STOCK PURCHASE AGREEMENT
by and among
SOLECTRON CORPORATION,
SOLECTRON CANADA ULC,
and
C-MAC INDUSTRIES, INC.,
as Sellers;
and
DY 4 SYSTEMS, INC.,
DY 4 (US), INC.
and
CURTISS-WRIGHT CONTROLS, INC.,
as Purchaser
Dated as of December 2, 2003
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS............................................................................2
Section 1.1. Certain Defined Terms........................................................2
Section 1.2. Other Interpretive Provisions...............................................10
ARTICLE II PURCHASE AND SALE....................................................................11
Section 2.1. Purchase and Sale of the Shares.............................................11
Section 2.2. Purchase Price..............................................................11
Section 2.3. Closing.....................................................................13
Section 2.4. Closing Deliveries of Sellers...............................................13
Section 2.5. Closing Deliveries of Dy 4 Systems and Dy 4 (US)............................13
Section 2.6. Closing Deliveries of Purchaser.............................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS...........................................14
Section 3.1. Authority...................................................................14
Section 3.2. No Conflict.................................................................14
Section 3.3. Governmental Consents and Approvals.........................................14
Section 3.4. Ownership of Shares.........................................................14
ARTICLE IV ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLERS, DY 4 SYSTEMS AND DY 4 (US).....15
Section 4.1. Organization and Qualification..............................................15
Section 4.2. Capitalization..............................................................15
Section 4.3. Subsidiaries................................................................15
Section 4.4. Authority...................................................................16
Section 4.5. No Conflict.................................................................16
Section 4.6. Financial Statements........................................................16
Section 4.7. No Undisclosed Liabilities..................................................16
Section 4.8. Receivables.................................................................17
Section 4.9. Inventories.................................................................17
Section 4.10. Conduct in the Ordinary Course; Absence of Material Adverse Effect..........17
Section 4.11. Litigation..................................................................17
Section 4.12. Compliance with Laws........................................................17
Section 4.13. Permits.....................................................................17
Section 4.14. Environmental Matters.......................................................18
Section 4.15. Material Contracts..........................................................20
Section 4.16. Intellectual Property.......................................................21
Section 4.17. Real Property...............................................................22
Section 4.18. Assets......................................................................22
Section 4.19. Employee Matters and Benefit Plans..........................................22
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(Continued)
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Section 4.20. Taxes.......................................................................24
Section 4.21. Brokers.....................................................................25
Section 4.22. Books and Records...........................................................25
Section 4.23. Certain Payments............................................................25
Section 4.24. Relationships With Related Persons..........................................25
Section 4.25. Labor Relations; Compliance.................................................26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................27
Section 5.1. Organization and Authority..................................................27
Section 5.2. No Conflict.................................................................27
Section 5.3. Governmental Consents and Approvals.........................................27
Section 5.4. Private Placement...........................................................28
Section 5.5. Investigation...............................................................28
Section 5.6. Financing...................................................................29
Section 5.7. Litigation..................................................................29
Section 5.8. Brokers.....................................................................29
ARTICLE VI ADDITIONAL AGREEMENTS................................................................29
Section 6.1. Conduct of Business by Dy 4 Entities........................................29
Section 6.2. Access to Information.......................................................31
Section 6.3. Confidentiality.............................................................31
Section 6.4. Nonsolicitation.............................................................31
Section 6.5. Regulatory Authorizations...................................................32
Section 6.6. Third Party Consents........................................................32
Section 6.7. Conveyance Taxes............................................................32
Section 6.8. Further Action..............................................................32
Section 6.9. Director and Officer Liability and Indemnification..........................33
Section 6.10. Contact with Customers and Suppliers........................................33
Section 6.11. Employees...................................................................33
Section 6.12. Use of Solectron's Name.....................................................35
Section 6.13. No Shop.....................................................................36
Section 6.14. Certain Subsidiaries........................................................36
Section 6.15. Transition Services.........................................................36
Section 6.16. Satisfaction and Release of Certain Indebtedness............................36
ARTICLE VII TAX MATTERS.........................................................................37
Section 7.1. Liability for Taxes.........................................................37
Section 7.2. Tax Return Filing...........................................................38
Section 7.3. Tax Contests; Audit Responsibilities........................................38
Section 7.4. Cooperation.................................................................39
Section 7.5. 338(h)(10) Election; Purchase Price Allocation..............................39
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TABLE OF CONTENTS
(Continued)
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ARTICLE VIII CONDITIONS TO CLOSING..............................................................40
Section 8.1. Conditions to Obligations of Sellers and Purchaser..........................40
Section 8.2. Additional Condition to Obligations of Sellers..............................40
Section 8.3. Additional Conditions to Obligations of Purchaser...........................41
ARTICLE IX TERMINATION AND WAIVER...............................................................42
Section 9.1. Termination.................................................................42
Section 9.2. Effect of Termination.......................................................43
Section 9.3. Waiver......................................................................43
ARTICLE X INDEMNIFICATION.......................................................................44
Section 10.1. Survival of Representations and Warranties..................................44
Section 10.2. Indemnification.............................................................44
Section 10.3. Proceedings Involving Governmental Authorities or Third Parties.............45
Section 10.4. Claims for Indemnification..................................................46
Section 10.5. Objections to Claims for Indemnification....................................46
Section 10.6. Resolution by the Parties...................................................46
Section 10.7. Arbitration.................................................................46
Section 10.8. Treatment of Indemnification Claims.........................................47
Section 10.9. Threshold for Indemnification Claims........................................47
Section 10.10. Limitation on Indemnification...............................................47
Section 10.11. Exclusive Remedy............................................................47
Section 10.12. No Set-Off..................................................................48
ARTICLE XI MISCELLANEOUS........................................................................48
Section 11.1. Expenses....................................................................48
Section 11.2. Notices.....................................................................48
Section 11.3. Public Announcements........................................................49
Section 11.4. Severability................................................................49
Section 11.5. Entire Agreement............................................................50
Section 11.6. Assignment..................................................................50
Section 11.7. No Third Party Beneficiaries................................................50
Section 11.8. Amendment...................................................................50
Section 11.9. Governing Law...............................................................50
Section 11.10. Waiver of Jury Trial........................................................50
Section 11.11. Counterparts and Facsimile Signature........................................51
Section 11.12. Specific Performance........................................................51
Section 11.13. Guarantee...................................................................51
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TABLE OF CONTENTS
(Continued)
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Schedules and Exhibits
Schedule I Seller Share Ownership Table
Exhibit A Transition Services Agreement
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 2, 2003 (as amended,
restated, supplemented or otherwise modified from time to time, this
"Agreement"), by and among Solectron Corporation, a Delaware corporation
("Solectron"), Solectron Canada ULC, an unlimited liability company organized
under the laws of Nova Scotia and a wholly-owned subsidiary of Solectron ("SC"),
and C-MAC Industries, Inc., a corporation organized under the laws of Canada and
wholly-owned subsidiary of Solectron ("C-MAC", together with Solectron and SC,
collectively, the "Sellers" and each, a "Seller"), as Sellers, Dy 4 Systems,
Inc., a corporation organized under the laws of Ontario and a wholly-owned
subsidiary of C-MAC ("Dy 4 Systems"), Dy 4 (US) Inc., a Delaware corporation and
indirect wholly-owned subsidiary of Solectron ("Dy 4 (US)"), and Curtiss-Wright
Controls, Inc., a corporation organized and existing under the laws of the State
of Delaware ("Purchaser"), as purchaser.
W I T N E S S E T H:
WHEREAS, as of the date hereof, C-MAC owns all of the issued and
outstanding shares of common stock, no par value per share, of Dy 4 Systems (the
"Dy 4 Systems Shares"), and Solectron owns all of the issued and outstanding
shares of common stock, $0.001 par value per share, of Dy 4 (US) and SC owns all
of the issued and outstanding shares of preferred stock, $0.001 par value per
share, of Dy 4 (US) (the "Dy 4 (US) Shares", and together with the Dy 4 Systems
Shares, collectively the "Shares")).
WHEREAS, Dy 4 Systems owns all of the issued and outstanding capital stock
of each of its direct subsidiaries (Dy 4 Systems International Ltd., a
corporation organized under the laws of Barbados, Dy 4 Systems UK Ltd, a
corporation organized under the laws of the United Kingdom, and Dy 4 Systems
Australia Pty Limited, a corporation organized under the laws of Australia), and
Dy 4 (US) owns all of the issued and outstanding capital stock of each of its
direct subsidiaries (Dy 4 Systems, Ltd., a California corporation and Dy 4
(Virginia), Inc., a Virginia corporation).
WHEREAS, as a material inducement for Sellers to sell the Shares, and for
Purchaser to purchase the Shares, Purchaser and Solectron are simultaneously
herewith entering into a Transition Services Agreement dated as of the date
hereof, in the form attached hereto as Exhibit A (the "Transition Services
Agreement"), which shall become effective as of the Closing.
WHEREAS, Sellers wish to sell to Purchaser, and Purchaser wishes to
purchase from Sellers, the Shares, upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
agreements, covenants, representations and warranties hereinafter set forth and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain Defined Terms. Unless the context otherwise requires,
the following terms, when used in this Agreement, shall have the respective
meanings specified below:
"Accountants" shall have the meaning ascribed thereto in Section 2.2(c).
"Action" shall mean any claim, action, charge, complaint, suit (whether
civil, criminal, administrative), arbitration, grievance, inquiry, proceeding or
formal or informal investigation by or before any Governmental Authority or duly
appointed arbitration authority.
"Adjustment Amount" shall have the meaning ascribed thereto in Section
2.2(b).
"Adjustment Amount Schedule" shall have the meaning ascribed thereto in
Section 2.2(c).
"Advance Payments" shall mean payments received by any Dy 4 Entity or any
affiliate of a Dy 4 Entity in respect of any Advance Payments Contract for
future performance under such Contract.
"Advance Payments Adjustment Amounts" shall have the meaning ascribed
thereto in Section 2.2(b).
"Advance Payments Contracts" shall mean all contracts or agreements,
written or oral, to which any Dy 4 Entity is bound pursuant to which a Dy 4
Entity or its affiliate (i) has received an Advance Payment that has not been
actually used or returned as of the date hereof or (ii) is entitled to receive
an Advance Payment after the date hereof.
"Advance Payments Schedule" shall have the meaning ascribed thereto in
Section 2.2(b).
"affiliate" shall mean, with respect to any specified Person, any other
Person, that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Affiliated Group" shall mean a group of corporations (consisting of
Solectron and/or any of its Subsidiaries) with which any Dy 4 Entity has filed
consolidated, combined, unitary or similar Tax Returns.
"Agreement" shall have the meaning specified in the preamble to this
Agreement.
"Assets" shall have the meaning specified in Section 4.18.
"Bonus Schedule" shall have the meaning ascribed thereto in Section 2.2(b).
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"Business" shall mean the businesses engaged in by the Dy 4 Entities as
conducted on the date hereof.
"business day" shall mean any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by Law to be closed in New York
City.
"Canadian EPA" shall mean the Canadian Environmental Protection Act, 1999,
as amended from time to time, and the rules and regulations promulgated
thereunder.
"Cleanup" shall mean any corrective action, including any investigation,
feasibility study, cleanup, removal, containment or other preventative action,
or other remediation or response action required under any applicable
Environmental Law (whether or not such Cleanup has been required or requested by
any Governmental Authority or any other Person).
"Closing Date" shall have the meaning specified in Section 2.3.
"Closing" shall have the meaning specified in Section 2.3.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and as codified in Section 4980B of the Code and Section 601
et. seq. of ERISA.
"Code" shall mean the Internal Revenue Code of 1986, as amended through the
date hereof.
"Competition Act" means the Competition Act (Canada) as amended, and the
rules and regulations promulgated thereunder.
"Confidentiality Agreement" shall mean the confidentiality letter
agreement, dated as of July 29, 2003, by and between Solectron and Purchaser.
"Contemplated Transactions" shall mean all of the transactions contemplated
by this Agreement, including the sale of the Shares by the Sellers to the
Purchaser; the Purchaser's acquisition and ownership of the Shares and exercise
of control over the Dy 4 Entities; the execution, delivery and performance of
the Transition Services Agreement; and the performance by the parties hereto of
their respective covenants, agreements and obligations under this Agreement.
"Continuation Period" shall have the meaning specified in Section 6.11.
"control" (including the terms "controlled by" and "under common control
with") shall mean, with respect to the relationship between or among two or more
Persons, the possession, directly or indirectly, or as trustee, personal
representative or executor, of the power to direct or cause the direction of the
affairs or management of a Person, whether through the ownership of voting
securities, as trustee, personal representative or executor, by contract or
otherwise, including, without limitation, the ownership, directly or indirectly,
of securities having the power to elect a majority of the board of directors or
similar body governing the affairs of such Person.
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"Dy 4 Entities" or "Dy 4 Entity" shall mean Dy 4 Systems and its
Subsidiaries, and Dy 4 (US) and its Subsidiaries.
"Dy 4 Intellectual Property" shall have the meaning ascribed thereto in
Section 4.16.
"Disclosure Schedule" shall mean the Disclosure Schedule attached hereto,
dated as of the date hereof, and forming a part of this Agreement, which
Disclosure Schedule shall (i) consist of items of disclosure categorized by
sections, and (ii) provide information with respect to, or otherwise qualify,
the representations and warranties set forth in the corresponding sections of
this Agreement and any other sections of this Agreement to the extent that it is
readily apparent on the face of such disclosure that such disclosure applies to
such other sections of this Agreement.
"dollars" and the sign "$" shall each mean lawful money of the United
States of America.
"Employee Plans" shall have the meaning specified in Section 4.19.
"Encumbrance" shall mean any security interest, pledge, mortgage, lien,
charge, encumbrance, adverse claim, preferential arrangement, option, right of
first refusal, covenant or restriction of any kind, including any restriction on
use, voting, transfer, receipt of income, or exercise of any other attribute of
ownership, equitable interest, easement, tenancy or other possessory interest,
encroachment, indenture, right of way, deed of trust, lease or security
agreement, excluding non-exclusive licenses of Intellectual Property.
"Environmental Claim" shall mean any claim, Action, cause of action,
investigation or written notice, order, direction or requirement by any Person
alleging potential liability or demanding a remedy, whether civil,
administrative, criminal or quasi-criminal (including, without limitation,
potential liability for the costs of any Cleanup, governmental response costs,
natural resources damages, property damage, personal injuries, harm or injury to
public health, nuisance or fines, penalties or monetary or non-monetary
sanctions (including, without limitation, loss of any Permit)) arising out of,
based on or resulting from (i) the presence or Release of any Hazardous
Materials at any location or (ii) circumstances forming the basis of any
violation of any Environmental Law.
"Environmental, Health and Safety Liabilities" shall mean any cost, damage,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or consisting of or relating to any Environmental Claim.
"Environmental Law" shall mean any applicable Law, permit, Governmental
Order, or other governmental restriction or requirement in effect as of the
Closing Date, relating directly or indirectly to (i) the environmental aspects
of product approvals, (ii) the protection of the environment (including air,
water vapor, surface water, groundwater, drinking water supply, surface or
subsurface land); (iii) providing safe and healthful working conditions and
reducing occupational safety and health hazards, including any program designed
to provide safe and healthful working conditions, including the United States
Occupational Safety and Health Act and the Occupational Health and Safety Act
(Ontario) and (iv) the exposure to, or the use, storage, recycling, treatment,
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generation, transportation, processing, handling, labeling, recycling, Release
or disposal of Hazardous Materials, including the United States Federal Solid
Waste Disposal Act; the United States Federal Clean Air Act (including, without
limitation, the United States Clean Air Act Amendments of 1990); the United
States Federal Water Pollution Control Act; the United States Hazardous
Materials Transportation Act; the United States Federal Toxic Substances Control
Act; the United States Federal Resource Conservation and Recovery Act of 1976;
the United States National Environmental Policy Act; the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA"); the Canadian EPA; the Ontario EPA;
and all amendments thereto, and all rules and regulations promulgated by any
Governmental Authority thereunder.
"Environmental Permit" shall mean any permit, approval, identification
number, license, certificate, or other authorization of a Governmental Authority
required under any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended through the date hereof, and the rules and regulations promulgated
thereunder.
"ERISA Affiliate" shall mean any person or entity under common control with
any of the Dy 4 Entities within the meaning of Section 414(b), (c), (m) or (o)
of the Code and the regulations issued thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
through the date hereof, and the rules and regulations promulgated thereunder.
"Financial Statements" shall have the meaning specified in Section 4.6.
"Governmental Authority" shall mean any national, foreign, multinational,
federal, state, provincial, municipal, local, or other government, governmental,
regulatory or administrative authority, agency or commission or any court,
tribunal or other judicial body.
