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EXHIBIT 2.4
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
FLEXTRONICS INTERNATIONAL LTD.,
LIGHTNING METAL ACQUISITION CORP.,
COATING ACQUISITION CORP.,
LIGHTNING TOOL ACQUISITION CORP.,
LIGHTNING METAL SPECIALTIES, INCORPORATED,
COATING TECHNOLOGIES, INC.,
LIGHTNING TOOL AND DESIGN, INC.,
LIGHTNING METAL SPECIALTIES E.M.F., LTD.,
LIGHTNING MANUFACTURING SOLUTIONS-EUROPE, LTD.,
LIGHTNING MANUFACTURING SOLUTIONS TEXAS, L.L.C.,
LIGHTNING LOGISTICS, L.L.C.,
PAPASON, L.L.C.,
200 SCOTT STREET, L.L.C.,
80 SCOTT STREET, L.L.C.,
230 SCOTT STREET, L.L.C.,
1350 LIVELY BLVD, L.L.C.,
D.A.D. PARTNERSHIP,
S.O.N. PARTNERSHIP,
S.O.N. II PARTNERSHIP
AND
SHAREHOLDERS, MEMBERS AND PARTNERS OF THE COMPANIES
DATED AS OF
AUGUST 31, 2000
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is entered
into as of August 31, 2000 by and among Flextronics International Ltd., a
Singapore company ("Flextronics"), Lightning Metal Acquisition Corp., a Delaware
corporation and an indirect wholly-owned subsidiary of Flextronics ("Lightning
Metal Merger Sub"), Coating Acquisition Corp., a Delaware corporation and an
indirect wholly-owned subsidiary of Flextronics ("Coating Merger Sub"),
Lightning Tool Acquisition Corp., a Delaware corporation and an indirect
wholly-owned subsidiary of Flextronics ("Lightning Tool Merger Sub" and,
together with Lightning Metal Merger Sub and Coating Merger Sub, the "Merger
Subs" and each individually a "Merger Sub"), Lightning Metal Specialties,
Incorporated, an Illinois corporation ("Lightning Metal"), Coating Technologies,
Inc., an Illinois corporation ("Coating"), Lightning Tool and Design, Inc., an
Illinois corporation ("Lightning Tool"), Lightning Metal Specialties E.M.F.,
Ltd., an Irish private limited company ("EMF"), Lightning Manufacturing
Solutions-Europe, Ltd., an Irish private limited company ("Lightning Europe"),
Lightning Manufacturing Solutions Texas, L.L.C., a Texas limited liability
company ("Lightning Texas"), Lightning Logistics, L.L.C., a Texas limited
liability company ("Logistics"), Papason, L.L.C., an Illinois limited liability
company ("Papason"), 200 Scott Street, L.L.C., an Illinois limited liability
company ("200 Scott Street"), 80 Scott Street, L.L.C., an Illinois limited
liability company ("80 Scott Street"), 230 Scott Street, L.L.C., an Illinois
limited liability company ("230 Scott Street"), 1350 Lively Blvd, L.L.C., an
Illinois limited liability company ("Lively"), D.A.D. Partnership, a general
partnership ("D.A.D."), S.O.N. Partnership, a general partnership ("S.O.N."),
S.O.N. II Partnership, a general partnership ("S.O.N. II" and, together with
Lightning Metal, Coating, Lightning Tool, EMF, Lightning Europe, Lightning
Texas, Logistics, Papason, 200 Scott Street, 80 Scott Street, 230 Scott Street,
Lively, D.A.D. and S.O.N., the "Companies" and each individually a "Company"),
the shareholders of Lightning Metal listed on Exhibit A (the "Lightning Metal
Shareholders"), the shareholders of Coating listed on Exhibit A (the "Coating
Shareholders"), the shareholders of Lightning Tool listed on Exhibit A (the
"Lightning Tool Shareholders"), the shareholders of EMF listed on Exhibit A (the
"EMF Shareholders"), the shareholders of Lightning Europe listed on Exhibit A
(the "Lightning Europe Shareholders" and, together with the Lightning Metal
Shareholders, the Coating Shareholders, the Lightning Tool Shareholders and the
EMF Shareholders, the "Shareholders" and each individually a "Shareholder"), the
members of Lightning Texas listed on Exhibit A (the "Lightning Texas Members"),
the members of Logistics listed on Exhibit A (the "Logistics Members"), the
members of Papason listed on Exhibit A (the "Papason Members"), the members of
200 Scott Street listed on Exhibit A (the "200 Scott Street Members"), the
members of 80 Scott Street listed on Exhibit A (the "80 Scott Street Members"),
the members of 230 Scott Street listed on Exhibit A (the "230 Scott Street
Members"), the members of Lively listed on Exhibit A (the "Lively Members" and,
together with the Lightning Texas Members, the Logistics Members, the Papason
Members, the 200 Scott Street Members, the 80 Scott Street Members and the 230
Scott Street Members, the "Members" and each individually a "Member"), the
partners of D.A.D. (the "D.A.D. Partners"), the partners of S.O.N. (the "S.O.N.
Partners") and the partners of S.O.N. II (the "S.O.N. II Partners" and, together
with the D.A.D. Partners and the S.O.N. Partners, the "Partners" and each
individually a "Partner").
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RECITALS
A. The parties intend that, subject to the terms and conditions
hereinafter set forth, Lightning Metal Merger Sub, Coating Merger Sub and
Lightning Tool Merger Sub will merge with and into Lightning Metal, Coating and
Lightning Tool, respectively (collectively, the "Merger"), with each of
Lightning Metal, Coating and Lightning Tool to be the respective surviving
corporations of the Merger, all pursuant to the terms and conditions of this
Agreement and the Certificates of Merger (the "Certificates of Merger") and the
Plans of Merger (the "Plans of Merger") substantially in the forms of Exhibits
B-1 and B-2, respectively, and the applicable provisions of the laws of the
States of Delaware and Illinois. Upon the effectiveness of the Merger, all of
the outstanding shares of common stock of each of Lightning Metal, Coating and
Lightning Tool shall be automatically converted into the right to receive, and
shall be exchangeable for, ordinary shares of Flextronics, S$0.01 par value per
share ("Flextronics Ordinary Shares"), in the manner and on the basis determined
herein and as provided in the Certificates of Merger and the Plans of Merger.
B. At the Closing (as defined in Section 11.1), the EMF Shareholders and
the Lightning Europe Shareholders will transfer to Flextronics or such
subsidiaries of Flextronics as may be designated by Flextronics, all of the
issued ordinary shares, IRPound Sterling1 par value per share, of EMF ("EMF
Ordinary Shares") and all of the issued ordinary shares, $1.00 par value per
share, of Lightning Europe ("Lightning Europe Ordinary Shares"), respectively,
in exchange for Flextronics Ordinary Shares as provided herein (collectively,
the "Irish Exchanges").
C. At the Closing, the Lightning Texas Members, the Logistics Members,
the Papason Members, the 200 Scott Street Members, the 80 Scott Street Members,
the 230 Scott Street Members and the Lively Members will transfer to Flextronics
or such subsidiaries of Flextronics as may be designated by Flextronics all of
the Lightning Texas Interests (as defined in Section 1.1(b)), all of the
Logistics Interests (as defined in Section 1.1(b)), all of the Papason Interests
(as defined in Section 1.1(b)), all of the 200 Scott Street Interests (as
defined in Section 1.1(b)), all of the 80 Scott Street Interests (as defined in
Section 1.1(b)), all of the 230 Scott Street Interests (as defined in Section
1.1(b)) and all of the Lively Interests (as defined in Section 1.1(b)),
respectively, in exchange for Flextronics Ordinary Shares as provided herein
(collectively, the "Member Exchanges").
D. At the Closing, the D.A.D. Partners, the S.O.N. Partners and the
S.O.N. II Partners will transfer to Flextronics or such subsidiaries of
Flextronics as may be designated by Flextronics all of the D.A.D. Interests (as
defined in Section 1.1(b)), all of the S.O.N. Interests (as defined in Section
1.1(b)) and all of the S.O.N. II Interests (as defined in Section 1.1(b)),
respectively, in exchange for Flextronics Ordinary Shares as provided herein
(collectively, the "Partner Exchanges" and, together with the Merger, the Irish
Exchanges and the Member Exchanges, the "Transactions").
E. The Board of Directors, Board of Managers, Members and Partners, as
applicable, of Flextronics, the Merger Subs and the Companies have determined
that this Agreement and the Transactions, as applicable, are in the best
interests of their respective companies or partnerships,
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and the Shareholders, the Members and the Partners have approved this Agreement
and the Transactions, as applicable, and, accordingly, have agreed to effect the
Transactions upon the terms and conditions of this Agreement.
F. It is intended by the parties hereto that the Merger and the Irish
Exchanges shall constitute non-taxable reorganizations within the meaning of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the
"Code").
G. It is intended by the parties hereto that, for financial accounting
purposes, the Transactions will be accounted for as a pooling of interests
transaction.
H. Concurrently with the execution of this Agreement, the Shareholders,
the Members, the Partners and Flextronics are entering into a voting agreement,
dated the date hereof, in the form of Exhibit C (the "Voting Agreement") and the
Shareholders, the Members and the Partners are executing investment
representation letters, dated the date hereof, in the form of Exhibit D (the
"Investment Representation Letters").
NOW, THEREFORE, the parties hereto agree as follows:
1. PLAN OF REORGANIZATION
1.1 The Merger. The Certificates of Merger and the Plans of Merger
will be filed with the Secretary of State of the States of Delaware and
Illinois, respectively, immediately after the Closing. The effective time of the
Merger as specified in the Certificates of Merger and the Plans of Merger (the
"Effective Time") will occur on the Closing Date (as defined in Section 11.1) at
10:00 a.m., Pacific Time, or at such other date or time as Flextronics and the
Companies may mutually agree. Subject to the terms and conditions of this
Agreement, the Certificates of Merger and the Plans of Merger, Lightning Metal
Merger Sub, Coating Merger Sub and Lightning Tool Merger Sub will be merged with
and into Lightning Metal, Coating and Lightning Tool, respectively, in statutory
mergers pursuant to each applicable Certificate of Merger and Plan of Merger and
in accordance with applicable provisions of Delaware law and Illinois law as
follows:
(a) Conversion and Exchange of Shares.
(i) Lightning Metal. Each share of Lightning Metal
common stock, no par value per share (the "Lightning Metal Common Stock"), that
is issued and outstanding immediately prior to the Effective Time will, by
virtue of the Merger, and without further action on the part of any holder
thereof, be automatically converted into the right to receive, and shall be
exchangeable for (subject to Sections 1.1(c) and 1.2), (a) at the Effective
Time, that number of fully paid and nonassessable Flextronics Ordinary Shares
obtained by multiplying each such share of Lightning Metal Common Stock by the
Lightning Metal Exchange Ratio (as defined in Section 1.1(b)), and (b) on the
first anniversary of the Closing (the "Release Date"), that number of fully paid
and nonassessable Flextronics Ordinary Shares obtained by multiplying each share
of Lightning Metal Common Stock by the Lightning Metal Hold-Back Exchange Ratio
(as defined in Section 1.1(b)).
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(ii) Coating. Each share of Coating common stock, $1.00
par value per share (the "Coating Common Stock"), that is issued and outstanding
immediately prior to the Effective Time will, by virtue of the Merger, and
without further action on the part of any holder thereof, be automatically
converted into the right to receive, and shall be exchangeable for (subject to
Sections 1.1(c) and 1.2), (a) at the Effective Time, that number of fully paid
and nonassessable Flextronics Ordinary Shares obtained by multiplying each such
share of Coating Common Stock by the Coating Exchange Ratio (as defined in
Section 1.1(b)), and (b) on the Release Date, that number of fully paid and
nonassessable Flextronics Ordinary Shares obtained by multiplying each share of
Coating Common Stock by the Coating Hold-Back Exchange Ratio (as defined in
Section 1.1(b)).
(iii) Lightning Tool. Each share of Lightning Tool
common stock, $1.00 par value per share (the "Lightning Tool Common Stock"),
that is issued and outstanding immediately prior to the Effective Time will, by
virtue of the Merger, and without further action on the part of any holder
thereof, be automatically converted into the right to receive, and shall be
exchangeable for (subject to Sections 1.1(c) and 1.2), (a) at the Effective
Time, that number of fully paid and nonassessable Flextronics Ordinary Shares
obtained by multiplying each such share of Lightning Tool Common Stock by the
Lightning Tool Exchange Ratio (as defined in Section 1.1(b)), and (b) on the
Release Date, that number of fully paid and nonassessable Flextronics Ordinary
Shares obtained by multiplying each share of Lightning Tool Common Stock by the
Lightning Tool Hold-Back Exchange Ratio (as defined in Section 1.1(b)).
(iv) EMF. Each EMF Ordinary Share that is in issue
immediately prior to the Effective Time will, effective upon the Effective Time,
be transferred to Flextronics or such subsidiaries of Flextronics as may be
designated by Flextronics by the holder thereof in exchange for (subject to
Sections 1.1(c) and 1.2), (a) at the Effective Time, that number of fully paid
and nonassessable Flextronics Ordinary Shares obtained by multiplying each such
EMF Ordinary Share by the EMF Exchange Ratio (as defined in Section 1.1(b)), and
(b) on the Release Date, that number of fully paid and nonassessable Flextronics
Ordinary Shares obtained by multiplying each EMF Ordinary Share by the EMF
Hold-Back Exchange Ratio (as defined in Section 1.1(b)); provided, however, that
each EMF Ordinary Share that is held by EMF as a Treasury Share (within the
meaning of Section 209 of the Companies Act, 1990) shall not be so exchanged but
shall be cancelled and retrieved and no consideration shall be delivered in
exchange therefor.
(v) Lightning Europe. Each Lightning Europe Ordinary
Share that is in issue immediately prior to the Effective Time will, immediately
prior to the Effective Time, be transferred to Flextronics or such subsidiaries
of Flextronics as may be designated by Flextronics by the holder thereof in
exchange for (subject to Sections 1.1(c) and 1.2), (a) immediately prior to the
Effective Time, that number of fully paid and nonassessable Flextronics Ordinary
Shares obtained by multiplying each such Lightning Europe Ordinary Share by the
Lightning Europe Exchange Ratio (as defined in Section 1.1(b)), and (b) on the
Release Date, that number of fully paid and nonassessable Flextronics Ordinary
Shares obtained by multiplying each Lightning Europe Ordinary Share by the
Lightning Europe Hold-Back Exchange Ratio (as defined in Section 1.1(b));
provided, however, that each Lightning Europe
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Ordinary Share that is held by Lightning Europe as a Treasury Share (within the
meaning of Section 209 of the Companies Act, 1990) shall not be so exchanged but
shall be cancelled and retrieved and no consideration shall be delivered in
exchange therefor.
(vi) Lightning Texas. Each Lightning Texas Interest (as
defined in Section 1.1(b)) that is issued and outstanding immediately prior to
the Effective Time will, effective upon the Effective Time, be transferred to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics by the holder thereof in exchange for (subject to Sections 1.1(c)
and 1.2), (a) at the Effective Time, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each such Lightning Texas
Interest by the Lightning Texas Exchange Ratio (as defined in Section 1.1(b)),
and (b) on the Release Date, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each Lightning Texas
Interest by the Lightning Texas Hold-Back Exchange Ratio (as defined in Section
1.1(b)).
(vii) Logistics. Each Logistics Interest (as defined in
Section 1.1(b)) that is issued and outstanding immediately prior to the
Effective Time will, effective upon the Effective Time, be transferred to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics by the holder thereof in exchange for (subject to Sections 1.1(c)
and 1.2), (a) at the Effective Time, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each such Logistics Interest
by the Logistics Exchange Ratio (as defined in Section 1.1(b)), and (b) on the
Release Date, that number of fully paid and nonassessable Flextronics Ordinary
Shares obtained by multiplying each Logistics Interest by the Logistics
Hold-Back Exchange Ratio (as defined in Section 1.1(b)).
(viii) Papason. Each Papason Interest (as defined in
Section 1.1(b)) that is issued and outstanding immediately prior to the
Effective Time will, effective upon the Effective Time, be transferred to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics by the holder thereof in exchange for (subject to Sections 1.1(c)
and 1.2), (a) at the Effective Time, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each such Papason Interest
by the Papason Exchange Ratio (as defined in Section 1.1(b)), and (b) on the
Release Date, that number of fully paid and nonassessable Flextronics Ordinary
Shares obtained by multiplying each Papason Interest by the Papason Hold-Back
Exchange Ratio (as defined in Section 1.1(b)).
(ix) 200 Scott Street. Each 200 Scott Street Interest
(as defined in Section 1.1(b)) that is issued and outstanding immediately prior
to the Effective Time will, effective upon the Effective Time, be transferred to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics by the holder thereof in exchange for (subject to Sections 1.1(c)
and 1.2), (a) at the Effective Time, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each such 200 Scott Street
Interest by the 200 Scott Street Exchange Ratio (as defined in Section 1.1(b)),
and (b) on the Release Date, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying
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each 200 Scott Street Interest by the 200 Scott Street Hold-Back Exchange Ratio
(as defined in Section 1.1(b)).
(x) 80 Scott Street. Each 80 Scott Street Interest (as
defined in Section 1.1(b)) that is issued and outstanding immediately prior to
the Effective Time will, effective upon the Effective Time, be transferred to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics by the holder thereof in exchange for (subject to Sections 1.1(c)
and 1.2), (a) at the Effective Time, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each such 80 Scott Street
Interest by the 80 Scott Street Exchange Ratio (as defined in Section 1.1(b)),
and (b) on the Release Date, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each 80 Scott Street
Interest by the 80 Scott Street Hold-Back Exchange Ratio (as defined in Section
1.1(b)).
(xi) 230 Scott Street. Each 230 Scott Street Interest
(as defined in Section 1.1(b)) that is issued and outstanding immediately prior
to the Effective Time will, effective upon the Effective Time, be transferred to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics by the holder thereof in exchange for (subject to Sections 1.1(c)
and 1.2), (a) at the Effective Time, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each such 230 Scott Street
Interest by the 230 Scott Street Exchange Ratio (as defined in Section 1.1(b)),
and (b) on the Release Date, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each 230 Scott Street
Interest by the 230 Scott Street Hold-Back Exchange Ratio (as defined in Section
1.1(b)).
(xii) Lively. Each Lively Interest (as defined in
Section 1.1(b)) that is issued and outstanding immediately prior to the
Effective Time will, effective upon the Effective Time, be transferred to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics by the holder thereof in exchange for (subject to Sections 1.1(c)
and 1.2), (a) at the Effective Time, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each such Lively Interest by
the Lively Exchange Ratio (as defined in Section 1.1(b)), and (b) on the Release
Date, that number of fully paid and nonassessable Flextronics Ordinary Shares
obtained by multiplying each Lively Interest by the Lively Hold-Back Exchange
Ratio (as defined in Section 1.1(b)).
(xiii) D.A.D. Each D.A.D. Interest (as defined in
Section 1.1(b)) that is issued and outstanding immediately prior to the
Effective Time will, effective upon the Effective Time, be transferred to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics by the holder thereof in exchange for (subject to Sections 1.1(c)
and 1.2), (a) at the Effective Time, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each such D.A.D. Interest by
the D.A.D. Exchange Ratio (as defined in Section 1.1(b)), and (b) on the Release
Date, that number of fully paid and nonassessable Flextronics Ordinary Shares
obtained by multiplying each D.A.D. Interest by the D.A.D. Hold-Back Exchange
Ratio (as defined in Section 1.1(b)).
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(xiv) S.O.N. Each S.O.N. Interest (as defined in
Section 1.1(b)) that is issued and outstanding immediately prior to the
Effective Time will, effective upon the Effective Time, be transferred to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics by the holder thereof in exchange for (subject to Sections 1.1(c)
and 1.2), (a) at the Effective Time, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each such S.O.N. Interest by
the S.O.N. Exchange Ratio (as defined in Section 1.1(b)), and (b) on the Release
Date, that number of fully paid and nonassessable Flextronics Ordinary Shares
obtained by multiplying each S.O.N. Interest by the S.O.N. Hold-Back Exchange
Ratio (as defined in Section 1.1(b)).
(xv) S.O.N. II. Each S.O.N. II Interest (as defined in
Section 1.1(b)) that is issued and outstanding immediately prior to the
Effective Time will, effective upon the Effective Time, be transferred to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics by the holder thereof in exchange for (subject to Sections 1.1(c)
and 1.2), (a) at the Effective Time, that number of fully paid and nonassessable
Flextronics Ordinary Shares obtained by multiplying each such S.O.N. II Interest
by the S.O.N. II Exchange Ratio (as defined in Section 1.1(b)), and (b) on the
Release Date, that number of fully paid and nonassessable Flextronics Ordinary
Shares obtained by multiplying each S.O.N. II Interest by the S.O.N. II
Hold-Back Exchange Ratio (as defined in Section 1.1(b)).
(xvi) Lightning Metal Merger Sub, Coating Merger Sub
and Lightning Tool Merger Sub. At the Effective Time, each share of Lightning
Metal Merger Sub, Coating Merger Sub and Lightning Tool Merger Sub common stock
that is issued and outstanding immediately prior to the Effective Time will be
converted into one validly issued, fully paid and nonassessable share of Common
Stock of Lightning Metal, Coating and Lightning Tool, respectively, each as a
Surviving Corporation (as defined below). Each certificate evidencing ownership
of shares of the common stock of Lightning Metal Merger Sub, Coating Merger Sub
and Lightning Tool Merger Sub will evidence ownership of such shares of capital
stock of Lightning Metal, Coating and Lightning Tool, respectively, each as a
Surviving Corporation.
(b) Definitions.
(i) The "Lightning Metal Exchange Ratio" equals the
quotient obtained by dividing (A) the quotient of (x) the product of ninety
percent (90%) multiplied by the Lightning Metal Acquisition Price, divided by
(y) the Flextronics Average Price Per Share by (B) the total number of shares of
Lightning Metal Capital Stock as of the Effective Time. The "Lightning Metal
Acquisition Price" equals $29,444,165.41. The term "Lightning Metal Capital
Stock" means the outstanding shares of Lightning Metal Common Stock and any
other classes and series of common and preferred stock of Lightning Metal, if
any, in each case on a fully diluted, as-converted basis and as of the Effective
Time, including, without limitation or duplication, all shares of such stock
that are issuable upon the exercise of any outstanding convertible stock,
options, warrants and other rights thereto (whether or not such rights are
vested or exercisable as of the Effective Time). The term "Lightning Metal
Hold-Back Shares" means that number of Flextronics Ordinary Shares issued to
Lightning Metal Shareholders on the
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Release Date equal to the quotient of (A) the product of ten percent (10%)
multiplied by the Lightning Metal Acquisition Price, divided by (B) the
Flextronics Average Price Per Share, reduced as, and to the extent, set forth in
Section 15.3. The term "Lightning Metal Hold-Back Exchange Ratio" means the
quotient obtained by dividing the Lightning Metal Hold-Back Shares by the total
number of shares of Lightning Metal Capital Stock as of the Effective Time.
(ii) The "Coating Exchange Ratio" equals the quotient
obtained by dividing (A) the quotient of (x) the product of ninety percent (90%)
multiplied by the Coating Acquisition Price, divided by (y) the Flextronics
Average Price Per Share by (B) the total number of shares of Coating Capital
Stock as of the Effective Time. The "Coating Acquisition Price" equals
$3,793,343.90. The term "Coating Capital Stock" means the outstanding shares of
Coating Common Stock and any other classes and series of common and preferred
stock of Coating, if any, in each case on a fully diluted, as-converted basis
and as of the Effective Time, including, without limitation or duplication, all
shares of such stock that are issuable upon the exercise of any outstanding
convertible stock, options, warrants and other rights thereto (whether or not
such rights are vested or exercisable as of the Effective Time). The term
"Coating Hold-Back Shares" means that number of Flextronics Ordinary Shares
issued to Coating Shareholders on the Release Date equal to the quotient of (A)
the product of ten percent (10%) multiplied by the Coating Acquisition Price,
divided by (B) the Flextronics Average Price Per Share, reduced as, and to the
extent, set forth in Section 15.3. The term "Coating Hold-Back Exchange Ratio"
means the quotient obtained by dividing the Coating Hold-Back Shares by the
total number of shares of Coating Capital Stock as of the Effective Time.
(iii) The "Lightning Tool Exchange Ratio" equals the
quotient obtained by dividing (A) the quotient of (x) the product of ninety
percent (90%) multiplied by the Lightning Tool Acquisition Price, divided by (y)
the Flextronics Average Price Per Share by (B) the total number of shares of
Lightning Tool Capital Stock as of the Effective Time. The "Lightning Tool
Acquisition Price" equals $5,251,200.03. The term "Lightning Tool Capital Stock"
means the outstanding shares of Lightning Tool Common Stock and any other
classes and series of common and preferred stock of Lightning Tool, if any, in
each case on a fully diluted, as-converted basis and as of the Effective Time,
including, without limitation or duplication, all shares of such stock that are
issuable upon the exercise of any outstanding convertible stock, options,
warrants and other rights thereto (whether or not such rights are vested or
exercisable as of the Effective Time). The term "Lightning Tool Hold-Back
Shares" means that number of Flextronics Ordinary Shares issued to Lightning
Tool Shareholders on the Release Date equal to the quotient of (A) the product
of ten percent (10%) multiplied by the Lightning Tool Acquisition Price, divided
by (B) the Flextronics Average Price Per Share, reduced as, and to the extent,
set forth in Section 15.3. The term "Lightning Tool Hold-Back Exchange Ratio"
means the quotient obtained by dividing the Lightning Tool Hold-Back Shares by
the total number of shares of Lightning Tool Capital Stock as of the Effective
Time.
(iv) The "EMF Exchange Ratio" equals the quotient
obtained by dividing (A) the quotient of (x) the product of ninety percent (90%)
multiplied by the EMF Acquisition Price, divided by (y) the Flextronics Average
Price Per Share by (B) the total number of shares of EMF Capital Stock as of the
Effective Time. The "EMF Acquisition Price" equals
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$49,967.77. The term "EMF Capital Stock" means the EMF Ordinary Shares and any
other classes and series of ordinary and extraordinary shares of EMF, if any, in
each case on a fully diluted, as-converted basis and as of the Effective Time,
including, without limitation or duplication, all such shares that are issuable
upon the exercise of any outstanding convertible shares, options, warrants and
other rights thereto (whether or not such rights are vested or exercisable as of
the Effective Time). The term "EMF Hold-Back Shares" means that number of
Flextronics Ordinary Shares issued to EMF Shareholders on the Release Date equal
to the quotient of (A) the product of ten percent (10%) multiplied by the EMF
Acquisition Price, divided by (B) the Flextronics Average Price Per Share,
reduced as, and to the extent, set forth in Section 15.3. The term "EMF
Hold-Back Exchange Ratio" means the quotient obtained by dividing the EMF
Hold-Back Shares by the total number of shares of EMF Capital Stock as of the
Effective Time.
(v) The "Lightning Europe Exchange Ratio" equals the
quotient obtained by dividing (A) the quotient of (x) the product of ninety
percent (90%) multiplied by the Lightning Europe Acquisition Price, divided by
(y) the Flextronics Average Price Per Share by (B) the total number of shares of
Lightning Europe Capital Stock as of the Effective Time. The "Lightning Europe
Acquisition Price" equals $7,976,282.17. The term "Lightning Europe Capital
Stock" means the Lightning Europe Ordinary Shares and any other classes and
series of ordinary and extraordinary shares of Lightning Europe, if any, in each
case on a fully diluted, as-converted basis and as of the Effective Time,
including, without limitation or duplication, all such shares that are issuable
upon the exercise of any outstanding convertible shares, options, warrants and
other rights thereto (whether or not such rights are vested or exercisable as of
the Effective Time). The term "Lightning Europe Hold-Back Shares" means that
number of Flextronics Ordinary Shares issued to Lightning Europe Shareholders on
the Release Date equal to the quotient of (A) the product of ten percent (10%)
multiplied by the Lightning Europe Acquisition Price, divided by (B) the
Flextronics Average Price Per Share, reduced as, and to the extent, set forth in
Section 15.3. The term "Lightning Europe Hold-Back Exchange Ratio" means the
quotient obtained by dividing the Lightning Europe Hold-Back Shares by the total
number of shares of Lightning Europe Capital Stock as of the Effective Time.
(vi) The "Lightning Texas Exchange Ratio" equals the
quotient obtained by dividing (A) the quotient of (x) the product of ninety
percent (90%) multiplied by the Lightning Texas Acquisition Price, divided by
(y) the Flextronics Average Price Per Share by (B) 100. The "Lightning Texas
Acquisition Price" equals $43,268,328.26. The term "Lightning Texas Interests"
means the outstanding Lightning Texas membership interests as of the Effective
Time, including, without limitation or duplication, all such membership
interests that are issuable on the exercise of any outstanding convertible
instruments, options, warrants and other rights thereto (whether or not such
rights are vested or exercisable as of the Effective Time). The term "Lightning
Texas Hold-Back Shares" means that number of Flextronics Ordinary Shares issued
to Lightning Texas Members on the Release Date equal to the quotient of (A) the
product of ten percent (10%) multiplied by the Lightning Texas Acquisition
Price, divided by (B) the Flextronics Average Price Per Share, reduced as, and
to the extent, set forth in Section 15.3. The term "Lightning Texas Hold-Back
Exchange Ratio" means the quotient obtained by dividing the Lightning Texas
Hold-Back Shares by 100.
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(vii) The "Logistics Exchange Ratio" equals the
quotient obtained by dividing (A) the quotient of (x) the product of ninety
percent (90%) multiplied by the Logistics Acquisition Price, divided by (y) the
Flextronics Average Price Per Share by (B) 100. The "Logistics Acquisition
Price" equals $3,500,000.00. The term "Logistics Interests" means the
outstanding Logistics membership interests as of the Effective Time, including,
without limitation or duplication, all such membership interests that are
issuable on the exercise of any outstanding convertible instruments, options,
warrants and other rights thereto (whether or not such rights are vested or
exercisable as of the Effective Time). The term "Logistics Hold-Back Shares"
means that number of Flextronics Ordinary Shares issued to Logistics Members on
the Release Date equal to the quotient of (A) the product of ten percent (10%)
multiplied by the Logistics Acquisition Price, divided by (B) the Flextronics
Average Price Per Share, reduced as, and to the extent, set forth in Section
15.3. The term "Logistics Hold-Back Exchange Ratio" means the quotient obtained
by dividing the Logistics Hold-Back Shares by 100.
(viii) The "Papason Exchange Ratio" equals the quotient
obtained by dividing (A) the quotient of (x) the product of ninety percent (90%)
multiplied by the Papason Acquisition Price, divided by (y) the Flextronics
Average Price Per Share by (B) 100. The "Papason Acquisition Price" equals
$3,128,982.27. The term "Papason Interests" means the outstanding Papason
membership interests as of the Effective Time, including, without limitation or
duplication, all such membership interests that are issuable on the exercise of
any outstanding convertible instruments, options, warrants and other rights
thereto (whether or not such rights are vested or exercisable as of the
Effective Time). The term "Papason Hold-Back Shares" means that number of
Flextronics Ordinary Shares issued to Papason Members on the Release Date equal
to the quotient of (A) the product of ten percent (10%) multiplied by the
Papason Acquisition Price, divided by (B) the Flextronics Average Price Per
Share, reduced as, and to the extent, set forth in Section 15.3. The term
"Papason Hold-Back Exchange Ratio" means the quotient obtained by dividing the
Papason Hold-Back Shares by the total number of Papason Interests as of the
Effective Time.
(ix) The "200 Scott Street Exchange Ratio" equals the
quotient obtained by dividing (A) the quotient of (x) the product of ninety
percent (90%) multiplied by the 200 Scott Street Acquisition Price, divided by
(y) the Flextronics Average Price Per Share by (B) 100. The "200 Scott Street
Acquisition Price" equals $282,804.00. The term "200 Scott Street Interests"
means the outstanding 200 Scott Street membership interests as of the Effective
Time, including, without limitation or duplication, all such membership
interests that are issuable on the exercise of any outstanding convertible
instruments, options, warrants and other rights thereto (whether or not such
rights are vested or exercisable as of the Effective Time). The term "200 Scott
Street Hold-Back Shares" means that number of Flextronics Ordinary Shares issued
to 200 Scott Street Members on the Release Date equal to the quotient of (A) the
product of ten percent (10%) multiplied by the 200 Scott Street Acquisition
Price, divided by (B) the Flextronics Average Price Per Share, reduced as, and
to the extent, set forth in Section 15.3. The term "200 Scott Street Hold-Back
Exchange Ratio" means the quotient obtained by dividing the 200 Scott Street
Hold-Back Shares by the total number of 200 Scott Street Interests as of the
Effective Time.
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(x) The "80 Scott Street Exchange Ratio" equals the
quotient obtained by dividing (A) the quotient of (x) the product of ninety
percent (90%) multiplied by the 80 Scott Street Acquisition Price, divided by
(y) the Flextronics Average Price Per Share by (B) 100. The "80 Scott Street
Acquisition Price" equals $483,125.15. The term "80 Scott Street Interests"
means the outstanding 80 Scott Street membership interests as of the Effective
Time, including, without limitation or duplication, all such membership
interests that are issuable on the exercise of any outstanding convertible
instruments, options, warrants and other rights thereto (whether or not such
rights are vested or exercisable as of the Effective Time). The term "80 Scott
Street Hold-Back Shares" means that number of Flextronics Ordinary Shares issued
to 80 Scott Street Members on the Release Date equal to the quotient of (A) the
product of ten percent (10%) multiplied by the 80 Scott Street Acquisition
Price, divided by (B) the Flextronics Average Price Per Share, reduced as, and
to the extent, set forth in Section 15.3. The term "80 Scott Street Hold-Back
Exchange Ratio" means the quotient obtained by dividing the 80 Scott Street
Hold-Back Shares by the total number of 80 Scott Street Interests as of the
Effective Time.
(xi) The "230 Scott Street Exchange Ratio" equals the
quotient obtained by dividing (A) the quotient of (x) the product of ninety
percent (90%) multiplied by the 230 Scott Street Acquisition Price, divided by
(y) the Flextronics Average Price Per Share by (B) 100. The "230 Scott Street
Acquisition Price" equals $503,033.45. The term "230 Scott Street Interests"
means the outstanding 230 Scott Street membership interests as of the Effective
Time, including, without limitation or duplication, all such membership
interests that are issuable on the exercise of any outstanding convertible
instruments, options, warrants and other rights thereto (whether or not such
rights are vested or exercisable as of the Effective Time). The term "230 Scott
Street Hold-Back Shares" means that number of Flextronics Ordinary Shares issued
to 230 Scott Street Members on the Release Date equal to the quotient of (A) the
product of ten percent (10%) multiplied by the 230 Scott Street Acquisition
Price, divided by (B) the Flextronics Average Price Per Share, reduced as, and
to the extent, set forth in Section 15.3. The term "230 Scott Street Hold-Back
Exchange Ratio" means the quotient obtained by dividing the 230 Scott Street
Hold-Back Shares by the total number of 230 Scott Street Interests as of the
Effective Time.
(xii) The "Lively Exchange Ratio" equals the quotient
obtained by dividing (A) the quotient of (x) the product of ninety percent (90%)
multiplied by the Lively Acquisition Price, divided by (y) the Flextronics
Average Price Per Share by (B) 100. The "Lively Acquisition Price" equals
$708,966.59. The term "Lively Interests" means the outstanding Lively membership
interests as of the Effective Time, including, without limitation or
duplication, all such membership interests that are issuable on the exercise of
any outstanding convertible instruments, options, warrants and other rights
thereto (whether or not such rights are vested or exercisable as of the
Effective Time). The term "Lively Hold-Back Shares" means that number of
Flextronics Ordinary Shares issued to Lively Members on the Release Date equal
to the quotient of (A) the product of ten percent (10%) multiplied by the Lively
Acquisition Price, divided by (B) the Flextronics Average Price Per Share,
reduced as, and to the extent, set forth in Section 15.3. The term "Lively
Hold-Back Exchange Ratio" means the quotient obtained by dividing the Lively
Hold-Back Shares by the total number of Lively Interests as of the Effective
Time.
