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Exhibit 2
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AGREEMENT AND PLAN OF MERGER
by and among
CELESTICA INC.
CELESTICA ASIA INC.
and
INTERNATIONAL MANUFACTURING SERVICES, INC.
Dated as of November 1, 1998
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.1. The Merger ................................................ 2
Section 1.2. Closing ................................................... 2
Section 1.3. Effective Time of the Merger .............................. 2
Section 1.4. Effects of the Merger ..................................... 3
Section 1.5. Certificate of Incorporation .............................. 3
Section 1.6. Bylaws .................................................... 3
Section 1.7. Directors ................................................. 3
Section 1.8. Officers .................................................. 3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
Section 2.1. Conversion of Shares ...................................... 3
Section 2.2. Shares of Dissenting Stockholders ......................... 4
Section 2.3. Cancellation and Retirement of Shares ..................... 5
Section 2.4. Shares Elections .......................................... 5
Section 2.5. Issuance of Stock Consideration and Payment of Cash
Election Price ........................................ 6
Section 2.6. Stock Plans ............................................... 8
Section 2.7. Exchange of Certificates .................................. 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1. Organization, Standing and Corporate Power ................ 12
Section 3.2. Subsidiaries .............................................. 12
Section 3.3. Capital Structure ......................................... 13
Section 3.4. Authority; Noncontravention ............................... 13
Section 3.5. SEC Documents; Financial Statements; No Undisclosed
Liabilities ........................................... 15
Section 3.6. Disclosure Documents ...................................... 16
Section 3.7. Property; Sufficiency of Assets ........................... 16
Section 3.8. Absence of Certain Changes or Events ...................... 17
Section 3.9. Litigation ................................................ 18
Section 3.10. Compliance with Laws, Etc ................................ 18
Section 3.11. Absence of Changes in Stock or Benefit Plans ............. 19
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Section 3.12. ERISA Compliance ........................................ 19
Section 3.13. Tax Matters ............................................. 22
Section 3.14. Debt Instruments ........................................ 23
Section 3.15. Insurance ............................................... 24
Section 3.16. Labor Matters ........................................... 24
Section 3.17. Business Relationships; No Restrictive Agreements ....... 24
Section 3.18. Patents, Trademarks, Etc ................................ 25
Section 3.19. Interests of Officers and Directors ..................... 26
Section 3.20. Environmental Matters ................................... 26
Section 3.21. Rights Plan ............................................. 28
Section 3.22. Year 2000 Compliance .................................... 28
Section 3.23. Brokers ................................................. 29
Section 3.24. Opinion of Financial Advisor ............................ 29
Section 3.25. Board Recommendation .................................... 29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 4.1. Organization, Standing and Corporate Power ............... 30
Section 4.2. Authority; Noncontravention .............................. 30
Section 4.3. SEC Documents; Financial Statements; No Undisclosed
Liabilities .......................................... 31
Section 4.4. Information Supplied ..................................... 31
Section 4.5. Absence of Certain Changes or Events ..................... 32
Section 4.6. Interim Operations of Merger Sub. ........................ 32
Section 4.7. Capital Structure ........................................ 32
Section 4.8. Litigation ............................................... 33
Section 4.9. Compliance with Laws, Etc ................................ 33
Section 4.10. Financing ............................................... 33
Section 4.11. Brokers ................................................. 33
ARTICLE V
COVENANTS OF THE COMPANY
Section 5.1. Conduct of Business ...................................... 34
Section 5.2. Company Stockholders Meeting ............................. 36
Section 5.3. Letter of the Company's Accountants ...................... 36
Section 5.4. Access to Information .................................... 37
Section 5.5. [Intentionally Omitted] .................................. 37
Section 5.6. Cooperation in Arrangements with Lenders ................. 37
Section 5.7. No Solicitation .......................................... 37
Section 5.8. Certain Agreements ....................................... 39
Section 5.9. Confidentiality .......................................... 39
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ARTICLE VI
COVENANTS OF PARENT
Section 6.1. Access to Information ..................................... 40
Section 6.2. Confidentiality ........................................... 40
Section 6.3. Obligations of Merger Sub. ................................ 40
Section 6.4. Voting of Shares .......................................... 40
Section 6.5. Letter of Parent's Accountants ............................ 40
Section 6.6. [Intentionally Omitted] ................................... 41
Section 6.7. Director and Officer Liability ............................ 41
ARTICLE VII
COVENANTS OF PARENT, MERGER SUB AND THE COMPANY
Section 7.1. Preparation of Form F-4 and the Proxy Statement;
Stockholder Meetings .................................. 42
Section 7.2. HSR Act Filings; Reasonable Efforts; Notification ......... 42
Section 7.3. Public Announcements ...................................... 43
Section 7.4. Affiliates ................................................ 43
Section 7.5. Stock Exchange Listing .................................... 44
Section 7.6. Takeover Statutes ......................................... 44
Section 7.7. Company Employee Benefits ................................. 44
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.1. Conditions to the Obligations of Each Party ............... 44
Section 8.2. Conditions to the Obligations of Parent and Merger Sub .... 45
Section 8.3. Conditions to the Obligations of the Company .............. 46
ARTICLE IX
TERMINATION
Section 9.1. Termination ............................................... 47
Section 9.2. Effect of Termination ..................................... 48
Section 9.3. Fees and Expenses ......................................... 48
ARTICLE X
MISCELLANEOUS
Section 10.1. Definitions .............................................. 49
Section 10.2. Notices .................................................. 49
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Section 10.3. Survival of Representations and Warranties ............... 50
Section 10.4. Amendments; No Waivers ................................... 50
Section 10.5. Successors and Assigns; Parties in Interest .............. 50
Section 10.6. Governing Law; Submission to Jurisdiction ................ 51
Section 10.7. Specific Performance ..................................... 51
Section 10.8. Counterparts; Effectiveness; Interpretation .............. 51
EXHIBITS
Exhibit A: Major Stockholders
Exhibit B: Stockholder Agreement
Exhibit C: Company Affiliate Letter
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of November
1, 1998, by and among CELESTICA INC., a corporation organized under the laws of
the Province of Ontario, Canada ("PARENT"), CELESTICA ASIA INC., a corporation
organized under the laws of Delaware and a wholly-owned subsidiary of Parent
("MERGER SUB") and INTERNATIONAL MANUFACTURING SERVICES, INC., a corporation
organized under the laws of Delaware (the "COMPANY").
R E C I T A L S
WHEREAS, the Board of Directors of the Company has (i) determined
that this Agreement and the transactions contemplated hereby, including the
Merger (as defined herein), are advisable and are fair to and in the best
interests of the stockholders of the Company, (ii) determined that the
consideration to be paid in the Merger is fair to and in the best interests of
the stockholders of the Company, (iii) approved this Agreement and the
transactions contemplated hereby, including the Merger, and (iv) resolved to
recommend approval and adoption of this Agreement, the Merger and the other
transactions contemplated hereby by such stockholders;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company and Parent, acting as the sole stockholder of Merger Sub, have
approved the merger of the Company with and into Merger Sub with Merger Sub as
the surviving corporation as set forth below (the "MERGER"), upon the terms and
subject to the conditions set forth in this Agreement and the General
Corporation Law of the State of Delaware (the "DGCL"), whereby (i) each issued
and outstanding share of Class A Common Stock, par value $0.001 per share, of
the Company (the "CLASS A SHARES") shall be converted into the right to receive
the Merger Consideration (as defined herein) and (ii) each issued and
outstanding share of Class B Common Stock, par value $0.001 per share, of the
Company (the "CLASS B SHARES" and, together with the Class A Shares, the
"SHARES") shall be converted into the right to receive the Merger Consideration,
in each case excluding Class A Shares and Class B Shares owned, directly or
indirectly, by the Company or any subsidiary of the Company or by Parent, Merger
Sub or any other subsidiary of Parent and Dissenting Shares (as defined herein);
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization under the provisions
of Section 368(a) of the Internal Revenue Code, as amended (together with the
Treasury regulations thereunder, the "CODE") and this Agreement is intended to
be and is adopted as a plan of reorganization within the meaning of Section 368
of the Code;
WHEREAS, as a condition and an inducement to the willingness of
Parent and Merger Sub to enter into this Agreement and consummate the
transactions contemplated hereby, Parent has required that certain affiliate
stockholders set forth on
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Exhibit A hereto (collectively, the "MAJOR STOCKHOLDERS") agree, among other
things, to enter into an agreement, dated as of the date hereof and in the form
of Exhibit B hereto, among each Major Stockholder, Parent and Merger Sub (each a
"VOTING AGREEMENT"); and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the consummation of the
Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL, the
Company shall be merged with and into Merger Sub at the Effective Time (as
defined herein). At the Effective Time, the separate corporate existence of the
Company shall cease, and Merger Sub (a) shall continue as the surviving
corporation as a direct or indirect wholly owned subsidiary of Parent(as the
context requires, Merger Sub, after giving effect to the Merger, is sometimes
hereinafter referred to as the "SURVIVING CORPORATION") and (b) shall succeed to
and assume all the rights and obligations of the Company in accordance with the
DGCL.
Section 1.2. Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 9.1, and subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the closing of the Merger (the "CLOSING")
shall take place at 10:00 a.m. on the second business day after satisfaction or
waiver of the conditions set forth in Article VIII (the "CLOSING DATE"), at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, unless another date, time or place is agreed to in writing by the
parties hereto. At the time of the Closing, the Company and Merger Sub will
cause the Merger to be consummated by filing a certificate of merger (the
"CERTIFICATE OF MERGER") with the Secretary of State of the State of Delaware in
such form as required by and executed in accordance with the relevant provisions
of the DGCL and shall make all other filings or recordings required by the DGCL
in connection with the Merger.
Section 1.3. Effective Time of the Merger. The Merger shall, subject
to the DGCL, become effective as of such date and time as the Certificate of
Merger is duly filed with the Secretary of State of the State of Delaware or at
such later date and time as is specified in the Certificate of Merger (the
"EFFECTIVE TIME").
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Section 1.4. Effects of the Merger. From and after the Effective
Time, the Surviving Corporation shall possess all the property, rights,
privileges, immunities, powers and franchises and be subject to all of the
debts, restrictions, disabilities and duties of the Company and Merger Sub, all
as provided under the DGCL.
Section 1.5. Certificate of Incorporation. The Certificate of
Incorporation of Merger Sub as in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law, subject
in all cases to Section 6.5.
Section 1.6. Bylaws. The Bylaws of Merger Sub as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law, subject in all cases to Section 6.5.
Section 1.7. Directors. The directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.8. Officers. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly appointed and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
Section 2.1. Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any Shares or
any shares of capital stock of Merger Sub:
(a) Each Share owned by the Company or owned by Parent, Merger Sub
or any subsidiary of any of the Company, Parent or Merger Sub immediately prior
to the Effective Time shall be canceled, and no payment shall be made with
respect thereto.
(b) Each share of common stock of Merger Sub outstanding immediately
prior to the Effective Time shall remain outstanding as a share of common stock
of the Surviving Corporation and such shares shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
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(c) Except as otherwise provided in Section 2.1(a), Section 2.2,
Section 2.5 or Section 2.7, each Share outstanding immediately prior to the
Effective Time shall be converted into the right to receive, at the election of
the holder thereof, one of the following (the consideration described in clause
(i) below being the "CASH CONSIDERATION" and the consideration described in
clause (ii) below being the "STOCK CONSIDERATION", and the Cash Consideration
and the Stock Consideration being collectively referred to herein as the "MERGER
CONSIDERATION"):
(i) subject to Sections 2.5(e) and 2.5(g), for each Share with
respect to which an election to receive cash has been effectively made and
not revoked pursuant to Sections 2.4(c), (d) and (e) ("CASH ELECTING
SHARES"), the right to receive in cash from Merger Sub an amount equal to
$7.00 (the "CASH ELECTION PRICE"); and
(ii) for each Share other than Cash Electing Shares, the right to
receive 0.4 Subordinate Voting Shares of Parent ("SUBORDINATE SHARES", and
such ratio being referred to herein as the "SUBORDINATE SHARES RATIO").
Immediately prior to the Effective Time, Parent shall (x) contribute or cause to
be made available to Merger Sub the Cash Consideration and (y) contribute to
Merger Sub the right to cause the delivery of the Stock Consideration in
consideration of the issuance to Parent by Merger Sub of 900 shares of Common
Stock, $.01 par value per share, of Merger Sub. Merger Sub shall satisfy its
obligations to deliver the Stock Consideration by exercising such right to cause
Parent to deliver the same. Parent shall cause Merger Sub to deliver the Merger
Consideration pursuant to the terms of this Article II.
All references in this Agreement to "$" or "DOLLARS" shall be to the
currency of the United States of America unless the context requires otherwise.
Section 2.2. Shares of Dissenting Stockholders. Notwithstanding
anything in this Agreement to the contrary, any Shares that are outstanding
immediately prior to the Effective Time and which are held by a person (a
"DISSENTING STOCKHOLDER") who has not voted in favor of or consented to the
Merger and who shall have delivered a written demand for appraisal of his Shares
in the time and manner provided in Section 262 of the DGCL and shall not have
failed to perfect or shall not have effectively withdrawn or otherwise lost his
rights to appraisal and payment under the DGCL ("DISSENTING SHARES") shall not
be converted into the right to receive the Merger Consideration, but shall be
entitled to receive such consideration as shall be determined pursuant to
Section 262 of the DGCL. If, however, such Dissenting Stockholder effectively
withdraws his demand for appraisal or fails to perfect or otherwise loses his
right of appraisal, in any case pursuant to the DGCL, his Shares shall thereupon
be deemed to have been converted as of the Effective Time into the right to
receive the Stock Consideration, without interest, pursuant to Section
2.1(c)(ii). The Company shall give Parent (i) prompt notice of any demands for
appraisal of Shares received by the Company and (ii) the opportunity to
participate in and
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direct all negotiations and proceedings with respect to any such demands. The
Company shall not, without the prior written consent of Parent, make any payment
with respect to, or settle, offer to settle or otherwise negotiate, any such
demands.
Section 2.3. Cancellation and Retirement of Shares. As of the
Effective Time, all Shares (other than shares referred to in Section 2.1(a))
issued and outstanding immediately prior to the Effective Time, shall no longer
be outstanding and shall automatically be cancelled and retired and shall cease
to exist, and each holder of a certificate(s) representing any such Shares shall
cease to have any rights with respect thereto, except (subject to Section 2.2)
the right to receive the applicable Merger Consideration in accordance with
Section 2.1(c) and any cash in lieu of fractional Subordinate Shares to be
issued or paid in consideration therefor upon surrender of such certificate in
accordance with Section 2.7.
Section 2.4. Shares Elections. (a) Subject to Sections 2.5 and
2.7(e), each person who, on or prior to the Election Date referred to in (c)
below, is a record holder of Shares (and remains a record holder of such stock
until the Effective Time) will be entitled, with respect to all or any portion
of his Shares, to make an unconditional election on or prior to such Election
Date to receive the Cash Consideration (a "CASH ELECTION"), failing which the
holder will receive the Stock Consideration, on the basis hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement (as defined in
Section 3.6), Parent shall appoint a bank or trust company designated by Parent
and reasonably satisfactory to the Company to act as exchange agent (the
"EXCHANGE AGENT") for the payment of the Merger Consideration.
(c) Parent shall prepare and mail a form of election, which form
shall be subject to the reasonable approval of the Company (the "FORM OF
ELECTION"), with the Proxy Statement to the record holders of Shares as of the
record date for the Company Stockholders Meeting (as defined in Section 5.2).
The Form of Election shall be used by each record holder of Shares who wishes to
elect to receive the Cash Election Price for any or all Shares held by such
holder. On such Form of Election, such a holder may indicate his election. The
Company will use its best efforts to make the Form of Election and the Proxy
Statement available to all persons who become holders of Shares during the
period between such record date and the Election Date referred to below. Any
such holder's election to receive the Cash Election Price shall have been
properly made only if the Exchange Agent shall have received at its designated
office, by 5:00 p.m., New York City time on the last business day (the "ELECTION
DATE") prior to the date of the Company Stockholders Meeting, a Form of Election
properly completed and signed and accompanied by a certificate(s) for the Shares
to which such Form of Election relates, duly endorsed in blank or otherwise in
form acceptable for transfer on the books of the Company (or by an appropriate
guarantee of delivery of such certificate(s) as set forth in such Form of
Election from a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank
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or trust company having an office or correspondent in the United States,
provided such certificate(s) is in fact delivered to the Exchange Agent within
three New York Stock Exchange trading days after the date of execution of such
guarantee of delivery).
(d) Any Form of Election may be revoked only by duly executed
written notice received by the Exchange Agent prior to 5:00 p.m., New York City
time on the Election Date. In addition, all Forms of Election shall
automatically be revoked if the Exchange Agent is notified in writing by Parent
and the Company that the Merger has been abandoned. If a Form of Election is
revoked, the Shares to which such Form of Election relates shall be treated as
Shares as to which no election has been made.
(e) The determination of the Exchange Agent shall be binding as to
whether or not elections to receive the Cash Election Price have been properly
made or revoked pursuant to this Section 2.4 with respect to Shares, and as to
the time when elections and revocations were received by it. If the Exchange
Agent determines that any election to receive the Cash Election Price was not
properly made, or not made at all, with respect to Shares, then such Shares
shall be treated by the Exchange Agent as Shares which were not Cash Electing
Shares at the Effective Time, and such Shares shall be exchanged in the Merger
for Subordinate Shares pursuant to Section 2.1(c)(ii). Parent, in consultation
with the Company, shall make such rules as are consistent with this Section 2.4
for the implementation of the election provided for herein as shall be necessary
or desirable fully to effect such elections.
Section 2.5. Issuance of Stock Consideration and Payment of Cash
Election Price. The manner in which each Share (other than Shares to be canceled
as set forth in Section 2.1(a) and Dissenting Shares) shall be converted as of
the Effective Time into the right to receive the Merger Consideration shall be
as set forth in this Section 2.5. All references to "outstanding Shares" in this
Section 2.5 shall mean all Shares outstanding immediately prior to the Effective
Time.
(a) In the event that, between the date of this Agreement and the
Effective Time, the outstanding Subordinate Shares shall have been changed into
a different number or class of shares as a result of a stock split, reverse
stock split, stock dividend, spin-off, extraordinary dividend, recapitalization,
reclassification or other similar transaction with a record date within such
period, the Stock Consideration shall be appropriately adjusted.
(b) As is more fully set forth below, the Total Cash Consideration
(as defined below) in the Merger pursuant to this Agreement shall not be more
than fifty-five percent (55%) of the sum of (i) the Total Cash Consideration and
(ii) the Total Stock Consideration; such amount is referred to herein as the
"CASH LIMITATION." "TOTAL STOCK CONSIDERATION" means the product of (i) the
Subordinate Shares Ratio and (ii) the number of Shares converted into
Subordinate Shares, after the application, if and to the extent necessary, of
Sections 2.5(e) and 2.7(e) and (iii) the average of the high and low trading
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prices of the Subordinate Shares on the New York Stock Exchange on the date on
which the Effective Time occurs. "TOTAL CASH CONSIDERATION" means the sum (after
the application, if and to the extent necessary, of Sections 2.5(e) and 2.7(e))
of (i) cash paid in connection with Cash Elections, (ii) cash paid in lieu of
fractional shares and (iii) cash paid for Dissenting Shares. For this purpose,
cash paid for Dissenting Shares shall be computed as if holders of Dissenting
Shares had made Cash Elections with respect to all of their Dissenting Shares.