"Governmental Order" shall mean any award, decision, injunction, judgment,
order, ruling, subpoena or verdict entered issued, made or rendered by any
court, administrative agency or other Governmental Authority or by any
arbitrator.
"Hazardous Materials" shall mean (i) all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R.300.5, (ii) all radioactive
materials, asbestos and asbestos-containing materials, polychlorinated
biphenyls, petroleum products and by-products, all solid, semi-solid, liquid or
gaseous substances which are toxic, ignitable, corrosive, carcinogenic or
otherwise dangerous to human, plant or animal health, and (iii) all substances
defined or listed as "hazardous substances," "toxic substances," "hazardous
waste," "toxic pollutants" in, or otherwise regulated under any Environmental
Law, including the meanings ascribed to them in CERCLA, the Canadian EPA and the
Ontario EPA as in effect from time to time and in any rules and regulations
promulgated thereunder by any Governmental Authority.
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"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean the Owned Intellectual Property and the
Licensed Intellectual Property.
"Inventories" shall mean all inventory, merchandise, finished goods, work
in process, raw materials, parts, packaging, pallets, and supplies on hand
(wherever located) and other personal property in transit, maintained or held by
or for the Dy 4 Entities.
"IP Rights" shall mean any or all of the following throughout the world:
(i) all patents and applications therefore and all reissues, divisions,
renewals, extensions, provisionals, continuations and continuations-in-part
thereof ("Patents"); (ii) all inventions (whether patentable or not), invention
disclosures and improvements, all trade secrets, proprietary information,
know-how and technology ("Trade Secrets"); (iii) all works of authorship,
copyrights, mask works, copyright and mask work registrations and applications
("Copyrights"); and (iv) all trade names, logos, trademarks and service marks;
trademark and service mark registrations and applications ("Trademarks").
"IRS" shall mean the Internal Revenue Service of the United States.
"knowledge" shall mean, with respect to any specified Person, (i) if such
Person is an individual, the actual knowledge of such Person, and (ii) if such
Person is not an individual, the actual knowledge of any executive officer (or
other individual serving in a similar capacity) of such Person.
"Law" shall mean any treaty, statute, law, ordinance, regulation, rule,
code, foreign, international, multinational, Governmental Order, constitution,
or other requirement enacted, entered or promulgated by any Governmental
Authority.
"Leased Real Property" shall mean the real property presently leased by or
subject to an agreement to lease or sublease or other use or occupancy agreement
by any of the Dy 4 Entities as tenant.
"Liabilities" shall mean any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable.
"Licensed Intellectual Property" shall mean all material IP Rights licensed
or sublicensed to any of the Dy 4 Entities from a third party.
"Loss" or "Losses" shall have the meaning specified in Section 10.2.
"Material Adverse Effect" shall mean any circumstance involving any change
in or effect on the Business that is materially adverse to the Business,
operations, Assets or Liabilities, results of operations or financial condition
of the Dy 4 Entities, taken as a whole; provided, however, that none of the
following shall be deemed, either alone or in combination, to constitute a
Material Adverse
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Effect: any circumstance, change or effect resulting from or arising out of (i)
the announcement of this Agreement or the pendency of the transactions
contemplated by this Agreement; (ii) the performance by Sellers, Dy 4 Systems
and Dy 4 (US) of their respective obligations under this Agreement or as
required by applicable Law or accounting requirements; (iii) general economic
conditions in the United States, Canada or other countries where any of the Dy 4
Entities conduct the Business; (iv) general conditions in the industries in
which any of the Dy 4 Entities conduct the Business; (v) any natural disaster or
any acts of terrorism, sabotage, military action or war (whether or not
declared) or any escalation or worsening thereof; or (vi) any failure by any of
the Dy 4 Entities to meet projections or forecasts for any period ending on or
after the date of this Agreement.
"Material Contracts" shall have the meaning specified in Section 4.15.
"Officer's Certificate" shall have the meaning specified in Section 10.4.
"Ontario EPA" shall mean the Environmental Protection Act (Ontario), as
amended from time to time, and the rules and regulations promulgated thereunder.
"ordinary course of business" shall mean an action taken by a Dy 4 Entity
only if such action is consistent with the past practices of the Dy 4 Entity and
is taken in the ordinary course of its normal day-to-day operations; such action
is not required to be specifically authorized by the board of directors or
stockholders of the Dy 4 Entity; and such action is similar in nature and
magnitude to actions customarily taken without specific authorization by the
board of directors or stockholders.
"Owned Intellectual Property" shall mean all material IP Rights owned by
any of the Dy 4 Entities.
"Owned Real Property" shall mean the real property presently owned by any
of the Dy 4 Entities, together with all buildings and other structures,
facilities or improvements currently or hereafter located thereon.
"Permits" shall have the meaning specified in Section 4.13.
"Permitted Encumbrances" shall mean such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (i) Encumbrances for Taxes, assessments, charges, levies or
other claims not yet delinquent, or the validity of which are being contested in
good faith and adequately reflected or reserved against in the Reference Balance
Sheet and, to the extent incurred in the ordinary course of business after the
Reference Balance Sheet Date, adequately reflected or reserved against in the
consolidated financial statements of Dy 4 Systems and Dy 4 (US) in accordance
with U.S. GAAP applied in a manner consistent with the Reference Balance Sheet;
(ii) Encumbrances imposed by Law, such as materialmen's, mechanics' carriers',
workmen's and repairmen's liens and other similar liens for amounts not yet
delinquent, or the validity of which are being contested in good faith; (iii)
pledges or deposits to secure obligations under workers' compensation Laws or
similar legislation or to secure public or statutory obligations; (iv)
Encumbrances, irregularities, easements, reserves, servitudes, encroachments,
rights of way or other imperfections of title or possession the existence of
which do
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not materially interfere with the present use of the affected property; and (v)
registered easements, rights-of-way, restrictive covenants and servitudes and
other similar rights in land granted to, reserved or taken by any Governmental
Authority or public utility; or any registered subdivision, development,
servicing, site plan or other similar agreement with any Governmental Authority
or public utility.
"Person" shall mean any individual, general or limited partnership, firm,
corporation, joint venture, association, estate, trust, labor union,
unincorporated organization, or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Exchange Act
through the date hereof and any Governmental Authority.
"Post-Closing Period" shall mean any taxable period or portion of a period
that begins after the Closing Date.
"Pre-Closing Period" shall mean any taxable period or portion of a period
that begins on or before the Closing Date and ends on the Closing Date.
"Purchase Price" shall mean One Hundred Ten Million Dollars ($110,000,000)
less the Adjustment Amount, if any, determined in accordance with the provisions
of Section 2.2(b).
"Purchaser" shall have the meaning specified in the preamble to this
Agreement.
"Purchaser Indemnified Parties" shall have the meaning specified in Section
10.2.
"Real Property" shall mean the Leased Real Property and the Owned Real
Property.
"Receivables" shall mean any and all accounts receivable, notes and other
amounts receivable owed to any of the Dy 4 Entities from third parties (not
including Solectron or any of its Subsidiaries), arising from the conduct of the
Business, together with all unpaid financing charges accrued thereon.
"Reference Balance Sheet Date" shall mean August 29, 2003.
"Reference Balance Sheet" shall mean the audited consolidated balance sheet
of the Dy 4 Entities dated as of August 29, 2003, a copy of which is set forth
in Section 4.6 of the Disclosure Schedule.
"Registered IP Rights" shall mean all United States, Canadian,
international and foreign: (i) patents and applications for patents (including
provisional applications); (ii) registered trademarks or service marks; and
(iii) registered copyrights; in each case that are the subject of an
application, certificate, filing, registration or other document issued, filed
with or recorded by any Governmental Authority.
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"Regulations" shall mean the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
"Related Person" shall mean (i) any Person that directly or indirectly
controls, is directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person; (ii) any Person that holds a
Material Interest in such specified Person; (iii) each Person that serves as a
director, officer, partner, executor, or trustee of such specified Person (or in
a similar capacity); (iv) any Person in which such specified Person holds a
Material Interest; and (v) any Person with respect to which such specified
Person serves as a general partner or a trustee (or in a similar capacity).
For purposes of this definition, the term "Material Interest" means
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of voting securities or other voting interests representing at
least 5% of the outstanding voting power of a Person or equity securities or
other equity interests representing at least 5% of the outstanding equity
securities or equity interests in a Person. The Sellers shall be deemed to be
Related Persons of the Dy 4 Entities.
"Release" shall mean any release, spill, emission, discharge, pouring,
emptying, escaping, leaking, pumping, injection, deposit, disposal, dispersal,
or leaching into the environment (including, without limitation, ambient air,
surface water, groundwater and surface or subsurface strata, including the
abandonment or discarding of barrels, containers, and other receptacles
containing Hazardous Materials) or into or out of any property (including but
not limited to any structure or equipment), including the migration or other
movement of Hazardous Materials through or in the air, soil, surface water or
groundwater.
"Securities Act" shall mean the Securities Act of 1933, as amended through
the date hereof.
"Seller Indemnified Parties" shall have the meaning specified in Section
10.2.
"Sellers" shall have the meaning specified in the preamble to this
Agreement.
"Shares" shall have the meaning specified in the recitals to this
Agreement.
"Straddle Period" shall mean any taxable period that begins before and ends
after the Closing Date.
"Subsidiary" shall mean, with respect to any Person, any other corporation,
limited liability company, general or limited partnership, unincorporated
association, trust or other business entity of which (i) if a corporation, a
majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a limited liability company,
partnership, association, trust or other business entity, a majority of the
partnership or other similar
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ownership interest thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more Subsidiaries of that Person or a
combination thereof.
"Tax" or "Taxes" shall mean any and all taxes, fees, levies, duties,
tariffs, imposts, and other like charges (together with any and all interest,
penalties, loss, damage, liability, expense, additions to tax and additional
amounts or costs incurred or imposed with respect thereto) imposed by any
government or taxing authority, including (i) taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital gains, capital stock or shares, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; (ii) taxes or other charges in the nature of excise, withholding,
ad valorem, stamp, transfer, value added, or gains taxes; and (iii) customs
duties, tariffs, and similar charges, whether or not disputed and including any
obligations to indemnify or otherwise assume or succeed to the Tax Liability of
another Person.
"Tax Arbitrator" shall mean a nationally recognized accounting or law firm
mutually acceptable to Solectron and Purchaser engaged in a dispute related to a
Tax Contest.
"Tax Attributes" shall mean net operating losses, capital losses and tax
credits, and carryovers thereof, for purposes of federal income or state and
provincial income or franchise taxes.
"Tax Contest" shall mean an audit, claim, dispute or controversy relating
to Taxes.
"Tax Returns" shall mean all reports, returns, declarations, statements or
other information required to be supplied to a taxing authority in connection
with Taxes.
"Third Party Proceedings" shall have the meaning specified in Section 10.3.
"Threatened" shall mean with respect to a claim, Action, dispute, or other
matter that a demand or statement has been made (orally or in writing) or any
notice has been given (orally or in writing), or if any other event has occurred
or any other circumstances exist, that would lead a prudent Person to conclude
that such a claim, Action, dispute, or other matter is likely to be asserted,
commenced, taken, or otherwise pursued in the future.
"Transferred Employees" shall have the meaning specified in Section 6.11.
"Transferred Former Employees" shall have the meaning specified in Section
6.11.
"U.S. GAAP" shall mean United States generally accepted accounting
principles and practices as in effect from time to time and applied consistently
throughout the periods involved.
Section 1.2. Other Interpretive Provisions. With reference to this
Agreement, unless otherwise specified herein, the following interpretive
provisions shall apply:
(a) the meanings of defined terms are equally applicable to the
singular and plural forms of such defined terms;
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(b) the words "herein," "hereto," "hereof" and "hereunder" and words
of similar import shall refer to this Agreement as a whole and not to any
particular provision hereof;
(c) Article, Section, Exhibit and Schedule references are to this
Agreement;
(d) the term "including" is by way of example and not limitation and
"or" has the inclusive meaning of the phrase "and/or";
(e) the term "documents" includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form;
(f) in the computation of periods of time from a specified date to a
later specified date, (i) the word "from" shall mean "from and including;" (ii)
the words "to" and "until" each mean "to but excluding;" and (iii) the word
"through" shall mean "to and including";
(g) article and section headings herein are included for convenience
of reference only and shall not affect the interpretation of this Agreement; and
words importing the masculine gender shall include the feminine and neuter
genders and vice versa and words importing individuals shall include Persons and
vice versa; and
(h) whenever anything is required to be done or any action is required
to be taken hereunder on or by a day which is not a business day, then such
thing may be validly done and such action may be validly taken on or by the next
succeeding day that is a business day.
ARTICLE II
PURCHASE AND SALE
Section 2.1. Purchase and Sale of the Shares. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing, each Seller shall
sell, assign, transfer, convey and deliver to Purchaser or cause to be sold,
assigned, transferred, conveyed and delivered to Purchaser, free and clear of
any and all Encumbrances (other than restrictions on transfer under applicable
U.S. federal and state and Canadian provincial securities laws), and Purchaser
shall purchase, all Shares held by such Seller, as set forth opposite such
Seller's name on Schedule I hereto.
Section 2.2. Purchase Price.
(a) In consideration for the sale of Shares pursuant to Section 2.1,
upon the terms and subject to the conditions set forth in this Agreement,
Purchaser shall pay to the Sellers the Purchase Price, such amount to be
allocated among such Sellers in accordance with Schedule I hereto.
(b) Purchaser shall cause Dy 4 Systems to prepare a schedule ("Advance
Payments Schedule") setting forth (i) the aggregate amount of all Advance
Payments received by the
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Dy 4 Entities or their affiliates in respect of the Advance Payments Contracts
as of the Closing Date, less (ii) the aggregate amount of all Advance Payments
attributable to (A) equipment or inventory purchased by the Dy 4 Entities or
their affiliates in accordance with the terms of such Advance Payments
Contracts, (B) work performed by the Dy 4 Entities or their affiliates under
such Advance Payments Contracts, or (C) goods or services delivered by the Dy 4
Entities or their affiliates in accordance with the terms of such Advance
Payments Contracts, in each case as of the Closing Date. In addition, Purchaser
shall cause Dy 4 Systems to prepare a schedule ("Bonus Schedule") of the
accrued, but unpaid bonus amounts payable to employees of the Dy 4 Entities. In
connection with the preparation of the Bonus Schedule, bonus amounts for the
partial quarterly period that includes the Closing Date shall be accrued in the
proportionate amounts of the bonus metrics achieved as of the Closing Date. The
difference between the amount set forth in clause (i) above, less the amount set
forth in clause (ii) above, if a positive number, is referred to herein as the
"Advance Payment Adjustment Amount". If the Advance Payment Adjustment Amount is
a positive number, the "Adjustment Amount" will be the Advance Payment
Adjustment Amount plus the amount of the unpaid bonuses reflected on the Bonus
Schedule. If the Advance Payment Adjustment Amount is a negative number, the
"Adjustment Amount" will be the amount of the unpaid bonuses reflected on the
Bonus Schedule.
(c) Purchaser shall cause Dy 4 Systems to deliver the Advance Payments
Schedule and Bonus Schedule (collectively, referred to herein as the "Adjustment
Amount Schedule") to Solectron within sixty days after the Closing Date. If
within thirty days following delivery of the Adjustment Amount Schedule,
Solectron has not given Purchaser written notice of its objection to the
Adjustment Amount Schedule (such notice must contain a statement of the basis of
Solectron's objection in reasonable detail, including Solectron's calculation of
the Adjustment Amount), then the Adjustment Amount, if any, produced pursuant to
Section 2.2(b) above based upon the Adjustment Amount Schedule shall be deemed
conclusive, final and binding on the parties. If Solectron gives such written
notice of objection, then the issues in dispute will be submitted to Ernst &
Young LLP, certified public accountants (the "Accountants"), for resolution. If
issues in dispute are submitted to the Accountants for resolution, (i) each
party will furnish to the Accountants such workpapers and other documents and
information relating to the disputed issues as the Accountants may request and
are available to that party (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material relating to
the determination and to discuss the determination with the Accountants; (ii)
the determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties.
(d) (i) Purchaser shall pay that portion of the fees of the
Accountants equal to the fraction, the numerator of which is the difference
between the Dy 4 Systems' calculation of the Adjustment Amount, minus the
Accountants final calculation of the Adjustment Amount, and the denominator of
which is the difference between the Dy 4 Systems' calculation of the Adjustment
Amount, minus Solectron's calculation of the Adjustment Amount, and (ii)
Solectron shall pay that portion of the fees of the Accountants equal to the
fraction, the numerator of which is the difference between the Accountants final
calculation of the Adjustment Amount, minus Solectron's calculation of the
Adjustment Amount, and the denominator of which is the difference between the Dy
4
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Systems' calculation of the Adjustment Amount, minus Solectron's calculation of
the Adjustment Amount.
