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Exhibit 2.2
EXECUTION COPY
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AMENDED AND RESTATED
RECAPITALIZATION AGREEMENT
by and among
MICRON ELECTRONICS, INC.,
MICRON CUSTOM MANUFACTURING SERVICES, INC.,
MEI CALIFORNIA, INC.,
and
CORNERSTONE EQUITY INVESTORS IV, L.P.
dated as of
February 1, 1998
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RECAPITALIZATION AGREEMENT
INDEX
Page
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ARTICLE I
Certain Definitions............................................................2
ARTICLE II
Representations and Warranties of MEI, Sub and the Company.....................5
Section 2.1. Authorization; No Conflicts; etc.............................5
Section 2.2. Incorporation; Capitalization; Structure.....................6
Section 2.3. Financial Statements.........................................7
Section 2.4. Undisclosed Liabilities......................................8
Section 2.5. Properties...................................................8
Section 2.6. Environmental Matters........................................9
Section 2.7. Absence of Certain Changes...................................9
Section 2.8. Litigation; Orders..........................................11
Section 2.9. Intellectual Property.......................................12
Section 2.10. Licenses, Approvals, Other Authorizations,
Consents, Reports, etc.....................................13
Section 2.11. Labor Matters...............................................13
Section 2.12. Compliance with Laws........................................13
Section 2.13. Employee Benefit Plans......................................14
Section 2.14. Tax Returns.................................................15
Section 2.15. Brokers, Finders, Lawyers, Accountants, etc.................16
Section 2.16. Customers and Suppliers.....................................17
Section 2.17. Real Property...............................................17
Section 2.18. Material Agreements.........................................18
Section 2.19. Transactions with Affiliates................................19
Section 2.20. Insurance...................................................20
Section 2.21. Computer Systems............................................20
Section 2.22. Products and Services Liability.............................20
Section 2.23. Predecessor Businesses; Former Facilities...................21
Section 2.24. Disclosure..................................................21
Section 2.25. No Representations Regarding Projections....................21
Section 2.26. Construction of Certain Provisions..........................21
ARTICLE III
Representations and Warranties of Investor....................................22
Section 3.1. Incorporation; Authorization; No Conflicts; etc.............22
Section 3.2. Licenses, Approvals, Other Authorizations, Consents,
Reports, etc...............................................23
Section 3.3. Brokers, Finders, etc.......................................23
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Section 3.4. Financing...................................................23
Section 3.5. Investment..................................................23
ARTICLE IV
Covenants.....................................................................24
Section 4.1. Investigation of Business; Access to Properties
and Records; Records Retention.............................24
Section 4.2. Efforts; Obtaining Consents.................................26
Section 4.3. Further Assurances..........................................26
Section 4.4. Conduct of Business.........................................26
Section 4.5. Preservation of Business....................................27
Section 4.6. Public Announcements........................................28
Section 4.7. Intercompany Accounts.......................................28
Section 4.8. Notice of Breach............................................28
Section 4.9. Acquisition Proposals.......................................28
Section 4.10. Noncompetition; Nonsolicitation.............................29
Section 4.11. Confidentiality.............................................30
Section 4.12. Nonsolicitation by the Company..............................31
Section 4.13. Alternative Financing.......................................31
Section 4.14. License Agreements..........................................31
Section 4.15. Use of Micron Name..........................................31
Section 4.16. Schedule Supplements........................................32
Section 4.17. Capital Expenditures........................................32
Section 4.18. Leased Property.............................................32
ARTICLE V
Employee Benefits.............................................................33
Section 5.1. Provision of Benefits.......................................33
Section 5.2. Savings Plan................................................33
Section 5.3. Welfare Benefits............................................34
Section 5.4. Intercompany Charges........................................34
ARTICLE VI
Conditions of Investor's Obligation to Close..................................35
Section 6.1. Representations, Warranties and Covenants of MEI, Sub
and the Company.............................................35
Section 6.2. Filings; Consents; Waiting Periods..........................35
Section 6.3. No Injunction...............................................35
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Section 6.4. Transitional Services Agreement.............................35
Section 6.5. Stockholders Agreement and Registration Rights Agreement....35
Section 6.6. Financing...................................................36
Section 6.7. Indebtedness................................................36
Section 6.8. Material Adverse Effect.....................................36
Section 6.9. Opinion of Counsel..........................................36
Section 6.10. Resignation of Directors....................................36
Section 6.11. Other Closing Documents.....................................36
Section 6.12. Articles of Incorporation...................................37
Section 6.13. Bylaws......................................................37
Section 6.14. Booster Pump and Power Substation...........................37
Section 6.15. Patent Agreement............................................37
Section 6.16. Know-How Agreement..........................................37
Section 6.17. MTI License Agreement.......................................37
ARTICLE VII
Conditions to MEI's, Sub's and the Company's Obligation to Close..............38
Section 7.1. Representations, Warranties and Covenants of Investor.......38
Section 7.2. Filings; Consents; Waiting Periods..........................38
Section 7.3. No Injunction...............................................38
Section 7.4. Transitional Services Agreements............................38
Section 7.5. Stockholders Agreement and Registration Rights Agreement....38
Section 7.6. Patent Agreement............................................38
Section 7.7. Know-How Agreement..........................................38
Section 7.8. MTI Agreement...............................................39
ARTICLE VIII
The Recapitalization; Closing.................................................39
Section 8.1. Authorization...............................................39
Section 8.2. Stock Purchase..............................................39
Section 8.3. Stock Redemption............................................39
Section 8.4. Closing.....................................................39
ARTICLE IX
Tax Matters...................................................................40
Section 9.1. Tax Indemnification by MEI and Sub..........................40
Section 9.2. Tax Indemnification by the Company..........................40
Section 9.3. Filing Responsibility.......................................41
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Section 9.4. Refunds.....................................................41
Section 9.5. Cooperation and Exchange of Information.....................42
Section 9.6. Allocation of Certain Taxes.................................43
Section 9.7. Certain Taxes...............................................44
ARTICLE X
Termination...................................................................44
Section 10.1. Termination.................................................44
Section 10.2. Procedure and Effect of Termination.........................44
ARTICLE XI
Miscellaneous.................................................................45
Section 11.1. Entire Agreement; Beneficiaries.............................45
Section 11.2. Survival of Representations and Warranties and
Covenants of Investor.......................................45
Section 11.3. Counterparts................................................45
Section 11.4. Governing Law...............................................45
Section 11.5. Expenses....................................................45
Section 11.6. Notices.....................................................46
Section 11.7. Successors and Assigns......................................48
Section 11.8. Headings; Definitions.......................................49
Section 11.9. Consent to Jurisdiction.....................................49
Section 11.10. Waivers and Amendments......................................49
Section 11.11. Severability................................................49
Section 11.12. Interpretation; Schedules and Exhibits......................49
ARTICLE XII
INDEMNIFICATION...............................................................49
Section 12.1. General Indemnification Obligations.........................50
Section 12.2. General Indemnification Procedures..........................50
Section 12.3. Indemnification Basket......................................51
Section 12.4. Indemnification Cap.........................................51
Section 12.5. Indemnity Exclusive Remedy..................................51
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EXHIBITS
Exhibit A Term Sheet for Transitional Services Agreement
Exhibit B Company Financial Statements
Exhibit C Term Sheet for the Stockholders Agreement and the Registration
Rights Agreement
Exhibit D Form of Patent and Invention Disclosure Assignment and License
Agreement
Exhibit E Form of Know-How License Agreement
Exhibit F Form of MTI Agreement
LISTS OF SCHEDULES
2.1(c) No Conflicts
2.2(a) Incorporation; Capitalization; Structure
2.2(c) List of Transferred Subsidiaries
2.4 Undisclosed Liabilities
2.5 Permitted Encumbrances
2.6 Environmental Matters
2.7 Absence of Certain Changes
2.8 Litigation; Orders
2.9 Intellectual Property
2.10(a) Licenses, Approvals, Other Authorizations, Consents,
Reports, etc.
2.10(c) Lists all consents, approvals, registrations, filings,
applications, etc.
2.11 Labor Matters
2.12 Compliance with laws
2.13(a) Employee Benefits Plans
2.13(c) Compliance with ERISA
2.14 Tax Matters
2.16 Customers and Suppliers
2.17 Real Property
2.18 Material Agreements
2.19 Transactions with Affiliates
2.20 Insurance
2.21 Computer Systems
2.22 Products and Services Liability
2.23 Predecessor Businesses; Former Facilities
3.2 Licenses, Approvals, Other Authorizations, Consents, Reports,
etc.
4.4 Conduct of Business
4.12 Nonsolicitation by the Company
4.14 License Agreements
6.2 Filings; Consents; Waiting Periods
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AMENDED AND RESTATED RECAPITALIZATION AGREEMENT
THIS AMENDED AND RESTATED RECAPITALIZATION AGREEMENT (this
"Agreement"), dated as of February 1, 1998, is by and among Micron Electronics,
Inc., a Minnesota corporation ("MEI"), MEI California, Inc., a California
corporation and a wholly owned subsidiary of MEI ("Sub"), Micron Custom
Manufacturing Services, Inc., an Idaho corporation and a wholly-owned subsidiary
of Sub (the "Company") and Cornerstone Equity Investors IV L.P., a Delaware
limited partnership ("Investor").
WHEREAS, certain parties hereto have entered into that certain
Recapitalization Agreement, dated as of December 21, 1997 (the "Original
Agreement");
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement in its entirety as set forth below;
WHEREAS, Sub owns 1,000 shares (the "Shares") of the Company's
common stock, par value $.01 per share (the "Company Common Stock"), which
Shares comprise all of the issued and outstanding shares of the Company's
capital stock;
WHEREAS, Investor will contribute $61.2 million (the "Purchase
Price") to the Company in exchange for 900 shares (such number to be
appropriately adjusted for any stock split or stock dividend of the Company
Common Stock after the date hereof and prior to the Closing Date) of the Company
Common Stock and such other securities of the Company (collectively, the
"Purchase Shares") as Investor shall request (such purchase, the "Stock
Purchase");
WHEREAS, Investor has proposed, and the Company, MEI and Sub have
agreed, that the Company arrange through BT Alex. Brown Incorporated for the
issuance by the Company of notes, debt securities and/or preferred stock in
exchange for approximately $200 million and the entering into by the Company of
a $40 million revolving credit facility with Bankers Trust Company (the "Credit
Facility") to provide for the working capital needs of the Company (such
issuance, and revolving credit facility collectively, the "BTAB Financing");
WHEREAS, the parties hereto desire that, immediately after the Stock
Purchase and the BTAB Financing, the Company shall redeem from Sub 900 shares
(such number to be appropriately adjusted for any stock split or stock dividend
of the Company Common Stock after the date hereof and prior to the Closing Date)
(the "Redemption Shares") of Company Common Stock in exchange for the Redemption
Price (as herein defined) (such redemption, the "Stock Redemption") and Sub
shall retain 100 shares (such number to be appropriately adjusted for any stock
split or stock dividend of the Company Common Stock after the date hereof and
prior to the Closing Date) (the "Sub Retained Shares") of Company Common Stock
such that immediately after
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Closing Sub shall own 10% of the outstanding Company Common Stock and Company
Common Stock equivalents;
WHEREAS, the Stock Purchase, the BTAB Financing and the Stock
Redemption are referred to herein as the "Recapitalization"; and
WHEREAS, it is intended that the Recapitalization be recorded as a
recapitalization for financial reporting purposes.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE I
Certain Definitions
As used in this Agreement the following terms shall have the
following respective meanings:
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding, order, claim or investigation by or before any Governmental
Authority.
"Affiliate" shall mean any person, and any corporation, partnership
or other entity, that directly or indirectly through one or more intermediaries,
controls or is controlled by or under common control with the party specified.
"Business" shall mean the business of design, assembly and testing
of custom complex printed circuit boards, memory intensive products and system
level assemblies for third party electronics original equipment manufacturers
primarily in the networking, telecommunications and computer systems industries
conducted by the Company and the Transferred Subsidiaries as of December 21,
1997; provided, that in no event shall Business mean any of the services,
properties or assets to be provided or licensed to the Company or any
Transferred Subsidiary pursuant to any Transitional Services Agreement. For
purposes of this definition, in all circumstances, MTI shall be deemed to be a
"third party".
"Business Condition" shall mean the results of operations or
financial condition of the Company and the Transferred Subsidiaries, taken as a
whole.
"Closing" shall mean the consummation of the Recapitalization and
other transactions contemplated hereby.
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"Closing Date" shall mean five business days after the date on which
the conditions set forth in Articles VI and VII shall be satisfied or duly
waived, or if MEI and Investor mutually agree on a different date, the date upon
which they have mutually agreed.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"Company Employee" shall mean an individual who is, as of the
Closing Date, employed by the Company or any Transferred Subsidiary, whether
such individual is then actively at work, on approved leave of absence or on
short-term disability leave, or who is entitled to be rehired by the Company or
any Transferred Subsidiary pursuant to any applicable law or regulation or
pursuant to the terms of any contract or collective bargaining or similar
agreement.
"Continuing Affiliate" shall mean MEI, Sub and any other direct or
indirect Subsidiary of MEI other than the Company and the Transferred
Subsidiaries.
"Controlled Group Liability" shall mean any and all Damages under
(a) Title IV of ERISA, (b) section 302 of ERISA, (c) sections 412 and 4971 of
the Code, or (d) the continuation coverage requirements of section 601, et seq.,
of ERISA and section 4980B of the Code, other than such Damages that arise
solely out of, or relate solely to, the Company Plans.
"Damages" shall mean any and all losses, liabilities, claims,
damages (including punitive, consequential or treble damages), obligations,
liens, assessments, judgments, awards and fines (including, without limitation,
those arising out of any pending or threatened Action, including any settlement
or compromise thereof) and any related reasonable out-of-pocket costs and
expenses (including, without limitation, reasonable attorneys' fees and expenses
incurred in connection with any pending or threatened Action).
"Employee Benefit Plan" means (a) an employee benefit plan as
defined in Section 3(3) of ERISA and (b) any bonus, incentive, profit sharing,
stock option or stock purchase, severance, fringe benefit or other compensation
plan or arrangement.
"Encumbrance" shall mean any lien, claim, charge, security interest,
option, mortgage, pledge or other legal or equitable encumbrance or restriction
of any kind
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor thereto.
"Former Company Employee" shall mean an individual who was an
employee of the Company or a Transferred Subsidiary before the Closing Date, is
not a Company Employee, and
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whose last employment with MEI and any of its Affiliates was with the Company or
a Transferred Subsidiary.
"Governmental Authority" shall mean any government or governmental
or regulatory body thereof, or political subdivision thereof, or any agency or
instrumentality thereof, or any court or arbitrator, in each case, whether
federal, state, local, foreign or otherwise.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Income Taxes" shall mean all Taxes based upon or measured by
income, gain or similar items.
"IRS" shall mean the Internal Revenue Service.
"MCMS Malaysia" shall mean M.C.M.S. Sdn. Bhd. (f/n/a Courageous
Expedition Sdn. Bhd.), a company organized under the laws of Malaysia, and an
indirect, wholly-owned subsidiary of the Company.
"MTI" shall mean Micron Technology, Inc., a Delaware corporation.
"Person" shall mean an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Returns" shall mean returns, reports and forms required to be filed
with any domestic or foreign Taxing Authority.
"Subsidiary" shall mean with respect to any Person, any corporation,
partnership, joint venture, business trust or other entity, of which such
Person, directly or indirectly, owns or controls at least 50% of the securities
or other interests entitled to vote in the election of directors or others
performing similar functions with respect to such corporation or other
organization, or to otherwise control such corporation, partnership, joint
venture, business trust or other entity.
"Tax Laws" shall mean the Code, federal, state, county, local, or
foreign laws relating to Taxes and any regulations or official administrative
pronouncements released thereunder.
"Taxes" shall mean (a) all taxes (whether federal, state, local or
foreign) based upon or measured by income and any other tax whatsoever,
including gross receipts, profits, sales, use, occupation, value added, ad
valorem, transfer, franchise, withholding, payroll, employment, excise,
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or property taxes, together with any interest or penalties imposed with respect
thereto and (b) any obligations under any agreements or arrangements with
respect to any Taxes described in clause (a) above.
"Taxing Authority" shall mean any Governmental Authority having
jurisdiction over the assessment, determination, collection, or other imposition
of Tax.
"Transferred Subsidiaries" shall mean the direct and indirect
Subsidiaries of the Company.
"Transitional Services Agreement" shall mean the Transitional
Services Agreement containing the terms set forth in Exhibit A hereto.
ARTICLE II
Representations and Warranties of MEI, Sub and the Company
MEI, Sub and the Company hereby represent and warrant to Investor as
follows:
Section 2.1. Authorization; No Conflicts; etc.
(a) MEI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Minnesota. Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. MEI and Sub each has full corporate power to execute and
deliver this Agreement and to perform its respective obligations hereunder, and
MEI and Sub each has full corporate power to consummate the transactions
contemplated hereby. All corporate acts and other proceedings required to be
taken by MEI and Sub to authorize the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and properly taken. This Agreement has been duly executed and
delivered by MEI and Sub and, assuming the due execution and delivery hereof by
the other parties hereto, this Agreement constitutes the legal, valid and
binding obligation of MEI and Sub, enforceable against MEI and Sub, as
applicable, in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
the rights and remedies of creditors generally and to general principles of
equity.
(b) The Company has full corporate power to execute and deliver this
Agreement and to perform its obligations hereunder, and the Company has full
corporate power to consummate the transactions contemplated hereby. All
corporate acts and other proceedings required to be taken by the Company to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and properly
taken. This Agreement has been duly executed and delivered by the Company and,
assuming the due execution
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and delivery hereof by the other parties hereto, this Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
the rights and remedies of creditors generally and to general principles of
equity.