(c) Each Share that is not a Cash Electing Share shall be converted
into the right to receive Subordinate Shares pursuant to Section 2.1(c)(ii).
(d) If the Total Cash Consideration is equal to or less than the
Cash Limitation, each Share that is a Cash Electing Share shall be converted
into the right to receive the Cash Election Price pursuant to Section 2.1(c)(i).
(e) If the Total Cash Consideration is more than the Cash
Limitation, the number of Cash Electing Shares shall be reduced, and certain
stockholders of the Company who have made a Cash Election (a "CASH ELECTING
STOCKHOLDER") shall instead receive one or more Subordinate Shares to the extent
and as described so that the Total Cash Consideration is equal to or less than
the Cash Limitation:
(i) each Cash Electing Stockholder who holds of record fewer
than 250 Shares shall receive the Cash Election Price for all of his
Shares; and
(ii) the number of Shares covered by a Cash Election held of
record by each other Cash Electing Stockholder shall be reduced, pro
rata to the total number of Shares subject to a Cash Election, by
that number of Shares sufficient to reduce the Total Cash
Consideration to an amount equal to or less than the Cash
Limitation, and each such Cash Electing Stockholder shall receive
Subordinate Shares for the balance of the Shares covered by the Cash
Election, at the Subordinate Shares Ratio pursuant to Section
2.1(c)(ii), in lieu of receiving the Cash Election Price for such
Shares pursuant to Section 2.1(c)(i).
(f) If the Exchange Agent shall determine that any Cash Election was
not effectively made or was revoked, the Shares covered by such Cash Election
shall, for purposes hereof, be exchanged for Subordinate Shares pursuant to
Section 2.1(c)(ii).
(g) If, due to the existence of Dissenting Shares or purchases of
Shares by Parent, the Company or their respective affiliates, the amount of cash
paid in cancellation of Company Options (as defined in Section 2.6(a)), or any
other uncertainty in the calculation of the Cash Limitation, it reasonably
appears to Parent or the Company that the Merger may potentially fail to satisfy
continuity of interest requirements under applicable principles relating to
reorganizations under Section 368(a) of the Code, the
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number of Cash Electing Shares shall be reduced, and Cash Electing Stockholders
shall instead receive one or more Subordinate Shares in the order described in
Section 2.5(e), to the extent necessary, as determined by Parent, in
consultation with the Company, in good faith, to enable the Merger to satisfy
such requirements.
Section 2.6. Stock Plans. Prior to the mailing of the Proxy
Statement, the Board of Directors of Parent and the Board of Directors of the
Company (or, if appropriate, any committee administering the Stock Plans (as
defined below)) shall adopt such resolutions or take such other actions as may
be required to effect the following:
(a) Adjust the terms of all outstanding employee and director stock
options to purchase Shares ("COMPANY STOCK OPTIONS") granted under any of the
Company's 1996 Stock Option Plan, 1997 Stock Plan or 1997 Director Option Plan
(collectively, the "OPTION PLANS"), to provide that each Company Stock Option
outstanding immediately prior to the Effective Time shall (except to the extent
that Parent and the holder of a Company Stock Option otherwise agree in writing
prior to the Effective Time): (i) at the Effective Time, if such Company Stock
Option is vested before the Merger and exercisable and has an exercise price of
less than $7.00, and the holder of such Company Stock Option shall have elected
by written notice to Parent prior to the date 15 business days prior to the
Effective Time to receive the payment contemplated by this clause (i), be
cancelled in exchange for a payment from the Surviving Corporation (subject to
any applicable withholding taxes) equal to the product of (1) the total number
of Shares subject to such Company Stock Option and (2) the excess of $7.00 over
the exercise price per Share subject to such Company Stock Option, payable in
cash immediately following the Effective Time; provided, however, that at the
request of any person subject to Section 16(a) of the Securities Exchange Act of
1934, as amended ("EXCHANGE ACT"), any such amount to be paid shall be paid as
soon as practicable after the first date payment can be made without liability
for such person under Section 16(b) of the Exchange Act; or (ii) immediately
prior to the Effective Time, with respect to any Company Stock Option not to be
cancelled pursuant to clause (i) above, be assumed by the Parent (on the then
existing terms other than as provided herein) if permissible under applicable
law and stock exchange rules, or, if such option assumption is not permitted
under applicable law or stock exchange rules, Parent shall issue an option to
acquire (on substantially the same terms and conditions as were applicable under
such Company Stock Option), the number of Subordinate Shares equal to the
product of (1) the number of Shares issuable upon exercise of such Option and
(2) the Subordinate Shares Ratio, provided that any fractional Subordinate
Shares resulting from such multiplication shall be rounded up or down to the
nearest whole share, and (x) with respect to any Company Stock Option that has
an exercise price of less than $7.00, at a price per share equal to (A) the
exercise price for Shares otherwise purchasable pursuant to such Company Stock
Option divided by (B) the Subordinate Shares Ratio, provided that such exercise
price shall be rounded up or down to the nearest cent; and (y) with respect to
all other Company Stock Options, at a price per share equal to $17.50, provided,
that if the Toronto Stock Exchange or the Montreal Stock Exchange prohibits the
issuance of such options at a price per share equal to $17.50, then
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at a price per share equal to $18.31. The number of Subordinate Shares subject
to the options referred to in clause (y) shall be increased, if the price per
share is $18.31, to provide the comparable economic value to the option holder
(as determined by an independent consultant selected by Parent and reasonably
acceptable to the Company). Parent agrees to file a registration statement on
Form S-8 as soon as reasonably practicable following the Effective Time to
register the Subordinate Shares issuable pursuant to the Company Stock Options
referred to in clause (ii) above. It is intended that the stock options referred
to in clause (ii) above shall qualify following the Effective Time as incentive
stock options as defined in Section 422 of the Code to the extent that they are
qualified as incentive stock options immediately prior to the Effective Time and
to the extent permitted under applicable law.
(b) Subject to the last sentence of this Section 2.6(b), at the
Effective Time, each outstanding right to purchase Shares under the Company's
1997 Employee Stock Purchase Plan and 1997 Non-U.S. Employee Stock Purchase Plan
(collectively, the "COMPANY ESPP") (an "ASSUMED PURCHASE RIGHT") shall be deemed
to constitute a purchase right to acquire, on substantially the same terms and
conditions as were applicable under the Company ESPP immediately prior to the
Effective Time, a number of Subordinate Shares determined as provided in the
Company ESPP, except that the purchase price of such Subordinate Shares under
each Assumed Purchase Right shall be the lower of (i) the quotient determined by
dividing eight-five percent (85%) of the closing sales price of the Shares on
the "Enrollment Date" (as such term is defined in the Company ESPP) by the
Exchange Ratio or (ii) eighty-five percent (85%) of the fair market value of the
Subordinate Shares on the "Exercise Date" (as such term is defined in the
Company ESPP). As soon as practicable after the Effective Time, Parent shall
deliver to the participants in the Company ESPP appropriate notice setting forth
such participants' rights pursuant thereto and that the then existing purchase
rights under the Company ESPP shall continue in effect as provided herein.
Parent agrees to file a registration statement on Form S-8 for the Assumed
Purchase Rights and the Subordinate Shares issuable pursuant to such Assumed
Purchase Rights as soon as reasonably practicable after the Effective Time. It
is intended that the Assumed Purchase Rights shall qualify following the
Effective Time as qualified stock options under Section 423 of the Code to the
extent that the Assumed Purchase Rights qualified as such immediately prior to
the Effective Time and to the extent permitted under applicable law. If the
Toronto Stock Exchange or the Montreal Stock Exchange prohibits the sale of
Subordinate Shares under the Assumed Purchase Rights, then the "Exercise Date"
shall be deemed to be the Closing Date and the then existing purchase rights
under the Company ESPP shall terminate at the Effective Time, and Parent shall
have no liability or obligation under this Section 2.6(b).
(c) Except as specifically provided in Sections 2.6(a) and 2.6(b),
the Option Plans and the ESPP (collectively, the "STOCK PLANS") shall terminate
as of the Effective Time, and the Company shall ensure that following the
Effective Time no holder of a Company Stock Option and no participant in any of
the Stock Plans shall have any right thereunder to acquire equity securities of
the Company or the Surviving Corporation.
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Section 2.7. Exchange of Certificates.
(a) Exchange Agent. As required from time to time as of or after the
Effective Time of the Merger, Parent shall deposit the Merger Consideration with
the Exchange Agent for the benefit of the holders of Shares and for exchange in
accordance with this Article II.
(b) Exchange Procedures. As soon as practicable after the Effective
Time of the Merger, but in any case within 10 business days thereafter, the
Exchange Agent shall mail to each holder of an outstanding certificate(s) which
prior thereto represented Shares (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to such
certificate shall pass, only upon delivery of such certificate(s) to such
Exchange Agent), and (ii) instructions for use in effecting the surrender of the
certificate(s) for the Merger Consideration. Upon surrender to the Exchange
Agent of such certificate(s) for cancellation, together with such letter of
transmittal, the holder of such certificate(s) shall be entitled to a
certificate(s) representing the number of whole Subordinate Shares and/or the
amount of cash, if any, into which the aggregate number of Shares previously
represented by such certificate(s) surrendered shall have been converted
pursuant to this Agreement. The Exchange Agent shall accept such certificate(s)
upon compliance with such reasonable terms and conditions as the Exchange Agent
may impose to effect an orderly exchange thereof in accordance with normal
exchange practices. After the Effective Time of the Merger, there shall be no
further transfer on the records of the Company or its transfer agent of any
certificate(s) representing Shares and if such certificate(s) is presented to
the Company for transfer, it shall be cancelled against delivery of a
certificate(s) for Subordinate Shares and/or cash as hereinabove provided. If
any certificate(s) for such Subordinate Shares is to be issued in, or if cash is
to be remitted to, a name other than that in which the certificate(s) for Shares
surrendered for exchange is registered, it shall be a condition of such exchange
that the certificate(s) so surrendered shall be properly endorsed, with
signature guaranteed, or otherwise in proper form for transfer and that the
person requesting such exchange shall pay to Parent or its transfer agent any
transfer or other taxes required by reason of the issuance of a certificate(s)
for such Subordinate Shares in a name other than that of the registered holder
of the certificate(s) surrendered, or establish to the satisfaction of Parent or
its transfer agent that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.7(b), each certificate for Shares
shall be deemed at any time after the Effective Time of the Merger to represent
only the right to receive upon such surrender the Merger Consideration. No
interest will be paid or will accrue on any cash payable as Merger Consideration
or in lieu of any fractional Subordinate Share.
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(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to Subordinate Shares with a record date
after the Effective Time of the Merger shall be paid to the holder of any
unsurrendered certificate(s) for Shares with respect to the Subordinate Shares
represented thereby and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.7(e) until the surrender of such
certificate(s) in accordance with this Article II. Subject to the effect of
applicable laws, following surrender of any such certificate(s), there shall be
paid to the holder of the certificate(s) representing whole shares of
Subordinate Shares issued in exchange therefor, without interest, (i) at the
time of such surrender the amount of any cash payable in lieu of a fractional
Subordinate Share to which such holder is entitled pursuant to Section 2.7(e)
and the amount of dividends or other distributions with a record date after the
Effective Time of the Merger theretofore paid with respect to such whole
Subordinate Shares, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time of
the Merger but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such whole Subordinate Shares.
(d) No Further Ownership Rights in Shares. All Subordinate Shares
issued and cash paid upon the surrender for exchange of certificates
representing Shares in accordance with the terms of this Article II (including
any cash paid pursuant to Section 2.7(e)) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the Shares
theretofore represented by such certificates.
(e) No Fractional Shares.
(i) No certificate or scrip representing fractional Subordinate
Shares shall be issued upon the surrender for exchange of any
certificate(s) representing Shares, and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent; and
(ii) Notwithstanding any other provision of this Agreement, each
holder of Shares exchanged pursuant to the Merger who would have otherwise
been entitled to receive a fraction of a Subordinate Share shall receive,
in lieu thereof, an amount in cash equal to the product of such fraction
and $7.00.
(f) Termination of Exchange Fund. Any portion of the Merger
Consideration deposited with the Exchange Agent pursuant to this Section 2.7
(the "EXCHANGE FUND"), which remains undistributed to the holders of the
certificates representing Shares for six months after the Effective Time of the
Merger, shall be delivered to Parent, upon demand, and any holders of Shares who
have not theretofore complied with this Article II shall thereafter look only to
Parent for, and except as set forth in Section 2.7(g) Parent shall remain liable
for, payment of their claim for cash, Subordinate Shares, any cash in lieu of
fractional Subordinate Shares and any dividends or distributions with respect to
Subordinate Shares to which such holders may be entitled.
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(g) No Liability. None of Parent, Merger Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any Subordinate
Shares (or dividends or distributions with respect thereto) or cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure letter delivered by the
Company to Parent and Merger Sub prior to the execution of this Agreement (the
"COMPANY DISCLOSURE LETTER"), the Company represents and warrants to Parent and
Merger Sub as follows:
Section 3.1. Organization, Standing and Corporate Power. Each of the
Company and each of its material subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of the Company and each of
its subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a Material Adverse
Effect (as defined in Section 10.1) on the Company. The Company has delivered or
heretofore made available to Parent complete and correct copies of its
certificate of incorporation and bylaws, and the certificate of incorporation
and bylaws (or equivalent organizational documents) of its subsidiaries, in each
case as amended to the date of this Agreement. Schedule 3.1 of the Company
Disclosure Letter lists each jurisdiction in which the Company and its
subsidiaries are duly qualified. For purposes of this Agreement, a "SUBSIDIARY"
of any person means another person in which such first person, directly or
indirectly, owns 50% or more of the equity interests or has the right, through
ownership of equity, contractually or otherwise, to elect at least a majority of
its Board of Directors or other governing body or to direct the conduct of its
business and affairs, and a "material subsidiary" of the Company means those
subsidiaries identified as such on Schedule 3.1 of the Company Disclosure
Letter.
Section 3.2. Subsidiaries. Schedule 3.2 of the Company Disclosure
Letter lists all subsidiaries of the Company and identifies those subsidiaries
which are material subsidiaries. Except as set forth in Section 3.2 of the
Company Disclosure Letter, all the outstanding shares of capital stock or other
ownership interests of each subsidiary of the
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Company have been validly issued and are fully paid and nonassessable and, other
than shares held by director nominees as required by applicable law, all such
shares or ownership interests are owned by the Company, by another subsidiary of
the Company or by the Company and another such subsidiary, free and clear of all
pledges, liens, security interests, claims, charges or other encumbrances
("LIENS") and free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or equity interests). The Company does not own, directly or indirectly,
any capital stock or other ownership interest in any corporation, partnership,
business association, joint venture or other entity.
Section 3.3. Capital Structure. The authorized capital stock of the
Company consists of 75,000,000 Class A Shares, 25,000,000 Class B Shares and
10,000,000 shares of preferred stock, par value $0.001 per share (the "PREFERRED
SHARES"). As of the date of this Agreement, (i) 16,095,884 Class A Shares are
issued and outstanding, (ii) 2,509,425 Class B Shares are issued and
outstanding, (iii) no Shares are held by the Company or by any of the Company's
subsidiaries, (iv) 5,327,500 Class A Shares are reserved for issuance pursuant
to the outstanding Company Stock Options (or have been issued since October 31,
1998 pursuant to the terms thereof), (v) 595,486 Class A Shares are reserved for
issuance upon exercise of authorized but unissued Company Stock Options, (vi)
2,509,425 Class A Shares are reserved for issuance upon conversion of
outstanding Class B Shares and 0 Class B Shares are reserved for issuance upon
outstanding Class A Shares, (vii) 250,000 Class A Shares are reserved for
issuance under the ESPP and (viii) no shares of Preferred Stock are issued,
reserved for issuance or outstanding. Except as set forth in the preceding
sentence, no shares of capital stock or other equity or voting securities of the
Company are issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of the Company are, and all Shares which may be issued pursuant
to the Stock Plans will, when issued, be, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. There are not any
bonds, debentures, notes or other indebtedness or securities of the Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the Company
may vote. Other than the outstanding Shares and Shares issuable pursuant to the
Stock Plans, there are not any securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them is bound
obligating the Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other equity or voting securities of the Company or of any of its subsidiaries
or obligating the Company or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are no outstanding rights,
commitments, agreements, arrangements or undertakings of any kind obligating the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire or
dispose of any shares of capital stock or other equity or voting securities of
the Company or any of its subsidiaries or any securities of the type described
in the two immediately preceding sentences. To the knowledge of the Company,
there are
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no irrevocable proxies with respect to shares of capital stock of the Company or
any subsidiary of the Company.
Section 3.4. Authority; Noncontravention. (a) The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to the Company Stockholder Approval (as defined below) required in
connection with the consummation of the Merger, to consummate the transactions
contemplated by this Agreement. The Merger requires the approval by the
affirmative vote of the holders of a majority of the outstanding Shares, voting
together as a single class (the "COMPANY STOCKHOLDER APPROVAL"), which approval
is the only vote of the holders of any class or series of the capital stock of
the Company necessary to approve the Merger and this Agreement and the
transactions contemplated hereby.
(b) The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby has been
duly authorized by all necessary corporate action on the part of the Company,
except for the Company Stockholder Approval in connection with the consummation
of the Merger. This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes the valid and binding agreement
of Parent and Merger Sub, this Agreement constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally, and general equitable principles.
(c) Except as set forth in Schedule 3.4(c) of the Company Disclosure
Letter, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or to a loss of a benefit under, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its subsidiaries under, (i) the certificate of incorporation or bylaws of the
Company or the comparable charter or organizational documents of any of its
subsidiaries or (ii) subject to the governmental filings and other matters
referred to in Section 3.4(d), any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or their respective properties or assets, other than, in the case
of clause (ii) above, any such conflicts, violations, defaults, rights, losses
or Liens that individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect or impair in any material respect the ability
of the Company to perform its obligations under this Agreement or prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement.
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(d) No consent, approval, franchise, order, license, permit, waiver
or authorization of, or registration, declaration or filing with or exemption,
notice, application, or certification by or to (collectively, "CONSENTS") any
federal, state or local government or any arbitral panel or any court, tribunal,
administrative or regulatory agency or commission or other governmental
authority, department, bureau, commission or agency, domestic or foreign (a
"GOVERNMENTAL ENTITY"), is required by or with respect to the Company or any of
its subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated hereby, except for (i) the filing of the documents referred to in
Section 1.2 in accordance with the DGCL and similar documents with the relevant
authorities of other states in which the Company is qualified to do business,
(ii) the filing of a premerger notification and report form by the Company under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), (iii) the filing with the Securities and Exchange Commission
("SEC") of a proxy statement relating to the Company Stockholder Approval (as
amended or supplemented from time to time, the "PROXY STATEMENT") and such
reports under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), as may be required in connection with this Agreement and the transactions
contemplated by this Agreement, and (iv) such other Consents of Governmental
Entities that are not "federal" (within the meaning of the following sentence)
as to which the failure to obtain or make could not reasonably be expected to
have a Material Adverse Effect. As used in this Agreement, unless the context
otherwise requires any reference to "FEDERAL" includes any federal or national
government or multi-national organization or body, and any reference to "STATE"
includes any state or provincial government.