(e) On the tenth business day following the final determination of the
Adjustment Amount, if any, Solectron will pay the Adjustment Amount to
Purchaser. All payments will be made together with simple interest thereon from
the Closing Date through the date of payment at the rate of interest published
in The Wall Street Journal as of the Closing Date (or, if not a business day, as
of the next business day) as the "prime rate." Payment must be made in
immediately available funds for deposit in an account designated in writing to
Parent by Purchaser.
Section 2.3. Closing. Upon the terms and subject to the conditions of this
Agreement, the sale and purchase of Shares contemplated by this Agreement shall
take place at a closing (the "Closing") to be held at Wilson Sonsini Goodrich &
Rosati, P.C., One Market, Spear Tower, Suite 3300, San Francisco, California
94105, on such date and at such time as Solectron, on behalf of Sellers, and
Purchaser may mutually agree, which date shall be no later than the second (2nd)
business day after the satisfaction or valid waiver of the conditions set forth
in Article VIII that are capable of being satisfied prior to the Closing (the
day on which the Closing takes place being referred to herein as the "Closing
Date").
Section 2.4. Closing Deliveries of Sellers. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing, each Seller shall
deliver, or cause to be delivered, to Purchaser the following:
(a) a stock certificate evidencing the Shares held by such Seller,
duly endorsed in blank or accompanied by stock powers duly executed in blank;
and
(b) each of the documents required to be delivered by Sellers pursuant
to Section 8.3 that has not been delivered prior to the Closing.
Section 2.5. Closing Deliveries of Dy 4 Systems and Dy 4 (US). Upon the
terms and subject to the conditions set forth in this Agreement, at the Closing,
Dy 4 Systems and Dy 4 (US) shall deliver, or cause to be delivered, to Purchaser
each of the documents required to be delivered by Dy 4 Systems and Dy 4 (US)
pursuant to Section 8.3 that has not been delivered prior to the Closing.
Section 2.6. Closing Deliveries of Purchaser. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing, Purchaser shall
deliver, or cause to be delivered:
(a) To Sellers, One Hundred Ten Million Dollars ($110,000,000), by
wire transfer in immediately available funds to the bank account or accounts
designated by Solectron in writing not fewer than two (2) business day prior to
the Closing;
(b) To Sellers, each of the documents required to be delivered by
Purchaser pursuant to Section 8.2 that has not been delivered prior to the
Closing.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Purchaser to enter into this Agreement, each of the
Sellers, hereby jointly represents and warrants to Purchaser that, except as set
forth in the Sellers' Disclosure Schedule:
Section 3.1. Authority. Each of the Sellers has all necessary power and
authority to enter into this Agreement and the Transition Services Agreement (to
the extent it is a party thereto), to carry out such Person's obligations
hereunder and thereunder, and to consummate the Contemplated Transactions. Each
of this Agreement and the Transition Services Agreement has been duly executed
and delivered by such Person, and (assuming due authorization, execution and
delivery by Purchaser and each other party hereto) each of this Agreement and
the Transition Services Agreement constitutes a legal, valid and binding
obligation of such Person, enforceable against such Person in accordance with
its terms, except as such enforceability may be subject to the laws of general
application relating to bankruptcy, insolvency, and the relief of debtors and
rules of law governing specific performance, injunctive relief, or other
equitable remedies.
Section 3.2. No Conflict. Assuming compliance with the notification
requirements of the HSR Act and, if applicable, the Competition Act, and the
making and obtaining of all filings, notifications, consents, approvals,
authorizations and other actions referred to in Section 3.3, the execution,
delivery and performance of this Agreement, and the Transition Services
Agreement by each of the Sellers does not and will not (i) violate, conflict
with or result in the breach of any provision of the charter or bylaws (or
similar organizational documents) of such Person, (ii) conflict with or violate
any Law or Governmental Order applicable to such Person or the Shares held
thereby, or (iii) result in the creation of any Encumbrance (other than
restrictions on transfer under applicable U.S. federal and state and Canadian
provincial securities laws) on any of the Shares held by such Person pursuant to
any material note, bond, mortgage, deed of trust, indenture, contract,
agreement, lease, sublease, offer to lease, agreement to lease, license, permit,
franchise or other instrument or arrangement to which such Person is a party or
by which any of the Shares held by such Person is bound or affected, in each
case which could reasonably be expected to have a material adverse effect on the
ability of Sellers or any Dy 4 Entity to consummate the Contemplated
Transactions.
Section 3.3. Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement and the Transition Services Agreement by such
Person does not and will not require any consent, approval, authorization or
other order of, action by, filing with or notification to any Governmental
Authority, except the notification requirements of the HSR Act and any
applicable foreign antitrust regulations, including the Competition Act.
Section 3.4. Ownership of Shares. Each Seller owns of record the Shares set
forth opposite such Seller's name on Schedule I hereto, free and clear of all
Encumbrances (other than restrictions on transfer under applicable U.S. federal
and state and Canadian provincial securities laws) and upon consummation of the
Contemplated Transactions, Purchaser shall have good and
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valid title to the Shares free and clear of any Encumbrance (other than
restrictions on transfer under applicable U.S. federal and state and Canadian
provincial securities laws).
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF SELLERS, DY 4 SYSTEMS AND DY 4 (US)
As an inducement to Purchaser to enter into this Agreement, each of the
Sellers and Dy 4 Systems and Dy 4 (US) hereby represents and warrants to
Purchaser that, except as set forth in the Disclosure Schedule:
Section 4.1. Organization and Qualification.
(a) Dy 4 Systems is a corporation duly organized, validly existing and
in good standing under the laws of Ontario, and Dy 4 (US) is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, and
each has all requisite power and authority to own, lease and operate its
properties and to conduct its Business.
(b) Each of the Dy 4 Entities is duly qualified or licensed and in
good standing to conduct its Business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the Business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not, individually or in the aggregate, have a Material Adverse Effect.
Section 4.2. Capitalization. The authorized capital stock of Dy 4 Systems
consists of an unlimited number of shares of common stock. There is no other
capital stock or equity security of Dy 4 Systems authorized for issuance. There
are 8,692,296 shares of Dy 4 Systems common stock issued and outstanding, all of
which outstanding shares are validly issued, fully paid and nonassessable and
free of preemptive rights. The authorized capital stock of Dy 4 (US) consists of
20,000 shares of common stock and 2,000 shares of preferred stock, all of which
are designated Series A Preferred Stock. There is no other capital stock or
equity security of Dy 4 (US) authorized for issuance. There are 8,000 shares of
Dy 4 (US) common stock and 2,000 shares of Dy 4 (US) Series A Preferred Stock
issued and outstanding, all of which outstanding shares are validly issued,
fully paid and nonassessable and free of preemptive rights. The Shares
constitute all of the issued and outstanding shares of capital stock of Dy 4
Systems and Dy 4 (US). Except as set forth above there are not outstanding any
(i) securities of any Dy 4 Entity convertible into, or exchangeable or
exercisable for, shares of capital stock or equity securities of Dy 4 Systems or
Dy 4 (US), or (ii) options, warrants or other rights to acquire from any Dy 4
Entity any shares of capital stock or equity securities or securities
convertible into or exchangeable or exercisable for shares of capital stock or
equity securities of Dy 4 Systems or Dy 4 (US).
Section 4.3. Subsidiaries. Section 4.3 of the Disclosure Schedule sets
forth, as of the date of this Agreement, a true and complete list of all of Dy 4
Systems' and Dy 4 (US)'s Subsidiaries, together with the jurisdiction of
incorporation or organization of each Subsidiary. Dy 4 Systems has
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delivered to Purchaser accurate and complete copies of the certificate of
incorporation and bylaws (or similar governing documents), as currently in full
force and effect, of each of Dy 4 Systems' and Dy 4 (US)'s Subsidiaries. All of
the capital stock or other equity interests of each Subsidiary is owned of
record by Dy 4 Systems or Dy 4 (US).
Section 4.4. Authority. Each of Dy 4 Systems and Dy 4 (US) has all
necessary power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by such Person, and
(assuming due authorization, execution and delivery by Purchaser and each other
party hereto) this Agreement constitutes a legal, valid and binding obligation
of such Person, enforceable against such Person in accordance with its terms,
except as such enforceability may be subject to the laws of general application
relating to bankruptcy, insolvency, and the relief of debtors and rules of law
governing specific performance, injunctive relief, or other equitable remedies.
Section 4.5. No Conflict. The execution, delivery and performance of this
Agreement by Dy 4 Systems and Dy 4 (US) does not and will not conflict in any
material respect with, or result in any material breach of, constitute a
material default (or event which with the giving of notice or lapse of time, or
both, would become a material default) under, require any consent under, or give
to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance
(excluding a Permitted Encumbrance) on any of the Assets or properties of Dy 4
Systems or Dy 4 (US) pursuant to, any material note, bond, mortgage, deed of
trust, indenture, contract, agreement, lease, sublease, offer to lease,
agreement to lease, license, permit, franchise or other instrument or
arrangement to which Dy 4 Systems or Dy 4 (US) is a party or by which any of
such other assets or properties is bound or affected, in each case which could
reasonably be expected to have a Material Adverse Effect.
Section 4.6. Financial Statements. Dy 4 Systems and Dy 4 (US) have provided
to the Purchaser the audited consolidated balance sheet and statement of income,
changes in stockholders' equity and cash flows of Dy 4 Systems and Dy 4 (US) as
of and for the fiscal year ended August 29, 2003. Such financial statements
(collectively, the "Financial Statements") have been prepared in accordance with
U.S. GAAP applied on a consistent basis throughout the periods covered thereby,
fairly present in all material respects the financial condition, results of
operations and cash flows of the Dy 4 Entities as of the respective date thereof
and for the period referred to therein and are consistent in all material
respects with the books and records of the Dy 4 Entities.
Section 4.7. No Undisclosed Liabilities. There are no Liabilities of any Dy
4 Entity other than Liabilities (i) adequately reflected or reserved against on
the Reference Balance Sheet, (ii) identified in the Disclosure Schedule, (iii)
in respect of IP rights, other than under the representations, warranties and
covenants in this Agreement, (iv) arising out of one or more of the types of
matters addressed in the representations, warranties, covenants or agreements
made in this Agreement and (A) not required to be disclosed in the Disclosure
Schedule by the terms of any such representation or warranty or (B) permitted to
exist or be incurred by the terms of any such covenant or agreement, as the case
may be, (v) covered by insurance, indemnification, contribution or comparable
arrangements, (vi) incurred since the Reference Balance Sheet Date in the
ordinary
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course of business, (vii) for Taxes incurred or accrued in the ordinary course
of business since the Reference Balance Sheet Date, or (viii) that would not
reasonably be expected to have a Material Adverse Effect.
Section 4.8. Receivables. Except to the extent, if any, reserved for on the
Reference Balance Sheet, all Receivables reflected on the Reference Balance
Sheet relating to sale of Inventory or services arose from, and such Receivables
existing on the Closing Date will have arisen from, the sale of Inventory or
services to Persons not affiliated with any Dy 4 Entity and in the ordinary
course of business.
Section 4.9. Inventories. Subject to amounts reserved therefor on the
Reference Balance Sheet, (i) the values at which all Inventories are carried on
the Reference Balance Sheet reflect the historical inventory valuation policy of
the Dy 4 Entities and (ii) the Inventories are in good and merchantable
condition in all material respects, are suitable and usable for the purposes for
which they are intended.
Section 4.10. Conduct in the Ordinary Course; Absence of Material Adverse
Effect. Since the Reference Balance Sheet Date, the Business has been conducted
in the ordinary course of business and there has occurred no Material Adverse
Effect and neither Sellers nor any Dy 4 Entity has any knowledge of any fact or
matter which would reasonably be expected to have a Material Adverse Effect.
Section 4.11. Litigation. There are no Actions by or against any Dy 4
Entity, or affecting any of the Assets of the Business, pending before, or to
the knowledge of Sellers, Dy 4 Systems or Dy 4 (US), Threatened to be brought by
or before, any Governmental Authority or by any other Person that could
reasonably be expected to have a Material Adverse Effect. No Dy 4 Entity, nor
any of their respective assets or properties, is subject to any material
Governmental Order, nor, to the knowledge of Sellers or any Dy 4 Entity, are
there any such material Governmental Orders Threatened to be imposed by any
Governmental Authority that could reasonably be expected to have a Material
Adverse Effect.
Section 4.12. Compliance with Laws. Each Dy 4 Entity has conducted and
continues to conduct the Business in accordance with all Laws and Governmental
Orders applicable to such Dy 4 Entity, as the case may be, or the Assets or the
Business, except as would not reasonably be expected to have a Material Adverse
Effect, and no Dy 4 Entity is in violation of, and to the knowledge of Sellers
or any Dy 4 Entity, no Dy 4 Entity is Threatened with any violation, of any such
Law or Governmental Order, except as would not reasonably be expected to have a
Material Adverse Effect.
Section 4.13. Permits. No Dy 4 Entity is in violation of or default under,
and to the knowledge of Sellers or any Dy 4 Entity, no Dy 4 Entity is Threatened
with any violation of any permit, license, franchise or authorization from any
Governmental Authority or any other Person used in its Business as presently
conducted and material to the Business (collectively, the "Permits") and no
Permit will be revoked, terminated prior to its normal expiration date or not
renewed solely as a result of the consummation of the transactions contemplated
by this Agreement, except, in all
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cases, for any violation, default, revocation, termination or renewal that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect.
Section 4.14. Environmental Matters.
(a) Each Dy 4 Entity is, and at all times has been, in compliance in
all material respects with, and has not been and is not in violation of or
liable under any Environmental Law, in any material respect. Neither Sellers nor
any Dy 4 Entity has, nor has any other Person for whose conduct a Dy 4 Entity is
or may be held responsible under Law or by contract or agreement, received, any
actual or, to the knowledge of Sellers or the Dy 4 Entities, Threatened order,
notice, or other communication from (i) any Governmental Authority or other
Person acting in the public interest, or (ii) the current or prior owner or
operator of any Real Property, alleging on the part of any Dy 4 Entity or Person
for whose conduct a Dy 4 Entity is or may be responsible under Law or by
contract or agreement, any actual or potential violation of or failure to comply
with any Environmental Law, or of any actual or, to the knowledge of Sellers or
any Dy 4 Entities, Threatened Environmental Claim or obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Real Property or any other properties or assets (whether real,
personal, or mixed) in which a Dy 4 Entity has had an interest, or with respect
to any Real Property or any other property or facility at or to which Hazardous
Materials were generated, manufactured, refined, transferred, imported, used, or
processed by a Dy 4 Entity, or any other Person for whose conduct they are or
may be held responsible under Law or by contract or agreement, or from which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed of, recycled, or received.
(b) There are no pending or, to the knowledge the Sellers or any Dy 4
Entities, Threatened Environmental Claims or Encumbrances (other than Permitted
Encumbrances), resulting from any Environmental, Health, and Safety Liabilities
or arising under or pursuant to any Environmental Law, with respect to or
affecting any of the Real Property or any other properties and assets (whether
real, personal, or mixed) in which a Dy 4 Entity has or had an interest.
(c) Neither Sellers nor a Dy 4 Entity has, nor has any of them or any
other Person for whose conduct they are or may be held responsible under Law or
by contract or agreement, received, any citation, directive, inquiry, notice,
Governmental Order, summons, warning, or other communication that relates to
Hazardous Materials or any activity involving Hazardous Materials alleging on
the part of such party actual, or potential violation of or failure to comply
with any Environmental Law, or of any alleged, actual, or potential
Environmental Claim or other obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the Real
Property or any other properties or assets (whether real, personal, or mixed) in
which a Dy 4 Entity has had an interest, or with respect to any Real Property or
any other property or facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or processed by a
Dy 4 Entity, or any other Person for whose conduct they are or may be held
responsible under Law or by contract or agreement, or from which Hazardous
Materials have been transported, treated, stored, handled, transferred, disposed
of, recycled, or received. No Dy 4 Entity is subject to any judgment, decree,
order or citation (involving any Dy 4 Entity or any of their
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affiliates) related to or arising out of any Environmental Laws. No Dy 4 Entity
has been named or listed as a potentially responsible party by any Governmental
Authority in any matter arising under any Environmental Law, except as would not
be reasonably likely to result in a material Liability to any Dy 4 Entity.
(d) Except as would not be reasonably likely to result in a material
Liability to any Dy 4 Entity, neither Sellers nor a Dy 4 Entity, nor any other
Person for whose conduct a Dy 4 Entity is or may be held responsible under Law
or by contract or agreement, is subject to or received any notice of any
Environmental Claim or Environmental, Health, and Safety Liabilities with
respect to the Real Property or with respect to any other properties and assets
(whether real, personal, or mixed) in which a Dy 4 Entity (or any predecessor),
has or had an interest, or with respect to any property geologically or
hydrologically adjoining the Real Property or any such other property or assets.
