<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SANMINA CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<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
2700 NORTH FIRST STREET
SAN JOSE, CALIFORNIA 95134
(408) 964-3500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
CHRISTOPHER D. MITCHELL, ESQ STEPHEN A. HURWITZ, ESQ.
WILSON SONSINI GOODRICH & ROSATI TESTA, HURWITZ & THIBEAULT, LLP
PROFESSIONAL CORPORATION 125 HIGH STREET
650 PAGE MILL ROAD BOSTON, MASSACHUSETTS 02110
PALO ALTO, CALIFORNIA 94304 (617) 248-7000
(650) 493-9300
</TABLE>
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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
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS TO BE OFFERING PRICE AGGREGATE REGISTRATION
OF SECURITIES TO BE REGISTERED(1) REGISTERED(2) PER SHARE OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par value................. 21,696,469 shares $55.84(3) $1,211,530,829(3) $319,844(4)
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</TABLE>
(1) The Registration Statement relates to securities of the Registrant issuable
to holders of common stock of Hadco Corporation, a Massachusetts corporation
("Hadco"), in the proposed merger (the "Merger") of a wholly-owned
subsidiary of the Registrant with and into Hadco.
(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 on May 15, 2000.
(4) A registration fee totaling $221,005 was paid on May 2, 2000 by Hadco in
connection with the filing of preliminary proxy materials of Hadco included
in the Registration Statement. As a result, $98,839 is being paid concurrent
with this filing.
------------------------
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.
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<PAGE> 2
PROXY STATEMENT FOR SPECIAL
MEETING OF STOCKHOLDERS OF
[HADCO CORPORATION LOGO]
To be held on June 23, 2000
Hadco Corporation and Sanmina Corporation have agreed to merge Hadco with a
subsidiary of Sanmina. Hadco will become a wholly owned subsidiary of Sanmina,
and Hadco stockholders will receive 1.40 shares of Sanmina Common Stock for each
share of Hadco Common Stock they own.
We estimate that the shares of Sanmina Common Stock to be issued to Hadco
stockholders will represent approximately 13.1% of the outstanding Sanmina
shares after the Merger.
Sanmina is quoted on the Nasdaq National Market under the symbol "SANM,"
and on May 18, 2000, Sanmina Common Stock closed at $59.00 per share. Hadco
Corporation is listed on the New York Stock Exchange under the symbol "HDC," and
on May 18, 2000, Hadco Common Stock closed at $81.375 per share.
PROSPECTUS OF
[SANMINA LOGO]
COMMON STOCK, PAR VALUE $0.01
The Merger cannot be completed unless the Hadco stockholders approve it.
The Hadco Board of Directors has scheduled a special meeting for Hadco
stockholders to vote on the Merger as follows:
June 23, 2000
10:00 a.m.
Testa, Hurwitz & Thibeault, LLP
Conference Center, 20(th) Floor
High Street Tower
125 High Street
Boston, Massachusetts
This document gives you detailed information about the proposed Merger.
Sanmina has provided the information concerning Sanmina, and Hadco has provided
the information concerning Hadco. Please see "References to Additional
Information" and "Where You Can Find More Information" on pages 2 and 66,
respectively, for additional information about Hadco and Sanmina on file with
the United States Securities and Exchange Commission.
IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE SECTION ENTITLED "RISK
FACTORS" BEGINNING ON PAGE 15 IN THIS DOCUMENT FOR A DISCUSSION OF RISKS
ASSOCIATED WITH THE MERGER.
This proxy statement/prospectus and proxy are being mailed to stockholders
of Hadco beginning about May 24, 2000.
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 MAY 22, 2000.
<PAGE> 3
[HADCO CORPORATION LOGO]
May 22, 2000
To Our Stockholders:
We invite you to attend a special meeting of the Stockholders of Hadco
Corporation ("Hadco") to be held at Testa, Hurwitz & Thibeault, LLP, Conference
Center, 20th Floor, High Street Tower, 125 High Street, Boston, Massachusetts on
Friday, June 23, 2000 at 10:00 a.m. At the special meeting, Hadco stockholders
will be asked to approve an 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 Hadco (the "Merger"). If the Merger is consummated, Hadco
will become a wholly-owned subsidiary of Sanmina, and each outstanding share of
Hadco 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 THE PROPOSED TRANSACTION IS IN THE BEST
INTERESTS OF HADCO AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD UNANIMOUSLY
RECOMMENDS THAT YOU VOTE TO APPROVE THE AGREEMENT AND PLAN OF MERGER AND THE
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 Hadco Common Stock are voted.
Sincerely,
/s/ Andrew E. Lietz
ANDREW E. LIETZ
President, Chief Executive Officer and
Director
<PAGE> 4
HADCO CORPORATION
12A MANOR PARKWAY
SALEM, NEW HAMPSHIRE 03079
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
A special meeting of the stockholders of Hadco Corporation ("Hadco") will
be held at Testa, Hurwitz & Thibeault, LLP, Conference Center, 20th Floor, High
Street Tower, 125 High Street, Boston, Massachusetts on Friday, June 23, 2000 at
10:00 a.m. for the following purposes:
1. To consider and act upon a proposal to approve the Agreement and Plan of
Merger among Sanmina Corporation ("Sanmina"), SANM Acquisition
Subsidiary, Inc. ("Merger Sub") and Hadco dated April 17, 2000, as
amended, (the "Merger Agreement") and the merger, pursuant to which
Merger Sub will merge with and into Hadco (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 of the meeting,
including without limitation, potential postponements or adjournments
for the purpose of soliciting additional proxies in order to approve the
above proposal.
The affirmative vote of two-thirds of the outstanding shares of Hadco
Common Stock entitled to vote at the special meeting is required to approve the
Merger Agreement and the Merger.
The Board of Directors has fixed the close of business on May 19, 2000 as
the record date for determining the stockholders entitled to notice of and to
vote at the special meeting and any adjournments or postponements of the
meeting. Only holders of record of shares of Hadco Common Stock at the close of
business on the record date are entitled to notice of and to vote at the special
meeting and any adjournments or postponements of the meeting.
YOUR VOTE IS VERY IMPORTANT REGARDLESS OF HOW MANY SHARES OF HADCO 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 OF THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE PERSONALLY ON
THE MATTERS PROPERLY BROUGHT BEFORE THE SPECIAL MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
James C. Hamilton
Clerk
May 22, 2000
NOTICE OF APPRAISAL RIGHTS
If the Merger Agreement and Merger are approved by the stockholders of
Hadco at the special meeting and the Merger is consummated, any Hadco
stockholder (1) who files with Hadco before the taking of the vote on the
approval of the Merger Agreement and Merger written objection to the proposed
Merger stating that he or she intends to demand payment for his or her Hadco
shares if the Merger is consummated and (2) whose shares are not voted in favor
of the Merger Agreement and Merger has or may have the right to demand in
writing from Hadco (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. Hadco and any such stockholder shall in such cases have the rights and
duties and shall follow the procedure set forth in Sections 85 to 98, inclusive,
of Chapter 156B of the General Laws of Massachusetts, copies of which are
attached as Annex V to the accompanying proxy statement/prospectus. See "Other
Matters -- Rights of Dissenting Stockholders" on page 58 of this proxy
statement/prospectus for more information.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
REFERENCES TO ADDITIONAL INFORMATION........................ 2
SUMMARY..................................................... 3
The Companies............................................. 3
Reasons for the Merger.................................... 3
Recommendation to Hadco Stockholders...................... 4
The Merger................................................ 4
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA............. 9
Sanmina Selected Historical Consolidated Financial Data... 9
Hadco Selected Historical Consolidated Financial Data..... 11
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
DATA...................................................... 12
COMPARATIVE PER SHARE DATA.................................. 13
RISK FACTORS................................................ 15
Risks Related To The Merger............................... 15
Risks Related To Sanmina Common Stock..................... 16
COMPARATIVE STOCK PRICES AND DIVIDEND POLICY................ 25
THE SPECIAL MEETING......................................... 27
Date, Time, Place and Purpose............................. 27
Record Date; Shares Entitled to Vote; Vote Required....... 28
Proxies; Proxy Solicitation............................... 28
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
OF HADCO.................................................. 30
THE COMPANIES............................................... 33
Sanmina Corporation....................................... 33
Hadco Corporation......................................... 33
THE MERGER.................................................. 35
Background of the Merger.................................. 35
Hadco's Reasons for the Merger............................ 37
Recommendation of the Hadco Board......................... 39
Opinion of Hadco's Financial Advisor...................... 39
Material Federal Income Tax Consequences.................. 45
Anticipated Accounting Treatment.......................... 46
Interests of Certain Persons in the Merger................ 46
Resale of Sanmina Common Stock............................ 48
THE MERGER AGREEMENT, THE STOCKHOLDERS AGREEMENT AND THE
STOCK OPTION AGREEMENT.................................... 49
The Merger Agreement...................................... 49
Effect of Merger....................................... 49
Merger Consideration................................... 49
Exchange Agent and Exchange Procedures................. 50
</TABLE>
i
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Representations and Warranties......................... 51
Conduct of Business Pending the Merger................. 52
No Solicitation........................................ 52
Expenses and Termination Fees.......................... 53
Conditions to Completion of the Merger................. 54
Termination............................................ 55
Amendment, Extension and Waiver........................ 56
The Stockholders Agreement................................ 56
The Stock Option Agreement................................ 57
OTHER MATTERS............................................... 58
Governmental and Regulatory Matters....................... 58
Rights of Dissenting Stockholders......................... 58
Comparison of Rights of Stockholders of Hadco and
Sanmina................................................ 59
DESCRIPTION OF SANMINA CAPITAL STOCK........................ 63
EXPERTS..................................................... 65
LEGAL MATTERS............................................... 65
STOCKHOLDER PROPOSALS....................................... 65
NOTICE OF BYLAW AMENDMENT................................... 65
WHERE YOU CAN FIND MORE INFORMATION......................... 66
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
STATEMENTS................................................ F-1
</TABLE>
ANNEXES
<TABLE>
<S> <C>
Annex I Agreement and Plan of Merger
Annex II Stockholders Agreement
Annex III Stock Option Agreement
Annex IV Opinion of Morgan Stanley & Co. Incorporated
Annex V Sections 85 to 98 of Chapter 156B of the Massachusetts
Business Corporation Law
</TABLE>
ii
<PAGE> 7
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY ARE SANMINA AND HADCO PROPOSING TO MERGE?
A: This is a unique opportunity for Hadco to join Sanmina, one of the world's
leading providers of customized integrated electronics manufacturing services,
and for Hadco stockholders to become Sanmina stockholders. We anticipate that
the Merger will create significant growth and business expansion opportunities
for the combined company which are greater than those that would be available to
Hadco as an independent company.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: If the Merger is completed, you will receive 1.40 shares of Sanmina Common
Stock for each share of Hadco Common Stock you own. Sanmina will not issue
fractional shares of Sanmina Common Stock in the Merger. You will also receive
cash based on the market price of Sanmina Common Stock instead of any fractional
share.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the information contained in this
proxy statement/prospectus, please complete, date and sign your proxy and return
it in the enclosed return envelope as soon as possible, so that your shares may
be represented at the special meeting. If you sign and send in your proxy and do
not indicate how you want to vote, we will count your proxy as a vote in favor
of approval of the Merger Agreement and Merger. If you abstain from voting or do
not vote, it will have the same effect as a vote against approval of the Merger
Agreement and Merger. The special meeting will take place on June 23, 2000. You
may attend the special meeting and vote your shares in person. Even if you plan
to attend the special meeting, we recommend that you complete, sign and date the
enclosed proxy and return it promptly in the enclosed postage-paid envelope.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?
A: Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You can do this in one of three ways. First, you can send a
written notice stating that you would like to revoke your proxy. Second, you can
complete and submit a new proxy. If you choose either of these two methods, you
must submit your notice of revocation or your new proxy to the Clerk and Chief
Financial Officer of Hadco at the address for Hadco set forth below. Third, you
can attend the special meeting and vote in person. Attendance at the special
meeting without voting in person will not revoke your proxy. If you hold your
shares through a broker or bank, you should follow the instructions provided by
that firm to revoke your proxy.
Q: IF MY HADCO SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A: Your broker will not be able to vote your Hadco shares on your behalf unless
you provide instructions on how to vote. You should follow the directions
provided by your broker regarding how to instruct your broker to vote your
shares. Without instructions, your shares will not be voted at the special
meeting, which will have the same effect as a vote against approval of the
Merger Agreement and Merger.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the Merger is completed, you will receive written instructions for
exchanging your stock certificates. Please do not send in your stock
certificates with your proxy.