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(xiii) The "D.A.D. Exchange Ratio" equals the quotient
obtained by dividing (A) the quotient of (x) the product of ninety percent (90%)
multiplied by the D.A.D. Acquisition Price, divided by (y) the Flextronics
Average Price Per Share by (B) 100. The "D.A.D. Acquisition Price" equals
$1,226,495.09. The term "D.A.D. Interests" means the outstanding D.A.D.
partnership interests as of the Effective Time, including, without limitation or
duplication, all such partnership interests that are issuable on the exercise of
any outstanding convertible instruments, options, warrants and other rights
thereto (whether or not such rights are vested or exercisable as of the
Effective Time). The term "D.A.D. Hold-Back Shares" means that number of
Flextronics Ordinary Shares issued to D.A.D. Partners on the Release Date equal
to the quotient of (A) the product of ten percent (10%) multiplied by the D.A.D.
Acquisition Price, divided by (B) the Flextronics Average Price Per Share,
reduced as, and to the extent, set forth in Section 15.3. The term "D.A.D.
Hold-Back Exchange Ratio" means the quotient obtained by dividing the D.A.D.
Hold-Back Shares by the total number of D.A.D. Interests as of the Effective
Time.
(xiv) The "S.O.N. Exchange Ratio" equals the quotient
obtained by dividing (A) the quotient of (x) the product of ninety percent (90%)
multiplied by the S.O.N. Acquisition Price, divided by (y) the Flextronics
Average Price Per Share by (B) 100. The "S.O.N. Acquisition Price" equals
$311,485.39. The term "S.O.N. Interests" means the outstanding S.O.N.
partnership interests as of the Effective Time, including, without limitation or
duplication, all such partnership interests that are issuable on the exercise of
any outstanding convertible instruments, options, warrants and other rights
thereto (whether or not such rights are vested or exercisable as of the
Effective Time). The term "S.O.N. Hold-Back Shares" means that number of
Flextronics Ordinary Shares issued to S.O.N. Partners on the Release Date equal
to the quotient of (A) the product of ten percent (10%) multiplied by the S.O.N.
Acquisition Price, divided by (B) the Flextronics Average Price Per Share,
reduced as, and to the extent, set forth in Section 15.3. The term "S.O.N.
Hold-Back Exchange Ratio" means the quotient obtained by dividing the S.O.N.
Hold-Back Shares by the total number of S.O.N. Interests as of the Effective
Time.
(xv) The "S.O.N. II Exchange Ratio" equals the quotient
obtained by dividing (A) the quotient of (x) the product of ninety percent (90%)
multiplied by the S.O.N. II Acquisition Price, divided by (y) the Flextronics
Average Price Per Share by (B) 100. The "S.O.N. II Acquisition Price" equals
$393,512.50. The term "S.O.N. II Interests" means the outstanding S.O.N. II
partnership interests as of the Effective Time, including, without limitation or
duplication, all such partnership interests that are issuable on the exercise of
any outstanding convertible instruments, options, warrants and other rights
thereto (whether or not such rights are vested or exercisable as of the
Effective Time). The term "S.O.N. II Hold-Back Shares" means that number of
Flextronics Ordinary Shares issued to S.O.N. II Partners on the Release Date
equal to the quotient of (A) the product of ten percent (10%) multiplied by the
S.O.N. II Acquisition Price, divided by (B) the Flextronics Average Price Per
Share, reduced as, and to the extent, set forth in Section 15.3. The term
"S.O.N. II Hold-Back Exchange Ratio" means the quotient obtained by dividing the
S.O.N. II Hold-Back Shares by the total number of S.O.N. II Interests as of the
Effective Time.
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(xvi) The "Flextronics Average Price Per Share" equals
the average of the closing price per share of Flextronics Ordinary Shares (in
U.S. dollars) as quoted on the Nasdaq National Market (or such other exchange or
quotation system registered under the Securities Exchange Act of 1934, as
amended, on which Flextronics Ordinary Shares are then traded or quoted) and
reported in The Wall Street Journal averaged over the twenty (20) trading days
ending with the trading day immediately prior to the Closing Date.
(xvii) The term "Hold-Back Shares" means the Lightning
Metal Hold-Back Shares, the Coating Hold-Back Shares, the Lightning Tool
Hold-Back Shares, the EMF Hold-Back Shares, the Lightning Europe Hold-Back
Shares, the Lightning Texas Hold-Back Shares, the Logistics Hold-Back Shares,
the Papason Hold-Back Shares, the 200 Scott Street Hold-Back Shares, the 80
Scott Street Hold-Back Shares, the 230 Scott Street Hold-Back Shares, the Lively
Hold-Back Shares, the D.A.D. Hold-Back Shares, the S.O.N. Hold-Back Shares, the
S.O.N. II Hold-Back Shares and the Shareholder Note Hold-Back Shares,
collectively.
(c) Adjustments for Capital Changes. If, between the date
hereof and the Effective Time (as to the Flextronics Ordinary Shares to be
issued at the Effective Time), or between the date hereof and the Release Date
(in the case of the Hold-Back Shares), Flextronics (i) recapitalizes either
through a split-up of its outstanding shares into a greater number of shares, or
through a combination of its outstanding shares into a lesser number of shares,
or (ii) reorganizes, reclassifies or otherwise changes its outstanding shares
into the same or a different number of shares of other classes (other than
through a split-up or combination of shares provided for in the previous
clause), or (iii) declares a dividend on its outstanding shares payable in
shares or securities convertible into shares, the calculation of the Lightning
Metal Exchange Ratio, the Coating Exchange Ratio, the Lightning Tool Exchange
Ratio, the EMF Exchange Ratio, the Lightning Europe Exchange Ratio, the
Lightning Texas Exchange Ratio, the Logistics Exchange Ratio, the Papason
Exchange Ratio, the 200 Scott Street Exchange Ratio, the 80 Scott Street
Exchange Ratio, the 230 Scott Street Exchange Ratio, the Lively Exchange Ratio,
the D.A.D. Exchange Ratio, the S.O.N. Exchange Ratio, the S.O.N. II Exchange
Ratio, the Shareholder Note Exchange Ratio, the Lightning Metal Hold-Back
Exchange Ratio, the Coating Hold-Back Exchange Ratio, the Lightning Tool
Hold-Back Exchange Ratio, the EMF Hold-Back Exchange Ratio, the Lightning Europe
Hold-Back Exchange Ratio, the Lightning Texas Hold-Back Exchange Ratio, the
Logistics Hold-Back Exchange Ratio, the Papason Hold-Back Exchange Ratio, the
200 Scott Street Hold-Back Exchange Ratio, the 80 Scott Street Hold-Back
Exchange Ratio, the 230 Scott Street Hold-Back Exchange Ratio, the Lively
Hold-Back Exchange Ratio, the D.A.D. Hold-Back Exchange Ratio, the S.O.N.
Hold-Back Exchange Ratio, the S.O.N. II Hold-Back Exchange Ratio and the
Shareholder Note Hold-Back Exchange Ratio will be adjusted such that the
relative ownership will be unchanged.
1.2 Fractional Shares. No fractional Flextronics Ordinary Shares
will be issued in connection with the Transactions, but in lieu thereof, the
holder of any shares of Lightning Metal Common Stock, shares of Coating Common
Stock, shares of Lightning Tool Common Stock, EMF Ordinary Shares, Lightning
Europe Ordinary Shares, Lightning Texas Interests, Logistics Interests, Papason
Interests, 200 Scott Street Interests, 80 Scott Street
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Interests, 230 Scott Street Interests, Lively Interests, D.A.D. Interests,
S.O.N. Interests or S.O.N. II Interests who would otherwise be entitled to
receive a fraction of a Flextronics Ordinary Share will receive from
Flextronics, promptly after the Effective Time or the Release Date (as the case
may be), an amount of cash equal to the last sale price on the Nasdaq National
Market of Flextronics Ordinary Shares on the last trading day prior to the
Effective Time, multiplied by the fraction of a Flextronics Ordinary Share to
which such holder would otherwise be entitled at the Effective Time or the
Release Date, as the case may be.
1.3 Effects of the Merger. At the Effective Time: (a) the separate
existence of Lightning Metal Merger Sub, Coating Merger Sub and Lightning Tool
Merger Sub will cease and will be merged with and into Lightning Metal, Coating
and Lightning Tool, respectively, and Lightning Metal, Coating and Lightning
Tool will be the surviving corporations in the Merger (each, a "Surviving
Corporation") pursuant to the terms of each applicable Certificate of Merger and
Plan of Merger; (b) the Certificate of Incorporation and Bylaws of each of
Lightning Metal Merger Sub, Coating Merger Sub and Lightning Tool Merger Sub
will continue unchanged and be the respective Certificate of Incorporation and
Bylaws of each of Lightning Metal, Coating and Lightning Tool, each as a
Surviving Corporation; (c) each share of Lightning Metal Common Stock, Coating
Common Stock and Lightning Tool Common Stock outstanding immediately prior to
the Effective Time will be converted and exchangeable for Flextronics Ordinary
Shares as provided in Section 1.1(a); (d) the directors and executive officers
of Lightning Metal Merger Sub, Coating Merger Sub and Lightning Tool Merger Sub
will become the respective Board of Directors and officers of each of Lightning
Metal, Coating and Lightning Tool, each as a Surviving Corporation; and (e) the
Merger will, at and after the Effective Time, have all of the effects provided
by applicable law.
1.4 Further Assurances. The Companies, the Shareholders, the
Members and the Partners agree that if, at any time after the Effective Time,
Flextronics considers or is advised that any further deeds, assignments or
assurances are reasonably necessary and appropriate:
(a) to vest, perfect, confirm or continue in each Surviving
Corporation, the Merger Subs or Flextronics title to any property or rights of
Lightning Metal, Coating, Lightning Tool, EMF, Lightning Europe, Lightning
Texas, Logistics, Papason, 200 Scott Street, 80 Scott Street, 230 Scott Street,
Lively, D.A.D., S.O.N. or S.O.N. II,
(b) to convey to Flextronics or such subsidiaries of
Flextronics as may be designated by Flextronics good and marketable title to the
EMF Ordinary Shares, the Lightning Europe Ordinary Shares, the Lightning Texas
Interests, the Logistics, Interests, the Papason Interests, the 200 Scott Street
Interests, the 80 Scott Street Interests, the 230 Scott Street Interests, the
Lively Interests, the D.A.D. Interests, the S.O.N. Interests and the S.O.N. II
Interests, as applicable, or
(c) to convey to Flextronics or such subsidiaries of
Flextronics as may be designated by Flextronics any right, title, claim or
interest they may have in or to any of the Companies, the assets of such
Companies and any loans to, or notes from, such Companies made
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or held by them, free of any adverse claims, liens, encumbrances or other rights
of third parties (except for Permitted Liens),
as provided herein, the Companies, the Shareholders, the Members and the
Partners, as applicable, shall execute and deliver all such deeds, assignments
and assurances and do all other things necessary or desirable to vest, perfect,
confirm, continue or convey title to such property or rights in each Surviving
Corporation, the Merger Subs or Flextronics, and otherwise to carry out the
purposes of this Agreement. The parties further agree that, upon Flextronics'
request, they will amend this Agreement to cause another direct or indirect
subsidiary of Flextronics to merge into Lightning Metal, Coating or Lightning
Tool, or to cause Lightning Metal, Coating or Lightning Tool to merge into
Flextronics, any Merger Sub or a different direct or indirect subsidiary of
Flextronics.
1.5 Securities Law Issues; Registration Rights. Based in part on
the representations of the Shareholders, the Members and the Partners made in
the Investment Representation Letters, the Flextronics Ordinary Shares to be
issued pursuant to this Agreement will be issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended (the
"1933 Act") and exemptions from qualification under applicable state securities
laws. Flextronics, the Shareholders, the Members and the Partners will enter
into a registration rights agreement in the form of Exhibit E hereto (the
"Registration Rights Agreement") with respect to the Flextronics Ordinary Shares
to be issued to the Shareholders, the Members and the Partners.
1.6 Tax-Free Reorganization. It is intended by the parties hereto
that the Merger and the Irish Exchanges shall constitute non-taxable
reorganizations within the meaning of Section 368(a)(1)(B) of the Code.
1.7 Pooling Accounting. The parties intend that the Transactions be
treated as a pooling of interests for accounting purposes.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
Except as set forth in the Disclosure Schedule attached hereto
(which, subject to Section 16.16, shall specifically reference the Sections of
this Agreement to which the specific items of disclosure therein constitute an
exception), and subject to the limitations of liability set forth in Section
15.2, each Company (with respect only to such Company notwithstanding references
in this Section 2 to the "Companies") hereby represents and warrants that:
2.1 Power, Authorization and Validity.
(a) Each of the Companies has the right, power, legal
capacity and authority to enter into and perform its obligations under this
Agreement and all agreements to which such Company is or will be a party that
are required to be executed pursuant to this Agreement (the "Company Ancillary
Agreements"). This Agreement and the Company Ancillary Agreements to which each
Company is a party have been duly and validly approved by such Company. Each
Shareholder, each Member and each Partner has the right, power, legal
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<PAGE> 17
capacity and authority to enter into and perform its respective obligations
under this Agreement and all agreements to which each such Shareholder, Member
or Partner is or will be a party that are required to be executed pursuant to
this Agreement (the "Shareholders Ancillary Agreements"). This Agreement and the
Shareholders Ancillary Agreements have been duly and validly approved by the
Shareholders, the Members and the Partners.
(b) No filing, authorization, consent or approval,
governmental or otherwise, or filing with any governmental authority or court is
necessary to enable the Companies, the Shareholders, the Members and the
Partners to enter into, and to perform their respective obligations under, this
Agreement, the Company Ancillary Agreements or the Shareholders Ancillary
Agreements except for (i) the filing of the Certificates of Merger and the Plans
of Merger with the Secretary of State of the States of Delaware and Illinois,
respectively; (ii) such filings and notifications as may be required to be made
by the Companies, the Shareholders, the Members and the Partners in connection
with the Transactions under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act") and the expiration of applicable waiting
periods under the HSR Act; (iii) such filings and notifications as may be
required to be made by Flextronics and the Companies in connection with the
Irish Exchanges pursuant to the Irish Mergers and Takeovers Acts, 1978 to 1996
(the "Irish Mergers Act"); and (iv) the receipt of one or more CG50A Clearance
Certificates in connection with the Lightning Europe Exchange (as defined in
Section 11.2) pursuant to the Taxes Consolidation Act, 1997 (the "CG50A
Clearance Certificate").
(c) This Agreement and the Company Ancillary Agreements are,
or when executed by each applicable Company will be, valid and binding
obligations of each such Company enforceable against each such Company in
accordance with their respective terms, subject only to the effect, if any, of
(i) applicable bankruptcy and other similar laws affecting the rights of
creditors generally, (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies, (iii) the enforceability of
provisions requiring indemnification in connection with the offering, issuance
or sale of securities, and (iv) any other matters listed on Schedule 2.1(c).
This Agreement and the Shareholders Ancillary Agreements are, or when executed
by each applicable Shareholder, Member or Partner will be, valid and binding
obligations of the Shareholders, the Members and the Partners enforceable
against the Shareholders, the Members and the Partners in accordance with their
respective terms, subject only to the effect, if any, of (i) applicable
bankruptcy and other similar laws affecting the rights of creditors generally,
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies, and (iii) the enforceability of provisions requiring
indemnification in connection with the offering, issuance or sale of securities.
2.2 Subsidiaries. None of the Companies has any Subsidiaries (as
defined below) or any equity interest, direct or indirect, in, or loans to, any
corporation, partnership, joint venture, limited liability company or other
business entity. None of the Companies is obligated to make, nor bound by any
agreement or obligation to make, any investment in or capital contribution in or
on behalf of any other entity. A "Subsidiary" of an entity means a corporation
or other business entity in which such entity owns, directly or indirectly, at
least a fifty percent (50%) interest or that is otherwise, directly or
indirectly, controlled by such entity.
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2.3 Litigation. There is no action, proceeding or investigation
pending or, to the knowledge of each of the Companies, threatened against any of
the Companies or any of their respective Subsidiaries before any court or
administrative agency that, if determined adversely to such Company or any of
its Subsidiaries, may reasonably be expected to have a Material Adverse Effect
(as defined below) on such Company or any of its Subsidiaries or in which the
adverse party or parties seek to recover in excess of $100,000 against such
Company or any of its Subsidiaries. To the Companies' knowledge, there is no
basis for any person, firm, corporation or entity to assert a claim against any
of the Companies (or Flextronics, any Merger Sub or any Surviving Corporation as
a successor in interest to any of the Companies) based upon: (a) ownership or
rights to ownership of any shares or interests, as the case may be, of Lightning
Metal Capital Stock, Coating Capital Stock, Lightning Tool Capital Stock, EMF
Capital Stock, Lightning Europe Capital Stock, Lightning Texas Interests,
Logistics Interests, Papason Interests, 200 Scott Street Interests, 80 Scott
Street Interests, 230 Scott Street Interests, Lively Interests, D.A.D.
Interests, S.O.N. Interests or S.O.N. II Interests, (b) any rights as a
securities holder of such Company, including, without limitation, any option or
other right to acquire any shares or interests, as the case may be, of Lightning
Metal Capital Stock, Coating Capital Stock, Lightning Tool Capital Stock, EMF
Capital Stock, Lightning Europe Capital Stock, Lightning Texas Interests,
Logistics Interests, Papason Interests, 200 Scott Street Interests, 80 Scott
Street Interests, 230 Scott Street Interests, Lively Interests, D.A.D.
Interests, S.O.N. Interests or S.O.N. II Interests, any preemptive rights or any
rights to notice or to vote, or (c) any rights under any agreement between any
of the Companies and any securities holder or former securities holder in such
holder's capacity as such. None of the Companies nor any of their respective
Subsidiaries has initiated any action or proceeding against any third party in
the three (3) years prior to the date of this Agreement other than in respect of
debt collection in the ordinary course of such Company's or Subsidiary's
business. "Knowledge" or any derivation thereof, when used with reference to (a)
an individual, means the actual knowledge, after reasonable inquiry, of such
individual, or (b) a person that is not an individual, means the collective
actual knowledge, after reasonable inquiry, of the executive officers and
directors of such party. "Material Adverse Effect" or "Material Adverse Change"
with respect to an entity means any event, change, violation, inaccuracy,
circumstance or effect (regardless of whether or not such events, changes,
violations, inaccuracies, circumstances or effects are inconsistent with the
representations or warranties made by such entity in this Agreement) that is or
is reasonably likely to be, individually or in the aggregate, materially adverse
to the condition (financial or otherwise), capitalization, properties taken as a
whole, employees taken as a whole, assets (including intangible assets) taken as
a whole, business, operations or results of operations of such entity and its
Subsidiaries, taken as a whole.
2.4 Company Financial Statements. Each of Lightning Metal, Coating,
Lightning Tool, EMF, Lightning Europe, Lightning Texas and Logistics has
delivered to Flextronics its balance sheet as of December 31, 1999 and its
income statement and statement of cash flows for the year then ended, each of
which is accompanied by either an unqualified audit opinion or an unqualified
review report prepared in accordance with SSARS, and its unaudited balance sheet
as of the six (6) months ended June 30, 2000 and its unaudited income statement
and statement of cash flows for the six (6) month period then ended
(collectively, the "Financial Statements"), a copy of each of which is included
as Schedule 2.4. The Financial Statements
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(a) are in accordance with the books and records of each such Company and (b)
fairly and accurately represent the financial condition of each such Company at
the respective dates specified therein and the results of operations for the
respective periods specified therein in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis or, in the case of
EMF and Lightning Europe, generally accepted accounting principles as they exist
in Ireland ("Irish GAAP") applied on a consistent basis, except, in the case of
unaudited Financial Statements, for the absence of notes and immaterial
period-end adjustments. None of the Companies has incurred any debt, liability
or obligation of any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, except for those reflected in the Financial
Statements or those incurred after June 30, 2000 (the "Balance Sheet Date") in
the ordinary course of such Company's business, consistent with past practice
that are not material in amount either individually or collectively.
2.5 Company Financial Projections. Each of the Companies has
delivered to Flextronics financial projections for each quarter in the period
from September 30, 2000 to March 31, 2002 (the "Financial Projections"), a
summary of each of which is included as Schedule 2.5. The Financial Projections
have been prepared in good faith by each Company based upon assumptions that
were reasonable under the circumstances under which they were made and when they
were made.
2.6 Taxes. Each of the Companies and each Subsidiary thereof has
filed all tax and information returns required to be filed prior to the date of
this Agreement, has paid all taxes required to be paid in respect of all periods
prior to the date hereof for which returns have been filed, has made all
necessary estimated tax payments, and has no liability for taxes in excess of
the amount so paid, except to the extent adequate reserves have been established
in the Financial Statements. None of the Companies nor any of their respective
Subsidiaries is delinquent in the payment of any tax or in the filing of any tax
returns, and no deficiencies for any tax have been threatened, claimed, proposed
or assessed which have not been settled or paid. Since January 1, 1995, no tax
return of any of the Companies or any Subsidiary thereof has ever been audited
by the Irish Revenue Commissioners, the Internal Revenue Service or any other
taxing agency or authority. For the purposes of this Section 2.6, unless noted
otherwise, the terms "tax" and "taxes" include all income, gains, franchise,
excise, property, sales, use, employment, license, payroll, services,
occupation, recording, value added or transfer taxes, governmental charges,
fees, levies or assessments (whether payable directly or by withholding) and,
with respect to such taxes, any estimated tax, interest and penalties or
additions to tax and interest on such penalties and additions to tax. None of
the Companies has any current or deferred tax liabilities. None of the Companies
will, as a result of the transactions contemplated herein, become liable for any
tax not adequately reserved against on the Financial Statements. None of the
Companies nor any of their respective Subsidiaries is obligated to make any
excess parachute payment, as defined in Section 280G(b)(1) of the Code, nor will
any excess parachute payment be deemed to have occurred as a result of or
arising out of the Merger to the extent Section 280G of the Code is applicable
to any of the Companies.
2.7 Title to Properties; Condition of Equipment and Property. The
Companies taken as a whole have good and marketable title to all of the personal
property assets used in the
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businesses of the Companies or as shown on the balance sheet as of the Balance
Sheet Date included in the Financial Statements, free and clear of all liens,
charges, encumbrances or restrictions (other than for taxes not yet due and
payable and Permitted Liens (as defined below)), other than such assets as were
sold in the ordinary course of business consistent with past practice since the
Balance Sheet Date, any material items of which are set forth on Schedule 2.7,
or which are subject to leases. Such assets are sufficient for the continued
operation of the business of each of the Companies consistent with current
practice. "Permitted Liens" means any lien, mortgage, encumbrance or restriction
which is reflected in the Financial Statements and is not in excess of $50,000
and which does not materially detract from the value or materially interfere
with the use, as currently utilized, of the properties subject thereto or
affected thereby or otherwise materially impair the business operations being
conducted thereon; provided, however, that with respect to the owned Real
Properties (as defined below) Permitted Liens shall also include all other
matters disclosed by the title insurance commitments (the "Title Insurance
Commitments") issued with respect to such owned Real Properties. With respect to
each of the owned Real Properties (defined below), a Company or a Subsidiary
thereof (i) is the legal and beneficial owner thereof, (ii) has good and
indefeasible fee simple title thereto free and clear of all conditions,
exceptions, reservations, encumbrances and liens other than Permitted Liens,
(iii) is in sole and undisputed occupation thereof subject to the Leases (as
defined in Section 7.13), and (iv) has in its possession or under its control
all deeds, documents or commitments for title insurance necessary to prove title
thereto. All leases of real or personal property to which each of the Companies
or any Subsidiary thereof is a party are fully effective and afford such Company
or a Subsidiary thereof peaceful and undisturbed possession of the subject
matter of the lease. Except as disclosed in the Title Insurance Commitments,
none of the Companies nor any of their respective Subsidiaries is in violation
of any material zoning, building, safety or environmental statute, ordinance,
regulation or requirement or other law or regulation applicable to the operation
of the Real Properties, and none of the Companies has received any written
notice of such violation with which it has not complied. Except as disclosed in
the Title Insurance Commitments, there are no agreements with any planning or
other competent authority regulating or restricting the use or development of
the Real Properties, and none of the Companies has received notice of any
pending or contemplated condemnation action with respect to any part of the Real
Properties. Except as disclosed in the Title Insurance Commitments, all of the
buildings and fixtures on the owned Real Properties were constructed in
accordance with all applicable laws and each of the Companies or a Subsidiary
thereof has adequate rights of ingress and egress into the owned Real Properties
for the operation of its business. The machinery and equipment owned or leased
by each of the Companies are (a) suitable for the uses to which they are
currently employed, (b) in generally good operating condition, (c) regularly
maintained, and (d) to the knowledge of the Companies, not obsolete, dangerous
or in need of renewal or replacement, except for renewal or replacement in the
ordinary course of business consistent with past practice. "Real Properties"
means the real properties owned or leased by any of the Companies or their
respective Subsidiaries.
2.8 Absence of Certain Changes. Since the Balance Sheet Date, each
of the Companies has carried on its business in the ordinary course
substantially in accordance with the procedures and practices in effect on the
Balance Sheet Date, and since the Balance Sheet Date there has not been with
respect to any of the Companies or any Subsidiary thereof:
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(a) any Material Adverse Change with respect to any of the
Companies;
(b) any contingent liability incurred as guarantor or surety
with respect to the obligations of others;
(c) any mortgage, encumbrance or lien placed on any of its
properties or granted with respect to any of its assets which exceeds $50,000;
(d) any material obligation or liability incurred by such
Company other than in the ordinary course of business consistent with past
practice;
(e) any purchase or sale or other disposition, or any
agreement or other arrangement for the purchase, sale or other disposition, of
any of the properties or assets of such Company other than sales of inventory
and purchases of raw materials and equipment in the ordinary course of business
consistent with past practice;
(f) any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting any of the material properties
or assets of such Company or its Subsidiaries;
(g) any declaration, setting aside or payment of any
dividend on, or the making of any other distribution in respect of, the capital
stock or interests, as the case may be, of such Company, any split, stock
dividend, combination or recapitalization of the capital stock or interests, as
the case may be, of such Company or any direct or indirect redemption, purchase
or other acquisition by such Company of its capital stock or interests, as the
case may be;
(h) any labor dispute or claim of material unfair labor
practices;
(i) any change with respect to the officers or management or
supervisory employees of such Company, all of whom are identified on Schedule
2.8(i) as being management or supervisory employees ("Management Employees");
(j) any modification of the benefits payable or to become
payable to any of such Company's directors, managers, partners, officers or
employees, or any increase in the compensation payable or to become payable to
any of such Company's directors, managers, partners, officers or employees, or
any bonus payment or arrangement made to or with any of such directors,
managers, partners, officers or employees, except salary increases (not in
excess of 10% for any individual) in the ordinary course of business consistent
with past practice;
(k) any increase in or modification of any bonus, pension,
insurance or other employee benefit plan, payment or arrangement (including, but
not limited to, the granting of stock options, restricted stock awards or stock
appreciation rights) made to, for or with any of such Company's employees;
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(l) any making of any loan, advance or capital contribution
to, or investment in, any person other than (i) travel loans or advances made in
the ordinary course of business consistent with the past practice of such
Company and (ii) other loans and advances in an aggregate amount which does not
exceed $50,000 outstanding at any time;
(m) any entry into, amendment of, relinquishment,
termination or nonrenewal by such Company of any contract, lease transaction,
commitment or other right or obligation other than in the ordinary course of
business consistent with past practice, but in no event involving obligations
(contingent or otherwise) of, or payments to such Company in excess of, $50,000
individually or in the aggregate;
(n) any payment or discharge of a material lien or liability
thereof, which lien or liability was not either (i) shown on the balance sheet
as of the Balance Sheet Date included in the Financial Statements or (ii)
incurred in the ordinary course of business consistent with past practice after
the Balance Sheet Date; or
(o) any obligation or liability incurred by such Company to
any of its officers, directors, managers, shareholders, members, partners or
affiliates, or any loans or advances made to any of its officers, directors,
managers, shareholders, members, partners or affiliates, except normal
compensation and expense allowances payable to officers.
2.9 Agreements and Commitments. None of the Companies or
Subsidiaries thereof is a party or subject to any agreement, contract,
obligation or commitment that is material to such Company or its Subsidiaries,
its financial condition, business or prospects, including, but not limited to,
the following:
(a) any agreement providing for payments by or to such
Company or its Subsidiaries with a Significant Customer (as defined in Section
2.20) or a Significant Supplier (as defined in Section 2.21) other than
individual purchase orders in the ordinary course of business consistent with
past practice;
(b) any license agreement under which such Company or its
Subsidiaries is licensor; or under which such Company or its Subsidiaries is
licensee (except for standard "shrink wrap" licenses for off-the-shelf software
products);
(c) any agreement by such Company or its Subsidiaries to
encumber, transfer or sell rights in or with respect to any Intellectual
Property (as defined in Section 2.10);
(d) any agreement for the sale, purchase or lease of real or
personal property involving more than $50,000 per year;
(e) any dealer, distributor, sales representative or similar
agreement for the distribution of such Company's or its Subsidiaries' products
(other than individual purchase orders in the ordinary course of business
consistent with past practice);
(f) any franchise agreement;
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(g) any stock redemption or purchase agreement;
(h) any joint venture contract or arrangement or any other
agreement that involves a sharing of profits with other persons or the payment
of royalties to any other person;
(i) any instrument evidencing indebtedness for borrowed
money or guarantees thereof;
(j) any contract containing covenants purporting to limit
such Company's freedom to compete in any line of business in any geographic
area;
(k) any agreement of indemnification other than standard
warranties in connection with the sale of products and/or services in the
ordinary course of business consistent with past practice;
(l) any agreement, contract or commitment relating to
capital expenditures and which involves future payments in excess of $100,000;
(m) any agreement, contract or commitment relating to the
disposition or acquisition of any assets by such Company or its Subsidiaries or
any Intellectual Property, which involves payments individually in excess of
$100,000 or in the aggregate in excess of $200,000 other than (i) purchases and
sales of Inventory (as defined in Section 2.22) and (ii) purchases of equipment,
in each case in the ordinary course of business consistent with past practice;
(n) any purchase order or contract for the purchase of raw
materials not in the ordinary course of business consistent with past practice;
or
(o) any indenture, mortgage or instrument by which any
Company's Real Property is bound.
All agreements, contracts, obligations and commitments
listed in Schedules 2.9, 2.10 and 2.13(d) (collectively, "Material Agreements")
are valid and in full force and effect. None of the Companies nor, to the
knowledge of any such Company, any other party, is in breach of or default under
any material term of any Material Agreement, nor will any of the Companies nor,
to the knowledge of any such Company, any other party, be in breach of or
default under any such term after giving effect to the Transactions. None of the
Companies has received any notice that any party to any such Material Agreement
intends to cancel, withdraw, modify or amend such Material Agreement. A true and
complete copy of each Material Agreement has been delivered to Flextronics or
its counsel.
None of the Companies is a party to any Material Agreement
or any other agreement, contract or instrument with any customer, supplier,
landlord or labor union or association that to the Companies' knowledge contains
any provision that is or could reasonably
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be expected to become materially burdensome to such Company, other than
provisions that are in the ordinary course of such Company's businesses and are
consistent with industry practice.
2.10 Intellectual Property. Each of the Companies and their
respective Subsidiaries owns all right, title and interest in, or has the right
to use, sell or license all patent applications, patents, trademark
applications, trademarks, service marks, trade names, copyright applications,
copyrights, trade secrets, know-how, technology, customer lists, proprietary
processes and formulae, all source and object code, algorithms, inventions,
development tools and all documentation and media constituting, describing or
relating to the above, including, without limitation, manuals, memoranda and
records and other intellectual property and proprietary rights used in or
reasonably necessary or required for the conduct of their respective business as
presently conducted ("Intellectual Property"). None of the Companies or their
respective Subsidiaries owns any copyright or trademark registrations or
applications or any patents or patent applications for Intellectual Property.
The business of each of the Companies and their respective Subsidiaries does not
cause such Company or any of its Subsidiaries to infringe any of the trade
names, mask works, trade secrets or, to the Companies' knowledge, any patents,
trademarks, service marks, copyrights or other intellectual property, of any
other person, and none of the Companies has received any written claim or notice
of infringement or potential infringement of the intellectual property of any
other person. There are no royalties, fees or other payments payable by any of
the Companies or any of their respective Subsidiaries to any person by reason of
the ownership, use, license, sale or disposition of the Intellectual Property.
Neither the manufacture, marketing, sale or intended use of any product
currently licensed or sold by any of the Companies or any of their respective
Subsidiaries or currently under development by any of the Companies or any of
their respective Subsidiaries violates any license or agreement between such
Company or any of its Subsidiaries and any third party. To the Companies'
knowledge, there is no infringement of any Intellectual Property by any third
party.
2.11 Compliance with Laws. Each of the Companies and their
respective Subsidiaries has complied and will be as of the Closing Date in
compliance with all applicable material laws, ordinances, regulations and rules,
and all orders, writs, injunctions, awards, judgments and decrees, applicable to
such Company and its Subsidiaries or to the assets, properties and business of
such Company and its Subsidiaries, except for noncompliance which individually
or in the aggregate would not have a Material Adverse Effect on such Company and
its Subsidiaries. Each of the Companies and their respective Subsidiaries has
received all permits and approvals from, and has made all filings with, third
parties, including government agencies and authorities, that are material to the
conduct of its business as presently conducted, and there exists no current
default under or violation of any such permit or approval. Schedule 2.11
includes a summary of all violations of, or conflicts with, any applicable
statute, law, rule, regulation, ruling, order, judgment or decree, and all
allegations of any such violations, of which each of the Companies or any of
their respective Subsidiaries has received notice from each such governmental
entity since December 31, 1995 other than immaterial violations or conflicts
which have been cured or waived.
2.12 Certain Transactions and Agreements. No person who is an
officer, director, manager, shareholder, member or partner of any of the
Companies or any Subsidiary
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thereof, or a member of any officer's, director's, manager's, shareholder's,
member's or partner's immediate family, (a) has any direct or indirect ownership
interest in or any employment or consulting agreement with any firm or
corporation that competes with such Company or Flextronics (except with respect
to any interest in less than one percent (1%) of the outstanding voting shares
of any corporation whose stock is publicly traded), (b) is directly or
indirectly interested in any material contract or informal arrangement with such
Company or any Subsidiary thereof, except for compensation for services as an
officer, director, manager, partner or employee of such Company or any
Subsidiary thereof as listed in Schedule 2.13(e) and except for arrangements
which exist among the Companies, (c) has any interest in any property, real or
personal, tangible or intangible, used in the business of such Company, except
for the normal rights of a shareholder, member or partner, as the case may be,
and except for arrangements which exist among the Companies, or (d) except for
arrangements which exist among the Companies, has had, either directly or
indirectly, a material interest in: (i) any person or entity which purchases
from or sells, licenses or furnishes to such Company or any of its Subsidiaries
any goods, property, technology or intellectual or other property rights or
services; or (ii) any contract or agreement to which such Company or any
Subsidiary thereof is a party or by which it may be bound or affected.
2.13 Employees.
(a) None of the Companies nor any of their respective
Subsidiaries is subject to any collective bargaining agreements. Each of the
Companies and each of their respective Subsidiaries believes it has good labor
relations, and none of the Companies has knowledge of any facts indicating that
the consummation of the transactions provided for herein will have a Material
Adverse Effect on its labor relations or those of any of its Subsidiaries, and
none of the Companies has knowledge that any of the Management Employees, or any
significant number of other employees, intends to leave such Company's employ or
the employ of any of its Subsidiaries. Between December 31, 1999 and the date of
this Agreement, to the knowledge of each of the Companies, no Management
Employee of such Company or any of its Subsidiaries, or significant number of
other employees of such Company or any of its Subsidiaries, has given notice
that such employee intends to terminate his or her employment with such Company
or any of its Subsidiaries. There are no activities or proceedings of any labor
union to organize any employees of any of the Companies or their respective
Subsidiaries and there are no strikes, material slowdowns, work stoppages or
lockouts, or threats thereof by or with respect to any employees of any of the
Companies or their respective Subsidiaries.
