\n 5.3 Non-Disclosure; Access to Information………………………………….43
\n 5.4 No Solicitation……………………………………………………..44
\n 5.5 Public Disclosure……………………………………………………45
\n 5.6 Reasonable Efforts; Notification………………………………………46
\n 5.7 Third Party Consents…………………………………………………47
\n 5.8 Stock Options and Company ESPP………………………………………..47
\n 5.9 Form S-8……………………………………………………………48
\n 5.10 Indemnification……………………………………………………..48
\n 5.11 NASDAQ Listing………………………………………………………49
\n 5.12 Company Affiliate Restrictions………………………………………..49
\n 5.13 Regulatory Filings; Reasonable Efforts…………………………………49
\n 5.14 Company Representatives on Parent Board of Directors…………………….49
\n 5.15 Rights Agreements……………………………………………………50<\/p>\nARTICLE VI CONDITIONS TO THE MERGER……………………………………………………50
\n 6.1 Conditions to Obligations of Each Party to Effect the Merger……………..50
\n 6.2 Additional Conditions to Obligations of Company…………………………51
\n 6.3 Additional Conditions to the Obligations of Parent and Merger Sub…………51<\/p>\n
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER…………………………………………..52
\n 7.1 Termination…………………………………………………………52
\n 7.2 Notice of Termination; Effect of Termination……………………………54
\n 7.3 Fees and Expenses……………………………………………………54
\n 7.4 Amendment…………………………………………………………..55
\n 7.5 Extension; Waiver……………………………………………………56<\/p>\n
ARTICLE VIII GENERAL PROVISIONS……………………………………………………….56
\n 8.1 Non-Survival of Representations and Warranties………………………….56
\n 8.2 Notices…………………………………………………………….57
\n 8.3 Interpretation; Knowledge…………………………………………….58
\n 8.4 Counterparts………………………………………………………..58
\n 8.5 Entire Agreement; Third Party Beneficiaries…………………………….58
\n 8.6 Severability………………………………………………………..58
\n 8.7 Other Remedies; Specific Performance…………………………………..58
\n 8.8 Governing Law……………………………………………………….58
\n 8.9 Rules of Construction………………………………………………..59
\n 8.10 Assignment………………………………………………………….59
\n<\/c><\/s><\/caption>\n<\/table>\n
-iii-
\n 5<\/p>\n
TABLE OF CONTENTS
\n (CONTINUED)<\/p>\n
INDEX OF EXHIBITS<\/p>\n
Exhibit A-1 Form of Company Voting Agreement
\nExhibit A-2 Form of Parent Voting Agreement<\/p>\n
-iv-<\/p>\n
6<\/p>\n
AGREEMENT AND PLAN OF REORGANIZATION<\/p>\n
This AGREEMENT AND PLAN OF REORGANIZATION (the “AGREEMENT”) is made and
\nentered into as of July 13, 2001, among Sanmina Corporation, a Delaware
\ncorporation (“PARENT”), Sun Acquisition Subsidiary, Inc., a Delaware corporation
\nand a wholly owned subsidiary of Parent (“MERGER SUB”) and SCI Systems, Inc., a
\nDelaware corporation (“COMPANY”).<\/p>\n
RECITALS<\/p>\n
A. Whereas, the Board of Directors of each of Parent, Merger Sub and
\nCompany have determined that it is in the best interests of each corporation and
\ntheir respective stockholders that the Company and Parent enter into a strategic
\nbusiness combination transaction by means of the merger of Merger Sub with and
\ninto the Company (the “MERGER”) and, in furtherance thereof, have approved the
\nMerger and declared the Merger advisable;<\/p>\n
B. Whereas, pursuant to the Merger, the outstanding shares of common
\nstock of Company will be converted into shares of common stock of Parent at the
\nrate set forth herein; and<\/p>\n
C. Whereas, for federal income tax purposes, it is intended that the
\nMerger will qualify as a reorganization within the meaning of Section 368 (a) of
\nthe Internal Revenue Code of 1986, as amended (the “CODE”); and<\/p>\n
D. Whereas, concurrently with the execution of this Agreement, and as
\nan inducement to Parent’s and Company’s willingness to enter into this
\nAgreement, (i) certain affiliates of Company are entering into Voting Agreements
\nin substantially the form attached hereto as Exhibit A-1 (the “COMPANY VOTING
\nAGREEMENTS”) and (ii) certain affiliates of Parent are entering into Voting
\nAgreements substantially the form attached hereto as Exhibit A-2 (the “PARENT
\nVOTING Agreements”).<\/p>\n
NOW, THEREFORE, in consideration of the covenants, promises and
\nrepresentations set forth herein, and for other good and valuable consideration,
\nthe receipt and sufficiency of which are hereby acknowledged, the parties agree
\nas follows:<\/p>\n
ARTICLE I
\n MERGER<\/p>\n
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
\nsubject to and upon the terms and conditions of this Agreement and the
\napplicable provisions of Delaware Law, Merger Sub shall be merged with and into
\nCompany (the “MERGER”), the separate corporate existence of Merger Sub shall
\ncease and Company shall continue as the surviving corporation (the “SURVIVING
\nCORPORATION”).<\/p>\n
1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this
\nAgreement, the parties hereto shall cause the Merger to be consummated by filing
\nthe Certificate of Merger (the “CERTIFICATE OF MERGER”) with the Secretary of
\nState of the State of Delaware in accordance with the relevant provisions of the
\nDelaware General Corporation Law (the “DGCL” or “DELAWARE LAW”) (the time of
\nsuch filing (or such later time as may be agreed in writing by Company and
\nParent and <\/p>\n
7<\/p>\n
specified in the Certificate of Merger) being the “EFFECTIVE TIME”)
\nas soon as practicable on or after the Closing Date (as hereinafter defined).
\nUnless the context otherwise requires, the term “AGREEMENT” as used herein
\nrefers collectively to this Agreement and Plan of Reorganization and the
\nCertificate of Merger. The closing of the Merger (the “CLOSING”) shall take
\nplace at the offices of Wilson Sonsini Goodrich & Rosati, Professional
\nCorporation, 650 Page Mill Road, Palo Alto, California, at a time and date to be
\nspecified by the parties, which shall be no later than the second business day
\nafter the satisfaction or waiver of the conditions set forth in Article VI, or
\nat such other time, date and location as the parties hereto agree in writing
\n(the “CLOSING DATE”).<\/p>\n
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
\nMerger shall be as provided in this Agreement and the applicable provisions of
\nthe DGCL. Without limiting the generality of the foregoing, and subject thereto,
\nat the Effective Time all the property, rights, privileges, powers and
\nfranchises of Company and Merger Sub shall vest in the Surviving Corporation,
\nand all debts, liabilities and duties of Company and Merger Sub shall become the
\ndebts, liabilities and duties of the Surviving Corporation.<\/p>\n
1.4 CERTIFICATE OF INCORPORATION; BYLAWS. At the Effective Time, the
\nCertificate of Incorporation of Merger Sub, as in effect immediately prior to
\nthe Effective Time, shall be the Certificate of Incorporation of the Surviving
\nCorporation until thereafter amended as provided by law and such Certificate of
\nIncorporation of the Surviving Corporation; provided, however, that at the
\nEffective Time the Certificate of Incorporation of the Surviving Corporation
\nshall be amended so that the name of the Surviving Corporation shall be “Sun,
\nInc.” The Bylaws of Merger Sub, as in effect immediately prior to the Effective
\nTime, shall be, at the Effective Time, the Bylaws of the Surviving Corporation
\nuntil thereafter amended.<\/p>\n
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
\nCorporation immediately following the Effective Time shall be the directors of
\nMerger Sub, until their respective successors are duly elected or appointed and
\nqualified. The initial officers of the Surviving Corporation shall be the
\nofficers of Company immediately prior to the Effective Time, until their
\nrespective successors are duly appointed.<\/p>\n
1.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
\nMerger and without any action on the part of Merger Sub, Company or the holders
\nof any of the following securities:<\/p>\n
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Common
\nStock, $0.10 par value per share, of Company (the “COMPANY COMMON STOCK”) issued
\nand outstanding immediately prior to the Effective Time, other than any shares
\nof Company Common Stock to be canceled pursuant to Section 1.6(b), will be
\ncanceled and extinguished and automatically converted (subject to Section
\n1.6(f)) into the right to receive 1.36 (the “EXCHANGE RATIO”) validly issued,
\nfully paid and nonassessable shares of Common Stock, $0.01 par value per share,
\nof Parent (the “PARENT COMMON STOCK”) upon surrender of the certificate
\nrepresenting such share of Company Common Stock in the manner provided in
\nSection 1.7 (or in the case of a lost, stolen or destroyed certificate, upon
\ndelivery of an affidavit (and bond, if required) in the manner provided in
\nSection 1.9). If any shares of Company Common Stock outstanding immediately
\nprior to the Effective Time are unvested or are subject to a repurchase option,
\nrisk of forfeiture or other condition under any applicable restricted stock
\npurchase agreement or other agreement with the Company, then the shares of
\nParent Common Stock issued in exchange for such shares of Company Common Stock
\nwill <\/p>\n
-2-
\n 8<\/p>\n
also be unvested and\/or subject to the same repurchase option, risk of
\nforfeiture or other condition, and the certificates representing such shares of
\nParent Common Stock may accordingly be marked with appropriate legends. Company
\nshall take all action that may be necessary to ensure that, from and after the
\nEffective Time, Parent is entitled to exercise any such repurchase option or
\nother right set forth in any such restricted stock purchase agreement or other
\nagreement.<\/p>\n
(b) CANCELLATION OF PARENT-OWNED AND COMPANY-HELD STOCK. Each
\nshare of Company Common Stock held by Company or owned by Merger Sub, Parent or
\nany direct or indirect wholly owned subsidiary of Company or of Parent
\nimmediately prior to the Effective Time shall be canceled and extinguished
\nwithout any conversion thereof.<\/p>\n
(c) STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLANS. At the
\nEffective Time, all options to purchase Company Common Stock then outstanding
\nunder Company’s 1994 Stock Incentive Plan, 2000 Stock Incentive Plan and
\nDirectors Deferred Compensation Plan (collectively, the “COMPANY STOCK OPTION
\nPLANS”) shall be assumed by Parent in accordance with Section 5.8 hereof. Rights
\noutstanding under Company’s Employee Stock Purchase Plan shall be treated as set
\nforth in Section 5.8.<\/p>\n
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock,
\n$0.001 par value per share, of Merger Sub (the “MERGER SUB COMMON STOCK”) issued
\nand outstanding immediately prior to the Effective Time shall be converted into
\none validly issued, fully paid and nonassessable share of Common Stock, $0.001
\npar value per share, of the Surviving Corporation. Each certificate evidencing
\nownership of shares of Merger Sub Common Stock shall evidence ownership of such
\nshares of capital stock of the Surviving Corporation.<\/p>\n
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
\nadjusted to reflect appropriately the effect of any stock split, reverse stock
\nsplit, stock dividend (including any dividend or distribution of securities
\nconvertible into Parent Common Stock or Company Common Stock), reorganization,
\nrecapitalization, reclassification or other like change with respect to Parent
\nCommon Stock or Company Common Stock occurring on or after the date hereof and
\nprior to the Effective Time.<\/p>\n
(f) FRACTIONAL SHARES. No fraction of a share of Parent Common
\nStock will be issued by virtue of the Merger, but in lieu thereof each holder of
\nshares of Company Common Stock who would otherwise be entitled to a fraction of
\na share of Parent Common Stock (after aggregating all fractional shares of
\nParent Common Stock that otherwise would be received by such holder) shall
\nreceive from Parent an amount of cash (rounded to the nearest whole cent) equal
\nto the product obtained by multiplying (i) such fraction, by (ii) the average of
\nthe closing price of Parent Common Stock on the Nasdaq National Market
\n(“NASDAQ”) for the five trading days immediately preceding the trading day on
\nwhich the Effective Time occurs.<\/p>\n
1.7 SURRENDER OF CERTIFICATES.<\/p>\n
(a) Exchange Agent. Parent shall designate Wells Fargo
\nShareowner Services, the transfer agent for Parent’s Common Stock, to act as the
\nexchange agent (the “EXCHANGE AGENT”) in the Merger.<\/p>\n
-3-
\n 9<\/p>\n
(b) PARENT TO PROVIDE COMMON STOCK. Promptly after the
\nEffective Time, Parent shall make available to the Exchange Agent for exchange
\nin accordance with this Article I, the shares of Parent Common Stock issuable
\npursuant to Section 1.6 in exchange for outstanding shares of Company Common
\nStock, and cash in an amount sufficient for payment in lieu of fractional shares
\npursuant to Section 1.6(f) and any dividends or distributions to which holders
\nof shares of Company Common Stock may be entitled pursuant to Section 1.7(d).<\/p>\n
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time,
\nParent shall cause the Exchange Agent to mail to each holder of record (as of
\nthe Effective Time) of a certificate or certificates (the “CERTIFICATES”), which
\nimmediately prior to the Effective Time represented outstanding shares of
\nCompany Common Stock whose shares were converted into the right to receive
\nshares of Parent Common Stock pursuant to Section 1.6, cash in lieu of any
\nfractional shares pursuant to Section 1.6(f) and any dividends or other
\ndistributions pursuant to Section 1.7(d), (i) a letter of transmittal in
\ncustomary form (which shall specify that delivery shall be effected, and risk of
\nloss and title to the Certificates shall pass, only upon delivery of the
\nCertificates to the Exchange Agent and containing such other provisions as
\nParent may reasonably specify) and (ii) instructions for use in effecting the
\nsurrender of the Certificates in exchange for certificates representing shares
\nof Parent Common Stock, cash in lieu of any fractional shares pursuant to
\nSection 1.6(f) and any dividends or other distributions pursuant to Section
\n1.7(d). Upon surrender of Certificates for cancellation to the Exchange Agent or
\nto such other agent or agents as may be appointed by Parent, together with such
\nletter of transmittal, duly completed and validly executed in accordance with
\nthe instructions thereto, the holders of such Certificates shall be entitled to
\nreceive in exchange therefor certificates representing the number of whole
\nshares of Parent Common Stock that such holder has a right to receive pursuant
\nto Section 1.6(a), payment in lieu of fractional shares which such holders have
\nthe right to receive pursuant to Section 1.6(f) and any dividends or
\ndistributions payable pursuant to Section 1.7(d), and the Certificates so
\nsurrendered shall forthwith be canceled. Until so surrendered, outstanding
\nCertificates will be deemed from and after the Effective Time, for all corporate
\npurposes, subject to Section 1.7(d) as to the payment of dividends or other
\ndistributions, to evidence only the right to receive the number of full shares
\nof Parent Common Stock issuable in exchange for such shares of Company Common
\nStock pursuant to Section 1.6(a) and the right to receive an amount in cash in
\nlieu of the issuance of any fractional shares in accordance with Section 1.6(f)
\nand any dividends or distributions payable pursuant to Section 1.7(d).<\/p>\n
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
\ndividends or other distributions declared or made after the date of this
\nAgreement with respect to Parent Common Stock with a record date after the
\nEffective Time will be paid to the holders of any unsurrendered Certificates
\nwith respect to the shares of Parent Common Stock issuable in exchange therefor
\nuntil the holders of record of such Certificates shall surrender such
\nCertificates. Subject to applicable law, following surrender of any such
\nCertificates, the Exchange Agent shall deliver to the record holders thereof,
\nwithout interest, certificates representing the number of whole shares of Parent
\nCommon Stock issued in exchange therefor along with payment in lieu of
\nfractional shares pursuant to Section 1.6(f) hereof and the amount of any such
\ndividends or other distributions with a record date after the Effective Time
\npayable with respect to such whole shares of Parent Common Stock.<\/p>\n
(e) TRANSFERS OF OWNERSHIP. If certificates representing
\nshares of Parent Common Stock are to be issued in a name other than that in
\nwhich the Certificates surrendered in exchange therefor are registered, it will
\nbe a condition of the issuance thereof that the Certificates so <\/p>\n
-4-
\n 10<\/p>\n
surrendered will be properly endorsed and otherwise in proper form for transfer
\nand that the persons requesting such exchange will have paid to Parent or any
\nagent designated by it any transfer or other taxes required by reason of the
\nissuance of certificates representing shares of Parent Common Stock in any name
\nother than that of the registered holder of the Certificates surrendered, or
\nestablished to the reasonable satisfaction of Parent or any agent designated by
\nit that such tax has been paid or is not payable.<\/p>\n
(f) REQUIRED WITHHOLDING. Each of the Exchange Agent, Parent,
\nand the Surviving Corporation shall be entitled to deduct and withhold from any
\nconsideration payable or otherwise deliverable pursuant to this Agreement to any
\nholder or former holder of Company Common Stock such amounts as may be required
\nto be deducted or withheld therefrom under the Code or under any provision of
\nstate, local or foreign tax law or under any other applicable legal requirement.
\nTo the extent such amounts are so deducted or withheld, such amounts shall be
\ntreated for all purposes under this Agreement as having been paid to the person
\nto whom such amounts would otherwise have been paid.<\/p>\n
(g) NO LIABILITY. Notwithstanding anything to the contrary in
\nthis Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation
\nnor any party hereto shall be liable to a holder of shares of Parent Common
\nStock or Company Common Stock for any amount properly paid to a public official
\npursuant to any applicable abandoned property, escheat or similar law.<\/p>\n
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
\nParent Common Stock issued in accordance with the terms hereof (including any
\ncash paid in respect thereof pursuant to Section 1.6(f) and 1.7(d)) shall be
\ndeemed to have been issued and paid in full satisfaction of all rights
\npertaining to such shares of Company Common Stock. At the Effective Time: (i)
\nall shares of Company Common Stock outstanding immediately prior to the
\nEffective Time shall automatically be cancelled and retired and cease to exist,
\nand all holders of Certificates representing shares of Company Common Stock that
\nwere outstanding immediately prior to the Effective Time shall cease to have any
\nrights as stockholders of Company other than the rights expressly provided in
\nthis Agreement and (ii) there shall be no further registration of transfers on
\nthe records of the Surviving Corporation of shares of Company Common Stock which
\nwere outstanding immediately prior to the Effective Time. If after the Effective
\nTime Certificates are presented to the Surviving Corporation for any reason,
\nthey shall be canceled and exchanged as provided in this Article I.<\/p>\n
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that any
\nCertificates shall have been lost, stolen or destroyed, the Exchange Agent shall
\nissue in exchange for such lost, stolen or destroyed Certificates, upon the
\nmaking of an affidavit of that fact by the holder thereof, certificates
\nrepresenting the shares of Parent Common Stock into which the shares of Company
\nCommon Stock represented by such Certificates were converted pursuant to Section
\n1.6, cash for fractional shares, if any, as may be required pursuant to Section
\n1.6(f) and any dividends or distributions payable pursuant to Section 1.7(d);
\nPROVIDED, HOWEVER, that Parent may, in its discretion and as a condition
\nprecedent to the issuance of such certificates representing shares of Parent
\nCommon Stock, cash and other distributions, require the owner of such lost,
\nstolen or destroyed Certificates to deliver a bond in such sum as it may
\nreasonably direct as indemnity against any claim that may be made against
\nParent, the Surviving Corporation or the Exchange Agent with respect to the
\nCertificates alleged to have been lost, stolen or destroyed.<\/p>\n
-5-
\n 11<\/p>\n
1.10 TAX CONSEQUENCES. It is intended by the parties hereto that the
\nMerger shall constitute a reorganization within the meaning of Section 368 of
\nthe Code. The parties hereto adopt this Agreement as a “plan of reorganization”
\nwithin the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
\nTreasury Regulations.<\/p>\n
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
\nthe Effective Time, any further action is necessary or desirable to carry out
\nthe purposes of this Agreement and to vest the Surviving Corporation with full
\nright, title and possession to all assets, property, rights, privileges, powers
\nand franchises of Company and Merger Sub, the officers and directors of
\nSurviving Corporation and Parent, acting for and on behalf of the Company and
\nMerger Sub, shall be fully authorized to take all such lawful and necessary
\naction. Parent shall cause Merger Sub to perform all of its obligations relating
\nto this Agreement and the transactions contemplated thereby.<\/p>\n
ARTICLE II
\n REPRESENTATIONS AND WARRANTIES OF COMPANY<\/p>\n
Company represents and warrants to Parent and Merger Sub, subject to
\nsuch exceptions as are specifically disclosed in writing in the disclosure
\nletter delivered by Company to Parent on or prior to the date of this Agreement
\nand certified by a duly authorized officer of Company (the “COMPANY DISCLOSURE
\nSCHEDULE”), as follows (it being understood that disclosure in one instance is
\nsufficient for all purposes if the context thereof is reasonably evident and it
\nbeing understood that disclosure of an item is not to be construed as an
\nadmission of any fact):<\/p>\n
2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.<\/p>\n
(a) Each of Company, its domestic subsidiaries and its foreign
\nsubsidiaries incorporated under the laws of Canada or Mexico (the “COMPANY
\nDESIGNATED FOREIGN SUBSIDIARIES”) is a corporation duly organized, validly
\nexisting and in good standing under the laws of the jurisdiction of its
\nincorporation and has the requisite corporate power and authority to own, lease
\nand operate its assets and properties and to carry on its business as it is now
\nbeing conducted. Company has delivered to Parent a complete and correct list of
\nall of Company’s direct and indirect subsidiaries as of the date of this
\nAgreement, indicating the jurisdiction of organization of each subsidiary and
\nCompany’s equity interest therein. Each of Company, its domestic subsidiaries
\nand each of the Company Designated Foreign Subsidiaries is in possession of all
\nfranchises, grants, authorizations, licenses, permits, consents, certificates,
\napprovals, variances, exemptions and orders (“APPROVALS”) necessary to own,
\nlease and operate the properties it purports to own, operate or lease and to
\ncarry on its business and the business of its subsidiaries as it is now being
\nconducted, except where the failure to have such Approvals would not,
\nindividually or in the aggregate, have a Material Adverse Effect on Company.