1
<PAGE> 8
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the Merger or you need additional copies of
this proxy statement/ prospectus or the enclosed proxy, you should contact:
Hadco Corporation
12A Manor Parkway
Salem, New Hampshire 03079
Attention: Chief Financial Officer
(603) 898-8000
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about Sanmina and Hadco from documents that are not
included in or delivered with this proxy statement/ prospectus. This information
is available to you without charge upon your written or oral request. You can
obtain documents incorporated by reference in this proxy statement/prospectus by
requesting them in writing or by telephone from the appropriate company at the
following addresses and telephone numbers:
<TABLE>
<S> <C>
Sanmina Corporation Hadco Corporation
2700 North First Street 12A Manor Parkway
San Jose, California 95134 Salem, New Hampshire 03079
Attention: Investor Relations Attention: Chief Financial Officer
Telephone: (408) 964-3500 Telephone: (603) 898-8000
</TABLE>
If you would like to request documents, please do so by June 15, 2000 in
order to receive them before the special meeting of the Hadco stockholders.
See "Where You Can Find More Information" on page 66.
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
HADCO CORPORATION
12A Manor Parkway
Salem, New Hampshire 03079
(603) 898-8000
Hadco is the largest manufacturer of advanced electronic interconnect
products in North America. Hadco offers a wide array of sophisticated
manufacturing, engineering and systems integration services to meet its
customers' electronic interconnect needs. Hadco's principal products are
multilayer rigid printed circuits and backplane and systems assemblies. Hadco's
advanced manufacturing and assembly facilities are designed to meet the
accelerated time-to-market and time-to-volume requirements of its customers
whose markets are characterized by high growth rates, rapid technological
advances and short product life cycles. Hadco focuses on commercializing
advanced technologies, such as embedded passives, advanced materials, laser
direct imaging and fine pitch assembly. Hadco also provides customers with
design services and engineering assistance in their product development.
SANMINA CORPORATION
2700 North First Street
San Jose, California 95134
(408) 964-3500
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 multilayer printed circuit boards, electronic
enclosure systems manufacture, 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. Sanmina also manufactures custom cable and wire
harness assemblies for electronics industry OEMs. These manufacturing services
are provided by Sanmina personnel at Sanmina's facilities.
REASONS FOR THE MERGER
The Hadco Board of Directors believes that the terms of the Merger and the
Merger Agreement are fair to, and in the best interests of, Hadco and its
stockholders. In reaching its decision, the Hadco Board of Directors considered
numerous factors, including the following:
- The financial condition, results of operations and businesses of Hadco
and Sanmina before and after giving effect to the Merger.
- The near- and long-term prospects of Hadco as an independent company and
of Sanmina.
- The opportunity for Hadco stockholders to participate in the potential
for greater growth, operational efficiencies, financial strength and
earning power of the combined company after the Merger.
3
<PAGE> 10
- Industry trends toward consolidation and the advantages that might be
expected to accrue to the combined company through the creation of a
larger customer base, a higher market profile, greater financial strength
and broader customer offerings, which could enhance the ability of the
combined company to compete in the marketplace.
RECOMMENDATION TO HADCO STOCKHOLDERS
The Hadco Board of Directors believes that the Merger is in the best
interests of Hadco and its stockholders and unanimously recommends that you vote
FOR approval of the Merger Agreement and the Merger.
THE MERGER
The Merger Agreement is attached as Annex I to this proxy
statement/prospectus and is incorporated by reference in this proxy
statement/prospectus. We encourage you to read the Merger Agreement as it is the
legal document that governs the Merger.
WHAT HADCO STOCKHOLDERS WILL RECEIVE
As a result of the Merger, Hadco stockholders will receive 1.40 shares of
Sanmina Common Stock for each share of Hadco Common Stock that they own at the
effective time of the Merger (the "Effective Time"). The number of shares of
Sanmina Common Stock that will be issued for each share of Hadco Common Stock is
fixed. This number of shares will not be adjusted as a result of changes in
either Hadco's or Sanmina's stock price, except as described below. As a result,
the value of the shares Hadco stockholders will receive in the Merger will not
be known at the time you vote at the special meeting. If the average last
reported sale price of Sanmina Common Stock is less than $40.00 over the 20
trading days ending on the third trading day prior to the special meeting, Hadco
may terminate the Merger Agreement. In that event, however, Sanmina has the
right, but not the obligation, to complete the Merger by increasing the exchange
ratio to an amount equal to $56.00 divided by the average last reported sale
price of Sanmina Common Stock over the 20 trading days ending on the third
trading day prior to the special meeting, assuming all other closing conditions
have been satisfied.
For example, if the average last reported sale price of Sanmina Common
Stock was $35.00 during this 20 day period, Sanmina could elect to increase the
exchange ratio to 1.6 ($56.00 divided by $35.00), in which event the Merger
would be completed (assuming the other closing conditions under the Merger
Agreement were satisfied).
Hadco 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 Common Stock.
For example, if a Hadco stockholder owns 51 shares of Hadco Common Stock,
this will translate into 71.40 shares of Sanmina Common Stock when multiplied by
the 1.40 Exchange Ratio. He or she would receive 71 shares of Sanmina Common
Stock and a check in the amount of 0.40 times the closing price of Sanmina
Common Stock at the Effective Time. Assuming a Sanmina market price of $50.00
this check would be in the amount of $20.00.
DO NOT SEND IN YOUR STOCK CERTIFICATES UNTIL INSTRUCTED TO DO SO AFTER THE
MERGER IS COMPLETED.
For additional information, please see "The Merger Agreement, The
Stockholders Agreement And The Stock Option Agreement -- The Merger
Agreement -- Effect of Merger," "-- Merger Consideration" and "-- Exchange Agent
and Exchange Procedures" on pages 49 and 50.
OTHER INTERESTS OF OFFICERS AND DIRECTORS IN THE MERGER
In considering the recommendation of Hadco's Board of Directors for the
approval of the Merger Agreement and the Merger, you should be aware that some
members of Hadco's management and the Hadco
4
<PAGE> 11
Board may have interests in the Merger that are different from, and in addition
to, your interests as stockholders of Hadco generally.
These include:
- accelerated vesting of stock options;
- employment arrangements and severance agreements; and
- indemnification rights and directors' and officers' liability insurance.
In discussing the fairness of the Merger to the stockholders of Hadco, the
Hadco Board took into account these interests. For more detailed information
regarding these matters, please see "The Merger -- Interests of Certain Persons
in the Merger" on page 46.
WHAT WILL HAPPEN TO HADCO
If the Merger is completed, Hadco will merge with a wholly owned subsidiary
of Sanmina and will become a wholly owned subsidiary of Sanmina. Individuals who
owned stock in Hadco 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 the Merger Agreement by holders of two-thirds of the
outstanding shares of Hadco Common Stock, approval for listing on the Nasdaq
National Market of Sanmina Common Stock to be issued in the Merger or pursuant
to the Stock Option Plans, the termination or expiration of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act and the absence of any
injunction or other legal restraint preventing the occurrence of the Merger. See
"The Merger Agreement, The Stockholders Agreement And The Stock Option
Agreement -- The Merger Agreement -- Conditions to Completion of the Merger" on
page 54.
TERMINATION OF THE MERGER AGREEMENT
Hadco and Sanmina can agree to terminate the Merger Agreement at any time
without completing the Merger. In addition, either company can agree to
terminate the Merger Agreement without completing the Merger, if, among other
things and under certain circumstances, any of the following occurs:
- The Merger is not completed by September 30, 2000, or November 15, 2000
if the principal reason the Merger cannot be completed is a legal
restraint or prohibition or an inability to obtain governmental
regulatory clearance;
- A temporary restraining order, injunction or order issued by any court or
other legal restraint or prohibition prevents the completion of the
Merger;
- The holders of two-thirds of the outstanding shares of Hadco Common Stock
do not approve the Merger Agreement;
- The Hadco Board determines that, as a result of receipt of a superior
proposal made by a third party, it is necessary for the Board to
terminate the Merger Agreement in order to comply with its fiduciary
duties to the Hadco stockholders; or
- The other party breaches or materially fails to comply with any of its
representations, warranties or obligations under the Merger Agreement,
subject to the breach being cured.
Hadco may also terminate the Merger Agreement if the average last reported
sale price of Sanmina Common Stock is less than $40.00 over the 20 trading days
ending on the third trading day prior to the special meeting. In that event,
however, Sanmina has the right, but not the obligation, to complete the Merger
by increasing the exchange ratio to an amount equal to $56.00 divided by the
average last reported sale price of Sanmina Common Stock over the 20 trading
days ending on the third trading day prior to the special meeting, assuming all
other closing conditions have been satisfied.
5
<PAGE> 12
Sanmina may also terminate the Merger Agreement if the Hadco Board
withdraws or modifies its approval or recommendation of the Merger Agreement or
Merger in a manner adverse to Sanmina or fails to reconfirm its recommendation
upon request by Sanmina following a takeover proposal by a third party, or
approves or recommends any takeover proposal by a third party. See "The Merger
Agreement, The Stockholders Agreement And The Stock Option Agreement -- The
Merger Agreement -- Termination" on page 55.
TERMINATION FEES
The Merger Agreement generally requires Hadco to pay to Sanmina a
termination fee of $23.87 million if Hadco's Board terminates the Merger
Agreement after it determines that, as a result of a superior proposal from a
third party, failure to terminate the Merger Agreement would be a breach of the
Board's fiduciary duties under applicable law. Additionally, the Merger
Agreement also requires Hadco to pay to Sanmina this termination fee under
certain other circumstances involving Hadco's failure to complete the Merger
where a takeover proposal by a third party has been announced and not withdrawn
if, within one year after the termination described above, Hadco is acquired by
a third party or enters into an agreement to be acquired and the acquisition
transaction is completed at any time in the future. If, on the other hand, the
Merger is not completed due to the willful and intentional acts of Sanmina in
contravention of the Merger Agreement, Sanmina must pay a termination fee of
$23.87 million to Hadco. See "The Merger Agreement, The Stockholders Agreement
and The Stock Option Agreement -- The Merger Agreement -- Expenses and
Termination Fees" on page 53.
VOTE REQUIRED
The affirmative vote of the holders of 66 2/3% of the outstanding shares of
Hadco Common Stock entitled to vote at the special meeting is legally required
for approval of the Merger Agreement and Merger. See "The Special
Meeting -- Record Date; Shares Entitled to Vote; Vote Required" on page 28.
STOCKHOLDERS AGREEMENT
As a condition to entering into the Merger Agreement, all of the directors
and certain of the executive officers of Hadco entered into the Stockholders
Agreement dated as of April 17, 2000, under which they agreed to vote all of
their shares of Hadco Common Stock to approve the Merger Agreement. The Hadco
stockholders who entered into the Stockholders Agreement collectively held
approximately 6.2% of the outstanding Hadco Common Stock as of the record date.
The Stockholders Agreement is attached as Annex II to this proxy
statement/prospectus. We encourage you to read the Stockholders Agreement in its
entirety.
STOCK OPTION AGREEMENT
On April 17, 2000, Hadco entered into a Stock Option Agreement with Sanmina
which grants Sanmina the option to buy 2,752,351 shares of Hadco Common Stock,
representing 19.9% of the shares of Hadco Common Stock outstanding on April 17,
2000, or approximately 16.6% after issuance of the shares of Hadco Common Stock
subject to the option. The exercise price of the option is $69.0375 per share.
The option may discourage third parties who are interested in acquiring a
significant ownership interest in Hadco and is intended to increase the
likelihood that the Merger will be completed.
The option is not currently exercisable and Sanmina may exercise the option
only if the Merger Agreement is terminated under circumstances which would
obligate Hadco to pay the termination fee. If the Merger Agreement is terminated
under circumstances upon which Hadco is not obligated to pay the termination
fee, the option will terminate and may not be exercised by Sanmina.
The Stock Option Agreement is attached as Annex III to this proxy
statement/prospectus. We encourage you to read the Stock Option Agreement in its
entirety.
6
<PAGE> 13
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 on April 28, 2000. It is possible that these
governmental authorities may impose conditions for granting their approval. We
cannot predict whether we will obtain all the required regulatory approvals
within the time frame contemplated by the Merger Agreement or without
conditions. In addition, 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"
on page 58.
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" on page 46.
OPINION OF FINANCIAL ADVISOR
In deciding to approve the Merger, Hadco's Board considered the opinion of
its financial advisor, Morgan Stanley & Co. Incorporated, that as of April 17,
2000 and subject to certain assumptions and other matters described therein, the
exchange ratio in the Merger Agreement was fair, from a financial point of view,
to the stockholders of Hadco. This opinion is attached as Annex IV to this proxy
statement/prospectus. We encourage you to read this opinion in its entirety,
although it is limited to the fairness, from a financial point of view, of the
exchange ratio to the Hadco stockholders and does not constitute a
recommendation as to how you should vote. See "The Merger -- Opinion of Hadco's
Financial Advisor" on page 39.