(b) Schedule 2.13(b) contains a list of all employment and
consulting agreements, pension, retirement, disability, medical, dental or other
health plans, life insurance or other death benefit plans, profit sharing,
deferred compensation agreements, stock option, bonus or other incentive plans,
vacation, sick, holiday or other paid leave plans, severance plans or other
similar employee benefit plans maintained by each of the Companies and their
respective Subsidiaries (the "Employee Plans"), including, without limitation,
all "employee benefit plans" as defined in Section 3(3) of the Employment
Retirement Income Security Act of 1974, as amended ("ERISA"). Each of the
Companies has delivered true and complete copies or descriptions of all its
Employee Plans to Flextronics' counsel. Each of the Companies has made
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available to Flextronics a true and complete copy of, to the extent applicable,
(a) the most recent annual report (Form 5500) with respect to each of its
Employee Plans that is subject to ERISA reporting requirements, (b) each trust
agreement related to its Employee Plans, (c) the most recent summary plan
description for each of its Employee Plans for which such a description is
required, (d) the most recent actuarial report relating to any of its Employee
Plans subject to Title IV of ERISA, and (e) the most recent United States
Internal Revenue Service determination letter issued with respect to any of its
Employee Plans. In addition, within the past five (5) years, none of Lightning
Metal, Coating, Lightning Tool, Lightning Texas, Logistics, Papason, 200 Scott
Street, 80 Scott Street, 230 Scott Street, Lively, D.A.D., S.O.N. or S.O.N. II
has been a participant in any "prohibited transaction," within the meaning of
Section 406 of ERISA with respect to any employee pension benefit plan (as
defined in Section 3(2) of ERISA) which it sponsors as employer or in which it
participates as an employer, which was not otherwise exempt pursuant to Section
408 of ERISA (including any individual exemption granted under Section 408(a) of
ERISA), or which could result in an excise tax under the Code. No Employee Plans
will be subject to any surrender fees or service fees upon termination other
than the normal and reasonable administrative fees associated with the
termination of benefit plans or administrative fees disclosed on Schedule 2.13
associated with the termination of benefit plans. All Employee Plans, to the
extent applicable, are in compliance, with the continuation coverage
requirements of Section 4980B of the Code and Sections 601 through 608 of ERISA
and the regulations thereunder. All individuals who, pursuant to the terms of
any Employee Plans, are entitled to participate in the Employee Plans, currently
are participating in such Employee Plans or have been offered an opportunity to
do so. Except as set forth on Schedule 2.13, no employee of any of the Companies
and no person subject to any health plan of such Company has made medical claims
through such health plan during the twelve (12) months preceding the date hereof
for more than $50,000 or more in the aggregate for which such Company is
responsible.
(c) To the Companies' knowledge, no employee of any of the
Companies is in material violation of any term of any employment contract or any
other contract or agreement, or any restrictive covenant, relating to the right
of any such employee to be employed by such Company or to use trade secrets or
proprietary information of others, and the employment of any employee of such
Company does not subject it to any liability to any third party.
(d) Except as set forth on Schedule 2.13(d), none of the
Companies nor any of their respective Subsidiaries is a party to any (i)
agreement with any of its executive officers or other key employees (A) the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving such Company in the nature of any
of the transactions contemplated by this Agreement, (B) providing any term of
employment or compensation guarantee, or (C) providing severance benefits or
other benefits after the termination of employment of such employee regardless
of the reason for such termination of employment, or (ii) agreement or plan,
including, without limitation, any stock option plan, stock appreciation rights
plan or stock purchase plan, any of the benefits of which will be materially
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the
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benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
(e) A list of all employees and officers of each of the
Companies and their respective Subsidiaries and their current compensation as of
the date specified on such list as set forth on Schedule 2.13(e).
(f) All contributions due from each of the Companies or any
of their respective Subsidiaries with respect to any of such Company's or its
Subsidiary's Employee Plans and all employee social security contributions have
been made or accrued on the Financial Statements, and no further contributions
will be due or will have accrued thereunder as of the Closing Date, other than
contributions accrued in the ordinary course of business consistent with past
practice after the Balance Sheet Date as a result of operations of such Company
and its Subsidiaries after the Balance Sheet Date, all of which have been paid.
2.14 No Brokers. Except for fees and expenses for Bank One Capital
Management pursuant to a letter agreement dated as of May 1, 2000 between Banc
One Capital Markets, Inc., and Lightning Metal, Coating, Lightning Tool, EMF,
Lightning Europe and Lightning Texas, the fees and expenses of which will be
paid by such Companies, none of the Companies is obligated for the payment of
fees or expenses of any investment banker, broker or finder in connection with
the origin, negotiation or execution of this Agreement or in connection with any
transaction provided for herein.
2.15 Disclosure. This Agreement, its exhibits and schedules, and
any of the certificates or documents to be delivered by the Companies, the
Shareholders, the Members and the Partners to Flextronics under this Agreement,
taken together, do not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances under which such statements
were made, not misleading.
2.16 Books and Records. The books, records and accounts of each of
the Companies and their respective Subsidiaries (a) are in all material respects
true and complete, (b) have been maintained in accordance with reasonable
business practices on a basis consistent with prior years, (c) are stated in
reasonable detail and fairly present the transactions of such Company, and (d)
fairly present the basis for the Financial Statements. Each of the Companies has
devised and maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (a) transactions are executed in accordance
with management's general or specific authorization; (b) transactions are
recorded as necessary (i) to permit preparation of financial statements in
conformity with GAAP or, in the case of EMF and Lightning Europe, Irish GAAP,
and (ii) to maintain accountability for assets; and (c) the amount recorded for
assets on the books and records of such Company is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
2.17 Insurance. Each of the Companies and each of their respective
Subsidiaries maintains fire, casualty and liability insurance as listed on
Schedule 2.17. All premiums heretofore payable under all such policies and bonds
have been paid and each of the
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Companies and each Subsidiary thereof is in compliance in all material respects
with the terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage) and all such policies are in full
force and effect. None of the Companies knows of any threatened termination of,
or premium increase with respect to, any of such policies.
2.18 Environmental, Health, and Safety Matters.
(a) Each of the Companies and, to the Companies' knowledge,
their respective predecessors and affiliates have complied and are in compliance
with all Environmental, Health, and Safety Requirements. For purposes of this
Agreement, "Environmental, Health, and Safety Requirements" means all statutes,
regulations, ordinances and other provisions having the force or effect of law,
all judicial and administrative orders and determinations, all contractual
obligations and all law concerning public health and safety, worker health and
safety, and pollution or protection of the environment, including, without
limitation, all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or cleanup
of any hazardous materials, substances or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation,
each as amended and as now or hereafter in effect. For purposes of this Section
2.18, the terms "predecessor" and "affiliate" mean any entity or person for
which any of the Companies may have liability as a successor under any
Environmental, Health, and Safety Requirements.
(b) No Site (as defined below) is a treatment, storage or
disposal facility, as defined in and regulated under the Resource Conservation
and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et. seq., is or was listed or
is nominated for listing on the National Priorities List pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. Section 9601 et. seq., or any similar state list of sites requiring
investigation or cleanup. A "Site" means any of the real properties currently or
previously owned, leased, used or operated by any of the Companies or any
Subsidiary of any of the Companies or any entities previously owned by any of
the Companies, including all soil, subsoil, surface waters and groundwaters
thereat.
(c) None of the Companies has received any notice, report or
other information regarding any actual or alleged violation of Environmental,
Health, and Safety Requirements at any Site, or any liabilities or potential
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating to any
of them or their facilities on any Site arising under Environmental, Health, and
Safety Requirements.
(d) To the Companies' knowledge, none of the following
exists at any Site: (i) underground storage tanks, (ii) asbestos-containing
material in any form or condition, (iii) materials or equipment containing
polychlorinated biphenyls, (iv) landfills or surface impoundments, or (v)
hazardous waste management facilities as defined by RCRA or comparable state
law.
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(e) To the Companies' knowledge, none of the Companies nor
any predecessor or affiliate of such Company has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled or released any
Hazardous Substance (as defined below), or owned or operated any Site (and no
such Site is contaminated by any such substance) in a manner that has given or
would give rise to liabilities, including any liability for response costs,
corrective action costs, personal injury, property damage, natural resources
damages or attorneys' fees, pursuant to any Environmental, Health, and Safety
Requirements. "Hazardous Substance" means any substance, chemical, compound,
product, solid, gas, liquid, waste, bi-product, pollutant, contaminant or
material which is hazardous or toxic, and includes, without limitation, (i)
asbestos, polychlorinated biphenyls and petroleum (including crude oil or any
fraction thereof) and (ii) any such material classified or regulated as
"hazardous" or "toxic" pursuant to CERCLA, RCRA, the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Section 1251
et. seq., the Clean Air Act of 1966, as amended, 42 U.S.C. Section 7401 et.
seq., the Toxic Substances Control Act of 1976, 15 U.S.C. Section 2601 et. seq.,
or the Hazardous Materials Transportation Act, 49 U.S.C. App. Section 1801 et.
seq.
(f) To the knowledge of each of the Companies, neither this
Agreement nor the consummation of the transactions that are the subject of this
Agreement will result in any obligations of such Company for Site investigation
or cleanup, or notification to or consent of government agencies or third
parties, pursuant to the Illinois Responsible Property Transfer Act, 76 ILCS
90/1 et. seq., the Texas Health and Safety Code, Section 361.539 or any other of
the so called "transaction triggered" or "responsible property transfer" or
Environmental, Health and Safety Requirements. The foregoing notwithstanding,
"transaction triggered" Environmental, Health and Safety Requirements does not
include any requirements for the transfer of permits, including air quality
permits and the like.
(g) To the Companies' knowledge, none of the Companies has
either expressly or by operation of law, assumed or undertaken any liability
that has not been fully cured or any obligation for corrective or remedial
action that has not been completely followed, of any other person or entity
relating to Environmental, Health, and Safety Requirements.
(h) To the knowledge of each of the Companies, no facts,
events or conditions relating to any Site will prevent, hinder or limit
continued compliance with Environmental, Health, and Safety Requirements, give
rise to any remedial or corrective obligations pursuant to Environmental,
Health, and Safety Requirements, or give rise to any other liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental, Health, and Safety Requirements, including, without limitation,
any relating to onsite or offsite releases or threatened releases of hazardous
materials, substances or wastes, personal injury, property damage or natural
resources damage.
2.19 Product and Service Warranties. Between December 31, 1998 and
the date of this Agreement, none of the Companies has experienced any product or
service warranty claims materially greater than the same type of claims
reflected in the Financial Statements for a comparable period in the previous
fiscal year ended December 31, 1998. The obligations of each of the Companies
with respect to defects in materials or workmanship is limited to an obligation
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to repair or replace the product in question. There is not presently nor has
there been since December 31, 1998 any failure or defect in any product sold by
any of the Companies that has required, or which would require, a general recall
or replacement campaign or similar action with respect to such product or a
reformulation or change of such product.
2.20 Customers; Backlog; Returns and Complaints. None of the
Companies has any outstanding material disputes concerning its goods and/or
services with any customer who, in the year ended December 31, 1999 or the six
(6) months ended June 30, 2000, was one of the five (5) largest sources of
revenues for such Company, based on amounts paid (a "Significant Customer"), and
none of the Companies has knowledge of any material complaint on the part of any
Significant Customer of such Company. Sales to the Significant Customers, in the
aggregate, represented at least ninety percent (90%) of the Companies' revenues
in the six (6) months ended June 30, 2000. None of the Companies has received
any notice from any current Significant Customer that the customer will not
continue as a customer of such Company (or the Surviving Corporation) after the
Closing or that any such customer intends to terminate or materially modify
existing contracts or arrangements with such Company (or the Surviving
Corporation). Since January 1, 2000, none of the Companies has had any of its
products returned by a purchaser thereof except for normal warranty and quality
returns that would not result in a material reversal of any revenue by such
Company.
2.21 Suppliers. None of the Companies has any outstanding material
disputes concerning goods or services provided by any supplier who, in the year
ended December 31, 1999 or the six (6) months ended June 30, 2000, was one of
the twenty (20) largest suppliers of goods and services to such Company, based
on amounts paid (a "Significant Supplier"). None of the Companies has received
any written notice of a termination or interruption of any existing contracts or
arrangements with any Significant Supplier. Each of the Companies has access, on
commercially reasonable terms, to all goods and services reasonably necessary to
it to carry on its business as currently conducted and none of the Companies has
knowledge of any reason why it will not continue to have such access on
commercially reasonable terms.
2.22 Inventory. The inventory of each of the Companies reflected in
the Financial Statements (the "Inventory") was valued at cost (determined on a
first-in, first-out basis) or sales value if sold to any Company by any other
Company. The Inventory of each of the Companies is in all material respects of
good and merchantable quality. The Inventory of raw materials and
work-in-process is readily usable, and the Inventory of raw materials is readily
usable and saleable, in the ordinary course of business of each of the
Companies, except for items of obsolete materials and materials of below
standard quality, substantially all of which have been written down to
realizable market value, or for which adequate reserves have been provided, in
the Financial Statements. All items included in such Inventory are owned by each
of the Companies free and clear of all liens and encumbrances (except Permitted
Liens), except for inventory sold by each of the Companies in the ordinary
course of business consistent with past practice subsequent to the Balance Sheet
Date. All Inventory materially in excess of reasonable estimated requirements
for each of the Companies based on current operations for the next six (6)
months are set forth on Schedule 2.22. For Inventory manufactured to customer
specifications effectively rendering the Inventory salable only to that
customer, the terms of the
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sales contracts applicable thereto require the customer to acquire such
Inventory (to the extent of the quantity limits specified in such sales
contracts) if it is manufactured and delivered in accordance with such sales
contracts.
2.23 Accounts Receivable. The receivables shown on the balance
sheet of each of the Companies on the Balance Sheet Date arose in the ordinary
course of business consistent with past practice and have been collected or are
collectible in the book amounts thereof, less an amount not in excess of the
allowance for doubtful accounts provided for in the balance sheet of each of the
Companies on the Balance Sheet Date. Allowances for doubtful accounts and
warranty returns are adequate and have been prepared in accordance with GAAP or,
in the case of EMF and Lightning Europe, Irish GAAP, consistently applied and in
accordance with the past practices of each of the Companies. The receivables of
each of the Companies arising after the Balance Sheet Date and prior to the
Closing Date arose or will arise in the ordinary course of business consistent
with past practice and have been collected or are collectible in the book
amounts thereof, less allowances for doubtful accounts and warranty returns
determined in accordance with the past practices of each of the Companies. To
the knowledge of each of the Companies, none of its receivables is subject to
any material claim of offset, recoupment, setoff or counter-claim and it has no
knowledge of any specific facts or circumstances (whether asserted or
unasserted) that could give rise to any such claim. No material amount of
receivables is contingent upon the performance by any of the Companies of any
obligation or contract other than normal warranty and quality repair and
replacement. No person has any lien on any of such receivables (except Permitted
Liens) and no agreement for deduction or discount has been made with respect to
any of such receivables. Schedule 2.23 sets forth an aging of accounts
receivable as of the Balance Sheet Date of each of the Companies in the
aggregate and by customer, and indicates the amounts of allowances for doubtful
accounts, reserves for credits and allowances, and allowances for warranty
returns and the amounts of accounts receivable as of the date hereof which are
subject to asserted warranty claims. Schedule 2.23 sets forth such amounts of
accounts receivable which are subject to asserted warranty and quality claims
known to the Companies by customers and reasonably detailed information
regarding the asserted warranty and quality claims.
2.24 Accounting Matters. None of the Companies nor any Shareholder,
Member or Partner has taken, or agreed to take, any action that would prevent
Flextronics from accounting for the Transactions as a pooling of interests under
GAAP. Each of the Companies is autonomous and has never been a subsidiary or
division of another corporation or other entity. None of the Companies has (a)
issued any shares of its capital stock or any interests, as the case may be,
since May 31, 1998, (b) paid any dividends or effected any other distributions
to its shareholders, members or partners, as the case may be, since May 31,
1998, (c) reacquired or purchased any shares of its capital stock or any
interests, as the case may be, since May 31, 1998, (d) changed any of its
equity, membership or partnership interests, as the case may be, after May 31,
1998, or (e) sold significant assets since May 31, 1998; and none of the
Shareholders, Members or Partners has any controlling interest or significant
influence in a business similar to Flextronics or which is dependent on
employees, assets or other resources of any of the Companies.
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2.25 Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon any of the Companies or any
of their respective Subsidiaries or which has or could reasonably be expected to
have the effect of prohibiting or materially impairing any business practice of
any of the Companies, any acquisition of property by any of the Companies or the
conduct of business of any of the Companies as currently conducted or as
currently proposed to be conducted by any such Company.
2.26 Certain Payments. Since December 31, 1995, none of the
Companies nor any Subsidiary thereof nor any officer, director, manager or
partner thereof, has offered, paid, promised to pay, or authorized payment of,
or given any money, gift or anything of value to (a) any governmental official
or employee, (b) any political party or candidate thereof, or (c) any person
while knowing that all or a portion of such money or thing of value will be
given or offered to any governmental official or employee or political party or
candidate thereof; with the purpose of influencing any act or decision of the
recipient in his or her official capacity or to induce the recipient to use his
or her influence to affect an act or decision of a government official or
employee.
2.27 Bank Accounts. Schedule 2.27 sets forth the names and
locations of all banks, trust companies, savings and loan associations, and
other financial institutions at which each of the Companies and each of their
respective Subsidiaries maintains accounts of any nature and the names of all
persons authorized to draw thereon or make withdrawals therefrom.
2.28 Other Entities' Liabilities. Other than as disclosed on the
Financial Statements, none of the Companies has any liabilities, contingent or
otherwise, with respect to the operations, transactions, liabilities or
obligations of any other entity.
2.29 Debt. Schedule 2.29 accurately lists all of the indebtedness
of each of the Companies for money borrowed ("Debt"). All Debt may be prepaid at
the Closing without penalty under the terms of agreements governing the Debt.
2.30 Bankruptcy. There are no attachments, executions, assignments
for the benefit of creditors or voluntary or involuntary proceedings in
bankruptcy, or under any other debtor relief laws, contemplated by, or pending
against, any Company, or, to the knowledge of any Company, threatened against
such Company or any of its properties or assets.
3. REPRESENTATIONS AND WARRANTIES OF LIGHTNING METAL, COATING AND
LIGHTNING TOOL
Except as set forth in the Disclosure Schedule attached hereto
(which, subject to Section 16.16, shall specifically reference the Sections of
this Agreement to which the specific items of disclosure therein constitute an
exception), and subject to the limitations of liability set forth in Section
15.2, Lightning Metal (with respect only to Lightning Metal, Coating (with
respect only to Coating) and Lightning Tool (with respect only to Lightning
Tool) hereby represent and warrant that:
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3.1 Organization and Good Standing. Each of Lightning Metal,
Coating and Lightning Tool is a corporation duly organized, validly existing and
in good standing under the laws of the State of Illinois and the jurisdictions
in which its real properties are located, has the corporate power and authority
to own, operate, lease and sell its properties and to carry on its business as
now conducted and as proposed to be conducted and is duly qualified to do
business and is in good standing in each jurisdiction where the character of its
properties owned or leased or the nature of its activities make such
qualification necessary (each such jurisdiction being listed on Schedule 3.1).
3.2 Capitalization.
(a) Authorized and Outstanding Capital Stock of Lightning Metal;
Options. The authorized capital stock of Lightning Metal consists solely of 900
shares of Lightning Metal Common Stock. A total of 450 shares of Common Stock
are issued and outstanding as of the date of this Agreement and will be issued
and outstanding as of the Closing Date, all of which are held of record and
owned by Lightning Metal Shareholders. No equity securities of Lightning Metal
shall be issued and outstanding at the Effective Time other than Lightning Metal
Common Stock. The vesting of any equity securities of Lightning Metal will not
accelerate or otherwise change as a result of the execution and delivery of this
Agreement or the consummation of the Merger or the transactions contemplated
hereby or the occurrence of any subsequent event. Lightning Metal Shareholders
each hold good and marketable title to such shares, free and clear of all liens,
agreements, voting trusts, proxies and other arrangements or restrictions of any
kind whatsoever (other than voting trusts and proxies delivered in connection
with this Agreement and the Shareholders' Agreement, dated as of December 28,
1990, among the Lightning Metal Shareholders, as amended). All issued and
outstanding shares of Lightning Metal Capital Stock have been duly authorized
and validly issued, are fully paid and nonassessable, are not subject to any
right of rescission and have been offered and sold by Lightning Metal in
compliance with exemptions from the registration requirements of the 1933 Act
and state securities laws. No issued and outstanding shares of Lightning Metal
Capital Stock are unvested or are subject to a repurchase option, risk of
forfeiture or other condition providing that such shares may be forfeited or
repurchased by Lightning Metal upon any termination of the shareholders'
employment, directorship or other relationship with Lightning Metal under the
terms of any restricted stock purchase agreement or other agreement with
Lightning Metal that does not by its terms provide that such repurchase option,
risk of forfeiture or other condition lapses upon the consummation of the
Transactions. There is no liability for dividends accrued and unpaid by
Lightning. The vote required to approve the Merger, this Agreement and the
transactions contemplated hereby is two-thirds of the Lightning Metal Common
Stock. There are no stock appreciation rights, options, warrants, calls, rights,
commitments, conversion privileges or preemptive or other rights or agreements
outstanding to purchase or otherwise acquire any shares of Lightning Metal
Capital Stock or any securities or debt convertible into or exchangeable for
Lightning Metal Capital Stock or obligating Lightning Metal to grant, extend or
enter into any such option, warrant, call, commitment, conversion privileges or
preemptive or other right or agreement. Other than under the Shareholders'
Agreement, dated as of December 28, 1990, among the Lightning Metal
Shareholders, as amended, there are no voting
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agreements, registration rights, rights of first refusal, preemptive rights,
co-sale rights, or other restrictions applicable to any outstanding securities
of Lightning Metal.
(b) Authorized and Outstanding Capital Stock of Coating;
Options. The authorized capital stock of Coating consists solely of 10,000
shares of Coating Common Stock. A total of 1,000 shares of Common Stock are
issued and outstanding as of the date of this Agreement and will be issued and
outstanding as of the Closing Date, all of which are held of record and owned by
Coating Shareholders. No equity securities of Coating shall be issued and
outstanding at the Effective Time other than Coating Common Stock. The vesting
of any equity securities of Coating will not accelerate or otherwise change as a
result of the execution and delivery of this Agreement or the consummation of
the Merger or the transactions contemplated hereby or the occurrence of any
subsequent event. Coating Shareholders each hold good and marketable title to
such shares, free and clear of all liens, agreements, voting trusts, proxies and
other arrangements or restrictions of any kind whatsoever (other than voting
trusts and proxies delivered in connection with this Agreement and the
Shareholders' Agreement, dated as of June 4, 1992, among the Coating
Shareholders, as amended). All issued and outstanding shares of Coating Capital
Stock have been duly authorized and validly issued, are fully paid and
nonassessable, are not subject to any right of rescission and have been offered
and sold by Coating in compliance with exemptions from the registration
requirements of the 1933 Act and state securities laws. No issued and
outstanding shares of Coating Capital Stock are unvested or are subject to a
repurchase option, risk of forfeiture or other condition providing that such
shares may be forfeited or repurchased by Coating upon any termination of the
shareholders' employment, directorship or other relationship with Coating under
the terms of any restricted stock purchase agreement or other agreement with
Lightning Metal that does not by its terms provide that such repurchase option,
risk of forfeiture or other condition lapses upon the consummation of the
Transactions. There is no liability for dividends accrued and unpaid by Coating.
The vote required to approve the Merger, this Agreement and the transactions
contemplated hereby is two-thirds of the Coating Common Stock. There are no
stock appreciation rights, options, warrants, calls, rights, commitments,
conversion privileges or preemptive or other rights or agreements outstanding to
purchase or otherwise acquire any shares of Coating Capital Stock or any
securities or debt convertible into or exchangeable for Coating Capital Stock or
obligating Coating to grant, extend or enter into any such option, warrant,
call, commitment, conversion privileges or preemptive or other right or
agreement. Other than under the Shareholders' Agreement, dated as of June 4,
1992, among the Coating Shareholders, as amended, there are no voting
agreements, registration rights, rights of first refusal, preemptive rights,
co-sale rights, or other restrictions applicable to any outstanding securities
of Coating.
(c) Authorized and Outstanding Capital Stock of Lightning
Tool; Options. The authorized capital stock of Lightning Tool consists solely of
10,000 shares of Lightning Tool Common Stock. A total of 1,923 shares of Common
Stock are issued and outstanding as of the date of this Agreement and will be
issued and outstanding as of the Closing Date, all of which are held of record
and owned by Lightning Tool Shareholders. No equity securities of Lightning Tool
shall be issued and outstanding at the Effective Time other than Lightning Tool
Common Stock. The vesting of any equity securities of Lightning Tool will not
accelerate or otherwise change as a result of the execution and delivery of this
Agreement or the
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consummation of the Merger or the transactions contemplated hereby or the
occurrence of any subsequent event. Lightning Tool Shareholders each hold good
and marketable title to such shares, free and clear of all liens, agreements,
voting trusts, proxies and other arrangements or restrictions of any kind
whatsoever (other than voting trusts and proxies delivered in connection with
this Agreement and the Shareholders' Agreement, dated as of May 11, 1998, among
the Lightning Tool Shareholders, as amended). All issued and outstanding shares
of Lightning Tool Capital Stock have been duly authorized and validly issued,
are fully paid and nonassessable, are not subject to any right of rescission and
have been offered and sold by Lightning Tool in compliance with exemptions from
the registration requirements of the 1933 Act and state securities laws. No
issued and outstanding shares of Lightning Tool Capital Stock are unvested or
are subject to a repurchase option, risk of forfeiture or other condition
providing that such shares may be forfeited or repurchased by Lightning Tool
upon any termination of the shareholders' employment, directorship or other
relationship with Lightning Tool under the terms of any restricted stock
purchase agreement or other agreement with Lightning Tool that does not by its
terms provide that such repurchase option, risk of forfeiture or other condition
lapses upon the consummation of the Transactions. There is no liability for
dividends accrued and unpaid by Lightning Tool. The vote required to approve the
Merger, this Agreement and the transactions contemplated hereby is two-thirds of
the Lightning Tool Common Stock. There are no stock appreciation rights,
options, warrants, calls, rights, commitments, conversion privileges or
preemptive or other rights or agreements outstanding to purchase or otherwise
acquire any shares of Lightning Tool Capital Stock or any securities or debt
convertible into or exchangeable for Lightning Tool Capital Stock or obligating
Lightning Tool to grant, extend or enter into any such option, warrant, call,
commitment, conversion privileges or preemptive or other right or agreement.
Other than under the Shareholders' Agreement, dated as of May 11, 1998, among
the Lightning Tool Shareholders, as amended, there are no voting agreements,
registration rights, rights of first refusal, preemptive rights, co-sale rights,
or other restrictions applicable to any outstanding securities of Lightning
Tool.
3.3 No Violation of Organizational Documents or Existing
Agreements. Neither the execution and delivery of this Agreement, the
Certificates of Merger, the Plans of Merger and the Company Ancillary
Agreements, nor the consummation of the transactions provided for herein, will
conflict with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of, (a) any provision of the
Articles of Incorporation or Bylaws of Lightning Metal, Coating or Lightning
Tool, as currently in effect, (b) any instrument, contract, agreement, permit,
mortgage or license to which Lightning Metal, Coating or Lightning Tool is a
party or by which Lightning Metal, Coating or Lightning Tool or any of their
respective assets are bound, or (c) any judgment, writ, decree, order, statute,
rule or regulation applicable to Lightning Metal, Coating or Lightning Tool or
any of their respective assets or properties. The Transactions will not require
the consent of any third party and will not have any Material Adverse Effect
upon any rights, licenses, franchises, leases or agreements of Lightning Metal,
Coating or Lightning Tool or any of their respective Subsidiaries.
3.4 Company Documents. Each of Lightning Metal, Coating and
Lightning Tool has provided to Flextronics' counsel complete and correct copies
of all documents identified in the Disclosure Schedule to this Agreement (other
than those documents specifically
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identified in the Disclosure Schedule as not having been delivered) including,
without limitation, the following: (a) copies of its Articles of Incorporation
and Bylaws, each as currently in effect; (b) copies of its minute book
containing records of all proceedings, consents, actions and meetings of its
directors, committees of the Board of Directors and its shareholders; (c) copies
of its stock ledger, journal and other records reflecting all issuances of stock
and transfers; (d) copies of the Material Agreements and all amendments thereto;
and (e) all permits, orders and consents issued by any regulatory agency
material to the business of Lightning Metal, Coating and Lightning Tool, or any
securities of Lightning Metal, Coating and Lightning Tool, and all applications
for such permits, orders and consents.
4. REPRESENTATIONS AND WARRANTIES OF LIGHTNING TEXAS, LOGISTICS,
PAPASON, 200 SCOTT STREET, 80 SCOTT STREET, 230 SCOTT STREET AND
LIVELY
Except as set forth in the Disclosure Schedule attached hereto
(which, subject to Section 16.16, shall specifically reference the Sections of
this Agreement to which the specific items of disclosure therein constitute an
exception), and subject to the limitations of liability set forth in Section
15.2, Lightning Texas (with respect only to Lightning Texas), Logistics (with
respect only to Logistics), Papason (with respect only to Papason), 200 Scott
Street (with respect only to 200 Scott Street), 80 Scott Street (with respect
only to 80 Scott Street), 230 Scott Street (with respect only to 230 Scott
Street) and Lively (with respect only to Lively) hereby represent and warrant
that:
4.1 Organization and Good Standing. Each of Lightning Texas and
Logistics is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Texas and the jurisdictions in
which its real properties are located, has the power and authority to own,
operate, lease and sell its properties and to carry on its business as now
conducted and as proposed to be conducted and is duly qualified to do business
and is in good standing in each jurisdiction where the character of its
properties owned or leased or the nature of its activities make such
qualification necessary (each such jurisdiction being listed on Schedule 4.1).
Each of Papason, 200 Scott Street, 80 Scott Street, 230 Scott Street and Lively
is a limited liability company duly formed, validly existing and in good
standing under the laws of the State of Illinois, has the power and authority to
own, operate and lease its properties and to carry on its business as now
conducted and as proposed to be conducted and is duly qualified to do business
and is in good standing in each jurisdiction where the character of its
properties owned or leased or the nature of its activities make such
qualification necessary (each such jurisdiction being listed on Schedule 4.1).
4.2 Capitalization.
(a) Authorized and Outstanding Interests of Lightning Texas;
Options. The authorized equity interests of Lightning Texas consists solely of
the Lightning Texas Interests which are issued and outstanding and held and
owned, of record and beneficially, solely by the Lightning Texas Members. All
issued and outstanding Lightning Texas Interests have been duly authorized and
validly issued, are fully paid and nonassessable, are not subject to any
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right of rescission and have been offered and sold by Lightning Texas in
compliance with exemptions from the registration requirements of the 1933 Act
and state securities laws. No issued and outstanding Lightning Texas Interests
are unvested or are subject to a repurchase option, risk of forfeiture or other
condition providing that such interests may be forfeited or repurchased by
Lightning Texas upon any termination of the member's employment or other
relationship with Lightning Texas under the terms of any membership interest
purchase agreement or other agreement with Lightning Texas that does not by its
terms provide that such repurchase option, risk of forfeiture or other condition
lapses upon the consummation of the Transactions. There is no liability for
distributions accrued but unpaid by Lightning Texas. Other than under the
Operating Agreement, dated as of February 11, 1998, between Frank Dotzler and
Ronald Arder, Jr., there are no options, warrants, calls, rights, commitments,
conversion privileges or preemptive or other rights or agreements outstanding to
purchase or otherwise acquire any Lightning Texas Interests or any securities or
debt convertible into or exchangeable for Lightning Texas Interests or
obligating Lightning Texas to grant, extend or enter into such option, warrant,
call, commitment, conversion privileges or preemptive or other right or
agreement. There are, to Lightning Texas' knowledge, no options, warrants,
conversion privileges or preemptive or other rights or agreements as to which
Lightning Texas is not a party involving the purchase or other acquisition of
any Lightning Texas Interests.
(b) Authorized and Outstanding Interests of Logistics;
Options. The authorized equity interests of Logistics consists solely of the
Logistics Interests which are issued and outstanding and held and owned, of
record and beneficially, solely by the Logistics Members. All issued and
outstanding Logistics Interests have been duly authorized and validly issued,
are fully paid and nonassessable, are not subject to any right of rescission and
have been offered and sold by Logistics in compliance with exemptions from the
registration requirements of the 1933 Act and state securities laws. There is no
liability for distributions accrued but unpaid by Logistics. No issued and
outstanding Logistics Interests are unvested or are subject to a repurchase
option, risk of forfeiture or other condition providing that such interests may
be forfeited or repurchased by Logistics upon any termination of the member's
employment or other relationship with Logistics under the terms of any
membership interest purchase agreement or other agreement with Logistics that
does not by its terms provide that such repurchase option, risk of forfeiture or
other condition lapses upon the consummation of the Transactions. There are no
options, warrants, calls, rights, commitments, conversion privileges or
preemptive or other rights or agreements outstanding to purchase or otherwise
acquire any Logistics Interests or any securities or debt convertible into or
exchangeable for Logistics Interests or obligating Logistics to grant, extend or
enter into such option, warrant, call, commitment, conversion privileges or
preemptive or other right or agreement. There are, to Logistics' knowledge, no
options, warrants, conversion privileges or preemptive or other rights or
agreements as to which Logistics is not a party involving the purchase or other
acquisition of any Logistics Interests.
(c) Authorized and Outstanding Interests of Papason;
Options. The authorized equity interests of Papason consists solely of the
Papason Interests which are issued and outstanding and held and owned, of record
and beneficially, solely by the Papason Members. All issued and outstanding
Papason Interests have been duly authorized and validly issued, are fully paid
and nonassessable, are not subject to any right of rescission and have been
offered and
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sold by Papason in compliance with exemptions from the registration requirements
of the 1933 Act and state securities laws. No issued and outstanding Papason
Interests are unvested or are subject to a repurchase option, risk of forfeiture
or other condition providing that such interests may be forfeited or repurchased
by Papason upon any termination of the member's employment or other relationship
with Papason under the terms of any membership interest purchase agreement or
other agreement with Papason that does not by its terms provide that such
repurchase option, risk of forfeiture or other condition lapses upon the
consummation of the Transactions. There is no liability for distributions
accrued but unpaid by Papason. There are no options, warrants, calls, rights,
commitments, conversion privileges or preemptive or other rights or agreements
outstanding to purchase or otherwise acquire any Papason Interests or any
securities or debt convertible into or exchangeable for Papason Interests or
obligating Papason to grant, extend or enter into such option, warrant, call,
commitment, conversion privileges or preemptive or other right or agreement.
There are, to Papason's knowledge, no options, warrants, conversion privileges
or preemptive or other rights or agreements as to which Papason is not a party
involving the purchase or other acquisition of any Papason Interests.
(d) Authorized and Outstanding Interests of 200 Scott
Street; Options. The authorized equity interests of 200 Scott Street consists
solely of the 200 Scott Street Interests which are issued and outstanding and
held and owned, of record and beneficially, solely by the 200 Scott Street
Members. All issued and outstanding 200 Scott Street Interests have been duly
authorized and validly issued, are fully paid and nonassessable, are not subject
to any right of rescission and have been offered and sold by 200 Scott Street in
compliance with exemptions from the registration requirements of the 1933 Act
and state securities laws. No issued and outstanding 200 Scott Street Interests
are unvested or are subject to a repurchase option, risk of forfeiture or other
condition providing that such interests may be forfeited or repurchased by 200
Scott Street upon any termination of the member's employment or other
relationship with 200 Scott Street under the terms of any membership interest
purchase agreement or other agreement with 200 Scott Street that does not by its
terms provide that such repurchase option, risk of forfeiture or other condition
lapses upon the consummation of the Transactions. There is no liability for
distributions accrued but unpaid by 200 Scott Street. There are no options,
warrants, calls, rights, commitments, conversion privileges or preemptive or
other rights or agreements outstanding to purchase or otherwise acquire any 200
Scott Street Interests or any securities or debt convertible into or
exchangeable for 200 Scott Street Interests or obligating 200 Scott Street to
grant, extend or enter into such option, warrant, call, commitment, conversion
privileges or preemptive or other right or agreement. There are, to 200 Scott
Street's knowledge, no options, warrants, conversion privileges or preemptive or
other rights or agreements as to which 200 Scott Street is not a party involving
the purchase or other acquisition of any 200 Scott Street Interests.