(c) The execution, delivery and performance of this Agreement by
MEI, Sub and the Company and the consummation by MEI, Sub and the Company of the
transactions contemplated hereby will not (1) violate any provision of the
charter or by-laws of MEI, Sub, the Company or any Transferred Subsidiary, (2)
except as disclosed in Schedule 2.1(c), violate any provision of, or constitute
a default (with or without notice or lapse of time) under, or give rise to a
right of termination, cancellation or acceleration of (or entitle any party to
accelerate whether after the giving of notice or lapse of time or both) any
obligation under, or result in the imposition of any lien upon or the creation
of any Encumbrance on any of the Shares or any of the Company's or any
Transferred Subsidiary's assets or properties pursuant to, any note, bond, debt
instrument, mortgage, indenture, lien, lease, agreement or other instrument, or
any judgment, injunction, order or decree to which any of MEI, Sub, the Company
or any Transferred Subsidiary is a party or by which any of them is bound or (3)
except as disclosed in Schedule 2.1(c), violate or conflict with any federal,
state, local or foreign law, statute, ordinance, rule or regulation
(collectively, "Laws") applicable to MEI, Sub, the Company or any Transferred
Subsidiary or by which any of their properties or assets is bound.
Section 2.2. Incorporation; Capitalization; Structure.
(a) Except as set forth in Schedule 2.2(a) hereto, the Company and
each Transferred Subsidiary (1) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (2) has all requisite corporate power and authority to own or
lease and operate its properties and to carry on its business as it is now being
conducted and (3) is in good standing and is duly qualified to transact
business in each jurisdiction in which the nature of property owned or leased by
it or the conduct of its business requires it to be so qualified.
(b) As of the date hereof, the authorized capital stock of the
Company consists of 10,000 shares of the Company Common Stock, 1,000 shares of
which are issued and outstanding. All of the outstanding Company Common Stock is
duly authorized, validly issued, fully paid and non-assessable. No shares of
capital stock of the Company are held in the Company's treasury. As of the date
hereof, the Shares constitute all of the issued and outstanding shares of
Company Common Stock. As of immediately after the Closing, (i) the Purchase
Shares which are Company Common Stock and the Sub Retained Shares shall
constitute all of the issued and outstanding shares of the Company Common Stock
and (ii) the Purchase Shares, the Sub Retained Shares and any shares of the
Company's preferred stock (the "Preferred Shares") issued pursuant to the BTAB
Financing shall constitute all of the issued and outstanding shares of the
Company's capital stock.
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Sub is the record and beneficial owner of, and has valid title to,
the Shares, free and clear of any Encumbrance. Upon delivery to the Company at
the Closing of certificates representing the Redemption Shares, duly endorsed by
Sub for transfer to the Company, and upon Sub's receipt of payment therefor,
valid title to the Redemption Shares will pass to the Company, free and clear of
any Encumbrance. Immediately after the Closing, the Purchase Shares and the
Preferred Shares, if any, will be duly authorized, validly issued and
non-assessable and free and clear of any Encumbrances (except to the extent
contemplated hereby) and will have been issued free and clear of any preemptive
or other similar rights.
(c) Schedule 2.2(c) lists each of the Transferred Subsidiaries and
its jurisdiction of incorporation; the authorized, issued and outstanding
capital stock of each Transferred Subsidiary; and the record and beneficial
owners of all such capital stock. Other than the Transferred Subsidiaries, the
Company does not, directly or indirectly, own any capital stock of, or equity
ownership interest in, any corporation, partnership, joint venture,
unincorporated association, limited liability company or other business entity.
Except as disclosed on Schedule 2.2(c), all of the outstanding shares of capital
stock or other equity interests of each of the Transferred Subsidiaries have
been validly issued and are fully paid and non-assessable and, except for
directors' qualifying shares and other nominal share interests issued to third
parties to comply with requirements of law, are owned by the Company and/or one
or more of the Transferred Subsidiaries free and clear of any Encumbrance.
(d) Except as specifically provided in this Agreement, there are no
authorized or outstanding options, warrants, convertible securities, preemptive
rights, calls, commitments or other rights or obligations of any kind to
acquire, or to issue, deliver or sell any shares of capital stock of any class
of, or other equity interests in, or securities convertible into or exchangeable
for any capital stock of or other ownership interests in the Company or any
Transferred Subsidiary, and there are no agreements, instruments or
understandings to grant or enter into any such option, warrant, convertible
security, preemptive right, call, commitment, right or obligation. There are no
shareholders agreements or similar agreements, and there are no rights of first
offer, rights of first refusal, stock appreciation rights, phantom stock rights,
profit participation rights or similar rights, in each case, relating to the
capital stock of or other ownership interests in the Company or any Transferred
Subsidiary.
Section 2.3. Financial Statements.
(a) Attached hereto as Exhibit B is a true and complete copy of the
following financial statements (the following financial statements, together
with the notes to such financial statements, collectively, the "Company
Financial Statements"):
(1) the audited consolidated financial statements of the
Company for the fiscal years ended August 31, 1995, August 29, 1996 and August
28, 1997;
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(2) the audited financial statements of MCMS Malaysia for the
fiscal year ended August 28, 1997; and
(3) the unaudited consolidated balance sheet of the Company as
of November 27, 1997, together with the related consolidated statements of
income, and cash flows for the three-month period ended on such date (the
"Interim Financial Statements").
(b) The Company Financial Statements: (i) are true, correct and
complete in all material respects, (ii) are in accordance with the books and
records of the Company and the Transferred Subsidiaries (which books and records
are accurate and complete in all material respects), (iii) fairly present the
consolidated financial condition, assets and liabilities of the Company as of
their respective dates and the results of operation and changes in cash flows of
the Company, on a consolidated basis, for the periods covered thereby, and (iv)
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP"), consistently applied, subject, in the case of
the Interim Financial Statements, to normal year-end adjustments.
Section 2.4. Undisclosed Liabilities. Except as disclosed in
Schedule 2.4 hereto, and except as reflected, reserved against or otherwise
disclosed in the Company Financial Statements (including the notes thereto), the
Company does not have any liabilities or obligations of any kind whatsoever
(whether accrued or contingent) except (1) liabilities and obligations which
were incurred after August 28, 1997 in the ordinary course of business
consistent with past practice, (2) obligations under this Agreement or (3)
obligations under contracts which do not create liabilities for purposes of
GAAP. Schedule 2.4 hereto sets forth all liabilities and obligations of the
Company and the Transferred Subsidiaries as of the date hereof for borrowed
money other than (i) receivables, payables and loans relating to ongoing
business between the Continuing Affiliates and MTI on the one hand, and the
Company and the Transferred Subsidiaries on the other hand and (ii) trade
payables and trade receivables incurred in the ordinary course of business
("Borrowed Money"). As of the Closing, neither the Company nor any Transferred
Subsidiary will have any liability or obligation for Borrowed Money except for
liabilities or obligations for Borrowed Money arranged by the Company in order
to finance or otherwise in connection with the transactions contemplated by this
Agreement.
Section 2.5. Properties. The Company and/or one or more of the
Transferred Subsidiaries has good title to, or holds by valid and existing
lease or license, free and clear of all Encumbrances other than Permitted
Encumbrances, each piece of tangible personal property currently used by them
in, and reasonably necessary to enable them to carry on, the Business as
presently conducted. "Permitted Encumbrances" shall mean those Encumbrances
which (1) are set forth in Schedule 2.5 or in the case of real property
Schedule 2.17, (2) are reflected or reserved against in the Company Financial
Statements, (3) arise by statute out of mechanics', carriers', workmen's,
repairmen's or other like statutory liens arising or incurred in the ordinary
course of business for sums not yet due or which are otherwise reflected in the
Company Financial Statements, (4) consist of liens
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for Taxes and other charges of Governmental Authorities which are not due and
payable or which may be paid without penalty or interest or the validity of
which is being contested in good faith by appropriate proceedings, (5) in the
case of real property, consist of zoning, land use and other similar legal
restrictions existing generally with respect to properties of a similar
character and which are not violated in any respect by the current use and
operation of any such real property, or (6) in the case of real property,
consist of easements, covenants, licenses, rights of way, conditions,
restrictions, defects and other Encumbrances which are of record, would be shown
by a survey or are typical of similar properties and which do not impair the
current occupancy or use of such real property in the Business. Such personal
property, taken as a whole, are free from any material defects, have been
maintained in accordance with normal industry practice and any regulatory
standard or procedure to which such properties are subject, and are in an
operating condition and repair (subject to normal wear and tear) adequate and
suitable for the purposes for which such properties are presently used.
Section 2.6. Environmental Matters. Except as set forth on Schedule
2.6: (i) no real property currently or formerly owned or operated by the Company
or any Transferred Subsidiary is contaminated with any Hazardous Substances to
an extent or in a manner or condition which would give rise to any liability of
the Company or any Transferred Subsidiary (contingent or otherwise) or
investigatory, corrective or remedial obligation of the Company or any
Transferred Subsidiary under Environmental Law, (ii) no judicial or
administrative proceeding is pending or, to the knowledge of MEI, Sub or the
Company, threatened relating to liability of the Company or any Transferred
Subsidiary for any on-site or off-site disposal or contamination or any
noncompliance with Environmental Laws by or with respect to the Company, any
Transferred Subsidiary, or any property or facility associated therewith, (iii)
neither MEI, Sub, the Company, nor any Transferred Subsidiary has received
written notice of any claims or written notices alleging any violation by the
Company or any Transferred Subsidiary of, or any liability of the Company or any
Transferred Subsidiary (contingent or otherwise) under, any Environmental Law,
and neither MEI, Sub nor the Company is aware of any facts, events, or
circumstances that exist or have occurred (including any disposal or arrangement
for disposal on or prior to the Closing Date) that would give rise to any such
claim or notice or give rise to any such violation or liability, and (iv) the
Company and each Transferred Subsidiary have complied and are in compliance with
all Environmental Laws. "Environmental Law" means any applicable federal, state
or local law, regulation, order, decree or judicial opinion or other agency
requirement having the force and effect of law, and any common law, relating to
noise, odor, Hazardous Substances or the protection of public health or safety,
workplace health or safety or pollution or protection of the environment.
"Hazardous Substance" means any toxic or hazardous substance that is regulated
by or under authority of, or as to which liability or standards of conduct are
imposed pursuant to, any Environmental Law, including any petroleum products,
asbestos or polychlorinated biphenyls.
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Section 2.7. Absence of Certain Changes.
(a) Except as disclosed in Schedule 2.7, since February 1, 1998,
there has been no material adverse change in the Business Condition except for
any change resulting from (1) any change or any development in worldwide,
foreign or national economic, financial or market conditions, (2) war,
insurrection or other political change or instability or (3) the announcement of
the transactions contemplated hereby;
(b) Except as disclosed in Schedule 2.7, since August 28, 1997,
there has been no physical damage, destruction or loss to any assets or
properties of the Company or any of the Transferred Subsidiaries, after taking
into account any insurance recoveries in respect thereof, which in the aggregate
exceeds $100,000; and
(c) Except as disclosed in Schedule 2.7, since August 28, 1997,
neither the Company nor any of the Transferred Subsidiaries has:
(1) sold, leased, assigned or otherwise transferred any of its
tangible assets, except in the ordinary course of business consistent with past
practice.
(2) incurred any liabilities or obligations other than current
liabilities incurred, or obligations (including contingent obligations) under
contracts entered into, in the ordinary course of business consistent with past
practice;
(3) canceled, waived, or released in writing any material debt
owed to the Company or any Transferred Subsidiary or, claim or right of the
Company or any Transferred Subsidiary;
(4) delayed or postponed the payment of the accounts payable
or any other liabilities of the Business other than in the ordinary course of
business consistent with past practice;
(5) issued any capital stock or other equity securities or any
securities convertible, exchangeable, or exercisable into any capital stock or
other equity securities, other than to the Company by Transferred Subsidiaries
in connection with the formation of Transferred Subsidiaries and other than as
contemplated hereby;
(6) declared, set aside, or paid any dividend or distribution
with respect to its capital stock or, except for the Stock Purchase and the
Stock Redemption, redeemed, purchased or otherwise acquired any of its capital
stock;
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(7) sold, leased, assigned, licensed, or otherwise transferred
any of its Intellectual Property or other intangible assets, except for any
license granted by the Company to any Transferred Subsidiary or by any
Transferred Subsidiary to the Company;
(8) permitted any of its material assets, tangible or
intangible, to become subject to any material Encumbrance (other than Permitted
Encumbrances);
(9) made any capital expenditures or commitments, or series
thereof, involving in excess of $17,200,000 in the aggregate for the Company and
the Transferred Subsidiaries during the fiscal quarter ended November 27, 1997;
(10) invested or committed to invest in any business entity
not organized under the laws of a jurisdiction within the United States of
America other than investments in Transferred Subsidiaries;
(11) written off as uncollectible any accounts receivable
other than in ordinary course of business consistent with past practice and
other than reserve adjustments relating to accounts receivable on a basis
consistent with past practice;
(12) terminated or amended other than in the ordinary course
of business consistent with past practice, suffered the termination or amendment
of, failed to perform in any material respect all of its obligations under or
suffered or permitted any material default to exist under, any material
agreement, contract, license, or permit;
(13) made any loans or advances to, guarantees for the benefit
of, or any investments (including any intercompany advance but excluding loans
or advances to, guaranties for the benefit of or investments in Transferred
Subsidiaries) in any Person, other than advances to employees in the ordinary
course of business consistent with past practice that do not exceed $10,000
individually or $50,000 in the aggregate;
(14) paid any amount to or entered into any agreement,
arrangement or transaction with any employee or officer or any Affiliate or
director (in each case, other than in the ordinary course of business consistent
with past practice);
(15) granted any increase in the compensation of any officer
or employee or made any other change in the employment terms of any officer or
employee other than in the ordinary course of business consistent with past
practice;
(16) made any material change in any method of accounting or
accounting practice; or
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(17) agreed, in writing or otherwise, to any of the foregoing.
Section 2.8. Litigation; Orders. Except as disclosed in Schedule
2.8, there are no Actions pending or, to MEI's, Sub's or the Company's
knowledge, threatened against the Company or any Transferred Subsidiary by or
before any Governmental Authority. Except as disclosed in Schedule 2.8, there
are no judgments or outstanding orders, injunctions, decrees, stipulations or
awards rendered by any Governmental Authority (collectively, "Orders") (a)
against the Company or any Transferred Subsidiary or any of their respective
properties or the Business or (b) which affects the ability of MEI or Sub to
perform their respective obligations hereunder.
Section 2.9. Intellectual Property.
(a) Except as set forth on Schedule 2.9, the Company or a
Transferred Subsidiary owns, or has a valid and enforceable license to use, or
as of the Closing will own or have a valid and enforceable license to use, free
and clear of all Encumbrances, all of the patents, trademarks, trade names,
service marks, copyrights, registrations for or applications to register any of
the foregoing, trade secrets, confidential information, know-how, computer
software and all other intellectual property rights ("Intellectual Property")
currently used by them which are material and necessary to enable them to carry
on their business as it is presently being conducted ("Company Intellectual
Property"); provided, however, that the foregoing sentence shall not be deemed
to be a representation as to non infringement of third party Intellectual
Property or an assignment or other transfer of Intellectual Property. Except as
set forth on Schedule 2.9, to the knowledge of MEI, Sub or the Company, the
operation of the business of the Company and the Transferred Subsidiaries does
not infringe the Intellectual Property of any third party.
(b) Schedule 2.9 contains a complete list of all domestic and
foreign patents, patent applications, invention disclosures, trade names,
registered and material unregistered trademarks and service marks
("Trademarks"), Trademark registrations and applications, copyright
registrations and applications, and licenses or similar agreements or
arrangements with respect to Intellectual Property, in each case which are owned
(in whole or in part) by (or as of the Closing will be owned by), filed by or on
behalf of, or to which the Company or any of the Transferred Subsidiaries is a
party.
(c) Except as disclosed in Schedule 2.9, no claims have been
asserted in writing by any Person (1) challenging the ownership, validity,
enforceability or effectiveness of any Intellectual Property owned, used, filed
by or licensed to the Company or a Transferred Subsidiary, (2) to the effect
that the Company or the sale of any product or the provision of any service as
now sold or provided by the Company or a Transferred Subsidiary infringes on or
misappropriates any Intellectual Property of a third party or (3) against the
use by the Company or a Transferred Subsidiary of any Intellectual Property
necessary to enable the Company and the Transferred Subsidiaries to carry on
their business as it is presently being conducted. The Company and the
Transferred
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Subsidiaries have taken all necessary and reasonable action to maintain and
protect all of the Company Intellectual Property, and until the Closing Date,
will continue to maintain and protect the Company Intellectual Property, in each
case, so as not to adversely affect the validity or enforceability thereof. MEI
has taken all necessary and reasonable action to maintain and protect those
patents and patent applications listed on Schedule 2.9 and indicated as those to
be assigned to the Company prior to the Closing. Except as set forth on Schedule
2.9, to MEI's, Sub's and the Company's knowledge, no third party has infringed
or misappropriated any of the material Company Intellectual Property.
Section 2.10. Licenses, Approvals, Other Authorizations, Consents,
Reports, etc.
(a) Except as set forth on Schedule 2.10(a), the Company and the
Transferred Subsidiaries (other than MCMS Belgium, S.A.) have all governmental
licenses, permits, franchises, approvals and other authorizations of any
Governmental Authority (the "Licenses") necessary to own, lease and operate its
properties and enable them to carry on the Business as presently conducted. All
such Licenses are in full force and effect. No proceeding is pending or, to
MEI's, Sub's or the Company's knowledge, threatened seeking the revocation or
limitation of any such License.
(b) As of the Closing, MCMS Belgium, S.A. will have all Licenses
necessary to own, lease and operate its present properties and enable it to
carry on the Business as presently conducted. As of the Closing, all such
Licenses will be in full force and effect. No proceeding is pending or, to
MEI's, Sub's or the Company's knowledge, threatened seeking the revocation or
limitation of any such License.
(c) Schedule 2.10(c) lists all consents, approvals, registrations,
filings, applications, notices, orders, authorizations, qualifications and
waivers required to be made, filed, given or obtained by any of MEI, Sub, the
Company or any of the Transferred Subsidiaries with, to or from any Persons or
Governmental Authorities in connection with the consummation of the
Recapitalization and the other transactions contemplated by this Agreement,
except for those that become applicable solely as a result of the specific
regulatory status of Investor or its Affiliates.