(e) There are no Hazardous Materials present on or in the Environment
at the Real Property or at any geologically or hydrologically adjoining
property, including any Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, equipment (whether
moveable or fixed) or other containers, either temporary or permanent, or
deposited or located in land, water, sumps, or any other part of the Real
Property or such adjoining property, or incorporated into any structure therein
or thereon, except the presence of which would not be reasonably likely to
result in a material liability to any Dy 4 Entity. Neither Sellers nor a Dy 4
Entity, nor any other Person for whose conduct a Dy 4 Entity is or may be held
responsible under Law or by contract or agreement, nor to the knowledge of
Sellers or any Dy 4 Entity, any other Person, has permitted or conducted, or is
aware of, any activity involving Hazardous Materials conducted with respect to
the Real Property or any other properties or assets (whether real, personal, or
mixed) in which a Dy 4 Entity has or had an interest, except as would not be
reasonably likely to result in a material Liability to any Dy 4 Entity.
(f) Except as would not be reasonably likely to result in a material
Liability to any Dy 4 Entity, there has been no Release or, to the knowledge of
Sellers or any Dy 4 Entity, Threat of Release, of any Hazardous Materials at or
from the Real Property or, to the knowledge of Sellers and each Dy 4 Entity, at
any other locations where any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used, or processed from or by a Dy 4
Entity, or from or by any other properties and assets (whether real, personal,
or mixed) in which a Dy 4 Entity has or had an interest, or any geologically or
hydrologically adjoining property, whether by the Sellers, a Dy 4 Entity, or any
other Person.
(g) The Dy 4 Entities have delivered to the Purchaser complete copies
and results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by the Sellers or a Dy 4 Entity pertaining to Hazardous Materials or
any activity involving Hazardous Materials in, on, or under the Real Property,
or concerning compliance by each Dy 4 Entity, or any other Person for whose
conduct a Dy 4 Entity is responsible under Law or by contract or agreement, with
Environmental Laws.
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(h) To the Sellers' or any Dy 4 Entity's knowledge, there are not now
nor have there ever been, any underground storage tanks on, under or at any real
estate now or heretofore owned or leased by a Dy 4 Entity which contain or
contained Hazardous Materials, which, if known to be present in soils or ground
water, may reasonably be expected to require a Cleanup for which any of the Dy 4
Entities may be held liable.
(i) To the Sellers' or any Dy 4 Entity's knowledge, each Dy 4 Entity
has in full force and effect all Permits and other approvals required to be
maintained under any Environmental Laws applicable to a Dy 4 Entity or any Real
Property, except where the failure to hold or maintain same would not have a
Material Adverse Effect.
Section 4.15. Material Contracts.
(a) For purposes hereof, the term "Material Contracts" shall mean all
contracts or agreements, written or oral, to which any Dy 4 Entity is bound:
(i) for the purchase by a Dy 4 Entity of goods involving
anticipated annual payments, in the case of contracts with suppliers, in excess
of $250,000, or, with anticipated annual receipts, in the case of contracts with
customers, in excess of $1,000,000 and in either case that are not terminable
upon notice of 90 days or less without material penalty;
(ii) pertaining to employment, consulting or severance
arrangements with any officer, director, or employee of a Dy 4 Entity (other
than offer letters with respect to "at will" employment or as required by Law or
any collective bargaining agreement);
(iii) relating to the borrowing of money or the guaranteeing or
securing of any obligation for borrowed money (including letters of credit)
involving an amount in excess of $100,000, except in the ordinary course in
connection with accounts payable;
(iv) relating to leases, licenses, installment and conditional
sale agreements, and other contracts affecting the ownership of, leasing of,
title to, use of, or any leasehold or other interest in, any personal property,
provided in each case such contract involves an amount in excess of $50,000 per
annum;
(v) relating to Leased Real Property, rental or occupancy
agreements, and other contracts affecting the ownership of, leasing of, title
to, use of, or any leasehold or other interest in, any real property, provided
in each case such contract involves an amount in excess of $100,000 per annum;
(vi) relating to collective bargaining agreements or other
contracts with any labor union;
(vii) relating to any material joint venture partnership or
similar legal relationship;
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(viii) that prohibit a Dy 4 Entity from freely engaging in any
business in any specified geographical area or from soliciting customers;
(ix) relating to licenses and other agreements concerning (A)
Owned Intellectual Property, or (B) Licensed Intellectual Property, provided in
each case (1) annual payments or receipts of greater than $500,000 were
attributable to such license or agreement in fiscal year 2003 and annual
payments or receipts of greater than $500,000 are reasonably anticipated to be
attributable to such license or agreement in fiscal year 2004, or (2) such
license or agreement is otherwise material to the operation of the Business; and
(x) not otherwise described that are material to the conduct of
the Business as currently conducted, or that are not entered into in the
ordinary course of business, and that involve payments or expenditures in excess
of $100,000 over its term.
(b) Section 4.15(b) of the Disclosure Schedule sets forth a complete
list, as of the date hereof, of all Material Contracts that any of the Dy 4
Entities is party to or by which any of them is bound. Except as would not
reasonably be expected to have a Material Adverse Effect, (i) each Material
Contract is valid, binding and enforceable against the Dy 4 Entity party to such
Material Contract, (ii) each Dy 4 Entity has performed, in all material
respects, all obligations under the Material Contracts required to be performed
by it and, to the knowledge of Sellers, Dy 4 Systems and Dy 4 (US), no Dy 4
Entity has received any written claim of any material default under any Material
Contract and (iii) neither Dy 4 Systems nor Dy 4 (US) has knowledge of any
material breach or anticipated breach by any other party to any Material
Contract.
(c) Section 4.15(c) of the Disclosure Schedule sets forth a complete
list, as of the date hereof, of all Advance Payments Contracts. Except as would
not reasonably be expected to have a Material Adverse Effect, (i) each Advance
Payments Contract is valid, binding and enforceable against the Dy 4 Entity
party to such Advance Payments Contract, (ii) each Dy 4 Entity has performed, in
all material respects, all obligations under the Advance Payments Contracts
required to be performed by it and, to the knowledge of Sellers, Dy 4 Systems
and Dy 4 (US), no Dy 4 Entity has received any written claim of any material
default under any Advance Payments Contract and (iii) neither Dy 4 Systems nor
Dy 4 (US) has knowledge of any material breach or anticipated breach by any
other party to any Advance Payments Contract.
Section 4.16. Intellectual Property.
(a) Each of the Dy 4 Entities owns or has the right to use all IP
Rights necessary for, or used in, the operation of its Business (the "Dy 4
Intellectual Property"), except for any failure to own or have the right to use
Dy 4 Intellectual Property that would not reasonably be expected to have a
Material Adverse Effect.
(b) Section 4.16 of the Disclosure Schedule lists each item of
Registered IP Rights included within Owned Intellectual Property. Each item of
Owned Intellectual Property is owned free and clear of all Encumbrances, except
Permitted Encumbrances. The rights of the Dy 4 Entities in or to the Owned
Intellectual Property do not infringe the IP Rights of any other Person,
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and neither the Sellers nor Dy 4 Systems or Dy 4 (US) has received any claim or
written notice from any Person to such effect.
Section 4.17. Real Property. Section 4.17 of the Disclosure Schedule lists
the address of each parcel of Owned Real Property and Leased Real Property,
including whether such Real Property is being held for sale or is leased or
subleased by any of the Dy 4 Entities to a third party. Each parcel of Owned
Real Property is owned free and clear of all Encumbrances (other than Permitted
Encumbrances), and each parcel of Leased Real Property is leased under a valid
and subsisting lease, sublease, offer to lease or agreement to lease. Dy 4
Systems has, or caused to be, made available to Purchaser copies of each deed,
lease, sublease, offer to lease or agreement to lease, as the case may be, and
all written amendments thereto, relating to the Real Property. Each lease,
sublease, offer to lease or agreement to lease relating to the Leased Real
Property is in full force and effect, and no Dy 4 Entity is in default of any
lease, sublease, offer to lease or agreement to lease in any material respect.
Section 4.18. Assets. "Assets" means all of the Dy 4 Entities' right, title
and interest in and to all of the material properties and assets used in the
conduct of the Business. The Dy 4 Entities own, or in the case of leased or
subleased Assets, have valid and subsisting leasehold interests in, all of the
Assets, free and clear of all Encumbrances, except Permitted Encumbrances. The
Assets represent all the assets necessary to conduct the Business as presently
being conducted by each Dy 4 Entity.
Section 4.19. Employee Matters and Benefit Plans.
(a) Section 4.19(a) of the Disclosure Schedule contains a complete and
accurate list of all "employee benefit plans" within the meaning of 'SS'3(3)
of ERISA, all material bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other employee benefit
plans, programs or arrangements, and all material employment or compensation
agreements, in each case for the benefit of, or relating to, current employees
and/or former employees of the Dy 4 Entities (collectively, the "Employee
Plans"). All Employee Plans (and each related trust, insurance contract or fund)
have been maintained, funded and administered, in all material respects, in
accordance with their terms and in compliance in all material respects with the
requirements prescribed by applicable Law, and the Dy 4 Entities have performed
all material obligations required to be performed by any of them under, and are
not in any material respect in violation of the terms of, any of the Employee
Plans. Each Employee Plan which is intended to meet the requirements of section
401(a) of the Code has received a determination letter from the IRS that such
Employee Plan is so qualified and no facts or circumstances exist that could
likely result in the loss of such qualified status. There have been no
prohibited transactions (as defined in section 406 of ERISA and section 4975 of
the Code) with respect to any Employee Plan or any Employee Plan maintained by
an ERISA Affiliate, excluding transactions effected in compliance with an
enforceable statutory or administrative exemption pursuant to section 408 of
ERISA. To the knowledge of Sellers or any Dy 4 Entities, no fiduciary has any
liability for material breach of fiduciary duty or any other material failure to
act or comply in connection with the administration or the investment of the
assets of any Employee Plan. No Action, proceeding,
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hearing, or investigation with respect to the administration or the investment
of the assets of any Employee Plan (other than routine claims for benefits) is
pending or, to the knowledge of Sellers or any Dy 4 Entity, Threatened. No Dy 4
Entity contributes to, or has any obligation to contribute to, or has any
material liability under or with respect to any Employee Plan that is a "defined
benefit plan" (as defined in section 3(35) of ERISA). For each Employee Plan
that is sponsored by a Dy 4 Entity, Dy 4 Systems has, or has caused to be, made
available to Purchaser copies of: (i) each Employee Plan and summary plan
description of each Employee Plan; (ii) the most recent annual actuarial
valuations, if any, prepared for each Employee Plan; (iii) if the Employee Plan
is funded, the most recent annual and periodic accounting of Employee Plan
assets; (iv) the most recent determination letter received from the IRS with
respect to any Employee Plan that is intended to be a qualified plan under
section 401(a) of the Code; (v) the most recent annual report (Form 5500) with
applicable attachments; and (vi) all trust agreements, insurance contracts and
other funding arrangements which are related to any Employee Plan. For each
Employee Plan, Dy 4 Systems has, or has caused to be, made available to
Purchaser a copy of a summary plan description of each Employee Plan.
(b) There are no Employee Plans subject to Title IV of ERISA or
Section 412 of the Code. No Dy 4 Entity or any ERISA Affiliate, contributes to,
has any obligation to contribute to, or has any material Liability (including
withdrawal liability as defined in section 4201 of ERISA) under or with respect
to any "multiemployer plan" (as defined in section 3(37) of ERISA).
(c) No Employee Plan provides, or reflects or represents any Liability
or potential Liability to provide post-termination or retiree welfare benefits
to any person for any reason, except as may be required by COBRA or other
applicable Law. The execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or upon termination of
employment following such transactions) constitute an event under any Employee
Plan that will or may result in any payment (whether of severance pay or
otherwise), forgiveness of indebtedness or accelerated vesting with respect to
any current employees or former employees of the Dy 4 Entities. No payment or
benefit which will or may be made by a Dy 4 Entity with respect to any
"disqualified individual" in connection with the transactions contemplated by
this Agreement (as defined in Code Section 280G and the regulations thereunder)
is reasonably likely to be characterized as a "parachute payment," within the
meaning of Section 280G(b)(2) of the Code.
(d) With respect to each employee benefit plan (as such term is
defined in Section 3(3) of ERISA) that any ERISA Affiliate maintains, to which
any of them contributes or has any obligation to contribute, or with respect to
which any of them has any Liability or potential Liability:
(i) no such employee benefit plan that is an "Employee Pension
Benefit Plan", as defined in section 3(2) of ERISA that is subject to Title IV
of ERISA (other than a "Multiemployer Plan" as defined in section 3(37) of
ERISA), has been completely or partially terminated or been the subject of a
"reportable event" within the meaning of Section 4043 of ERISA. No proceeding by
the Pension Benefit Guaranty Corporation ("PBGC") to terminate any such Employee
Pension Benefit Plan (other than any Multiemployer Plan) has been instituted or
Threatened. The market value of the assets under each such employee benefit plan
that is an
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Employee Pension Benefit Plan (other than a Multiemployer Plan) equals or
exceeds the present value of all vested and non-vested Liabilities thereunder
determined in accordance with PBGC methods, factors, and assumptions applicable
to an Employee Pension Benefit Plan terminating on the date of determination.
(ii) none of the Dy 4 Entities has incurred, and Parent does not
expect that any Dy 4 Entity will incur, any Liabilities to the PBGC (other than
with respect to any PBGC premiums not yet due) or otherwise under Title IV of
ERISA or under the Code with respect to any such employee benefit plan which is
an Employee Pension Benefit Plan.
Section 4.20. Taxes.
(a) Except to the extent that any failure does not have a Material
Adverse Effect, (i) all material Tax Returns required to be filed with respect
to the Dy 4 Entities have been timely filed and were correct and complete in all
material respects, (ii) all Taxes shown due and owing on such Tax Returns have
been paid, (iii) no Dy 4 Entity is currently the beneficiary of any extension of
time to file any Tax Return, (iv) no material adjustment relating to any of such
Tax Returns has been proposed formally or, to the knowledge of Dy 4 Systems or
Dy 4 (US), informally by any Tax authority, and (v) no Dy 4 Entity has any
actual or potential liability for any Tax obligation of any taxpayer (including
without limitation any Affiliated Group) other than the Dy 4 Entities, including
any obligation under any tax allocation or sharing agreement, under Section
1.1502-6 of the Regulations or any similar provision of Law, as a transferee or
successor, by contract, or otherwise. No representation or warranty is made
regarding the availability or utility of Tax Attributes or the amount thereof.
(b) The Dy 4 Entities have, or have caused to be, made available to
Purchaser copies of all Tax Returns filed with respect to the Dy 4 Entities, all
Tax audit records with respect to such Tax Returns, examination reports, and
statements of deficiencies assessed against, or agreed to by any Dy 4 Entity. No
such Tax Return is the subject of any pending audit proceedings and no Seller or
any Dy 4 Entity has received any notice of any proposed audit of any such Tax
Return. The statute of limitations in respect of Taxes of the Affiliated Group
or any Dy 4 Entity has not been waived, which waiver is still outstanding, and
no extension of time with respect to any Tax assessment or deficiency of the
Affiliated Group or any Dy 4 Entity is currently still in effect.
(c) The unpaid Taxes of the Dy 4 Entities (i) did not, as of the date
of the Reference Balance Sheet, exceed the reserve for Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) established in accordance with US GAAP on the face
of the Reference Balance Sheet (rather than in any notes thereto) and (ii) will
not exceed that reserve as adjusted for operations and transactions through the
Closing Date in accordance with the past custom and practice of the Dy 4
Entities in filing their Tax Returns.
(d) No Dy 4 Entity will be required to include any item of income in,
or exclude any deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change of
accounting method for a taxable period ending on or
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before the Closing Date, (ii) "closing agreement" (as defined in section 7121 of
the Code or corresponding or similar provision of any other applicable Law)
entered into before the Closing Date, (iii) intercompany transactions or any
excess loss account described in Treasury Regulations under section 1502 of the
Code (or any corresponding or similar provision of any other applicable Law),
(iv) installment sale or open transaction disposition made on or before the
Closing Date, or (v) prepaid amount received on or before the Closing Date.
Section 4.21. Brokers. Except for Morgan Stanley & Co. Incorporated and/or
one or more affiliates thereof, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon any agreement,
arrangement or understanding made by or on behalf of such Person. Solectron
shall be solely responsible for payment of the fees and expenses of Morgan
Stanley & Co. Incorporated and its affiliates.
Section 4.22. Books and Records. The books of account, minute books, stock
record books, and other records of each Dy 4 Entity, all of which have been made
available to the Purchaser, are complete and correct in all material respects.