IMPORTANT FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a tax-free reorganization for United
States federal income tax purposes. Accordingly, Hadco stockholders will not
recognize any gain or loss for United States federal income tax purposes in
connection with the Merger. However, Hadco stockholders will recognize gain or
loss with respect to cash received instead of fractional shares or pursuant to
the exercise of dissenters' rights. See "The Merger -- Material Federal Income
Tax Consequences" on page 45. All stockholders are urged to consult their own
tax advisor to determine their particular tax consequences of the Merger.
RIGHTS OF DISSENTING STOCKHOLDERS
Under Massachusetts law, Hadco stockholders who do not vote in favor of the
Merger Agreement and 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 Common
Stock to be paid to other Hadco stockholders according to the Merger Agreement.
Dissenting Hadco 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 V. See "Other Matters -- Rights of Dissenting Stockholders"
on page 58.
LISTING OF SANMINA COMMON STOCK
The shares of Sanmina Common Stock issued in connection with the Merger and
to be issued under the stock and option plans of Hadco that will be assumed by
Sanmina in connection with the Merger will be listed on the Nasdaq Stock
Market's National Market.
7
<PAGE> 14
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Shares of Sanmina Common Stock are quoted on the Nasdaq National Market.
Shares of Hadco Common Stock are listed on the New York Stock Exchange. On April
17, 2000, the last full trading day prior to the public announcement of the
proposed Merger, Sanmina Common Stock closed at $50.94 per share on the Nasdaq
National Market and Hadco Common Stock closed at $60.50 per share on the New
York Stock Exchange. On May 18, 2000, Sanmina Common Stock closed at $59.00 per
share and Hadco Common Stock closed at $81.375 per share.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
Hadco 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 benefits of the Merger and
results of operations of the combined company as well as statements preceded by,
followed by, or that include the words "believes," "expects," "anticipates,"
"intends," "future," "could," "may" and similar words or expressions (as well as
other words or expressions referencing future events, conditions or
circumstances). You should understand that certain important factors, in
addition to those discussed elsewhere in this document and in the documents
which we incorporate by reference, could affect the future results of the
combined company and could cause these results to differ materially from those
expressed in our forward-looking statements. Many of the factors that will
determine these results are beyond our ability to control or predict.
Stockholders are cautioned not to put undue reliance on any forward-looking
statement. For a discussion of some of the factors that may cause actual results
to differ materially from those suggested by the forward-looking statements,
please read carefully the information under "Risk Factors" beginning on page 15.
8
<PAGE> 15
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
SANMINA SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The selected historical consolidated financial data as of September 30,
1995, 1996, and 1997 and for the years ended September 30, 1995 and 1996 are
derived from financial statements of Sanmina not included or incorporated by
reference in this proxy statement/prospectus. The historical consolidated
statement of operations data for the years ended September 30, 1997, September
30, 1998 and October 2, 1999, and the selected historical consolidated balance
sheet data as of September 30, 1998 and October 2, 1999 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 is also incorporated
by reference in this proxy statement/prospectus. The historical consolidated
financial data as of April 1, 2000 and for the six-month periods ended April 3,
1999 and April 1, 2000 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 data. Operating results for the interim period
are not necessarily indicative of the results of Sanmina that may be expected
for the entire year. All share and per share data reflect the two-for-one stock
split in the form of a 100 percent stock dividend on March 22, 2000. The
following summary consolidated financial data should be read together with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the consolidated financial statements and related notes and
other financial data contained in Sanmina's Form 10-K for its fiscal year ended
October 2, 1999 and Form 10-Q for its six-month period ended April 1, 2000.
9
<PAGE> 16
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------ SIX MONTHS ENDED
SEPTEMBER 30, ---------------------
----------------------------------------- OCTOBER 2, APRIL 3, APRIL 1,
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- ---------- -------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $469,394 $617,487 $803,064 $991,821 $1,214,744 $556,673 $1,014,997
Cost of sales...................... 375,238 484,687 640,644 783,949 962,595 442,774 849,670
-------- -------- -------- -------- ---------- -------- ----------
Gross profit..................... 94,156 132,800 162,420 207,872 252,149 113,899 165,327
Selling, general and administrative
expenses......................... 36,278 45,483 63,856 67,165 74,796 37,387 42,372
Amortization of goodwill........... 568 2,000 2,283 3,127 3,269 1,555 3,893
Provision for plant closing and
relocation costs................. -- -- 8,876 -- 16,875 16,875 --
Write down of long-lived assets.... -- -- -- -- 11,400 11,400 --
Merger costs....................... -- -- -- 3,945 5,479 5,479 --
-------- -------- -------- -------- ---------- -------- ----------
Operating income................... 57,310 85,317 87,405 133,635 140,330 41,203 119,062
Other income (expense), net........ (681) (760) (1,691) (272) 7,549 3,547 6,092
Income before provision for income
taxes and extraordinary item..... 56,629 84,557 85,714 133,363 147,879 44,750 125,154
Provision for income taxes......... 20,965 29,543 36,358 47,734 54,182 16,540 45,056
Gain from exchange of convertible
subordinated debentures for
common stock, net of expenses.... 1,833 -- -- -- -- -- --
-------- -------- -------- -------- ---------- -------- ----------
Net income......................... $ 37,497 $ 55,014 $ 49,356 $ 85,629 $ 93,697 $ 28,210 $ 80,098
======== ======== ======== ======== ========== ======== ==========
Basic earnings per share:
Income before extraordinary
item........................... $ 0.39 $ 0.58 $ 0.51 $ 0.85 $ 0.81 $ 0.25 $ 0.66
Extraordinary item............... 0.02 -- -- -- -- -- --
Net income per share............. $ 0.41 $ 0.58 $ 0.51 $ 0.85 $ 0.81 $ 0.25 $ 0.66
Shares used in computing basic per
share amounts.................... 90,623 94,277 96,602 100,602 115,948 115,136 121,219
Diluted earnings per share:
Income before extraordinary
item........................... $ 0.38 $ 0.52 $ 0.46 $ 0.76 $ 0.76 $ 0.23 $ 0.62
Extraordinary item............... 0.02 -- -- -- -- -- --
Net income per share............. $ 0.40 $ 0.52 $ 0.46 $ 0.76 $ 0.76 $ 0.23 $ 0.62
Shares used in computing diluted
per share amounts................ 95,945 111,332 115,231 117,194 123,324 122,509 128,672
</TABLE>
<TABLE>
<CAPTION>
AS OF
--------------------------------------------------------------------
SEPTEMBER 30,
----------------------------------------- OCTOBER 2, APRIL 1,
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- ---------- -----------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments............................... $150,439 $155,069 $152,520 $181,504 $ 454,602 $ 856,286
Working capital............................. 200,703 228,620 251,350 300,337 667,784 1,217,796
Total assets................................ 368,858 450,134 553,478 658,367 1,201,713 1,933,935
Long-term debt.............................. 113,997 117,726 120,307 19,408 357,980 357,269
Stockholders' equity........................ 166,493 233,959 297,870 481,985 626,347 1,260,529
</TABLE>
10
<PAGE> 17
HADCO SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The selected historical consolidated financial data as of October 28, 1995,
October 26, 1996, and October 25, 1997 and for the years ended October 28, 1995
and October 26, 1996 are derived from financial statements of Hadco not included
or incorporated by reference in this proxy statement/prospectus. The historical
consolidated statement of operations data for the years ended October 25, 1997,
October 31, 1998 and October 30, 1999 and the selected historical consolidated
balance sheet data as of October 31, 1998 and October 30, 1999 are derived from
the audited consolidated financial statements of Hadco incorporated by reference
in this proxy statement/prospectus. These statements have been audited by Arthur
Andersen LLP, independent public accountants, whose report is also incorporated
by reference in this proxy statement/prospectus. The historical consolidated
financial data as of April 29, 2000 and for the six-month periods ended May 1,
1999 and April 29, 2000 are derived from unaudited consolidated financial
statements of Hadco and, in the opinion of Hadco, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
representation of the financial data. Operating results for the interim period
are not necessarily indicative of the results of Hadco that may be expected for
the entire year. The following summary consolidated financial data should be
read together with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and the consolidated financial statements and
related notes and other financial data contained in Hadco's Form 10-K for its
fiscal year ended October 30, 1999 and Form 10-Q for its quarterly period ended
April 29, 2000.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
------------------------------------------------------------------- -------------------------
OCTOBER 28, OCTOBER 26, OCTOBER 25, OCTOBER 31, OCTOBER 30, MAY 1, APRIL 29,
1995 1996 1997 1998 1999 1999 2000
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales....................... $265,168 $350,685 $648,705 $826,359 $1,005,970 $491,565 $520,165
Cost of sales................... 197,728 260,230 507,313 702,669 849,100 420,755 429,622
-------- -------- -------- -------- ---------- -------- --------
Gross profit.................... 67,440 90,455 141,392 123,690 156,870 70,810 90,543
Operating expenses.............. 33,534 38,923 59,371 71,877 78,678 37,978 44,006
Restructuring and other
non-recurring charges......... -- -- -- 7,053 -- -- --
Amortization of goodwill and
acquired intangible assets.... -- -- 5,215 9,750 12,226 6,126 6,103
Write-off of acquired in-process
research and development...... -- -- 78,000 63,050 -- -- --
-------- -------- -------- -------- ---------- -------- --------
Income (loss) from operations... 33,906 51,532 (1,194) (28,040) 65,966 26,706 40,434
Other income (expense), net..... 1,132 949 (7,627) (20,173) (29,511) (15,692) (11,992)
-------- -------- -------- -------- ---------- -------- --------
Income (loss) before provision
for income taxes.............. 35,038 52,481 (8,821) (48,213) 36,455 11,014 28,442
Provision for income taxes...... 13,664 20,467 27,672 5,897 14,491 4,378 10,808
-------- -------- -------- -------- ---------- -------- --------
Net income (loss)............... $ 21,374 $ 32,014 $(36,493) $(54,110) $ 21,964 $ 6,636 $ 17,634
======== ======== ======== ======== ========== ======== ========
Basic earnings (loss) per
share......................... $ 2.18 $ 3.12 $ (3.18) $ (4.09) $ 1.62 $ 0.49 $ 1.28
Basic weighted average shares
outstanding................... 9,805 10,245 11,458 13,216 13,533 13,470 13,733
Diluted earnings (loss) per
share......................... $ 1.98 $ 2.89 $ (3.18) $ (4.09) $ 1.60 $ 0.49 $ 1.26
Diluted weighted average shares
outstanding................... 10,806 11,084 11,458 13,216 13,751 13,678 14,038
</TABLE>
<TABLE>
<CAPTION>
AS OF
---------------------------------------------------------------------------------
OCTOBER 28, OCTOBER 26, OCTOBER 25, OCTOBER 31, OCTOBER 30, APRIL 29,
1995 1996 1997 1998 1999 2000
----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments................................. $ 36,474 $ 42,187 $ 13,733 $ 7,169 $ 9,078 $ 112
Working capital............................... 41,043 43,561 53,693 91,830 47,781 80,591
Total assets.................................. 162,991 219,501 502,517 743,825 724,823 731,234
Long-term debt and capital lease
obligations................................. 2,387 1,515 109,716 354,291 278,309 267,408
Stockholders' investment...................... 100,774 138,841 239,912 191,549 219,009 242,663
</TABLE>
11
<PAGE> 18
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The following unaudited pro forma combined condensed financial data have
been prepared to give effect to the Merger using the pooling-of-interests method
of accounting.
The unaudited pro forma combined condensed financial data reflect certain
assumptions deemed probable by management regarding the Merger (for example,
that share information used in the unaudited pro forma data approximates actual
share information at the Effective Time). No adjustments to the unaudited pro
forma combined condensed financial data 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 condensed balance sheet data as of April
1, 2000 gives effect to the Merger as if it had occurred on April 1, 2000, and
combines the unaudited consolidated balance sheet of Sanmina as of April 1, 2000
and the unaudited consolidated balance sheet of Hadco as of April 29, 2000. The
unaudited pro forma combined condensed statement of operations data for all
periods presented give effect to the Merger as if it had occurred on October 1,
1996. Hadco has a fiscal year that ends on the last Saturday in October of each
year. For purposes of the unaudited pro forma combined condensed statements of
operations, Hadco's consolidated statements of operations for the years ended
October 25, 1997, October 31, 1998 and October 30, 1999, and for the six-month
periods ended May 1, 1999 and April 29, 2000, have been combined with Sanmina's
consolidated statements of operations for the years ended September 30, 1997,
September 30, 1998 and October 2, 1999, and the six-month periods ended April 3,
1999 and April 1, 2000.