Section 2.11. Labor Matters. Except as set forth on Schedule 2.11,
neither the Company nor any of the Transferred Subsidiaries is a party to any
labor union agreement or involved in or, to MEI's, Sub's or the Company's
knowledge, threatened with any labor action, arbitration, lawsuit or
administrative proceeding relating to labor matters involving the employees of
the Company or the Transferred Subsidiaries (excluding routine workers'
compensation claims).
Section 2.12. Compliance with Laws. Except as set forth on Schedule
2.12, the conduct of the Business substantially complies with all applicable
Laws and all Orders applicable thereto.
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Section 2.13. Employee Benefit Plans.
(a) Schedule 2.13(a) lists all material employee benefit plans and
programs providing benefits to any Company Employee or Former Company Employee
or beneficiary or dependent thereof, sponsored or maintained by MEI or any of
its Affiliates, or to which MEI or any of its Affiliates currently contributes
or is obligated to contribute ("Plans"). Without limiting the generality of the
foregoing, the term "Plans" includes all employee welfare benefit plans within
the meaning of Section 3(1) of ERISA and all employee pension benefit plans
within the meaning of Section 3(2) of ERISA. Schedule 2.13(a) also specifically
identifies those Plans that are sponsored, maintained or contributed to
exclusively by the Company and the Transferred Subsidiaries ("Company Plans").
(b) MEI has delivered or made available to Investor a true, correct
and complete copy of all plan documents and the current summary plan
descriptions (if any) for each Plan. In addition, with respect to each Company
Plan, MEI has delivered or made available to Investor a true, correct and
complete copy of: (i) the three most recent filed Annual Reports (Form 5500
Series) and accompanying schedules, if any, or any similar filing made with any
foreign authority; (ii) the most recent annual financial report, if any; (iii)
the most recent actuarial report, if any; and (iv) the most recent determination
letter from the IRS, if any.
(c) No Company Plan is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code. The IRS has issued a favorable
determination letter with respect to the Micron Electronics, Inc. Retirement at
Micron Plan ("MEI's 401(k) Plan") which letter has not been revoked, and except
as disclosed in Schedule 2.13(c), to MEI's knowledge there are no existing
circumstances nor any events that have occurred that could reasonably be
expected to adversely affect the qualified status of MEI's 401(k) Plan or the
related trust. Except as disclosed in Schedule 2.13(c), MEI and its Affiliates
have substantially complied with all provisions of ERISA, the Code and all other
laws and regulations applicable to the Plans.
(d) No Plan is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code. Without limiting the generality of the
foregoing, no Plan that is subject to ERISA is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA. Neither MEI, Sub nor the Company
maintains or has any obligation to contribute to (or any other liability with
respect to) any plan or arrangement whether or not terminated, which provides
medical, health, life insurance or other welfare-type benefits for current or
future retired or terminated Company Employees (except for limited continued
medical benefit coverage required to be provided under Section 4980B of the IRC
or as required under applicable state law or any applicable termination or
severance agreements). There does not now exist, nor do any circumstances now
exist that could reasonably be expected to result in, any Controlled Group
Liability that would be a Liability of the Company or any Transferred Subsidiary
following the Closing.
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(e) All contributions required to be made to any Plan by applicable
law or regulation or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any Plan,
before the date hereof have been timely made or paid in full.
Section 2.14. Tax Returns.
(a) Except as disclosed in Schedule 2.14, all material Returns
required to be filed prior to Closing for taxable periods ending on or prior to
the Closing Date by, or with respect to any activities of, the Company and the
Transferred Subsidiaries have been or will be filed in accordance with all
applicable laws, and all Taxes shown to be due on such Returns have been or will
be paid prior to Closing. All such Returns have been or will be correct in all
material respects. Except as set forth on Schedule 2.14 attached hereto, there
is no action, suit, taxing authority proceeding or audit with respect to Taxes
that is or could likely be material in amount now in progress, pending or
threatened in writing against or with respect to the Company and the Transferred
Subsidiaries. Each of the Company and the Transferred Subsidiaries has withheld
and paid over to the applicable Taxing Authority all Taxes that are or would
likely be material in amount and that are due and owing with respect to any
amount paid to any independent contractor, employee, shareholder, creditor or
other party.
(b) Except as set forth on Schedule 2.14, none of the Company or any
Transferred Subsidiary has currently in effect any waiver of any statute of
limitations or granted any extension of time in which any material Tax may be
assessed. Except as set forth on Schedule 2.14, none of the Company or any
Transferred Subsidiary is currently the beneficiary of any extension for filing
a Return.
(c) Except as set forth on Schedule 2.14, none of the Company or any
Transferred Subsidiary is a party to any agreement which could obligate the
Company or any Transferred Subsidiary to pay any amount that would not be
deductible under Code ss.280G.
(d) No claim has been made in the last five years by any Taxing
Authority in any jurisdiction where any of the Company or any Transferred
Subsidiaries do not file Returns that such entity is or may be subject to
taxation by that jurisdiction.
(e) The Company is not, and has not been within the previous five
years, a "United States real property holding company" within the meaning of
Code ss.897(c).
(f) The reserve for Taxes accrued on the balance sheet of the
Company as of August 28, 1997 has been established in accordance with GAAP and
the unpaid Taxes of the Company and the Transferred Subsidiaries will not, as of
the Closing Date, exceed such reserve,
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adjusted for results of operations, changes in the rate of Tax and the passage
of time in accordance with the Company's past practice.
Section 2.15. Brokers, Finders, Lawyers, Accountants, etc.
(a) None of the Company, MEI, Sub or any Transferred Subsidiary has
employed any broker, finder, consultant or other intermediary in connection with
the transactions contemplated hereby who has or would have a valid claim for a
fee or commission in connection with such transactions, except for Deutsche
Morgan Grenfell Inc. ("DMG").
(b) None of the Company, MEI, Sub or any Transferred Subsidiary has
employed any broker, finder, consultant, other intermediary, attorney,
appraiser, accountant or any other Person who has been paid by the Company or
any of the Transferred Subsidiaries or who has or will have a valid claim for a
fee or commission or other payment in connection with the auction of the Company
(but not in connection with the negotiation, execution or delivery of the
Original Agreement or this Agreement or in connection with the consummation of
the transactions contemplated thereby or hereby, including, without limitation,
the BTAB Financing or any other financing proposed by Investor and arranged by
the Company in lieu of the BTAB Financing), except for DMG; Wachtell, Lipton,
Rosen & Katz ("Wachtell"); Fenwick & West ("Fenwick"); and Coopers & Lybrand
L.L.P. ("Coopers"). Such fees, commissions or other payments in connection with
the auction of the Company (but not in connection with the negotiation,
execution or delivery of the Original Agreement or this Agreement or in
connection with the consummation of the transactions contemplated thereby or
hereby, including, without limitation, the BTAB Financing or any other financing
proposed by Investor and arranged by the Company in lieu of the BTAB Financing)
which have been made or are payable to Coopers shall hereinafter be referred to
as the "Coopers Auction Fees".
(c) None of the Company, MEI, Sub or any Transferred Subsidiary has
employed any outside attorney who has been paid by the Company or any of the
Transferred Subsidiaries or who has or will have a valid claim for a fee or
other payment in connection with the negotiation, execution and delivery of the
Original Agreement or this Agreement or the consummation of the transactions
contemplated hereby, except for Wachtell and Fenwick.
(d) Neither the Company nor any Transferred Subsidiary (i) has made
any payments to DMG, Wachtell or Fenwick, or (ii) has any liability or other
obligation to make any payment to DMG, Wachtell or Fenwick, in each case, in
connection with the auction of the Company, the negotiation, execution and
delivery of the Original Agreement or this Agreement and/or the consummation of
the transactions contemplated hereby.
(e) MEI is solely responsible for (i) the Coopers Auction Fees and
(ii) any payment, fee or commission that may be due to DMG (the "DMG Fees"),
Wachtell (the "Wachtell
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Fees") or Fenwick (the "Fenwick Fees") in connection with the auction of the
Company, the negotiation, execution and delivery of the Original Agreement or
this Agreement and/or the consummation of the transactions contemplated hereby.
Section 2.16. Customers and Suppliers. Schedule 2.16 lists, as of
November 27, 1997, each of the ten largest suppliers and the ten largest
customers of the Company and the Transferred Subsidiaries taken as a whole based
on prior twelve month purchases and sales, respectively. Except as listed on
Schedule 2.16 to the knowledge of MEI, Sub or the Company, no supplier or
third-party contractor has taken any action that is reasonably likely to have a
material adverse effect on the quality of the goods that it supplies to the
Company or the Transferred Subsidiaries.
Section 2.17. Real Property.
(a) Schedule 2.17 identifies by street address all real estate
leased, subleased or otherwise occupied pursuant to an agreement (the "Leases")
by the Company or any of the Transferred Subsidiaries (the "Leased Premises") or
owned by the Company or any of the Transferred Subsidiaries ("Owned Property",
and collectively with the Leased Premises, the "Real Property"). The Leased
Premises are leased to the Company or a Transferred Subsidiary pursuant to
written leases, copies of which have been made available to Investor prior to
the date hereof. With respect to each Lease: (i) the Company or the applicable
Transferred Subsidiary has a good and valid leasehold interest in and to all of
the Leased Premises, subject to no Encumbrances, except for Permitted
Encumbrances or as disclosed on Schedule 2.17; (ii) each Lease is in full force
and effect and is enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting the rights and remedies of creditors generally and to
general principles of equity, and, except for Permitted Encumbrances or as
disclosed on Schedule 2.17, none of the Company or any Transferred Subsidiary
has assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered
any interest in such Lease; and (iii) there exists no declared default or to the
knowledge of the Company, Sub or MEI any condition which, with the giving of
notice, the passage of time or both, could become a default under any Lease.
There are no outstanding options or rights of first refusal to purchase the
Owned Property or any portion thereof or interest therein except for Permitted
Encumbrances. The Company or a Transferred Subsidiary has good and insurable
title in and to the Owned Property, free and clear of any Encumbrances other
than Permitted Encumbrances.
(b) The Real Property constitutes all of the real property owned,
leased, or otherwise utilized in connection with the Business. Other than the
Company and the Transferred Subsidiaries, there are no parties in possession or
parties having any current or future right to occupy any of the Real Property,
except (x) tenants under any leases disclosed on Schedule 2.17 who are in
possession of space to which they lease or (y) under or pursuant to Permitted
Encumbrances. There exists no violation of any material covenant, condition,
restriction, easement, agreement or order
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affecting any portion of the Real Property. All improvements located on the Real
Property have direct access to a public road adjoining such Real Property,
either directly or through a valid easement or other valid rights. Except as set
forth on Schedule 2.17, no such improvements or access ways encroach on land not
included in the Real Property except pursuant to a valid easement or other valid
right and no such improvement is dependent for its access, current operation or
utility in the Business on any land, building or other improvement not included
in the Real Property except pursuant to valid easement or other valid right. All
facilities located on the Real Property are supplied with adequate utilities and
other services necessary for the operation of such facilities as currently
operated. There is no pending or, to the knowledge of MEI, Sub and the Company,
any threatened condemnation proceeding, or material lawsuit or administrative
action affecting any portion of the Real Property.
Section 2.18. Material Agreements. Set forth on Schedule 2.18 is a
list of each agreement, arrangement, or understanding to which the Company or
any of the Transferred Subsidiaries is a party or by which the Company or any of
the Transferred Subsidiaries is bound (collectively, the "Material Agreements"):
(1) for the lease of personal property from or to third
parties providing for annual lease payments to any single lessor or from any
single lessee in excess of $500,000;
(2) for the purchase, distribution or sale of supplies,
products or other personal property or for the furnishing or receipt of
information or services, in each case, calling for performance over a period of
more than six months or involving more than $1,000,000;
(3) relating to the acquisition by the Company or any of the
Transferred Subsidiaries of any legal entity or all or substantially all of the
assets of any Person;
(4) under which it has created, incurred or assumed
indebtedness involving more than $500,000 or pursuant to which an Encumbrance is
imposed on any of its tangible or intangible assets;
(5) for the license of Intellectual Property material to the
Business or the payment of royalties (whether as licensee or licensor or payor
or payee) or any other agreement material to the Business providing in whole or
in part for the use of, or limiting the use of, any Intellectual Property;
(6) purporting to limit the right of the Company or any of the
Transferred Subsidiaries to compete in any line of business, with any Person or
in any geographic area or containing any covenant providing for an exclusive
relationship between the Company or any Transferred Subsidiary and any Person;
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(7) with any director, officer or employee of the Company or
any Transferred Subsidiary (including any involving employment or severance);
(8) the consequences of a default or termination of which is
reasonably likely to have a material adverse effect on the Business Condition;
(9) containing any guarantee or power of attorney granted by
the Company or any Transferred Subsidiary;
(10) relating to any partnership or joint venture;
(11) otherwise involving the receipt or expenditure of more
than $250,000 or not entered into in the ordinary course of business consistent
with past practice; and
(12) otherwise material to the Business.
Each of the Material Agreements are in full force and effect and are enforceable
in accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the rights and
remedies of creditors generally and to general principles of equity. Except as
set forth on Schedule 2.18, the Company or the applicable Transferred
Subsidiary, as the case may be, has complied with the material provisions of
each of the Material Agreements, is not in default under any of the terms
thereof, and no event has occurred that with the passage of time or the giving
of notice or both would constitute a default by the Company or the applicable
Transferred Subsidiary, as the case may be, under any provision thereof. Except
as set forth on Schedule 2.18, to MEI's, Sub's and the Company's knowledge, all
parties other than the Company or any of the Transferred Subsidiaries have
complied with the material provisions of the Material Agreements; are not in
default under any of the terms thereof; and no event has occurred that with the
passage of time or the giving of notice or both would constitute a default by
any such party under any provision thereof. Neither the Company nor any of the
Transferred Subsidiaries have received any written notice of termination with
respect to any of the Material Agreements. Neither the Company nor any of the
Transferred Subsidiaries has assigned any of its rights or obligations under any
of the Material Agreements other than to each other. Neither the Company nor any
of the Transferred Subsidiaries have waived any of its rights in writing under
any of the Material Agreements. True and complete copies of all written Material
Agreements and summaries of any oral Material Agreements have been made
available to Investor prior to the date hereof.
Section 2.19. Transactions with Affiliates. Except as set forth on
Schedule 2.19, (a) neither the Company nor any Transferred Subsidiary is a party
to any executory contract with any of its Affiliates, and (b) no Affiliate of
the Company or any Transferred Subsidiary (other than the Company and the
Transferred Subsidiaries) owns any asset, property, or right, tangible or
intangible, that is used in the Business.
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Section 2.20. Insurance. Set forth on Schedule 2.20 is a list and
summary description of all policies (including scope, duration and amount of
coverage) of fire, liability, product liability, worker's compensation and other
forms of liability and casualty insurance currently in effect with respect to
the Company, each of the Transferred Subsidiaries, and their respective
businesses and assets. Neither the Company nor any of the Transferred
Subsidiaries is in default with respect to its material obligations under any
insurance policy maintained by it, and neither the Company nor any of the
Transferred Subsidiaries has been denied insurance coverage. The insurance
coverage of the Company and the Transferred Subsidiaries covers risks of such
types and in such amounts as are customary for corporations of similar size
engaged in similar lines of business. Except as set forth on Schedule 2.20, the
Company and the Transferred Subsidiaries do not have any self-insurance or
co-insurance programs, and the reserves set forth on the Financial Statements
are adequate to cover all reasonably anticipated liabilities with respect to any
such self-insurance or co-insurance programs.
Section 2.21. Computer Systems. Except as set forth on Schedule
2.21, neither the Company nor any Transferred Subsidiary plan or anticipate any
material expenditure in relation to the hardware or software or communications
systems used or planned to be used in connection with the Business. Except as
set forth on Schedule 2.21, all computer systems used by the Company and the
Transferred Subsidiaries recognize the advent of the year 2000 and can correctly
recognize and manipulate date information relating to dates on or after January
1, 2000 and the operation and functionality of such computer systems will not be
adversely affected by the advent of the year 2000 or any manipulation of data
featuring date information relating to dates before, on or after January 1,
2000.
Section 2.22. Products and Services Liability. Except as disclosed
on Schedule 2.22 hereto, to MEI's, Sub's and the Company's knowledge, there are
not any:
(a) outstanding liabilities of the Company or any Transferred
Subsidiary, fixed or contingent, asserted or unasserted, in the aggregate in
excess of $50,000 with respect to any products liability or any similar claim
that relates to any product manufactured or sold by the Company or any
Transferred Subsidiary to any Person,
(b) outstanding liabilities of the Company or any Transferred
Subsidiary, fixed or contingent, asserted or unasserted, in the aggregate in
excess of $50,000 with respect to any claim for the breach of any express or
implied product warranty or any other similar claim with respect to any product
manufactured or sold by the Company or any Transferred Subsidiary to any Person
other than standard warranty obligations (to replace or repair) made by either
the Company or any Transferred Subsidiaries in the ordinary course of business
to purchasers of its product provided that any liability for returned materials
authorizations (in amounts consistent with past practice) shall not be
considered a liability for purposes of this Section 2.22, and
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(c) outstanding liabilities of the Company or any Transferred
Subsidiary, fixed or contingent, asserted or unasserted, in the aggregate in
excess of $50,000 with respect to any claim for the breach of any express or
implied warranty or any other similar claim with respect to any service rendered
by the Company or any Transferred Subsidiary to any Person other than standard
warranty obligations made by either the Company or any Transferred Subsidiaries
in the ordinary course of business to users of its services.
A copy of each type of warranty given to customers of the Company or any
Transferred Subsidiary are attached hereto as Schedule 2.22. Set forth on
Schedule 2.22 hereto is a description of each claim in excess of $25,000 that
has been asserted against the Company or any Transferred Subsidiary since
December 31, 1995 based upon any product or service liability or similar claim,
or on the breach or alleged breach of any express or implied product or service
warranty or any other similar claim with respect to any product manufactured or
sold by or any service rendered by the Company or any Transferred Subsidiary to
any Person, including information regarding (i) the amount of the claim, (ii)
the basis of the claim, (iii) whether the claim was covered by insurance, (iv)
how the claim was resolved, and (v) the amount paid by the Company or any
Transferred Subsidiary in relation to the claim.