\nEach of Company, its domestic subsidiaries and each of the Company Designated
\nForeign Subsidiaries is in compliance with the terms of the Approvals and is
\nduly qualified or licensed as a foreign corporation to do business, and is in
\ngood standing, in each jurisdiction where the character of the properties owned,
\nleased or operated by it or the nature of its activities makes such
\nqualification or licensing necessary, except for such failures to be so duly
\nqualified or licensed and in good standing that would not, either individually
\nor in the aggregate, have a Material Adverse Effect on Company. Other than
\nwholly owned subsidiaries, Company does not directly or indirectly own any
\nmaterial equity or similar interest in, or any interest convertible or<\/p>\n
-6-
\n 12<\/p>\n
exchangeable or exercisable for, any equity or similar interest in, any
\ncorporation, partnership, joint venture or other business, association or
\nentity.<\/p>\n
(b) Each of the foreign subsidiaries of Company that are
\nincorporated under the laws of countries other than Canada or Mexico (the
\n“COMPANY OTHER FOREIGN SUBSIDIARIES”) is, to the Company’s knowledge, a
\ncorporation duly organized, validly existing and in good standing under the laws
\nof the jurisdiction of its incorporation and has the requisite corporate power
\nand authority to own, lease and operate its assets and properties and to carry
\non its business as it is now being conducted. Each of the Company Other Foreign
\nSubsidiaries is, to the Company’s knowledge, is in possession of all Approvals
\nnecessary to own, lease and operate the properties it purports to own, operate
\nor lease and to carry on its business and the business of its subsidiaries as it
\nis now being conducted, except where the failure to have such Approvals would
\nnot, individually or in the aggregate, have a Material Adverse Effect (as
\ndefined in Section 8.3(b)) on Company. Each of the Company Other Foreign
\nSubsidiaries is, to the Company’s knowledge, in compliance with the terms of the
\nApprovals and is duly qualified or licensed as a foreign corporation to do
\nbusiness, and is in good standing, in each jurisdiction where the character of
\nthe properties owned, leased or operated by it or the nature of its activities
\nmakes such qualification or licensing necessary, except for such failures to be
\nso duly qualified or licensed and in good standing that would not, either
\nindividually or in the aggregate, have a Material Adverse Effect on Company.<\/p>\n
2.2 CERTIFICATES OF INCORPORATION AND BYLAWS. The Company has
\npreviously furnished to Parent a complete and correct copy of the Certificate of
\nIncorporation and Bylaws of Company, as amended to date. Such Certificate of
\nIncorporation, Bylaws and equivalent organizational documents of Company and
\neach of its subsidiaries are in full force and effect. Neither Company nor any
\nof its subsidiaries is in violation of any of the provisions of its respective
\nCertificate of Incorporation or Bylaws or equivalent organizational documents,
\nexcept for any violation which would not reasonably be expected to have a
\nMaterial Adverse Effect on Company.<\/p>\n
2.3 CAPITALIZATION.<\/p>\n
(a) The authorized capital stock of Company consists of
\n500,000,000 shares of Company Common Stock, $0.10 par value per share, and
\n500,000 shares of Preferred Stock, without par value (“COMPANY PREFERRED
\nSTOCK”). At the close of business on June 30, 2001:<\/p>\n
(i) 147,024,974 shares of Company Common Stock were
\nissued and outstanding;<\/p>\n
(ii) 884,045 shares of Company Common Stock were held
\nin treasury by Company or by subsidiaries of Company;<\/p>\n
(iii) 9,037,200 shares of Company Common Stock were
\nreserved for issuance upon the exercise of outstanding options to purchase
\nCompany Common Stock under the Company Stock Option Plans;<\/p>\n
(iv) 4,890,234 shares of Company Common Stock were
\navailable for future grant under the Company Stock Option Plans;<\/p>\n
-7-
\n 13<\/p>\n
(v) 500,000 shares of Company Common Stock were
\nreserved for issuance under the Company’s United States and International
\nEmployee (Stock Purchase Plans (collectively, the “COMPANY ESPP”) in the
\nPurchase Period (as defined in the Company ESPP) ended June 30, 2001;<\/p>\n
(vi) 500,000 shares of Company Common Stock were
\navailable for future sale under the Company ESPP;<\/p>\n
(vii) 10,225,858 shares of Company Common Stock were
\nreserved for issuance upon conversion of Company’s 3% Convertible Subordinated
\nNotes due 2007 (the “COMPANY CONVERTIBLE NOTES”); and<\/p>\n
(viii) 146,990,574 shares of Company Common Stock
\nreserved for issuance upon exercise of the rights (the “COMPANY RIGHTS”)
\ndistributed to holders of Company Common Stock pursuant to the Rights Agreement
\ndated December 20, 2000 between Company and Mellon Investor Services LLC, as
\nRights Agent, the “COMPANY RIGHTS AGREEMENT”).<\/p>\n
(b) As of the date hereof, no shares of Company Preferred
\nStock are issued and outstanding.<\/p>\n
(c) No change in such capitalization has occurred between June
\n30, 2001 and the date hereof except (x) the issuance of shares of Company
\nCommon Stock pursuant to the exercise of outstanding options or warrants or (y)
\nthe cancellation of unvested options for Common Stock held by, or the repurchase
\nof unvested shares of Common Stock from, directors, employees, consultants or
\nother service providers of Company pursuant to the terms of their stock option,
\nstock purchase or stock restriction agreements. All outstanding shares of
\nCompany Common Stock are duly authorized, validly issued, fully paid and
\nnonassessable and are not subject to preemptive rights created by statute, the
\nCertificate of Incorporation or Bylaws of Company or any agreement or document
\nto which Company is a party or by which it is bound.<\/p>\n
(d) Except as set forth in Section 2.3 of the Company
\nDisclosure Schedule, as of the date of this Agreement, there are no options,
\nwarrants or other rights, agreements, arrangements or commitments of any
\ncharacter relating to the issued or unissued capital stock of Company or any of
\nits subsidiaries that obligate Company or any of its subsidiaries to issue or
\nsell any shares of capital stock of, or other equity interests in, Company or
\nany of its subsidiaries or obligating Company or any of its subsidiaries to
\ngrant, extend, accelerate the vesting of or enter into any such option, warrant
\nor other right, agreement, arrangement or commitment.<\/p>\n
(e) All shares of Company Common Stock subject to issuance as
\naforesaid, upon issuance on the terms and conditions specified in the
\ninstruments pursuant to which they are issuable, shall be duly authorized,
\nvalidly issued, fully paid and nonassessable.<\/p>\n
(f) There are no obligations, contingent or otherwise, of
\nCompany or any of its subsidiaries to repurchase, redeem or otherwise acquire
\nany shares of Company Common Stock or the capital stock of any subsidiary,
\nexcept the repurchase of unvested shares of Company Common Stock from directors,
\nemployees, consultants or other service providers of Company pursuant to the
\nterms of their stock option, stock purchase or stock restriction agreements, or
\nto provide funds to or <\/p>\n
-8-
\n 14<\/p>\n
make any investment (in the form of a loan, capital contribution or otherwise)
\nin any such subsidiary or any other entity.<\/p>\n
(g) All of the outstanding shares of capital stock of each of
\nCompany’s domestic direct or indirect subsidiaries and Designated Foreign
\nSubsidiaries, and to Company’s knowledge, of each of Company’s direct or
\nindirect Other Foreign Subsidiaries, are duly authorized, validly issued, fully
\npaid and nonassessable and, except for de minimis numbers of shares of certain
\nforeign subsidiaries required to be held by individuals to satisfy local law
\nrequirements (as indicated in the Company Disclosure Schedule), all such shares
\nare owned by Company or another subsidiary free and clear of all security
\ninterests, liens, claims, pledges, agreements, limitations in Company’s voting
\nrights, charges or other encumbrances of any nature whatsoever.<\/p>\n
(h) The Company Disclosure Schedule lists for each person who
\nheld options or warrants to acquire shares of Company Common Stock as of June
\n30, 2001, the name of the holder of such option or warrant, the exercise price
\nof such option or warrant, the number of shares as to which such option or
\nwarrant had vested as of June 30, 2001 for such option or warrant and whether
\nthe exercisability of such option or warrant will be accelerated in any way by
\nthe transactions contemplated by this Agreement, and indicates the extent of
\nacceleration, if any.<\/p>\n
(i) Except as contemplated by this Agreement and the Company
\nRights Agreement, there are no registration rights and no voting trusts,
\nproxies, shareholder rights plans, anti-takeover plans or other agreements or
\nunderstandings to which Company is a party or by which it is bound with respect
\nto any equity security of any class of Company or with respect to any equity
\nsecurity, partnership interest or similar ownership interest of any class of any
\nof its subsidiaries.<\/p>\n
(j) The stockholders of Company will not be entitled to
\ndissenters’ rights under the DGCL or any other applicable state law in
\nconnection with the Merger.<\/p>\n
2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Company has all necessary
\ncorporate power and authority to execute and deliver this Agreement and to
\nperform its obligations hereunder and, subject to obtaining the approval of the
\nstockholders of Company of this Agreement and the Merger, to consummate the
\ntransactions contemplated hereby. The execution and delivery of this Agreement
\nby Company and the consummation by Company of the transactions contemplated
\nhereby have been duly and validly authorized by all necessary corporate action
\non the part of Company and no other corporate proceedings on the part of Company
\nare necessary to authorize this Agreement or to consummate the transactions so
\ncontemplated (other than, with respect to the Merger, the approval and adoption
\nof this Agreement and the approval of the Merger by holders of a majority of the
\noutstanding shares of Company Common Stock in accordance with the DGCL and the
\nCompany’s Certificate of Incorporation and Bylaws (the “COMPANY STOCKHOLDER
\nAPPROVAL”)). This Agreement has been duly and validly executed and delivered by
\nCompany and, assuming the due authorization, execution and delivery by Parent
\nand Merger Sub, constitutes a legal and binding obligation of Company,
\nenforceable against Company in accordance with its terms.<\/p>\n
2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.<\/p>\n
(a) The execution and delivery of this Agreement by Company
\ndoes not, and the performance of this Agreement by Company will not, (i)
\nconflict with or violate the Certificate of <\/p>\n
-9-
\n 15<\/p>\n
Incorporation, Bylaws or equivalent organizational documents of Company or any
\nof its subsidiaries, (ii) subject to obtaining the Company Stockholder Approval
\nand compliance with the requirements set forth in Section 2.5(b) below, conflict
\nwith or violate any law, rule, regulation, order, judgment or decree applicable
\nto Company or any of its subsidiaries or by which Company or any of its
\nsubsidiaries or any of their respective properties are bound or affected, or
\n(iii) result in any breach of or constitute a default (or an event that with
\nnotice or lapse of time or both would become a default) under, or impair
\nCompany’s or any such subsidiaries’ rights or alter the rights or obligations of
\nany third party under, or give to others any rights of termination, amendment,
\nacceleration or cancellation of, or result in the creation of a lien or
\nencumbrance on any of the properties or assets of Company or any of its
\nsubsidiaries pursuant to, any material note, bond, mortgage, indenture,
\ncontract, agreement, lease, license, permit, franchise or other instrument or
\nobligation to which Company or any of its subsidiaries is a party or by which
\nCompany or any of its subsidiaries or its or any of their respective properties
\nare bound or affected. The Company Disclosure Schedule lists all material
\nconsents, waivers and approvals under any of Company’s or any of its
\nsubsidiaries’ material agreements, contracts, licenses or leases required to be
\nobtained in connection with the consummation of the transactions contemplated
\nhereby.<\/p>\n
(b) The execution and delivery of this Agreement by Company
\ndoes not, and the performance of this Agreement by Company will not, require any
\nconsent, approval, authorization or permit of, or filing with or notification
\nto, any court, administrative agency, commission, governmental or regulatory
\nauthority, domestic or foreign (a “GOVERNMENTAL ENTITY”), except (A) for
\napplicable requirements, if any, of the Securities Act of 1933, as amended (the
\n“SECURITIES ACT”), the Securities Exchange Act of 1934, as amended (the
\n“EXCHANGE ACT”), state securities laws (“BLUE SKY LAWS”), the pre-merger
\nnotification requirements (the “HSR APPROVAL”) of the Hart-Scott-Rodino
\nAntitrust Improvements Act of 1976, as amended (the “HSR ACT”) and of foreign
\nGovernmental Entities and the rules and regulations thereunder, the rules and
\nregulations of the New York Stock Exchange (“NYSE”), and the filing of the
\nCertificate of Merger as required by the DGCL and (B) where the failure to
\nobtain such consents, approvals, authorizations or permits, or to make such
\nfilings or notifications, would not prevent consummation of the Merger or
\notherwise impair Company’s ability to timely perform its obligations under this
\nAgreement.<\/p>\n
2.6 COMPLIANCE; PERMITS; RESTRICTIONS. Neither Company nor any of its
\nsubsidiaries is in conflict with, or in default or violation of, (i) any law,
\nrule, regulation, order, judgment or decree applicable to Company or any of its
\nsubsidiaries or by which Company or any of its subsidiaries or any of their
\nrespective properties is bound or affected, or (ii) any note, bond, mortgage,
\nindenture, contract, agreement, lease, license, permit, franchise or other
\ninstrument or obligation to which Company or any of its subsidiaries is a party
\nor by which Company or any of its subsidiaries or its or any of their respective
\nproperties is bound or affected, except for any conflicts, defaults or
\nviolations which would not reasonably be expected to have, individually or in
\nthe aggregate, a Material Adverse Effect on Company. No investigation by any
\ngovernmental or regulatory body or authority is pending or, to the Company’s
\nknowledge, threatened against Company or its subsidiaries, nor has any
\ngovernmental or regulatory body or authority indicated in writing an intention
\nto conduct the same.<\/p>\n
-10-
\n 16<\/p>\n
2.7 SEC FILINGS; COMPANY FINANCIAL STATEMENTS.<\/p>\n
(a) Company has made available to Parent a correct and
\ncomplete copy of each material form, report, schedule, registration statement
\nand definitive proxy statement filed by Company with the Securities and Exchange
\nCommission (“SEC”) since July 1, 1999 (the “COMPANY SEC REPORTS”), which are all
\nthe material forms, reports and documents required to be filed by Company with
\nthe SEC since July 1, 1999. The Company SEC Reports (A) complied as to form in
\nall material respects with the requirements of the Securities Act or the
\nExchange Act, as the case may be, and the rules and regulations of the SEC
\nthereunder applicable to such Company SEC Reports, and (B) did not at the time
\nthey were filed (or if amended or superseded by a filing prior to the date of
\nthis Agreement, then on the date of such filing) contain any untrue statement of
\na material fact or omit to state a material fact required to be stated therein
\nor necessary in order to make the statements therein, in light of the
\ncircumstances under which they were made, not misleading. None of Company’s
\nsubsidiaries is required to file any forms, reports or other documents with the
\nSEC.<\/p>\n
(b) Each of the consolidated financial statements (including,
\nin each case, any related notes thereto) contained in the Company SEC Reports,
\nincluding each Company SEC Report filed after the date hereof until the Closing,
\n(i) complied as to form in all material respects with the published rules and
\nregulations of the SEC with respect thereto, (ii) was prepared in accordance
\nwith United States generally accepted accounting principles (“GAAP”) applied on
\na consistent basis throughout the periods involved (except as may be indicated
\nin the notes thereto or, in the case of unaudited interim financial statements,
\nas may be permitted by Form 10-Q or Form 10-K under the Exchange Act) and (iii)
\nfairly presented the consolidated financial position of Company and its
\nsubsidiaries as of the respective dates thereof and the consolidated results of
\nCompany’s operations and cash flows for the periods indicated, except that the
\nunaudited interim financial statements may not contain all footnotes and were or
\nare subject to year-end adjustments. The balance sheet of Company at March 25,
\n2001 (the “Company Balance Sheet Date”) contained in Company SEC Reports is
\nhereinafter referred to as the “COMPANY BALANCE SHEET.”<\/p>\n
(c) Company has previously furnished to Parent a complete and
\ncorrect copy of any amendments or modifications, which have not yet been filed
\nwith the SEC but which are required to be filed, to agreements, documents or
\nother instruments which previously had been filed by Company with the SEC
\npursuant to the Securities Act or the Exchange Act.<\/p>\n
2.8 NO UNDISCLOSED LIABILITIES. Neither Company nor any of its
\nsubsidiaries has any liabilities (absolute, accrued, contingent or otherwise),
\nwhich are, individually or in the aggregate, material to the business, results
\nof operations or financial condition of Company and its subsidiaries taken as a
\nwhole, except (i) liabilities provided for in Company Balance Sheet, (ii)
\nliabilities incurred since the Company Balance Sheet Date in the ordinary course
\nof business consistent with past practices, which would not reasonably be
\nexpected to have, individually or in the aggregate, a Material Adverse Effect on
\nCompany or (iii) banking, accounting, legal and printing fees and expenses
\nassociated with the Merger.<\/p>\n
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed on the
\nCompany Disclosure Schedule, since the Company Balance Sheet Date, there has not
\nbeen: (i) any Material Adverse Effect on Company, (ii) any declaration, setting
\naside or payment of any dividend on, or other distribution (whether in cash,
\nstock or property) in respect of, any of Company’s or any of its <\/p>\n
-11-
\n 17<\/p>\n
subsidiaries’ capital stock, or any purchase, redemption or other acquisition by
\nCompany of any of Company’s capital stock or any other securities of Company or
\nits subsidiaries or issuances of any options, warrants, calls or rights to
\nacquire any such shares or other securities except for repurchases from
\nemployees following their termination pursuant to the terms of their
\npre-existing stock option or purchase agreements, (iii) any split, combination
\nor reclassification of any of Company’s or any of its subsidiaries’ capital
\nstock, (iv) any granting by Company or any of its subsidiaries of any material
\nincrease in compensation or fringe benefits, except for normal increases of cash
\ncompensation in the ordinary course of business consistent with past practice,
\nor any payment by Company or any of its subsidiaries of any material bonus,
\nexcept for bonuses made in the ordinary course of business consistent with past
\npractice, or any granting by Company or any of its subsidiaries of any increase
\nin severance or termination pay or any entry by Company or any of its
\nsubsidiaries into any currently effective employment, severance, termination or
\nindemnification agreement or any agreement the benefits of which are contingent
\nor the terms of which are materially altered upon the occurrence of a
\ntransaction involving Company of the nature contemplated hereby, (v) entry by
\nCompany or any of its subsidiaries into any licensing or other agreement with
\nregard to the acquisition or disposition of any material Intellectual Property
\n(as defined in Section 2.18) other than licenses in the ordinary course of
\nbusiness consistent with past practice or any amendment or consent with respect
\nto any licensing agreement filed or required to be filed by Company with the
\nSEC, (vi) any material change by Company in its accounting methods, principles
\nor practices, except as required by concurrent changes in GAAP, or (vii) any
\nrevaluation by Company of any of its assets, including, without limitation,
\nwriting down the value of capitalized inventory or writing off notes or accounts
\nreceivable other than in the ordinary course of business.<\/p>\n
2.10 ABSENCE OF LITIGATION. Section 2.10 of the Company Disclosure
\nSchedule lists all material claims, actions, suits or proceedings pending or, to
\nthe knowledge of Company, threatened against Company or any of its subsidiaries
\nor any properties or rights of Company or any of its subsidiaries, before any
\ncourt, arbitrator or administrative, governmental or regulatory authority or
\nbody, domestic or foreign.<\/p>\n
2.11 ENVIRONMENTAL MATTERS. (a) Definitions. For the purposes of this
\nAgreement, the following terms shall have the meanings set forth below:<\/p>\n
(i) “ENVIRONMENTAL LAWS” shall mean all applicable
\nand enforceable laws, directives, guidance, rules, regulations, orders,
\ntreaties, statutes, and codes promulgated by any Governmental Entity which
\nprohibit, regulate or control any Hazardous Material or any Hazardous Material
\nActivity, including, without limitation, the Comprehensive Environmental
\nResponse, Compensation, and Liability Act of 1980, the Resource Recovery and
\nConservation Act of 1976, the Occupational Safety and Health Act, the Federal
\nWater Pollution Control Act, the Clean Air Act, the Hazardous Materials
\nTransportation Act, the Clean Water Act, all as amended to date and any
\njurisdiction relating to Hazardous Materials or Hazardous Materials Activity;<\/p>\n
(ii) “ENVIRONMENTAL PERMITS” shall mean all permits,
\nlicenses, registrations, clearances, consents, approvals and other
\nauthorizations that are required for the operation of the business of the
\nCompany and its subsidiaries under Environmental Laws;<\/p>\n
(iii) “HAZARDOUS MATERIALS” shall mean any material
\nor substance that is prohibited or regulated by any Environmental Law or that
\nhas been designated by any Governmental <\/p>\n
-12-
\n 18<\/p>\n
Entity to be radioactive, toxic, hazardous or otherwise a danger to health,
\nreproduction or the environment; and<\/p>\n
(iv) “HAZARDOUS MATERIALS ACTIVITY” shall mean the
\ntransportation, transfer, recycling, storage, use, treatment, manufacture,
\nremoval, remediation, release, exposure of others to, sale, or distribution of
\nany Hazardous Material or any product or waste containing a Hazardous Material,
\nor product manufactured with Ozone depleting substances.<\/p>\n
(b) The Company and its subsidiaries have obtained all
\napplicable Environmental Permits and are and have been in compliance in all
\nmaterial respects with such Environmental Permits and any conditions placed
\nthereon, except to the extent that the failure to obtain or comply with
\nEnvironmental Permits could not reasonably be expected to have a Material
\nAdverse Effect on Company.<\/p>\n
(c) The Company and its subsidiaries have not disposed of,
\nreleased, discharged or emitted any Hazardous Materials into the soil or
\ngroundwater at any properties owned or leased at any time by the Company or any
\nof its subsidiaries, or at any other property, or exposed any employee or other
\nindividual to any Hazardous Materials or any workplace or environmental
\ncondition in such a manner as would result in any material liability or material
\nclean-up obligation of any kind or nature to the Company or any of its
\nsubsidiaries.<\/p>\n
(d) No Hazardous Materials are present in, on, or under any
\nproperties owned, leased or used at any time by the Company or its subsidiaries
\nso as to give rise to any material liability or material clean-up obligation
\nunder any Environmental Laws.<\/p>\n
2.12 EMPLOYEE MATTERS AND BENEFIT PLANS.<\/p>\n
(a) DEFINITIONS. With the exception of the definition of
\nAffiliate set forth in Section 2.12(a)(i) below (such definition shall only
\napply to this Section 2.12 and Section 3.12), for purposes of this Agreement,
\nthe following terms shall have the meanings set forth below:<\/p>\n
(i) “AFFILIATE” shall mean any other person or entity
\nunder common control with Company or Parent, as the case may be, within the
\nmeaning of Section 414(b), (c), (m) or (o) of the Code and the regulations
\nthereunder;<\/p>\n
(ii) “COBRA” shall mean the Consolidated Omnibus
\nBudget Reconciliation Act of 1985, as amended;<\/p>\n
(iii) “COMPANY EMPLOYEE PLAN” shall mean any plan,
\nprogram, policy, practice, contract, agreement or other arrangement providing
\nfor compensation, severance, termination pay, deferred compensation, performance
\nawards, stock or stock-related awards, fringe benefits or other employee
\nbenefits or remuneration of any kind, whether written, unwritten or otherwise,
\nfunded or unfunded, including without limitation, each “EMPLOYEE BENEFIT PLAN,”
\nwithin the meaning of Section 3(3) of ERISA (as defined below) which is or has
\nbeen maintained, contributed to, or required to be contributed to, by Company or
\nany Affiliate for the benefit of any Employee (as defined below), or with
\nrespect to which Company or any Affiliate has or may have any liability or
\nobligation;<\/p>\n
-13-
\n 19<\/p>\n
(iv) “DOL” shall mean the United States Department of
\nLabor;<\/p>\n
(v) “EMPLOYEE” shall mean any current, former, or
\nretired employee, officer, or director of Parent, Company or any Affiliate;<\/p>\n
(vi) “EMPLOYEE AGREEMENT” shall refer to each
\nmanagement, employment, severance, consulting or similar agreement between
\nCompany or any Affiliate and any Employee of Company;<\/p>\n
(vii) “ERISA” shall mean the Employee Retirement
\nIncome Security Act of 1974, as amended;<\/p>\n
(viii) “FMLA” shall mean the Family Medical Leave Act
\nof 1993, as amended;<\/p>\n
(ix) “INTERNATIONAL EMPLOYEE PLAN” shall mean each
\nCompany Employee Plan or Parent Employee Plan(as such term is defined in Section
\n3.12), as the case may be, that has been adopted or maintained by Parent,
\nCompany or any Affiliate, or with respect to which Parent, Company or any
\nAffiliate will have any liability, for the benefit of Employees who perform
\nservices outside the United States;<\/p>\n
(x) “IRS” shall mean the United States Internal
\nRevenue Service;<\/p>\n
(xi) “MULTIEMPLOYER PLAN” shall mean any “PENSION
\nPLAN” (as defined below) which is a “multiemployer plan,” as defined in Section
\n3(37) of ERISA; and<\/p>\n
(xii) “PENSION PLAN” shall refer to each Company
\nEmployee Plan or Parent Employee Plan which is an “employee pension benefit
\nplan,” within the meaning of Section 3(2) of ERISA.<\/p>\n
(b) The Company Disclosure Schedule contains an accurate and
\ncomplete list of each Company Employee Plan, International Employee Plan and
\neach Employee Agreement. Company does not have any plan or commitment to
\nestablish any new Company Employee Plan, International Employee Plan or Employee
\nAgreement, to modify any Company Employee Plan, International Employee Plan or
\nEmployee Agreement (except to the extent required by law or to conform any such
\nCompany Employee Plan, International Employee Plan or Employee Agreement to the
\nrequirements of any applicable law, in each case as previously disclosed to
\nParent in writing, or as required by this Agreement or as required to maintain
\ntax qualification), or to adopt or enter into any Company Employee Plan,
\nInternational Employee Plan or Employee Agreement nor does it have any intention
\nor commitment to do any of the foregoing.<\/p>\n
(c) Documents. Company has provided to Parent correct and
\ncomplete copies of: (i) all material documents embodying each Company Employee
\nPlan, International Employee Plan and each Employee Agreement including, without
\nlimitation, all amendments thereto and all related trust documents; (ii) the
\nmost recent annual actuarial valuations, if any, prepared for each Company
\nEmployee Plan; (iii) the two (2) most recent annual reports (Form Series 5500
\nand all schedules and financial statements attached thereto), if any, required
\nunder ERISA or the Code in connection with each Company Employee Plan; (iv) if
\nCompany Employee Plan is funded, the most recent annual <\/p>\n
-14-
\n 20<\/p>\n
and periodic accounting of Company Employee Plan assets; (v) the most recent
\nsummary plan description together with the most recent summary(ies) of material
\nmodifications thereto, if any, required under ERISA with respect to each Company
\nEmployee Plan; (vi) all IRS determination, opinion, notification and advisory
\nletters; (vii) all agreements and contracts relating to each Company Employee
\nPlan, International Employee Plan and Employee Agreement, including, but not
\nlimited to, administrative service agreements, group annuity contracts and group
\ninsurance contracts, if any; (viii) all communications material to any Employee
\nor Employees relating to any Company Employee Plan and any proposed Company
\nEmployee Plans, in each case, relating to any amendments, terminations,
\nestablishments, increases or decreases in benefits, acceleration of payments or
\nvesting schedules or other events which would result in any material liability
\nto Company; (ix) all material correspondence to or from any governmental agency
\nrelating to any Company Employee Plan; (x) all material COBRA forms and related
\nnotices (or such forms and notices as required under comparable law); (xi) all
\npolicies pertaining to fiduciary liability insurance covering the fiduciaries
\nfor each Company Employee Plan; (xii) discrimination tests for each Company
\nEmployee Plan for the three (3) most recent plan years; and (xiii) all
\nregistration statements, annual reports (Form 10-K and all attachments thereto)
\nand prospectuses prepared in connection with each Company Employee Plan.<\/p>\n
(d) EMPLOYEE PLAN COMPLIANCE. (i) The Company has performed in
\nall material respects all obligations required to be performed by it under, is
\nnot in default or violation of, and has no knowledge of any default or violation
\nby any other party with respect to each Company Employee Plan, and each Company
\nEmployee Plan has been established and maintained in all material respects in
\naccordance with its terms and in compliance with all applicable laws, statutes,
\norders, rules and regulations, including but not limited to ERISA or the Code;
\n(ii) each Company Employee Plan intended to qualify under Section 401(a) of the
\nCode and each trust intended to qualify under Section 501(a) of the Code has
\neither received a favorable determination, opinion, notification and\/or advisory
\nletter, as applicable, from the IRS with respect to each such Company Employee
\nPlan as to its qualified status under the Code, including all amendments to the
\nCode effected by the Tax Reform Act of 1986 and subsequent legislation, or has a
\nremaining period of time under applicable Treasury regulations or IRS
\npronouncements in which to apply for such a letter and make any amendments
\nnecessary to obtain a favorable determination as to the qualified status of each
\nsuch Company Employee Plan; (iii) no “prohibited transaction” within the meaning