(e) Authorized and Outstanding Interests of 80 Scott Street;
Options. The authorized equity interests of 80 Scott Street consists solely of
the 80 Scott Street Interests which are issued and outstanding and held and
owned, of record and beneficially, solely by the 80 Scott Street Members. All
issued and outstanding 80 Scott Street Interests have been duly authorized and
validly issued, are fully paid and nonassessable, are not subject to any right
of rescission and have been offered and sold by 80 Scott Street in compliance
with exemptions from the registration requirements of the 1933 Act and state
securities laws. No issued and
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outstanding 80 Scott Street Interests are unvested or are subject to a
repurchase option, risk of forfeiture or other condition providing that such
interests may be forfeited or repurchased by 80 Scott Street upon any
termination of the member's employment or other relationship with 80 Scott
Street under the terms of any membership interest purchase agreement or other
agreement with 80 Scott Street that does not by its terms provide that such
repurchase option, risk of forfeiture or other condition lapses upon the
consummation of the Transactions. There is no liability for distributions
accrued but unpaid by 80 Scott Street. There are no options, warrants, calls,
rights, commitments, conversion privileges or preemptive or other rights or
agreements outstanding to purchase or otherwise acquire any 80 Scott Street
Interests or any securities or debt convertible into or exchangeable for 80
Scott Street Interests or obligating 80 Scott Street to grant, extend or enter
into such option, warrant, call, commitment, conversion privileges or preemptive
or other right or agreement. There are, to 80 Scott Street's knowledge, no
options, warrants, conversion privileges or preemptive or other rights or
agreements as to which 80 Scott Street is not a party involving the purchase or
other acquisition of any 80 Scott Street Interests.
(f) Authorized and Outstanding Interests of 230 Scott
Street; Options. The authorized equity interests of 230 Scott Street consists
solely of the 230 Scott Street Interests which are issued and outstanding and
held and owned, of record and beneficially, solely by the 230 Scott Street
Members. All issued and outstanding 230 Scott Street Interests have been duly
authorized and validly issued, are fully paid and nonassessable, are not subject
to any right of rescission and have been offered and sold by 230 Scott Street in
compliance with exemptions from the registration requirements of the 1933 Act
and state securities laws. No issued and outstanding 230 Scott Street Interests
are unvested or are subject to a repurchase option, risk of forfeiture or other
condition providing that such interests may be forfeited or repurchased by 230
Scott Street upon any termination of the member's employment or other
relationship with 230 Scott Street under the terms of any membership interest
purchase agreement or other agreement with 230 Scott Street that does not by its
terms provide that such repurchase option, risk of forfeiture or other condition
lapses upon the consummation of the Transactions. There is no liability for
distributions accrued but unpaid by 230 Scott Street. There are no options,
warrants, calls, rights, commitments, conversion privileges or preemptive or
other rights or agreements outstanding to purchase or otherwise acquire any 230
Scott Street Interests or any securities or debt convertible into or
exchangeable for 230 Scott Street Interests or obligating 230 Scott Street to
grant, extend or enter into such option, warrant, call, commitment, conversion
privileges or preemptive or other right or agreement. There are, to 230 Scott
Street's knowledge, no options, warrants, conversion privileges or preemptive or
other rights or agreements as to which 230 Scott Street is not a party involving
the purchase or other acquisition of any 230 Scott Street Interests.
(g) Authorized and Outstanding Interests of Lively; Options.
The authorized equity interests of Lively consists solely of the Lively
Interests which are issued and outstanding and held and owned, of record and
beneficially, solely by the Lively Members. All issued and outstanding Lively
Interests have been duly authorized and validly issued, are fully paid and
nonassessable, are not subject to any right of rescission and have been offered
and sold by Lively in compliance with exemptions from the registration
requirements of the 1933 Act and state securities laws. No issued and
outstanding Lively Interests are unvested or are subject to a repurchase option,
risk of forfeiture or other condition providing that such interests may be
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forfeited or repurchased by Lively upon any termination of the member's
employment or other relationship with Lively under the terms of any membership
interest purchase agreement or other agreement with Lively that does not by its
terms provide that such repurchase option, risk of forfeiture or other condition
lapses upon the consummation of the Transactions. There is no liability for
distributions accrued but unpaid by Lively. There are no options, warrants,
calls, rights, commitments, conversion privileges or preemptive or other rights
or agreements outstanding to purchase or otherwise acquire any Lively Interests
or any securities or debt convertible into or exchangeable for Lively Interests
or obligating Lively to grant, extend or enter into such option, warrant, call,
commitment, conversion privileges or preemptive or other right or agreement.
There are, to Lively's knowledge, no options, warrants, conversion privileges or
preemptive or other rights or agreements as to which Lively is not a party
involving the purchase or other acquisition of any Lively Interests.
4.3 No Violation of Organizational Documents or Existing
Agreements. Neither the execution and delivery of this Agreement and the Company
Ancillary Agreements, nor the consummation of the Transactions provided for
herein, will conflict with, or (with or without notice or lapse of time, or
both) result in a termination, breach, impairment or violation of, (a) any
provision of the Articles of Organization or Operating Agreement of Lightning
Texas, Logistics, Papason, 200 Scott Street, 80 Scott Street, 230 Scott Street
or Lively, as currently in effect, (b) any instrument, contract, agreement,
permit, mortgage or license to which Lightning Texas, Logistics, Papason, 200
Scott Street, 80 Scott Street, 230 Scott Street or Lively is a party or by which
Lightning Texas, Logistics, Papason, 200 Scott Street, 80 Scott Street, 230
Scott Street or Lively or any of their respective assets are bound, or (c) any
judgment, writ, decree, order, statute, rule or regulation applicable to
Lightning Texas, Logistics, Papason, 200 Scott Street, 80 Scott Street, 230
Scott Street or Lively or any of their respective assets or properties. The
Member Exchanges will not require the consent of any third party and will not
have any Material Adverse Effect upon any rights, licenses, franchises, leases
or agreements of Lightning Texas, Logistics, Papason, 200 Scott Street, 80 Scott
Street, 230 Scott Street or Lively or any of their respective Subsidiaries.
4.4 Company Documents. Each of Lightning Texas, Logistics, Papason,
200 Scott Street, 80 Scott Street, 230 Scott Street and Lively has provided to
Flextronics' counsel complete and correct copies of all documents identified in
the Disclosure Schedule to this Agreement (other than those documents
specifically identified in the Disclosure Schedule as not having been delivered)
including, without limitation, the following: (a) copies of its Articles of
Organization and Operating Agreement, each as currently in effect; (b) copies of
its minute book containing records of all proceedings, consents, actions and
meetings of its managers and members; (c) copies of its records reflecting all
issuances of membership interests and transfers; (d) copies of the Material
Agreements and all amendments thereto; and (e) all permits, orders and consents
issued by any regulatory agency material to the business of such Company, or any
securities of such Company, and all applications for such permits, orders and
consents.
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<PAGE> 41
5. REPRESENTATIONS AND WARRANTIES OF D.A.D., S.O.N. AND S.O.N. II
Except as set forth in the Disclosure Schedule attached hereto
(which, subject to Section 16.16, shall specifically reference the Sections of
this Agreement to which the specific items of disclosure therein constitute an
exception), and subject to the limitations of liability set forth in Section
15.2, D.A.D. (with respect only to D.A.D.), S.O.N. (with respect only to S.O.N.)
and S.O.N. II (with respect only to S.O.N. II) hereby represent and warrant
that:
5.1 Organization and Good Standing. Each of D.A.D., S.O.N. and
S.O.N. II is a general partnership duly formed, validly existing and in good
standing under the laws of the State of Illinois and the jurisdictions in which
its real properties are located, has the power and authority to own, operate,
lease and sell its properties and to carry on its business as now conducted and
as proposed to be conducted and is duly qualified to do business and is in good
standing in each jurisdiction where the character of its properties owned or
leased or the nature of its activities make such qualification necessary (each
such jurisdiction being listed on Schedule 5.1).
5.2 Capitalization.
(a) Authorized and Outstanding Interests of D.A.D.; Options.
The authorized equity interests of D.A.D. consists solely of the D.A.D.
Interests which are issued and outstanding and held and owned, of record and
beneficially, solely by the D.A.D. Partners. All issued and outstanding D.A.D.
Interests have been duly authorized and validly issued, are fully paid and
nonassessable, are not subject to any right of rescission and have been offered
and sold by D.A.D. in compliance with exemptions from the registration
requirements of the 1933 Act and state securities laws. No issued and
outstanding D.A.D. Interests are unvested or are subject to a repurchase option,
risk of forfeiture or other condition providing that such interests may be
forfeited or repurchased by D.A.D. upon any termination of the partner's
employment or other relationship with D.A.D. under the terms of any partnership
interest purchase agreement or other agreement with D.A.D. that does not by its
terms provide that such repurchase option, risk of forfeiture or other condition
lapses upon the consummation of the Transactions. There is no liability for
distributions accrued but unpaid by D.A.D. Other than under the Partnership
Agreement, dated as of May 24, 1988 among John M. Dotzler, Ronald W. Arder, Sr.
and Ralph L. DiSilvestro, as amended, there are no options, warrants, calls,
rights, commitments, conversion privileges or preemptive or other rights or
agreements outstanding to purchase or otherwise acquire any D.A.D. Interests or
any securities or debt convertible into or exchangeable for D.A.D. Interests or
obligating D.A.D. to grant, extend or enter into such option, warrant, call,
commitment, conversion privileges or preemptive or other right or agreement.
There are, to D.A.D.'s knowledge, no options, warrants, conversion privileges or
preemptive or other rights or agreements as to which D.A.D. is not a party
involving the purchase or other acquisition of any D.A.D. Interests.
(b) Authorized and Outstanding Interests of S.O.N.; Options.
The authorized equity interests of S.O.N. consists solely of the S.O.N.
Interests which are issued and
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<PAGE> 42
outstanding and held and owned, of record and beneficially, solely by the S.O.N.
Partners. All issued and outstanding S.O.N. Interests have been duly authorized
and validly issued, are fully paid and nonassessable, are not subject to any
right of rescission and have been offered and sold by S.O.N. in compliance with
exemptions from the registration requirements of the 1933 Act and state
securities laws. No issued and outstanding S.O.N. Interests are unvested or are
subject to a repurchase option, risk of forfeiture or other condition providing
that such interests may be forfeited or repurchased by S.O.N. upon any
termination of the partner's employment or other relationship with S.O.N. under
the terms of any partnership interest purchase agreement or other agreement with
S.O.N. that does not by its terms provide that such repurchase option, risk of
forfeiture or other condition lapses upon the consummation of the Transactions.
There is no liability for distributions accrued but unpaid by S.O.N. Other than
under the General Partnership Agreement, dated as of November 1991, between
Ronald W. Arder, Jr. and Frank J. Dotzler, there are no options, warrants,
calls, rights, commitments, conversion privileges or preemptive or other rights
or agreements outstanding to purchase or otherwise acquire any S.O.N. Interests
or any securities or debt convertible into or exchangeable for S.O.N. Interests
or obligating S.O.N. to grant, extend or enter into such option, warrant, call,
commitment, conversion privileges or preemptive or other right or agreement.
There are, to S.O.N.'s knowledge, no options, warrants, conversion privileges or
preemptive or other rights or agreements as to which S.O.N. is not a party
involving the purchase or other acquisition of any S.O.N. Interests.
(c) Authorized and Outstanding Interests of S.O.N. II;
Options. The authorized equity interests of S.O.N. II consists solely of the
S.O.N. II Interests which are issued and outstanding and held and owned, of
record and beneficially, solely by the S.O.N. II Partners. All issued and
outstanding S.O.N. II Interests have been duly authorized and validly issued,
are fully paid and nonassessable, are not subject to any right of rescission and
have been offered and sold by S.O.N. II in compliance with exemptions from the
registration requirements of the 1933 Act and state securities laws. No issued
and outstanding S.O.N. II Interests are unvested or are subject to a repurchase
option, risk of forfeiture or other condition providing that such interests may
be forfeited or repurchased by S.O.N. II upon any termination of the partner's
employment or other relationship with S.O.N. II under the terms of any
partnership interest purchase agreement or other agreement with S.O.N. II that
does not by its terms provide that such repurchase option, risk of forfeiture or
other condition lapses upon the consummation of the Transactions. There is no
liability for distributions accrued but unpaid by S.O.N. II. Other than under
the General Partnership Agreement, dated as of November 9, 1992, between Ronald
W. Arder, Jr. and Frank J. Dotzler, there are no options, warrants, calls,
rights, commitments, conversion privileges or preemptive or other rights or
agreements outstanding to purchase or otherwise acquire any S.O.N. II Interests
or any securities or debt convertible into or exchangeable for S.O.N. II
Interests or obligating S.O.N. II to grant, extend or enter into such option,
warrant, call, commitment, conversion privileges or preemptive or other right or
agreement. There are, to S.O.N. II's knowledge, no options, warrants, conversion
privileges or preemptive or other rights or agreements as to which S.O.N. II is
not a party involving the purchase or other acquisition of any S.O.N. II
Interests.
5.3 No Violation of Organizational Documents or Existing
Agreements. Neither the execution and delivery of this Agreement and the Company
Ancillary Agreements,
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<PAGE> 43
nor the consummation of the Transactions provided for herein, will conflict
with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of, (a) any provision of the
Partnership Agreement or other organizational documents of D.A.D., S.O.N. or
S.O.N. II, as currently in effect, (b) any instrument, contract, agreement,
permit, mortgage or license to which D.A.D., S.O.N. or S.O.N. II is a party or
by which D.A.D., S.O.N. or S.O.N. II or any of their respective assets are
bound, or (c) any judgment, writ, decree, order, statute, rule or regulation
applicable to D.A.D., S.O.N. or S.O.N. II or any of their respective assets or
properties. The Partner Exchanges will not require the consent of any third
party and will not have any Material Adverse Effect upon any rights, licenses,
franchises, leases or agreements of D.A.D., S.O.N. or S.O.N. II or any of their
respective Subsidiaries.
5.4 Company Documents. Each of D.A.D., S.O.N. and S.O.N. II has
provided to Flextronics' counsel complete and correct copies of all documents
identified in the Disclosure Schedule to this Agreement (other than those
documents specifically identified in the Disclosure Schedule as not having been
delivered) including, without limitation, the following: (a) copies of its
Partnership Agreement and other organizational documents, each as currently in
effect; (b) copies of its minute book containing records of all proceedings,
consents, actions and meetings of its partners; (c) copies of its records
reflecting all issuances of partnership interests and transfers; (d) copies of
the Material Agreements and all amendments thereto; and (e) all permits, orders
and consents issued by any regulatory agency material to the business of such
Company, or any securities of such Company, and all applications for such
permits, orders and consents.
6. REPRESENTATIONS AND WARRANTIES OF EMF AND LIGHTNING EUROPE
Except as set forth in the Disclosure Schedule attached hereto
(which, subject to Section 16.16, shall specifically reference the Sections of
this Agreement to which the specific items of disclosure therein constitute an
exception), and subject to the limitations of liability set forth in Section
15.2, EMF (with respect only to EMF) and Lightning Europe (with respect only to
Lightning Europe) hereby represent and warrant that:
6.1 Organization and Good Standing. Each of EMF and Lightning
Europe is a private limited company duly organized and validly existing under
the laws of Ireland, has the corporate power and authority to own, operate,
lease and sell its properties and to carry on its business as now conducted and
as proposed to be conducted and is duly qualified to do business in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities make such qualification necessary (each such jurisdiction
being listed on Schedule 6.1).
6.2 Capitalization.
(a) Authorized and Issued Share Capital of EMF; Options. EMF
has an authorized share capital of IRPound Sterling100 divided into 100 EMF
Ordinary Shares having a par value of IRPound Sterling1 each, of which six (6)
EMF Ordinary Shares are issued and are fully paid up as of the date of this
Agreement and will be issued and fully paid up as of the Closing Date. Each EMF
Shareholder is the sole registered and beneficial owner of the EMF Ordinary
Shares set forth
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<PAGE> 44
opposite his, her or its name on Schedule 6.2(a) and is absolutely entitled to
all dividends, proceeds, interests, voting and other rights payable thereon, in
respect thereof and attaching thereto. The EMF Ordinary Shares listed on
Schedule 6.2(a) represent the entire issued share capital of EMF. The vesting of
any equity securities of EMF will not accelerate or otherwise change as a result
of the execution and delivery of this Agreement or the consummation of the
Transactions or the occurrence of any subsequent event. The EMF Shareholders
hold the EMF Ordinary Shares free and clear of all encumbrances, liens,
agreements, voting trusts, proxies and other arrangements or restrictions of any
kind whatsoever (other than voting trusts and proxies delivered in connection
with this Agreement). None of the EMF Ordinary Shares are subject to any current
or pending claim or litigation as to their title or ownership. No encumbrance
exists or has been created or is in the course of being created over any of the
EMF Ordinary Shares or any rights attaching thereto. All of EMF's issued share
capital has been duly authorized and validly issued, is fully paid up, is not
subject to any right of rescission and has been offered, issued, sold and
delivered by EMF in compliance with all requirements of applicable laws. No EMF
Ordinary Shares are unvested or are subject to a repurchase option, risk of
forfeiture or other condition providing that such interests may be forfeited or
repurchased by EMF upon any termination of the shareholder's employment or other
relationship with EMF under the terms of any share purchase agreement or other
agreement with EMF that does not by its terms provide that such repurchase
option, risk of forfeiture or other condition lapses upon the consummation of
the Transactions. There is no liability for dividends accrued and unpaid by EMF.
There are no stock appreciation rights, options, warrants, stock bonuses, stock
awards, calls, rights, commitments, conversion privileges, stock purchase plans,
programs or arrangements or preemptive or other rights or agreements outstanding
to purchase or otherwise acquire any EMF Ordinary Shares or any securities or
debt convertible into or exchangeable for EMF Ordinary Shares or obligating EMF
to grant, extend or enter into any such option, warrant, call, commitment,
conversion privileges or preemptive or other right or agreement. There are no
voting agreements, registration rights, rights of first refusal, preemptive
rights, co-sale rights, or other restrictions applicable to any outstanding
securities of EMF.
(b) Authorized and Issued Share Capital of Lightning Europe;
Options. Lightning Europe has an authorized share capital of $100,000,000
divided into 100,000,000 Lightning Europe Ordinary Shares having a par value of
$1.00 each, of which four (4) Lightning Europe Ordinary Shares are issued and
are fully paid up as of the date of this Agreement and will be issued and fully
paid up as of the Closing Date. Each Lightning Europe Shareholder is the sole
registered and beneficial owner of the Lightning Europe Ordinary Shares set
forth opposite his, her or its name on Schedule 6.2(a) and is absolutely
entitled to all dividends, proceeds, interests, voting and other rights payable
thereon, in respect thereof and attaching thereto. The Lightning Europe Ordinary
Shares listed on Schedule 6.2(a) represent the entire issued share capital of
Lightning Europe. The vesting of any equity securities of Lightning Europe will
not accelerate or otherwise change as a result of the execution and delivery of
this Agreement or the consummation of the Transactions or the occurrence of any
subsequent event. The Lightning Europe Shareholders hold the Lightning Europe
Ordinary Shares free and clear of all encumbrances, liens, agreements, voting
trusts, proxies and other arrangements or restrictions of any kind whatsoever
(other than voting trusts and proxies delivered in connection with this
Agreement). None of the Lightning Europe Ordinary Shares are subject to any
current or
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<PAGE> 45
pending claim or litigation as to their title or ownership. No encumbrance
exists or has been created or is in the course of being created over any of the
Lightning Europe Ordinary Shares or any rights attaching thereto. All of
Lightning Europe's issued share capital has been duly authorized and validly
issued, is fully paid up, is not subject to any right of rescission and has been
offered, issued, sold and delivered by Lightning Europe in compliance with all
requirements of applicable laws. No Lightning Europe Ordinary Shares are
unvested or are subject to a repurchase option, risk of forfeiture or other
condition providing that such interests may be forfeited or repurchased by
Lightning Europe upon any termination of the shareholder's employment or other
relationship with Lightning Europe under the terms of any share purchase
agreement or other agreement with Lightning Europe that does not by its terms
provide that such repurchase option, risk of forfeiture or other condition
lapses upon the consummation of the Transactions. There is no liability for
dividends accrued and unpaid by Lightning Europe. There are no stock
appreciation rights, options, warrants, stock bonuses, stock awards, calls,
rights, commitments, conversion privileges, stock purchase plans, programs or
arrangements or preemptive or other rights or agreements outstanding to purchase
or otherwise acquire any Lightning Europe Ordinary Shares or any securities or
debt convertible into or exchangeable for Lightning Europe Ordinary Shares or
obligating Lightning Europe to grant, extend or enter into any such option,
warrant, call, commitment, conversion privileges or preemptive or other right or
agreement. There are no voting agreements, registration rights, rights of first
refusal, preemptive rights, co-sale rights, or other restrictions applicable to
any outstanding securities of Lightning Europe.
6.3 No Violation of Organizational Documents or Existing
Agreements. The copies of the Memorandum of Association and the Articles of
Association of EMF and Lightning Europe which have been provided to Flextronics
and its legal counsel on or prior to the date of this Agreement are true,
complete and accurate copies in all respects, annexing or embodying all
alterations which have been made up to the date of this Agreement. Neither the
execution and delivery of this Agreement and the Company Ancillary Agreements,
nor the consummation of the Transactions, will conflict with, or (with or
without notice or lapse of time, or both) result in a termination, breach,
impairment or violation of, (a) any provision of the Memorandum of Association
or the Articles of Association of EMF or Lightning Europe, as currently in
effect, (b) any instrument, contract, agreement, permit, mortgage, lease,
license or grant to which EMF or Lightning Europe is a party or by which EMF or
Lightning Europe or any of their respective assets are bound, or (c) any
judgment, writ, decree, order, statute, rule or regulation applicable to EMF or
Lightning Europe or any of their respective assets or properties. The
Transactions will not (i) require the consent of any third party (except with
regard to the provisions of the Irish Mergers Act and the receipt of the CG50A
Clearance Certificate), (ii) result in the creation, imposition, crystallization
or enforcement of any encumbrance whatsoever with respect to any of the assets
of EMF or Lightning Europe or any of their respective Subsidiaries, or (iii)
have any Material Adverse Effect upon such rights, licenses, franchises, leases
or agreements of EMF or Lightning Europe or any of their respective
Subsidiaries.
6.4 Company Documents. Each of EMF and Lightning Europe has
provided to Flextronics' counsel complete and correct copies of all documents
identified in the Disclosure Schedule to this Agreement (other than those
documents specifically identified in the Disclosure
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<PAGE> 46
Schedule as not having been delivered) including, without limitation, the
following: (a) copies of its Memorandum of Association and Articles of
Association (or any equivalent corporate governance documents), each as
currently in effect; (b) copies of its minute book containing records of all
resolutions and meetings of its directors, committees of the Board of Directors
and its shareholders; (c) copies of its register of members and register of
transfers and other records reflecting all share issuances and transfers and all
share option grants and agreements; (d) copies of the Material Agreements and
all amendments thereto; and (e) all permits, orders and consents issued by any
regulatory agency material to the business of EMF and Lightning Europe, or any
securities of EMF and Lightning Europe, and all applications for such permits,
orders and consents.
6.5 Taxes. Each of EMF and Lightning has properly operated the PAYE
system of deduction of tax and accounted to the Irish Revenue Commissioners for
tax chargeable on the remuneration of its employees and has properly operated
the Pay Related Social Insurance system and has accounted to the relevant tax
authority for all deductions made thereunder or provided in full for same in its
Financial Statements.
6.6 Employees.
(a) With respect to all retirement, death, superannuation
and pension benefits and schemes offered to present and former employees of EMF
and Lightning Europe or their respective Subsidiaries in Ireland (the "Pension
Schemes"), such Pension Schemes have been registered pursuant to the provisions
of the Irish Pensions Act, 1990. The Pension Schemes are exempt approved schemes
within the meaning of Sections 15 and 16 of the Irish Finance Act, 1972 and
comply with and have at all times been administered in accordance with all
applicable laws, regulations and requirements (including those of the Irish
Revenue Commissioners and of trust law) and neither EMF nor Lightning Europe is
aware of any reason why such exempt status should or could be withdrawn. Copies
of all of the Definitive and Interim Trust Deeds, Rules, Explanatory Booklets
and Announcements relating to the Pension Schemes have been delivered to
Flextronics or its legal counsel, and neither EMF nor Lightning Europe has any
obligation to any employee or former employee in relation to death in service,
pension, superannuation or analogous benefits save as provided in such Deeds,
Rules, Booklets and Announcements. All of the Pension Schemes are fully,
properly and adequately funded with respect to existing and prospective
liabilities having regard to current funding rates, assets and investment and
liability assumptions of the Pension Schemes, and no increase in funding rates
is proposed or has been recommended in relation to any of the Pension Schemes. A
copy of the latest reports and valuations of all of the Pension Schemes by the
actuary or actuaries advising thereon have been delivered to Flextronics and its
legal counsel, and since the dates of such reports all recommendations contained
therein have been fully implemented and no material change has occurred in the
assets, valuations, liabilities or funding rates of any of the Pension Schemes
or as to the assumptions according to which the same are calculated. All
benefits (other than any refund of members' contributions with interest where
appropriate) payable under the Pensions Schemes on the death of any person while
in employment to which the Pension Schemes relate are insured fully under a
policy with an insurance company of good repute, and there are no grounds on
which that company might avoid liability thereunder. Contributions to the
Pension
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Schemes are not paid in arrears, and all contributions and other amounts which
have fallen due for payment have been paid. No fees, charges or expenses
referable to the Pension Schemes for which EMF or Lightning Europe is or may
become liable (whether wholly or in part) have been incurred but not paid, and
neither EMF nor Lightning Europe has reimbursed any person who has paid any such
fees, costs or expenses if and to the extent that EMF or Lightning Europe is or
may become liable so to do. The trustees of the Pension Schemes are not engaged
in any litigation or arbitration proceedings, and no litigation or arbitration
proceedings are pending or threatened by or against the trustees of the Pension
Schemes and there are no facts likely to give rise to any litigation or
arbitration. EMF and Lightning Europe may terminate their respective liabilities
to contribute to the Pension Schemes without notice, without the consent of any
person and without further payment.
(b) Each of EMF and Lightning Europe and their respective
Subsidiaries has in relation to each of its employees (and so far as is relevant
to each of its former employees) complied in all material respects with (i) all
obligations imposed on it by any statutory provision or regulation and codes of
conduct relevant to the relations between it and its employees or any recognised
trade union and has maintained adequate and suitable records regarding the
service of each of its employees, and (ii) where applicable, the provisions of
the following Irish and European Community statutes and regulations: the
Redundancy Payments Acts, 1967 - 1991; the Minimum Notice and Terms of
Employment Acts, 1973 - 1991; the Organisation of Working Time Act, 1997; the
Anti-Discrimination (Pay) Act, 1974; the Protection of Young Persons
(Employment) Act, 1996; the Unfair Dismissals Act, 1977; the Protection of
Employment Act, 1977; the Employment Equality Act, 1977; the European
Communities (Safeguarding of Rights of Employees on Transfer of Undertakings)
Regulations 1980; the Maternity Protection of Employees Act, 1981 and 1991; the
Pensions Act, 1990; the European Communities (Protection of Workers) (Exposure
to Noise) Regulations, 1990; the Payment of Wages Act, 1991; the Worker
Protection (Regular Part Time Employees) Act, 1991; the Industrial Training
(Apprenticeship Levy) Act, 1994; the Terms of Employment (Information) Act,
1994; the Maternity Protection Act, 1994; and the Adoptive Leave Act, 1995.
7. REPRESENTATIONS AND WARRANTIES OF LIGHTNING METAL, LIGHTNING
EUROPE, PAPASON, 200 SCOTT STREET, 80 SCOTT STREET, 230 SCOTT
STREET, LIVELY, D.A.D., S.O.N. AND S.O.N. II
Except as set forth in the Disclosure Schedule attached hereto
(which, subject to Section 16.16, shall specifically reference the Sections of
this Agreement to which the specific items of disclosure therein constitute an
exception), and subject to the limitations of liability set forth in Section
15.2, Lightning Metal (with respect only to Lightning Metal and its owned Real
Properties notwithstanding references in this Section 7 to the "Real Property
Owners"), Lightning Europe (with respect only to Lightning Europe and its owned
Real Properties notwithstanding references in this Section 7 to the "Real
Property Owners"), Papason (with respect only to Papason and its owned Real
Properties notwithstanding references in this Section 7 to the "Real Property
Owners"), 200 Scott Street (with respect only to 200 Scott Street and its owned
Real Properties notwithstanding references in this Section 7 to the "Real
Property Owners"), 80 Scott Street (with respect only to 80 Scott Street and its
owned Real Properties
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notwithstanding references in this Section 7 to the "Real Property Owners"), 230
Scott Street (with respect only to 230 Scott Street and its owned Real
Properties notwithstanding references in this Section 7 to the "Real Property
Owners"), Lively (with respect only to Lively and its owned Real Properties
notwithstanding references in this Section 7 to the "Real Property Owners"),
D.A.D. (with respect only to D.A.D. and its owned Real Properties
notwithstanding references in this Section 7 to the "Real Property Owners"),
S.O.N. (with respect only to S.O.N. and its owned Real Properties
notwithstanding references in this Section 7 to the "Real Property Owners") and
S.O.N. II (with respect only to S.O.N. II and its owned Real Properties
notwithstanding references in this Section 7 to the "Real Property Owners")
(collectively, the "Real Property Owners") hereby represent and warrant that:
7.1 Joinder. The joinder of no person or entity other than the Real
Property Owners will be necessary to convey the owned Real Properties fully and
completely to Flextronics or such subsidiaries of Flextronics as may be
designated by Flextronics upon Closing.
7.2 Options and Rights of First Refusal. None of the Real Property
Owners, nor to knowledge of any such Real Property Owner, any predecessor in
title to such Real Property Owner, has granted any rights, options, rights of
first refusal or any other agreements of any kind, which are currently in
effect, to purchase or to otherwise acquire any of its owned Real Properties or
any part thereof or any interest therein, except the rights of Flextronics under
this Agreement. Without limiting the generality of the foregoing, except for any
right of first refusal granted to the Members or Partners of the Real Property
Owners to acquire membership or partnership interests in any of the Real
Property Owners as set forth in the applicable operating agreements or
partnership agreements, no shareholder, member or partner, as applicable, of any
Real Property Owner has any rights, options, rights of first refusal or any
other agreements of any kind to purchase or to otherwise acquire any of the
owned Real Properties or any part thereof or any interest therein.
7.3 Zoning. Except as disclosed in the Title Insurance Commitments,
each owned Real Property as it presently exists is zoned for use and operation
as it is currently used and operated without relying for compliance upon a
variance or a preexisting, nonconforming use. No application for variance or
change in zoning is pending. No application for change in use or occupancy of
any owned Real Property is pending.
7.4 No Violation of Restrictive Covenants. Except as disclosed in
the Title Insurance Commitments, none of the owned Real Properties or the use
thereof violates any restriction, condition or agreement contained in any
easement, restrictive covenant or similar instrument or agreement affecting such
owned Real Property, or any part thereof.
7.5 Taxes. Except as disclosed in the Title Insurance Commitments,
no part of any owned Real Property has been assessed for real estate tax
purposes at a rate or under a classification that would result in an increase in
the tax rate for such owned Real Property upon the consummation of the
Transactions or a change in use of such owned Real Property. Except as disclosed
in the Title Insurance Commitments, no part of any owned Real Property has been
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the subject of, or had the benefit, of tax abatements that would (a) be lost to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics, or (b) require Flextronics or such subsidiaries of Flextronics as
may be designated by Flextronics to repay to any taxing authority all or a
portion of such abated taxes upon transfer of such owned Real Property to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics. Except as disclosed in the Title Insurance Commitments, none of the
Real Property Owners has received notice of any proposed change in the valuation
of any of its owned Real Properties for real estate taxes from that assessed for
the current assessment period, nor does any Real Property Owner have any other
knowledge or information of any action or proceeding designed to levy any
special assessment against any of its owned Real Properties. Except as disclosed
in the Title Insurance Commitments, none of the Real Property Owners has
received notice of any possible future improvements by a governmental
instrumentality, any part of the cost of which would or might be assessed
against any of its owned Real Properties, or of any contemplated future
assessments of any kind. Except as disclosed in the Title Insurance Commitments,
no action is pending to seek an increase in or reduction of real estate taxes.
7.6 Insurance. Except as disclosed in the Title Insurance
Commitments, none of the Real Property Owners has received, or has any other
knowledge or information of, any notice from any insurance company or board of
fire underwriters requesting the performance of any work or alteration with
respect to any of its owned Real Properties, or requiring an increase in the
insurance rates applicable to any of its owned Real Properties. The owned Real
Properties comply, to the knowledge of the Real Property Owners, with the
requirements of all insurance carriers providing insurance therefor.
7.7 Material Changes. Except as disclosed in the Title Insurance
Commitments, none of the Real Property Owners has received notice of, or has any
other knowledge or information of, any pending or contemplated change in any
statute, law, rule, regulation or private restriction applicable to any of its
owned Real Properties, any pending or threatened judicial or administrative
action, any action pending or threatened by adjacent landowners or other
persons, or any natural or artificial condition upon or affecting any of its
owned Real Properties, or any part thereof, any of which would result in any
material change in the condition of any of such owned Real Properties, or any
part thereof, or in any way limit or impede the operations currently conducted
upon any such owned Real Properties.
7.8 Condition of the Real Properties. The owned Real Properties
are, and as of the Closing will be, in good repair, condition and working order,
free from latent and apparent defects, normal wear and tear excepted. Except as
disclosed in the Title Insurance Commitments, all painting, repairs,
alterations, replacements, maintenance and other work, structural and
non-structural, ordinary and extraordinary, that may be necessary to operate and
use any of the owned Real Properties as currently operated and used, or to lease
any of the owned Real Properties, have been made. Each Real Property Owner has
disclosed to Flextronics in writing any and all facts and circumstances that
materially and adversely affect any of its owned Real Properties and its
operation, or any portion thereof. Without limiting the generality of the
foregoing, except as disclosed in the Title Insurance Commitments, the roofs,
walls and
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foundations of the buildings on the owned Real Properties are free from leaks
and seepage of moisture and are in sound structural condition.
7.9 Utilities. Except as disclosed in the Title Insurance
Commitments, the water, sewer, heating, electrical, plumbing, air conditioning
and other systems in or on the owned Real Properties are, and as of the Closing
will be, in good repair, condition and working order. Except as disclosed in the
Title Insurance Commitments, all water, sewer, gas (if any), electric, telephone
and drainage facilities, and other utilities required by law for the normal and
proper operation of the businesses currently conducted upon the owned Real
Properties, are installed to the property line and are connected with valid
permits, are in good repair, condition and working order, and are adequate to
serve the businesses currently conducted upon the owned Real Properties and, to
the knowledge of the Real Property Owners, to permit full compliance with all
requirements of law and the Leases (as defined in Section 7.13). All permits and
connection fees are fully paid, and, except as disclosed in the Title Insurance
Commitments, no action is necessary on the part of Flextronics, in connection
with the consummation of the Transactions, to retain any such permits. Except as
disclosed in the Title Insurance Commitments, all utilities serving the owned
Real Properties enter such owned Real Property through currently effective
public or private easements. To the knowledge of the Real Property Owners, no
fact or condition exists which would result in the termination of such utilities
services to the owned Real Properties.
7.10 Access. The owned Real Properties have direct access to all
streets and roadways abutting such owned Real Property, all of which are
completed and, to the knowledge of the Real Property Owners, dedicated streets
and roadways that have been accepted for public maintenance by the appropriate
governmental instrumentality. There is vehicular and pedestrian ingress to and
egress from the owned Real Properties that is adequate for the normal and proper
operation of the businesses currently conducted upon the owned Real Properties.
Except as disclosed in the Title Insurance Commitments, no fact or condition
exists which would result in the termination of such ingress and egress.
7.11 Flood Hazards. Except as disclosed in the Title Insurance
Commitments, no portion of the owned Real Properties is situated in an area
designated by the Secretary of the United States Department of Housing and Urban
Development (or by any other federal, state, municipal or other governmental
instrumentality) as having special flood or mudslide hazards.
7.12 Independence. Except as disclosed in the Title Insurance
Commitments, each of the owned Real Properties is an independent unit which does
not now rely on any facilities (other than facilities of municipalities or
public utilities) located on any property that is not part of such owned Real
Property to fulfill any municipal or other governmental requirement, or for the
furnishing to such owned Real Property of any essential building systems or
utilities (including drainage facilities, catch basins and retention ponds).
Except as disclosed in the Title Insurance Commitments, no other building or
other property that is not part of an owned Real Property relies upon any part
of such owned Real Property to fulfill any municipal or other governmental
requirement, or to provide any essential building systems or utilities. Except
as
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disclosed in the Title Insurance Commitments, without limiting the generality of
the foregoing, no reciprocal easement agreements affect the owned Real
Properties.