(e) The Board of Directors has taken all requisite action to approve
for purposes of Section 203 of the DGCL the Voting Agreements, the acquisition
of Shares pursuant to the Voting Agreements, any acquisition of Shares not
prohibited by the terms of the Confidentiality Agreement (as defined in Section
5.9), as modified by Section 5.8, and the other transactions contemplated by
this Agreement and the Voting Agreements so that the restrictions on business
combinations provided by Section 203 of the DGCL will not apply to Parent and
its affiliates.
Section 3.5. SEC Documents; Financial Statements; No Undisclosed
Liabilities. (a) The Company has filed, and has heretofore made available to
Parent true and complete copies of, all required reports, schedules, forms,
exhibits and other documents filed with the SEC since August 1, 1997 (the "SEC
DOCUMENTS") and provincial securities commission in Canada (the "CANADIAN
DOCUMENTS"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "SECURITIES ACT"), or the
Exchange Act, as the case may be, applicable to such SEC Documents, and the
Canadian Documents complied in all material respects with the requirements of
the Canadian securities laws applicable to such Canadian Documents. Except to
the extent that the information contained in any SEC Document or Canadian
Document has been revised or superseded by an SEC Document or Canadian Document,
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as applicable, filed subsequently thereto but prior to the date hereof, none of
the SEC Documents or the Canadian Documents at the time they were filed
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The financial statements of the Company included in the SEC
Documents complied as to form in all material respects with accounting
requirements and the published rules and regulations of the SEC applicable at
such time with respect thereto, have been prepared in accordance with United
States generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis throughout the periods involved ("GAAP") (except as may be
indicated in the notes thereto) and fairly presented the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and the absence of footnotes).
(c) Except as set forth in the SEC Documents, neither the Company
nor any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise), except for liabilities and
obligations which, individually or in the aggregate, have not had and would not
have a Material Adverse Effect.
Section 3.6. Disclosure Documents. (a) None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the registration statement on Form F-4 to be filed by Parent
with the SEC in connection with the issuance of Subordinate Shares in the Merger
(the "FORM F-4"), will (except to the extent revised or superseded by amendments
or supplements contemplated hereby) at the time the Form F-4 is filed with the
SEC, at any time it is amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the Proxy
Statement will (except to the extent revised or superseded by amendments or
supplements contemplated hereby), at the time the Proxy Statement is first
mailed to stockholders of the Company or at the time of the Company Stockholders
Meeting (including any adjournments or postponements thereof), contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The Proxy Statement will comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder, except that no representation
or warranty is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by Parent or
Merger Sub for inclusion or incorporation by reference therein.
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Section 3.7. Property; Sufficiency of Assets. The Company and its
subsidiaries (a) have good and valid title to all material property reflected
in the latest audited financial statements included in the SEC Documents as
being owned by the Company and its subsidiaries or acquired after the date
thereof (except properties sold or otherwise disposed of in the ordinary course
of business since the date thereof), free and clear of all Liens except (i)
statutory Liens securing payments not yet due and (ii) such imperfections or
irregularities of title or Liens as do not affect the use of the properties or
assets subject thereto, or affected thereby in any material respect, or
otherwise materially impair business operations at such properties, and (b) are
collectively the lessee of all material property reflected as leased in the
latest audited financial statements included in the SEC Documents (or on the
books and records of the Company as of the date thereof) or acquired after the
date thereof (except for leases that have expired by their terms) and are in
possession of the properties purported to be leased thereunder, and each such
lease is valid and in full force and effect without default thereunder in any
material respect by the lessee or the lessor. Each of the Company and each of
its subsidiaries enjoys peaceful and undisturbed possession under all such
leases. Such owned and leased property that is tangible personal property is in
good working order, reasonable wear and tear excepted, and is suitable for the
use for which it is intended.
Section 3.8. Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents, during the period from July 31, 1998 through the
date hereof, the Company and its subsidiaries have conducted their business only
in the ordinary course consistent with past practice, and there is not and has
not been:
(a) any event, occurrence or development of a state of circumstances
which, individually or in the aggregate, has had or would have a Material
Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) with respect to any of the Company's capital stock or any repurchase,
redemption or other acquisition by the Company or any of its subsidiaries of any
outstanding shares of capital stock or other securities of the Company or any of
its subsidiaries, except for dividends paid in the ordinary course by a wholly
owned subsidiary of the Company to its parent, or for repurchases from employees
following their termination pursuant to the terms of their existing stock option
or purchase agreements;
(c) any adjustment split, combination or reclassification of any of
its capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of, or in substitution for, shares of
its capital stock;
(d) any amendment of the Company's or any of its subsidiaries'
certificate of incorporation or by laws or similar governing documents;
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(e) (i) any granting by the Company or any of its subsidiaries to
any current or former director, officer or employee of the Company or any of its
subsidiaries of any material increase in compensation or benefits, except for
grants to employees who are not officers or directors in the ordinary course of
business consistent with past practice, (ii) any granting by the Company or any
of its subsidiaries to any such director, officer or employee of any increase in
severance or termination pay (including the acceleration in the vesting of
Shares (or other property) or the provision of any tax gross-up), or (iii) any
entry by the Company or any of its subsidiaries into any employment, deferred
compensation, severance or termination agreement or arrangement with or for the
benefit of any such current or former director, officer or employee;
(f) any change in accounting methods, principles or practices by the
Company or any of its subsidiaries;
(g) any amendment, waiver or modification of any material term of
any outstanding security of the Company or any of its subsidiaries;
(h) any incurrence, assumption or guarantee by the Company or any of
its subsidiaries of any material indebtedness for borrowed money or other
material obligations, or any creation or assumption by the Company or any of
its subsidiaries of any Lien on any asset other than in the ordinary course of
business consistent with past practice, but in no event with respect to assets
with a value of, or obligations in an amount of, more than $2,000,000 for any
one transaction or $5,000,000 in the aggregate;
(i) any making of any loan, advance or capital contributions to or
investment in any person other than in the ordinary course of business
consistent with past practice, but in no event in the amount of more than
$1,000,000 for any one transaction or $5,000,000 in the aggregate, and other
than investments in cash equivalents made in the ordinary course of business
consistent with past practice;
(j) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its subsidiaries relating to its assets
or business on behalf of the Company or any of its subsidiaries of more than
$1,000,000 for any transaction or $5,000,000 for any series of transactions,
other than short-term supply contracts and purchase orders in the ordinary
course of business consistent with past practice;
(k) any acquisition or disposition of any assets or any merger or
consolidation with any person on behalf of the Company or any of its
subsidiaries of more than $500,000 for any transaction or $5,000,000 for any
series of transactions;
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(l) any relinquishment by the Company or any of its subsidiaries of
any contract or other right, in either case, material to the Company and its
subsidiaries taken as a whole, other than transactions and commitments in the
ordinary course of business consistent with past practice and those contemplated
by the Agreement; or
(m) any agreement, commitment, arrangement or undertaking by the
Company or any of its subsidiaries to perform any action described in clauses
(a) through (l).
Section 3.9. Litigation. There is no action or proceeding pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any of its subsidiaries that, individually or in the aggregate, has resulted
in or would have a Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity outstanding against the
Company or any of its subsidiaries that, individually or in the aggregate, would
have a Material Adverse Effect.
Section 3.10. Compliance with Laws, Etc. The conduct by the Company
and its subsidiaries of their business is in compliance with all statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees, applicable to
their businesses or operations, except for instances of possible noncompliance
that individually or in the aggregate would not have a Material Adverse Effect,
impair in any material respect the ability of the Company to perform its
obligations under this Agreement or prevent or materially delay the consummation
of any of the transactions contemplated by this Agreement.
Section 3.11. Absence of Changes in Stock or Benefit Plans. Except
as required under this Agreement, during the period from April 30, 1998 through
the date hereof, there has not been (a) any acceleration, amendment or change of
the period of exercisability or vesting of any Company Stock Options under the
Option Plans (including any discretionary acceleration of the exercise periods
or vesting by the Board of Directors or any committee thereof or any other
persons administering an Option Plan) or authorization of cash payments in
exchange for any Company Stock Options under any of such Option Plans or any
rights under the Company ESPP, other than such actions taken in the ordinary
course of business consistent with past practice with respect to Company Stock
Options or rights under the Company ESPP held by non-officer employees of the
Company or its subsidiaries, (b) any adoption or material amendment by the
Company or any of its subsidiaries of any collective bargaining agreement or any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, stock appreciation
right, retirement, vacation, severance, disability, death benefit,
hospitalization, medical, worker's compensation, supplementary unemployment
benefits, or other plan, arrangement or understanding (whether or not legally
binding) or any employment agreement providing compensation or benefits to any
current or former employee, officer, director or independent contractor of the
Company or any of its subsidiaries or any beneficiary thereof or entered into,
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maintained or contributed to, as the case may be, by the Company or any of its
subsidiaries (collectively, "BENEFIT PLANS"), except as required by law, or (c)
any adoption of, or amendment to, or change in employee participation or
coverage under, any Benefit Plans which would increase materially the expense of
maintaining such Benefit Plans above the level of the expense incurred in
respect thereof for the fiscal year ended on April 30, 1998. Except as expressly
contemplated hereby, and except as otherwise specified in employment agreements
to which Merger Sub is a party entered into in connection with the Merger and
effective at the Effective Time, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(either alone or in conjunction with any other event) result in, or cause the
accelerated vesting or delivery of, or increase the amount or value of, any
payment or benefit to any employee of the Company.
Section 3.12. ERISA Compliance. (a) For purposes of this Agreement,
the following definitions apply: "CONTROLLED GROUP LIABILITY" means any and all
liabilities under (i) Title IV of ERISA, (ii) section 302 of ERISA, (iii)
sections 412 and 4971 of the Code, (iv) the continuation coverage requirements
of section 601 et seq. of ERISA and section 4980B of the Code, and (v)
corresponding or similar provisions of foreign laws or regulations, other than
such liabilities that arise solely out of, or relate solely to, the Plans
(defined below); "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder; "ERISA AFFILIATE" means, with
respect to any entity, trade or business, any other entity, trade or business
that is a member of a group described in Section 414(b), (c), (m) or (o) of the
Code or Section 4001 (b)(1) of ERISA that includes the first entity, trade or
business, or that is a member of the same "controlled group" as the first
entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
(b) Schedule 3.12(b) of the Company Disclosure Letter includes a
complete list of all material employee benefit plans, programs, policies,
practices, and other arrangements providing benefits to any current or former
employee, officer or director of the Company or any of its subsidiaries or
beneficiary or dependent thereof, whether or not written, and whether covering
one person or more than one person, sponsored or maintained by the Company or to
which the Company contributes or is obligated to contribute ("PLANS"). Without
limiting the generality of the foregoing, the term "Plans" includes all employee
welfare benefit plans within the meaning of Section 3(1) of ERISA, all employee
pension benefit plans within the meaning of Section 3(2) of ERISA, and all other
employee benefit, bonus, incentive, deferred compensation, stock purchase, stock
option, severance, change of control and fringe benefit plans, programs or
agreements, including, without limitation, plans, programs and agreements that
are not subject to ERISA and do not cover employees within the United States.
(c) With respect to each Plan, the Company has made available to
Parent and Merger Sub a true, correct and complete copy of: (i) each writing
constituting a part of such Plan, including without limitation all plan
documents, benefit schedules, trust agreements, and insurance contracts and
other funding vehicles; (ii) the most recent
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Annual Report (Form 5500 Series) and accompanying schedule, if any; (iii) the
current summary plan description and any material modifications thereto, if any;
(iv) the most recent annual financial report, if any; (v) the most recent
actuarial report, if any; and (vi) the most recent determination, opinion,
notification or advisory letter from the IRS, if any. Except as specifically
provided in the foregoing documents delivered to Parent and Merger Sub or as
required by law, there are no amendments to any Plan or any new Plan that have
been adopted or approved nor has the Company undertaken to make any such
amendments or adopt or approve any new Plan.
(d) Schedule 3.12(d) identifies each Plan that is intended to be a
"qualified plan" within the meaning of Section 401(a) of the Code ("QUALIFIED
PLANS"). The Internal Revenue Service has issued a favorable determination,
opinion, notification or advisory letter with respect to each Qualified Plan
that has not been revoked or has remaining a sufficient period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a letter and make any amendments necessary to obtain a favorable determination,
and, to the knowledge of the Company, there are no existing circumstances nor
any events that have occurred that could adversely affect the qualified status
of any Qualified Plan or the related trust. No Plan is intended to meet the
requirements of Code Section 501(c)(9).
(e) All contributions required to be made to any Plan by applicable
law or regulation or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any Plan,
for any period through the date hereof have been timely made or paid in full or,
to the extent not required to be made or paid on or before the date hereof, have
been fully reflected on the financial statements contained in the SEC Documents.
(f) The Company has complied, and is now in compliance, in all
material respects with all provisions of ERISA, the Code and all laws and
regulations applicable to the Plans. To the Company's knowledge, there is not
now, nor do any circumstances exist that could give rise to, any requirement for
the posting of security with respect to a Plan or the imposition of any lien on
the assets of the Company under ERISA or the Code. No prohibited transaction has
occurred with respect to any Plan. There is no Plan that is subject to Title IV
or Section 302 of ERISA or Section 412 or 4971 of the Code.
(g) There is no Plan that is subject to Title IV or Section 302 of
ERISA or Section 412 or 4971 of the Code.
(h) No Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "MULTIEMPLOYER PLAN") or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA (a "MULTIPLE EMPLOYER PLAN").
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(i) There does not now exist, nor do any circumstances exist that
could result in, any Controlled Group Liability that would be a liability of the
Company following the Closing. Without limiting the generality of the foregoing,
neither the Company nor any ERISA Affiliate of the Company has engaged in any
transaction described in Section 4069 or Section 4204 of ERISA.
(j) The Company has no liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or dependents thereof,
except for (a) health continuation coverage as required by Section 4980B of the
Code or Part 6 of Title I of ERISA or similar laws or regulations; (b) death or
disability benefits under any of the Benefit Plans; (c) benefits arising in
connection with a separation or severance program, plan or arrangement; and (d)
life insurance benefits for any employee of the Company who dies while in
service with the Company.
(k) All Plans covering foreign employees of the Company comply in
all material respects with applicable local law and are fully funded and/or book
reserved to the extent applicable.
(l) No labor organization or group of employees of the Company has
made a pending demand for recognition or certification, and to the Company's
knowledge there are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or threatened to be
brought or filed, with the National Labor Relations Board or any other labor
relations tribunal or authority. Each of the Company and its subsidiaries has
complied with the Worker Adjustment and Retraining Notification Act.
(m) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted against the Plans, any fiduciaries thereof with respect
to their duties to the Plans or the assets of any of the trusts under any of the
Plans which could reasonably be expected to result in any material liability of
the Company to the Pension Benefit Guaranty Corporation, the Department of
Treasury, the Department of Labor or any Multiemployer Plan.
Section 3.13. Tax Matters. Except as reflected in the SEC Documents:
(a) Each of the Company and each of its subsidiaries has timely
filed all tax returns and reports required to be filed by it. All such returns
are complete and correct in all material respects. Each of the Company and each
of its subsidiaries has paid (or the Company has paid on its subsidiaries'
behalf) all taxes shown as due on such returns and all taxes for which no return
was required to be filed, except where a failure to do so would be immaterial.
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(b) No income tax return or other material tax return of the Company
or any of its subsidiaries is under audit or examination by any taxing
authority, and no written or unwritten notice of such an audit or examination
has been received by the Company or any of its subsidiaries. Each deficiency
resulting from any audit or examination relating to taxes by any taxing
authority has been paid, except for deficiencies being contested in good faith
by appropriate proceedings and which have been reserved against in accordance
with GAAP. No issues relating to taxes were raised in writing by the relevant
taxing authority during any presently pending audit or examination, and no
material issues relating to taxes were raised in writing by the relevant taxing
authority in any completed audit or examination that can reasonably be expected
to recur in a later taxable period. The United States federal income tax returns
of the Company and each of its subsidiaries consolidated in such returns have
been examined by and settled with the Internal Revenue Service for all years, or
all years are otherwise closed, through the taxable year ended April 30, 1997.
(c) No liens for taxes exist with respect to any assets or
properties of the Company or any of its subsidiaries, except for statutory liens
for taxes not yet due.
(d) None of the Company or any of its subsidiaries is a party to or
is bound by any tax sharing agreement, tax allocation agreement, tax indemnity
obligation or similar written or unwritten agreement, arrangement, understanding
or practice with respect to taxes (including any advance pricing agreement,
closing agreement or other agreement relating to taxes with any taxing
authority), except for customary arrangements relating to property taxes and
sales taxes in leases and other agreements entered into in the ordinary course
of business.
(e) The disallowance of a deduction under Section 162(m) of the Code
for employee remuneration will not apply to any amount paid or payable by the
Company or any of its subsidiaries under any contract, Option Plan, Benefit
Plan, program, arrangement or understanding currently in effect.
(f) Except in connection with employment agreements referred to in
the last sentence of Section 3.11 and entered into in connection with this
transaction, no amount or other entitlement that could be received (whether in
cash or property or the vesting of property) in connection with the transactions
contemplated hereby (either alone or in conjunction with any other event) will
be an "excess parachute payment" (as such term is defined in Section 280G(b)(1)
of the Code).
(g) As used in this Agreement, "TAXES" shall include all federal,
state and local, domestic and foreign, income, property, sales, excise,
withholding and other taxes, tariffs or governmental charges of any nature
whatsoever, and all interest, penalties and additions to tax with respect to any
of the foregoing.
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Section 3.14. Debt Instruments. Schedule 3.14 of the Company
Disclosure Letter contains a list of (i) all loan or credit agreements, notes,
bonds, mortgages, indentures and other agreements and instruments pursuant to
which any indebtedness of the Company or any of its subsidiaries is outstanding
or may be incurred and (ii) the respective principal amounts currently
outstanding thereunder. Except as set forth in Schedule 3.14 of the Company
Disclosure Letter, all such indebtedness is prepayable at any time without
penalty, subject to the notice provisions of the agreements governing such
indebtedness (which, except as set forth in Schedule 3.14 of the Company
Disclosure Letter, shall not require a notice period of more than thirty days).
