company.
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<PAGE> 25
(v) 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
of business.
(vi) There is no contract, agreement, plan or
arrangement to which Company is a party as of the date of this Agreement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of Company or any of its subsidiaries that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code as
a result of the Merger and the other transactions contemplated hereby.
(vii) 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.
(viii) 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 with an unaffiliated third party.
(ix) Company and its subsidiaries have not been and
will not be required to include any material 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.
(x) None of Company's or its subsidiaries' assets are
tax exempt use property within the meaning of Section 168(h) of the Code.
(xi) The Company Disclosure Schedule lists (A) any
material foreign Tax holidays, (B) any material intercompany transfer pricing
agreements, or other arrangements that have been established by Company or any
of its subsidiaries with any Tax authority and (C) any material expatriate
programs or policies affecting Company or any of its subsidiaries.
(xii) Neither the Company nor any of its subsidiaries
was either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under section 355 of the
Code that (x) occurred within two years before the date of this Agreement or (y)
could otherwise constitute part of "plan or series of transactions" (within the
meaning of section 355(e) of the Code) that includes the Merger.
(xiii) None of the Company and its subsidiaries (A)
has been a member of an affiliated group filing a consolidated federal income
Tax Return (other than a group the common parent of which was the Company) or
(B) has any material liability for the Taxes of any person (other than the
Company and its subsidiaries) under Treasury Regulation 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise.
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(xiv) the Company is not, and has not been at any
time, a "United States real property holding corporation" within the meaning of
Section 897(c) of the Code.
2.17 BROKERS. Except for fees payable to Goldman, Sachs & Co. (the
"COMPANY FINANCIAL ADVISOR"), pursuant to an engagement letter dated May 1,
2001, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Company.
2.18 INTELLECTUAL PROPERTY. The Company owns, or is validly licensed or
otherwise has the right to use, all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service mark
rights, copyrights and other proprietary intellectual property rights and
computer programs (collectively, "INTELLECTUAL PROPERTY RIGHTS") which are
material to the conduct of the business of the Company and its subsidiaries
taken as a whole. Except as set forth on the Company Disclosure Schedule, no
claims are pending or, to the knowledge of the Company, threatened in writing
that the Company or any of its subsidiaries is infringing or otherwise adversely
affecting the rights of any person with regard to any Intellectual Property
Right except for claims which, if determined adversely to the Company, would not
have a Material Adverse Effect on the Company. To the knowledge of the Company,
no person is infringing the rights of the Company or any of its subsidiaries
with respect to any Intellectual Property Right except where such infringement
has not had, and could not reasonably be expected to have, a Material Adverse
Effect on the Company. Neither the Company nor any of its subsidiaries has
licensed, or otherwise granted, to any third party, any rights in or to any
Intellectual Property Rights which are material to the conduct of the business
of the Company and its subsidiaries taken as a whole.
2.19 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth on the
Company Disclosure Schedule, neither Company nor any of its subsidiaries is a
party to or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any executive officer, director 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 and which do so with no express
(whether by contract or by policy) liability or financial obligation to Company;
(b) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan (except
for those described in Section 2.3 of the Company Disclosure Schedule), any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(c) any agreement of indemnification or any guaranty currently
in force other than any agreement of indemnification entered into in connection
with the sale or license or distribution or marketing of products or services in
the ordinary course of business;
(d) any agreement, contract or commitment containing any
covenant limiting in any material respect the right of Company or any of its
subsidiaries to engage in any line of business;
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<PAGE> 27
(e) 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;
Neither Company nor any of its subsidiaries, nor to Company's knowledge
any other party to a Company Contract (as defined below), is in breach,
violation or default under, 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 of the agreements, 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 Schedule
pursuant to this Section 2.19 (any such agreement, contract or commitment, a
"COMPANY CONTRACT") in such a manner as would permit any other party to cancel
or terminate any such Company Contract, 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).
2.20 INSURANCE. Company maintains insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, employees,
officers and directors of Company and its subsidiaries (collectively, the
"INSURANCE POLICIES") which are of the type and in amounts customarily carried
by persons conducting businesses similar to those of Company and its
subsidiaries. There is no material claim by Company or any of its subsidiaries
pending under any of the Insurance Policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds
other than customary reservation of rights notices issued by such insurers.
2.21 OPINION OF FINANCIAL ADVISOR. Company has received a written
opinion from the Company Financial Advisor to the effect that as of the date
hereof, the Exchange Ratio is fair to the stockholders of Company from a
financial point of view.