\nof Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise
\nexempt under Section 4975 of the Code or Section 408 of ERISA (or any
\nadministrative class exemption issued thereunder), has occurred with respect to
\nany Company Employee Plan; (iv) there are no actions, suits or claims pending,
\nor, to the knowledge of Company, threatened or anticipated (other than routine
\nclaims for benefits) against any Company Employee Plan or against the assets of
\nany Company Employee Plan; (v) except as disclosed on the Company Disclosure
\nSchedule each Company Employee Plan can be amended, terminated or otherwise
\ndiscontinued after the Effective Time, without material liability to Company,
\nParent or any of its Affiliates (other than ordinary administration expenses);
\n(vi) there are no audits, inquiries or proceedings pending or, to the knowledge
\nof Company or any Affiliates, threatened by the IRS or DOL with respect to any
\nCompany Employee Plan; and (vii) neither Company nor any Affiliate is subject to
\nany penalty or tax with respect to any Company Employee Plan under Section
\n502(i) of ERISA or Sections 4975 through 4980 of the Code.<\/p>\n
-15-
\n 21<\/p>\n
(e) PENSION PLANS. Except as disclosed on the Company
\nDisclosure Schedule, neither Company nor any Affiliate has ever maintained,
\nestablished, sponsored, participated in, or contributed to, any Pension Plan,
\nwhich is subject to Title IV of ERISA or Section 412 of the Code.<\/p>\n
(f) COLLECTIVELY BARGAINED, MULTIEMPLOYER AND MULTIPLE
\nEMPLOYER PLANS. Neither Company nor any Affiliate contributes to or is obligated
\nto contribute to any Multiemployer Plan. Neither Company nor any Affiliate has
\nestablished or maintains, sponsors, participates in or contributes to any
\nmultiple employer plans, or to any plan described in Section 413 of the Code.<\/p>\n
(g) NO POST-EMPLOYMENT OBLIGATIONS. Except as set forth on the
\nCompany Disclosure Schedule, no Company Employee Plan provides, or
\nreflects or represents any liability to provide retiree health to any person for
\nany reason, except as may be required by COBRA or other applicable statute, and
\nCompany has never represented, promised or contracted (whether in oral or
\nwritten form) to any Employee (either individually or to Employees as a group)
\nor any other person that such Employee(s) or other person would be provided with
\nretiree health, except to the extent required by statute.<\/p>\n
(h) HEALTH CARE COMPLIANCE. Neither Company nor any Affiliate
\nhas, prior to the Effective Time, in any material respect, violated any of
\nthe health care continuation requirements of COBRA, the requirements of FMLA,
\nthe requirements of the Health Insurance Portability and Accountability Act of
\n1996, the requirements of the Women’s Health and Cancer Rights Act of 1998, the
\nrequirements of the Newborns’ and Mothers’ Health Protection Act of 1996 or any
\namendment to each such act or any similar provisions of state law applicable to
\nits Employees.<\/p>\n
(i) EFFECT OF TRANSACTION.<\/p>\n
(i) The execution of this Agreement and the
\nconsummation of the transactions contemplated hereby will not (either alone or
\nupon the occurrence of any additional or subsequent events) constitute an event
\nunder any Company Employee Plan, Employee Agreement, trust or loan that will or
\nmay result in any payment (whether of severance pay or otherwise), acceleration,
\nforgiveness of indebtedness, vesting, distribution, increase in benefits or
\nobligation to fund benefits with respect to any Employee.<\/p>\n
(ii) No payment, compensation or benefit which will
\nor may be made by Parent, Company or their respective Affiliates with respect to
\nany Employee or any other “disqualified individual” in connection with the
\nconsummation of the transaction contemplated hereby will be characterized as a
\n“parachute payment,” within the meaning of Section 280G(b)(2) of the Code as a
\nresult of the Merger or the other transactions contemplated by this Agreement.<\/p>\n
(j) EMPLOYMENT MATTERS. The Company Disclosure Schedule lists
\nall current officers and directors of Company. The Company, each of its domestic
\nsubsidiaries, each Company Designated Foreign Subsidiary and, to the Company’s
\nknowledge, each Company Other Foreign Subsidiary (i) is in compliance in all
\nmaterial respects with all applicable federal, state and local laws, rules and
\nregulations respecting employment, employment practices, terms and conditions of
\nemployment and wages and hours, in each case, with respect to Employees
\n(including any immigration laws with respect to the same); (ii) has withheld and
\nreported all amounts required by law or by agreement to be withheld from the
\nwages, salaries and other payments to Employees; <\/p>\n
-16-
\n 22<\/p>\n
(iii) is not liable for any arrears of wages or any taxes or any penalty for
\nfailure to comply with any of the foregoing; and (iv) is not liable for any
\npayment to any trust or other fund governed by or maintained by or on behalf of
\nany governmental or administrative authority, with respect to unemployment
\ncompensation benefits, social security or other benefits or obligations for
\nEmployees (other than routine payments to be made in the normal course of
\nbusiness and consistent with past practice). There are no pending or threatened
\nin writing claims or actions against Company under any workers compensation
\npolicy or long-term disability policy. Each person who is acting or has acted as
\na consultant to Company is acting or has acted as an “independent contractor”
\nand could not, based on the facts and circumstances of his or her consultancy,
\nreasonably be deemed to be or have been “employed” with Company. The Company
\nDisclosure Schedule also sets forth all outstanding offers of employment by the
\nCompany, whether written or oral, made to any prospective executive or
\nmanagerial-level employee, which offer has not been rejected by the offeree.<\/p>\n
(k) LABOR. Except as set forth in the Company Disclosure
\nSchedule, no work stoppage or labor strike against Company is pending,
\nthreatened or reasonably anticipated. Company does not know of any activities or
\nproceedings of any labor union to organize any Employees. There are no actions,
\nsuits, claims, labor disputes or grievances pending, or, to the knowledge of
\nCompany, threatened relating to any labor, safety or discrimination matters
\ninvolving any Employee, including, without limitation, charges of unfair labor
\npractices or discrimination complaints, except for such action, suits, claims,
\nlabor disputes or grievances which, if adversely determined, would not,
\nindividually or in the aggregate, result in any Material Adverse Effect on
\nCompany. Company and its subsidiaries have not engaged in any unfair labor
\npractices within the meaning of the National Labor Relations Act. The Company is
\nnot presently, nor has it been in the past, a party to, or bound by, any
\ncollective bargaining agreement or union contract with respect to Employees and
\nno collective bargaining agreement is being negotiated by Company.<\/p>\n
(l) INTERNATIONAL EMPLOYEE PLAN. Each International Employee
\nPlan of the Company or of one of the Company’s foreign subsidiaries has been
\nestablished, maintained and administered in compliance in all material respects
\nwith its terms and conditions and with the requirements prescribed by any and
\nall statutory or regulatory laws that are applicable to such International
\nEmployee Plan, and no such International Employee Plan has any material unfunded
\nliabilities, that as of the Effective Time, will not be offset by insurance or
\nfully accrued.<\/p>\n
(m) NO INTERFERENCE OR CONFLICT. To the knowledge of Company,
\nno stockholder, officer, employee or consultant of Company is obligated under
\nany contract or agreement subject to any judgement, decree or order of any court
\nor administrative agency that would interfere with such person’s efforts to
\npromote the interests of Company or that would interfere with Company’s
\nbusiness, except for any interference that would not give rise to a Material
\nAdverse Effect on the Company.<\/p>\n
2.13 S-4; PROXY STATEMENTS. None of the information supplied or to be
\nsupplied by Company for inclusion or incorporation by reference in (i) the
\nregistration statement on Form S-4 to be filed with the SEC by Parent in
\nconnection with the issuance of the Parent Common Stock in or as a result of the
\nMerger (the “S-4”) will, at the time the S-4 is filed with the SEC and at the
\ntime it becomes effective under the Securities Act, contain any untrue statement
\nof a material fact or omit to state any material fact required to be stated
\ntherein or necessary in order to make the statements therein, in light of the
\ncircumstances under which they are made, not misleading; and (ii) the Joint<\/p>\n
-17-
\n 23<\/p>\n
Proxy Statement\/Prospectus (the “JOINT PROXY STATEMENT\/PROSPECTUS”) to be filed
\nwith the SEC by Company and Parent pursuant to Section 5.1 hereof will, at the
\ndates mailed to the stockholders of Company, at the times of the stockholder
\nmeeting of Company (the “COMPANY STOCKHOLDERS’ MEETING”) and the stockholders of
\nthe Parent (the “PARENT STOCKHOLDERS’ MEETING”) in connection with the
\ntransactions contemplated hereby and as of the Effective Time, contain any
\nuntrue statement of a material fact or omit to state any material fact required
\nto be stated therein or necessary in order to make the statements therein, in
\nlight of the circumstances under which they are made, not misleading. The Joint
\nProxy Statement\/Prospectus will comply as to form in all material respects with
\nthe provisions of the Securities Act, Exchange Act and the rules and regulations
\npromulgated by the SEC thereunder. If at any time prior to the Effective Time
\nany event relating to Company or any of its affiliates, officers or directors
\nshould be discovered by Company which in the opinion of Company’s counsel is
\nrequired to be set forth in an amendment to the S-4 or a supplement to the Joint
\nProxy Statement\/Prospectus, Company shall promptly inform Parent.
\nNotwithstanding any statement by the Parent and Merger Sub in this Agreement,
\nCompany makes no representation or warranty with respect to any information
\nsupplied by Parent or Merger Sub, which is contained in any of the foregoing
\ndocuments.<\/p>\n
2.14 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
\njudgment, injunction, order or decree binding upon Company or any of its
\nsubsidiaries which has or could reasonably be expected to have the effect of
\nprohibiting or materially impairing any business practice of Company or any of
\nits subsidiaries, any acquisition of property by Company or any of its
\nsubsidiaries or the conduct of business by Company or any of its subsidiaries as
\ncurrently conducted.<\/p>\n
2.15 TITLE TO PROPERTY; CONDITION OF EQUIPMENT.<\/p>\n
(a) Company has good and marketable fee simple title to all
\nreal property owned by the Company (“OWNED REAL PROPERTY”). There are no parties
\nin possession of any portion of the Owned Real Property as lessees, sublessees,
\nassignees, tenants at sufferance or trespassers and there are no leases,
\nsubleases, assignments, or operating agreements applicable to or affecting the
\nOwned Real Property.<\/p>\n
(b) All leases or other occupancy agreements for the material
\nreal property leased or otherwise occupied by the Company (“LEASED REAL
\nPROPERTY”) afford Company peaceful and undisturbed possession of the Leased Real
\nProperty. All leases for the Leased Real Property are in good standing, valid
\nand effective in accordance with their respective terms, and there is not, under
\nany of such leases or other occupancy agreements, any existing material default
\nor event of default (or any event which with notice or lapse of time, or both,
\nwould constitute a material default).<\/p>\n
(c) All of the improvements to the Owned Real Property and all
\nof the plants and structures of Company and its subsidiaries, except such as may
\nbe under construction, are in good operating condition and repair, in all
\nmaterial respects, ordinary wear and tear excepted. To its knowledge, Company is
\nnot in violation of any zoning, building, safety or environmental ordinance,
\nregulation or requirement or other law or regulation applicable to the operation
\nof the Owned Real Property or the Leased Real Property except where such
\nviolation would not give rise to a Material Adverse Effect, and Company has not
\nreceived any notice of such violation. Company has good and marketable title to
\nall of its assets (including real property) used in its business or as shown on
\nthe Company Balance Sheet, free and clear of all mortgages, liens, charges,
\nencumbrances or restrictions <\/p>\n
-18-
\n 24<\/p>\n
(other than for Permitted Liens, as defined below), other than such assets as
\nwere sold in the ordinary course of Company’s business since the Company Balance
\nSheet Date or which are subject to capitalized leases. “PERMITTED LIENS” means
\nany lien, mortgage, encumbrance or restriction which is (i) set forth on
\nSchedule 2.15 of the Company Disclosure Schedule or the Parent Disclosure
\nSchedule or (ii) reflected in the Company financial statements and is not in
\nexcess of $1,000,000 and which does not materially detract from the value or
\nmaterially interfere with the use, as currently utilized, of the properties
\nsubject thereto or affected thereby or otherwise materially impair the business
\noperations being conducted thereon.<\/p>\n
(d) The material machinery and equipment (the “EQUIPMENT”)
\nowned or leased by Company is (i) suitable for the uses to which it is currently
\nemployed; (ii) in good operating condition (except for ordinary wear and tear);
\nand (iii) regularly and properly maintained in all material respects.<\/p>\n
2.16 TAXES.<\/p>\n
(a) DEFINITION OF TAXES. For the purposes of this Agreement,
\n“TAX” or “TAXES” refers to any and all federal, state, local and foreign taxes,
\nassessments and other governmental charges, duties, impositions and liabilities
\nrelating to taxes, including taxes based upon or measured by gross receipts,
\nincome, profits, sales, use and occupation, and value added, ad valorem,
\ntransfer, franchise, withholding, payroll, recapture, employment, excise and
\nproperty taxes, together with all interest, penalties and additions imposed with
\nrespect to such amounts and any obligations under any agreements or arrangements
\nwith any other person with respect to such amounts and including any liability
\nfor taxes of a predecessor entity.<\/p>\n
(b) TAX RETURNS AND AUDITS<\/p>\n
(i) Company and each of its subsidiaries (to the
\nextent any such subsidiaries are required to file tax returns on a basis other
\nthan as part of a consolidated group with Company) have timely filed (taking
\ninto account applicable extensions) all material federal and state, local and
\nforeign returns, estimates, information statements and reports (“RETURNS”)
\nrelating to Taxes required to be filed by Company and each of such subsidiaries
\nwith any Tax authority and such Returns, when filed, were true and correct in
\nall material respects.<\/p>\n
(ii) There is no material Tax deficiency outstanding
\nwhich has been proposed or assessed in writing against Company or any of its
\nsubsidiaries.<\/p>\n
(iii) To the Company’s knowledge, no audit or other
\nexamination of any Return of Company or any of its subsidiaries by any Tax
\nauthority is presently in progress. Neither Company nor any of its subsidiaries
\nhas been notified of any request for such an audit or other examination, except
\nfor any audit or other examination that would not be expected to have a Material
\nAdverse Effect on Company.<\/p>\n
(iv) No adjustment relating to any Returns filed by
\nCompany or any of its subsidiaries has been proposed in writing by any Tax
\nauthority to Company or any of its subsidiaries or any representative thereof,
\nexcept for any adjustment that would not be expected to have a Material Adverse
\nEffect on Company.<\/p>\n
-19-
\n 25<\/p>\n
(v) Neither Company nor any of its subsidiaries has
\nany liability for unpaid Taxes which has not been accrued for or reserved on the
\nCompany Balance Sheet, whether asserted or unasserted, contingent or otherwise,
\nwhich is material to Company, other than any liability for unpaid Taxes that may
\nhave accrued since the date of the Company Balance Sheet in connection with the
\noperation of the business of Company and its subsidiaries in the ordinary course
\nof business.<\/p>\n
(vi) There is no contract, agreement, plan or
\narrangement to which Company is a party as of the date of this Agreement,
\nincluding but not limited to the provisions of this Agreement, covering any
\nemployee or former employee of Company or any of its subsidiaries that,
\nindividually or collectively, could give rise to the payment of any amount that
\nwould not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code as
\na result of the Merger and the other transactions contemplated hereby.<\/p>\n
(vii) Neither Company nor any of its subsidiaries has
\nfiled any consent agreement under Section 341(f) of the Code or agreed to have
\nSection 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
\n(as defined in Section 341(f)(4) of the Code) owned by Company.<\/p>\n
(viii) Neither Company nor any of its subsidiaries is
\nparty to or has any obligation under any tax-sharing, tax indemnity or tax
\nallocation agreement or arrangement with an unaffiliated third party.<\/p>\n
(ix) Company and its subsidiaries have not been and
\nwill not be required to include any material adjustment in Taxable income for
\nany Tax period (or portion thereof) pursuant to Section 481 or Section 263A of
\nthe Code or any comparable provision under state or foreign Tax laws as a result
\nof transactions, events or accounting methods employed prior to the Closing.<\/p>\n
(x) None of Company’s or its subsidiaries’ assets are
\ntax exempt use property within the meaning of Section 168(h) of the Code.<\/p>\n
(xi) The Company Disclosure Schedule lists (A) any
\nmaterial foreign Tax holidays, (B) any material intercompany transfer pricing
\nagreements, or other arrangements that have been established by Company or any
\nof its subsidiaries with any Tax authority and (C) any material expatriate
\nprograms or policies affecting Company or any of its subsidiaries. <\/p>\n
(xii) Neither the Company nor any of its subsidiaries
\nwas either a “distributing corporation” or a “controlled corporation” in a
\ndistribution of stock qualifying for tax-free treatment under section 355 of the
\nCode that (x) occurred within two years before the date of this Agreement or (y)
\ncould otherwise constitute part of “plan or series of transactions” (within the
\nmeaning of section 355(e) of the Code) that includes the Merger.<\/p>\n
(xiii) None of the Company and its subsidiaries (A)
\nhas been a member of an affiliated group filing a consolidated federal income
\nTax Return (other than a group the common parent of which was the Company) or
\n(B) has any material liability for the Taxes of any person (other than the
\nCompany and its subsidiaries) under Treasury Regulation 1.1502-6 (or any similar
\nprovision of state, local or foreign law), as a transferee or successor, by
\ncontract or otherwise. <\/p>\n
-20-
\n 26
\n (xiv) the Company is not, and has not been at any
\ntime, a “United States real property holding corporation” within the meaning of
\nSection 897(c) of the Code.<\/p>\n
2.17 BROKERS. Except for fees payable to Goldman, Sachs & Co. (the
\n“COMPANY FINANCIAL ADVISOR”), pursuant to an engagement letter dated May 1,
\n2001, no broker, finder or investment banker is entitled to any brokerage,
\nfinder’s or other fee or commission in connection with the transactions
\ncontemplated by this Agreement based upon arrangements made by or on behalf of
\nCompany.<\/p>\n
2.18 INTELLECTUAL PROPERTY. The Company owns, or is validly licensed or
\notherwise has the right to use, all patents, patent rights, trademarks,
\ntrademark rights, trade names, trade name rights, service marks, service mark
\nrights, copyrights and other proprietary intellectual property rights and
\ncomputer programs (collectively, “INTELLECTUAL PROPERTY RIGHTS”) which are
\nmaterial to the conduct of the business of the Company and its subsidiaries
\ntaken as a whole. Except as set forth on the Company Disclosure Schedule, no
\nclaims are pending or, to the knowledge of the Company, threatened in writing
\nthat the Company or any of its subsidiaries is infringing or otherwise adversely
\naffecting the rights of any person with regard to any Intellectual Property
\nRight except for claims which, if determined adversely to the Company, would not
\nhave a Material Adverse Effect on the Company. To the knowledge of the Company,
\nno person is infringing the rights of the Company or any of its subsidiaries
\nwith respect to any Intellectual Property Right except where such infringement
\nhas not had, and could not reasonably be expected to have, a Material Adverse
\nEffect on the Company. Neither the Company nor any of its subsidiaries has
\nlicensed, or otherwise granted, to any third party, any rights in or to any
\nIntellectual Property Rights which are material to the conduct of the business
\nof the Company and its subsidiaries taken as a whole.<\/p>\n
2.19 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth on the
\nCompany Disclosure Schedule, neither Company nor any of its subsidiaries is a
\nparty to or is bound by: <\/p>\n
(a) any employment or consulting agreement, contract or
\ncommitment with any executive officer, director or member of Company’s Board of
\nDirectors, other than those that are terminable by Company or any of its
\nsubsidiaries on no more than thirty days notice and which do so with no express
\n(whether by contract or by policy) liability or financial obligation to Company;<\/p>\n
(b) any agreement or plan, including, without limitation, any
\nstock option plan, stock appreciation right plan or stock purchase plan (except
\nfor those described in Section 2.3 of the Company Disclosure Schedule), any of
\nthe benefits of which will be increased, or the vesting of benefits of which
\nwill be accelerated, by the occurrence of any of the transactions contemplated
\nby this Agreement or the value of any of the benefits of which will be
\ncalculated on the basis of any of the transactions contemplated by this
\nAgreement;<\/p>\n
(c) any agreement of indemnification or any guaranty currently
\nin force other than any agreement of indemnification entered into in connection
\nwith the sale or license or distribution or marketing of products or services in
\nthe ordinary course of business;<\/p>\n
(d) any agreement, contract or commitment containing any
\ncovenant limiting in any material respect the right of Company or any of its
\nsubsidiaries to engage in any line of business;<\/p>\n
-21-
\n 27<\/p>\n
(e) any agreement, contract or commitment currently in force
\nrelating to the disposition or acquisition by Company or any of its subsidiaries
\nafter the date of this Agreement of a material amount of assets not in the
\nordinary course of business or pursuant to which Company has any material
\nownership interest in any corporation, partnership, joint venture or other
\nbusiness enterprise other than Company’s subsidiaries; <\/p>\n
Neither Company nor any of its subsidiaries, nor to Company’s knowledge
\nany other party to a Company Contract (as defined below), is in breach,
\nviolation or default under, and neither Company nor any of its subsidiaries has
\nreceived written notice that it has breached, violated or defaulted under, any
\nof the material terms or conditions of any of the agreements, contracts or
\ncommitments to which Company or any of its subsidiaries is a party or by which
\nit is bound that are required to be disclosed in the Company Disclosure Schedule
\npursuant to this Section 2.19 (any such agreement, contract or commitment, a
\n“COMPANY CONTRACT”) in such a manner as would permit any other party to cancel
\nor terminate any such Company Contract, or would permit any other party to seek
\nmaterial damages or other remedies (for any or all of such breaches, violations
\nor defaults, in the aggregate).<\/p>\n
2.20 INSURANCE. Company maintains insurance policies and fidelity bonds
\ncovering the assets, business, equipment, properties, operations, employees,
\nofficers and directors of Company and its subsidiaries (collectively, the
\n“INSURANCE POLICIES”) which are of the type and in amounts customarily carried
\nby persons conducting businesses similar to those of Company and its
\nsubsidiaries. There is no material claim by Company or any of its subsidiaries
\npending under any of the Insurance Policies as to which coverage has been
\nquestioned, denied or disputed by the underwriters of such policies or bonds
\nother than customary reservation of rights notices issued by such insurers.<\/p>\n
2.21 OPINION OF FINANCIAL ADVISOR. Company has received a written
\nopinion from the Company Financial Advisor to the effect that as of the date
\nhereof, the Exchange Ratio is fair to the stockholders of Company from a
\nfinancial point of view.<\/p>\n
2.22 BOARD APPROVAL. The Board of Directors of Company has, as of the
\ndate of this Agreement, (i) approved this Agreement and the transactions
\ncontemplated hereby, (ii) determined that the Merger is in the best interests of
\nthe stockholders of Company and is on terms that are fair to such stockholders
\nand (iii) recommended that the stockholders of Company approve this Agreement
\nand the Merger.<\/p>\n
2.23 VOTE REQUIRED. The affirmative vote of a majority of the
\noutstanding shares of Company Common Stock is the only vote of the holders of
\nany class or series of Company’s capital stock necessary to approve this
\nAgreement and the transactions contemplated hereby.<\/p>\n
2.24 NO OWNERSHIP OF PARENT COMMON STOCK. As of the date hereof,
\nCompany does not own, beneficially or of record, any shares of Parent Common
\nStock other than ownership, if any, held by Company Employee Plan or Pension
\nPlan.<\/p>\n
2.25 STATE TAKEOVER STATUTES. The Board of Directors of Company has
\napproved the Merger, this Agreement and the Company Voting Agreement, and has
\ntaken such additional action, if any, as may be necessary to render inapplicable
\nto the Merger, this Agreement and the Company <\/p>\n
-22-
\n 28<\/p>\n
Voting Agreement and the transactions contemplated hereby and thereby, any
\napplicable state takeover statute or similar law or regulation including
\n“control share,” “fair price,” “business combination” or other anti-takeover
\nlaws and regulations of any state including Section 203 of the DGCL.<\/p>\n
2.26 PRODUCT WARRANTY. Since January 1, 1999, each product
\nmanufactured, sold, leased or delivered by Company has complied in all material
\nrespects with all applicable standard contractual commitments and all express
\nand implied warranties, and there is no present action, suit, proceeding,
\nhearing, investigation, charge, complaint, claim or demand pending for any
\nreplacement or repair thereof or other damages in connection therewith which if
\ndetermined adversely to the Company would have a Material Adverse Effect. No
\nproduct manufactured, sold, leased or delivered by Company is subject to any
\nwarranty or other indemnity beyond the applicable standard terms and conditions
\nof sale or lease.<\/p>\n
2.27 INVENTORY. Except as set forth on the Company Disclosure Schedule,
\nthe parts and materials in the inventory of Company, the value of which is
\nreflected in the Company Balance Sheet, and thereafter acquired by Company (the
\n“INVENTORY”) was acquired and maintained through an acquisition transaction or
\nin the ordinary course of business of Company and except for those parts or
\nmaterials for which a reserve is reflected on the Company Balance Sheet, is of
\nsuch quality as to be usable or salable in the ordinary course of Company’s
\nbusiness. Since the date of the Company Balance Sheet, Company has continued to
\nreplenish inventories in the ordinary course of business consistent with past
\npractices. All items included in the Inventory are owned by Company, free and
\nclear of all liens and encumbrances (except Permitted Liens), except for
\ninventory sold by Company in the ordinary course of business subsequent to the
\ndate of the Company Balance Sheet. Company is not under any liability or
\nobligation with respect to the return of Inventory in the possession of any
\ncustomer other than return of Inventory used in noncompliant products.<\/p>\n
2.28 QUESTIONABLE PAYMENTS. The Company has not nor has, to its
\nknowledge, any director, officer or other employee of the Company: (i) made any
\npayments or provided services or other favors in the United States or any
\nforeign country in order to obtain preferential treatment or consideration by
\nany Government Entity with respect to any aspect of the Company’s business; or
\n(ii) made any political contributions that would not be lawful under the laws of
\nthe United States (including the Foreign Corrupt Practices Act) or the foreign
\ncountry in which such payments were made.<\/p>\n
-23-
\n 29
\n ARTICILE III
\n REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB<\/p>\n
Parent and Merger Sub represent and warrant to Company, subject to such
\nexceptions as are specifically disclosed in writing in the disclosure letter
\ndelivered by Parent and Merger Sub to Company on or prior to the date of this
\nAgreement and certified by a duly authorized officer of Parent and Merger Sub
\n(the “PARENT DISCLOSURE SCHEDULE”), as follows (it being understood that
\ndisclosure in one instance is sufficient for all purposes if the context thereof
\nis reasonably evident and it being understood that disclosure of an item is not
\nto be construed as an admission of any fact):<\/p>\n
3.1 Organization and Qualification; Subsidiaries.<\/p>\n
(a) Each of Parent, its domestic subsidiaries and its foreign
\nsubsidiaries incorporated under the laws of Canada or Sweden (the “PARENT
\nDESIGNATED FOREIGN SUBSIDIARIES”) is a corporation duly organized, validly
\nexisting and in good standing under the laws of the jurisdiction of its
\nincorporation and has the requisite corporate power and authority to own, lease
\nand operate its assets and properties and to carry on its business as it is now
\nbeing conducted. Parent has delivered to Company a complete and correct list of
\nall of Parent’s direct and indirect subsidiaries as of the date of this
\nAgreement, indicating the jurisdiction of organization of each subsidiary and
\nParent’s equity interest therein. Each of Parent, its domestic subsidiaries and
\neach of the Parent Designated Foreign Subsidiaries is in possession of all
\nApprovals necessary to own, lease and operate the properties it purports to own,
\noperate or lease and to carry on its business and the business of its
\nsubsidiaries as it is now being conducted, except where the failure to have such
\nApprovals would not, individually or in the aggregate, have a Material Adverse
\nEffect on Parent. Each of Parent, its domestic subsidiaries and each of the
\nParent Designated Foreign Subsidiaries is in compliance with the terms of the
\nApprovals and is duly qualified or licensed as a foreign corporation to do
\nbusiness, and is in good standing, in each jurisdiction where the character of
\nthe properties owned, leased or operated by it or the nature of its activities
\nmakes such qualification or licensing necessary, except for such failures to be
\nso duly qualified or licensed and in good standing that would not, either
\nindividually or in the aggregate, have a Material Adverse Effect on Parent.