These unaudited pro forma combined condensed financial data are presented
for illustrative purposes only and are 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
are they necessarily indicative of the future financial position and results of
operations. These unaudited pro forma combined condensed financial data are
based upon the respective historical consolidated financial statements and
related notes of Sanmina and Hadco included elsewhere in this proxy
statement/prospectus or incorporated by reference in this document, and do not
incorporate, nor do they assume, any benefits from cost savings or synergies of
operations of the combined companies. See "Unaudited Pro Forma Combined
Condensed Financial Statements" elsewhere in this proxy statement/prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED -----------------------
------------------------------------ APRIL 3, APRIL 1,
1997 1998 1999 1999 2000
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
DATA:
Net sales.................................... $1,450,686 $1,816,769 $2,217,574 $1,046,470 $1,534,513
Income from operations....................... 86,211 105,595 206,296 67,909 159,496
Net income................................... 12,863 31,519 115,661 34,846 97,732
Basic earnings per share..................... $ 0.11 $ 0.26 $ 0.86 $ 0.26 $ 0.70
Diluted earnings per share................... $ 0.11 $ 0.25 $ 0.81 $ 0.25 $ 0.66
Basic weighted average shares outstanding.... 112,643 119,104 134,894 133,994 140,445
Diluted weighted average shares
outstanding................................ 119,034 124,844 142,575 141,658 148,325
</TABLE>
<TABLE>
<CAPTION>
AS OF
APRIL 1,
2000
--------------
(IN THOUSANDS)
<S> <C>
PRO FORMA COMBINED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $ 582,319
Working capital............................................. 1,009,543
Total assets................................................ 2,384,381
Long-term debt.............................................. 431,128
Stockholders' equity........................................ 1,472,095
</TABLE>
12
<PAGE> 19
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data of Sanmina
and Hadco and combined per share data on an unaudited pro forma combined basis
after giving effect to the Merger with Hadco as if the Merger were completed at
the beginning of the respective periods for basic and diluted earnings per share
data. The exchange ratio assumes that the Merger was consummated on April 1,
2000. The pro forma book value per common share assumes that the Merger was
consummated on October 2, 1999. The following data should be read together with
the Unaudited Pro Forma Combined Condensed Financial Data and the separate
historical consolidated financial statements of Sanmina and Hadco incorporated
by reference or included elsewhere in this document. The unaudited pro forma
combined per common share data are provided for illustrative purposes only and
are 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 do they represent a forecast of the combined financial
position or results of operations for any future period. No pro forma
adjustments have been included in these data to reflect potential effects of:
- the efficiencies which may be obtained by combining Sanmina and Hadco
operations;
- costs related to the Merger; and
- the costs of restructuring, integrating or consolidating these
operations.
All historical Sanmina per share information has been adjusted to give effect to
the two-for-one stock split in the form of a 100 percent stock dividend on March
22, 2000.
COMPARATIVE PER COMMON SHARE DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
------------------------------------------- -----------------------
SEPTEMBER 30, SEPTEMBER 30, OCTOBER 2, APRIL 3, APRIL 1,
1997 1998 1999 1999 2000
------------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
HISTORICAL -- SANMINA:
Basic earnings (loss) per share......... $0.51 $0.85 $ 0.81 $(0.25) $0.66
Diluted earnings (loss) per share....... $0.46 $0.76 $ 0.76 $(0.23) $0.62
Book value per common share(1).......... $ 5.32 $9.79
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
------------------------------------------- -----------------------
OCTOBER 25, OCTOBER 31, OCTOBER 30, MAY 1, APRIL 29,
1997 1998 1999 1999 2000
------------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
HISTORICAL -- HADCO:
Basic earnings (loss) per share......... $(3.18) $(4.09) $ 1.62 $ 0.49 $ 1.28
Diluted earnings (loss) per share....... $(3.18) $(4.09) $ 1.60 $ 0.49 $ 1.26
Book value per common share(1).......... $16.07 $17.54
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
------------------------------------------- -----------------------
SEPTEMBER 30, SEPTEMBER 30, OCTOBER 2, APRIL 3, APRIL 1,
1997 1998 1999 1999 2000
------------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PRO FORMA COMBINED PER SANMINA SHARE:
Basic earnings per share................ $0.11 $0.26 $ 0.86 $ 0.26 $ 0.70
Diluted earnings per share.............. $0.11 $0.25 $ 0.81 $ 0.25 $ 0.66
Book value per common share(1).......... $ 5.83 $10.37
</TABLE>
13
<PAGE> 20
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SIX MONTHS ENDED
------------------------------------------ -------------------------
SEPTEMBER 30, SEPTEMBER 30, OCTOBER 2, APRIL 3, APRIL 1,
1997 1998 1999 1999 2000
------------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
EQUIVALENT PRO FORMA COMBINED PER HADCO
SHARE(2):
Basic earnings per share............... $0.16 $0.37 $1.20 $0.36 $ 0.97
Diluted earnings per share............. $0.14 $0.33 $1.14 $0.34 $ 0.92
Book value per common share(1)......... $8.65 $13.98
</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 pro forma combined per Hadco share amounts are calculated by
multiplying the pro forma combined per Sanmina share amounts by 1.40, the
exchange ratio.
14
<PAGE> 21
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 Hadco Common Stock in evaluating whether to
approve the Merger Agreement and Merger. These factors should be considered
together 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 Hadco, unless the context otherwise requires.
RISKS RELATED TO THE MERGER
SANMINA FACES UNCERTAINTIES RELATING TO THE INTEGRATION OF THE SANMINA AND HADCO
OPERATIONS.
The successful combination of Sanmina and Hadco will require substantial
effort from each company. Sanmina may encounter difficulties in the transition
process. These difficulties could include the interruption of, or a loss of
momentum in, Hadco's activities, problems associated with integration of
management information and reporting systems, and delays in implementation of
consolidation plans. If 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 materially adversely affected.
THE VALUE OF THE SANMINA SHARES TO BE RECEIVED BY HADCO STOCKHOLDERS WILL
FLUCTUATE WITH THE SANMINA SHARE PRICE.
As a result of the Merger, each outstanding share of Hadco Common Stock
will be converted into 1.40 fully paid and nonassessable shares of Sanmina
Common Stock. Except as set forth below, this exchange ratio will not change
even if the market price of Sanmina Common Stock or Hadco Common Stock changes
before the Merger is completed. However, if the average last reported sale price
of the Sanmina Common Stock on the Nasdaq National Market during the 20 trading
days ending on the third trading day prior to the date of the special meeting of
Hadco stockholders is less than $40.00, then Hadco will have the right to
terminate the Merger Agreement. In that event, however, Sanmina has the right,
but not the obligation, to complete the Merger by increasing the exchange ratio
to an amount equal to $56.00 divided by the average last reported sale price of
Sanmina Common Stock during this 20-day period, assuming all other closing
conditions have been satisfied. Accordingly, the specific value of the
consideration to be received by Hadco stockholders in the Merger will depend on
the market price of Sanmina Common Stock during the 20 trading days ending on
the third trading day prior to the special meeting, and you will not know this
specific value when you vote upon the Merger Agreement and Merger. The market
prices of Sanmina Common Stock and Hadco Common Stock as of a recent date are
shown under "Comparative Stock Prices And Dividend Policy" on page 25. Hadco
stockholders are advised to obtain recent market quotations for Sanmina Common
Stock and Hadco Common Stock. There can be no assurance as to the market prices
of Sanmina Common Stock or Hadco Common Stock at any time before the Effective
Time or as to the market price of Sanmina Common Stock at any time after the
Effective Time. See "Comparative Stock Prices And Dividend Policy" on page 25.
THE MERGER MAY RESULT IN A LOSS OF CUSTOMERS AND EMPLOYEES WHICH COULD HARM THE
COMBINED COMPANY'S RESULTS OF OPERATIONS.
The announcement and completion of the Merger could cause certain of
Hadco's or Sanmina's customers to either seek alternative sources of product
supply or service, or delay or change orders for products due to uncertainty
over the integration of our companies or the strategic position of the combined
company. As a result, Sanmina may experience some customer attrition following
the Merger. Any customer attrition could harm the combined company's results of
operations. Difficulties in integrating the operations of Sanmina and Hadco,
including the uncertainty related to organizational changes, could also
negatively affect employee
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morale and result in the loss of key employees. Sanmina may not be able to
retain Hadco's key management, sales and marketing, and technical personnel. Any
steps taken by Sanmina to address customer and employee attrition may not be
effective, and this attrition could negatively affect Sanmina's results of
operations.
FAILURE TO COMPLETE THE MERGER COULD HARM EACH COMPANY'S STOCK PRICE AND FUTURE
BUSINESS AND OPERATIONS.
Both Sanmina and Hadco face a number of special risks if the Merger is not
completed, including the following:
- Sanmina or Hadco may be required to pay to the other party a termination
fee of $23.87 million.
- The option Hadco granted to Sanmina to purchase 19.9% of Hadco's
outstanding Common Stock may become exercisable.
- The price of Sanmina Common Stock and Hadco Common Stock may decline to
the extent the current market price of Sanmina Common Stock and Hadco
Common Stock reflects the assumption that the Merger will be completed.
- Costs related to the Merger, such as legal, accounting and financial
advisor fees, must be paid even if the Merger is not completed.
In addition, current and prospective Sanmina and Hadco employees and
customers may experience uncertainty regarding the integration of the companies
and could terminate their relationships with Sanmina or Hadco. Terminations may
impede subsequent integration of the two companies, and if the Merger is not
completed, Sanmina's and Hadco's businesses may be harmed.
Further, if the Merger is terminated and the Hadco Board determines to seek
another business combination, it is not certain that Hadco will be able to find
a party willing to combine with it on equivalent or more attractive terms.
Furthermore, the option that Hadco granted to Sanmina, if exercised, would make
it impossible for Hadco to account for future business combinations as a pooling
of interests for up to two years after the date Sanmina exercises the option,
which would make it less likely that an attractive offer for Hadco would be
found.
RISKS RELATED TO SANMINA COMMON STOCK
SANMINA IS HEAVILY DEPENDENT ON THE ELECTRONICS INDUSTRY, AND CHANGES IN THE
INDUSTRY COULD HARM SANMINA'S BUSINESS AND OPERATING RESULTS.
Sanmina's business is heavily dependent on the health of the electronics
industry. Sanmina's customers are manufacturers in the communications,
industrial and medical instrumentation and high-speed 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. Any discontinuance or modification of orders
or commitments could harm Sanmina's operating results. 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 harm Sanmina's business and operating results.
SANMINA TYPICALLY DOES NOT OBTAIN LONG-TERM VOLUME PURCHASE COMMITMENTS FROM
CUSTOMERS, AND CANCELLATIONS AND RESCHEDULING OF PURCHASE ORDERS COULD HARM
SANMINA'S OPERATING RESULTS AND CAUSE ITS STOCK PRICE TO DECLINE.
Sanmina typically does not obtain long-term volume purchase contracts from
its customers. Customer orders may be canceled and volume levels may be changed
or delayed. For example, Sanmina experienced certain cancellation and
rescheduling of shipment dates of customer orders during the fourth fiscal
quarter of 1998. As a result, Sanmina's results of operations for that quarter
failed to meet the expectations of stock market analysts, and the price of
Sanmina Common Stock declined. Sanmina cannot assure you that it will be able to
replace canceled, delayed or reduced contracts with new business. As a result,
future cancellations or
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rescheduling of orders or commitments could cause Sanmina's operating results to
be below expectations, which would likely cause Sanmina's stock price to
decline.
SANMINA'S RESULTS OF OPERATIONS CAN BE AFFECTED BY A VARIETY OF FACTORS, WHICH
COULD CAUSE SANMINA'S OPERATING RESULTS TO FAIL TO MEET EXPECTATIONS AND
SANMINA'S STOCK PRICE TO DECLINE.
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 products ordered by and shipped to major customers, including the
mix between backplane assemblies and printed circuit board assemblies;
- the volume of orders as related to Sanmina's capacity;
- pricing and other competitive pressures;
- component shortages, which could cause Sanmina to be unable to meet
customer delivery schedules;
- Sanmina's ability to effectively manage inventory and fixed assets; and
- Sanmina's ability to time expenditures in anticipation of future sales.
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 Sanmina's 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 six months. 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 IS DEPENDENT ON A SMALL NUMBER OF CUSTOMERS FOR A LARGE PORTION OF
SANMINA'S REVENUES, AND DECLINES IN SALES TO MAJOR CUSTOMERS COULD HARM
SANMINA'S OPERATING RESULTS.
A small number of customers are responsible for a significant portion of
Sanmina's net sales. During the first six months of fiscal year 2000, fiscal
year 1999 and fiscal year 1998, sales to Sanmina's ten largest customers
accounted for 60%, 52% and 55%, respectively, of Sanmina's net sales. For the
first six months of fiscal 2000, sales to Nortel Networks and Cisco Systems each
represented more than 10% of Sanmina's net sales. For fiscal 1999, sales to
Cisco Systems represented more than 10% of Sanmina's net sales. For fiscal 1998,
sales to Cisco Systems and DSC Communications (now a subsidiary of Alcatel USA)
each represented more than 10% of Sanmina's net sales. Although Sanmina cannot
assure you that its 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 Sanmina's
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 or more major customers or declines in
sales to major customers could significantly harm Sanmina's business and
operating results and lead to declines in the price of Sanmina Common Stock.