The books of account and financial records of each Dy 4 Entity represent actual,
bona fide transactions and have been maintained in accordance with sound
business practices, including the maintenance of an adequate system of internal
controls. All of these books and records are and at Closing will be in the
possession of the respective Dy 4 Entity.
Section 4.23. Certain Payments. Since December 31, 2001, neither a Dy 4
Entity nor, to Sellers' or any Dy 4 Entity's knowledge, any director, officer,
agent, or employee of a Dy 4 Entity, or any other Person associated with or
acting for or on behalf of a Dy 4 Entity, has directly or indirectly (a) made
any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or
other payment to any Person, private or public, regardless of form, whether in
money, property, or services (i) to obtain favorable treatment in securing
business for a Dy 4 Entity, (ii) to pay for favorable treatment for business
secured for a Dy 4 Entity, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of a Dy 4 Entity, or (iv) in
violation of any Law for the benefit of or on behalf of a Dy 4 Entity, or (b)
established or maintained any fund or asset for the benefit or on behalf of a Dy
4 Entity that has not been recorded in the books and records of a Dy 4 Entity.
Section 4.24. Relationships With Related Persons. No Related Person of a Dy
4 Entity has any interest in any of the Assets. No Related Person of a Dy 4
Entity owns (of record or as a beneficial owner), an equity interest or any
other financial or profit interest in, a Person that has (a) had material
business dealings or a material financial interest in any transaction with a Dy
4 Entity, or (b) engaged in direct competition with a Dy 4 Entity with respect
to any line of services of a Dy 4 Entity, other than for non-material interests
in a publicly traded company. Except (i) as set forth in Section 4.24 of the
Disclosure Schedule, (ii) as will be paid at or prior to Closing as set forth in
Section 6.16, or (iii) as compensation to employees in the ordinary course of
business, no Related Person of a Dy 4 Entity is a party to any Material Contract
with, or has any claim or right against, a Dy 4 Entity. No Related Person of a
Dy 4 Entity has any outstanding loans, or guarantees of
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indebtedness, from a Dy 4 Entity (other than travel and expense advances
incurred in accordance with existing established policies of the Dy 4 Entities
and in the ordinary course of business).
Section 4.25. Labor Relations; Compliance.
(a) No Dy 4 Entity has been nor is a party to any collective
bargaining or other labor contract. There has not been, there is not presently
pending or existing, and to Sellers' or any Dy 4 Entity's knowledge, there is
not Threatened, (i) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (ii) any Action against or affecting a Dy 4 Entity relating
to the alleged violation of any Law pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission,
or any comparable Governmental Authority, organizational activity, or other
labor or employment dispute against or affecting a Dy 4 Entity or its premises,
except as would not result in material liability to the Dy 4 Entities, or (iii)
any application for certification of a collective bargaining agent. To the
Sellers' or any Dy 4 Entity's knowledge, no event has occurred or circumstance
exists that could provide the basis for any work stoppage or other labor
dispute. There is no lockout of any employees by a Dy 4 Entity, and no such
action is contemplated by a Dy 4 Entity. Each Dy 4 Entity has complied in all
material respects with all Laws relating to employment, employment practices,
terms and conditions of employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of withholding, social security and similar Taxes, occupational
safety and health, and plant closing in each case with respect to their current
and former employees. No Dy 4 Entity is liable for the payment of any material
compensation, damages, Taxes, fines, penalties, or other amounts, however
designated, for failure to comply in all material respects with any of the
foregoing Laws.
(b) No notice has been received by Dy 4 Systems nor, to the knowledge
of Sellers or any Dy 4 Entity, has any complaint been Threatened or filed by any
Dy 4 Systems employee which has not been resolved claiming that Dy 4 Systems has
materially violated the Employment Standards Act (Ontario) or the Human Rights
Code (Ontario) or any applicable employee or human rights or similar legislation
in this or the other jurisdictions in which Dy 4 Systems operates, or of any
complaints or proceedings which might not have been resolved, of any kind
involving Dy 4 Systems, to the Sellers' or Dy 4 Systems' knowledge, after due
inquiry, by any Dy 4 Systems employee before any labor relations board.
(c) There are no outstanding orders or charges or, to the knowledge of
Sellers' or any Dy 4 Entity, potential or Threatened orders or charges against
Dy 4 Systems under the Occupational Health and Safety Act (Ontario) (or any
applicable health and safety legislation in the other jurisdictions in which Dy
4 Systems carries on its Business).
(d) All complaints, appeals, premiums, levies, assessments and
penalties required to be paid by Dy 4 Systems pursuant to the Workers'
Compensation Act (Ontario) and/or the Workplace Safety and Insurance Act
(Ontario) (and any applicable workers' compensation legislation in the other
jurisdictions in which Dy 4 Systems carries on the Business) have been paid
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by Dy 4 Systems, and Dy 4 Systems has not been reassessed or, to its knowledge,
Threatened with any assessment under any such legislation except such as have
been resolved.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Sellers to enter into this Agreement, Purchaser hereby
represents and warrants to each of the Sellers as follows:
Section 5.1. Organization and Authority. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, and
has all necessary corporate power and authority to enter into this Agreement and
the Transition Services Agreement, and to carry out its obligations hereunder
and thereunder, and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of each of this Agreement and the Transition
Services Agreement by Purchaser, the performance by Purchaser of all of its
obligations hereunder and thereunder, and the consummation by Purchaser of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all requisite action on the part of Purchaser. This Agreement and
the Transition Services Agreement have been duly executed and delivered by
Purchaser, and (assuming due authorization, execution and delivery by each party
thereto) constitute legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with their terms, except as such
enforceability may be subject to the laws of general application relating to
bankruptcy, insolvency, and the relief of debtors and rules of law governing
specific performance, injunctive relief, or other equitable remedies.
Section 5.2. No Conflict. Assuming compliance with the notification
requirements of the HSR Act and, if applicable, the Competition Act, and the
making and obtaining of all filings, notifications, consents, approvals,
authorizations and other actions referred to in Section 5.3, the execution,
delivery and performance of this Agreement and the Transition Services Agreement
by Purchaser does not and will not (i) violate, conflict with or result in the
breach of any provision of the charter or by-laws of Purchaser, (ii) conflict
with or violate in any material respect any Law or Governmental Order applicable
to Purchaser, or (iii) conflict in any material respect with, or result in any
material breach of, constitute a material default (or event which with the
giving of notice or lapse of time, or both, would become a material default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, any material
note, bond, mortgage, deed of trust, indenture, contract, agreement, lease,
sublease, license, permit, franchise or other instrument or arrangement to which
Purchaser is a party or by which any of such assets or properties is bound or
affected, in each case which could reasonably be expected to have a material
adverse effect on the ability of Purchaser to consummate the Contemplated
Transactions.
Section 5.3. Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement and the Transition Services Agreement by
Purchaser does not and will not require any consent, approval, authorization or
other order of, action by, filing with, or notification to, any Governmental
Authority, except (i) as described in a writing given to Solectron
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by Purchaser on the date of this Agreement and (ii) the notification
requirements of the HSR Act and any applicable foreign antitrust regulations,
including the Competition Act.
Section 5.4. Private Placement.
(a) Purchaser understands that (i) the offering and sale of the Shares
under this Agreement is intended to be exempt from the registration requirements
of the Securities Act, and (ii) there is no existing public or other market for
the Shares and there can be no assurance that Purchaser will be able to sell or
dispose of the Shares.
(b) Purchaser is acquiring the Shares for its own account solely for
the purpose of investment and not with a view to, or for offer or sale in
connection with, any distribution thereof.
(c) Purchaser is an "accredited investor" as such term is defined in
Regulation D promulgated under the Securities Act.
(d) Purchaser is not a broker-dealer subject to Regulation T
promulgated by the Board of Governors of the Federal Reserve System.
(e) Purchaser has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Shares, and Purchaser is capable of bearing the economic risks
of such investment, including a complete loss of its investment in the Shares.
(f) Purchaser has been given the opportunity to ask questions of, and
receive answers from the Sellers and the Dy 4 Entities concerning the
transactions contemplated by this Agreement, the Shares and other related
matters. Dy 4 Systems has, or has caused to be, made available to Purchaser or
its agents all documents and information requested by or on behalf of Purchaser
relating to an investment in the Shares. In evaluating the suitability of an
investment in the Shares, Purchaser has not relied upon any representations or
other information (whether oral or written) made by or on behalf of the Dy 4
Entities or any Seller other than as contemplated by the two preceding sentences
and Article III and Article IV hereof.
(g) Purchaser understands that it may not sell or dispose of any of
the Shares other than pursuant to a registered offering, unless otherwise exempt
from the registration requirements of the Securities Act.
Section 5.5. Investigation.
(a) Without in any way affecting Purchaser's right to rely on the
representations and warranties of the Sellers and the Dy 4 Entities set forth
herein, Purchaser (i) has made its own inquiry and investigation into, and,
based thereon, has formed an independent judgment concerning the Dy 4 Entities
and the Business, (ii) has been furnished with or given adequate access to such
information about the Dy 4 Entities and the Business as it has requested, and
(iii) understands that none of Sellers, or any Dy 4 Entity is making any
representation or warranty with respect to the
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Business or the operations, assets, liabilities or financial condition of a Dy 4
Entity, other than as specifically set forth in this Agreement.
(b) In connection with Purchaser's investigation of the Dy 4 Entities
and the Business, Purchaser has received from Dy 4 Systems and Dy 4 (US) certain
estimates, projections, forecasts, plans and budgets for the Business. Purchaser
(i) understands that there are uncertainties inherent in attempting to make such
projections, forecasts, plans and budgets, (ii) is familiar with such
uncertainties, (iii) is taking full responsibility for making its own evaluation
of the adequacy and accuracy of all estimates, projections, forecasts, plans and
budgets furnished to it, (iv) will not assert any claim against any Seller or
any of their respective directors, officers, employees, agents, stockholders,
affiliates, consultants, counsel, accountants, investment bankers or
representatives, or hold any Seller or any such other persons liable, with
respect to such estimates, projections, forecasts, plans and budgets, and (v)
understands that none of the Sellers is making any representation or warranty
with respect to any estimates, projections, forecasts, plans or budgets referred
to in this Section 5.5.
Section 5.6. Financing. Purchaser now has funds sufficient to consummate
the transactions contemplated by this Agreement and will have such funds at the
Closing.
Section 5.7. Litigation. Except as set forth in a writing given to
Solectron by Purchaser on the date of this Agreement, no claim, Action, or
proceeding is pending or, to the knowledge of Purchaser, Threatened, which seeks
to delay or prevent the consummation of, or which could reasonably be expected
to materially adversely affect Purchaser's ability to consummate, the
Contemplated Transactions.
Section 5.8. Brokers. Except for Philpott Ball & Werner, Inc., no broker,
finder or investment banker may be entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon any agreement, arrangement or understanding, written or
oral, made by or on behalf of Purchaser. Purchaser shall be solely responsible
for payment of the fees and expenses of Philpott Ball & Werner, Inc.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1. Conduct of Business by Dy 4 Entities. Except as permitted,
required or contemplated by this Agreement, including those actions contemplated
in Section 6.1 of the Disclosure Schedule, during the period commencing on the
date hereof and ending on the Closing Date, the Dy 4 Entities will conduct the
Business in the ordinary course of business, and Dy 4 Systems and Dy 4 (US) will
not, and will cause each of its Subsidiaries to not, do any of the following,
unless expressly contemplated by this Agreement or approved or consented to in
writing by Purchaser (which consent will not be unreasonably delayed,
conditioned or withheld):
(a) Amend the certificate of incorporation or by-laws or similar
governing documents of a Dy 4 Entity;
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(b) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof),
except for (A) by a wholly-owned Subsidiary of Dy 4 Systems or Dy 4 (US) to a Dy
4 Entity, or (B) by a Dy 4 Entity to Solectron or its Subsidiaries in the
ordinary course of business in connection with intercompany cash management, or
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock;
(c) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (i) any capital stock of, or other equity or voting
interest in, Dy 4 Systems or Dy 4 (US) or (ii) any securities convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire either (A)
any capital stock of, or other equity or voting interest in, Dy 4 Systems or Dy
4 (US), or (B) any securities convertible into, exchangeable for, or evidencing
the right to subscribe for or acquire, any capital stock of, or other equity or
voting interest in, Dy 4 Systems or Dy 4 (US).
(d) incur or assume any material indebtedness for borrowed money or
guarantee any such indebtedness which individually is in excess of $100,000,
other than in the ordinary course of business;
(e) permit any of its assets to become subjected to any material
Encumbrance, other than Permitted Encumbrances;
(f) sell, lease or otherwise dispose of any of its material assets,
except for the disposition of inventory and obsolete assets in the ordinary
course of business;
(g) acquire or agree to acquire by merging or consolidating with, or
by purchasing a material portion of the assets or equity securities of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or agree
to acquire any assets which are material, individually or in the aggregate, to
the Business;
(h) make, commit to make, or incur any capital expenditure which
individually is in excess of $250,000, except capital expenditures reasonably
required in the event of exigent circumstances or which are funded by insurance
or other third parties;
(i) make any material change in any method of accounting or accounting
practice or policy other than in accordance with U.S. GAAP or as required by
applicable Law or authoritative interpretation of such Law;
(j) grant to any of its employees a material increase in compensation,
except in the ordinary course of business and as may be required under existing
agreements;
(k) modify or amend in any material manner, terminate (except in
accordance with its terms or in the ordinary course of business), or enter into
any Material Contract (except in the ordinary course of business), provided that
a Dy 4 Entity may make modifications or
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amendments to a Material Contract (i) in the ordinary course of business that
does not materially increase the obligations of the Dy 4 Entities in an adverse
manner or (ii) associated with renewals of such Material Contract in the
ordinary course of business;
(l) subject to Section 7.2, make or change any election, change an
annual accounting period, adopt or change any accounting method, file any
amended Tax Return, enter into any closing agreement, settle any Tax claim or
assessment relating to the Dy 4 Entities, surrender any right to claim a refund
of Taxes, consent to any extension or waiver of the limitation period applicable
to any Tax claim or assessment relating to any Dy 4 Entity, or take any similar
action relating to the filing of any Tax Return or the payment of any Tax, if
such election, adoption, change, amendment, agreement, settlement, surrender,
consent or other action would have the effect of increasing the Tax liability of
any Dy 4 Entity for any period ending after the Closing Date or decreasing any
Tax attribute of any Dy 4 Entity existing on the Closing Date, provided that Tax
Returns and amended Tax Returns may be filed in the ordinary course of business
and may include carrybacks of net operating losses and other Tax attributes to
the extent attributable to the Pre-Closing Period; or
(m) agree to do any of the foregoing.
Section 6.2. Access to Information. Subject to the terms of the
Confidentiality Agreement, from the date hereof until the Closing, upon
reasonable notice, each of Dy 4 Systems and Dy 4 (US) shall, and shall cause
their respective officers, directors, employees, agents, representatives,
accountants and counsel to, afford the officers, employees and authorized
agents, representatives, accountants, counsel and any debt financing sources of
Purchaser reasonable (but non-intrusive) access, during normal business hours
upon reasonable notice, to the offices, properties, plants, other facilities,
books and records of each Dy 4 Entity and to those officers, directors,
employees, agents, representatives, accountants and counsel of the Dy 4 Entities
who have any knowledge relating to the Business, Assets, financial condition and
operations of each of the Dy 4 Entities; provided, however, that Purchaser and
its officers, employees and authorized agents, representatives, accountants,
counsel and financing sources shall not unreasonably interfere with the business
and operations of the Dy 4 Entities.
Section 6.3. Confidentiality. The terms of the Confidentiality Agreement
are hereby incorporated herein by reference and shall continue in full force and
effect until the Closing, at which time, except as set forth below, such
Confidentiality Agreement and the obligations of the parties under this Section
6.3 shall terminate; provided, however, that (i) the seventh paragraph of the
Confidentiality Agreement (Non-Solicitation) shall remain in full force and
effect in accordance with its terms and (ii) the Confidentiality Agreement shall
terminate only in respect of that portion of the Evaluation Material (as defined
in the Confidentiality Agreement) exclusively relating to the Contemplated
Transactions. If this Agreement is, for any reason, terminated prior to the
Closing, the Confidentiality Agreement shall continue in full force and effect.
Section 6.4. Nonsolicitation. Each of the Sellers agrees that, from the
Closing Date through July 29, 2005, they shall not, and shall cause their
affiliates not to, solicit to employ (or entertain a solicitation to be employed
by) any of the officers, directors or employees of any Dy 4
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Entity, so long as they are employed by any Dy 4 Entity, without obtaining the
prior written consent of the Purchaser; provided, however, Sellers or their
affiliates shall not be precluded from hiring such officer, director or employee
who (i) has been terminated by the Dy 4 Entity prior to commencement of
employment discussions between any Seller or its affiliate and such officer,
director or employee, or (ii) is responding, on his or her own initiative, to a
general advertisement for employment not directed at any Dy 4 Entity.
