<PAGE> 1
As filed with the Securities and Exchange Commission on October 28, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SANMINA CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3672 77-0228183
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
JURE SOLA
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
SANMINA CORPORATION
355 EAST TRIMBLE ROAD
SAN JOSE, CALIFORNIA 95131
(408) 435-8444
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
Copies to:
CHRISTOPHER D. MITCHELL, ESQ. ANTHONY J. MEDAGLIA, JR., ESQ.
WILSON SONSINI GOODRICH & ROSATI HUTCHINS, WHEELER & DITTMAR
PROFESSIONAL CORPORATION 101 FEDERAL STREET
650 PAGE MILL ROAD BOSTON, MASSACHUSETTS 02110
PALO ALTO, CA 94304 (617) 951-6600
(415) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the merger referred to herein.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
general instruction g, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO TO BE PRICE OFFERING REGISTRATION
BE REGISTERED(1) REGISTERED(2) PER UNIT PRICE FEE
---------------- ------------- -------- ----- ---
<S> <C> <C> <C> <C>
Common Stock
$0.01 par value ........ 7,225,772 shares $32.99(3) $238,378,218(3) $66,269.15(4)
</TABLE>
(1) The Registration Statement relates to securities of the Registrant
issuable to holders of common stock of Altron Incorporated, a
Massachusetts corporation ("Altron"), in the proposed merger (the
"Merger") of a wholly-owned subsidiary of the Registrant with and into
Altron.
(2) Represents the maximum number of shares of Registrant's Common Stock
issuable upon consummation of the Merger.
(3) Pursuant to Rule 457(f) and estimated solely for the purpose of
calculating the registration fee. Amounts are based on the average of
the high and low prices of the Registrant's Common Stock for the
ten trading days ended October 26, 1998.
(4) A registration fee totaling $42,725.00 was paid on September 10, 1998
by Altron in connection with the filing of preliminary proxy materials
of Altron included in the Registration Statement.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE> 2
ALTRON LOGO
October 28, 1998
To Our Stockholders:
We invite you to attend a Special Meeting of the Stockholders of Altron
Incorporated ("Altron") to be held at Hutchins, Wheeler & Dittmar, A
Professional Corporation, 101 Federal Street, Boston, Massachusetts on Monday,
November 30, 1998 at 10:00 a.m. At the Special Meeting, Altron stockholders will
be asked to approve an Amended and Restated Agreement and Plan of Merger
pursuant to which a newly formed wholly-owned subsidiary of Sanmina Corporation
("Sanmina") is to be merged with and into Altron (the "Merger"). If the Merger
is consummated, Altron will become a wholly-owned subsidiary of Sanmina, and
each outstanding share of Altron Common Stock will be converted into the right
to receive shares of Sanmina Common Stock pursuant to an exchange ratio which is
described in the accompanying Proxy Statement/ Prospectus.
YOUR BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED TRANSACTION IS IN THE
BEST INTERESTS OF ALTRON STOCKHOLDERS. ACCORDINGLY, THE BOARD UNANIMOUSLY
RECOMMENDS THAT YOU VOTE TO APPROVE THE AGREEMENT AND PLAN OF MERGER.
Details concerning the proposed Merger and other important information
appear in the accompanying Proxy Statement/Prospectus which you are urged to
read carefully.
A proxy card is enclosed. Please sign, date and mail the proxy card
promptly in the return envelope provided. It is important that you return the
proxy card whether or not you plan to attend the Special Meeting, so that your
shares of Altron Common Stock are voted.
Sincerely,
S. ALTSCHULER SIGNATURE
SAMUEL ALTSCHULER
Chairman of the Board of
Directors and President
<PAGE> 3
ALTRON INCORPORATED
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
A Special Meeting of the Stockholders of Altron Incorporated ("Altron")
will be held at Hutchins, Wheeler & Dittmar, A Professional Corporation, 101
Federal Street, Boston, Massachusetts on Monday, November 30, 1998 at 10:00 a.m.
for the following purposes:
1. To consider and act upon a proposal to approve the Amended and
Restated Agreement and Plan of Merger among Sanmina Corporation, SANM
Acquisition Subsidiary, Inc. ("Merger Sub") and Altron dated September 2,
1998 (the "Merger Agreement"), and the transactions contemplated thereby,
pursuant to which Merger Sub will merge with and into Altron (the "Merger")
on and subject to the terms contained in the Merger Agreement. A copy of
the Merger Agreement is attached as Annex I to the accompanying Proxy
Statement/Prospectus.
2. To transact such other and further business as may properly come
before the Special Meeting or any adjournments or postponements thereof.
The affirmative vote of two-thirds of the outstanding shares of Altron
Common Stock is required to approve the Merger Agreement and the transactions
contemplated thereby, including the Merger.
The Board of Directors has fixed the close of business on October 21, 1998
as the record date for determining the stockholders entitled to notice of and to
vote at the Special Meeting and any adjournments or postponements thereof. Only
holders of record of shares of Altron Common Stock at the close of business on
the record date are entitled to notice of and to vote at the Special Meeting.
YOUR VOTE IS VERY IMPORTANT REGARDLESS OF HOW MANY SHARES OF ALTRON COMMON
STOCK YOU OWN. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE
ENCLOSED POSTAGE PAID ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO
ITS EXERCISE. IF YOU ARE PRESENT AT THE SPECIAL MEETING OR ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF, YOU MAY REVOKE YOUR PROXY AND VOTE PERSONALLY ON THE
MATTERS PROPERLY BROUGHT BEFORE THE SPECIAL MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
ANTHONY J. MEDAGLIA, JR.
Clerk
October 28, 1998
NOTICE OF APPRAISAL RIGHTS
If the Merger Agreement is approved by the stockholders of Altron at the
Special Meeting and the Merger is consummated, any Altron stockholder (1) who
files with Altron before the taking of the vote on approval of the Merger
Agreement, written objection to the proposed Merger stating that he or she
intends to demand payment for his or her Altron shares if the Merger is
consummated and (2) whose shares are not voted in favor of the Merger has or may
have the right to demand in writing from Altron (as it exists after the Merger),
within twenty days after the date of mailing to him or her of notice in writing
that the Merger has been consummated, payment for his or her shares and an
appraisal of the value thereof. Altron and any such stockholder shall in such
cases have the rights and duties and shall follow the procedures set forth in
Sections 85 to 98, inclusive, of Chapter 156B of the General Laws of the
Commonwealth of Massachusetts, copies of which are attached as Annex IV to the
accompanying Proxy Statement/Prospectus. See "Other Matters -- Rights of
Dissenting Stockholders" in the Proxy Statement/Prospectus for more information.
<PAGE> 4
PROXY STATEMENT FOR SPECIAL
MEETING OF STOCKHOLDERS OF
[ALTRON LOGO]
To be held on November 30, 1998
Altron Incorporated and Sanmina Corporation have agreed to merge Altron with a
subsidiary of Sanmina. Altron will become a wholly owned subsidiary of Sanmina
and Altron stockholders will receive .4545 of a share of Sanmina common stock
for each share of Altron common stock they own, subject to adjustment depending
on the price of Sanmina before the merger.
We estimate that the shares of Sanmina common stock to be issued to Altron
stockholders will represent between 15.5% and 19.4% of the outstanding Sanmina
shares after the merger depending upon fluctuations in the price of Sanmina
common stock.
On October 27, 1998 Sanmina stock closed at $42.00 per share and Altron stock
closed at $18.375 per share.
PROSPECTUS OF
[SANMINA LOGO]
COMMON STOCK, PAR VALUE $.01
The merger cannot be completed unless Altron stockholders approve it. The Altron
Board of Directors has scheduled a special meeting for Altron stockholders to
vote on the merger as follows:
Monday, November 30, 1998
10:00 a.m.
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, MA
This document gives you detailed information about the proposed merger. Sanmina
has provided the information concerning Sanmina, and Altron has provided the
information concerning Altron. Please see "Available Information and
Incorporation of Documents by Reference" on page 1 for additional information
about Altron and Sanmina on file with the United States Securities and Exchange
Commission.
This proxy statement/prospectus and proxy are being mailed to shareholders of
Altron beginning about October 29, 1998.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED THE SANMINA COMMON STOCK TO BE ISSUED
UNDER THIS PROXY STATEMENT/PROSPECTUS OR DETERMINED IF THIS PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS OCTOBER , 1998.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION....................................... 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 1
SUMMARY..................................................... 3
The Companies............................................. 3
Reasons for the Merger.................................... 3
Recommendation to Altron Stockholders..................... 3
The Merger................................................ 3
SELECTED HISTORICAL FINANCIAL DATA.......................... 7
Sanmina Selected Historical Consolidated Financial
Information............................................ 7
Altron Selected Historical Consolidated Financial
Information............................................ 8
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
DATA...................................................... 9
COMPARATIVE PER SHARE DATA.................................. 10
RISK FACTORS................................................ 12
COMPARATIVE STOCK PRICES AND DIVIDEND POLICY................ 17
THE SPECIAL MEETING......................................... 18
Date, Time, Place and Purpose............................. 18
Record Date; Shares Entitled to Vote; Vote Required....... 18
Proxies; Proxy Solicitation............................... 19
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
OF ALTRON................................................. 20
THE COMPANIES............................................... 21
Sanmina Corporation....................................... 21
Altron Incorporated....................................... 22
THE MERGER.................................................. 23
Background of the Merger.................................. 23
Altron's Reasons For The Merger -- Recommendation of the
Altron Board........................................... 25
Opinion of Altron's Financial Advisor..................... 26
Material Federal Income Tax Consequences.................. 30
Anticipated Accounting Treatment.......................... 31
Interests of Certain Persons in the Merger................ 31
Resale of Sanmina Common Stock............................ 33
THE MERGER AGREEMENT........................................ 34
The Merger................................................ 34
Merger Consideration...................................... 34
Additional Information for Holders of Altron Options...... 35
Exchange Agent; Exchange Procedures; Dividends; No Further
Ownership Rights in Altron's Common Stock; No
Fractional Shares; Articles of Organization and
Bylaws................................................. 36
Representations and Warranties............................ 38
Business of Altron Pending the Merger..................... 39
Business of Sanmina Pending the Merger.................... 40
Certain Additional Agreements............................. 41
Conditions to the Consummation of the Merger.............. 41
No Solicitation........................................... 42
Right of the Altron Board to Withdraw Recommendation...... 43
Expenses.................................................. 44
Termination Fee........................................... 44
</TABLE>
i
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Termination, Amendment and Waiver......................... 44
The Stockholder Agreements................................ 45
Management and Operations after the Merger................ 46
OTHER MATTERS............................................... 46
Governmental and Regulatory Matters....................... 46
Rights of Dissenting Stockholders......................... 47
Comparison of Rights of Stockholders of Altron and
Sanmina................................................ 48
DESCRIPTION OF SANMINA CAPITAL STOCK........................ 51
EXPERTS..................................................... 53
LEGAL MATTERS............................................... 53
STOCKHOLDER PROPOSALS....................................... 53
UNAUDITED PRO FORMA FINANCIAL INFORMATION................... 54
ANNEXES
Annex I Amended and Restated Agreement and Plan of Merger
Annex II Form of Shareholder Agreement
Annex III Opinion of Needham & Company, Inc.
Annex IV Sections 85 to 98 of Chapter 156B of the
Massachusetts Business Corporation Law
</TABLE>
ii
<PAGE> 7
AVAILABLE INFORMATION
Sanmina and Altron are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
with the Exchange Act, Sanmina and Altron file proxy statements, reports and
other information with the Securities and Exchange Commission (the "SEC"). This
filed material can be inspected and copied at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following Regional Offices of the SEC: Chicago Regional Office
(Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661)
and New York Regional Office (Seven World Trade Center, 13th Floor, New York,
New York 10048). The filed material also is available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at "http://www.sec.gov." Copies of such material also can be obtained by mail
from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, such material can be
inspected at the offices of the National Association of Securities Dealers, Inc.
(the "NASD"), 1935 K Street, N.W., Washington, D.C. 20006.
Sanmina has filed a Registration Statement on Form S-4 (the "Registration
Statement") with the SEC under the Securities Act with respect to the Sanmina
Common Stock to be issued upon consummation of the Merger. This Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto, certain portions of which have
been omitted as permitted by the rules and regulations of the SEC. Copies of the
Registration Statement are available from the SEC, upon payment of prescribed
rates. For further information, reference is made to the Registration Statement
and the exhibits filed therewith. Statements contained in this Proxy
Statement/Prospectus or in any document incorporated by reference in this Proxy
Statement/Prospectus relating to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or such other document, each such
Statement being qualified in all respects by such reference. All material
elements of the subject documents are described in this Proxy
Statement/Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following Sanmina documents are incorporated by reference in this Proxy
Statement/Prospectus: (i) Sanmina's Annual Report on Form 10-K for the fiscal
year ended September 30, 1997 (filed with the Securities and Exchange Commission
("SEC") on December 22, 1997); (ii) Sanmina's Quarterly Report on Form 10-Q for
the quarters ended December 27, 1997 (filed with the SEC on February 10, 1998),
March 28, 1998 (filed with the SEC on May 12, 1998) and June 27, 1998 (filed
with the SEC on August 11, 1998); (iii) Sanmina's Quarterly Report on Form
10-Q/A for the period ended June 27, 1998 (filed with the SEC on August 20,
1998); (iv) Sanmina's Current Report on Form 8-K/A (filed with the SEC on
January 7, 1998); and (v) the description of Sanmina Common Stock contained in
Sanmina's Registration Statement on Form 8-A (filed with the SEC on February 19,
1993). Sanmina's SEC file number for reports filed pursuant to the Exchange Act
is 0-21272.
The following Altron documents are incorporated by reference in this Proxy
Statement/Prospectus: (i) Altron's Annual Report on Form 10-K for the fiscal
year ended January 3, 1998 (filed with the SEC on March 27, 1998), as amended by
a report on Form 10-K/A (filed with the SEC on June 10, 1998); (ii) Altron's
Quarterly Reports on Form 10-Q for the quarters ended April 4, 1998 (filed with
the SEC on May 15, 1998) and July 4, 1998 (filed with the SEC on August 18,
1998), (iii) Altron's Quarterly Report on Form 10-Q/A for the period ended April
4, 1998 (filed with the SEC on June 10, 1998); Altron's Current Report on Form
8-K (filed with the SEC on September 4, 1998); (iv) the description of Altron
Common Stock contained in Altron's Registration Statement on Form 8-A (filed
with the SEC on February 25, 1988). Altron's SEC file number for reports filed
pursuant to the Exchange Act is 0-13230.
All reports and definitive proxy or information statements filed by Sanmina
and Altron pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
since the date of this Proxy Statement and prior to the date of the Special
Meeting shall be deemed to be incorporated by reference into this Proxy
Statement/ Prospectus from the dates of filing of such documents. Any statement
contained in a document incorporated
1
<PAGE> 8
or deemed to be incorporated by reference into this Proxy Statement/Prospectus
shall be deemed to be modified or superseded for purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein or in any
other subsequently filed document that also is or is deemed to be incorporated
by reference modifies or supersedes such statement.
All information contained in this Proxy Statement/Prospectus relating to
Sanmina has been supplied by Sanmina, and all information relating to Altron has
been supplied by Altron.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. A COPY OF THE DOCUMENTS INCORPORATED
HEREIN BY REFERENCE WITHOUT EXHIBITS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT) WILL BE PROVIDED BY
FIRST-CLASS MAIL WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER
OF ALTRON'S COMMON STOCK, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED,
UPON ORAL OR WRITTEN REQUEST OF ANY SUCH PERSON. WITH RESPECT TO SANMINA'S
DOCUMENTS, REQUESTS SHOULD BE DIRECTED TO INVESTOR RELATIONS, 355 EAST TRIMBLE
ROAD, SAN JOSE, CALIFORNIA 95131 (TELEPHONE (408) 954-5500). WITH RESPECT TO
ALTRON'S DOCUMENTS, REQUESTS SHOULD BE DIRECTED TO THE OFFICE OF THE CHIEF
FINANCIAL OFFICER, ALTRON INCORPORATED, ONE JEWEL DRIVE, WILMINGTON,
MASSACHUSETTS 01887 (TELEPHONE: (978) 658-5800). IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE SPECIAL MEETING TO WHICH THIS PROXY
STATEMENT/PROSPECTUS RELATES, ANY SUCH REQUEST SHOULD BE MADE BY NOVEMBER 20,
1998.
2
<PAGE> 9
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
merger fully and for a more complete description of the legal terms of the
merger, you should carefully read this entire document and the documents to
which we have referred you.
THE COMPANIES
ALTRON, INCORPORATED
One Jewel Drive
Wilmington, Massachusetts
(978) 658-5800
Altron is a leading contract manufacturer of interconnect products used in
advanced electronics equipment. Altron manufactures complex products in the
mid-volume sector of the electronic interconnect industry. Altron's products
generally require greater engineering and manufacturing expertise than mass
produced, less complex products. Altron manufactures custom-designed backplanes,
surface mount assemblies and total systems, as well as multi-layer, high density
printed circuit boards. Altron works closely with its customers from the early
stages of product design and development. Altron provides original design,
engineering prototype, preproduction and volume production capabilities.
SANMINA CORPORATION
355 East Trimble Road
San Jose, California 95131
(408) 954-5500
Sanmina is a leading independent provider of customized integrated electronics
manufacturing services. These services include turnkey electronic assembly and
manufacturing managing services, to original equipment manufacturers in the
electronics industry. Sanmina's electronic manufacturing services consist
primarily of the manufacture of complex printed circuit board assemblies using
surface mount and pin through-hole interconnection technologies, the manufacture
of custom design back planes assemblies, fabrication of complex multi-layer
printed circuit boards, and testing an assembly of completed systems. In
addition to assembly, turnkey manufacturing's management also involves
procurement and materials management, as well as consultation on printed circuit
board design and manufacturability. Sanmina, through its Sanmina Cable Systems,
Inc. subsidiary, also manufactures custom cable assemblies for electronics
industry OEMs.
REASONS FOR THE MERGER
The Altron Board believes that the terms of the merger and the merger agreement
are fair to, and in the best interests of, Altron and its stockholders. In
reaching its decision, the Altron Board of Directors considered the following
factors, among other things:
- - Altron's business, results of operations and future prospects as an
independent entity.
- - The relative interests of Altron and Sanmina stockholders in the equity of
the combined company.
- - The expectation that the merger would result in certain cost savings which
might improve the operating results of the combined company.
- - Industry trends toward consolidation and the advantages that the combined
company might receive due to its greater size and financial strength in the
marketplace and its greater geographic reach.
RECOMMENDATION TO ALTRON STOCKHOLDERS
The Altron Board believes that the merger is in the best interest of Altron and
its stockholders and unanimously recommends that you vote FOR the merger.
THE MERGER
The Merger Agreement is attached as Annex I to this Proxy
Statement/Prospectus. We encourage you to read the Merger Agreement as it
is the legal document that governs the merger.
WHAT ALTRON STOCKHOLDERS WILL RECEIVE
As a result of the merger, Altron stockholders will receive .4545 of a share of
Sanmina common stock for each share of Altron common stock that they own. This
"exchange ratio" is subject to adjustment based on the market price of Sanmina
stock shortly before the merger. If the market price at this time is less than
3
<PAGE> 10
$30.00, the exchange ratio will increase such that each Altron shareholder will
receive Sanmina stock with a minimum value of $13.635 for each share of Altron
stock held by them, but the exchange ratio will not exceed 0.5681 (which is
$13.635 divided by $24). Additionally, if the market price of Sanmina stock is
less than $24.00, Altron will have the right to terminate the merger agreement.
(See "THE MERGER AGREEMENT -- Merger Consideration" and "-- Exchange Agent;
Exchange Procedures; Dividends; No Further Ownership Rights in Altron Common
Stock; No Fractional Shares; Articles of Organization and Bylaws").
Altron stockholders will not receive fractional shares. Instead, they will
receive a check in payment for any fractional shares based on the market value
of Sanmina stock.
For example, if an Altron stockholder owns 100 shares of Altron common stock,
this will translate into 45.45 shares of Sanmina common stock when multiplied by
the .4545 exchange ratio. He or she would receive 45 shares of Sanmina common
stock and a check in the amount of .45 times the Sanmina market price used in
the calculation of the exchange ratio. Assuming a Sanmina market price of $30
this check would be in the amount of $13.50.
DO NOT SEND IN YOUR STOCK CERTIFICATES UNTIL INSTRUCTED TO DO SO AFTER THE
MERGER IS COMPLETED.
OTHER INTERESTS OF OFFICERS AND DIRECTORS IN THE MERGER
In considering the Altron Board's recommendation that you vote for the merger,
you should be aware that the officers and directors of Altron have interests in
the merger that are different from, or in addition to, their rights as Altron
shareholders. As of the record date, directors and executive officers of Altron
owned 2,345,703 shares of Altron common stock and 411,959 unexercised Altron
options which represents approximately 19% of the Altron options which will be
assumed by Sanmina.
Sanmina and certain officers, who are also directors, of Altron have entered
into employment agreements, retention incentives or benefit plans that provide
them with interests in the merger that are different from, or in addition to,
yours. In addition, Samuel Altschuler will become a member of the Board of
Directors of Sanmina following the merger. Specifically, Samuel Altschuler,
Burton Doo and Peter Brennan have entered into three (3) year employment
arrangements which will pay Mr. Altschuler $275,000 per year, Mr. Doo $250,000
per year and Mr. Brennan $176,800 per year. Either party may terminate the
employment for any reason. However, if Mr. Doo or Mr. Altschuler are terminated
without cause or resign for any reason after one year, they are entitled to
continue to receive compensation at current levels for the remainder of the
term. In the Event that Mr. Brennan is terminated without cause, he is entitled
to continue to receive compensation at current levels for the remainder of the
term. (See "THE MERGER -- Interests of Certain Persons in the Merger.")
WHAT WILL HAPPEN TO ALTRON
If the merger is completed, Altron will merge with and become a subsidiary of
Sanmina. Individuals who owned stock in Altron before the merger will own stock
in Sanmina after the merger.
CONDITIONS TO THE MERGER
The completion of the merger depends upon meeting a number of conditions,
including the approval of two-thirds of Altron's stockholders, approval for
listing on the NASDAQ National Market of Sanmina's common stock, and the absence
of any injunction or other legal restraint preventing the occurrence of the
merger. (See "THE MERGER AGREEMENT -- Conditions to the Consummation of the
Merger".)
TERMINATION OF THE MERGER AGREEMENT
Either company can agree to terminate the merger agreement without completing
the merger, if, among other things, any of the following occurs:
(a) The merger is not completed by December 31, 1998 (or November 30, 1998 if
this Proxy Statement/Prospectus has been mailed to Altron stockholders by
October 29, 1998 and all closing conditions have been satisfied by November 30,
1998);
(b) The holders of two-thirds of the stock of Altron do not approve the merger;
(c) The other party breaches or materially fails to comply with any of its
representations or warranties or obligations under the merger agreement.
Altron may terminate the merger agreement in the event that the average Sanmina
trading price is less
4
<PAGE> 11
than $24.00 for the 10 trading days prior to the special meeting.
In addition, Altron may terminate the merger agreement prior to the receipt of
stockholder approval if the Board determines that, following receipt of a
superior proposal made by a third party, it may do so in order to comply with
its fiduciary duties to stockholders. (See "THE MERGER AGREEMENT -- Termination,
Amendment and Waiver.")
TERMINATION FEES
The merger agreement generally requires Altron to pay to Sanmina a termination
fee of $6,000,000 if, prior to the receipt of stockholder approval, the Board
determines that, as a result of a superior proposal, failure to terminate the
merger agreement would be inconsistent with the Board's fiduciary duties under
applicable law. Additionally, the merger agreement also requires Altron to pay
to Sanmina this termination fee if, within one year after the termination
described above, it agrees to enter into or completes a transaction with a third
party.
(See "THE MERGER AGREEMENT -- Termination Fee.")
VOTE REQUIRED
Each of the directors and officers of Altron have executed a Stockholders
Agreement with Sanmina with respect to a total of approximately 15.0% of the
outstanding Altron shares. Under these agreements, the directors agree to vote
all of their Altron shares in favor of the merger. They also irrevocably appoint
representatives of Sanmina as proxies to vote their Altron shares in favor of
the merger.
GOVERNMENTAL AND REGULATORY MATTERS
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, prohibits
us from completing the merger until after we have furnished certain information
and materials to the Antitrust Division of the Department of Justice and the
Federal Trade Commission and a required waiting period has ended. The required
information was furnished and the waiting period ended on October 14, 1998.
However, the Department of Justice and the FTC continue to have the authority to
challenge the merger on antitrust grounds before or after the merger is
completed. (See "OTHER MATTERS -- Governmental and Regulatory Matters.")
ACCOUNTING TREATMENT
We expect the merger to qualify as a pooling of interests, which means that we
will treat our companies as if they had always been combined for accounting and
financial reporting purposes. (See "THE MERGER -- Anticipated Accounting
Treatment.")
OPINION OF FINANCIAL ADVISOR
In deciding to approve the merger, Altron's Board considered the opinion of its
financial advisor, Needham & Company, Inc., that as of September 2, 1998 and
subject to certain assumptions and other matters described therein, the Exchange
Ratio in the merger was fair, from a financial point of view, to the
stockholders of Altron. This opinion is attached as Annex III. We encourage you
to read this opinion, although it is limited to the fairness, from a financial
point of view, of the Exchange Ratio to the Altron stockholders and does not
constitute a recommendation as to how you should vote. Sanmina received advice
from its financial advisor, but did not request a written opinion. (See "THE
MERGER -- Opinion of Altron's Financial Advisor.")
IMPORTANT FEDERAL INCOME TAX CONSEQUENCES
We have structured the merger so that Altron stockholders will not recognize any
gain or loss for federal income tax purposes in the merger (except for tax
payable because of cash received by Altron stockholders instead of fractional
shares or pursuant to the exercise of dissenters' rights). We have conditioned
the merger on our receipt of a legal opinion that such is the case. (See "THE
MERGER -- Material Federal Income Tax Consequences.")
RIGHTS OF DISSENTING STOCKHOLDERS
Under Massachusetts law, Altron stockholders who do not vote in favor of the
merger and who comply with certain notice requirements and other procedures will
have the right to be paid cash for the "fair value" of their shares. "Fair
value" may be more or less than the value of Sanmina stock to be paid to other
Altron stockholders according to the merger agreement. Sanmina is not required
to close the merger if stockholders owning more than
5
<PAGE> 12
15% of the Altron common stock exercise these dissenter's rights. Dissenting
Altron stockholders must precisely follow specific procedures to exercise this
right, or the right may be lost. These procedures are described in this Proxy
Statement/Prospectus, and the Massachusetts law that grants the right is
attached as Annex IV. (See "OTHER MATTERS -- Rights of Dissenting
Stockholders".)
LISTING OF SANMINA COMMON STOCK
The shares of Sanmina common stock issued in connection with the merger will be
listed on the Nasdaq Stock Market's National Market.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Shares of Sanmina common stock and Altron common stock are listed on the Nasdaq
National Market. On September 1, 1998, the full trading day prior to the public
announcement of the proposed merger, Sanmina stock closed at $27.25 per share
and Altron stock closed at $10.625 per share, both on the Nasdaq National
Market. On October 27, 1998, Sanmina stock closed at $42 per share and Altron
stock closed at $18.375 per share.
RECENT DEVELOPMENTS
For the third quarter of 1998 which ended September 30, Altron reported revenues
of $51.8 million and net income of $2.7 million, resulting in basic earnings per
share of $0.18 and diluted earnings per share of $0.17. For the nine months
ended September 30, 1998, Altron reported revenues of $154.0 million, net income
of $9.9 million and basic earnings per share of $0.64 and diluted earnings per
share of $0.62. The higher sales for the third quarter and nine months resulted
primarily from increased shipments of value-added assembly products to Altron's
large customers in the communications and computer segments of the electronics
industry. Earnings for the quarter and nine-month period were impacted by a
shift in mix and pricing pressure related to the circuit board business, as well
as by higher costs due to Altron's investment in equipment and facilities to
increase capacity and capabilities further.
For the quarter ended September 30, 1998, Sanmina reported revenues of $194.2
million and net income of $19.4 million, resulting in basic earnings per share
of $0.43 and diluted earnings per share of $0.41. Sanmina also reported year end
results for the 1998 fiscal year ended September 30, 1998 consisting of revenues
of $722.6 million, net income of $68.2 million and basic earnings per share of
$1.61 and diluted earnings per share of $1.43. The higher sales for the fourth
quarter and the fiscal year resulted primarily from shipments to new customers
and from new programs with existing customers in each of Sanmina's market
segments. The increase in earnings resulted primarily from increased sales and
cost controls.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
Altron and Sanmina have made forward-looking statements in this document that
are subject to risks and uncertainties. Forward-looking statements include
information concerning the possible or assumed future results of operations of
the combined company as well as statements preceded by, followed by, or that
include the words "believes", "expects", "anticipates" or similar expressions.
You should understand that certain important factors, in addition to those
discussed elsewhere in this document and in the documents which we incorporated
by reference, could affect the future results of the combined company and could
cause those results to differ materially from those expressed in our
forward-looking statements.
6
<PAGE> 13
SELECTED HISTORICAL FINANCIAL DATA
SANMINA SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The selected historical financial data as of September 30, 1993, 1994, and
1995 and for the years ended September 30, 1993 and 1994 are derived from
financial statements of Sanmina not included or incorporated by reference
herein. The historical consolidated statement of operations data for each of the
three years in the period ended September 30, 1997 and the selected historical
balance sheet data at September 30, 1996 and 1997 are derived from the audited
consolidated financial statements of Sanmina incorporated by reference in this
Proxy Statement/Prospectus. These statements have been audited by Arthur
Andersen LLP, independent public accountants, whose report therein is also
incorporated by reference in this Proxy Statement/Prospectus. The historical
financial information as of June 27, 1998 and for the nine-month periods ended
June 28, 1997 and June 27, 1998 are derived from unaudited consolidated
financial statements of Sanmina and, in the opinion of Sanmina, include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair representation of the financial information. Operating results for the
interim period are not necessarily indicative of the results of Sanmina that may
be expected for the entire year. The selected historical financial information
presented below, for all periods presented, includes the results of operations
and balance sheet data of Elexsys International, Inc., which was acquired by
Sanmina in November 1997 in a transaction accounted for as a pooling of
interests. The following summary financial data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the consolidated financial statements and related notes and
other financial information contained in Sanmina's Form 10-K for the fiscal year
ended September 30, 1997 and Form 10-Q for the quarterly period ended June 27,
1998.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED SEPTEMBER 30, -------------------
---------------------------------------------------- JUNE 28, JUNE 27,
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL STATEMENT OF OPERATIONS
DATA:
Net sales........................... $187,746 $210,805 $271,757 $391,982 $569,787 $409,195 $528,392
Unusual items(1).................... (3,000) (16,919) -- -- (8,876) -- (3,945)
Income from operations.............. (2,487) (2,380) 32,351 55,329 59,319 57,356 77,423
Extraordinary items(2).............. (824) 10,617 1,833 -- -- -- --
Net income (loss)................... (11,234) (555) 22,086 36,565 30,525 35,913 48,762
Basic earnings per share(3)
Income (loss) before extraordinary
item............................ $ (0.41) $ (0.31) $ 0.53 $ 0.93 $ 0.75 $ 0.89 1.17
Extraordinary item................ (0.03) 0.29 0.05 -- -- -- --
Net income (loss)................. $ (0.44) $ (0.02) $ 0.58 $ 0.93 $ 0.75 $ 0.89 1.17
Diluted earnings per share(3)
Income (loss) before extraordinary
item............................ $ (0.41) $ (0.31) $ 0.51 $ 0.84 $ 0.68 $ 0.78 1.02
Extraordinary item................ (0.03) 0.29 0.05 -- -- -- --
Net income (loss)................. $ (0.44) (0.02) $ 0.56 $ 0.84 $ 0.68 $ 0.78 $ 1.02
Weighted average shares used in
computing per share amounts(3)
Basic............................. 25,280 34,904 38,100 39,356 40,432 40,226 41,508
Diluted........................... 25,280 34,904 40,348 47,490 49,426 49,104 50,287
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, AS OF
------------------------------------------------------- JUNE 27,
1993 1994 1995 1996 1997 1998
------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
HISTORICAL CONSOLIDATED BALANCE
SHEET DATA:
Working capital..................... $15,566 $ 41,846 $136,078 $155,879 $181,971 $196,049
Total assets........................ 93,593 101,450 233,245 292,646 375,854 443,363
Long-term obligations............... 36,894 16,000 98,250 98,250 98,250 95,607
Stockholders' equity................ 24,454 52,823 81,089 128,237 171,777 227,519
</TABLE>
- ---------------
(1) In 1993 and 1994, Sanmina recorded a charge to operations of $3,000 and
$2,100, respectively, to establish a provision for restructuring of
operations. In 1994, Sanmina recorded a write-off of goodwill of $11,190. In
1994 and 1997, Sanmina recorded a charge to operations of $3,629 and $8,876,
respectively, to provide for the closure of certain facilities. In 1998,
Sanmina recorded a charge of $3,945 for merger costs pertaining to the
merger with Elexsys.
(2) In 1993, Sanmina paid-off long-term debt and recognized a related
extraordinary charge for writing off previously deferred financing expenses
of $824. In 1994 and 1995, Sanmina recorded gains of $10,167 and $1,833,
respectively, from the exchange of convertible subordinated debentures for
common stock, net of expenses.
(3) Adjusted to reflect the two-for-one splits of Sanmina's common stock
effected in January 1996 and June 1998.
7
<PAGE> 14
ALTRON SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The selected historical financial data as of January 1, 1994, December 31,
1994 and December 30, 1995 and for the years ended January 1, 1994 and December
31, 1994 are derived from audited financial statements of Altron not included or
incorporated by reference herein. The historical statement of operations data
for each of the three years in the period ended January 3, 1998 and the
historical balance sheet data at December 28, 1996 and January 3, 1998 are
derived from the audited consolidated financial statements of Altron
incorporated by reference in this Proxy Statement/Prospectus. These statements
have been audited by Arthur Andersen LLP, certified public accountants, whose
report thereon is also incorporated by reference in this Proxy
Statement/Prospectus. The unaudited historical financial information as of July
4, 1998 and for the six-month periods ended June 28, 1997 and July 4, 1998 are
derived from unaudited consolidated financial statements of Altron and, in the
opinion of Altron, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial information.
Operating results for the interim period are not necessarily indicative of the
results of Altron that may be expected for the entire year. The following
summary financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
the consolidated financial statements and related notes and other financial
information contained in Altron's Form 10-K for the fiscal years ended December
28, 1996 and January 3, 1998 and Form 10-Q for the quarterly period ended July
4, 1998.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
-------------------------------------------------------------------- -------------------
JANUARY 1, DECEMBER 31, DECEMBER 30, DECEMBER 28, JANUARY 3, JUNE 28, JULY 4,
1994 1994 1995 1996 1998 1997 1998
---------- ------------ ------------ ------------ ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL STATEMENT OF
OPERATIONS DATA:
Net sales................... $83,406 $104,202 $143,867 $165,248 $172,428 $83,728 $102,232
Cost of sales............... 67,020 81,161 109,858 125,079 134,373 64,306 82,347
------- -------- -------- -------- -------- ------- --------
Gross profit................ 16,386 23,041 34,009 40,169 38,055 19,422 19,885
Selling, general and
administrative expenses... 7,308 8,645 10,704 11,969 14,844 6,820 8,659
------- -------- -------- -------- -------- ------- --------
Income from operations...... 9,078 14,396 23,305 28,200 23,211 12,602 11,226
Other income................ 109 261 1,317 1,869 1,503 838 546
Interest expense............ 582 574 359 232 31 26 7
------- -------- -------- -------- -------- ------- --------
Income before provision for
income taxes.............. 8,605 14,083 24,263 29,837 24,683 13,414 11,765
Provision for income
taxes..................... 3,445 5,633 9,705 12,122 10,016 5,439 4,591
------- -------- -------- -------- -------- ------- --------
Net income.................. $ 5,160 $ 8,450 $ 14,558 $ 17,715 $ 14,667 $ 7,975 $ 7,174
======= ======== ======== ======== ======== ======= ========
Basic earnings per
share(1).................. $ 0.44 $ 0.68 $ 1.05 $ 1.17 $ 0.96 $ 0.52 $ 0.46
======= ======== ======== ======== ======== ======= ========
Basic weighted average
shares outstanding(1)..... 11,746 12,361 13,887 15,143 15,333 15,266 15,541
======= ======== ======== ======== ======== ======= ========
Diluted earnings per
share(1).................. $ 0.42 $ 0.65 $ 0.98 $ 1.11 $ 0.91 $ 0.49 $ 0.45
======= ======== ======== ======== ======== ======= ========
Diluted weighted average
shares outstanding(1)..... 12,370 12,980 14,795 16,009 16,039 16,204 16,055
======= ======== ======== ======== ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
AS OF
-------------------------------------------------------------------------------
JANUARY 1, DECEMBER 31, DECEMBER 30, DECEMBER 28, JANUARY 3, JULY 4,
1994 1994 1995 1996 1998 1998
---------- ------------ ------------ ------------ ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
HISTORICAL CONSOLIDATED BALANCE
SHEET DATA:
Working capital.................... $21,522 $24,542 $ 52,277 $ 60,989 $ 63,135 $ 66,884
Total assets....................... 52,553 68,522 113,059 134,561 155,603 164,027
Long-term debt..................... 9,405 8,646 4,577 7,600 7,600 7,600
Stockholders' equity............... 29,452 40,381 80,654 100,624 117,127 124,756
</TABLE>
- ---------------
(1) Adjusted to reflect the three-for-two splits of Altron's common stock
effected September 3, 1993, February 10, 1995 and May 10, 1996.
8
<PAGE> 15
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The following unaudited pro forma combined condensed financial statements
have been prepared to give effect to the Merger, using the pooling of interests
method of accounting.
The unaudited pro forma combined condensed financial statements reflect
certain assumptions deemed probable by management regarding the Merger (for
example, that share information used in the unaudited pro forma information
approximates actual share information at the Effective Date). No adjustments to
the unaudited pro forma combined condensed financial information have been made
to account for different possible results in connection with the foregoing, as
management believes that the impact on such information of the varying outcomes,
individually or in the aggregate, would not be materially different.
The unaudited pro forma combined balance sheet as of June 27, 1998 gives
effect to the Merger as if it had occurred on June 27, 1998, and combines the
unaudited consolidated balance sheet of Sanmina as of June 27, 1998 and the
unaudited consolidated balance sheet of Altron as of July 4, 1998. The unaudited
pro forma combined statements of income for all periods presented give effect to
the Merger as if it had occurred on October 1, 1994. Altron has a fiscal year
that ends on the Saturday closest to December 31 of each year. For purposes of
the unaudited pro forma combined statements of income, Altron's consolidated
statements of income for each of the three fiscal years ended January 3, 1998,
and for the nine month periods ended June 28, 1997 and July 4, 1998, have been
combined with Sanmina's consolidated statements of income for each of the three
fiscal years ended September 30, 1997, and the nine month periods ended June 28,
1997 and June 27, 1998. As a result, Altron's results for the three month period
ended January 3, 1998 are included in the unaudited pro forma combined statement
of operations data for both the twelve months ended September 30, 1997 and the
nine months ended June 27 1998, and results for the three month period ended
December 28, 1996 are included in the unaudited pro forma combined statement of
operations data for both the twelve months ended September 30, 1996 and the nine
months ended June 28, 1997.
Such unaudited pro forma combined condensed financial information is
presented for illustrative purposes only and is not necessarily indicative of
the financial position or results of operations that would have actually been
reported had the Merger occurred at the beginning of the period presented, nor
is it necessarily indicative of future financial position and results of
operations. These unaudited pro forma combined financial statements are based
upon the respective historical consolidated financial statements and notes
thereto of Sanmina and Altron included elsewhere in this Proxy
Statement/Prospectus, and do not incorporate, nor do they assume, any benefits
from cost savings or synergies of operations of the combined company.
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED SEPTEMBER 30, -------------------
--------------------------------- JUNE 28, JUNE 27,
PRO FORMA STATEMENT OF INCOME DATA: 1995(1) 1996(1) 1997(1) 1997 1998
----------------------------------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales.................................... $415,624 $557,230 $742,215 $531,549 $677,783
Income from operations....................... 55,656 83,529 82,530 76,474 93,693
Net income................................... 36,644 54,280 45,192 48,068 59,103
Basic earnings per share
Income before extraordinary item........... $ 0.78 $ 1.17 $ 0.95 $ 1.02 $ 1.22
Extraordinary item......................... 0.04 -- -- -- --
Net income................................. $ 0.82 $ 1.17 $ 0.95 $ 1.02 $ 1.22
Diluted earnings per share
Income before extraordinary item........... $ 0.75 $ 1.05 $ 0.85 $ 0.89 $ 1.07
Extraordinary item......................... 0.04 -- -- -- --
Net income................................. $ 0.79 $ 1.05 $ 0.85 $ 0.89 $ 1.07
Basic weighted average shares outstanding.... 44,412 46,238 47,401 47,137 48,524
Diluted weighted average shares 47,072 54,766 56,716 56,425 57,580
outstanding................................
</TABLE>
<TABLE>
<CAPTION>
AS OF
JUNE 27,
PRO FORMA COMBINED BALANCE SHEET DATA: 1998
-------------------------------------- --------
<S> <C>
Working capital............................................. $261,333
Total assets................................................ 607,390
Long-term obligations....................................... 115,526
Stockholders' equity........................................ 350,675(2)
</TABLE>
- ---------------
(1) Includes Altron's results for the years ended December 30, 1995, December
28, 1996 and January 3, 1998, respectively.
(2) Reflects estimated expenses of Merger of $1.6 million.
9
<PAGE> 16
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data of Sanmina
and Altron and combined per share data on an unaudited pro forma combined basis
after giving effect to the Merger with Altron as if the Merger was completed at
the beginning of the respective periods for net income per common share data.
The Exchange Ratio assumes that the Merger was consummated on June 27, 1998. The
pro forma book value per common share assumes that the Merger was consummated on
June 27, 1998 and September 30, 1997. The following data should be read in
conjunction with the Unaudited Pro Forma Financial Information and the separate
historical financial statements of Sanmina and Altron incorporated by reference
or included elsewhere herein. The unaudited pro forma combined per common share
data is provided for illustrative purposes only and is not necessarily
indicative of the combined financial position or combined results of operations
that would have been reported had the Merger occurred on the date indicated, nor
does it represent a forecast of the combined financial position or results of
operations for any future period. No pro forma adjustments have been included
herein which reflect potential effects of (i) the efficiencies which may be
obtained by combining Sanmina and Altron operations or (ii) the costs of
restructuring, integrating or consolidating such operations.
COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
AS OF OR FOR
THE NINE
FISCAL YEARS ENDED MONTHS ENDED
SEPTEMBER 30, -------------------
--------------------------- JUNE 28, JUNE 27,
1995 1996 1997 1997 1998
----- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Historical -- Sanmina:
Basic earnings per share
Income before extraordinary item......... $0.53 $0.93 $0.75 $0.89 $1.17
Extraordinary item....................... 0.05 -- -- -- --
Net income............................... $0.58 $0.93 $0.75 $0.89 $1.17
Diluted earnings per share
Income before extraordinary item......... $0.51 $0.84 $0.68 $0.78 $1.02
Extraordinary item....................... 0.05 -- -- -- --
Net income............................... $0.56 $0.84 $0.68 $0.78 $1.02
Book value per common share(1)............. $4.19 $5.40
</TABLE>
<TABLE>
<CAPTION>
AS OF OR FOR
THE SIX
FISCAL YEARS ENDED MONTHS ENDED
---------------------------------------- -------------------
DECEMBER 30, DECEMBER 28, JANUARY 3, JUNE 28, JULY 4,
1995 1996 1998 1997 1998
------------ ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Historical -- Altron:
Basic earnings per share............... $1.05 $1.17 $0.96 $0.52 $0.46
Diluted earnings per share............. $0.98 $1.11 $0.91 $0.49 $0.45
Book value per common share(1)......... $7.56 $8.02
</TABLE>
<TABLE>
<CAPTION>
AS OF OR FOR
THE NINE
FISCAL YEARS ENDED MONTHS ENDED
SEPTEMBER 30, -------------------
---------------------------------------- JUNE 28, JUNE 27,
1995 1996 1997 1997 1998
------------ ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Pro Forma Combined Per Sanmina Share:
Basic earnings per share
Income before extraordinary item....... $0.78 $1.17 $0.95 $1.02 $1.22
Extraordinary item..................... 0.04 -- -- -- --
Net income............................. $0.82 $1.17 $0.95 $1.02 $1.22
Diluted earnings per share
Income before extraordinary item....... $0.75 $1.05 $0.85 $0.89 $1.07
Extraordinary item..................... 0.04 -- -- -- --
Net income............................. $0.79 $1.05 $0.85 $0.89 $1.07
Book value per common share(1)........... $6.01 $7.16
</TABLE>
10
<PAGE> 17
<TABLE>
<CAPTION>
AS OF OR FOR
THE NINE
FISCAL YEARS ENDED MONTHS ENDED
SEPTEMBER 30, -------------------
---------------------------------------- JUNE 28, JUNE 27,
1995 1996 1997 1997 1998
------------ ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Equivalent Pro Forma Combined per Altron
Share(2):
Basic earnings per share
Income before extraordinary item....... $0.35 $0.53 $0.43 $0.46 $0.55
Extraordinary item..................... 0.02 -- -- -- --
Net income............................. $0.37 $0.53 $0.43 $0.46 $0.55
Diluted earnings per share
Income before extraordinary item....... $0.34 $0.45 $0.36 $0.39 $0.49
Extraordinary item..................... 0.02 -- -- -- --
Net income............................. $0.36 $0.45 $0.36 $0.39 $0.49
Book value per common share(1)......... $2.73 $3.25
</TABLE>
- ---------------
(1) The historical book value per common share is computed by dividing total
stockholders' equity by the number of shares of common stock outstanding at
the end of the period. The pro forma book value per share is computed by
dividing pro forma stockholders' equity by the pro forma number of shares of
Sanmina at the end of the period.
(2) The equivalent Altron pro forma per share amounts are calculated by
multiplying the Sanmina combined pro forma per share amounts by 0.4545, the
Exchange Ratio.
11
<PAGE> 18
RISK FACTORS
This Proxy Statement/Prospectus contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Actual results could differ materially from those projected in the
forward-looking statements as a result of the risk factors set forth below and
elsewhere in this Proxy Statement/Prospectus. The following factors should be
considered carefully by holders of Altron Common Stock in evaluating whether to
approve and adopt the Merger Agreement and approve the Merger. These factors
should be considered in conjunction with the other information included or
incorporated by reference in this Proxy Statement/Prospectus, including the
forward-looking statements made in this Proxy Statement/Prospectus. For periods
following the Merger, references to Sanmina should be considered to refer to
Sanmina and its subsidiaries, including Altron, unless the context otherwise
requires.
Sanmina faces uncertainties relating to the integration of the Sanmina and
Altron operations. The successful combination of Sanmina and Altron will require
substantial effort from each company, including the coordination of sales and
marketing efforts. Sanmina may encounter difficulties in the transition process.