For purposes of this Section, "INDEBTEDNESS" shall mean, with respect to any
person (defined below), without duplication, (i) all obligations of such person
for borrowed money, or with respect to deposits or advances of any kind to such
person, (ii) all obligations of such person evidenced by bonds, debentures,
notes or similar instruments, (iii) all obligations of such person upon which
interest charges are customarily paid, (iv) all obligations of such person under
conditional sale or other title retention agreements relating to property
purchased by such person, (v) all obligations of such person issued or assumed
as the deferred purchase price of property or services (excluding obligations of
such person to creditors for raw materials, inventory, services and supplies
incurred in the ordinary course of such person's business), (vi) all capitalized
lease obligations of such person, (vii) all obligations of others secured by any
Lien on property or assets owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (viii) all obligations of such
person under interest rate or currency swap transactions (valued at the
termination value thereof), (ix) all letters of credit issued for the account of
such person (excluding letters of credit issued for the benefit of suppliers to
support accounts payable to suppliers incurred in the ordinary course of
business), (x) all obligations of such person to purchase securities (or other
property) which arises out of or in connection with the sale of the same or
substantially similar securities or property, and (xi) all guarantees and
arrangements having the economic effect of a guarantee of such person of any
indebtedness of any other person. "PERSON" means an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a governmental or political subdivision or any agency or
instrumentality thereof.
Section 3.15. Insurance. The Company and its subsidiaries are
covered by currently effective insurance policies issued in favor of the Company
that are customary for companies engaged in a similar business of similar size
and financial condition. All such policies are in full force and effect, all
premiums due thereon have been paid and the Company has complied in all material
respects with the provisions of such policies. Schedule 3.14 of the Company
Disclosure Letter identifies all property, general liability and casualty
insurance policies which currently insure the Company or any of its subsidiaries
or any of their respective properties or assets. The Company has not been
advised in writing, and has no knowledge, of any defense to coverage in
connection with any claim to coverage asserted or noticed by the Company under
or in connection with any of its existing insurance policies. The Company has
not received any written notice from or on behalf of any insurance carrier
issuing policies or binders relating to or covering the Com-
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pany and its subsidiaries that there will be a cancellation or non-renewal of
existing policies or binders, or that alteration of any equipment or any
improvements to real estate occupied by or leased to or by the Company or its
subsidiaries, purchase of additional equipment, or material modification of any
of the methods of doing business, will be required.
Section 3.16. Labor Matters. Except as disclosed in the SEC
Documents, (a) neither the Company nor any of its subsidiaries is a party to, or
bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization; (b) neither the Company
nor any of its subsidiaries is the subject of any proceeding asserting that it
or any of its subsidiaries has committed an unfair labor practice or seeking to
compel it to bargain with any labor organization as to wages or conditions of
employment; (c) there is no strike, work stoppage or other labor dispute
involving the Company or any of its subsidiaries pending or, to the Company's
knowledge, threatened; (d) no action, suit, complaint, charge, arbitration,
inquiry, proceeding or investigation by or before any Governmental Entity
brought by or on behalf of any employee, prospective employee, former employee,
retiree, labor organization or other representative of its employees is pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries; (e) to the knowledge of the Company, no grievance is pending
or threatened against the Company or any of its subsidiaries; and (f) neither
the Company nor any of its subsidiaries is a party to, or otherwise bound by,
any consent decree with, or citation by, any Governmental Entity relating to
employees or employment practices.
Section 3.17. Business Relationships; No Restrictive Agreements.
(a) The relationships of the Company and its subsidiaries with its
customers, distributors, licensors, designers and suppliers are satisfactory in
all material respects. Schedule 3.17(a) identifies the customers of the Company
that accounted for not less than 80% of the Company's gross revenues for the
fiscal year ended April 30, 1998, and sets forth the gross revenues attributable
to each such customer, by fiscal quarter, for the two fiscal years ended April
30, 1998. No customer identified on Schedule 3.17(a) has advised any executive
officer of the Company or either of ▇▇▇ ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇ that such
customer intends to terminate or alter materially and adversely its relationship
with the Company, or has terminated or so altered its relationship since August
1, 1998.
(b) Except as set forth in Schedule 3.17(b) of the Company
Disclosure Letter and except for this Agreement and the other agreements
contemplated hereby, neither the Company nor any of its subsidiaries is a party
to, or bound by, any material agreement (as defined below) of any kind to be
performed in whole or in part after the Effective Time. For purposes of this
Agreement, the term "MATERIAL AGREEMENT", as used in relation to the Company,
shall mean any agreement that (i) involves the payment by the Company or any of
its subsidiaries, subsequent to the date of this Agreement and for so long as
such contract is in effect, of more than $1,000,000 and is not terminable at
will by
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the Company and its subsidiaries without material penalty, (ii) is referred to
in Schedule 3.14 of the Company Disclosure Letter, (iii) has a remaining term of
more than twelve months and involves the payment or receipt by the Company of
more than $250,000 annually, (iv) requires the Company or a subsidiary thereof
to make any payment to any person as a result of (A) the execution and delivery
of this Agreement or (B) the consummation of the Merger, (v) limits the freedom
of the Company or any subsidiary or affiliate to compete in any line of business
or with any person in any geographic area or which would so limit the freedom of
the Company or any of its subsidiaries or affiliates after the date of the
consummation of the Merger or (vi) is described in paragraphs (b)(3), (b)(4),
(b)(9) or (b)(10) of Item 601 of Regulation S-K of the SEC. Except as set forth
in Schedule 3.17(b) of the Company Disclosure Letter, there is no breach in any
material respect of or any material default under, and there are no facts which
with notice or the passage of time or both would constitute a breach in any
material respect or material default under, or give rise to any right of
termination, material amendment or cancellation by any third party, or
acceleration of any obligation to be performed by any party under, in each case
whether as a result of the consummation of the transactions contemplated hereby
or otherwise, any material agreement.
Section 3.18. Patents, Trademarks, Etc.
(a) Schedule 3.18 of the Company Disclosure Letter identifies all
registered trademarks, copyrights and patents owned by the Company and its
subsidiaries as of the date hereof. The Company and its subsidiaries own, or are
licensed or otherwise have adequate right to use, all patents, patent rights,
trademarks, trademark rights, service marks, service ▇▇▇▇ rights, trade names,
trade name rights, copyrights, know-how, technology, trade secrets and other
proprietary information which are material to and/or necessary for the conduct
of the business of the Company and its subsidiaries (collectively, the
"INTELLECTUAL PROPERTY").
(b) Excluding software that is generally available in the commercial
market, Schedule 3.18(b) of the Company Disclosure Letter describes the material
licenses for Intellectual Property held by the Company or any of its
subsidiaries. Neither the Company nor its Subsidiaries is in breach in any
material respect or in material default under any such license and there are no
facts which with notice or the passage of time or both would constitute a breach
in any material respect or material default under, or give rise to any third
party's right of termination, material amendment or cancellation, whether as a
result of the consummation of the transactions contemplated hereby or otherwise,
any such license.
(c) The conduct of the business by the Company and its subsidiaries,
as currently carried on by the Company, including the use of the Intellectual
Property, does not materially infringe upon or breach the Intellectual Property,
domestic or foreign, of any other person and none of the Company or its
subsidiaries has received any written allegation of any such material
infringement.
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Section 3.19. Interests of Officers and Directors. Except as
disclosed in the SEC Documents, none of the Company's or any of its
subsidiaries' officers or directors or any of their respective affiliates (other
than the Company or any of its subsidiaries) has any interest in any property,
real or personal, tangible or intangible, used in or pertaining to the business
of the Company or its subsidiaries, or any supplier, distributor or customer of
the Company or its subsidiaries, or any other relationship, contract, agreement,
arrangement or understanding with the Company or any of its subsidiaries
required to be disclosed pursuant to Item 404 of Regulation S-K of the SEC.
Section 3.20. Environmental Matters.
(a) The following definitions shall apply to this Section:
(i) "ENVIRONMENTAL CLAIMS" shall mean all notices of violation,
liens, claims, demands, suits, or causes of action for any damage,
including, without limitation, costs of compliance or remediation,
personal injury, property damage, lost use of property or consequential
damages, arising directly or indirectly out of Environmental Conditions or
Environmental Laws. By way of example only, Environmental Claims include
(i) violations of or obligations under any contract related to
Environmental Laws or Environmental Conditions, (ii) actual or threatened
damages to natural resources, (iii) claims for nuisance or its statutory
equivalent relating to Environmental Claims or Environmental Conditions,
(iv) claims for the recovery of response costs, or administrative or
judicial orders directing the performance of investigations, responses or
remedial actions under any Environmental Laws, (v) requirements to
implement "corrective action" pursuant to any order or permit issued
pursuant to Environmental Laws, (vi) fines, penalties or liens of any kind
against property related to Environmental Laws or Environmental
Conditions, and (vii) with regard to any present or former employees,
claims relating to exposure to or injury from Environmental Conditions.
(ii) "ENVIRONMENTAL CONDITIONS" shall mean the state of the
environment, including natural resources, soil, surface water, ground
water, or ambient air, relating to or arising out of the use, storage,
treatment, transportation, release, disposal, dumping or threatened
release of Hazardous Substances.
(iii)"ENVIRONMENTAL LAWS" shall mean all applicable federal, state,
district and local laws, domestic and foreign, all rules or regulations
promulgated thereunder, and all orders, consent orders, judgments,
notices, permits or demand letters issued to or entered into by the
Company or any of its subsidiaries pursuant thereto, relating to pollution
or protection of the environment (e.g., ambient air, surface water, ground
water, or soil). Environmental Laws shall include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Toxic Substances Control Act, as amended, the
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Hazardous Materials Transportation Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Clean Water Act, as
amended, the Safe Drinking Water Act, as amended, the Clean Air Act, as
amended, the Atomic Energy Act of 1954, as amended, the Occupational
Safety and Health Act, as amended, and all analogous laws, rules,
regulations or ordinances promulgated or issued by any foreign, federal,
state or other Governmental Entity.
(iv) "ENVIRONMENTAL REPORTS" shall mean any and all written
analyses, audits, assessments, summaries or explanations, in the
possession or control of the Company or any subsidiary, of (a) any
Environmental Conditions in, on or about the Properties (as defined below)
of, or any property or facility formerly owned, leased or operated by, the
Company or any of its subsidiaries or (b) the Company's or any such
Subsidiary's compliance with Environmental Laws.
(v) "HAZARDOUS SUBSTANCES" shall mean all pollutants, contaminants,
chemicals, wastes, and any other carcinogenic, ignitable, corrosive,
reactive, toxic or otherwise hazardous substances or materials subject to
regulation, control or remediation under Environmental Laws, including but
not limited to petroleum, urea formaldehyde, flammable, explosive and
radioactive materials, PCBs, pesticides, herbicides, asbestos, sludge,
slag, acids, metals, and solvents.
(b) Except as set forth in Schedule 3.20 of the Company Disclosure
Letter, (i) to the knowledge of the Company, the Company and each of its
subsidiaries possess all permits or licenses required for their operation under
the Environmental Laws and are currently in material compliance with all
applicable Environmental Laws, including, without limitation, all permits or
licenses required thereunder for their operations other than, in each case, any
failure which would not, individually or in the aggregate, have a Material
Adverse Effect; (ii) neither the Company nor any of its subsidiaries has
received any written notice that the Company or any such subsidiary is not in
material compliance with, or is in material violation of, any such Environmental
Laws which violation has not been cured or for which there is any remaining
liability; (iii) there are no Environmental Claims pending or, to the knowledge
of the Company, threatened against the Company or any of its subsidiaries and to
the knowledge of the Company, neither the Company nor any of its subsidiaries
has any material liability or any present cleanup or remediation obligation,
under any Environmental Law; (iv) to the knowledge of the Company, no
underground storage tank for Hazardous Substances as would result in any
Environmental Claims against the Company, no PCBs, and no asbestos containing
material is currently located at or on any of the properties or facilities
owned, leased or operated by the Company or any of its subsidiaries (the
"PROPERTIES"); and (v) to the knowledge of the Company, there have been no
releases of Hazardous Substances on, upon or into the Properties or on or at any
property at or to which the Company or its subsidiaries may have transported or
arranged for the transport of Hazardous Substances. In addition, complete copies
of the Environmental Reports have been made available to Parent and Merger Sub
and a list of
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all such Environmental Reports is set forth in Schedule 3.20 of the Company
Disclosure Letter.
Section 3.21. Rights Plan. The Company has not entered into, and its
Board of Directors has not adopted or authorized the adoption of, a stockholder
rights plan or similar agreement. No provision of the certificate of
incorporation, bylaws or other governing instruments of the Company or any of
its subsidiaries or the terms of any plan or agreement of the Company would,
directly or indirectly, restrict or impair the ability of Parent to vote, or
otherwise to exercise the rights of a stockholder with respect to, securities of
the Company and its subsidiaries that may be acquired or controlled by Parent or
permit any stockholder to acquire securities of the Company or of Parent or any
of its subsidiaries on a basis not available to Parent in the event that Parent
were to acquire securities of the Company.
Section 3.22. Year 2000 Compliance.
(a) As used herein, "YEAR 2000 COMPLIANT", means that Systems will
function correctly, in the following manner, when dealing with dates/times and
date/time related data prior to, during and after the calendar year 2000:
(i) the Systems shall, when processing date/time data from,
into, in and between the 20th and 21st centuries, and the years 1999
and 2000, and performing leap year calculations, accurately process
such date/time data (including, without limitation, accurately
inputting, outputting, extracting, displaying, calculating,
comparing, sorting and sequencing such data), and shall not, as a
result of the processing of such data, (A) create any logical or
mathematical error or inconsistency, (B) malfunction or (C) cease to
function; and
(ii)the Systems shall accurately process the date/time data
exchanged with the information technology systems of all Company
customers and suppliers, provided that the information technology
systems of such Company customers and suppliers properly exchange
date/time data with the Systems;
and "SYSTEMS" means computer systems, hardware, equipment and peripherals and
all computer software and files, and all process controls, environmental
controls and any other systems which employ, store or process date/time
information in electronic form.
(b) The Company has preliminarily evaluated its level of exposure to
the risks and costs associated with problems relating to Year 2000 compliance
and is currently in the process of updating its information systems to be Year
2000 compliant. The Company expects its information systems to be Year 2000
compliant by the end of fiscal 1999 and expects to spend a total of $4 million
to $5 million on the project, a portion of
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which would relate to newly purchased systems and would be capitalized. When the
project is successfully completed, the Company anticipates no material
disruptions in the manufacturing services it provides to its customers as a
result of Year 2000 compliance problems. The Company has not assessed the status
of Year 2000 compliance by its compliance of major distributors, suppliers,
customers or vendors, or financial services organizations with which the Company
interacts.
Section 3.23. Brokers. No broker, investment banker, financial
advisor or other person, other than BT Alex. ▇▇▇▇▇ Incorporated ("BT ALEX.
▇▇▇▇▇") which has been engaged as financial advisor, the fees and expenses of
which will be paid by the Company (and copies of whose engagement letters and a
calculation of the fees that would be due thereunder have been provided to
Parent and Merger Sub), is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any of its subsidiaries. No such engagement letters obligate the
Company to continue to use their services or pay fees or expenses in connection
with any future transaction.
Section 3.24. Opinion of Financial Advisor. The Board of Directors
of the Company has received the opinion of BT Alex. ▇▇▇▇▇, dated the date of
this Agreement, to the effect that, as of such date, the Merger Consideration to
be received in the Merger by the holders of the Shares is fair to such holders
from a financial point of view. A signed copy of the written opinion will be
delivered to Parent promptly upon receipt by the Company.
Section 3.25. Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has by unanimous vote of those
directors present(i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable and are fair to and in
the best interests of the stockholders of the Company, and (ii) resolved to
recommend that the holders of the Shares approve this Agreement and the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as
follows:
Section 4.1. Organization, Standing and Corporate Power. Each of
Parent and Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of incorporation and
has the requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Merger Sub is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the nature of
its business or the ownership, leasing or
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operation of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed or be in good standing individually or in the aggregate would not have
a Material Adverse Effect on Parent. Parent has made available to the Company
complete and correct copies of its Certificate of Incorporation and Bylaws and
the Certificate of Incorporation and Bylaws of Merger Sub, in each case as
amended to the date hereof.
Section 4.2. Authority; Noncontravention. (a) Parent and Merger Sub
have all requisite corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub. This Agreement has been duly executed and delivered by Parent and Merger
Sub and, assuming this Agreement constitutes a valid and binding agreement of
the Company, constitutes a valid and binding obligation of Parent and Merger
Sub, enforceable against them in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, and general equitable principles.
(c) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or to a loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Parent or any of its subsidiaries under, (i) the certificate of incorporation or
bylaws of Parent or Merger Sub, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or any other contract, agreement, instrument, permit,
concession, franchise or license applicable to Parent or Merger Sub or their
respective properties or assets, or (iii) subject to the governmental filings
and other matters referred to in Section 4.2(d), any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent, Merger Sub or
any other subsidiary of Parent or their respective properties or assets other
than, in the case of clause (ii) or (iii), any such conflicts, violations,
defaults, rights, losses or Liens that individually or in the aggregate would
not (x) have a Material Adverse Effect, (y) impair in any material respect the
ability of Parent and Merger Sub to perform their respective obligations under
this Agreement or (z) prevent or materially delay consummation of any of the
transactions contemplated by this Agreement.
(d) No Consent of any Governmental Entity is required by or with
respect to Parent, Merger Sub or any other subsidiary of Parent in connection
with the execution and delivery of this Agreement or the consummation by Parent
or Merger Sub, as the case may be, of any of the transactions contemplated by
this Agreement, except for
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(i) the filing of the documents referred to in Section 1.2 in accordance with
the DGCL and similar documents with the relevant authorities of other states in
which the Company is qualified to do business, (ii) the filing of a premerger
notification and report form under the HSR Act, (iii) compliance with any
applicable requirements of the Securities Act, the Exchange Act and Canadian
federal and provincial securities laws, and (iv) such other Consents as to which
the failure to obtain or make would not have a Material Adverse Effect.
Section 4.3. SEC Documents; Financial Statements; No Undisclosed
Liabilities. (a) Parent has filed, and made available to the Company true and
complete copies of, all required reports, schedules, forms, statements, exhibits
and other documents filed with the SEC since June 29, 1998 (the "PARENT SEC
DOCUMENTS"). As of their respective dates, the Parent SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, applicable to such Parent SEC Documents, and
none of the Parent SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) The financial statements of Parent included in the Parent SEC
Documents comply in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC applicable to
foreign private issuers with respect thereto, have been prepared in accordance
with Canadian generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by the rules applicable to foreign private
issuers) applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto) and fairly present the consolidated
financial position of Parent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(c) Except as set forth in the SEC Documents, Parent has no
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise), except for liabilities and obligations which, individually or in
the aggregate, have had or would have a Parent Material Adverse Effect.
Section 4.4. Information Supplied. None of the information supplied
or to be supplied by Parent or Merger Sub for inclusion or incorporation by
reference in (i) the Form F-4, will (except to the extent revised or superseded
by amendments or supplements), at the time the Form F-4 is filed with the SEC,
or will, at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and (ii) the Proxy Statement will (except to the extent revised or superseded by
amendments or supplements contemplated hereby), at the time
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the Proxy Statement is first mailed to stockholders of the Company and at the
time of the Company Stockholders Meeting (including any adjournments or
postponements thereof), contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The Form F-4 will comply as to form in all material respects with
the requirements of the Securities Act and the rules and regulations promulgated
thereunder, except that no representation or warranty is made by Parent or
Merger Sub with respect to statements made or incorporated by reference therein
based on information supplied by the Company for inclusion or incorporation by
reference in the Form F-4.