2.22 BOARD APPROVAL. The Board of Directors of Company has, as of the
date of this Agreement, (i) approved this Agreement and the transactions
contemplated hereby, (ii) determined that the Merger is in the best interests of
the stockholders of Company and is on terms that are fair to such stockholders
and (iii) recommended that the stockholders of Company approve this Agreement
and the Merger.
2.23 VOTE REQUIRED. The affirmative vote of a majority of the
outstanding shares of Company Common Stock is the only vote of the holders of
any class or series of Company's capital stock necessary to approve this
Agreement and the transactions contemplated hereby.
2.24 NO OWNERSHIP OF PARENT COMMON STOCK. As of the date hereof,
Company does not own, beneficially or of record, any shares of Parent Common
Stock other than ownership, if any, held by Company Employee Plan or Pension
Plan.
2.25 STATE TAKEOVER STATUTES. The Board of Directors of Company has
approved the Merger, this Agreement and the Company Voting Agreement, and has
taken such additional action, if any, as may be necessary to render inapplicable
to the Merger, this Agreement and the Company
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<PAGE> 28
Voting Agreement and the transactions contemplated hereby and thereby, any
applicable state takeover statute or similar law or regulation including
"control share," "fair price," "business combination" or other anti-takeover
laws and regulations of any state including Section 203 of the DGCL.
2.26 PRODUCT WARRANTY. Since January 1, 1999, each product
manufactured, sold, leased or delivered by Company has complied in all material
respects with all applicable standard contractual commitments and all express
and implied warranties, and there is no present action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand pending for any
replacement or repair thereof or other damages in connection therewith which if
determined adversely to the Company would have a Material Adverse Effect. No
product manufactured, sold, leased or delivered by Company is subject to any
warranty or other indemnity beyond the applicable standard terms and conditions
of sale or lease.
2.27 INVENTORY. Except as set forth on the Company Disclosure Schedule,
the parts and materials in the inventory of Company, the value of which is
reflected in the Company Balance Sheet, and thereafter acquired by Company (the
"INVENTORY") was acquired and maintained through an acquisition transaction or
in the ordinary course of business of Company and except for those parts or
materials for which a reserve is reflected on the Company Balance Sheet, is of
such quality as to be usable or salable in the ordinary course of Company's
business. Since the date of the Company Balance Sheet, Company has continued to
replenish inventories in the ordinary course of business consistent with past
practices. All items included in the Inventory are owned by Company, free and
clear of all liens and encumbrances (except Permitted Liens), except for
inventory sold by Company in the ordinary course of business subsequent to the
date of the Company Balance Sheet. Company is not under any liability or
obligation with respect to the return of Inventory in the possession of any
customer other than return of Inventory used in noncompliant products.
2.28 QUESTIONABLE PAYMENTS. The Company has not nor has, to its
knowledge, any director, officer or other employee of the Company: (i) made any
payments or provided services or other favors in the United States or any
foreign country in order to obtain preferential treatment or consideration by
any Government Entity with respect to any aspect of the Company's business; or
(ii) made any political contributions that would not be lawful under the laws of
the United States (including the Foreign Corrupt Practices Act) or the foreign
country in which such payments were made.
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<PAGE> 29
ARTICILE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to Company, subject to such
exceptions as are specifically disclosed in writing in the disclosure letter
delivered by Parent and Merger Sub to Company on or prior to the date of this
Agreement and certified by a duly authorized officer of Parent and Merger Sub
(the "PARENT DISCLOSURE SCHEDULE"), as follows (it being understood that
disclosure in one instance is sufficient for all purposes if the context thereof
is reasonably evident and it being understood that disclosure of an item is not
to be construed as an admission of any fact):
3.1 Organization and Qualification; Subsidiaries.
(a) Each of Parent, its domestic subsidiaries and its foreign
subsidiaries incorporated under the laws of Canada or Sweden (the "PARENT
DESIGNATED FOREIGN SUBSIDIARIES") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its business as it is now
being conducted. Parent has delivered to Company a complete and correct list of
all of Parent's direct and indirect subsidiaries as of the date of this
Agreement, indicating the jurisdiction of organization of each subsidiary and
Parent's equity interest therein. Each of Parent, its domestic subsidiaries and
each of the Parent Designated Foreign Subsidiaries is in possession of all
Approvals necessary to own, lease and operate the properties it purports to own,
operate or lease and to carry on its business and the business of its
subsidiaries as it is now being conducted, except where the failure to have such
Approvals would not, individually or in the aggregate, have a Material Adverse
Effect on Parent. Each of Parent, its domestic subsidiaries and each of the
Parent Designated Foreign Subsidiaries is in compliance with the terms of the
Approvals and is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that would not, either
individually or in the aggregate, have a Material Adverse Effect on Parent.