These difficulties could include the interruption of, or a loss of momentum in,
Altron's activities, problems associated with integration of management
information and reporting systems, and delays in implementation of consolidation
plans. In the event that Sanmina encounters any of these difficulties, or if the
attention of Sanmina's management is diverted, Sanmina's ability to realize the
anticipated benefits of the Merger could be adversely affected. There can be no
assurance that Sanmina will be able to retain Altron's key management,
technical, sales and marketing personnel, or that Sanmina will realize the
anticipated benefits of the Merger.
Altron stockholders face risks associated with the exchange ratio. As a result
of the Merger, each outstanding share of Altron Common Stock will be converted
into 0.4545 fully paid and nonassessable shares of Sanmina Common Stock. The
Exchange Ratio is subject to adjustment in the event that the average of the
last reported sale price of Sanmina Common Stock on the Nasdaq National Market
over the 10 trading days ending one day prior to the date of the Special Meeting
is less than $30.00 (the average of the last reported sale price of Sanmina
Common Stock during such period is hereafter referred to as the "Effective Time
Sanmina Price"). In this event, the Exchange Ratio will be adjusted to an amount
equal to $13.635 divided by the Effective Time Sanmina Price, provided that the
Exchange Ratio will not exceed 0.5681 Sanmina shares per Altron share. If the
Effective Time Sanmina Price is less than $24.00, Altron will have the right to
terminate the Merger Agreement. Alternatively, Altron and Sanmina may, by mutual
consent, amend the Merger Agreement to provide for completion of the Merger at
an Exchange Ratio greater than 0.5681 Sanmina shares per Altron share. The
Exchange Ratio will not be reduced in the event the Effective Time Sanmina Price
is greater than $30.00. Accordingly, the specific value of the consideration to
be received by Altron stockholders in the Merger will depend on the market price
of Sanmina Common Stock during the 10 trading days ending one day prior to the
Special Meeting. The market prices of Sanmina Common Stock and Altron Common
Stock as of a recent date are set forth herein under "COMPARATIVE STOCK PRICES
AND DIVIDEND POLICY."Altron stockholders are advised to obtain recent market
quotations for Sanmina Common Stock and Altron Common Stock. There can be no
assurance as to the market prices of Sanmina Common Stock or Altron Common Stock
at any time before the Effective Time or as to the market price of Sanmina
Common Stock at any time thereafter. See "COMPARATIVE STOCK PRICES AND DIVIDEND
POLICY."
Sanmina is heavily dependent on the electronics industry. Sanmina's business is
heavily dependent on the health of the electronics industry. Sanmina's customers
are manufacturers in the telecommunications, networking (data communications),
industrial and medical instrumentation and computer systems segments of the
electronics industry. These industry segments, and the electronics industry as a
whole, are subject to rapid technological change and product obsolescence.
Sanmina's customers can discontinue or modify products containing components
manufactured by Sanmina. Such discontinuance or modification could adversely
affect Sanmina's results of operations. The electronics industry is also subject
to economic cycles and has in the past experienced, and is likely in the future
to experience, recessionary periods. A general recession in the electronics
industry could have a material adverse effect on Sanmina's business, financial
condition and results of operations. Sanmina typically does not obtain long-term
volume purchase contracts
12
<PAGE> 19
from its customers and has recently experienced reduced lead times in customer
orders. Customer orders may be canceled and volume levels may be changed or
delayed. In particular, Sanmina experienced certain cancellation and
rescheduling of shipment dates of customer orders during the fourth fiscal
quarter of 1998. The timely replacement of canceled, delayed or reduced
contracts with new business cannot be assured.
Sanmina's results of operations can be affected by a variety of
factors. Sanmina's results of operations have varied and may continue to
fluctuate significantly from period to period, including on a quarterly basis.
Sanmina's operating results are affected by a number of factors. These factors
include timing of orders from major customers, mix of product ordered by and
shipped to major customers, the volume of orders as related to Sanmina's
capacity, the ability of Sanmina to effectively manage inventory and fixed
assets, and the ability of Sanmina to time expenditures in anticipation of
future sales. Sanmina's results are also affected by the mix of products between
backplane assemblies and printed circuit boards. Sanmina's results are also
affected by general economic conditions in the electronics industry. Sanmina's
results can also be significantly influenced by development and introduction of
new products by Sanmina's customers. From time to time, Sanmina experiences
changes in the volume of sales to each of its principal customers, and operating
results may be affected on a period-to-period basis by these changes. Sanmina's
customers generally require short delivery cycles, and a substantial portion of
Sanmina's backlog is typically scheduled for delivery within 120 days. Quarterly
sales and operating results therefore depend in large part on the volume and
timing of bookings received during the quarter, which are difficult to forecast.
Sanmina's backlog also affects its ability to plan production and inventory
levels, which could lead to fluctuations in operating results. In addition, a
significant portion of Sanmina's operating expenses are relatively fixed in
nature and planned expenditures are based in part on anticipated orders. Any
inability to adjust spending quickly enough to compensate for any revenue
shortfall may magnify the adverse impact of such revenue shortfall on Sanmina's
results of operations. Results of operations in any period should not be
considered indicative of the results to be expected for any future period. In
addition, fluctuations in operating results may also result in fluctuations in
the price of Sanmina Common Stock.
Sanmina experiences customer concentration. A small number of customers are
responsible for a significant portion of Sanmina's net sales. In fiscal 1997,
sales to DSC Communications accounted for more than 10% of Sanmina's net sales.
In fiscal 1996, sales to DSC Communications and Alcatel each accounted for more
than 10% of Sanmina's net sales. In addition, during fiscal 1997 and 1996,
Sanmina's ten largest customers accounted for approximately 63% and 65%,
respectively, of Sanmina's net sales. Although there can be no assurance that
Sanmina's principal customers will continue to purchase products and services
from Sanmina at current levels, if at all, Sanmina expects to continue to depend
upon its principal customers for a significant portion of its net sales.
Sanmina's customer concentration could increase or decrease, depending on future
customer requirements, which will be dependent in large part on market
conditions in the electronics industry segments in which Sanmina's customers
participate. The loss of one of more major customers or declines in sales to
major customers could have a material adverse effect on Sanmina's business,
financial condition and results of operations.
Sanmina is subject to risks associated with its strategy of acquisitions and
expansions. Sanmina has, for the past several fiscal years, pursued a strategy
of growth. This growth has come in part through acquisitions. These acquisitions
have involved both acquisitions of entire companies, such as the June 1995
acquisition of Assembly Solutions in Manchester, New Hampshire, the January 1996
acquisition of Golden Eagle Systems, now known as Sanmina Cable Systems, the
November 1997 merger with Elexsys, the February 1998 acquisition of Pragmatech
and the planned merger with Altron. In addition, Sanmina has in other instances
acquired selected assets, principally equipment, inventory and customer
contracts and, in certain cases, facilities or facility leases. Acquisitions of
this nature completed by Sanmina include the November 1996 acquisitions of the
Guntersville, Alabama operations of Comptronix Corporation and certain assets of
the custom manufacturing services division of Lucent Technologies. In addition
to these acquisitions, Sanmina has also grown its operations through internal
expansion, such as the opening of its Richardson, Texas assembly facility, its
Durham, North Carolina assembly facility and its Dublin, Ireland assembly
facility. Acquisitions of companies and businesses and expansion of operations
involves certain risks, including the following:
13
<PAGE> 20
* the potential inability to successfully integrate acquired operations and
businesses or to realize anticipated synergies, economies of scale or other
value,
* diversion of management's attention,
* difficulties in scaling up production at new sites and coordinating
management of operations at new sites,
* loss of key employees of acquired operations.
Accordingly, Sanmina may experience problems in integrating the Altron
operations or operations associated with any future acquisition. Accordingly,
there can be no assurance that the merger with Altron or any other future
acquisition will result in a positive contribution to Sanmina's results of
operations. Furthermore, there can be no assurance that Sanmina will realize
value from any such acquisition which equals or exceeds the consideration paid.
In particular, the successful combination of Sanmina and Altron will require
substantial effort from each company, including the integration and coordination
of sales and marketing efforts. The diversion of the attention of management and
any difficulties encountered in the transition process, including, the
interruption of, or a loss of momentum in, Altron's activities, problems
associated with integration of management information and reporting systems, and
delays in implementation of consolidation plans, could have an adverse impact on
Sanmina's ability to realize the anticipated benefits of the Merger. Therefore,
there can be no assurance that Sanmina will realize any of these anticipated
benefits. In addition, there can be no assurance that Sanmina will realize
anticipated strategic and other benefits from expansion of existing operations
to new sites. Any such problems could have a material adverse effect on
Sanmina's business, financial condition and results of operations. In addition,
future acquisitions by Sanmina may result in dilutive issuances of equity
securities, the incurrence of additional debt, large one-time write-offs and the
creation of goodwill or other intangible assets that could result in
amortization expense. These factors could have a material adverse effect on
Sanmina's business, financial condition and results of operations.
Sanmina is subject to competition and technological change. The electronic
interconnect product industry is highly fragmented and it is characterized by
intense competition. Sanmina competes in the technologically advanced segment of
the interconnect product market, which is also highly competitive but is much
less fragmented than the industry as a whole. Sanmina's competitors consist
primarily of larger manufacturers of interconnect products, and some of these
competitors have greater manufacturing and financial resources than Sanmina as
well as greater SMT assembly capacity. As a participant in the interconnect
industry, Sanmina must continually develop improved manufacturing processes to
accommodate its customers' needs for increasingly complex products. During
periods of recession in the electronics industry, Sanmina's competitive
advantages in the areas of quick turnaround manufacturing and responsive
customer service may be of reduced importance to electronics OEMs, who may
become more price sensitive. In addition, captive interconnect product
manufacturers seek orders in the open market to fill excess capacity, thereby
increasing price competition. Sanmina may be at a competitive disadvantage with
respect to price when compared to manufacturers with lower cost structures,
particularly those with offshore facilities where labor and other costs are
lower.
Environmental matters are a key consideration in Sanmina's business. Proper
waste disposal is a major consideration for printed circuit board manufacturers
because metals and chemicals are used in the manufacturing process. Water used
in the printed circuit board manufacturing process must be treated to remove
metal particles and other contaminants before it can be discharged into the
municipal sanitary sewer system. In addition, although the electronics assembly
process generates significantly less waste water than printed circuit board
fabrication, maintenance of environmental controls is also important in the
electronics assembly process. Each of Sanmina's printed circuit board and
electronics assembly plants has personnel responsible for monitoring
environmental compliance. These individuals report to Sanmina's director of
environmental compliance, who has overall responsibility for environmental
matters. Each plant operates under effluent discharge permits issued by the
appropriate governmental authority. These permits must be renewed periodically
and are subject to revocation in the event of violations of environmental laws.
There can be no assurance that violations will not occur in the future as a
result of human error, equipment failure or other causes. In the event of a
future violation of environmental laws, Sanmina could be held liable for damages
and for the costs of remedial actions and could be also subject to revocation of
effluent discharge
14
<PAGE> 21
permits. Any such revocation could require Sanmina to cease or limit production
at one or more of its facilities, thereby having an adverse impact on Sanmina's
results of operations. Sanmina is also subject to environmental laws relating to
the storage, use and disposal of chemicals, solid waste and other hazardous
materials as well as air quality regulations. Furthermore, environmental laws
could become more stringent over time, and the costs of compliance with and
penalties associated with violation of more stringent laws could be substantial.
Sanmina is subject to certain environmental contingencies at former Elexsys
International sites. In November 1997, Sanmina acquired Elexsys International,
Inc. which, by virtue of such acquisition, became a wholly-owned subsidiary of
Sanmina. Several facilities owned or occupied by Elexsys at the time of the
acquisition, or formerly owned or occupied by Elexsys or companies acquired by
Elexsys, had either soil contamination or contamination of groundwater
underneath or near the facility including the following: Contamination was
discovered at Elexsys' Irvine, California facility in 1989 and Elexsys
voluntarily installed a groundwater remediation system at the facility in 1994.
The California Regional Water Quality Control Board has requested that Sanmina
extend the investigation of the groundwater contamination at the Irvine facility
to off-site areas. It is unknown what the results of this additional
investigation will be and whether any additional remediation activities will be
required. Sanmina has been required by the California Department of Toxic
Substances Control to undertake investigation of soil and/or groundwater at
certain facilities formerly owned or occupied by a predecessor company to
Elexsys in Mountain View, California. Depending upon the results of this soil
sampling and groundwater testing, Sanmina could be ordered to undertake soil
and/or groundwater cleanup. To date, Sanmina has not been ordered to undertake
any soil or groundwater cleanup activities at the Mountain View facilities, and
does not believe any such activities should be required. Test results received
to date are not sufficient to enable Sanmina to determine whether or not such
cleanup activities are likely to be mandated.
Contamination has also been discovered at other current and former Elexsys
facilities and has been reported to the relevant regulatory agencies. No
remediation or further investigation of such contamination has been required by
regulatory agencies. To date, the cost of the various investigations and the
cost of operating the remediation system at the Irvine facility have not been
material to Sanmina's financial condition. However, in the event Sanmina is
required to undertake additional groundwater or soil cleanup, the costs of such
cleanup are likely to be substantial. Sanmina is currently unable to estimate
the amount of such soil and groundwater cleanup costs because no soil or
groundwater cleanup has been ordered and Sanmina cannot determine from available
test results what remediation activities, if any, are likely to be required.
Sanmina believes, based on the limited information currently available, that the
cost of any groundwater or soil clean-up that may be required would not have a
material adverse effect on Sanmina's business, financial condition and results
of operations. Nevertheless, the process of remediating contaminated soil and
groundwater is costly, and if Sanmina is required to undertake substantial
remediation activities at one or more of the former Elexsys facilities, there
can be no assurance that the costs of such activities costs would not have a
material adverse effect on Sanmina's business, financial condition and results
of operations.
Altron was advised in 1993 by Olin Corporation that contamination resulting from
activities of prior owners of property owned by Olin Corporation and located
close to the Altron manufacturing plant in Wilmington, Massachusetts, had
migrated under the Altron plant. Olin has assumed full responsibility for any
remediation activities that may be required and has agreed to indemnify and hold
Altron harmless from any and all costs, liabilities, fines, penalties, charges
and expenses arising from and relating to any action or requirement, whether
imposed by statute, ordinance, rule, regulation, order, decree or by general
principles of law to remediate, clean up or abate contamination emanating from
the Olin site, Although the Company believes that Olin's assumption of
responsibility will result in no remediation cost to Altron from the
contamination, there can be no assurance that Altron will not be subject to some
costs regarding this matter, but Altron does not anticipate that such costs, if
any, will be material to its financial condition.
Sanmina's international operations involve additional risks. Sanmina opened its
first overseas facility, located in Dublin, Ireland, in June 1997. In addition,
Sanmina has obtained a printed circuit board fabrication facility in
Peterborough, England as a result of the acquisition of Elexsys. A number of
risks are inherent in international operations and transactions. International
sales and operations may be limited or disrupted by
15
<PAGE> 22
the imposition of government controls, export license requirements, political
instability, trade restrictions, changes in tariffs, and difficulties in
staffing, coordinating communications among and managing international
operations. Additionally, Sanmina's business, financial condition and results of
operations may be adversely affected by fluctuations in international currency
exchange rates as well as increases in duty rates, difficulties in obtaining
export licenses, constraints on its ability to maintain or increase prices, and
competition. There can be no assurance that Sanmina will realize the anticipated
strategic benefits of its expansion in Ireland or that Sanmina's international
operations will contribute positively to Sanmina's business, financial condition
and results of operations. Furthermore, difficulties encountered in scaling up
production at overseas facilities or in coordinating Sanmina's United States and
international operations, as well as any failure of the international operations
to realize anticipated revenue growth, could, individually or in the aggregate,
have a material adverse effect on Sanmina's business, financial condition and
results of operations.
Sanmina is subject to risks related to Year 2000 problems. Many currently
installed computer systems and software products are coded to accept only two
digit entries in the date code field. As the Year 2000 approaches, these code
fields will need to accept four digit entries to distinguish years beginning
with "19" from those beginning with "20." As a result, in less than two years,
computer systems and/or software products used by many companies may need to be
upgraded to comply with such Year 2000 requirements. Sanmina is currently
expending resources to review its products and services, as well as its internal
use software in order to identify and modify those products, services and
systems that are not Year 2000 compliant. Additionally, Sanmina is in the
process of evaluating the need for contingency plans with respect to Year 2000
requirements. The necessity of any contingency plan must be evaluated on a
case-by-case basis and will vary considerably in nature depending on the Year
2000 issue it may need to address. There can be no assurance however, that
Sanmina will be able to solve all potential Year 2000 issues. Sanmina's reliance
on its key suppliers, and therefore on the proper functioning of their
information systems and software, is increasing, and there can be no assurance
that another company's failure to address Year 2000 issues could not have an
adverse effect on Sanmina. Sanmina has initiated formal communications with each
of its significant suppliers and customers to determine the extent to which
Sanmina is vulnerable to those third parties' failure to remediate their own
Year 2000 issues. Sanmina is requesting that third party vendors represent their
products and services to be Year 2000 compliant and that they have a program to
test for Year 2000 compliance. However, the response of those third parties is
beyond Sanmina's control. To the extent that Sanmina does not receive adequate
responses by December 31, 1998, it is prepared to develop contingency plans,
with completion of these plans scheduled for no later than March 31, 1999. At
this time, Sanmina cannot estimate the additional cost, if any, that might
develop from such contingency plans. Breakdowns in Sanmina's computer systems
and applications, such as its manufacturing application software, its bar-coding
systems, and the computer chips embedded in its plant equipment, as well as
other Year 2000-related problems such as disruptions in the delivery of
materials, power, heat or water to Sanmina's facilities, could prevent Sanmina
from being able to manufacture and ship its products. Sanmina plans to replace
or upgrade or otherwise work around any of its date driven systems that are not
Year 2000 compliant. Sanmina's Year 2000 Project Team will have compliance
solutions or work arounds planned by November 30, 1998, and intends to complete
compliance testing by June 30, 1999. If Sanmina fails to correct a material Year
2000 problem, its normal business activities and operations could be
interrupted. Such interruptions could materially and adversely affect Sanmina's
results of operations, liquidity and financial condition. To date, Year 2000
costs are not considered by Sanmina to be material to its financial condition.
Sanmina currently estimates that, in order to complete Year 2000 compliance,
Sanmina will be required to incur expenditures of approximately $1.1 million.
Possible Volatility of Stock Price. The trading price of the Sanmina Common
Stock has been and could in the future be subject to significant fluctuations in
response to variations in quarterly operating results, developments in the
electronics industry, general economic conditions, changes in securities
analysts' recommendations regarding Sanmina's securities and other factors. In
addition, the stock market in recent years has experienced significant price and
volume fluctuations which have affected the market prices of technology
companies and which have often been unrelated to or disproportionately impacted
by the operating performance of such companies. These broad market fluctuations
may adversely affect the market price of Sanmina's Common Stock.
16
<PAGE> 23
COMPARATIVE STOCK PRICES AND DIVIDEND POLICY
Sanmina Common Stock (symbol: SANM) and Altron Common Stock (symbol: ALRN)
are quoted on the Nasdaq National Market. The following table sets forth, for
the periods indicated, the high and low sale prices per share of Sanmina Common
Stock and of Altron Common Stock on the Nasdaq National Market. Sanmina and
Altron have never paid cash dividends on shares of Sanmina Common Stock and
Altron Common Stock, respectively. In addition, the Merger Agreement restricts
Altron's and Sanmina's ability to pay cash dividends between the date of the
Merger Agreement and the Effective Time. Sanmina does not currently intend to
pay any cash dividends in the future.
<TABLE>
<CAPTION>
COMMON STOCK
----------------
HIGH LOW
------ ------
<S> <C> <C>
SANMINA(1)
FISCAL 1996
First Quarter............................................. $13.88 $ 9.88
Second Quarter............................................ 15.75 11.00
Third Quarter............................................. 18.88 13.50
Fourth Quarter............................................ 20.25 10.50
FISCAL 1997
First Quarter............................................. 27.50 19.06
Second Quarter............................................ 32.00 20.06
Third Quarter............................................. 33.00 21.88
Fourth Quarter............................................ 45.06 30.55
FISCAL 1998
First Quarter............................................. 44.00 28.72
Second Quarter............................................ 40.19 26.69
Third Quarter............................................. 46.88 33.88
Fourth Quarter (to September 8, 1998)..................... 47.56 23.50
FISCAL 1999
First Quarter (to October 27, 1998)....................... 42.00 23.88
ALTRON(2)
FISCAL 1996
First Quarter............................................. 21.50 15.83
Second Quarter............................................ 25.50 18.83
Third Quarter............................................. 20.75 12.25
Fourth Quarter............................................ 21.50 13.50
FISCAL 1997
First Quarter............................................. 21.75 16.13
Second Quarter............................................ 19.75 13.88
Third Quarter............................................. 21.13 14.50
Fourth Quarter............................................ 17.75 12.75
FISCAL 1998
First Quarter............................................. 16.25 11.13
Second Quarter............................................ 15.63 9.88
Third Quarter (to September 8, 1998)...................... 13.75 9.38
Fourth Quarter (to October 27, 1998)...................... 18.38 11.25
</TABLE>
- ---------------
(1) Per share amounts for Sanmina Common Stock have been restated to
retroactively reflect a two-for-one stock split effected in June 1998.
(2) Per share amounts for Altron Common Stock have been restated to
retroactively reflect a three-for-two stock split effected May 1996.
The following table sets forth the last reported sales prices per share of
Sanmina Common Stock and of Altron Common Stock on the Nasdaq National Market on
September 1, 1998, the last trading day before announcement of the Merger
Agreement, and on October 27, 1998:
<TABLE>
<CAPTION>
SANMINA ALTRON
COMMON STOCK COMMON STOCK
------------ ------------
<S> <C> <C>
September 1, 1998............................... $ 27.25 $10.625
October 27, 1998................................ 42.00 18.375
</TABLE>
ALTRON STOCKHOLDERS ARE ADVISED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
SANMINA COMMON STOCK AND ALTRON COMMON STOCK IN CONNECTION WITH VOTING THEIR
SHARES.
17
<PAGE> 24
THE SPECIAL MEETING
DATE, TIME, PLACE AND PURPOSE
This Proxy Statement/Prospectus is being furnished to Altron stockholders
in connection with the solicitation of proxies by the Altron Board for use at
the Special Meeting to be held on November 30, 1998 at 10:00 a.m., local time,
at Hutchins, Wheeler & Dittmar, 101 Federal Street, Boston, Massachusetts 02110.
Only holders of record of Altron Common Stock at the close of business on the
Record Date will be entitled to notice of, and to vote at, the Special Meeting.
At the Special Meeting, holders of Altron Common Stock will be asked to consider
and vote upon a proposal to approve the Merger Agreement, a copy of which is
attached as Annex I to this Proxy Statement/Prospectus, and approve the Merger
of Merger Sub with and into Altron upon the terms and subject to the conditions
of the Merger Agreement. If the Merger is consummated, Altron will be the
Surviving Corporation in the Merger and will become a wholly owned subsidiary of
Sanmina.
At the Effective Time, each issued and outstanding share of Altron Common
Stock, other than shares owned by Sanmina, Merger Sub or Altron, and other than
Dissenting Shares, will be converted into 0.4545 fully paid and nonassessable
shares of Sanmina Common Stock, provided however that if the Effective Time
Sanmina Price is less than $30.00 per share, the Exchange Ratio shall be a
fraction, the numerator of which shall be $13.635 and the denominator of which
shall be the Effective Time Sanmina Price, provided that the Exchange Ratio
shall not exceed 0.5681 (which is $13.635 divided by $24.00). If the Effective
Time Sanmina Price is less than $24.00, Altron will have the right to terminate
the Merger Agreement. Alternatively, Altron and Sanmina may, by mutual consent,
amend the Merger Agreement to provide for completion of the Merger at an
Exchange Ratio greater than .5681 Sanmina shares per Altron share. No fractional
shares of Sanmina Common Stock will be issued in the Merger. Each holder of
shares of Altron Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Sanmina Common
Stock will receive, in lieu thereof, cash (without interest) in an amount, less
the amount of any withholding taxes which may be required thereon, equal to such
fraction of a share of Sanmina Common Stock multiplied by the per share last
reported sale price of Sanmina Common Stock on the date of the Special Meeting
as such price is reported on the Nasdaq National Market. Sanmina will deposit
with the Exchange Agent (as defined in the Merger Agreement and described below
under "THE MERGER AGREEMENT -- Exchange Agent; Exchange Procedures; Dividends;
No Further Ownership Rights in Altron Common Stock; No Fractional Shares;
Articles of Organization and Bylaws") on the Closing Date, funds sufficient to
pay cash in lieu of fractional shares. At the Effective Time, each Altron Option
that has not been exercised prior to the Effective Time will be assumed by
Sanmina.
THE ALTRON BOARD HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE MERGER
AGREEMENT AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, ALTRON
STOCKHOLDERS. ACCORDINGLY, THE ALTRON BOARD HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF ALTRON VOTE FOR
APPROVAL OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER. CERTAIN MEMBERS OF
THE ALTRON BOARD MAY BE DEEMED TO HAVE A CONFLICT OF INTEREST IN RECOMMENDING
STOCKHOLDER APPROVAL OF THE MERGER. SEE "THE MERGER -- INTERESTS OF CERTAIN
PERSONS IN THE MERGER."
The Sanmina Board of Directors (the "Sanmina Board") has unanimously
approved the Merger Agreement and the Merger and the issuance of Sanmina Common
Stock in connection with the Merger. Sanmina, as the sole stockholder of Merger
Sub, and the Board of Directors of Merger Sub, have each approved the Merger
Agreement and the Merger. No approval by stockholders of Sanmina is required to
effect the Merger.
RECORD DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED
The close of business on October 21, 1998 has been fixed as the Record Date
for determining the holders of Altron Common Stock who are entitled to notice of
and to vote at the Special Meeting. As of the Record
18
<PAGE> 25
Date, there were 15,636,934 shares of Altron Common Stock outstanding, of which
2,345,703 shares (approximately 15.0% of the outstanding shares) of Altron
Common Stock were owned by directors (in their capacity as stockholders) of
Altron. As indicated below, all such directors of Altron have indicated that
they intend to vote all such shares in favor of the approval of the Merger
Agreement and approval of the Merger. The holders of record on the Record Date
of shares of Altron Common Stock are entitled to one vote per share of Altron
Common Stock on each matter submitted to a vote at the Special Meeting. The
presence in person or by proxy of the holders of shares representing a majority
of the voting power of Altron Common Stock entitled to vote is necessary to
constitute a quorum for the transaction of business at the Special Meeting.
Under the MBCL, the affirmative vote of holders of at least two-thirds of the
Altron Common Stock outstanding and entitled to vote is required for Stockholder
Approval. An abstention from voting or a broker non-vote will have the practical
effect of voting against approval and adoption of the Merger Agreement and
approval of the Merger since a vote to abstain or a broker non-vote represents
one less vote for such approval and adoption. A "broker non-vote" occurs when
brokers who hold shares in street name for customers who are the beneficial
owners of such shares do not give a proxy to vote such customers' shares because
the customers have failed to give the broker specific instructions concerning
the voting of the customers' shares.
As indicated above, pursuant to the terms of the Shareholder Agreements,
the directors of Altron (in their capacity as stockholders) have agreed, among
other things, to vote (or cause to be voted) their shares of Altron Common Stock
in favor of approval the Merger Agreement and approval of the Merger at the
Special Meeting. Together, such stockholders held on the Record Date 2,345,703
shares (approximately 15.0% of the outstanding shares) of Altron Common Stock.
Consequently, holders of approximately 51.7% of Altron Common Stock who are not
parties to the Stockholder Agreements need vote in favor of approval of the
Merger Agreement and approval of the Merger for Stockholder Approval to be
obtained. The general effect of the Stockholder Agreements is to increase the
likelihood that Stockholder Approval will be obtained. See "THE
MERGER -- Interests of Certain Persons in the Merger" and "THE MERGER
AGREEMENT -- The Stockholder Agreements."
PROXIES; PROXY SOLICITATION
Shares of Altron Common Stock represented by properly executed proxies
received at or prior to the Special Meeting that have not been revoked will be
voted at the Special Meeting in accordance with the instructions contained
therein. Shares of Altron Common Stock represented by properly executed proxies
for which no instruction is given will be voted FOR approval of the Merger
Agreement and approval of the Merger. Altron stockholders are requested to
complete, sign and return promptly the enclosed proxy card in the enclosed
postage-prepaid envelope to ensure that their shares are voted at the Special
Meeting. An Altron stockholder may revoke a proxy by submitting at any time
prior to the vote on the approval of the Merger Agreement and the approval of
the Merger a later dated proxy with respect to the same shares, by delivering
written notice of revocation to the Clerk of Altron at any time prior to such
vote or by attending the Special Meeting and voting in person. Mere attendance
at the Special Meeting will not in and of itself revoke a proxy. If an Altron
stockholder is not the registered direct holder of his or her shares, such
stockholder must obtain appropriate documentation from the registered holder in
order to be able to vote the shares in person.
If the Special Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Special Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the meeting (except for any proxies which have effectively been revoked or
withdrawn), notwithstanding that they may have been effectively voted in the
same or any other manner at a previous meeting.
In addition to solicitation by mail, directors, officers and employees of
Sanmina and Altron may solicit proxies by telephone, telegram or otherwise. Such
directors, officers and employees of Sanmina and Altron will not be additionally
compensated for such solicitation but may be reimbursed for out-of-pocket
expenses incurred in connection therewith. Brokerage firms, fiduciaries and
other custodians who forward soliciting material to the beneficial owners of
shares of Altron Common Stock held of record by them will be reimbursed for
their reasonable expenses incurred in forwarding such material. Altron may
retain a proxy solicitation firm to aid in soliciting proxies from its
stockholders. The fees of such firm are estimated not to
19
<PAGE> 26
exceed $10,000, plus reimbursement of out-of-pocket expenses. Altron will bear
the cost of solicitation of proxies from the stockholders.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL
STOCKHOLDERS OF ALTRON
The following table sets forth certain information regarding beneficial
ownership of Altron Common Stock as of September 1, 1998 (except as otherwise
noted) by (i) each director of Altron, (ii) Altron's executive officers, (iii)
all directors and executive officers of Altron as a group, and (iv) all those
known by Altron to be beneficial owners of more than five percent of the
outstanding shares of Altron Common Stock. This table is based on information
provided to Altron or filed with the SEC by Altron's directors, executive
officers and principal stockholders. Unless otherwise indicated in the footnotes
below, each of the named persons has sole voting and investment power with
respect to shares shown as beneficially owned.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OWNERSHIP OF CLASS
---- ---------- --------
<S> <C> <C>
Samuel Altschuler(1)(2)(3)(4)............................... 1,988,971 12.7%
One Jewel Drive
Wilmington, MA 01887
Nancy Altschuler(3)......................................... 700,312 4.5%
Burton Doo(1)(2)(5)......................................... 473,132 3.0%
Thomas M. Claflin, II(2)(6)................................. 179,494 1.1%
Anthony J. Medaglia, Jr.(2)(7)(8)........................... 131,327 *
Daniel A. Cronin, Jr.(2)(9)................................. 76,708 *
Peter D. Brennan(1)(10)..................................... 47,834 *
All Directors and Executive Officers as a group (6
persons)(11).............................................. 2,897,466 18.2%
Wasatch Advisors, Inc.(12).................................. 937,291 6.0%
Sanford C. Bernstein & Co.(12)(13).......................... 997,900 6.4%
Mellon Bank Corporation(12)(14)............................. 803,243 5.1%
</TABLE>
- ---------------
* Less than one percent
(1) Executive Officer of the Company.
(2) Director of the Company.
(3) Mr. and Mrs. Altschuler are general partners of a nominee partnership which
holds 700,312 shares, all of which are included in the shares listed as
owned by both Mr. and Mrs. Altschuler. Mr. Altschuler has sole voting
rights with respect to these shares and shares investment power with his
wife. Of the shares held of record by the nominee partnership, 232,875
shares are held as a nominee for Mrs. Altschuler as trustee of trusts
established for the benefit of her children, as to which shares she
disclaims beneficial interest. Does not include 192,159 shares held by the
Samuel Altschuler 1980 Irrevocable Trust, in which members of the
Altschuler family have an interest.
(4) Includes 52,334 shares which can be acquired pursuant to options currently
exercisable or exercisable within sixty days.
(5) Includes 52,334 shares which can be acquired pursuant to options currently
exercisable or exercisable within sixty days.
(6) Includes 65,083 shares which can be acquired pursuant to options currently
exercisable or exercisable within sixty days.
(7) Includes 17,212 shares Mr. Medaglia holds as trustee for his children and
10,000 shares held by his spouse, as to which he disclaims beneficial
ownership.
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<PAGE> 27
(8) Includes 11,667 shares which can be acquired pursuant to options currently
exercisable or exercisable within sixty days.
(9) Includes 61,708 shares which can be acquired pursuant to options currently
exercisable or exercisable within sixty days.
(10) Includes 47,834 shares which can be acquired pursuant to options currently
exercisable or exercisable within sixty days.
(11) Includes 290,960 shares which Executive Officers and Directors have the
right to acquire through the exercise of options currently exercisable or
exercisable within sixty days.
(12) According to a Schedule 13G for the year ended December 31, 1997.
(13) Of these shares, 15,500 are held with shared voting power.
(14) Of these shares, 4,747 are held with shared investment power.
THE COMPANIES
SANMINA CORPORATION
Sanmina is a leading independent provider of customized integrated
electronics manufacturing services, including turnkey electronic assembly and
turnkey manufacturing management services, to original equipment manufacturers
("OEMs") in the electronics industry. Sanmina's electronic manufacturing
services consist primarily of the manufacture of complex printed circuit board
assemblies using surface mount ("SMT") and pin through-hole ("PTH")
interconnection technologies, the manufacture of custom designed backplane
assemblies, fabrication of complex multi-layer printed circuit boards, and
testing and assembly of completed systems. In addition to assembly, turnkey
manufacturing management also involves procurement and materials management, as
well as consultation on printed circuit board design and manufacturability.
These manufacturing services are provided by Sanmina personnel at Sanmina's
facilities. Sanmina, through its Sanmina Cable Systems subsidiary, also
manufactures custom cable assemblies for electronics industry OEMs.
SMT and PTH printed circuit board assemblies are printed circuit boards on
which various electronic components, such as integrated circuits, capacitors,
microprocessors and resistors have been mounted. These assemblies are key
functional elements of many types of electronic products. Backplane assemblies
are large printed circuit boards on which connectors are mounted to interconnect
printed circuit boards, integrated circuits and other electronic components.
Interconnect products manufactured by Sanmina generally require greater
manufacturing expertise and have shorter delivery cycles than mass produced
interconnect products and therefore typically have higher profit margins.
Sanmina's customers include leading OEMs in the telecommunications,
networking (data communications), industrial and medical instrumentation and
computer systems sectors. Sanmina's manufacturing and assembly plants are
located in Northern California; Richardson, Texas; Manchester, New Hampshire;
Raleigh, North Carolina; Guntersville, Alabama and Dublin, Ireland. Sanmina
Cable Systems' manufacturing facility is located in Carrollton, Texas.
Sanmina was incorporated in Delaware in 1989 to acquire the printed circuit
board and backplane operations of its predecessor company, which had been in the
printed circuit board and backplane business since 1980.
See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
The principal offices of Sanmina are located at 355 East Trimble Road, San
Jose, California 95131. The telephone number is (408) 954-5500.
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<PAGE> 28
ALTRON INCORPORATED
Altron is a leading contract manufacturer of interconnect products used in
advanced electronic equipment. Altron manufactures complex products in the
mid-volume sector of the electronic interconnect industry. Altron's products
generally require greater engineering and manufacturing expertise than mass-
produced, less complex products. Altron manufactures custom-designed backplanes,
surface mount assemblies and total systems, as well as multilayer, high density
printed circuit boards. Altron works closely with its customers from the early
stages of product design and development. Altron provides original design,
engineering prototype, preproduction and volume production capabilities.
Altron believes its capabilities both in manufacturing multilayer, high
density printed circuit boards and in providing value added contract
manufacturing services advantageously position Altron to serve high growth OEMs
in the rapidly changing electronics markets. Altron's OEM customers include a
diversified base of manufacturers in the telecommunication, data communication,
computer, industrial and medical systems segments of the electronics industry,
such as Ascend Communications Corp., Cisco Systems, Inc., Data General
Corporation, EMC Corporation, General Electric Company, Hewlett-Packard Company,
KLA Tencor Corp., Lucent Technologies, Inc., Motorola, Inc., Silicon Graphics,
Inc., Sun Microsystems, Inc., and 3Com Corporation.
Altron's strategy is to continue to use its well established high
technology printed circuit board manufacturing and engineering capabilities to
further expand into the rapidly growing contract manufacturing business,
providing products and services including backplanes, surface mount assemblies,
power supplies and total systems. Key elements of this strategy include
providing its customers with the highest levels of quality, superior service and
leading edge technology.
Altron was incorporated in Massachusetts on March 4, 1970.
See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
The principal offices of Altron are located at One Jewel Drive, Wilmington,
Massachusetts 01887. The telephone number is (978) 658-5800.
22
<PAGE> 29
THE MERGER
BACKGROUND OF THE MERGER
On July 28, 1998 Samuel Altschuler, President and Chief Executive Officer
of Altron and Jure Sola, Chairman and Chief Executive Officer of Sanmina met in
San Francisco and discussed a variety of matters affecting the industry in which
both companies operate. During the course of the meeting, Mr. Sola indicated an
interest in exploring the potential acquisition of Altron by Sanmina. Mr.
Altschuler had a further discussion along the same lines by telephone with Mr.
Sola and Randy Furr, the President and Chief Operating Officer of Sanmina on
July 30, 1998. Thereafter, Mr. Altschuler advised the Altron Board of Sanmina's
interest.
On August 7, 1998 Mr. Furr and Mr. Altschuler met in Boston to discuss the
potential benefits of a merger in terms of the synergies which might be achieved
through a combination of the two companies. They exchanged views regarding the
valuation of the two companies. Mr. Furr indicated potential interest in
acquiring Altron in a stock for stock transaction which would value Altron's
shares at a price in the range of $16.00 to $17.00, subject to due diligence
review of Altron. The closing price of Altron Common Stock on August 7, 1998 was
$12.94.
Following the meeting, Mr. Altschuler apprised the Altron Board of Mr.
Furr's continued interest in acquiring Altron.
On August 11, 1998 Sanmina furnished to Altron an outline of proposed terms
of a transaction which called for an exchange ratio under which Altron
stockholders (based on market price stocks then prevailing) would receive $20.00
market value in Sanmina Common Stock for each share of Altron Common Stock. The
terms provided that the exchange ratio would not be subject to adjustment. The
closing price of Altron Common Stock on August 11, 1998 was $13.06.
On August 12 and August 13 Mr. Altschuler discussed with the Altron Board
the proposed transaction and potential terms thereof. Further discussions
regarding price and other terms were held by telephone on August 13 and August
14 between Mr. Altschuler and Mr. Furr. During the course of these discussions
it was proposed that the exchange ratio be .4545, and Sanmina refused to agree
to any floor in the event of a decline in the market price of Sanmina Common
Stock. On August 14, 1998 Altron Common Stock closed at $12.56 and Sanmina
Common Stock closed at $42.75.
On August 19, 1998 the Altron Board met for the purpose of reviewing the
status of discussions with Sanmina. The Board authorized Altron management to
continue discussions with Sanmina and decided to engage Needham to serve as its
financial advisor in connection with a possible transaction with Sanmina.
Needham and Altron entered into an engagement letter on August 19, 1998. The
closing price of Sanmina Common Stock on August 19, 1998 was $44.94.
On August 24, 1998 the Altron Board met to further discuss the possible
transaction with Sanmina and other alternatives available to maximize
stockholder value. Needham made a financial presentation to the Altron Board at
the meeting. Altron management presented its analysis of the synergies and the
potential for the merged entity. Sanmina's leadership position in the industry
and its financial success were noted. Further discussions took place between
representatives of Altron and Sanmina on August 25, 26 and 27. Such discussions
involved potential terms of the transaction, as well as due diligence
investigations by each party regarding the other.
The Altron Board met again on August 27, 1998 for the purpose of discussing
the proposed transaction. Needham presented an update of its financial
presentation at the meeting. The Board instructed representatives of Altron to
seek to negotiate in conjunction with any exchange ratio a floor which would
assure Altron stockholders some specified value regardless of fluctuations in
the market price of Sanmina Common Stock between the time any agreement might be
signed and the time the transaction would close, as well as a mutual termination
fee and a November 30th closing date target. The closing price of Sanmina Common
Stock on August 27, 1998 was $37.34.
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<PAGE> 30
Further discussions ensued between representatives of Altron and Sanmina
following the August 27, 1998 Board meeting. Following such discussions, Mr.
Altschuler advised the Altron Board that Sanmina was unwilling to agree to any
such floor, or to a mutual termination fee but would use its best efforts to
close by November 30th.
On August 25, 1998 counsel to Sanmina furnished a draft Merger Agreement to
Altron's counsel. The draft Merger Agreement provided for a $10 million
termination fee in the event that the Merger Agreement were terminated by Altron
upon the occurrence of certain events. Negotiations between counsel occurred on
August 27 and 28 in which Altron's counsel conveyed the unwillingness of the
Altron Board to agree to a termination fee at that level and the Board's
insistence that the circumstances triggering payment of any termination fee be
more limited than those contained in the draft agreement.
During the period August 25, 1998 to September 1, 1998 representatives of
Altron and Sanmina also discussed employment arrangements offered by Sanmina to
Mr. Altschuler, Burton Doo, Altron's Executive Vice President, Peter D. Brennan,
its Chief Financial Officer, and certain key executives, as well as incentives
to be offered by Sanmina to retain the services of certain key employees.
On September 1, 1998 Mr. Altschuler and counsel to Altron met with Mr. Sola
and Mr. Furr of Sanmina and Sanmina's counsel in Palo Alto, California for the
purpose of further negotiations concerning the proposed transaction. During the
course of those negotiations, the Altron Board met by telephone several times to
discuss the progress of negotiations with Mr. Altschuler and Altron's counsel
and with a representative of Needham. As a result of the negotiations, Sanmina
agreed that the Exchange Ratio would be adjusted in the event that the average
of the last reported sale price of Sanmina Common Stock on the Nasdaq National
Market during the 10 trading days immediately preceding the Special Meeting is
less than $30.00, such that each share of Altron stock would be exchanged for
Sanmina stock having a value of $13.635, but that in no event shall the Exchange
Ratio be greater than 0.5681. In addition, Sanmina agreed that if the Sanmina
Effective Time Price were not at least $24.00, either Sanmina or Altron would
have the right to terminate the Merger Agreement without any further liability
or obligation. In addition, the termination fee was reduced from $10 million to
$6 million. It was also agreed that if the conditions to closing have been
satisfied by November 30, 1998 and the transaction nevertheless does not close
by November 30, 1998, either Altron or Sanmina may terminate the Merger
Agreement.
At approximately 11:30 p.m. on September 1, 1998 the Altron Board held a
final meeting by telephone in which the Board reviewed the progress of
negotiations, and representatives of Needham updated the information they had
provided at the earlier meetings concerning the relative valuations of the two
companies and the recent market performance of both the stocks. The closing
prices of the Altron and Sanmina Common Stock on September 1, 1998 were $10.63
and $27.25, respectively. The Board reviewed with counsel the terms of the
proposed Merger Agreement. The Board also reviewed in detail the proposed
employment arrangements for various officers and employees of Altron. At the
meeting, the Altron Board received Needham's oral opinion that, as of such date
and subject to certain assumptions and other matters set forth in its written
opinion dated September 2, 1998 and subsequently provided to the Altron Board,
the consideration to be received by the stockholders of Altron in the Merger was
fair from a financial point of view to such stockholders. See below " -- Opinion
of Altron's Financial Advisor." After discussion, the Altron Board unanimously
approved the terms of the Merger Agreement and directed the officers of Altron
to finalize and execute the Merger Agreement.
The Merger Agreement was executed on behalf of Altron, Sanmina and Merger
Sub on September 2, 1998 and the transaction was announced prior to the opening
of the market on September 2, 1998.
On October 5, 1998, Mr. Altschuler received a letter dated October 2, 1998
from a third party (the "Offeror"), pursuant to which the Offeror submitted an
unsolicited offer to acquire all of Altron's outstanding Common Stock, and
options to purchase Common Stock, for $15.00 in cash per share. The Offeror's
letter indicated that it was subject to several material contingencies,
including satisfactory completion of due diligence and financing. Following
receipt of the offer, Mr. Altschuler advised Sanmina of the offer. Sanmina did
not make a counteroffer to Altron.
24
<PAGE> 31
On the afternoon of October 5, 1998, the Board held a telephonic meeting to
discuss the Offeror's letter. Also present at this telephonic meeting were
representatives of Needham. The Board discussed the offer, the terms of the
Merger Agreement and the Board's responsibilities to act in the best interests
of the Altron stockholders. The Board adjourned the meeting until 7:45 a.m. on
October 7, 1998. The closing prices of the Altron and Sanmina Common Stock on
October 5, 1998 were $11.75 and $23.875, respectively.
On the morning of October 7, 1998, the Board reconvened the October 5, 1998
meeting in person. Representatives of Needham were present and provided the
Board with a financial analysis of the offer. The Board discussed the fact that
the offer represented only a 10% premium over the minimum value of $13.635 which
Altron stockholders would receive if the Effective Time Sanmina Price were
between $30 and $24 per share and that the offer did not provide the opportunity
for Altron stockholders to participate in any potential appreciation in equity
values following the Merger. It was also noted that the Merger Agreement
provided for a tax-free transaction, while the offer would be a taxable
transaction to the Altron stockholders. Following lengthy deliberations, the
Board resolved to decline to pursue the offer and authorized Mr. Altschuler to
respond to the Offeror to that effect in writing, the Board having concluded
that in light of the price offered, the fact that the offer was subject to
material contingencies including satisfactory completion of due diligence and
financing, that the transaction would be taxable to Altron stockholders and that
the offer did not provide the opportunity for Altron stockholders to participate
in any potential appreciation in equity values following the Merger, the offer
did not represent an attractive opportunity for Altron stockholders.
On October 9, 1998, Mr. Altschuler sent a letter to the Offeror indicating
that it had been determined that it was not appropriate to proceed.
ALTRON'S REASONS FOR THE MERGER -- RECOMMENDATION OF THE ALTRON BOARD
The Altron Board has unanimously determined that the terms of the Merger
Agreement and the Merger are fair to, and in the best interests of, Altron and
its stockholders. Accordingly, the Altron Board has unanimously approved the
Merger Agreement and unanimously recommends that the stockholders of Altron vote
for approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger.
In reaching its decision to approve the Merger Agreement and recommend the
Merger, the Altron Board consulted with Altron's management, as well as its
legal counsel and financial advisor. Among the factors considered by the Altron
Board in its deliberations were the following:
(i) Terms of the Transaction. In reaching its decision, the Board
reviewed Altron's business, results of operations, and near- and
longer-term prospects as an independent entity. The Board also considered
Sanmina's strategic position in the industry, its management, and its near-
and longer-term prospects. The Board recognized that Altron could remain as
an independent entity, but the Board was conscious of the industry trends
referred to below. The Board viewed Sanmina as having a track record which
demonstrates a clear ability to compete effectively in the industry and the
Board looked upon the historical trading range of Sanmina common stock as
reflecting the market's favorable view of Sanmina's historical operating
performance. The Board noted that in comparing price earnings ratios
commencing in January, 1997, Sanmina common stock has consistently traded
at a multiple of earnings significantly higher than that of Altron common
stock. Similarly, during the same period, the price appreciation in the
market place of Sanmina stock has generally been significantly higher than
that of Altron common stock. In analyzing the terms of the proposed
transaction with Sanmina, the Altron Board took into account the volatile
trading environment then prevailing; the Exchange Ratio (noting that it
provided for adjustment in the event of a decline in the price of Sanmina
Common Stock and that if such decline takes Sanmina Common Stock below
$24.00 per share, Altron would have the right to terminate the Merger
Agreement without liability); and the resulting relative interests of
Altron and Sanmina stockholders in the equity of the combined company.