Section 4.5. Absence of Certain Changes or Events. Except as
disclosed in the Parent SEC Documents, during the period from July 1, 1998
through the date hereof, Parent has conducted its business only in the ordinary
course consistent with past practice, and there is not and has not been (i) any
Material Adverse Change; (ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) with respect to Parent's capital stock or any repurchase,
redemption or other acquisition by Parent of any outstanding shares of its
capital stock except for repurchases from employees following their termination
of employment pursuant to the terms of their existing stock option or purchase
agreements; (iii) any adjustment split, combination or reclassification of any
of Parent's capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of, or in substitution for,
shares of its capital stock; (iv) any amendment, waiver or modification of any
material term of any outstanding capital stock of Parent; (v) any incurrence,
assumption or guarantee by Parent of any material indebtedness for borrowed
money or other material obligations, other than in the ordinary course of
business consistent with past practice; or (vii) any condition, event or
occurrence which, individually or in the aggregate, would have a Material
Adverse Effect.
Section 4.6. Interim Operations of Merger Sub. Merger Sub was formed
on October 30, 1998 solely for the purposes of engaging in the transactions
contemplated hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
Section 4.7. Capital Structure. The authorized capital stock of
Parent consists of an unlimited number of Subordinate Shares, an unlimited
number of Multiple Voting Shares and an unlimited number of Preference Shares,
issuable in series. As of the date of this Agreement, (i) 47,416,800 Subordinate
Shares and 19,532,975 Multiple Voting Shares are issued and outstanding, (ii)
4,086,918 Subordinate Shares are reserved for issuance pursuant to outstanding
stock options under Parent employee benefit plans ("PARENT PLANS") (or have been
issued since October 31, 1998 pursuant to the terms thereof) and 7,067,105
Subordinate Shares are reserved for issuance upon exercise of authorized but
unissued stock options under Parent Plans, (iii) 19,532,975 Subordinate Shares
are reserved for issuance upon conversion of outstanding Multiple Voting Shares
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and (iv) no Preference Shares are issued, reserved for issuance or outstanding.
Except as set forth above, and except as contemplated by the parenthetical in
clause (ii), no shares of capital stock or other equity or voting securities of
Parent are issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of Parent are, and all Subordinate Shares which may be issued
pursuant to the Parent Plans will, when issued, be duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights. There
are not any bonds, debentures, notes or other indebtedness or securities of
Parent having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of
Parent may vote. Other than the Subordinate Shares issuable in the Merger and
the capital stock described in the second sentence of this Section 4.7, there
are not any securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Parent is a party
or by which it is bound obligating Parent to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other equity
or voting securities of Parent or obligating Parent to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. Except for repurchases of employee
Subordinate Shares upon termination of employment in accordance with Parent
Plans, there are no outstanding rights, commitments, agreements, arrangements or
undertakings of any kind obligating Parent to repurchase, redeem or otherwise
acquire or dispose of any shares of capital stock or other equity or voting
securities of Parent or any securities of the type described in the two
immediately preceding sentences.
Section 4.8. Litigation. There is no action or proceeding pending
or, to the knowledge of Parent, threatened against or affecting Parent that,
individually or in the aggregate, has resulted in or would have a Material
Adverse Effect, nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity outstanding against Parent or any of its subsidiaries
that, individually or in the aggregate, would have a Material Adverse Effect.
Section 4.9. Compliance with Laws, Etc. The conduct by Parent and
its subsidiaries of their business is in compliance with all statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees, applicable to
their businesses or operations, except for instances of possible noncompliance
that individually or in the aggregate would not have a Material Adverse Effect,
impair in any material respect the ability of Parent to perform its obligations
under this Agreement or prevent or materially delay the consummation of any of
the transactions contemplated by this Agreement.
Section 4.10. Financing. Parent has, and will make available to
Merger Sub, sufficient funds available to purchase the Shares pursuant to this
Agreement.
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Section 4.11. Brokers. No broker, investment banker, financial
advisor or other person other than Onex Corporation, the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Merger Sub.
ARTICLE V
COVENANTS OF THE COMPANY
The Company agrees that:
Section 5.1. Conduct of Business. During the period from the date of
this Agreement to the Effective Time, the Company shall, and shall cause its
subsidiaries to, carry on their business in the ordinary course of business in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, endeavor in good faith to preserve intact their current
business organizations, keep available the services of their current officers
and employees (as a group) and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. Without limiting the generality of the foregoing, other than
as set forth in Section 5.1 of the Company Disclosure Letter, during the period
from the date of this Agreement to the Effective Time, the Company shall not,
and shall not permit any of its subsidiaries to, except as contemplated by this
Agreement or with the prior written approval of Parent:
(a) (i) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of, any of
its capital stock, other than dividends and distributions by any direct or
indirect wholly owned subsidiary of the Company to its parent, (ii) adjust,
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities other than repurchases from employees following their
termination pursuant to the terms of their existing stock option and purchase
agreements;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options, including Company Stock Options, to
acquire, any such shares, voting securities or convertible securities (other
than the issuance of (i) Class A Shares upon the exercise of Company Stock
Options or the conversion of Class B Shares, in each case outstanding as of the
date hereof, (ii) Class B Shares upon the conversion of Class A Shares
outstanding as of the date hereof, (iii) Class A Shares pursuant to the Company
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ESPP and (iv) Company Stock Options issued to newly-hired employees in the
ordinary course consistent with past practice);
(c) amend its certificate of incorporation, bylaws or other
comparable charter or organizational documents;
(d) other than Liens under agreements identified in Schedule 3.14 or
3.17(b) of the Company Disclosure Letter, mortgage or otherwise encumber or
subject to any pledge or grant any security interest in, or, except in the
ordinary course of business consistent with past practice sell, lease, license,
transfer or otherwise dispose of, any properties or assets;
(e) incur, assume, guarantee or become obligated with respect to any
indebtedness (as defined in Section 3.14) other than drawings on existing
revolving credit facilities listed in Schedule 3.14 of the Company Disclosure
Letter, or guarantee or become obligated with respect to any material
obligations of third parties other than in the ordinary course of business and
consistent with past practice;
(f) make or agree to make any new capital expenditures or
acquisitions of assets or property or other acquisitions or commitments in
excess of $2,500,000 individually or $7,500,000 in the aggregate;
(g) make any material tax election or take any material tax position
(unless required by law) or change its fiscal year or accounting methods,
policies or practices (except as required by changes in GAAP) or settle or
compromise any material income tax liability;
(h) make any loan, advance or capital contributions to or investment
in any person (other than a subsidiary of the Company) other than in the
ordinary course of business consistent with past practice, but in no event in
the amount (to persons other than subsidiaries) of more than $500,000 for any
one transaction or $500,000 in the aggregate, and other than investments in cash
equivalents made in the ordinary course of business consistent with past
practice;
(i) modify or amend in any manner that is materially adverse to the
Company, or terminate, any material agreement or any confidentiality agreement
entered into by the Company or any subsidiary in the ordinary course of
business, or release or waive any material rights or claims, or modify or amend
in any manner adverse to the Company, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is a party;
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(j) except for "one-off" arrangements with individual non-executive
officer employees for future severance or bonus payments in amounts and on terms
consistent with past practice and offered by the Company pursuant to its
endeavors described in the first sentence of Section 5.1, and except for the
grant of options to purchase up to 100,000 Shares in the aggregate (with options
to purchase not more than 10,000 Shares granted to any individual) pursuant to
the Option Plans (at an option price not less than the fair market value on the
date of grant), (i) provide to any current or former director, officer or
employee of the Company or any of its subsidiaries any material increase in
compensation or benefits or any severance payment or other benefit not required
under the terms of an existing Plan, except for employees who are not officers
or directors in the ordinary course of business consistent with past practice,
(ii) grant to any such director, officer, or employee any increase in severance
or termination pay (including the acceleration in the exercisability of Company
Stock Options or in the vesting of Shares (or other property)), or (iii) enter
into any employment, deferred compensation, severance or termination agreement
or arrangement with or for the benefit of any such current or former director,
officer, or employee; or
(k) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 5.2. Company Stockholders Meeting.
(a) The Company shall cause a meeting of its stockholders (the
"COMPANY STOCKHOLDERS MEETING") to be duly called and held as soon as reasonably
practicable for the purpose of voting on the approval and adoption of this
Agreement and the Merger. The Company will, through its Board of Directors,
recommend approval and adoption of this Agreement and the Merger by the
Company's stockholders, and such recommendation shall be included in the Proxy
Statement, unless, in either case, the Board of Directors of the Company shall
have withdrawn or modified its recommendation of this Agreement or the Merger in
accordance with Section 5.7. Also, unless the Board of Directors of the Company
shall have withdrawn or modified its recommendation of this Agreement or the
Merger in accordance with Section 5.7, in connection with the Company
Stockholders Meeting the Company will use its commercially reasonable efforts to
obtain the necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby; a copy of the opinion referred to in Section
3.25 shall be included in the Proxy Statement notwithstanding any withdrawal or
modification of such recommendation, provided that the Proxy Statement may also
include such additional disclosure regarding such opinion as BT Alex. ▇▇▇▇▇ may
reasonably request. The Company will comply in all material respects with all
legal requirements applicable to the Company Stockholders Meeting. If at any
time prior to the Company Stockholders Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
Company will promptly prepare and mail to its stockholders such an amendment or
supplement. The Company will not mail any Proxy Statement, or any
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amendment or supplement thereto, to which Parent reasonably objects (with
respect only to information supplied by Parent or Merger Sub).
(b) The Company will cause its transfer agent to make stock transfer
records relating to the Company available to the extent reasonably necessary to
effectuate the intent of this Agreement, and otherwise will render reasonable
assistance to Parent in the solicitation of proxies by Parent in favor of
approval of this Agreement and the Merger.
Section 5.3. Letter of the Company's Accountants. The Company shall
use its commercially reasonable efforts to cause to be delivered to Parent a
letter of PricewaterhouseCoopers LLP, the Company's independent public
accountants, dated a date within two business days before the date on which the
Form F-4 shall become effective and addressed to Parent, in form and substance
reasonably satisfactory to Parent and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form F-4.
Section 5.4. Access to Information. From the date hereof until the
Effective Time or the termination of this Agreement, the Company will give
Parent, its counsel, financial advisors, auditors and other authorized
representatives reasonable access (during normal business hours and upon
reasonable notice) to the offices, properties, officers, employees, accountants,
auditors, counsel and other representatives, customers and suppliers, and books
and records of the Company and its subsidiaries (including to perform any
environmental studies), will furnish to Parent, its counsel, financial advisors,
auditors and other authorized representatives such financial, operating and
property related data and other information as such persons may request, will
furnish promptly to Parent a copy of each report, schedule, registration
statement and other document filed by the Company during such period pursuant to
the requirements of federal or state securities laws and will instruct the
Company's and its subsidiaries' employees, counsel and financial advisors to
cooperate with Parent in its investigation of the business of the Company and
the subsidiaries, including, without limitation, in connection with Parent's
obtaining title reports, surveys, environmental reports and similar reports or
studies with respect to properties owned or leased by the Company or its
subsidiaries, and will exercise all reasonable efforts to obtain from landlords
such estoppel certificates as Parent may request.
Section 5.5. [Intentionally Omitted].
Section 5.6. Cooperation in Arrangements with Lenders. The Company
shall, and shall cause its subsidiaries to, cooperate with and assist Parent and
its professionals and advisors in arranging for the prepayment at the Effective
Time of all indebtedness (as defined in Section 3.14) of the Company and its
subsidiaries that Parent identifies to the Company it elects to prepay and
otherwise ensuring that no "Default" or "Event of Default" (under and as defined
in the Credit Agreement dated as of July 7, 1998 among Parent and certain of its
subsidiaries, various financial institutions party thereto as
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lenders and The Bank of Nova Scotia, as Administrative Agent) shall occur by
virtue of the Surviving Corporation becoming a wholly-owned indirect subsidiary
of Parent at the Effective Time, and shall provide whatever other assistance and
cooperation Parent and its professionals and advisors might reasonably request
in connection with any of the foregoing.
Section 5.7. No Solicitation.
(a) The Company and its subsidiaries will not, and will not permit
any of its officers, directors, advisors, agents, employees, representatives or
other intermediaries to, directly or indirectly, (i) solicit, initiate,
encourage or knowingly take any action to facilitate the initiation or
submission of any inquiries, requests for information, proposals or offers from
any person relating to (x) any acquisition or purchase of all or a material
amount of assets (other than the purchase in the ordinary course of products
manufactured by the Company) of, or any equity interest in, the Company (other
than pursuant to the provisions of the Stock Plans) or any of its subsidiaries
or any merger, consolidation, tender offer (including a self tender offer),
exchange offer, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries other
than the transactions contemplated by this Agreement, or (y) knowingly and with
the intention of preventing the Merger, any other transaction (any of the
foregoing inquiries, proposals, offers or transactions being referred to herein
as an "ACQUISITION PROPOSAL") or agree to or endorse any Acquisition Proposal,
or (ii) enter into or participate in any discussions or negotiations regarding
any of the foregoing, or furnish to any other person any information with
respect to its business, properties or assets or any of the foregoing (other
than the disclosure of public information, and the disclosure of nonpublic
information in connection with customer and supplier relationships, in each case
in the ordinary course of business consistent with past practice) or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent the Company, its officers, directors, advisors, agents,
employees, representatives or other intermediaries from (A) referring any third
party to this provision, (B) considering or participating in discussions or
negotiations regarding a bona fide written Superior Proposal (as defined below)
that was not solicited after the date of this Agreement, (C) complying with Rule
14e-2(a) or Rule 14d-9 promulgated under the Exchange Act, if applicable, with
regard to an Acquisition Proposal made in the form of a tender offer or exchange
offer by a third party, or (D) furnishing information (pursuant to a customary
confidentiality agreement with non-disclosure obligations no more favorable to
the party receiving information than the Confidentiality Agreement is as to
Parent) in response to a bona fide unsolicited Superior Proposal. If the Board
of Directors, after consultation with the Company's outside counsel and
financial advisor, determines in good faith that it is required by its fiduciary
responsibilities to approve or recommend a Superior Proposal, then (i) the
Company may enter into a Qualifying Agreement, (ii) the Board of Directors may
withdraw or modify its approval or recommendation of this Agreement or the
Merger and may approve and recommend the Superior Proposal and (iii) the Board
of
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Directors may use reasonable commercial efforts to obtain the necessary
approvals by its stockholders of the Superior Proposal, provided that, if
permitted by applicable law and in any event other than in the case of a tender
offer or an exchange offer, that it shall not submit the Superior Proposal to
holders of Shares for approval unless it has previously submitted or
concurrently submits this Agreement and the Merger for such approval.
Notwithstanding any Superior Proposal or other Acquisition Proposal, or any
determination by the Board of Directors with respect to a Superior Proposal or
other Acquisition Proposal, the Board of Directors shall be required to submit
this Agreement and the Merger to the holders of Shares for approval unless this
Agreement is terminated pursuant to Section 9.1 prior to the date set for the
Company Stockholders Meeting (or any adjournment or postponement thereof). As
used herein (x) the term "SUPERIOR PROPOSAL" means a bona fide proposal made by
a third party to acquire the Company pursuant to a tender or an exchange offer
for not less than 75% of the shares of capital stock of the Company, a merger or
the acquisition of all or substantially all of the Company's assets that, in any
case, the Board of Directors determines in its good faith judgment (after
consultation with its outside counsel and financial advisor) to offer greater
consideration and be more favorable to the holders of Shares than the Merger and
(y) the term "QUALIFYING AGREEMENT" means a merger, purchase, reorganization or
similar agreement for a Superior Proposal that (A) terminates automatically upon
receipt, if any, of Company Stockholder Approval of this Agreement and the
Merger, (B) provides that there shall be no liability or obligation of the
Company upon or following termination thereof as a result of the receipt by the
Company of Company Stockholder Approval of this Agreement and the Merger and (C)
does not provide for the payment of any expenses of, or the transfer or issuance
of any assets or securities to, the party making the Superior Proposal (or any
affiliate of such party) except upon consummation of the Superior Proposal. The
terms of a Qualifying Agreement shall not require the Company not to perform or
comply with any provision of this Agreement except insofar as such provisions
would otherwise restrict entry into the Qualifying Agreement, recommendations to
and solicitations of stockholders in connection with the Superior Proposal that
is the subject of the Qualifying Agreement, or consummation of such Superior
Proposal.
(b) The Company shall promptly notify Parent after receipt of any
Acquisition Proposal or any request for nonpublic information relating to the
Company by any third party in connection with an Acquisition Proposal or for
access to the properties, books or records of the Company that informs the Board
of Directors of the Company that such third party is considering making, or has
made, an Acquisition Proposal. Such notice to Parent shall be made orally and in
writing and shall indicate in reasonable detail the terms and conditions of such
proposal, inquiry or contact and, unless precluded by the terms of a
confidentiality agreement, the identity of the offeror.
Section 5.8. Certain Agreements. The Company will not fail to
enforce any standstill agreement to which it is a party, except that the Company
hereby waives the provisions of the Confidentiality Agreement (defined in
Section 5.9) with respect to this
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Agreement and the transactions contemplated hereby, including, without
limitation, the Voting Agreements and the exercise of Parent's and Merger Sub's
rights thereunder.
Section 5.9. Confidentiality. Prior to the Effective Time and after
any termination of this Agreement, the Company will hold, and will use its
reasonable commercial efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, any and all
information received from Parent, directly or indirectly, in confidence in
accordance with the non-disclosure agreement entered into between the Parent and
Company dated July 23, 1998 (the "CONFIDENTIALITY AGREEMENT"). The provisions of
section (7) of the Confidentiality Agreement shall terminate upon the earliest
to occur of (a) the twenty-second business day after the filing of Parent's
Schedule 13-D under the Exchange Act relating to this Agreement, (b) the filing
of a Schedule 13-D by any person other than Parent and/or its affiliates and (c)
an Acquisition Proposal for a Company Acquisition that does not include a tender
offer being publicly announced or confirmed by the party making the Acquisition
Proposal, provided that, with respect to clauses (b) and (c), not earlier than
the fourth business day after the filing of a Schedule 13-D by Parent with
respect to this Agreement. The references to "business days" and time periods in
this Section 5.9 shall be calculated in accordance with the rules and
regulations promulgated under Section 14(d) of the Exchange Act.