Section 6.5. Regulatory Authorizations. Each of the parties hereto shall
use commercially reasonable efforts to obtain all authorizations, consents,
orders and approvals of all Governmental Authorities that may be or become
necessary for the consummation of the Contemplated Transactions and shall
cooperate fully with each other in promptly seeking to obtain all such
authorizations, consents, orders and approvals. Each party hereto shall make an
appropriate filing pursuant to the HSR Act and, if necessary, the Competition
Act with respect to the transactions contemplated by this Agreement promptly
after the date hereof and shall supply as promptly as practicable to the
appropriate Governmental Authorities any additional information and documentary
material that may be requested or required pursuant to the HSR Act and the
Competition Act. Each party hereto shall make any required filing(s), if
necessary, pursuant to the applicable foreign antitrust regulations, including
without limitation the Competition Act, with respect to the transactions
contemplated by this Agreement promptly after the date hereof and shall supply
as promptly as practicable to the appropriate Governmental Authorities any
additional information and documentary material that may be requested or
required pursuant thereto. Purchaser and Solectron shall share equally all
filing fees related to compliance with HSR and the Competition Act.
Section 6.6. Third Party Consents. The Sellers and the Dy 4 Entities shall
use reasonable efforts to obtain all such third party consents and estoppel
certificates as Purchaser may reasonably request (provided that, except as
expressly set forth herein, no Seller or Dy 4 Entity shall be required to pay
any fee or make any payment to obtain any such consent or estoppel certificate).
Purchaser shall cooperate and use reasonable efforts to assist the Sellers and
the Dy 4 Entities in obtaining such consents and estoppel certificates.
Notwithstanding the foregoing, Purchaser understands and agrees that the
procurement of any such third party consents and estoppel certificates
(regardless of whether any such consent or estoppel certificate is identified on
Section 4.5 of the Disclosure Schedule) is not a condition to Purchaser's
obligation to effect the Closing.
Section 6.7. Conveyance Taxes. Purchaser shall be liable for and shall hold
Sellers harmless against any transfer, stock transfer and stamp Taxes, any
transfer, recording, registration and other fees, and any similar Taxes and fees
(including, without limitation, real property transfer taxes in connection with
Owned Real Property) which become payable in connection with the sale and
purchase of the Shares pursuant to this Agreement.
Section 6.8. Further Action. Each of the parties hereto shall use
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers, as may
reasonably be required to carry out the provisions of this Agreement and
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consummate and make effective the transactions contemplated by this Agreement,
and to vest in Purchaser good and valid title to the Shares.
Section 6.9. Director and Officer Liability and Indemnification. For a
period of seven (7) years after the Closing, Purchaser shall not, and shall
cause each Dy 4 Entity not to amend, repeal or modify any provision in its
certificate of incorporation or bylaws (or similar governing documents) or
pursuant to other instruments of agreements in effect on the date hereof
relating to the exculpation or indemnification of present and former officers
and directors of the Dy 4 Entities (unless required by Law or the rules of any
stock exchange or self-regulatory organization), it being the intent of the
parties that such officers and directors of the Dy 4 Entities prior to the
Closing shall continue to be entitled to such exculpation and indemnification
after the Closing Date to the fullest extent permitted under applicable law
until the expiration of the applicable statute of limitations. The parties agree
that Purchaser shall purchase directors and officers liability insurance
coverage for purposes of indemnifying and insuring persons covered by such
insurance of the Dy 4 Entities, as the case may be, immediately prior to the
Closing Date, which coverage shall be on terms and in amounts at least as
favorable to such persons as they were on the Closing Date.
Section 6.10. Contact with Customers and Suppliers. Purchaser and its
representatives shall contact and communicate with the employees, customers,
suppliers, licensees and licensors of the Dy 4 Entities in connection with the
transactions contemplated hereby only with the prior written consent of
Solectron (or its designee, as evidenced by a writing delivered to Purchaser by
Solectron), which consent shall not be unreasonably withheld, delayed or
conditioned except that such consent may be conditioned upon a designee of
Solectron being present at any such meeting or conference.
Section 6.11. Employees.
(a) For the period commencing on the Closing Date and ending on the
one-year anniversary of the Closing Date (or such longer period as may be
required by the terms of any collective bargaining agreement or applicable law)
(the "Continuation Period"), Purchaser shall provide, or cause the Dy 4 Entities
to provide, those persons employed by the Dy 4 Entities immediately prior to the
Closing, including those employees on vacation, leave of absence, disability or
sick leave or layoff, and, where applicable, their eligible dependents (whether
or not such employees return to active employment with such Dy 4 Entity) (the
"Transferred Employees"), with employee benefits and base pay that are
substantially equivalent to, or more favorable than, the benefits and base pay
that such Transferred Employees received or were entitled to receive under the
Employee Plans immediately prior to the Closing. Purchaser shall also maintain
the employee benefit plans of the Dy 4 Entities identified in Section 6.11(a) of
the Disclosure Schedule for applicable Transferred Employees participating in
such plans immediately prior to Closing (subject to the terms of such plans)
through the one-year anniversary of the Closing Date, and shall make such
payments as are required by such plans. During the Continuation Period or such
longer period as may be required under the terms of any applicable Employee
Plan, Purchaser shall continue to provide, or cause the Dy 4 Entities to
provide, those former employees of a Dy 4 Entity who were employed prior to the
Closing (the "Transferred Former Employees") with employee benefits and base pay
that are substantially equivalent to, or more favorable than, the benefits and
base pay that
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such Transferred Former Employees were entitled under the Employee Plans or
applicable collective bargaining agreements immediately prior to the Closing.
(b) Purchaser shall use reasonable best efforts to cause its medical,
dental and other health and welfare plans to (i) waive any preexisting condition
limitations for conditions covered under the applicable medical, dental or other
health or welfare plans of the Dy 4 Entities (the "Welfare Plans") and any
waiting periods for such plans, and (ii) credit Transferred Employees and
Transferred Former Employees with any deductible and out-of-pocket expenses
incurred by such employees and their dependents under the Welfare Plans during
the portion of 2003 preceding the Closing Date for purposes of satisfying any
applicable deductible or out-of-pocket requirements under any similar welfare
benefit plan in which such employees may be eligible to participate after the
Closing Date.
(c) Upon the Closing Date, Purchaser shall honor or cause the Dy 4
Entities to honor in accordance with their terms all individual employment,
severance and other compensation agreements then existing between the Dy 4
Entities and any employee, director or officer thereof, except as otherwise
agreed in writing by Purchaser and such Person. Purchaser shall assume and be
responsible for all liabilities with respect to each Transferred Employee's and
Transferred Former Employee's accrued vacation and for any Employee Plan that is
sponsored by a Dy 4 Entity and to which Seller is not a sponsor or participating
employer.
(d) Effective no later than the Closing Date, each Transferred
Employee that is U.S. based employee shall be eligible to participate in a
defined contribution plan which is maintained by Purchaser, is qualified under
Section 401(a) of the Code and includes a qualified cash or deferred
arrangement, within the meaning of Section 401(k) of the Code (the "Purchaser
401(k) Plan"). The Purchaser and the Dy 4 Entities shall effectuate the
plan-to-plan transfer of accounts maintained on behalf of Transferred Employees
from each defined contribution plan which is maintained by the Dy 4 Entities or
one of its ERISA Affiliates, is qualified under Section 401(a) of the Code and
includes a qualified cash or deferred arrangement, within the meaning of Section
401(k) of the Code to the Purchaser 401(k) Plan, as soon as administratively
practicable after the Closing Date and in accordance with applicable Laws
(including the Code, ERISA and any laws and regulations with respect to
applicable black-out periods).
(e) To the extent that service is relevant for purposes of
eligibility, vesting or benefit accrual under any employee benefit plan, program
or arrangement established or maintained by Purchaser or any Dy 4 Entity for the
benefit of Transferred Employees or Transferred Former Employees, such plan,
program or arrangement shall credit such employees or former employees for
service on or prior to the Closing with a Dy 4 Entity.
(f) Purchaser will establish no later than the Closing Date, such
employee benefit plans as to provide each Transferred Employee and Transferred
Former Employee (and, where applicable, their eligible dependents) with
substantially equivalent or more favorable benefits than those received (or
entitled to receive) under the Employee Plans prior to the Closing Date and will
continue to maintain and sponsor such benefit plans through at least the
one-year anniversary of the
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Closing Date. Purchaser shall further adopt and sponsor each Employee Plan that
is sponsored by a Dy 4 Entity and to which Seller is not a sponsor or
participating employer.
(g) Purchaser will establish prior to Closing a registered retirement
savings plan ("RRSP") or defined contribution pension plan ("DC Plan") for the
benefit of employees of the Dy 4 Entities based in Canada and will permit such
employees to transfer, where applicable, their account balances from the DC Plan
and RRSP(s) of Sellers or their Affiliates to such RRSP or DC Plan of Purchaser.
The transfers described herein shall comply with applicable Law, and each party
shall make all filings and take any actions required of such party by applicable
Law in connection therewith. To the extent permitted by Law, participants in the
RRSP(s) of Sellers or their Affiliates shall be given full service credit for
all service with the Dy 4 Entities for purposes of eligibility and vesting under
the RRSP or DC Plan of Purchaser.
(h) For purposes of this Section 6.11, references to "Purchaser" shall
mean the Purchaser, together with its Subsidiaries (including without limitation
the Dy 4 Entities after Closing).
Section 6.12. Use of Solectron's Name.
(a) Within three (3) months after the Closing, the Purchaser shall:
(i) remove "Solectron", "C-MAC" or any other similar mark and any
other trademark, design or logo previously or currently used by Solectron (the
"Solectron Marks") from all buildings, signs and vehicles of Purchaser; and
(ii) cease using the Solectron Marks in electronic databases, web
sites, product instructions, packaging and other materials, printed or otherwise
(all such materials, together with buildings, signs and vehicles, the "Marked
Assets").
(b) Immediately after the Closing, Purchaser shall cease using the
Solectron Marks in all invoices, letterhead, advertising and promotional
materials, office forms and business cards.
(c) From and after the Closing, Purchaser shall use reasonable best
efforts to remove the Solectron Marks from all assets of the Dy 4 Entities
(including all Marked Assets); provided that in no event shall Purchaser use the
Solectron Marks after the six month anniversary of the Closing Date.
(d) Purchaser acknowledges and agrees that Solectron is the owner of
the Solectron Marks and all goodwill attached thereto. This Agreement does not
give Purchaser the right to use the Solectron Marks except in accordance with
this Agreement. Purchaser agrees not to attempt to register the Solectron Marks
nor to register anywhere in the world a mark same as or similar to the Solectron
Marks.
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(e) In no event shall Purchaser advertise or hold itself out as
Solectron (or an affiliate of Solectron or otherwise associated with Solectron)
after the Closing Date.
(f) For purposes of this Section 6.12, references to "Solectron" shall
mean Solectron, together with its Subsidiaries, and references to "Purchaser"
shall mean the Purchaser, together with its Subsidiaries (including without
limitation the Dy 4 Entities after Closing).
Section 6.13. No Shop. Until the sooner to occur of the consummation of the
Contemplated Transactions or the termination of this Agreement, Purchaser shall
have the exclusive right to negotiate with Sellers regarding the acquisition of
the Shares (and/or any material assets of each Dy 4 Entity, other than the
disposition of inventory or obsolete assets in the ordinary course of business)
contemplated hereby and neither Sellers nor any Dy 4 Entity will solicit or
conduct any negotiations with any other party for the sale or other disposition,
by merger or otherwise, of any Dy 4 Entity, its shares of capital stock, or any
of its material assets or properties (other than the disposition of inventory or
obsolete assets in the ordinary course of business). In no event shall the
provisions of this Section 6.13 survive termination of this Agreement.
Section 6.14. Certain Subsidiaries. Solectron shall use commercially
reasonable efforts to have Dy 4 Systems Australia Pty Limited and Dy 4 Systems
International Ltd. dissolved and liquidated prior to the Closing Date, and in
the event that such Subsidiaries are not dissolved and liquidated prior to
Closing, Solectron shall promptly reimburse Purchaser for any reasonable costs
and expenses that it incurs associated with such dissolution and liquidation.
Solectron hereby agrees to indemnify and hold Purchaser harmless from any
Liabilities that Purchaser or any of its affiliates may incur attributable to
the dissolution and liquidation of such Subsidiaries.
Section 6.15. Transition Services. Solectron and Purchaser shall consider
and negotiate in good faith with respect to any amendment to the Transition
Services Agreement necessary to incorporate any additional transition services
that are identified after the date hereof.
Section 6.16. Satisfaction and Release of Certain Indebtedness. At or prior
to Closing, (i) all direct or indirect indebtedness of any kind owed by any Dy 4
Entity to Solectron or any of its Subsidiaries (other than a Dy 4 Entity) and
(ii), if applicable, all direct or indirect indebtedness of Solectron or any of
its Subsidiaries (other than a Dy 4 Entity) which is guaranteed by any Dy 4
Entity or in respect of which any Dy 4 Entity is liable, shall either be paid in
full or such Dy 4 Entity shall be released from any obligations in respect
thereof, in either case with no further Liability to such Dy 4 Entity or any
affiliate thereof (including Purchaser) as of and after the consummation of the
Contemplated Transactions. At or prior to Closing, all indebtedness of any kind
owed by Solectron or any of its Subsidiaries (other than a Dy 4 Entity) to any
Dy 4 Entity shall be paid in full. At the Closing, Solectron shall execute and
deliver, or cause to be executed and delivered, to Purchaser one or more
releases in form and substance reasonably satisfactory to Purchaser and its
counsel releasing each Dy 4 Entity and its affiliates for any and all
Liabilities attributable to or arising under all direct or indirect indebtedness
referred to in clause (i) above, and if applicable, clause (ii) above.
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Section 6.17. Foreign Currency.
(a) After the Closing, no Dy 4 Entity shall incur or suffer any
Liability under, nor receive any benefit from, any foreign currency hedging or
other derivative financial instrument (including options, forward and futures
contracts, repurchase agreements and swap agreements, and any combinations
thereof) entered into by any Seller or any of their affiliates ("Hedging
Instruments"). Any asset or liability upon which such Hedging Instruments are
based and that are reflected on the financial statements of Dy 4 Systems and Dy
4 (US) will be distributed to, or assumed by, Solectron immediately prior to
Closing, and any such asset or liability will be eliminated from the financial
statements of Dy 4 Systems and Dy 4 (US) as of the Closing.
(b) Promptly after the date hereof, Purchaser shall consider and
negotiate in good faith with respect to the assumption or transfer of the
Hedging Instruments (and/or the associated loss or gain) of Solectron obtained
with respect to the Dy 4 Entities; provided, however, that Purchaser shall have
no obligation to assume or transfer such Hedging Instruments.
Section 6.18. Intercompany Accounts; Cash and Cash Equivalents.
Notwithstanding anything in this Agreement to the contrary, immediately prior to
Closing, (i) all accounts receivable of Dy 4 Systems and Dy 4 (US) owing from
Solectron or any of its Subsidiaries (other than a Dy 4 Entity) shall be
distributed, forgiven or otherwise eliminated, (ii) all accounts payable owing
to Solectron or any of its Subsidiaries (other than a Dy 4 Entity) shall be
assumed, forgiven or otherwise eliminated, and (iii) all cash and cash
equivalents of Dy 4 Systems and Dy 4 (US) shall be distributed to Solectron.
ARTICLE VII
TAX MATTERS
Section 7.1. Liability for Taxes.
(a) Solectron shall indemnify the Purchaser Indemnified Parties
against all Taxes relating or attributable to any Dy 4 Entity and any related
Losses incurred or suffered by Purchaser which are attributable to the
Pre-Closing Period.
(b) Purchaser shall indemnify Solectron for all Losses for Taxes
relating or attributable to any Dy 4 Entity incurred or suffered by Solectron
which are attributable to the Post-Closing Period.
(c) With respect to any Straddle Period, Losses for Taxes will be
allocated between the Pre-Closing Period and the Post-Closing Period by closing
the books at the end of the Closing Date, except that Tax items of a periodic
nature, such as depreciation allowances calculated on an annual basis, shall be
allocated by apportioning a pro rata portion of such Taxes to each day in the
relevant Straddle Period.
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(d) Solectron shall not be required to indemnify the Purchaser
Indemnified Parties for reductions in net operating loss carryovers, Tax credits
or similar Tax attributes. Solectron shall not be required to indemnify the
Purchaser Indemnified Parties against Losses for Taxes attributable to the
Pre-Closing Period to the extent such Losses for Taxes are reduced under
applicable Law by reason of net operating loss carryovers, Tax credits and
similar Tax attributes arising in the Pre-Closing Period (assuming for the
purposes of this sentence that such attributes are not used to reduce Taxes in
the Post-Closing Period).