7.13 Leases. The leases affecting the owned Real Properties (the
"Leases") have been furnished to Flextronics, are in full force and effect and
have not been amended, modified or supplemented in any way that has not been
disclosed to Flextronics in writing. The Leases constitute all written and oral
agreements of any kind for the leasing, rental or occupancy of any portion of
the owned Real Properties. Each Real Property Owner has performed and complied
with all its obligations under the Leases as and when thereby required, and
there exists no fact or circumstance that with or without notice or the passage
of time, or both, could constitute a default of the landlord or lessor under any
Lease, or entitle any tenant thereunder to offsets or defenses against the
prompt, current payment of rent thereunder. Except as expressly disclosed to
Flextronics in writing, no rental under any Lease has been collected in advance
of the current month, and except as so disclosed to Flextronics in writing,
there are no concessions, bonuses, free months' rental, rebates or other matters
affecting the rental for any tenant thereunder. The Real Property Owners are the
owners of the entire lessors' interests in and to the Leases, and, except as
disclosed in the Title Insurance Commitments, none of the Leases or the rentals
or other sums payable thereunder has been assigned or otherwise encumbered.
There are no statutes, laws, rules, regulations or agreements in effect (other
than the Leases) which restrict in any way the rental that may be charged to
tenants of any portion of the owned Real Properties. Except as disclosed in the
Title Insurance Commitments, no tenant under any of the Leases is in default
thereunder, nor is there any fact or circumstance that with or without notice or
the passage of time, or both, would constitute a default of any tenant under any
Lease. Except as disclosed in the Title Insurance Commitments, no tenant under
any Lease or any other person or entity has any option to renew its lease or any
other right to possess or acquire any interest in any part of the owned Real
Properties. All tenants under the Leases have accepted, and are in actual
occupancy of, their leased premises. Except as disclosed in the Title Insurance
Commitments, the Real Property Owners have satisfied all of their respective
obligations as landlord under the Leases that are conditions to the obligations
of the tenants thereunder to pay rent (including, but not limited to, completion
of leasehold improvements), and each Real Property Owner as landlord has no
obligation continuing after the Closing to perform any maintenance or make any
improvements except as set forth in the Leases. Flextronics will have no
obligation to pay any commissions or referral fees with respect to any lease or
other rental agreement involving the Real Properties that is in effect on the
Closing Date.
7.14 Irish Real Properties. With respect to each of the owned Real
Properties located in Ireland, Lightning Europe hereby represents and warrants
that (a) Lightning Europe is the legal and beneficial owner thereof, (b)
Lightning Europe has good and marketable title thereto, free and clear of all
conditions, exceptions, reservations, encumbrances and liens other than
Permitted Liens, (c) Lightning Europe thereof is in sole and undisputed
occupation thereof, (d) Lightning Europe has in its possession or under its
control all deeds and documents necessary to prove title thereto and all such
deeds and documents are properly stamped and registered, (e) such owned Real
Properties are free from any caution, inhibition or notice and no matter exists
which is capable of registration against any of them, (f) there is no
resolution, proposal, scheme or order, whether formerly adopted or not, for the
compulsory acquisition of the whole or
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any part of such owned Real Properties, (g) where the title to such owned Real
Properties or any part thereof is unregistered, no event has occurred in
consequence of which compulsory registration should have been effected under the
provision of the Registration of Title Act, 1964, (h) where the title to such
owned Real Properties or any part thereof is registered in the Land Registry,
Lightning Europe is registered with an absolute freehold title thereof and none
of the burdens specified in Sections 59, 72 and 73 of the Registration of Title
Act, 1964 affect the same, and (i) no part of such owned Real Properties is or
has been affected by the provisions of the Family Home Protection Act, 1976.
8. REPRESENTATIONS AND WARRANTIES OF FLEXTRONICS AND THE MERGER SUBS
Flextronics and each Merger Sub hereby represent and warrant as
follows:
8.1 Organization. Flextronics is a company duly organized and
validly existing under the laws of Singapore and has the corporate power and
authority to own, operate and lease its properties and to carry on its business
as now conducted and as proposed to be conducted, and is qualified to do
business in each jurisdiction in which such qualification is required. Each
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to own, operate and lease its properties and to carry on its business
as now conducted and as proposed to be conducted. All of the outstanding shares
of capital stock of each Merger Sub will, as of the Effective Time, be owned by
a direct subsidiary of Flextronics.
8.2 Power, Authorization and Validity.
(a) Flextronics has the right, power, legal capacity and
authority to enter into and perform its obligations under this Agreement and all
agreements to which Flextronics is or will be a party that are required to be
executed pursuant to this Agreement (the "Flextronics Ancillary Agreements").
The execution, delivery and performance of this Agreement and the Flextronics
Ancillary Agreements have been duly and validly approved and authorized by all
necessary corporate and shareholder action on the part of Flextronics. Each
Merger Sub has the right, power, legal capacity and authority to enter into and
perform its obligations under this Agreement and all agreements to which such
Merger Sub is or will be a party that are required to be executed pursuant to
this Agreement (the "Merger Subs Ancillary Agreements"). The execution, delivery
and performance of this Agreement and the Merger Subs Ancillary Agreements have
been duly and validly approved and authorized by all necessary corporate and
shareholder action on the part of each Merger Sub.
(b) No filing, authorization, consent or approval,
governmental or otherwise, is necessary to enable Flextronics and the Merger
Subs to enter into, and to perform their respective obligations under, this
Agreement, the Flextronics Ancillary Agreements or the Merger Subs Ancillary
Agreements, except for: (i) the filing of the Plans of Merger with the Secretary
of State of the State of Illinois; (ii) such post-closing filings as may be
required to comply with Singapore, federal and state securities laws; (iii) such
filings and notifications as may be necessary under the HSR Act and the
expiration of applicable waiting periods under the
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HSR Act; (iv) the filing with the SEC and the effectiveness of any registration
statement under the 1933 Act that is required to be filed by Flextronics after
the Effective Time pursuant to the terms and conditions of this Agreement or the
Registration Rights Agreement; and (v) such filings and recordings as may be
necessary to effectuate the conveyance of the Real Properties owned by any of
the Companies to Flextronics or such subsidiaries as may be designated by
Flextronics as contemplated by this Agreement.
(c) This Agreement and the Flextronics Ancillary Agreements
are, or when executed by Flextronics, will be, valid and binding obligations of
Flextronics enforceable in accordance with their respective terms, subject only
to the effect, if any, of (i) applicable bankruptcy and other similar laws
affecting the rights of creditors generally, (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies, and (iii)
the enforceability of provisions requiring indemnification in connection with
the offering, issuance or sale of securities. This Agreement and the Merger Subs
Ancillary Agreements are, or when executed by each applicable Merger Sub, will
be, valid and binding obligations of each applicable Merger Sub enforceable in
accordance with their respective terms, subject only to the effect, if any, of
(i) applicable bankruptcy and other similar laws affecting the rights of
creditors generally, (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies, and (iii) the enforceability of
provisions requiring indemnification in connection with the offering, issuance
or sale of securities; provided, however, that the Merger Subs Ancillary
Agreements will not be effective until the later of the Effective Time or the
date provided for therein.
8.3 No Violation of Articles or Existing Agreements. Neither the
execution and delivery of this Agreement nor any Flextronics Ancillary
Agreement, nor the consummation of the transactions contemplated herein or
therein, will conflict with or (with or without notice or lapse of time, or
both) result in a termination, breach, impairment or violation of (a) any
provision of the Memorandum and Articles of Association of Flextronics, as
currently in effect, (b) in any material respect, any material agreement,
instrument, permit, mortgage, license or contract to which Flextronics is a
party or by which Flextronics is bound, or (c) except as would not have a
Material Adverse Effect on Flextronics, any national, provincial, local or
foreign judgment, writ, decree, order, statute, rule or regulation applicable to
Flextronics or its assets or properties. Neither the execution and delivery of
this Agreement nor any Merger Subs Ancillary Agreement, nor the consummation of
the transactions contemplated herein or therein, will conflict with or (with or
without notice or lapse of time, or both) result in a termination, breach,
impairment or violation of (a) any provision of the Certificate of Incorporation
or Bylaws of any Merger Sub, as currently in effect, or (b) except as would not
have a Material Adverse Effect on any Merger Sub, any national, provincial,
local or foreign judgment, writ, decree, order, statute, rule or regulation
applicable to any Merger Sub or its assets or properties.
8.4 Litigation. Except as set forth in the Flextronics Disclosure
Package (as defined in Section 8.6), there is no action, claim, proceeding or
investigation pending or, to Flextronics' knowledge, threatened against
Flextronics or any of its Subsidiaries before any court or administrative agency
that, if determined adversely to Flextronics, may reasonably be expected to have
a Material Adverse Effect on Flextronics.
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8.5 Absence of Certain Changes. Since March 31, 2000, there has not
been any change in the financial condition, properties, assets, liabilities,
business or results of operations of Flextronics, which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business consistent with past practice, has had or can reasonably be
expected to have a Material Adverse Effect on Flextronics.
8.6 Disclosure. Flextronics has furnished to each of the Companies
and to each Shareholder and each Member an investor disclosure package
consisting of Flextronics' annual report on Form 10-K for the fiscal year ending
March 31, 2000, all Forms 10-Q and 8-K filed by Flextronics with the SEC since
March 31, 2000 and up to the date of this Agreement and all proxy materials
distributed to Flextronics' shareholders since March 31, 2000 and up to the date
of this Agreement, in each case excluding any exhibits or attachments thereto
(the "Flextronics Disclosure Package"). The documents in the Flextronics
Disclosure Package (a) conformed, as of the dates of their respective filing
with the SEC, in all material respects, to the requirements of the 1933 Act and
the Securities Exchange Act of 1934, as amended, and (b) when taken together, do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of Flextronics, including the notes thereto, included in
the documents in the Flextronics Disclosure Package fairly and accurately
represented in all material respects the consolidated financial condition of
Flextronics as of their respective dates and Flextronics' consolidated results
of operations for the respective periods specified therein conformed with GAAP
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Forms 10-Q, as permitted by Form
10-Q of the SEC and subject, in the case of unaudited statements, to normal,
immaterial year-end audit adjustments).
8.7 Flextronics Ordinary Shares. The Flextronics Ordinary Shares to
be allotted and issued pursuant to this Agreement will be duly authorized, and
when the share certificates in respect of such Flextronics Ordinary Shares are
issued in accordance with the terms hereof, will be validly issued and credited
as fully paid-up. The Flextronics Ordinary Shares to be allotted and issued
pursuant to this Agreement, when issued, will be eligible for trading on the
Nasdaq National Market.
9. POST-CLOSING COVENANTS OF THE SHAREHOLDERS, THE MEMBERS AND THE
PARTNERS
9.1 Stamping. Prior to the stamping of the share transfers in
respect of the Irish Exchanges, the EMF Shareholders and the Lightning Europe
Shareholders shall cooperate in any manner reasonably requested by Flextronics
for the convening of any general meetings required by Flextronics, including the
completion of proxy forms on a timely basis and generally shall act in all
respects as the nominee of and in accordance with the reasonable directions of
Flextronics.
9.2 Notice Under Section 53. The EMF Shareholders and the Lightning
Europe Shareholders shall cooperate with Flextronics in providing to EMF,
Lightning Europe
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and any relevant Subsidiaries thereof, within five (5) business days after the
Closing Date, such notice as may be required by Section 53 of the Companies Act,
1990.
9.3 Tax Matters. If any of the Companies or any Subsidiary thereof
becomes subject to an audit by the Irish Revenue Commissioners, the Internal
Revenue Service or any other taxing agency or authority for tax years or periods
prior to the Closing, the Shareholders, the Members and the Partners, as
applicable, will use all reasonable efforts to resolve all such audits in a
manner consistent with the intentions of the parties as expressed in this
Agreement.
10. POST-CLOSING COVENANTS OF FLEXTRONICS
10.1 Employee Matters. Following the Effective Time, any employee
of any Company or Subsidiary thereof will be entitled to life, health and
disability insurance, paid vacation and other welfare and retirement benefits
offered or made available to employees of Flextronics and commensurate with his
or her position in accordance with Flextronics' standard policies in effect from
time to time and on terms no less favorable than those offered by Flextronics to
employees of Flextronics in accordance with the eligibility criteria thereof.
Any employee of any Company or Subsidiary thereof shall receive full credit for
years of service with such Company or Subsidiary thereof prior to the Effective
Time for purposes of determining eligibility to participate, vesting and level
of benefit accruals under any applicable Flextronics employee benefit plan.
10.2 Pooling of Interests Accounting. Flextronics shall use all
reasonable efforts to cause the business combination to be effected by the
Transactions to be accounted for as a "pooling of interests." Flextronics shall
use all reasonable efforts to cause its affiliates not to take any action that
would adversely affect the ability of Flextronics to account for the business
combination to be effected by the Transactions as a "pooling of interests."
11. CLOSING MATTERS
11.1 The Closing. The closing of the transactions provided for
herein (the "Closing") will take place at the offices of Fenwick & West LLP, Two
Palo Alto Square, Palo Alto, California 94306 on August 31, 2000 at 10:00 a.m.,
Pacific Time or at such other place, time and date as the Companies and
Flextronics may mutually select (the "Closing Date"). Immediately after the
Closing, the Certificates of Merger and the Plans of Merger and such officers'
certificates or other documents as may be required to effectuate the Merger will
be filed in the office of the Secretary of State of the States of Delaware and
Illinois, respectively. Accordingly, the Merger will become effective at the
Effective Time.
11.2 Conversion or Transfer of Shares and Interests.
(a) Immediately prior to the Effective Time, each holder of
Lightning Europe Ordinary Shares will surrender the certificates for such shares
to Flextronics for cancellation and Flextronics will issue and deliver to such
surrendering holder share certificates covering the number of Flextronics
Ordinary Shares as determined pursuant to Section 1.1, subject to Section 1.2,
and such Flextronics Ordinary Shares will be registered in the name of the
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holder of such certificate (the "Lightning Europe Exchange"); provided, however,
that it shall be a condition to the Lightning Europe Exchange that either (i)
each Lightning Europe Shareholder shall have received a certificate issued by
the Irish Revenue Commissioners confirming that no amounts are required to be
withheld or paid to the Irish Revenue Commissioners in connection with the
Lightning Europe Exchange or (ii) each Lightning Europe Shareholder (other than
Lightning Metal) and the Lightning Metal Shareholders (on behalf of Lightning
Metal) shall have delivered to William Fry Solicitors, Irish counsel to
Flextronics, cash in an amount necessary to pay any withholding taxes payable by
Flextronics in respect of the Lightning Europe Exchange for delivery by William
Fry Solicitors to the Irish Revenue Commissioners on Flextronics' behalf.
(b) Immediately after Flextronics issues and delivers share
certificates for Flextronics Ordinary Shares as specified in Section 11.2(a),
Lightning Metal shall distribute any such Flextronics Ordinary Shares received
by it pursuant to Section 11.2(a) to the Lightning Metal Shareholders, together
with the related rights to receive the Lightning Europe Hold-Back Shares
otherwise issuable to Lightning Metal pursuant to this Agreement and the rights
of Lightning Metal under Section 15, and each such Lightning Metal Shareholder
shall assume its pro rata share of the indemnification obligations of Lightning
Metal under Section 15 (the "Lightning Europe Distribution"); provided, however,
that it shall be a condition to the Lightning Europe Distribution that such
Lightning Metal Shareholders shall have paid any amount required to be withheld
or paid in connection with the Lightning Europe Distribution or shall have
received and delivered to Flextronics certificates confirming that no such
amounts are required to be paid.
(c) As of the Effective Time, all shares of Lightning Metal
Common Stock, Coating Common Stock and Lightning Tool Common Stock that are
outstanding immediately prior thereto will, by virtue of the Merger and without
further action, cease to exist, and all such shares or interests, as the case
may be, will be automatically converted into the right to receive from
Flextronics, and shall be exchangeable for, the number of Flextronics Ordinary
Shares determined as set forth in Section 1.1, subject to Section 1.2.
(d) Exchange of Certificates.
(i) At the Effective Time, each holder of shares of
Lightning Metal Common Stock, Coating Common Stock and Lightning Tool Common
Stock will surrender the certificates for such shares to Flextronics for
cancellation and Flextronics will issue and deliver to such surrendering holder
share certificates covering the number of Flextronics Ordinary Shares as
determined pursuant to Section 1.1, subject to Section 1.2, and such Flextronics
Ordinary Shares will be registered in the name of the holder of such
certificate; provided, however, that it shall be a condition to the foregoing
exchanges that the Lightning Europe Exchange and the Lightning Europe
Distribution shall have occurred.
(ii) At the Effective Time, each holder of EMF Ordinary
Shares and Lightning Europe Ordinary Shares will surrender the certificates for
such shares to Flextronics for cancellation and Flextronics will issue and
deliver to such surrendering holder
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share certificates covering the number of Flextronics Ordinary Shares as
determined pursuant to Section 1.1, subject to Section 1.2, and such Flextronics
Ordinary Shares will be registered in the name of the holder of such
certificate; provided, however, that it shall be a condition to the foregoing
exchanges that the Lightning Europe Exchange and the Lightning Europe
Distribution shall have occurred.
(iii) At the Effective Time, each holder of Lightning
Texas Interests, Logistics Interests, Papason Interests, 200 Scott Street
Interests, 80 Scott Street Interests, 230 Scott Street Interests and Lively
Interests will surrender the certificates for such interests to Flextronics for
transfer and Flextronics will issue and deliver to such surrendering holder
share certificates covering the number of Flextronics Ordinary Shares as
determined pursuant to Section 1.1, subject to Section 1.2, and such Flextronics
Ordinary Shares will be registered in the name of the holder of such
certificate; provided, however, that it shall be a condition to the foregoing
exchanges that the Lightning Europe Exchange and the Lightning Europe
Distribution shall have occurred.
(iv) At the Effective Time, each holder of D.A.D.
Interests, S.O.N. Interests and S.O.N. II Interests will surrender the
certificates for such interests to Flextronics for transfer and Flextronics will
issue and deliver to such surrendering holder share certificates covering the
number of Flextronics Ordinary Shares as determined pursuant to Section 1.1,
subject to Section 1.2, and such Flextronics Ordinary Shares will be registered
in the name of the holder of such certificate; provided, however, that it shall
be a condition to the foregoing exchanges that the Lightning Europe Exchange and
the Lightning Europe Distribution shall have occurred.
(e) All share certificates covering the number of
Flextronics Ordinary Shares, as determined pursuant to Section 1.1, subject to
Section 1.2 (and, if applicable, cash in lieu of fractional shares), to be
delivered upon the surrender of certificates in accordance with the terms hereof
will be delivered to the registered holder of such certificate. After the
Effective Time, there will be no further registration of transfers of the shares
of capital stock or membership interests on the transfer books of any Company.
(f) Subject to Section 11.2(e), until certificates
representing Lightning Metal Common Stock, Coating Common Stock, Lightning Tool
Common Stock, EMF Ordinary Shares, Lightning Europe Ordinary Shares, Lightning
Texas Interests, Logistics Interests, Papason Interests, 200 Scott Street
Interests, 80 Scott Street Interests, 230 Scott Street Interests, Lively
Interests, D.A.D. Interests, S.O.N. Interests, or S.O.N. II Interests
outstanding prior to the Merger, are surrendered pursuant to Sections 11.2(a)
and 11.2(d), such certificates will be deemed, for all purposes, to evidence
only ownership of (i) the right to receive share certificates covering the
number of Flextronics Ordinary Shares for which the Lightning Metal Common
Stock, Coating Common Stock, Lightning Tool Common Stock, EMF Ordinary Shares,
Lightning Europe Ordinary Shares, Lightning Texas Interests, Logistics
Interests, Papason Interests, 200 Scott Street Interests, 80 Scott Street
Interests, 230 Scott Street Interests, Lively Interests, D.A.D. Interests,
S.O.N. Interests, or S.O.N. II Interests are to be exchanged, and (ii) if
applicable, cash in lieu of fractional shares.
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11.3 Closing Deliveries. At the Closing, the Shareholders, the
Members and the Partners shall deliver to Flextronics and/or its nominees:
(a) the original of any power of attorney under which any
document required to be delivered to Flextronics under this Agreement has been
executed; and
(b) the share register, seal, share certificate books and
certificate of incorporation (including any certificates of change of name), as
applicable, of each Company and each Subsidiary thereof.
11.4 Irish Closing Deliveries.
(a) At the Closing, each holder of EMF Ordinary Shares and
Lightning Europe Ordinary Shares shall deliver to Flextronics and/or its
nominees:
(i) duly executed share transfers in respect of such
shares (and of all the issued shares not registered in the name thereof) and
surrender the relevant share certificates (or in the case of any share
certificates found to be missing, an express indemnity, in a form satisfactory
to Flextronics);
(ii) in relation to EMF and Lightning Europe, the
statutory books, records and registers (duly written up-to-date), the title
deeds to the owned Real Properties located in Ireland and all documents,
contracts, licenses, agreements, insurance policies, records, papers,
correspondence, files and books of trading and account;
(iii) a letter from any third party who provided
financial facilities to EMF or Lightning Europe granting all such consents,
clearance or releases which may be necessary in relation to the Transactions;
(iv) the CG50A Clearance Certificate;
(v) copies of all bank mandates of EMF and Lightning
Europe;
(vi) letters of resignation under seal from the
directors of EMF and Lightning Europe resigning with effect from termination of
the meeting of the board of directors thereof, containing an acknowledgement
that each has no claim against any Company in respect of breach of contract,
compensation for loss of office or otherwise, howsoever arising;
(vii) the written resignation of the auditors of EMF
and Lightning Europe containing confirmation in accordance with the provisions
of Section 185(2)(a) of the Companies Act, 1990 that there are no circumstances
connected with their resignation which ought to be brought to the attention of
the members or creditors and incorporating an acknowledgement that they will
have no claim in respect of compensation for loss of office or on any account
whatsoever, including fees for services rendered; and
(b) At the Closing, the EMF Shareholders and the Lightning
Europe Shareholders shall procure:
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(i) the discharge of all monies owing to EMF and
Lightning Europe (whether then due for payment or not) by the EMF Shareholders
and the Lightning Europe Shareholders or the directors thereof or by any
Connected Person (within the meaning of Section 26 of the Companies Act, 1990)
other than monies owed by any of the Companies;
(ii) except for Lightning Metal, the release of any and
all guarantees, indemnities or security given by the EMF Shareholders or the
Lightning Europe Shareholders or the directors of EMF or Lightning Europe or any
Subsidiary thereof or any of them or any other person or entity;
(iii) resolutions approved at meetings of the board of
directors of EMF and Lightning Europe (and meetings of the board of directors of
any other Company) and which, inter alia: (A) all transfers of EMF Ordinary
Shares and Lightning Europe Ordinary Shares are approved (subject only to
stamping); (B) such persons as Flextronics may nominate are appointed as
directors, secretary, auditors and solicitors thereof with immediate effect; (C)
all existing mandates for the operation of bank accounts of EMF and Lightning
Europe are revoked, and new mandates are issued giving authority to such persons
as Flextronics may nominate; (D) the resignations of all relevant directors are
accepted; (E) the registered office of EMF and Lightning Europe is changed to
Fitzwilton House, Wilton Place, Dublin 2; and (F) the resignation of the
auditors of each of EMF and Lightning Europe is accepted.
(c) At the Closing, the EMF Shareholders and the Lightning
Europe Shareholders shall:
(i) assign and/or deliver any asset whatsoever
(including bank balances, agencies or appointments) in their name or in the name
of a company or companies controlled by them which asset is related to the
business of EMF or Lightning Europe carried on at the Closing Date; and
(ii) irrevocably waive any claims, outstanding at the
Closing Date, against EMF or Lightning Europe or any of their respective agents
or employees.
11.5 Other Closing Matters. The Shareholders, the Members and the
Partners shall procure:
(a) the payment of any monies owing to the Companies or any
Subsidiary of any Company (whether then due for payment or not) by the
Shareholders, the Members, the Partners or the directors thereof or any related
party thereto; and
(b) the release of any and all guarantees or indemnities or
security given by any Company or any Subsidiary thereof for or on behalf of any
Shareholder, Member, Partner or directors of any Company or any Subsidiary
thereof or any other person.
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12. CONDITIONS TO OBLIGATIONS OF THE COMPANIES, THE SHAREHOLDERS, THE
MEMBERS AND THE PARTNERS
The obligations of each of the Companies, the Shareholders, the
Members and the Partners hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions (any
one or more of which may be waived by the Companies but only in writing signed
on behalf of each of the Companies by its President, Chief Financial Officer,
Managing Member or Managing Partner):
12.1 Accuracy of Representations and Warranties. The
representations and warranties of Flextronics set forth in Section 8 that are
qualified by materiality shall be true and correct, and that are not qualified
by materiality shall be true and correct in all material respects, on and as of
the Closing Date with the same force and effect as if they had been made at the
Closing (except for any such representations and warranties that, by their
terms, speak only as of a specific date or dates, in which case such
representations and warranties that are not qualified by materiality shall be
true and correct, and such representations and warranties that are not qualified
by materiality shall be true and correct in all material respects, on and as of
such specified date or dates), and the Companies shall have received a
certificate dated the Closing Date to such effect executed on behalf of
Flextronics by a duly authorized officer.
12.2 [Intentionally Omitted].
12.3 Compliance with Law. There shall be no order, decree, or
ruling by any court or governmental agency or threat thereof, or any other fact
or circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.
12.4 Government Consents; HSR Compliance. There shall have been
obtained at or prior to the Closing Date such permits or authorizations, and
there shall have been taken such other actions, as may be required to consummate
the Transactions by any regulatory authority having jurisdiction over the
parties and the actions herein proposed to be taken, including, but not limited
to, satisfaction of all requirements under applicable federal and state
securities laws. All applicable waiting periods under the HSR Act shall have
expired or early termination of such waiting periods shall have been granted by
both the Federal Trade Commission and the United States Department of Justice
without any condition or requirement requiring or calling for the disposition or
divestiture of any product or other asset of any of the Companies by Flextronics
or any of the Companies.
12.5 Irish Mergers Act Clearance. Flextronics, the Companies, the
Shareholders, the Members and the Partners shall have responded to all queries
raised by or on behalf of the Minister for Enterprise Trade and Employment (the
"Minister") and (a) the Minister shall have informed Flextronics that the
Minister has decided not to make an order under Section 9 of the first Irish
Mergers Act in relation to the Irish Exchanges, (b) the Minister shall have made
a conditioned order permitting the Irish Exchanges on terms satisfactory to each
of the parties at its absolute discretion, or (c) the relevant period under
Section 6 of the first Irish Mergers Act shall have expired without the Minister
having made any order.
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12.6 No Litigation; Investigations. No litigation, proceeding or
governmental or quasi-governmental investigation shall be pending which could
reasonably be expected to have the effect of enjoining or preventing the
consummation of any of the transactions provided for in this Agreement or which
will have the probable effect of suspending trading of Flextronics Ordinary
Shares. No litigation, proceeding or governmental or quasi-governmental
investigation shall be pending which could reasonably be expected to have a
Material Adverse Effect on Flextronics that has not been previously disclosed to
the Companies prior to the date of this Agreement.
12.7 Absence of Material Change. There shall not have been any
Material Adverse Change with respect to Flextronics.
12.8 Opinion of Flextronics' Counsel. The Companies shall have
received (a) from Allen & Gledhill, Singapore counsel to Flextronics, an opinion
substantially in the form of Exhibit F-1, and (b) from Fenwick & West LLP, U.S.
counsel to Flextronics, an opinion substantially in the form of Exhibit F-2.
12.9 Registration Rights Agreement. Flextronics shall have executed
and delivered to the Shareholders, the Members and the Partners the Registration
Rights Agreement.
12.10 Retention and Noncompetition Agreements. Flextronics shall
have executed and delivered to each of the individuals listed on Schedule 12.10
a written agreement in the form of Exhibit G.
12.11 Employment Agreements. Flextronics shall have executed and
delivered to each of the individuals listed on Schedule 12.11 a written
agreement in the form of Exhibit H.
13. CONDITIONS TO OBLIGATIONS OF FLEXTRONICS AND THE MERGER SUBS
The obligations of Flextronics and the Merger Subs hereunder are
subject to the fulfillment or satisfaction, on and as of the Closing, of each of
the following conditions (any one or more of which may be waived by Flextronics,
but only in writing signed on behalf of Flextronics by its Chief Executive
Officer or President, Systems Group and Chief Financial Officer):
13.1 Accuracy of Representations and Warranties. The
representations and warranties of each of the Companies set forth in Sections 2,
3, 4, 5, 6 and 7 that are qualified by materiality shall be true and correct,
and that are not qualified by materiality shall be true and correct in all
material respects, as of the Closing Date with the same force and effect as if
they had been made at the Closing (except for any such representations and
warranties that, by their terms, speak only as of a specific date or dates, in
which case such representations and warranties that are not qualified by
materiality shall be true and correct, and such representations and warranties
that are not qualified by materiality shall be true and correct in all material
respects, on and as of such specified date or dates), and Flextronics shall have
received certificates dated
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the Closing Date to such effect executed on behalf of each of the Companies by
its President, Managing Member or Managing Partner, as applicable.
13.2 [Intentionally Omitted].
13.3 Absence of Material Change. There shall not have been any
Material Adverse Change with respect to any of the Companies.
13.4 Material Agreements. The consummation of the Transactions
shall not have any Material Adverse Effect on any Material Agreements.
13.5 Compliance with Law. There shall be no order, decree, or
ruling by any court or governmental agency or threat thereof, or any other fact
or circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.
13.6 Government Consents; HSR Compliance. There shall have been
obtained at or prior to the Closing Date such permits or authorizations, and
there shall have been taken such other actions, as may be required to consummate
the Transactions by any regulatory authority having jurisdiction over the
parties and the actions herein proposed to be taken, including, but not limited
to, satisfaction of all requirements under applicable federal and state
securities laws. All applicable waiting periods under the HSR Act shall have
expired or early termination of such waiting periods shall have been granted by
both the Federal Trade Commission and the United States Department of Justice
without any condition or requirement requiring or calling for the disposition or
divestiture of any product or other asset of any of the Companies by Flextronics
or any of the Companies.
13.7 Irish Mergers Act Clearance. Flextronics, the Companies, the
Shareholders, the Members and the Partners shall have responded to all queries
raised by or on behalf of the Minister and (a) the Minister shall have informed
Flextronics that the Minister has decided not to make an order under Section 9
of the first Irish Mergers Act in relation to the Irish Exchanges, (b) the
Minister shall have made a conditioned order permitting the Irish Exchanges on
terms satisfactory to each of the parties at its absolute discretion, or (c) the
relevant period under Section 6 of the first Irish Mergers Act shall have
expired without the Minister having made any order.
13.8 Documents. Flextronics shall have received all written
consents, assignments, waivers, authorizations or other certificates necessary
to provide for the continuation in full force and effect of any and all material
contracts and leases of the Companies, and for Flextronics to consummate the
transactions contemplated hereby, including consents to the transactions
contemplated hereby from each party identified on Schedules 3.3 and 4.3.
13.9 No Litigation; Investigations. No litigation, proceeding or
governmental or quasi-governmental investigation shall be pending which will
have the probable effect of enjoining or preventing the consummation of any of
the transactions provided for in this Agreement. No litigation, proceeding or
governmental or quasi-governmental investigation shall
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be pending which could reasonably be expected to have a Material Adverse Effect
on any of the Companies that has not been previously disclosed to Flextronics
herein.
13.10 Real Property Transfers. Flextronics shall have received a
commitment to deliver title insurance with respect to the owned Real Properties,
which shall disclose that the Companies have good and indefeasible fee simple
title to the owned Real Properties free and clear of all conditions, exceptions,
reservations, encumbrances and liens other than Permitted Liens that (i) could
reasonably be expected to adversely affect the value or use of such property, or
(ii) which would be inconsistent with the representations and warranties of the
Companies in this Agreement. At or prior to the Closing, the Companies shall pay
any transfer taxes due in connection with the transfer of the ownership
interests in the Companies that own any real property, and the Companies shall
execute any necessary transfer tax declarations.
13.11 Opinion of Companies' Counsel. Flextronics shall have
received from Piper Marbury Rudnick & Wolfe, counsel to the Companies, and
Matheson Ormsby Prentice, Irish counsel to Lightning Europe and EMF, opinions
substantially in the forms of Exhibits I-1 and I-2, respectively.
13.12 Requisite Approvals. The principal terms of this Agreement,
the Certificates of Merger and the Plans of Merger shall have been approved and
adopted by the requisite vote or written consent or vote of all of the Lightning
Metal Shareholders, Coating Shareholders and Lightning Tool Shareholders. This
Agreement and, as applicable, the Merger, the Irish Exchanges, the Member
Exchanges and the Partner Exchanges, shall have been approved by the
Shareholders, the Member and the Partners.
13.13 Transfers of Lightning Texas Interests, Logistics Interests,
Papason Interests, 200 Scott Street Interests, 80 Scott Street Interests, 230
Scott Street Interests and Lively Interests. The Lightning Texas Members,
Logistics Members, Papason Members, 200 Scott Street Members, 80 Scott Street
Members, 230 Scott Street Members and Lively Members shall have assigned to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics their Lightning Texas Interests, Logistics Interests, Papason
Interests, 200 Scott Street Interests, 80 Scott Street Interests, 230 Scott
Street Interests and Lively Interests, respectively, and any instruments held by
the Members representing debt or equity interests in Lightning Texas, Logistics,
Papason, 200 Scott Street, 80 Scott Street, 230 Scott Street and Lively, and the
Members, Lightning Texas, Logistics, Papason, 200 Scott Street, 80 Scott Street,
230 Scott Street and Lively shall have taken any and all action reasonably
requested by Flextronics to convey, assign and transfer good and marketable
title to such membership interests, and any other interest or rights the
Lightning Texas Members, Logistics Members, Papason Members, 200 Scott Street
Members, 80 Scott Street Members, 230 Scott Street Members and Lively Members
may have in Lightning Texas, Logistics, Papason, 200 Scott Street, 80 Scott
Street, 230 Scott Street and Lively, respectively, free of any adverse claims,
liens, encumbrances or other rights of third parties, to Flextronics or such
subsidiaries of Flextronics as may be designated by Flextronics.
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13.14 Transfers of EMF Ordinary Shares and Lightning Europe
Ordinary Shares. The EMF Shareholders and the Lightning Europe Shareholders
shall have delivered and assigned to Flextronics or such subsidiaries of
Flextronics as may be designated by Flextronics certificates representing all of
the outstanding EMF Ordinary Shares and Lightning Europe Ordinary Shares,
respectively, and any instruments held by the EMF Shareholders and the Lightning
Europe Shareholders representing debt or equity interests in EMF and Lightning
Europe, and the EMF Shareholders, the Lightning Europe Shareholders, EMF and
Lightning Europe shall have taken any and all action reasonably requested by
Flextronics to convey, assign and transfer good and marketable title to such
shares, and any other shares or rights the EMF Shareholders and the Lightning
Europe Shareholders may have in EMF and Lightning Europe, respectively, free of
any adverse claims, liens, encumbrances or other rights of third parties, to
Flextronics or such subsidiaries of Flextronics as may be designated by
Flextronics.
13.15 Transfers of D.A.D. Interests, S.O.N. Interests and S.O.N. II
Interests. The D.A.D. Partners, S.O.N. Partners and S.O.N. II Partners shall
have assigned to Flextronics or such subsidiaries of Flextronics as may be
designated by Flextronics their D.A.D. Interests, S.O.N. Interests and S.O.N. II
Interests, respectively, and any instruments held by the Partners representing
debt or equity interests in D.A.D., S.O.N. and S.O.N. II, and the Partners,
D.A.D., S.O.N. and S.O.N. II shall have taken any and all action reasonably
requested by Flextronics to convey, assign and transfer good and marketable
title to such membership interests, and any other interest or rights the D.A.D.
Partners, S.O.N. Partners and S.O.N. II Partners may have in D.A.D., S.O.N. and
S.O.N. II, respectively, free of any adverse claims, liens, encumbrances or
other rights of third parties, to Flextronics or such subsidiaries of
Flextronics as may be designated by Flextronics.
13.16 Opinion of Flextronics' and Companies' Accountants.
Flextronics shall have received from Arthur Andersen LLP a "pooling letter" in
form reasonably acceptable to Flextronics as to the availability of pooling of
interest accounting for the Transactions.
13.17 Estoppel Certificate. Flextronics shall have received
Estoppel Certificates substantially in the form attached as Exhibit J, dated not
more than ten (10) days prior to the Closing Date, executed by each lessor of
the Real Properties other than the Companies.