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SANMINA IS SUBJECT TO RISKS ASSOCIATED WITH ITS STRATEGY OF ACQUISITIONS, AND
THESE RISKS COULD HARM SANMINA'S OPERATING RESULTS AND CAUSE ITS STOCK PRICE TO
DECLINE.
Sanmina has, for the past several fiscal years, pursued a strategy of
growth through acquisitions. These acquisitions have involved acquisitions of
entire companies, such as the January 1996 acquisition of Golden Eagle Systems,
now known as Sanmina Cable Systems, the November 1997 acquisition of Elexsys
International, Inc., the February 1998 acquisition of Pragmatech, Inc., the
November 1998 acquisition of Altron, Incorporated, the December 1998 acquisition
of Telo Electronics, Inc. and the March 1999 acquisition of Manu-Tronics, Inc.
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 October and November 1999, Sanmina
acquired the electronics assembly operations of Nortel Networks located in
Calgary, Canada and Chateaudun, France. In October 1999, Sanmina also acquired
the electronics enclosure systems business of Devtek, located in Toronto,
Canada. In March 2000, Sanmina acquired a printed circuit board assembly
operation located principally in San Antonio, Texas from Harris Corporation. In
March 2000, Sanmina also acquired an electromechanical assembly operation
located in Clinton, North Carolina from Alcatel USA. Acquisitions of companies
and businesses and expansion of operations involve certain risks, including the
following:
- 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;
- the possible need to restructure, modify or terminate customer
relationships of the acquired company; and
- loss of key employees of acquired operations.
Accordingly, Sanmina may experience problems in integrating the recently
acquired operations or operations associated with any future acquisition.
Sanmina therefore can not assure you that any recent or future acquisition will
result in a positive contribution to Sanmina's results of operations.
Furthermore, Sanmina can not assure you that Sanmina will realize value from any
acquisition which equals or exceeds the consideration paid. In particular, the
successful combination of Sanmina and any businesses Sanmina acquires in the
future 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, the
activities of any future acquisition, problems associated with integration of
management information and reporting systems, and delays in implementation of
consolidation plans, could harm Sanmina's ability to realize the anticipated
benefits of any future acquisition. Any failure of Sanmina to realize the
anticipated benefits of its acquisitions could harm Sanmina's business and
operating results, and could cause the price of its common stock to decline. In
addition, future acquisitions 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 harm Sanmina's business and operating
results and cause the price of Sanmina's common stock to decline.
In addition, Sanmina has pursued and expects to continue to pursue
opportunities to acquire assembly operations being divested by electronics
industry OEMs. Sanmina expects that competition for these opportunities among
electronics manufacturing services firms will be intense as these transactions
typically enable the acquiror to enter into long-term supply arrangements with
the divesting OEM. Accordingly, Sanmina's future results of operations could be
harmed if it is not successful in attracting a significant portion
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of the OEM divestiture transactions Sanmina pursues. In addition, due to the
large scale and long-term nature of supply arrangements typically entered into
in OEM divestiture transactions and because cost reductions are generally a
major reason why the OEM is divesting operations, pricing of manufacturing
services may be less favorable to the manufacturer than in standard contractual
relationships. For example, Sanmina experienced declines in gross margins in the
first quarter of fiscal 2000 due to Sanmina's increase in sales to Nortel under
Sanmina's supply agreement relating to the operations it acquired. As Sanmina
enters into new OEM divestiture transactions, Sanmina may experience further
erosion in gross margins.
SANMINA MAY EXPERIENCE COMPONENT SHORTAGES, WHICH WOULD CAUSE SANMINA TO DELAY
SHIPMENTS TO CUSTOMERS, RESULTING IN POTENTIAL DECLINES IN REVENUES AND
OPERATING RESULTS.
Recently, a number of components purchased by Sanmina and incorporated into
assemblies and subassemblies it produces has been the subject of shortages.
These components include application-specific integrated circuits, capacitors
and connectors. Unanticipated component shortages caused Sanmina to be unable to
make certain scheduled shipments to customers in the first six months of fiscal
2000 and may do so in the future. The inability to make scheduled shipments in
the future could cause Sanmina to experience a shortfall in revenues. Sanmina
could also experience negative customer goodwill due to the delay in shipment.
Component shortages may also increase Sanmina's cost of goods due to premium
charges it must pay to purchase components in short supply and due to changes in
the mix of assemblies shipped to customers. For example, shortages in certain
components negatively affected Sanmina's operating results and contributed to an
increase in inventory levels during the first six months of fiscal 2000.
Accordingly, component shortages could harm Sanmina's operating results for a
particular fiscal period due to the resulting revenue shortfall or cost
increases and could also damage customer relationships over a longer-term
period.
SANMINA IS SUBJECT TO COMPETITION AND TECHNOLOGICAL CHANGE, AND ITS BUSINESS MAY
BE HARMED BY COMPETITIVE PRESSURES AND FAILURE TO ADAPT TO TECHNOLOGICAL
CHANGES.
The electronic interconnect industry is highly fragmented and characterized
by intense competition. Sanmina competes in the technologically advanced segment
of the interconnect 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 surface mount 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 manufacturers
seek orders in the open market to fill excess capacity, thereby increasing price
competition.
In addition, 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. Sanmina
does not currently have offshore facilities in lower cost locations, such as
Asia and Latin America. If the Merger is completed, however, Sanmina will gain a
manufacturing facility in Malaysia. Although Sanmina plans to establish other
offshore facilities, Sanmina may not do so in time to be competitive.
ENVIRONMENTAL MATTERS ARE A KEY CONSIDERATION IN SANMINA'S AND HADCO'S
BUSINESSES, AND FAILURE TO COMPLY WITH THE REQUIREMENTS OF ENVIRONMENTAL LAWS
COULD HARM SANMINA'S AND HADCO'S BUSINESSES.
Sanmina and Hadco are subject to a variety of local, state and federal
environmental laws and regulations relating to the storage, use, discharge and
disposal of chemicals, solid waste and other hazardous materials used during
their manufacturing processes, as well as air quality regulations and
restrictions on water use. Proper waste disposal is a major consideration for
printed circuit board manufacturers because metals and chemicals are used in the
manufacturing process. Maintenance of environmental controls is also important
in the electronics assembly process. When violations of environmental laws
occur, Sanmina and Hadco can be
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held liable for damages and the costs of remedial actions and can also be
subject to revocation of permits necessary to conduct their businesses. If the
Merger is completed, Sanmina may not be able to assume all or any of Hadco's
environmental permits. There can be no assurance that violations of
environmental laws will not occur in the future as a result of the inability to
obtain permits, human error, equipment failure or other causes. Any permit
revocations could require Sanmina and Hadco to cease or limit production at one
or more facilities, which could seriously harm the combined company's business,
financial condition and results of operations. Moreover, the failure to comply
with present and future regulations could restrict the combined company's
ability to expand facilities or could require it to acquire costly equipment or
to incur other significant expenses to comply with environmental regulations.
Environmental laws could become more stringent over time, imposing greater
compliance costs and increasing risks and penalties associated with violations.
Sanmina and Hadco operate in several environmentally sensitive locations and are
subject to potentially conflicting and changing regulatory agendas of political,
business and environmental groups. Changes or restrictions on discharge limits,
emissions levels, permitting requirements or processes, or material storage or
handling might require a high level of unplanned capital investment and/or
relocation. Compliance with new or existing regulations could seriously harm the
combined company's business, financial condition and results of operations.
SANMINA IS SUBJECT TO ENVIRONMENTAL CONTINGENCIES AT SITES OPERATED BY ACQUIRED
COMPANIES AND COULD INCUR SUBSTANTIAL COSTS FOR ENVIRONMENTAL REMEDIATION AND
RELATED ACTIVITIES AT THESE SITES.
In November 1997, Sanmina acquired Elexsys International, Inc. which became
Sanmina's wholly-owned subsidiary. Several facilities owned or occupied by
Elexsys at the time of the merger, 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. Additional investigation is being undertaken by other parties in the
area at the request of the California Regional Water Quality Control Board. It
is unknown whether any additional remediation activities will be required as a
result of such investigations or whether any third party claims will be brought
against Sanmina alleging that they have been damaged in any way by the existence
of the contamination at the Irvine facility. 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 Sanmina 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 harm
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 would not harm Sanmina's business, financial condition and
results of operations.
In November 1998, Sanmina acquired Altron Incorporated which became a
wholly owned subsidiary of Sanmina. Altron was advised in 1993 by Olin
Corporation that contamination resulting from activities of prior
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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 Sanmina 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 Sanmina does not anticipate that such costs, if any, will be material to its
financial condition or results of operations.
Sanmina has been named as a potentially responsible party at several
contaminated disposal sites as a result of the past disposal of hazardous waste
by companies acquired by Sanmina or their corporate predecessors. While
liabilities for such historic disposal activities have not been material to
Sanmina's financial condition to date, there can be no guarantee that past
disposal activities will not result in material liability to Sanmina in the
future.
HADCO IS SUBJECT TO ENVIRONMENTAL CONTINGENCIES AT SITES CURRENTLY OR FORMERLY
OPERATED BY IT AND COULD INCUR SUBSTANTIAL COSTS FOR ENVIRONMENTAL REMEDIATION
AND RELATED ACTIVITIES AT THESE SITES.
Hadco is aware of certain chemicals that exist in the ground at certain of
its facilities. Hadco has notified various governmental agencies and continues
to work with them to monitor and resolve these matters. During March 1995, Hadco
received a Record Of Decision (ROD) from the New York State Department of
Environmental Conservation (NYSDEC), regarding soil and groundwater
contamination at its Owego, New York facility. Based on a Remedial Investigation
and Feasibility Study (RIFS) for apparent on-site contamination at that facility
and a Focused Feasibility Study (FFS), each prepared by environmental
consultants of Hadco, the NYSDEC has approved a remediation program of
groundwater withdrawal and treatment and iterative soil flushing. Hadco has
executed a Modification of the Order on Consent to implement the approved ROD.
Capital equipment for this remediation has already been acquired by Hadco, and
future operation and maintenance costs, which will be incurred and expended over
the estimated life of the program of the next 28 years, are estimated at between
$40,000 and $100,000 per year. In the summer of 1998, NYSDEC took additional
samples from a wetland area near Hadco's Owego facility. Analytical reports of
earlier sediment samples indicated the presence of certain inorganics. The new
samples showed elevated levels of certain metals, but NYSDEC has not made a
determination as to the potential source of such metals, the remedial action to
be taken, or the persons to undertake and/or pay for any remediation. Hadco
and/or other third parties may be required to conduct additional investigations
and remediation at that location, the costs of which are currently
indeterminable.
Hadco commenced the operation of a groundwater extraction system at its
Derry, New Hampshire facility to address certain groundwater contamination and
groundwater migration control issues. Further investigation is underway to
determine the areal extent of the groundwater contaminant plume. Because of the
uncertainty regarding both the quantity of contaminants beneath the building at
the site and the long-term effectiveness of the groundwater migration control
system Hadco has installed, it is not possible to make a reliable estimate of
the length of time remedial activity will have to be performed. However, it is
anticipated that the groundwater extraction system will be operated for at least
30 years. Hadco may be required to conduct additional investigations and
remediation relating to the Derry facility. The total costs of such groundwater
extraction system and of conducting any additional investigations and
remediation relating to the Derry facility are not fully determinable.
Hadco is one of 33 entities which have been named as potentially
responsible parties in a lawsuit pending in the federal district court of New
Hampshire concerning environmental conditions at the Auburn Road, Londonderry,
New Hampshire landfill site. Local, state and federal entities and certain other
parties to the litigation seek contribution for past costs, totaling
approximately $20 million, allegedly incurred to assess and remediate the Auburn
Road site. In December 1996, following publication and comment period, the EPA
amended the ROD to change the remedy at the Auburn Road site from active
groundwater remediation to future monitoring. In June 1999, Hadco entered into a
Consent Decree with 30 of the defendants and third-
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party defendants. The Consent Decree was approved by the Court in March 2000.
Under the terms of the Consent Decree, Hadco is a cash-out party and does not
have responsibility for performance of ongoing remedial or monitoring work at
the site.
From 1974 to 1980, Hadco operated a printed circuit manufacturing facility
in Florida as a lessee. This property is the subject of a pending lawsuit in the
circuit court for Broward County, Florida (the "Florida Lawsuit") and an
investigation by the Florida Department of Environmental Protection a("FDEP").
In connection with the investigation, Hadco and others have participated in
alternative dispute resolution regarding the site with an independent mediator.