ARTICLE VI
COVENANTS OF PARENT
Parent agrees that:
Section 6.1. Access to Information. From the date hereof until the
Effective Time, Parent will give the Company, its counsel, financial advisors,
auditors and other authorized representatives reasonable access (during normal
business hours and upon reasonable notice) to the officers, accountants,
auditors, counsel and other representatives of Parent and its subsidiaries, will
furnish to the Company, its counsel, financial advisors, auditors and other
authorized representatives such financial, operating and property related data
and other information as such persons may reasonably request under the
circumstances, will furnish promptly to the Company a copy of each report,
schedule, registration statement and other document filed by Parent during such
period pursuant to the requirements of federal or state securities laws and will
instruct Parent's and its subsidiaries' counsel and financial advisors to
cooperate with the Company in its investigation of the business of Parent and
the subsidiaries. Notwithstanding the foregoing, the Company shall not be
entitled to (a) non-public information that Parent reasonably concludes can not
or should not be disclosed to the Company for competitive reasons or applicable
securities laws, (b) obtain title reports, surveys, environmental reports or
similar reports or studies with respect to properties owned or leased by Parent
or its subsidiaries (but the Company shall have the right to review any such
reports in the
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possession of Parent) or (c) access to non-officer employees or customers or
suppliers of Parent or its subsidiaries.
Section 6.2. Confidentiality. Prior to the Effective Time and after
any termination of this Agreement, Parent will hold, and will use its reasonable
commercial efforts to cause its officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, any and all information
received from the Company, directly or indirectly, in confidence in accordance
with the Confidentiality Agreement.
Section 6.3. Obligations of Merger Sub. Parent will take all action,
and provide all financing, necessary to cause Merger Sub to perform its
obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
Section 6.4. Voting of Shares. Each of Parent and Merger Sub agrees
to vote all Shares beneficially owned by it, if any, in favor of adoption of
this Agreement at the Company Stockholders Meeting.
Section 6.5. Letter of Parent's Accountants. Parent shall use its
commercially reasonable efforts to cause to be delivered to the Company a letter
of KPMG, Parent's independent public accountants, dated a date within two
business days before the date on which the Form F-4 shall become effective and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Form F-4.
Section 6.6. [Intentionally Omitted].
Section 6.7. Director and Officer Liability. (a) From and after the
consummation of the Merger, Parent will, and will cause the Surviving
Corporation to, fulfill and honor in all respects the obligations of the Company
pursuant to (i) each indemnification agreement in effect between the Company and
each person who is or was a director or officer of the Company at or prior to
the Effective Time (copies of which have been made available to Parent) and (ii)
any indemnification provisions under the Company's Restated Certificate of
Incorporation or By-laws as each is in effect on the date hereof (the persons to
be indemnified pursuant to the agreements or provisions referred to in clauses
(i) and (ii) of this Section 6.7, together with their heirs, shall be referred
to as, individually, the "INDEMNIFIED PARTY"). The Certificate of Incorporation
and By-laws of the Surviving Corporation shall contain the provisions with
respect to indemnification and exculpation from liability set forth in the
Company's Restated Certificate of Incorporation and By-laws on the date of this
Agreement, which provisions shall not be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of any Indemnified Party. For six years
after the Effective Time, Parent shall provide officers' and directors'
liability insurance
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in respect of acts or omissions occurring on or prior to the Effective Time
covering each such person currently covered by the Company's officers' and
directors' liability insurance policy on terms substantially similar to those of
such policy in effect on the date hereof; provided, that, in satisfying its
obligation under this Section, Parent shall not be obligated to pay premiums in
excess of 150% of the amount per annum the Company paid in its last full fiscal
year, which amount has been disclosed to Merger Sub, and if the Surviving
Corporation is unable to obtain the insurance required by this Section, it shall
obtain as much comparable insurance as possible for an annual premium equal to
such maximum amount.
(b) Notwithstanding anything to the contrary contained in this
Agreement, from and after the date hereof, except to the extent that Parent
reasonably objects the Company may enter into indemnification agreements, or
amend existing indemnification agreements, with current directors and officers
of the Company providing for such provisions as are customary under Delaware
law.
(c) The Indemnified Parties are intended third party beneficiaries
of this Section to the extent such provisions benefit any such Indemnified
Party, but the foregoing shall not limit the right of the Company and Parent to
agree to any amendment or modification of such provisions prior to the Effective
Time without the consent of any Indemnified Party.
ARTICLE VII
COVENANTS OF PARENT, MERGER SUB AND THE COMPANY
The parties hereto agree that:
Section 7.1. Preparation of Form F-4 and the Proxy Statement;
Stockholder Meetings. Promptly following the date of this Agreement, the Company
shall prepare and the Company shall file with the SEC the Proxy Statement, and
Parent shall prepare and file with the SEC the Form F-4, in which the Proxy
Statement will be included as a prospectus. Each of the Company and Parent shall
use its reasonable commercial efforts to have the Form F-4 declared effective
under the Securities Act as promptly as practicable after such filing. The
Company will use its reasonable commercial efforts to cause the Proxy Statement
to be mailed to the Company's stockholders as promptly as practicable after the
Form F-4 is declared effective under the Securities Act. Parent shall also take
any action (other than qualifying to do business in any jurisdiction in which it
is not now so qualified) required to be taken under any applicable state
securities laws in connection with the issuance of Subordinate Shares in the
Merger, and each of Parent and the Company shall furnish all information
concerning the Company and the holders of the Shares and rights to acquire
Shares pursuant to the Stock Plans as may be reasonably requested in connection
with any such action.
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Section 7.2. HSR Act Filings; Reasonable Efforts; Notification. (a)
Each of Parent and the Company shall (i) promptly make or cause to be made the
filings required of such party or any of its subsidiaries under the HSR Act with
respect to the transactions contemplated by this Agreement, (ii) comply at the
earliest practicable date with any request under the HSR Act for additional
information, documents, or other material received by such party or any of its
subsidiaries from the Federal Trade Commission or the Department of Justice or
any other Governmental Entity in respect of such filings or such transactions,
and (iii) cooperate with the other party in connection with any such filing, and
in connection with resolving any investigation or other inquiry of any such
agency or other Governmental Entity under the HSR Act, the ▇▇▇▇▇▇▇ Act, as
amended, the ▇▇▇▇▇▇▇ Act, as amended, the Federal Trade Commission Act, as
amended, and any other foreign, federal or state statutes, rules, regulations,
orders or decrees that are designed to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade with
respect to any such filing or any such transaction. Each party shall promptly
inform the other party of any communication with, and any proposed
understanding, undertaking, or agreement with, any Governmental Entity regarding
any such filings or any such transaction. Neither party shall participate in any
meeting, with any Governmental Entity in respect of any such filings,
investigation, or other inquiry without giving the other party notice of the
meeting and, to the extent permitted by such Governmental Entity, the
opportunity to attend and participate.
(b) Each of Parent and the Company shall use all reasonable efforts
to take such action as may be required to cause the expiration of the notice
periods under the HSR Act or any other federal or state statutes, rules,
regulations, orders or decrees that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade with respect to the transactions contemplated hereby as promptly as
possible after the execution of this Agreement.
(c) Upon the terms and subject to the conditions set forth in this
Agreement, including, without limitation, Sections 5.2 and 5.7, each of the
parties agrees to use reasonable commercial efforts to take, or cause to be
taken, all actions and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable the
Merger and the other transactions contemplated by this Agreement, including
using reasonable commercial efforts (i) to obtain all other necessary waivers,
consents and approvals from Governmental Entities and to make all other
necessary registrations and filings (including other filings with Governmental
Entities, if any), (ii) to obtain all necessary consents, approvals or waivers
from third parties, (iii) to prepare the Form F-4 and the Proxy Statement and
(iv) to repay, with funds of the Surviving Corporation, all of the Company's
indebtedness contemplated by Section 5.6 at the Effective Time.
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(d) Notwithstanding anything to the contrary in Sections 7.2(a),(b)
or (c), neither Parent nor any of its subsidiaries shall be required (i) to
divest, or cause or permit the Company or its subsidiaries or affiliates to
divest, any material portion of their respective businesses, product lines or
assets; (ii) neither Parent nor Merger Sub shall be required to waive any of the
conditions to the Merger set forth in Article VIII; and (iii) the Company shall
not be required to take any action that would cause a condition to the Merger in
Article VIII to fail to be satisfied.
Section 7.3. Public Announcements. Parent and Merger Sub, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by applicable law, court process or by obligations
pursuant to any listing agreement with any Canadian securities exchange or U.S.
national securities exchange or with the Nasdaq National Market. The parties
agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement will be in the form previously
agreed to by the parties.
Section 7.4. Affiliates. Prior to the Closing Date, the Company
shall deliver to Parent a letter identifying all persons who may reasonably be
deemed, at the time this Agreement is submitted for approval to the stockholders
of the Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its reasonable commercial efforts to cause
each such person to deliver to Parent on or prior to the Closing Date a written
agreement substantially in the form attached as Exhibit C hereto.
Section 7.5. Stock Exchange Listing. Prior to the Closing Date,
Parent shall cause the Subordinate Shares to be issued in the Merger and under
the Stock Plans to be approved for listing on the Toronto Stock Exchange,
Montreal Exchange and New York Stock Exchange, in each case subject to notice of
issuance.
Section 7.6. Takeover Statutes. If any "fair price", "moratorium",
"control share acquisition" or other form of antitakeover statute or regulation
shall become applicable to the transactions contemplated hereby, the Company and
the members of the Board of Directors of the Company shall grant such approvals
and take such actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
such statute or regulation on the transactions contemplated hereby.
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Section 7.7. Company Employee Benefits. Parent and the Company agree
that, for a period of two years following the Effective Time, the Company's U.S.
employees who remain employed in the U.S. by the Surviving Corporation following
the Effective Time shall not have their aggregate levels of employee benefits
(other than bonus plans and equity compensation plans and arrangements)
materially diminished, except as part of an overall reduction in employee
benefit levels by Parent and its subsidiaries. The Surviving Corporation will
terminate the Company's existing bonus plan at March 31, 1999 and will implement
a new bonus plan.
Section 7.8. Tax Consequences. The parties intend that the Merger
shall constitute a reorganization within the meaning of Section 368 of the Code.
The parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations. The parties shall not take a position on any tax return
inconsistent with this Section 7.7. Each of the parties agrees not to take any
action either prior to or after the Effective Time that would cause the Merger
to fail to qualify as a "reorganization" under Section 368(a) of the Code.
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.1. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement shall have been approved and adopted by the
holders of a majority of the outstanding Shares within the meaning and in
accordance with the DGCL;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(c) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
statute, rule or regulation (collectively, "RESTRAINTS") preventing the
consummation of the Merger shall be in effect;
(d) the Subordinate Shares issuable to the Company's stockholders in
the Merger and under the Stock Plans shall have been approved for listing on the
New York Stock Exchange, subject to official notice of issuance; and
(e) the Form F-4 shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceedings seeking a stop
order, and any other federal and material "blue sky" and other state securities
laws applicable to the issuance of the Subordinate Shares shall have been
complied with.
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Section 8.2. Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger
are further subject to the satisfaction of the following conditions:
(a) There shall not be pending any action by any Governmental
Entity or any statute, rule or regulation of any Governmental Entity of
competent jurisdiction (i) challenging or seeking to make, or having the effect
of making, illegal or to restrain or prohibit the consummation by Parent or
Merger Sub of the Merger, seeking to obtain material damages or imposing any
material adverse conditions in connection therewith, (ii) seeking to restrain or
prohibit, or having the effect of restraining or prohibiting, Parent's or Merger
Sub's ownership or operation (or that of their respective subsidiaries or
affiliates) of all or any material portion of the business or assets of the
Company and its subsidiaries, or, in connection with the Merger, of Parent and
its subsidiaries or affiliates, or to compel Parent or any of its subsidiaries
or affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Company and its subsidiaries, or, in connection with
the Merger, of Parent and its subsidiaries and affiliates, (iii) seeking to
impose, or having the effect of imposing, material limitations on the ability of
Parent or any of its subsidiaries or affiliates effectively to exercise full
rights of ownership of the Shares (excluding statutes, rules or regulations,
such as securities laws, pertaining to limitations on the acquisition, holding
or disposition of securities generally), including, without limitation, the
right to vote any Shares acquired or owned by Parent or any of its subsidiaries
or affiliates on all matters properly presented to the Company's stockholders,
(iv) seeking to require, or having the effect of requiring, divestiture by
Parent or any of its subsidiaries or affiliates of any Shares, or (v) seeking to
prohibit, or having the effect of prohibiting, Parent or any of its subsidiaries
from effectively controlling in any material respect the business and operations
of the Company.
(b) The Company shall have performed in all material respects
all material obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer and the chief
financial officer of the Company to such effect.
(c) Since the date of this Agreement, there has not been a
Material Adverse Change in the Company.
(d) Parent shall have received the opinion of ▇▇▇▇, Scholer,
Fierman, ▇▇▇▇ & Handler, LLP, counsel to Parent, dated the Closing Date, based
on appropriate representations of the Company, its affiliates, and Parent, and
such other facts, representations, assumptions and agreements as counsel may
reasonably deem relevant, to the effect that for United States Federal income
tax purposes the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code and that each of Parent,
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Sub and the Company will be a party to the reorganization within the meaning of
Section 368(b) of the Code.
If the opinion referred to in this Section 8.2(d) is not
delivered, such condition shall be deemed to be satisfied if Parent shall have
received an opinion to such effect from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
or another law firm selected by the Company and reasonably acceptable to Parent.
Parent will cooperate in obtaining such opinion, including, without limitation,
making (and requesting from affiliates) appropriate representations with respect
to relevant matters.
(e) Parent shall have received the agreements referred to in
Section 7.4.
Section 8.3. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the further
satisfaction of the following conditions:
(a) Parent shall have performed in all material respects all
material obligations required to be performed by it under this Agreement at or
prior to the Closing Date, and the Company shall have received a certificate
signed on behalf of Parent by the chief executive officer and the chief
financial officer of Parent to such effect.
(b) Since the date of this Agreement, there has not been a
Material Adverse Change in Parent.
(c) The Company shall have received the opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, dated the Closing Date, based
on appropriate representations of the Company, its affiliates, and Parent and
such other facts, representations, assumptions and agreements as counsel may
reasonably deem relevant, to the effect that for United States Federal income
tax purposes the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code and that each of Parent, Sub and the Company will be
a party to the reorganization within the meaning of Section 368(b) of the Code.
If the opinion referred to in this Section 8.3(c) is not
delivered, such condition shall be deemed to be satisfied if the Company shall
have received an opinion to such effect from ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ &
Handler, LLP or another law firm selected by Parent and reasonably acceptable to
the Company. The Company will cooperate in obtaining such opinion, including,
without limitation, making (and requesting from affiliates) appropriate
representations with respect to relevant matters.
ARTICLE IX
TERMINATION
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Section 9.1. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written consent of the Company and Parent;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by
June 30, 1999 for any reason; provided, however, that the
right to terminate this Agreement under this Section 9.1(b)(i)
shall not be available to any party whose action or failure to
act has been a principal cause of or resulted in the failure
of the Merger to occur on or before such date and such action
or failure to act constitutes a material breach of this
Agreement;
(ii) if any Restraint having any of the effects set
forth in Section 8.1(c) shall be in effect and shall have
become final and nonappealable; or
(iii)if the Stockholder Approval shall not have been
obtained at the Company Stockholders Meeting duly convened
therefor or at any adjournment or postponement thereof or by
written consent, provided, that the Company shall have no
right to terminate this Agreement prior to June 30, 1999 if
the Company has materially breached the provisions of Section
5.2 of this Agreement; or
(c) by Parent if the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to Parent
its approval or recommendation of the Merger or this Agreement or failed to
reconfirm its recommendation within 10 business days after a written request to
do so from Parent, or approved or recommended any Superior Proposal.
Section 9.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 9.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto or their respective
officers and directors, except as set forth in the next sentence and except that
the agreements contained in Sections 5.9, 6.2, 9.2, 9.3 and Article X shall
survive the termination hereof. No such termination shall relieve any of the
Company, Parent or Merger Sub, as the case may be, from liability for damages
arising (a) from any willful or intentional breach of this Agreement or (b) from
their obligations under this Section 9.2, Section 9.3 and Article X. If this
Agreement is terminated as provided herein, each party (the "REDELIVERING
PARTY") upon request therefor shall redeliver all documents, work papers and
other materials obtained (whether before or after execution of this Agreement)
by the Redelivering Party from the requesting
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party in connection with the transaction contemplated hereby, together with all
copies thereof in the possession of the Redelivering Party.
Section 9.3. Fees and Expenses.
(a) Except as specifically provided in this Section 9.3, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.
(b) Parent and the Company shall each pay one-half of all
printing costs and SEC filing fees for the Proxy Statement and the Form F-4.
(c) In the event that Parent terminates this Agreement
pursuant to Section 9.1(c), the Company shall, upon demand, concurrently with
such termination pay Parent a fee equal to $4,000,000, payable in immediately
available funds (the "TERMINATION FEE"). If, at the time of any termination of
this Agreement pursuant to Section 9.1(b)(iii), an Acquisition Proposal for a
Company Acquisition shall have been publicly announced or confirmed and not
publicly withdrawn and (x) prior to the date six months following the date of
the termination of this Agreement the Company shall consummate a Company
Acquisition (as hereinafter defined) or (y) prior to the date three months
following the date of the termination of this Agreement the Company shall enter
into a definitive agreement providing for a Company Acquisition, then the
Company shall pay the Termination Fee in the case of clause (x) concurrently
with the consummation of such Company Acquisition or in the case of clause (y)
concurrently with the consummation of the transaction subject to such definitive
agreement (whether or not such transaction is consummated prior to the date six
months following the date of the termination of this Agreement); provided,
however, that no Termination Fee shall be payable pursuant to this sentence if
at the time the Agreement is terminated pursuant to Section 9.1(b)(iii) a
Material Adverse Change with respect to Parent had occurred and had not been
cured prior to the date of the Company Stockholders Meeting. "COMPANY
ACQUISITION" shall mean any of the following transactions with a party other
than Parent and/or its affiliates: (i) a merger, consolidation, business
combination, recapitalization, or similar transactions involving the Company
pursuant to which the stockholders of the Company immediately preceding such
transaction hold less than 60% of the equity interests in the surviving or
resulting entity of such transaction (other than the transactions contemplated
by this Agreement); (ii) a sale by the Company of assets (excluding inventory
and used equipment sold in the ordinary course of business consistent with past
practice) representing in excess of 40% of the fair market value of its assets
immediately prior to such sale; (iii) a sale and issuance by the Company of
shares of capital stock of the Company which would, upon issuance, represent
more than 40% of the outstanding shares of capital stock of the Company other
than in an underwritten public offering; or (iv) the acquisition by any person
or group by way of a tender offer or an exchange offer of beneficial ownership
of 40% or more of the then outstanding shares of capital stock of the Company.
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ARTICLE X
MISCELLANEOUS
Section 10.1. Definitions. For all purposes of this Agreement,
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means, when used in
connection with the Company or Parent, as the case may be, any change or effect,
as the case may be, caused by an act of God (or other supernatural body mutually
acceptable to the parties) (including such events as fire, earthquake and
typhoon) which has a catastrophic effect on the Company or Parent, as the case
may be, and their respective subsidiaries taken as a whole. This definition
shall have no relevance to the interpretation of any usage in this Agreement of
the term "material" other than in the two phrases defined in this Section.