\nOther than wholly owned subsidiaries, Parent does not directly or indirectly own
\nany material equity or similar interest in, or any interest convertible or
\nexchangeable or exercisable for, any equity or similar interest in, any
\ncorporation, partnership, joint venture or other business, association or
\nentity.<\/p>\n
(b) Each of the foreign subsidiaries of Parent that are
\nincorporated under the laws of countries other than Canada or Sweden (the
\n“PARENT OTHER FOREIGN SUBSIDIARIES”) is, to the Parent’s knowledge, a
\ncorporation duly organized, validly existing and in good standing under the laws
\nof the jurisdiction of its incorporation and has the requisite corporate power
\nand authority to own, lease and operate its assets and properties and to carry
\non its business as it is now being conducted. Each of the Parent Other Foreign
\nSubsidiaries is, to the Parent’s knowledge, is in possession of all Approvals
\nnecessary to own, lease and operate the properties it purports to own, operate
\nor lease and to carry on its business and the business of its subsidiaries as it
\nis now being conducted, except where the failure to have such Approvals would
\nnot, individually or in the aggregate, have a Material Adverse Effect on Parent.
\nEach of the Parent Other Foreign Subsidiaries is, to the Parent’s knowledge, in
\ncompliance with the terms of the Approvals and is duly qualified or licensed as
\na foreign corporation to do business, and is in good standing, in each
\njurisdiction where the character of the properties owned, leased or operated by
\nit or the nature of its activities makes <\/p>\n
-24-
\n 30<\/p>\n
such qualification or licensing necessary, except for such failures to be so
\nduly qualified or licensed and in good standing that would not, either
\nindividually or in the aggregate, have a Material Adverse Effect on Parent.<\/p>\n
3.2 CERTIFICATES OF INCORPORATION AND BYLAWS. Parent has previously
\nfurnished to Company a complete and correct copy of its Certificate of
\nIncorporation and Bylaws as amended to date, and Merger Sub has previously
\nfurnished to Company a complete and correct copy of its Certificate of
\nIncorporation and Bylaws as amended to date. Such Certificate of Incorporation
\nor Certificate of Incorporation, as the case may be, and Bylaws are in full
\nforce and effect. Neither Parent nor any of its subsidiaries is in violation of
\nany of the provisions of their Certificate of Incorporation or Certificate of
\nIncorporation, as the case may be, or Bylaws or equivalent organizational
\ndocuments, except for any violation which would not reasonably be expected to
\nhave a Material Adverse Effect on the Company.<\/p>\n
3.3 CAPITALIZATION.<\/p>\n
(a) The authorized capital stock of Parent consists of
\n1,000,000,000 shares of Parent Common Stock, $0.01 par value per share, and
\n5,000,000 shares of Preferred Stock, $0.01 par value per share (“PARENT
\nPREFERRED STOCK”), of which 1,000,000 shares have been designated Series A
\nPreferred Stock in connection with the Rights Agreement (as defined in Section
\n3.3(h) below). At the close of business on June 30, 2001:<\/p>\n
(i) 320,528,259 shares of Parent Common Stock were
\nissued and outstanding;<\/p>\n
(ii) no shares of Parent Common Stock were held in
\ntreasury by Parent or by subsidiaries of Parent;<\/p>\n
(iii) 32,118,590 shares of Parent Common Stock were
\nreserved for issuance upon the exercise of outstanding options to purchase
\nParent Common Stock under the Parent’s 1990 Stock Option Plan, 1999 Stock Option
\nPlan, 1995 Director Stock Option Plan and 1996 Supplemental Stock Option Plan
\n(collectively, the “PARENT OPTION PLANS”);<\/p>\n
(iv) 24,386,228 shares of Parent Common Stock were
\navailable for future grant under the Parent Option Plans;<\/p>\n
(v) 1,674,092 shares of Parent Common Stock were
\nreserved for issuance under the Parent’s 1993 Employee Stock Purchase Plan (the
\n“PARENT ESPP”); and<\/p>\n
(vi) 15,789,236 shares of Parent Common Stock were
\nreserved for issuance upon conversion of Parent’s 4.25% Convertible Subordinated
\nNotes due 2004 and 10,761,116 shares of Parent Common Stock were reserved for
\nissuance upon conversion of Parent’s 4% Zero Coupon Notes due 2020
\n(collectively, the “PARENT CONVERTIBLE NOTES”);<\/p>\n
(vii) 382,076 shares of Parent Common Stock were
\nreserved for issuance upon conversion of certain convertible subordinated notes
\nissued by predecessor companies acquired by Parent; and<\/p>\n
-25-
\n 31<\/p>\n
(viii) 1,000,000 shares have been designated Series A
\nParticipating Preferred Stock and reserved for issuance upon exercise of the
\nrights (the “PARENT RIGHTS”) distributed to holders of Parent Common Stock
\npursuant to a Preferred Stock Rights Agreement dated May 17, 2001 between Parent
\nand Wells Fargo Bank Minnesota, N.A., as Rights Agent (the “PARENT RIGHTS
\nAGREEMENT”).<\/p>\n
(b) As of the date hereof, no shares of Parent Preferred Stock
\nare issued and outstanding.<\/p>\n
(c) No change in such capitalization has occurred between June
\n30, 2001 and the date hereof except (x) the issuance of shares of Parent Common
\nStock pursuant to the exercise of outstanding options or (y) the cancellation of
\nunvested options for Common Stock held by, or the repurchase of unvested shares
\nof Common Stock from, directors, employees, consultants or other service
\nproviders of Parent pursuant to the terms of their stock option, stock purchase
\nor stock restriction agreements. All outstanding shares of Parent Common Stock
\nare duly authorized, validly issued, fully paid and nonassessable and are not
\nsubject to preemptive rights created by statute, the Certificate of
\nIncorporation or Bylaws of Parent or any agreement or document to which Parent
\nis a party or by which it is bound.<\/p>\n
(d) Except as set forth in this Section 3.3 or in Section
\n3.3(d) of the Patent Disclosure Schedule, as of the date of this Agreement,
\nthere are no options, warrants or other rights, agreements, arrangements or
\ncommitments of any character relating to the issued or unissued capital stock of
\nParent or any of its subsidiaries that obligate Parent or any of its
\nsubsidiaries to issue or sell any shares of capital stock of, or other equity
\ninterests in, Parent or any of its subsidiaries or obligating Parent or any of
\nits subsidiaries to grant, extend, accelerate the vesting of or enter into any
\nsuch option, warrant or other right, agreement, arrangement or commitment.<\/p>\n
(e) All shares of Parent Common Stock subject to issuance as
\naforesaid, upon issuance on the terms and conditions specified in the
\ninstruments pursuant to which they are issuable, shall be duly authorized,
\nvalidly issued, fully paid and nonassessable.<\/p>\n
(f) There are no obligations, contingent or otherwise, of
\nParent or any of its subsidiaries to repurchase, redeem or otherwise acquire any
\nshares of Parent Common Stock or the capital stock of any subsidiary, except to
\nprovide funds to or make any investment (in the form of a loan, capital
\ncontribution or otherwise) in any such subsidiary or any other entity.<\/p>\n
(g) All of the outstanding shares of capital stock of each of
\nParent’s domestic direct or indirect subsidiaries and Designated Parent Foreign
\nSubsidiaries, and to Parent’s knowledge, of each of Parent’s direct or indirect
\nOther Parent Foreign Subsidiaries are duly authorized, validly issued, fully
\npaid and nonassessable and, except for de minimis numbers of shares of certain
\nforeign subsidiaries required to be held by individuals to satisfy local law
\nrequirements (as indicated in the Parent Disclosure Schedule) all such shares
\nare owned by Parent or another subsidiary free and clear of all security
\ninterests, liens, claims, pledges, agreements, limitations in Parent’s voting
\nrights, charges or other encumbrances of any nature whatsoever.<\/p>\n
(h) Except as contemplated by this Agreement, the Parent
\nRights Agreement and Section 3.3 of the Parent Disclosure Schedule, there are no
\nregistration rights and, to the knowledge <\/p>\n
-26-
\n 32<\/p>\n
of Parent, there are no voting trusts, proxies, rights plans, anti-takeover
\nplans or other agreements or understandings to which Parent is a party or by
\nwhich it is bound with respect to any equity security of any class of Parent or
\nwith respect to any equity security, partnership interest or similar ownership
\ninterest of any class of any of its subsidiaries.<\/p>\n
(i) The Parent Common Stock to be issued pursuant to the
\nMerger has been duly authorized and will, when issued in accordance with this
\nAgreement be validly issued, fully paid, and nonassessable and will not be
\nsubject to any restrictions on resale under the Securities Act, other than
\nrestrictions imposed by Rule 145 under the Securities Act.<\/p>\n
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Merger Sub
\nhas all necessary corporate power and authority to execute and deliver this
\nAgreement and to perform its obligations hereunder and thereunder and to
\nconsummate the transactions contemplated hereby and thereby. The execution and
\ndelivery of this Agreement by Parent and Merger Sub and the consummation by
\nParent and Merger Sub of the transactions contemplated hereby and thereby have
\nbeen duly and validly authorized by all necessary corporate action on the part
\nof Parent and Merger Sub, and no other corporate proceedings on the part of
\nParent or Merger Sub are necessary to authorize this Agreement, or to consummate
\nthe transactions so contemplated, subject only to (i) the approval of the
\nissuance of the parent Common Stock in connection with the Merger by the
\nstockholders of the Parent (the “PARENT STOCKHOLDERS’ APPROVAL”) and (ii) the
\nfiling of the Certificate of Merger pursuant to the DGCL. This Agreement has
\nbeen duly and validly executed and delivered by Parent and Merger Sub and,
\nassuming the due authorization, execution and delivery by Company, constitute
\nlegal and binding obligations of Parent and Merger Sub, enforceable against
\nParent and Merger Sub in accordance with their respective terms.<\/p>\n
3.5 NO CONFLICT.<\/p>\n
(a) The execution and delivery of this Agreement by Parent
\ndoes not, and the performance of this Agreement by Parent will not, (i) conflict
\nwith or violate the Certificate of Incorporation, Bylaws or equivalent
\norganizational documents of Parent or any of its subsidiaries, (ii) subject to
\nobtaining the Parent Stockholder Approval and compliance with the requirements
\nset forth in Section 3.5(b) below, conflict with or violate any law, rule,
\nregulation, order, judgment or decree applicable to Parent or any of its
\nsubsidiaries or by which Parent or any of its subsidiaries or any of their
\nrespective properties are bound or affected, or (iii) result in any breach of or
\nconstitute a default (or an event that with notice or lapse of time or both
\nwould become a default) under, or impair Parent’s or any such subsidiaries’
\nrights or alter the rights or obligations of any third party under, or give to
\nothers any rights of termination, amendment, acceleration or cancellation of, or
\nresult in the creation of a lien or encumbrance on any of the properties or
\nassets of Parent or any of its subsidiaries pursuant to, any material note,
\nbond, mortgage, indenture, contract, agreement, lease, license, permit,
\nfranchise or other instrument or obligation to which Parent or any of its
\nsubsidiaries is a party or by which Parent or any of its subsidiaries or its or
\nany of their respective properties are bound or affected.<\/p>\n
(b) The execution and delivery of this Agreement by Parent do
\nnot, and the performance of this Agreement by Parent will not, require any
\nconsent, approval, authorization or permit of, or filing with or notification
\nto, any Governmental Entity, except (A) for applicable requirements, if any, of
\nthe Securities Act, the Exchange Act, Blue Sky Laws, the pre-merger <\/p>\n
-27-
\n 33<\/p>\n
notification requirements of the HSR Act and of foreign Governmental Entities
\nand the rules and regulations thereunder, the rules and regulations of Nasdaq,
\nand the filing of the Certificate of Merger as required by the DGCL and (B)
\nwhere the failure to obtain such consents, approvals, authorizations or permits,
\nor to make such filings or notifications, would not prevent consummation of the
\nMerger or otherwise impair Parent’s ability to timely perform its obligations
\nunder this Agreement.<\/p>\n
3.6 COMPLIANCE; PERMITS; RESTRICTIONS. Neither Parent nor any of its
\nsubsidiaries is in conflict with, or in default or violation of, (i) any law,
\nrule, regulation, order, judgment or decree applicable to Parent or any of its
\nsubsidiaries or by which Parent or any of its subsidiaries or any of their
\nrespective properties is bound or affected, or (ii) any note, bond, mortgage,
\nindenture, contract, agreement, lease, license, permit, franchise or other
\ninstrument or obligation to which Parent or any of its subsidiaries is a party
\nor by which Parent or any of its subsidiaries or its or any of their respective
\nproperties is bound or affected, except for any conflicts, defaults or
\nviolations which would not reasonably be expected to have, individually or in
\nthe aggregate, a Material Adverse Effect on Parent. To the knowledge of Parent,
\nno investigation by any governmental or regulatory body or authority is pending
\nor threatened against Parent or its subsidiaries, nor has any governmental or
\nregulatory body or authority indicated in writing an intention to conduct the
\nsame.<\/p>\n
3.7 SEC FILINGS; FINANCIAL STATEMENTS.<\/p>\n
(a) Parent has made available to Company a correct and
\ncomplete copy of each report, schedule, registration statement and definitive
\nproxy statement filed by Parent with the SEC on or after October 1, 1999 (the
\n“PARENT SEC REPORTS”), which are all the forms, reports and documents required
\nto be filed by Parent with the SEC since October 1, 1999 and prior to the date
\nof this Agreement. The Parent SEC Reports (A) complied as to Form in all
\nmaterial respects with the requirements of the Securities Act or the Exchange
\nAct, as the case may be, and (B) did not at the time they were filed (or if
\namended or superseded by a filing prior to the date of this Agreement, then on
\nthe date of such filing) contain any untrue statement of a material fact or omit
\nto state a material fact required to be stated therein or necessary in order to
\nmake the statements therein, in light of the circumstances under which they were
\nmade, not misleading. None of Parent’s subsidiaries is required to file any
\nreports or other documents with the SEC.<\/p>\n
(b) Each of the consolidated financial statements (including,
\nin each case, any related notes thereto) contained in the Parent SEC Reports (i)
\ncomplied as to form in all material respects with the published rules and
\nregulations of the SEC with respect thereto, (ii)was prepared in accordance with
\nGAAP applied on a consistent basis throughout the periods involved (except as
\nmay be indicated in the notes thereto or as may be permitted by Form 10-Q or
\nForm 10-K of the Exchange Act) and (iii) fairly presented the consolidated
\nfinancial position of Parent and its subsidiaries as of the respective dates
\nthereof and the consolidated results of its operations and cash flows for the
\nperiods indicated, except that the unaudited interim financial statements may
\nnot contain footnotes and were or are subject to normal and recurring year-end
\nadjustments. For purposes of this Agreement, the Parent balance sheet as of
\nMarch 31, 2001 (the “Parent Balance Sheet Date”) as set forth in the Parent’s
\nForm 10-Q for the quarter ended March 31, 2001 shall be referred to as the
\n“PARENT BALANCE SHEET.”<\/p>\n
-28-
\n 34<\/p>\n
(c) Parent has previously furnished to Company a complete and
\ncorrect copy of any amendments or modifications, which have not yet been filed
\nwith the SEC but which are required to be filed, to agreements, documents or
\nother instruments which previously had been filed by Parent with the SEC
\npursuant to the Securities Act or the Exchange Act.<\/p>\n
3.8 NO UNDISCLOSED LIABILITIES. Neither Parent nor any of its
\nsubsidiaries has any liabilities (absolute, accrued, contingent or otherwise),
\nwhich are, individually or in the aggregate, material to the business, results
\nof operations or financial condition of Parent and its subsidiaries taken as a
\nwhole, except (i) liabilities provided for in Parent Balance Sheet or the notes
\nthereto, (ii) liabilities incurred since the Parent Balance Sheet Date in the
\nordinary course of business consistent with past practices, which would not
\nreasonably be expected to have, individually or in the aggregate, a Material
\nAdverse Effect on Parent or (iii) banking, accounting, legal and printing fees
\nand expenses associated with the Merger.<\/p>\n
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Parent Balance
\nSheet Date, there has not been: (i) any Material Adverse Effect on Parent, (ii)
\nany declaration, setting aside or payment of any dividend on, or other
\ndistribution (whether in cash, stock or property) in respect of, any of Parent’s
\nor any of its subsidiaries’ capital stock, or any purchase, redemption or other
\nacquisition by Parent of any of Parent’s capital stock or any other securities
\nof Parent or its subsidiaries or any options, warrants, calls or rights to
\nacquire any such shares or other securities except for repurchases from
\nemployees following their termination pursuant to the terms of their
\npre-existing stock option or purchase agreements, (iii) any split, combination
\nor reclassification of any of Parent’s or any of its subsidiaries’ capital
\nstock, (iv) any material change by Parent in its accounting methods, principles
\nor practices, except as required by concurrent changes in GAAP, or (v) any
\nrevaluation by Parent of any of its assets, including, without limitation,
\nwriting down the value of capitalized inventory or writing off notes or accounts
\nreceivable or any sale of assets of the Parent other than in the ordinary course
\nof business.<\/p>\n
3.10 ABSENCE OF LITIGATION. Section 3.10 of the Parent Disclosure
\nSchedule lists all material claims, actions, suits or proceedings pending or, to
\nthe knowledge of Parent, threatened against Parent or any of its subsidiaries or
\nany properties or rights of Parent or any of its subsidiaries, before any court,
\narbitrator or administrative, governmental or regulatory authority or body,
\ndomestic or foreign.<\/p>\n
3.11 ENVIRONMENTAL MATTERS. (i) The Parent and its subsidiaries have
\nobtained all applicable Environmental Permits and are and have been in
\ncompliance in all material respects with such Environmental Permits and any
\nconditions placed thereon except to the extent that the failure to obtain or
\ncomply with Environmental Permits could not reasonably be expected to have a
\nMaterial Adverse Effect on Parent.<\/p>\n
(b) The Parent and its subsidiaries have not disposed of,
\nreleased, discharged or emitted any Hazardous Materials into the soil or
\ngroundwater at any properties owned or leased at any time by the Parent or any
\nof its subsidiaries, or at any other property, or exposed any employee or other
\nindividual to any Hazardous Materials or any workplace or environmental
\ncondition in such a manner as would result in any material liability or material
\nclean-up obligation of any kind or nature to the Parent or any of its
\nsubsidiaries.<\/p>\n
-29-
\n 35<\/p>\n
(c) No Hazardous Materials are present in, on, or under any
\nproperties owned, leased or used at any time by the Parent or its subsidiaries
\nso as to give rise to any material liability or material clean-up obligation
\nunder any Environmental Laws.<\/p>\n
3.12 EMPLOYEE MATTERS AND BENEFIT PLANS.<\/p>\n
(a) DEFINITIONS. The following terms shall have the meanings
\nset forth below:<\/p>\n
(i) “PARENT EMPLOYEE PLAN” shall mean any plan,
\nprogram, policy, practice, contract, agreement or other arrangement providing
\nfor compensation, severance, termination pay, deferred compensation, performance
\nawards, stock or stock-related awards, fringe benefits or other employee
\nbenefits or remuneration of any kind, whether written, unwritten or otherwise,
\nfunded or unfunded, including without limitation, each “employee benefit plan,”
\nwithin the meaning of Section 3(3) of ERISA which is or has been maintained,
\ncontributed to, or required to be contributed to, by Parent or any Affiliate for
\nthe benefit of any Employee of Parent, or with respect to which Parent or any
\nAffiliate has or may have any liability or obligation;<\/p>\n
(ii) “PARENT EMPLOYEE AGREEMENT” shall refer to each
\neach management, employment, severance or consulting or similar agreement
\nbetween Parent or any Affiliate and any Employee of Parent;<\/p>\n
(b) EMPLOYEE PLAN COMPLIANCE. (i) The Parent has performed in
\nall material respects all obligations required to be performed by it under, is
\nnot in default or violation of, and has no knowledge of any default or violation
\nby any other party with respect to each Parent Employee Plan, and each Parent
\nEmployee Plan has been established and maintained in all material respects in
\naccordance with its terms and in compliance with all applicable laws, statutes,
\norders, rules and regulations, including but not limited to ERISA or the Code;
\n(ii) each Parent Employee Plan intended to qualify under Section 401(a) of the
\nCode and each trust intended to qualify under Section 501(a) of the Code has
\neither received a favorable determination, opinion, notification and\/or advisory
\nletter, as applicable, from the IRS with respect to each such Parent Employee
\nPlan as to its qualified status under the Code, including all amendments to the
\nCode effected by the Tax Reform Act of 1986 and subsequent legislation, or has a
\nremaining period of time under applicable Treasury regulations or IRS
\npronouncements in which to apply for such a letter and make any amendments
\nnecessary to obtain a favorable determination as to the qualified status of each
\nsuch Parent Employee Plan; (iii) no “prohibited transaction” within the meaning
\nof Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise
\nexempt under Section 4975 of the Code or Section 408 of ERISA (or any
\nadministrative class exemption issued thereunder), has occurred with respect to
\nany Parent Employee Plan; (iv) there are no actions, suits or claims pending,
\nor, to the knowledge of Parent, threatened or anticipated (other than routine
\nclaims for benefits) against any Parent Employee Plan or against the assets of
\nany Parent Employee Plan; (v) there are no audits, inquiries or proceedings
\npending or, to the knowledge of Parent or any Affiliates, threatened by the IRS
\nor DOL with respect to any Parent Employee Plan; and (vi) neither Parent nor any
\nAffiliate is subject to any penalty or tax with respect to any Parent Employee
\nPlan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code.<\/p>\n
-30-
\n 36<\/p>\n
(c) PENSION PLANS. Neither Parent nor any Affiliate has ever
\nmaintained, established, sponsored, participated in, or contributed to, any
\nPension Plan, which is subject to Title IV of ERISA or Section 412 of the Code.<\/p>\n
(d) COLLECTIVELY BARGAINED, MULTIEMPLOYER AND MULTIPLE
\nEMPLOYER PLANS. Neither Parent nor any Affiliate contributes to or is obligated
\nto contribute to any Multiemployer Plan. Neither Parent nor any Affiliate has
\nestablished or maintains, sponsors, participates in or contributes to any
\nmultiple employer plans, or to any plan described in Section 413 of the Code.<\/p>\n
(e) HEALTH CARE COMPLIANCE. Neither Parent nor any Affiliate
\nhas, prior to the Effective Time, in any material respect, violated any of the
\nhealth care continuation requirements of COBRA, the requirements of FMLA, the
\nrequirements of the Health Insurance Portability and Accountability Act of 1996,
\nthe requirements of the Women’s Health and Cancer Rights Act of 1998, the
\nrequirements of the Newborns’ and Mothers’ Health Protection Act of 1996 or any
\namendment to each such act or any similar provisions of state law applicable to
\nits Employees.<\/p>\n
(f) EFFECT OF TRANSACTION. The execution of this Agreement and
\nthe consummation of the transactions contemplated hereby will not (either alone
\nor upon the occurrence of any additional or subsequent events) constitute an
\nevent under any Parent Employee Plan, Parent Employee Agreement, trust or loan
\nthat will or may result in any payment (whether of severance pay or otherwise),
\nacceleration, forgiveness of indebtedness, vesting, distribution, increase in
\nbenefits or obligation to fund benefits with respect to any Employee of Parent.<\/p>\n
(g) EMPLOYMENT MATTERS. The Parent Disclosure Schedule lists
\nall current officers and directors of Parent. Parent, each of its domestic
\nsubsidiaries, each Designated Parent Foreign Subsidiary and, to Parent’s
\nknowledge, each Other Parent Foreign Subsidiary (i) is in compliance in all
\nmaterial respects with all applicable federal, state and local laws, rules and
\nregulations respecting employment, employment practices, terms and conditions of
\nemployment and wages and hours, in each case, with respect to its Employees
\n(including any immigration laws with respect to the same); (ii) has withheld and
\nreported all amounts required by law or by agreement to be withheld from the
\nwages, salaries and other payments to its Employees; (iii) is not liable for any
\narrears of wages or any taxes or any penalty for failure to comply with any of
\nthe foregoing; and (iv) is not liable for any payment to any trust or other fund
\ngoverned by or maintained by or on behalf of any governmental or administrative
\nauthority, with respect to unemployment compensation benefits, social security
\nor other benefits or obligations for its Employees (other than routine payments
\nto be made in the normal course of business and consistent with past practice).