Section 7.2. Tax Return Filing.
(a) Except as set forth in Section 7.2(b) Purchaser shall control and
be responsible for the filing of all Tax Returns required to be filed with
respect to the Dy 4 Entities after the Closing Date with respect to any Straddle
Period or Post-Closing Period. All such Tax Returns shall be completed in
accordance with past practice to the extent permitted by applicable Law.
Purchaser shall make all payments required with respect to any such Tax Return,
subject to reimbursement and indemnification by Solectron pursuant to Sections
7.1(a) and 7.2(c).
(b) Solectron shall control and be responsible for the preparation and
filing of all Tax Returns due after the Closing Date that relate to the Dy 4
Entities and are (i) Affiliated Group Tax Returns which include Pre-Closing
Period operations and (ii) Tax Returns for any Dy 4 Entity which are not
Straddle Period Tax Returns for which Purchaser has responsibility under Section
7.2(a). All such Tax Returns shall be completed in accordance with past practice
to the extent permitted by applicable Law. Solectron shall make all payments
required with respect to any such Tax Return, subject to reimbursement and
indemnification by Purchaser pursuant to Sections 7.1(b) and 7.2(c).
(c) In the event that Solectron or Purchaser is liable for any Taxes
paid by the other party with respect to any Tax Return, prompt reimbursement
shall be made.
Section 7.3. Tax Contests; Audit Responsibilities.
(a) If Purchaser receives notice of a Tax Contest with respect to
which the Dy 4 Entities could reasonably be expected to cause Solectron or any
Solectron affiliate to have an indemnification obligation under this Article
VII, then Purchaser shall notify Solectron in writing of such Tax Contest within
thirty (30) days of receiving such notice; provided, however, that Purchaser's
failure to provide such notice shall not release Solectron from any
indemnification obligation hereunder unless Solectron loses its right to contest
such Tax Contest as a result of such failure to notify. Solectron shall have the
right to control the conduct and resolution of such Tax Contest, provided,
however, that Solectron may decline to participate in such Tax Contest. If
Solectron controls the conduct of such Tax Contest, Solectron regularly shall
advise Purchaser of the status of such Tax Contest and shall not resolve such
Tax Contest, to the extent such Tax Contest relates to Post-Closing Period
Taxes, without Purchaser's written consent, which consent shall not be
unreasonably delayed, conditioned or withheld. If Solectron declines to control
such Tax Contest, then the Purchaser shall have the right to control the conduct
of such Tax Contest, provided, however, that Purchaser shall regularly advise
Solectron of the status of such Tax Contest and shall
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not resolve such Tax Contest without Solectron's written consent, which consent
shall not be unreasonably delayed, conditioned or withheld. Each party shall
bear its own costs for participating in such Tax Contest, subject to any
indemnification provided under Section 7.1.
(b) In the event of a dispute between Solectron and Purchaser
regarding the conduct or resolution of any Tax Contest or claim for
indemnification under this Article VII, such dispute shall be referred to a Tax
Arbitrator. The decision of the Tax Arbitrator shall be final and binding, and
its fees and costs shall be shared equally by the disputing parties. Each party
shall bear its own costs for participating in such dispute resolution.
(c) Any net refunds and credits attributable to the payment of Taxes
for a Pre-Closing Period shall be for the account of Solectron.
(d) To the extent not inconsistent with the provisions of this Section
7.3, the procedures of Article X shall apply in the case of any claim for Losses
related to Taxes.
Section 7.4. Cooperation. Each of Solectron and Purchaser shall:
(a) provide assistance to each other party as reasonably requested in
preparing and filing Tax Returns and responding to Tax audits or Tax authority
disputes;
(b) make available to each other party as reasonably requested all
information, records, and documents relating to Taxes concerning the Dy 4
Entities, including information required by Solectron for Tax Returns required
to be filed after Closing which relate to Pre-Closing Periods; and
(c) retain any books and records that could reasonably be expected to
be necessary or useful in connection with any preparation by any other party of
any Tax Return, or for any audit, examination, or proceeding relating to Taxes.
Such books and records shall be retained until the expiration of the applicable
statute of limitations (including extensions thereof) or applicable time for any
appeals, if relevant.
Section 7.5. 338(h)(10) Election; Purchase Price Allocation.
(a) If Purchaser so requests: (i) Solectron agrees that Solectron and
Purchaser will treat the purchase of the Dy 4 (US) Shares hereunder as a deemed
sale of assets by Dy 4 (US), pursuant to Section 338(h)(10) of the Code, and
(ii) Solectron, Solectron Canada ULC, Dy 4 (US) and Purchaser will make a timely
and effective joint election under Section 338(h)(10) of the Code (the "Section
338(h)(10) Election").
(b) In the event of a Section 338(h)(10) Election, Solectron and
Purchaser shall mutually agree following the Closing on the allocation of
Purchase Price between the Dy 4 (US) Shares and Dy 4 Systems Shares and on the
allocation of Purchase Price among the assets of Dy 4 (US), and shall jointly
prepare and timely file IRS Form 8023 in connection with the Section 338(h)(10)
Election.
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ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1. Conditions to Obligations of Sellers and Purchaser. The
obligations of each Seller and Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, at or prior
to the Closing, of each of the following conditions:
(a) HSR Act and Competition Act. Any waiting period (and any extension
thereof) under the HSR Act and Competition Act applicable to the purchase of the
Shares contemplated by this Agreement shall have expired or shall have been
terminated.
(b) Regulatory Approvals. Purchaser and the Dy 4 Entities shall have
received all authorizations, consents, orders and approvals of all Governmental
Authorities, including but not limited to any authorizations, consents, orders
and approvals under the Competition Act or other applicable foreign antitrust
regulatory approvals that are reasonably required to consummate the transactions
contemplated by this Agreement.
(c) No Governmental Order. No Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Law or Governmental Order
which is in effect and has the effect of making the transactions contemplated by
this Agreement illegal or otherwise restraining or prohibiting the consummation
of the transactions contemplated by this Agreement.
(d) No Proceeding or Litigation. No Action shall have been commenced
by or before any Governmental Authority seeking to restrain or materially and
adversely alter the transactions contemplated by this Agreement which, in the
reasonable, good faith determination of Solectron or Purchaser is expected to
prevent the parties from consummating such transactions contemplated this
Agreement; provided, however, that the provisions of this Section 8.1(d) shall
not apply to any party which has directly or indirectly solicited or encouraged
any such Action.
Section 8.2. Additional Condition to Obligations of Sellers. The
obligations of each Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of:
(a) Representations and Warranties of Purchaser. (i) The
representations and warranties of Purchaser contained in this Agreement that are
not qualified by materiality shall be true and correct in all material respects
as of the Closing Date, with the same force and effect as if made as of the
Closing Date (other than such representations and warranties as are made as of
another date, which shall have been true and correct in all material respects as
of such other date), and (ii) the representations and warranties of Purchaser
contained in this Agreement that are qualified by materiality shall be true and
correct as of the Closing Date, with the same force and effect as if made as of
the Closing Date (other than such representations and warranties as are made as
of another date, which shall have been true and correct as of such other date);
provided, however, that in order to fail to satisfy this closing condition, any
failure of the representations and warranties
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to be true and correct, whether or not qualified by materiality, individually or
in the aggregate, must be material in the context of the Agreement taken as a
whole.
(b) Compliance with Covenants. The covenants and agreements contained
in this Agreement to be complied with by Purchaser on or before the Closing
shall have been complied with in all material respects.
(c) Purchaser Certificate. Purchaser shall have delivered to Solectron
a certificate executed by an authorized officer of Purchaser to the effect that
each of the conditions specified in clauses (a) and (b) of this Section 8.2 is
satisfied in all respects.
Section 8.3. Additional Conditions to Obligations of Purchaser. The
obligations of Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following additional conditions:
(a) Representations and Warranties of Sellers. (i) The representations
and warranties of Sellers contained in this Agreement that are not qualified by
materiality shall be true and correct in all material respects as of the Closing
Date, with the same force and effect as if made as of the Closing Date (other
than such representations and warranties as are made as of another date, which
shall have been true and correct in all material respects as of such other
date), and (ii) the representations and warranties of Sellers contained in this
Agreement that are qualified by materiality shall be true and correct as of the
Closing Date, with the same force and effect as if made as of the Closing Date
(other than such representations and warranties as are made as of another date,
which shall have been true and correct as of such other date); provided,
however, that in order to fail to satisfy this closing condition, any failure of
the representations and warranties to be true and correct, whether or not
qualified by materiality, individually or in the aggregate, must be material in
the context of the Agreement taken as a whole.
(b) Representations and Warranties of Dy 4 Systems and Dy 4 (US). (i)
The representations and warranties of Dy 4 Systems and Dy 4 (US) contained in
this Agreement that are not qualified by materiality shall be true and correct
in all material respects as of the Closing Date, with the same force and effect
as if made as of the Closing Date (other than such representations and
warranties as are made as of another date, which shall have been true and
correct in all material respects as of such other date) and (ii) the
representations and warranties of Dy 4 Systems and Dy 4 (US) contained in this
Agreement that are qualified by materiality shall be true and correct as of the
Closing Date, with the same force and effect as if made as of the Closing Date
(other than such representations and warranties as are made as of another date,
which shall have been true and correct as of such other date); provided,
however, that in order to fail to satisfy this closing condition, any failure of
the representations and warranties to be true and correct, whether or not
qualified by materiality, individually or in the aggregate, must be material in
the context of the Agreement taken as a whole.
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(c) Compliance with Covenants.
(i) The covenants and agreements contained in this Agreement to
be complied with by Sellers on or before the Closing shall have been complied
with in all material respects.
(ii) The covenants and agreements contained in this Agreement to
be complied with by Dy 4 Systems and Dy 4 (US) on or before the Closing shall
have been complied with in all material respects.
(d) Sellers' Certificate. Solectron, on behalf of the Sellers, shall
have delivered to Purchaser a certificate executed by an authorized officer of
Solectron to the effect that each of the conditions specified in clauses (a) and
(c)(i) of this Section 8.3 is satisfied in all respects.
(e) Dy 4 Entities' Certificate. Dy 4 Systems and Dy 4 (US), on behalf
of the Dy 4 Entities, shall have delivered to Purchaser a certificate executed
by an authorized officer of each of Dy 4 Systems and Dy 4 (US), to the effect
that each of the conditions specified in clauses (b) and (c)(ii) of this Section
8.3 is satisfied in all respects.
ARTICLE IX
TERMINATION AND WAIVER
Section 9.1. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual written consent of Solectron, on behalf of Sellers,
and Purchaser;
(b) by Solectron, on behalf of Sellers, or Purchaser, if the Closing
shall not have occurred by March 2, 2004; provided, however, that this date
shall be automatically extended to April 2, 2004, if all applicable waiting
periods under HSR and the Competition Act have not either expired or been
terminated; provided, further, however, that the right to terminate this
Agreement under this Section 9.1(b) shall not be available to any party hereto
whose actions or failure to fulfill any obligation under this Agreement shall
have been the cause of, or shall have resulted in, the failure of the Closing to
occur on or prior to such date and such actions or failure to act constitutes a
breach of this Agreement;
(c) by Purchaser, by giving written notice to Solectron in the event
any Dy 4 Entity or Seller is in breach of any representation, warranty or
covenant contained in this Agreement, and such breach, individually or in
combination with any other such breach, (i) would cause the conditions set forth
in clauses (a), (b) or (c) of Section 8.3 not to be satisfied and (ii) is not
cured within 30 days following delivery by Purchaser to Solectron of written
notice of such breach (except in the case of a breach that is not curable or
efforts to cure such breach have ceased);
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(d) by Solectron, on behalf of the Sellers, by giving written notice
to Purchaser in the event Purchaser is in breach of any representation, warranty
or covenant contained in this Agreement, and such breach, individually or in
combination with any other such breach, (i) would cause the conditions set forth
in clauses (a) or (b) of Section 8.2 not to be satisfied and (ii) is not cured
within 30 days following delivery by Solectron to Purchaser of written notice of
such breach (except in the case of a breach that is not curable or efforts to
cure such breach have ceased);
(e) by Purchaser or Solectron, if a Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Law, Governmental Order or
award which is then in effect and has the effect of making the Contemplated
Transactions illegal or otherwise prohibiting consummation of the Contemplated
Transactions and which is final and non-appealable.
Section 9.2. Effect of Termination. In the event of termination of this
agreement as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto except (i) as
set forth in this Section 9.2, Section 6.3 and Article XI and (ii) that nothing
herein shall relieve any party from liability for any willful breach of this
Agreement.
Section 9.3. Waiver.
(a) Solectron, on behalf of Sellers, may (i) extend the time for the
performance of any of the obligations or other acts of Purchaser or any of the
obligations or other acts of Dy 4 Systems or Dy 4 (US) to be performed after the
Closing, (ii) waive any inaccuracies in the representations and warranties of
Purchaser contained herein or in any document delivered by Purchaser pursuant
hereto, or (iii) waive compliance with any of the agreements or conditions of
Purchaser contained or compliance after the Closing with any of the agreements
or conditions of Dy 4 Systems or Dy 4 (US) contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
Solectron.
(b) Purchaser may (i) extend the time for the performance of any of
the obligations or other acts of any Seller or Dy 4 Entity (ii) waive any
inaccuracies in the representations and warranties of a Dy 4 Entity, or any
Seller contained herein or in any document delivered by a Dy 4 Entity or any
Seller pursuant hereto or (iii) waive compliance with any of the agreements or
conditions of a Dy 4 Entity or any Seller contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
Purchaser.
(c) Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
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ARTICLE X
INDEMNIFICATION
Section 10.1. Survival of Representations and Warranties.
(a) All representations and warranties set forth in this Agreement
shall expire and terminate on the date that is eighteen months after the Closing
Date; provided, however, that the representations and warranties set forth in
Section 4.14 and Section 4.19 shall expire on the date that is 27 months after
the Closing Date; provided, further, that the representations and warranties set
forth in Section 4.20 shall expire one month after the expiration of the
applicable statute of limitations relating thereto (the date of such applicable
expiration, a "Termination Date"); provided, further, that the representations
and warranties set forth in Section 3.1, Section 3.4, Section 4.1, Section 4.2,
Section 4.3, and Section 4.4 shall not expire. Except as provided in the
preceding sentence and except for any breach of any covenant which requires
performance beyond the Termination Date (except in each case as a result of any
changes contemplated or permitted by this Agreement), the obligations to
indemnify and hold harmless any Person pursuant to Section 10.2(a)(i) or Section
10.2(b)(i) or Section 7.1 shall terminate on the Termination Date; provided that
such obligations to indemnify and hold harmless shall not terminate as to any
item with respect to which the person to be indemnified shall have, prior to the
Termination Date, delivered to the indemnifying party a bona fide Officer's
Certificate or, in the event of a Third Party Proceeding, given notice to the
indemnifying party of such Third Party Proceeding in accordance with Section
10.4. References herein to the "indemnified party" shall mean the party entitled
to indemnification under Section 10.2 or Section 7.1, and references herein to
the "indemnifying party" shall mean the party obligated to indemnify an
indemnified party against Losses pursuant to Section 10.2 and Section 7.1.
(b) The right to indemnification, payment of Losses or other remedy
based on such representations, warranties, covenants, and obligations will not
be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Losses, or other remedy based on such
representations, warranties, covenants, and obligations.
Section 10.2. Indemnification.
(a) Indemnification by Solectron. Subject to the provisions of this
Article X and Article VII, from and after the Closing, Solectron agrees to
indemnify and hold the Purchaser and its officers, directors and affiliates,
including the Dy 4 Entities after the Closing (the "Purchaser Indemnified
Parties"), harmless against all claims, losses, liabilities, damages,
deficiencies, costs and expenses (including costs of investigation and defense
and all reasonable legal and other professional fees and disbursements,
interest, penalties and amounts paid in settlement), relating to
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such claim, loss, liability, damage, deficiency, cost or expense incurred or
suffered (hereinafter individually a "Loss" and collectively "Losses") by the
Purchaser Indemnified Parties, or any of them, (i) as a result of the breach of
any representation or warranty made by Sellers or the Dy 4 Entities in this
Agreement, (ii) as a result of the breach of any covenant made by Sellers or the
Dy 4 Entities in this Agreement (except in each case as a result of any changes
contemplated or permitted by this Agreement), (iii) as a result of, or
attributable to, the disclosure set forth in Schedule 4.19(a)(iii), or (iv) as a
result of, or attributable to, any unsatisfied obligations to pay severance
benefits or professional fees that were incurred with respect to the
reductions-in-force of employees of the Dy 4 Entities occurring between January
1, 2003 and August 29, 2003. Notwithstanding the foregoing, indemnification for
any Losses relating to Taxes shall be governed by the provisions in Section 7.1;
provided that the provisions of this Article X shall also apply for
indemnification for Losses relating to Taxes to the extent not inconsistent with
the provisions of Article VII.