13.18 Retention and Noncompetition Agreements. Flextronics shall
have received from each individual listed on Schedule 12.10 an executed
agreement in the form of Exhibit G.
13.19 Employment Agreements. Flextronics shall have received from
each individual listed on Schedule 12.11 an executed agreement in the form of
Exhibit H.
13.20 Debt. Lightning Metal shall have received a payoff letter
from American National Bank and Trust Company ("ANB") stating that the Debt owed
to ANB may be paid in full without penalty and the amount of such Debt due to
ANB at the Effective Time, and acknowledging that, upon payment, such Debt shall
be paid in full and all liens shall be released.
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13.21 Tax Clearance Certificate. Each of the EMF Shareholders shall
have paid any required withholding taxes in connection with the Irish Exchanges
or delivered to Flextronics a certificate confirming that no such withholding
taxes are required to be paid. The Lightning Europe Shareholders shall have
delivered to Flextronics the CG50A Clearance Certificate with respect to the
Irish Exchanges.
13.22 Company Affiliates Agreements. Each of the Companies'
affiliates shall have executed a written agreement in the form of Exhibit K.
13.23 Payments and Releases. The Shareholders, the Members and the
Partners shall have paid any and all monies owning to the Companies or any
Subsidiary of any Company (whether then due for payment or not) by the
Shareholders, the Members, the Partners or the directors thereof or any related
party thereto; and shall have procured the release of any and all guarantees or
indemnities or security given by any Company or any Subsidiary thereof for or on
behalf of any Shareholder, Member, Partner or directors of any Company or any
Subsidiary thereof or any other person.
13.24 Employee Plans. The Companies shall have terminated any
Employee Plan qualified under Section 401(a) of the Code which contains a cash
or deferred arrangement under Section 401(k) of the Code immediately prior to
the Effective Time; provided that the Companies may apply for a favorable I.R.S.
determination letter upon plan termination with respect to such Employee Plans
within a reasonable period of time after the Effective Time and may distribute
the assets of such Employee Plans to participants following the receipt of such
favorable determination letter.
13.25 Exemption Available. Flextronics must be reasonably satisfied
that the issuance of Flextronics Ordinary Shares pursuant to this Agreement is
exempt from the registration requirements of the 1933 Act by virtue of the
exemptions provided by Section 4(2) of the 1933 Act under the 1933 Act and any
exemptions from the registration and/or qualification requirements of all
applicable state "blue sky" securities laws.
13.26 Company Notes. The outstanding principal and interest under
each promissory note listed on Schedule 13.26 shall have been paid in full in
the amount set forth in such Schedule to each lender under such promissory note.
13.27 Repayment of Shareholder Notes. Lightning Tool and Coating
shall have repaid the outstanding principal of and accrued interest on the
promissory notes held by the holders listed on, and in the amounts set forth in,
Schedule 13.27.
14. [INTENTIONALLY OMITTED]
15. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES
15.1 Survival of Representations. All representations and
warranties of the Companies contained in this Agreement will remain operative
and in full force and effect,
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regardless of any investigation or disclosure made by or on behalf of the
parties to this Agreement, until the Release Date; provided, however, that the
representations and warranties of the Companies under Sections 2.4, 2.6, 2.16,
2.22 and 2.23 will remain operative and in full force and effect until the
earlier of (a) the date of the completion of the first audit of financial
statements following the Effective Time containing combined operations to the
extent that the representations and warranties of such Sections relates to an
item expected to be encountered in the audit process (in view of the scope of
the audit actually conducted with respect to the Financial Statements) or (b)
the Release Date. Flextronics acknowledges and agrees that, from and after the
Closing, except for fraud and deliberate malfeasance, its sole remedy against
the Shareholders, the Members and the Partners pursuant to this Agreement for
any breach of any representation or warranty set forth in Sections 2, 3, 4, 5, 6
or 7 of this Agreement is set forth in this Section 15. Flextronics'
representations and warranties set forth in this Agreement shall terminate as of
the Closing.
15.2 Agreement to Indemnify.
(a) Indemnification by the Shareholders, the Members and the
Partners.
(i) Indemnification by Lightning Metal Shareholders.
Subject to the limitations set forth in this Section 15.2(i), the Lightning
Metal Shareholders will severally indemnify and hold harmless Flextronics and
its respective officers, directors, agents and employees, and each person, if
any, who controls or may control Flextronics within the meaning of the 1933 Act
(hereinafter in this Section 15.2 referred to individually as an "Indemnified
Person" and collectively as "Indemnified Persons") from and against any and all
claims, demands, actions, causes of action, losses, reductions in value, costs,
damages, liabilities and expenses including, without limitation, reasonable
legal fees (collectively, "Damages") directly or indirectly caused by or arising
out of the failure of any of the representations and warranties of Lightning
Metal in this Agreement or in any certificate, document or instrument delivered
by or on behalf of Lightning Metal or any of the Lightning Metal Shareholders
pursuant to Section 13 hereof to be true and correct as of the Effective Time.
In seeking indemnification for Damages under this Section 15.2(a)(i) the
Indemnified Persons shall make no claim for Damages unless and until such
Damages relating to the Shareholders, Members and the Partners aggregate at
least $150,000, inclusive of legal fees (the "Basket"), in which event such
Indemnified Person may make claims for all Damages (including the first $150,000
thereof). The aggregate liability of each Lightning Metal Shareholder pursuant
to this Section 15.2(a)(i) (other than for Lightning Metal Ownership Losses)
shall be limited to the value of the Lightning Metal Hold-Back Shares to be
received by such Lightning Metal Shareholder in connection with the Merger of
Lightning Metal, with each Lightning Metal Hold-Back Share valued at the Closing
Price (as defined below). Subject to the limit set forth in the preceding
sentence, the aggregate liability of each Lightning Metal Shareholder pursuant
to this Section 15.2(a)(i) (including liability for Lightning Metal Ownership
Losses) shall be limited to the value of the consideration received by such
Lightning Metal Shareholder in connection with the Merger of Lightning Metal,
with each Flextronics Ordinary Share valued at the Closing Price (in each case
absent fraud or willful misconduct by Lightning Metal or such Lightning Metal
Shareholder). As used herein, the term
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"Lightning Metal Ownership Loss" means any Damages, specified by Flextronics in
the applicable Notice of Claim (as defined below) as being a Lightning Metal
Ownership Loss, resulting directly or indirectly from any inaccuracy or
misrepresentation in this Agreement or in the Investment Representation Letters
as to the ownership of Lightning Metal. Notwithstanding anything herein to the
contrary, the Basket shall not be applicable to any claim by any Indemnified
Person for indemnification for any Lightning Metal Ownership Loss or for fraud
or willful misconduct
(ii) Indemnification by Coating Shareholders. Subject
to the limitations set forth in this Section 15.2(a)(ii), the Coating
Shareholders will severally indemnify and hold harmless the Indemnified Persons
from and against any Damages directly or indirectly caused by or arising out of
the failure of any of the representations and warranties of Coating in this
Agreement or in any certificate, document or instrument delivered by or on
behalf of Coating or any of the Coating Shareholders pursuant to Section 13
hereof to be true and correct as of the Effective Time. In seeking
indemnification for Damages under this Section 15.2(a)(ii) the Indemnified
Persons shall make no claim for Damages unless and until such Damages relating
to the Shareholders, the Member and the Partners aggregate at least the Basket,
in which event such Indemnified Person may make claims for all Damages
(including the first $150,000 thereof). The aggregate liability of each Coating
Shareholder pursuant to this Section 15.2(a)(ii) (other than for Coating
Ownership Losses) shall be limited to the value of the Coating Hold-Back Shares
to be received by such Coating Shareholder in connection with the Merger of
Coating, with each Coating Hold-Back Share valued at the Closing Price. Subject
to the limit set forth in the preceding sentence, the aggregate liability of
each Coating Shareholder pursuant to this Section 15.2(a)(ii) (including
liability for Coating Ownership Losses) shall be limited to the value of the
consideration received by such Coating Shareholder in connection with the Merger
of Coating, with each Flextronics Ordinary Share valued at the Closing Price (in
each case absent fraud or willful misconduct by Coating or such Coating
Shareholder). As used herein, the term "Coating Ownership Loss" means any
Damages, specified by Flextronics in the applicable Notice of Claim as being a
Coating Ownership Loss, resulting directly or indirectly from any inaccuracy or
misrepresentation in this Agreement or in the Investment Representation Letters
as to the ownership of Coating. Notwithstanding anything herein to the contrary,
the Basket shall not be applicable to any claim by any Indemnified Person for
indemnification for any Coating Ownership Loss or for fraud or willful
misconduct.
(iii) Indemnification by Lightning Tool Shareholders.
Subject to the limitations set forth in this Section 15.2(a)(iii), the Lightning
Tool Shareholders will severally indemnify and hold harmless the Indemnified
Persons from and against any Damages directly or indirectly caused by or arising
out of the failure of any of the representations and warranties of Lightning
Tool in this Agreement or in any certificate, document or instrument delivered
by or on behalf of Lightning Tool or any of the Lightning Tool Shareholders
pursuant to Section 13 hereof to be true and correct as of the Effective Time.
In seeking indemnification for Damages under this Section 15.2(a)(iii) the
Indemnified Persons shall make no claim for Damages unless and until such
Damages relating to the Shareholders, the Members and the Partners aggregate at
least the Basket, in which event such Indemnified Person may make claims for all
Damages (including the first $150,000 thereof). The aggregate liability of each
Lightning
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Tool Shareholder pursuant to this Section 15.2(a)(iii) (other than for Lightning
Tool Ownership Losses) shall be limited to the value of the Lightning Tool
Hold-Back Shares to be received by such Lightning Tool Shareholder in connection
with the Merger of Lightning Tool, with each Lightning Tool Hold-Back Share
valued at the Closing Price. Subject to the limit set forth in the preceding
sentence, the aggregate liability of each Lightning Tool Shareholder pursuant to
this Section 15.2(a)(iii) (including liability for Lightning Tool Ownership
Losses) shall be limited to the value of the consideration received by such
Lightning Tool Shareholder in connection with the Merger of Lightning Tool, with
each Flextronics Ordinary Share valued at the Closing Price (in each case absent
fraud or willful misconduct by Lightning Tool or such Lightning Tool
Shareholder). As used herein, the term "Lightning Tool Ownership Loss" means any
Damages, specified by Flextronics in the applicable Notice of Claim as being a
Lightning Tool Ownership Loss, resulting directly or indirectly from any
inaccuracy or misrepresentation in this Agreement or in the Investment
Representation Letters as to the ownership of Lightning Tool. Notwithstanding
anything herein to the contrary, the Basket shall not be applicable to any claim
by any Indemnified Person for indemnification for any Lightning Tool Ownership
Loss or for fraud or willful misconduct.
(iv) Indemnification by EMF Shareholders. Subject to
the limitations set forth in this Section 15.2(a)(iv), the EMF Shareholders will
severally indemnify and hold harmless the Indemnified Persons from and against
any Damages directly or indirectly caused by or arising out of the failure of
any of the representations and warranties of EMF in this Agreement or in any
certificate, document or instrument delivered by or on behalf of EMF or any of
the EMF Shareholders pursuant to Section 13 hereof to be true and correct as of
the Effective Time. In seeking indemnification for Damages under this Section
15.2(a)(iv) the Indemnified Persons shall make no claim for Damages unless and
until such Damages relating to the Shareholders, Members and the Partners
aggregate at least the Basket, in which event such Indemnified Person may make
claims for all Damages (including the first $150,000 thereof). The aggregate
liability of each EMF Shareholder pursuant to this Section 15.2(a)(iv) (other
than for EMF Ownership Losses) shall be limited to the value of the EMF
Hold-Back Shares to be received by such EMF Shareholder in connection with the
transfer of the EMF Ordinary Shares, with each EMF Hold-Back Share valued at the
Closing Price. Subject to the limit set forth in the preceding sentence, the
aggregate liability of each EMF Shareholder pursuant to this Section 15.2(a)(iv)
(including liability for EMF Ownership Losses) shall be limited to the value of
the consideration received by such EMF Shareholder in connection with the
transfer of the EMF Ordinary Shares, with each Flextronics Ordinary Share valued
at the Closing Price (in each case absent fraud or willful misconduct by EMF or
such EMF Shareholder). As used herein, the term "EMF Ownership Loss" means any
Damages, specified by Flextronics in the applicable Notice of Claim as being a
EMF Ownership Loss, resulting directly or indirectly from any inaccuracy or
misrepresentation in this Agreement or in the Investment Representation Letters
as to the ownership of EMF. Notwithstanding anything herein to the contrary, the
Basket shall not be applicable to any claim by any Indemnified Person for
indemnification for any EMF Ownership Loss or for fraud or willful misconduct.
(v) Indemnification by Lightning Europe Shareholders.
Subject to the limitations set forth in this Section 15.2(a)(v), the Lightning
Europe Shareholders
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will severally indemnify and hold harmless the Indemnified Persons from and
against any Damages directly or indirectly caused by or arising out of the
failure of any of the representations and warranties of Lightning Europe in this
Agreement or in any certificate, document or instrument delivered by or on
behalf of Lightning Europe or any of the Lightning Europe Shareholders pursuant
to Section 13 hereof to be true and correct as of the Effective Time. In seeking
indemnification for Damages under this Section 15.2(a)(v) the Indemnified
Persons shall make no claim for Damages unless and until such Damages relating
to the Shareholders, the Members and the Partners aggregate at least the Basket,
in which event such Indemnified Person may make claims for all Damages
(including the first $150,000 thereof). The aggregate liability of each
Lightning Europe Shareholder pursuant to this Section 15.2(a)(v) (other than for
Lightning Europe Ownership Losses) shall be limited to the value of the
Lightning Europe Hold-Back Shares to be received by such Lightning Europe
Shareholder in connection with the transfer of the Lightning Europe Ordinary
Shares, with each Lightning Europe Hold-Back Share valued at the Closing Price.
Subject to the limit set forth in the preceding sentence, the aggregate
liability of each Lightning Europe Shareholder pursuant to this Section
15.2(a)(v) (including liability for Lightning Europe Ownership Losses) shall be
limited to the value of the consideration received by such Lightning Europe
Shareholder in connection with the transfer of the Lightning Europe Ordinary
Shares, with each Flextronics Ordinary Share valued at the Closing Price (in
each case absent fraud or willful misconduct by Lightning Europe or such
Lightning Europe Shareholder). As used herein, the term "Lightning Europe
Ownership Loss" means any Damages, specified by Flextronics in the applicable
Notice of Claim as being a Lightning Europe Ownership Loss, resulting directly
or indirectly from any inaccuracy or misrepresentation in this Agreement or in
the Investment Representation Letters as to the ownership of Lightning Europe.
Notwithstanding anything herein to the contrary, the Basket shall not be
applicable to any claim by any Indemnified Person for indemnification for any
Lightning Europe Ownership Loss or for fraud or willful misconduct.
(vi) Indemnification by Lightning Texas Members.
Subject to the limitations set forth in this Section 15.2(a)(vi), the Lightning
Texas Members will severally indemnify and hold harmless the Indemnified Persons
from and against any Damages directly or indirectly caused by or arising out of
the failure of any of the representations and warranties of Lightning Texas in
this Agreement or in any certificate, document or instrument delivered by or on
behalf of Lightning Texas or any of the Lightning Texas Members pursuant to
Section 13 hereof to be true and correct as of the Effective Time. In seeking
indemnification for Damages under this Section 15.2(a)(vi) the Indemnified
Persons shall make no claim for Damages unless and until such Damages relating
to the Shareholders, the Members and the Partners aggregate at least the Basket,
in which event such Indemnified Person may make claims for all Damages
(including the first $150,000 thereof). The aggregate liability of each
Lightning Texas Member pursuant to this Section 15.2(a)(vi) (other than for
Lightning Texas Ownership Losses) shall be limited to the value of the Lightning
Texas Hold-Back Shares to be received by such Lightning Texas Member in
connection with the transfer of the Lightning Texas Interests, with each
Lightning Texas Hold-Back Share valued at the Closing Price. Subject to the
limit set forth in the preceding sentence, the aggregate liability of each
Lightning Texas Member pursuant to this Section 15.2(a)(vi) (including liability
for Lightning Texas Ownership Losses) shall be limited to the value of the
consideration received by such Lightning Texas Member in connection
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with the transfer of the Lightning Texas Interests, with each Flextronics
Ordinary Share valued at the Closing Price (in each case absent fraud or willful
misconduct by Lightning Texas or such Lightning Texas Member). As used herein,
the term "Lightning Texas Ownership Loss" means any Damages, specified by
Flextronics in the applicable Notice of Claim as being a Lightning Texas
Ownership Loss, resulting directly or indirectly from any inaccuracy or
misrepresentation in this Agreement or in the Investment Representation Letters
as to the ownership of Lightning Texas. Notwithstanding anything herein to the
contrary, the Basket shall not be applicable to any claim by any Indemnified
Person for indemnification for any Lightning Texas Ownership Loss or for fraud
or willful misconduct.
(vii) Indemnification by Logistics Members. Subject to
the limitations set forth in this Section 15.2(a)(vii), the Logistics Members
will severally indemnify and hold harmless the Indemnified Persons from and
against any Damages directly or indirectly caused by or arising out of the
failure of any of the representations and warranties of Logistics in this
Agreement or in any certificate, document or instrument delivered by or on
behalf of Logistics or any of the Logistics Members pursuant to Section 13
hereof to be true and correct as of the Effective Time. In seeking
indemnification for Damages under this Section 15.2(a)(vii) the Indemnified
Persons shall make no claim for Damages unless and until such Damages relating
to the Shareholders, the Members and the Partners aggregate at least the Basket,
in which event such Indemnified Person may make claims for all Damages
(including the first $150,000 thereof). The aggregate liability of each
Logistics Member pursuant to this Section 15.2(a)(vii) (other than for Logistics
Ownership Losses) shall be limited to the value of the Logistics Hold-Back
Shares to be received by such Logistics Member in connection with the transfer
of the Logistics Interests, with each Logistics Hold-Back Share valued at the
Closing Price. Subject to the limit set forth in the preceding sentence, the
aggregate liability of each Logistics Member pursuant to this Section
15.2(a)(vii) (including liability for Logistics Ownership Losses) shall be
limited to the value of the consideration received by such Logistics Member in
connection with the transfer of the Logistics Interests, with each Flextronics
Ordinary Share valued at the Closing Price (in each case absent fraud or willful
misconduct by Logistics or such Logistics Member). As used herein, the term
"Logistics Ownership Loss" means any Damages, specified by Flextronics in the
applicable Notice of Claim as being a Logistics Ownership Loss, resulting
directly or indirectly from any inaccuracy or misrepresentation in this
Agreement or in the Investment Representation Letters as to the ownership of
Logistics. Notwithstanding anything herein to the contrary, the Basket shall not
be applicable to any claim by any Indemnified Person for indemnification for any
Logistics Ownership Loss or for fraud or willful misconduct.
(viii) Indemnification by Papason Members. Subject to
the limitations set forth in this Section 15.2(a)(viii), the Papason Members
will severally indemnify and hold harmless the Indemnified Persons from and
against any Damages directly or indirectly caused by or arising out of the
failure of any of the representations and warranties of Papason in this
Agreement or in any certificate, document or instrument delivered by or on
behalf of Papason or any of the Papason Members pursuant to Section 13 hereof to
be true and correct as of the Effective Time. In seeking indemnification for
Damages under this Section 15.2(a)(viii) the Indemnified Persons shall make no
claim for Damages unless and until
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<PAGE> 71
such Damages relating to the Shareholders, the Members and the Partners
aggregate at least the Basket, in which event such Indemnified Person may make
claims for all Damages (including the first $150,000 thereof). The aggregate
liability of each Papason Member pursuant to this Section 15.2(a)(viii) (other
than for Papason Ownership Losses) shall be limited to the value of the Papason
Hold-Back Shares to be received by such Papason Member in connection with the
transfer of the Papason Interests, with each Papason Hold-Back Share valued at
the Closing Price. Subject to the limit set forth in the preceding sentence, the
aggregate liability of each Papason Member pursuant to this Section
15.2(a)(viii) (including liability for Papason Ownership Losses) shall be
limited to the value of the consideration received by such Papason Member in
connection with the transfer of the Papason Interests, with each Flextronics
Ordinary Share valued at the Closing Price (in each case absent fraud or willful
misconduct by Papason or such Papason Member). As used herein, the term "Papason
Ownership Loss" means any Damages, specified by Flextronics in the applicable
Notice of Claim as being a Papason Ownership Loss, resulting directly or
indirectly from any inaccuracy or misrepresentation in this Agreement or in the
Investment Representation Letters as to the ownership of Papason.
Notwithstanding anything herein to the contrary, the Basket shall not be
applicable to any claim by any Indemnified Person for indemnification for any
Papason Ownership Loss or for fraud or willful misconduct.
(ix) Indemnification by 200 Scott Street Members.
Subject to the limitations set forth in this Section 15.2(a)(ix), the 200 Scott
Street Members will severally indemnify and hold harmless the Indemnified
Persons from and against any Damages directly or indirectly caused by or arising
out of the failure of any of the representations and warranties of 200 Scott
Street in this Agreement or in any certificate, document or instrument delivered
by or on behalf of 200 Scott Street or any of the 200 Scott Street Members
pursuant to Section 13 hereof to be true and correct as of the Effective Time.
In seeking indemnification for Damages under this Section 15.2(a)(ix) the
Indemnified Persons shall make no claim for Damages unless and until such
Damages relating to the Shareholders, the Members and the Partners aggregate at
least the Basket, in which event such Indemnified Person may make claims for all
Damages (including the first $150,000 thereof). The aggregate liability of each
200 Scott Street Member pursuant to this Section 15.2(a)(ix) (other than for 200
Scott Street Ownership Losses) shall be limited to the value of the 200 Scott
Street Hold-Back Shares to be received by such 200 Scott Street Member in
connection with the transfer of the 200 Scott Street Interests, with each 200
Scott Street Hold-Back Share valued at the Closing Price. Subject to the limit
set forth in the preceding sentence, the aggregate liability of each 200 Scott
Street Member pursuant to this Section 15.2(a)(ix) (including liability for 200
Scott Street Ownership Losses) shall be limited to the value of the
consideration received by such 200 Scott Street Member in connection with the
transfer of the 200 Scott Street Interests, with each Flextronics Ordinary Share
valued at the Closing Price (in each case absent fraud or willful misconduct by
200 Scott Street or such 200 Scott Street Member). As used herein, the term "200
Scott Street Ownership Loss" means any Damages, specified by Flextronics in the
applicable Notice of Claim as being a 200 Scott Street Ownership Loss, resulting
directly or indirectly from any inaccuracy or misrepresentation in this
Agreement or in the Investment Representation Letters as to the ownership of 200
Scott Street. Notwithstanding anything herein to the contrary, the Basket shall
not be applicable to any
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claim by any Indemnified Person for indemnification for any 200 Scott Street
Ownership Loss or for fraud or willful misconduct.
(x) Indemnification by 80 Scott Street Members. Subject
to the limitations set forth in this Section 15.2(a)(x), the 80 Scott Street
Members will severally indemnify and hold harmless the Indemnified Persons from
and against any Damages directly or indirectly caused by or arising out of the
failure of any of the representations and warranties of 80 Scott Street in this
Agreement or in any certificate, document or instrument delivered by or on
behalf of 80 Scott Street or any of the 80 Scott Street Members pursuant to
Section 13 hereof to be true and correct as of the Effective Time. In seeking
indemnification for Damages under this Section 15.2(a)(x) the Indemnified
Persons shall make no claim for Damages unless and until such Damages relating
to the Shareholders, the Members and the Partners aggregate at least the Basket,
in which event such Indemnified Person may make claims for all Damages
(including the first $150,000 thereof). The aggregate liability of each 80 Scott
Street Member pursuant to this Section 15.2(a)(x) (other than for 80 Scott
Street Ownership Losses) shall be limited to the value of the 80 Scott Street
Hold-Back Shares to be received by such 80 Scott Street Member in connection
with the transfer of the 80 Scott Street Interests, with each 80 Scott Street
Hold-Back Share valued at the Closing Price. Subject to the limit set forth in
the preceding sentence, the aggregate liability of each 80 Scott Street Member
pursuant to this Section 15.2(a)(x) (including liability for 80 Scott Street
Ownership Losses) shall be limited to the value of the consideration received by
such 80 Scott Street Member in connection with the transfer of the 80 Scott
Street Interests, with each Flextronics Ordinary Share valued at the Closing
Price (in each case absent fraud or willful misconduct by 80 Scott Street or
such 80 Scott Street Member). As used herein, the term "80 Scott Street
Ownership Loss" means any Damages, specified by Flextronics in the applicable
Notice of Claim as being a 80 Scott Street Ownership Loss, resulting directly or
indirectly from any inaccuracy or misrepresentation in this Agreement or in the
Investment Representation Letters as to the ownership of 80 Scott Street.
Notwithstanding anything herein to the contrary, the Basket shall not be
applicable to any claim by any Indemnified Person for indemnification for any 80
Scott Street Ownership Loss or for fraud or willful misconduct.
(xi) Indemnification by 230 Scott Street Members.
Subject to the limitations set forth in this Section 15.2(a)(xi), the 230 Scott
Street Members will severally indemnify and hold harmless the Indemnified
Persons from and against any Damages directly or indirectly caused by or arising
out of the failure of any of the representations and warranties of 230 Scott
Street in this Agreement or in any certificate, document or instrument delivered
by or on behalf of 230 Scott Street or any of the 230 Scott Street Members
pursuant to Section 13 hereof to be true and correct as of the Effective Time.
In seeking indemnification for Damages under this Section 15.2(a)(xi) the
Indemnified Persons shall make no claim for Damages unless and until such
Damages relating to the Shareholders, the Members and the Partners aggregate at
least the Basket, in which event such Indemnified Person may make claims for all
Damages (including the first $150,000 thereof). The aggregate liability of each
230 Scott Street Member pursuant to this Section 15.2(a)(xi) (other than for 230
Scott Street Ownership Losses) shall be limited to the value of the 230 Scott
Street Hold-Back Shares to be received by such 230 Scott Street Member in
connection with the transfer of the 230 Scott Street Interests,
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with each 230 Scott Street Hold-Back Share valued at the Closing Price. Subject
to the limit set forth in the preceding sentence, the aggregate liability of
each 230 Scott Street Member pursuant to this Section 15.2(a)(xi) (including
liability for 230 Scott Street Ownership Losses) shall be limited to the value
of the consideration received by such 230 Scott Street Member in connection with
the transfer of the 230 Scott Street Interests, with each Flextronics Ordinary
Share valued at the Closing Price (in each case absent fraud or willful
misconduct by 230 Scott Street or such 230 Scott Street Member). As used herein,
the term "230 Scott Street Ownership Loss" means any Damages, specified by
Flextronics in the applicable Notice of Claim as being a 230 Scott Street
Ownership Loss, resulting directly or indirectly from any inaccuracy or
misrepresentation in this Agreement or in the Investment Representation Letters
as to the ownership of 230 Scott Street. Notwithstanding anything herein to the
contrary, the Basket shall not be applicable to any claim by any Indemnified
Person for indemnification for any 230 Scott Street Ownership Loss or for fraud
or willful misconduct.
(xii) Indemnification by Lively Members. Subject to the
limitations set forth in this Section 15.2(a)(xii), the Lively Members will
severally indemnify and hold harmless the Indemnified Persons from and against
any Damages directly or indirectly caused by or arising out of the failure of
any of the representations and warranties of Lively in this Agreement or in any
certificate, document or instrument delivered by or on behalf of Lively or any
of the Lively Members pursuant to Section 13 hereof to be true and correct as of
the Effective Time. In seeking indemnification for Damages under this Section
15.2(a)(xii) the Indemnified Persons shall make no claim for Damages unless and
until such Damages relating to the Shareholders, the Members and the Partners
aggregate at least the Basket, in which event such Indemnified Person may make
claims for all Damages (including the first $150,000 thereof). The aggregate
liability of each Lively Member pursuant to this Section 15.2(a)(xii) (other
than for Lively Ownership Losses) shall be limited to the value of the Lively
Hold-Back Shares to be received by such Lively Member in connection with the
transfer of the Lively Interests, with each Lively Hold-Back Share valued at the
Closing Price. Subject to the limit set forth in the preceding sentence, the
aggregate liability of each Lively Member pursuant to this Section 15.2(a)(xii)
(including liability for Lively Ownership Losses) shall be limited to the value
of the consideration received by such Lively Member in connection with the
transfer of the Lively Interests, with each Flextronics Ordinary Share valued at
the Closing Price (in each case absent fraud or willful misconduct by Lively or
such Lively Member). As used herein, the term "Lively Ownership Loss" means any
Damages, specified by Flextronics in the applicable Notice of Claim as being a
Lively Ownership Loss, resulting directly or indirectly from any inaccuracy or
misrepresentation in this Agreement or in the Investment Representation Letters
as to the ownership of Lively. Notwithstanding anything herein to the contrary,
the Basket shall not be applicable to any claim by any Indemnified Person for
indemnification for any Lively Ownership Loss or for fraud or willful
misconduct.
(xiii) Indemnification by D.A.D. Partners. Subject to
the limitations set forth in this Section 15.2(a)(xiii), the D.A.D. Partners
will severally indemnify and hold harmless the Indemnified Persons from and
against any Damages directly or indirectly caused by or arising out of the
failure of any of the representations and warranties of D.A.D. in this Agreement
or in any certificate, document or instrument delivered by or on behalf of
D.A.D.
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or any of the D.A.D. Partners pursuant to Section 13 hereof to be true and
correct as of the Effective Time. In seeking indemnification for Damages under
this Section 15.2(a)(xiii) the Indemnified Persons shall make no claim for
Damages unless and until such Damages relating to the Shareholders, the Members
and the Partners aggregate at least the Basket, in which event such Indemnified
Person may make claims for all Damages (including the first $150,000 thereof).
The aggregate liability of each D.A.D. Partner pursuant to this Section
15.2(a)(xiii) (other than for D.A.D. Ownership Losses) shall be limited to the
value of the D.A.D. Hold-Back Shares to be received by such D.A.D. Partner in
connection with the transfer of the D.A.D. Interests, with each D.A.D. Hold-Back
Share valued at the Closing Price. Subject to the limit set forth in the
preceding sentence, the aggregate liability of each D.A.D. Partner pursuant to
this Section 15.2(a)(xiii) (including liability for D.A.D. Ownership Losses)
shall be limited to the value of the consideration received by such D.A.D.
Partner in connection with the transfer of the D.A.D. Interests, with each
Flextronics Ordinary Share valued at the Closing Price (in each case absent
fraud or willful misconduct by D.A.D. or such D.A.D. Partner). As used herein,
the term "D.A.D. Ownership Loss" means any Damages, specified by Flextronics in
the applicable Notice of Claim as being a D.A.D. Ownership Loss, resulting
directly or indirectly from any inaccuracy or misrepresentation in this
Agreement or in the Investment Representation Letters as to the ownership of
D.A.D. Notwithstanding anything herein to the contrary, the Basket shall not be
applicable to any claim by any Indemnified Person for indemnification for any
D.A.D. Ownership Loss or for fraud or willful misconduct.
(xiv) Indemnification by S.O.N. Partners. Subject to
the limitations set forth in this Section 15.2(a)(xiv), the S.O.N. Partners will
severally indemnify and hold harmless the Indemnified Persons from and against
any Damages directly or indirectly caused by or arising out of the failure of
any of the representations and warranties of S.O.N. in this Agreement or in any
certificate, document or instrument delivered by or on behalf of S.O.N. or any
of the S.O.N. Partners pursuant to Section 13 hereof to be true and correct as
of the Effective Time. In seeking indemnification for Damages under this Section
15.2(a)(xiv) the Indemnified Persons shall make no claim for Damages unless and
until such Damages relating to the Shareholders, the Members and the Partners
aggregate at least the Basket, in which event such Indemnified Person may make
claims for all Damages (including the first $150,000 thereof). The aggregate
liability of each S.O.N. Partner pursuant to this Section 15.2(a)(xiv) (other
than for S.O.N. Ownership Losses) shall be limited to the value of the S.O.N.
Hold-Back Shares to be received by such S.O.N. Partner in connection with the
transfer of the S.O.N. Interests, with each S.O.N. Hold-Back Share valued at the
Closing Price. Subject to the limit set forth in the preceding sentence, the
aggregate liability of each S.O.N. Partner pursuant to this Section 15.2(a)(xiv)
(including liability for S.O.N. Ownership Losses) shall be limited to the value
of the consideration received by such S.O.N. Partner in connection with the
transfer of the S.O.N. Interests, with each Flextronics Ordinary Share valued at
the Closing Price (in each case absent fraud or willful misconduct by S.O.N. or
such S.O.N. Partner). As used herein, the term "S.O.N. Ownership Loss" means any
Damages, specified by Flextronics in the applicable Notice of Claim as being a
S.O.N. Ownership Loss, resulting directly or indirectly from any inaccuracy or
misrepresentation in this Agreement or in the Investment Representation Letters
as to the ownership of S.O.N. Notwithstanding anything herein to the contrary,
the Basket shall not be
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applicable to any claim by any Indemnified Person for indemnification for any
S.O.N. Ownership Loss or for fraud or willful misconduct.
(xv) Indemnification by S.O.N. II Partners. Subject to
the limitations set forth in this Section 15.2(a)(xv), the S.O.N. II Partners
will severally indemnify and hold harmless the Indemnified Persons from and
against any Damages directly or indirectly caused by or arising out of the
failure of any of the representations and warranties of S.O.N. II in this
Agreement or in any certificate, document or instrument delivered by or on
behalf of S.O.N. II or any of the S.O.N. II Partners pursuant to Section 13
hereof to be true and correct as of the Effective Time. In seeking
indemnification for Damages under this Section 15.2(a)(xv) the Indemnified
Persons shall make no claim for Damages unless and until such Damages relating
to the Shareholders, the Members and the Partners aggregate at least the Basket,
in which event such Indemnified Person may make claims for all Damages
(including the first $150,000 thereof). The aggregate liability of each S.O.N.
II Partner pursuant to this Section 15.2(a)(xv) (other than for S.O.N. II
Ownership Losses) shall be limited to the value of the S.O.N. II Hold-Back
Shares to be received by such S.O.N. II Partner in connection with the transfer
of the S.O.N. II Interests, with each S.O.N. II Hold-Back Share valued at the
Closing Price. Subject to the limit set forth in the preceding sentence, the
aggregate liability of each S.O.N. II Partner pursuant to this Section
15.2(a)(xv) (including liability for S.O.N. II Ownership Losses) shall be
limited to the value of the consideration received by such S.O.N. II Partner in
connection with the transfer of the S.O.N. II Interests, with each Flextronics
Ordinary Share valued at the Closing Price (in each case absent fraud or willful
misconduct by S.O.N. II or such S.O.N. II Partner). As used herein, the term
"S.O.N. II Ownership Loss" means any Damages, specified by Flextronics in the
applicable Notice of Claim as being a S.O.N. II Ownership Loss, resulting
directly or indirectly from any inaccuracy or misrepresentation in this
Agreement or in the Investment Representation Letters as to the ownership of
S.O.N. II. Notwithstanding anything herein to the contrary, the Basket shall not
be applicable to any claim by any Indemnified Person for indemnification for any
S.O.N. II Ownership Loss or for fraud or willful misconduct.
(b) Survival of Claims. Notwithstanding anything to the
contrary, if, prior to the Release Date, an Indemnified Person makes a good
faith claim for indemnification under this Agreement with respect to a
misrepresentation in, or breach of, any representation or warranty (a "Claim"),
then the Indemnified Person's rights to indemnification under this Section
15.2(b) for such claim shall survive any expiration of such representation or
warranty.
(c) Indemnification Procedures. Frank Dotzler shall act as
representative (the "Representative") of all Shareholders, Members and Partners
for purposes of the indemnification provisions of this Section 15.2(c), and is
duly authorized to be such Representative and may bind the Shareholders, the
Members and the Partners. Promptly after the receipt by Flextronics of notice or
discovery of any misrepresentation in, or breach of, any representation or
warranty of any Company that Flextronics believes gives to indemnification
rights under this Agreement, Flextronics will give the Representative written
notice thereof in accordance with Section 15.2(e) (provided that any failure by
Flextronics to delivery such notice promptly shall not affect or limit the
indemnification rights of any Indemnified Person under this
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Agreement). Flextronics may assert a Claim at any time prior to the Release
Date. Within ten (10) days of delivery of such written notice, the
Representative may, at the expense of the Shareholders, the Members and the
Partners, elect to contest any Claim and, in the case of any Claim for Damages
resulting from a proceeding by third parties against a Company (a "Third Party
Proceeding"), and if the reasonable anticipated amount of any Third Party
Proceeding could not reasonably be expected to materially exceed (a) the product
of the Closing Price multiplied by the aggregate number of Hold-Back Shares
issuable to the Shareholders, Members and Partners of such Company, less (b) the
amount of any other then-pending indemnification claims against such Hold-Back
Shares, then the Representative if he so elects shall be entitled to assume the
defense of such Third Party Proceeding and prosecute such Third Party Proceeding
to conclusion or settlement satisfactory to the Representative using counsel
reasonably acceptable to Flextronics.