(ii) Synergies. The Altron Board also took into account the
expectation that the Merger would result in certain cost synergies which,
if achieved, might improve the operating results of Sanmina.
25
<PAGE> 32
(iii) Advice and Opinion of Financial Advisor. The Altron Board
considered the advice of its financial advisor, Needham, and reviewed the
detailed financial analyses and other information presented by Needham. The
Altron Board considered the opinion of Needham that, as of September 2,
1998, and based on the matters set forth in its written opinion as of that
date, the consideration to be received by the stockholders of Altron in the
Merger is fair to the stockholders of Altron from a financial point of
view.
(iv) Strategic Alternatives. The Board's deliberations included
consideration of the likelihood of effecting an alternative transaction.
The Altron Board took into account the views expressed by Altron management
that Sanmina occupied a premier position in the industry, that there
appeared to be a limited number of parties with which Altron would be a
good strategic fit and management's view that a general "auction" of Altron
would have significant adverse consequences on Altron's relationships with
its suppliers, customers, and employees. The Board was conscious of the
fact that the Merger Agreement permits Altron to furnish to third parties,
pursuant to confidentiality agreements, non-public information with respect
to Altron in response to requests that are unsolicited or that do not
otherwise result from a breach of the Merger Agreement, to participate in
discussions and negotiations with potential third party acquirors under
certain circumstances and to terminate the Merger Agreement in order to
accept certain third party offers. The Board nevertheless recognized that
the termination fee in the amount of $6 million that would be required to
be paid by Altron under the Merger Agreement were Altron to accept an offer
from a third party might discourage any such third party from seeking to
acquire Altron.
(v) Tax and Accounting Treatment of the Transaction. The Altron Board
considered that the Merger is expected to be tax-free for federal income
tax purposes to Altron stockholders receiving Altron Common Stock and to be
accounted for under the pooling-of-interests method of accounting for
business combinations.
(vi) Industry Trends. The Altron Board was cognizant of industry
trends toward consolidation and the advantages that might be expected to
accrue to the combined company in terms of greater size and financial
strength in competing in the marketplace. The Altron Board recognized that
the combination might broaden the customer base, facilitate geographic
expansion and make possible economies of scale which would enhance the
ability of the combined company to penetrate its market.
In the light of the foregoing factors, the Altron Board decided that it is
in the best interests of Altron and its stockholders to combine the two
companies at this time so that the combined enterprise can embark upon an effort
to capitalize upon the opportunity afforded by the combination to compete more
effectively in the industry. The Altron Board did not assign relative weights to
the foregoing factors or determine that any factor was of particular importance.
Rather, the Altron Board viewed its position and recommendations as being based
on the totality of the information presented to and considered by it.
OPINION OF ALTRON'S FINANCIAL ADVISOR
Pursuant to an engagement letter dated August 19, 1998 (the "Engagement
Letter"), Altron retained Needham to furnish financial advisory services with
respect to the proposed Merger and to render an opinion as to the fairness, from
a financial point of view, of the proposed Exchange Ratio to the shareholders of
Altron. The Exchange Ratio to be provided for in the Merger was determined
through arm's length negotiations between Altron and Sanmina and not by Needham.
Needham was not engaged to seek alternative offers or to furnish alternative
strategies for maximizing stockholder value.
At a meeting of the Board of Directors of Altron in the evening of
September 1, 1998, Needham delivered its oral opinion (subsequently confirmed in
writing by a written opinion dated September 2, 1998) that, as of such date and
based upon and subject to certain assumptions and other matters described in its
written opinion, the proposed Exchange Ratio is fair to the stockholders of
Altron from a financial point of view. NEEDHAM'S OPINION IS ADDRESSED TO THE
ALTRON BOARD, IS DIRECTED ONLY TO THE FINANCIAL TERMS OF THE MERGER AGREEMENT
AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER OF ALTRON AS TO HOW
SUCH STOCKHOLDER SHOULD VOTE AT THE ALTRON SPECIAL MEETING.
26
<PAGE> 33
The complete text of the Needham Opinion, which sets forth the assumptions
made, matters considered, limitations on and scope of the review undertaken by
Needham, is attached to this Proxy Statement/ Prospectus as Annex III, and the
summary of the Needham Opinion set forth in this Proxy Statement/ Prospectus is
qualified in its entirety by reference to the Needham Opinion. ALTRON
STOCKHOLDERS ARE URGED TO READ THE NEEDHAM OPINION CAREFULLY AND IN ITS ENTIRETY
FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED, THE FACTORS CONSIDERED, AND THE
ASSUMPTIONS MADE BY NEEDHAM.
In arriving at the Needham Opinion, Needham, among other things, (a)
reviewed drafts of the Merger Agreement; (b) reviewed certain publicly available
information concerning Sanmina and Altron and certain other information
concerning Sanmina and Altron furnished to Needham by Sanmina and Altron; (c)
reviewed the historical stock prices and trading volumes of Sanmina's and
Altron's common stock; (d) held discussions with members of senior management of
Sanmina and Altron concerning the current and future business prospects of the
respective companies and joint prospects of the combined companies, including
synergies that may be achieved thereby; (e) held discussions with members of
senior management of Sanmina and Altron concerning certain research analyst
projections for Sanmina and Altron, respectively; (f) compared certain publicly
available financial data of companies whose securities are traded in the public
markets and that Needham deemed relevant to similar data for Altron; (g)
reviewed the financial terms of certain other business combinations that Needham
deemed generally relevant; and (h) performed and/or considered such other
studies, analyses, inquiries and investigations as Needham deemed appropriate.
Needham assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by or discussed with it
for purposes of rendering the Needham Opinion. With respect to information
relating to the prospects of Sanmina and Altron and the joint prospects of the
combined companies, Needham assumed that such information reflects the best
currently available estimates and judgments of the managements of Sanmina and
Altron of the future operating and financial performance of Sanmina and Altron
and the combined companies, and Needham relied upon the estimates of the
respective managements of Sanmina and Altron of the synergies that may be
achieved as a result of the proposed Merger. Needham did not assume any
responsibility for or make or obtain any independent evaluation, appraisal or
physical inspection of the assets or liabilities of Sanmina or Altron. The
Needham Opinion states that it was based on economic, monetary and market
conditions existing as of the date of such opinion. Needham expressed no opinion
as to what the value of Sanmina Common Stock will be when issued to the
shareholders of Altron pursuant to the Merger or the prices at which the Sanmina
Common Stock will actually trade at any time. In addition, Needham was not asked
to consider, and the Needham Opinion does not address, Altron's underlying
business decision to engage in the Merger, the relative merits of the Merger as
compared to any alternative business strategies that might exist for Altron, or
the effect of any other transaction in which Altron might engage. No other
limitations were imposed by Altron on Needham with respect to the investigations
made or procedures followed by Needham in rendering the Needham Opinion.
Based on this information, Needham performed a variety of financial
analyses of the Merger and the Exchange Ratio. The following paragraphs
summarize the material financial analyses performed by Needham in arriving at
the Needham Opinion.
Contribution Analysis. Needham determined the ownership interest of
holders of Altron Common Stock in the equity value (defined as the consideration
paid in the Merger) and in the enterprise value (defined as the consideration
paid in the Merger plus net debt) of the pro forma combined company based on a
range of stock prices of Sanmina Common Stock of between $26.00 and $30.00 per
share and a corresponding range of exchange ratios of 0.5244 to 0.4545. This
resulted in a range of ownership interests of holders of Altron Common Stock in
the equity and enterprise values of the pro forma combined company of between
12.5% to 14.5%. To compare these ranges of ownership interests to the relative
contributions made by Sanmina and Altron in the pro forma combined company,
Needham reviewed and analyzed the pro forma contribution of each of Sanmina and
Altron to the pro forma combined balance sheet, based on the most recent balance
sheet of the companies (June 27, 1998 for Sanmina and July 4, 1998 for Altron)
and to pro forma combined income statements for the twelve months ending
September 30, 1998 and 1999, based on publicly available analyst forecasts. This
analysis indicated that Altron would have contributed, as of the most
27
<PAGE> 34
recent balance sheet date, 27.0% of the pro forma combined total assets, 25.4%
of the pro forma combined working capital, and 28.4% of the pro forma combined
shareholders' equity. In addition, Altron would have contributed 21.5%, 19.2%
and 15.7%, respectively, of estimated pro forma combined revenues, gross profit
and net income for the twelve months ending September 30, 1998 and 19.8%, 17.2%
and 13.7%, respectively, of estimated pro forma combined revenues, gross profit
and net income for the twelve months ending September 30, 1999. The results of
the contribution analysis are not necessarily indicative of the contributions
that the respective businesses may have in the future.
Pro Forma Combined Earnings Analysis. Needham reviewed the pro forma
effect of the Merger on the combined company's estimated earnings per share for
the twelve months ending September 30, 1999, based on publicly available analyst
forecasts and using Sanmina Common Stock prices and resulting exchange ratios
ranging from $24.00 per share (resulting in an exchange ratio of 0.5681) to
$45.00 per share and higher (with an exchange ratio of 0.4545 at all prices per
share in excess of $30.00). Needham analyzed such effects before taking into
account assumed potential cost savings and other synergies and after taking into
account $5.5 million of assumed potential cost savings and other synergies. This
analysis indicated that the Merger would be accretive to the earnings per share
of the combined company for such period before taking into account any assumed
cost savings and other synergies in all instances where the Sanmina Common Stock
price per share exceeded $27.00 and after taking account the assumed cost
savings and other synergies in all instances. The actual operating or financial
results achieved by the combined entity may vary from projected results and such
variations may be material.
Selected Company Analysis. Using publicly available information, Needham
compared selected historical and projected financial and market data ratios for
Altron to the corresponding data and ratios of certain other publicly traded
contract manufacturing and printed circuit board assembly companies: Hadco
Corporation, Merix Corporation, Praegitzer Industries, Inc., and Sanmina (the
"Selected Manufacturers") and Benchmark Electronics, Inc., The DII Group, Inc.,
Flextronics International Ltd., Jabil Circuit, Inc., Plexus Corp., SCI Systems,
Inc., and Solectron Corporation (the "Selected Assemblers"). Such data and
ratios included total market capitalization to historical and projected revenue,
price per share to historical and projected earnings per share, and market value
to historical book value.
Needham calculated multiples for Altron based on the closing price of
Sanmina Common Stock on September 1, 1998 of $27.25 and the resulting equivalent
price per share for the Altron Common Stock of $13.64. The financial information
used in connection with the multiples was based on publicly available analyst
forecasts. For the Selected Manufacturers, the multiples of total market
capitalization to last twelve months ("LTM") revenues had a mean of 1.0 and a
median of 0.9, as compared with a multiple of 1.0 for Altron; the multiples of
market capitalization to projected calendar 1998 revenues had a mean and a
median of 0.9, as compared with a multiple of 1.0 for Altron; the multiples of
market capitalization to projected calendar 1999 revenues had a mean and a
median of 0.7, as compared with a multiple of 0.8 for Altron. For the Selected
Manufacturers, the LTM price-earnings multiples had a mean of 13.8 and a median
of 13.6, as compared with a multiple of 15.8 for Altron; the projected calendar
1998 price-earnings multiples had a mean of 28.2 and a median of 24.2, as
compared with a multiple of 16.6 for Altron; and the projected calendar 1999
price-earnings multiples had a mean of 13.4 and a median of 14.0, as compared
with a multiple of 12.9 for Altron. For the Selected Manufacturers, the
multiples of market value to historical book value had a mean of 2.1 and a
median of 1.9, as compared with a multiple of 1.7 for Altron.
For the Selected Assemblers, the multiples of total market capitalization
to LTM revenues had a mean and a median of 0.6, as compared with a multiple of
1.0 for Altron; the multiples of market capitalization to projected calendar
1998 revenues had a mean of 0.6 and a median of 0.5, as compared with a multiple
of 1.0 for Altron; the multiples of market capitalization to projected calendar
1999 revenues had a mean and a median of 0.4, as compared with a multiple of 0.8
for Altron. For the Selected Assemblers, the LTM price-earnings multiples had a
mean of 15.4 and a median of 13.1, as compared with a multiple of 15.8 for
Altron; the projected calendar 1998 price-earnings multiples had a mean of 14.7
and a median of 13.3, as compared with a multiple of 16.6 for Altron; and the
projected calendar 1999 price-earnings multiples had a mean of 10.6 and a median
of 9.8, as compared with a multiple of 12.9 for Altron. For the Selected
Assemblers, the
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multiples of market value to historical book value had a mean of 2.8 and a
median of 2.6, as compared with a multiple of 1.7 for Altron.
Selected Transaction Analysis. Needham also analyzed publicly available
financial information for 10 selected mergers and acquisitions of in the printed
circuit board industry (the "Selected Transactions"). In examining these
transactions, Needham analyzed certain income statement and balance sheet
parameters of the acquired companies relative to the consideration offered, such
as one-day and four-week premiums of the consideration offered to the target's
stock price; aggregate transaction value as multiples of LTM revenues, earnings
before interest and taxes ("EBIT"), and earnings before interest, taxes,
depreciation and amortization ("EBITDA"); and multiples of market value to LTM
net income and historical book value. In certain cases, complete financial data
was not publicly available for these transactions and only partial information
was used in such instances.
The Selected Transactions were: Sigma Circuits, Inc./Tyco International
Ltd.; Continental Circuits Corp./Hadco Corporation; Details, Inc./Bain Capital;
Elexsys International, Inc./Sanmina Corporation; Forward Group PLC/Viasystems
Group, Inc. (Hicks, Muse, Tate & Furst, Incorporated); Interconnection Systems
(Holdings) Limited/Viasystems, Inc. (Hicks, Muse, Tate & Furst, Incorporated);
Zycon Corporation/Hadco Corporation; ElectroStar, Inc./Tyco International Ltd.;
Circo Craft Co. Inc./Viasystems Group, Inc. (Hicks, Muse, Tate & Furst,
Incorporated); Advance Circuits, Inc./Johnson Matthey PLC.
Needham calculated premiums and multiples for Altron based on the closing
price of Sanmina Common Stock on September 1, 1998 of $27.25 and the resulting
equivalent price per share for the Altron Common Stock of $13.64. For the
Selected Transactions the one-day stock price premium ranged from 1.5% to 41.6%
with a mean of 17.7% and a median of 12.5%, as compared with a premium of 28.3%
for Altron; the four-week stock price premium ranged from 16.7% to 94.6% with a
mean of 47.2% and a median of 40.2%, as compared with a premium of 16.7% for
Altron. The multiples of transaction value to LTM sales ranged from 0.8 to 4.2
with a mean of 1.6 and a median of 1.5, as compared with a multiple of 1.0 for
Altron; the LTM EBIT multiples ranged from 10.5 to 22.9 with a mean of 15.4 and
a median of 14.3, as compared with a multiple of 9.1 for Altron; and the LTM
EBITDA multiples ranged from 5.7 to 14.1 with a mean of 8.7 and a median of 8.0,
as compared with a multiple of 6.8 for Altron. The multiples of market value to
LTM net income ranged from 16.8 to 29.2 with a mean of 21.7 and a median of
21.6, as compared with a multiple of 15.8 for Altron; and the multiples of
market value to book value ranged from 1.5 to 9.8 with a mean of 5.4 and a
median of 4.3, as compared with a multiple of 1.7 for Altron.
No company, transaction or business used in the "Selected Company Analysis"
or "Selected Transaction Analysis" as a comparison is identical to Altron,
Sanmina or the Merger. Accordingly, these analyses are not simply mathematical;
rather, they involve complex considerations and judgments concerning differences
in the financial and operating characteristics and other factors that could
affect the acquisition, public trading or other values of the Selected
Companies, Selected Transactions, or the business segment, company or
transaction to which they are being compared.
Other Analyses. In rendering its opinion, Needham considered certain other
analyses, including, among other things, a history of trading prices and volumes
for Altron and Sanmina, a comparison of Altron's and Sanmina's indexed stock
price performance relative to each other, relative to the Selected Manufacturers
and Selected Assemblers and relative to Nasdaq, and a comparison of Altron's
historical stock price performance relative to the value implied by the Merger
(based on the closing price of Sanmina Common Stock on September 1, 1998 of
$27.25).
The summary set forth above does not purport to be a complete description
of the analyses performed by Needham in connection with the rendering of the
Needham Opinion. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant quantitative and
qualitative methods of financial analyses and the application of those methods
to the particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Accordingly, Needham believes that its
analyses must be considered as a whole and that considering any portions of such
analyses and of the factors considered, without considering all analyses and
factors, could create a misleading or incomplete view of the process underlying
the Needham Opinion. In its analyses, Needham made numerous assumptions with
respect
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to industry performance, general business and economic and other matters, many
of which are beyond the control of Altron or Sanmina. Any estimates contained in
these analyses are not necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or less favorable as
set forth therein. Additionally, analyses relating to the values of business or
assets do not purport to be appraisals or necessarily reflect the prices at
which businesses or assets may actually be sold. Accordingly, such analyses and
estimates are inherently subject to substantial uncertainty. The Needham Opinion
and Needham's related analyses were only one of many factors considered by
Altron's Board of Directors in its evaluation of the proposed Merger and should
not be viewed as determinative of the views of Altron's Board of Directors or
management with respect to the Exchange Ratio or the proposed Merger.
Pursuant to the terms of the Engagement Letter, Altron has agreed to pay
Needham an advisory fee of $50,000 and a fee for rendering the Needham Opinion
of $100,000. Needham will also receive an additional transaction fee, upon
consummation of the Merger, of $100,000. Altron has also agreed to reimburse
Needham for certain of its reasonable out-of-pocket expenses and to indemnify it
against certain liabilities relating to or arising out of services performed by
Needham as financial advisor to Altron.
Needham is a nationally recognized investment banking firm. As part of its
investment banking services, Needham is frequently engaged in the evaluation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of securities, private
placements and other purposes. Needham was retained by the Altron Board of
Directors to act as Altron's financial advisor in connection with the Merger
based on Needham's experience as a financial advisor in mergers and acquisitions
as well as Needham's familiarity with the electronics contract manufacturing and
printed circuit board industries. In the normal course of its business, Needham
may actively trade the equity securities of Sanmina or Altron for its own
account or for the account of its customers and, therefore, may at any time hold
a long or short position in such securities.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal income tax
considerations relevant to the conversion of shares of Altron Common Stock into
Sanmina Common Stock pursuant to the Merger that are generally applicable to
holders of Altron Common Stock. This discussion is based on currently existing
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing Treasury Regulations thereunder and current administrative rulings and
court decisions, all of which are subject to change. Any such change, which may
or may not be retroactive, could affect the continuing validity of this
discussion.
Altron stockholders should be aware that this discussion does not deal with
all federal income tax considerations that may be relevant to particular Altron
stockholders in light of their particular circumstances, such as stockholders
who are dealers in securities, who are subject to the alternative minimum tax
provisions of the Code, who are foreign persons, who do not hold their Altron
Common Stock as capital assets or who acquired their shares in connection with
stock option or stock purchase plans or in other compensatory transactions or
who hold their shares as a hedge or as part of hedging, straddle, conversion or
other risk reduction transactions. In addition, the following discussion does
not address the tax consequences of the Merger under state, local or foreign tax
laws, or the tax consequences of transactions effectuated prior or subsequent
to, or concurrently with, the Merger (whether or not any such transactions are
undertaken in connection with the Merger), including without limitation any
transaction in which shares of Altron Common Stock are acquired or shares of
Sanmina Common Stock are disposed of. ACCORDINGLY, ALTRON STOCKHOLDERS ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF
THE MERGER, INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES.
The parties are not requesting a ruling from the Internal Revenue Service
(the "IRS") in connection with the Merger. Instead, Altron has received an
opinion from its tax counsel, Hutchins, Wheeler & Dittmar, A Professional
Corporation and Sanmina has received an opinion from its tax counsel, Wilson
Sonsini Goodrich & Rosati, Professional Corporation to the effect that, for
federal income purposes, the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code (a "Reorganization"). These
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opinions will neither bind the IRS or any governmental body nor preclude the IRS
or any governmental body from adopting a contrary position. In addition, these
opinions are subject to certain assumptions and qualifications and will be based
on the continuing truth and accuracy of certain representations made by Sanmina,
Merger Sub and Altron and by a certain stockholder of Altron.
The discussion below assumes that the Merger will qualify as a
Reorganization, based upon the opinions of counsel described above. Wilson
Sonsini Goodrich & Rosati, Professional Corporation counsel to Sanmina, and
Hutchins, Wheeler & Dittmar, A Professional Corporation, counsel to Altron, have
stated in writing their respective opinions that the discussion in paragraphs
(a) through (e) fairly presents the material federal income tax consequences to
Sanmina, Altron and the stockholders of Altron as a result of the Merger.
(a) No gain or loss will be recognized by holders of Altron Common Stock
solely as a result of the conversion of their shares of Altron Common
Stock into shares of Sanmina Common Stock in the Merger.
(b) The aggregate tax basis of Sanmina Common Stock received by Altron
stockholders in the Merger will be the same as the aggregate tax basis
of Altron Common Stock converted pursuant to the Merger (except for the
tax basis attributable to fractional shares).
(c) Cash payments in lieu of fractional shares will be treated as if a
fractional share of Sanmina Common Stock had been received in the
Merger and then redeemed by Sanmina. An Altron stockholder receiving
such cash will generally recognize gain or loss upon such payment equal
to the difference (if any) between such stockholder's basis in the
fractional share and the amount of cash received.
(d) The holding period of Sanmina Common Stock received by each Altron
stockholder in the Merger will include the period for which Altron
Common Stock surrendered in exchange therefor was considered to be
held, provided that Altron Common Stock so surrendered is held as a
capital asset at the time of the Merger.
(e) Neither Sanmina nor Altron will recognize any gain solely as a result
of the Merger.
A successful IRS challenge to the reorganization status of the Merger would
result in Altron stockholders recognizing taxable gain or loss with respect to
each share of Altron Common Stock surrendered equal to the difference between
such stockholder's basis in such share and the fair market value, as of the
Effective Time, of Sanmina Common Stock received in exchange therefor. In such
event, the stockholder's aggregate basis in Sanmina Common Stock so received
would equal its fair market value, and the stockholder's holding period for such
stock would begin the day after the Merger.
Certain noncorporate shareholders may be subject to backup withholding at a
rate of 31% on cash payments received in lieu of a fractional share interest in
Sanmina Common Stock. Backup withholding will not apply, however, to a
shareholder who furnishes a correct taxpayer identification number ("TIN") and
certifies that he is not subject to backup withholding on the substitute Form
W-9 included in the Transmittal Letter, who provides a certificate of foreign
status on Form W-8, or who is otherwise exempt from backup withholding. A
shareholder who fails to provide the correct TIN on Form W-9 may be subject to a
$50 penalty imposed by the IRS.
Each Altron shareholder will be required to retain records and file with
such holder's U.S. federal income tax return a statement setting forth certain
facts relating to the Merger.
ANTICIPATED ACCOUNTING TREATMENT
Sanmina intends to treat the Merger as a pooling of interests for
accounting and financial reporting purposes.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Altron Board with respect to the
approval and adoption of the Merger Agreement and approval of the Merger,
stockholders of Altron should be aware that certain members of the management of
Altron and the Altron Board may have certain interests in the Merger that are
different from, or in addition to, the interests of Altron stockholders
generally. Other than the Merger Agreement and the transactions contemplated
thereby, there are no past, present or proposed contracts, arrangements,
understandings, relationships or transactions between Altron and its affiliates
and Sanmina and its affiliates.
Altron will be the Surviving Corporation in the Merger and, following the
Merger, will be a wholly owned subsidiary of Sanmina. As of Record Date,
directors and executive officers of Altron owned (i) 2,345,703 shares of Altron
Common Stock for which they will receive the same consideration in connection
with the Merger as other Altron stockholders and (ii) 411,959 unexercised Altron
Options which will be treated as described below. See "THE MERGER AGREEMENT --
Merger Consideration -- Altron Options." Members of Altron management hold
approximately 19.0% of the Altron Options. The Altron Options held by directors
and executive officers of Altron will be treated the same as Altron Options held
by other employees of Altron.
Employment and Noncompetition Agreements. Sanmina will enter into
employment agreements with Samuel Altschuler and Burton Doo. Under such
employment agreements (the "Employment Agreements"), Messrs. Altschuler and Doo
will receive base salaries of $275,000 and $250,000 (their current salaries) per
year and current benefits, respectively, for a period of three years commencing
on the Effective Date. In the event that Messrs. Altschuler or Doo are
terminated other than "for cause" or, after one year of employment, resign
voluntarily, they shall be entitled to receive salary and benefits at their then
current rates until the end of the three year period under the Employment
Agreements. In the event Messrs. Altschuler or Doo resign other than "for
cause", any unvested stock options shall either, at the sole discretion of
Sanmina, be immediately vested upon resignation or termination or continue to
vest on existing option terms and continue to be exercisable over a five year
period beginning on the date of resignation or termination. In the event of any
such resignation or termination, Messrs. Altschuler and Doo each agree to be
available to provide consulting services to Sanmina for the remainder of the
effective term under the Employment Agreements. Messrs. Altschuler and Doo also
agree to enter into noncompetition agreements (the "Noncompetition Agreements").
Under the Noncompetition Agreements, Messrs. Altschuler and Doo agree,
commencing on the Effective Date and for a period of five years thereafter, not
(a) to engage in any other employment, occupation, consulting or other business
activity directly related to the business in which Sanmina is now involved or
becomes involved during the term of Messrs. Altschuler's or Doo's employment or
(b) to engage in any other activities that conflict with their obligations to
Sanmina. In consideration for the Noncompetition Agreements, Messrs. Altschuler
and Doo each will receive nonstatutory stock options to purchase 25,000 shares
of Sanmina Common Stock which shall become vested over a five year period
beginning on the Effective Date.
Messrs. Altschuler and Doo will each receive the title of Executive Vice
President of Sanmina and will have significant operational responsibilities
within the combined company.
Sanmina also will enter into an employment agreement with Peter Brennan.
Under such employment agreement (the "Brennan Employment Agreement"), Mr.
Brennan will receive a base salary of $176,800 per year and current benefits for
a period of three years commencing on the Effective Date provided that Mr.
Brennan is actively employed with Sanmina. In the event Mr. Brennan is
terminated other than "for cause", he shall be entitled to receive salary and
benefits at his then current rate until the end of the three year period under
the Brennan Employment Agreement. Upon termination other than "for cause", any
unvested stock options held by Mr. Brennan shall either, at the sole discretion
of Sanmina, be immediately vested upon termination or continue to vest on
existing option terms and continue to be exercisable over a three year period
beginning on the termination date.
Mr. Brennan will receive the title of Vice President of Finance of Sanmina
and will have responsibilities within the finance organization of the combined
company.
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For the purposes of the Employment Agreements and the Brennan Employment
Agreement, "for cause" means (i) the employee shall have been convicted of, or
shall have pleaded guilty or nolo contendere to, any felony or a crime involving
moral turpitude, (ii) the employee shall have repeatedly failed or refused to
perform his duties under the agreement and such failure or refusal shall have
continued for a period of ten days following written notice by the Sanmina Board
or (iii) the employee shall have intentionally committed fraud, embezzlement,
misappropriation of funds, breach of fiduciary duty or any other act of
dishonesty against Sanmina which has a material adverse effect on Sanmina.
Sanmina also will enter into agreements with Altron's outside directors,
Daniel A. Cronin, Jr., Thomas M. Claflin, II and Anthony J. Medaglia, Jr.,
providing that all of the stock options held by such outside directors on the
Effective Date shall be assumed by Sanmina and continue to vest on existing
option terms and continue to be exercisable over a five year period beginning on
the Effective Date.
Stockholder Agreements. Each of the directors of Altron (in his capacity
as a stockholder) has entered into a Stockholder Agreement relating to the
Merger. The general effect of the Stockholder Agreements is to increase the
likelihood that Stockholder Approval will be obtained. See "THE MERGER
AGREEMENT -- The Stockholder Agreements."
Indemnification Pursuant to the Merger Agreement. Sanmina has agreed that,
from and after the Effective Time, Sanmina will cause the Surviving Corporation
to fulfill and honor in all respects the obligations of Altron pursuant to (i)
each indemnification agreement currently in effect between Altron and each
person who is or was a director or officer of Altron at or prior to the
Effective Time and (ii) any indemnification provision under the Altron Articles
of Organization or the Altron Bylaws as each is in effect on the date hereof
(such persons to be indemnified are referred to as, collectively, the
"Indemnified Parties"). The Merger Agreement also provides that the Articles of
Organization and Bylaws of the Surviving Corporation will contain the provisions
with respect to indemnification and exculpation from liability set forth in the
Altron Articles of Organization and the Altron Bylaws on the date of the Merger
Agreement, which provisions may not be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of any Indemnified Party.
During the period ending six years after the Effective Time, Sanmina also
has agreed, to the fullest extent permitted under applicable law, to indemnify
and hold harmless each Indemnified Party against and from any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, to the extent such claim, action, suit,
proceeding or investigation arises out of or pertains to (a) any action or
omission, or alleged action or omission, in his or her capacity as a director or
officer of Altron or any of its subsidiaries, or (b) any of the transactions
contemplated by the Merger Agreement. Sanmina has also agreed to maintain
Altron's existing directors and officers insurance during such six-year period,
subject to certain limitations on the maximum amount of premiums payable by
Sanmina with respect to such insurance.
Sanmina Board of Directors. Sanmina has agreed that, at the Effective
Time, Samuel Altschuler, the Chairman of the Altron Board and President of
Altron, shall be appointed a member of the Board of Directors of Sanmina.
RESALE OF SANMINA COMMON STOCK
The Sanmina Common Stock issued in connection with the Merger will be
transferable under the Securities Act except for shares issued to any Altron
stockholder who may be deemed to be an affiliate of Altron (an "Affiliate") for
purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"). An Affiliate is defined generally as including, without
limitation, directors of, certain executive officers of and certain other
persons who control a company. Altron has agreed to use its reasonable efforts
to cause each Affiliate to deliver to Sanmina on or prior to the Closing Date, a
written agreement (an "Affiliate Agreement") providing, among other things, that
such Affiliate will not transfer any Sanmina Common Stock received in connection
with the Merger, except in compliance with the Securities Act, and the Merger
Agreement provides that Sanmina's obligation to consummate the Merger is subject
to Sanmina receiving such Affiliate Agreements from the Affiliates.
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THE MERGER AGREEMENT
The following is a brief summary of certain provisions of the Merger
Agreement, which is attached as Annex I to this Proxy Statement/Prospectus and
is incorporated herein by reference. Such summary is qualified in its entirety
by reference to the Merger Agreement. All material elements of the Merger
Agreement are described in this Proxy Statement/Prospectus.
THE MERGER
The Merger. The Merger Agreement provides that, following the approval of
the Merger Agreement and approval of the Merger by the stockholders of Altron
and the satisfaction or waiver of the other conditions to the Merger, Merger Sub
will be merged with and into Altron (with Altron being the Surviving
Corporation).
Effective Time. The Merger shall become effective at such time as Articles
of Merger are duly filed with the Secretary of State of the Commonwealth of
Massachusetts, or at such other time as Altron and Sanmina shall agree should be
specified in such Articles of Merger. The Merger Agreement provides that Sanmina
and Altron will cause Articles of Merger to be filed as soon as practicable on
or after the Closing Date.
MERGER CONSIDERATION
Common Stock. At the Effective Time, each issued and outstanding share of
Altron Common Stock, other than shares owned by Sanmina, Merger Sub or Altron,
and other than Dissenting Shares, will be converted into 0.4545 fully paid and
nonassessable shares of Sanmina Common Stock. The Exchange Ratio is subject to
adjustment in the event that the Effective Time Sanmina Price is less than
$30.00 per share. In such event, the Exchange Ratio will be adjusted to an
amount equal to $13.635 divided by the Effective Time Sanmina Price, provided
that the Exchange Ratio shall not exceed 0.5681 Sanmina shares per Altron share
(which is $13.635 divided by $24.00). If the Effective Time Sanmina Price is
less than $24.00, Altron will have the right to terminate the Merger Agreement.
Alternatively, Altron and Sanmina may, by mutual consent, amend the Merger
Agreement to provide for the completion of the Merger at an Exchange Ratio
greater than 0.5681 Sanmina shares per Altron share. The Exchange Ratio will not
be reduced in the event the Effective Time Sanmina Price is greater than $30.00.
As of the Effective Time, all shares of Altron Common Stock will no longer be
outstanding and will automatically be canceled and retired and will cease to
exist, and each certificate which immediately prior to the Effective Time
represented shares of Altron Common Stock (except Dissenting Shares and shares
owned by Sanmina, Merger Sub or Altron) will, as of the Effective Time,
represent the right to receive certificates representing the number of fully
paid and nonassessable shares of Sanmina Common Stock into which such shares of
Altron Common Stock were converted at the Effective Time and any cash in lieu of
fractional shares of Sanmina Common Stock, without interest.
Any shares of Altron Common Stock owned by Sanmina, Merger Sub or Altron
will automatically be canceled and retired and will cease to exist, and no
consideration will be delivered in exchange therefor.
Shares of Altron Common Stock held by a stockholder who has demanded
appraisal rights in compliance with the provisions of the MBCL will not be
converted into the right to receive the shares of Sanmina Common Stock otherwise
issuable in exchange for such shares of Altron Common Stock unless the
stockholder withdraws or fails to perfect the demand. Instead, the stockholder
who perfects appraisal rights will receive payment of the appraised value of the
Dissenting Shares in accordance with the MBCL. For further discussion of
stockholder appraisal rights, see "THE MERGER -- Rights of Dissenting
Stockholders."
As of September 8, 1998, an aggregate of 15,636,964 shares of Altron Common
Stock and options to purchase an aggregate of 2,164,334 shares of Altron Common
Stock were outstanding. Based upon the number of shares of Sanmina Common Stock
issued and outstanding on September 8, 1998, and after giving effect to the
Sanmina Common Stock that is expected to be issued in the Merger, assuming the
exercise of all
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exercisable Altron Options and assuming an Exchange Ratio of 0.4545 the former
holders of Altron Common Stock would hold and have voting power with respect to
approximately 15.5% of Sanmina's issued and outstanding shares (19.4% assuming
the maximum Exchange Ratio of 0.5681). The foregoing numbers of shares and
percentages are subject to change to reflect any changes in the capitalization
of either Sanmina or Altron subsequent to the date indicated and prior to the
Effective Time, and there can be no assurance as to the actual capitalization of
Sanmina or Altron at the Effective Time or Sanmina at any time following the
Effective Time.
Altron Options. The Merger Agreement provides that each Altron Option
outstanding at the Effective Time will, by virtue of the Merger, become an
option to acquire, on substantially the same terms and conditions (including the
continuation of vesting without interruption) as were applicable under such
Altron Option, the same number of shares of Sanmina Common Stock as the holder
of such Stock Option would have been entitled to receive pursuant to the Merger
had such holder exercised such Stock Option in full immediately prior to the
Effective Time. The exercise price per share of such new Sanmina option will be
equal to the exercise price of the Altron Option divided by the Exchange Ratio.
All Altron stock option plans will terminate as of the Effective Time, and
following the Effective Time no holder of an Altron Option or any participant in
any Altron stock option plan shall have any right thereunder to acquire any
capital stock of Altron, Sanmina or the Surviving Corporation except as
described above. Sanmina has delivered to the holders of Altron Options
appropriate notices describing the transactions contemplated by the Merger
Agreement and the effect that consummation of those transactions will have on
outstanding Altron Options.
Altron Employee Stock Purchase Plan. Altron has adopted a 1995 Employee
Stock Purchase Plan (the "Purchase Plan"). Under the Purchase Plan, eligible
Altron employees may purchase shares of Altron Common Stock through payroll
deductions. The Purchase Plan is implemented by offerings of rights to all
eligible employees from time to time by the Altron Board. Generally, each such
offering is six months in duration. The purchase price per share at which shares
are sold in an offering under the Purchase Plan is the lower of (a) 90% of the
average fair market value of the shares of Altron Common Stock for the five
business days immediately preceding the first day of the relevant purchase
period, or (b) 90% of the fair market value of a share of Altron Common Stock
for the five business days immediately preceding the relevant exercise date.
Altron has pending an offering under the Purchase Plan that will terminate on
December 31, 1998. At the Effective Time, each outstanding right under the
currently ongoing "offering period" to purchase Altron Common Stock under the
Purchase Plan (an "Assumed Purchase Right") shall be deemed to constitute a
purchase right to acquire, on the same terms and conditions as were applicable
under the Purchase Plan immediately prior to the Effective Time, a number of
shares of Sanmina Common Stock determined as provided in the Purchase Plan
except that the purchase price of such shares of Sanmina Common Stock under each
Assumed Purchase Right shall be ninety percent (90%) of the lower of (i) the
quotient determined by dividing the fair market value of the Altron Common Stock
on the offering date of each offering period that is ongoing as of the Effective
Time by the Exchange Ratio or (ii) the fair market value of the Sanmina Common
Stock on each exercise date occurring after the Effective Time with respect to
each offering period that is ongoing as of the Effective Time. The Assumed
Purchase Rights, in accordance with their terms, shall be subject to further
adjustment upon a stock split, stock dividend, recapitalization or similar
transaction after the Effective Time. As soon as practicable after the Effective
Time, Sanmina is required to deliver to the participants in the Purchase Plan an
appropriate notice setting forth such participants' rights pursuant thereto and
stating that the Assumed Purchase Rights pursuant to the Purchase Plan shall
continue in effect on the same terms and conditions. Following the completion of
the currently ongoing offering period and the issuance of shares to holders of
Assumed Purchase Rights, Sanmina anticipates that it will terminate the Altron
Purchase Plan and will offer Altron employees the opportunity to enroll in
Sanmina's Employee Stock Purchase Plan.
ADDITIONAL INFORMATION FOR HOLDERS OF ALTRON OPTIONS
The federal income tax consequences to holders of Altron Options depend
upon whether the Altron Options are incentive stock options ("ISOs") or
nonstatutory stock options ("NSOs").
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ISOs generally have the following tax consequences. There generally are no
federal income tax consequences to the optionee or to Altron by reason of the
exercise of an ISO. However, the exercise of an ISO may increase the optionee's
alternative minimum tax liability, if any. If an optionee holds stock acquired
through exercise of an ISO for more than two years from the date on which the
option is granted and more than one year from the date on which the shares are
transferred to the optionee upon exercise of the option, any gain or loss on a
disposition of such stock will be capital gain or loss. Generally, if the
optionee disposes of the stock before the expiration of either of these holding
periods (a "disqualifying disposition"), at the time of disposition the optionee
will recognize taxable ordinary income equal to the lesser of (i) the excess of
the stock's fair market value on the date of exercise over the exercise price,
or (ii) the optionee's actual gain, if any, on the purchase and sale. The
optionee's additional gain or any loss upon the disqualifying disposition will
be a capital gain or loss. Any capital gain or loss recognized by an optionee on
a qualifying disposition or a disqualifying disposition of stock acquired
through exercise of an ISO will be long- or short-term depending on whether the
stock was held for more than 12 months (long-term) or one year or less
(short-term). To the extent the optionee recognizes ordinary income by reason of
a disqualifying disposition, Altron generally will be entitled (subject to the
requirement of reasonableness and the satisfaction of a reporting obligation) to
a corresponding business expense deduction in the tax year in which the
disposition occurs.
NSOs generally have the following federal income tax consequences. Upon
exercise of an NSO normally the optionee will recognize taxable ordinary income
equal to the excess of the stock's fair market value on the date of exercise
over the exercise price. Generally, with respect to employees, Altron is
required to withhold from regular wages or supplemental wage payments an amount
based on the ordinary income recognized. Subject to the requirement of
reasonableness and the satisfaction of a reporting obligation, Altron generally
will be entitled to a business expense deduction equal to the taxable ordinary
income recognized by the optionee. Upon disposition of the stock, the optionee
will recognize a capital gain or loss equal to the difference between the
selling price and the sum of the amount paid for such stock plus any amount
recognized as ordinary income upon exercise of the option. Such gain or loss
will be long- or short-term depending on whether the stock was held for more
than twelve months (long-term) or one year or less (short-term). The holder can
satisfy the income and FICA withholding tax obligation to which the holder will
be subject if the holder exercises an NSO by delivering cash in an amount
necessary to satisfy the withholding obligation.
EXCHANGE AGENT; EXCHANGE PROCEDURES; DIVIDENDS; NO FURTHER OWNERSHIP RIGHTS IN
ALTRON COMMON STOCK; NO FRACTIONAL SHARES; ARTICLES OF ORGANIZATION AND BYLAWS
Exchange Agent. The Merger Agreement requires Sanmina to deposit as of the
Effective Time, with Norwest Bank Minnesota, N.A. (or such other bank or trust
company designated by Sanmina and acceptable to Altron) (the "Exchange Agent"),
for the benefit of the holders of shares of Altron Common Stock, certificates
representing the shares of Sanmina Common Stock issuable in exchange therefor.
Exchange Procedures. As soon as reasonably practicable after the Effective
Time, Sanmina will cause the Exchange Agent to mail to each holder of record of
a certificate or certificates, which immediately prior to the Effective Time
represented outstanding shares of Altron Common Stock (the "Certificates"),
whose shares were converted into shares of Sanmina Common Stock pursuant to the
Merger Agreement, (i) a letter of transmittal (which shall specify that delivery
will be effected, and risk of loss and title to the Certificates will pass, only
upon delivery of the Certificates to the Exchange Agent and will be in customary
form and have such other provisions as Sanmina may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Sanmina Common Stock. Upon surrender of
a Certificate for cancellation to the Exchange Agent, together with such letter
of transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate will be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Sanmina Common Stock which such holder has the right to receive
pursuant to the Merger Agreement, cash in lieu of fractional shares of Sanmina
Common Stock to which such holder is entitled and any dividends or other
distributions to which such holder is entitled, and the Certificate so
surrendered will forthwith be canceled. In the event of a transfer of ownership
of Altron Common Stock that is
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not registered in the transfer records of Altron, a certificate representing the
proper number of shares of Sanmina Common Stock may be issued to a person other
than the person in whose name the Certificate so surrendered is registered, if,
upon presentation to the Exchange Agent, such Certificate will be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment pays any transfer or other taxes required by reason of the issuance
of shares of Sanmina Common Stock to a person other than the registered holder
of such Certificate or establishes to the reasonable satisfaction of Sanmina
that such taxes have been paid or are nonapplicable. Until surrendered, each
Certificate will be deemed at any time after the Effective Time to represent
only the shares of Sanmina Common Stock into which the shares of Altron Common
Stock represented thereby were converted at the Effective Time, and the right to
receive cash in lieu of any fractional shares of Sanmina Common Stock and any
dividends or other distributions to which such holder is entitled. No interest
will be paid or will accrue on any cash payable pursuant to the exchange
provisions of the Merger Agreement.
ALTRON STOCKHOLDERS SHOULD NOT FORWARD ALTRON STOCK CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED FORMS OF LETTERS OF TRANSMITTAL. ALTRON
STOCKHOLDERS SHOULD NOT RETURN ALTRON STOCK CERTIFICATES WITH THE ENCLOSED
PROXY.
Dividends. No dividends or other distributions with respect to Sanmina
Common Stock with a record date after the Effective Time will be paid to the
holder of any unsurrendered Certificate with respect to the shares of Sanmina
Common Stock represented thereby, and no cash payment in lieu of fractional
shares will be paid to any such holder until the holder of record of such
Certificate surrenders such Certificate. Following surrender of any such
Certificate, there will be paid to the record holder of the certificate
representing whole shares of Sanmina Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Sanmina Common Stock to which such
holder is entitled and the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such whole
shares of Sanmina Common Stock and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time, but prior to such surrender, and a payment date subsequent to
such surrender payable with respect to such whole shares of Sanmina Common
Stock.
No Further Ownership Rights in Altron Common Stock. All shares of Sanmina
Common Stock issued in the Merger (and any cash paid) will be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Altron Common Stock, subject, however, to the obligation of the Surviving
Corporation (as defined in the Merger Agreement) to pay any dividends or make
any other distributions with a record date prior to the Effective Time which may
have been declared or made by Altron on such shares of Altron Common Stock in
accordance with the terms of, or prior to the date of, the Merger Agreement and
which remain unpaid at the Effective Time, and there will be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Altron Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they will be canceled and exchanged as described in the Merger
Agreement.
No Fractional Shares. No certificates or scrip representing fractional
shares of Sanmina Common Stock will be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a shareholder of Sanmina. Each holder of
shares of Altron Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Sanmina Common
Stock will receive, in lieu thereof, cash (without interest) in an amount, less
the amount of any withholding taxes which may be required thereon, equal to such
fraction of a share of Sanmina Common Stock multiplied by the per share closing
price of Sanmina Common Stock as of the Closing Date, as such price is reported
on the Nasdaq National Market (as published in The Wall Street Journal or, if
not published therein, in any other authoritative source).
Articles of Organization and Bylaws. The Merger Agreement provides that
the Articles of Organization of Merger Sub as in effect immediately prior to the
Effective Time will be the Articles of Organization of the
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Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law except that the name of the Surviving Corporation will be
changed to be "Altron Incorporated" in such Articles of Organization. The Merger
Agreement provides that the Bylaws of Merger Sub as in effect immediately prior
to the Effective Time will be the Bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law. The
Merger Agreement provides that Sanmina will cause the Surviving Corporation to
fulfill and honor and maintain certain indemnification and exculpation
provisions of the Altron Articles of Organization and the Altron Bylaws. See
"THE MERGER -- Interests of Certain Persons in the Merger."