(b) Indemnification by Purchaser. Subject to the provisions of this
Article X and Article VII, from and after the Closing, Purchaser agrees to
indemnify and hold each Seller and its officers, directors and affiliates (the
"Seller Indemnified Parties"), harmless against all Losses (other than any
Losses relating to Taxes, for which the indemnification provisions in Section
7.1 shall govern) incurred or suffered by the Seller Indemnified Parties, or any
of them, (i) as a result of the breach of any representation or warranty made by
Purchaser in this Agreement, (ii) as a result of the breach of any covenant made
by Purchaser in this Agreement, or (iii) as a result of, or attributable to, the
failure to provide, as of the Closing Date and through the one-year anniversary
of the Closing Date, Transferred Employees or Transferred Former Employees with
employee benefits and base pay that are equivalent to, or more favorable than,
the benefits and base pay that such Transferred Employees or Transferred Former
Employees received or were entitled to receive under the Employee Plans
immediately prior to Closing.
Section 10.3. Proceedings Involving Governmental Authorities or Third
Parties. If the existence or amount of any Loss cannot be ascertained until the
conclusion of any audit, examination, litigation, or other proceeding involving
any Governmental Authority, tax authority or third party ("Third Party
Proceeding"), the indemnified party shall give written notice of such Third
Party Proceeding to the indemnifying party within five (5) business days of the
indemnified party's receipt of notice of the commencement of such Third Party
Proceeding. Such written notice shall describe in reasonable detail the facts
constituting the basis for such Third Party Proceeding and the amount of the
potential Loss. Within 20 days after delivery of such notification, the
indemnifying party may, upon written notice thereof to the indemnified party,
assume control of the Third Party Proceeding with counsel reasonably
satisfactory to the indemnified party. If the indemnifying party elects not to
assume control, the indemnified party shall retain control of such Third Party
Proceeding. The party not controlling such Third Party Proceeding (the
"Non-controlling Party") may participate therein at its own expense. The party
controlling such Third Party Proceeding (the "Controlling Party") shall keep the
Non-controlling Party advised of the status of such Third Party Proceeding and
shall consider in good faith recommendations made by the Non-controlling Party
with respect thereto. The Non-controlling Party shall furnish the Controlling
Party with such information as it may have with respect to such Third Party
Proceeding (including copies of any summons, complaint or other pleading which
may have been served on such party and any written
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claim, demand, invoice, billing or other document evidencing or asserting the
same) and shall otherwise cooperate with and assist the Controlling Party such
Third Party Proceeding. The indemnifying party shall not agree to any settlement
of, or the entry of any judgment arising from, any such Third Party Proceeding
without the prior written consent of the indemnified party, which shall not be
unreasonably withheld, conditioned or delayed; provided that the consent of the
indemnified party shall not be required if the indemnifying party agrees in
writing to pay any amounts payable pursuant to such settlement or judgment and
such Third Party Proceeding includes a complete release of the indemnified party
from further liability and has no other adverse effect on the indemnified party.
The indemnified party shall not agree to any settlement of, or the entry of any
judgment arising from, any such Third Party Proceeding without the prior written
consent of the indemnifying party. Notwithstanding the foregoing, in the event
of a Loss relating to a Tax Contest, the provisions of Section 7.3 shall govern.
Section 10.4. Claims for Indemnification. An indemnified party shall make
any claims for indemnification pursuant to Section 10.2 (subject to Section 7.3
with respect to claims made under both Section 10.2 and Section 7.1) by
delivering an Officer's Certificate to the indemnifying party. For purposes
hereof, "Officer's Certificate" shall mean a certificate signed by any officer
of the Purchaser, in the case of a Purchaser Indemnified Party, and Solectron,
in the case of a Seller Indemnified Party; and such certificate shall (A) state
that the party claiming indemnification has paid, incurred or properly accrued
or reasonably anticipates that it will have to pay, incur or accrue Losses, and
(B) specifying in reasonable detail the individual items of Losses included in
the amount so stated, the date each such item was paid, incurred or properly
accrued, or the basis for such anticipated liability.
Section 10.5. Objections to Claims for Indemnification. An indemnifying
party may make a written objection ("Objection") to any claim for
indemnification. Subject to Section 7.3 with respect to claims made under both
Section 10.2 and Section 7.1, the Objection shall be delivered to the
indemnified party within 30 days after delivery of the Officer's Certificate to
the indemnifying party.
Section 10.6. Resolution by the Parties. The indemnifying party and the
indemnified party shall attempt in good faith to resolve any claim for
indemnification to which an Objection is made. If such parties are able to
resolve any such claim for indemnification, they shall prepare and sign a
memorandum setting forth such agreement. The indemnifying party shall pay to the
applicable indemnified party by wire transfer of immediately available funds to
an account designated by such indemnified party the agreed-upon amount of the
Loss (if any) within 15 days of the date of the written memorandum described in
the preceding sentence.
Section 10.7. Arbitration. Subject to Section 7.3 with respect to claims
made under both Section 10.2 and Section 7.1, if the indemnifying party and the
indemnified party are unable to resolve a claim for indemnification to which an
Objection has been made within 20 days (as such period may be extended by mutual
agreement between Solectron and Purchaser), either the indemnifying party or the
indemnified party shall serve the other with a written demand for arbitration
within 30 days of the expiration of such 20-day period, unless the amount of the
Loss is at
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issue in a Third Party Proceeding, in which event arbitration shall not be
commenced until such amount is ascertained or Solectron and Purchaser agree to
commence arbitration. Any such arbitration shall be held in Santa Clara County,
California and shall be conducted before a single arbitrator mutually agreeable
to Solectron and Purchaser in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. In the event that within 30 days after
submission of any dispute to arbitration Solectron and Purchaser cannot mutually
agree on one arbitrator, Solectron and Purchaser shall each select one
arbitrator, and the two arbitrators so selected shall select a third arbitrator.
The decision of the arbitrator or, if applicable, the majority of the three
arbitrators regarding any claim for indemnification to which an Objection has
been made shall be binding and conclusive. Such decision shall be written and
shall be supported by written findings of fact and conclusions which shall set
forth the award, judgment, decree or order awarded by the arbitrator. The
parties agree to complete such arbitration as expeditiously as reasonably
possible.
Section 10.8. Treatment of Indemnification Claims. All indemnification
payments made under this Agreement shall be treated by all parties as an
adjustment to the Purchase Price.
Section 10.9. Threshold for Indemnification Claims. The Purchaser
Indemnified Parties shall not be entitled to make a claim for indemnification
under Section 10.2(a)(i) (other than for any claims for indemnification (a)
alleging a breach of the representations and warranties set forth in Sections
4.20 or 4.24, (b) for Losses relating to Taxes, or (c) pursuant to Section
10.2(a)(iii), in each case, which shall not be subject to any such limitation)
until the Losses claimed exceed $400,000 in the aggregate (the "Basket Amount"),
in which case the Purchaser Indemnified Parties shall be entitled to recover all
Losses in excess of the Basket Amount. No indemnified party shall be permitted
to assert any individual claim for indemnification involving alleged Losses of
less than $25,000 (other than for any claims for indemnification (a) alleging a
breach of the representations and warranties set forth in Sections 4.20 or 4.24,
(b) for Losses relating to Taxes, or (c) pursuant to Section 10.2(a)(iii), in
each case, which shall not be subject to any such limitation) unless such claims
originate from the same set of factual circumstances and, in the aggregate,
exceed the Basket Amount.
Section 10.10. Limitation on Indemnification. Notwithstanding anything to
the contrary in this Agreement, Solectron's liability for indemnifying the
Purchaser Indemnified Parties pursuant to Article X (other than for any claims
for indemnification (i) alleging a breach of the representations and warranties
set forth in Section 4.20, (ii) alleging a breach of the covenants set forth in
Sections 6.14 and 6.16, or (iii) pursuant to Article VII, which shall not be
subject to any such limitation) shall not exceed $15,000,000 in the aggregate
(the "Indemnity Cap"). Neither Solectron nor Purchaser shall have a right for
indemnification with respect to any incidental, special, punitive or
consequential damages incurred or suffered by an indemnified party hereunder.
Section 10.11. Exclusive Remedy. The parties hereby acknowledge and agree
that, from and after the Closing, the sole and exclusive remedy of the parties
hereto with respect to any and all monetary claims arising in connection with
the transactions contemplated by this Agreement shall be pursuant to the
indemnification obligations set forth in Section 10.2 and Section 7.1. In
addition,
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Sellers shall not have any liability under this Agreement except to the extent
of the Indemnity Cap. The foregoing shall not prohibit a party from bringing a
claim for fraud.
Section 10.12. No Set-Off. Neither the Purchaser nor any Purchaser
Indemnified Party shall have any right to set-off any Losses against any
payments to be made by the Purchaser pursuant to this Agreement or the
Transition Services Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Expenses. Except as otherwise specified in this Agreement,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred.
Section 11.2. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered, given or
made (and shall be deemed to have been duly delivered, given or made upon
receipt) by delivery in person, or by nationally recognized courier service, or
cable, telecopy, telegram, or registered or certified mail (postage prepaid,
return receipt requested) to the respective parties hereto at their addresses
set forth below (or at such other address for a party hereto as shall be
specified in a notice given in accordance with this Section 11.2).
If to Purchaser (or after the Closing, any of the Dy 4 Entities), to:
Curtiss-Wright Controls, Inc.
3120 Northwest Boulevard
Gastonia, North Carolina 28052
Attention: Robert H. Shaw, Esq., General Counsel
Fax No. (704) 869-4601
with a copy to:
Curtiss-Wright Corporation
4 Becker Farm Road
Roseland, NJ 07068
Attention: Michael J. Denton, Esq., General Counsel
Fax No. (973) 597-4798
with a copy to:
Satterlee Stephens Burke & Burke LLP
230 Park Avenue
New York, NY 10169
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Attention: Peter A. Basilevsky, Esq.
Fax No. (212) 818-9607
If to Sellers (or prior to the Closing, any of the Dy 4 Entities), to:
Solectron Corporation
777 Gibraltar Drive
Milpitas, California 95035
Attention: Chief Legal Counsel
with copies to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Steven E. Bochner, Esq.
Robert T. Ishii, Esq.
Telephone: (650) 493-9300
Telecopy: (650) 493-6811
Section 11.3. Public Announcements. No party shall issue any press release
or public announcement relating to the subject matter of this Agreement without
the prior written approval of the other parties; provided, however, that any
party may make any public disclosure it believes in good faith is required by
applicable Law, regulation or stock market rule (in which case the disclosing
party shall use reasonable efforts to advise the other parties and provide them
with a copy of the proposed disclosure prior to making the disclosure),
including any disclosure to any and all Persons, without limitation of any kind,
of the transaction's Tax treatment and Tax structure (as such terms are defined
in sections 6011 and 6012 of the Code and the Regulations thereunder)
contemplated by this Agreement and all materials of any kind (including Tax
opinions or analyses) provided to such party or such Person relating to such Tax
treatment and Tax structure, except to the extent necessary to comply with any
applicable federal, state or provincial securities laws, provided that the
parties acknowledge and agree that the Tax treatment and Tax structure of any
Transaction does not include the name of any party to the Transaction or any
sensitive business information (including, without limitation, the name and
other specific information about any party's intellectual property or other
proprietary assets) unless such information is necessary to understand the
purported or claimed federal income Tax treatment of the Transaction.
Section 11.4. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms 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
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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 an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the greatest
extent possible.
Section 11.5. Entire Agreement. This Agreement together with all Schedules
(including the Disclosure Schedule) and Exhibits hereto constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersedes all prior agreements, covenants, representations,
warranties, undertakings and understandings, written or oral, among the parties
hereto with respect to the subject matter hereof and thereof; provided, however,
that the Confidentiality Agreement shall continue to have force and effect as
provided in Section 6.3.
Section 11.6. Assignment. This Agreement may not be assigned by operation
of law or otherwise without the express written consent of Solectron, on behalf
of Sellers, and Purchaser (which consent may be granted or withheld in the
reasonable discretion of each such party), except that Purchaser may assign any
of its rights (but not its obligations) under this Agreement to any Subsidiary
of Purchaser.
Section 11.7. No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, whether express or implied, is intended to or shall
confer upon any other Person any legal or equitable right, benefit or remedy of
any nature whatsoever under or by reason of this Agreement, provided, however,
that the provisions of Section 6.9 concerning indemnification are intended for
the benefit of the individuals referred to in such Section.
Section 11.8. Amendment. This Agreement may not be amended, restated,
supplemented or otherwise modified except (i) by an instrument in writing signed
by Solectron, on behalf of Sellers, and Purchaser or (ii) by a waiver in
accordance with Section 9.3.
Section 11.9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
Section 11.10. Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED ON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY
HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES HERETO EACH HEREBY AGREES THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT THE PARTIES HERETO MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
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EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
Section 11.11. Counterparts and Facsimile Signature. This Agreement may be
executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement. This Agreement may be executed by facsimile signature.
Section 11.12. Specific Performance. The parties agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms thereof and that, prior to the
termination of this Agreement pursuant to its terms, the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
Section 11.13. Guarantee. Curtiss-Wright Corporation, a Delaware
corporation ("Guarantor") irrevocably guarantees each and every representation,
warranty, covenant, agreement and obligation of the Purchaser and the full and
timely performance of its obligations under the provisions of this Agreement.
This is a guarantee of payment and performance, and not of collection, and
Guarantor acknowledges and agrees that this guarantee is full and unconditional,
and no release or extinguishments of the Purchaser's obligations or liabilities
(other than in accordance with the terms of this Agreement), whether by decree
in any bankruptcy proceeding or otherwise, shall affect the continuing validity
and enforceability of this guarantee. Purchaser hereby waives, for the benefit
of the Dy 4 Entities and the Sellers, (i) any right to require the Dy 4 Entities
or the Sellers as a condition of payment or performance of Guarantor to proceed
against the Purchaser or pursue any other remedies whatsoever and (ii) to the
fullest extent permitted by law, any defenses or benefits that may be derived
from or afforded by law that limit the liability of or exonerate guarantors or
sureties, except to the extent that any such defense is available to the
Purchaser. Guarantor understands that the Dy 4 Entities and the Sellers are
relying on this guarantee in entering into this Agreement. Guarantor has all
necessary power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement, and
performance of this Section 11.13, by Guarantor does not and will not (i)
violate, conflict with or result in the breach of any provision of the charter
or bylaws (or similar organizational documents) of such Person, (ii) conflict
with or violate in any material respect any Law or Governmental Order applicable
to such Person, or (iii) conflict in any material respect with, or result in any
material breach of, constitute a material default (or event which with the
giving of notice or lapse of time, or both, would become a material default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, any material
note, bond, mortgage, deed of trust, indenture, contract, agreement, lease,
sublease, license, permit, franchise or other instrument or arrangement to which
Guarantor is a party or by which any of such assets or properties is bound or
affected, in each case which could reasonably be expected to have a material
adverse effect on the ability of Guarantor to perform its obligations under this
Section 11.13.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each party hereto has executed, or caused its duly
authorized officer(s) to execute, this Agreement as of the date first written
above.
SELLERS
SOLECTRON CORPORATION
By:
-------------------------------
Name:
Title:
SOLECTRON CANADA ULC
By:
-------------------------------
Name:
Title:
C-MAC INDUSTRIES INC.
By:
-------------------------------
Name:
Title:
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
DY 4 ENTITIES
DY 4 SYSTEMS, INC.
By:
-------------------------------
Name:
Title:
DY 4 (US), INC.
By:
-------------------------------
Name:
Title:
PURCHASER
CURTISS-WRIGHT CONTROLS, INC.
By:
-------------------------------
Name:
Title:
GUARANTOR
CURTISS-WRIGHT CORPORATION
By:
-------------------------------
Name:
Title:
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
SCHEDULE I
SELLER SHARE OWNERSHIP
Seller Number of Shares Allocation of Purchase Price
- ---------------------- ------------------------ -----------------------------------
C-MAC Industries, Inc. 8,692,296 shares of 71.0% of Purchase Price (or $78.1
common stock of Dy 4 million, assuming Purchase Price of
Systems, Inc. $110,000,000)
Solectron Corporation 8,000 shares of common 29.0% of Purchase Price, minus
stock of Dy 4 (US) Inc. 26,120,800 CDN Dollars
Solectron Canada ULC 2,000 shares of Series A 26,120,800 CDN Dollars
Preferred Stock of Dy 4
(US) Inc.