If the Representative makes the foregoing election with
respect to Third Party Proceedings, Flextronics will have the right to
participate at its own expense in all such Third Party Proceedings. If the
Representative does not make such election with respect to Third Party
Proceedings, Flextronics shall be free to handle the prosecution or defense of
any such Third Party Proceeding, will take all necessary steps to contest the
Third Party Proceeding or to prosecute such Third Party Proceeding to conclusion
or settlement satisfactory to Flextronics, and will notify the Representative of
the progress of any such Third Party Proceeding, will permit the Representative
at the sole cost of the Representative to participate in such prosecution or
defense and will provide the Representative with reasonable access to all
relevant information and documentation relating to the Third Party Proceeding
and Flextronics' prosecution or defense thereof. In any case, the party not in
control of the Third Party Proceeding will cooperate with the other party in the
conduct of the prosecution or defense of such Third Party Proceeding. Neither
party will compromise or settle any such Third Party Proceeding without the
written consent of either Flextronics (if the Representative defends the Third
Party Proceeding) or the Representative (if Flextronics defends the Third Party
Proceeding); provided that Flextronics shall be entitled to compromise or settle
any Third Party Proceeding without the consent of the Representative if
Flextronics shall agree to waive any rights to indemnification therefor.
In the event that any party to this Agreement elects to
contest a Claim against any other party to this Agreement under this Section
15.2, such contest shall be conducted in accordance with Section 16.1.
(i) The Representative shall have the power to act for
the Shareholders, the Members and the Partners with respect to all transactions
contemplated by this Agreement, and in connection with any dispute, litigation
or arbitration involving this Agreement, and to do or refrain from doing all
such further acts and things, and execute all such documents as the
Representative shall deem necessary or appropriate in connection with
transactions contemplated by this Agreement, including, without limitation, the
power (i) to act for the Shareholders, the Members and the Partners with regard
to matters pertaining to the indemnification referred to in this Agreement,
including the power to compromise any Claim or Third Party Proceeding on behalf
of the Shareholders, the Members and the Partners and to
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transact matters of litigation; (ii) to do or refrain from doing any further act
or deed on behalf of the Shareholders, the Members and the Partners which the
Representative deems necessary or appropriate in his sole discretion relating to
the subject matter of this Agreement, as fully and completely as each
Shareholder, Member or Partner could do if personally present; and (iii) to
receive all notices and service of process on behalf of the Shareholders, the
Members and the Partners in connection with any Claims, Third Party Proceedings
or matters under this Agreement.
(ii) The Representative or any successor Representative
shall have the power to substitute any other Shareholder, Member or Partner
(with such shareholder's or member's consent) as a successor Representative
hereunder. In the event that the Representative is unable to perform his duties
hereunder and unable to substitute a successor Representative by reason of the
death or incapacity of the Representative and no substitute Representative has
previously been appointed, a substitute Representative shall be appointed by the
Shareholders and Members holding a majority of the voting power of the shares or
membership interests, as the case may be, of each of the Companies as of the
date of this Agreement.
(iii) The Representative shall act for the
Shareholders, the Members and the Partners on all matters set forth in this
Agreement in a manner the Representative believes to be in the best interests of
the Shareholders, the Members and the Partners and consistent with his
obligations under this Agreement, but the Representative shall not be
responsible to the Shareholders, the Members or the Partners for any loss,
damages, costs or expenses the Shareholders, the Members or the Partners may
suffer by reason of the performance by the Representative of his duties under
the Agreement, other than loss or damage arising from willful violation of the
law or gross negligence in the performance of his duties under this Agreement.
The Shareholders, the Members and the Partners agree, jointly and severally, to
indemnify and hold harmless the Representative for any loss, damage, costs and
expenses arising from the performance of his duties as Representative hereunder,
including, without limitation, the cost of any accounting firm or legal counsel
retained by the Representative on behalf of the Shareholders, the Members and
the Partners, but excluding any loss or damage arising from willful violation of
the law or gross negligence in the performance of his duties under this
Agreement.
(iv) All actions, decisions and instructions of the
Representative taken, made or given pursuant to the authority granted to the
Representative hereunder shall be conclusive and binding upon all of the
Shareholders and Members and no Shareholder or Member shall have the right to
object, dissent, protest or otherwise contest the same. Flextronics hereby
acknowledges that the Representative may with respect to any particular action,
decision or instruction, solicit the consent of the Shareholders and Members
before acting.
(v) The provisions of this Section are independent and
severable, shall constitute an irrevocable power of attorney coupled with an
interest granted to the Representative and shall be binding upon the executors,
heirs, legal representatives, successors and assigns of each Shareholder and
each Member.
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(d) Subrogation. In the event that any Shareholder, Member
or Partner shall be obligated to indemnify any Indemnified Person pursuant to
this Agreement, the Shareholder, the Member or the Partner shall, upon payment
of such indemnity in full, be subrogated to all rights of such Indemnified
Person with respect to the Claim to which such indemnification relates.
(e) Notice of Claim. Each notice of a Claim by Flextronics
pursuant to this Section 15.2 (the "Notice of Claim") shall be in writing,
promptly delivered upon Flextronics' knowledge of the Claim (provided that any
failure by Flextronics to deliver any Notice of Claim promptly shall not affect
or limit the indemnification rights of any Indemnified Person under this
Agreement) and contain the following information:
(i) Flextronics' good faith estimate of the reasonably
foreseeable maximum amount of the alleged Damages (which amount may be the
amount of damages claimed by a third party plaintiff in an action brought
against Flextronics, any of the Companies or the Surviving Corporation based on
alleged facts, which if true, would constitute a breach of the representations
and warranties of any Company, a Shareholder or a Member); and
(ii) A brief description, in reasonable detail (to the
extent reasonably available to Flextronics), of the facts, circumstances or
events giving rise to the alleged Damages based on Flextronics' good faith
belief thereof, including, without limitation, the identity and address of any
third-party claimant (to the extent reasonably available to Flextronics), copies
of any formal demand or complaint, and a statement as to how and whether the
Damages relate to Lightning Metal, Coating, Lightning Tool, EMF, Lightning
Europe, Lightning Texas, Logistics, Papason, 200 Scott Street, 80 Scott Street,
230 Scott Street, Lively, D.A.D., S.O.N. or S.O.N. II.
15.3 Reduction of Hold-Back Shares.
(a) Lightning Metal. Provided the procedures in Sections
15.2(c) and 15.2(e) are followed, Flextronics shall reduce the number of
Lightning Metal Hold-Back Shares issuable to the Lightning Metal Shareholders by
a number equal to the amount of Damages, if any, set forth in any Notice of
Claim or for which Flextronics shall be entitled to indemnification pursuant to
any other agreement between Flextronics and the Lightning Metal Shareholders,
divided by the closing price of Flextronics Ordinary Shares as quoted on the
Nasdaq National Market on the Closing Date (the "Closing Price") to the extent
that the amount of such Damages does not exceed the number of Lightning Metal
Hold-Back Shares available for such reduction (after giving effect to any
previous reduction thereto) multiplied by the Closing Price. In the event of any
Claim which the Representative shall, on the Release Date, be disputing pursuant
to Section 15.2(c), Flextronics may reduce the number of Lightning Metal
Hold-Back Shares to be issued to the Lightning Metal Shareholders on the Release
Date by the Estimated Claim Amount (as defined below) with respect thereto. Upon
resolution of such dispute Flextronics will issue to the Lightning Metal
Shareholders the number of Lightning Metal Hold-Back Shares, if any, that the
Lightning Metal Shareholders would have been entitled to had such dispute been
resolved prior to the Release Date, but which were not issued to the Lightning
Metal Shareholders on the
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Release Date as a result of the preceding sentence. To the extent the amount of
any Damages for which an Indemnified Person is entitled to indemnification
pursuant to Section 15.2 exceeds the number of remaining Lightning Metal
Hold-Back Shares available for reduction therefor multiplied by the Closing
Price, no additional Lightning Metal Hold-Back Shares will be allotted and
issued and such Indemnified Person shall be entitled to indemnification as to
such excess in cash pursuant to Section 15.2, including the limitations set
forth therein. All indemnification obligations of the Lightning Metal
Shareholders under this Section 15 shall be allocated proportionately among the
Lightning Metal Shareholders pro rata based on the gross consideration payable
to each Lightning Metal Shareholder under Section 1.1. "Estimated Claim Amount"
means (i) Flextronics' good faith estimate of the Damages claimed under any
disputed Claim unresolved as of the Release Date, divided by (ii) the Closing
Price.
(b) Coating. Provided the procedures in Sections 15.2(c) and
15.2(e) are followed, Flextronics shall reduce the number of Coating Hold-Back
Shares issuable to the Coating Shareholders by a number equal to the amount of
Damages, if any, set forth in any Notice of Claim, divided by the Closing Price
to the extent that the amount of such Damages does not exceed the number of
Coating Hold-Back Shares available for such reduction (after giving effect to
any previous reduction thereto) multiplied by the Closing Price. In the event of
any Claim which the Representative shall, on the Release Date, be disputing
pursuant to Section 15.2(c), Flextronics may reduce the number of Lightning
Metal Hold-Back Shares to be issued to the Coating Shareholders on the Release
Date by the Estimated Claim Amount with respect thereto. Upon resolution of such
dispute Flextronics will issue to the Coating Shareholders the number of Coating
Hold-Back Shares, if any, that the Coating Shareholders would have been entitled
to had such dispute been resolved prior to the Release Date, but which were not
issued to the Coating Shareholders on the Release Date as a result of the
preceding sentence. To the extent the amount of any Damages for which an
Indemnified Person is entitled to indemnification pursuant to Section 15.2
exceeds the number of remaining Coating Hold-Back Shares available for reduction
therefor multiplied by the Closing Price, no additional Coating Hold-Back Shares
will be allotted and issued and such Indemnified Person shall be entitled to
indemnification as to such excess in cash pursuant to Section 15.2, including
the limitations set forth therein. All indemnification obligations of the
Coating Shareholders under this Section 15 shall be allocated proportionately
among the Coating Shareholders pro rata based on the gross consideration payable
to each Coating Shareholder under Section 1.1.
(c) Lightning Tool. Provided the procedures in Sections
15.2(c) and 15.2(e) are followed, Flextronics shall reduce the number of
Lightning Tool Hold-Back Shares issuable to the Lightning Tool Shareholders by a
number equal to the amount of Damages, if any, set forth in any Notice of Claim,
divided by the Closing Price to the extent that the amount of such Damages does
not exceed the number of Lightning Tool Hold-Back Shares available for such
reduction (after giving effect to any previous reduction thereto) multiplied by
the Closing Price. In the event of any Claim which the Representative shall, on
the Release Date, be disputing pursuant to Section 15.2(c), Flextronics may
reduce the number of Lightning Tool Hold-Back Shares to be issued to the
Lightning Tool Shareholders on the Release Date by the Estimated Claim Amount
with respect thereto. Upon resolution of such dispute Flextronics will issue to
the Lightning Tool Shareholders the number of Lightning Tool Hold-Back Shares,
if
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any, that the Lightning Tool Shareholders would have been entitled to had such
dispute been resolved prior to the Release Date, but which were not issued to
the Lightning Tool Shareholders on the Release Date as a result of the preceding
sentence. To the extent the amount of any Damages for which an Indemnified
Person is entitled to indemnification pursuant to Section 15.2 exceeds the
number of remaining Lightning Tool Hold-Back Shares available for reduction
therefor multiplied by the Closing Price, no additional Lightning Tool Hold-Back
Shares will be allotted and issued and such Indemnified Person shall be entitled
to indemnification as to such excess in cash pursuant to Section 15.2, including
the limitations set forth therein. All indemnification obligations of the
Lightning Tool Shareholders under this Section 15 shall be allocated
proportionately among the Lightning Tool Shareholders pro rata based on the
gross consideration payable to each Lightning Tool Shareholder under Section
1.1.
(d) EMF. Provided the procedures in Sections 15.2(c) and
15.2(e) are followed, Flextronics shall reduce the number of EMF Hold-Back
Shares issuable to the EMF Shareholders by a number equal to the amount of
Damages, if any, set forth in any Notice of Claim, divided by the Closing Price
to the extent that the amount of such Damages does not exceed the number of EMF
Hold-Back Shares available for such reduction (after giving effect to any
previous reduction thereto) multiplied by the Closing Price. In the event of any
Claim which the Representative shall, on the Release Date, be disputing pursuant
to Section 15.2(c), Flextronics may reduce the number of EMF Hold-Back Shares to
be issued to the EMF Shareholders on the Release Date by the Estimated Claim
Amount with respect thereto. Upon resolution of such dispute Flextronics will
issue to the EMF Shareholders the number of EMF Hold-Back Shares, if any, that
the EMF Shareholders would have been entitled to had such dispute been resolved
prior to the Release Date, but which were not issued to the EMF Shareholders on
the Release Date as a result of the preceding sentence. To the extent the amount
of any Damages for which an Indemnified Person is entitled to indemnification
pursuant to Section 15.2 exceeds the number of remaining EMF Hold-Back Shares
available for reduction therefor multiplied by the Closing Price, no additional
EMF Hold-Back Shares will be allotted and issued and such Indemnified Person
shall be entitled to indemnification as to such excess in cash pursuant to
Section 15.2, including the limitations set forth therein. All indemnification
obligations of the EMF Shareholders under this Section 15 shall be allocated
proportionately among the EMF Shareholders pro rata based on the gross
consideration payable to each EMF Shareholder under Section 1.1.
(e) Lightning Europe. Provided the procedures in Sections
15.2(c) and 15.2(e) are followed, Flextronics shall reduce the number of
Lightning Europe Hold-Back Shares issuable to the Lightning Europe Shareholders
by a number equal to the amount of Damages, if any, set forth in any Notice of
Claim, divided by the Closing Price to the extent that the amount of such
Damages does not exceed the number of Lightning Europe Hold-Back Shares
available for such reduction (after giving effect to any previous reduction
thereto) multiplied by the Closing Price. In the event of any Claim which the
Representative shall, on the Release Date, be disputing pursuant to Section
15.2(c), Flextronics may reduce the number of Lightning Europe Hold-Back Shares
to be issued to the Lightning Europe Shareholders on the Release Date by the
Estimated Claim Amount with respect thereto. Upon resolution of such dispute
Flextronics will issue to the Lightning Europe Shareholders the number of
Lightning Europe Hold-Back Shares,
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if any, that the Lightning Europe Shareholders would have been entitled to had
such dispute been resolved prior to the Release Date, but which were not issued
to the Lightning Europe Shareholders on the Release Date as a result of the
preceding sentence. To the extent the amount of any Damages for which an
Indemnified Person is entitled to indemnification pursuant to Section 15.2
exceeds the number of remaining Lightning Europe Hold-Back Shares available for
reduction therefor multiplied by the Closing Price, no additional Lightning
Europe Hold-Back Shares will be allotted and issued and such Indemnified Person
shall be entitled to indemnification as to such excess in cash pursuant to
Section 15.2, including the limitations set forth therein. All indemnification
obligations of the Lightning Europe Shareholders under this Section 15 shall be
allocated proportionately among the Lightning Europe Shareholders pro rata based
on the gross consideration payable to each Lightning Europe Shareholder under
Section 1.1.
(f) Lightning Texas. Provided the procedures in Sections
15.2(c) and 15.2(e) are followed, Flextronics shall reduce the number of
Lightning Texas Hold-Back Shares issuable to the Lightning Texas Members by a
number equal to the amount of Damages, if any, set forth in any Notice of Claim
or for which Flextronics shall be entitled to indemnification pursuant to any
other agreement between Flextronics and the Lightning Texas Members, divided by
the Closing Price to the extent that the amount of such Damages does not exceed
the number of Lightning Texas Hold-Back Shares available for such reduction
(after giving effect to any previous reduction thereto) multiplied by the
Closing Price. In the event of any Claim which the Representative shall, on the
Release Date, be disputing pursuant to Section 15.2(c), Flextronics may reduce
the number of Hold-Back Shares to be issued to the Lightning Texas Members on
the Release Date by the Estimated Claim Amount with respect thereto. Upon
resolution of such dispute Flextronics will issue to the Lightning Texas Members
the number of Lightning Texas Hold-Back Shares, if any, that the Lightning Texas
Members would have been entitled to had such dispute been resolved prior to the
Release Date, but which were not issued to the Lightning Texas Members on the
Release Date as a result of the preceding sentence. To the extent the amount of
any Damages for which an Indemnified Person is entitled to indemnification
pursuant to Section 15.2 exceeds the number of remaining Lightning Texas
Hold-Back Shares available for reduction therefor multiplied by the Closing
Price, no additional Lightning Texas Hold-Back Shares will be allotted and
issued and such Indemnified Person shall be entitled to indemnification as to
such excess in cash pursuant to Section 15.2, including the limitations set
forth therein. All indemnification obligations of the Lightning Texas Members
under this Section 15 shall be allocated proportionately among the Lightning
Texas Members pro rata based on the gross consideration payable to each
Lightning Texas Member under Section 1.1.
(g) Logistics. Provided the procedures in Sections 15.2(c)
and 15.2(e) are followed, Flextronics shall reduce the number of Logistics
Hold-Back Shares issuable to the Logistics Members by a number equal to the
amount of Damages, if any, set forth in any Notice of Claim, divided by the
Closing Price to the extent that the amount of such Damages does not exceed the
number of Logistics Hold-Back Shares available for such reduction (after giving
effect to any previous reduction thereto) multiplied by the Closing Price. In
the event of any Claim which the Representative shall, on the Release Date, be
disputing pursuant to Section 15.2(c), Flextronics may reduce the number of
Logistics Hold-Back Shares to be issued
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to the Logistics Members on the Release Date by the Estimated Claim Amount with
respect thereto. Upon resolution of such dispute Flextronics will issue to the
Logistics Members the number of Logistics Hold-Back Shares, if any, that the
Logistics Members would have been entitled to had such dispute been resolved
prior to the Release Date, but which were not issued to the Logistics Members on
the Release Date as a result of the preceding sentence. To the extent the amount
of any Damages for which an Indemnified Person is entitled to indemnification
pursuant to Section 15.2 exceeds the number of remaining Logistics Hold-Back
Shares available for reduction therefor multiplied by the Closing Price, no
additional Logistics Hold-Back Shares will be allotted and issued and such
Indemnified Person shall be entitled to indemnification as to such excess in
cash pursuant to Section 15.2, including the limitations set forth therein. All
indemnification obligations of the Logistics Members under this Section 15 shall
be allocated proportionately among the Logistics Members pro rata based on the
gross consideration payable to each Logistics Member under Section 1.1.
(h) Papason. Provided the procedures in Sections 15.2(c) and
15.2(e) are followed, Flextronics shall reduce the number of Papason Hold-Back
Shares issuable to the Papason Members by a number equal to the amount of
Damages, if any, set forth in any Notice of Claim, divided by the Closing Price
to the extent that the amount of such Damages does not exceed the number of
Papason Hold-Back Shares available for such reduction (after giving effect to
any previous reduction thereto) multiplied by the Closing Price. In the event of
any Claim which the Representative shall, on the Release Date, be disputing
pursuant to Section 15.2(c), Flextronics may reduce the number of Papason
Hold-Back Shares to be issued to the Papason Members on the Release Date by the
Estimated Claim Amount with respect thereto. Upon resolution of such dispute
Flextronics will issue to the Papason Members the number of Papason Hold-Back
Shares, if any, that the Papason Members would have been entitled to had such
dispute been resolved prior to the Release Date, but which were not issued to
the Papason Members on the Release Date as a result of the preceding sentence.
To the extent the amount of any Damages for which an Indemnified Person is
entitled to indemnification pursuant to Section 15.2 exceeds the number of
remaining Papason Hold-Back Shares available for reduction therefor multiplied
by the Closing Price, no additional Papason Hold-Back Shares will be allotted
and issued and such Indemnified Person shall be entitled to indemnification as
to such excess in cash pursuant to Section 15.2, including the limitations set
forth therein. All indemnification obligations of the Papason Members under this
Section 15 shall be allocated proportionately among the Papason Members pro rata
based on the gross consideration payable to each Papason Member under Section
1.1.
(i) 200 Scott Street. Provided the procedures in Sections
15.2(c) and 15.2(e) are followed, Flextronics shall reduce the number of 200
Scott Street Hold-Back Shares issuable to the 200 Scott Street Members by a
number equal to the amount of Damages, if any, set forth in any Notice of Claim,
divided by the Closing Price to the extent that the amount of such Damages does
not exceed the number of 200 Scott Street Hold-Back Shares available for such
reduction (after giving effect to any previous reduction thereto) multiplied by
the Closing Price. In the event of any Claim which the Representative shall, on
the Release Date, be disputing pursuant to Section 15.2(c), Flextronics may
reduce the number of 200 Scott Street Hold-Back Shares to be issued to the 200
Scott Street Members on the Release Date by the
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Estimated Claim Amount with respect thereto. Upon resolution of such dispute
Flextronics will issue to the 200 Scott Street Members the number of 200 Scott
Street Hold-Back Shares, if any, that the 200 Scott Street Members would have
been entitled to had such dispute been resolved prior to the Release Date, but
which were not issued to the 200 Scott Street Members on the Release Date as a
result of the preceding sentence. To the extent the amount of any Damages for
which an Indemnified Person is entitled to indemnification pursuant to Section
15.2 exceeds the number of remaining 200 Scott Street Hold-Back Shares available
for reduction therefor multiplied by the Closing Price, no additional 200 Scott
Street Hold-Back Shares will be allotted and issued and such Indemnified Person
shall be entitled to indemnification as to such excess in cash pursuant to
Section 15.2, including the limitations set forth therein. All indemnification
obligations of the 200 Scott Street Members under this Section 15 shall be
allocated proportionately among the 200 Scott Street Members pro rata based on
the gross consideration payable to each 200 Scott Street Member under Section
1.1.
(j) 80 Scott Street. Provided the procedures in Sections
15.2(c) and 15.2(e) are followed, Flextronics shall reduce the number of 80
Scott Street Hold-Back Shares issuable to the 80 Scott Street Members by a
number equal to the amount of Damages, if any, set forth in any Notice of Claim,
divided by the Closing Price to the extent that the amount of such Damages does
not exceed the number of 80 Scott Street Hold-Back Shares available for such
reduction (after giving effect to any previous reduction thereto) multiplied by
the Closing Price. In the event of any Claim which the Representative shall, on
the Release Date, be disputing pursuant to Section 15.2(c), Flextronics may
reduce the number of 80 Scott Street Hold-Back Shares to be issued to the 80
Scott Street Members on the Release Date by the Estimated Claim Amount with
respect thereto. Upon resolution of such dispute Flextronics will issue to the
80 Scott Street Members the number of 80 Scott Street Hold-Back Shares, if any,
that the 80 Scott Street Members would have been entitled to had such dispute
been resolved prior to the Release Date, but which were not issued to the 80
Scott Street Members on the Release Date as a result of the preceding sentence.
To the extent the amount of any Damages for which an Indemnified Person is
entitled to indemnification pursuant to Section 15.2 exceeds the number of
remaining 80 Scott Street Hold-Back Shares available for reduction therefor
multiplied by the Closing Price, no additional 80 Scott Street Hold-Back Shares
will be allotted and issued and such Indemnified Person shall be entitled to
indemnification as to such excess in cash pursuant to Section 15.2, including
the limitations set forth therein. All indemnification obligations of the 80
Scott Street Members under this Section 15 shall be allocated proportionately
among the 80 Scott Street Members pro rata based on the gross consideration
payable to each 80 Scott Street Member under Section 1.1.
(k) 230 Scott Street. Provided the procedures in Sections
15.2(c) and 15.2(e) are followed, Flextronics shall reduce the number of 230
Scott Street Hold-Back Shares issuable to the 230 Scott Street Members by a
number equal to the amount of Damages, if any, set forth in any Notice of Claim,
divided by the Closing Price to the extent that the amount of such Damages does
not exceed the number of 230 Scott Street Hold-Back Shares available for such
reduction (after giving effect to any previous reduction thereto) multiplied by
the Closing Price. In the event of any Claim which the Representative shall, on
the Release Date, be disputing pursuant to Section 15.2(c), Flextronics may
reduce the number of 230 Scott Street
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Hold-Back Shares to be issued to the 230 Scott Street Members on the Release
Date by the Estimated Claim Amount with respect thereto. Upon resolution of such
dispute Flextronics will issue to the 230 Scott Street Members the number of 230
Scott Street Hold-Back Shares, if any, that the 230 Scott Street Members would
have been entitled to had such dispute been resolved prior to the Release Date,
but which were not issued to the 230 Scott Street Members on the Release Date as
a result of the preceding sentence. To the extent the amount of any Damages for
which an Indemnified Person is entitled to indemnification pursuant to Section
15.2 exceeds the number of remaining 230 Scott Street Hold-Back Shares available
for reduction therefor multiplied by the Closing Price, no additional 230 Scott
Street Hold-Back Shares will be allotted and issued and such Indemnified Person
shall be entitled to indemnification as to such excess in cash pursuant to
Section 15.2, including the limitations set forth therein. All indemnification
obligations of the 230 Scott Street Members under this Section 15 shall be
allocated proportionately among the 230 Scott Street Members pro rata based on
the gross consideration payable to each 230 Scott Street Member under Section
1.1.
(l) Lively. Provided the procedures in Sections 15.2(c) and
15.2(e) are followed, Flextronics shall reduce the number of Lively Hold-Back
Shares issuable to the Lively Members by a number equal to the amount of
Damages, if any, set forth in any Notice of Claim, divided by the Closing Price
to the extent that the amount of such Damages does not exceed the number of
Lively Hold-Back Shares available for such reduction (after giving effect to any
previous reduction thereto) multiplied by the Closing Price. In the event of any
Claim which the Representative shall, on the Release Date, be disputing pursuant
to Section 15.2(c), Flextronics may reduce the number of Lively Hold-Back Shares
to be issued to the Lively Members on the Release Date by the Estimated Claim
Amount with respect thereto. Upon resolution of such dispute Flextronics will
issue to the Lively Members the number of Lively Hold-Back Shares, if any, that
the Lively Members would have been entitled to had such dispute been resolved
prior to the Release Date, but which were not issued to the Lively Members on
the Release Date as a result of the preceding sentence. To the extent the amount
of any Damages for which an Indemnified Person is entitled to indemnification
pursuant to Section 15.2 exceeds the number of remaining Lively Hold-Back Shares
available for reduction therefor multiplied by the Closing Price, no additional
Lively Hold-Back Shares will be allotted and issued and such Indemnified Person
shall be entitled to indemnification as to such excess in cash pursuant to
Section 15.2, including the limitations set forth therein. All indemnification
obligations of the Lively Members under this Section 15 shall be allocated
proportionately among the Lively Members pro rata based on the gross
consideration payable to each Lively Member under Section 1.1.
(m) D.A.D. Provided the procedures in Sections 15.2(c) and
15.2(e) are followed, Flextronics shall reduce the number of D.A.D. Hold-Back
Shares issuable to the D.A.D. Partners by a number equal to the amount of
Damages, if any, set forth in any Notice of Claim, divided by the Closing Price
to the extent that the amount of such Damages does not exceed the number of
D.A.D. Hold-Back Shares available for such reduction (after giving effect to any
previous reduction thereto) multiplied by the Closing Price. In the event of any
Claim which the Representative shall, on the Release Date, be disputing pursuant
to Section 15.2(c), Flextronics may reduce the number of D.A.D. Hold-Back Shares
to be issued to the D.A.D.
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Partners on the Release Date by the Estimated Claim Amount with respect thereto.
Upon resolution of such dispute Flextronics will issue to the D.A.D. Partners
the number of D.A.D. Hold-Back Shares, if any, that the D.A.D. Partners would
have been entitled to had such dispute been resolved prior to the Release Date,
but which were not issued to the D.A.D. Partners on the Release Date as a result
of the preceding sentence. To the extent the amount of any Damages for which an
Indemnified Person is entitled to indemnification pursuant to Section 15.2
exceeds the number of remaining D.A.D. Hold-Back Shares available for reduction
therefor multiplied by the Closing Price, no additional D.A.D. Hold-Back Shares
will be allotted and issued and such Indemnified Person shall be entitled to
indemnification as to such excess in cash pursuant to Section 15.2, including
the limitations set forth therein. All indemnification obligations of the D.A.D.
Partners under this Section 15 shall be allocated proportionately among the
D.A.D. Partners pro rata based on the gross consideration payable to each D.A.D.
Partner under Section 1.1.
(n) S.O.N. Provided the procedures in Sections 15.2(c) and
15.2(e) are followed, Flextronics shall reduce the number of S.O.N. Hold-Back
Shares issuable to the S.O.N. Partners by a number equal to the amount of
Damages, if any, set forth in any Notice of Claim, divided by the Closing Price
to the extent that the amount of such Damages does not exceed the number of
S.O.N. Hold-Back Shares available for such reduction (after giving effect to any
previous reduction thereto) multiplied by the Closing Price. In the event of any
Claim which the Representative shall, on the Release Date, be disputing pursuant
to Section 15.2(c), Flextronics may reduce the number of S.O.N. Hold-Back Shares
to be issued to the S.O.N. Partners on the Release Date by the Estimated Claim
Amount with respect thereto. Upon resolution of such dispute Flextronics will
issue to the S.O.N. Partners the number of S.O.N. Hold-Back Shares, if any, that
the S.O.N. Partners would have been entitled to had such dispute been resolved
prior to the Release Date, but which were not issued to the S.O.N. Partners on
the Release Date as a result of the preceding sentence. To the extent the amount
of any Damages for which an Indemnified Person is entitled to indemnification
pursuant to Section 15.2 exceeds the number of remaining S.O.N. Hold-Back Shares
available for reduction therefor multiplied by the Closing Price, no additional
S.O.N. Hold-Back Shares will be allotted and issued and such Indemnified Person
shall be entitled to indemnification as to such excess in cash pursuant to
Section 15.2, including the limitations set forth therein. All indemnification
obligations of the S.O.N. Partners under this Section 15 shall be allocated
proportionately among the S.O.N. Partners pro rata based on the gross
consideration payable to each S.O.N. Partner under Section 1.1.
(o) S.O.N. II. Provided the procedures in Sections 15.2(c)
and 15.2(e) are followed, Flextronics shall reduce the number of S.O.N. II
Hold-Back Shares issuable to the S.O.N. II Partners by a number equal to the
amount of Damages, if any, set forth in any Notice of Claim, divided by the
Closing Price to the extent that the amount of such Damages does not exceed the
number of S.O.N. II Hold-Back Shares available for such reduction (after giving
effect to any previous reduction thereto) multiplied by the Closing Price. In
the event of any Claim which the Representative shall, on the Release Date, be
disputing pursuant to Section 15.2(c), Flextronics may reduce the number of
S.O.N. II Hold-Back Shares to be issued to the S.O.N. II Partners on the Release
Date by the Estimated Claim Amount with respect thereto. Upon resolution of such
dispute Flextronics will issue to the S.O.N. II Partners the
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<PAGE> 86
number of S.O.N. II Hold-Back Shares, if any, that the S.O.N. II Partners would
have been entitled to had such dispute been resolved prior to the Release Date,
but which were not issued to the S.O.N. II Partners on the Release Date as a
result of the preceding sentence. To the extent the amount of any Damages for
which an Indemnified Person is entitled to indemnification pursuant to Section
15.2 exceeds the number of remaining S.O.N. II Hold-Back Shares available for
reduction therefor multiplied by the Closing Price, no additional S.O.N. II
Hold-Back Shares will be allotted and issued and such Indemnified Person shall
be entitled to indemnification as to such excess in cash pursuant to Section
15.2, including the limitations set forth therein. All indemnification
obligations of the S.O.N. II Partners under this Section 15 shall be allocated
proportionately among the S.O.N. II Partners pro rata based on the gross
consideration payable to each S.O.N. II Partner under Section 1.1.
(p) An Indemnified Person may institute Claims against the
Hold-Back Shares and in satisfaction thereof may recover Hold-Back Shares, in
accordance with the terms of this Agreement, without rescinding or attempting to
rescind any transaction consummated by this Agreement and without first
exhausting any other remedies that may be available to it with respect to the
subject matter of any Claim, and such Indemnified Person may proceed directly in
accordance with the provisions of this Agreement. The assertion of any single
Claim for indemnification hereunder will not bar an Indemnified Person from
asserting any other Claim or Claims hereunder.
(q) Flextronics will allot and issue the Hold-Back Shares
(reduced as provided in this Section 15.3, if applicable) to the Shareholders,
the Members and the Partners on the Release Date in accordance with Section 1.1,
and Flextronics will take such action as may be necessary to cause share
certificates to be issued in the name of the Shareholders, the Members and the
Partners and deliver such share certificates to the Shareholders, the Members
and the Partners promptly, and in any event within twenty (20) business days,
after the Release Date. Cash will be paid in lieu of fractions of Flextronics
Ordinary Shares as provided in Section 1.2. It is hereby acknowledged and agreed
that the Hold-Back Shares will not be represented by share certificates and will
remain as unissued Flextronics Ordinary Shares until the Release Date (or such
later time as such shares are issued pursuant to the preceding paragraph).
16. MISCELLANEOUS
16.1 Governing Law; Dispute Resolution. The internal laws of the
State of California (irrespective of its choice of law principles) will govern
the validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties hereto.
Any dispute hereunder ("Dispute") brought by the Companies, the Shareholders,
the Members or the Partners against Flextronics shall be settled by arbitration
in San Francisco, California and any Dispute brought by Flextronics or any
Indemnified Persons shall be settled by arbitration in Chicago, Illinois. Except
as herein specifically stated, such Disputes shall be settled in accordance with
the commercial arbitration rules of the American Arbitration Association ("AAA
Rules") then in effect. However, in all events, these arbitration provisions
shall govern over any conflicting rules which may now or hereafter be contained
in the AAA Rules. Any judgment upon the award rendered by the arbitrator may be
entered in any
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court having jurisdiction over the subject matter thereof. The arbitrator shall
have the authority to grant any equitable and legal remedies that would be
available in any judicial proceeding instituted to resolve a Dispute.
(a) Compensation of Arbitrator. Any such arbitration will be
conducted before a single arbitrator who will be compensated for his or her
services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon reasonable hourly or daily consulting
rates for the arbitrator in the event the parties are not able to agree upon his
or her rate of compensation.
(b) Selection of Arbitrator. The American Arbitration
Association will have the authority to select an arbitrator from a list of
arbitrators who are lawyers familiar with California contract law; provided,
however, that such lawyers cannot perform or have performed, within the
immediately preceding ten (10) years, work for a firm then performing services
for either party, that each party will have the opportunity to make such
reasonable objection to any of the arbitrators listed as such party may wish and
that the American Arbitration Association will select the arbitrator from the
list of arbitrators as to whom neither party makes any such objection. In the
event that the foregoing procedure is not followed, each party will choose one
person from the list of arbitrators provided by the American Arbitration
Association (provided that such person does not have a conflict of interest),
and the two persons so selected will select from the list provided by the
American Arbitration Association the person who will act as the arbitrator.
(c) Payment of Costs. Flextronics, the Shareholders, the
Members and the Partners will bear the expense of deposits and advances required
by the arbitrator in equal proportions, but either party may advance such
amounts, subject to recovery as an addition or offset to any award. The
arbitrator will award to the prevailing party, as determined by the arbitrator,
all costs, fees and expenses related to the arbitration, including reasonable
fees and expenses of attorneys, accountants and other professionals incurred by
the prevailing party.
(d) Burden of Proof. For any Dispute submitted to
arbitration, the burden of proof will be as it would be if the claim were
litigated in a judicial proceeding.
(e) Award. Upon the conclusion of any arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons for
any decision reached and will deliver such documents to each party to this
Agreement along with a signed copy of the award. The arbitrator may not award
punitive damages.
(f) Terms of Arbitration. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions of
this Agreement.