Section 2.23. Predecessor Businesses; Former Facilities. Neither the
Company nor any Transferred Subsidiary has ever conducted any business other
than the Business and the component recovery business. Except as disclosed on
Schedule 2.23 hereto, other than the Real Property, neither the Company nor any
Transferred Subsidiary has ever owned, leased or occupied any real property.
Section 2.24. Disclosure. No representation or warranty by MEI, Sub
or the Company in this Agreement, and no exhibit, document, statement,
certificate or schedule furnished or to be furnished to Investor pursuant
hereto, or in connection with the transactions contemplated hereby, in any event
taken together, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances in which they are made in any material respect with respect to the
Business Condition.
Section 2.25. No Representations Regarding Projections. It is
understood that any cost estimates, projections or other predictions contained
or referred to in the Schedules hereto and any cost estimates, projections or
other predictions contained or referred to in other materials that have been or
may hereafter be provided to Investor or any of its Affiliates, agents or
representatives are not and shall not be deemed to be representations or
warranties of MEI, Sub or the Company.
Section 2.26. Construction of Certain Provisions. It is understood
and agreed that neither the specification of any dollar amount in the
representations, warranties or covenants con tained in this Agreement nor the
inclusion of any specific item in the Schedules or Exhibits is
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intended to imply that such amounts or higher or lower amounts, or the items so
included or other items, are or are not material, and neither party shall use
the fact of the setting of such amounts or the fact of the inclusion of any such
item in the Schedules or Exhibits in any dispute or controversy between the
parties as to whether any obligation, item or matter is or is not material for
purposes of this Agreement.
ARTICLE III
Representations and Warranties of Investor
Investor hereby represents and warrants to MEI and Sub as follows:
Section 3.1. Incorporation; Authorization; No Conflicts; etc.
(a) Investor is a legal entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization.
Investor has full corporate, partnership or limited liability company, as the
case may be, power to execute and deliver this Agreement and to perform its
obligations hereunder, and Investor has full corporate, partnership or limited
liability company, as the case may be, power to consummate the transactions
contemplated hereby. All corporate, partnership or limited liability company, as
the case may be, acts and other proceedings required to be taken by Investor to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and prop
erly taken. This Agreement has been duly executed and delivered by Investor and,
assuming the due execution and delivery hereof by the other parties hereto, this
Agreement constitutes the legal, valid and binding obligation of Investor,
enforceable against Investor in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
principles of equity.
(b) The execution, delivery and performance of this Agreement by
Investor and the consummation by Investor of the transactions contemplated
hereby will not (1) violate any provision of the organizational documents or
limited partnership agreement of Investor, (2) violate any provision of, or
constitute a default (with or without notice or lapse of time) under, or give
rise to a right of termination, cancellation or acceleration of (or entitle any
party to accelerate whether after the giving of notice or lapse of time or both)
any obligation under, or result in the imposition of any lien upon or the
creation of a security interest in any of Investor's assets or properties
pursuant to, any note, bond, debt instrument, mortgage, indenture, lien, lease,
agreement or other instrument, or any judgment, injunction, order or decree to
which Investor is a party or by which any of them is bound, or (3) violate or
conflict with any Law applicable to Investor or by which any of its proper ties
or assets is bound, except, in the case of clauses (2) and (3), for any such
violations, defaults, rights or restrictions that would not reasonably be
expected to have, individually or in the aggregate,
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a material adverse effect on (A) the business, financial condition, assets or
liabilities of Investor or (B) the ability of Investor to consummate the Stock
Purchase or the other transactions contemplated by this Agreement.
Section 3.2. Licenses, Approvals, Other Authorizations, Consents,
Reports, etc. Schedule 3.2 lists all consents, approvals, registrations,
filings, applications, notices, orders, authorizations, qualifications or
waivers required to be made, filed, given or obtained by Investor with, to or
from any persons or Governmental Authorities in connection with the consummation
of the Recapitalization and the other transactions contemplated by this
Agreement, except for those (a) that become applicable solely as a result of the
specific regulatory status of MEI, Sub, the Company or the Transferred
Subsidiaries or (b) the failure to make, file, give or obtain which would not
reasonably be expected, individually or in the aggregate, either to have a
material adverse effect on the Business Condition of Investor or to prevent the
consummation of the Stock Purchase or the other transactions contemplated by
this Agreement.
Section 3.3. Brokers, Finders, etc. Investor has not employed any
broker, finder, consultant or other intermediary in connection with the
transactions contemplated by this Agreement who would have a valid claim for a
fee or commission in connection with such transactions.
Section 3.4. Financing. Investor has received, and has furnished to
MEI a copy of a commitment letter from BT Alex. Brown Incorporated ("BTAB"),
dated December 18, 1997 (the "BTAB Commitment Letter"), pursuant to which BTAB
has committed to provide up to $215 million in financing for the transactions
contemplated hereby. Investor has the financial ability, subject only to the
conditions set forth in Article VI hereof, to provide up to $61.2 million toward
the Stock Purchase. Each of the BTAB Commitment Letter and a letter from Bankers
Trust Company ("BT") relating to the Credit Facility (the "BT Letter") have been
duly accepted by Investor. All fees required to be paid by Investor or any of
its Affiliates on or prior to the date hereof in respect of the BTAB Commitment
Letter and the BT Letter have been paid by Investor or its Affiliates, as
applicable. As of the date hereof, neither BTAB nor BT have advised Investor of
any reason why the BTAB Commitment Letter or the BT Letter will not be fulfilled
in a manner sufficient to consummate the Recapitalization.
Section 3.5. Investment. Investor (a) has been informed by the
Company that the Purchase Shares have not been and will not be registered under
the Securities Act of 1933, as amended (the "Securities Act"), or under any
state securities laws and are being offered and sold in reliance upon federal
and state exemptions for transactions not involving any public offering, (b) is
an experienced and sophisticated investor and has such knowledge and experience
in financial and business matters as are necessary to evaluate the merits and
risks of an investment in the Purchase Shares, (c) confirms that it has been
given the opportunity to ask questions of the officers and management employees
of MEI, the Company and the Transferred Subsidiaries and to acquire
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additional information about the Business and the Business Condition and (d) is
an "Accredited Investor" as defined in Regulation D under the Securities Act.
ARTICLE IV
Covenants
Section 4.1. Investigation of Business; Access to Properties and
Records; Records Retention.
(a) Subject to existing confidentiality arrangements, after the date
hereof and prior to Closing, MEI and Sub shall cause the Company and each of the
Transferred Subsidiaries to afford to representatives of Investor reasonable
access to its offices, properties, books and records, officers, counsel,
accountants, contracts and Other Persons (as defined below) during normal
business hours, in order that Investor may have an opportunity to make such
investigations as it desires of the affairs of the Company, the Transferred
Subsidiaries and the Business; provided, however, that such inves tigation shall
be upon reasonable prior notice and shall not unreasonably disrupt the personnel
and operations of MEI, Sub, the Company or any Transferred Subsidiary. All
requests for access to the Company or any Transferred Subsidiary and the
offices, properties, books, records and contracts re lating thereto shall be
made to such representatives of MEI as MEI shall designate in writing, who shall
be solely responsible for coordinating all such requests and all access
permitted hereunder. It is further understood and agreed that neither Investor
nor its representatives shall contact any of the employees, customers,
suppliers, joint venture partners, or other associates or Affiliates of MEI, Sub
or the Company (collectively, "Other Persons"), in connection with the
transactions contemplated by this Agreement, whether in person or by telephone,
mail or other means of communication, without the specific prior notification of
such representatives of MEI as MEI shall designate in writing. If, as of the
date hereof or at any time hereafter Investor is aware of or discovers any
breach of any representation or warranty contained in this Agreement or any
circumstance or condition that upon Closing would constitute such a breach,
Investor shall use reasonable best efforts to promptly so inform MEI in writing;
provided, that Investor's awareness or discovery of any such breach,
circumstance or condition shall in no way affect any of Investor's rights or
remedies under this Agreement including any rights pursuant to Article XII.
(b) Prior to Closing, any information provided to Investor or its
representatives pursuant to this Agreement shall be held by Investor and its
representatives in accordance with, and shall be subject to the terms of, the
Confidentiality Agreement dated September 23, 1997 by and between MEI and
Cornerstone Equity Investors, L.L.C. (the "Confidentiality Agreement").
(c) Subject to Section 9.5(c), the Company agrees (i) to hold all of
the books and records of the Company and Transferred Subsidiaries existing on
the Closing Date and not to destroy or dispose of any thereof for a period of 5
years from the Closing Date or such longer time as may
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be required by Law or by any Order, and thereafter, if it proposes to destroy or
dispose of any of such books and records, to offer first in writing, at least 60
days prior to such proposed destruction or disposition to surrender them to MEI,
and (ii) for a period of 5 years from the Closing Date to afford MEI or Sub (or
MEI's or Sub's successors or assigns), their accountants, counsel and other
representatives, during normal business hours, upon reasonable request, at any
time, full access to such books, records and other data and to the employees of
the Company and any of its Subsidiaries to the extent that such access may be
requested for any legitimate purpose at no cost to MEI or Sub (other than for
reasonable out-of-pocket expenses); provided, however, that nothing herein shall
limit any of MEI's or Sub's rights of discovery.
(d) MEI and Sub agree and shall use their respective reasonable best
efforts to cause each Continuing Affiliate and MTI (i) to hold all of the books,
records, documents, files and other data held by any such Person as of
immediately after the Closing which relates in any way to the Business of the
Company (including all books, record documents, files and other data relating to
any Intellectual Property held by any such Person as of immediately after the
Closing which relates to or is used in the Business of the Company) and not to
destroy or dispose of any thereof for a period of 5 years from the Closing Date
or such longer time as may be required by Law or by any Order, and thereafter,
if any of them proposes to destroy or dispose of any of such books, records,
documents, files or other data to offer first in writing, at least 60 days prior
to such proposed destruction or disposition to surrender them to the Company,
and (ii) for a period of 5 years from the Closing Date to afford the Company (or
the Company's successors or assigns), their accountants, counsel and other
representatives, during normal business hours, upon reasonable request, at any
time, full access to such books, records, documents, files and other data and to
the employees of MEI, each Continuing Affiliate and MTI to the extent that such
access may be requested for any le gitimate purpose at no cost to the Company
(other than for reasonable out-of-pocket expenses); provided, however, that
nothing herein shall limit any of the Company's rights of discovery.
(e) Notwithstanding anything contained herein to the contrary, MEI,
Sub and the Company acknowledges that Investor may cause a Rule 144A placement
memorandum (the "Placement Memorandum") to be prepared and used in connection
with the consummation of the Company's financing of the transactions
contemplated hereby and agrees to use reasonable efforts to furnish Investor
with access to, and to cause the cooperation of, all records and personnel
necessary for Investor to cause the consummation such financing; provided that
no director or officer of MEI or Sub, in such capacity, shall be required to
execute a registration statement or purchase agreement in connection with such
financing. In addition, the Company shall request its accountants to consent to
the inclusion of their report or reports in, and to issue a comfort letter in
connection with, any offering memoranda or filings required by such financing.
The Company agrees to indemnify MEI and Sub against all damages caused by any
untrue statement of material fact contained in the Placement Memorandum or any
omission or alleged omission of material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as MEI
or Sub, as applicable, has provided information containing such material
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misstatement or material omission to the Investor or the Company in writing
including in any representation and warranty contained in this Agreement.
Section 4.2. Efforts; Obtaining Consents. Subject to the terms and
conditions herein provided, MEI, Sub and Investor each agrees to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated hereby
and to cooperate with the other in connection with the foregoing, including
using all reasonable efforts (1) to obtain all necessary waivers, consents and
approvals from other parties to material loan agreements, leases and other
contracts, (2) to obtain the consents, approvals and authorizations that are
required to be obtained from any Governmental Authority, (3) to prevent the
entry of, or to lift or rescind, any Order adversely affecting the ability of
the parties hereto to consummate the transactions contemplated hereby, (4) to
effect all necessary registrations and filings including, but not limited to,
filings under the HSR Act and submissions of information requested by
Governmental Authorities and (5) to fulfill all conditions to this Agreement.
Section 4.3. Further Assurances. MEI, Sub and Investor agree that,
from time to time, whether before, at or after the Closing Date, each of them
will, and will use their reasonable best efforts to cause their respective
Affiliates to, execute and deliver such further instruments of conveyance and
transfer and take such other action as may be necessary to carry out the
purposes and intents of this Agreement.
Section 4.4. Conduct of Business. From December 21, 1997 to the
Closing, except as disclosed on Schedule 4.4 or otherwise provided for in, or
contemplated by, this Agreement, and, except as consented to or approved by
Investor, MEI, Sub and the Company covenant and agree that:
(a) the Company and the Transferred Subsidiaries shall operate their
respective businesses in the ordinary course in all material respects;
(b) none of the Company or any of the Transferred Subsidiaries shall
amend its certificate of incorporation or by-laws;
(c) except for the transfer of the Shares from MEI to Sub (which has
been completed prior to the execution of this Agreement), the Stock Purchase,
the Stock Redemption and in connection with the BTAB Financing, none of the
Company or any of the Transferred Subsidiaries shall issue, sell, agree to issue
or sell or redeem or otherwise acquire (1) any shares of its capital stock or
(2) any securities convertible into, or options with respect to, or warrants to
purchase or rights to subscribe for, any shares of its capital stock or
evidences of indebtedness or other securities;
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(d) except in the ordinary course of business, none of the Company
or any of the Transferred Subsidiaries shall (1) create, incur or assume any
indebtedness for Borrowed Money; (2) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any Person, if such assumption, guarantee, endorse ment or
other liability is in any such case material to the Company; or (3) make any
material loans, advances or capital contributions to or investments in, any
Person (except for customary loans or ad vances to employees);
(e) except in the ordinary course of business or as required by any
Law or contractual obligations or other understandings or arrangements existing
on the date hereof which are disclosed in Schedule 4.4, none of the Company or
any of the Transferred Subsidiaries shall (1) increase in any manner the base
compensation of, or enter into or amend any employment, bonus, incentive,
severance, consulting, or other compensation agreement with, any existing
director or of ficer; or (2) commit itself to any additional pension,
profit-sharing, deferred compensation, group insurance, severance pay,
retirement or other employee benefit plan, fund or similar arrangement or amend
or commit itself to amend any of such plans, funds or similar arrangements in
existence on the date hereof so as to increase benefits thereunder;
(f) except in the ordinary course of business or as required by any
Law or contractual obligations existing on the date hereof which are disclosed
in Schedule 4.4 or as provided for in or expressly contemplated by this
Agreement or Schedule 4.4, none of the Company or any of the Transferred
Subsidiaries shall (1) sell, transfer or otherwise dispose of any of its
material assets, (2) create any new material Encumbrance, other than a Permitted
Encumbrance, on its properties or assets, (3) enter into any material joint
venture or partnership or (4) purchase any mate rial amount of assets or
securities of any Person;
(g) none of the Company or any of the Transferred Subsidiaries shall
enter into any transaction or other arrangement which would have to be listed on
Schedule 2.7 (provided that, notwithstanding anything contained herein, no
material adverse change in the Business Condition which occurred prior to
February 1, 1998 would have to be listed on Schedule 2.7); and
(h) none of the Company or any of the Transferred Subsidiaries shall
agree to take any action prohibited by this Section 4.4.
Section 4.5. Preservation of Business. Subject to the terms and
conditions of this Agreement, MEI and Sub shall, and shall cause the Company and
the Transferred Subsidiaries to, use reasonable efforts to preserve the Business
intact, to keep available to the Company and the Transferred Subsidiaries the
services of persons employed by the Company and the Transferred Subsidiaries and
to preserve the goodwill of customers and others having business relations with
the Company and the Transferred Subsidiaries but shall not be required to incur
material expense to do so.
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Section 4.6. Public Announcements. From and after the date hereof
until the Closing, MEI, Sub and Investor will, before issuing, or permitting any
agent or Affiliate to issue, any press releases or otherwise making or
permitting any agent or Affiliate to make, any public statements with respect
to this Agreement and the transactions contemplated hereby, mutually agree in
good faith upon the content of such press release or statement, except in the
event, and only to the extent, that disclosure is required by law; provided,
that in such instances the disclosing party will consult with the other party
prior to making such disclosure.
Section 4.7. Intercompany Accounts.
(a) Notwithstanding the provisions of Section 4.4 hereof, nothing in
this Agreement shall be construed or interpreted to prevent the Company from
engaging in any trans action incident to the cash management procedures of
Continuing Affiliates, the Company and the Transferred Subsidiaries in a manner
consistent with past practice, including, without limitation, short-term
investments in bank deposits, money market instruments, time deposits,
certificates of deposit and bankers' acceptances, incurrence or payment of bank
overdrafts and borrowings for working capital purposes and for purposes of
providing additional funds to the Company and the Transferred Subsidiaries in
the ordinary course of business consistent with past practice; provided,
however, that notwithstanding the foregoing, between December 21, 1997 and the
Closing, the Company shall not declare, set aside, or pay any dividend or
distribution with respect to its capital stock and, except for the Stock
Purchase and the Stock Redemption, shall not redeem, purchase or otherwise
acquire any of its capital stock.
(b) Immediately prior to the Closing, MEI shall settle on an
arms-length basis all intercompany receivables, payables and loans then existing
between MTI and the Continuing Affiliates, on the one hand, and the Company and
the Transferred Subsidiaries, on the other hand other than (i) receivables,
payables and loans relating to ongoing business between MTI and the Continuing
Affiliates, on the one hand and the Company and the Transferred Subsidiaries, on
the other hand and (ii) trade payables and receivables.
Section 4.8. Notice of Breach. If, as of the date hereof or at any
time hereafter MEI, Sub or the Company is aware of or discovers any breach of
any representation or warranty contained in this Agreement or any circumstance
or condition that upon Closing would constitute such a breach, MEI, Sub or the
Company, as the case may be, shall promptly so inform Investor in writing.