REPRESENTATIONS AND WARRANTIES
The Merger Agreement includes various representations and warranties of the
parties thereto, each of which is qualified by reference to certain documents
filed by such parties with the SEC and in certain other respects. The Merger
Agreement includes representations and warranties by Altron as to, among other
things, (i) the organization, good corporate standing and corporate power of
Altron; (ii) the absence of undisclosed subsidiaries of Altron; (iii) Altron's
capital structure (the "Altron Capital Structure Representations"); (iv) the
authorization, execution, delivery, and enforceability of the Merger Agreement,
the Merger's noncontravention of any agreement, law, or charter or bylaw
provision and the absence of the need for governmental or third-party filings,
consents, approvals or actions with respect to any transaction contemplated by
the Merger Agreement (except for certain filings specified in the Merger
Agreement) (the "Altron Authority Representations"); (v) compliance as to form
of, and the accuracy of information contained in, documents filed with the SEC;
(vi) the accuracy of information supplied by Altron in connection with this
Proxy Statement/Prospectus and the Registration Statement; (vii) the absence of
certain material changes or events since the date of the most recent financial
statements filed with the SEC, including the absence of any material adverse
change in Altron, any material change in Altron's accounting methods, any
material reevaluation of Altron's assets or any declaration, setting aside or
payment of a dividend or other distribution, with respect to Altron's capital
stock; (viii) the absence of material litigation or investigations; (ix) the
disclosure of material contracts; (x) compliance with laws applicable to the
business of Altron, including environmental laws; (xi) compliance with
applicable labor laws (xii) the absence of certain material changes in the
benefit plans of Altron or labor relations; (xiii) the compliance with
applicable laws of the benefit plans of Altron and certain other matters
relating to ERISA; (xiv) the filing of tax returns and payment of taxes; (xv)
the absence of "excess parachute payments" under the Code; (xvi) good and valid
title to, or valid leasehold interests in (and compliance with the terms of such
leaseholds), all material property and assets necessary to conduct Altron's
business; (xvii) ownership of or the right to use, and no infringement of
others' rights to, and lack of licensing of, the intellectual property necessary
to conduct Altron's business; (xviii) the voting requirements for the approval
of the Merger; (xix) compliance with applicable state takeover laws; (xx)
certain broker's or advisor's fees; (xxi) the receipt of an opinion of Needham;
(xxii) the absence of actions taken or agreed to be taken which would prevent
pooling of interests accounting treatment for the Merger; and (xxiii) certain
matters with respect to equipment and personal property leases, product and
service warranties, customers and inventories.
The Merger Agreement also includes representations and warranties by
Sanmina and Merger Sub as to, among other things, (i) the organization, standing
and corporate power of Sanmina and Merger Sub; (ii) Sanmina's capital structure
(iii) the authorization, execution, delivery, and enforceability of the Merger
Agreement and related matters, the Merger Agreement's noncontravention of any
agreement, law, or charter or bylaw provision and the absence of the need for
governmental or third-party filings, consents, approvals or actions with respect
to any transaction contemplated by the Merger Agreement or the Shareholder
Agreements (except for certain filings specified in the Merger Agreement) (the
"Sanmina and Merger Sub Authority Representations"); (iv) compliance as to form
of, and the accuracy of information contained in, documents filed with the SEC;
(v) the accuracy of information supplied by Sanmina or Merger Sub in connection
with this Proxy Statement/Prospectus and the Registration Statement; (vi) the
absence of certain material changes or events since the date of the most recent
unaudited financial statements filed with the SEC, including the absence of any
material adverse change in Sanmina, any material change in Sanmina's accounting
methods, any setting aside or payment of any dividend or other distribution with
respect to
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Sanmina's capital stock; (vii) the absence of material litigation or
investigations; (viii) the disclosure of material contracts; (ix) compliance
with laws applicable to the business of Sanmina, including environmental laws;
(x) compliance with applicable labor laws; (xi) the absence of certain material
changes in the benefit plans of Sanmina; (xii) the filing of tax returns and
payment of taxes; (xiii) good and valid title to, or valid leasehold interests
in (and compliance with the terms of such leaseholds), all material property and
assets necessary to conduct Sanmina's business; (xiv) ownership of or the right
to use, and no infringement of others' rights to, and lack of licensing of, the
intellectual property necessary to conduct Sanmina's business; (xv) the absence
of a stockholder voting requirements for the approval of the Merger; (xvi)
certain broker's or advisor's fees; (xvii) the receipt of an opinion of
NationsBanc Montgomery Securities; (xviii) the absence of actions taken or
agreed to be taken which would prevent pooling of interests accounting treatment
for the Merger; (xix) certain matters with respect to product and service
warranties, customers and inventories; and (xx) the absence of prior activities
of Merger Sub.
BUSINESS OF ALTRON PENDING THE MERGER
Altron has agreed that, prior to the Effective Time, it will carry on its
businesses in the ordinary course consistent with prior conduct and, to the
extent consistent therewith, use reasonable efforts to preserve intact its
current business organization, and preserve its relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with it. Altron has also agreed that, prior to the Effective Time,
without Sanmina's consent (which consent will not be unreasonably withheld) or
except as contemplated or permitted by or not inconsistent with the Merger
Agreement, it will not, among other things: (i)(x) declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of its capital
stock, (y) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock (other than the issuance of Altron
Common Stock to employees under the Altron Employee Stock Purchase Plan in a
manner consistent with past practice or upon the exercise of Altron Options
outstanding on the date of, and in accordance with their terms as of the date
of, the Merger Agreement or as contemplated by the Merger Agreement) or (z)
purchase, redeem or otherwise acquire any shares of capital stock of Altron or
any other securities thereof or any rights, warrants or options to acquire any
such shares or other securities; (ii) amend the Altron Articles of Organization
or the Altron Bylaws; (iii) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof or (y)
any assets which are in the aggregate in excess of $500,000, except as disclosed
in writing to Sanmina and except for purchases of inventory in the ordinary
course of business; (iv) take any action that would, or that could reasonably be
expected to, result in (x) any of its representations and warranties set forth
in the Merger Agreement that are qualified as to materiality becoming untrue,
(y) any of such representations and warranties that are not so qualified
becoming untrue in any material respect or (z) any of the conditions to the
Merger set forth in the Merger Agreement not being satisfied; (v) issue,
deliver, sell, pledge or otherwise encumber any shares of its capital stock, any
other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities (other than the sale of shares of Altron Common Stock to
employees under Altron's Employee Stock Purchase Plan in a manner consistent
with past practice and the issuance of shares of Altron Common Stock upon the
exercise of Altron Stock Options outstanding on the date of the Merger Agreement
and in accordance with their present terms); (vi) sell, lease, license, mortgage
or otherwise encumber or otherwise dispose of any of its properties or assets,
except sales in the ordinary course of business consistent with past practice
and sales of assets in connection with upgrading of equipment; (vii) (x) incur
any indebtedness for borrowed money or guarantee any such indebtedness of
another person, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of Altron, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with past practice or (y)
make any loans, advances or capital contributions to, or investments in, any
other person, other than advances to employees in the ordinary course in
accordance with past practice; (viii) except as disclosed in writing to Sanmina,
make or agree to make any new capital
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expenditures which in the aggregate are in excess of $1.0 million; (ix) make any
material payment outside the ordinary course of business to settle any dispute;
(x) except as required to comply with applicable law and except as disclosed in
writing to Sanmina, (a) adopt, enter into, terminate or amend any benefit plan
or other arrangement for the benefit or welfare of any current or former
employee, officer or director, (b) increase in any manner the compensation or
fringe benefits of, or pay any bonus to, any director, officer or employee
(except for normal increases of cash compensation or cash bonuses in the
ordinary course of business consistent with past practice), (c) pay any benefit
not provided for under any benefit plan, (d) except as permitted in clause (b),
grant any awards under any bonus, incentive, performance or other compensation
plan or arrangement or benefit plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock or the removal of existing restrictions in any benefit plans or
agreements or awards made thereunder) or (e) take any action to fund or in any
other way secure the payment of compensation or benefits under any employee
plan, agreement, contract or arrangement or benefit plan; (xi) form any
subsidiary of Altron; or (xii) authorize any of, or commit or agree to take any
of, the foregoing actions.
BUSINESS OF SANMINA PENDING THE MERGER
Sanmina has agreed that, prior to the Effective Time, it will carry on its
businesses in the ordinary course consistent with prior conduct and, to the
extent consistent therewith, use commercially reasonable efforts to preserve
intact its current business organization, and preserve its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with it. Sanmina has also agreed that, prior to the Effective
Time, without Altron' consent (which consent will not be unreasonably withheld),
it will not, among other things: (i)(x) declare, set aside or pay any dividends
on, or make any other distributions in respect of, any of its capital stock, (y)
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (z) except as disclosed in writing to Altron,
purchase, redeem or otherwise acquire any shares of capital stock of Sanmina or
any other securities thereof or any rights, warrants or options to acquire any
such shares or other securities; (ii) amend the Sanmina Restated Certificate of
Incorporation or the Sanmina Bylaws; (iii) acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division thereof
except that Sanmina shall not be prohibited from effecting an acquisition of any
other business if (A) such acquisition would not materially affect the ability
of Sanmina to, or materially delay Sanmina's ability to, complete the
transactions contemplated by the Merger Agreement, and (B) such acquisition
would involve the issuance by Sanmina of equity securities and, when considered
together with all other acquisitions effected by Sanmina, would not involve the
issuance of more than 2,000,000 shares of Sanmina's capital stock or securities
convertible into or exercisable for more than 2,000,000 shares of Sanmina's
capital stock; (iv) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than pursuant to
stock option plans, employee stock purchase plans or pursuant to acquisitions of
businesses involving the issuance by Sanmina of less than 2,000,000 shares in
the aggregate for all such acquisitions); (v) sell, lease, license, mortgage or
otherwise encumber or subject to any Lien (as defined in the Merger Agreement)
or otherwise dispose of any substantial part of its (or any of its
subsidiaries') material properties, assets or business, except sales made in the
ordinary course of business and except for subjecting any of its properties to
Parent Permitted Liens (as defined in the Merger Agreement); (vi) make any
material payments outside the ordinary course of business for purposes of
settling any dispute; (vii) allow Sanmina or any of its subsidiaries, or any
significant portion of their respective businesses or assets, to be acquired (by
merger, tender offer, purchase or otherwise); or (viii) authorize any of, or
commit or agree to take any of, the foregoing actions.
Each of Sanmina and Altron also have agreed to (i) file all tax returns and
reports ("Post-Signing Returns") required to be filed by it (after taking into
account any extensions); (ii) pay timely all taxes due and payable with respect
to such Post-Signing Returns that are so filed; (iii) notify the other party
promptly of any action, suit, proceeding, claim or audit (collectively,
"Actions") pending against or with respect to the notifying party in respect of
any tax where there is a reasonable possibility of a determination or decision
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which would have a material adverse effect on such party's tax liabilities or
tax attributes; and (iv) not make any material tax election without the other
party's consent. Altron has agreed to not settle or compromise any such Action
without Sanmina's consent.
CERTAIN ADDITIONAL AGREEMENTS
The Merger Agreement contains additional covenants relating to, among other
things, (i) Altron promptly establishing a record date and calling a stockholder
meeting; (ii) the use of reasonable efforts to obtain "comfort letters" from
each party's accountants regarding the financial statements contained in or
incorporated by reference in this Proxy Statement/Prospectus; (iii) each party
having reasonable access to the others' properties, books, contracts,
commitments, personnel and records; (iv) each party consulting with the other
party regarding any press release or other public statement relating to the
transactions contemplated by the Merger Agreement; (v) each party's use of
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other party in doing, all
things necessary, proper and advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement; (vi) each party identifying all persons
who are, at the time the Merger Agreement is submitted for approval to the
stockholders of Altron, Affiliates of such party for purposes of Rule 145 under
the Securities Act or for purposes of qualifying the Merger for pooling of
interests accounting treatment under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations and to use its reasonable efforts
to cause each such person to deliver to the other party on or before the Closing
Date an Affiliate Agreement (as described under "THE MERGER -- Resale of Sanmina
Common Stock"); (viii) each party's use of reasonable efforts to cause the
transactions contemplated by the Merger Agreement, including the Merger, to be
accounted for as a pooling of interests under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations; and (ix) each party
not taking action or failing to take any action, which action or failure to act
would prevent, or would be reasonably likely to prevent, the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
In addition, Sanmina has agreed (i) to maintain all rights of indemnification in
favor of the Indemnified Parties as described above under "THE
MERGER -- Interests of Certain Persons in the Merger" and (ii) to cause the
shares of Sanmina Common Stock to be issued in connection with the Merger to be
approved for listing on the Nasdaq National Market.
Under the Merger Agreement, Altron has also agreed not to solicit other
Takeover Proposals or to withdraw its recommendation of the Merger except as set
forth below under "-- No Solicitation" and "-- Right of the Altron Board to
Withdraw Recommendation."
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Conditions to Each Party's Obligations to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver of the following conditions: (i) the Merger Agreement
having received Stockholder Approval; (ii) the shares of Sanmina Common Stock
issuable to Altron security holders pursuant to the Merger Agreement having been
approved for listing on the Nasdaq National Market, subject to official notice
of issuance; (iii) the waiting period (and any extensions thereof) under the HSR
Act applicable to the Merger having expired or having been terminated; (iv)
there not being in effect any temporary restraining order, preliminary or
permanent injunction or other order of any U.S. federal or state court of
competent jurisdiction or other legal restraint or prohibition issued by a U.S.
federal or state governmental entity preventing the consummation of the Merger;
(v) the Registration Statement having become effective under the Securities Act
and not being the subject of any stop order suspending the effectiveness thereof
or any proceeding seeking such a stop order; and (vi) Altron having received
from Arthur Andersen LLP, independent public accountants for Altron, a letter to
the effect that Arthur Andersen LLP concurs with Altron management's conclusion
that Altron would meet the applicable specific criteria for a pooling of
interests in accordance with generally accepted accounting principles, as such
criteria relate only to Altron (and not to Sanmina) and Sanmina having received
from Arthur Andersen LLP, independent public accountants for Sanmina, a letter
to the effect that Arthur Andersen LLP concurs with Sanmina's management's
conclusion that Sanmina would meet the applicable specific criteria for a
pooling of interests in
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accordance with generally accepted accounting principles, as such criteria
relate only to Sanmina (and not to Altron).
Conditions to the Obligations of Sanmina and Merger Sub. The obligations
of Sanmina and Merger Sub to effect the Merger are further subject to the
following conditions: (i) the representations and warranties of Altron contained
in the Merger Agreement that are qualified as to materiality being accurate and
the representations and warranties of Altron contained in the Merger Agreement
that are not so qualified being accurate in all material respects as of the
Closing Date; (ii) Altron having performed in all material respects all
obligations required to be performed by it under the Merger Agreement at or
prior to the Closing Date; (iii) Sanmina having received from each Affiliate of
Altron for purposes of Rule 145 under the Securities Act or for purposes of
qualifying the Merger for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations an executed Affiliate Agreement; (iv) Sanmina having received the
opinion of Wilson Sonsini Goodrich & Rosati, counsel to Sanmina, to the effect
that the Merger will constitute a reorganization within the meaning of Section
368(a) of the Code; (v) the absence of any material adverse change in the
business, properties, assets, liabilities (contingent or otherwise), financial
condition or results of operations of Altron; and (vi) rights of appraisal under
Massachusetts law having been exercised by holders of not more than five percent
of the shares of Altron Common Stock outstanding as of the date of the Special
Meeting.
Conditions to the Obligations of Altron. The obligation of Altron to
effect the Merger is further subject to the following conditions: (i) the
representations and warranties of Sanmina and Merger Sub contained in the Merger
Agreement that are qualified as to materiality being accurate and the
representations and warranties of Sanmina and Merger Sub contained in the Merger
Agreement that are not so qualified being accurate in all material respects as
of the Closing Date; (ii) Sanmina having performed in all material respects all
obligations required to be performed by it under the Merger Agreement at or
prior to the Closing Date; (iii) Altron having received from each Affiliate of
Sanmina for purposes of qualifying the Merger for pooling of interests
accounting treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations an executed Affiliate Agreement; (iv)
Altron having received the opinion of Hutchins, Wheeler & Dittmar, A
Professional Corporation, counsel to Altron, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code;
and (v) the absence of any material adverse change in the business, properties,
assets, liabilities (contingent or otherwise), financial condition or results of
operations of Sanmina.
NO SOLICITATION
The Merger Agreement provides that Altron will not, nor will it authorize
or instruct any of its officers, directors or employees or any investment
banker, attorney or other advisor or representative retained by it, directly or
indirectly, (i) to solicit, initiate or knowingly encourage the submission of
any Takeover Proposal (as hereinafter defined) by any person (other than Sanmina
or its affiliates or representatives) or (ii) to participate in any discussions
or negotiations regarding, or furnish to any person any nonpublic information
with respect to, or take any other action intended or reasonably expected to
facilitate the making of any inquiry or proposal to Altron that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal by any person
(other than Sanmina or its affiliates or their respective representatives);
provided, however, that if, at any time prior to receipt of Stockholder Approval
the Altron Board determines in good faith, after consultation with outside
counsel, that failure to do so would be inconsistent with or create a
substantial risk of liability for breach of its fiduciary duties to Altron
stockholders under applicable law, Altron may, prior to receipt of Stockholder
Approval, in response to a Takeover Proposal that was unsolicited or that did
not otherwise result from a breach of the terms described in this paragraph, and
subject to compliance with the notice requirements described in the following
paragraph, (x) furnish nonpublic information with respect to Altron and its
subsidiaries to any person pursuant to a customary and reasonable
confidentiality agreement and (y) participate in discussions and negotiations
regarding such Takeover Proposal. Under the Merger Agreement, any violation of
the foregoing restrictions by any officer, director or employee of Altron or any
investment banker, attorney or other advisor or representative of Altron, acting
on behalf of and with the authorization of Altron, shall be deemed to be a
breach of the foregoing nonsolicitation provision by Altron.
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Under the Merger Agreement, "Takeover Proposal" means any proposal or offer from
any person (other than Sanmina or its affiliates or their respective
representatives) for any acquisition by such person of a substantial amount of
assets of Altron (other than an acquisition of assets of Altron in the ordinary
course of business or as permitted under the terms of the Merger Agreement) or
more than a 25% interest in the total voting securities of Altron or any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 25% or more of any class of equity securities of Altron or
any merger, consolidation, or business combination, sale of substantially all
assets, recapitalization, liquidation, dissolution or similar transaction of
Altron with any unaffiliated third party, other than the transactions
contemplated by the Merger Agreement or the Stockholder Agreements.
Under the Merger Agreement, Altron has also agreed to promptly advise
Sanmina orally and in writing of any request for nonpublic information which
Altron reasonably believes could lead to a Takeover Proposal, of any Takeover
Proposal submitted to Altron or any inquiry with respect to or which Altron
reasonably believes could lead to any Takeover Proposal, and the material terms
and conditions of such request, Takeover Proposal or inquiry. Altron has agreed
to keep Sanmina informed in all material respects of the status and details
(including amendments or proposed amendments) of any such Takeover Proposal or
inquiry, except to the extent that the Altron Board determines in good faith,
after consultation with outside counsel, that to do so would be inconsistent
with or create a substantial risk of liability for breach of its fiduciary
duties to the Altron stockholders under applicable law.
Nothing contained in the Merger Agreement prohibits Altron from (i) taking
and disclosing to its shareholders a position contemplated by Rule 14d-9 and
14e-2(a) promulgated under the Exchange Act or (ii) making any disclosure to
Altron's stockholders if, in the good faith judgment of the Altron Board, after
consultation with independent counsel, failure to so disclose would be
inconsistent with, or create a substantial risk of, liability for breach of its
fiduciary duties to the Company's stockholders under applicable law; provided
that Altron shall not, except in accordance with the provisions of the Merger
Agreement described under "Right of the Altron Board to Withdraw Recommendation"
below, withdraw or modify, or propose to withdraw or modify, its recommendation
of the Merger or approve or recommend, or propose to approve or recommend, a
Takeover Proposal.
RIGHT OF THE ALTRON BOARD TO WITHDRAW RECOMMENDATION
Under the Merger Agreement, Altron has agreed that, except as specifically
permitted by Section 5.4 of the Merger Agreement, the Altron Board may not (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Sanmina or Merger Sub, the approval or recommendation by such Board or any such
committee of the Merger Agreement or the Merger, (ii) approve or recommend, or
propose to approve or recommend, any Takeover Proposal or (iii) cause Altron to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (an "Acquisition Agreement") with respect to any
Takeover Proposal. However, notwithstanding the foregoing provisions of the
Merger Agreement, the Board of Directors of Altron, to the extent it determines
in good faith, after consultation with outside counsel, that failure to do so
would be inconsistent with, or create a substantial risk of liability to the
Altron Board for breach of its fiduciary duties to the Altron stockholders under
applicable law, may, prior to receipt of Stockholder Approval, withdraw or
modify its approval or recommendation of the Merger Agreement or the Merger or
approve or recommend any Superior Proposal (as defined below), subject to
certain requirements to provide notice of such Superior Proposal to Sanmina as
set forth in the Merger Agreement. In addition, prior to receipt of stockholder
approval of the Merger Agreement and the Merger, the Board of Directors of
Altron, to the extent it determines in good faith, after consultation with
outside counsel, that failure to do so would be inconsistent with, or create a
substantial risk of liability for breach of its fiduciary duties to Altron's
stockholders under applicable law, may cause Altron to terminate the Merger
Agreement and concurrently with or after such termination, if it so chooses,
cause Altron to enter into an Acquisition Agreement with respect to a Superior
Proposal. In the event that Altron terminates the Merger Agreement under such
provisions, Altron will be obligated to pay a termination fee to Sanmina as
described under "Termination Fees" below. Under the Merger Agreement, a
"Superior Proposal" means any bona fide proposal made by a third party to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than
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50% of the voting power of Altron Common Stock or all or substantially all the
assets of Altron and otherwise on terms which the Board of Directors of Altron
determines in its good faith judgment (after consultation with a financial
advisor of nationally recognized reputation) to be more favorable to Altron's
shareholders than the Merger and for which financing, to the extent required, is
then committed or which, in the good faith judgment of the Board of Directors of
Altron is capable of being obtained by such third party.
EXPENSES
The Merger Agreement provides that (except under the circumstances
described below under "-- Termination Fee") all fees and expenses incurred in
connection with the Merger, the Merger Agreement and the transactions
contemplated by the Merger Agreement will be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated, except that expenses
incurred in connection with printing and mailing this Proxy Statement/Prospectus
and the Registration Statement will be shared equally by Sanmina and Altron.
TERMINATION FEE
The Merger Agreement requires Altron to pay Sanmina the Termination Fee if
the Merger Agreement is validly terminated pursuant to Section 7.1(b)(iv) of the
Merger Agreement by any party to the Merger Agreement as a result of the receipt
of a Superior Proposal (as defined below) by the Altron Board. The Termination
Fee is payable promptly, but in no event later than two business days after
termination. In addition, if at the time of termination of the Merger Agreement
by any party pursuant to Section 7.1(b)(i) (relating to failure of the Merger to
be completed by certain specified dates, to the extent Altron has failed to hold
the Stockholders Meeting in breach of its obligations under Section 5.2)
7.1(b)(iii) (relating to failure of Altron to obtain shareholder approval) or
7.1(c) (relating to withdrawal or modification of the approval or recommendation
of the Merger by the Altron Board), a Takeover Proposal has been publicly
announced and not withdrawn, and Altron during the 12 month period following
such termination either enters into a written acquisition agreement providing
for a Company Acquisition (as defined below) or completes a Company Acquisition,
Altron will pay Sanmina a $6.0 million Termination Fee upon the completion of
such Company Acquisition. A "Company Acquisition" is defined as any transaction
or series of related transactions involving (a) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Altron pursuant to which the stockholders of Altron
immediately preceding such transaction or series of related transactions hold
less than 60% of the equity interests in the surviving or resulting entity of
such transaction or transactions (other than the transactions contemplated by
the Merger Agreement); (b) a sale by Altron of assets (excluding inventory and
used equipment sold in the ordinary course of business) representing in excess
of 40% of the fair market value of Altron's business immediately prior to such
sale; or (c) the acquisition by any person or group (including without
limitation by way of a tender offer or an exchange offer or issuance by Altron),
directly or indirectly, of beneficial ownership or a right to acquire beneficial
ownership of 40% or more of the then outstanding shares of capital stock of
Altron.
In addition, in the event that the Merger is not completed due to the
willful and intentional acts of Sanmina which are in contravention of the Merger
Agreement, Sanmina will promptly but in no event later than two days after
termination of the Merger Agreement, pay Altron a fee (the "Parent Fee") equal
to $6.0 million.
Both the Termination Fee and the Parent Fee will constitute liquidated
damages. Therefore, in the event that Altron pays the Termination Fee to
Sanmina, Sanmina will not have a claim against Altron for additional damages
arising from termination of the Merger Agreement. Correspondingly, in the event
Sanmina pays the Parent Fee to Altron, Altron will not have a claim against
Sanmina for additional damages arising from termination of the Merger Agreement.
TERMINATION, AMENDMENT AND WAIVER
The Merger Agreement may be terminated, and the Merger may be abandoned, at
any time prior to the Effective Time, whether before or after receipt of
Stockholder Approval: (i) by mutual written consent of
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Sanmina, Merger Sub and Altron; (ii) by Altron if the Effective Time Sanmina
Price is less than $24.00 per share or if the Merger is not consummated by
December 31, 1998 (subject to exceptions described in the Merger Agreement);
(iii) by either Sanmina or Altron, if any temporary restraining order,
preliminary or permanent injunction or other order issued by any U.S. federal or
state court of competent jurisdiction or other material legal restraint or
prohibition issued or promulgated by a U.S. Federal or state governmental entity
having the effect of preventing the consummation of the Merger shall be in
effect and shall have become final and nonappealable; (iv) by either Sanmina or
Altron if the adoption and approval of the Merger Agreement and the approval of
the Merger by the holders of two-thirds in interest of the shares of Altron
Common Stock outstanding on the Record Date shall not have been obtained or if
prior to Stockholder Approval the Altron Board has determined to terminate the
Merger Agreement in accordance with its fiduciary duties so long as appropriate
notices have been given; (v) by Sanmina if (x) the Altron Board or any committee
thereof shall have withheld, withdrawn or modified in a manner adverse to
Sanmina its approval or recommendation of the Merger, or approved or recommended
any Superior Proposal, or (y) the Altron Board shall have resolved to take any
of the foregoing actions; (vi) by Altron, upon a breach of any representation,
warranty, covenant or agreement on the part of Sanmina set forth in the Merger
Agreement, or if any such representation or warranty of Sanmina shall have
become inaccurate, in either case such that the conditions in the Merger
Agreement relating to accuracy of representations and warranties of Sanmina and
compliance with covenants by Sanmina would not be satisfied as of the time of
such breach or as of the time such representation or warranty shall have become
inaccurate; (vii) by either Sanmina or Altron if the Registration Statement on
Form S-4 shall have been declared effective by the SEC on or prior to October
28, 1998 and shall have been mailed to Altron's stockholders on or prior to
October 29, 1998 and all other conditions to closing of all parties have been
satisfied by November 30, 1998, and the Closing is not completed by November 30,
1998; or (viii) by Sanmina, upon a breach of any representation, warranty,
covenant or agreement on the part of Altron set forth in the Merger Agreement,
or if any such representation or warranty of Altron shall have become
inaccurate, in either case such that the conditions in the Merger Agreement
relating to accuracy of representations and warranties of Altron and compliance
with covenants by Altron, as the case may be, would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall have
become inaccurate.
Subject to applicable law, (i) the Merger Agreement may be modified or
amended by written agreement executed and delivered by the respective duly
authorized officers of Sanmina, Merger Sub and Altron (except that after
Stockholder Approval has been obtained, no amendment may be made which requires
the approval by such stockholders without the further approval of such
stockholders) and (ii) the parties, by written agreement signed by each party,
may extend the time for performance of any of the obligations or other acts of
the other parties to the Merger Agreement, waive inaccuracies in representations
and warranties or waive compliance with any of the agreements or conditions of
the other parties contained in the Merger Agreement. In the event that an
amendment to, or waiver of, a provision of the Merger Agreement would materially
affect the information available to holders of Altron Common Stock, Altron will
resolicit proxies with respect to approval of the Merger Agreement.
THE STOCKHOLDER AGREEMENTS
The description of the Stockholder Agreements contained in this Proxy
Statement/Prospectus does not purport to be complete and is qualified in its
entirety by reference to the Stockholder Agreements, the form of which is
attached hereto as Annex II and incorporated herein by reference. All material
elements of the Stockholder Agreements are described in this Proxy
Statement/Prospectus.
Sanmina entered into the Stockholder Agreements dated as of September 2,
1998 with the directors of Altron (in their capacities as stockholders) (the
"Stockholder Parties"). Together, the Stockholder Parties held as of the Record
Date 2,345,703 shares of Altron Common Stock (approximately 15.0% of the
outstanding shares). The general effect of the Stockholder Agreements is to
increase the likelihood that Stockholder Approval will be obtained.
Pursuant to the terms of the Stockholder Agreements, each Stockholder Party
has agreed to vote (or cause to be voted), at the Special Meeting or in any
other circumstances upon which a vote, consent or other
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approval with respect to the Merger and the Merger Agreement is sought, his
shares of Altron Common Stock (together, the "Subject Shares") in favor of
approval and adoption of the Merger Agreement and approval of the Merger.
Each Stockholder Party also has irrevocably granted to, and appointed,
Sanmina and two of Sanmina's officers, in their capacities as officers of
Sanmina, and each of them individually, such Stockholder Party's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of such Stockholder Party, to vote such Stockholder Party's Subject
Shares, or grant a consent or approval in respect of such Subject Shares, in
favor of approval and adoption of the Merger Agreement and approval of the
Merger.
Under the Stockholder Agreements, each Stockholder Party has agreed not to
(i) sell, transfer, pledge, assign or otherwise dispose of (including by gift)
(collectively, "Transfer"), consent to any Transfer of, or enter into any
contract, option or other arrangement (including any profit sharing arrangement)
with respect to the Transfer of, any or all of the Subject Shares (or any
interest therein) to any person other than pursuant to the terms of the Merger
or (ii) enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection with, directly or indirectly, any Takeover Proposal (as
defined in the Merger Agreement and described above under "-- No Solicitation"),
and has agreed not to commit or agree to take any of the foregoing actions.
Each Stockholder Party has agreed not to instruct any agent or any
investment banker, attorney or other adviser or representative of such
Stockholder Party to, directly or indirectly, (i) solicit, initiate or knowingly
encourage the submission to Altron of, any Takeover Proposal or (ii) participate
in any discussions or negotiations with any person (other than Sanmina and its
affiliates, agents and representatives) regarding, or furnish to any such person
any nonpublic information with respect to, or take any other action intended to
facilitate the making of any inquiry or proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal.
Under each Stockholder Agreement, Sanmina has agreed to indemnify and hold
harmless each Stockholder Party against any costs or expenses (including
reasonable attorneys' fees), demands, judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement incurred in connection with any
claim, action, suit, proceeding, that arises from or relates to the execution,
delivery or performance of the Stockholder Agreements or any of the transactions
contemplated by the Stockholder Agreements.
The Stockholder Agreements will terminate on the earlier of the Effective
Time or the date upon which the Merger Agreement is terminated in accordance
with its terms.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Directors and Officers. The directors of Merger Sub immediately prior to
the Effective Time will become the directors of the Surviving Corporation until
their respective successors have been duly elected and qualified or until their
earlier resignation or removal. The officers of Altron at the Effective Time
will be the officers of the Surviving Corporation until their respective
successors have been duly appointed and qualified or until their earlier
resignation or removal.
OTHER MATTERS
GOVERNMENTAL AND REGULATORY MATTERS
Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), certain acquisition transactions may not be consummated
unless notice has been given and certain information has been furnished to the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") and the FTC and specified waiting period requirements have been
satisfied. Sanmina and Altron each filed with the Antitrust Division and the FTC
a Notification and Report Form with respect to the Merger on September 14, 1998.
The waiting period under the HSR Act terminated on October 14, 1998. At any time
before or after the Effective Time, the FTC or the Antitrust Division could take
such action under
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the antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the Merger or seeking the divestiture of Altron by
Sanmina, in whole or in part, or the divestiture of substantial assets of
Sanmina, Altron or their respective subsidiaries. State Attorneys General and
private parties may also bring legal actions under federal or state antitrust
laws in certain circumstances. Based on an examination of information available
to Sanmina and Altron relating to the businesses in which Sanmina, Altron and
their respective subsidiaries are engaged, Sanmina and Altron believe that the
consummation of the Merger will not violate the antitrust laws.
Sanmina and Altron do not believe that any other material governmental
approvals or actions will be required for consummation of the Merger. See "THE
MERGER AGREEMENT -- Conditions to the Consummation of the Merger."
RIGHTS OF DISSENTING STOCKHOLDERS
If the Merger becomes effective, a stockholder of Altron who does not vote
in favor of the Merger and who follows the procedures prescribed under the MBCL
may require Altron (as it exists after the Effective Time as the Surviving
Corporation) to pay the fair value, determined as provided under the MBCL, for
the Dissenting Shares held by such stockholder. The following is a summary of
certain features of the relevant Massachusetts law, the statutory provisions of
which are set forth in full in Annex IV annexed hereto. In order to exercise
such statutory appraisal rights, strict adherence to the statutory provisions is
required, and each stockholder who may desire to exercise such rights should
carefully review and adhere to such provisions.
A dissenting stockholder of Altron who desires to pursue the appraisal
rights available thereto must adhere to the following procedures: (i) file a
written objection to the Merger with Altron before the taking of the
stockholders' vote on approval of the Merger Agreement, stating the intention of
such stockholder to demand payment for shares owned by such stockholder if the
Merger Agreement is approved and the Merger is consummated; (ii) shares owned by
such stockholder must not be voted in favor of the Merger Agreement; and (iii)
within twenty days of the date of the date of mailing of a notice by Altron (as
it exists after the Effective Time) to objecting stockholders that the Merger
has become effective, make written demand to Altron (as it exists after the
Effective Time) for payment for said stockholder's shares. Such written
objection should be delivered for said stockholder's shares should be delivered
to Altron, One Jewel Drive, Wilmington, Massachusetts 01887, Attention
President. It is recommended that such objection and such demand be sent by
registered or certified mail, return receipt requested.
A dissenting stockholder who files the required written objection with
Altron prior to the stockholder vote need not vote against the Merger Agreement.
However, a vote in favor of the Merger Agreement will constitute a waiver of
such stockholder's statutory appraisal rights. Stockholders should note that
returning a properly signed proxy card that does not indicate a vote or
abstention on approval of the Merger Agreement will constitute a vote in favor
of the Merger Agreement. A vote against the Merger Agreement does not, alone,
constitute a written objection. Pursuant to the applicable statutory provisions,
notice that the Merger has become effective will be sent to each objecting
stockholder of Altron within ten days after the date on which the Merger becomes
effective.
The value of the Altron Common Stock will be determined initially by Altron
(as it exists after the Effective Time) and the dissenting stockholder. If,
during the period of thirty days after the expiration of the period during which
the foregoing demand for payment may be made, Altron (as it exists after the
Effective Time) and the stockholder fail to agree on an appraisal value, either
of them may file a bill in equity in the Superior Court of Middlesex County,
Massachusetts asking that the court determine the value of the Altron Common
Stock of all objecting stockholders. The bill in equity must be filed within
four months after the date of expiration of the foregoing thirty-day period.
After a hearing, the court will enter a decree determining the fair value of the
Altron Common Stock and will order Altron (as it exists after the Effective
Time) to make payment of such value, with interest, if any, to the stockholders
entitled to said payment, upon transfer by them to Altron (as it exists after
the Effective Time) of the certificate or certificates representing the Altron
Common Stock held by said stockholders. Altron and Sanmina have made no decision
whether or not the surviving company would file such a bill in equity in
Superior Court if no agreement on value is reached. If it
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does not, any dissenting stockholder with whom agreement has not been reached
will likely be required to incur the expense of initiating any such proceeding.
For appraisal proceeding purposes, value is determined as of the day before
the approval of the Merger Agreement by Altron stockholders, excluding any
element of value arising from the expectation or accomplishment of the Merger.
If a stockholder withdraws his or her demand for appraisal or fails to
establish entitlement to appraisal rights under the MBCL, such stockholder will
forfeit the right to appraisal and his or her Dissenting Shares will be deemed
to have been converted into the right to receive shares of Sanmina Common Stock
as of the Effective Time (without interest or entitlement to the payment of
dividends or other distributions unless payable to stockholders of record at a
date prior to the date the dissenting stockholder exercises appraisal rights).
Under Massachusetts statutory law, procedures relating to dissenters'
rights are stated to be the exclusive remedy available to a stockholder
objecting to the Merger except upon the grounds that the Merger will be or is
illegal or fraudulent as to such stockholder. However, under Massachusetts case
law, dissenting stockholders may not be limited to the statutory remedy of
judicial appraisal where violations of fiduciary duty are found.
The law pertaining to the statutory appraisal remedy also contains
provisions regarding costs, dividends on dissenting shares, rights under
dissenting shares prior to purchase, discontinuance of dissenters' rights, and
certain miscellaneous matters. See Annex IV.
COMPARISON OF RIGHTS OF STOCKHOLDERS OF ALTRON AND SANMINA
General. At the Effective Time, the stockholders of Altron who do not
perfect and exercise their statutory dissenters' rights will become stockholders
of Sanmina. As stockholders of Sanmina, their rights will be governed by the
Delaware General Corporation Law and Sanmina's Certificate of Incorporation
("Certificate") and Bylaws, which differ in certain respects from Altron's
Articles of Organization ("Articles") and Bylaws. The material differences are
summarized below. This summary is qualified in its entirety by reference to the
Massachusetts General Laws, the Articles and Bylaws of Altron and the
Certificate and Bylaws of Sanmina.
Authorized Capital. Altron's authorized capital stock consists of
1,000,000 shares of Preferred Stock (none of which are outstanding) and
40,000,000 shares of Common Stock, par value $.05 per share. At July 4, 1998
there were 15,872,545 shares of Common Stock issued, of which 235,581 shares
were held in the treasury. Holders of Altron Common Stock are entitled to one
vote per share and to receive such dividends as may from time to time be
declared by the Altron Board out of funds legally available therefor. Upon
dissolution of Altron or any distribution of its assets, the holders of Altron
Common Stock are entitled to all assets of Altron available for distribution to
stockholders after the holders of any series of Preferred Stock which may be
issued have received the preferential amount fixed by the Board of Directors for
such shares. The holders of Altron Common Stock have no preemptive rights to
purchase shares of Altron. The authorized capital stock of Sanmina is set forth
under "Description of Sanmina Capital Stock."
Directors. The Altron Board is divided into three classes, with each class
as nearly equal in number as possible. One class is elected each year for a term
of three years. Sanmina does not have a classified board of directors, and the
entire Sanmina board is elected at each year's annual meeting of stockholders.
Indemnification and Limitation of Liability. Section 145 of the DGCL
generally permits indemnification of officers, directors, employees and agents
of a Delaware corporation against expenses (including attorneys' fees) incurred
in connection with a derivative action and against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlements incurred in
connection with a third-party action provided that the person seeking
indemnification acted in good faith and in a manner reasonably believed to be
in, or not opposed to, the best interests of the corporation (and, with respect
to any third-party criminal action or proceeding, had no reasonable cause to
believe this conduct was unlawful). Indemnification under Section 145 is not
exclusive of any other rights to which those persons seeking indemnification may
be entitled.
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Massachusetts law similarly permits indemnification of directors, officers,
employees and agents of a corporation, except that no indemnification shall be
provided for any person with respect to any matter as to which he shall have
been adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interests of the corporation or, to the extent that
such matter relates to service with respect to any employee benefit plan, in the
best interests of the participants or beneficiaries of such benefit plan.
Indemnification permitted by statute does not limit any rights of
indemnification existing independently of the statute.
Delaware law requires indemnification when the individual being indemnified
has successfully defended the action on the merits or otherwise. Massachusetts
law merely permits indemnification to the extent authorized in the corporation's
articles of organization or its by-laws or as set forth in a vote of
stockholders.
Expenses incurred by an indemnified person in defending an action may be
paid in advance under Delaware and Massachusetts law if such person undertakes
to repay such amounts should it be determined ultimately that he or she is not
entitled to indemnification. In addition, both Delaware and Massachusetts law
permit a corporation to purchase indemnity insurance for the benefit of its
officers, directors, employees and agents whether or not the corporation would
have the power to indemnify against the liability covered by the policy.
Both Delaware and Massachusetts corporations may include in their corporate
charters a provision eliminating or limiting the liability of a director in
certain circumstances to the corporation or its stockholders for monetary
damages for a breach of certain fiduciary duties as a director notwithstanding
any provision of law imposing such liability. Both the Altron Articles and the
Sanmina Certificate include such provisions.
The Altron Bylaws provide for indemnification to its directors and officers
to the maximum extent legally permissible. The Sanmina Bylaws provide for the
indemnification of officers and directors to the maximum extent permissible
under Delaware law. See "THE MERGER -- Interests of Certain Persons in the
Merger -- Indemnification pursuant to the Merger Agreement" for a description of
indemnification of directors and officers of Altron which will be in effect
following the Effective Time.
Inspection Rights. Inspection rights under Delaware law are more extensive
than under Massachusetts law. Under Delaware law, stockholders, upon the
demonstration of a proper purpose, have the right to inspect a corporation's
stock ledger, stockholder lists and other books and records. Under Massachusetts
law, a corporation's stockholders have a right to inspect only the corporation's
charter, by-laws, records of all meetings of incorporators and stockholders and
transfer records.
Special Meetings of Stockholders. Pursuant to the Altron Bylaws, a special
meeting of stockholders of Altron may be called by the holders of shares
entitled to cast not less than 40% of the votes at the meeting. Pursuant to the
Sanmina Bylaws, a special meeting of Sanmina's stockholders may be called by the
holders of shares entitled to cast not less than 10% of the votes at the
meeting.
Action by Consent of Stockholders. Under Massachusetts law, any action to
be taken by stockholders may be taken without a meeting only if all stockholders
entitled to vote on the matter consent to the action in writing, and a
corporation may not provide otherwise in its charter documents or by-laws. Under
Delaware law, unless the certificate of incorporation provides otherwise, any
action to be taken by the stockholders may be taken without a meeting, without
prior notice and without a vote, if the stockholders having the number of votes
that would be necessary to take such action at a meeting at which all of the
stockholders were present and voted consent to the action in writing. The
Sanmina Certificate requires that any action by stockholders be taken by the
holders of a majority of the shares of Sanmina capital stock entitled to vote
with respect to such action.
Proxies. Massachusetts law permits the authorization by a stockholder to
vote by proxy to be valid for no more than six months. Delaware law permits a
proxy to be valid for up to three years unless the proxy provides for a longer
period.
Approval of Business Combinations and Asset Sales. Generally, under
Massachusetts law, the affirmative vote of two-thirds of the shares of each
class of stock outstanding and entitled to vote or which would be
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adversely affected by a merger or asset sale is necessary to approve a merger or
a sale of all or substantially all of the corporation's assets unless the
articles of organization provide for a lesser proportion of each class entitled
to vote, but not less than a majority. The Altron Articles do not provide for
such a lesser proportion, so that the approval of any such merger or sale,
including the Merger, requires a two-thirds vote of each class entitled to vote.
Under Delaware law, the affirmative vote of only a majority of the shares of
stock outstanding and entitled to vote are necessary to approve a merger or
asset sale.
Anti-Takeover Legislation. Under Section 203 of the DGCL, certain
"business combinations" with "interested stockholders" of Delaware corporations
are subject to a three-year moratorium unless specified conditions are met.
Section 203 applies to Sanmina. See "DESCRIPTION OF SANMINA CAPITAL STOCK."
Massachusetts law contains an analogous anti-takeover law which is set
forth in Chapter 110F of the General Laws of Massachusetts. Chapter 110F does
not apply to the Merger because the transaction has been approved by the Altron
Board.
Altron is subject to the provisions of Chapter 110D of the Massachusetts
General Laws relating to control share acquisitions. In general, the statute
provides that any stockholder who acquires 20% or more of the outstanding voting
stock of a corporation subject to this statute may not vote that stock unless
the stockholders of the corporation so authorize. In addition, Chapter 110D
permits the corporation to provide in its articles of organization or bylaws
that the corporation may redeem (for fair value) all the shares thereafter
acquired in a control share acquisition if voting rights for those shares were
not authorized by the stockholders or if no control share acquisition statement
was delivered. Altron's bylaws include a provision which permits Altron to
effect such redemptions.
Dissenters' Rights. Under Massachusetts law, dissenting stockholders who
follow prescribed statutory procedures are entitled to dissenters' rights in
connection with any merger or sale of substantially all the assets of a
corporation and in connection with certain mergers, reclassifications and other
transactions which may adversely affect the rights or preferences of
stockholders. See "OTHER MATTERS -- Rights of Dissenting Stockholders." Delaware
provides similar rights in the case of a merger or consolidation of a
corporation except that such rights are not provided as to shares of a
corporation listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the NASD or held of
record by more than 2,000 stockholders where such stockholders are required to
accept in such a merger only (i) shares of the surviving or resulting
corporation, (ii) shares of a corporation listed on a national securities
exchange or held of record by more than 2,000 holders, (iii) cash in lieu of
fraction shares, or (iv) any combination thereof. Delaware law does not provide
dissenters' rights in connection with sales of substantially all of the assets
of a corporation, reclassifications of stock or other amendments to the
certificate of incorporation which adversely affect a class of stock; provided,
however, that a corporation may provide in its certificate of incorporation that
appraisal rights shall be available as a result of an amendment to its
certificate of incorporation, a merger or a sale of all or substantially all of
its assets. The Sanmina Certificate does not provide for the appraisal rights
described in the preceding sentence.
Removal of Directors. Under Delaware law, a director serving on the board
that is not classified may be removed with or without cause by the holders of a
majority of the outstanding shares entitled to vote at an election of directors.
In the case of a Delaware corporation having a classified board, stockholders
may effect such removal only for cause unless the certificate of incorporation
otherwise provides. The Sanmina Certificate and Bylaws do not provide for a
classified board. Under Massachusetts law, any director or the entire board of
directors may be removed, except as otherwise provided in the articles of
organization or by-laws, with or without cause, by the holders of a majority of
the shares entitled to vote at an election of directors, except that directors
of a class elected by a particular class of stockholders may be removed only by
the vote of the holders of a majority of the shares entitled to vote for the
election of such directors. In addition, directors of a classified board, such
as Altron's, may only be removed for cause.
Change in Number of Directors. Under Massachusetts law, the number of
directors is determined in the manner provided in the corporation's by-laws. The
board of directors may be enlarged by the stockholders or, if authorized by the
by-laws, by vote of a majority of directors. The Altron Bylaws fix the number of
directors
50
<PAGE> 57
at not less than three, unless there are fewer than three stockholders, in which
case there can be as few directors as stockholders. The number of directors of
Altron is determined by the stockholders.
Under Delaware law, the number of directors shall be fixed by or in the
manner provided in the by-laws unless the number of directors is fixed in the
corporation's certificate of incorporation. Under the Sanmina Bylaws, the Board
may fix the number of directors.
Interested Director Transactions. Delaware law provides that no
transaction between a corporation and a director or officer, or any entity in
which any of them have an interest, is void or voidable solely for this reason,
solely because the director or officer is present at or participates in the
meeting of the board or committee which authorizes the contract or transaction,
or solely because of his or their votes are counted for such purpose if (i)
after full disclosure the transaction is approved by the disinterested
directors, which may be less than a quorum, or the stockholders or (ii) the
transaction is fair to the corporation at the time it is approved. Massachusetts
law only expressly provides that directors who vote for and officers who
knowingly participate in loans to officers or directors are jointly and
severally liable to the corporation for any part of the loan which is not
repaid, unless (i) a majority of the directors who are not direct or indirect
recipients of such loans, or (ii) the holders of a majority of the shares
entitled to vote for such directors, have approved or ratified the loan as one
which in the judgment of such directors or stockholders, as the case may be, may
reasonably be expected to benefit the corporation.
Filling Vacancies on the Board of Directors. Under Massachusetts law,
unless the articles of organization provide otherwise, any vacancy in the board
of directors, however occurring, including a vacancy resulting from enlargement
of the board and any vacancy in any other office, may be filled in the manner
prescribed in the by-laws, or, in the absence of any such provision in the
by-laws, by the directors.