Other than wholly owned subsidiaries, Parent does not directly or indirectly own
any material equity or similar interest in, or any interest convertible or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business, association or
entity.
(b) Each of the foreign subsidiaries of Parent that are
incorporated under the laws of countries other than Canada or Sweden (the
"PARENT OTHER FOREIGN SUBSIDIARIES") is, to the Parent's knowledge, a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted. Each of the Parent Other Foreign
Subsidiaries is, to the Parent's knowledge, is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business and the business of its subsidiaries as it
is now being conducted, except where the failure to have such Approvals would
not, individually or in the aggregate, have a Material Adverse Effect on Parent.
Each of the Parent Other Foreign Subsidiaries is, to the Parent's knowledge, in
compliance with the terms of the Approvals and is duly qualified or licensed as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes
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<PAGE> 30
such qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing that would not, either
individually or in the aggregate, have a Material Adverse Effect on Parent.
3.2 CERTIFICATES OF INCORPORATION AND BYLAWS. Parent has previously
furnished to Company a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended to date, and Merger Sub has previously
furnished to Company a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended to date. Such Certificate of Incorporation
or Certificate of Incorporation, as the case may be, and Bylaws are in full
force and effect. Neither Parent nor any of its subsidiaries is in violation of
any of the provisions of their Certificate of Incorporation or Certificate of
Incorporation, as the case may be, or Bylaws or equivalent organizational
documents, except for any violation which would not reasonably be expected to
have a Material Adverse Effect on the Company.
3.3 CAPITALIZATION.
(a) The authorized capital stock of Parent consists of
1,000,000,000 shares of Parent Common Stock, $0.01 par value per share, and
5,000,000 shares of Preferred Stock, $0.01 par value per share ("PARENT
PREFERRED STOCK"), of which 1,000,000 shares have been designated Series A
Preferred Stock in connection with the Rights Agreement (as defined in Section
3.3(h) below). At the close of business on June 30, 2001:
(i) 320,528,259 shares of Parent Common Stock were
issued and outstanding;
(ii) no shares of Parent Common Stock were held in
treasury by Parent or by subsidiaries of Parent;
(iii) 32,118,590 shares of Parent Common Stock were
reserved for issuance upon the exercise of outstanding options to purchase
Parent Common Stock under the Parent's 1990 Stock Option Plan, 1999 Stock Option
Plan, 1995 Director Stock Option Plan and 1996 Supplemental Stock Option Plan
(collectively, the "PARENT OPTION PLANS");
(iv) 24,386,228 shares of Parent Common Stock were
available for future grant under the Parent Option Plans;
(v) 1,674,092 shares of Parent Common Stock were
reserved for issuance under the Parent's 1993 Employee Stock Purchase Plan (the
"PARENT ESPP"); and
(vi) 15,789,236 shares of Parent Common Stock were
reserved for issuance upon conversion of Parent's 4.25% Convertible Subordinated
Notes due 2004 and 10,761,116 shares of Parent Common Stock were reserved for
issuance upon conversion of Parent's 4% Zero Coupon Notes due 2020
(collectively, the "PARENT CONVERTIBLE NOTES");
(vii) 382,076 shares of Parent Common Stock were
reserved for issuance upon conversion of certain convertible subordinated notes
issued by predecessor companies acquired by Parent; and
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<PAGE> 31
(viii) 1,000,000 shares have been designated Series A
Participating Preferred Stock and reserved for issuance upon exercise of the
rights (the "PARENT RIGHTS") distributed to holders of Parent Common Stock
pursuant to a Preferred Stock Rights Agreement dated May 17, 2001 between Parent
and Wells Fargo Bank Minnesota, N.A., as Rights Agent (the "PARENT RIGHTS
AGREEMENT").
(b) As of the date hereof, no shares of Parent Preferred Stock
are issued and outstanding.
(c) No change in such capitalization has occurred between June
30, 2001 and the date hereof except (x) the issuance of shares of Parent Common
Stock pursuant to the exercise of outstanding options or (y) the cancellation of
unvested options for Common Stock held by, or the repurchase of unvested shares
of Common Stock from, directors, employees, consultants or other service
providers of Parent pursuant to the terms of their stock option, stock purchase
or stock restriction agreements. All outstanding shares of Parent 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 Parent or any agreement or document to which Parent
is a party or by which it is bound.