Section 4.9. Acquisition Proposals. MEI, Sub and the Company shall
not, and the Company shall cause the Transferred Subsidiariffes not to, directly
or indirectly, (i) solicit, initiate or encourage the submission of any
inquiries, discussions or proposals or offers from any Person relating to a
possible disposition of any capital stock or any material portion of the assets
of the Company or any Transferred Subsidiary, (ii) continue, propose, solicit,
initiate, encourage or enter into negotiations or discussions relating to a
possible disposition of any capital stock or any material
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portion of the assets of the Company or any Transferred Subsidiary, (iii) enter
into or consummate any agreement or understanding providing for the disposition
of any capital stock or any material portion of the assets of the Company or any
Transferred Subsidiary, or (iv) assist, participate in or encourage any effort
or attempt by any other Person to do or seek any of the foregoing. MEI, Sub or
the Company shall promptly notify Investor of, and communicate to Investor the
terms of, any such inquiry, proposal or request for information received by, or
negotiations or discussions sought with, MEI, Sub, the Company or any
Transferred Subsidiary.
Section 4.10. Noncompetition; Nonsolicitation.
(a) For a period of two (2) years from and after the Closing (the
"Two Year Term"), no Continuing Affiliate shall and each Continuing Affiliate
shall use its reasonable best efforts to cause its officers and directors to not
directly or indirectly, (i) own, manage, operate, control or participate in the
ownership, management, operation or control of, or be connected as an officer,
director, employee, stockholder, partner or any other similar capacity with any
business which is in competition with the business of design, assembly and
testing of custom complex printed circuit boards for third party electronics
original equipment manufacturers ("OEM's") and the business of design, assembly
and testing of system level assemblies when acting solely and strictly in the
capacity of a subcontractor of an OEM (a "Competitive Business"), or (ii)
solicit, interfere with or attempt to entice away (other than through
advertisements or general solicitations) from the Company, any of the
Transferred Subsidiaries or any successor to any of the foregoing, any
individual who is, has agreed to be or within six months of such solicitation,
interference or enticement has been, employed or retained by the Company, any of
the Transferred Subsidiaries or any successor to any of the foregoing. Ownership
of not more than 5% of the outstanding stock of any publicly traded company
shall not, in and of itself, be a violation of this Section 4.10. The
restrictive covenant contained in this Section 4.10 is a covenant independent of
any other provision of this Agreement, and the existence of any claim which MEI
or Sub may allege against Investor, the Company, or any of their Affiliates,
whether based on this Agreement or otherwise, shall not prevent the enforcement
of this covenant. MEI and Sub agree that a breach of this Section 4.10 shall
cause irreparable harm to Investor, the Company and their respective Affiliates,
that Investor's and the Company's remedies at law for any breach or threat of
breach of the provisions of this Section 4.10 shall be inadequate, and that
Investor and/or the Company shall be entitled to an injunction or injunctions to
prevent breaches of this Section 4.10 and to enforce specifically the terms and
provisions hereof, in addition to any other remedy to which Investor and/or the
Company may be entitled at law or in equity. The Two Year Period shall be tolled
during any period of violation of this Section 4.10 after which MEI is provided
notice and during any other period required for litigation during which Investor
and/or the Company seeks to enforce this covenant. In the event that this
Section 4.10 shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too long a period of time or over
too large a geographical area or by reason of its being too extensive in any
other respect, it shall be interpreted to extend only over the longest period of
time for which it may be enforceable, and/or over the largest geographical area
as
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to which it may be enforceable and/or to the maximum extent in all other aspects
as to which it may be enforceable, all as determined by such court in such
action.
(b) Notwithstanding the foregoing, MEI may acquire any business or
entity which has a component which is a Competitive Business (an "Acquired
Business") during the Two Year Term, provided that (i) not more than 10% of the
revenues of the Acquired Business during the 12 calendar months immediately
preceding such acquisition are derived from the business which is competitive
with the Business and (ii) MEI uses its best efforts to dispose of the portion
of the Acquired Business which is a Competitive Business as soon as commercially
practicable.
(c) Nothing contained in this Section 4.10 shall prohibit or in any
way infringe upon the activities (including conducting the business) of MEI's
advanced engineering group consistent with the activities conducted as of
December 21, 1997.
Section 4.11. Confidentiality.
(a) From and after the Closing, MEI and Sub shall, and shall use
their respective reasonable best efforts to cause their respective Affiliates
and representatives to, keep confidential and not disclose to any other Person
or use for their own respective benefit or the benefit of any other Person any
trade secrets or other confidential proprietary information in their possession
or control regarding the Company, any of the Transferred Subsidiaries or the
Business. The obligation of MEI and Sub under this Section 4.11(a) shall not
apply to information which (i) is or becomes generally available to the public
without breach of the commitment provided for in this Section 4.11(a); or (ii)
is required to be disclosed by law, order or regulation of a court or tribunal
or governmental authority; provided, however, that, in any such case, the Person
subject to such requirement shall notify Investor and the Company as early as
reasonably practicable prior to disclosure to allow Investor and the Company to
take appropriate measures to preserve the confidentiality of such information.
(b) From and after the Closing, the Company shall, and shall cause
its Affiliates and representatives to, keep confidential and not disclose to any
other Person or use for its own benefit or the benefit of any other Person any
trade secrets or other confidential proprietary information in its or their
possession or control regarding the Continuing Affiliates or their respective
businesses. The obligation of the Company under this Section 4.11(b) shall not
apply to information which (i) is or becomes generally available to the public
without breach of the commitment provided for in this Section 4.11(b); or (ii)
is required to be disclosed by law, order or regulation of a court or tribunal
or governmental authority; provided, however, that, in any such case, the Person
subject to such requirement shall notify MEI as early as reasonably practicable
prior to disclosure to allow MEI to take appropriate measures to preserve the
confidentiality of such information.
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Section 4.12. Nonsolicitation by the Company. For a period of two
(2) years from and after the Closing, neither the Company nor any of its
Affiliates shall, directly or indirectly, solicit, interfere with or attempt to
entice away (other than through advertisements or general solicitations) from
any Continuing Affiliate or any successor to any of the foregoing, any
individual who is, has agreed to be or within six (6) months of such
solicitation, interference or enticement has been, employed or retained by any
of the Continuing Affiliates or any successor other than the individuals listed
on Schedule 4.12 hereto.
Section 4.13. Alternative Financing. In the event the financing
described in the BTAB Commitment Letter will not be available at Closing in a
manner sufficient to consummate the Recapitalization, Investor shall use
commercially reasonable efforts to pursue financing, reasonably acceptable to
Investor, on terms in the aggregate not materially worse to Investor or the
Company than the terms contained in the BTAB Commitment Letter (taking into
account the BTAB Financing as contemplated as of the date hereof); provided,
that if Investor is unable to obtain any such alternative financing, Investor
shall have no obligation to consummate the Stock Purchase, the Recapitalization
or any other transaction contemplated hereby.
Section 4.14. License Agreements. The parties hereto acknowledge
that the Company currently enjoys certain rights under various agreements listed
on Schedule 4.14 hereto to which either MTI or MEI is a party (the "Master
Agreements"). MEI and the Company shall use their commercially reasonable
efforts to obtain for the Company a replacement license or other agreement
(which the Company shall be a party to), on terms reasonably satisfactory to the
Company and Investor, with each of the third parties listed on Schedule 4.14 as
a replacement for each of the Master Agreements.
Section 4.15. Use of Micron Name. It is understood and agreed
between the parties hereto that after the Closing, neither the Company nor any
of the Transferred Subsidiaries shall have an interest in or right to use,
either alone or in combination with other words or phrases, the name "Micron" or
the stylized "M" currently used by the Company and the Transferred Subsidiaries.
No later than the Closing, MEI shall cause the name of the Company to be changed
to "MCMS, Inc." and within three (3) months after Closing will change the font
currently used by the Company in the name "MCMS." The Company shall have a
transition period of 3 months after the Closing to take all steps within its
control to change the name of each Transferred Subsidiary, as necessary, so as
to remove the name "Micron" therefrom. MEI acknowledges and agrees that the
Company and the Transferred Subsidiaries will have in inventory after the
Closing a quantity of work-in-process, preprinted stationery, invoices,
receipts, forms, advertising and promotional materials, training and source
literature, packaging material and other supplies which bear the "Micron" name
and the stylized "M" (collectively, "Supplies"). Notwithstanding anything in
this Section 4.15 to the contrary, MEI hereby grants to the Company and the
Transferred Subsidiaries a paid-up, royalty-free right and license, to remain in
effect until exhaustion of the Supplies (but in no event more than 3 months
after Closing) in the ordinary course of business, to use any trademarks, trade
names, trade
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dress, copyright or other proprietary rights of MEI associated with such
Supplies, including but not limited to the "Micron" name and the Stylized "M."
MEI agrees that the Company shall be permitted to continue to use its current
logo and MEI expressly disclaims any rights thereto.
Section 4.16. Schedule Supplements. Investor, Sub and MEI agree that
during the period between the date hereof and the Closing Date, the schedules to
this Agreement relating to Article II may be supplemented in order for MEI, Sub
and the Company to bring down the representations and warranties contained in
Article II to the Closing Date (but not to change any representations and
warranties made by MEI, Sub and the Company as of the date hereof).
Notwithstanding the foregoing, no such schedule shall be so amended without the
review and approval of Investor, which review and approval shall not be
arbitrarily withheld.
Section 4.17. Capital Expenditures. Neither the Company nor any
Transferred Subsidiary shall make any capital expenditures or commitments, or
series thereof, involving more than $6,500,000 in the aggregate for the Company
and the Transferred Subsidiaries during the fiscal quarter ending February 28,
1998 or more than $6,000,000 in the aggregate for the Company and the
Transferred Subsidiaries during the fiscal quarter ending May 31, 1998.
Section 4.18. Leased Property. The parties hereto agree that, prior
to Closing, MEI and the Company shall amend the lease (the "MCMS Lease"), dated
as of November 1, 1996, by and between MEI and the Company, to provide,
notwithstanding any other provision of the MCMS Lease other than Section 13
thereof including, without limitation, any change of control provision, that (1)
MEI shall have the right to occupy the premises covered by the MCMS Lease until
December 31, 1998, at the rental rates effective on the date hereof, and the
Company shall have no right to terminate the MCMS Lease at any time prior to
December 31, 1998; provided that MEI will vacate the space it currently occupies
in the bullpen area of the Company's accounting area (approximately 3,625 square
feet) upon 90 days' advanced written notice by the Company; (2) MEI shall have
the right to terminate the MCMS Lease at anytime upon 30 days' written notice to
the Company; (3) at any time after March 31, 1998, the Company shall be entitled
to occupy (upon the execution of a sublease agreement with customary terms and
conditions consistent with the terms and conditions of the lease agreement
covering the Shilo Property (as herein defined)) approximately 24,000 square
feet of space currently leased by MEI at 1400 Shilo Drive, Nampa, Idaho (the
"Shilo Property") (with respect to which MEI warrants its ability to sublease to
the Company); provided that the Company give 60 days' advanced written notice of
its intent to so occupy and 30 days' advanced written notice of its intent to
vacate the Shilo Property; (4) the Company shall pay all fees, expenses and rent
associated with its occupancy of the Shilo Property (which fees, expenses and
rent shall be no greater than the amounts MEI currently is obligated to pay
under its lease of the Shilo Property); provided that MEI shall pay up to
$35,000 in start-up/upfit and relocation expenses (whether to or from the Shilo
Property) associated with the Company's occupancy of the Shilo Property; (5)
prior to the time that MEI vacates the premises covered by the MCMS Lease, MEI
will use its reasonable best efforts to assist the Company in locating up to
12,000 additional square feet
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(in the Company's discretion) of space in Nampa, Idaho (the "Additional Space")
after receiving a written request from the Company for such assistance; and (6)
the Company shall pay all fees, expenses and rent of any kind associated with
its occupancy of the Additional Space.
ARTICLE V
Employee Benefits
Section 5.1. Provision of Benefits. Any Company Plan other than
plans maintained for the benefit of Company Employees located in Belgium and
Malaysia shall terminate no later than as of the Closing Date. Except as
specifically provided in this Article V, MEI shall be responsible for (x) all
liabilities and obligations under the Company Plans terminated pursuant to the
preceding sentence (other than Liabilities that are accrued on the Company
Financial Statements), (y) the $1,009,672.60 amount with respect to potential
bonuses that is listed at Schedule 2.4, and (z) all liabilities and obligations
under any Plan that is not a Company Plan. As of the Closing Date or as soon as
practicable thereafter, the Company shall establish for the benefit of its
employees and employees of the Transferred Subsidiaries on and after the Closing
Date such Employee Benefit Plans as are reasonably deemed appropriate by the
president of the Company and the Investor. The Company agrees, for all purposes
under all Employee Benefit Plans applicable to employees of the Company and the
Transferred Subsidiaries to treat all service by Company Employees with MEI or
any of its Affiliates before the Closing as service with the Company and the
Transferred Subsidiaries, except to the extent such treatment would result in
duplication of benefits.
Section 5.2. Savings Plan. As soon as reasonably practicable after
the Closing Date, the Company shall establish one or more defined contribution
plans (the "Successor 401(k) Plan") qualified under Section 401 of the Code, and
one or more related trusts (the "Successor 401(k) Trust") exempt from taxation
under Section 501 of the Code, in which Company Employees will be eligible to
participate. The account balances in MEI's 401(k) Plan of all Company Employees
shall be transferred to the Successor 401(k) Trust in cash or in kind, as agreed
by MEI and the Company. Such transfer shall take place as soon as practicable
after the Closing Date, but no earlier than the date on which the Company
delivers to MEI either (x) a copy of a favorable determination letter or letters
from the IRS that the Successor 401(k) Plan is qualified under Section 401 of
the Code and the Successor 401(k) Trust is exempt from taxation under Section
501 of the Code, or (y) an opinion of counsel to the Company, reasonably
satisfactory to MEI, that the Successor 401(k) Plan is quali fied under Section
401 of the Code and the Successor 401(k) Trust is exempt from taxation under
Section 501 of the Code. Following the Closing Date, Company Employees shall
continue to vest in the unvested portion of their account balances in MEI's
401(k) Plan as transferred to the Successor 401(k) Plan, based upon continued
employment with the Company and the Affiliates of the Company, and otherwise on
the same terms and conditions as applied under MEI's 401(k) Plan. The Company
and MEI agree to cooperate in making all appropriate filings and taking all
appropriate actions required to implement the provisions of this Section 5.2.
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Section 5.3. Welfare Benefits. (a) MEI shall be responsible for (i)
continuing to provide Company Employees and Former Company Employees and their
respective beneficiaries and dependents with welfare benefits, including without
limitation life insurance, accidental death and dismemberment insurance,
medical, dental, vision, short-term and long-term disability benefits (such
benefits, collectively, "Welfare Benefits"), for claims incurred before the
Closing Date; and (ii) providing Company Employees, Former Company Employees and
their respective current and former dependents and beneficiaries with all
required continuation coverage under Section 601 et seq. of ERISA and Section
4980B of the Code for "qualifying events" (as defined in Section 603 of ERISA
and the regulations pertaining thereto) occurring on or prior to the Closing
Date. The Company and the Transferred Subsidiaries shall be solely responsible
for providing Company Employees and their beneficiaries and dependents with the
Welfare Benefits that are provided under plans to be established by the Company
for claims incurred after the Closing Date; provided, that if as a result of the
level of benefits provided by the Company after the Closing Date any employee
experiences a "qualifying event" (as defined above) merely as a result of
ceasing to participate in the Plans and starting to participate in such plans
established by the Company, the Buyer shall compensate MEI for its costs and
expenses in providing continuation coverage to such employees. For purposes of
this Section 5.3(a), a claim for a medical, dental or other similar benefit
shall be con sidered to be incurred when the services that are the subject of
the claim are performed; a claim for life insurance or other death-related
benefits shall be considered to be incurred when the death of the covered
individual occurs; and a claim for disability benefits or other
income-replacement benefits shall be considered incurred as and when such
benefits are payable.
(b) The Welfare Benefits provided by the Company to Company
Employees and their beneficiaries and dependents after the Closing shall be
provided without evidence of insur ability and without the application of any
pre-existing physical or mental condition restrictions, except to the extent
such restrictions applied to any particular individual immediately before the
Closing Date. To the extent any such individual has, before the Closing Date,
satisfied in whole or in part any annual deductible or paid any out-of-pocket or
co-payment expenses under the applicable plan of MEI and its Affiliates, such
individual shall be credited therefor under the corresponding provisions of the
corresponding plan of the Company and the Transferred Subsidiaries in which such
individual participates after the Closing Date.
Section 5.4. Intercompany Charges. Nothing contained herein shall be
deemed to prevent the Company from paying monthly charges accrued for
pre-Closing periods for employee benefits, in a manner consistent with past
practice (including such charges for any period of less than a month ending
immediately on the Closing Date).
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ARTICLE VI
Conditions of Investor's Obligation to Close
Investor's obligation to consummate the Recapitalization shall be
subject to the satisfaction on or prior to the Closing Date, or waiver by
Investor, of all of the following conditions:
Section 6.1. Representations, Warranties and Covenants of MEI, Sub
and the Company. The covenants and agreements of MEI, Sub and the Company to be
performed on or be fore the Closing Date in accordance with this Agreement shall
have been duly performed in all respects (except for such failures to be
performed which could not reasonably be expected in the aggregate to have a
material adverse effect on the Company's Business Condition) and the
representations and warranties of MEI, Sub and the Company contained in this
Agreement shall be true and correct in all respects (except for such failure to
be true and correct which could not reasonably be expected in the aggregate to
have a material adverse effect on the Company's Business Condition) as of the
date hereof and on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date, except
for such representations and warranties that speak as of a specific date or time
other than the Closing Date (which need only be true and correct in all respects
as of such other date or time (except for such failures to be true and correct
which could not reasonably be expected in the aggregate to have a material
adverse effect on the Company's Business Condition), and Investor shall have
received a certificate to such effect signed by an executive officer of MEI, Sub
and the Company.