\nThere are no pending or threatened in writing claims or actions against Parent
\nunder any workers compensation policy or long-term disability policy. The Parent
\nDisclosure Schedule also sets forth all outstanding offers of employment by
\nParent, whether written or oral, made to any prospective executive officer of
\nParent, which offer has not been rejected by the offeree.<\/p>\n
(h) LABOR. No work stoppage or labor strike against Parent is
\npending, threatened or reasonably anticipated. Parent does not know of any
\nactivities or proceedings of any labor union to organize any of its Employees.
\nThere are no actions, suits, claims, labor disputes or grievances pending, or,
\nto the knowledge of Parent, threatened relating to any labor, safety or
\ndiscrimination matters involving any of its Employee, including, without
\nlimitation, charges of unfair labor practices or discrimination complaints,
\nexcept for such action, suits, claims, labor disputes or <\/p>\n
-31-
\n 37<\/p>\n
grievances which, if adversely determined, would not, individually or in the
\naggregate, result in any Material Adverse Effect on Parent. Parent and its
\nsubsidiaries have not engaged in any unfair labor practices within the meaning
\nof the National Labor Relations Act. The Parent is not presently, nor has it
\nbeen in the past, a party to, or bound by, any collective bargaining agreement
\nor union contract with respect to its Employees and no collective bargaining
\nagreement is being negotiated by Parent.<\/p>\n
(i) INTERNATIONAL EMPLOYEE PLAN. Each International Employee
\nPlan of the Parent or of one of Parent’s foreign subsidiaries has been
\nestablished, maintained and administered in compliance in all material respects
\nwith its terms and conditions and with the requirements prescribed by any and
\nall statutory or regulatory laws that are applicable to such International
\nEmployee Plan, and no such International Employee Plan has any material unfunded
\nliabilities, that as of the Effective Time, will not be offset by insurance or
\nfully accrued.<\/p>\n
(j) NO INTERFERENCE OR CONFLICT. To the knowledge of Parent,
\nno stockholder, officer, employee or consultant of Parent is obligated under any
\ncontract or agreement subject to any judgement, decree or order of any court or
\nadministrative agency that would interfere with such person’s efforts to promote
\nthe interests of Parent or that would interfere with Parent’s business, except
\nfor any interference that would not give rise to a Material Adverse Effect on
\nParent.<\/p>\n
3.13 S-4; JOINT PROXY STATEMENT\/PROSPECTUS. None of the information
\nsupplied or to be supplied by Parent for inclusion or incorporation by reference
\nin (i) the S-4 will not, at the time the S-4 is filed with the SEC and at the
\ntime it becomes effective under the Securities Act, contain any untrue statement
\nof a material fact or omit to state any material fact required to be stated
\ntherein or necessary in order to make the statements therein, in light of the
\ncircumstances under which they are made, not misleading; and (ii) the Joint
\nProxy Statement\/Prospectus will, at the dates mailed to the stockholders of
\nParent, at the time of the Parent Stockholders’ Meeting and as of the Effective
\nTime, contain any untrue statement of a material fact or omit to state any
\nmaterial fact required to be stated therein or necessary in order to make the
\nstatements therein, in light of the circumstances under which they are made, not
\nmisleading. The S-4 will comply as to form in all material respects with the
\nprovisions of the Securities Act and the rules and regulations promulgated by
\nthe SEC thereunder. If at any time prior to the Effective Time any event
\nrelating to Parent or any of its affiliates, officers or directors should be
\ndiscovered by Parent which in the opinion of Parent’s counsel is required to be
\nset forth in an amendment to the S-4 or a supplement to the Joint Proxy
\nStatement\/Prospectus, Parent shall promptly inform Company. Notwithstanding any
\nstatement by the Parent and Merger Sub in this Agreement, Parent makes no
\nrepresentation or warranty with respect to any information supplied by Company
\nthat is contained in any of the foregoing documents.<\/p>\n
3.14 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
\njudgment, injunction, order or decree binding upon Parent or any of its
\nsubsidiaries which has or could reasonably be expected to have the effect of
\nprohibiting or materially impairing any business practice of Parent or any of
\nits subsidiaries, any acquisition of property by Parent or any of its
\nsubsidiaries or the conduct of business by Parent or any of its subsidiaries as
\ncurrently conducted.<\/p>\n
-32-
\n 38<\/p>\n
3.15 TITLE TO PROPERTY; CONDITION OF EQUIPMENT.<\/p>\n
(c) Parent has good and marketable fee simple title to all
\nreal property owned by the Parent (“PARENT OWNED REAL PROPERTY”). There are no
\nparties in possession of any portion of the Parent Owned Real Property as
\nlessees, sublessees, assignees, tenants at sufferance or trespassers and there
\nare no leases, subleases, assignments, or operating agreements applicable to or
\naffecting the Parent Owned Real Property.<\/p>\n
(b) All leases or other occupancy agreements for the material
\nreal property leased or otherwise occupied by Parent (“PARENT LEASED REAL
\nPROPERTY”) afford Parent peaceful and undisturbed possession of the Parent
\nLeased Real Property. All leases for the Parent Leased Real Property are in good
\nstanding, valid and effective in accordance with their respective terms, and
\nthere is not, under any of such leases or other occupancy agreements, any
\nexisting material default or event of default (or any event which with notice or
\nlapse of time, or both, would constitute a material default).<\/p>\n
(c) All of the improvements to the Parent Owned Real Property
\nand all of the plants and structures of Parent and its subsidiaries, except such
\nas may be under construction, are in good operating condition and repair, in all
\nmaterial respects, ordinary wear and tear excepted. To its knowledge, Parent is
\nnot in violation of any zoning, building, safety or environmental ordinance,
\nregulation or requirement or other law or regulation applicable to the operation
\nof the Parent Owned Real Property or the Parent Leased Real Property except
\nwhere such violation would not give rise to a Material Adverse Effect, and
\nParent has not received any notice of such violation. Parent has good and
\nmarketable title to all of its assets (including real property) used in its
\nbusiness or as shown on the Parent Balance Sheet, free and clear of all
\nmortgages, liens, charges, encumbrances or restrictions (other than for
\nPermitted Liens, as defined below), other than such assets as were sold in the
\nordinary course of Parent’s business since the Parent Balance Sheet Date or
\nwhich are subject to capitalized leases.<\/p>\n
(d) The Equipment owned or leased by Parent is (i) suitable
\nfor the uses to which it is currently employed; (ii) in good operating condition
\n(except for ordinary wear and tear); and (iii) regularly and properly maintained
\nin all material respects.<\/p>\n
3.16 TAXES.<\/p>\n
(a) TAX RETURNS AND AUDITS.<\/p>\n
(i) Parent and each of its subsidiaries (to the
\nextent any such subsidiaries are required to file tax returns on a basis other
\nthan as part of a consolidated group with Parent) have timely filed (taking into
\naccount applicable extensions) all material Returns relating to Taxes required
\nto be filed by Parent and each of its subsidiaries with any Tax authority and
\nsuch Returns, when filed, were true and correct in all material respects.<\/p>\n
(ii) There is no Tax deficiency outstanding which has
\nbeen proposed or assessed in writing against Parent or any of its subsidiaries.<\/p>\n
(iii) To Parent’s knowledge, no audit or other
\nexamination of any Return of Parent or any of its subsidiaries by any Tax
\nauthority is presently in progress. Neither Parent nor <\/p>\n
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\n 39<\/p>\n
any of its subsidiaries has been notified of any request for such an audit or
\nother examination, except for any audit or examination that would not be
\nexpected to have a Material Adverse Effect on Parent.<\/p>\n
(iv) No adjustment relating to any Returns filed by
\nParent or any of its subsidiaries has been proposed in writing by any Tax
\nauthority to Parent or any of its subsidiaries or any representative thereof,
\nexcept for any adjustment that would not be expected to have a Material Adverse
\nEffect on Parent.<\/p>\n
(v) Neither Parent nor any of its subsidiaries has
\nany liability for unpaid Taxes which has not been accrued for or reserved on the
\nParent Balance Sheet, whether asserted or unasserted, contingent or otherwise,
\nwhich is material to Parent, other than any liability for unpaid Taxes that may
\nhave accrued since the date of the Parent Balance Sheet in connection with the
\noperation of the business of Parent and its subsidiaries in the ordinary course
\nof business.<\/p>\n
(vi) There is no contract, agreement, plan or
\narrangement to which Parent is a party as of the date of this Agreement,
\nincluding but not limited to the provisions of this Agreement, covering any
\nemployee or former employee of Parent or any of its subsidiaries that,
\nindividually or collectively, could give rise to the payment of any amount that
\nwould not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code as
\na result of the Merger or the other transactions contemplated hereby.<\/p>\n
(vii) Neither Parent nor any of its subsidiaries has
\nfiled any consent agreement under Section 341(f) of the Code or agreed to have
\nSection 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
\n(as defined in Section 341(f)(4) of the Code) owned by Parent.<\/p>\n
(viii) Neither Parent nor any of its subsidiaries is
\nparty to or has any obligation under any tax-sharing, tax indemnity or tax
\nallocation agreement or arrangement with any unaffiliated party.<\/p>\n
(ix) Parent and its subsidiaries have not been and
\nwill not be required to include any material adjustment in Taxable income for
\nany Tax period (or portion thereof) pursuant to Section 481 or Section 263A of
\nthe Code or any comparable provision under state or foreign Tax laws as a result
\nof transactions, events or accounting methods employed prior to the Closing.<\/p>\n
(x) None of Parent’s or its subsidiaries’ assets are
\ntax exempt use property within the meaning of Section 168(h) of the Code.<\/p>\n
(xi) The Parent Disclosure Schedule lists (A) any
\nmaterial foreign Tax holidays, (B) any material intercompany transfer pricing
\nagreements, or other arrangements that have been established by Parent or any of
\nits subsidiaries with any Tax authority and (C) any material expatriate programs
\nor policies affecting Parent or any of its subsidiaries.<\/p>\n
(xii) Neither the Parent nor any of its subsidiaries
\nwas either a “distributing corporation” or a “controlled corporation” in a
\ndistribution of stock qualifying for tax-free treatment under section 355 of the
\nCode that (x) occurred within two years before the date of this Agreement or (y)
\ncould otherwise constitute part of “plan or series of transactions” (within the
\nmeaning of section 355(e) of the Code) that includes the Merger. <\/p>\n
-34-
\n 40<\/p>\n
(xiii) None of Parent and its subsidiaries (A) has
\nbeen a member of an affiliated group filing a consolidated federal income Tax
\nReturn (other than a group the common parent of which was Parent) or (B) has any
\nliability for the Taxes of any person (other than Parent and its subsidiaries)
\nunder Treasury Regulation 1.1502-6 (or any similar provision of state, local or
\nforeign law), as a transferee or successor, by contract or otherwise.<\/p>\n
(xiv) Parent is not, and has not been at any time, a
\n“United States real property holding corporation” within the meaning of Section
\n897(c) of the Code.<\/p>\n
3.17 BROKERS. Except for fees payable to Merrill Lynch, Pierce, Fenner
\n& Smith Inc. (the “PARENT FINANCIAL ADVISOR”) pursuant to an engagement letter
\ndated May 30, 2001, no broker, finder or investment banker is entitled to any
\nbrokerage, finder’s or other fee or commission in connection with the
\ntransactions contemplated by this Agreement based upon arrangements made by or
\non behalf of Parent.<\/p>\n
3.18 PARENT INTELLECTUAL PROPERTY. The Parent owns, or is validly
\nlicensed or otherwise has the right to use, all Intellectual Property Rights
\nwhich are material to the conduct of the business of the Parent and its
\nsubsidiaries taken as a whole. No claims are pending or, to the knowledge of the
\nParent, threatened in writing that Parent or any of its subsidiaries is
\ninfringing or otherwise adversely affecting the rights of any person with regard
\nto any Intellectual Property Right except for claims which, if determined
\nadversely to Parent, would not have a Material Adverse Effect on Parent. To the
\nknowledge of the Parent, no person is infringing the rights of the Parent or any
\nof its subsidiaries with respect to any Intellectual Property Right except where
\nsuch infringement has not had, and could not reasonably be expected to have, a
\nMaterial Adverse Effect on Parent. Neither Parent nor any of its subsidiaries
\nhas licensed, or otherwise granted, to any third party, any rights in or to any
\nIntellectual Property Rights which are material to the conduct of the business
\nof Parent and its subsidiaries taken as a whole.<\/p>\n
3.19 AGREEMENTS, CONTRACTS AND COMMITMENTS. Neither Parent nor any of
\nits subsidiaries is a party to or is bound by:<\/p>\n
(i) any employment or consulting agreement, contract
\nor commitment with any executive officer, director or member of Parent’s Board
\nof Directors, other than those that are terminable by Parent or any of its
\nsubsidiaries on no more than thirty days notice and which do so with no express
\n(whether by contract or by policy) liability or financial obligation to Parent;<\/p>\n
(ii) any agreement or plan, including, without
\nlimitation, any stock option plan, stock appreciation right plan or stock
\npurchase plan, any of the benefits of which will be increased, or the vesting of
\nbenefits of which will be accelerated, by the occurrence of any of the
\ntransactions contemplated by this Agreement or the value of any of the benefits
\nof which will be calculated on the basis of any of the transactions contemplated
\nby this Agreement;<\/p>\n
(iii) any agreement of indemnification or any
\nguaranty currently in force other than any agreement of indemnification entered
\ninto in connection with the sale or license or distribution or marketing of
\nproducts or services in the ordinary course of business;<\/p>\n
-35-
\n 41<\/p>\n
(iv) any agreement, contract or commitment containing
\nany covenant limiting in any material respect the right of Parent or any of its
\nsubsidiaries to engage in any line of business;<\/p>\n
(v) any agreement, contract or commitment currently
\nin force relating to the disposition or acquisition by Parent or any of its
\nsubsidiaries after the date of this Agreement of a material amount of assets not
\nin the ordinary course of business or pursuant to which Parent has any material
\nownership interest in any corporation, partnership, joint venture or other
\nbusiness enterprise other than Parent’s subsidiaries;<\/p>\n
Neither Parent nor any of its subsidiaries, nor to Parent’s knowledge
\nany other party to a Parent Contract (as defined below), is in breach, violation
\nor default under, and neither Parent nor any of its subsidiaries has received
\nwritten notice that it has breached, violated or defaulted under, any of the
\nmaterial terms or conditions of any of the agreements, contracts or commitments
\nto which Parent or any of its subsidiaries is a party or by which it is bound
\nthat are required to be disclosed in the Parent Disclosure Schedule pursuant to
\nthis Section 3.19 (any such agreement, contract or commitment, a “PARENT
\nCONTRACT”) in such a manner as would permit any other party to cancel or
\nterminate any such Parent Contract, or would permit any other party to seek
\nmaterial damages or other remedies (for any or all of such breaches, violations
\nor defaults, in the aggregate).<\/p>\n
3.20 INSURANCE. Parent maintains Insurance Policies covering the
\nassets, business, equipment, properties, operations, employees, officers and
\ndirectors of Company and its subsidiaries which are of the type and in amounts
\ncustomarily carried by persons conducting businesses similar to those of Parent
\nand its subsidiaries. There is no material claim by Parent or any of its
\nsubsidiaries pending under any of the Insurance Policies as to which coverage
\nhas been questioned, denied or disputed by the underwriters of such policies or
\nbonds other than customary reservations of rights notices issued by the
\ninsurers.<\/p>\n
3.21 OPINION OF FINANCIAL ADVISOR. Parent has received a written
\nopinion from Parent Financial Advisor to the effect that, as of the date hereof,
\nthe Exchange Ratio is fair to Parent from a financial point of view.<\/p>\n
3.22 BOARD APPROVAL. The Board of Directors of Parent has, as of the
\ndate hereof, (i) approved this Agreement and the transactions contemplated
\nhereby, (ii) determined that the Merger is in the best interests of the
\nstockholders of Parent and is on terms that are fair to such stockholders, (iii)
\nhas approved this Agreement and the Merger and (iv) has determined to recommend
\nthat the stockholders of Parent vote in favor of this Agreement and the Merger.<\/p>\n
3.23 VOTE REQUIRED. The affirmative vote of a majority of the
\noutstanding shares of Parent Common Stock present at the Parent Stockholders’
\nMeeting at which a quorum is present is the only vote of the holders of any
\nclass or series of Parent’s capital stock necessary to approve the Share
\nIssuance.<\/p>\n
3.24 NO OWNERSHIP OF COMPANY COMMON STOCK. As of the date hereof,
\nParent does not own, beneficially or of record, any shares of Company Common
\nStock other than ownership, if any, held by any Parent Employee Plan.<\/p>\n
-36-
\n 42<\/p>\n
3.25 STATE TAKEOVER STATUTES. The Board of Directors of Parent has
\napproved the Merger, this Agreement and the Parent Voting Agreement, and has
\ntaken such action, if any, as may be necessary to render inapplicable to the
\nMerger, this Agreement and the Parent Voting Agreement and the transactions
\ncontemplated hereby and thereby, any applicable state takeover statute or
\nsimilar law or regulation including “control share,” “fair price,” “business
\ncombination” or other anti-takeover laws and regulations of any state including
\nSection 203 of the DGCL.<\/p>\n
3.26 PRODUCT WARRANTY. Since January 1, 1999, each product
\nmanufactured, sold, leased or delivered by Parent has complied in all material
\nrespects with all applicable standard contractual commitments and all express
\nand implied warranties, and there is no present action, suit, proceeding,
\nhearing, investigation, charge, complaint, claim or demand pending for any
\nreplacement or repair thereof or other damages in connection therewith which if
\ndetermined adversely to Parent would have a Material Adverse Effect. No product
\nmanufactured, sold, leased or delivered by Parent is subject to any warranty or
\nother indemnity beyond the applicable standard terms and conditions of sale or
\nlease.<\/p>\n
3.27 INVENTORY. The parts and materials in the inventory of Parent, the
\nvalue of which is reflected in the Parent Balance Sheet, and thereafter acquired
\nby Parent (the “INVENTORY”) was acquired and maintained in an acquisition
\ntransaction or in the ordinary course of business of Parent and except for those
\nparts or materials for which a reserve is reflected on the Parent Balance Sheet,
\nis of such quality as to be usable or salable in the ordinary course of Parent’s
\nbusiness. Since the date of the Parent Balance Sheet, Parent has continued to
\nreplenish inventories in the ordinary course of business consistent with past
\npractices. All items included in the Inventory are owned by Parent, free and
\nclear of all liens and encumbrances (except Permitted Liens), except for
\ninventory sold by Parent in the ordinary course of business subsequent to the
\ndate of the Parent Balance Sheet. Parent is not under any liability or
\nobligation with respect to the return of Inventory in the possession of any
\ncustomer other than return of Inventory used in noncompliant products.<\/p>\n
3.28 QUESTIONABLE PAYMENTS. Parent has not nor has, to its knowledge,
\nany director, officer or other employee of the Parent: (i) made any payments or
\nprovided services or other favors in the United States or any foreign country in
\norder to obtain preferential treatment or consideration by any Government Entity
\nwith respect to any aspect of the Parent’s business; or (ii) made any political
\ncontributions that would not be lawful under the laws of the United States
\n(including the Foreign Corrupt Practices Act) or the foreign country in which
\nsuch payments were made.<\/p>\n
3.29 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely for
\nthe purpose of engaging in the transactions contemplated hereby, has engaged in
\nno other business activities and has conducted its operations only as
\ncontemplated hereby.<\/p>\n
CONDUCT PRIOR TO THE EFFECTIVE TIME<\/p>\n
4.1 CONDUCT OF BUSINESS. During the period from the date of this
\nAgreement and continuing until the earlier of the termination of this Agreement
\npursuant to its terms or the Effective Time, Company and Parent shall, and shall
\ncause their respective subsidiaries to, carry on their respective businesses, in
\nall material respects, in the ordinary course, in substantially the same manner
\nas heretofore conducted and in compliance with all applicable laws and
\nregulations, pay <\/p>\n
-37-
\n 43<\/p>\n
their respective debts and taxes when due subject to good faith disputes over
\nsuch debts or taxes, pay or perform other material obligations when due, and use
\ncommercially reasonable efforts consistent with past practices and policies to
\n(i) preserve intact their respective present business organizations, (ii) keep
\navailable the services of their respective present officers and employees and
\n(iii) preserve their respective relationships with customers, suppliers,
\ndistributors, licensors, licensees, and others with which each has business
\ndealings. In addition, unless otherwise required by law or contract, Company and
\nParent will each promptly notify the other of any material event involving its
\nbusiness or operations.<\/p>\n
In addition, except as permitted or expressly contemplated by the terms
\nof this Agreement or as disclosed in the Company Disclosure Schedule or the
\nParent Disclosure Schedule, Company and Parent will not, without the prior
\nwritten consent of the other party, during the period from the date of this
\nAgreement and continuing until the earlier of the termination of this Agreement
\npursuant to its terms or the Effective Time, do any of the following or permit
\ntheir respective subsidiaries to do any of the following:<\/p>\n
(a) Waive any stock repurchase rights, accelerate, amend or
\nchange the period of exercisability of options or restricted stock, or reprice
\noptions granted under any employee, consultant, director or other stock plans or
\nauthorize cash payments in exchange for any options granted under any of such
\nplans;<\/p>\n
(b) Grant (whether in cash, stock, equity securities, property
\nor otherwise) any severance or termination pay to any executive officer or
\nany person who reports directly to an executive officer except pursuant to
\nwritten agreements outstanding, or policies existing, on the date hereof, or
\nadopt any new severance plan, except in the ordinary course of business
\nconsistent with past practice;<\/p>\n
(c) Declare, set aside or pay any dividends on or make any
\nother distributions (whether in cash, stock, equity securities or property) in
\nrespect of any capital stock or split, combine or reclassify any capital stock
\nor issue or authorize the issuance of any other securities in respect of, in
\nlieu of or in substitution for any capital stock;<\/p>\n
(d) Purchase, redeem or otherwise acquire, directly or
\nindirectly, any shares of capital stock, except repurchases of unvested shares
\nin connection with the termination of the service relationship with any employee
\nor consultant pursuant to the terms of stock option or purchase agreements in
\neffect on the date hereof;<\/p>\n
(e) Issue, deliver, sell, authorize, pledge or otherwise
\nencumber any shares of capital stock or any securities convertible into shares
\nof capital stock, or subscriptions, rights, warrants or options to acquire any
\nshares of capital stock or any securities convertible into shares of capital
\nstock, or enter into other agreements or commitments of any character obligating
\nit to issue any such shares or convertible securities, other than (x) the
\nissuance, delivery and\/or sale of (i) shares of Company Common Stock or Parent
\nCommon Stock, as the case may be, pursuant to the exercise of stock options or
\nwarrants therefor outstanding as of the date of this Agreement, and (ii) shares
\nof Company Common Stock and Parent Common Stock, as the case may be, issuable to
\nparticipants in the Company ESPP or the Parent ESPP consistent with the
\nrespective terms thereof and (y) the granting of stock options in the ordinary
\ncourse of business consistent with past practice <\/p>\n
-38-
\n 44<\/p>\n
(and the issuance of Company Common Stock and Parent Common Stock, as the case
\nmay be, upon exercise thereof); <\/p>\n
(f) Cause, permit or propose any amendments to its Certificate
\nof Incorporation, Bylaws or other charter documents (or similar governing
\ninstruments of any of its subsidiaries), except as otherwise contemplated by
\nthis Agreement;<\/p>\n
(g) Acquire or agree to acquire by merging or consolidating
\nwith, or by purchasing any equity interest in or a portion of the assets of, any