Under Delaware law, vacancies and newly created directorships may be filled
by a majority of directors then in office, unless otherwise provided in the
corporation's certificate of incorporation or by-laws, provided that if at the
time of filling any vacancy or newly created directorship, the directors then in
office constitute less than a majority of the entire board as constituted
immediately prior to any increase, the Delaware Court of Chancery may, upon
application of any stockholder or stockholders holding at least 10% of the total
number of shares at the time outstanding having the right to vote for such
directors, summarily order an election to be held to fill any such vacancies or
newly created directorships or to replace the directors chosen by the directors
then in office.
Payment of Dividends. There are no restrictions on authorized dividend
payments under Massachusetts law. Delaware law permits the payment of dividends
out of paid-in and earned surplus or out of net profits for the current and
preceding fiscal year.
DESCRIPTION OF SANMINA CAPITAL STOCK
The authorized capital stock of Sanmina consists of 75,000,000 shares of
Sanmina Common Stock and 5,000,000 shares of Preferred Stock.
The following summary of certain provisions of the Sanmina Common Stock and
Preferred Stock does not purport to be complete and is subject to, and qualified
in its entirety by, the provisions of Sanmina's Restated Certificate of
Incorporation and by the provisions of applicable law. All material elements of
the Sanmina Restated Certificate of Incorporation are described in this Proxy
Statement/Prospectus.
Common Stock. The holders of shares of Sanmina Common Stock are entitled
to one vote per share on all matters to be voted on by stockholders. Subject to
preferences of any Preferred Stock that may be issued in the future, the holders
of Sanmina Common Stock are entitled to receive ratably such dividends, if any,
as may be declared from time to time by the Sanmina Board out of funds legally
available for that purpose. In the event of a liquidation, dissolution or
winding up of Sanmina, the holders of Sanmina Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
distribution rights of Preferred Stock, if any, then outstanding. The Sanmina
Common Stock has no preemptive or conversion rights or other subscription
rights. There are no redemption or sinking fund provisions applicable to the
51
<PAGE> 58
Sanmina Common Stock. All outstanding shares of Sanmina Common Stock are fully
paid and nonassessable, including the Sanmina Common Stock to be issued in
connection with the Merger.
Preferred Stock. The Sanmina Board has the authority, without further
action by the stockholders, to issue up to 5,000,000 shares of Preferred Stock
in one or more series and to fix the rights, qualifications, preferences,
privileges, limitations and restrictions of each such series, including the
dividend rights, dividend rate or rates, conversion rights, voting rights, terms
of redemption (including sinking fund provisions), redemption price or prices,
liquidation preferences and the number of shares constituting any series or the
designations of such series, without any further vote or action by the
stockholders. Thus, any series may, if so determined by the Sanmina Board, have
disproportionately high voting rights or class voting rights, be convertible
into or exchangeable for Sanmina Common Stock or another security of Sanmina, be
redeemable, carry the right to specified participating dividends (which may be
fixed or adjustable and which may be cumulative) and have such other relative
rights, preferences and limitations as the Sanmina Board shall determine.
Issuance of authorized but unissued shares of Sanmina Common Stock or Preferred
Stock (including issuance upon conversion of any convertible Preferred Stock)
could cause a dilution of the book value of the Sanmina Common Stock and (in the
case of Sanmina Common Stock and Preferred Stock with voting rights) would
dilute the voting power of the then current stockholders. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of Sanmina without further action by the stockholders, may
discourage bids for Sanmina's Common Stock at a premium over the market price of
Sanmina Common Stock and may adversely affect the market price of Sanmina Common
Stock.
The ability to issue Preferred Stock will enhance Sanmina's flexibility in
connection with possible future corporate financing needs such as equity
financing, acquisitions, raising of capital for infusion into its subsidiaries
or other corporate purposes deemed appropriate by the Sanmina Board. Preferred
Stock may have significant advantages in certain financing situations over the
issuance of debt securities or Sanmina Common Stock and Sanmina's Restated
Certificate of Incorporation allows the Sanmina Board the flexibility to tailor
the rights and terms of future Preferred Stock issuances to the requirements of
specific situations.
Change of Control Provisions. Certain provisions of the Sanmina's Restated
Certificate of Incorporation and Bylaws may have the effect of preventing,
discouraging or delaying any change in control of Sanmina. The authorization of
undesignated Preferred Stock makes it possible for the Sanmina Board to issue
Preferred Stock with voting or other rights or preferences that could impede the
success of any attempt to change control of Sanmina. There are also a
substantial number of authorized but unissued shares of Sanmina Common Stock
that could be issued for such purpose.
Section 203 of the DGCL ("Section 203") prohibits certain "Business
Combination" transactions (as defined in Section 203) between a publicly held
Delaware corporation, such as Sanmina, and any "interested stockholder" (as
defined in Section 203) for a period of three years after the date such
stockholder becomes an interested stockholder unless (a) prior to such
stockholder becoming an interested stockholder, either the proposed Business
Combination or the proposed acquisition of stock that would make such
stockholder an interested stockholder was approved by the corporation's board of
directors, or (b) upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned (i) by persons who are directors and also
officers and (ii) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer, or (c) the interested
stockholder obtained the approval of the corporation's board of directors and
the approval of the holders of at least two-thirds of the outstanding shares of
the corporation's voting stock, other than any shares of voting stock held by
the interested stockholder.
For purposes of Section 203, an "interested stockholder" is any person or
entity that (a) beneficially owns 15% or more of the outstanding voting stock of
the corporation or (b) is an affiliate or associate of the corporation and at
any time within the preceding three-year period was the beneficial owner of 15%
or more of the outstanding voting stock of the corporation, together in each
case with the affiliates and associates of such person.
52
<PAGE> 59
The "Business Combination" transactions to which Section 203 applies
include (a) any merger or consolidation of the corporation or any of its
majority-owned subsidiaries with an interested stockholder, (b) any disposition
or pledge to an interested stockholder (except proportionately as a stockholder
of the corporation) of assets of the corporation or any of its majority-owned
subsidiaries having an aggregate market value equal to 10% or more of either the
aggregate market value of all of the assets of the corporation and its
subsidiaries or of all of the outstanding stock of the corporation; (c) any
issuance or transfer of stock to the interested stockholder except (i) pursuant
to the exercise of previously outstanding options, rights or convertible
securities or (ii) pursuant to options, rights or convertible securities offered
on the same terms or distributed pro rata by the corporation to all stockholders
so long as the interested stockholder's percentage ownership does not increase
and (d) any loan or other financial benefit provided by or through the
corporation or any of its majority-owned subsidiaries to the interested
stockholder, except proportionately as a stockholder of such corporation.
Transfer Agent and Registrar. The transfer agent and registrar for
Sanmina's Common Stock is Norwest Bank Minnesota, N.A. Its address is 161 North
Concord Exchange, South St. Paul, Minnesota 55075-0738 and its telephone number
is (800) 468-9716.
EXPERTS
The audited consolidated financial statements of Sanmina incorporated by
reference in this Proxy Statement/Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated by reference in reliance upon the
authority of said firm as experts in giving said reports.
The audited consolidated financial statements of Altron incorporated by
reference in this Proxy Statement/Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated by reference in reliance upon the
authority of said firm as experts in giving said reports.
Representatives for Arthur Andersen, independent auditors for Altron for
the current year and for the most recently completed fiscal year: (i) are
expected to be present at the Special Meeting; (ii) will have the opportunity to
make a statement if they desire to do so; and (iii) are expected to be available
to respond to appropriate questions.
LEGAL MATTERS
The legality of the shares of Sanmina Common Stock offered hereby will be
passed upon for Sanmina by Wilson Sonsini Goodrich & Rosati, Palo Alto,
California. Mario M. Rosati, a director of Sanmina, and Christopher D. Mitchell,
Assistant Secretary of Sanmina, are members of Wilson Sonsini Goodrich & Rosati.
Wilson Sonsini Goodrich & Rosati, counsel for Sanmina, and Hutchins Wheeler
& Dittmar, A Professional Corporation ("HW&D"), Boston, Massachusetts, counsel
for Altron, have delivered opinions concerning certain federal income tax
consequences of the Merger. See "THE MERGER -- Certain Federal Income Tax
Consequences" and "THE MERGER AGREEMENT -- Conditions to the Consummation of the
Merger." As of the date of this Proxy Statement/Prospectus, certain stockholders
of HW&D beneficially own 131,327 shares of Altron Common Stock. Anthony J.
Medaglia, Jr., a director of and the Clerk of Altron, is a stockholder of HW&D.
STOCKHOLDER PROPOSALS
If the Merger is not consummated, the only proposals of holders of Altron
Common Stock eligible to be considered for inclusion in the proxy statement and
form of proxy relating to the Annual Meeting of the Stockholders of Altron (the
"Annual Meeting") to be held in 1999 will be those which have been duly received
by Altron, at One Jewel Drive, Wilmington, Massachusetts 01887, no later than
December 14, 1998 (which date is 120 days prior to the anticipated mailing date
of the proxy statement and form of proxy relating to such Annual Meeting). If
the Merger is approved at the Special Meeting, no Annual Meeting will be held in
1999.
53
<PAGE> 60
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial statements
have been prepared to give effect to the Merger, using the pooling of interests
method of accounting.
The unaudited pro forma combined condensed financial statements reflect
certain assumptions deemed probable by management regarding the Merger (for
example, that share information used in the unaudited pro forma information
approximates actual share information at the Effective Date). No adjustments to
the unaudited pro forma combined condensed financial information have been made
to account for different possible results in connection with the foregoing, as
management believes that the impact on such information of the varying outcomes,
individually or in the aggregate, would not be materially different.
The unaudited pro forma combined balance sheet as of June 27, 1998 gives
effect to the Merger as if it had occurred on June 27, 1998, and combines the
unaudited consolidated balance sheet of Sanmina as of June 27, 1998 and the
unaudited consolidated balance sheet of Altron as of July 4, 1998. The unaudited
pro forma combined statements of income for all periods presented give effect to
the Merger as if it had occurred on October 1, 1994. Altron has a fiscal year
that ends on the Saturday closest to December 31 of each year. For purposes of
the unaudited pro forma combined statements of income, Altron's consolidated
statements of income for each of the three fiscal years ended January 3, 1998,
and for the nine month periods ended June 28, 1997 and July 4, 1998, have been
combined with Sanmina's consolidated statements of income for each of the three
fiscal years ended September 30, 1997, and the nine month periods ended June 28,
1997 and June 27, 1998. As a result, Altron's results for the three month period
ended January 3, 1998 are included in the unaudited pro forma combined statement
of operations data for both the twelve months ended September 30, 1997 and the
nine months ended June 27, 1998, and results for the three month period ended
December 28, 1996 are included in the unaudited pro forma combined statement of
operations data for both the twelve months ended September 30, 1996 and the nine
months ended June 28, 1997.
Sanmina and Altron estimate that they will incur direct transaction costs
of approximately $1.6 million associated with the Merger, consisting of
transaction fees for investment bankers, attorneys, accountants, financial
printing and other related charges. These nonrecurring transaction costs will be
charged to operations upon consummation of the Merger. These charges have been
reflected in the unaudited pro forma combined balance sheet but have not been
included in the unaudited pro forma combined statements of income. There can be
no assurance that the combined company will not incur additional charges to
reflect costs associated with the Merger.
Such unaudited pro forma combined condensed financial information is
presented for illustrative purposes only and is not necessarily indicative of
the financial position or results of operations that would have actually been
reported had the Merger occurred at the beginning of the period presented, nor
is it necessarily indicative of future financial position and results of
operations. These unaudited pro forma combined financial statements are based
upon the respective historical consolidated financial statements and notes
thereto of Sanmina and Altron included elsewhere in this Proxy
Statement/Prospectus, and do not incorporate, nor do they assume, any benefits
from cost savings or synergies of operations of the combined company.
54
<PAGE> 61
SANMINA AND ALTRON
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED JUNE 27, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
SANMINA ALTRON ADJUSTMENTS BALANCES
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales...................................... $528,392 $149,391 $ -- $677,783
Cost of Sales.................................. 412,658 120,093 -- 532,751
-------- -------- -------- --------
Gross Profit................................... 115,734 29,298 -- 145,032
-------- -------- -------- --------
Expenses:
Selling, general and administrative............ 32,340 13,028 -- 45,368
Amortization expense........................... 2,026 -- -- 2,026
Provision for restructuring.................... 3,945 -- -- 3,945
-------- -------- -------- --------
38,311 13,028 -- 51,339
-------- -------- -------- --------
Operating Income............................... 77,423 16,270 -- 93,693
Other income (expense), net.................... (615) 852 -- 237
-------- -------- -------- --------
Income before provision for income taxes....... 76,808 17,122 -- 93,930
Provision for income taxes..................... 28,046 6,781 -- 34,827
-------- -------- -------- --------
Net Income..................................... $ 48,762 $ 10,341 $ -- $ 59,103
======== ======== ======== ========
Basic earnings per share....................... $ 1.17 $ 0.67 -- $ 1.22
Diluted earnings per share..................... $ 1.02 $ 0.64 -- $ 1.07
Shares used in computing per share amounts
Basic........................................ 41,508 15,437 (8,421)(1) 48,524
Diluted...................................... 50,287 16,047 (8,754)(1) 57,580
</TABLE>
- ---------------
(1) Reflects the exchange of all Altron stock for Sanmina stock at a ratio of
0.4545 shares of Sanmina stock for one share of Altron stock
(2) Principal components of the restructuring provision recorded by Sanmina
during the nine months ended June 27, 1998 consist of the following:
<TABLE>
<S> <C>
Write down of assets at closed facilities................... $ 560
Write off of previously recorded goodwill related to closed
facility.................................................. --
Severance pay for terminated employees...................... 950
Professional fees........................................... 1,400
Other....................................................... 1,035
------
$3,945
------
</TABLE>
55
<PAGE> 62
SANMINA AND ALTRON
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED JUNE 28, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
SANMINA ALTRON ADJUSTMENTS BALANCES
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales...................................... $409,195 $122,354 $ -- $531,549
Cost of Sales.................................. 320,414 93,512 -- 413,926
-------- -------- -------- --------
Gross Profit................................... 88,781 28,842 -- 117,623
-------- -------- -------- --------
Expenses:
Selling, general and administrative............ 29,921 9,724 -- 39,645
Amortization expense........................... 1,504 -- -- 1,504
-------- -------- -------- --------
31,425 9,724 -- 41,149
-------- -------- -------- --------
Operating Income............................... 57,356 19,118 -- 76,474
Other income(expense), net..................... (1,956) 1,262 -- (694)
-------- -------- -------- --------
Income before provision for income taxes....... 55,400 20,380 -- 75,780
Provision for income taxes..................... 19,487 8,225 -- 27,712
-------- -------- -------- --------
Net Income..................................... $ 35,913 $ 12,155 $ -- $ 48,068
======== ======== ======== ========
Basic earnings per share....................... $ $0.89 $ 0.80 -- $ 1.02
Diluted earnings per share..................... $ 0.78 $ 0.75 -- $ 0.89
Shares used in computing per share amounts
Basic........................................ 40,226 15,205 (8,294)(1) 47,137
Diluted...................................... 49,104 16,107 (8,786)(1) 56,425
</TABLE>
- ---------------
(1) Reflects the exchange of all Altron stock for Sanmina stock at a ratio of
0.4545 shares of Sanmina stock for one share of Altron stock
56
<PAGE> 63
SANMINA AND ALTRON
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
SANMINA ALTRON ADJUSTMENTS BALANCES
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales...................................... $569,787 $172,428 $ -- $742,215
Cost of Sales.................................. 455,576 134,373 -- 589,949
-------- -------- -------- --------
Gross Profit................................... 114,211 38,055 -- 152,266
-------- -------- -------- --------
Expenses:
Selling, general and administrative............ 44,010 14,844 -- 58,854
Provision for restructuring.................... 8,876 -- -- 8,876
Amortization expense........................... 2,006 -- -- 2,006
-------- -------- -------- --------
54,892 14,844 -- 69,736
-------- -------- -------- --------
Operating Income............................... 59,319 23,211 -- 82,530
Other income (expense), net.................... (2,462) 1,472 -- (990)
-------- -------- -------- --------
Income before provision for income taxes....... 56,857 24,683 -- 81,540
Provision for income taxes..................... 26,332 10,016 -- 36,348
-------- -------- -------- --------
Net Income..................................... $ 30,525 $ 14,667 $ -- $ 45,192
======== ======== ======== ========
Basic earnings per share....................... $ 0.75 $ 0.96 -- $ 0.95
Diluted earnings per share..................... $ 0.68 $ 0.91 -- $ 0.85
Shares used in computing per share amounts
Basic........................................ 40,432 15,333 (8,364)(1) 47,401
Diluted...................................... 49,426 16,039 (8,749)(1) 56,716
</TABLE>
- ---------------
(1) Reflects the exchange of all Altron stock for Sanmina stock at a ratio of
0.4545 shares of Sanmina stock for one share of Altron stock
(2) Principal components of the restructuring provision recorded by Sanmina
during the year ended September 30, 1997 consist of the following:
<TABLE>
<S> <C>
Write down of assets at closed facilities................... $3,755
Write off of previously recorded goodwill related to closed
facility.................................................. 1,750
Severance pay for terminated employees...................... 779
Professional fees........................................... --
Other....................................................... 2,592
------
$8,876
======
</TABLE>
57
<PAGE> 64
SANMINA AND ALTRON
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
SANMINA ALTRON ADJUSTMENTS BALANCES
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales...................................... $391,982 $165,248 $ -- $557,230
Cost of Sales.................................. 305,227 125,079 -- 430,306
-------- -------- -------- --------
Gross Profit................................... 86,755 40,169 -- 126,924
-------- -------- -------- --------
Expenses:
Selling, general and administrative............ 29,703 11,969 -- 41,672
Amortization expense........................... 1,723 -- -- 1,723
-------- -------- -------- --------
31,426 11,969 -- 43,395
-------- -------- -------- --------
Operating Income............................... 55,329 28,200 -- 83,529
Other income(expense), net..................... (1,345) 1,637 -- 292
-------- -------- -------- --------
Income before provision for income taxes....... 53,984 29,837 -- 83,821
Provision for income taxes..................... 17,419 12,122 -- 29,541
-------- -------- -------- --------
Net Income..................................... $ 36,565 $ 17,715 $ -- $ 54,280
======== ======== ======== ========
Basic earnings per share....................... $ 0.93 $ 1.17 -- $ 1.17
Diluted earnings per share..................... $ 0.84 $ 1.11 -- $ 1.05
Shares used in computing per share amounts
Basic........................................ 39,356 15,143 (8,261)(1) 46,238
Diluted...................................... 47,490 16,009 (8,733)(1) 54,766
</TABLE>
- ---------------
(1) Reflects the exchange of all Altrons stock for Sanmina stock at a ratio of
0.4545 shares of Sanmina stock for one share of Altron stock
58
<PAGE> 65
SANMINA AND ALTRON
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
SANMINA ALTRON ADJUSTMENTS BALANCES
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales...................................... $271,757 $143,867 $ -- $415,624
Cost of Sales.................................. 216,814 109,858 326,672
-------- -------- -------- --------
Gross Profit................................... 54,943 34,009 -- 88,952
-------- -------- -------- --------
Expenses:
Selling, general and administrative............ 22,301 10,704 -- 33,005
Amortization expense........................... 291 -- -- 291
-------- -------- -------- --------
22,592 10,704 -- 33,296
-------- -------- -------- --------
Operating Income............................... 32,351 23,305 -- 55,656
Other income (expense), net.................... (841) 958 -- 117
-------- -------- -------- --------
Income (loss) before provision for income taxes
and extraordinary item....................... 31,510 24,263 -- 55,773
Provision (benefit) for income taxes........... 11,257 9,705 -- 20,962
-------- -------- -------- --------
Income (loss) before extraordinary item........ 20,253 14,558 -- 34,811
Extraordinary item:
Gain from exchange of convertible subordinated
debentures for common stock, net of
expenses..................................... 1,833 -- -- 1,833
-------- -------- -------- --------
Net Income..................................... $ 22,086 $ 14,558 $ -- $ 36,644
======== ======== ======== ========
Basic earnings per share
Income before extraordinary item............. $ 0.53 $ 1.05 $ 0.78
Extraordinary item........................... 0.05 -- 0.04
-------- -------- --------
Net Income................................... $ 0.58 $ 1.05 $ 0.82
Diluted earnings per share
Income before extraordinary item............. $ 0.51 $ 0.98 $ 0.75
Extraordinary item........................... 0.05 -- 0.04
-------- -------- --------
Net Income................................... $ 0.56 $ 0.98 $ 0.79
Shares used in computing per share amounts
Basic........................................ 38,100 13,887 (7,575)(1) 44,412
Diluted...................................... 40,348 14,795 (8,071)(1) 47,072
</TABLE>
- ---------------
(1) Reflects the exchange of all Altron stock for Sanmina stock at a ratio of
0.4545 shares of Sanmina stock for one share of Altron stock
59
<PAGE> 66
SANMINA AND ALTRON
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 27, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
SANMINA ALTRON ADJUSTMENTS BALANCES
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents...................... $ 25,357 $ 12,944 -- $ 38,301
Short-term investments......................... 109,522 13,191 -- 122,713
Accounts receivable, net....................... 95,058 26,067 -- 121,125
Inventories.................................... 70,874 33,271 -- 104,145
Deferred income taxes.......................... 9,115 -- -- 9,115
Prepaid expenses and other..................... 3,399 3,724 -- 7,123
-------- -------- -------- --------
Total Current Assets........................... 313,325 89,197 -- 402,522
Property, plant & equipment, net................. 111,111 70,068 -- 181,179
Deposits and other............................... 18,927 4,762 -- 23,689
-------- -------- -------- --------
Total Assets........................... $443,363 $164,027 $ -- $607,390
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable............................... $ 73,510 $ 16,299 $ 1,600(1) $ 91,409
Accrued liabilities............................ 39,029 6,014 -- 45,043
Income taxes payable........................... 4,737 -- -- 4,737
-------- -------- -------- --------
Total Current Liabilities.............. 117,276 22,313 1,600 141,189
-------- -------- -------- --------
LONG TERM LIABILITIES
Convertible subordinated notes................. 95,607 -- -- 95,607
Other liabilities.............................. 2,961 16,958 -- 19,919
-------- -------- -------- --------
Total long-term liabilities...................... 98,568 16,958 -- 115,526
-------- -------- -------- --------
STOCKHOLDERS' EQUITY
Common stock and additional paid-in capital.... 98,124 41,354 -- 139,478
Unrealized holding gain on investments......... 152 -- -- 152
Retained earnings.............................. 129,243 83,679 (1,600)(1) 211,322
Treasury Stock................................. -- (277) -- (277)
-------- -------- -------- --------
TOTAL STOCKHOLDERS' EQUITY....................... 227,519 124,756 (1,600) 350,675
-------- -------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....... $443,363 $164,027 $ -- $607,390
======== ======== ======== ========
</TABLE>
- ---------------
(1) Reflects expenses of Merger of $1.6 million.
60
<PAGE> 67
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS OF SANMINA AND ALTRON
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma combined balance sheet as of June 27, 1998 gives
effect to the Merger as if it had occurred on June 27, 1998, and combines the
unaudited consolidated balance sheet of Sanmina as of June 27, 1998 and the
unaudited consolidated balance sheet of Altron as of July 4, 1998. The unaudited
pro forma combined statements of income for all periods presented give effect to
the Merger as if it had occurred on October 1, 1994. Altron has a fiscal year
that ends on the closest Saturday to December 31 of each year. For purposes of
the unaudited pro forma combined statements of income, Altron's consolidated
statements of income for each of the three fiscal years ended January 3, 1998,
and for the nine month periods ended June 28, 1997 and July 4, 1998, have been
combined with Sanmina's consolidated statements of income for each of the three
fiscal years ended September 30, 1997, and the nine month periods ended June 28,
1997 and June 27, 1998. As a result, Altron's results for the three month period
ended January 3, 1998 are included in the unaudited pro forma combined statement
of operations data for both the twelve months ended September 30, 1997 and the
nine months ended June 27, 1998, and results for the three month period ended
December 28, 1996 are included in the unaudited pro forma combined statement of
operations data for both the twelve months ended September 30, 1996 and the nine
months ended June 28, 1997. Revenues and net income of Altron for the three
month periods ended January 3, 1998 and December 28, 1996 were $47,159,000 and
$3,167,000 and $38,626,000 and $4,180,000, respectively. No adjustments were
necessary to conform the accounting policies of the combining companies.
These unaudited pro forma combined condensed financial statements reflect
the issuance of 7,074,131 shares of Sanmina common stock in exchange for an
aggregate of 15,564,645 shares of Altron common stock (outstanding at July 4,
1998) in connection with the Merger, based on the Exchange Ratio of 0.4545.
NOTE 2. PRO FORMA NET INCOME PER SHARE
The pro forma combined earnings per share calculations are based on the
combined basic and diluted weighted average number of shares outstanding of
Sanmina and Altron based upon an exchange ratio of 0.4545 of a share of Sanmina
Common Stock for each share of Altron Common Stock.
NOTE 3. MERGER RELATED EXPENSES OF SANMINA AND ALTRON
Sanmina and Altron estimate that they will incur merger-related expenses,
consisting primarily of transaction costs for investment banker fees, attorneys,
accountants, financial printing and other related charges, of approximately $1.6
million. This estimate is preliminary and is therefore subject to change. These
nonrecurring expenses will be charged to operations during the period in which
the Merger is consummated. The pro forma combined balance sheet gives effect to
such expenses as if they had been incurred as of June 27, 1998, but the pro
forma condensed statements of income do not give effect to such expenses as such
expenses are non-recurring.
61
<PAGE> 68
ANNEX I
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 2, 1998
AMONG
SANMINA CORPORATION,
SANM ACQUISITION SUBSIDIARY, INC.
AND
ALTRON INCORPORATED
<PAGE> 69
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
THE MERGER
SECTION 1.1 The Merger.................................................. 1
SECTION 1.2 Closing..................................................... 1
SECTION 1.3 Effective Time.............................................. 1
SECTION 1.4 Effects of the Merger....................................... 2
SECTION 1.5 Articles of Organization and Bylaws......................... 2
SECTION 1.6 Directors................................................... 2
SECTION 1.7 Officers.................................................... 2
SECTION 1.8 Effect on Capital Stock..................................... 2
SECTION 1.9 Dissenting Shares........................................... 3
SECTION 1.10 Exchange of Certificates.................................... 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.1 Organization, Standing and Corporate Power.................. 5
SECTION 2.2 Subsidiaries................................................ 6
SECTION 2.3 Capital Structure........................................... 6
SECTION 2.4 Authority; Noncontravention................................. 6
SECTION 2.5 SEC Documents............................................... 7
SECTION 2.6 Information Supplied........................................ 8
SECTION 2.7 Absence of Certain Changes or Events........................ 8
SECTION 2.8 Litigation.................................................. 8
SECTION 2.9 Contracts................................................... 9
SECTION 2.10 Compliance with Laws........................................ 9
SECTION 2.11 Labor Matters............................................... 10
SECTION 2.12 Absence of Changes in Benefit Plans......................... 11
SECTION 2.13 ERISA Compliance............................................ 11
SECTION 2.14 Taxes....................................................... 12
SECTION 2.15 No Excess Parachute Payments................................ 13
SECTION 2.16 Title to Properties......................................... 13
SECTION 2.17 Intellectual Property....................................... 13
SECTION 2.18 Voting Requirements......................................... 13
SECTION 2.19 State Takeover Statutes..................................... 14
SECTION 2.20 Brokers; Schedule of Fees and Expense....................... 14
SECTION 2.21 Opinion of Financial Advisor................................ 14
SECTION 2.22 Accounting Matters.......................................... 14
SECTION 2.23 Equipment and Other Personal Property Leases................ 14
SECTION 2.24 Product and Service Warranties.............................. 14
SECTION 2.25 Orders, Commitments and Returns............................. 14
SECTION 2.26 Customers................................................... 15
SECTION 2.27 Suppliers................................................... 15
SECTION 2.28 Inventory................................................... 15
</TABLE>
i
<PAGE> 70
<TABLE>
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
SECTION 3.1 Organization, Standing and Corporate Power.................. 15
SECTION 3.2 Capital Structure........................................... 15
SECTION 3.3 Authority; Noncontravention................................. 16
SECTION 3.4 SEC Documents............................................... 17
SECTION 3.5 Information Supplied........................................ 17
SECTION 3.6 Absence of Certain Changes or Events........................ 17
SECTION 3.7 Litigation.................................................. 18
SECTION 3.8 Contracts................................................... 18
SECTION 3.9 Compliance with Laws........................................ 18
SECTION 3.10 Labor Matters............................................... 20
SECTION 3.11 Absence of Changes in Benefit Plans......................... 20
SECTION 3.12 Taxes....................................................... 20
SECTION 3.13 Title to Properties......................................... 20
SECTION 3.14 Intellectual Property....................................... 21
SECTION 3.15 Voting Requirements......................................... 21
SECTION 3.16 Brokers; Schedule of Fees and Expense....................... 21
SECTION 3.17 Opinion of Financial Advisor................................ 21
SECTION 3.18 Accounting Matters.......................................... 21
SECTION 3.19 Interim Operations of Sub................................... 21
SECTION 3.20 Customers................................................... 21
SECTION 3.21 Inventory................................................... 21
SECTION 3.22 Product and Service Warranties.............................. 21
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
SECTION 4.1 Conduct of Business by the Company.......................... 22
SECTION 4.2 Conduct of Business by Parent............................... 23
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of Registration Statement and Proxy Statement... 24
SECTION 5.2 Shareholders Meeting........................................ 24
SECTION 5.3 Access to Information; Confidentiality...................... 24
SECTION 5.4 No Solicitation............................................. 25
SECTION 5.5 Fees and Expenses........................................... 27
SECTION 5.6 Certain Fees................................................ 27
SECTION 5.7 Public Announcements........................................ 28
SECTION 5.8 Letters of the Company's Accountants........................ 28
SECTION 5.9 Letters of Parent's Accountants............................. 28
SECTION 5.10 Affiliates.................................................. 28
SECTION 5.11 Pooling of Interests........................................ 29
SECTION 5.12 Tax Treatment............................................... 29
SECTION 5.13 FIRPTA...................................................... 29
</TABLE>
ii
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<TABLE>
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<S> <C> <C>
SECTION 5.14 Stock Options............................................... 29
SECTION 5.15 NMS Listing................................................. 30
SECTION 5.16 Indemnification and Insurance............................... 30
SECTION 5.17 Stop Transfer............................................... 31
SECTION 5.18 Non-Competition Agreements.................................. 31
SECTION 5.19 Certain Tax Matters......................................... 32
SECTION 5.20 Reasonable Efforts; Notification............................ 32
SECTION 5.21 Parent Benefit Plans........................................ 33
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
SECTION 6.1 Conditions to Obligations of Each Party to Effect the
Merger...................................................... 33
SECTION 6.2 Additional Conditions to Obligation of the Company.......... 33
SECTION 6.3 Additional Conditions to Obligations of Parent and Sub...... 34
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination................................................. 35
SECTION 7.2 Effect of Termination....................................... 36
SECTION 7.3 Amendment................................................... 36
SECTION 7.4 Extension; Waiver........................................... 36
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Nonsurvival of Representations and Warranties............... 36
SECTION 8.2 Notices..................................................... 36
SECTION 8.3 Definitions................................................. 37
SECTION 8.4 Interpretation.............................................. 38
SECTION 8.5 Counterparts................................................ 38
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries.............. 38
SECTION 8.7 Governing Law............................................... 38
SECTION 8.8 Assignment.................................................. 38
SECTION 8.9 Enforcement................................................. 38
SECTION 8.10 Severability................................................ 38
</TABLE>
iii
<PAGE> 72
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement")
is made and entered into as of September 2, 1998, among Sanmina Corporation, a
Delaware corporation ("Parent"), SANM Acquisition Subsidiary, Inc., a
Massachusetts Corporation and a wholly owned subsidiary of Parent ("Sub"), and
Altron Incorporated, a Massachusetts corporation (the "Company").
RECITALS
A. The respective Boards of Directors of Parent, Sub and the Company, and
Parent, acting as the sole shareholder of Sub, have approved the merger of Sub
with and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $.05 per share, of the Company ("Company Common
Stock"), other than Company Common Stock owned by Parent, Sub or the Company,
will be converted into the right to receive common stock, par value $.01 per
share, of Parent ("Parent Common Stock").
B. Substantially concurrently herewith and as a condition and inducement
to Parent's willingness to enter into this Agreement, Parent and certain
shareholders of the Company have entered into a Shareholder Agreement in the
form attached hereto as Exhibit A (the "Shareholder Agreement").
C. Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
D. For Federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code").
E. For financial accounting purposes, it is intended that the Merger will
be accounted for as a pooling of interests transaction.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Massachusetts Business
Corporation Law (the "MBCL"), Sub shall be merged with and into the Company at
the Effective Time (as defined in Section 1.3). Following the Merger, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of Sub in accordance with the MBCL. At
the election of Parent, any direct or indirect wholly owned subsidiary (as
defined in Section 8.3) of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties hereto agree to execute an
appropriate amendment to this Agreement in order to reflect such substitution.
SECTION 1.2 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of the
conditions set forth in Article VI (the "Closing Date"), at the offices of
Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road,
Palo Alto, CA 94304, unless another date or place is agreed to in writing by the
parties hereto.
SECTION 1.3 Effective Time. Subject to the provisions of this Agreement,
as soon as practicable on or after the Closing Date, the parties shall file
articles of merger or other appropriate documents (in any such case, the
"Articles of Merger") executed in accordance with the relevant provisions of the
MBCL and shall make all other filings or recordings required under the MBCL. The
Merger shall become effective at such time as the Articles of Merger are duly
filed with the Massachusetts Secretary of State, or at such other time
<PAGE> 73
as Parent and the Company shall agree should be specified in the Articles of
Merger (the time the Merger becomes effective being the "Effective Time").
SECTION 1.4 Effects of the Merger. The Merger shall have the effects set
forth in Section 80 of the MBCL.
SECTION 1.5 Articles of Organization and Bylaws.
(a) The Articles of Organization of Sub, as in effect immediately
prior to the Effective Time, shall be the Articles of Organization of the
Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law, except that the name of the Surviving
Corporation in such Articles of Organization will be changed to be "Altron
Incorporated".
(b) The Bylaws of Sub, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
SECTION 1.6 Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 1.7 Officers. The officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 1.8 Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
of Company Common Stock that is owned by the Company and each share of
Company Common Stock that is owned by Parent or Sub shall automatically be
canceled and retired and shall cease to exist, and no Parent Common Stock
or other consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 1.10(e),
each issued and outstanding share of Company Common Stock (other than
shares to be canceled in accordance with Section 1.8(b) and other than as
provided in Section 1.9) shall be converted into the right to receive
0.4545 (the "Exchange Ratio") of a duly authorized, fully paid and
nonassessable share of Parent Common Stock (the "Share Consideration").
Notwithstanding the foregoing, in the event that Effective Time Parent
Price (as defined below) is less than $30.00, the Exchange Ratio shall be
adjusted to a fraction, the numerator of which shall be 13.635 and the
denominator of which shall be the Effective Time Parent Price; provided
that in no event shall the Exchange Ratio be adjusted to an amount greater
than 0.5681 (13.635/24). The Effective Time Parent Price shall be the
average of the last reported sale price of Parent Common Stock on the
Nasdaq National Market during the 10 trading days ending on the trading day
which is one day prior to the date of the Shareholders Meeting. In the
event that the Effective Time Parent Price is not at least $24.00, the
Company may, with no further liability or obligation to the other party,
terminate this Agreement. As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate which immediately prior to the Effective Time represented any
such shares of Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive shares of Parent Common Stock
and any cash in lieu of fractional shares of Parent Common Stock to be
issued or paid in consideration therefor upon surrender of such certificate
in accordance with Section 1.10, without interest. Notwithstanding the
foregoing, if between the date of this Agreement and the Effective Time the
outstanding shares of Parent Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassifica-
2
<PAGE> 74
tion, recapitalization, split, combination or exchange of shares or if
Parent pays an extraordinary dividend, the Exchange Ratio shall be
appropriately adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange or
extraordinary dividend.
(d) Stock Options; Employee Stock Purchase Plan. At the Effective
Time, all options to purchase shares of Company Common Stock ("Stock
Options") granted under the Company's stock option plans (collectively, the
"Stock Option Plans") shall be assumed by Parent in accordance with Section
5.14 (including vested and unvested options). At the Effective Time, in
accordance with the terms of the Company's 1995 Employee Stock Purchase
Plan (the "Employee Stock Purchase Plan"), all rights to purchase shares of
Company Common Stock under the Employee Stock Purchase Plan shall be
converted into rights to purchase a number of shares of Parent Common Stock
as provided in the Employee Stock Purchase Plan in accordance with the
Exchange Ratio.
SECTION 1.9 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
the shares of any holder of Company Common Stock who has demanded and
perfected appraisal rights for such shares in accordance with the MBCL and
who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights ("Dissenting Shares"), shall not be converted into or
represent a right to receive Parent Common Stock pursuant to Section
1.8(c), but the holder thereof shall only be entitled to such rights as are
granted by the MBCL.
(b) Notwithstanding the provisions of subsection (a), if any holder of
shares of Company Common Stock who demands appraisal of such shares under
the MBCL shall effectively withdraw the right to appraisal, then, as of the
later of the Effective Time and the occurrence of such event, such holder's
shares shall automatically be converted into and represent only the right
to receive Parent Common Stock, without interest thereon.
(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal of any shares of Company Common Stock, withdrawals of
such demands, and any other instruments served pursuant to the MBCL and
received by the Company which relate to any such demand for appraisal and
(ii) the opportunity to participate in all negotiations and proceedings
which take place prior to the Effective Time with respect to demands for
appraisal under the MBCL. The Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to any
demands for appraisal of Company Common Stock or offer to settle or settle
any such demands if the settlement is in excess of $25,000 in any case or
$250,000 in the aggregate.
SECTION 1.10 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit
with Norwest Bank Minnesota, N.A. or such other bank or trust company as
may be designated by Parent (the "Exchange Agent"), for the benefit of the
holders of shares of Company Common Stock, for exchange in accordance with
this Article II, through the Exchange Agent, certificates representing the
shares of Parent Common Stock (such shares of Parent Common Stock, together
with any dividends or distributions with respect thereto with a record date
after the Effective Time and any cash payments in lieu of any fractional
shares of Parent Common Stock, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to Section 1.8 in exchange for
outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately prior
to the Effective Time represented outstanding shares of Company Common
Stock (the "Certificates") whose shares were converted into the right to
receive shares of Parent Common Stock pursuant to Section 1.8(c), (i) a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate for cancellation
3
<PAGE> 75
to the Exchange Agent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate representing that number of whole shares
of Parent Common Stock which such holder has the right to receive pursuant
to the provisions of Section 1.8 after taking into account all the shares
of Company Common Stock then held by such holder under all such
Certificates so surrendered, cash in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 1.10(e)
and any dividends or other distributions to which such holder is entitled
pursuant to Section 1.10(c), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company
Common Stock which is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Parent
Common Stock may be issued to a person other than the person in whose name
the Certificate so surrendered is registered, if, upon presentation to the
Exchange Agent, such Certificate shall be properly endorsed or otherwise be
in proper form for transfer and the person requesting such issuance shall
pay any transfer or other taxes required by reason of the issuance of
shares of Parent Common Stock to a person other than the registered holder
of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated
by this Section 1.10(b), each Certificate shall be deemed at any time after
the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of Parent Common Stock, cash
in lieu of any fractional shares of Parent Common Stock as contemplated by
Section 1.10(e) and any dividends or other distributions to which such
holder is entitled pursuant to Section 1.10(c). No interest will be paid or
will accrue on any cash payable pursuant to Sections 1.10(c) or 1.10(e).
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock represented
thereby and no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to Section 1.10(e) until the holder of record of
such Certificate shall surrender such Certificate. Following surrender of
any such Certificate, there shall be paid to the record holder of the
certificate representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 1.10(e) and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective
Time but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares
of Parent Common Stock issued upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof (including any
cash paid pursuant to Section 1.10(c) or 1.10(e)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a
record date prior to the Effective Time which may have been declared or
made by the Company on such shares of Company Common Stock in accordance
with the term of this Agreement or prior to the date of this Agreement and
which remain unpaid at the Effective Time, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange
Agent for any reason, they shall be canceled and exchanged as provided in
this Section 1.10.
(e) No Fractional Shares.
(i) No certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the
owner thereof to vote or to any rights of a stockholder of Parent.
4
<PAGE> 76
(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a
share of Parent Common Stock (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount, less the amount of any withholding taxes which
may be required thereon, equal to such fractional part of a share of
Parent Common Stock multiplied by the per share closing price of Parent
Common Stock on the date of the Shareholders Meeting, as such price is
reported on the Nasdaq Stock Market National Market (as reported by The
Wall Street Journal, or, if not reported thereby, any other
authoritative source). Parent will deposit into the Exchange Fund cash
sufficient to fund this amount on the Closing Date.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Parent upon demand,
and any holders of the Certificates who have not theretofore complied with
this Article II shall thereafter look only to Parent for payment of their
claim for Parent Common Stock, any cash in lieu of fractional shares of
Parent Common Stock and any dividends or distributions with respect to
Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company or the Exchange
Agent shall be liable to any person in respect of any shares of Parent
common Stock (or dividends or distributions with respect thereto) or cash
from the Exchange Fund in each case delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily
basis. Any interest and other income resulting from such investments shall
be paid to Parent.
(i) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any
claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock and any cash in lieu of
fractional shares, and unpaid dividends and distributions on shares of
Parent Common Stock deliverable in respect thereof, pursuant to this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule"), the Company represents and warrants to Parent and Sub as follows (it
being understood that disclosure in one instance is sufficient for all purposes
if the context thereof is reasonably evident and it being understood that
disclosure of an item is not to be construed as an admission of any fact):
SECTION 2.1 Organization, Standing and Corporate Power. The Company and
each of its subsidiaries (as defined in Section 8.3) is a corporation duly
organized, validly existing and in good corporate standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted. The Company and each
of its subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, other than in any such jurisdiction where the failure to be
so qualified or licensed individually or in the aggregate would not have a
material adverse effect (as defined in Section 8.3) on the Company. The Company
has delivered to Parent complete and correct copies of the Articles of
Organization and Bylaws, in each case as amended to the date hereof, of the
Company and of each of its subsidiaries.
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SECTION 2.2 Subsidiaries. Except as set forth in Section 2.2 of the
Company Disclosure Schedule, the Company has no subsidiaries and does not own,
directly or indirectly, beneficially or of record, any shares of capital stock
or other security of any other entity or any other investment in any other
entity.
SECTION 2.3 Capital Structure. The authorized capital stock of the
Company consists of 40,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $1.00 per share ("Preferred Stock"). At the
close of business on August 31, 1998, (a) 15,626,298 shares of Company Common
Stock were issued and outstanding, (b) 235,581 shares of Company Common Stock
were held by the Company in its treasury, (c) 4,452,196 shares of Company Common
Stock were reserved for issuance pursuant to outstanding Stock Option Plans and
(d) 390,657 shares of Company Common Stock were reserved for issuance pursuant
to the Employee Stock Purchase Plan. Except as set forth above, at the close of
business on August 31, 1998, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of the Company are, and all shares which may
be issued pursuant to the Stock Option Plans will be, when issued in accordance
with the terms thereof, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into securities having the right to vote) on any matters on
which shareholders of the Company may vote. Except as set forth above, there are
no securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company is a party, or by
which it is bound, obligating the Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other voting
securities of the Company or obligating the Company to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are not any outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any shares
of capital stock or other securities of the Company. There are no shareholder
agreements, voting trusts or other agreements or understandings to which the
Company is a party or by which it is bound relating to the voting of any shares
of capital stock of the Company.
All of the outstanding capital stock of the Company's subsidiaries is owned
by the Company, directly or indirectly, free and clear of any pledge, claim,
lien, charge, encumbrance or security interest of any kind or nature whatsoever
(any of which, a "Lien" and collectively, "Liens") or any other limitation or
restriction (including any restriction on the right to vote or sell the same,
except as may be provided as a matter of law). There are no securities of the
Company or its subsidiaries convertible into or exchangeable for, no options or
other rights to acquire from the Company or its subsidiaries, and no other
contract, understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital stock
or other ownership interests in, or any other securities of, any subsidiary of
the Company. There are no outstanding contractual obligations of the Company or
its subsidiaries to repurchase, redeem or otherwise acquire any outstanding
shares of capital stock or other ownership interests in any subsidiary of the
Company.
SECTION 2.4 Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to
approval of this Agreement by the holders of two thirds ( 2/3) of the
outstanding shares of Company Common Stock, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of the Company, subject, in the case of this Agreement, to approval of
this Agreement by the holders of two thirds ( 2/3) of the outstanding shares of
Company Common Stock. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and similar laws, both state and federal, affecting
the enforcement of creditors' rights or remedies in general as from time to time
in effect or (ii) the exercise by courts of equity powers. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any
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obligation or to loss of a material benefit under, or result in the creation of
any Lien in or upon any of the properties or assets of the Company or of any of
its subsidiaries under any provision of (a) the Articles of Organization or
Bylaws of the Company or any provision of the comparable charter or
organizational documents of any of the Company's subsidiaries, (b) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Company
or to any of its subsidiaries or their respective properties or assets or (c),
subject to the governmental filings and other matters referred to in the
following sentence, any (i) statute, law, ordinance, rule or regulation or (ii)
judgment, order or decree applicable to the Company or to any of its
subsidiaries or their respective or properties or assets, other than, in the
case of clause (b) and clause (c)(i), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not (x) have a
material adverse effect on the Company, (y) impair in any material respect the
ability of the Company to perform its obligations under this Agreement, or (z)
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement. No consent, approval, order or authorization of,
or registration, declaration or filing with, any third party, including any
Federal, state or local government or any court, administrative agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company or any of
its subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated by this Agreement, except for (1) the filing of a Premerger
Notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (2) the filing
with the Securities and Exchange Commission (the "SEC") of a proxy statement
relating to the approval by the Company's shareholders of this Agreement (as
amended or supplemented from time to time, the "Proxy Statement") and such
reports under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with this Agreement and the transactions
contemplated by this Agreement, (3) the filing of the Articles of Merger with
the Massachusetts Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business and
(4) such other consents, approvals, orders, authorizations, registrations
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a material adverse effect on the Company
or prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
SECTION 2.5 SEC Documents. The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since January 1,
1995 (the "Company SEC Documents"). As of their respective dates, the Company
SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933 (the "Securities Act"), or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents, and none of the Company SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any Company SEC
Document has been revised or superseded by a later-filed Company SEC Document,
none of the Company SEC Documents contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the Company SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
financial statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company as of the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited financial
statements, to normal year-end audit adjustments). Except as set forth in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed Company SEC Documents"), since the completion of the audit
of the Company's financial statements at and for the period ended December 31,
1997, the Company has not incurred any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) other
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than liabilities incurred in the ordinary course of business, liabilities which
are not required to be disclosed on a balance sheet and/or in the footnotes
thereto in accordance with GAAP and liabilities which, individually or in the
aggregate would not, in the exercise of reasonable business judgment, be
expected to have a material adverse effect on the Company.