Section 6.2. Filings; Consents; Waiting Periods. The material
registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers which are set forth on Schedule 6.2 (the "Material
Consents") shall have been filed, made or obtained, in each case in a form
reasonably acceptable to Investor, and all waiting periods applicable under the
HSR Act shall have expired or been terminated.
Section 6.3. No Injunction. At the Closing Date, there shall be no
Order of any nature of any Governmental Authority of competent jurisdiction that
is in effect that restrains, enjoins or prohibits the consummation of the
Recapitalization or the other transactions contemplated hereby.
Section 6.4. Transitional Services Agreement. MEI and MTI shall have
duly delivered authorized and executed counterparts of each of the Transitional
Services Agreements containing the terms set forth in the term sheet annexed
hereto as Exhibit A.
Section 6.5. Stockholders Agreement and Registration Rights
Agreement. Sub and the Company shall have delivered duly authorized and executed
counterparts to a stockholders
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agreement (the "Stockholders Agreement") and a registration rights agreement
(the "Registration Rights Agreement"), in each case, containing the terms set
forth in the term sheet annexed hereto as Exhibit C.
Section 6.6. Financing. The Company shall have received the
financing described in the BTAB Commitment Letter and the BT Letter consistent
with the terms therein or otherwise obtained financing sufficient to consummate
the transactions contemplated hereby on terms reasonably satisfactory to
Investor.
Section 6.7. Indebtedness. All outstanding indebtedness for Borrowed
Money of the Company and the Transferred Subsidiaries ("Indebtedness") shall be
paid in full; any outstanding letters of credit shall be terminated; and the
Company shall have obtained (x) the release of all Encumbrances on the capital
stock of the Company and each of the Transferred Subsidiaries and all assets
securing such Indebtedness and (y) the release of all guarantees with respect to
such Indebtedness. At the Closing, the Company shall provide or arrange to be
provided to Investor evidence demonstrating the payment in full of such
Indebtedness, the termination of such letters of credit and the release of such
Encumbrances and guarantees.
Section 6.8. Material Adverse Effect. Since February 1, 1998, no
event shall have occurred which has or which could reasonably be expected to
have a material adverse effect on the Business or the financial condition of the
Company and the Transferred Subsidiaries taken as a whole except for any change
resulting from (i) any change or any development in worldwide, foreign or
national economic, financial or market conditions, (ii) war, insurrection or
other political changes or instability or (iii) the announcement of the
transactions contemplated hereby.
Section 6.9. Opinion of Counsel. MEI, Sub and the Company shall have
delivered to Investor an opinion of counsel to MEI, Sub and the Company (which
counsel shall be reasonably acceptable to Investor) with respect to items and in
a form, in each case, reasonably acceptable to Investor.
Section 6.10. Resignation of Directors. MEI, Sub and the Company
shall have delivered to Investor the written resignations or evidence of removal
of each of the directors of the Company or any of the Transferred Subsidiaries
as Investor shall have requested at least two business days prior to the
Closing.
Section 6.11. Other Closing Documents. The Company shall have
obtained title insurance and surveys for each parcel of Owned Real Property
located within the United States and Leased Real Property in the United States
(to the extent required by the providers of the BTAB Financing), in each case,
which is in customary form and does not disclose matters other than (i)
Permitted Encumbrances or (ii) matters which do not have a material adverse
effect on the current use of such parcel of Real Property. With respect to each
leased parcel of Real Property, the
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Company shall have delivered to Investor (to the extent required by the
providers of the BTAB Financing) a consent and waiver and an estoppel letter
executed by the landlord, lessor, landlord and/or licensor of such leased Real
Property, in each case, in form and substance reasonably acceptable to Investor
and the providers of the BTAB Financing. The Company shall have delivered to
Investor all other customary closing documents, each in form and substance
reasonably acceptable to Investor.
Section 6.12. Articles of Incorporation. The Company's Articles of
Incorporation shall have been amended and restated to be in a form as provided
by Investor to MEI and the Company at least five (5) business days prior to the
Closing (the "Amended Charter"). The Amended Charter shall have been filed with
the Secretary of State of Idaho, shall be in full force and effect under the
laws of the State of Idaho as of the Closing, and no further amendments or
modifications shall have been made to the Company's Articles of Incorporation.
Section 6.13. Bylaws. The Company's Bylaws shall have been amended
and restated to be in a form as provided by Investor to MEI and the Company
prior to the Closing (the "Amended Bylaws"). The Amended Bylaws shall be in full
force and effect as of the Closing and shall not have been further amended or
modified.
Section 6.14. Booster Pump and Power Substation. MEI and the Company
shall have entered into an arrangement, reasonably satisfactory to Investor and
MEI, pursuant to which the Company shall be granted (i) access to the booster
pump located on MEI's real property in Nampa, Idaho and (ii) the ability to draw
power from the power substation located on MEI's real property in Nampa, Idaho.
Section 6.15. Patent Agreement. MEI shall have duly delivered an
authorized and executed counterpart of a patent and invention disclosure
assignment and license agreement substantially in the form attached hereto as
Exhibit D (the "Patent Agreement").
Section 6.16. Know-How Agreement. MEI shall have duly delivered an
authorized counterpart of a know-how license agreement substantially in the form
attached hereto as Exhibit E (the "Know-How Agreement").
Section 6.17. MTI License Agreement. MTI shall have duly delivered
an authorized and executed counterpart of a covenant not to sue agreement
substantially in the form attached hereto as Exhibit F (the "MTI Agreement").
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ARTICLE VII
Conditions to MEI's, Sub's and the Company's Obligation to Close
MEI's, Sub's and the Company's obligation to consummate the
Recapitalization is subject to the satisfaction on or prior to the Closing Date,
or waiver by MEI, Sub and the Company, of all of the following conditions:
Section 7.1. Representations, Warranties and Covenants of Investor.
The covenants and agreements of Investor to be performed on or before the
Closing Date in accordance with this Agreement shall have been duly performed in
all material respects and the representations and warranties of Investor
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such
date, except for representations and warranties that speak as of a specific date
or time other than the Closing Date (which need other only be true and correct
in all material respects as of such other date or time), and MEI, Sub and the
Company shall have received a certificate to such effect signed by an authorized
person of Investor.
Section 7.2. Filings; Consents; Waiting Periods. The Material
Consents shall have been filed, made or obtained, and all applicable waiting
periods under the HSR Act shall have ex pired or been terminated.
Section 7.3. No Injunction. At the Closing Date, there shall be no
Order of any nature of any Governmental Authority of competent jurisdiction that
is in effect that restrains, enjoins or prohibits the consummation of the
Recapitalization or the other transactions contemplated hereby.
Section 7.4. Transitional Services Agreements. The Company shall
have delivered duly authorized and executed counterparts of each of the
Transitional Services Agreements.
Section 7.5. Stockholders Agreement and Registration Rights
Agreement. Investor and the Company shall have delivered duly authorized and
executed counterparts to the Stockholders Agreement and the Registration Rights
Agreement.
Section 7.6. Patent Agreement. The Company shall have duly delivered
an authorized and executed counterpart of the Patent Agreement.
Section 7.7. Know-How Agreement. The Company shall have duly
delivered an authorized and executed counterpart of the Know-How Agreement.
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Section 7.8. MTI Agreement. The Company shall have duly delivered an
authorized and executed counterpart of the MTI Agreement.
ARTICLE VIII
The Recapitalization; Closing
Section 8.1. Authorization. Prior to the Closing Date, the Company
shall have authorized (i) the issuance and sale of the Purchase Shares to the
Investor and (ii) the other transactions comprising the Recapitalization,
including the Stock Redemption and the BTAB Financing.
Section 8.2. Stock Purchase. Subject to the terms and conditions of
this Agreement, at the Closing, the Company shall issue to the Investor the
Purchase Shares in exchange for the Purchase Price.
Section 8.3. Stock Redemption. Pursuant to the authorization
contemplated by Section 8.1 hereof and subject to the terms and conditions set
forth in this Agreement, the parties hereto agree that Sub shall offer for
redemption, and the Company shall redeem the Redemption Shares. In consideration
for the Redemption Shares, at the Closing, Sub will receive $249,200,000 (the
"Redemption Price") from the Company.
Section 8.4. Closing.
(a) Time and Place of Closing. The Closing shall take place on the
Closing Date at 10:00 A.M., New York City time, at the offices of Kirkland &
Ellis, 153 East 53rd Street, New York, New York 10022 or such other place at the
parties shall mutually agree.
(b) Deliveries and Proceedings at the Closing. At the Closing,
(1) Deliveries by the Company to Investor. The Company shall
deliver to Investor certificate(s) representing the Purchase Shares.
(2) Deliveries by Investor to the Company. Investor shall pay
to the Company the Purchase Price by wire transfer of immediately available
funds to one or more accounts as designated by the Company.
(3) Deliveries by Sub to the Company. Sub shall surrender to
the Company certificate(s) representing the Redemption Shares, free and clear of
all Encumbrances, duly endorsed in blank or accompanied by stock powers or any
other proper instrument of assignment
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duly endorsed in blank in proper form for transfer, with appropriate transfer
stamps, if any, affixed, whereupon the Company shall cancel such Redemption
Shares, which shall thereafter cease to be issued and outstanding.
(4) Deliveries by the Company to Sub. The Company shall pay to
Sub the Redemption Price by wire transfer of immediately available funds to one
or more accounts as designated by Sub.
(5) Other Deliveries. The closing certificates, opinion of
counsel and other documents and agreements required to be delivered pursuant to
this Agreement with respect to the Closing will be exchanged.
ARTICLE IX
Tax Matters
Section 9.1. Tax Indemnification by MEI and Sub. MEI shall be liable
for, and shall hold the Company and any successor corporations thereto or
affiliates thereof harmless from and against the following Taxes with respect to
the Company or any Transferred Subsidiary:
(a) any and all Taxes for any taxable period or portion thereof
ending on or before the Closing Date due or payable by the Company or any
Transferred Subsidiary (whether or not accrued or reserved for on the books and
records of the Company and/or any of the Transferred Subsidiaries), except to
the extent provided in Sections 9.2(b) and 9.2(c); and
(b) any several liability of the Company under Treasury Regulations
Section 1.1502-6 or under any comparable or similar provision under state, local
or foreign laws for tax periods or portions thereof ending on or prior to the
Closing Date and for tax periods of MEI and any other member of MEI's
consolidated tax group (other than the Company and the Transferred Subsidiaries
with respect to periods after the Closing) ending after the Closing Date and
including the Closing Date.
Section 9.2. Tax Indemnification by the Company. The Company shall
be liable for, and shall hold MEI and Sub harmless from and against, the
following Taxes with respect to the Company or any Transferred Subsidiary: (a)
any and all Taxes for any taxable period or portion thereof beginning after the
Closing Date, due or payable by the Company or any Transferred Subsidiary; (b)
any and all Taxes resulting from transactions, acts or omissions not in the
ordinary course of business after the Closing on the Closing Date; and (c) Taxes
payable with respect to the business or operations of the Company or the
Transferred Subsidiaries during the period from the date hereof through the
Closing. For purposes of clause (c) of this Section 9.2, the Company shall
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compute, or cause to be computed, the Taxes payable (which computation shall be
reduced by the amount of any estimated Taxes paid by the Company during such
period) within 90 days of the Closing Date and shall pay to MEI such amount.
Section 9.3. Filing Responsibility. (a) MEI or Sub shall prepare and
file or shall cause the Company to prepare and file the following Returns with
respect to the Company:
(1) all Income Tax Returns required to be filed for any
taxable period ending on or before the Closing Date;
(2) all other Returns with respect to Taxes other than Income
Taxes required to be filed (taking into account extensions) prior to the Closing
Date; and
(b) The Company shall, subject to the provisions of Section 9.3(c),
file or cause to be filed all Returns for which MEI or Sub does not have filing
responsibility pursuant to Section 9.3(a) with respect to the Company.
(c) With respect to any Tax Return of the Company and/or the
Transferred Subsidiaries for taxable periods beginning before the Closing Date
and ending after the Closing Date, the Company shall consult with MEI and Sub
concerning such Return and report all items with respect to the portion of the
period ending on the Closing Date in accordance with the instructions of MEI,
unless otherwise agreed by MEI and Investor and unless, in the written opinion
of nationally recognized tax counsel to the Investor, complying with MEI's
instructions could subject Investor or the Company to any criminal or civil
penalties under Sections 6662 through 6664 of the Code or similar provisions of
applicable state, local or foreign laws.
(d) The Company, Sub and MEI shall report all transactions not in
the ordinary course of business occurring on the Closing Date after the Closing
on the Company's federal income tax return to the extent permitted by Reg.
ss.1.1502-76(b)(1)(B).
Section 9.4. Refunds. (a) Except to the extent that an asset
representing a Tax refund is recorded on the audited balance sheet of the
Company as of August 28, 1997, MEI shall be entitled to any refunds or credits
of Taxes attributable to or arising in taxable periods or portions thereof
ending on or before the Closing Date (plus any interest received with respect
thereto).
(b) The Company shall be entitled to any refunds or credits of Taxes
paid in and attributable to taxable periods beginning on or after the Closing
Date (plus any interest received with respect thereto).
(c) The Company shall promptly forward to MEI or reimburse MEI for
any refunds or credits due MEI (pursuant to the terms of this Article IX) after
receipt thereof, and MEI
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shall promptly forward to the Company (pursuant to the terms of this Article IX)
or reimburse the Company for any refunds or credits due the Company after
receipt thereof.
(d) MEI, Sub, Investor and the Company agree that the Company shall
not elect to carry back any item of loss, deduction or credit which arises in
any taxable period ending after the Closing Date into any taxable period ending
on or before the Closing Date.
(e) Except as contemplated by this Agreement, all Tax sharing
agreements and arrangements of whatever kind with respect to the Company shall
be terminated as of the Closing Date without obligation to the Company, and the
Company will not have any current or potential contractual obligation to
indemnify any other person with respect to Taxes as of or after the Closing
Date.
Section 9.5. Cooperation and Exchange of Information. (a) Investor,
Sub and MEI and their respective affiliates shall cooperate in the preparation
of all Returns relating in whole or in part to taxable periods ending on or
before or including the Closing Date that are required to be filed after such
date. Such cooperation shall include, but not be limited to, furnishing prior
years' Returns or return preparation packages illustrating previous reporting
practices or containing historical information relevant to the preparation of
such Returns, furnishing such other information within such party's possession
requested by the party filing such Returns as is relevant to their preparation
and making available such knowledgeable employees of the Company, Sub or MEI, as
the case may be, as may be reasonably requested. In the case of any state, local
or foreign joint, consolidated, combined, unitary or group relief system
Returns, such cooperation shall also relate to any other taxable periods in
which one party could reasonably require the assistance of the other party in
obtaining any necessary information.
(b) MEI shall have the right, at its own expense, to control any
audit or examination by any Taxing Authority ("Tax Audit"), initiate any claim
for refund, contest, resolve and defend against any assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to any and all
Taxes for any taxable period ending on or before the Closing Date with respect
to the Company provided that, with respect to any state and local Income Taxes
for any taxable period beginning before the Closing Date and ending after the
Closing Date, MEI shall consult with Investor and the Company with respect to
the resolution of any issue that would have a material effect on Investor and/or
the Company, and not settle any such issue, or file any amended return relating
to any such issue, without the consent of Investor, which consent shall not
unreason ably be withheld. In the event Investor withholds its consent to any
proposed settlement, MEI's liability for Taxes with respect to such proposed
settlement shall be limited to the amount of Taxes that the Company would have
paid (including as the result of any adjustments to the basis or a changed
method of accounting) under the terms of such proposed settlement. Investor
shall have the right, at its own expense, to control any proceeding which MEI
has declined to control, and any other Tax Audit, initiate any other claim for
refund, and contest, resolve and defend against any other
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assessment, notice of deficiency, or other adjustment or proposed adjustment
relating to any and all Taxes for any taxable period beginning on or after the
Closing Date with respect to the Company provided that, with respect to any
state and local Income Taxes for any taxable period beginning be fore the
Closing Date and ending after the Closing Date, Investor shall consult with MEI
with respect to the resolution of any issue that would affect MEI, and not
settle any such issue, or file any amended return relating to any such issue,
without the consent of MEI, which consent shall not un reasonably be withheld.
Where consent to a settlement is withheld by the other party pursuant to this
Section, such other party may continue or initiate any further proceedings at
its own expense, provided that the liability of the first party, after giving
effect to this Agreement, shall not exceed the liability that would have
resulted from the settlement or amended return.
(c) For a period of seven (7) years after the Closing Date, the
Company shall retain all Returns, books and records (including computer files)
of, or with respect to the activities of, the Company and the Transferred
Subsidiaries for all taxable periods ending on or prior to the Closing Date.
(d) If any party hereto or an Affiliate thereof fails to provide any
information required to be provided hereunder and requested by the other party
hereto in the time specified herein, or if no time is specified pursuant to this
Section 9.5, within a reasonable period, or otherwise fails to do any act
required of it under this Section 9.5, then the first party shall be obligated,
notwithstanding any other provision of this Agreement, to indemnify the other
party and shall so indemnify the other party and hold the other party harmless
from and against any and all costs, claims or damages, including, without
limitation, all Taxes or deficiencies thereof, to the extent payable solely as a
result of such failure.
Section 9.6. Allocation of Certain Taxes. Any Income Taxes for a
taxable period beginning before the Closing Date and ending after the Closing
Date (a "Straddle Period") shall be apportioned between the portion of such
Straddle Period ending on the Closing Date and the portion of such Straddle
Period beginning on the day following the Closing Date based on the actual
operations of the Company during each such portion of the Straddle Period and
for purposes of the provisions of Sections 9.1, 9.2 and 9.5, each portion of
such period shall be deemed to be a taxable period (whether or not it is in fact
a taxable period). All Taxes other than Income Taxes relating to a Straddle
Period shall be apportioned between the portion of such Straddle Period ending
on the Closing Date and the portion of such Straddle Period beginning on the day
following the Closing Date based on the number of days of the assessment period
occurring on and before the Closing Date and the number of days during such
period occurring after the Closing Date, and for purposes of Sections 9.1, 9.2,
and 9.5 each portion of such period shall be deemed to be a taxable period
(whether or not it is in fact a taxable period). To the extent estimated Taxes
have been paid prior to the Closing Date with respect to a Straddle Period,
MEI's and Sub's liability with respect thereto shall be reduced by that amount.