\nbusiness or any corporation, partnership, association or other business
\norganization or division thereof, or otherwise acquire or agree to acquire any
\nassets which are material, individually or in the aggregate, to the business of
\nCompany or Parent, as the case may be, or enter into any material joint
\nventures, strategic partnerships or alliances (collectively, an “ACQUISITION”);
\nprovided, however, that this clause shall not prohibit an Acquisition or
\nAcquisitions which (i) does not involve the issuance of Company Common Stock,
\nParent Common Stock or securities exercisable for or convertible into Company
\nCommon Stock or Parent Common Stock, (ii) does not involve cash consideration
\nfor the stock or assets being purchased in excess of $375 million (either
\nindividually or in the aggregate); provided that the limitations set forth in
\nthis clause (ii) shall not apply to Parent’s previously announced divestiture
\ntransaction with Alcatel USA; and (iii) will not delay or adversely affect the
\nability of Company or Parent, as the case may be, to complete the Merger and
\nfulfull its obligations hereunder; and provided further that the covenant set
\nforth in this Section 4.1(g) shall terminate upon the first to occur of (x)
\nCompany’s receipt of an Acquisition Proposal or (y) October 31, 2001;<\/p>\n
(h) Sell, lease, license, encumber or otherwise dispose of any
\nproperties or assets which are material, individually or in the aggregate, to
\nthe business of Company or Parent, as the case may be, except sales or licenses
\nof product or inventory in the ordinary course of business consistent with past
\npractice;<\/p>\n
(i) Incur any indebtedness for borrowed money or guarantee any
\nsuch indebtedness of another person, issue or sell any debt securities or
\noptions, warrants, calls or other rights to acquire any debt securities of
\nCompany or Parent, as the case may be, enter into any “keep well” or other
\nagreement to maintain any financial statement condition or enter into any
\narrangement having the economic effect of any of the foregoing other than (i) in
\nconnection with the financing of ordinary course trade payables consistent with
\npast practice or (ii) pursuant to existing credit facilities in the ordinary
\ncourse of business;<\/p>\n
(j) Except as disclosed on the Company Disclosure Schedule,
\nadopt or amend any employee benefit plan or employee stock purchase or employee
\nstock option plan, or enter into any employment contract or collective
\nbargaining agreement (other than offer letters and letter agreements entered
\ninto in the ordinary course of business consistent with past practice with
\nemployees who are terminable “at will”), pay any special bonus or special
\nremuneration to any director or employee, or increase the salaries or wage rates
\nor fringe benefits (including rights to severance or indemnification) of its
\ndirectors, officers, employees or consultants other than as required by
\napplicable law or this Agreement, except in connection with (i) regularly
\nscheduled periodic performance reviews and compensation adjustments consistent
\nwith past practice or (ii) Acquisitions permitted by the last clause of
\nSubsection (g) of this Section 4.1;<\/p>\n
-39-
\n 45<\/p>\n
(k) Except in the ordinary course of business consistent with
\npast practice, modify or amend in any material respect or terminate any material
\ncontract or agreement to which Company or Parent or any subsidiary thereof is a
\nparty or waive, release or assign any material rights or claims thereunder;<\/p>\n
(l) Except as required by GAAP, make any change in accounting
\nmethods, principles or practices;<\/p>\n
(m) Make any Tax election inconsistent with past practice
\nthat, individually or in the aggregate, would adversely affect in any material
\nrespect the Tax liability or Tax attributes of the Company or any of its
\nsubsidiaries, taken as a whole, or settle or compromise any material Tax
\nliability, or consent to any extension or waiver of any limitation period with
\nrespect to Taxes;<\/p>\n
(n) Make any Tax election inconsistent with past practice
\nthat, individually or in the aggregate, would adversely affect in any material
\nrespect the Tax liability or Tax attributes of Parent or any of its
\nsubsidiaries, taken as a whole, or settle or compromise any material Tax
\nliability, or consent to any extension or waiver of any limitation period with
\nrespect to Taxes; or<\/p>\n
(o) Agree in writing or otherwise to take any of the actions
\ndescribed in Section 4.1 (a) through (n) above.<\/p>\n
4.2 CONDUCT AFFECTING THE STATUS OF THE REORGANIZATION. During the
\nperiod from the date of this Agreement and continuing until the earlier of the
\ntermination of this Agreement pursuant to its terms or the Effective Time,
\nParent and the Company shall not, and shall not permit any of their respective
\nsubsidiaries to, engage in any action that could cause the Merger to fail to
\nqualify as a “reorganization” under Section 368(a) of the Code.<\/p>\n
4.3 PARENT NAME. Parent and Company shall mutually agree upon the name
\nof the Parent which will become effective immediately following the Merger, and
\nParent shall submit any such name change for approval of its stockholders at the
\nParent Stockholders’ Meeting; provided that any such agreed upon name change
\nshall be contingent upon completion of the Merger. If Parent and Company do not
\nagree upon a new name, the name of Parent immediately following the Merger shall
\nbe changed to the name set forth in Section 4.3 of the Parent Disclosure
\nSchedule.<\/p>\n
ARTICLE V
\n ADDITIONAL AGREEMENTS<\/p>\n
5.1 JOINT PROXY STATEMENT\/PROSPECTUS; S-4; OTHER FILINGS. As promptly
\nas practicable after the execution of this Agreement, Company and Parent will
\nprepare and file with the SEC the Joint Proxy Statement\/Prospectus and Parent
\nwill prepare and file with the SEC the S-4 in which the Joint Proxy
\nStatement\/Prospectus will be included as a prospectus. Each of Company and
\nParent will respond to any comments of the SEC, will use its respective
\ncommercially reasonable efforts to have the S-4 declared effective under the
\nSecurities Act as promptly as practicable after such filing, and Company and
\nParent will cause the Joint Proxy Statement\/Prospectus to be mailed to their
\nrespective stockholders at the earliest practicable time after the S-4 is
\ndeclared effective by the SEC. As promptly as practicable after the date of this
\nAgreement, each of Company and Parent will prepare and file any other filings
\nrequired to be filed by it under the Exchange Act, the Securities Act or any
\nother federal, foreign or Blue Sky or related laws relating to the Merger and
\nthe <\/p>\n
-40-
\n 46<\/p>\n
transactions contemplated by this Agreement (the “OTHER FILINGS”). Each of
\nCompany and Parent will notify the other promptly upon the receipt of any
\ncomments from the SEC or its staff or any other government officials and of any
\nrequest by the SEC or its staff or any other government officials for amendments
\nor supplements to the S-4, the Joint Proxy Statement\/Prospectus or any Other
\nFiling or for additional information and will supply the other with copies of
\nall correspondence between such party or any of its representatives, on the one
\nhand, and the SEC, or its staff or any other government officials, on the other
\nhand, with respect to the S-4, the Joint Proxy Statement\/Prospectus, the Merger
\nor any Other Filing. Each of Company and Parent will cause all documents that it
\nis responsible for filing with the SEC or other regulatory authorities under
\nthis Section 5.1 to comply in all material respects with all applicable
\nrequirements of law and the rules and regulations promulgated thereunder.
\nWhenever any event occurs which is required to be set forth in an amendment or
\nsupplement to the Joint Proxy Statement\/Prospectus, the S-4 or any Other Filing,
\nCompany or Parent, as the case may be, will promptly inform the other of such
\noccurrence and cooperate in filing with the SEC or its staff or any other
\ngovernment officials, and\/or mailing to stockholders of Company and stockholders
\nof Parent, such amendment or supplement.<\/p>\n
5.2 MEETINGS OF COMPANY STOCKHOLDERS AND PARENT STOCKHOLDERS.<\/p>\n
(a) COMPANY STOCKHOLDERS’ MEETING.<\/p>\n
(i) Promptly after the date hereof, Company will take
\nall action necessary in accordance with the DGCL and its Certificate of
\nIncorporation and Bylaws to convene the Company Stockholders’ Meeting to be held
\nas promptly as practicable, and in any event (to the extent permissible under
\napplicable law and Company’s Certificate of Incorporation and Bylaws) within 45
\ndays after the declaration of effectiveness of the S-4, for the purpose of
\nvoting upon this Agreement and the Merger. Subject to Section 5.2(a)(iii),
\nCompany will use its commercially reasonable efforts to solicit from its
\nstockholders proxies in favor of the adoption and approval of this Agreement and
\nthe approval of the Merger and will take all other action necessary or advisable
\nto secure the vote or consent of its stockholders required by the rules of the
\nNYSE or the DGCL to obtain such approvals (“COMPANY STOCKHOLDER VOTE”). Company
\nshall ensure that the Company Stockholders’ Meeting is called, noticed,
\nconvened, held and conducted, and subject to Section 5.2(a)(iii), that all
\nproxies solicited by Company in connection with the Company Stockholders’
\nMeeting are solicited, in compliance with the DGCL, its Certificate of
\nIncorporation and Bylaws, the rules of the NYSE and all other applicable legal
\nrequirements. Notwithstanding anything to the contrary contained in this
\nAgreement, Company may adjourn or postpone the Company Stockholders’ Meeting to
\nthe extent necessary to ensure that any necessary supplement or amendment to the
\nJoint Prospectus\/Proxy Statement is provided to Company’s stockholders in
\nadvance of a vote on the Merger and this Agreement or if as of the time for
\nwhich Company Stockholders’ Meeting is originally scheduled (as set forth in the
\nJoint Prospectus\/Proxy Statement) there are insufficient shares of Company
\nCommon Stock represented (either in person or by proxy) to constitute a quorum
\nnecessary to conduct the business of the Company Stockholders’ Meeting.<\/p>\n
(ii) Subject to Section 5.4: (A) the Board of
\nDirectors of Company shall recommend that Company’s stockholders vote in favor
\nof and adopt and approve this Agreement and the Merger at the Company
\nStockholders’ Meeting; (B) the Joint Prospectus\/Proxy Statement shall include a
\nstatement to the effect that the Board of Directors of Company has recommended
\nthat Company’s stockholders vote in favor of and adopt and approve this
\nAgreement and the Merger at <\/p>\n
-41-
\n 47<\/p>\n
the Company Stockholders’ Meeting; and (C) neither the Board of Directors of
\nCompany nor any committee thereof shall withdraw, amend or modify, or propose or
\nresolve to withdraw, amend or modify in a manner adverse to Parent, the
\nrecommendation of the Board of Directors of Company that Company’s stockholders
\nvote in favor of and adopt and approve this Agreement and the Merger.<\/p>\n
(iii) Nothing in this Agreement shall prevent the
\nBoard of Directors of Company from withholding, withdrawing, amending or
\nmodifying its recommendation in favor of the Merger, ceasing to solicit from its
\nstockholders proxies in favor of the adoption and approval of this Agreement and
\nthe approval of the Merger, or from endorsing or recommending to its
\nstockholders a Superior Offer (as defined below) if (A) a Superior Offer is made
\nto Company and is not withdrawn, (B) Company shall have not violated any of the
\nrestrictions set forth in Section 5.4, (C) the Board of Directors of Company
\nconcludes in good faith, after consultation with its outside counsel, that, in
\nlight of such Superior Offer, the failure to withhold, withdraw, amend or modify
\nits recommendation, ceasing to solicit from its stockholders proxies in favor of
\nthe adoption and approval of this Agreement and the approval of the Merger,
\nwould result in a reasonable likelihood that the Board of Directors of Company
\nwould not fulfill its fiduciary duties to the Company’s stockholders under
\nDelaware Law and (D) the Company provides Parent with two (2) business days
\nprior written notice of its intent to approve, endorse or recommend any Superior
\nOffer, such notice to include the material terms and conditions of such Superior
\nOffer and the identity of the person or group making any such Superior Offer.
\nFor purposes of this Agreement “SUPERIOR OFFER” shall mean an unsolicited, bona
\nfide offer made by a third party to consummate any of the following
\ntransactions: (x) a sale or other disposition by Company of all or substantially
\nall of its assets or (y) the acquisition by any person or group (including by
\nway of a merger, tender offer or an exchange offer or issuance by Company),
\ndirectly or indirectly, of beneficial ownership or a right to acquire beneficial
\nownership of shares representing a majority of the voting power of the then
\noutstanding shares of Company Common Stock, on terms that the Board of Directors
\nof Company determines, in good faith, after consultation with the Company
\nFinancial Advisor, to be more favorable to Company stockholders than the terms
\nof the Merger; provided, however, that any such offer shall not be deemed to be
\na Superior Offer if any financing required to consummate the transaction
\ncontemplated by such offer is not committed or is not likely in the reasonable
\njudgment of Company’s Board of Directors after consultation with the Company
\nFinancial Advisor to be obtained by such third party on a timely basis.<\/p>\n
(b) PARENT STOCKHOLDERS’ MEETING.<\/p>\n
(i) Promptly after the date hereof, Parent will take
\nall action necessary in accordance with the DGCL and its Certificate of
\nIncorporation and Bylaws to convene the Parent Stockholders’ Meeting to be held
\nas promptly as practicable, and in any event (to the extent permissible under
\napplicable law and Parent’s Certificate of Incorporation and Bylaws) within 45
\ndays after the declaration of effectiveness of the S-4, for the purpose of
\nvoting upon this Agreement, the Merger, the change of Parent’s name and the
\nissuance of shares of Parent Common Stock as pursuant to the Merger
\n(collectively, the “PARENT STOCKHOLDER PROPOSALS”). Parent will use its
\ncommercially reasonable efforts to solicit from its stockholders proxies in
\nfavor of the Parent Stockholder Proposals and will take all other action
\nnecessary or advisable to secure the vote or consent of its stockholders
\nrequired by the rules of Nasdaq or Delaware Law to obtain such approval (“PARENT
\nSTOCKHOLDER VOTE”). Notwithstanding anything to the contrary contained in this
\nAgreement, Parent may adjourn or postpone the Parent Stockholders’ Meeting to
\nthe extent <\/p>\n
-42-
\n 48<\/p>\n
necessary to ensure that any necessary supplement or amendment to the
\nJoint Prospectus\/Proxy Statement is provided to Parent’s stockholders in advance
\nof a vote on the Parent Stockholder Proposals or, if as of the time for which
\nParent Stockholders’ Meeting is originally scheduled (as set forth in the Joint
\nProspectus\/Proxy Statement) there are insufficient shares of Parent Common Stock
\nrepresented (either in person or by proxy) to constitute a quorum necessary to
\nconduct the business of the Parent Stockholders’ Meeting. Parent shall ensure
\nthat the Parent Stockholders’ Meeting is called, noticed, convened, held and
\nconducted, and that all proxies solicited by Parent in connection with the
\nParent Stockholders’ Meeting are solicited, in compliance with Delaware Law, its
\nCertificate of Incorporation and Bylaws, the rules of Nasdaq and all other
\napplicable legal requirements.<\/p>\n
(ii) The Board of Directors of Parent shall recommend
\nthat Parent’s stockholders vote in favor of and adopt and approve the Parent
\nStockholder Proposals at the Parent Stockholders’ Meeting; (B) the Joint
\nProspectus\/Proxy Statement shall include a statement to the effect that the
\nBoard of Directors of Parent has recommended that Parent’s stockholders vote in
\nfavor of and adopt and approve the Parent Stockholder Proposals at the Parent
\nStockholders’ Meeting; and (C) neither the Board of Directors of Parent nor any
\ncommittee thereof shall withdraw, amend or modify, or propose or resolve to
\nwithdraw, amend or modify in a manner adverse to Company, the recommendation of
\nthe Board of Directors of Parent that Parent’s stockholders vote in favor of and
\nadopt and approve the Parent Stockholder Proposals.<\/p>\n
5.3 NON-DISCLOSURE; ACCESS TO INFORMATION.<\/p>\n
(a) The parties acknowledge that Company and Parent have
\npreviously executed a Mutual Non-Disclosure Agreement, dated as of June 12, 2001
\n(the “NON-DISCLOSURE AGREEMENT”), which Non-Disclosure Agreement will continue
\nin full force and effect in accordance with its terms.<\/p>\n
(b) ACCESS TO INFORMATION.<\/p>\n
(i) COMPANY. Company will afford Parent and its
\naccountants, counsel and other representatives reasonable access during normal
\nbusiness hours to the properties, books, records and personnel of Company during
\nthe period prior to the Effective Time to obtain all information concerning the
\nbusiness, including the status of product development efforts, properties,
\nresults of operations and personnel of Company, as Parent may reasonably
\nrequest. Parent and its agents and representatives shall have access during
\nnormal business hours to the Company’s facilities for the purpose of performing
\nsuch environmental testing and investigations (including, without limitation,
\nsampling of subsurface soils and groundwater) that Parent, in its sole
\ndiscretion, deems necessary (such testing and investigation, whenever performed,
\nreferred to as an “ENVIRONMENTAL REVIEW”) at any time prior to the Closing;
\nprovided, however, that Parent shall not unreasonably interfere with the
\noperations of the Company during the performance of the Environmental Reviews.<\/p>\n
(ii) PARENT. Parent will afford Company and its
\naccountants, counsel and other representatives reasonable access upon reasonable
\nnotice during normal business hours to the properties, books, records and
\npersonnel of Parent during the period prior to the Effective Time to obtain all
\ninformation concerning the business, including the status of product development
\nefforts, properties, results of operations and personnel of Parent, as Company
\nmay reasonably request. <\/p>\n
-43-
\n 49<\/p>\n
Company and its agents and representatives shall have access during normal
\nbusiness hours to the Parent’s facilities for the purpose of performing
\nEnvironmental Reviews at any time prior to the Closing; provided, however, that
\nCompany shall not unreasonably interfere with the operations of the Parent
\nduring the performance of the Environmental Reviews.<\/p>\n
(iii) No information or knowledge obtained by Parent
\nor Company in any investigation pursuant to this Section 5.3 will affect or be
\ndeemed to modify any representation or warranty contained herein or the
\nconditions to the obligations of the parties to consummate the Merger.<\/p>\n
5.4 NO SOLICITATION.<\/p>\n
(a) From and after the date of this Agreement until the
\nEffective Time or termination of this Agreement pursuant to Article VII, Company
\nand its subsidiaries will not, nor will they authorize or knowingly permit any
\nof their respective officers, directors, or affiliates or any investment banker,
\nattorney or auditor retained by any of them to, directly or indirectly, (i)
\nsolicit, initiate, encourage or knowingly induce the making, submission or
\nannouncement of any Acquisition Proposal (as hereinafter defined), (ii)
\nparticipate in any discussions or negotiations regarding, or furnish to any
\nperson any non-public information with respect to, or take any other action to
\nfacilitate any inquiries or the making of any proposal that constitutes or would
\nreasonably be expected to lead to, any Acquisition Proposal, (iii) subject to
\nSection 5.2(a)(iii), approve, endorse or recommend any Acquisition Proposal or
\n(iv) enter into any letter of intent or similar document or any contract,
\nagreement or commitment contemplating or otherwise relating to any Acquisition
\nTransaction; provided, however, that prior to the approval of this Agreement by
\nthe required Company Stockholder Vote, this Agreement shall not prohibit Company
\nfrom (A) furnishing nonpublic information regarding Company and its subsidiaries
\nto, entering into a confidentiality agreement with or entering into discussions
\nor negotiations with, any person or group in response to a Superior Offer
\nsubmitted by such person or group (and not withdrawn) if (1) Company and its
\nsubsidiaries shall not have violated any of the restrictions set forth in this
\nSection 5.4, (2) the Board of Directors of Company concludes in good faith,
\nafter consultation with its outside legal counsel, that the failure to take such
\naction will result in a reasonable likelihood that the Company’s Board of
\nDirectors will not fulfill its fiduciary obligations to the Company’s
\nstockholders under Delaware Law, (3) prior to furnishing any such nonpublic
\ninformation to, or entering into discussions or negotiations with, such person
\nor group, Company gives Parent two (2) business days prior written notice of the
\nidentity of such person or group and of Company’s intention to furnish nonpublic
\ninformation to, or enter into discussions or negotiations with, such person or
\ngroup and Company receives from such person or group an executed confidentiality
\nagreement containing customary limitations on the use and disclosure of all
\nnonpublic written and oral information furnished to such person or group by or
\non behalf of Company that is no more favorable to such person or group than the
\nNon-Disclosure Agreement is to Parent (provided that any such confidentiality
\nagreement need not contain restrictions of the nature set forth in Section 7
\nthereof), and (4) contemporaneously with furnishing any such nonpublic
\ninformation to such person or group, Company furnishes such nonpublic
\ninformation to Parent (to the extent such nonpublic information has not been
\npreviously furnished by Company to Parent) or (B) complying with Rules 14d-9 and
\n14e-2 promulgated under the Exchange Act or other applicable law with regard to
\nan Acquisition Proposal, PROVIDED, HOWEVER, that unless the conditions set forth
\nin clauses (A) through (C) of the first sentence of Section 5.2(a)(iii) are
\nsatisfied, the Company’s Board of Directors may not withhold, withdraw, <\/p>\n
-44-
\n 50<\/p>\n
modify or change in a manner adverse to Parent, or fail to make, any of its
\nrecommendations in connection with this Agreement and the Merger, or approve,
\nendorse or recommend, any Acquisition Proposal. The Company also will promptly
\nrequest each Person that has executed a confidentiality agreement in connection
\nwith its consideration of an Acquisition Proposal to return all confidential
\ninformation heretofore furnished to such person by or on behalf of the Company
\nor any of its Subsidiaries. Company and its subsidiaries will immediately cease
\nany and all existing activities, discussions or negotiations with any parties
\nconducted heretofore with respect to any Acquisition Proposal. Without limiting
\nthe foregoing, it is understood that any violation of the restrictions set forth
\nin this Section 5.4 by any officer, director or affiliate of Company or any of
\nits subsidiaries or any investment banker, attorney or auditor of Company or any
\nof its subsidiaries that results in a Superior Offer shall be deemed to be a
\nbreach of this Section 5.4 by Company. In addition to the foregoing, Company
\nshall provide Parent with at least two (2) business days prior notice of any
\nmeeting of Company’s Board of Directors at which Company’s Board of Directors is
\nreasonably expected to consider a Superior Offer.<\/p>\n
For purposes of this Agreement, “ACQUISITION PROPOSAL” shall
\nmean any inquiry, offer or proposal (other than an inquiry, offer or proposal by
\nParent) relating to any Acquisition Transaction. For the purposes of this
\nAgreement, “ACQUISITION TRANSACTION” shall mean any transaction or series of
\nrelated transactions other than the transactions contemplated by this Agreement
\ninvolving: (A) any acquisition or purchase from Company by any person or “group”
\n(as defined under Section 13(d) of the Exchange Act and the rules and
\nregulations thereunder) of more than a 15% interest in the total outstanding
\nvoting securities of Company or any of its subsidiaries or any tender offer or
\nexchange offer that if consummated would result in any person or “group” (as
\ndefined under Section 13(d) of the Exchange Act and the rules and regulations
\nthereunder) beneficially owning 15% or more of the total outstanding voting
\nsecurities of Company or any of its subsidiaries or any merger, consolidation,
\nbusiness combination or similar transaction involving Company pursuant to which
\nthe stockholders of Company immediately preceding such transaction hold less
\nthan 85% of the equity interests in the surviving or resulting entity of such
\ntransaction; (B) any sale, lease (other than in the ordinary course of
\nbusiness), exchange, transfer, license (other than in the ordinary course of
\nbusiness), acquisition or disposition of more than 50% of the assets of Company;
\nor (C) any liquidation or dissolution of Company.<\/p>\n
(b) In addition to the obligations of Company set forth in
\nparagraph (a) of this Section 5.4, Company as promptly as practicable, and in
\nany event within two (2) business days, shall advise Parent in writing of any
\nrequest for non-public information which Company reasonably believes would lead
\nto an Acquisition Proposal or of any Acquisition Proposal, the material terms
\nand conditions of such request, Acquisition Proposal or inquiry and the identity
\nof the person or group making any such request, Acquisition Proposal or inquiry.