(d) Except as set forth in this Section 3.3 or in Section
3.3(d) of the Patent Disclosure Schedule, as of the date of this Agreement,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
Parent or any of its subsidiaries that obligate Parent or any of its
subsidiaries to issue or sell any shares of capital stock of, or other equity
interests in, 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 option, warrant or other right, agreement, arrangement or commitment.
(e) All shares of Parent Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable.
(f) There are no obligations, contingent or otherwise, of
Parent or any of its subsidiaries to repurchase, redeem or otherwise acquire any
shares of Parent Common Stock or the capital stock of any subsidiary, except to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any such subsidiary or any other entity.
(g) All of the outstanding shares of capital stock of each of
Parent's domestic direct or indirect subsidiaries and Designated Parent Foreign
Subsidiaries, and to Parent's knowledge, of each of Parent's direct or indirect
Other Parent Foreign Subsidiaries are duly authorized, validly issued, fully
paid and nonassessable and, except for de minimis numbers of shares of certain
foreign subsidiaries required to be held by individuals to satisfy local law
requirements (as indicated in the Parent Disclosure Schedule) all such shares
are owned by Parent or another subsidiary free and clear of all security
interests, liens, claims, pledges, agreements, limitations in Parent's voting
rights, charges or other encumbrances of any nature whatsoever.
(h) Except as contemplated by this Agreement, the Parent
Rights Agreement and Section 3.3 of the Parent Disclosure Schedule, there are no
registration rights and, to the knowledge
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<PAGE> 32
of Parent, there are no voting trusts, proxies, rights plans, anti-takeover
plans or other agreements or understandings to which Parent is a party or by
which it is bound with respect to any equity security of any class of Parent or
with respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries.
(i) The Parent Common Stock to be issued pursuant to the
Merger has been duly authorized and will, when issued in accordance with this
Agreement be validly issued, fully paid, and nonassessable and will not be
subject to any restrictions on resale under the Securities Act, other than
restrictions imposed by Rule 145 under the Securities Act.
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Merger Sub
has all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part
of Parent and Merger Sub, and no other corporate proceedings on the part of
Parent or Merger Sub are necessary to authorize this Agreement, or to consummate
the transactions so contemplated, subject only to (i) the approval of the
issuance of the parent Common Stock in connection with the Merger by the
stockholders of the Parent (the "PARENT STOCKHOLDERS' APPROVAL") and (ii) the
filing of the Certificate of Merger pursuant to the DGCL. This Agreement has
been duly and validly executed and delivered by Parent and Merger Sub and,
assuming the due authorization, execution and delivery by Company, constitute
legal and binding obligations of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with their respective terms.
3.5 NO CONFLICT.
(a) The execution and delivery of this Agreement by Parent
does not, and the performance of this Agreement by Parent will not, (i) conflict
with or violate the Certificate of Incorporation, Bylaws or equivalent
organizational documents of Parent or any of its subsidiaries, (ii) subject to
obtaining the Parent Stockholder Approval and compliance with the requirements
set forth in Section 3.5(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 Parent or any of its subsidiaries or any of their
respective properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair Parent's or any such subsidiaries'
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 lien or encumbrance on any of the properties or
assets of Parent or any of its subsidiaries pursuant to, 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 are bound or affected.
(b) The execution and delivery of this Agreement by Parent do
not, and the performance of this Agreement by Parent will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (A) for applicable requirements, if any, of
the Securities Act, the Exchange Act, Blue Sky Laws, the pre-merger
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notification requirements of the HSR Act and of foreign Governmental Entities
and the rules and regulations thereunder, the rules and regulations of Nasdaq,
and the filing of the Certificate of Merger as required by the DGCL and (B)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not prevent consummation of the
Merger or otherwise impair Parent's ability to timely perform its obligations
under this Agreement.
3.6 COMPLIANCE; PERMITS; RESTRICTIONS. Neither Parent nor any of its
subsidiaries is in conflict with, or in default or 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 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 any conflicts, defaults or
violations which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent. To the knowledge of Parent,
no investigation by any governmental or regulatory body or authority is pending
or threatened against Parent or its subsidiaries, nor has any governmental or
regulatory body or authority indicated in writing an intention to conduct the
same.
3.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to Company a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Parent with the SEC on or after October 1, 1999 (the
"PARENT SEC REPORTS"), which are all the forms, reports and documents required
to be filed by Parent with the SEC since October 1, 1999 and prior to the date
of this Agreement. The Parent SEC Reports (A) complied as to Form in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and (B) 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 light of the circumstances under which they were
made, not misleading. None of Parent's subsidiaries is required to file any
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Parent SEC Reports (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 as may be permitted by Form 10-Q or
Form 10-K of the Exchange Act) and (iii) fairly presented the consolidated
financial position of Parent and its subsidiaries as of the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements may
not contain footnotes and were or are subject to normal and recurring year-end
adjustments. For purposes of this Agreement, the Parent balance sheet as of
March 31, 2001 (the "Parent Balance Sheet Date") as set forth in the Parent's
Form 10-Q for the quarter ended March 31, 2001 shall be referred to as the
"PARENT BALANCE SHEET."