(g) Exclusive Remedy. Except as specifically otherwise
provided in this Agreement, arbitration will be the sole and exclusive remedy of
the parties for any Dispute arising out of this Agreement.
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16.2 Assignment; Binding Upon Successors and Assigns. No party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other parties hereto. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
16.3 Severability. If any provision of this Agreement, or the
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
16.4 Counterparts. This Agreement may be executed in counterparts,
each of which will be an original as regards any party whose name appears
thereon and all of which together will constitute one and the same instrument.
This Agreement will become binding when one or more counterparts hereof,
individually or taken together, bear the signatures of all parties reflected
hereon as signatories.
16.5 Other Remedies. Except as otherwise provided herein, and
subject to Section 15, any and all remedies herein expressly conferred upon a
party will be deemed cumulative with and not exclusive of any other remedy
conferred hereby or by law on such party, and the exercise of any one remedy
will not preclude the exercise of any other.
16.6 Amendment and Waivers. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only by writing signed by each party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default. This Agreement may be amended by the parties hereto at any
time before or after approval of the Shareholders, the Members and the Partners.
16.7 No Waiver. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. The waiver by any party of the
right to enforce any of the provisions hereof on any occasion will not be
construed to be a waiver of the right of such party to enforce such provision on
any other occasion.
16.8 Expenses. Each party will bear its respective expenses and
fees of its own accountants, attorneys, investment bankers and other
professionals incurred with respect to this Agreement and the transactions
contemplated hereby. If the Transactions are consummated, Flextronics will pay
at the Closing the reasonable accounting and attorneys' fees and expenses and
other fees and expenses incurred by the Companies that are solely related to the
Transactions, which amount to be paid by Flextronics shall not to exceed a total
of $75,000. If for any reason Flextronics pays any amounts in excess of the
foregoing limits, Flextronics will be entitled to be reimbursed by the
Shareholders, the Members and the Partners for such payment
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and, if not so reimbursed, Flextronics will be entitled to treat the amount of
payment as Damages recoverable under Section 15.2, without giving effect to the
first sentence of the second paragraph of Section 15.2(a).
16.9 Notices. Any notice or other communication required or
permitted to be given under this Agreement will be in writing, will be delivered
personally, by mail or express delivery, postage prepaid, or by facsimile, and
will be deemed given upon actual delivery or, if mailed by registered or
certified mail, on the third business day following deposit in the mails, or, if
by facsimile, against confirmation of receipt thereof, addressed as follows:
(a) If to Flextronics:
Flextronics International Ltd.
2090 Fortune Drive
San Jose, California 95131
Attention: Robert R.B. Dykes
President, Systems Group and Chief
Financial Officer
Phone: (408) 428-1300
Fax: (408) 428-0859
with a copy to:
Fenwick & West LLP
275 Battery Street
San Francisco, California 94111
Attention: David K. Michaels, Esq.
Phone: (415) 875-2455
Fax: (415) 281-1350
(b) If to Lightning Metal Specialties, Incorporated:
Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
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(c) If to Coating Technologies, Inc.:
Coating Technologies, Inc.
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(d) If to Lightning Tool and Design, Inc.:
Lightning Tool and Design, Inc.
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(e) If to Lightning Manufacturing Solutions Texas,
L.L.C.:
Lightning Manufacturing Solutions Texas, L.L.C.
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
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(f) If to Lightning Logistics, L.L.C.:
Lightning Logistics, L.L.C.
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(g) If to Lightning Metal Specialties E.M.F., Ltd.:
Lightning Metal Specialties E.M.F., Ltd.
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(h) If to Lightning Manufacturing Solutions-Europe,
Ltd.:
Lightning Manufacturing Solutions-Europe, Ltd.
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
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(i) If to Papason, L.L.C.:
Papason, L.L.C.
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(j) If to 200 Scott Street, L.L.C.:
200 Scott Street, L.L.C.
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(k) If to 80 Scott Street, L.L.C.:
80 Scott Street, L.L.C.
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(l) If to 230 Scott Street, L.L.C.:
230 Scott Street, L.L.C.
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c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(m) If to 1350 Lively Blvd, L.L.C.:
1350 Lively Blvd, L.L.C.
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(n) If to D.A.D. Partnership:
D.A.D. Partnership
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(o) If to S.O.N. Partnership:
S.O.N. Partnership
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c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(p) If to S.O.N. II Partnership:
S.O.N. II Partnership
c/o Lightning Metal Specialties, Incorporated
123 Scott Street
Elk Grove Village, Illinois 60007
Attention: Frank Dotzler
Phone: (847) 956-6700
Fax: (847) 956-6899
with copies to:
the parties specified in paragraph (q) below
(q) Terry Ray
80 Scott Street
Elk Grove Village, Illinois 60007
Phone: (847) 758-2324 ext. 406
Fax: (847) 758-2323
and
Piper Marbury Rudnick & Wolfe
203 North LaSalle Street
Chicago, Illinois 60601
Attention: Byron S. Delman, Esq.
Phone: (312) 368-2179
Fax: (312) 236-7516
(r) If to the Representative, the Shareholders,
the Members or the Partners:
Frank Dotzler
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123 Scott Street
Elk Grove Village, Illinois 60007
Phone: (847) 956-6700
Fax: (847) 956-6899
with a copy to:
Piper Marbury Rudnick & Wolfe
203 North LaSalle Street
Chicago, Illinois 60601
Attention: Byron S. Delman, Esq.
Phone: (312) 368-2179
Fax: (312) 236-7516
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 16.9.
16.10 Construction of Agreement. The language hereof will not be
construed for or against either party. A reference to an article, section,
schedule or exhibit will mean an article or section in, schedule to, or an
exhibit to, this Agreement, unless otherwise explicitly set forth. The titles
and headings in this Agreement are for reference purposes only and will not in
any manner limit the construction of this Agreement. For the purposes of such
construction, this Agreement will be considered as a whole.
16.11 Further Assurances. Each party agrees to cooperate fully with
the other party and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by another party to evidence and reflect the transactions provided for
herein and to carry into effect the intent of this Agreement.
16.12 Absence of Third-Party Beneficiary Rights. No provisions of
this Agreement are intended, nor will be interpreted, to provide or create any
third-party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, partner or employee of any party hereto or any other person
or entity, unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof will be personal solely between the parties to
this Agreement.
16.13 Public Announcement. Upon or following execution of this
Agreement, Flextronics may issue a press release, previously reviewed by the
Companies and with the consent of the Companies, announcing the Transactions, it
being understood, however, that the Companies may make such private
announcements to its employees and such customers as may be approved in writing
by Flextronics concerning the subject matter of this Agreement that it deems are
reasonably necessary or advisable to carry into effect the transactions
contemplated hereby. Thereafter, Flextronics may issue such press releases, and
make such other disclosures regarding the Transactions, as it reasonably and in
good faith determines are required under applicable securities laws or
regulatory rules; provided, however, that the Companies and their
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counsel will have a reasonable opportunity to review any such disclosure to be
made before the Effective Time prior to its issuance.
16.14 Time is of the Essence. The parties hereto acknowledge and
agree that time is of the essence in connection with the execution, delivery and
performance of this Agreement, and that they will each utilize all reasonable
efforts to satisfy all the conditions to Closing on or before November 30, 2000.
16.15 Entire Agreement. This Agreement, the Company Ancillary
Agreements, the Shareholders Ancillary Agreements, the Flextronics Ancillary
Agreements, the Merger Subs Ancillary Agreements, that certain Indemnification
Agreement dated the date hereof among Flextronics, the Lightning Metal
Shareholders and the Lightning Texas Members and the exhibits and schedules
hereto and thereto constitute the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof and supersede all prior
and contemporaneous agreements or understandings, inducements or conditions,
express or implied, written or oral, between the parties with respect to the
subject matter hereof. The express terms hereof control and supersede any course
of performance or usage of trade inconsistent with any of the terms hereof.
16.16 Effect of Schedules. Notwithstanding anything to the contrary
contained in this Agreement or in any of the schedules, any information
disclosed in one of such schedules shall be deemed to be disclosed in any other
schedules to which such information is relevant, to the extent it is reasonably
apparent from the information disclosed that it is relevant to such other
schedules.
16.17 Mutual Drafting. This Agreement is the joint product of
Flextronics, the Companies, the Shareholders, the Members and the Partners and
each provision hereof has been subject to the mutual consultation, negotiation
and agreement of Flextronics, the Companies, the Shareholders, the Members and
the Partners and shall not be construed for or against any party thereto.
16.18 No Joint Ventures. Nothing contained in this Agreement will
be deemed or construed as creating a joint venture or partnership between the
parties hereto. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party will have the
power to control the activities and operations of any other, and the parties'
status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as having
any authority or relationship in contravention of this Section 16.18.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
FLEXTRONICS INTERNATIONAL LTD. LIGHTNING METAL SPECIALTIES,
INCORPORATED
By: /s/ Robert R. B. Dykes By: /s/ Frank Dotzler
--------------------------------- -------------------------------
Name: Robert R. B. Dykes Frank Dotzler
Title: President, Systems Group & CFO Vice President
LIGHTNING METAL ACQUISITION CORP. COATING TECHNOLOGIES, INC.
By: /s/ Tim Stewart By: /s/ Frank Dotzler
--------------------------------- -------------------------------
Name: Tim Stewart Frank Dotzler
Title: Secretary Vice President
COATING ACQUISITION CORP. LIGHTNING TOOL AND DESIGN, INC.
By: /s/ Tim Stewart By: /s/ Frank Dotzler
--------------------------------- -------------------------------
Name: Tim Stewart Frank Dotzler
Title: Secretary Vice President
LIGHTNING TOOL ACQUISITION CORP. LIGHTNING METAL SPECIALTIES
E.M.F., LTD.
By: /s/ Tim Stewart By: /s/ Frank Dotzler
--------------------------------- -------------------------------
Name: Tim Stewart Frank Dotzler
Title: Secretary Vice President
[SIGNATURE PAGE 1 OF 9 TO AGREEMENT AND PLAN OF REORGANIZATION]
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LIGHTNING MANUFACTURING LIGHTNING MANUFACTURING
SOLUTIONS-EUROPE, LTD. SOLUTIONS TEXAS, L.L.C.
By: /s/ Frank Dotzler By: /s/ Frank Dotzler
--------------------------------- -------------------------------
Frank Dotzler Frank Dotzler
President President
LIGHTNING LOGISTICS, L.L.C. PAPASON, L.L.C.
By: /s/ Frank Dotzler By: /s/ Frank Dotzler
--------------------------------- -------------------------------
Frank Dotzler Name:
Member Title:
200 SCOTT STREET, L.L.C. 80 SCOTT STREET, L.L.C.
By: /s/ Frank Dotzler By: /s/ Frank Dotzler
--------------------------------- -------------------------------
Name: Frank Dotzler Name: Frank Dotzler
Title: Member Title: Member
230 SCOTT STREET, L.L.C. 1350 LIVELY BLVD, L.L.C.
By: /s/ Frank Dotzler By: /s/ Frank Dotzler
--------------------------------- -------------------------------
Name: Frank Dotzler Name: Frank Dotzler
Title: Member Title: Member
[SIGNATURE PAGE 2 OF 9 TO AGREEMENT AND PLAN OF REORGANIZATION]
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D.A.D. PARTNERSHIP
By: /s/ Byron S. Delman
---------------------------------
Byron S. Delman
as Trustee of the Lorraine Trust
established under the Arder Daughters'
Trusts dated December 31, 1990
as Trustee of the Terri Trust established
under the Arder Daughters' Trusts dated
December 31, 1990
as Trustee of the Carolyn Trust
established under the Arder Daughters'
Trusts dated December 31, 1990
as Trustee of the Diane Trust established
under the Arder Daughters' Trusts dated
December 31, 1990
as Trustee of the Evelyn Trust u/a/d
December 31, 1990
S.O.N. II PARTNERSHIP
By: /s/ Frank Dotzler
---------------------------------
Frank Dotzler, as a Manager
[SIGNATURE PAGE 3 OF 9 TO AGREEMENT AND PLAN OF REORGANIZATION]
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LIGHTNING METAL SHAREHOLDERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler, as Trustee of the Ronald W. Arder, Jr.
Declaration of Trust of Frank J.
Dotzler dated August 8, 1991 as
Amended and Restated on
October 27, 1999
/s/ John M. Dotzler /s/ Ronald W. Arder, Sr.
--------------------------------- ----------------------------------
John M. Dotzler Ronald W. Arder, Sr., as Trustee
of the Ronald W. Arder Revocable
Trust dated April 19, 1988, as
restated September 23, 1991
COATING SHAREHOLDERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
/s/ Donato Clemente /s/ William Fitch
--------------------------------- ----------------------------------
Donato Clemente William Fitch
[SIGNATURE PAGE 4 OF 9 TO AGREEMENT AND PLAN OF REORGANIZATION]
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LIGHTNING TOOL SHAREHOLDERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
/s/ Neven Rudman /s/ Timothy J. Perry
--------------------------------- ----------------------------------
Neven Rudman Timothy J. Perry
/s/ Bruce R. Cox
---------------------------------
Bruce R. Cox
EMF SHAREHOLDERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
LIGHTNING EUROPE SHAREHOLDERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
Lightning Metal Specialties, Incorporated
By: /s/ Frank J. Dotzler
-----------------------------------
Frank J. Dotzler
Vice President
[SIGNATURE PAGE 5 OF 9 TO AGREEMENT AND PLAN OF REORGANIZATION]
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<PAGE> 102
LIGHTNING TEXAS MEMBERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
LOGISTICS MEMBERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank Dotzler Ronald W. Arder, Jr.
/s/ Van Holley /s/ Lyndon M. Frame
--------------------------------- ----------------------------------
Van Holley Lyndon M. Frame
PAPASON MEMBERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
[SIGNATURE PAGE 6 OF 8 TO AGREEMENT AND PLAN OF REORGANIZATION]
101
<PAGE> 103
200 SCOTT STREET MEMBERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
80 SCOTT STREET MEMBERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
/s/ Neven Rudman
---------------------------------
Neven Rudman
230 SCOTT STREET MEMBERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
[SIGNATURE PAGE 7 OF 9 TO AGREEMENT AND PLAN OF REORGANIZATION]
102
<PAGE> 104
LIVELY MEMBERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
/s/ Donato Clemente
-----------------------------------
Donato Clemente
D.A.D. PARTNERS:
/s/ Byron S. Delman /s/ Byron S. Delman
--------------------------------- ----------------------------------
Byron S. Delman, as Trustee of Byron S. Delman, as Trustee of
the Lorraine Trust established the Terri Trust established
under the Arder Daughters' under the Arder Daughters'
Trusts dated December 31, 1990 Trusts dated December 31, 199
/s/ Byron S. Delman /s/ Byron S. Delman
--------------------------------- ----------------------------------
Byron S. Delman, as Trustee of Byron S. Delman, as Trustee of
the Carolyn Trust established the Diane Trust established
under the Arder Daughters' under the Arder Daughters'
Trusts dated December 31, 1990 Trusts dated December 31, 1990
/s/ Byron S. Delman
--------------------------------- ----------------------------------
Byron S. Delman, as Trustee of
the Evelyn Trust u/a/d
December 31, 1990
S.O.N. PARTNERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
[SIGNATURE PAGE 8 OF 9 TO AGREEMENT AND PLAN OF REORGANIZATION]
103
<PAGE> 105
S.O.N. II PARTNERS:
/s/ Frank J. Dotzler /s/ Ronald W. Arder, Jr.
--------------------------------- ----------------------------------
Frank J. Dotzler Ronald W. Arder, Jr.
[SIGNATURE PAGE 9 OF 9 TO AGREEMENT AND PLAN OF REORGANIZATION]
104
<PAGE> 106
EXHIBIT INDEX TO AGREEMENT AND PLAN OF REORGANIZATION
Exhibit A List of Shareholders, Members and Partners
Exhibit B-1 Certificates of Merger
Exhibit B-2 Plans of Merger
Exhibit C Voting Agreement
Exhibit D Investment Representation Letter
Exhibit E Registration Rights Agreement
Exhibit F-1 Form of Allen & Gledhill Opinion
Exhibit F-2 Form of Fenwick & West LLP Opinion
Exhibit G Retention and Noncompetition Agreement
Exhibit H Employment Agreement
Exhibit I-1 Form of Piper Marbury Rudnick & Wolfe Opinion
Exhibit I-2 Form of Matheson Ormsby Prentice Opinion
Exhibit J Estoppel Certificate
Exhibit K Company Affiliates Agreement
<PAGE> 107
TABLE OF DEFINITIONS
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<S> <C>
1933 Act 1.5
200 Scott Street Opening Paragraph
200 Scott Street Acquisition Price 1.1.(b)(ix)
200 Scott Street Exchange Ratio 1.1.(b)(ix)
200 Scott Street Hold-Back Exchange Ratio 1.1.(b)(ix)
200 Scott Street Hold-Back Shares 1.1.(b)(ix)
200 Scott Street Interests 1.1.(b)(ix)
200 Scott Street Members Opening Paragraph
200 Scott Street Ownership Loss 15.2(ix)
230 Scott Street Opening Paragraph
230 Scott Street Acquisition Price 1.1.(b)(xi)
230 Scott Street Exchange Ratio 1.1.(b)(xi)
230 Scott Street Hold-Back Exchange Ratio 1.1.(b)(xi)
230 Scott Street Hold-Back Shares 1.1.(b)(xi)
230 Scott Street Interests 1.1.(b)(xi)
230 Scott Street Members Opening Paragraph
230 Scott Street Ownership Loss 15.2(xi)
80 Scott Street Opening Paragraph
80 Scott Street Acquisition Price 1.1.(b)(x)
80 Scott Street Exchange Ratio 1.1.(b)(x)
80 Scott Street Hold-Back Exchange Ratio 1.1.(b)(x)
80 Scott Street Hold-Back Shares 1.1.(b)(x)
80 Scott Street Interests 1.1.(b)(x)
80 Scott Street Members Opening Paragraph
80 Scott Street Ownership Loss 15.2(x)
AAA Rules 16.1
Agreement Opening Paragraph
Balance Sheet Date 2.4
Basket 15.2(i)
Certificates of Merger Recitals
CG50A Clearance Certificate 2.1(b)
Claim 15.2(b)
Closing 11.1
Closing Date 11.1
Closing Price 15.3(a)
Coating Opening Paragraph
Coating Acquisition Price 1.1.(b)(ii)
Coating Capital Stock 1.1.(b)(ii)
Coating Common Stock 1.1.(a)(ii)
Coating Exchange Ratio 1.1.(b)(ii)
</TABLE>
<PAGE> 108
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<S> <C>
Coating Hold-Back Exchange Ratio 1.1.(b)(ii)
Coating Hold-Back Shares 1.1.(b)(ii)
Coating Merger Sub Opening Paragraph
Coating Ownership Loss 15.2(ii)
Coating Shareholders Opening Paragraph
Code Recitals
Companies Opening Paragraph
Company Ancillary Agreements 2.1
Company Project 14.3
CERCLA 2.18(b)
D.A.D. Opening Paragraph
D.A.D. Acquisition Price 1.1.(b)(xiii)
D.A.D. Exchange Ratio 1.1.(b)(xiii)
D.A.D. Hold-Back Exchange Ratio 1.1.(b)(xiii)
D.A.D. Hold-Back Shares 1.1.(b)(xiii)
D.A.D. Interests 1.1.(b)(xiii)
D.A.D. Ownership Loss 15.2(xiii)
D.A.D. Partners Opening Paragraph
Damages 15.2(i)
Debt 2.29
Dispute 16.1
Effective Time 1.1
EMF Opening Paragraph
EMF Acquisition Price 1.1.(b)(iv)
EMF Capital Stock 1.1.(b)(iv)
EMF Hold-Back Exchange Ratio 1.1.(b)(iv)
EMF Hold-Back Shares 1.1.(b)(iv)
EMF Ordinary Shares Recitals
EMF Ownership Loss 15.2(iv)
EMF Shareholders Opening Paragraph
employee benefit plans 2.13(b)
Employee Plans 2.13(b)
Environmental, Health, and Safety Requirements 2.18(a)
ERISA 2.13(b)
Estimated Claim Amount 15.3(a)
Financial Projections 2.5
Financial Statements 2.4
Flextronics Opening Paragraph
Flextronics Ancillary Agreements 8.2
Flextronics Average Price Per Share 1.1.(b)(xvi)
Flextronics Disclosure Package 8.6
Flextronics Ordinary Shares Recitals
</TABLE>
<PAGE> 109
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<S> <C>
Flextronics Project 14.3
GAAP 2.4
Hazardous Substance 2.18(e)
Hold-Back Shares 1.1.(b)(xvii)
HSR Act 2.1(b)
Indemnified Person 15.2(i)
Indemnified Persons 15.2(i)
Intellectual Property 2.10
Inventory 2.22
Investment Representation Letters Recitals
Irish Exchanges Recitals
Irish Mergers Act 2.1(b)
knowledge 2.3
Leases 7.13
Lightning Europe Opening Paragraph
Lightning Europe Acquisition Price 1.1.(b)(v)
Lightning Europe Capital Stock 1.1.(b)(v)
Lightning Europe Distribution 11.2(b)
Lightning Europe Exchange 11.2(a)
Lightning Europe Exchange Ratio 1.1.(b)(v)
Lightning Europe Hold-Back Exchange Ratio 1.1.(b)(v)
Lightning Europe Hold-Back Shares 1.1.(b)(v)
Lightning Europe Ordinary Shares Recitals
Lightning Europe Ownership Loss 15.2(v)
Lightning Europe Shareholders Opening Paragraph
Lightning Metal Opening Paragraph
Lightning Metal Acquisition Price 1.1.(b)(i)
Lightning Metal Capital Stock 1.1.(b)(i)
Lightning Metal Common Stock 1.1.(a)(i)
Lightning Metal Exchange Ratio 1.1.(b)(i)
Lightning Metal Hold-Back Exchange Ratio 1.1.(b)(i)
Lightning Metal Hold-Back Shares 1.1.(b)(i)
Lightning Metal Merger Sub Opening Paragraph
Lightning Metal Ownership Loss 15.2(i)
Lightning Metal Shareholders Opening Paragraph
Lightning Texas Opening Paragraph
Lightning Texas Acquisition Price 1.1.(b)(vi)
Lightning Texas Exchange Ratio 1.1.(b)(vi)
Lightning Texas Hold-Back Exchange Ratio 1.1.(b)(vi)
Lightning Texas Hold-Back Shares 1.1.(b)(vi)
Lightning Texas Interests 1.1.(b)(vi)
Lightning Texas Members Opening Paragraph
Lightning Texas Ownership Loss 15.2(vi)
</TABLE>
<PAGE> 110
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<S> <C>
Lightning Tool Opening Paragraph
Lightning Tool Acquisition Price 1.1.(b)(iii)
Lightning Tool Capital Stock 1.1.(b)(iii)
Lightning Tool Common Stock 1.1.(a)(iii)
Lightning Tool Exchange Ratio 1.1.(b)(iii)
Lightning Tool Hold-Back Exchange Ratio 1.1.(b)(iii)
Lightning Tool Hold-Back Shares 1.1.(b)(iii)
Lightning Tool Merger Sub Opening Paragraph
Lightning Tool Ownership Loss 15.2(iii)
Lightning Tool Shareholders Opening Paragraph
Lively Opening Paragraph
Lively Acquisition Price 1.1.(b)(xii)
Lively Exchange Ratio 1.1.(b)(xii)
Lively Hold-Back Exchange Ratio 1.1.(b)(xii)
Lively Hold-Back Shares 1.1.(b)(xii)
Lively Interests 1.1.(b)(xii)
Lively Members Opening Paragraph
Lively Ownership Loss 15.2(xii)
Logistics Opening Paragraph
Logistics Acquisition Price 1.1.(b)(vii)
Logistics Exchange Ratio 1.1.(b)(vii)
Logistics Hold-Back Exchange Ratio 1.1.(b)(vii)
Logistics Hold-Back Shares 1.1.(b)(vii)
Logistics Interests 1.1.(b)(vii)
Logistics Members Opening Paragraph
Logistics Ownership Loss 15.2(vii)
Management Employees 2.8(i)
Material Adverse Change 2.2
Material Adverse Effect 2.2
Material Agreements 2.9(o)
Member Exchanges Recitals
Members Opening Paragraph
Merger Recitals
Merger Subs Opening Paragraph
Merger Subs Ancillary Agreements 8.2
Minister 12.5
Notice of Claim 15.2(e)
Papason Opening Paragraph
Papason Acquisition Price 1.1.(b)(viii)
Papason Exchange Ratio 1.1.(b)(viii)
Papason Hold-Back Exchange Ratio 1.1.(b)(viii)
Papason Hold-Back Shares 1.1.(b)(viii)
Papason Interests 1.1.(b)(viii)
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<S> <C>
Papason Members
Papason Ownership Loss 15.2(viii)
Partner Exchanges Recitals
Partners Opening Paragraph
Pension Schemes 6.6
Permitted Liens 2.7
Plans of Merger Recitals
prohibited transaction 2.13(b)
RCRA 2.18(b)
Real Properties 2.7
Real Property Owners 7.
Registration Rights Agreement 1.5
Release Date 1.1.(a)(i)
Representative 15.2(b)
responsible property transfer 2.18(e)
S.O.N. Opening Paragraph
S.O.N. Acquisition Price 1.1.(b)(xiv)
S.O.N. Exchange Ratio 1.1.(b)(xiv)
S.O.N. Hold-Back Exchange Ratio 1.1.(b)(xiv)
S.O.N. Hold-Back Shares 1.1.(b)(xiv)
S.O.N. II Opening Paragraph
S.O.N. II Acquisition Price 1.1.(b)(xv)
S.O.N. II Exchange Ratio 1.1.(b)(xv)
S.O.N. II Hold-Back Exchange Ratio 1.1.(b)(xv)
S.O.N. II Hold-Back Shares 1.1.(b)(xv)
S.O.N. II Interests 1.1.(b)(xv)
S.O.N. II Ownership Loss 15.2(xv)
S.O.N. II Partners Opening Paragraph
S.O.N. Interests 1.1.(b)(xiv)
S.O.N. Ownership Loss 15.2(xiv)
S.O.N. Partners Opening Paragraph
Shareholders Opening Paragraph
Shareholders Ancillary Agreements 2.1
shrink wrap 2.9(b)
Significant Customer 2.20
Significant Supplier 2.21
Site 2.18(b)
Subsidiary 2.2
Surviving Corporation 1.3
Tax 2.6
Taxes 2.6
Title Insurance Commitments 2.7
transaction triggered 2.18(e)
</TABLE>
<PAGE> 112
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<S> <C>
Transactions Recitals
Voting Agreement Recitals
</TABLE>
<PAGE> 113
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. PLAN OF REORGANIZATION............................................................. 3
1.1 The Merger.................................................................. 3
1.2 Fractional Shares........................................................... 14
1.3 Effects of the Merger....................................................... 14
1.4 Further Assurances.......................................................... 15
1.5 Securities Law Issues; Registration Rights.................................. 15
1.6 Tax-Free Reorganization..................................................... 16
1.7 Pooling Accounting.......................................................... 16
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES.................................... 16
2.1 Power, Authorization and Validity........................................... 16
2.2 Subsidiaries................................................................ 17
2.3 Litigation.................................................................. 17
2.4 Company Financial Statements................................................ 18
2.5 Company Financial Projections............................................... 18
2.6 Taxes....................................................................... 18
2.7 Title to Properties; Condition of Equipment and Property.................... 19
2.8 Absence of Certain Changes.................................................. 20
2.9 Agreements and Commitments.................................................. 21
2.10 Intellectual Property....................................................... 23
2.11 Compliance with Laws........................................................ 24
2.12 Certain Transactions and Agreements......................................... 24
2.13 Employees................................................................... 24
2.14 No Brokers.................................................................. 26
2.15 Disclosure.................................................................. 26
2.16 Books and Records........................................................... 27
2.17 Insurance................................................................... 27
2.18 Environmental, Health, and Safety Matters................................... 27
2.19 Product and Service Warranties.............................................. 29
2.20 Customers; Backlog; Returns and Complaints.................................. 29
</TABLE>
i
<PAGE> 114
TABLE OF CONTENTS
(continued)
<TABLE>
<S> <C>
2.21 Suppliers................................................................... 29
2.22 Inventory................................................................... 30
2.23 Accounts Receivable......................................................... 30
2.24 Accounting Matters.......................................................... 31
2.25 Restrictions on Business Activities......................................... 31
2.26 Certain Payments............................................................ 31
2.27 Bank Accounts............................................................... 31
2.28 Other Entities' Liabilities................................................. 32
2.29 Debt........................................................................ 32
2.30 Bankruptcy.................................................................. 32
3. REPRESENTATIONS AND WARRANTIES OF LIGHTNING METAL, COATING AND LIGHTNING TOOL...... 32
3.1 Organization and Good Standing.............................................. 32
3.2 Capitalization.............................................................. 32
3.3 No Violation of Organizational Documents or Existing Agreements............. 35
3.4 Company Documents........................................................... 35
4. REPRESENTATIONS AND WARRANTIES OF LIGHTNING TEXAS, LOGISTICS, PAPASON, 200
SCOTT STREET, 80 SCOTT STREET, 230 SCOTT STREET AND LIVELY......................... 35
4.1 Organization and Good Standing.............................................. 36
4.2 Capitalization.............................................................. 36
4.3 No Violation of Organizational Documents or Existing Agreements............. 39
4.4 Company Documents........................................................... 40
5. REPRESENTATIONS AND WARRANTIES OF D.A.D., S.O.N. AND S.O.N. II..................... 40
5.1 Organization and Good Standing.............................................. 40
5.2 Capitalization.............................................................. 40
5.3 No Violation of Organizational Documents or Existing Agreements............. 42
5.4 Company Documents........................................................... 42
6. REPRESENTATIONS AND WARRANTIES OF EMF AND LIGHTNING EUROPE......................... 42
</TABLE>
ii
<PAGE> 115
TABLE OF CONTENTS
(continued)
<TABLE>
<S> <C>
6.1 Organization and Good Standing.............................................. 43
6.2 Capitalization.............................................................. 43
6.3 No Violation of Organizational Documents or Existing Agreements............. 45
6.4 Company Documents........................................................... 45
6.5 Taxes....................................................................... 45
6.6 Employees................................................................... 45
7. REPRESENTATIONS AND WARRANTIES OF LIGHTNING METAL, LIGHTNING EUROPE, PAPASON,
200 SCOTT STREET, 80 SCOTT STREET, 230 SCOTT STREET, LIVELY, D.A.D., S.O.N.
AND S.O.N. II...................................................................... 47
7.1 Joinder..................................................................... 47
7.2 Options and Rights of First Refusal......................................... 47
7.3 Zoning...................................................................... 48
7.4 No Violation of Restrictive Covenants....................................... 48
7.5 Taxes....................................................................... 48
7.6 Insurance................................................................... 48
7.7 Material Changes............................................................ 48
7.8 Condition of the Real Properties............................................ 49
7.9 Utilities................................................................... 49
7.10 Access...................................................................... 49
7.11 Flood Hazards............................................................... 49
7.12 Independence................................................................ 50
7.13 Leases...................................................................... 50
7.14 Irish Real Properties....................................................... 50
8. REPRESENTATIONS AND WARRANTIES OF FLEXTRONICS AND THE MERGER SUBS.................. 51
8.1 Organization................................................................ 51
8.2 Power, Authorization and Validity........................................... 51
8.3 No Violation of Articles or Existing Agreements............................. 52
8.4 Litigation.................................................................. 53
8.5 Absence of Certain Changes.................................................. 53
</TABLE>
iii
<PAGE> 116
TABLE OF CONTENTS
(continued)
<TABLE>
<S> <C>
8.6 Disclosure.................................................................. 53
8.7 Flextronics Ordinary Shares................................................. 53
9. POST-CLOSING COVENANTS OF THE EMF SHAREHOLDERS AND THE LIGHTNING EUROPE
SHAREHOLDERS....................................................................... 54
9.1 Stamping.................................................................... 54
9.2 Notice Under Section 53..................................................... 54
10. POST-CLOSING COVENANTS OF FLEXTRONICS.............................................. 54
10.1 Employee Matters............................................................ 54
10.2 Pooling of Interests Accounting............................................. 54
11. CLOSING MATTERS.................................................................... 54
11.1 The Closing................................................................. 54
11.2 Conversion or Transfer of Shares and Interests.............................. 55
11.3 Closing Deliveries.......................................................... 57
11.4 Irish Closing Deliveries.................................................... 57
11.5 Other Closing Matters....................................................... 59
12. CONDITIONS TO OBLIGATIONS OF THE COMPANIES, THE SHAREHOLDERS, THE MEMBERS AND
THE PARTNERS....................................................................... 59
12.1 Accuracy of Representations and Warranties.................................. 59
12.2 [Intentionally Omitted]..................................................... 60
12.3 Compliance with Law......................................................... 60
12.4 Government Consents; HSR Compliance......................................... 60
12.5 Irish Mergers Act Clearance................................................. 60
12.6 No Litigation; Investigations............................................... 60
12.7 Absence of Material Change.................................................. 60
12.8 Opinion of Flextronics' Counsel............................................. 60
12.9 Registration Rights Agreement............................................... 61
12.10 Retention and Noncompetition Agreements..................................... 61
12.11 Employment Agreements....................................................... 61
13. CONDITIONS TO OBLIGATIONS OF FLEXTRONICS AND THE MERGER SUBS....................... 61
</TABLE>
v
<PAGE> 117
TABLE OF CONTENTS
(continued)
<TABLE>
<S> <C>
13.1 Accuracy of Representations and Warranties.................................. 61
13.2 [Intentionally Omitted]..................................................... 61
13.3 Absence of Material Change.................................................. 61
13.4 Material Agreements......................................................... 61
13.5 Compliance with Law......................................................... 61
13.6 Government Consents; HSR Compliance......................................... 61
13.7 Irish Mergers Act Clearance................................................. 62
13.8 Documents................................................................... 62
13.9 No Litigation; Investigations............................................... 62
13.10 Real Property Transfers..................................................... 62
13.11 Opinion of Companies' Counsel............................................... 62
13.12 Requisite Approvals......................................................... 63
13.13 Transfers of Lightning Texas Interests, Logistics Interests, Papason
Interests, 200 Scott Street Interests, 80 Scott Street Interests, 230
Scott Street Interests and Lively Interests................................. 63
13.14 Transfers of EMF Ordinary Shares and Lightning Europe Ordinary Shares....... 63
13.15 Transfers of D.A.D. Interests, S.O.N. Interests and S.O.N. II Interests..... 63
13.16 Opinion of Flextronics' and Companies' Accountants.......................... 64
13.17 Estoppel Certificate........................................................ 64
13.18 Retention and Noncompetition Agreements..................................... 64
13.19 Employment Agreements....................................................... 64
13.20 Debt........................................................................ 64
13.21 Tax Clearance Certificate................................................... 64
13.22 Company Affiliates Agreements............................................... 64
13.23 Payments and Releases....................................................... 64
13.24 Employee Plans.............................................................. 65
13.25 Exemption Available......................................................... 65
13.26 Company Notes............................................................... 65
14. [INTENTIONALLY OMITTED]............................................................ 65
</TABLE>
vi
<PAGE> 118
TABLE OF CONTENTS
(continued)
<TABLE>
<S> <C>
15. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES.......................... 65
15.1 Survival of Representations................................................. 65
15.2 Agreement to Indemnify...................................................... 65
15.3 Reduction of Hold-Back Shares............................................... 78
16. MISCELLANEOUS...................................................................... 86
16.1 Governing Law; Dispute Resolution........................................... 86
16.2 Assignment; Binding Upon Successors and Assigns............................. 87
16.3 Severability................................................................ 87
16.4 Counterparts................................................................ 87
16.5 Other Remedies.............................................................. 88
16.6 Amendment and Waivers....................................................... 88
16.7 No Waiver................................................................... 88
16.8 Expenses.................................................................... 88
16.9 Notices..................................................................... 88
16.10 Construction of Agreement................................................... 95
16.11 Further Assurances.......................................................... 95
16.12 Absence of Third-Party Beneficiary Rights................................... 95
16.13 Public Announcement......................................................... 95
16.14 Time is of the Essence...................................................... 95
16.15 Entire Agreement............................................................ 95
16.16 Effect of Schedules......................................................... 96
16.17 Mutual Drafting............................................................. 96
16.18 No Joint Ventures........................................................... 96
16.19 Confidentiality Agreement................................................... 96
</TABLE>
vi