\nCompany will keep Parent informed in all material respects of the status and
\ndetails (including material amendments or proposed amendments) of any such
\nrequest, Acquisition Proposal or inquiry.<\/p>\n
5.5 PUBLIC DISCLOSURE. Parent and Company will consult with each other,
\nand to the extent practicable, agree, before issuing any press release or
\notherwise making any public statement with respect to the Merger and this
\nAgreement and will not issue any such press release or make any such public
\nstatement prior to such consultation, except as may be required by law or any
\nlisting agreement with a national securities exchange, the NYSE (in the case of
\nCompany) or Nasdaq (in the case of Parent).<\/p>\n
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\n 51
\n 5.6 REASONABLE EFFORTS; NOTIFICATION.<\/p>\n
(a) Upon the terms and subject to the conditions set forth in
\nthis Agreement, each of the parties agrees to use all commercially reasonable
\nefforts to take, or cause to be taken, all actions, and to do, or cause to be
\ndone, and to assist and cooperate with the other parties in doing, all things
\nnecessary, proper or advisable to consummate and make effective, in the most
\nexpeditious manner practicable, the Merger and the other transactions
\ncontemplated by this Agreement, including using reasonable efforts to accomplish
\nthe following: (i) the taking of all reasonable acts necessary to cause the
\nconditions precedent set forth in Article VI to be satisfied, (ii) the obtaining
\nof all necessary actions or nonactions, waivers, consents, approvals, orders and
\nauthorizations from Governmental Entities and the making of all necessary
\nregistrations, declarations and filings (including registrations, declarations
\nand filings with Governmental Entities, if any) and the taking of all reasonable
\nsteps as may be necessary to avoid any suit, claim, action, investigation or
\nproceeding by any Governmental Entity, (iii) the obtaining of all necessary
\nconsents, approvals or waivers from third parties, (iv) the defending of any
\nsuits, claims, actions, investigations or proceedings, whether judicial or
\nadministrative, challenging this Agreement or the consummation of the
\ntransactions contemplated hereby, including seeking to have any stay or
\ntemporary restraining order entered by any court or other Governmental Entity
\nvacated or reversed and (v) the execution or delivery of any additional
\ninstruments necessary to consummate the transactions contemplated by, and to
\nfully carry out the purposes of, this Agreement. In connection with and without
\nlimiting the foregoing, Company and its Board of Directors shall, if any state
\ntakeover statute or similar statute or regulation is or becomes applicable to
\nthe Merger, this Agreement or any of the transactions contemplated by this
\nAgreement, use all reasonable efforts to ensure that the Merger and the other
\ntransactions contemplated by this Agreement may be consummated as promptly as
\npracticable on the terms contemplated by this Agreement and otherwise to
\nminimize the effect of such statute or regulation on the Merger, this Agreement
\nand the transactions contemplated hereby. Notwithstanding anything herein to the
\ncontrary, nothing in this Agreement shall be deemed to require Parent or Company
\nor any subsidiary or affiliate thereof to agree to any divestiture by itself or
\nany of its affiliates of shares of capital stock or of any business, assets or
\nproperty, or the imposition of any material limitation on the ability of any of
\nthem to conduct their businesses or to own or exercise control of such assets,
\nproperties and stock.<\/p>\n
(b) Company shall give prompt notice to Parent of any
\nrepresentation or warranty made by it contained in this Agreement becoming
\nuntrue or inaccurate in any material respect, or any failure of Company to
\ncomply with or satisfy in any material respect any covenant, condition or
\nagreement to be complied with or satisfied by it under this Agreement, in each
\ncase, such that the conditions set forth in Section 6.3(a) or 6.3(b) could not
\nbe satisfied, provided, however, that no such notification shall affect the
\nrepresentations, warranties, covenants or agreements of the parties or the
\nconditions to the obligations of the parties under this Agreement.<\/p>\n
(c) Parent shall give prompt notice to Company of any
\nrepresentation or warranty made by it or Merger Sub contained in this Agreement
\nbecoming untrue or inaccurate in any material respect, or any failure of Parent
\nor Merger Sub to comply with or satisfy in any material respect any covenant,
\ncondition or agreement to be complied with or satisfied by it under this
\nAgreement, in each case, such that the conditions set forth in Section 6.2(a) or
\n6.2(b) could not be satisfied, PROVIDED, HOWEVER, that no such notification
\nshall affect the representations, warranties, <\/p>\n
-46-
\n 52<\/p>\n
covenants or agreements of the parties or the conditions to the obligations of
\nthe parties under this Agreement.<\/p>\n
5.7 THIRD PARTY CONSENTS. As soon as practicable following the date
\nhereof, Parent and Company will each use all commercially reasonable efforts to
\nobtain any consents, waivers and approvals under any of its or its subsidiaries’
\nrespective agreements, contracts, licenses or leases required to be obtained in
\nconnection with the consummation of the transactions contemplated hereby or
\nnecessary to enable the Surviving Corporation to conduct and operate the
\nbusiness of Company and its subsidiaries substantially as presently conducted.<\/p>\n
5.8 STOCK OPTIONS, COMPANY ESPP AND BENEFIT PLANS.<\/p>\n
(a) At the Effective Time, each outstanding option to purchase
\nshares of Company Common Stock under Company’s Stock Option Plans, whether or
\nnot exercisable and whether or not vested, shall by virtue of the Merger and
\nwithout any further action on the part of Company or the holder thereof, be
\nassumed by Parent, all outstanding options under the Company Stock Option Plans
\n(each a “COMPANY STOCK OPTION” and collectively the “COMPANY STOCK OPTIONS”),
\nwhether or not exercisable and whether or not vested, shall, and without any
\nfurther action on the part of the Company or the holder thereof, be assumed by
\nParent, in such manner (with respect to all such option assumptions) that Parent
\n(i) is “assuming a stock option in a transaction to which Section 424(a)
\napplied” within the meaning of Section 424(a) of the Code, or (ii) to the extent
\nthat Section 424 of the Code does not apply to any such Company Stock Options,
\nwould be a transaction within Section 424 of the Code. Each Company Stock Option
\nso assumed by Parent under this Agreement will continue to have, and be subject
\nto, the same terms and conditions set forth in the applicable Company Stock
\nOption Plan immediately prior to the Effective Time (including, without
\nlimitation, any repurchase rights or vesting provisions), except that (1) each
\nCompany Stock Option will be exercisable (or will become exercisable in
\naccordance with its terms) for the number of whole shares of Parent Common Stock
\nequal to the product of the number of shares of Company Common Stock that were
\nissuable upon exercise of such Company Stock Option immediately prior to the
\nEffective Time multiplied by the Exchange Ratio, rounded down to the nearest
\nwhole number of shares of Parent Common Stock and (2) the per share exercise
\nprice for the shares of Parent Common Stock issuable upon exercise of such
\nassumed Company Stock Option will be equal to the quotient determined by
\ndividing the exercise price per share of Company Common Stock at which such
\nCompany Stock Option was exercisable immediately prior to the Effective Time by
\nthe Exchange Ratio, rounded up to the nearest whole cent.<\/p>\n
(b) It is intended that Company Stock Options assumed by
\nParent shall qualify following the Effective Time as incentive stock options as
\ndefined in Section 422 of the Code to the extent such Company Stock Options
\nqualified as incentive stock options immediately prior to the Effective Time and
\nthe provisions of this Section 5.8 shall be applied consistent with such intent.<\/p>\n
(c) Company shall take actions as are necessary to cause the
\n“Purchase Date” (as such term is used in the Company ESPP) applicable to the
\nthen current Offering (as such term is used in the Company ESPP) to be the last
\ntrading day on which the Company Common Stock is traded on the NYSE immediately
\nprior to the Effective Time (the “FINAL COMPANY PURCHASE DATE”); provided, that
\nsuch change in the Purchase Date shall be conditioned upon the consummation of
\nthe Merger. On the Final Company Purchase Date, Company shall apply the funds<\/p>\n
-47-
\n 53<\/p>\n
credited as of such date under the Company ESPP within each participant’s
\npayroll withholding account to the purchase of whole shares of Company Common
\nStock in accordance with the terms of the Company ESPP. Any such shares
\npurchased under the Company ESPP shall be automatically converted on the same
\nbasis as all other shares of Company Common Stock (other than shares canceled
\npursuant to Section 1.6(b)), except that such shares shall be converted
\nautomatically into shares of Parent Common Stock without the issuance of
\ncertificates representing issued and outstanding shares of Company Common Stock
\nto the Company ESPP participants.<\/p>\n
(d) Notwithstanding anything to the contrary contained herein,
\nCompany shall not incur any obligations under the Company ESPP after the Final
\nCompany Purchase Date and the Company shall take any steps necessary to
\nterminate the Company ESPP on the Final Company Purchase Date immediately after
\neffecting the transactions described in Section 5.8(c).<\/p>\n
5.9 FORM S-8. Parent agrees to file a registration statement on Form
\nS-8 for the shares of Parent Common Stock issuable with respect to assumed
\nCompany Stock Options as to which Form S-8 is available within ten (10) business
\ndays following the Effective Time and to maintain the effectiveness of such
\nregistration statement thereafter for so long as any of such options or other
\nrights remain outstanding.<\/p>\n
5.10 INDEMNIFICATION.<\/p>\n
(a) Parent will cause the Surviving Corporation to fulfill and
\nhonor in all respects the obligations of Company pursuant to any indemnification
\nagreements between Company and its present and former directors, officers,
\nemployees and agents in effect immediately prior to the Effective Time (the
\n“INDEMNIFIED Parties”) and any indemnification provisions under Company’s
\nCertificate of Incorporation or Bylaws as in effect on the date hereof. The
\nCertificate of Incorporation and Bylaws of the Surviving Corporation will
\ncontain provisions with respect to exculpation and indemnification that are at
\nleast as favorable to the Indemnified Parties as those contained in the
\nCertificate of Incorporation and Bylaws of Company as in effect on the date
\nhereof, which provisions will not be amended, repealed or otherwise modified for
\na period of six years from the Effective Time in any manner that would adversely
\naffect the rights thereunder of individuals who, immediately prior to the
\nEffective Time, were directors, officers, employees or agents of Company, unless
\nsuch modification is required by law.<\/p>\n
(b) For a period of six (6) years after the Effective Time,
\nParent will cause the Surviving Corporation to maintain in effect the current
\npolicies of directors’ and officers’ liability insurance maintained by the
\nCompany and its subsidiaries (provided that such policy shall during such period
\ncover only acts of Company’s directors and officers occurring at or prior to the
\nEffective Time and not thereafter). Parent may substitute therefor policies of
\nsubstantially similar coverage containing terms and conditions that are not less
\nadvantageous, in all material respects to the Indemnified Parties; provided,
\nhowever, that in no event will Parent or the Surviving Corporation be required
\nto expend in excess of 125% of the annual premium currently paid by Company for
\nsuch coverage (or, alternatively, shall obtain such coverage as is available for
\n125% of such annual premium).<\/p>\n
(c) The provisions of this Section 5.10 are intended to be in
\naddition to the rights otherwise available to the Indemnified Parties by law,
\ncharter, statute, bylaw, resolution of the Board <\/p>\n
-48-
\n 54<\/p>\n
of Directors of Company or agreement, and shall operate for the benefit of, and
\nshall be enforceable by, each of the Indemnified Parties, their heirs and their
\nrepresentatives.<\/p>\n
5.11 NASDAQ LISTING. Parent agrees to authorize for listing on
\nNasdaq the shares of Parent Common Stock issuable, and those required to be
\nreserved for issuance, in connection with the Merger, upon official notice of
\nissuance.<\/p>\n
5.12 COMPANY AFFILIATE RESTRICTIONS. Set forth in the Company
\nDisclosure Schedule is a list of those persons who may be deemed to be, in
\nCompany’s reasonable judgement, affiliates of Company (each a “COMPANY
\nAFFILIATE”), as such term is defined in paragraphs (c) and (d) of Rule 145
\npromulgated by the Securities Act. Company will provide Parent with such
\ninformation and documents as Parent reasonably requests for purposes of
\nreviewing and validating such list. Parent will be entitled to place appropriate
\nlegends referring to SEC Rule 145 on the certificates evidencing any Parent
\nCommon Stock to be received by a Company Affiliate pursuant to the terms of this
\nAgreement, and to issue appropriate stop transfer instructions to the transfer
\nagent for the Parent Common Stock, consistent with the provisions of Rule 145.<\/p>\n
5.13 REGULATORY FILINGS; REASONABLE EFFORTS. As soon as may be
\nreasonably practicable, Company and Parent each shall file with the United
\nStates Federal Trade Commission (the “FTC”) and the Antitrust Division of the
\nUnited States Department of Justice (“DOJ”) Notification and Report Forms
\nrelating to the transactions contemplated herein as required by the HSR Act, as
\nwell as comparable pre-merger notification forms required by the merger
\nnotification or control laws and regulations of any applicable jurisdiction, as
\nagreed to by the parties in the exercise of reasonable business judgment and
\nwith the advice of counsel. Company and Parent each shall (a) cooperate and
\ncoordinate with one another in the making of such Filings, (b) promptly supply
\nthe other with any information which may be required in order to effectuate such
\nfilings and (c) promptly supply any additional information which reasonably may
\nbe required by the FTC, the DOJ or the competition or merger control authorities
\nof any other jurisdiction and which the parties may reasonably deem appropriate.<\/p>\n
5.14 COMPANY REPRESENTATIVES ON PARENT BOARD OF DIRECTORS. At
\nthe Effective Time, the Board of Directors of Parent shall amend its bylaws to
\nincrease the size of its Board of Directors from seven (7) to ten (10) persons
\nand shall appoint three (3) representatives of Company (the “COMPANY DIRECTORS”)
\nto fill such vacancies. Each Company Director who is not an employee of Parent
\nor one of its subsidiaries shall be entitled to participate in the compensation
\nand benefits plans to the same extent as other nonemployee directors of Parent
\nand shall become a party to an indemnification agreement with Parent that is
\nsubstantially similar to the indemnification agreements between Parent and its
\nnonemployee directors who were not formerly directors of the Company. Parent
\nshall nominate the Company Directors for election as members of the Parent’s
\nBoard of Directors at Parent’s 2002, 2003 and 2004 annual meetings of
\nstockholders, provided that the Company Directors are willing to be so nominated
\nand, in the case of Company directors standing for re-election, shall have
\naverage board meeting attendance for the prior year at least equal to the
\naverage meeting attendance for the prior year of all Parent’s other directors as
\na group.<\/p>\n
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\n 55<\/p>\n
5.15 RIGHTS AGREEMENTS.<\/p>\n
(a) The Board of Directors of Parent shall take all action to
\nthe extent necessary (including amending the Parent Rights Agreement) in order
\nto render the Parent Rights inapplicable to the Merger and the other
\ntransactions contemplated by this Agreement. Except in connection with the
\nforegoing sentence, the Board of Directors of Parent shall not, without the
\nprior written consent of Company, (i) amend the Parent Rights Agreement or (ii)
\ntake any action with respect to, or make any determination under, the Parent
\nRights Agreement, including a redemption of the Parent Rights, in each case in
\norder to facilitate any Acquisition Proposal with respect to Parent.<\/p>\n
(b) The Board of Directors of Company shall take all action to
\nthe extent necessary (including amending the Company Rights Agreement) in order
\nto render the Company Rights inapplicable to the Merger and the other
\ntransactions contemplated by this Agreement. Except in connection with the
\nforegoing sentence, the Board of Directors of Company shall not, without the
\nprior written consent of Parent (except with respect to a Superior Offer), (i)
\namend the Company Rights Agreement or (ii) take any action with respect to, or
\nmake any determination under, the Company Rights Agreement, including a
\nredemption of the Company Rights, in each case in order to facilitate any
\nAcquisition Proposal with respect to Company.<\/p>\n
ARTICLE VI
\n CONDITIONS TO THE MERGER<\/p>\n
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
\nrespective obligations of each party to this Agreement to effect the Merger
\nshall be subject to the satisfaction at or prior to the Closing Date of the
\nfollowing conditions:<\/p>\n
(a) STOCKHOLDER APPROVALS. This Agreement shall have been
\napproved and adopted, and the Merger shall have been duly approved, by the
\nrequisite vote under applicable law, by the stockholders of Company. Each of the
\nParent Stockholder Proposals shall have been duly approved, by the requisite
\nvote under applicable law and the rules of NASDAQ, and by the stockholders of
\nParent.<\/p>\n
(b) S-4 EFFECTIVE; PROXY STATEMENT. The SEC shall have
\ndeclared the S-4 effective. No stop order suspending the effectiveness of the
\nS-4 or any part thereof shall have been issued and no proceeding for that
\npurpose, and no similar proceeding in respect of the Joint Proxy
\nStatement\/Prospectus, shall have been initiated or threatened in writing by the
\nSEC.<\/p>\n
(c) NO ORDER; HSR ACT. No Governmental Entity shall have
\nenacted, issued, promulgated, enforced or entered any statute, rule, regulation,
\nexecutive order, decree, injunction or other order (whether temporary,
\npreliminary or permanent) which is in effect and which has the effect of making
\nthe Merger illegal or otherwise prohibiting consummation of the Merger. All
\nwaiting periods, if any, under the HSR Act relating to the transactions
\ncontemplated hereby will have expired or terminated early and all material
\nforeign antitrust approvals required to be obtained prior to the Merger in
\nconnection with the transactions contemplated hereby shall have been obtained
\nwithout any requirement that would violate the provisions of the last sentence
\nof Section 5.6(a) hereof.<\/p>\n
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\n 56<\/p>\n
(d) TAX OPINIONS. Parent and Company shall each have received
\nwritten opinions from their respective tax counsel in form and substance
\nreasonably satisfactory to them, to the effect that the Merger will constitute a
\nreorganization within the meaning of Section 368(a) of the Code and such
\nopinions shall not have been withdrawn. The parties to this Agreement agree to
\nmake such reasonable representations as requested by such counsel for the
\npurpose of rendering such opinions.<\/p>\n
(e) NASDAQ LISTING. The shares of Parent Common Stock issuable
\nto stockholders of Company pursuant to this Agreement and such other shares
\nrequired to be reserved for issuance in connection with the Merger shall have
\nbeen authorized for listing on Nasdaq upon official notice of issuance.<\/p>\n
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of
\nCompany to consummate and effect the Merger shall be subject to the satisfaction
\nat or prior to the Closing Date of each of the following conditions, any of
\nwhich may be waived, in writing, exclusively by Company:<\/p>\n
(a) REPRESENTATIONS AND WARRANTIES. The representations and
\nwarranties of Parent and Merger Sub contained in this Agreement (i) shall have
\nbeen true and correct as of the date of this Agreement and (ii) shall be true
\nand correct on and as of the Closing Date with the same force and effect as if
\nmade on the Closing Date except, (A) for such inaccuracies as in the aggregate,
\nwould not constitute a Material Adverse Effect on Parent and Merger Sub and (B)
\nfor those representations and warranties which address matters only as of a
\nparticular date (which representations shall have been so true and correct as of
\nsuch particular date) (it being understood that, for purposes of determining the
\naccuracy of such representations and warranties, (i) all “Material Adverse
\nEffect” qualifications and other qualifications based on the word “material” or
\nsimilar phrases contained in such representations and warranties shall be
\ndisregarded and (ii) any update of or modification to the Parent Disclosure
\nSchedule made or purported to have been made after the date of this Agreement
\nshall be disregarded). Company shall have received a certificate with respect to
\nthe foregoing signed on behalf of Parent by the Chief Executive Officer and the
\nChief Financial Officer of Parent.<\/p>\n
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
\nperformed or complied in all material respects with all agreements and covenants
\nrequired by this Agreement to be performed or complied with by them on or prior
\nto the Closing Date, and Company shall have received a certificate to such
\neffect signed on behalf of Parent by the Chief Executive Officer and the Chief
\nFinancial Officer of Parent.<\/p>\n
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
\nrespect to Parent shall have occurred since the date of this Agreement and
\nCompany shall have received a certificate to such effect signed on behalf of
\nParent by the Chief Executive Officer and the Chief Financial Officer of Parent.<\/p>\n