SECTION 2.6 Information Supplied. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in (a) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of Parent Common Stock in the Merger
(the "Form S-4") will, at the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented and at the time it becomes effective under
the Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading, and (b) the Proxy Statement will, at the date it is first mailed to
the Company's shareholders and at the time of the meeting of the Company's
shareholders held to vote on approval and adoption of this Agreement, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement shall comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder. No representation is made by the Company in this Agreement with
respect to statements made or incorporated by reference therein based on
information supplied by Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement.
SECTION 2.7 Absence of Certain Changes or Events. Except as disclosed in
the Filed Company SEC Documents, since the date of the most recent audited
financial statements included in the Filed Company SEC Documents, the Company
has conducted its business only in the ordinary course consistent with past
practice, and there has not been:
(a) any material adverse change (as defined in Section 8.3) in the
Company or any of its subsidiaries;
(b) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock;
(c) any split, combination or reclassification of any of the Company's
capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
the Company's capital stock;
(d) (x) any granting by the Company or any of its subsidiaries to any
Named Executive Officer of the Company (as identified in the Company's
proxy statement for its 1998 annual meeting of stockholders) of any
increase in compensation, except in the ordinary course of business
consistent with prior practice or as was required under employment
agreements in effect an of the date of the most recent audited financial
statements included in the Filed Company SEC Documents, (y) any granting by
the Company or any of its subsidiaries to any Named Executive Officer of
any increase in severance or termination pay, except as was required under
any employment, severance or termination agreements in effect as of the
date of the most recent audited financial statements included in the Filed
Company SEC Documents or (z) any entry by the Company or any of its
subsidiaries into any employment, severance or termination agreement with
any Named Executive Officer;
(e) any change in accounting methods, principles or practices by the
Company materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in generally accepted
accounting principles;
(f) any tax election that individually or in the aggregate would have
a material adverse effect on the Company or any of its tax attributes or
any settlement or compromise of any material income tax liability;
(g) any agreement, whether in writing or otherwise, to take any action
described in this Section 2.7.
SECTION 2.8 Litigation. There is no suit, action or proceeding pending
or, to the knowledge of the Company, threatened in writing since December 31,
1997 against or directly affecting the Company or any of
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its subsidiaries that individually or in the aggregate would have a material
adverse effect on the Company, nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against, or,
to the knowledge of the Company, investigation by any Governmental Entity
pending that involves, the Company or any of its subsidiaries that individually
or in the aggregate would have a material adverse effect on the Company.
SECTION 2.9 Contracts. Except as disclosed in the Filed Company SEC
Documents, there is no contract or agreement that is of a nature required to be
filed as an exhibit to a report on Form 10-Q or 10-K required to be filed by the
Company or any of its subsidiaries under the Exchange Act and the rules and
regulations promulgated thereunder (such type of contract or agreement is
hereinafter referred to as a "Contract"). Neither the Company nor any of its
subsidiaries is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any Contract, except for violations
or defaults that individually or in the aggregate would not have a material
adverse effect on the Company. Except as disclosed in the Filed Company SEC
Documents, the Company has not entered into any contract, agreement, arrangement
or understanding with any affiliate of the Company.
SECTION 2.10 Compliance with Laws.
(a) The Company and each of its subsidiaries is in compliance with all
applicable statutes, laws, ordinances, regulations, rules, judgments,
decrees and orders of any Governmental Entity (collectively, "Legal
Provisions") applicable to its business or operations, except for instances
of possible noncompliance that, individually or in the aggregate, would not
have a material adverse effect on the Company or prevent or materially
delay the consummation of the Merger. The Company and each of its
subsidiaries has in effect all Federal, state, local and foreign
governmental approvals, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights, including all authorizations under
Environmental Laws (as hereinafter defined) ("Permits"), necessary for it
to own, lease or operate its properties and assets and to carry on its
business as now conducted, and there has occurred no default under, or
violation of, any such Permit, except for the lack of Permits and for
defaults under, or violations of, Permits which lack, default or violation
individually or in the aggregate would not have a material adverse effect
on the Company. Except as disclosed in the Filed Company SEC Documents,
since December 31, 1997, the Company has not received any notice or other
communication from any Governmental Entity alleging any violation of any
Legal Provision by the Company, other than any such notice or communication
relating to any actual or alleged violation the consequences of which would
not have a material adverse effect on the Company or relating to any actual
or alleged violation that has since the receipt of such notice been cured
by the Company within the time frame, if any, specified for cure in such
notice.
(b) The term "Hazardous Material" means any material or substance that
is prohibited or regulated by any Environmental Law or that has been
designated by any Governmental Authority to be radioactive, toxic,
hazardous or otherwise a danger to health, reproduction or the environment.
The term "Business Facility" means any property including the land, the
improvements thereon, the groundwater thereunder and the surface water
thereon, that is or at any time has been owned, operated, occupied,
controlled or leased by the Company or any of its subsidiaries in
connection with the operation of its business. The term "Disposal Site"
means a landfill, disposal agent, waste hauler or recycler of Hazardous
Materials. The term "Environmental Laws" means all applicable laws, rules,
regulations, orders, treaties, statutes, and codes promulgated by any
Governmental Authority which prohibit, regulate or control any Hazardous
Material or any Hazardous Material Activity, including, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, the Resource Recovery and Conservation Act of 1976, the Federal
Water Pollution Control Act, the Clean air Act, the Hazardous Materials
Transportation Act, the Clean Water Act, comparable laws, rules,
regulations, orders, treaties, statutes, and codes of other Governmental
Authorities, the regulations promulgated pursuant to any of the foregoing,
and all amendments and modifications of any of the foregoing, all as
amended to date. The term "Hazardous Materials Activity" means the
transportation, transfer, recycling, storage, use, treatment, manufacture,
removal, remediation, release, exposure of others to, sale, or distribution
of any Hazardous Material or any product containing a Hazardous Material.
The term "Environmental Permit"
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means any approval, permit, license, clearance or consent required to be
obtained from any private person or any Governmental Authority with respect
to a Hazardous Materials Activity which is or was conducted by the Company
or any of its subsidiaries.
(c) Except in compliance with Environmental Laws in a manner that
could not reasonably be expected to subject the Company or any of its
subsidiaries to material liability, to Company's knowledge no Hazardous
Materials are present on any Business Facility. There are no underground
storage tanks, asbestos which is friable or likely to become friable or
PCBs present on any Business Facility currently owned, operated, occupied,
controlled or leased by the Company or any of its subsidiaries or as a
consequence of the acts of the Company or any of its subsidiaries or their
agents where the result would be material and adverse.
(d) The Company and each of its subsidiaries have conducted all
Hazardous Material Activities in compliance in all material respects with
all applicable Environmental Laws. To the knowledge of the Company, the
Hazardous Materials Activities of the Company and each of its subsidiaries
have not resulted in the exposure of any person to a Hazardous material in
a manner which has or will result in a material liability to the Company.
(e) The Company has all Environmental Permits necessary for the
continued conduct of any Hazardous Material Activity of the company and
each of its subsidiaries as such activities are currently being conducted,
except for those permits the absence of which could not reasonably be
expected to result in a material adverse effect on the Company. All such
Environmental Permits are valid and in full force and effect except where
the result would not be material. The Company and its subsidiaries have
complied in all material respects with all covenants and conditions of any
Environmental Permit which is or has been in force with respect to its
Hazardous Materials Activities except where the result would not be
materially adverse. To the knowledge of the Company, no circumstance exists
which could cause any Environmental Permit to be revoked, modified, or
rendered non-renewable upon payment of the permit fee except where the
result would not be materially adverse.
(f) No action, proceeding, revocation proceeding, amendment procedure,
writ, injunction or claim is pending, or to the knowledge of the Company,
threatened since December 31, 1997, concerning or relating to any
Environmental Permit or any Hazardous Materials Activity of the Company or
any of its subsidiaries, or to any Business Facility currently owned,
operated, occupied, controlled or leased by the Company or any of its
subsidiaries, or to the knowledge of the Company, pending or threatened
with respect to any other Business Facility.
(g) To the knowledge of the Company, no action, proceeding, liability
or claim exists or is threatened against the Company or any of its
subsidiaries with respect to any transfer or release of Hazardous Materials
to a Disposal Site which could reasonably be expected to subject the
Company or any of its subsidiaries to material liability.
(h) The Company has delivered to Parent or made available for
inspection by Parent and its agents and employees all records in the
Company's possession concerning the Hazardous Materials Activities of the
Company and each of its subsidiaries and all environmental audits and
environmental assessments of any Business Facility conducted at the request
of, or otherwise in the possession of, the Company or any of its
subsidiaries.
SECTION 2.11 Labor Matters. There are no collective bargaining agreements
or other labor union agreements to which the Company or any of its subsidiaries
is a party, or by which it is bound. The Company and each of its subsidiaries is
in compliance with all federal, state and local laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice except where the failure to be
in compliance would not have a material adverse effect on the Company. There is
no unfair labor practice complaint against the Company or any of its
subsidiaries pending or, to the knowledge of the Company, threatened before the
National Labor Relations Board or the United States Department of Labor. There
is no labor strike, dispute, slowdown or stoppage in progress or, to the
knowledge of the Company, threatened against or involving the Company or any of
its subsidiaries. To the
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Company's knowledge, there is no overtly threatened organizing or similar
activity relating to the formation of a collective bargaining unit to represent
the Company's employees. No written agreement restricts the Company or any of
its subsidiaries from relocating, closing or terminating any of its operations
or facilities. Neither the Company nor any of its subsidiaries has, in the past
three years, experienced any labor strike, dispute, slowdown, stoppage or other
labor difficulty.
SECTION 2.12 Absence of Changes in Benefit Plans. Except as disclosed in
the Filed Company SEC Documents, since the date of the most recent audited
financial statements included in the Filed Company SEC Documents, there has not
been any adoption or amendment in any material respect by the Company or any of
its subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of the Company (collectively,
"Benefit Plans"). Except as disclosed in a writing by the Company to the Parent
concurrent with the execution of this Agreement (such disclosure being hereafter
referred to as the "Employee Matters Disclosure") or in the Filed Company SEC
Documents, there exist no employment, consulting, severance, termination or
indemnification agreements, arrangements or understandings between the Company,
any current or former employee, officer or director of the Company, which is
either currently effective or will become effective at the Closing Date.
SECTION 2.13 ERISA Compliance.
(a) There has been made available to Parent all "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (sometimes referred to
herein as "Pension Plans"), "employee welfare benefit plans" (as defined in
Section 3(l) of ERISA), "employee benefit plans" (as defined in Section
3(3) of ERISA), which are maintained in connection with any trust described
in Section 501(c)(9) of the Code, and all other Benefit Plans maintained,
or contributed to, by the Company or any person or entity that, together
with the Company, is treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code (the Company and each such other person or
entity, a "Commonly Controlled Entity") for the benefit of any current or
former employees, officers or directors of the Company. The Company has
made available to Parent true, complete and correct copies of (i) each
Benefit Plan (or, in the case of any unwritten Benefit Plans, descriptions
thereof), (ii) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Benefit Plan (if any such
report was required), (iii) the most recent summary plan description for
each Benefit Plan for which such summary plan description is required and
(iv) each trust agreement and group annuity contract relating to any
Benefit Plan. Each Benefit Plan has been administered in all material
respects in accordance with its terms. The Company and all the Benefit
Plans are all in compliance in all material respects with applicable
provisions of ERISA and the Code.
(b) Neither the Company nor any Commonly Controlled Entity has
maintained, contributed or been obligated to contribute to any Benefit Plan
that is subject to Title IV of ERISA.
(c) With respect to any Benefit Plan that is an employee welfare
benefit plan, there are no agreements, written or oral, that would prevent
any such plan (including any such plan covering retirees or other former
employees) from being amended or terminated without material liability to
the Company on or at any time after the Effective Time.
(d) Neither the Company nor any of its subsidiaries contributes to or
has any material liability to the Pension Benefit Guaranty Corporation or
any other person, plan or entity under or with respect to (i) a pension
plan subject to Title IV of ERISA or Section 412 of the Code, (ii) a
multi-employer pension plan, as defined in Section 3(37) of ERISA or (iii)
an employee welfare benefit plan. Neither the Company nor any of its
subsidiaries maintains an employee welfare benefit plan providing health or
medical benefits for retired employees.
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(e) No employee welfare benefit plan of the company or any of its
subsidiaries provides for continuing benefits or coverage after termination
or retirement from employment, except with respect to any "group health
plan" as defined in Section 4980B(g) of the Code and Section 607 of ERISA
and except as provided for under certain state laws. With respect to any
Benefit Plan which is a "group health plan," as so defined, the Company
warrants that in all "qualified events" (including those resulting from the
Merger) occurring prior to or on the Closing Date, the Company has or will
offer to its eligible employees and their "qualified beneficiaries" the
opportunity to elect continuation coverage under Section 602 of ERISA to
the extent required by ERISA Sections 601-607 and will provide that
coverage, if elected, at no expense to Parent.
(f) There is no Benefit Plan covering any employee or former employee
of the Company or any of its subsidiaries that, individually or
collectively, could give rise to the payment of an amount that would not be
deductible pursuant to the terms of Sections 280G or 162 of the Code.
(g) Neither the Company nor any of its subsidiaries nor any of their
"affiliates" (as defined in ERISA) has ever participated in or withdrawn
from a multi-employer plan as defined in Section 4001(a)(3) of Title IV of
ERISA, and neither the Company nor any of its subsidiaries has incurred or
owes any liability as a result of any partial or complete withdrawal by any
employer from such a multi-employer plan as described under Sections 4201,
4203, or 4205 of ERISA.
(h) To the Company's knowledge, no employee of the Company or any of
its subsidiaries is obligated under any agreement or judgment that would
conflict with such employee's obligation to use his best efforts to promote
the interests of the Company or would conflict with the Company's business
as conducted or proposed to be conducted. To knowledge of the Company, no
employee of the Company or any of its subsidiaries is in violation of the
terms of any employment agreement or any other agreement relating to such
employee's relationship with any previous employer and no litigation is
pending or to the Company's knowledge, threatened in writing with regard
thereto.
(i) The Company will, promptly after the date of this Agreement,
provide Parent with a schedule listing all outstanding Stock Options as of
September 1, 1998, showing for each such option: (i) the number of shares
issuable, (ii) the number of vested shares, (iii) the date of expiration
and (iv) the exercise price.
(j) Except as set forth on the Employee Matters Disclosure, no
employee of the Company will be entitled to any additional compensation or
benefits or any acceleration of the time of payment or vesting of any
compensation or benefits under any Benefit Plan as a result of the
transactions contemplated by this Agreement.
(k) The deduction of any amount payable pursuant to the terms of the
Benefit Plans will not be subject to disallowances under Section 162(m) of
the Code.
SECTION 2.14 Taxes. The Company has filed all tax returns and reports
required to be filed by it and has paid all taxes required to be paid by it (as
shown on such returns and reports), and the most recent financial statements
contained in the Filed Company SEC Documents reflect an adequate reserve for all
taxes payable by the Company for all taxable periods and portions thereof
through the date of such financial statements. No material deficiencies for any
taxes have been proposed, asserted or assessed by any taxing authority against
the Company, nor is there, to the Company's knowledge, any reasonable basis for
the assertion of any such deficiency. No requests for waivers of the time to
assess any such taxes are pending. No material special charges, penalties,
fines, liens, or similar encumbrances have been asserted against the Company
with respect to payment of or failure to pay any taxes. The Company has not
executed or filed with any taxing authority any agreements extending the period
for assessment or collection of any taxes. Proper amounts have been withheld by
the Company from employee compensation payments for all periods in compliance
with the tax withholding provisions of applicable federal and state laws. None
of the Federal income tax returns of the Company have been examined by the
United States Internal Revenue Service for the fiscal years through January 3,
1998. The Company has not taken any action nor does it have any knowledge of any
fact or circumstance that would prevent or is reasonably likely to prevent the
Merger from
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qualifying as a reorganization within the meaning of Section 368(a) of the Code.
As used in this Agreement, "taxes" shall include all Federal, state, local and
foreign income, property, sales, excise and other taxes, tariffs or governmental
charges of any nature whatsoever.
SECTION 2.15 No Excess Parachute Payments. Except as specifically
identified in the Employee Matters Disclosure, no amount that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of the Company or any of its subsidiaries who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Benefit Plan currently in effect would be an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the Code).
No such person is entitled to receive any additional payment from the Company,
the Surviving Corporation or any other person (a "Parachute Gross-Up Payment")
in the event that the excise tax of Section 4999(a) of the Code is imposed on
such person. No officer, director or employee of the Company or any of its
subsidiaries has been granted any right to receive any Parachute Gross-up
Payment by the Company or any of its subsidiaries.
SECTION 2.16 Title to Properties. The Company and each of its
subsidiaries has good and marketable title to, or valid leasehold interests in,
all its material properties and assets except for such as are no longer used or
useful in the conduct of its businesses or as have been disposed of in the
ordinary course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances that individually or in the
aggregate would not materially interfere with the ability of the Company or any
of its subsidiaries to conduct its business as currently conducted. All such
material assets and properties, other than assets and properties in which the
Company or any of its subsidiaries has a leasehold interest, are free and clear
of all Liens and except for Liens that (A) are created, arise or exist under or
in connection with any of the contracts or other matters referred to in the
Company Disclosure Schedule or in the Company SEC Documents or the exhibits
thereto, (B) relate to any taxes or other governmental charges or levies that
are not yet due and payable, (C) relate to, or are created, arise or exist in
connection with, any legal proceeding that is being contested in good faith, or
(D) individually or in the aggregate would not materially interfere with the
ability of the Company and each of its subsidiaries to conduct their business as
currently conducted ("Company Permitted Liens"). The Company and each of its
subsidiaries has complied in all material respects with the terms of all
material leases to which it is a party and under which it is in occupancy, and
all such leases are in full force and effect. The Company and/or one or more of
its subsidiaries enjoys peaceful and undisturbed possession under all such
material leases, except for failures to do so that would not individually or in
the aggregate have a material adverse effect on the Company.
SECTION 2.17 Intellectual Property. The Company owns, or is validly
licensed or otherwise has the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights, copyrights and other proprietary intellectual property
rights and computer programs (collectively, "Intellectual Property Rights")
which are material to the conduct of the business of the Company and its
subsidiaries taken as a whole. No claims are pending or, to the knowledge of the
Company, threatened in writing that the Company or any of its subsidiaries is
infringing or otherwise adversely affecting the rights of any person with regard
to any Intellectual Property Right except for claims which, if determined
adversely to the Company, would not have a material adverse effect on the
Company. To the knowledge of the Company, no person is infringing the rights of
the Company or any of its subsidiaries with respect to any Intellectual Property
Right except where such infringement has not had, and could not reasonably be
expected to have, a material adverse effect on the Company. Neither the Company
nor any of its subsidiaries has licensed, or otherwise granted, to any third
party, any rights in or to any Intellectual Property Rights which are material
to the conduct of the business of the Company and its subsidiaries taken as a
whole.
SECTION 2.18 Voting Requirements. The affirmative vote of the holders of
two thirds (2/3) of the outstanding shares of Company Common Stock at the
Shareholders Meeting to approve this Agreement is the only vote of the holders
of any class or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated by this Agreement.
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SECTION 2.19 State Takeover Statutes. The Board of Directors of the
Company have approved the Merger, this Agreement and the Shareholder Agreement,
and such approval is sufficient to render inapplicable to the Merger, this
Agreement, the Shareholder Agreement and the transactions contemplated by this
Agreement and the Shareholder Agreement, the provisions of Section 110F of the
MBCL to the extent, if any, such Section is applicable to the Merger, this
Agreement, the Shareholder Agreement and the transactions contemplated by this
Agreement and the Shareholder Agreement. To the Company's knowledge, no other
state takeover statute or similar statute or regulation applies to or purports
to apply to the Merger, this Agreement, the Shareholder Agreement or the
transactions contemplated by this Agreement or the Shareholder Agreement.
SECTION 2.20 Brokers; Schedule of Fees and Expense. No broker, investment
banker, financial advisor or other person, other than Needham & Company, the
fees and expenses of which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
SECTION 2.21 Opinion of Financial Advisor. The Company has received the
opinion of Needham & Company, dated the date hereof, to the effect that, as of
such date, the consideration to be received in the Merger by the Company's
shareholders is fair to the Company's shareholders from a financial point of
view. A copy of such opinion has been delivered to Parent for informational
purposes only.
SECTION 2.22 Accounting Matters. The Company has not taken or agreed to
take any action that would prevent the business combination to be effected by
the Merger to be accounted for as a pooling of interests.
SECTION 2.23 Equipment and Other Personal Property Leases. All of the
material items of equipment and personal property leased by the Company or any
of its subsidiaries from any third party are currently used by the Company
and/or one or more of its subsidiaries in the ordinary course of their
businesses. All leases in effect as of the date of this Agreement pursuant to
which the Company leases material items of equipment or other material items of
personal property are valid, subsisting and in full force and effect, and
neither the Company nor any other party thereto is in default of any of its
obligations under any of such leases, except for defaults and failures to be
valid, subsisting and in full force and effect which would not have a material
adverse effect on the Company. No consent to the consummation of the
transactions contemplated by this Agreement is required from the lessors under
such leases except for any such consent the failure to obtain which would not
have a material adverse effect on the Company.
SECTION 2.24 Product and Service Warranties. Since June 10, 1998 (date of
filing of Company 10-K/A), the Company has not received any written notice
pursuant to which any third party has made any claims against the Company or its
subsidiaries regarding any product or service warranties sold or provided by the
Company or its subsidiaries, except for (i) claims which have been fully settled
and (ii) unresolved claims that would not have a material adverse effect on the
Company.
SECTION 2.25 Orders, Commitments and Returns. The aggregate of all
accepted and unfilled orders for the sale of merchandise entered into by the
Company or any of its subsidiaries does not exceed an amount which can
reasonably be expected to be filled in the ordinary course of business on a
schedule which will maintain satisfactory customer relationships, and the
aggregate of all contracts or commitments for the purchase of products by the
Company and all of its subsidiaries does not exceed an amount which is
reasonable for the anticipated volumes of their businesses (all of which orders,
contracts and commitments were made in the ordinary course of business). There
are no asserted claims to return merchandise of the Company or any of its
subsidiaries by reason of alleged overshipments, defective merchandise, breach
of warranty or otherwise except for normal returns in the ordinary course of
business consistent with past practice. The Company does not know or have reason
to believe that either the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby will result in any
cancellations or withdrawals of accepted and unfilled orders for the sale of
merchandise.
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SECTION 2.26 Customers. Neither the Company nor any of its subsidiaries
has received any written information from any customer that such customer will
not continue as a customer of the Company, such subsidiary or Parent after the
Closing or that any such customer intends to terminate or materially modify any
contract, purchase order or other commitment for the purchase of goods such
customer may have with the Company, except where the termination or modification
of such customer relationship would not, individually or in the aggregate, have
a material adverse effect on the Company.
SECTION 2.27 Suppliers. Neither the Company nor any of its subsidiaries
has received any indication from any material supplier to the Company that such
supplier will not continue as a supplier of the Company, such subsidiary or
Parent after the Closing, except where the termination of such supplier
relationship would not, individually or in the aggregate, have a material
adverse effect on the Company.
SECTION 2.28 Inventory. The Company's inventory is of good and
merchantable quality and are usable and saleable in the ordinary course of the
Company's and its subsidiaries' businesses, except for items of obsolete
materials and materials of below standard quality, all of which have been
written down to realizable market value or for which adequate reserves have been
provided in a manner consistent with past practice and in light of prior Company
practices.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Except as set forth on the disclosure schedule delivered by the Parent and
Sub to Company prior to the execution of this Agreement (the "Parent/Sub
Disclosure Schedule"), Parent and Sub represent and warrant to the Company as
follows (it being understood that disclosure in one instance is sufficient for
all purposes if the context thereof is reasonably evident and it being
understood that disclosure of an item is not to be construed as an admission of
any fact):
SECTION 3.1 Organization, Standing and Corporate Power. Each of Parent
and Sub is a corporation duly organized, validly existing and in good corporate
standing under the laws of Delaware and has all requisite corporate power and
authority to carry on its business as now being conducted. Each of Parent and
Sub is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed individually or in the aggregate would not have a material adverse
effect on Parent. Parent has delivered to the Company complete and correct
copies of its Certificate of Incorporation and Bylaws and the Articles of
Organization and Bylaws of Sub, in each case as amended to the date hereof.
SECTION 3.2 Capital Structure. The authorized capital stock of Parent
consists of 75,000,000 shares of Common Stock, par value $0.01 per share, and
5,000,000 shares of preferred stock, par value $0.01 per share ("Preferred
Stock"). At the close of business on August 31, 1998, (a) 48,373,500 shares of
Parent Common Stock were issued and outstanding, (b) no shares of Company Common
Stock were held by the Company in its treasury, and (c) 10,500,000 shares of
Company Common Stock were reserved for issuance pursuant to Parent's stock
option and employee stock purchase plans ("Parent Equity Incentive Plans").
Except as set forth above, at the close of business on August 31, 1998, no
shares of capital stock or other voting securities of the Company were issued,
reserved for issuance or outstanding. All outstanding shares of capital stock of
the Company are, and all shares which may be issued pursuant to the Parent
Equity Incentive Plans will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into
securities having the right to vote) on any matters on which shareholders of the
Company may vote. Except as set forth above, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company is a party, or by which it is bound, obligating
the Company to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the Company or
obligating the Company to issue, grant, extend or enter into any such security,
option, warrant,
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call, right, commitment, agreement, arrangement or undertaking. There are not
any outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of capital stock or other securities of the
Company. There are no shareholder agreements, voting trusts or other agreements
or understandings to which the Company is a party or by which it is bound
relating to the voting of any shares of capital stock of the Company. The shares
of Parent Common Stock constituting the Share Consideration will, when issued
pursuant to this Agreement, be duly and validly issued, fully paid and
nonassessable and will be issued free of any preemptive rights.
All of the outstanding capital stock of the Company's subsidiaries is owned
by the Company, directly or indirectly, free and clear of any Lien (as defined
in Section 2.3) or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided as
a matter of law). There are no securities of the Company or its subsidiaries
convertible into or exchangeable for, no options or other rights to acquire from
the Company or its subsidiaries, and no other contract, understanding,
arrangement or obligation (whether or not contingent) providing for the issuance
or sale, directly or indirectly, of any capital stock or other ownership
interests in, or any other securities of, any subsidiary of the Company. There
are no outstanding contractual obligations of the Company or its subsidiaries to
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
or other ownership interests in any subsidiary of the Company.
SECTION 3.3 Authority; Noncontravention. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement (and, in
the case of Parent, the Shareholder Agreement), and to consummate the
transactions contemplated by this Agreement (and, in the case of Parent, those
contemplated by the Shareholder Agreement). The execution and delivery of this
Agreement by Parent and Sub (and, in the case of Parent, the Shareholder
Agreement), and the consummation by Parent and Sub of the transactions
contemplated by this Agreement (and, in the case of Parent, those contemplated
by the Shareholder Agreement), have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement (and, in the case
of Parent, the Shareholder Agreement) has been duly executed and delivered by
Parent and Sub, and constitutes a valid and binding obligation of each such
party, enforceable against each such party in accordance with its terms, except
as enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and similar laws, both state and federal, affecting
the enforcement of creditors' rights or remedies in general as from time to time
in effect or (ii) the exercise by courts of equity powers. The execution and
delivery of this Agreement and the Shareholder Agreement do not, and the
consummation of the transactions contemplated by this Agreement and the
Shareholder Agreement and compliance with the provisions of this Agreement and
the Shareholder Agreement will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of any Lien in
or upon any of the properties or assets of Parent or any of its subsidiaries
under, any provision of (a) the Certificate of Incorporation or Bylaws of Parent
or the Articles of Organization or Bylaws of Sub or any provision of the
comparable charter or organizational documents of any other subsidiary of
Parent, (b) any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or license
applicable to Parent, Sub or any other subsidiary of Parent or their respective
properties or assets or (c) subject to the governmental filings and other
matters referred to in the following sentence, any (i) statute, law, ordinance,
rule or regulation or (ii) judgment, order or decree applicable to Parent, Sub
or any other subsidiary of Parent or their respective properties or assets,
other than, in the case of clause (b) and clause (c)(i), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (x) have a material adverse effect on Parent, (y) impair in any
material respect the ability of Parent and Sub to perform their respective
obligations under this Agreement or (z) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to Parent,
Sub or any other subsidiary of Parent in connection with the execution and
delivery of this Agreement (and, in the case of Parent, the Shareholder
Agreement) by Parent and Sub or the consummation by Parent and Sub of the
transactions contemplated by this Agreement (and, in the case of Parent, those
contemplated by the Shareholder Agreement), except for (1) the filing of a
premerger notification and report form under the HSR Act, (2) the
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filing with the SEC of the Form S-4 and such reports under the Exchange Act as
may be required in connection with this Agreement or the Shareholder Agreement
and the transactions contemplated by this Agreement or the Shareholder
Agreement, (3) the filing of the Articles of Merger with the Massachusetts
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business and (4) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under the "blue sky" laws of various states, the
failure of which to be obtained or made would not, individually or in the
aggregate, have a material adverse effect on Parent or prevent or materially
delay the consummation of any of the transactions contemplated by this
Agreement.
SECTION 3.4 SEC Documents. Parent has filed all required reports,
schedules, forms, statements and other documents with the SEC since January 1,
1995 (the "Parent SEC Documents"). As of their respective dates, the Parent SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933 (the "Securities Act"), or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any Parent SEC
Document has been revised or superseded by a later-filed Parent SEC Document,
none of the Parent SEC Documents contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the Parent SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
financial statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company as of the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited financial
statements, to normal year-end audit adjustments). Except as set forth in the
Parent SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed Parent SEC Documents"), since the completion of the audit
of the Parent's financial statements at and for the period ended September 30,
1997, the Parent has not incurred any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) other than liabilities
incurred in the ordinary course of business, liabilities which are not required
to be disclosed on a balance sheet and/or in the footnotes thereto in accordance
with GAAP and liabilities which, individually or in the aggregate would not, in
the exercise of reasonable business judgment, be expected to have a material
adverse effect on the Parent.
SECTION 3.5 Information Supplied. None of the information supplied or to
be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (a) the Form S-4 will, at the time the Form S-4 is filed with the
SEC, at any time it is amended or supplemented and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (b) the Proxy Statement will, at the
date it is first mailed to the Company's shareholders and at the time of the
meeting of the Company's shareholders held to vote on approval and adoption of
this Agreement, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. The Form S-4 will comply as to form in all material respects
with the requirements of the Securities Act and the rules and regulations
thereunder. No representation is made by Parent or Sub with respect to
Statements made or incorporated by reference therein based on information
supplied by the Company specifically for inclusion or incorporation by reference
in the Form S-4.
SECTION 3.6 Absence of Certain Changes or Events. Except as disclosed in
the Filed Parent SEC Documents and publicly available prior to the date of this
Agreement, since the date of the most recent
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unaudited financial statements included in the Filed Parent SEC Documents and
through the date of this Agreement, Parent has conducted its business only in
the ordinary course consistent with past practice, and there has not been:
(a) any material adverse change in Parent;
(b) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of
the Parent's capital stock;
(c) any split, combination or reclassification of any of Parent's
capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock;
(d) any change in accounting methods, principles or practices by the
Company materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in generally accepted
accounting principles;
(e) any tax election that individually or in the aggregate would have
a material adverse effect on the Company or any of its tax attributes or
any settlement or compromise of any material income tax liability; or
(f) any agreement, whether in writing or otherwise, to take any action
described in this Section 3.6.
SECTION 3.7 Litigation. There is no suit, action or proceeding pending
or, to the knowledge of Parent, threatened in writing since December 31, 1997
against or directly affecting Parent or any of its subsidiaries that
individually or in the aggregate would have a material adverse effect on Parent,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against, or, to the knowledge of Parent,
investigation by any Governmental Entity pending that involves Parent or any of
its subsidiaries that individually or in the aggregate would have a material
adverse effect on Parent.
SECTION 3.8 Contracts. Except as disclosed in the Filed Parent SEC
Documents, there is no Contract. Neither Parent nor any of its subsidiaries is
in violation of or in default under (nor does there exist any condition which
upon the passage of time or the giving of notice or both would cause such a
violation of or default under) any Contract, except for violations or defaults
that individually or in the aggregate would not have a material adverse effect
on Parent. Except as disclosed in the Filed Parent SEC Documents, Parent has not
entered into any contract, agreement arrangement or understanding with any
affiliate of Parent.
SECTION 3.9 Compliance with Laws.
(a) Parent and each of its subsidiaries is in compliance with all
applicable statutes, laws, ordinances, regulations, rules, judgments,
decrees and orders of any Governmental Entity (collectively, "Legal
Provisions") applicable to its business or operations, except for instances
of possible noncompliance that, individually or in the aggregate, would not
have a material adverse effect on the Company or prevent or materially
delay the consummation of the Merger. Parent and each of its subsidiaries
has in effect all Federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices,
permits and rights, including all authorizations under Environmental Laws
(as defined in Section 2.10(b)) ("Permits"), necessary for it to own, lease
or operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under, or violation of, any
such Permit, except for the lack of Permits and for defaults under, or
violations of, Permits which lack, default or violation individually or in
the aggregate would not have a material adverse effect on Parent. Except as
disclosed in the Filed Parent SEC Documents, Parent has not received any
notice or other communication from any Governmental Entity alleging any
violation of any Legal Provision by Parent.
(b) The term "Hazardous Material" means any material or substance that
is prohibited or regulated by any Environmental Law or that has been
designated by any Governmental Authority to be radioactive, toxic,
hazardous or otherwise a danger to health, reproduction or the environment.
The term "Business Facility" means any property including the land, the
improvements thereon, the groundwater thereunder and the surface water
thereon, that is or at any time has been owned, operated, occupied,
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controlled or leased by the Parent or any of its subsidiaries in connection
with the operation of its business. The term "Disposal Site" means a
landfill, disposal agent, waste hauler or recycler of Hazardous Materials.
The term "Environmental Laws" means all applicable laws, rules,
regulations, orders, treaties, statutes, and codes promulgated by any
Governmental Authority which prohibit, regulate or control any Hazardous
Material or any Hazardous Material Activity, including, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, the Resource Recovery and Conservation Act of 1976, the Federal
Water Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act, the Clean Water Act, comparable laws, rules,
regulations, orders, treaties, statutes, and codes of other Governmental
Authorities, the regulations promulgated pursuant to any of the foregoing,
and all amendments and modifications of any of the foregoing, all as
amended to date. The term "Hazardous Materials Activity" means the
transportation, transfer, recycling, storage, use, treatment, manufacture,
removal, remediation, release, exposure of others to, sale, or distribution
of any Hazardous Material or any product containing a Hazardous Material.
The term "Environmental Permit" means any approval, permit, license,
clearance or consent required to be obtained from any private person or any
Governmental Authority with respect to a Hazardous Materials Activity which
is or was conducted by the Parent or any of its subsidiaries.
(c) Except in compliance with Environmental Laws in a manner that
could not reasonably be expected to subject the Parent or any of its
subsidiaries to material liability, to Parent's knowledge no Hazardous
Materials are present on any Business Facility. There are no underground
storage tanks, asbestos which is friable or likely to become friable or
PCBs present on any Business Facility currently owned, operated, occupied,
controlled or leased by the Parent or any of its subsidiaries or as a
consequence of the acts of the Parent or any of its subsidiaries or their
agents where the result would be material and adverse.
(d) The Parent and each of its subsidiaries have conducted all
Hazardous Material Activities in compliance in all material respects with
all applicable Environmental Laws. To the knowledge of the Parent, the
Hazardous Materials Activities of the Parent and each of its subsidiaries
have not resulted in the exposure of any person to a Hazardous material in
a manner which has or will result in a material liability to the Parent.
(e) The Parent has all Environmental Permits necessary for the
continued conduct of any Hazardous Material Activity of the Parent and each
of its subsidiaries as such activities are currently being conducted,
except for those permits the absence of which could not reasonably be
expected to result in a material adverse effect on the Parent. All such
Environmental Permits are valid and in full force and effect except where
the result would not be material. The Parent and its subsidiaries have
complied in all material respects with all covenants and conditions of any
Environmental Permit which is or has been in force with respect to its
Hazardous Materials Activities except where the result would not be
materially adverse. To the knowledge of the Parent, no circumstance exists
which could cause any Environmental Permit to be revoked, modified, or
rendered non-renewable upon payment of the permit fee except where the
result would not be materially adverse.
(f) No action, proceeding, revocation proceeding, amendment procedure,
writ, injunction or claim is pending, or to the knowledge of the Parent,
threatened since December 31, 1997, concerning or relating to any
Environmental Permit or any Hazardous Materials Activity of the Parent or
any of its subsidiaries, or to any Business Facility currently owned,
operated, occupied, controlled or leased by the Parent or any of its
subsidiaries, or to the knowledge of the Parent, pending or threatened with
respect to any other Business Facility.
(g) To the knowledge of the Parent, no action, proceeding, liability
or claim exists or is threatened against the Parent or any of its
subsidiaries with respect to any transfer or release of Hazardous Materials
to a Disposal Site which could reasonably be expected to subject the Parent
or any of its subsidiaries to material liability.
(h) The Parent has delivered to Company or made available for
inspection by Parent and its agents and employees all records in the
Company's possession concerning the Hazardous Materials Activities of
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the Company and each of its subsidiaries and all environmental audits and
environmental assessments of any Business Facility conducted at the request
of, or otherwise in the possession of, the Company or any of its
subsidiaries.
SECTION 3.10 Labor Matters. There are no collective bargaining agreements
or other labor union agreements to which Parent or any of its subsidiaries is a
party, or by which it is bound. Parent and each of its subsidiaries is in
compliance with all federal, state and local laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice except where the failure to be
in compliance would not have a material adverse effect on Parent. There is no
unfair labor practice complaint against Parent or any of its subsidiaries
pending or, to the knowledge of Parent, threatened before the National Labor
Relations Board or the United States Department of Labor. There is no labor
strike, dispute, slowdown or stoppage in progress or, to the knowledge of
Parent, threatened against or involving Parent or any of its subsidiaries. To
the Parent's knowledge, there is no overtly threatened organizing or similar
activity relating to the formation of a collective bargaining unit to represent
the Parent's employees. No written agreement restricts Parent or any of its
subsidiaries from relocating, closing or terminating any of its operations or
facilities. Neither Parent nor any of its subsidiaries has, in the past three
years, experienced any labor strike, dispute, slowdown, stoppage or other labor
difficulty.
SECTION 3.11 Absence of Changes in Benefit Plans. Except as disclosed in
the Filed SEC Parent Documents, since the date of the most recent audited
financial statements included in the Filed Parent SEC Documents, there has not
been any adoption or amendment in any material respect by Parent or any of its
subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of Parent (collectively,
"Benefit Plans").
SECTION 3.12 Taxes. Parent has filed all tax returns and reports required
to be filed by it and has paid all taxes required to be paid by it (as shown on
such returns and reports), and the most recent financial statements contained in
the Filed Parent SEC Documents reflect an adequate reserve for all taxes payable
by Parent for all taxable periods and portions thereof through the date of such
financial statements. No material deficiencies for any taxes have been proposed,
asserted or assessed by any taxing authority against Parent, nor is there, to
Parent's knowledge, any reasonable basis for the assertion of any such
deficiency. No requests for waivers of the time to assess any such taxes are
pending. No material special charges, penalties, fines, liens, or similar
encumbrances have been asserted against Parent with respect to payment of or
failure to pay any taxes. Parent has not executed or filed with any taxing
authority any agreements extending the period for assessment or collection of
any taxes. Proper amounts have been withheld by Parent from employee
compensation payments for all periods in compliance with the tax withholding
provisions of applicable federal and state laws. Neither Parent nor Sub has
taken any action that would prevent or that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
SECTION 3.13 Title to Properties. Parent and each of its subsidiaries has
good and marketable title to, or valid leasehold interests in, all its material
properties and assets except for such as are no longer used or useful in the
conduct of its businesses or as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive covenants and
similar encumbrances that individually or in the aggregate would not materially
interfere with the ability of Parent or any of its subsidiaries to conduct its
business as currently conducted. All such material assets and properties, other
than assets and properties in which Parent or any of its subsidiaries has a
leasehold interest, are free and clear of all Liens and except for Liens except
for Liens that (A) are created or arise in the ordinary course of business, (B)
are created, arise or exist under or in connection with any of the contracts or
other matters referred to in the Parent Disclosure Schedule or in the Parent SEC
Documents or the exhibits thereto, (C) relate to any taxes or other governmental
charges or levies that are not yet due and payable, (D) relate to, or are
created, arise or exist in connection with, any legal proceeding that is being
contested in good faith, or (E) individually or in the aggregate would not
materially interfere with the ability of Parent and each of its subsidiaries to
conduct their business as currently conducted ("Parent Permitted Liens"). Parent
and each of its subsidiaries has complied
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in all material respects with the terms of all material leases to which it is a
party and under which they are in occupancy, and all such leases are in full
force and effect, except where the failure to be in compliance or the failure to
be in full force and effect would not have a material adverse effect on Parent.
As of the date of this Agreement, Parent and/or one or more of its subsidiaries
enjoys peaceful and undisturbed possession under all such material leases,
except for failures to do so that would not individually or in the aggregate
have a material adverse effect on Parent.
SECTION 3.14 Intellectual Property. Parent owns, or is validly licensed
or otherwise has the right to use all Parent Intellectual Property Rights which
are material to the conduct of the business of Parent and its subsidiaries taken
as a whole. As of the date of this Agreement, no suits, actions or proceedings
are pending, and no person has overtly threatened in a writing delivered to
Parent since January 1, 1997 to commence any suit, action or proceeding,
alleging that Parent or any of its subsidiaries is infringing the rights of any
person with regard to any Intellectual Property Right, except for suits, actions
or proceedings which, individually or in the aggregate, would not have a
material adverse effect on Parent. To the knowledge of Parent, no person is
infringing the rights of Parent or any of its subsidiaries with respect to any
Intellectual Property Right, except for infringements which individually or in
the aggregate, would not have a material adverse effect on Parent. Neither
Parent nor any of its subsidiaries is licensing, or otherwise granting, to any
third party, any rights in or to any Intellectual Property Rights which would
have a material adverse effect on Parent.
SECTION 3.15 Voting Requirements. No vote of or other action by the
holders of Parent's Common Stock (or securities convertible into Parent's Common
Stock) is necessary in connection with the approval of this Agreement or the
consummation by Parent of the transactions contemplated by this Agreement.
SECTION 3.16 Brokers; Schedule of Fees and Expense. No broker, investment
banker, financial advisor or other person, other than NationsBanc Montgomery
Securities, the fees and expenses of which will be paid by Parent, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent.
SECTION 3.17 Opinion of Financial Advisor. Parent has received the
opinion of NationsBanc Montgomery Securities, dated the date hereof, to the
effect that, as of such date, the consideration paid pursuant to the Merger is
fair to the Parent from a financial point of view. A copy of such opinion has
been provided to the Company for informational purposes only.
SECTION 3.18 Accounting Matters. Parent has not taken or agreed to take
any action that would prevent the business combination to be effected by the
Merger to be accounted for as a pooling of interests.
SECTION 3.19 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
SECTION 3.20 Customers. As of the date of this Agreement, neither Parent
nor any of its subsidiaries has received any written information from any
current material Customer that such Customer will not continue as a customer of
Parent, such subsidiary or the Company after the Closing or that any such
Customer intends to terminate or materially modify any such Customer Contract,
except where the termination or modification of a customer relationship would
not have a material adverse effect on Parent.
SECTION 3.21 Inventory. Parent's inventory is of good and merchantable
quality and are usable and saleable in the ordinary course of the Parent's and
its subsidiaries' businesses, except for items of obsolete materials and
materials of below standard quality, all of which have been written down to
realizable market value or for which adequate reserves have been provided in a
manner consistent with past practice and in light of prior Parent practices.
SECTION 3.22 Product and Service Warranties. Since December 31, 1997, the
Parent has not received any written notice pursuant to which any third party has
made any claims against the Parent or its subsidiaries regarding any product or
service warranties sold or provided by the Parent or its subsidiaries,
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except for (i) claims which have been fully settled and (ii) unresolved claims
that would not have a material adverse effect on the Parent.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
SECTION 4.1 Conduct of Business by the Company. During the period from
the date of this Agreement to the Effective Time, the Company shall carry on its
businesses in the ordinary course consistent with the manner as heretofore
conducted and, to the extent consistent therewith, use reasonable efforts to
preserve intact its current business organization, keep available the services
of its current officers and employees and preserve its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with it. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time, the
Company shall not:
(a)(i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (ii) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (iii) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(b) amend its Articles of Organization, Bylaws or other comparable
charter or organizational documents;
(c) acquire or agree to acquire (i) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (ii) any
assets which, in the aggregate, are in excess of $500,000, except as set
forth in Section 4.1 of the Company Disclosure Schedule and except for
purchases of inventory in the ordinary course of business consistent with
past practice;
(d) take any action that would, or that could reasonably be expected
to, result in (i) any of its representations and warranties set forth in
this Agreement that are qualified as to materiality becoming untrue, (ii)
any of such representations and warranties that are not so qualified
becoming untrue in any material respect or (iii) any of the conditions to
the Merger set forth in Article VI not being satisfied.
(e) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the sale of
shares of Company Common Stock to employees under the Company's Employee
Stock Purchase Plan in a manner consistent with past practice and the
issuance of shares of Company Common Stock upon the exercise of Stock
Options outstanding on the date of this Agreement and in accordance with
their present terms);
(f) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any material portion of its properties or
assets, except sales in the ordinary course of business consistent with
past practice and sales of assets in connection with the upgrading of
equipment;
(g)(i) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company,
guarantee any debt securities of another person, enter into any "keep well"
or other agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any of
the foregoing, except for short-term borrowings incurred in the ordinary
course of business consistent with past practice or (ii) make any loans,
advances or capital contributions to, or investments in, any other person,
other than advances to employees in the ordinary course in accordance with
past practice;
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(h) except for the items listed on Schedule 4.1(h) to the Company
Disclosure Schedule, make or agree to make any new capital expenditure or
expenditures which, in the aggregate, are in excess of $1,000,000;
(i) make any material payments outside the ordinary course of business
for the purposes of settling any dispute;
(j) except as required to comply with applicable law or as set forth
in the Employee Matters Disclosure, (i) adopt, enter into, terminate or
amend any Benefit Plan or other arrangement for the benefit or welfare of
any director, officer or current or former employee, (ii) increase in any
manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee (except for normal increases of cash
compensation or cash bonuses in the ordinary course of business consistent
with past practice), (iii) pay any benefit not provided for under any
Benefit Plan, (iv) except as permitted in clause (ii), grant any awards
under any bonus, incentive, performance or other compensation plan or
arrangement or Benefit Plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units
or restricted stock or the removal of existing restrictions in any Benefit
Plans or agreements or awards made thereunder) or (v) take any action to
fund or in any other way secure the payment of compensation or benefits
under any employee plan, agreement, contract or arrangement or Benefit
Plan;
(k) form any subsidiary to the Company; or
(l) authorize any of, or commit or agree to take any of, the foregoing
actions.