Mediation sessions began in 1992 and continued over the next several years
through May 1998. In June 1995, Hadco and Gould, Inc., another prior lessee of
the site, were joined as third-party defendants in the pending Florida lawsuit
by a party who had previously been named as a defendant when the Florida lawsuit
was commenced in 1993 by the FDEP. As a result of the mediation, a Settlement
Agreement was entered into among Hadco, Gould and the FDEP in March 1999. The
third-party complaints against Hadco and Gould in the pending Florida lawsuit
were dismissed. The Settlement Agreement provides that Hadco and Gould will
undertake remedial action based on a Supplemental Contamination Assessment
Report and a later Feasibility Study, which has been prepared by a consultant to
Hadco and Gould and approved by FDEP. The estimated cost of the recommended
source removal described in the Feasibility Study is approximately $165,000, and
for ongoing monitoring and remediation is approximately $2.1 million. Actual
remedial activities have not yet commenced but are expected to begin in the near
future.
In March 1993, the EPA notified Hadco Santa Clara of its potential
liability for maintenance and remediation costs in connection with a hazardous
waste disposal facility operated by Casmalia Resources, a California Limited
Partnership, in Santa Barbara County, California. The EPA identified Hadco Santa
Clara as one of the 65 generators which had disposed of the greatest amounts of
materials at the site. Based on the total tonnage contributed by all generators,
Hadco Santa Clara's share is estimated at approximately 0.2% of the total
weight.
The Casmalia site was regulated by the EPA during the period when the
material was accepted. There is no allegation that Hadco Santa Clara violated
any law in the disposal of material at the sites. Rather the EPA's actions
stemmed from the fact that Casmalia Resources may not have the financial means
to implement a closure plan for the site and because of Hadco Santa Clara's
status as a generator of hazardous waste.
In June 1997, the United States District Court in Los Angeles, California
approved and entered a Consent Decree among the EPA and 49 entities (including
Hadco Santa Clara) acting through the Casmalia Steering Committee (CSC). The
Consent Decree sets forth the terms and conditions under which the CSC will
carry out work aimed at final closure of the site. Certain closure activities
will be performed by the CSC. Later work will be performed by the CSC, if funded
by other parties. Under the Consent Decree, the settling parties will work with
the EPA to pursue the non-settling parties to ensure they participate in
contributing to the closure and long-term operation and maintenance of the
facility.
The EPA will continue as the lead regulatory agency during the final
closure work. Because long-term maintenance plans for the site will not be
determined for a number of years, it has not yet been decided which regulatory
agency will oversee this phase of the work plan or how the long-term costs will
be funded. However, the Consent Decree provides a mechanism for ensuring that an
appropriate federal, state or local agency will assume regulatory responsibility
for long-term maintenance.
FAILURE TO MANAGE SANMINA'S GROWTH MAY SERIOUSLY HARM ITS BUSINESS.
Sanmina's business has grown in recent years through both internal
expansion and acquisitions, and continued growth may cause a significant strain
on Sanmina's infrastructure and internal systems. To manage its growth
effectively, Sanmina must continue to improve and expand its management
information systems. Sanmina will face additional growth management challenges,
particularly if it expands in Asia and Latin America, and if Sanmina undertakes
additional new acquisition transactions. If Sanmina is unable to manage growth
effectively, its results of operations could be harmed.
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SANMINA'S AND HADCO'S EXISTING INTERNATIONAL OPERATIONS AND PLANS TO EXPAND
INTERNATIONAL OPERATIONS INVOLVE ADDITIONAL RISKS, AND FAILURE TO EFFECTIVELY
EXPAND INTERNATIONALLY COULD HARM THE COMBINED COMPANY'S OPERATING RESULTS.
Sanmina opened its first overseas facility, located in Dublin, Ireland, in
June 1997. Hadco completed construction of a volume manufacturing facility for
printed circuits in Malaysia in fiscal 1997. A number of risks are inherent in
international operations and transactions. International sales and operations
may be limited or disrupted by the imposition of government controls, export
license requirements, political and economic instability, trade restrictions,
changes in tariffs, labor unrest and difficulties in staffing, coordinating
communications among and managing international operations. Additionally,
Sanmina's and Hadco's businesses and operating results may be harmed by
fluctuations in international currency exchange rates as well as increases in
duty rates, difficulties in obtaining export licenses, misappropriation of
intellectual property, constraints on Sanmina's and Hadco's ability to maintain
or increase prices, and competition. Sanmina cannot assure you that the combined
company will realize the anticipated strategic benefits of its international
expansion or that international operations will contribute positively to
Sanmina's business and operating results.
In addition, to respond to competitive pressures and customer requirements,
Sanmina plans to further expand internationally in lower cost locations,
particularly Asia and Latin America. As a result of this proposed expansion,
Sanmina could encounter difficulties in scaling up production at overseas
facilities or in coordinating Sanmina's United States and international
operations. In addition, Sanmina may not realize anticipated revenue growth at
new international operations. Sanmina may elect to establish start-up operations
rather than acquiring existing businesses, which would require Sanmina to
recruit management and other personnel and build a customer base at a completely
new operation. Accordingly, unanticipated problems Sanmina encounters in
establishing new international operations could harm its business and operating
results and cause its stock price to decline.
SANMINA IS SUBJECT TO RISKS RELATED TO INTELLECTUAL PROPERTY RIGHTS HELD BY
THIRD PARTIES.
Sanmina is subject to risks related to intellectual property rights held by
third parties. In certain cases, Sanmina may find it necessary or desirable to
license or otherwise acquire rights to intellectual property rights held by
others. For example, Sanmina has been notified by the Lemelson Foundation that
it may infringe certain patents covering applications of machine vision
technology held by the Lemelson Foundation. The Lemelson Foundation has asserted
these patent rights against numerous other manufacturers of electronic
components and products. Most of these disputes have been resolved through
licensing arrangements. Sanmina is in the process of negotiating a license with
the Lemelson Foundation and believes that it will be able to enter into a
license on commercially reasonable terms.
THE PRICE OF SANMINA COMMON STOCK MAY BE VOLATILE, AND THE VALUE OF YOUR
INVESTMENT COULD DECLINE.
The trading price of 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 been unrelated to or
disproportionately impacted by the operating performance of such companies.
These broad market fluctuations may cause the market price of Sanmina Common
Stock to decline, which would diminish the value of your investment.
SANMINA DEPENDS ON CERTAIN KEY PERSONNEL, AND THE LOSS OF KEY PERSONNEL MAY HARM
SANMINA'S BUSINESS.
Sanmina's future success depends in large part on the continued service of
its key technical and management personnel and on its ability to continue to
attract and retain qualified employees, particularly those highly skilled
design, process and test engineers involved in the manufacture of existing
products and the development of new products and processes. The competition for
such personnel is intense, and the loss of key
23
<PAGE> 30
employees, none of whom is subject to an employment agreement for a specified
term or a post-employment non-competition agreement, could harm Sanmina's
business.
IF SANMINA HAS NOT ADEQUATELY PREPARED FOR THE TRANSITION TO YEAR 2000,
SANMINA'S BUSINESS COULD BE HARMED.
Sanmina has executed a plan designed to make Sanmina's computer systems,
applications, computer and manufacturing equipment and facilities year 2000
ready. To date, none of Sanmina's systems, applications, equipment or facilities
have experienced material difficulties from the transition to year 2000.
However, it is possible that material difficulties could be discovered or could
arise. Sanmina cannot guarantee that its year 2000 readiness plan has been
successfully implemented, and actual results could still differ materially from
Sanmina's plan. In addition, Sanmina has communicated with its critical
suppliers to determine the extent to which Sanmina may be vulnerable to such
parties' failure to resolve their own year 2000 issues. Where practicable,
Sanmina has attempted to mitigate its risks with respect to the failure of these
entities to be year 2000 ready. The effect, if any, on Sanmina's results of
operations from any failure of such parties to be year 2000 ready cannot yet be
determined.
24
<PAGE> 31
COMPARATIVE STOCK PRICES AND DIVIDEND POLICY
Sanmina Common Stock (symbol: SANM) is quoted on the Nasdaq National Market
and Hadco Common Stock (symbol: HDC) is listed on the New York Stock Exchange.
The following table sets forth, for the periods indicated, the high and low sale
prices per share of Sanmina Common Stock on the Nasdaq National Market and of
Hadco Common Stock on the New York Stock Exchange. Sanmina and Hadco have never
paid cash dividends on shares of Sanmina Common Stock and Hadco Common Stock,
respectively. In addition, the Merger Agreement restricts Hadco'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 1997
First Quarter............................................... $13.75 $ 9.53
Second Quarter.............................................. 16.00 10.03
Third Quarter............................................... 16.50 10.94
Fourth Quarter.............................................. 22.53 15.28
FISCAL 1998
First Quarter............................................... 22.00 14.36
Second Quarter.............................................. 20.10 13.35
Third Quarter............................................... 23.44 16.94
Fourth Quarter.............................................. 23.78 11.75
FISCAL 1999
First Quarter............................................... 31.25 11.94
Second Quarter.............................................. 37.78 24.75
Third Quarter............................................... 40.61 28.66
Fourth Quarter.............................................. 41.62 32.07
FISCAL 2000
First Quarter............................................... 54.03 37.97
Second Quarter.............................................. 67.56 45.88
Third Quarter (to May 18, 2000)............................. 67.50 42.13
HADCO
FISCAL 1997
First Quarter............................................... 59.13 27.38
Second Quarter.............................................. 57.13 33.13
Third Quarter............................................... 75.63 41.00
Fourth Quarter.............................................. 73.00 47.50
FISCAL 1998
First Quarter............................................... 65.25 37.50
Second Quarter.............................................. 54.00 35.50
Third Quarter............................................... 40.00 17.50
Fourth Quarter.............................................. 33.75 19.25
</TABLE>
25
<PAGE> 32
<TABLE>
<CAPTION>
COMMON STOCK
----------------
HIGH LOW
------ ------
<S> <C> <C>
FISCAL 1999
First Quarter............................................... 40.13 28.72
Second Quarter.............................................. 37.38 24.44
Third Quarter............................................... 47.50 27.25
Fourth Quarter.............................................. 45.13 36.75
FISCAL 2000
First Quarter............................................... 51.00 36.69
Second Quarter.............................................. 82.44 39.25
Third Quarter (to May 18, 2000)............................. 83.38 68.50
</TABLE>
- ---------------
(1) Per share amounts for Sanmina Common Stock have been restated to
retroactively reflect two-for-one stock splits effected in June 1998 and
March 2000.
The following table sets forth the last reported sales prices per share of
Sanmina Common Stock on the Nasdaq National Market and of Hadco Common Stock on
the New York Stock Exchange on April 17, 2000, the last trading day before
announcement of the Merger Agreement, and on May 18, 2000:
<TABLE>
<CAPTION>
SANMINA HADCO
COMMON COMMON
STOCK STOCK
------- ------
<S> <C> <C>
April 17, 2000.............................................. $50.94 $60.50
May 18, 2000................................................ 59.00 81.38
</TABLE>
HADCO STOCKHOLDERS ARE ADVISED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
SANMINA COMMON STOCK AND HADCO COMMON STOCK IN CONNECTION WITH VOTING THEIR
SHARES AT THE SPECIAL MEETING.
26
<PAGE> 33
THE SPECIAL MEETING
DATE, TIME, PLACE AND PURPOSE
This proxy statement/prospectus is being furnished to Hadco stockholders in
connection with the solicitation of proxies by the Hadco Board for use at the
special meeting to be held on June
23, 2000 at 10:00 a.m., local time, at Testa, Hurwitz & Thibeault, LLP,
Conference Center, 20(th) Floor, High Street Tower, 125 High Street, Boston,
Massachusetts, and at any and all adjournments or postponements of the special
meeting. Only holders of record of Hadco Common Stock at the close of business
on the record date will be entitled to notice of, and to vote at, the special
meeting, and at any and all adjournments or postponements of the special
meeting. At the special meeting, holders of Hadco 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, approve the
Merger of Merger Sub with and into Hadco upon the terms and subject to the
conditions of the Merger Agreement, and to transact any other and further
business as may properly come before the special meeting or any adjournments or
postponements of the meeting, including without limitation, potential
adjournments or postponements for the purpose of soliciting additional proxies
in order to approve the Merger Agreement and Merger. If the Merger is
consummated, Hadco 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 Hadco Common
Stock, other than shares owned by Sanmina, Merger Sub, any of their respective
subsidiaries or Hadco, and other than dissenting shares, will be converted into
1.40 shares of Sanmina Common Stock. If the average last reported sale price of
Sanmina Common Stock is less than $40.00 over the 20 trading days ending on the
third trading day prior to the special meeting, Hadco may terminate the Merger
Agreement. In that event, however, Sanmina has the right, but not the
obligation, to complete the Merger by increasing the exchange ratio to an amount
equal to $56.00 divided by the average last reported sale price of Sanmina
Common Stock over the 20 trading days ending on the third trading day prior to
the special meeting, assuming all other closing conditions have been satisfied.