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(c) Parent has previously 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 NO UNDISCLOSED LIABILITIES. Neither Parent nor any of its
subsidiaries has 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 (i) liabilities provided for in Parent Balance Sheet or the notes
thereto, (ii) liabilities incurred since the Parent Balance Sheet Date in the
ordinary course of business consistent with past practices, which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent or (iii) banking, accounting, legal and printing fees
and expenses associated with the Merger.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Parent Balance
Sheet Date, there has not been: (i) any Material Adverse Effect on Parent, (ii)
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, (iii) any split, combination
or reclassification of any of Parent's or any of its subsidiaries' capital
stock, (iv) any material change by Parent in its accounting methods, principles
or practices, except as required by concurrent changes in GAAP, or (v) any
revaluation by Parent of any of its assets, including, without limitation,
writing down the value of capitalized inventory or writing off notes or accounts
receivable or any sale of assets of the Parent other than in the ordinary course
of business.
3.10 ABSENCE OF LITIGATION. Section 3.10 of the Parent Disclosure
Schedule lists all material claims, actions, suits or proceedings pending or, to
the knowledge of Parent, threatened against Parent or any of its subsidiaries or
any properties or rights of Parent or any of its subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign.
3.11 ENVIRONMENTAL MATTERS. (i) The Parent and its subsidiaries have
obtained all applicable Environmental Permits and are and have been in
compliance in all material respects with such Environmental Permits and any
conditions placed thereon except to the extent that the failure to obtain or
comply with Environmental Permits could not reasonably be expected to have a
Material Adverse Effect on Parent.
(b) The Parent and its subsidiaries have not disposed of,
released, discharged or emitted any Hazardous Materials into the soil or
groundwater at any properties owned or leased at any time by the Parent or any
of its subsidiaries, or at any other property, or exposed any employee or other
individual to any Hazardous Materials or any workplace or environmental
condition in such a manner as would result in any material liability or material
clean-up obligation of any kind or nature to the Parent or any of its
subsidiaries.
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(c) No Hazardous Materials are present in, on, or under any
properties owned, leased or used at any time by the Parent or its subsidiaries
so as to give rise to any material liability or material clean-up obligation
under any Environmental Laws.
3.12 EMPLOYEE MATTERS AND BENEFIT PLANS.
(a) DEFINITIONS. The following terms shall have the meanings
set forth below:
(i) "PARENT EMPLOYEE PLAN" shall mean any plan,
program, policy, practice, contract, agreement or other arrangement providing
for compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written, unwritten or otherwise,
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 of Parent, or with respect to which Parent or any
Affiliate has or may have any liability or obligation;
(ii) "PARENT EMPLOYEE AGREEMENT" shall refer to each
each management, employment, severance or consulting or similar agreement
between Parent or any Affiliate and any Employee of Parent;
(b) EMPLOYEE PLAN COMPLIANCE. (i) The Parent has performed in
all material respects all obligations required to be performed by it under, is
not in default or violation of, and has no knowledge of any default or violation
by any other party with respect to each 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 intended to qualify under Section 501(a) of the Code has
either received a favorable determination, opinion, notification and/or advisory
letter, as applicable, from the IRS with respect to each such Parent Employee
Plan as to its qualified status under the Code, including all amendments to the
Code effected by the Tax Reform Act of 1986 and subsequent legislation, or has a
remaining period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified status of each
such Parent Employee Plan; (iii) no "prohibited transaction" within the meaning
of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise
exempt under Section 4975 of the Code or Section 408 of ERISA (or any
administrative class exemption issued thereunder), 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 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 or any Affiliates, 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 502(i) of ERISA or Sections 4975 through 4980 of the Code.
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(c) PENSION PLANS. Neither Parent nor any Affiliate has 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) COLLECTIVELY BARGAINED, MULTIEMPLOYER AND MULTIPLE
EMPLOYER PLANS. Neither Parent nor any Affiliate contributes to or is obligated
to contribute to any Multiemployer Plan. Neither Parent nor any Affiliate has
established or maintains, sponsors, participates in or contributes to any
multiple employer plans, or to any plan described in Section 413 of the Code.
(e) HEALTH CARE COMPLIANCE. Neit