Section 10.2. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy or
similar writing) and shall be given,
if to Parent or Merger Sub, to:
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
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if to the Company, to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective when delivered at the address specified
in this Section.
Section 10.3. Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement.
Section 10.4. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if, and only
if, such amendment or waiver is in writing and signed, by the party to be
charged therewith; provided, that, after the approval of the matters presented
in connection with the Merger by the stockholders of the Company, no amendment
or waiver shall be made that by law requires further stockholder approval
without such further approval.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 10.5. Successors and Assigns; Parties in Interest. The
provisions of this Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns, provided that no
party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other parties hereto
except that Merger Sub may transfer or assign, in whole or from time to time in
part, to one or more of Parent or any of its wholly-owned subsidiaries, any or
all of its rights or obligations, but any such transfer or assignment will
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not relieve Merger Sub of its obligations under this Agreement. Except as set
forth herein, nothing in this Agreement, express or implied, is intended to or
shall confer upon any person not a party hereto any right, benefit or remedy of
any nature whatsoever under or by reason of this Agreement, including to confer
third party beneficiary rights.
Section 10.6. Governing Law; Submission to Jurisdiction. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware without regard to its conflicts of laws principles thereof
that would call for the application of the laws of any jurisdiction. Each party
hereto hereby (a) irrevocably and unconditionally submits in any legal action or
proceeding relating to this Agreement, or for recognition and enforcement of any
judgment in respect thereof, to the general jurisdiction of the state and
federal courts in the State of Delaware, and appellate courts thereof and (b)
consents that any action or proceeding may be brought in such courts and waives
any objection that it may now or hereafter have to the venue of any such action
or proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same.
Section 10.7. Specific Performance. THE PARTIES AGREE THAT
IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS
AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE
OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED
TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO
ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS OF THIS AGREEMENT IN THE UNITED
STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE TO THE EXTENT SUCH COURT
WOULD HAVE SUBJECT MATTER JURISDICTION WITH RESPECT TO SUCH DISPUTE, AND THE
CHANCERY OR OTHER COURTS OF THE STATE OF DELAWARE, THIS BEING IN ADDITION TO ANY
OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.
Section 10.8. Counterparts; Effectiveness; Interpretation.
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the other
parties hereto. When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The table of contents and headings contained in
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this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
INTERNATIONAL MANUFACTURING
SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
CELESTICA INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President, Chief
Financial Officer and Secretary
CELESTICA ASIA INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President, Chief
Financial Officer
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EXHIBIT A
Major Stockholders
Prudential Private Equity Investors III, L.P.
Oak Investment Partners VI, L.P.
Oak VI Affiliates Fund, L.P.
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EXHIBIT B
FORM OF STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of November 1, 1998 (this
"AGREEMENT") among Celestica Inc., a corporation organized under the laws of the
Province of Ontario, Canada ("PARENT"), Celestica Asia Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("MERGER SUB"), and
___________________________________________________________________________ (the
"STOCKHOLDER").
RECITALS
Parent, Merger Sub and International Manufacturing Services, Inc.
(the "COMPANY") propose to enter into an Agreement and Plan of Merger dated as
of the date hereof (as the same may be amended or supplemented, the "MERGER
AGREEMENT") providing for the merger of the Company with and into Merger Sub,
upon the terms and subject to the conditions set forth in the Merger Agreement.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Merger Agreement as entered into on the date hereof.
As of the date hereof, the Stockholder is the record and
beneficial owner of _________ shares of Class A Common Stock and _________
shares of Class B Common Stock (the "EXISTING SHARES" and, together with any
shares of Class A Common Stock or Class B Common Stock acquired by the
Stockholder after the date hereof, whether upon the exercise of warrants,
options or rights, the conversion or exchange of any Existing Shares or
convertible or exchangeable securities or by means of purchase, dividend,
distribution or otherwise, the "SUBJECT SHARES").
As an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholder agree, and the Stockholder
has agreed, to enter into this Agreement.
The Stockholder and Parent desire to set forth their agreement
with respect to the voting of the Subject Shares and the election of Merger
Consideration in connection with the Merger and the Stockholder desires to grant
to Merger Sub an option to acquire the Subject Shares, in each case upon the
terms and subject to the conditions set forth herein.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Covenants of the Stockholder. Until the termination of this Agreement in
accordance with Section 7, the Stockholder agrees as follows:
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(a) Agreement to Vote. At any meeting of stockholders of the
Company called for purposes that include approval of the Merger and the Merger
Agreement, however called, or at any adjournment thereof, or in connection with
any written consent of the holders of Shares or in any other circumstances in
which the Stockholder is entitled to vote, consent or give any other approval
with respect to the Merger and the Merger Agreement, the Stockholder shall vote
(or cause to be voted) the Subject Shares in favor of adoption and approval of
the Merger Agreement and the Merger and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement and this
Agreement and any amendments hereto or, with the Stockholder's written consent,
thereto.
At any meeting of stockholders of the Company, however called, or
at any adjournment thereof, or in connection with any written consent of the
holders of Shares or in any other circumstances in which the Stockholder is
entitled to vote, consent or give any other approval, except as otherwise agreed
to in writing in advance by Parent, the Stockholder shall vote (or cause to be
voted) the Subject Shares against the following actions:
(i) any action or agreement that would result in a
breach in any material respect of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement or
of the Stockholder hereunder; or
(ii) any action or agreement that could reasonably be
expected to impede, interfere with, delay, postpone or attempt to discourage the
Merger, including, but not limited to: (A) the adoption by the Company of a
proposal regarding (1) the acquisition of the Company by merger, tender offer or
otherwise by any person other than Parent, Merger Sub or any designee thereof (a
"THIRD PARTY"), or any other merger, combination or similar transaction with any
Third Party; (2) the acquisition by a Third Party of 10% or more of the assets
of the Company and its subsidiaries, taken as a whole (whether by the
acquisition of assets or securities of, or any merger, consolidation or other
business combination involving, the Company or any of its subsidiaries); (3) the
acquisition by a Third Party of 10% or more of the outstanding Shares; or (4)
the repurchase by the Company or any of its subsidiaries of 10% or more of the
outstanding Shares; (B) any amendment of the Company's certificate of
incorporation or by-laws or other proposal or transaction involving the Company
or any of its subsidiaries, which amendment or other proposal or transaction
could in any manner reasonably be expected to impede, in any material respect,
prevent or nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement or change in any manner the
rights and privileges, including, without limitation, voting rights of any class
of the Company's capital stock; (C) any change in the management or board of
directors of the Company that could in any manner reasonably be expected to
impede, in any material respect, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger Agreement;
(D) any material change in the present capitalization or dividend policy of the
Company; or (E) any other material change in the Company's corporate
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structure or business. The Stockholder further agrees not to commit or agree to
take any action inconsistent with the foregoing agreements.
(b) Proxies. As security for the agreements of the Stockholder
provided for herein, the Stockholder hereby grants to Merger Sub a proxy to vote
the Subject Shares as indicated in Section 1(a) above. The Stockholder agrees
that this proxy shall be irrevocable during the term of this Agreement and
coupled with an interest and each of the Stockholder and Merger Sub will take
such further action or execute such other instruments as may be necessary to
effectuate the intent of this proxy and hereby revokes any proxy previously
granted by the Stockholder with respect to the Subject Shares.
(c) Transfer Restrictions. The Stockholder agrees not to (i)
sell, transfer, pledge, encumber, assign or otherwise dispose of or hypothecate
(including by gift or by contribution or distribution to any trust or similar
instrument or to any beneficiaries of the Stockholder (collectively,
"TRANSFER")), or enter into any contract, option or other arrangement or
understanding (including any profit sharing arrangement) with respect to the
Transfer of, any of the Subject Shares other than pursuant to the terms hereof
and the Merger Agreement, (ii) enter into any voting arrangement or
understanding with respect to the Subject Shares, whether by proxy, voting
agreement or otherwise, or (iii) take any action that could reasonably be
expected to make any of its representations or warranties contained herein
untrue or incorrect or could reasonably be expected to have the effect of
preventing or disabling the Stockholder from performing any of its obligations
hereunder.
(d) Stop Transfer. The Stockholder hereby authorizes and
requests the Company and its counsel to notify the Company's transfer agent that
there is a stop transfer order with respect to all of the Subject Shares (and
that this Agreement places limits on the voting of the Subject Shares). The
Stockholder agrees with, and covenants to, Parent that the Stockholder shall not
request that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of the Subject Shares,
unless such transfer is made in compliance with this Agreement. In the event of
a stock dividend or distribution, or any change in the Shares by reason of any
stock dividend or distribution, or any change in the Shares by reason of any
stock dividend, split-up, recapitalization, combination, exchange of shares or
the like, the term "Subject Shares" shall be deemed to refer to and include the
Subject Shares as well as all such stock dividends and distributions and any
shares into which or for which any or all of the Subject Shares may be changed
or exchanged and the Subject Shares Purchase Price shall be accordingly
adjusted. The Stockholder shall be entitled to receive and retain any cash
dividend paid by the Company during the term of this Agreement until the Subject
Shares are canceled in the Merger or purchased hereunder.
(e) Stock Consideration. The Stockholder agrees not to make
the Cash Election with respect to any Subject Shares, and hereby acknowledges
that the Merger Consideration to be received by the Stockholder will consist
solely of Subordinate Shares.
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(f) Appraisal Rights. The Stockholder hereby irrevocably
waives any and all rights which it may have as to appraisal, dissent or any
similar or related matter with respect to the Merger.
(g) Affiliate Agreement. Stockholder will deliver to Parent on
or prior to the Closing Date a written agreement substantially in the form of
Exhibit C to the Merger Agreement.
2. Option. (a) Grant of Option. The Stockholder hereby grants to Merger
Sub (or its designee) an irrevocable option (the "OPTION") to purchase the
Subject Shares at an exercise price of 0.40 Subordinate Shares per Subject Share
(the "EXERCISE PRICE"). In the event of any change in the Subject Shares or
Subordinate Shares by reason of stock dividends, split-ups, recapitalizations or
the like, the type and number of shares or securities subject to the Option and
the Exercise Price shall be adjusted appropriately to preserve the respective
rights of the Stockholder and Merger Sub hereunder.
(b) Exercise of Option. The Option may be exercised by Merger
Sub, as a whole and not in part, at any time during the six-month period
commencing upon the occurrence of any of the following events:
(i) the Merger Agreement shall have been terminated
or become terminable by Parent pursuant to Section 9.1(c) thereof; or
(ii) the Merger Agreement shall have been terminated
or become terminable pursuant to Section 9.1(b)(iii) if an Acquisition Proposal
was publicly announced or confirmed on or before the date of the Company
Stockholders Meeting; or
(iii) any failure by the Stockholder to perform its
obligations under Section 1 hereof.
(c) Notice of Exercise. If Merger Sub wishes to exercise the
Option, Merger Sub shall send a written notice to the Stockholder of its
intention to exercise the Option, specifying the place, and, if then known, the
time and the date (the "OPTION CLOSING DATE") of the closing (the "OPTION
CLOSING") of the purchase. The Option Closing Date shall occur on the fifth
business day (or such longer period as may be required by applicable law or
regulation, after the later of (i) the date on which such notice is delivered
and (ii) the satisfaction of the conditions set forth in Section 2(f).
(d) Closing Deliveries by Stockholder. At the Option Closing,
the Stockholder shall deliver to Merger Sub (or its designee) all of the Subject
Shares by delivery of a certificate or certificates evidencing the Subject
Shares in the denominations designated by Merger Sub in its exercise notice
delivered pursuant to Section 2(c), duly endorsed to Merger Sub or accompanied
by stock powers duly executed in favor of Merger Sub, with all necessary stock
transfer stamps affixed.
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(e) Closing Deliveries by Merger Sub. At the Option Closing,
Merger Sub shall pay, and Parent shall cause Merger Sub to pay, to the
Stockholder the aggregate Exercise Price for the Subject Shares by delivery to
the Stockholder of a certificate registered in the name of the Stockholder and
bearing the legend set forth in the following sentence, representing the number
of whole Subordinate Shares equal to (A) the number of Subject Shares purchased
pursuant to the exercise of the Option by (B) 0.40 and rounded to the nearest
whole number of Subordinate Shares. The certificate representing Subordinate
Shares issued to the Stockholder hereunder shall include a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
(f) Conditions. The Option Closing shall be subject to the
satisfaction of each of the following conditions:
(i) no court, arbitrator or governmental body, agency
or official shall have issued any order, decree or ruling that is in effect, and
there shall not be any statute, rule or regulation, which in either case
restrains, enjoins or prohibits the consummation of the purchase and sale of the
Subject Shares pursuant to the exercise of the Option; (ii) any waiting period
applicable to the consummation of the purchase and sale of the Subject Shares
pursuant to the exercise of the Option under the HSR Act shall have expired or
been terminated; and
(iii) all actions by or in respect of, and any filing
with, any governmental body, agency, official, or authority required to permit
the consummation of the purchase and sale of the Subject Shares pursuant to the
exercise of the Option shall have been obtained or made and shall be in full
force and effect.
3. Representations and Warranties of the Stockholder. The Stockholder hereby
represents and warrants to Parent and Merger Sub as of the date hereof as
follows:
(a) Organization. The Stockholder is a __________________,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
(b) Authorization; Validity of Agreement; Necessary Action.
The Stockholder has full partnership power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance by it
of this Agreement and the consummation by it of the transactions contemplated
hereby have been duly and validly authorized by the Stockholder and no other
partnership action or proceedings on
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the part of the Stockholder are necessary to authorize the execution and
delivery by it of this Agreement and the consummation by it of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Stockholder, and, assuming this Agreement constitutes a valid and binding
obligation of Parent and Merger Sub, constitutes a valid and binding obligation
of the Stockholder, enforceable against it in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law), an implied covenant of good faith and fair dealing and
considerations of public policy.
(c) Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the HSR Act and any applicable state takeover
laws, neither the execution, delivery or performance of this Agreement by the
Stockholder nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the provisions hereof will (i) conflict with or
result in any breach of any provision of its certificate of incorporation or
by-laws, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity (except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings would not
materially impair the ability of the Stockholder to consummate the transactions
contemplated hereby), (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, lease, license, contract, agreement
or other instrument or obligation to which the Stockholder is a party or by
which it or any of its properties or assets may be bound or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to it or
any of its properties or assets, except in the case of clauses (iii) and (iv)
for violations, breaches or defaults, or rights of termination, amendment,
cancellation or acceleration, which would not materially impair the ability of
the Stockholder to consummate the transactions contemplated hereby.
(d) Shares. The Existing Shares are, and the Subject Shares on
the Option Closing Date will be, owned beneficially and of record by the
Stockholder. The Existing Shares constitute all of the Shares owned of record or
beneficially by the Stockholder. All of the Existing Shares are issued and
outstanding and the Stockholder does not own, of record or beneficially, any
warrants, options or other rights to acquire any Shares (except that (x) a
portion of the Existing Shares that are Class A Shares are convertible into
Class B Shares and (y) the Existing Shares that are Class B Shares are
convertible into Class A Shares under certain circumstances). The Stockholder
has sole voting power, sole power of disposition, sole power to issue
instructions with respect to the matters set forth in Sections 1 and 2 hereof,
sole power of conversion, sole power to demand appraisal rights and sole power
to agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Existing Shares and will have sole voting power, sole
power of disposition, sole power to issue instructions with respect to the
matters set forth in Sections 1 and 2 hereof, sole power of conversion, sole
power to
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demand appraisal rights and sole power to agree to all of the matters set forth
in this Agreement, with respect to all of the Subject Shares on the Option
Closing Date, with no limitations, qualifications or restrictions on such
rights, subject to applicable federal securities laws and the terms of this
Agreement. The Stockholder has good and valid title to the Existing Shares and
at all times during the term hereof and on the Option Closing Date will have
good and valid title to the Subject Shares, free and clear of all Liens and free
of any other limitation or restriction, and, upon delivery thereof to Merger Sub
against delivery of the consideration therefor pursuant to this Agreement, good
and valid title thereto, free and clear of all Liens and free of any other
limitation or restriction (other than any arising as a result of actions taken
or omitted by Parent or Merger Sub or any arising under this Agreement), will
pass to Merger Sub.
(e) Subordinate Shares. Any Subordinate Shares acquired by the
Stockholder in the Merger or upon Parent's exercise of the Option will be
acquired for the Stockholder's own account, and will not be acquired by the
Stockholder with a view to the distribution thereof in violation of any
applicable provision of the Securities Act. The Stockholder has received copies
of all reports filed by Parent pursuant to Section 12, 13 or 14 of the Exchange
Act in the preceding twelve months and had an opportunity to ask questions
concerning the Subordinate Shares that may be acquired by the Stockholder in the
Merger or upon Parent's exercise of the Option and concerning the business and
financial affairs of Parent and to receive answers concerning the same, from
representatives of Parent. The Stockholder has such knowledge and experience in
business and financial matters as to be capable of utilizing the information
which is available to it to evaluate the merits and risks of an investment by
the Stockholder in the Subordinate Shares and the Stockholder is able to bear
the economic risks of any investment in the Subordinate Shares which the
Stockholder may acquire in the Merger or upon Parent's exercise of the Option.
(f) No Finder's Fees. Except as disclosed in the Merger
Agreement, no broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Stockholder.
4. Representations and Warranties of Parent and Merger Sub. Parent and Merger
Sub, jointly and severally, hereby represent and warrant to the Stockholder as
of the date hereof as follows:
(a) Organization. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation.
(b) Corporate Authorization; Validity of Agreement; Necessary
Action. Each of Parent and Merger Sub has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
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The execution, delivery and performance by Parent of this Agreement and the
consummation by Parent of the transactions contemplated hereby have been duly
and validly authorized by its Board of Directors and the execution, delivery and
performance by Merger Sub of this Agreement and the consummation by Merger Sub
of the transactions contemplated hereby have been duly and validly authorized by
its Board of Directors, and no other corporate action or proceedings on the part
of Parent or Merger Sub are necessary to authorize the execution and delivery by
Parent or Merger Sub of this Agreement, and the consummation by Parent or Merger
Sub of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and Merger Sub, and, assuming this Agreement
constitutes a valid and binding obligation of the Stockholder, constitutes valid
and binding obligations of Parent and Merger Sub, enforceable against them in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law), an implied
covenant of good faith and fair dealing and considerations of public policy.
(c) Subordinate Voting Shares. All Subordinate Shares that may
be issued to the Stockholder hereunder will, when issued, be duly authorized,
validly issued, fully paid and nonassessable.
(d) Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the HSR Act and any applicable state takeover
laws, neither the execution, delivery or performance of this Agreement by Parent
or Merger Sub nor the consummation by Parent or Merger Sub of the transactions
contemplated hereby nor compliance by Parent or Merger Sub with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws of Parent or Merger
Sub, (ii) require any filing with, or permit, authorization, consent or approval
of, any Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not
materially impair the ability of Parent and Merger Sub to consummate the
transactions contemplated hereby), (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, guarantee, other evidence of indebtedness, lease, license, contract,
agreement or other instrument or obligation to which Parent or Merger Sub is a
party or by which it or any of its properties or assets may be bound or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its subsidiaries or any of their properties or
assets, except in the case of clauses (iii) and (iv) for violations, breaches or
defaults, or rights of termination, amendment, cancellation or acceleration,
which would not materially impair the ability of Parent and Merger Sub to
consummate the transactions contemplated hereby.