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Section 9.7. Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by MEI or
Sub when due, and MEI or Sub will, at its own expense, file all necessary
Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if required by
applicable law, the Company will, and will cause its affiliates to, join in the
execution of any such Return and other documentation.
ARTICLE X
Termination
Section 10.1. Termination. This Agreement may be terminated at any
time prior to the Closing by:
(a) The mutual consent of each of the parties hereto;
(b) Either MEI, the Company or Investor by written notice to all
other parties hereto if the Closing has not occurred by the close of business on
April 30, 1998 and if the failure to consummate the Recapitalization on or
before such date did not result from the failure by the party seeking
termination of this Agreement to fulfill any undertaking or commitment provided
for herein that is required to be fulfilled prior to Closing and such party is
not otherwise in breach of this Agreement;
(c) By Investor, at any time prior to the Closing, following written
notice by Investor to MEI, Sub and the Company of a material breach of any
material representation, warranty or covenant of MEI, Sub or the Company
contained in this Agreement, if such breach is not cured within thirty (30) days
after receiving notice thereof; or
(d) By MEI, at any time prior to the Closing, following written
notice by MEI to Investor of a material breach of any material representation,
warranty or covenant of Investor contained in this Agreement, if such breach is
not cured within thirty (30) days after receiving notice thereof.
Section 10.2. Procedure and Effect of Termination. In the event of
termination of this Agreement by any party or parties hereto pursuant to Section
10.1, this Agreement shall thereupon terminate and become void and have no
effect, and the transactions contemplated hereby shall be abandoned without
further action by the parties hereto, except that the provisions of Sections
4.1(b) and 11.5 shall survive the termination of this Agreement; provided,
however, that such ter mination shall not relieve any party hereto of any
liability for any breach of this Agreement. If this Agreement is terminated as
provided herein all filings, applications and other submissions made to
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any Governmental Authority pursuant to this Agreement shall, to the extent
practicable, be with drawn from the agency or other persons to which they were
made.
ARTICLE XI
Miscellaneous
Section 11.1. Entire Agreement; Beneficiaries. This Agreement
(including the Schedules and Exhibits attached hereto) and the Confidentiality
Agreement contain the entire agreement between the parties with respect to the
subject matter hereof and there are no agreements, understandings,
representations or warranties between the parties relating to the matters set
forth herein other than those set forth or referred to herein or therein. This
Agreement amends and restates the Original Agreement in its entirety. This
Agreement is not intended to confer upon any person not a party hereto (and
their successors and assigns permitted by Section 11.7) any rights or remedies
hereunder.
Section 11.2. Survival of Representations and Warranties and
Covenants of Investor. All representations and warranties and covenants of
Investor set forth in this Agreement or in any certificate, document or other
instrument delivered in connection herewith shall terminate at the earlier of
(a) one year after the Closing Date and (b) termination of this Agreement in
accordance with Article X hereof.
Section 11.3. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section 11.3, provided receipt of copies of such counterparts is confirmed.
Section 11.4. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without reference
to the choice of law principles thereof.
Section 11.5. Expenses. MEI shall pay and hold the Company, the
Transferred Subsidiaries and Investor harmless against liability for the payment
of the Coopers Auction Fees, the DMG Fees, the Wachtell Fees, the Fenwick Fees
and all fees and expenses paid or payable with respect to the items required to
be delivered by the Company pursuant to Section 6.11 (collectively, the "Seller
Expenses"). In the event any Seller Expenses have been paid by the Company or
any Transferred Subsidiaries prior to the Closing without being reimbursed by a
Continuing Affiliate, such amount paid (and not reimbursed) shall be a valid and
enforceable receivable of the Company
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owed from MEI to the Company as of the Closing. Other than the Seller Expenses,
neither MEI nor Sub shall be responsible for any fees or expenses incurred by
the Company or any Transferred Subsidiary in connection with the negotiation,
execution or delivery of the Original Agreement or this Agreement or the
consummation of the transactions contemplated thereby or hereby. Except as
provided in this Section 11.5 or as otherwise set forth in this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses. As a matter of clarification, all fees and expenses (including,
without limitation, commitment fees, underwriting fees, legal and accounting
fees and expenses and printing fees and expenses but excluding any fees and
expenses paid or payable with respect to the items required to be delivered by
the Company pursuant to Section 6.11) relating to the BTAB Financing or any
other financing proposed by Investor and arranged by the Company in lieu of the
BTAB Financing shall be the responsibility of the Company, and MEI and Sub shall
have no responsibility therefor. Notwithstanding the foregoing, if the
transactions contemplated hereby are consummated, then the Company shall pay all
fees and expenses of Investor and Investor's Affiliates (other than the Company
and the Transferred Subsidiaries) in connection with the transactions
contemplated hereby, including, any and all commitment fees and reasonable
legal, accounting and consulting fees, and MEI and Sub shall have no
responsibility therefor.
Section 11.6. Notices. All notices and other communications
hereunder shall be sufficiently given for all purposes hereunder if in writing
and delivered personally, sent by documented overnight delivery service or, to
the extent receipt is confirmed, telecopy, telefax or other electronic
transmission service to the appropriate address or number as set forth below.
Notices to MEI and Sub shall be addressed to:
Micron Electronics, Inc.
MEI California, Inc.
900 East Karcher Road
Nampa, Idaho 83687
Attention: General Counsel
Telecopy No: (208) 898-7411
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Barry A. Bryer
Telecopy No: (212) 403-2000
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or at such other address and to the attention of such other person as MEI or Sub
may designate by written notice to the other parties hereto. Notices to Investor
shall be addressed to:
Cornerstone Equity Investors IV, L.P.
c/o Cornerstone Equity Investors, L.L.C.
717 Fifth Avenue
Suite 1100
New York, New York 10022
Attention: Tony Downer
Michael E. Najjar
Telecopy No: (212) 826-6798
with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne
Telecopy No: (212) 446-4900
or at such other address and to the attention of such other person as Investor
may designate by written notice to the other parties hereto. Notices to the
Company prior to the Closing shall be addressed to:
Micron Electronics, Inc.
900 East Karcher Road
Nampa, Idaho 83687
Attention: General Counsel
Telecopy No: (208) 898-7411
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Barry A. Bryer
Telecopy No: (212) 403-2000
and notices to the Company after the Closing shall be addressed to:
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MCMS, Inc.
16399 Franklin Road
Nampa, Idaho 83687
Attention: General Counsel
Telecopy No: (208) 893-8711
with a copy to:
Cornerstone Equity Investors, L.L.C.
717 Fifth Avenue
Suite 1100
New York, New York 10022
Attention: Tony Downer
Michael E. Najjar
Telecopy No: (212) 826-6798
and
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne
Telecopy No: (212) 446-4900
or at such other address and to the attention of such other person as the
Company may designate by written notice to the other parties hereto.
Section 11.7. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party hereto will assign its
rights or delegate its obligations under this Agreement without the express
prior written consent of each other party hereto; provided, further, that,
notwithstanding the foregoing, Investor may assign its rights and obligations
hereunder in whole or in part to any Affiliate of Investor; Investor may assign
its rights and obligations to purchase up to 49.9% of the Purchase Shares to any
Person provided that any such assignment shall not release Investor of its
purchase obligations hereunder and provided further that the representations and
warranties contained in Article III hereof (other than Section 3.4) shall be
true and correct with respect to any such assigns; and the Company may assign
its rights and obligations hereunder as collateral security to any bona fide
financial institution or underwriter providing financing to the Company in
connection herewith, in each case, without the consent of any party hereto.
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Section 11.8. Headings; Definitions. The Section and Article
headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or interpretation of this Agreement. All
references to Sections or Articles contained herein mean Sections or Articles of
this Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
Section 11.9. Consent to Jurisdiction. Each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any federal court
located in the State of New York or any New York state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of New York or a New York state court.
Section 11.10. Waivers and Amendments. No modification of or
amendment to this Agreement shall be valid unless in a writing signed by the
parties hereto referring specifically to this Agreement and stating the parties'
intention to modify or amend the same. Any waiver of any term or condition of
this Agreement must be in a writing signed by the party hereto sought to be
charged with such waiver referring specifically to the term or condition to be
waived, and no such waiver shall be deemed to constitute the waiver of any other
breach of the same or of any other term or condition of this Agreement.
Section 11.11. Severability. Any provision of this Agreement which
is invalid or unenforceable shall be ineffective to the extent of such
invalidity or unenforceability, without affecting in any way the remaining
provisions hereof.
Section 11.12. Interpretation; Schedules and Exhibits. For purposes
of this Agreement, all representations and warranties contained herein shall be
deemed to have been made as of February 1, 1998, except for representations and
warranties contained herein that speak as of a specific date (which
representations and warranties shall speak as of such specific date). The
schedules and exhibits attached to the Original Agreement shall be deemed to be
the schedules and exhibits of this Agreement except that (i) all references to
MEI contained in Exhibit C are hereby changed to Sub, (ii) the Amended and
Restated Schedule 2.8 attached hereto hereby replaces the Schedule 2.8 attached
to the Original Agreement, and (iii) the Amended and Restated Schedule 2.10(a)
attached hereto hereby replaces the Schedule 2.10(a) attached to the Original
Agreement.
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ARTICLE XII
INDEMNIFICATION
The parties hereto agree as follows:
Section 12.1. General Indemnification Obligations. MEI and Sub
hereby agree to, jointly and severally, indemnify, defend and hold Investor and
its respective officers, directors and Affiliates (including, after the Closing,
the Company and the Transferred Subsidiaries) (the "Investor Indemnitees")
harmless from and against and to reimburse the Investor Indemnitees with respect
to any one or more of the following: (i) any and all Damages arising out of or
resulting from a misrepresentation or breach of warranty of MEI, Sub or the
Company contained in this Agreement or in any exhibit or schedule hereto, (ii)
any and all Damages arising out of or resulting from any breach of any covenant
or obligation of MEI or Sub contained in this Agreement, whether requiring
performance before or after the Closing Date, (iii) any and all Damages arising
out of or resulting from any breach of any covenant or obligation of the Company
contained in this Agreement requiring performance before the Closing Date, and
(iv) any and all Damages arising out of or resulting from the matter described
on Schedule 2.13(c). Notwithstanding any provision to the contrary contained
herein, MEI and Sub agree that neither MEI nor Sub will make any claim for
indemnification or contribution against the Company and MEI and Sub will cause
their Continuing Affiliates and each of their respective directors, officers and
employees not to make any claim for indemnification or contribution against the
Company, by reason of the fact that MEI, Sub or any such Affiliate, director,
officer or employee was a stockholder, director, officer, employee, or agent of
the Company, with respect to or in connection with (a) any action, suit,
proceeding, complaint, claim, or demand brought by the Company or the Investor
against MEI, Sub or such Affiliate, director, officer or employee (whether such
action, suit, proceeding, complaint, claim, or demand is pursuant to this
Agreement, applicable law, or otherwise) or (b) any action, suit, proceeding,
complaint, claim or demand arising out of or in connection with the Stock
Redemption, the Recapitalization or the other transactions contemplated by this
Agreement.
Section 12.2. General Indemnification Procedures.
(a) All of the parties hereto shall cooperate in the defense or
prosecution of any claim, action, suit or proceeding by a Person other than a
party hereto or an Affiliate of any party hereto in respect of which indemnity
may be sought hereunder (a "Third Party Claim") and shall furnish such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals, as may be reasonably requested in connection
therewith.
(b) No action or claim for Damages under Section 12.1(i) arising out
of or resulting from a breach of representations and warranties contained herein
shall be brought or made after the date which is one year after the Closing
Date; provided, however, that the foregoing time
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limitations shall not apply to: (1) any of the representations and warranties
contained in Sections 2.1 (other than subsection 2.1(c)(2)), 2.2 (other than
subsection 2.2(a)(3)) and 2.6, each of which shall survive until the date which
is three years after the Closing Date; (2) any of the representations and
warranties contained in Section 2.14 which shall survive until the expiration of
the applicable statute of limitations or (3) any such actions or claims which
have been the subject of a good faith written notice from any Investor
Indemnitee to MEI prior to either such applicable period, which notice specifies
in reasonable detail the nature and basis for such action or claim (which shall
survive until the final resolution of such actions or claims).
(c) Notwithstanding anything to the contrary in this Article 12, no
limitation or condition of liability provided in this Article 12 shall apply to
the breach of any representations and warranties if such breach was made
wilfully or with the intent to deceive.
Section 12.3. Indemnification Basket. MEI and Sub shall not be
obligated to indemnify the Investor Indemnitees pursuant to this Article 12 for
any Damages resulting from any breaches of representations and warranties in
this Agreement (which breaches and resulting Damages shall be determined, solely
for the purposes of this Section 12.3 as though any materiality limitations in
such representations and warranties did not exist), unless (i) the Damages
arising from any such breach or series of related breaches and incurred by the
Investor Indemnitees exceeds $35,000 only in which such case shall such Damages
be counted towards the Threshold, and (ii) the aggregate of all such Damages
counted towards the Threshold and incurred by the Investor Indemnitees exceeds
$1,000,000 (the "Threshold"), in which event MEI and Sub together shall be
liable for all Damages in excess of the Threshold claimed by the Investor
Indemnitees; provided, however, that Damages recoverable by the Investor
Indemnitees for breaches of the representations and warranties contained in
Sections 2.1 (other than subsection 2.1(c)(2)), 2.2 (other than subsection
2.2(a)(3)), 2.6 and 2.14 shall not be subject to the Threshold and shall be paid
by MEI and/or Sub in their entirety. Notwithstanding the foregoing, the
Threshold shall not be available for any wilful breach of any representation or
warranty.
Section 12.4. Indemnification Cap. In no event shall MEI and Sub
together be required to indemnify the Investor Indemnitees for Damages pursuant
to Section 12.1(i) in excess of $13,550,000 (the "Cap"); provided, however, that
Damages recoverable by the Investor Indemnitees for breaches of the
representations and warranties contained in Sections 2.1(other than subsection
2.1(c)(2)), 2.2 (other than subsection 2.2(a)(3)), 2.6 and 2.14 shall not be
subject to the provisions of this Section 12.4 and shall be paid by MEI and/or
Sub in their entirety. Notwithstanding the foregoing, the Cap shall not be
available for any wilful breach of any representation or warranty.
Section 12.5. Indemnity Exclusive Remedy. In the absence of fraud,
the indemnification pursuant to this Article XII shall be the exclusive remedy
for any breach or misrepresentation of warranty of MEI, Sub or the Company
contained in this Agreement or in any
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58
exhibit or schedule hereto, any breach of any covenant or obligation of MEI or
Sub contained in this Agreement, whether requiring performance before or after
the Closing Date, and any breach of any covenant or obligation of the Company
contained in this Agreement requiring performance prior to the Closing Date.
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59
IN WITNESS WHEREOF, this Amended and Restated Recapitalization
Agreement has been signed by or on behalf of each of the parties as of the day
first above written.
MICRON CUSTOM MANUFACTURING
SERVICES, INC.
By: /s/ Jess Asla
------------------------------
Name: Jess Asla
Title: V.P. Operations
MICRON ELECTRONICS, INC.
By:
------------------------------
Name:
Title:
MEI CALIFORNIA, INC.
By:
------------------------------
Name:
Title:
CORNERSTONE EQUITY INVESTORS IV, L.P.
By: Cornerstone IV, L.L.C.,
as General Partner
By:
------------------------------
Name:
Title:
60
IN WITNESS WHEREOF, this Amended and Restated Recapitalization
Agreement has been signed by or on behalf of each of the parties as of the day
first above written.
MICRON CUSTOM MANUFACTURING
SERVICES, INC.
By:
------------------------------
Name:
Title:
MICRON ELECTRONICS, INC.
By: /s/ [ILLEGIBLE]
------------------------------
Name:
Title:
MEI CALIFORNIA, INC.
By: /s/ [ILLEGIBLE]
------------------------------
Name:
Title:
CORNERSTONE EQUITY INVESTORS IV, L.P.
By: Cornerstone IV, L.L.C.,
as General Partner
By:
------------------------------
Name:
Title:
61
IN WITNESS WHEREOF, this Amended and Restated Recapitalization
Agreement has been signed by or on behalf of each of the parties as of the day
first above written.
MICRON CUSTOM MANUFACTURING
SERVICES, INC.
By:
------------------------------
Name:
Title:
MICRON ELECTRONICS, INC.
By:
------------------------------
Name:
Title:
MEI CALIFORNIA, INC.
By:
------------------------------
Name:
Title:
CORNERSTONE EQUITY INVESTORS IV, L.P.