6.3 Additional Conditions to the Obligations of Parent and Merger Sub.
\nThe obligations of Parent and Merger Sub to consummate and effect the Merger
\nshall be subject to the satisfaction at or prior to the Closing Date of each of
\nthe following conditions, any of which may be waived, in writing, exclusively by
\nParent:<\/p>\n
-51-
\n 57<\/p>\n
(a) REPRESENTATIONS AND WARRANTIES. The representations and
\nwarranties of Company contained in this Agreement (i) shall have been true and
\ncorrect as of the date of this Agreement and (ii) shall be true and correct on
\nand as of the Closing Date with the same force and effect as if made on and as
\nof the Closing Date except (A) for such inaccuracies as in the aggregate would
\nnot constitute a Material Adverse Effect on the Company (it being understood
\nthat, for purposes of determining the accuracy of such representations and
\nwarranties, (i) all “Material Adverse Effect” qualifications and other
\nqualifications based on the word “material” or similar phrases contained in such
\nrepresentations and warranties shall be disregarded and (ii) any update of or
\nmodification to the Company Disclosure Schedule made or purported to have been
\nmade after the date of this Agreement shall be disregarded) and (B) those
\nrepresentations and warranties which address matters only as of a particular
\ndate (which representations shall have been so true and correct as of such
\nparticular date). Parent shall have received a certificate with respect to the
\nforegoing signed on behalf of Company by the Chief Executive Officer and the
\nChief Financial Officer of Company.<\/p>\n
(b) AGREEMENTS AND COVENANTS. Company shall have performed or
\ncomplied in all material respects with all agreements and covenants required by
\nthis Agreement to be performed or complied with by it at or prior to the Closing
\nDate, and Parent shall have received a certificate to such effect signed on
\nbehalf of Company by the Chief Executive Officer and the Chief Financial Officer
\nof Company.<\/p>\n
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
\nrespect to Company shall have occurred since the date of this Agreement and
\nParent shall have received a certificate to such effect signed on behalf of
\nCompany by the Chief Executive Officer and Chief Financial Officer of the
\nCompany.<\/p>\n
(d) CONSENTS. Company shall have obtained all consents,
\nwaivers and approvals contemplated by this Agreement or the Company Disclosure
\nSchedule in connection with the material agreements, contracts, licenses or
\nleases of Company or its subsidiaries.<\/p>\n
ARTICLE VII
\n TERMINATION, AMENDMENT AND WAIVER<\/p>\n
7.1 TERMINATION. This Agreement may be terminated at any time prior to
\nthe Effective Time, whether before or after the requisite approval of the
\nstockholders of Company or Parent, respectively: <\/p>\n
(a) by mutual written consent duly authorized by the Boards of
\nDirectors of Parent and Company;<\/p>\n
(b) by either Company or Parent if the Merger shall not have
\nbeen consummated by December 31, 2001 for any reason; provided, however, that
\nthe right to terminate this Agreement under this Section 7.1(b) shall not be
\navailable to any party whose action or failure to act has been the principal
\ncause of or resulted in the failure of the Merger to occur on or before such
\ndate and such action or failure to act constitutes a breach of this Agreement;<\/p>\n
(c) by either Company or Parent if a Governmental Entity shall
\nhave issued an order, decree or ruling or taken any other action, in any case
\nhaving the effect of permanently <\/p>\n
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\n 58<\/p>\n
restraining, enjoining or otherwise prohibiting the Merger, which order, decree,
\nruling or other action is final and nonappealable;<\/p>\n
(d) by either Company or Parent if: (i) the required approval
\nof the stockholders of Company contemplated by this Agreement shall not have
\nbeen obtained by reason of the failure to obtain the required vote at the
\nCompany Stockholder Meeting or at any adjournment thereof or (ii) the required
\napproval of the stockholders of Parent contemplated by this Agreement shall not
\nhave been obtained by reason of the failure to obtain the required vote at the
\nParent Stockholder Meeting or at any adjournment thereof; PROVIDED that the
\nright to terminate this Agreement under this Section 7.1(d) shall not be
\navailable to any party whose action or failure to act has been the principal
\ncause of or resulted in the failure to receive such requisite stockholder vote
\nand such action or failure to act constitutes a breach of this Agreement;<\/p>\n
(e) by Company concurrently with the execution by Company of a
\ndefinitive agreement relating to an Acquisition Transaction;<\/p>\n
(f) by Company, upon a breach of any representation, warranty,
\ncovenant or agreement on the part of Parent set forth in this Agreement, or if
\nany representation or warranty of Parent shall have become untrue, in either
\ncase such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
\nwould not be satisfied as of the time of such breach or as of the time such
\nrepresentation or warranty shall have become untrue, provided that Company may
\nnot terminate this Agreement under this Section 7.1(f) until 30 days after
\ndelivery of written notice from Company to Parent of such breach, provided
\nParent promptly commences to exercise commercially reasonable efforts to cure
\nsuch breach (it being understood that Company may not terminate this Agreement
\npursuant to this paragraph (f) if it shall have materially breached this
\nAgreement or if such breach by Parent is cured during such 30 day period);<\/p>\n
(g) by Parent, upon a breach of any representation, warranty,
\ncovenant or agreement on the part of Company set forth in this Agreement, or if
\nany representation or warranty of Company shall have become untrue, in either
\ncase such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
\nwould not be satisfied as of the time of such breach or as of the time such
\nrepresentation or warranty shall have become untrue, provided, that Parent may
\nnot terminate this Agreement under this Section 7.1(g) until 30 days after
\ndelivery of written notice from Parent to Company of such breach, provided
\nCompany promptly commences to exercise commercially reasonable efforts to cure
\nsuch breach (it being understood that Parent may not terminate this Agreement
\npursuant to this paragraph (g) if it shall have materially breached this
\nAgreement or if such breach by Company is cured during such 30 day period); or<\/p>\n
(h) by Parent if a Triggering Event (as defined below) shall
\nhave occurred.<\/p>\n
For the purposes of this Agreement, a “TRIGGERING EVENT” shall be
\ndeemed to have occurred if: (i) the Board of Directors of Company or any
\ncommittee thereof shall for any reason have withdrawn or shall have amended or
\nmodified in a manner adverse to Parent its recommendation in favor of, the
\nadoption and approval of the Agreement or the approval of the Merger; (ii)
\nCompany shall have failed to include in the Proxy Statement\/Prospectus the
\nrecommendation of the Board of Directors of Company in favor of the adoption and
\napproval of the Agreement and the approval of the Merger; (iii) the Board of
\nDirectors of Company or any committee thereof shall have approved <\/p>\n
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\n 59<\/p>\n
or recommended any Acquisition Proposal; (iv) Company shall have materially
\nbreached Section 5.4; (v) Company shall have entered into a definitive agreement
\nfor an Acquisition Transaction; (vi) a tender or exchange offer relating to
\nsecurities of Company shall have been commenced by a Person unaffiliated with
\nParent and Company shall not have sent to its security holders pursuant to Rule
\n14e-2 promulgated under the Securities Act, within ten (10) business days after
\nsuch tender or exchange offer is first published sent or given, a statement
\ndisclosing that Company recommends rejection of such tender or exchange offer,
\nor (vii) the Board of Directors of Company resolves to take any of the actions
\ndescribed under clauses (i), (iii) and (v) above.<\/p>\n
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of
\nthis Agreement under Section 7.1 above will be effective immediately upon the
\ndelivery of written notice of the terminating party to the other parties hereto.
\nIn the event of the termination of this Agreement as provided in Section 7.1,
\nthis Agreement shall be of no further force or effect, except (i) as set forth
\nin this Section 7.2, Section 7.3 and Article 8, each of which shall survive the
\ntermination of this Agreement, and (ii) nothing herein shall relieve any party
\nfrom liability for any willful breach of this Agreement. No termination of this
\nAgreement shall affect the obligations of the parties contained in the
\nNon-disclosure Agreement, all of which obligations shall survive termination of
\nthis Agreement in accordance with their terms.<\/p>\n
7.3 FEES AND EXPENSES.<\/p>\n
(a) GENERAL. Except as set forth in this Section 7.3, all fees
\nand expenses incurred in connection with this Agreement and the transactions
\ncontemplated hereby shall be paid by the party incurring such expenses whether
\nor not the Merger is consummated; provided, however, that Parent and Company
\nshall share all fees and expenses, other than attorneys’ and accountants fees
\nand expenses, incurred in relation to (i) the printing and filing (with the SEC)
\nof the Joint Proxy Statement\/Prospectus (including any preliminary materials
\nrelated thereto) and the S-4 (including financial statements and exhibits) and
\nany amendments or supplements thereto and (ii) the filing of any notices
\nrequired to be filed for HSR Approval or comparable filing requirements with
\nother Governmental Entities, in proportion to the relative ownership levels of
\nParent Common Stock upon Closing by the stockholders of Company and Parent.<\/p>\n
(b) COMPANY PAYMENTS.<\/p>\n
(i) In the event that Company shall terminate this
\nAgreement pursuant to Section 7.1(e), Company shall, promptly but in no event
\nmore than two (2) business days after such termination, pay Parent a termination
\nfee (the “TERMINATION FEE”) of $30,000,000.00. In the event that, within fifteen
\n(15) months after such termination by the Company, the Company consummates the
\nAcquisition Transaction which gave rise to the Company’s right to terminate this
\nAgreement pursuant to Section 7.1(e) or consummates any other Acquisition
\nTransaction, Company shall, promptly but in no event more than two (2) business
\ndays after such consummation, pay Parent a consummation fee (the “CONSUMMATION
\nFEE”) of $120,000,000.00.<\/p>\n
(ii) In the event that Parent shall terminate this
\nAgreement pursuant to Section 7.1(h) and within fifteen (15) months after such
\ntermination by Parent, the Company <\/p>\n
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\n 60<\/p>\n
consummates an Acquisition Transaction, Company shall, promptly but in no event
\nmore than two (2) business days after such consummation, pay Parent an amount
\nequal to the sum of the Termination Fee and the Consummation Fee.<\/p>\n
(iii) For purposes of Sections 7.3(i) and 7.3(ii)
\nhereof, the 15% threshold referenced in clause (A) of the definition of
\n“Acquisition Transaction” shall be increased to a threshold of 50% or more of
\nthe total outstanding voting securities of the Company and the 85% threshold
\nreferenced in said clause (A) shall be reduced to a threshold of less than 50%
\nof the equity interests in the surviving or resulting entity.<\/p>\n
(c) PAYMENTS IN THE EVENT OF STOCKHOLDER VOTE NOT RECEIVED.<\/p>\n
(i) Company shall pay Parent a cash termination fee
\nof $3.0 million (the “EXPENSE FEE”) in the event this Agreement is terminated
\npursuant to Section 7.1(d)(i) as a result of the failure to receive the Company
\nStockholder Vote if the Parent Stockholder vote has been obtained. The Expense
\nFee will, to the extent paid by the Company or on its behalf, be credited
\nagainst the Termination Fee, if any, payable under Section 7.3(b).<\/p>\n
(ii) Parent shall pay Company the Expense Fee in the
\nevent this Agreement is terminated pursuant to Section 7.1(d)(ii) as a result of
\nthe failure to receive the Parent Stockholder Vote if (A) the Company
\nStockholder Vote has been obtained and (B) this Agreement is not terminable by
\nParent pursuant to Section 7.1(h).<\/p>\n
(d) The Expense Fee shall be paid no later than two (2)
\nbusiness days after the date the obligation arises pursuant to clauses (i) or
\n(ii) of Section 7.3(c).<\/p>\n
(e) Each party acknowledges that the agreements contained in
\nthis Section 7.3 are an integral part of the transactions contemplated by this
\nAgreement, and that, without these agreements, the other party would not enter
\ninto this Agreement; accordingly, if either party fails promptly to pay the
\namounts due pursuant to this Section 7.3, and, in order to obtain such payment,
\nthe other party commences a suit which results in a judgment against such party
\nfor the amounts set forth in this Section 7.3, such party shall pay to the other
\nparty its reasonable costs and expenses (including attorneys’ fees and expenses)
\nin connection with such suit, together with interest on the amounts set forth in
\nthis Section 7.3 at the prime rate of Bank of America N.A. in effect on the date
\nsuch payment was required to be made. All fees payable pursuant to this Section
\n7.3 shall be paid by wire transfer of immediately available funds to an account
\ndesignated by the party to whom such fees are payable.<\/p>\n
(f) Payment of the fees and expenses described in Sections
\n7.3(b) and 7.3(c) shall be in lieu of damages incurred in the event of breach of
\nthis Agreement.<\/p>\n
7.4 Amendment. Subject to applicable law and the requirements of NYSE
\nand Nasdaq, the parties may amend this Agreement hereto at any time by execution
\nof an instrument in writing signed on behalf of each of Parent and Company.<\/p>\n
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\n 61<\/p>\n
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time any
\nparty hereto may, to the extent legally allowed, (i) extend the time for the
\nperformance of any of the obligations or other acts of the other parties hereto,
\n(ii) waive any inaccuracies in the representations and warranties made to such
\nparty contained herein or in any document delivered pursuant hereto and (iii)
\nwaive compliance with any of the agreements or conditions for the benefit of
\nsuch party contained herein. Any agreement on the part of a party hereto to any
\nsuch extension or waiver shall be valid only if set forth in an instrument in
\nwriting signed on behalf of such party. Delay in exercising any right under this
\nAgreement shall not constitute a waiver of such right.<\/p>\n
ARTICLE VII
\n GENERAL PROVISIONS<\/p>\n
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
\nand warranties of Company, Parent and Merger Sub contained in this Agreement
\nshall terminate at the Effective Time, and only the covenants that by their
\nterms survive the Effective Time shall survive the Effective Time.<\/p>\n
8.2 NOTICES. All notices and other communications hereunder shall be in
\nwriting and shall be deemed given if delivered personally or by commercial
\ndelivery service, or sent via telecopy (receipt confirmed) to the parties at the
\nfollowing addresses or telecopy numbers (or at such other address or telecopy
\nnumbers for a party as shall be specified by like notice):<\/p>\n
(a) if to Parent or Merger Sub, to:<\/p>\n
Sanmina Corporation
\n 2700 North First Street
\n San Jose, CA 95134
\n Attn: Rick Ackel, Chief Financial Officer
\n Facsimile:<\/p>\n
with a copy to:<\/p>\n
Wilson Sonsini Goodrich & Rosati
\n Professional Corporation
\n 650 Page Mill Road
\n Palo Alto, California 94304-1050
\n Attention:
\n Facsimile: (650) 493-6811<\/p>\n
(b) if to Company, to:<\/p>\n
SCI Systems, Inc.
\n 2101 West Clinton Avenue
\n P.O. Box 1000
\n Huntsville, AL 35807
\n Attention: Michael M. Sullivan, General Counsel
\n Facsimile: (256) 882-4466<\/p>\n
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\n 62<\/p>\n
with a copy to:<\/p>\n
Powell, Goldstein, Frazer & Murphy LLP
\n 16th Floor, 191 Peachtree Streeet, N.W.
\n Atlanta, Georgia 30303
\n Attention: James J. McAlpin, Jr. Esq.
\n Facsimile: (404) 572-6999<\/p>\n
8.3 Interpretation; Knowledge.<\/p>\n
(a) When a reference is made in this Agreement to Exhibits,
\nsuch reference shall be to an Exhibit to this Agreement unless otherwise
\nindicated. When a reference is made in this Agreement to Sections, such
\nreference shall be to a Section of this Agreement. Unless otherwise indicated
\nthe words “INCLUDE,” “INCLUDES” and “INCLUDING” when used herein shall be deemed
\nin each case to be followed by the words “without limitation” except when
\npreceded by a negative predicate. The table of contents and headings contained
\nin this Agreement are for reference purposes only and shall not affect in any
\nway the meaning or interpretation of this Agreement. When reference is made
\nherein to “THE BUSINESS OF” an entity, such reference shall be deemed to include
\nthe business of all direct and indirect subsidiaries of such entity. Reference
\nto the subsidiaries of an entity shall be deemed to include all direct and
\nindirect subsidiaries of such entity.<\/p>\n
(b) For purposes of this Agreement, the term “MATERIAL ADVERSE
\nEFFECT” when used in connection with an entity means any change, event,
\nviolation, inaccuracy, circumstance or effect that is or would reasonably be
\nexpected to be materially adverse to the business, assets (including intangible
\nassets), capitalization, financial condition, or results of operations or
\nprospects of such entity and its parent (if applicable) and subsidiaries taken
\nas a whole (provided, however, that none of the following shall be deemed, in
\nand of itself, to be a Material Adverse Effect: (A) a change that primarily
\nresults from conditions generally affecting the United States economy or the
\nworld economy; (B) a change that primarily results from conditions generally
\naffecting the electronics manufacturing services industry; (C) a change that
\nresults from the effect of change of control provisions in contracts and
\nagreements between the Company and its principal customers or suppliers; or (D)
\na change that results from the announcement and the pendency of this Agreement
\nand the transactions contemplated hereby or (E) a change that results directly
\nfrom action taken by a party in connection with fulfilling its obligations
\nhereunder. For purposes of this condition, changes in the trading price of the
\nParent Common Stock, as reported by Nasdaq, or the Company Common Stock, as
\nreported by the NYSE, shall not alone constitute a Material Adverse Effect,
\nwhether occurring at any time or from time to time.<\/p>\n
(c) For purposes of this Agreement, the term “PERSON” shall
\nmean any individual, corporation (including any non-profit corporation), general
\npartnership, limited partnership, limited liability partnership, joint venture,
\nestate, trust, company (including any limited liability company or joint stock
\ncompany), firm or other enterprise, association, organization, entity or
\nGovernmental Entity.<\/p>\n
(d) For purposes of this Agreement, term “KNOWLEDGE” when used
\nin connection with the Company’s knowledge shall refer to the actual knowledge
\nof the Chief Executive Officer, <\/p>\n
-57-
\n 63<\/p>\n
President, Chief Financial Officer and General Counsel of Company and when used
\nin connection with the Parent’s knowledge shall mean the actual knowledge of the
\nChief Executive Officer, President and Chief Financial Officer of Parent.<\/p>\n
8.4 COUNTERPARTS. This Agreement may be executed in one or more
\ncounterparts, all of which shall be considered one and the same agreement and
\nshall become effective when one or more counterparts have been signed by each of
\nthe parties and delivered to the other party, it being understood that all
\nparties need not sign the same counterpart.<\/p>\n
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and the
\ndocuments and instruments and other agreements among the parties hereto as
\ncontemplated by or referred to herein, including Company Disclosure Schedule and
\nthe Parent Disclosure Schedule (a) constitute the entire agreement among the
\nparties with respect to the subject matter hereof and supersede all prior
\nagreements and understandings, both written and oral, among the parties with
\nrespect to the subject matter hereof, it being understood that the
\nNon-Disclosure Agreement shall continue in full force and effect until the
\nClosing and shall survive any termination of this Agreement; and (b) are not
\nintended to confer upon any other person any rights or remedies hereunder,
\nexcept as expressly and specifically provided herein.<\/p>\n
8.6 SEVERABILITY. In the event that any provision of this Agreement or
\nthe application thereof, becomes or is declared by a court of competent
\njurisdiction to be illegal, void or unenforceable, the remainder of this
\nAgreement will continue in full force and effect and the application of such
\nprovision to other persons or circumstances will be interpreted so as reasonably
\nto effect the intent of the parties hereto. The parties further agree to replace
\nsuch void or unenforceable provision of this Agreement with a valid and
\nenforceable provision that will achieve, to the extent possible, the economic,
\nbusiness and other purposes of such void or unenforceable provision.<\/p>\n
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
\nherein, any and all remedies herein expressly conferred upon a party will be
\ndeemed cumulative with and not exclusive of any other remedy conferred hereby,
\nor by law or equity upon such party, and the exercise by a party of any one
\nremedy will not preclude the exercise of any other remedy. The parties hereto
\nagree that irreparable damage would occur in the event that any of the
\nprovisions of this Agreement were not performed in accordance with their
\nspecific terms or were otherwise breached. It is accordingly agreed that the
\nparties shall be entitled to seek an injunction or injunctions to prevent
\nbreaches of this Agreement and to enforce specifically the terms and provisions
\nhereof in any court of the United States or any state having jurisdiction, this
\nbeing in addition to any other remedy to which they are entitled at law or in
\nequity.<\/p>\n
8.8 GOVERNING LAW. This Agreement shall be governed by and construed in
\naccordance with the laws of the State of Delaware, regardless of the laws that
\nmight otherwise govern under applicable principles of conflicts of law thereof;
\nprovided that issues involving the corporate governance of any of the parties
\nhereto shall be governed by their respective jurisdictions of incorporation.
\nEach of the parties hereto irrevocably consents to the exclusive jurisdiction of
\nany state or federal court within the State of Delaware, in connection with any
\nmatter based upon or arising out of this Agreement or the matters contemplated
\nherein, agrees that process may be served upon them in any manner authorized by
\nthe laws of the State of Delaware for such persons and <\/p>\n
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\n 64<\/p>\n
waives and covenants not to assert or plead any objection which they might
\notherwise have to such jurisdiction and such process.<\/p>\n
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been
\nrepresented by counsel during the negotiation and execution of this Agreement
\nand, therefore, waive the application of any law, regulation, holding or rule of
\nconstruction providing that ambiguities in an agreement or other document will
\nbe construed against the party drafting such agreement or document.<\/p>\n
8.10 ASSIGNMENT. No party may assign either this Agreement or any of
\nits rights, interests, or obligations hereunder without the prior written
\napproval of the other parties. Subject to the preceding sentence, this Agreement
\nshall be binding upon and shall inure to the benefit of the parties hereto and
\ntheir respective successors and permitted assigns.<\/p>\n
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]<\/p>\n
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\n 65<\/p>\n
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
\nexecuted by their duly authorized respective officers as of the date first
\nwritten above.<\/p>\n
SANMINA CORPORATION<\/p>\n
By:
\n ————————————-
\n Name:
\n Title:<\/p>\n
SUN ACQUISITION SUBSIDIARY, INC.<\/p>\n
By:
\n ————————————-
\n Name:
\n Title:<\/p>\n
SCI SYSTEMS, INC.<\/p>\n
By:
\n ————————————-
\n Name:
\n Title:<\/p>\n
**** AGREEMENT AND PLAN OF REORGANIZATION****<\/p>\n
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