SECTION 4.2 Conduct of Business by Parent. During the period from the
date of this Agreement to the Effective Time, Parent shall carry on its
businesses in the ordinary course consistent with the manner as heretofore
conducted and, to the extent consistent therewith, use reasonable efforts to
preserve intact its current business organization, keep available the services
of its current officers and employees and preserve its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with it. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time, Parent
shall not:
(a)(i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (ii) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (iii) except as set forth in Section 4.2 of
the Parent/Sub Disclosure Schedule, purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(b) amend its Restated Certificate of Incorporation, Bylaws or other
comparable charter or organizational documents; or
(c) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof, except that
this Section 4.2(c) shall not prohibit Parent from effecting an acquisition
of any other business if (A) such acquisition would not materially affect
the ability of Parent to, or materially delay Parent's ability to, complete
the transactions contemplated by this Agreement, and (B) such acquisition
would involve the issuance by Parent of equity securities and, when
considered together with all other acquisitions effected by Parent during
the period between the date hereof and the Effective Time, would not
involve the issuance of more than 2,000,000 shares of Parent's capital
stock or securities convertible into or exercisable for more than 2,000,000
shares of Parent's capital stock;
(d) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than pursuant to
stock option plans, employee stock purchase plans and convertible
indebtedness in effect as of the date of this Agreement, or pursuant to
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acquisitions of businesses involving the issuance by Parent of less than
2,000,000 shares in the aggregate for all such acquisitions);
(e) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any substantial part of its (or any of its
subsidiaries') material properties, assets or business, except sales made
in the ordinary course of business and except for subjecting any of its
properties to Parent Permitted Liens;
(f) make any material payments outside the ordinary course of business
for purposes of settling any dispute;
(g) allow Parent or any of its subsidiaries, or any significant
portion of their respective businesses or assets, to be acquired (by
merger, tender offer, purchase or otherwise); or
(h) authorize any of, or commit or agree to take any of, the foregoing
actions.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of Registration Statement and Proxy Statement. As
soon as practicable following the date of this Agreement, the Company and Parent
shall prepare and the Company shall file with the SEC the Proxy Statement and
Parent shall prepare and file with the SEC the Form S-4, in which the Proxy
Statement will be included as a prospectus. Each of the Company and Parent shall
use all reasonable efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. To the extent
consistent with applicable law, the Company will use its reasonable efforts to
cause the Proxy Statement to be mailed to the Company's shareholders as promptly
as practicable after the Form S-4 is declared effective under the Securities
Act. Parent shall also take any action (other than qualifying to do business in
any jurisdiction in which it is not now so qualified) required to be taken under
any applicable state securities laws in connection with the issuance of Parent
Common Stock in the Merger and under the Stock Option Plans. Each of Parent and
the Company shall furnish all information concerning itself to the other as may
be reasonably requested in connection with any such action and the preparation,
filing and distribution of the Proxy Statement. Each of Parent and the Company
will provide the other with copies of SEC correspondence, including comment
letters, relating to the Form S-4 and Proxy Statement and will allow the other a
reasonable opportunity to review and comment upon the form and substance of such
documents prior to filing with the SEC. Parent and Company will each use best
efforts to cause the preliminary Proxy Statement to be filed with the SEC by the
close of business on September 11, 1998. Parent and Company will each use best
efforts to respond to SEC comments on the preliminary Proxy Statement within
three business days following receipt of such comments. Parent and Company will
each use best efforts to cause their respective HSR Act premerger notifications
to be filed with the United States Department of Justice and the United States
Federal Trade Commission by the close of business on September 15, 1998.
SECTION 5.2 Shareholders Meeting. The Company will, as soon as
practicable following the date of this Agreement, establish a record date (which
will be as soon as practicable following the date of this Agreement) for, duly
call, give notice of, convene and hold a meeting of its shareholders (the
"Shareholders Meeting") for the purpose of approving and adopting this
Agreement. The Company will, through its Board of Directors, recommend to its
shareholders approval and adoption of this Agreement. Without limiting the
generality of the foregoing, the Company agrees that its obligations pursuant to
the first sentence of this Section 5.2 shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company
of any takeover proposal.
SECTION 5.3 Access to Information; Confidentiality. The Company shall
afford to Parent, and to Parent's officers, employees, accountants, counsel,
financial advisors and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time or the termination
of this Agreement to all its properties, books, contracts, commitments,
personnel and records and, during such period, the Company shall furnish
promptly to Parent (a) a copy of each report, schedule, registration statement
and
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other document filed by it during such period pursuant to the requirements of
Federal or state securities laws and (b) all other information concerning its
business, properties and personnel as Parent may reasonably request; provided,
however, that (i) Parent shall not contact, and Parent shall ensure that none of
its officers, employees, accountants, counsel, financial advisors or other
representatives contacts, any employee of the Company or any of its subsidiaries
without the prior authorization of the Company's Chief Executive Officer,
Executive Vice President or Chief Financial Officer, and (ii) Parent shall take
all reasonable action to ensure that none of its employees, accountants,
counsel, financial advisors or other representatives interferes with or
otherwise disrupts the business or operations of the Company while exercising
the rights provided under this Section 5.3. Parent shall afford to the Company,
and to the Company's officers, employees, accountants, counsel, financial
advisors and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time or the termination of this
Agreement to all its properties, books, contracts, commitments, personnel and
records and, during such period, Parent shall furnish promptly to the Company
(a) a copy of each report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements of Federal or state
securities laws and (b) all other information concerning its business,
properties and personnel as the Company may reasonably request; provided,
however, that (i) the Company shall not contact, and the Company shall ensure
that none of its officers, employees, accountants, counsel, financial advisors
or other representatives contacts, any employee of Parent or any of its
subsidiaries without the prior authorization of Parent's Chief Executive
Officer, Chief Operating Officer or Chief Financial Officer, and (ii) the
Company shall take all reasonable action to ensure that none of its employees,
accountants, counsel, financial advisors or other representatives interferes
with or otherwise disrupts the business or operations of Parent while exercising
the rights provided under this Section 5.3. Parent and Company will each hold,
and will cause their respective officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold, any and all
information received from the other party, directly or indirectly, in
confidence, in accordance with the Mutual Confidentiality Agreement dated as of
August 25, 1998.
SECTION 5.4 No Solicitation.
(a) The Company shall not, nor shall it authorize or permit any of its
officers, directors or employees or any investment banker, attorney or
other advisor or representative retained by it to, directly or indirectly,
(i) solicit, initiate or knowingly encourage the submission of any Takeover
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person (other than Parent) any
information with respect to, or take any other action intended to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal; provided,
however (and notwithstanding anything in this Agreement), that if, at any
time prior to receipt of the Shareholder Approval the Board of Directors of
the Company determines in good faith, after consultation with outside
counsel, that failure to do so would be inconsistent with, or create a
substantial risk of liability for breach of, its fiduciary duties to the
Company's shareholders under applicable law, the Company may, in response
to a Takeover Proposal that was unsolicited or that did not otherwise
result from a breach of this Section 5.4, and subject to compliance with
Section 5.4(c), (x) furnish information with respect to the Company to any
person pursuant to a customary and reasonable confidentiality agreement and
(y) participate in negotiations regarding such Takeover Proposal. Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any officer, director
or employee of the Company or any investment banker, attorney or other
advisor or representative of the Company, acting on behalf of the Company,
shall be deemed to be a breach of this Section 5.4 by the Company. For
purposes of this Agreement, "Takeover Proposal" means any proposal or offer
from any person (other than Parent) relating to any direct or indirect
acquisition or purchase of all or a substantial amount of assets of the
Company (other than products of the Company) or more than a 25% interest in
the total voting securities of the Company or any tender offer or exchange
offer that if consummated would result in any person beneficially owning
25% or more of any class of equity securities of the Company or any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving
the Company, other than the transactions contemplated by this Agreement or
the Shareholder Agreement.
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(b) Except as expressly permitted by this Section 5.4, neither the
Board of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse
to Parent or Sub, the approval or recommendation by such Board of Directors
or any such committee of this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal or
(iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (an
"Acquisition Agreement") with respect to any Takeover Proposal.
Notwithstanding the foregoing, prior to receipt of the Shareholder
Approval, the Board of Directors of the Company, to the extent it
determines in good faith, after consultation with outside counsel, that
failure to do so would be inconsistent with, or create a substantial risk
of liability for breach of its fiduciary duties to the Company's
shareholders under applicable law, may withdraw or modify its approval or
recommendation of this Agreement or the Merger or approve or recommend any
Superior Proposal (as hereinafter defined), in each case at any time after
the third business day following Parent's receipt of written notice (a
"Notice of Superior Proposal") advising Parent that the Board of Directors
of the Company has received a Superior Proposal, specifying the material
terms and conditions of the Superior Proposal and identifying the person
making such Superior Proposal (it being understood that any amendment to
the price or material terms of a Superior Proposal shall require an
additional Notice of Superior Proposal and an additional three business day
period thereafter to the extent permitted under applicable law). In
addition, prior to receipt of Shareholder Approval, the Board of Directors
of the Company, to the extent it determines in good faith, after
consultation with outside counsel, that failure to do so would be
inconsistent with, or create a substantial risk of liability for breach of
its fiduciary duties to the Company's shareholders under applicable law,
may cause the Company to terminate this Agreement in accordance with
Section 7.01(b)(iv) (and concurrently with or after such termination, if it
so chooses, cause the Company to enter into an Acquisition Agreement with
respect to a Superior Proposal). For purposes of this Agreement, a
"Superior Proposal" means any bona fide proposal made by a third party to
acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of the voting power of the Company Common
Stock or all or substantially all the assets of the Company and otherwise
on terms which the Board of Directors of the Company determines in its good
faith judgment (after consultation with a financial advisor of nationally
recognized reputation) to be more favorable to the Company's shareholders
than the Merger and for which financing, to the extent required, is then
committed or which, in the good faith judgment of the Board of Directors of
the Company, is capable of being obtained by such third party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.4, the Company promptly shall
advise Parent orally and in writing of any request for nonpublic
information which the Company reasonably believes could lead to a Takeover
Proposal or of any Takeover Proposal, or any inquiry with respect to or
which the Company reasonably believes could lead to any Takeover Proposal,
and the material terms and conditions of such request, Takeover Proposal or
inquiry. The Company will keep Parent informed in all material respects of
the status and details (including amendments or proposed amendments) of any
such Takeover Proposal or inquiry unless the Company's Board of Directors,
determines in good faith, after consultation with outside counsel, that
failure to do so would be inconsistent with, or create a substantial risk
of liability for breach of its fiduciary duties to the Company's
shareholders under applicable law.
(d) Nothing contained in this Section 5.4 or elsewhere in this
Agreement shall prohibit the Company from (i) taking and disclosing to its
shareholders a position contemplated by Rule 14d-9 and 14e-2(a) promulgated
under the Exchange Act or (ii) making any disclosure to the Company's
shareholders if, in the good faith judgment of the Board of Directors of
the Company, after consultation with independent counsel, failure to so
disclose would be inconsistent with applicable law or create a substantial
risk of liability for breach of its fiduciary duties to the Company's
shareholders under applicable law; provided that the Company shall not,
except in accordance with the provisions of Section 5.4(b), withdraw or
modify, or propose to withdraw or modify, its recommendation of the Merger
or approve or recommend, or propose to approve or recommend, a Takeover
Proposal.
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SECTION 5.5 Fees and Expenses. All fees and expenses incurred in
connection with the Merger, this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated, except that expenses incurred in
connection with printing and mailing the Proxy Statement and the Form S-4 shall
be shared equally by Parent and the Company.
SECTION 5.6 Certain Fees.
(a) In the event that this Agreement is terminated by any party hereto
pursuant to Section 7.1(b)(iv), the Company shall promptly, but in no event
later than two days after the date of such termination, pay Parent a fee
equal to $6.0 million in cash in immediately available funds (the
"Termination Fee"). If, at the time of any termination of this Agreement by
any party hereto pursuant to Section 7.1(b)(i) (to the extent the Company
has theretofore failed to hold the Shareholders Meeting in breach of its
obligations under Section 5.2), 7.1(b)(iii) or 7.1(c), a Takeover Proposal
shall have been publicly announced and not publicly withdrawn and prior to
the date 12 months following the date of the termination of this Agreement
the Company shall either (x) consummate a Company Acquisition (as
hereinafter defined) or (y) enter into a written Acquisition Agreement
providing for a Company Acquisition, then the Company shall pay the
Termination Fee in the case of clause (x) concurrently with the
consummation of such Company Acquisition or in the case of clause (y)
concurrently with the consummation of the transaction subject to such
Acquisition Agreement (whether or not such transaction is consummated prior
to the date 12 months following the date of the termination of this
Agreement, but only in the event that such transaction subject to such
Acquisition Agreement is in fact consummated). The Company acknowledges
that the agreements contained in this Section 5.6(a) are an integral part
of the transactions contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement; accordingly, if the
Company fails promptly to pay the amounts due pursuant to this Section
5.6(a), and, in order to obtain such payment, Parent commences a suit which
results in a judgment against the Company for the amounts set forth in this
Section 5.6(a), the Company shall pay to Parent its reasonable costs and
expenses (including attorneys' fees and expenses) in connection with such
suit, together with interest on the amounts set forth in this Section
5.6(a) at the prime rate of Bank of America N.T. & S.A. in effect on the
date such payment was required to be made. "Company Acquisition" shall mean
any transaction or series of related transactions involving (a) a merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which
the shareholders of the Company immediately preceding such transaction or
series of related transactions hold less than 60% of the equity interests
in the surviving or resulting entity of such transaction or transactions
(other than the transactions contemplated by this Agreement); (b) a sale by
the Company of assets (excluding inventory and used equipment sold in the
ordinary course of business) representing in excess of 40% of the fair
market value of the Company's business immediately prior to such sale; or
(c) the acquisition by any person or group (including without limitation by
way of a tender offer or an exchange offer or issuance by the Company),
directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of 40% or more of the then outstanding shares of
capital stock of the Company.
(b) In the event that the Closing of the Merger does not occur due to
the willful and intentional acts of Parent which are in contravention of
this Agreement, the Parent will promptly, but in no event later than two
days after the date of termination of this Agreement, pay Company a fee
equal to $6.0 million in cash in immediately available funds (the "Parent
Fee"). The Parent acknowledges that the agreements contained in this
Section 5.6(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, the Company would not
enter into this Agreement; accordingly, if the Parent fails promptly to pay
the amounts due pursuant to this Section 5.6(b), and, in order to obtain
such payment, Company commences a suit which results in a judgment against
the Parent for the amounts set forth in this Section 5.6(b), the Parent
shall pay to Company its reasonable costs and expenses (including
attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in this Section 5.6(b) at the prime rate
of Bank of America N.T. & S.A. in effect on the date such payment was
required to be made.
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(c) All fees paid by either the Company or Parent pursuant to this
Section 5.6 shall constitute liquidated damages.
SECTION 5.7 Public Announcements. Parent and Sub, on the one hand, and
the Company, on the other hand, will consult with each other before issuing, and
give each other the opportunity to review and comment upon, any press release or
other public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or national securities
quotation system. The parties agree that the initial press release to be issued
with respect to the transactions contemplated by this Agreement shall be in the
form theretofore agreed to by the parties.
SECTION 5.8 Letters of the Company's Accountants.
(a) The Company shall use its reasonable efforts to cause to be
delivered to Parent two letters from Arthur Andersen LLP, the Company's
independent public accountants, one dated a date within two business days
before the date on which the Form S-4 shall become effective and one dated
a date within two business days before the Closing Date, each addressed to
Parent, in form and substance customary for transactions effected pursuant
to a registration statement on Form S-4.
(b) The Company shall use its reasonable efforts to cause to be
delivered to Parent two letters from Arthur Andersen LLP, addressed to
Parent and the Company, one dated as of the date hereof and one dated as of
the Closing Date, stating that the Merger meets the applicable criteria to
qualify as a pooling of interests transaction under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations (as
such criteria relate to the Company and not Parent). Such letters shall be
subject to customary qualifications and assumptions.
SECTION 5.9 Letters of Parent's Accountants.
(a) Parent shall use reasonable efforts to cause to be delivered to
the Company two letters from Arthur Andersen LLP, Parent's independent
public accountants, one dated a date within two business days before the
date on which the Form S-4 shall become effective and one dated a date
within two business days before the Closing Date, each addressed to the
Company, in form and substance customary for transactions effected pursuant
to a registration statement on Form S-4.
(b) Parent shall use its reasonable efforts to cause to be delivered
to the Company two letters from Arthur Andersen LLP, addressed to the
Company and Parent, one dated as of the date hereof and one dated as of the
Closing Date, stating that the Merger meets the applicable criteria to
qualify as a pooling of interests transaction under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations (as
such criteria relate to Parent and not to the Company). Such letters shall
be subject to customary qualifications and assumptions.
SECTION 5.10 Affiliates.
(a) Prior to the Closing Date, the Company shall deliver to Parent a
letter identifying all persons who are, at the time this Agreement is
submitted for approval to the shareholders of the Company, affiliates of
the Company for purposes of Rule 145 under the Securities Act or for
purposes of qualifying the Merger for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations. The Company shall use its reasonable
efforts to cause each such person to deliver to Parent on or prior to the
Closing Date a written agreement substantially in the form attached hereto
as Exhibit B (the "Company Affiliate Agreement").
(b) Prior to the Closing Date, Parent shall deliver to the Company a
letter identifying all persons who are, at the time this Agreement is
submitted for approval to the shareholders of the Company, affiliates of
Parent for purposes of qualifying the Merger for pooling of interests
accounting treatment under Opinion 16 of the Accounting Principles Board
and applicable SEC rules and regulations. Parent shall use its reasonable
efforts to cause each such person to deliver to the Company on or prior to
the
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Closing Date a written agreement substantially in the form attached hereto
as Exhibit C (the "Parent Affiliate Agreement").
SECTION 5.11 Pooling of Interests. Each of the Company and Parent will
use reasonable efforts to cause the transactions contemplated by this Agreement,
including the Merger, to be accounted for as a pooling of interests under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations, and such accounting treatment to be accepted by each of the
Company's and Parent's independent public accountants, and by the SEC,
respectively, and each of the Company and Parent agrees that it will voluntarily
take no action that would cause such accounting treatment not to be obtained.
SECTION 5.12 Tax Treatment. Each of Parent and the Company shall not take
any action and shall not fail to take any action which action or failure to act
would prevent, or would be reasonably likely to prevent, the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code,
and each shall use reasonable efforts to obtain the opinions of counsel referred
to in Sections 6.2(d) and 6.3(d), respectively.
SECTION 5.13 FIRPTA. The Company shall deliver to the Internal Revenue
Service a notice that the Company Common Stock is not a "U.S. Real Property
Interest" as defined in and in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2).
SECTION 5.14 Stock Options.
(a) As soon as practicable following the date of this Agreement, the
Board of Directors of the Company (or, if appropriate, any committee
administering the Stock Option Plans) shall adopt such resolutions or take
such other actions as may be required to effect the following with respect
to all options not exercised prior to the Closing Date:
(i) adjust the terms of all Stock Options granted under the Stock
Option Plans, to provide that, at the Effective Time, each Stock Option
outstanding immediately prior to the Effective Time shall be deemed to
constitute an option to acquire, on substantially the same terms and
conditions (including the continuation of vesting without interruption)
as were applicable under such Stock Option, the same number of shares of
Parent Common Stock as the holder of such Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised
such Stock Option in full immediately prior to the Effective Time, at a
price per share equal to (y) the aggregate exercise price for the shares
of Company Common Stock otherwise purchasable pursuant to such Stock
Option divided by (z) the number of shares of Parent Common Stock deemed
purchasable pursuant to such Stock Option; provided, however, that (A)
no certificate or scrip representing fractional shares of Parent Common
Stock shall be issued upon the exercise of any Stock Option as adjusted
pursuant to this Section 5.14, (B) any such fractional share will not
entitle the owner thereof to vote or to any rights of a stockholder of
Parent and (C) each holder of any Stock Option who would otherwise have
been entitled to receive a fraction of a share of Parent Common Stock
(after taking into account all such holder's Stock Options adjusted
pursuant to this Section 5.14) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share
of Parent Common Stock multiplied by the closing price of Parent Common
Stock on the Nasdaq Stock Market National Market (as reported by The
Wall Street Journal or, if not reported thereby, any other authoritative
source) on the full trading date immediately preceding the date such
Stock Options are exercised; provided further that in the case of any
option to which Section 421 of the Code applies by reason of its
qualification under any of Section 422 of the Code ("qualified stock
options"), the option price, the number of shares purchasable pursuant
to such option and the terms and conditions of exercise of such option
shall be determined in order to comply with Section 424(a) of the Code;
and
(ii) make such other changes to the Stock Option Plans as it deems
appropriate to give effect to the Merger (subject to the approval of
Parent, which shall not be unreasonably withheld).
(b) All Stock Option Plans shall terminate as of the Effective Time
and the provisions in any other Benefit Plan providing for the issuance,
transfer or grant of any capital stock of the Company or any
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interest in respect of any capital stock of the Company shall be deleted as
of the Effective Time, and the Company shall ensure that following the
Effective Time no holder of a Stock Option or any participant in any Stock
Option Plan shall have any right thereunder to acquire any capital stock of
the Company, Parent or the Surviving Corporation, except as provided in
Section 5.14(a).
(c) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Stock Options appropriate notices setting forth
such holders' rights pursuant to the respective Stock Option Plans and the
agreements evidencing the grants of such Stock Options shall continue in
effect on the same terms and conditions (including the continuation of
vesting without interruption, and subject to any acceleration of vesting
and other adjustments required by this Section 5.14 after giving effect to
the Merger). Except as otherwise provided in this Section 5.14, Parent
shall comply with the terms of the Stock Option Plans and shall ensure, to
the extent required by, and subject to the provisions of such Stock Option
Plans, that the Stock Options which qualified as incentive stock options
prior to the Effective Time continue to qualify as incentive stock options
after the Effective Time.
(d) Parent agrees to use best efforts to take such actions as are
necessary for the conversion of the Stock Options of the Company in
accordance with this Section 5.14, including (i) the reservation, issuance
and listing of Parent Common stock as is necessary to effectuate the
transactions contemplated by Section 5.14(a), (ii) entering into such
agreements as are necessary to assume such Stock Options and (iii) the
filing of a registration statement on Form S-8, if necessary, to facilitate
the public sale of stock issuable upon the exercise of such Stock Options.
(e) A holder of a Stock Option adjusted in accordance with this
Section 5.14 may exercise such adjusted Stock Option in whole or in part in
accordance with its terms by delivering a properly executed notice of
exercise to Parent, together with the consideration therefor and the
Federal withholding tax information, if any, required in accordance with
the related Stock Option Plan.
SECTION 5.15 NMS Listing. Parent shall use its reasonable efforts to
cause the shares of Parent Common Stock to be issued in the Merger and under the
Stock Option Plans to be approved for listing on the Nasdaq Stock Market
National Market, subject to official notice of issuance, prior to the Closing
Date.
SECTION 5.16 Indemnification and Insurance.
(a) From and after the Effective Time, Parent will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of the
Company pursuant to (i) each indemnification agreement currently in effect
between the Company and each person who is or was a director or officer of
the Company at or prior to the Effective Time and (ii) any indemnification
provision under the Company's Restated Articles of Organization or By-Laws
as each is in effect on the date hereof (the persons to be indemnified
pursuant to the agreements or provisions referred to in clauses (i) and
(ii) of this Section 5.16(a) shall be referred to as, collectively, the
"Indemnified Parties"). The Articles of Organization and By-Laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in the Company's
Articles of Organization and By-Laws on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a
period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of any Indemnified Party.
(b) Without limiting the provisions of Section 5.16(a), during the
period ending six years after the Effective Time, Parent will indemnify and
hold harmless each Indemnified Party against and from any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, to the extent such claim, action, suit,
proceeding or investigation arises out of or pertains to (1) any action or
omission or alleged action or omission in his or her capacity as a director
or officer of the Company or any of its subsidiaries (regardless of whether
such action or omission, or alleged action or omission, occurred prior to,
on or after the Closing Date) or (2) any of the transactions contemplated
by this Agreement; provided, however, that if, at any time prior to the
sixth anniversary of the Effective Time, any Indemnified Party delivers to
Parent
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a written notice asserting a claim for indemnification under this Section
5.16(b), then the claim asserted in such notice shall survive the sixth
anniversary of the Effective Time until such time as such claim is fully
and finally resolved. In the event of any such claim, action, suit,
proceeding or investigation, (i) Parent will have the right to control the
defense thereof after the Effective Time (it being understood that, by
electing to control the defense thereof, Parent will be deemed to have
waived any right to object to the Indemnified Parties' entitlement to
indemnification hereunder with respect thereto), (ii) any counsel retained
by the Indemnified Parties with respect to the defense thereof for any
period after the Effective Time must be reasonably satisfactory to Parent,
and (iii) after the Effective Time, Parent will pay the reasonable fees and
expenses of such counsel, promptly after statements therefor are received
(provided that in the event that any Indemnified Party is not entitled to
indemnification hereunder, any amounts advanced on his or her behalf shall
be remitted to the Surviving Corporation); provided, however, that neither
Parent nor the Surviving Corporation nor any Indemnified Party, will be
liable for any settlement effected without its express written consent. The
Indemnified Parties as a group may retain only one law firm (in addition to
local counsel) to represent them with respect to any single action unless
counsel for any Indemnified Party determines in good faith that, under
applicable standards of professional conduct, a conflict exists or is
reasonably likely to arise on any material issue between the positions of
any two or more Indemnified Parties. Notwithstanding anything to the
contrary contained in this Section 5.16(b) or elsewhere in this Agreement,
Parent agrees that it will not settle or compromise or consent to the entry
of any judgment or otherwise seek termination with respect to any claim,
action, suit, proceeding or investigation for which indemnification may be
sought under this Agreement unless such settlement, compromise, consent or
termination includes an unconditional release of all Indemnified Parties
from all liability arising out of such claim, action, suit, proceeding or
investigation.
(c) For six years after the Effective Time, Parent shall maintain in
effect the current level and scope of directors' and officers' liability
insurance covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy (a copy of which has
been heretofore delivered to Parent); provided, however, that in no event
shall Parent be required to expend in any one year an amount in excess of
150% of the annual premium currently paid by the Company for such
insurance, and provided, further, that if the annual premiums of such
insurance coverage exceed such amount, Parent shall be obligated to obtain
a policy with the greatest coverage available for a cost not exceeding such
amount.
(d) Parent and the Surviving Corporation jointly and severally agree
to pay all expenses, including attorneys' fees, that may be incurred by the
Indemnified Parties in enforcing the indemnity and other obligations
provided for in this Section 5.16.
(e) This Section 5.16 shall survive the consummation of the Merger and
the Effective Time, is intended to benefit and may be enforced by the
Company, Parent, the Surviving Corporation and the Indemnified Parties, and
shall be binding on all successors and assigns of Parent and the Surviving
Corporation.
SECTION 5.17 Stop Transfer. The Company shall not register the transfer
of any Certificate representing any Subject Shares (as defined in the
Shareholder Agreement), unless such transfer is made to Parent or Sub or
otherwise in compliance with the Shareholder Agreement. The Company will
inscribe upon any Certificate representing Subject Shares tendered by a
Shareholder (as defined in the Shareholder Agreement) for such purpose the
following legend: "THE SHARES OF COMMON STOCK, PAR VALUE $.05 PER SHARE, OF THE
COMPANY REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDER AGREEMENT
DATED AS OF SEPTEMBER 2, 1998, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED,
EXCEPT IN ACCORDANCE THEREWITH. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE
PRINCIPAL EXECUTIVE OFFICES OF COMPANY."
SECTION 5.18 Non-Competition Agreements. At the Effective Time, the
Company and each of the Company's Chairman and President and the Company's
Executive Vice President shall have executed a Non-Competition Agreement in the
form attached hereto as Exhibit D. Such Non-Competition Agreement shall
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restrict the Company's Chairman and President and the Company's Executive Vice
President from engaging in a business that is competitive with the current
business of the Company or of any of its subsidiaries for a 60-month term after
the Effective Time.
SECTION 5.19 Certain Tax Matters. From the date hereof until the
Effective Time, (i) the Company will file all tax returns and reports
("Post-Signing Returns") required to be filed by it; (ii) the Company will
timely pay all taxes due and payable with respect to such Post-Signing Returns
that are so filed; (iii) the Company will make provision for all taxes payable
by the Company for which no Post-Signing Return is due prior to the Effective
Time; (iv) the Company will promptly notify Parent of any action, suit,
proceeding, claim or audit (collectively, "Actions") pending against or with
respect to the Company in respect of any tax where there is a reasonable
possibility of a determination or decision which would have a material adverse
effect on the Company's tax liabilities or tax attributes and will not settle or
compromise any such Action without Parent's consent; and (v) the Company will
not make any material tax election.
SECTION 5.20 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities, if any) and the
taking of all reasonable steps as may be necessary to avoid an action or
proceeding by any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of
any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Entity vacated or reversed and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement,
except that the Company's need not take action if the Company's Board of
Directors determines, in consultation with outside counsel, that to do so
would be inconsistent with its fiduciary duties. In connection with and
without limiting the foregoing, the Company and its Board of Directors
shall, if any state takeover statute or similar statute or regulation is or
becomes applicable to the Merger, this Agreement, the Shareholder Agreement
or any other transactions contemplated by this Agreement or the Shareholder
Agreement, use all reasonable efforts to ensure that the Merger and the
other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the term contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the
Merger, this Agreement, the Shareholder Agreement and the other
transactions contemplated by this Agreement or the Shareholder Agreement.
Nothing in this Agreement shall be deemed to require Parent to dispose of
any significant asset or collection of assets.
(b) The Company shall give prompt notice to Parent of (i) any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate such that the condition to closing set forth in
Section 6.3(a) is not met or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement such that the
condition to closing set forth in Section 6.3(b) is not met; provided,
however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
(c) The Parent shall give prompt notice to Company of (i) any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate such that the condition to closing set forth in
Section 6.3(a) is not met or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement such that the
condition to closing set forth in Section 6.2(b) is not met; provided,
however, that no such notification
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shall affect the representations, warranties, covenants or agreements of
the parties or the conditions to the obligations of the parties under this
Agreement.
SECTION 5.21 Parent Benefit Plans. Parent shall ensure that all employees
of the Company and all employees of each of the Company's subsidiaries are
allowed and are eligible to participate in Parent's employee benefit plans after
the Effective Time, to the same extent as if they were employees of Parent.
Without limiting the generality of the foregoing, (i) to the extent that any
employee of the Company or any of the Company's subsidiaries becomes eligible to
participate in any employee benefit plan of Parent after the Effective Time,
Parent, the Surviving Corporation and their subsidiaries shall credit such
employee's service with the Company or its subsidiaries, to the same extent as
such service was credited under the similar employee benefit plans of the
Company and its subsidiaries immediately prior to the Effective Time, for
purposes of determining eligibility to participate in and vesting under, and for
purposes of calculating the benefits under, such employee benefit plan of
Parent, and (ii) to the extent permitted by such employee benefit plan of Parent
and applicable law, Parent, the Surviving Corporation and its subsidiaries shall
waive any pre-existing condition limitations, waiting periods or similar
limitations under such employee benefit plan of Parent and shall provide each
such employee with credit for any co-payments previously made and any
deductibles previously satisfied.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
SECTION 6.1 Conditions to Obligations of Each Party to Effect the
Merger. The respective obligation of each party to effect the merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock.
(b) National Market Listing. The shares of Parent Company Stock
issuable to the Company's shareholders pursuant to this Agreement and under
the Stock Option Plans shall have been approved for listing on the Nasdaq
Stock Market National Market, subject to official notice of issuance.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect.
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(f) Pooling Letters. Parent and the Company shall have received
letters from Arthur Andersen LLP, dated as of the Closing Date, addressed
to Parent and the Company, stating in substance that the Merger will
qualify as a pooling of interests transaction under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations.
SECTION 6.2 Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement that are qualified
as to materiality shall be true and correct, and the representations and
warranties of Parent and Sub set forth in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except as otherwise contemplated by this
Agreement.
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(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing Date.
(c) Tax Opinion. The opinion of Hutchins, Wheeler & Dittmar, A
Professional Corporation, counsel to the Company, in customary form and
subject to customary assumptions and qualifications, dated on the date that
is two business days prior to the Proxy Statement is first mailed to
shareholders of the Company, shall not have been withdrawn or modified in
any material respect. In rendering such opinion, such firm may rely on such
representations, warranties and certificates as it deems reasonable or
appropriate under the circumstances.
(d) No Material Adverse Change. At any time on or after the date of
this Agreement, there shall not have occurred any material adverse change
in the business, properties, assets, liabilities (contingent or otherwise),
financial condition or results of operations of Parent (or, if one shall
have occurred, it shall have been cured). Notwithstanding the foregoing
sentence, any changes in the business of the Parent resulting from the
announcement or pendency of the Merger shall not constitute a material
adverse change.
(e) No Litigation. There shall not be pending or threatened any suit,
action or proceeding by any Governmental Entity, (i) challenging the
acquisition by Parent or Sub of any shares of Company Common Stock, seeking
to restrain or prohibit the consummation of the Merger, seeking to place
limitations on the ownership of shares of Company Common Stock (or shares
of common stock of the Surviving Corporation) by Parent or Sub or seeking
to obtain from the Company, Parent or Sub any damages that are material in
relation to the Company, (ii) seeking to prohibit or limit the ownership or
operation by the Company, Parent or any of Parent's subsidiaries of any
material portion of any business or of any assets of the Company, Parent or
any of Parent's subsidiaries, or to compel the Company, Parent or any of
Parent's subsidiaries to dispose of or hold separate any material portion
of any business or of any assets of the Company, Parent or any of Parent's
subsidiaries, an a result of the Merger or (iii) seeking to prohibit Parent
or any of its subsidiaries from effectively controlling in any material
respect the business or operations of the Company.
SECTION 6.3 Additional Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement that are qualified as
to materiality shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except as otherwise contemplated by this
Agreement.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date.
(c) Letters from Company Affiliates. Parent shall have received from
each person named in the letter referred to in Section 5.10(a) an executed
copy of an agreement substantially in the form of Exhibit B hereto.
(d) Tax Opinion. The opinion of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, counsel to Parent, in customary form and subject
to customary assumptions and qualifications, dated on the date that is two
business days prior to the Proxy Statement is first mailed to shareholders
of the Company, shall not have been withdrawn or modified in any material
respect. In rendering such opinion, such firm may rely on such
representations, warranties and certificates as it deems reasonable or
appropriate under the circumstances.
(e) No Litigation. There shall not be pending or threatened any suit,
action or proceeding by any Governmental Entity, (i) challenging the
acquisition by Parent or Sub of any shares of Company Common Stock, seeking
to restrain or prohibit the consummation of the Merger, seeking to place
limitations on the ownership of shares of Company Common Stock (or shares
of common stock of the
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Surviving Corporation) by Parent or Sub or seeking to obtain from the
Company, Parent or Sub any damages that are material in relation to the
Company, (ii) seeking to prohibit or limit the ownership or operation by
the Company, Parent or any of Parent's subsidiaries of any material portion
of any business or of any assets of the Company, Parent or any of Parent's
subsidiaries, or to compel the Company, Parent or any of Parent's
subsidiaries to dispose of or hold separate any material portion of any
business or of any assets of the Company, Parent or any of Parent's
subsidiaries, an a result of the Merger or (iii) seeking to prohibit Parent
or any of its subsidiaries from effectively controlling in any material
respect the business or operations of the Company.
(f) No Material Adverse Change. At any time on or after the date of
this Agreement there shall not have occurred any material adverse change in
the business, properties, assets, liabilities (contingent or otherwise),
financial condition or results of operations of the Company.
Notwithstanding the foregoing sentence, any changes in the business of the
Company resulting from the announcement or pendency of the Merger shall not
constitute a material adverse change.
(g) Dissenters' Rights. The total amount of Company Common Stock held
by shareholders who have indicated as of the date of the Shareholders
Meeting their intent to exercise appraisal rights under the MBCL shall not
exceed 5% of the total Company Common Stock outstanding as of the
Shareholders Meeting.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination. This Agreement may be terminated, and the Merger
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether before or after approval of matters presented in connection with the
Merger by the shareholders of the Company:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by December 31,
1998 for any reason; provided, however, that the right to terminate this
Agreement under this Section 7.1(b)(i) shall not be available to any
party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to occur on or before such date
and such action or failure to act constitutes a wilful and material
breach of this Agreement; provided, however, that notwithstanding this
December 31, 1998 date, if the Registration Statement on Form S-4 shall
have been declared effective by the SEC on or prior to October 28, 1998,
the Proxy Statement shall have been mailed to the Company's shareholders
on or prior to October 29, 1998 and all other conditions to Closing of
all parties, the Company and Parent have been satisfied by November 30,
1998, and the Closing is not completed by November 30, 1998, either
Company or Parent may terminate this Agreement;
(ii) if any Restraint having any of the effects set forth in
Section 6.1(d) shall be in effect and shall have become final and
nonappealable;
(iii) if the Shareholder Approval shall not have been obtained at
the Shareholders Meeting duly convened therefor or at any adjournment or
postponement thereof; or
(iv) if, prior to receipt of the Shareholder Approval, the Board of
Directors of the Company determines that, as a result of the receipt of
Superior Proposal (which was not received in violation of Section 5.4),
it is necessary for the Board in order to comply with its fiduciary
duties to the Company's shareholders to terminate this Agreement;
provided, however, that the Company may not terminate this Agreement
pursuant to this Section 7.1(b)(iv) unless and until three business days
have elapsed following delivery to Parent of a Notice of Superior
Proposal with respect to a Superior Proposal by the Board of Directors
of the Company, and no later than two days thereafter the Company pays
to Parent the amounts specified under Section 5.6(a) pursuant to the
terms of such Section 5.6(a).
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(c) by Parent if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to
Parent its approval or recommendation of the Merger or this Agreement or
failed to reconfirm its recommendation within 15 business days after a
written request to do so, or approved or recommended any Takeover Proposal
or (ii) the Board of Directors of the Company shall have resolved to take
any of the foregoing actions;
(d) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or
if any such representation or warranty or Parent shall have become
inaccurate, in either case such that the conditions set forth in Section
6.2(a) or Section 6.2(b), as the case may be, would not be satisfied as of
the time of such breach or as of the time such representation or warranty
shall have become inaccurate; provided, that the Company may not terminate
this Agreement pursuant to this Section 7.1(d) if it shall have wilfully
and materially breached this Agreement; or
(e) by Parent, upon a breach of any representation, warranty, covenant
or agreement on the part of the Company set forth in this Agreement, or if
any such representation or warranty of the Company shall have become
inaccurate, in either case such that the conditions set forth in Section
6.3(a) or Section 6.3(b), as the case may be, would not be satisfied as of
the time of such breach or as of the time such representation or warranty
shall have become inaccurate; provided, that Parent may not terminate this
Agreement pursuant to this Section 7.1(e) if it shall have wilfully and
materially breached this Agreement.
SECTION 7.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of the last sentence of Section 5.3, Section 5.5, Section 5.6, this
Section 7.2 and Article VIII and except to the extent that such termination
results from the wilful and material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement. Notwithstanding the foregoing, Parent shall have no additional
liability following the payment by it of the Parent Fee pursuant to Section
5.6(b).
SECTION 7.3 Amendment. This Agreement may be amended by the parties
hereto at any time before or after any required approval of matters presented in
connection with the Merger by the shareholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such shareholders without the further approval
of such shareholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
SECTION 7.4 Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) subject to the proviso of Section 7.3, waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties contained in this Agreement and any certificate
or instrument delivered pursuant hereto thereto shall survive the Effective
Time. This Section 8.1 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
SECTION 8.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing
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proof of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to Parent or Sub, to:
Sanmina Corporation
355 East Trimble Road
San Jose, California 95131
Attention: Chief Operating Officer
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Christopher D. Mitchell
if to the Company, to:
Altron Incorporated
One Jewel Drive
Wilmington, Massachusetts 01887
Attention: Chief Executive Officer
with a copy to:
Hutchins, Wheeler & Dittmar
Professional Corporation
101 Federal Street
Boston, MA 02110
Attention: Anthony J. Medaglia, Jr.
SECTION 8.3 Definitions. For purposes of this Agreement:
an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
any references in this Agreement to the "knowledge" of Company or to
matters "known" to Company shall mean the actual knowledge, without inquiry
or investigation, other than reviewing this Agreement and the Company
Disclosure Schedule, of the Company's Chief Executive Officer, Executive
Vice President, Chief Financial Officer and Controller;
any references in this Agreement to the "knowledge" of Parent or to
matters "known" to Parent shall mean the actual knowledge, without inquiry
or investigation, other than reviewing this Agreement and the Parent
Disclosure Schedule, of the Company's Chief Executive Officer, Chief
Operating President, Chief Financial Officer and Controller;
"material adverse change" or "material adverse effect" means, when
used in connection with the Company or Parent, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) that is materially adverse to the business,
properties, assets, liabilities (contingent or otherwise), financial
condition or results of operations of either the Company and its
subsidiaries or Parent and its subsidiaries, taken as a whole, as the case
may be;
a "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
and
a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of
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Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person.
SECTION 8.4 Interpretation. When a reference is made in this Agreement to
a Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
SECTION 8.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the Confidentiality Agreement (a) constitute the entire agreement,
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter of this Agreement and the
Confidentiality Agreement and (b) except for the provisions of Article I,
Section 5.14 and Section 5.16, are not intended to confer upon any person other
than the parties any rights or remedies.
SECTION 8.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 8.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
SECTION 8.9 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the partes shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the Commonwealth of Massachusetts or in any Massachusetts state
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any court of the United States located in
the Commonwealth of Massachusetts or of any Massachusetts state court in the
event any dispute arises out of this Agreement or the transactions contemplated
by this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (c) agrees that it will not bring any action relating to this Agreement or
the transactions contemplated by this Agreement in any court other than a court
of the United States located in the Commonwealth of Massachusetts or a
Massachusetts state court.
SECTION 8.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
SANMINA CORPORATION
By: /s/ JURE SOLA
------------------------------------
Name: Jure Sola
Title: Chairman and CEO
SANM ACQUISITION SUBSIDIARY, INC.
By: /s/ JURE SOLA
------------------------------------
Name: Jure Sola
Title: Chairman and CEO
ALTRON INCORPORATED
By: /s/ SAMUEL ALTSCHULER
------------------------------------
Name: Samuel Altschuler
Title: Chairman and President
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ANNEX II
SHAREHOLDER AGREEMENT
This SHAREHOLDER AGREEMENT (the "Agreement") is made and entered into as of
September 2, 1998, among Sanmina Corporation, a Delaware corporation ("Parent"),
and the individual identified on Schedule A attached hereto (the "Shareholder").
WHEREAS Parent, SANM Acquisition Subsidiary, Inc., a Massachusetts
corporation and a wholly owned subsidiary of Parent ("Sub"), and Altron
Incorporated, a Massachusetts corporation (the "Company"), propose to enter into
an Agreement and Plan of Reorganization dated as of the date hereof (as the same
may be amended or supplemented, the "Merger Agreement"; capitalized terms used
but not defined herein shall have the meanings set forth in the Merger
Agreement) providing for the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Merger
Agreement; and
WHEREAS the Shareholder owns of record the number of shares of common
stock, par value $.05 per share, of the Company (the "Common Stock"), set forth
opposite the Shareholder's name on Schedule A attached hereto; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent has requested that the Shareholder enter into this Agreement;
NOW, THEREFORE, to induce Parent to enter into, and in consideration of its
entering into, the Merger Agreement, and in consideration of the promises and
the representations, warranties and agreements contained herein, the parties
agree as follows:
1. Definition. For purposes of this Agreement, "Subject Shares"
shall mean all issued and outstanding shares of Common Stock of the Company
owned of record or beneficially by the Shareholder as of the record date
for persons entitled (a) to receive notice of, and to vote at, a meeting of
the shareholders of the Company called for the purpose of voting on the
matter referred to in Section 4(a) hereof, or (b) to take action by written
consent of the shareholders of the Company with respect to the matter
referred to in Section 4(a) hereof. Notwithstanding anything to the
contrary contained in this Agreement, the "Subject Shares" shall not
include, and the Shareholder shall not be deemed to be the beneficial owner
of, any shares of Common Stock of the Company that the Shareholder may
acquire upon the exercise of any stock option (unless such option has been
exercised and such shares have been issued to the Shareholder and are held
by the Shareholder as of such record date).
2. Representations and Warranties of the Shareholder. The
Shareholder hereby represents and warrants to Parent as of the date hereof
as follows:
(a) Authority. The Shareholder has all requisite capacity to enter
into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the
Shareholder and constitutes a valid and binding obligation of the
Shareholder, enforceable against the Shareholder in accordance with its
terms. Except for informational filings with the SEC, the execution and
delivery of this Agreement by the Shareholder do not, and the
consummation by the Shareholder of the transactions contemplated hereby
and compliance by the Shareholder with the terms hereof will not, (i)
conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any trust agreement, loan
or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, judgment, order, notice, decree, statute, law,
ordinance, rule or regulation applicable to the Shareholder or to the
Shareholder's property or assets, (ii) require any filing by the
Shareholder on or before the Closing Date with, or require the
Shareholder to obtain on or before the Closing Date, any permit,
authorization, consent or approval of, any Federal, state or local
government or any court, tribunal, administrative agency or commission
or other governmental or regulatory authority or agency, domestic or
foreign, or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Shareholder or the Subject Shares.
<PAGE> 112
(b) The Shares. The Shareholder is the record and beneficial owner
of, and has good and valid title to, the shares of Common Stock set
forth opposite the Shareholder's name on Schedule A attached hereto,
free and clear of any Liens whatsoever. The Shareholder does not own, of
record or beneficially, any shares of capital stock of the Company other
than the shares of Common Stock set forth opposite the Shareholder's
name on Schedule A attached hereto. The Shareholder has the sole right
to vote such shares, and none of such shares is subject to any voting
trust or other agreement, arrangement or restriction with respect to the
voting of such shares, except as contemplated by this Agreement.
3. Representations and Warranties of Parent. Parent hereby
represents and warrants to the Shareholder that Parent has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been
duly authorized, executed and delivered by Parent and constitutes a valid
and binding obligation of Parent enforceable against Parent in accordance
with its terms. Except for informational filings with the SEC, the
execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated hereby and compliance with the terms hereof
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, the
certificate of incorporation or bylaws of Parent, or any trust agreement,
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, license, judgment,
order, notice, decree, statute, law, ordinance, rule or regulation
applicable to Parent or to Parent's property or assets.
4. Covenants of the Shareholder. Until the termination of this
Agreement in accordance with Section 11 hereof, the Shareholder agrees as
follows:
(a) Subject to Section 5 hereof, at any meeting of shareholders of
the Company called to vote upon the Merger and the Merger Agreement or
at any adjournment thereof or in any other circumstances upon which a
vote, consent or other approval (including by written consent) with
respect to the Merger and the Merger Agreement is sought from the
Company's shareholders in their capacities as such, the Shareholder
shall, including by executing a written consent if requested by Parent,
vote (or cause to be voted) the Subject Shares in favor of the Merger,
and in favor of the adoption and approval by the Company of the Merger
Agreement.