For example, if the average last reported sale price of Sanmina Common
Stock was $35.00 during this 20 day period, Sanmina could elect to increase the
exchange ratio to 1.6 ($56.00 divided by $35.00), in which event the Merger
would be completed (assuming the other closing conditions under the Merger
Agreement were satisfied).
No fractional shares of Sanmina Common Stock will be issued in the Merger.
Each holder of shares of Hadco 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 instead receive cash (without interest) in an amount, less the
amount of any withholding taxes which may be required thereon, equal to that
fraction of a share of Sanmina Common Stock multiplied by the per share closing
price of Sanmina Common Stock at the Effective Time as that 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,
The Stockholders Agreement And The Stock Option Agreement -- The Merger
Agreement -- Exchange Agent and Exchange Procedures" on page 50) on the Closing
Date, funds sufficient to pay cash instead of fractional shares. At the
Effective Time, each option to purchase shares of Hadco Common Stock that has
not been exercised prior to the Effective Time will be assumed by Sanmina.
THE HADCO BOARD HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE MERGER
AGREEMENT AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, HADCO
STOCKHOLDERS. ACCORDINGLY, THE HADCO BOARD HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND MERGER, AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF HADCO
VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND MERGER. CERTAIN MEMBERS OF THE
HADCO BOARD MAY BE DEEMED TO HAVE A CONFLICT OF INTEREST IN RECOMMENDING
STOCKHOLDER APPROVAL OF THE MERGER AGREEMENT AND MERGER. SEE "THE
MERGER -- INTERESTS OF CERTAIN PERSONS IN THE MERGER" ON PAGE 46.
27
<PAGE> 34
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 May 19, 2000 has been fixed as the record date for
determining the holders of Hadco Common Stock who are entitled to notice of and
to vote at the special meeting and any adjournments or postponements of the
meeting. As of the record date, there were 13,836,718 shares of Hadco Common
Stock outstanding, of which 857,090 shares (approximately 6.2% of the
outstanding shares) of Hadco Common Stock were owned by directors (in their
capacity as stockholders) of Hadco. As indicated below, all directors and
certain executive officers of Hadco have agreed to vote all their shares to
approve the Merger Agreement and Merger. The holders of record on the record
date of shares of Hadco Common Stock are entitled to one vote per share of Hadco
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 Hadco Common Stock entitled to vote at the special
meeting is necessary to constitute a quorum for the transaction of business at
the special meeting. Under the Massachusetts Business Corporation Law ("MBCL"),
the affirmative vote of holders of at least two-thirds of the Hadco Common Stock
outstanding and entitled to vote is required for stockholder approval of the
Merger Agreement and Merger. An abstention from voting or a broker non-vote will
have the practical effect of voting against approval of the Merger Agreement and
Merger since a vote to abstain or a broker non-vote represents one less vote for
approval. A "broker non-vote" occurs when brokers who hold shares in street name
for customers who are the beneficial owners of those shares do not give a proxy
to vote the customers' shares because the customers have failed to give the
broker specific instructions concerning voting.
As indicated above, pursuant to the terms of the Stockholders Agreement,
the directors and certain executive officers of Hadco (in their capacity as
stockholders) have agreed, among other things, to vote (or cause to be voted)
their shares of Hadco Common Stock in favor of approval of the Merger Agreement
and Merger at the special meeting. Together, such stockholders held on the
record date 860,663 shares (approximately 6.2% of the outstanding shares) of
Hadco Common Stock. Consequently, holders of approximately 60.4% of Hadco Common
Stock who are not parties to the Stockholders Agreement need to vote in favor of
approval of the Merger Agreement and Merger for stockholder approval to be
obtained. The general effect of the Stockholders Agreement is to increase the
likelihood that stockholder approval will be obtained, and it may discourage
third parties who are interested in acquiring a significant ownership interest
in Hadco. See "The Merger -- Interests of Certain Persons in the Merger" and
"The Merger Agreement, The Stockholders Agreement And The Stock Option
Agreement -- The Stockholders Agreement" on pages 46 and 56, respectively.
PROXIES; PROXY SOLICITATION
Horace H. Irvine II, Andrew E. Lietz and F. Gordon Bitter, each of whom has
been named as proxies in the proxy, are directors and/or executive officers of
Hadco. Shares of Hadco Common Stock that are entitled to vote and are
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 in the proxy. Shares of Hadco Common
Stock that are entitled to vote and are represented by properly executed proxies
for which no instruction is given will be voted FOR approval of the Merger
Agreement and Merger. Hadco 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. A Hadco
stockholder may revoke a proxy by submitting to the Clerk of Hadco at any time
prior to the vote on the approval of the Merger Agreement and Merger a later
dated proxy with respect to the same shares, by delivering written notice of
revocation to the Clerk of Hadco 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. Any written notice of
28
<PAGE> 35
revocation or subsequent proxy should be sent to Hadco Corporation, 12A Manor
Parkway, Salem, New Hampshire 03079, Attention: Clerk and Chief Financial
Officer, or hand delivered to the Clerk of Hadco at or prior to the taking of
the vote at the special meeting. Stockholders that have instructed a broker to
vote their shares must follow directions received from their broker in order to
change their vote, revoke their proxy or vote at the special meeting. If a Hadco
stockholder is not the registered direct holder of his or her shares, the
stockholder must obtain appropriate documentation from the registered holder in
order to be able to vote the shares in person.
To the knowledge of Hadco's Board, there are no other matters to be
presented at the special meeting. If any other matters are properly presented
for consideration at the special meeting, or any adjournments or postponements
of the meeting, including consideration of a motion to adjourn or postpone the
special meeting to another time or place for the purpose of soliciting
additional proxies, the proxies will have the discretion to vote on these
matters in accordance with their best judgment. 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 the proxies
would have been voted at the original convening of the meeting (except for any
proxies which have effectively been revoked or withdrawn), regardless of whether
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 Hadco may solicit proxies by telephone, telegram or otherwise.
Directors, officers and employees of Sanmina and Hadco will not be additionally
compensated for this solicitation but may be reimbursed for out-of-pocket
expenses incurred in connection with their activities. Brokerage firms,
fiduciaries and other custodians who forward soliciting material to the
beneficial owners of shares of Hadco Common Stock held of record by them will be
reimbursed for their reasonable expenses incurred in forwarding this material.
Hadco may retain a proxy solicitation firm to aid in soliciting proxies from its
stockholders. The fees of a proxy solicitation firm are estimated not to exceed
$10,000, plus reimbursement of out-of-pocket expenses. Hadco will bear the cost
of solicitation of proxies from the stockholders.
29
<PAGE> 36
SECURITY OWNERSHIP OF MANAGEMENT AND
PRINCIPAL STOCKHOLDERS OF HADCO
The following table shows certain information regarding beneficial
ownership of Hadco Common Stock as of May 19, 2000 (except as otherwise noted)
by (i) each director of Hadco, (ii) Hadco's executive officers, (iii) all
directors and executive officers of Hadco as a group, and (iv) all those known
by Hadco to be beneficial owners of more than five percent of the outstanding
shares of Hadco Common Stock. This table is based on information provided to
Hadco or filed with the SEC by Hadco'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>
J. & W. Seligman & Co. Incorporated(1)...................... 1,685,100 12.2%
100 Park Avenue
New York, NY 10017
Legg Mason Inc.(2).......................................... 1,384,547 10.0
100 Light Street
Baltimore, MD 21202
Horace H. Irvine II(3)...................................... 689,762 5.0
Andrew E. Lietz(4).......................................... 372,601 2.6
F. Gordon Bitter(5)......................................... 32,073 *
William M. Beckenbaugh(6)................................... 23,425 *
John D. Caruso, Jr.(7)...................................... 49,280 *
Timothy P. Losik(8)......................................... 103,738 *
Christopher T. Mastrogiacomo(9)............................. 78,586 *
Frederick G. McNamee, III(10)............................... 105,138 *
Michael K. Sheehy(11)....................................... 70,832 *
James C. Hamilton(12)....................................... 50,905 *
Oliver O. Ward(13).......................................... 13,387 *
John F. Smith(14)........................................... 29,887 *
John E. Pomeroy(15)......................................... 19,387 *
James C. Taylor(16)......................................... 21,387 *
Mauro J. Walker(17)......................................... 16,329 *
Gilbert M. Roddy, Jr.(18)................................... 58,350 *
All directors and executive officers as a group (16
persons)(19).............................................. 1,692,462 11.6%
</TABLE>
- ---------------
* Less than one percent
(1) According to information provided by J. & W. Seligman & Co. Incorporated
("Seligman") to Hadco as of April 30, 2000. Seligman, as investment adviser
for various clients, including Seligman Communications and Information
Fund, Inc., may be deemed to beneficially own the shares beneficially owned
by these clients. Accordingly, the shares reported by Seligman include
those shares separately owned by their clients. William C. Morris, a
majority owner of the outstanding voting securities of Seligman may also be
deemed to have beneficial ownership of these shares.
(2) According to information set forth in a Schedule 13G filed with the SEC on
February 16, 1999 by Legg Mason Inc., Legg Mason Inc. beneficially owned
1,384,547 shares of Hadco's Common Stock with sole voting power and sole
dispositive power over 1,265,000 shares and shared voting power and shared
dispositive power over 119,547 shares. 1,265,000 shares are held by Legg
Mason Special Investment Trust, Inc., with Legg Mason Fund Advisor, Inc.
having the power to dispose of these shares; 119,547 shares are held for
various clients of Legg Mason Wood Walker, Inc. and Legg Mason Capital
Management, Inc., with each client having the power to dispose of its
respective shares.
30
<PAGE> 37
(3) Includes 19,355 shares held in a voting trust for the benefit of Andrea P.
Irvine. Mr. Irvine, who is the sole trustee of the trust and retains sole
voting power with respect to the shares held in the trust, disclaims
beneficial ownership of these shares. Does not include 42,605 shares held
in irrevocable trusts for the benefit of members of Horace H. Irvine II's
family. Mr. Irvine, who is not a trustee of those trusts, disclaims
beneficial ownership of these 42,605 shares. James C. Hamilton, Clerk of
Hadco and a partner at the law firm that is general counsel to Hadco,
Lawrence Coolidge, a former Director of Hadco, and Gilbert M. Roddy, Jr., a
Director of Hadco, are co-trustees of these irrevocable trusts. Horace H.
Irvine II retains no voting or dispositive power with respect to these
shares. All voting rights under these trusts reside in Messrs. Hamilton,
Coolidge and Roddy, who have the right to dispose of these shares. Messrs.
Hamilton and Roddy own 8,300 and 15,745 shares, respectively, as
individuals, in addition to the shares they hold as co-trustees. Mr.
Roddy's 15,745 shares include 6,000 shares issuable upon the exercise of
stock options that are currently exercisable or will become exercisable
within 60 days of the record date and 9,000 shares issuable pursuant to
options which will become exercisable at the Effective Time pursuant to the
terms of the Stock Option Plans.
(4) Includes 145,000 shares issuable upon the exercise of stock options that
are currently exercisable or will become exercisable within 60 days after
the record date and 144,000 shares issuable pursuant to options which will
become exercisable at the Effective Time pursuant to the terms of the Stock
Option Plans. Of the 372,601 shares listed in the table above, 66,646
shares are held by a trust of which Mr. Lietz is the sole trustee and sole
beneficiary, and 10,000 shares are held by a trust of which Mr. Lietz's
wife is the sole trustee and beneficiary. Mr. Lietz disclaims beneficiary
ownership of these 10,000 shares.
(5) Includes 28,500 shares issuable pursuant to options which will become
exercisable at the Effective Time pursuant to the terms of the Stock Option
Plans.
(6) Includes 22,800 shares issuable pursuant to options which will become
exercisable at the Effective Time pursuant to the terms of the Stock Option
Plans.
(7) Includes 7,750 shares issuable upon the exercise of stock options that are
currently exercisable or will become exercisable within 60 days after the
record date and 36,950 shares issuable pursuant to options which will
become exercisable at the Effective Time pursuant to the terms of the Stock
Option Plans.
(8) Includes 45,950 shares issuable upon the exercise of stock options that are
currently exercisable or will become exercisable within 60 days after the
record date and 45,750 shares issuable pursuant to options which will
become exercisable at the Effective Time pursuant to the terms of the Stock
Option Plans. Of the 103,738 shares listed in the table above, 8,200 shares
are held jointly with Mr. Losik's wife.
(9) Includes 26,550 shares issuable upon the exercise of stock options that are
currently exercisable or will become exercisable within 60 days after the
record date and 46,250 shares issuable pursuant to options which will
become exercisable at the Effective Time pursuant to the terms of the Stock
Option Plans.
(10) Includes 12,000 shares issuable upon the exercise of stock options that are
currently exercisable or will become exercisable within 60 days after the
record date and 51,200 shares issuable pursuant to options which will
become exercisable at the Effective Time pursuant to the terms of the Stock
Option Plans.