By: Cornerstone IV, L.L.C.,
as General Partner
By: /s/ John A. Downer
------------------------------
Name: John A. Downer
Title: Managing Director
62
Amended and Restated Schedule 2.8
See Schedule 2.9
See attached
63
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CHARGE OF DISCRIMINATION AGENCY CHARGE NUMBER
|_| FEPA
|X| EEOC 141980127
This form is affected by the Privacy Act of 1974: see Privacy Act Statement
before completing this form
- --------------------------------------------------------------------------------
AND EEOC
-----------------------------------------------
State or local Agency, if any
- --------------------------------------------------------------------------------
Name (indicate Mr. Ms. Mrs.) HOME TELEPHONE (Indicate Area Code)
Mr. Rajesh H. Lavani (919) 544-9610
- --------------------------------------------------------------------------------
Street Address DATE OF BIRTH
1707-D East Cornwallis Road, Durham, N.C. 27713 06/08/68
- --------------------------------------------------------------------------------
NAMED IS THE EMPLOYER, LABOR ORGANIZATION, EMPLOYMENT AGENCY APPRENTICESHIP
COMMITTEE, STATE OR LOCAL GOVERNMENT AGENCY WHO DISCRIMINATED AGAINST ME
(If more than one list below)
- --------------------------------------------------------------------------------
NAME NUMBER OF EMPLOYEES, MEMBER TELEPHONE (Indicate Area Code)
X Micron CMS 300 + (919) 405-1200 (HR)
- --------------------------------------------------------------------------------
Street Address CITY, STATE, AND ZIP CODE COUNTY
2500 S. Triangle Center, Durham, N.C. 27713 Durham
- --------------------------------------------------------------------------------
NAME TELEPHONE (Indicate Area Code)
- --------------------------------------------------------------------------------
Street Address CITY, STATE, AND ZIP CODE COUNTY
- --------------------------------------------------------------------------------
CAUSE OF DISCRIMINATION BASED ON (Check appropriate boxes)
|X|RACE |_| COLOR |_| SEX |_| RELIGION |X| NATIONAL ORIGIN
|_| RETALIATION |_| AGE |_| DISABILITY |_| OTHER (Specify)
- --------------------------------------------------------------------------------
DATE DISCRIMINATION TOOK PLACE
EARLIEST LATEST
Present
09/10/96 |_|
|XX| CONTINUING ACTION
- --------------------------------------------------------------------------------
THE PARTICULARS (If additional space is needed, attach extra sheet(s)):
SEE ATTACHMENT HERETO.
- --------------------------------------------------------------------------------
|_| I want this charge filed with both the EEOC and the State or local Agency,
if any. I will advise the agencies if I change my address or telephone number
and cooperate fully with them in the processing of my charge in accordance with
their procedures.
- --------------------------------------------------------------------------------
I declare under penalty of perjury that the foregoing is true and correct
Date 11/11/97 /s/Rajesh H. Lavani
Charging Party (Signature)
- --------------------------------------------------------------------------------
[SEAL]
JANET C. FUQUAY
NOTARY PUBLIC
[ILLEGIBLE N.C.]
NOTARY [ILLEGIBLE]
/s/ Janet E. Fuquay
- --------------------------------------------------------------------------------
I swear of affirm that I have read the above charge and that it is true to the
best of my knowledge, information and believe.
- --------------------------------------------------------------------------------
SIGNATURE OF COMPLAINANT
SUBSCRIBED AND SWORN TO BEFORE ME THIS DATE
(Day, Month, and year)
Nov 11, 1997
My Comm Exp:
[ILLEGIBLE]
- --------------------------------------------------------------------------------
64
- --------------------------------------------------------------------------------
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION | PERSON FILING CHARGE
| Lavini, Rajesh H.
Ms. Jennifer Mann |---------------------------------------
Director of Human Resources | THIS PERSON (check one)
Micron CMS | |X| CLAIMS TO BE AGGRIEVED
2500 S. Triangle Center | |_| IS FILING ON BEHALF OF ANOTHER
Durham, NC 27713 |---------------------------------------
| DATE OF ALLEGED VIOLATION
| EARLIEST MOST RECENT
| 09/10/96 11/11/97
|---------------------------------------
| PLACE OF ALLEGED VIOLATION
| Durham, NC
|---------------------------------------
|CHARGE NUMBER
|141980127
- --------------------------------------------------------------------------------
NOTICE OF CHARGE OF DISCRIMINATION
(See EEOC "Rules and Regulations" before completing this Part)
You are hereby notified that a charge or employment discrimination has been
filed against your organization under:
|X| TITLE VII OF THE CIVIL RIGHTS ACT OF 1964
|_| THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1987
|_| THE AMERICANS WITH DISABILITIES ACT
|_| THE EQUAL PAY ACT (29 U.S.C. SECT. 206(d)) investigation will be
conducted concurrently with our investigation of this charge
The boxes checked below apply to your organization:
1. |_| No action is required on your part at this time.
2. |X| Please submit by 12/08/97 a statement of your position with respect
to the allegations(s) contained in this charge, with copies of any
supporting documentation. This material will be made a part of the
file and will be considered at the time that we investigate this
charge. Your prompt response to this request will make it easier to
conduct and conclude our investigation of this charge.
3. |X| Please respond fully by 12/08/97 to the attached request for
information which pertains to the allegations contained in this
charge. Such information will be made a part of the file and will be
considered by the commission during the course of its investigation
or the charge.
For further inquiry on this matter, please use the charge number shown above,
Your position statement, your response to our request for information, or any
inquiry you may have should be directed to:
Raleigh Area Office
1309 Annapolis Drive Alvan L. Robinson, Senior Investigator
Raleigh, NC 27608-2129 --------------------------------------
(Commission Representative)
(919) 856-4076
--------------------------------------
(Telephone Number)
|X| Enclosure: Copy of Charge
- --------------------------------------------------------------------------------
BASIS OF DISCRIMINATION
|X| RACE |_| COLOR |_| SEX |_| RELIGION |X| NAT. ORIGIN |_| AGE
|_| DISABILITY |_| RETALIATION |_| OTHER
- --------------------------------------------------------------------------------
CIRCUMSTANCES OF ALLEGED VIOLATION
See enclosed Form 5, Charge of Discrimination.
- --------------------------------------------------------------------------------
DATE TYPED NAME/TITLE OF AUTHORIZED EEOC OFFICIAL SIGNATURE
11/24/97 Richard E. Waltz /s/ Richard E. Waltz
- --------------------------------------------------------------------------------
EEOC FORM 151 (Rev. (6/092) RESPONDENT'S COPY
- --------------------------------------------------------------------------------
65
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Equal Employment Opportunity Commission
REQUEST FOR INFORMATION
- --------------------------------------------------------------------------------
Chg. Party: Lavani, Rajash H.
Respondent: Micron CMS
Charge No.: 141980127
1. Give the correct name and address of the facility named in the charge.
2. State the total number of persons who were employed by your organization
during the relevant period. Include both full and part-time employees. How
many employees are employed by your organization at the present time?
3. Supply an organizational chart, statement, or documents which describe
your structure, indicating, if any, the relationship between it and
superior and subordinate establishments within the organization.
4. Supply a statement or documents which identify the principal product or
service of the named facility.
5. State the legal status of your organization, i.e, corporation,
partnership, tax-exempt non-profit, etc. If incorporated, identify and the
state of incorporation
6. State whether your organization has a contract with any agency of the
federal government or is a subcontractor on a project which receives
federal funding. Is your organization covered by the provisions of
Executive Order 11246? If your answer is yes, has your organization been
the subject of a compliance review by the OFCCP at any time during the
past two years?
7. Submit a written position statement on each of the allegations of the
charge, accompanied by documentary evidence and/or written statements,
where appropriate. Also include any additional information and explanation
you deem relevant to the charge.
8. Submit copies of all written rules, policies and procedures relating to
the issue(s) raised in the charge. If such does not exist in written form,
explain rules, polices and procedures.
66
ATTACHMENT TO
CHARGE OF DISCRIMINATION
OF RAJESH H. LAVANI
I began working for Micron, CMS on September 10, 1996. Micron is an
electronic assembly plant. I am a test technician. Since I began employment,
they have discriminated against me based on my national origin, Indian. My
supervisor has discriminated against me in the following ways:
1. I was denied training provided to other employees. In my annual review,
they told me that I was doing good work. However, I needed additional training.
Target dates were set for the training. When they held the training courses,
other employees were allowed to attend and I was not notified of the training
programs.
2. My job performance was rated as "exceeds expectations". However,
Caucasian employees who hold the same position and have been in that position
for a shorter time received higher bonuses than I.
3. The company exceeded performance goals and treated the employees in my
department to dinner. They did not include me. I questioned my supervisor, Mr.
Chris Landi. I wanted to know if my exclusion was a "major oversight". He told
me that it was not an oversight.
67
INFORMATION SHEET ON CHARGES OF DISCRIMINATION
EEOC RULES AND REGULATIONS
Section 1601.15 of EEOC's Procedure Regulations provides that persons
charged with employment discrimination, such as yourself, may submit a statement
of position or evidence with respect to the allegations contained in this
charge.
EEOC's Recordkeeping and Reporting Requirements are set forth at Title 29,
Code of Federal Regulations (CFR), Part 1602 (see particularly Section 1602.14
below) for Title VII and the ADA; 29 CFR Part 1620 for the EPA; and 29 CFR Part
1627, for the ADEA. These regulations generally require respondents to preserve
payroll and personnel records relevant to a charge of discrimination until
disposition of the charge or litigation relating to the charge (for ADEA
charges, this notice constitutes the written request set out in Part 1627 for
respondents to preserve records relevant to the charge - the records to be
retained are as described in Section 1602.14, as cited below, and should be kept
for the periods described in that section). Parts 1602, 1620 and 1627 also
prescribe record retention periods - generally, three years for basic payroll
records and one year for personnel records. Questions regarding retention
periods and the types of records to be retained should be resolved by reference
to the regulations.
Section 1602.14 Preservation of records made or kept. Where a charge of
discrimination has been filed, or an action brought by the Commission or the
Attorney General, against an employer under Title VII or the ADA, the employer
shall preserve all personnel records relevant to the charge or the action. The
term "personnel records relevant to the charge, "for example, would include
personnel or employment records relating to the aggreived person and to all
other aggrieved employees holding positions similar to that held or sought by
the aggreived person and application forms or test papers completed by an
unsuccessful applicant and by all other candidates for the same position as that
for which the aggreived person applied and was rejected. The date of "final
disposition of the charge or the action" means the date of expiration of the
statutory period within which the aggreived person may bring an action in a U.S.
District Court or, where an action is brought against an employer either by the
aggreived person, the Commission, or by the Attorney General, the date on which
such litigation is terminated.
NOTICE OF NON-RETALIATION REQUIREMENTS
Section 704(a) of Title VII, Section 4(d) of the ADEA, and Section 503(a)
of the ADA provide that it shall be an unlawful employment practice for an
employer to discriminate against any of his/her employees or applicants for
employment, for an employment agency to discriminate against any individual, or
for a labor organization to discriminate against any member thereof or applicant
for membership, because s/he has opposed any act or practice made unlawful by
these statutes; or because s/he has made a charge, testified, assisted, or
participated in any manner in an investigation, proceeding, or hearing under
these statutes. The Equal Pay Act of 1963 contains similar provisions.
Additionally, Section 503(b) of the ADA prohibits coercion, intimidation,
threats, or interference with any person because s/he has exercised or enjoyed,
or aided or encouraged others in their exercise or enjoyment, of rights under
the Act.
Person filing charges of discrimination are advised of these
Non-Retaliation Requirements and are instructed to notify EEOC if any attempt at
retaliation is made. Note that the Civil Rights Act of 1991 provides substantial
additional monetary provisions to remedy instances of retaliation or other
discrimination, including, for example, to remedy the emotional harm caused by
on-the-job harassment.
NOTICE REGARDING REPRESENTATION BY ATTORNEYS
Although it is not necessary that you be represented by an attorney while
we handle this charge, you have a right, and may wish to retain an attorney to
represent you. If you are represented by an attorney we request that you provide
the Commission with your attorney's name, address, and telephone number, and
that you ask your attorney to write to the Commission confirming such
representation.
Reverse side of EEOC Form 131/131 A1
68
[LETTERHEAD OF IDAHO HUMAN RIGHTS COMMISSION]
RECEIVED
JAN - 8 1998
Tuesday January 6, 1998
[SEAL]
GREAT SEAL OF
THE STATE OF IDAHO
Ms. Dena L. Banducci
C/O Micron Custom Manufacturing
16399 Franklin Road
Nampa, ID 83687-8211
RE: Bruce Moore vs. Micron Custom Manufacturing
Complaint No. AD-0198-218; 38C 980095
Dear Ms. Banducci:
Enclosed is a copy of a complaint alleging a violation of Title 67, Chapter 59,
of the Idaho Code, which prohibits certain kinds of discrimination. You will
also note that this case is jointly filed with EEOC under the corresponding
federal law. The Idaho Human Rights Commission must by law accept for filing,
attempt to resolve, and investigate alleged violations of these laws.
Retaliation against the complainant or others for filing a charge or for other
involvement in the exercise of these rights is also illegal.
The enclosed flow chart more fully explains our process. It is important that
you submit a written response to each allegation, with as much supporting detail
as possible, within the time limit of 30 days. Each allegation not specifically
denied will be considered admitted. A copy of your response will be sent to the
complainant for possible rebuttal or explanation. A comprehensive response from
you will also provide with an excellent starting point for attempting to resolve
the complaint.
Efforts will be made toward reaching a negotiated settlement on grounds mutually
acceptable to both sides. Commission staff will not act as an advocate for
either party during mediation or investigation.
Equal Opportunity Employer
69
Dena L. Banducci
Page 2
Please be advised that although the files of the Idaho Human Rights Commission
are not open to the public at large, this case file is available to both parties
during regular business hours (with the exception of confidential negotiations
during the course of mediation).
Please contact me, or have your representative do so, if you have any questions
or concerns regarding your response, mediation options, and the possibility of
holding a mediation conference.
Sincerely;
/s/ Linda L. Goodman
Linda L. Goodman
Sr. Civil Rights Investigator
LLG/ah
Enclosure
70
- --------------------------------------------------------------------------------
CHARGE OF DISCRIMINATION
This Form is affected by the Privacy Act of 1974; See Privacy Act Statement
before completing this form.
- --------------------------------------------------------------------------------
AGENCY
|x| FGPA
|_| EEOC
- --------------------------------------------------------------------------------
CHARGE NUMBER A0-0198-218
38C980095
- --------------------------------------------------------------------------------
Idaho Human Rights Commission and EEOC
------------------------------------------------------
State or local Agency, if any
- --------------------------------------------------------------------------------
NAME (Indicate Mr., Ms., Mrs.) HOME TELEPHONE (Include Area Code)
Mr. Bruce Moore (208) 452-5463
- --------------------------------------------------------------------------------
STREET ADDRESS CITY, STATE, AND ZIP CODE DATE OF BIRTH
P.O. Box 139, Fruitland, ID 83619-0139 02/03/61
- --------------------------------------------------------------------------------
NAMED IS THE EMPLOYER, LABOR ORGANIZATION, EMPLOYMENT AGENCY APPRENTICESHIP
COMMITTEE, STATE OR LOCAL GOVERNMENT AGENCY WHO DISCRIMINATED AGAINST ME (If
more than one list below.)
- --------------------------------------------------------------------------------
NAME NUMBER OF EMPLOYEES, MEMBERS TELEPHONE (Include
Area Code)
Micron Custom Manufacturing 501+ Employees (208) 898-2600
- --------------------------------------------------------------------------------
STREET ADDRESS CITY, STATE AND ZIP CODE COUNTY
16399 Franklin Road, Nampa, ID 83687-8211 027
- --------------------------------------------------------------------------------
NAME TELEPHONE (Include Area Code)
- --------------------------------------------------------------------------------
STREET ADDRESS CITY, STATE AND ZIP CODE COUNTY
- --------------------------------------------------------------------------------
CAUSE OF DISCRIMINATION BASED ON (Check appropriate box(es)
|_| RACE |_| COLOR |_|SEX |_|RELIGION |_| NATIONAL ORIGIN
|_| RETALIATION |_| AGE |x| DISABILITY |_| OTHER (Specify)
- --------------------------------------------------------------------------------
DATE DISCRIMINATION TOOK PLACE
EARLIEST LATEST
12/18/97 12/18/97
|_| CONTINUING ACTION
- --------------------------------------------------------------------------------
THE PARTICULARS ARE (If additional space is needed, attach with sheet(s)),
**** SEE ATTACHED ****
JAN 06, 1998
- --------------------------------------------------------------------------------
|X| I want this charge filed with both the EEOC and the State or local Agency,
if any. I will advise the agencies if I change my address or telephone number
and cooperate fully with them in the processing of my charge in accordance with
their procedures.
- --------------------------------------------------------------------------------
I declare under penalty of perjury that the foregoing is true and correct.
Date 980101 /s/ Bruce Moore
Charging Party (Signature)
- --------------------------------------------------------------------------------
EEOC FORM 5 (Rev. 06/82)
71
COMPLAINANT: Bruce Moore vs. Micron Custom Manufacturing
PAGE TWO
THE PARTICULARS ARE:
I. COMPLAINANT'S STATEMENT OF HARM:
I was not hired on December 18, 1997.
II. RESPONDENT'S REASON FOR ADVERSE ACTION:
Respondent gives no reason for the adverse action.
III. COMPLAINANT'S STATEMENT OF DISCRIMINATION:
I believe I have been discriminated against based on my rights under the
Americans with Disabilities Act and the Idaho Human Rights Act. In support of
this statement, I offer the following facts:
A. On December 15, 1997, I applied with above-named Respondent for a technician
or assembly position. On December 16, 1997, I had an interview with Michelle
________. During the interview she said that I was more than qualified for the
position. I have five and one half years experience in electronics, including
computer repair and upgrade. I am able to perform the essential functions of the
job with the accommodation of being allowed to sit down periodically.
B. On December 18, 1997, the above-named Respondent sent me a letter saying I
did not receive the job. The letter was signed my Paula M. Barber of the
personnel department for Respondent.
C. The following Sunday, December 21, 1997, the above-named Respondent ran an ad
in the paper stating they had 60 positions for assembly work. When I contacted
Respondent, Paula M. Barber refused to give me a reason as to why I wasn't
accepted as a candidate for employment.
D. I believe that Respondent saw my brace and cane and didn't hire me because it
believed that I was unable to perform the job because most positions for which I
was applying require standing.
E. Respondent employs at least 15 employees.
I believe the practices of the above-named Respondent are in violation of:
|X| Title 67, Chapter 59 of the Idaho Code
|_| Title 44, Chapter 17 of the Idaho Code
|_| Title VII of the Civil Rights Act of 1964, as amended
|_| Age Discrimination in Employment Act of 1967 (ADEA)
|X| Americans with Disabilities Act
72
Amended and Restated Schedule 2.10(a)
M.C.M.S Sdn. Bhd. has applied for, but has not yet received, a Malaysian
environmental permit.
M.C.M.S Sdn. Bhd. Does not have an occupancy certificate or a machinery
department approval.
See Schedule 2.6