(b) The Shareholder shall not (i) sell, transfer, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"),
consent to any Transfer of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to
the Transfer of, any or all of the Subject Shares (or any interest
therein) to any person other than pursuant to the terms of the Merger or
(ii) enter into any voting arrangement, whether by proxy, voting
agreement or otherwise, in connection with, directly or indirectly, any
Takeover Proposal, and agrees not to commit or agree to take any of the
foregoing actions; provided, however, that notwithstanding anything to
the contrary contained in this Agreement, the Shareholder may, without
the consent of Parent or any other person, transfer any or all of the
Subject Shares (or any interest therein) to one or more members of the
Shareholder's family, any trust for the benefit of the Shareholder or
one or more members of the Shareholder's family or any entity controlled
by the Shareholder so long as the transferee of such Subject Shares (or
such interest therein) agrees to be bound by the applicable provisions
of this Agreement.
(c) The Shareholder shall not, nor shall the Shareholder instruct
any agent or any investment banker, attorney or other adviser or
representative of the Shareholder to, directly or indirectly, (i)
solicit, initiate or knowingly encourage the submission to the Company
of, any Takeover Proposal or (ii) participate in any discussions or
negotiations with any person (other than Parent and its affiliates,
agents and representatives) regarding, or furnish to any such person any
non-public information with respect to, or take any other action
intended to facilitate the making of any inquiry or proposal that
constitutes, or may reasonably be expected to lead to, any Takeover
Proposal.
(d) If, at the time the Merger Agreement is submitted for approval
to the shareholders of the Company, the Shareholder is an "affiliate" of
the Company for purposes of Rule 145 under the
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Securities Act or for purposes of qualifying the Merger for pooling of
interests accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations, the
Shareholder shall deliver to Parent on or prior to the Closing Date a
written agreement substantially in the form attached as Exhibit B to the
Merger Agreement.
5. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Until the termination of this Agreement in accordance with
Section 11 hereof, the Shareholder hereby irrevocably grants to, and
appoints, Parent and Jure Sola and Randy Furr, in their respective
capacities as officers of Parent, and any individual who shall hereafter
succeed to any such office of Parent, and each of them individually, the
Shareholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the Shareholder,
to vote the Subject Shares, or to grant a consent or approval in respect
of the Subject Shares, in favor of approval of the Merger and in favor
of the adoption and approval of the Merger Agreement.
(b) The Shareholder represents that any proxies heretofore given in
respect of the Subject Shares are not irrevocable, and that all such
proxies are hereby revoked.
(c) The Shareholder hereby affirms that the irrevocable proxy set
forth in this Section 5 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Shareholder under this Agreement. The
Shareholder hereby further affirms that the irrevocable proxy is coupled
with an interest and may under no circumstances be revoked. The
Shareholder hereby ratifies and confirms all that such proxies and
attorneys in fact may lawfully do or cause to be done by virtue hereof.
Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 41 of the Massachusetts
Business Corporation Law.
6. Further Assurances. The Shareholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional
or further consents, documents and other instruments as Parent may
reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement.
7. Certain Events. The Shareholder agrees that this Agreement and
the obligations hereunder shall attach to the Subject Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of
such Subject Shares shall pass, whether by operation of law or otherwise,
including such Shareholder's heirs, guardians, administrators or
successors. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure
of the Company affecting the Company's Common Stock, or the acquisition of
additional shares of Common Stock or other voting securities of the Company
by the Shareholder, the number of Subject Shares shall be adjusted
appropriately and this Agreement and the obligations hereunder shall attach
to any additional shares of Common Stock or other voting securities of the
Company issued to or acquired by the Shareholder.
8. Indemnification. Parent shall indemnify and hold harmless the
Shareholder and the Shareholder's affiliates, agents, advisers and
representatives (the "Indemnified Parties") against and from any costs,
expenses (including reasonable attorneys' fees), settlement payments,
claims, demands, judgments, fines, penalties, losses, damages and
liabilities incurred in connection with any claim, suit, action or
proceeding (whether asserted, commenced or arising before or after the
Effective Time) that arises directly or indirectly from or relates directly
or indirectly to (a) the execution, delivery or performance of this
Agreement, or (b) any of the transactions contemplated by this Agreement.
In the event any such claim, suit, action or proceeding is asserted or
commenced against any Indemnified Party, (i) Parent shall advance and pay
the reasonable fees and expenses of any counsel retained by such
Indemnified Party in connection with such claim, suit, action or proceeding
promptly after receipt of a request therefor from such Indemnified Party,
and (ii) Parent shall cooperate with such Indemnified Party and such
Indemnified Party's counsel in the defense of such claim, suit, action or
proceeding. Parent agrees to pay
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all expenses, including attorneys' fees, that may be incurred by any of the
Indemnified Parties in enforcing the indemnity and other obligations
provided for in this Section 8.
9. Assignment. Except as otherwise provided in Section 4(b), neither
this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by the Shareholder, on the one hand, without the prior
written consent of Parent nor by Parent, on the other hand, without the
prior written consent of the Shareholder, except that Parent may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder (other than Parent's obligations under Section 8 hereof) to any
direct or indirect wholly owned subsidiary of Parent (provided that in the
case of any assignment by Parent to any such subsidiary of Parent, Parent
shall remain jointly and severally liable for the due and timely
performance of any obligations so assigned). Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and
be enforceable by the parties and their respective representatives,
executors, administrators, estate, heirs, successors and assigns.
10. Termination. This Agreement (including the proxy referred to in
Section 5) and all rights of Parent and all obligations of the Shareholder
hereunder, shall terminate upon the first to occur of (i) the Effective
Time or (ii) the date on which the Merger Agreement is terminated in
accordance with its terms; provided, however, that notwithstanding anything
to the contrary contained in this Agreement, the rights of the Shareholder
and the obligations of Parent pursuant to Section 8 hereof, and the
provisions contained in Sections 11, 12 and 14, shall survive any
termination of this Agreement.
11. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or sent
by overnight courier (providing proof of delivery) to Parent in
accordance with Section 8.2 of the Merger Agreement and to the
Shareholder at the Shareholder's address set forth on Schedule A
attached hereto (or at such other address for a party as shall be
specified by like notice).
(c) Interpretation. When a reference is made in this Agreement to
a Section, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include,"
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
(d) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be deemed to be one and the same
agreement, and shall become effective when one or more of the
counterparts have been signed by each of the parties and delivered to
the other party, it being understood that each party need not sign the
same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries. The Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect
to the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto (and the other persons referred to
in Section 8) any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware
regardless of the laws that might otherwise govern under applicable
principles of conflicts of law thereof.
(g) No Limitations. Nothing in this Agreement shall, and nothing
in this Agreement shall be deemed to, prevent the Shareholder from
acting in accordance with his fiduciary duties as a director of the
Company or otherwise limit the ability of the Shareholder to take any
action in his capacity as a director or officer of the Company.
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(h) Voidability. If prior to the execution hereof, the Board of
Directors of the Company shall not have duly and validly authorized and
approved by all necessary corporate action, the Merger Agreement and the
transactions contemplated thereby, so that by the execution and delivery
hereof Parent or Sub would become, or could reasonably be expected to
become an "interested shareholder" within the meaning of Section 110F of
the MBCL, then this Agreement shall be void and unenforceable until such
time as such authorization and approval shall have been duly and validly
obtained.
13. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Delaware or in a
Delaware state court, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties
hereto (i) consents to submit such party to the personal jurisdiction of
any court of the United States located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party
will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (iii) agrees that such party
will not bring any action relating to this Agreement or the transactions
contemplated hereby in any court other than a court of the United States
located in the State of Delaware or a Delaware state court and (iv) waives
any right to trial by jury with respect to any claim or proceeding related
to or arising out of this Agreement or any of the transactions contemplated
hereby.
14. Public Announcement. Except to the extent required by law or
regulation, the Shareholder shall not issue any press release or other
public statement with respect to the transactions contemplated by this
Agreement and the Merger Agreement without the prior written consent of
Parent.
15. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled
to the extent possible.
5
<PAGE> 116
IN WITNESS WHEREOF, Parent has caused this Agreement to be signed by its
officer thereunto duly authorized and the Shareholder has signed this Agreement,
all as of the date first written above.
SANMINA CORPORATION
By:
------------------------------------
Name:
Title:
SHAREHOLDER
--------------------------------------
Name:
6
<PAGE> 117
SCHEDULE A TO SHAREHOLDER AGREEMENT
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
NAME AND ADDRESS OF SHAREHOLDER OWNED OF RECORD
- ------------------------------- ----------------
<S> <C>
</TABLE>
<PAGE> 118
ANNEX III
September 2, 1998
Board of Directors
Altron Incorporated
One Jewel Drive
Wilmington, MA 01887-3390
Gentlemen:
We understand that Altron Incorporated ("Altron"), Sanmina Corporation
("Samnina"), and a wholly-owned subsidiary of Sanmina ("Merger Sub"), propose to
enter into an Agreement and Plan of Merger (the "Merger Agreement") whereby
Merger Sub will be merged with and into Altron and Altron will become a
wholly-owned subsidiary of Sanmina (the "Merger"). The terms of the Merger will
be set forth more fully in the Merger Agreement.
Pursuant to the proposed Merger Agreement, we understand that at the
Effective Time (as defined in the Merger Agreement), each issued and outstanding
share of common stock, par value $.05 per share, of Altron will be converted
into the right to receive 0.4545 of a share ( the "Exchange Ratio") of common
stock, par value $.01 per share, of Sanmina (the "Sanmina Common Stock"). If the
Effective Time Parent Price (as defined in the proposed Merger Agreement) is
less than $30.00, the Exchange Ratio will be adjusted to a fraction, the
numerator of which is 13.635 and the denominator of which is the Effective Time
Parent Price, provided that in no event will the Exchange Ratio be adjusted to
an amount greater than 0.5681.
You have asked us to advise you as to the fairness, from a financial point
of view, of the Exchange Ratio to the shareholders of Altron. Needham & Company,
Inc., as part of its investment banking business, is regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of securities,
private placements and other purposes. We have acted as financial advisor to
Altron in connection with the Merger and will receive a fee for our services, a
portion of which is contingent on the consummation of the Merger. In addition,
Altron has agreed to indemnify us for certain liabilities arising from our role
as financial advisor and out of the rendering of this opinion.
For purposes of this opinion we have, among other things: (i) reviewed a
draft of the Merger Agreement dated September 2, 1998; (ii) reviewed certain
publicly available information concerning Sanmina and Altron and certain other
information concerning Sanmina and Altron furnished to us by Sanmina and Altron;
(iii) reviewed the historical stock prices and trading volumes of Samnina's and
Altron's common stock; (iv) held discussions with members of senior management
of Sanmina and Altron concerning the current and future business prospects of
the respective companies and joint prospects of the combined companies,
including synergies that may be achieved thereby; (v) held discussions with
members of senior management of Sanmina and Altron concerning certain research
analyst projections for Sanmina and Altron, respectively; (vi) compared certain
publicly available financial data of companies whose securities are traded in
the public markets and that we deemed relevant to similar data for Altron; (vii)
reviewed the financial terms of certain other business combinations that we
deemed generally relevant; and (viii) performed and/or considered such other
studies, analyses, inquiries and investigations as we deemed appropriate.
In connection with our review and in arriving at our opinion, we have
assumed and relied on the accuracy and completeness of all of the financial and
other information publicly available or furnished to or otherwise reviewed by or
discussed with us for purposes of rendering this opinion and have neither
attempted to verify independently nor assumed responsibility to verify any of
such information. In addition, we have assumed, with your consent, that (i) the
Merger will be accounted for under the pooling- of-interests method of
accounting, (ii) the Merger will constitute a tax-free reorganization, (iii) the
terms set forth in the executed Merger Agreement will not differ materially from
the proposed terms provided to us in the draft Merger Agreement dated September
2, 1998, and (iv) any material liabilities (contingent or otherwise, known or
unknown) of Samnina and Altron are as set forth in the consolidated financial
statements of Sanmina and
<PAGE> 119
Altron, respectively. With respect to information relating to the prospects of
Sanmina and Altron and the joint prospects of the combined companies, we have
assumed, with your consent and based upon discussions with the respective
managements, that such information reflects the best currently available
estimates and judgments of the managements of Sanmina and Altron of the future
operating and financial performance of Sanmina and Altron and the combined
companies, and we have relied upon the estimates of the respective managements
of Samnina and Altron of the synergies that may be achieved as a result of the
proposed Merger. We express no opinion with respect to such forecasts or the
assumptions on which they were based. We have not assumed any responsibility for
or made or obtained any independent evaluation, appraisal or physical inspection
of the assets or liabilities of Samnina or Altron. Further, our opinion is based
on economic, monetary and market conditions as they exist and can be evaluated
as of the date hereof. Our opinion as expressed herein is limited to the
fairness, from a financial point of view to the Altron shareholders of the
Exchange Ratio and does not address Altron's underlying business decision to
engage in the Merger. Our opinion does not constitute a recommendation to any
shareholder of Altron as to how such shareholder should vote on the proposed
Merger.
We are not expressing any opinion as to what the value of Sanmina Common
Stock will be when issued to the shareholders of Altron pursuant to the Merger
or the prices at which Samnina Common Stock will actually trade at any time.
In the ordinary course of our business, we may actively trade the equity
securities of Altron or Sanmina for our own account or for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
This letter and the opinion expressed herein are provided at the request
and for the information of the Board of Directors of Altron and may not be
quoted or referred to or used for any purpose without our prior written consent,
except that this letter may be disclosed in connection with any registration
statement or proxy statement used in connection with the Merger so long as this
letter is quoted in full in such registration statement or proxy statement.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair to the shareholders of Altron from a
financial point of view.
Very truly yours,
/s/ NEEDHAM & COMPANY, INC.
Needham & Company, Inc.
<PAGE> 120
ANNEX IV
TEXT OF SECTIONS 85 THROUGH 98 OF CHAPTER 156B OF THE
MASSACHUSETTS BUSINESS CORPORATION LAW
SEC.85. DISSENTING STOCKHOLDER; RIGHT TO DEMAND PAYMENT FOR STOCK; EXCEPTION
A stockholder in any corporation organized under the laws of Massachusetts
which shall have duly voted to consolidate or merge with another corporation or
corporations under the provisions of sections seventy-eight or seventy-nine who
objects to such consolidation or merger may demand payment for his stock from
the resulting or surviving corporation and an appraisal in accordance with the
provisions of sections eighty-six to ninety-eight, inclusive, and such
stockholder and the resulting or surviving corporation shall have the rights and
duties and follow the procedure set forth in those sections. This section shall
not apply to the holders of any shares of stock of a constituent corporation
surviving a merger if, as permitted by subsection (c) of section seventy-eight,
the merger did not require for its approval a vote of the stockholders of the
surviving corporation.
SEC.86. SELECTIONS APPLICABLE TO APPRAISAL; PREREQUISITES
If a corporation proposes to take a corporate action as to which any
section of this chapter provides that a stockholder who objects to such action
shall have the right to demand payment for his shares and an appraisal thereof,
sections eighty-seven to ninety-eight, inclusive, shall apply except as
otherwise specifically provided in any section of this chapter. Except as
provided in sections eighty-two and eighty-three, no stockholder shall have such
right unless (1) he files with the corporation before the taking of the vote of
the shareholders on such corporate action, written objection to the proposed
action stating that he intends to demand payment for his shares if the action is
taken and (2) his shares are not voted in favor of the proposed action.
SEC.87. STATEMENT OF RIGHTS OF OBJECTING STOCKHOLDERS IN NOTICE OF MEETING;
FORM
The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting
and effected by the corporation, any stockholder (1) who files with the
corporation before the taking of the vote on the approval of such action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) whose shares are not
voted in favor of such action has or may have the right to demand in
writing from the corporation (or, in the case of a consolidation or merger,
the name of the resulting or surviving corporation shall be inserted),
within twenty days after the date of mailing to him of notice in writing
that the corporate action has become effective, payment for his shares and
an appraisal of the value thereof. Such corporation and any such
stockholder shall in such cases have the rights and duties and shall follow
the procedure set forth in sections 88 to 98, inclusive, of chapter 156B of
the General Laws of Massachusetts."
SEC.88. NOTICE OF EFFECTIVENESS OF ACTION OBJECTED TO
The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed a written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the action approved at the meeting of the corporation of which he
is a stockholder has become effective. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock. The notice shall
<PAGE> 121
be sent by registered or certified mail, addressed to the stockholder at his
last known address as it appears in the records of the corporation.
SEC.89. DEMAND FOR PAYMENT; TIME FOR PAYMENT
If within twenty days after the date of mailing of a notice under
subsection (e) of section eighty-two, subsection (f) of section eighty-three, or
section eighty-eight, any stockholder to whom the corporation was required to
give such notice shall demand in writing from the corporation taking such
action, or in the case of a consolidation or merger from the resulting or
surviving corporation, payment for his stock, the corporation upon which such
demand is made shall pay to him the fair value of his stock within thirty days
after the expiration of the period during which such demand may be made.
SEC.90. DEMAND FOR DETERMINATION OF VALUE; BILL IN EQUITY; VENUE
If during the period of thirty days provided for in section eighty-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county where
the corporation in which such objecting stockholder held stock had or has its
principal office in the commonwealth.
SEC.91. PARTIES TO SUIT TO DETERMINE VALUE; SERVICE
If the bill is filed by the corporation, it shall name as parties
respondent all stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof. If the
bill is filed by a stockholder, he shall bring the bill in his own behalf and in
behalf of all other stockholders who have demanded payment for their shares and
with whom the corporation has not reached agreement as to the value thereof, and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
SEC.92. DECREE DETERMINING VALUE AND ORDERING PAYMENT; VALUATION DATE
After hearing the court shall enter a decree determining the fair value of
the stock of those stockholders who have become entitled to the valuation of and
payment for their shares, and shall order the corporation to make payment of
such value, together with interest, if any, as hereinafter provided, to the
stockholders entitled thereto upon the transfer by them to the corporation of
the certificates representing such stock if certificated or, if uncertificated,
upon receipt of an instruction transferring such stock to the corporation. For
this purpose, the value of the shares shall be determined as of the day
preceding the date of the vote approving the proposed corporate action and shall
be exclusive of any element of value arising from the expectation or
accomplishment of the proposed corporate action.
SEC.93. REFERENCE TO SPECIAL MASTER
The court in its discretion may refer the bill or any question arising
thereunder to a special master to hear the parties, make findings and report the
same to the court, all in accordance with the usual practice in suits in equity
in the superior court.
2
<PAGE> 122
SEC.94. NOTATION ON STOCK CERTIFICATES OF PENDENCY OF BILL
On motion the court may order stockholder parties to the bill to submit
their certificates of stock to the corporation for the notation thereon of the
pendency of the bill and may order the corporation to note such pendency in its
records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
SEC.95. COSTS; INTEREST
The costs of the bill, including the reasonable compensation and expenses
of any master appointed by the court, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to the bill, or any of them, in such manner as appears to be
equitable, except that all costs of giving notice to stockholders as provided in
this chapter shall be paid by the corporation. Interest shall be paid upon any
award from the date of the vote approving the proposed corporate action, and the
court may on application of any interested party determine the amount of
interest to be paid in the case of any stockholder.
SEC.96. DIVIDENDS AND VOTING RIGHTS AFTER DEMAND FOR PAYMENT
Any stockholder who has demanded payment for his stock as provided in this
chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation, or
in the case of a consolidation or merger, the resulting or surviving
corporation, deliver to it a written withdrawal of his objections to
and an acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
SEC.97. STATUS OF SHARES PAID FOR
The shares of the corporation Paid for by the corporation pursuant to the
provisions of this chapter shall have the status of treasury stock, or in the
case of a consolidation or merger the shares or the securities of the resulting
or surviving corporation into which the shares of such objecting stockholder
would have been converted had he not objected to such consolidation or merger
shall have the status of treasury stock or securities.
SEC.98. EXCLUSIVE REMEDY; EXCEPTION
The enforcement by a stockholder of his right to receive payment for his
shares in the manner provided in this chapter shall be an exclusive remedy
except that this chapter shall not exclude the right of such stockholder to
bring or maintain an appropriate proceeding to obtain relief on the ground that
such corporate action will be or is illegal or fraudulent as to him.
3
<PAGE> 123
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a
corporation to include in its charter documents, and in agreements between the
corporation and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article VIII of the Registrant's Certificate of Incorporation provides
for the indemnification of directors to the fullest extent permissible under
Delaware law.
Article VI of the Registrant's Bylaws provides for the indemnification
of officers, directors and third parties acting on behalf of the corporation if
such person acted in good faith and in a manner reasonably believed to be in and
not opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his conduct was unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for in
the Registrant's Bylaws, and intends to enter into indemnification agreements
with any new directors and executive officers in the future.
The general effect of Section 145 of the Delaware General Corporation
Law, the Company's charter documents and the indemnification agreements is to
provide indemnification to officers and directors for liabilities that may arise
by reason of their status as officers or directors, other than liabilities
arising from willful or intentional misconduct, acts or omissions not in good
faith, unlawful distributions of corporate assets or transactions from which the
officer or director derived an improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
EXHIBIT EXHIBITS
NO.
2.1 Agreement and Plan of Merger dated as of September 2, 1998 among the
Registrant, Altron Incorporated and SANM Acquisition Subsidiary, Inc.
(included as Annex I to the Proxy Statement/Prospectus which is a part
of this Registration Statement on Form S-4).
2.2 Form of Stockholder Agreement dated as of September 2, 1998 among the
Registrant, Altron and certain stockholders of Altron (included as
Annex II to the Proxy Statement/Prospectus which is a part of this
Registration Statement on Form S-4).
3.2(1) Restated Certificate of Incorporation of Registrant.
3.3(2) Bylaws of Registrant, as amended.
4.2(2) Specimen Stock Certificate.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati ("WSGR") relating to
validity of shares registered hereby.
8.1 Tax opinion of WSGR.
8.2 Tax opinion of Hutchins, Wheeler & Dittmar ("HWD").
10.1(9) Lease for premises at 18522 Von Karman, Irvine, California.
-2-
<PAGE> 124
EXHIBIT EXHIBITS
10.2(5) Amended 1990 Incentive Stock Plan.
10.3(2) 1993 Employee Stock Purchase Plan.
10.4(2) Form of Indemnification Agreement.
10.10(2) Lease for premises at 2109 O'Toole Avenue, Suites A-E, San Jose,
California (Portion of Plant I).
10.11(2) Lease for premises at 2101 O'Toole Avenue, San Jose, California
(Portion of Plant I).
10.12(2) Lease for premises at 2539 Scott Boulevard, Santa Clara, California
(Plant III).
10.14(2) Lease for premises at 2060-2068 Bering Drive, San Jose, California
(Plant II).
10.15(2) Lease for premises at 4220 Business Center Drive, Fremont, California
(Plant V).
10.16(2) Lease for premises at McCarthy Boulevard, Milpitas, California (Plant
VI).
10.17(2) Lease for premises at 2121 O'Toole Avenue, San Jose, California
(Corporate Headquarters).
10.19(3) Lease for premises at 1250 American Parkway, Richards, Texas (Plant
VII).
10.20(3) Lease for premises at 6453 Kaiser Drive, Fremont, California (Plant
VIII).
10.21(4) Asset Purchase Agreement dated September 28, 1994 between Registrant
and Comptronix Corporation.
10.22(5) Lease for premises at 355 East Trimble Road, San Jose, California.
10.23(6) Stock Purchase Agreement dated May 31, 1995 between Sanmina
Corporation, Assembly Solutions, Inc. and the principal stockholders of
Assembly Solutions, Inc.
10.24(7) Indenture dated August 15, 1995 between Registrant and Norwest Bank
Minnesota, N.A. as Trustee.
10.25(8) Asset Purchase Agreement dated September 20, 1996 between Registrant
and Comptronix Corporation.
10.45(10) Lease for premises at 4405-4445 Fortran Court, San Jose, California.
21. Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consents of WSGR as to legal matters and tax opinion (included in
Exhibits 5.1 and 8.1, respectively).
23.4 Consent of HWD (included in Exhibit 8.2).
99.1 Consent of Needham & Company, Inc.
- --------------
(1) Incorporated by reference to the like-numbered exhibits previously
filed with Registrant's Report on Form 10-K for the fiscal year ended
September 30, 1996 filed with the Securities and Exchange Commission
("SEC") on December 24, 1996, as amended by reports on Form 10-K/A
filed December 27, 1996 and March 25, 1997.
(2) Incorporated by reference to the like-numbered exhibits previously
filed with Registrant's Registration Statement on Form S-1, No.
33-70700 filed with the SEC on February 19, 1993.
(3) Incorporated by reference to the like-numbered exhibits previously
filed with Registrant's Registration Statement on Form S-1 No. 33-70700
filed with the SEC on October 22, 1993.
(4) Incorporated by reference to exhibit no. 2 previously filed with
Registrant's Report on Form 8-K filed with the SEC on October 28, 1994.
-3-
<PAGE> 125
(5) Incorporated by reference to the like-numbered exhibits previously
filed with Registrant's Report on Form 10-K filed with the SEC on
December 29, 1994.
(6) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-Q filed with the SEC on July 31,
1995.
(7) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-K for the fiscal year ended
September 30, 1995.
(8) Incorporated by reference to exhibit 2 previously filed with the
Registrant's Report on Form 8-K filed with the SEC on November 15,
1996.
(9) Incorporated by reference to the like-numbered exhibits previously
filed with Elexsys International, Inc.'s Registration Statement on Form
S-1, No. 2-86316.
(10) Incorporated by reference to the like-numbered exhibits previously
filed with Elexsys International, Inc.'s Report on Form 10-K filed with
the SEC on December 27, 1996.
-4-
<PAGE> 126
(B) FINANCIAL STATEMENT SCHEDULES
None.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) to file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement.
(i) to include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
(b) that, for the purpose of determining any liability under the
Securities Act of 1933, each such posteffective amendment shall be deemed to be
a now registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(c) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering;
(d) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(e) that prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145 (c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form;
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<PAGE> 127
(f) that every prospectus (i) that is filed pursuant to paragraph (c)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the Registration
Statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof;
(g) insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue;
(h) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request; and
(i) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it became
effective.
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<PAGE> 128
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in San Jose, California on the 28th day
of October, 1998.
SANMINA CORPORATION
By: /s/ Jure Sola
--------------------------
Jure Sola, Chairman and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Randy Furr and Bernard Whitney, and each of them, as his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and all documents relating thereto,
and to file same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing necessary or advisable to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Jure Sola President, Chief Executive Officer October 28, 1998
- ---------------------- and Director (Principal Executive
Jure Sola Officer)
/s/ Bernard Whitney Vice President and Chief October 28, 1998
- ---------------------- Financial Officer (Principal
Bernard Whitney Financial and Accounting Officer)
/s/ Mario Rosati
- ---------------------- Director October 28, 1998
Mario Rosati
/s/ Bernard Vonderschmitt
- ---------------------- Director October 28, 1998
Bernard Vonderschmitt
/s/ Neil Bonke
- ---------------------- Director October 28, 1998
Neil Bonke
/s/ John Bolger
- ---------------------- Director October 28, 1998
John Bolger
-7-
<PAGE> 129
EXHIBIT INDEX
EXHIBIT EXHIBITS
NO.
2.1 Agreement and Plan of Merger dated as of September 2, 1998 among the
Registrant, Altron Incorporated and SANM Acquisition Subsidiary, Inc.
(included as Annex I to the Proxy Statement/Prospectus which is a part
of this Registration Statement on Form S-4).
2.2 Form of Stockholder Agreement dated as of September 2, 1998 among the
Registrant, Altron and certain stockholders of Altron (included as
Annex II to the Proxy Statement/Prospectus which is a part of this
Registration Statement on Form S-4).
3.2(1) Restated Certificate of Incorporation of Registrant.
3.3(2) Bylaws of Registrant, as amended.
4.2(2) Specimen Stock Certificate.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati ("WSGR") relating to
validity of shares registered hereby.
8.1 Tax opinion of WSGR.
8.2 Tax opinion of Hutchins, Wheeler & Dittmar ("HWD").
10.1(9) Lease for premises at 18522 Von Karman, Irvine, California.
10.2(5) Amended 1990 Incentive Stock Plan.
10.3(2) 1993 Employee Stock Purchase Plan.
10.4(2) Form of Indemnification Agreement.
10.10(2) Lease for premises at 2109 O'Toole Avenue, Suites A-E, San Jose,
California (Portion of Plant I).
10.11(2) Lease for premises at 2101 O'Toole Avenue, San Jose, California
(Portion of Plant I).
-8-
<PAGE> 130
EXHIBIT EXHIBITS
NO.
10.12(2) Lease for premises at 2539 Scott Boulevard, Santa Clara, California
(Plant III).
10.14(2) Lease for premises at 2060-2068 Bering Drive, San Jose, California
(Plant II).
10.15(2) Lease for premises at 4220 Business Center Drive, Fremont, California
(Plant V).
10.16(2) Lease for premises at McCarthy Boulevard, Milpitas, California (Plant
VI).
10.17(2) Lease for premises at 2121 O'Toole Avenue, San Jose, California
(Corporate Headquarters).
10.19(3) Lease for premises at 1250 American Parkway, Richards, Texas (Plant
VII).
10.20(3) Lease for premises at 6453 Kaiser Drive, Fremont, California (Plant
VIII).
10.21(4) Asset Purchase Agreement dated September 28, 1994 between Registrant
and Comptronix Corporation.
10.22(5) Lease for premises at 355 East Trimble Road, San Jose, California.
10.23(6) Stock Purchase Agreement dated May 31, 1995 between Sanmina
Corporation, Assembly Solutions, Inc. and the principal stockholders of
Assembly Solutions, Inc.
10.24(7) Indenture dated August 15, 1995 between Registrant and Norwest Bank
Minnesota, N.A. as Trustee.
10.25(8) Asset Purchase Agreement dated September 20, 1996 between Registrant
and Comptronix Corporation.
10.45(10) Lease for premises at 4405-4445 Fortran Court, San Jose, California.
21. Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consents of WSGR as to legal matters and tax opinion (included in
Exhibits 5.1 and 8.1, respectively).
23.4 Consent of HWD (included in Exhibit 8.2).
99.1 Consent of Needham and Company, Inc.
- --------------
-9-
<PAGE> 131
(1) Incorporated by reference to the like-numbered exhibits previously
filed with Registrant's Report on Form 10-K for the fiscal year ended
September 30, 1996 filed with the Securities and Exchange Commission
("SEC") on December 24, 1996, as amended by reports on Form 10-K/A
filed December 27, 1996 and March 25, 1997.
(2) Incorporated by reference to the like-numbered exhibits previously
filed with Registrant's Registration Statement on Form S-1, No.
33-70700 filed with the SEC on February 19, 1993.
(3) Incorporated by reference to the like-numbered exhibits previously
filed with Registrant's Registration Statement on Form S-1 No. 33-70700
filed with the SEC on October 22, 1993.
(4) Incorporated by reference to exhibit no. 2 previously filed with
Registrant's Report on Form 8-K filed with the SEC on October 28, 1994.
(5) Incorporated by reference to the like-numbered exhibits previously
filed with Registrant's Report on Form 10-K filed with the SEC on
December 29, 1994.
(6) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-Q filed with the SEC on July 31,
1995.
(7) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-K for the fiscal year ended
September 30, 1995.
(8) Incorporated by reference to exhibit 2 previously filed with the
Registrant's Report on Form 8-K filed with the SEC on November 15,
1996.
(9) Incorporated by reference to the like-numbered exhibits previously
filed with Elexsys International, Inc.'s Registration Statement on Form
S-1, No. 2-86316.
(10) Incorporated by reference to the like-numbered exhibits previously
filed with Elexsys International, Inc.'s Report on Form 10-K filed with
the SEC on December 27, 1996.
-10-
<PAGE> 1
Exhibit 5.1
[WILSON SONSINI GOODRICH & ROSATI LETTERHEAD]
October 28, 1998
Sanmina Corporation
355 East Trimble Road
San Jose, CA 95131
Re: Registration Statement on Form S-4; Registration No. 333- _____
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-4,
Registration No. 333-_____, (the "Registration Statement") filed with the
Securities and Exchange Commission in connection with the registration under the
Securities Act of 1933, as amended, of 7,225,772 shares of your common stock,
$0.01 par value ("Common Stock") issuable in connection with the merger (the
"Merger") contemplated by that certain Agreement and Plan of Merger dated as of
September 2, 1997, as amended (the "Merger Agreement"), among Sanmina
Corporation, a Delaware corporation ("Sanmina"), SANM Acquisition Subsidiary,
Inc., a Massachusetts corporation and wholly-owned subsidiary of Sanmina, and
Altron Incorporated, a Massachusetts corporation ("Altron").
As your counsel in connection with the Registration Statement, we have
examined (i) the proceedings taken by you in connection with entering into the
Merger Agreement, (ii) the proceedings taken by you in connection with the
authorization of the issuance of shares of the Common Stock to be issued in
connection with the Merger (the "Shares"), and (iii) originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
records, certificates of public officials and other documents as we have deemed
necessary to render this opinion.
Based upon the foregoing, it is our opinion that the Shares, when issued in
exchange for shares of Altron in accordance with the Merger Agreement, will be
legally issued, fully paid and nonassessable shares of Common Stock.
We express no opinion as to matters governed by any laws other than the
laws of the State of Delaware which are in effect as of the date hereof.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of the name in the Registration Statement under "Legal
Matters."
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI
<PAGE> 1
Exhibit 8.1
[WILSON SONSINI GOODRICH & ROSATI LETTERHEAD]
October 28, 1998
Sanmina Corporation
355 East Trimble Road
San Jose, California 95131
Ladies and Gentlemen:
This opinion is being delivered to you in accordance with Section
6.3(d) of the Amended and Restated Agreement and Plan of Merger dated as of
September 2, 1998 (the "Merger Agreement") by and among Sanmina Corporation, a
Delaware corporation ("Sanmina"), SANM Acquisition Subsidiary, Inc., a
Massachusetts corporation and wholly-owned subsidiary of Sanmina ("Merger Sub")
and Altron Incorporated, a Massachusetts corporation ("Altron"). Pursuant to the
terms of the Merger Agreement, Merger Sub will merge with and into Altron (the
"Merger"), and Altron will become a wholly-owned subsidiary of Sanmina.
Except as otherwise provided, capitalized terms used but not defined
herein shall have the meanings set forth in the Merger Agreement. All section
references, unless otherwise indicated, are to the Internal Revenue Code of
1986, as amended (the "Code").
We have acted as counsel to Sanmina in connection with the Merger. As
such, and for the purpose of rendering this opinion, we have examined, and are
relying upon (without any independent investigation or review thereof) the truth
and accuracy, at all relevant times, of the statements, covenants,
representations and warranties contained in, the following documents (including
all exhibits and schedules attached thereto):
1. the Merger Agreement;
2. those certain tax representation letters dated October 28,
1998 delivered to us by Sanmina, Merger Sub and Altron
containing certain representations of Sanmina, Merger Sub and
Altron (the "Tax Representation Letters");
3. The Registration Statement on Form S-4 filed which contains a
joint proxy statement/prospectus Altron and Sanmina (the
"Registration Statement"); and
4. such other instruments and documents related to the formation,
organization and operation of Sanmina, Merger Sub and Altron
and related to the consummation of the Merger and the other
transactions contemplated by the Merger Agreement as we have
deemed necessary or appropriate.
<PAGE> 2
Sanmina Corporation
October 28, 1998
Page 2
In connection with rendering this opinion, we have assumed (without any
independent investigation or review thereof) that:
a. Original documents submitted to us (including signatures
thereto) are authentic, documents submitted to us as copies
conform to the original documents, and that all such documents
have been (or will be by the Effective Date) duly and validly
executed and delivered where due execution and delivery are a
prerequisite to the effectiveness thereof;
b. All representations, warranties and statements made or agreed
to by Sanmina, Merger Sub and Altron, their managements,
employees, officers, directors and shareholders in connection
with the Merger, including, but not limited to, those set
forth in the Merger Agreement (including the exhibits
thereto) and the Tax Representation Letters are true and
accurate at all relevant times;
c. All covenants contained in the Merger Agreement (including
exhibits thereto) and the Tax Representation Letters are
performed without waiver or breach of any material provision
thereof;
d. Any representation or statement made "to the best of
knowledge" or similarly qualified is correct without such
qualification; and
e. The opinion, dated October 28, 1998, from Hutchins, Wheeler &
Dittmar, A Professional Corporation, to Altron in satisfaction
of Section 6.2(c) of the Merger Agreement has been delivered
and has not been withdrawn.
Based on our examination of the foregoing items and subject to the
limitations, qualifications, assumptions and caveats set forth herein, we are of
the opinion that, for federal income tax purposes, the Merger will be a
reorganization within the meaning of Section 368(a)(1) of the Code.
In addition to your request for our opinion on this specific matter of
federal income tax law, you have asked us to review the discussion of federal
income tax consequences contained in the Registration Statement. We have
reviewed the discussion entitled "THE MERGER -- Material Federal Income Tax
Consequences" contained in the Registration Statement and are of the opinion
that the discussion in paragraphs (a) through (e) thereof fairly presents the
material federal income tax consequences to Sanmina, Altron, and Altron's
shareholders as a result of the Merger.
This opinion does not address the various state, local or foreign tax
consequences that may result from the Merger or the other transactions
contemplated by the Merger Agreement. In addition, no opinion is expressed as to
any federal income tax consequence of the Merger or the other transactions
<PAGE> 3
Sanmina Corporation
October 28, 1998
Page 3
contemplated by the Merger Agreement except as specifically set forth
herein, and this opinion may not be relied upon except with respect to the
consequences specifically discussed herein.
No opinion is expressed as to any transaction other than the Merger as
described in the Merger Agreement, or as to any other transaction whatsoever,
including the Merger, if all of the transactions described in the Merger
Agreement are not consummated in accordance with the terms of the Merger
Agreement and without waiver of any material provision thereof. To the extent
that any of the representations, warranties, statements and assumptions material
to our opinion and upon which we have relied are not accurate and complete in
all material respects at all relevant times, our opinion would be adversely
affected and should not be relied upon.
This opinion only represents our best judgment as to the federal income
tax consequences of the Merger and is not binding on the Internal Revenue
Service or any court of law, tribunal, administrative agency or other
Governmental Body. The conclusions are based on the Code, existing judicial
decisions, administration regulations and published rulings. No assurance can be
given that future legislative, judicial or administrative changes or
interpretations would not adversely affect the accuracy of the conclusions
stated herein. Nevertheless, by rendering this opinion, we undertake no
responsibility to advise you of any new developments in the application or
interpretation of the federal income tax laws.
This opinion has been delivered to you for the purpose of being
included as an exhibit to the Registration Statement and satisfying the
conditions set forth in Section 6.3(d) of the Merger Agreement. This opinion has
been delivered by us in our capacity as counsel to Sanmina. We hereby consent to
the filing of this opinion as an exhibit to the Registration Statement and to
the use of our name in the Registration Statement under "THE MERGER -- Material
Federal Income Tax Consequences" and "Legal Matters."
Very truly yours,
/s/ Wilson Sonsini Goodrich & Rosati
--------------------------------------
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE> 1
Exhibit 8.2
HUTCHINS, WHEELER & DITTMAR,
A Professional Corporation
101 Federal Street
Boston, MA 02110
October 28, 1998
Altron Incorporated
One Jewel Drive
Wilmington, Massachusetts 01887
Ladies and Gentlemen:
This opinion is being delivered to you in accordance with Section 6.2(c) of
the Amended and Restated Agreement and Plan of Merger dated as of September 2,
1998 (the "Merger Agreement") by and among Sanmina Corporation, a Delaware
corporation ("Parent"), SANM Acquisition Subsidiary, Inc., a Massachusetts
corporation and wholly owned subsidiary of Parent ("Sub"), and Altron
Incorporated, a Massachusetts corporation (the "Company"). Pursuant to the terms
of the Merger Agreement, Sub will merge with and into the Company (the "Merger")
and the Company will become a wholly owned subsidiary of Parent.
Except as otherwise provided, capitalized terms used but not defined herein
shall have the meanings set forth in the Merger Agreement. All section
references, unless otherwise indicated, are to the Internal Revenue Code of
1986, as amended (the "Code").
We have acted as counsel to the Company in connection with the Merger. As
such, and for the purpose of rendering this opinion, we have examined and are
relying upon (without any independent investigation or review thereof) the truth
and accuracy, at all relevant times, of the statements, covenants,
representations, and warranties contained in the following documents (including
all exhibits and schedules attached thereto):
(a) the Merger Agreement;
(b) those certain tax representation letters dated October 28, 1998
delivered to us by Parent, Sub, and the Company, containing certain
representations of Parent, Sub, and the Company (the "Tax
Representation Letters");
<PAGE> 2
Altron Incorporated
October 28, 1998
Page 2
(c) Continuity of Interest Certificate dated October 28, 1998, by a
certain shareholder of the Company in favor of Parent, Sub, and the
Company (the "Continuity of Interest Certificate");
(d) Form S-4 registration statement filed in connection with the Merger
(the "Registration Statement"); and
(e) such other instruments and documents related to the formation,
organization, and operation of Parent, Sub, and the Company and
related to the consummation of the Merger and the other transactions
contemplated by the Merger Agreement as we have deemed necessary or
appropriate.
In connection with rendering this opinion, we have assumed (without any
independent investigation or review thereof) that:
1. Original documents submitted to us (including signatures thereto) are
authentic, documents submitted to us as copies conform to the original
documents, and all such documents have been (or will be by the Effective Time)
duly and validly executed and delivered where due execution and delivery are a
prerequisite to the effectiveness thereof;
2. All statements, covenants, representations, and warranties made or
agreed to by Parent, Sub, and the Company, their managements, employees,
officers, directors, and shareholders in connection with the Merger, including,
but not limited to, those set forth in the Merger Agreement (including the
exhibits thereto), the Tax Representation Letters, and the Continuity of
Interest Certificate, are true and accurate at all relevant times;
3. All covenants contained in the Merger Agreement (including exhibits
thereto), the Tax Representation Letters, and the Continuity of Interest
Certificate are performed without waiver or breach of any material provision
thereof;
4. Any representation or statement made "to the best of knowledge" or
similarly qualified is correct without such qualification;
5. The total amount of Company Common Stock held by shareholders who have
elected to exercise appraisal rights does not exceed five percent (5%) of the
total Company Common Stock outstanding both at the date of the Shareholders
Meeting and at the Effective Time. For purposes of the preceding sentence,
shares of Company Common Stock (A) pursuant to which shareholders of the Company
exercise dissenters' rights in the Merger, (B) that are exchanged for
consideration in the Merger, including being exchanged for cash in lieu of
fractional shares of Parent Common Stock, or (C) that are redeemed or acquired
in a
<PAGE> 3
Altron Incorporated
October 28, 1998
Page 3
transaction that is in contemplation of or related to the Merger, shall be
considered outstanding shares of the Company Common Stock held by shareholders
of the Company at the applicable time; and
6. The opinion, dated October 28, 1998, from Wilson Sonsini Goodrich &
Rosati, Professional Corporation, to the Company in satisfaction of Section
6.3(d) of the Merger Agreement has been delivered and has not been withdrawn.
Based on our examination of the foregoing items and subject to the
limitations, qualifications, assumptions, and caveats set forth herein, we are
of the opinion that, for federal income tax purposes, the Merger will be a
reorganization within the meaning of Section 368(a) of the Code.
In addition to your request for our opinion on this specific matter of
federal income tax law, you have asked us to review the discussion of federal
income tax consequences contained in the Registration Statement. We have
reviewed the discussion entitled "The Merger -- Material Federal Income Tax
Consequences" contained in the Registration Statement and are of the opinion
that the discussion in paragraphs (a) through (e) thereof fairly presents the
material federal income tax consequences to Parent, the Company and the
Company's shareholders as a result of the Merger.
We consent to the reference to our firm under the captions "The Merger --
Material Federal Income Tax Consequences" and "Legal Matters" in the
Registration Statement and to the filing of this opinion as an exhibit to the
Registration Statement.
This opinion does not address the various state, local, or foreign tax
consequences that may result from the Merger or the other transactions
contemplated by the Merger Agreement. In addition, no opinion is expressed as to
any federal income tax consequence of the Merger or the other transactions
contemplated by the Merger Agreement except as specifically set forth herein,
and this opinion may not be relied upon except with respect to the consequences
specifically discussed herein.
No opinion is expressed as to any transaction other than the Merger as
described in the Merger Agreement, or as to the Merger if all of the
transactions described in the Merger Agreement are not consummated in accordance
with the terms of the Merger Agreement and without waiver or breach of any
material provision thereof. To the extent that any of the statements, covenants,
representations, warranties, and assumptions material to our opinion and upon
which we have relied are not accurate and complete in all material respects at
all relevant times, our opinion would be adversely affected and should not be
relied upon.
<PAGE> 4
Altron Incorporated
October 28, 1998
Page 4
This opinion represents only our best judgment as to the federal income tax
consequences of the Merger and is not binding on the Internal Revenue Service or
any court of law, tribunal, administrative agency, or other governmental body.
The conclusions are based on the Code, judicial decisions, administrative
regulations, and published rulings existing on the date hereof. No assurance can
be given that future legislative, judicial, or administrative changes or
interpretations, on either a prospective or retroactive basis, would not
adversely affect the accuracy of the conclusions stated herein. Nevertheless, by
rendering this opinion, we undertake no responsibility to advise you of any new
developments in the application or interpretation of the federal income tax
laws.
This opinion is being delivered by us in our capacity as counsel to the
Company, for the purpose of satisfying the conditions set forth in Section
6.2(c) of the Merger Agreement and for the purpose of being included as an
exhibit to the Registration Statement. It is intended for the benefit of the
Company and its shareholders and may not be relied upon or utilized for any
other purpose or by any other person and may not be made available to any other
person without our prior written consent.
Very truly yours,
/s/ Hutchins Wheeler & Dittmar
HUTCHINS, WHEELER & DITTMAR,
A Professional Corporation
<PAGE> 1
EXHIBIT 21
List of Subsidiaries
Subsidiary Jurisdiction of Incorporation
Sanmina Cable Systems, Inc. Texas
Comptronix Corporation N/A
Elexsys International, Inc. Delaware
Sanmina B.V. Netherlands
Sanmina Ireland Ltd. (a subsidiary
of Sanmina B.V.) Ireland
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our reports dated October 21,
1997 (except for the matter discussed in Note 10, as to which the date is
November 6, 1997) included in Sanmina's Form 10-K for the year ended September
30, 1997 and to all references to our Firm included in this Registration
Statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
San Jose, California
October 28, 1998
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 11, 1998
included in Altron, Inc.'s Form 10-K for the year ended January 3, 1998 and to
all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
-------------------------
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 26, 1998
<PAGE> 1
Exhibit 99.1
CONSENT OF NEEDHAM & COMPANY, INC.
We hereby consent to the inclusion in the Proxy Statement/Prospectus of
Sanmina Corporation and Altron Incorporated forming part of this Registration
Statement on Form S-4 of our opinion dated September 2, 1998 to the Board of
Directors of Altron Incorporated attached as Annex III to such Proxy
Statement/Prospectus and to the references to our opinion under the captions
"Summary--The Merger--Opinion of Altron's Financial Advisor" and "The
Merger--Background of the Merger" and "--Opinion of Altron's Financial
Advisor." In giving such consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, nor do we thereby admit that we are experts with respect
to any part of such Registration Statement within the meaning of the term
"experts" as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
/s/ Needham & Company, Inc.
---------------------------
NEEDHAM & COMPANY, INC.
October 28, 1998