5. Further Assurances. From time to time prior to the Option Closing, at any
other
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party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement.
6. Further Agreements of Parent and Merger Sub.
(a) Follow-Up Offer. Parent and Merger Sub hereby agree that,
in the event that Merger Sub purchases the Subject Shares pursuant to the
Option, as promptly as practicable thereafter, Merger Sub will, and Parent will
cause Merger Sub to, make a tender and exchange offer for the remaining Shares
to the stockholders of the Company pursuant to which the stockholders of the
Company (other than the Company, any direct or indirect subsidiary of the
Company or Parent or Merger Sub) would be entitled to receive either, at the
election of each such stockholder, (x) not less than $7.00 per Share in cash or
(y) not less than 0.40 Subordinate Shares per Share.
(b) Participation in Transaction. If, after purchasing Subject
Shares pursuant to the exercise of the Option, Merger Sub or any of its
affiliates effects a Merger Sub Business Combination (as defined below) during
the period commencing on the Option Closing Date and ending 18 months
thereafter, Merger Sub shall promptly pay over to the Stockholder, as additional
purchase price for the Subject Shares, the Excess Price, if any, for each
Subject Share so purchased. The term "Merger Sub Business Combination" means the
consummation of the first to occur of any of the following transactions: (A) a
tender offer or exchange offer by Merger Sub or any of its affiliates for the
outstanding Shares, including an offer pursuant to Section 6(a) hereof, (B) a
merger or consolidation between the Company and Merger Sub or any of its
affiliates or (C) the acquisition by Merger Sub or any of its affiliates of all
or substantially all of the assets of the Company and its subsidiaries. The term
"Excess Price" shall mean (A) if stockholders of the Company (other than Merger
Sub and any of its affiliates) receive only Subordinate Shares for their Shares
pursuant to the terms of the Merger Sub Business Combination, the excess, if
any, of the number of Subordinate Shares so received for each Share over 0.40 or
(B) if stockholders of the Company receive consideration other than, or in
addition to, Subordinate Shares for their Shares pursuant to the terms of the
Merger Sub Business Combination (other than by reason of a right to elect
between receiving only Subordinate Shares or such other consideration), the
excess of the per Share consideration so paid over the greatest of (i) $7.00,
(ii) the product of 0.40 and the closing price of Subordinate Shares on the New
York Stock Exchange on the Option Closing Date (or if the Option Closing Date is
not a trading day on the New York Stock Exchange, the last such trading day
before the Option Closing Date) or (iii) the product of 0.40 and the closing
price of a Subordinate Share on the New York Stock Exchange on the date of
consummation of the Merger Sub Business Combination (or if such date is not a
trading day on the New York Stock Exchange, the last such trading day before
such date of consummation) or (C) if stockholders of the Company are entitled to
elect to receive either consideration described in clause (A) or consideration
described in clause (B), the greater of the amount determined pursuant to clause
(A) (determined as if only the consideration described in
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clause (A) were available) and the amount determined pursuant to clause (B)
(determined as if only the consideration described in clause (B) were
available). If the consideration received by stockholders of the Company in the
Merger Sub Business Combination consists of securities listed on a national
securities exchange or traded on the Nasdaq National Market, the per share value
of such consideration shall be equal to the closing price per share of such
securities listed on such national securities exchange or the Nasdaq National
Market on the date such transaction is consummated, and (ii) if the
consideration received by stockholders of the Company in the Merger Sub Business
Combination shall be in a form other than such listed or traded securities, the
per share value shall be determined in good faith as of the date such
transaction is consummated by Merger Sub and the Stockholder, or, if Merger Sub
and the Stockholder cannot reach agreement, by a nationally recognized
investment banking firm reasonably acceptable to the parties.
(c) Maxtor Corporation. If at any time Merger Sub or any of
its affiliates purchases shares from Maxtor Corporation or its affiliates other
than the Company and its subsidiaries (collectively, "MAXTOR") at a price or
value per Share in excess of the product of 0.40 and the closing price per
Subordinate Share on the New York Stock Exchange on the date an agreement is
entered into with Maxtor providing for such purchase or, if such date is not a
trading day on the New York Stock Exchange, on the last such trading day
preceding such date) during the period commencing on the date hereof and ending
18 months thereafter, Merger Sub shall promptly pay over to the Stockholder, as
additional purchase price for the Subject Shares, the amount of such excess, if
any, in cash for each Subject Share purchased. If additional purchase price
shall at any time be payable under this Section 5(c) and under Section 5(b)
shall be determined without duplication so that the aggregate additional
purchase price so payable is equal to the greater of the amounts determined
under this Section 5(c) and under Section 5(b), not the sum of those amounts.
(d) Resale of Subject Shares. Subject to the penultimate
sentence of this Section 5(d), if, after purchasing Subject Shares pursuant to
the exercise of the Option, Merger Sub or any of its affiliates has not effected
a Merger Sub Business Contribution and has not otherwise acquired the remaining
Shares, Merger Sub or any of its affiliates receives any cash or non-cash
consideration in respect of such Subject Shares pursuant to a Third Party
Business Combination (as defined below) during the period commencing on the date
of the Option Closing and ending 18 months thereafter, Merger Sub shall promptly
pay over to the Stockholder in cash, as additional purchase price for the
Subject Shares (x) the excess, if any, of such consideration over the aggregate
purchase price (determined on the basis of the closing price per Subordinate
Share on the New York Stock Exchange on the Option Closing Date or, if the
Option Closing Date is not a trading day on the New York Stock Exchange, on the
last such trading day preceding the Option Closing Date) paid for the Subject
Shares which are sold by Merger Sub hereunder less (y) the sum of (i) the amount
of taxes payable or to be payable by Merger Sub (as estimated by Merger Sub in
good faith) in connection with such Third Party Business Combination, and (ii)
the amount of expenses of Merger Sub and its affiliates in connection
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herewith and the Merger Agreement and in connection with such Third Party
Business Combination to the extent exceeding the "break-up fee", if any, payable
to Parent under the Merger Agreement; provided that, (i) if the consideration
received by Merger Sub or such affiliates consists of securities listed on a
national securities exchange or traded on the Nasdaq National Market, the per
share value of such consideration shall be equal to the closing price per share
of such securities listed on such national securities exchange or the Nasdaq
National Market on the date such transaction is consummated, and (ii) if the
consideration received by Merger Sub or such affiliates shall be in a form other
than such listed or traded securities, the per share value shall be determined
in good faith as of the date such transaction is consummated by Merger Sub and
the Stockholder, or, if Merger Sub and the Stockholder cannot reach agreement,
by a nationally recognized investment banking firm reasonably acceptable to the
parties. The term "Third Party Business Combination" means the occurrence of any
of the following events: (A) the Company, or more than 75% of the outstanding
shares of the Company's capital stock, is acquired by merger or otherwise by any
Third Party; or (B) a Third Party acquires all or substantially all of the
assets of the Company and its subsidiaries, taken as a whole; provided, however,
that in no event will any transaction in which shares of the Company's capital
stock or any of its assets are sold or transferred directly or indirectly in
connection with or as a part of a sale or other transaction involving a sale,
merger or other similar transaction of Parent or any of its material assets or
business constitute a Third Party Business Combination, and in no event will a
sale of any division, line of business or similar unit of the Company and its
subsidiaries constitute a Third Party Business Combination. The term "Third
Party" means any person or entity other than Merger Sub or any of its
affiliates.
7. Termination. Except as set forth in Section 2, this Agreement shall
terminate, and no party shall have any rights or obligations hereunder and this
Agreement shall become null and void and have no further effect upon the
earliest to occur of (a) the Effective Time, (b) six months following the
termination of the Merger Agreement pursuant to Section 9.1(b) or 9.1(c) thereof
or (c) termination of the Merger Agreement pursuant to Section 9.1(a) thereof.
Notwithstanding the foregoing, in the event the Option shall have been exercised
in accordance with Section 2, but the Option Closing shall not have occurred,
this Agreement shall not terminate. Nothing in this Section 7 shall relieve any
party of liability for breach of this Agreement.
8. General Provisions.
(a) Costs and Expenses. All costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses, subject
to Section 6(b) hereof.
(b) Amendment. This Agreement may not be amended except by an
instrument in writing signed by the party to be charged therewith.
(c) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is
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confirmed) or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(i) if to Parent or Merger Sub, to:
Celestica Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Stockholder, to:
with a copy to:
(d) Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this
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Agreement they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof," and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to November 1, 1998.
(e) Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
(f) Entire Agreement; No Third Party Beneficiaries. This
Agreement constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof, and is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
(g) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby may be consummated as
originally contemplated to the fullest extent possible.
(h) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
(i) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder, except as specifically provided herein with
respect to Merger Sub's rights under the Option, shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Parent and Merger Sub may
assign, in Parent's sole discretion, any or all of their respective rights,
interests and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent; provided, however, that no such assignment shall relieve
Parent from any of its obligations hereunder. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors (including the Company as
successor to Merger Sub pursuant to the Merger), heirs, agents, representatives,
trust beneficiaries, attorneys, affiliates and associates and all of their
respective predecessors, successors, permitted assigns, heirs, executors and
administrators.
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(j) Enforcement; Consent to Jurisdiction; Waiver of Jury
Trial.
i. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the United States District Court
for the District of Delaware to the extent such court would have subject matter
jurisdiction with respect to such dispute, and the Chancery or other Courts of
the State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto:
(A) consents to submit itself to the personal
jurisdiction of (x) the United States District Court for the District of
Delaware in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement to the extent such court would have
subject matter jurisdiction with respect to such dispute and (y) the Chancery or
other Courts of the State of Delaware otherwise;
(B) agrees that it will not attempt to deny or defeat
such personal jurisdiction or venue by motion or other request for leave from
any such court;
(C) agrees that it will not bring any action relating
to this Agreement or any of the transactions contemplated by this Agreement in
any court other than such courts;
(D) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
a party at its address set forth in Section 7(c) or at such other address of
which a party shall have been notified pursuant thereto; and
(E) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by law or shall limit
the right to ▇▇▇ in any other jurisdiction.
(ii) EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING IN
RELATION TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(iii) All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
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9. Registration Rights. At the request of the Stockholder at any time after the
earlier of the Effective Time or the Option Closing Date, Parent and Merger Sub
will enter into a Registration Rights Agreement with the Stockholder in the form
of Exhibit A.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Stockholder have
caused this Agreement to be signed by their respective officers or other
authorized person thereunto duly authorized as of the date first written above.
Celestica Inc.
By:________________________________________
Name:
Title:
Celestica Asia Inc.
By:________________________________________
Name:
Title:
[Stockholder]
By:________________________________________
Name:
Title:
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77
EXHIBIT C
FORM OF COMPANY AFFILIATE LETTER
Gentlemen:
The undersigned, a holder of shares of Class A Common Stock, par value
$0.001 per share ("CLASS A SHARES"), of International Manufacturing Services,
Inc., a Delaware corporation (the "COMPANY"), is entitled to receive in
connection with the merger (the "MERGER") of the Company with Celestica Asia
Inc., a Delaware corporation ("MERGER SUB"), Subordinate Voting Shares (the
"SUBORDINATE SHARES") of Celestica Inc., a corporation organized under the laws
of the Province of Ontario, Canada (the "PARENT"). The undersigned acknowledges
that the undersigned may be deemed an "affiliate" of the Company within the
meaning of Rule 145 ("RULE 145") promulgated under the Securities Act of 1933,
as amended (the "ACT"), although nothing contained here should be construed as
an admission of such fact.
If the undersigned were an affiliate under the Act, the undersigned's
ability to sell, assign or transfer the Subordinate Shares received by the
undersigned in exchange for any Class A Shares pursuant to the Merger may be
restricted unless such transaction is registered under the Act or an exemption
from such registration is available. The undersigned understands that such
exemptions are limited and the undersigned has obtained advice of counsel as to
the nature and conditions of such exemptions including information with respect
to the applicability to the sale of such securities pursuant to Rules 144 and
145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with the Company,
Merger Sub and Parent that the undersigned will not sell, assign or transfer any
of the Subordinate Shares received by the undersigned in exchange for Class A
Shares pursuant to the merger except (i) pursuant to an effective registration
statement under the Act or (ii) in conformity with the volume and other
limitations of Rule 145, or (iii) in a transaction which, in the opinion of the
general counsel of Parent or other independent counsel reasonably satisfactory
to Parent (it being expressly agreed that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
P.C., ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP shall each be
considered reasonably satisfactory for all purposes under this letter) or as
described in a "no-action" or interpretative letter from Staff of the Securities
and Exchange Commission (the "SEC"), is not required to be registered under the
Act.
In the event of a sale or other disposition by the undersigned of
Subordinate Shares pursuant to Rule 145, the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I hereto. The undersigned understands that Parent may instruct its
transfer agent not to effect the transfer of any Subordinate Shares disposed of
by the undersigned, but that upon receipt of such evidence of compliance Parent
shall cause the transfer agent to effectuate the transfer of the Subordinate
Shares sold as indicated in such letter.
78
The undersigned acknowledges and agrees that the following appropriate
legend will be placed on certificates representing Subordinate Shares received
by the undersigned in the merger or held by a transferee thereof, which legends
will be removed by delivery of substitute certificates upon receipt of an
opinion in form and substance reasonably satisfactory to Parent from independent
counsel reasonably satisfactory to Parent to the effect that such legends are no
longer required for purposes of the Act:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE REOFFERED OR SOLD
ONLY IF REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR IF AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of Subordinate Shares
and (ii) the receipt by Parent of this letter is an inducement and a condition
to Parent's obligations to consummate the Merger.
Dated:
Very truly yours,
79
ANNEX I
TO EXHIBIT C
[NAME] [DATE]
On ______________ the undersigned sold the Subordinate Voting Shares of
____________ ("PARENT") described below in the space provided for that purpose
(the "SUBORDINATE SHARES'). The Subordinate Shares were received by the
undersigned in connection with the merger of International Manufacturing
Services, Inc. with and into Celestica Asia Inc., a subsidiary of Parent.
Based upon the most recent report or statement filed by parent with the
Securities and Exchange Commission, the Subordinate Shares sold by the
undersigned were within the prescribed limitations set forth in paragraph (e) of
Rule 144 promulgated under the Securities Act of 1933, as amended (the "ACT").
The undersigned hereby represents that the Subordinate Shares were sold
in "brokers' transactions" within the meaning of Section 4(4) of the Act or in
transactions directly with a "market maker" as that term is defined in Section
3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned
further represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the Subordinate Shares, and that the undersigned
has not made any payment in connection with the offer or sale of the Subordinate
Shares to any person other than to the broker who executed the order in respect
of such sale.
Very truly yours,
[Space to be provided for description of securities]
80
INDEX OF DEFINED TERMS
POSITION OF
DEFINED TERM DEFINED TERM
Acquisition Proposal..................................................... Section 5.7
Agreement................................................................ Preamble
Assumed Purchase Right................................................... Section 2.6
Benefit Plans............................................................ Section 3.11
BT Alex. ▇▇▇▇▇........................................................... Section 3.23
Canadian Documents....................................................... Section 3.5
Cash Consideration....................................................... Section 2.1
Cash Electing Shares..................................................... Section 2.1
Cash Electing Stockholder................................................ Section 2.5
Cash Election............................................................ Section 2.4
Cash Election Price...................................................... Section 2.1
Cash Limitation.......................................................... Section 2.5
Certificate of Merger.................................................... Section 1.2
Class A Shares........................................................... Recitals
Class B Shares........................................................... Recitals
Closing.................................................................. Section 1.2
Closing Date............................................................. Section 1.2
Code..................................................................... Recitals
Company.................................................................. Preamble
Company Acquisition...................................................... Section 9.3
Company Disclosure Letter................................................ Section 3
Company Stock Options.................................................... Section 2.6
Company Stockholder Approval............................................. Section 3.4
Company Stockholders Meeting............................................. Section 5.2
Confidentiality Agreement................................................ Section 5.9
Consents................................................................. Section 3.4
Controlled Group Liability............................................... Section 3.12
DGCL..................................................................... Recitals
Dissenting Shares........................................................ Section 2.2
Dissenting Stockholder................................................... Section 2.2
Effective Time........................................................... Section 1.3
Election Date............................................................ Section 2.4
Environmental Claims..................................................... Section 3.20
Environmental Conditions................................................. Section 3.20
Environmental Laws....................................................... Section 3.20
Environmental Reports.................................................... Section 3.20
ERISA.................................................................... Section 3.12
ERISA Affiliate.......................................................... Section 3.12
Exchange Act............................................................. Section 2.6
Exchange Agent........................................................... Section 2.4
Exchange Fund............................................................ Section 2.7
Form F-4................................................................. Section 3.6
Form of Election......................................................... Section 2.4
GAAP..................................................................... Section 3.5
Governmental Entity...................................................... Section 3.4
Hazardous Substances..................................................... Section 3.20
HSR Act.................................................................. Section 3.4
indebtedness............................................................. Section 3.14
Indemnified Party........................................................ Section 6.7
Intellectual Property.................................................... Section 3.18
Liens.................................................................... Section 3.2
Major Stockholders....................................................... Recitals
Material Adverse Change.................................................. Section 10.1
Material Adverse Effect.................................................. Section 10.1
material agreement....................................................... Section 3.17
Merger................................................................... Recitals
Merger Consideration..................................................... Section 2.1
Merger Sub............................................................... Preamble
Multiemployer Plan....................................................... Section 3.12
Multiple Employer Plan................................................... Section 3.12
Option Plans............................................................. Section 2.6
Parent................................................................... Preamble
Parent Plans............................................................. Section 4.7
Parent SEC Documents..................................................... Section 4.3
Person................................................................... Section 3.14
Plans.................................................................... Section 3.12
Preferred Shares......................................................... Section 3.3
Properties............................................................... Section 3.20
Proxy Statement.......................................................... Section 3.4
Qualified Plans.......................................................... Section 3.12
Redelivering Party....................................................... Section 9.2
Restraints............................................................... Section 8.1
SEC...................................................................... Section 3.4
SEC Documents............................................................ Section 3.5
Securities Act........................................................... Section 3.5
Shares................................................................... Recitals
Stock Consideration...................................................... Section 2.1
Stock Plans.............................................................. Section 2.6
Subordinate Shares....................................................... Section 2.1
Subordinate Shares Ratio................................................. Section 2.1
subsidiary............................................................... Section 3.1
Superior Proposal........................................................ Section 5.7
Surviving Corporation.................................................... Section 1.1
Systems.................................................................. Section 3.22
taxes.................................................................... Section 3.13
Termination Fee.......................................................... Section 9.3
Total Cash Consideration................................................. Section 2.5
Total Stock Consideration................................................ Section 2.5
Voting Agreement......................................................... Recitals
Year 2000 compliant...................................................... Section 3.22