(11) Includes 19,250 shares issuable upon the exercise of stock options that are
currently exercisable or will become exercisable within 60 days after the
record date and 47,200 shares issuable pursuant to options which will
become exercisable at the Effective Time pursuant to the terms of the Stock
Option Plans.
(12) See note (1) above.
(13) Includes 12,000 shares issuable upon the exercise of stock options that are
currently exercisable or will become exercisable within 60 days after the
record date.
(14) Includes 3,000 shares issuable upon the exercise of stock options that are
currently exercisable or will become exercisable within 60 days after the
record date.
(15) Includes 12,000 shares issuable upon the exercise of stock options that are
currently exercisable or will become exercisable within 60 days after the
record date and 3,000 shares issuable pursuant to options which will become
exercisable at the Effective Time pursuant to the terms of the Stock Option
Plans.
31
<PAGE> 38
(16) Includes 12,000 shares issuable upon the exercise of stock options that are
currently exercisable or will become exercisable within 60 days after the
record date and 3,000 shares issuable pursuant to options which will become
exercisable at the Effective Time pursuant to the terms of the Stock Option
Plans.
(17) Includes 9,000 shares issuable upon the exercise of stock options that are
currently exercisable or will become exercisable within 60 days after the
record date and 6,000 shares issuable pursuant to options which will become
exercisable at the Effective Time pursuant to the terms of the Stock Option
Plans.
(18) Includes 6,000 shares issuable upon the exercise of stock options that are
currently exercisable or will become exercisable within 60 days after the
record date and 9,000 shares issuable pursuant to options which will become
exercisable at the Effective Time pursuant to the terms of the Stock Option
Plans. See note (3) above.
(19) Includes 310,500 shares issuable upon the exercise of stock options that
are currently exercisable or will become exercisable within 60 days after
the record date and 443,650 shares issuable pursuant to options which will
become exercisable at the Effective Time pursuant to the terms of the Stock
Option Plans.
32
<PAGE> 39
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 multilayer printed circuit boards, electronic
enclosure systems manufacture, 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. Sanmina also manufactures custom cable and wire
harness assemblies for electronics industry OEMs. These manufacturing services
are provided by Sanmina personnel at Sanmina's facilities.
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 a diversified base of OEMs in the
communications, (telecommunications and networking), industrial and medical
instrumentation, and high speed computer systems segments of the electronics
industry. Sanmina's manufacturing and assembly plants are located in Northern
California; Richardson, Texas; Manchester, New Hampshire; Durham, North
Carolina; Guntersville, Alabama; Carrollton, Texas; the greater Chicago area;
Irvine, California; Nashua, New Hampshire; Wilmington and Woburn, Massachusetts;
Calgary, Alberta Canada; Toronto, Ontario Canada; Dublin, Ireland; and
Chateaudun, France.
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. The principal offices
of Sanmina are located at 2700 North First Street, San Jose, California 95134.
The telephone number is (408) 964-3500, and its internet site is
http://www.sanmina.com.
See "References to Additional Information" and "Where You Can Find More
Information" on pages 2 and 66, respectively.
HADCO CORPORATION
Hadco is the largest manufacturer of advanced electronic interconnect
products in North America. Hadco offers a wide array of sophisticated
manufacturing, engineering and systems integration services to meet its
customers' electronic interconnect needs.
Hadco's principal products are multilayer rigid printed circuits and
backplane and systems assemblies. Printed circuits are the basic platforms used
to interconnect microprocessors, integrated circuits and other components
essential to the functioning of electronic systems. Backplane assemblies are
generally larger and thicker printed circuits on which connectors are mounted to
receive and interconnect printed circuits, integrated circuits and other
electronic components. Systems assemblies include the backplane, power supply,
fan card, cabling and system chassis.
Hadco's advanced manufacturing and assembly facilities are designed to meet
the accelerated time-to-market and time-to-volume requirements of its customers
whose markets are characterized by high growth rates, rapid technological
advances and short product life cycles. Hadco works closely with customers
during the early stages of the product life-cycle in an effort to develop
process changes and refinements required for
33
<PAGE> 40
volume production. The development projects include increased printed circuit
density, embedded passive components, advanced materials, laser direct imaging,
fine pitch assembly and new product offerings.
Hadco's customers are a diverse group of electronic manufacturing services
providers and OEMs in the computing (mainly workstations, servers, mainframes,
storage and notebooks), data communications/telecommunications and industrial
automation industries, including process controls, automotive, medical and
instrumentation. Hadco's manufacturing facilities are located in Arizona,
California, Massachusetts, New Hampshire, New York, Texas and Malaysia.
Hadco was incorporated in Massachusetts in 1966. Hadco's principal
executive offices are located at 12A Manor Parkway, Salem, New Hampshire 03079;
its telephone number is (603) 898-8000, and its internet site is
http://www.hadco.com.
See "References to Additional Information" and "Where You Can Find More
Information" on pages 2 and 66, respectively.
34
<PAGE> 41
THE MERGER
BACKGROUND OF THE MERGER
The management of Hadco and Sanmina have known each other for many years,
and Sanmina has been a customer of Hadco since December 1996 and a supplier of
Hadco since February 1998.
On March 1, 2000, Jure Sola, the Chairman and Chief Executive Officer of
Sanmina, telephoned Andrew E. Lietz, Chief Executive Officer and President of
Hadco, to discuss a subject of mutual interest. Mr. Lietz returned Mr. Sola's
telephone call on March 2, 2000, and in that conversation Mr. Sola expressed
interest in a possible business combination with Hadco. Mr. Lietz indicated that
he was always available to discuss ways in which to increase shareholder value.
They agreed to meet in San Francisco on March 20 and 21, 2000 to discuss
strategic opportunities.
On March 20 and 21, 2000, Mr. Lietz and F. Gordon Bitter, Senior Vice
President and Chief Financial Officer of Hadco, met with Mr. Sola and Mr. Randy
Furr, President and Chief Operating Officer of Sanmina, in San Francisco. They
discussed the electronic interconnect industry and EMS business at length,
including the long-term potential for the EMS industry and printed wiring board
manufacturers. Mr. Sola told Mr. Lietz that Sanmina would provide further
thoughts to Hadco later that week on a possible transaction between the
companies. Mr. Lietz relayed to members of the Hadco Board information
concerning the initial inquiry and follow-up meeting with Sanmina
representatives.
On March 24, 2000, Mr. Lietz received from Mr. Sola a letter and a proposal
outlining certain terms for a merger between the companies, which included an
exchange ratio of 1.1 shares of Sanmina Common Stock for each share of Hadco
Common Stock and which valued Hadco Common Stock on that date at $72.60 per
share. The closing price of Hadco Common Stock and Sanmina Common Stock on March
24, 2000 was $58.00 and $66.00, respectively.
On March 24, 2000, the Hadco Board held a telephonic meeting, which was
also attended by representatives of Morgan Stanley. Mr. Lietz and Mr. Bitter
informed members of the Hadco Board of the transaction proposed by Sanmina. A
representative of Morgan Stanley reviewed with the Hadco Board certain financial
issues relating to Sanmina. The Hadco Board requested that management work with
Morgan Stanley representatives to analyze and evaluate Sanmina's proposal and to
consider potential responses.
The Hadco Board met again telephonically on March 28, 2000. Senior
management and representatives of Morgan Stanley discussed the Sanmina proposal
and a potential response. On the same date, Mr. Lietz and Mr. Sola further
discussed the potential transaction.
The Hadco Board met again with senior management and representatives of
Morgan Stanley on March 30, 2000 to further discuss Sanmina's proposal. Morgan
Stanley reviewed the terms of the Sanmina proposal, made a presentation to the
Hadco Board of its financial, business and market analyses relating to the
proposal and made its recommendations. Mr. Lietz also provided the Hadco Board
with his views on the benefits of a proposed transaction with Sanmina. The Hadco
Board authorized management to provide a response to Sanmina's proposal, which
was communicated to Sanmina on March 30, 2000.
On March 31, 2000, Mr. Sola contacted representatives of Morgan Stanley
requesting a meeting on April 3, 2000 with Hadco's senior management in Palo
Alto, California.
On April 3, 2000, Messrs. Lietz, Bitter, Sola, Furr, Ms. Elizabeth D.
Jordan, Chief Financial Officer of Sanmina, Ms. Patricia Randall, General
Counsel of Hadco, and representatives of Morgan Stanley met in Palo Alto to
discuss further the terms of a potential transaction between the parties. The
parties entered into a Confidentiality Agreement pursuant to which each of them
agreed to treat confidentially certain information provided by the other in
connection with determining whether a transaction between them would be
desirable. The parties exchanged confidential information relating to their
business and strategic initiatives. Lengthy valuation discussions ensued with
each party presenting various valuation approaches for a possible transaction.
The parties also discussed other financial aspects of a possible transaction
including termination fees.
35
<PAGE> 42
On August 3 and 4, 2000, Mr. Lietz briefed members of the Hadco Board
regarding the April 3 discussions with Sanmina.
On April 5, 2000, the Hadco Board held a telephonic meeting during which
senior management of Hadco reported on its April 3, 2000 meeting with senior
management of Sanmina. Morgan Stanley further discussed valuation and downside
protection for Hadco in the event of a significant drop in the share price of
Sanmina. Following these reports, the Board of Directors authorized senior
management and legal advisors of Hadco to engage in mutual due diligence
exchanges with Sanmina. It was agreed that the board would review and consider
the proposals discussed at the April 3 meeting in California in order to make a
decision at the next meeting of the board that was scheduled for April 17, 2000.
The Hadco Board also discussed Morgan Stanley's prior service as Sanmina's
investment banker in certain matters but noted that Morgan Stanley was
representing only Hadco in the proposed transaction. Based on the Hadco Board's
discussion and Hadco's prior relationship with Morgan Stanley, the Hadco Board
was comfortable with Morgan Stanley's representation of Hadco in the proposed
transaction.
On April 7, 2000, counsel for Sanmina provided counsel for Hadco a first
draft of a proposed form of Merger Agreement. The companies engaged in due
diligence exchanges during the week of April 10, 2000. Such exchanges included
interviews of persons responsible for the financial and environmental affairs of
Sanmina and Hadco, respectively, as well as due diligence regarding other
strategic, management, legal and business issues.
On April 12, 2000, Morgan Stanley sent the Hadco Board a preliminary
financial analysis of a proposed transaction between Hadco and Sanmina. Counsel
engaged in discussions and exchanges with respect to the Merger Agreement
throughout the week of April 10, 2000. On April 14, 2000, a proposed form of
Merger Agreement and related ancillary agreements were forwarded to members of
the Hadco Board for review.
During the week of April 10 and throughout the weekend of April 15 and 16,
2000, Mr. Lietz held discussions with various members of Hadco's board of
directors to determine Hadco's continuing interest in pursuing discussions with
Sanmina in light of the decline in the share price of Sanmina. During the
weekend of April 15 and 16, 2000, Mr. Bitter held numerous discussions with
representatives of Morgan Stanley about the exchange ratio and walk-away rights
of Hadco, and Morgan Stanley representatives held numerous discussions with the
investment bankers for Sanmina, Donaldson, Lufkin & Jenrette Securities
Corporation.
Over a period of time, Morgan Stanley also made contact with several other
prospective strategic buyers as well as several prospective financial buyers
that they and Hadco's management had identified as potential candidates to
pursue a possible transaction with Hadco. No serious continuing interest arose
from such contacts.
Early in the morning of April 17, 2000, Messrs. Lietz and Bitter met with
Messrs. Sola and Furr and Ms. Jordan and the respective investment bankers for
each party to discuss the exchange ratio and value of the proposed transaction,
as well as the walk-away right of Hadco, an option for Sanmina to acquire 19.9%
of Hadco Common Stock under certain circumstances and other terms of the
proposed transaction. The parties agreed to recommend to their respective boards
a transaction with an exchange ratio of 1.4, which valued Hadco Common Stock at
a price of $69.0375 per share as of that date, with a walk away right for Hadco
if Sanmina's share price fell below $40.00 for the 20 day average prior to the
third day prior to the special meeting, which walk away right will terminate if
Sanmina increases the exchange ratio so that Hadco shareholders would receive
Sanmina Common Stock with an aggregate value of at least $56.00. Their
recommendation also included the above option and mutual termination fees of
2.5%. The closing price of Hadco Common Stock on April 14, 2000 was $59.625.
The Hadco Board met on April 17, 2000 to review the progress of
negotiations and the proposed terms of the Merger. Mr. Lietz and Mr. Bitter gave
reports to the Hadco Board, and representatives of Morgan Stanley updated and
supplemented the financial and other information and analyses they had provided
to the Hadco Board at earlier meetings. Legal advisors for Hadco reviewed with
the Hadco Board the results of their due diligence review and the terms of the
proposed transaction. Representatives of Arthur Andersen LLP, Hadco's
independent public accountants, also furnished a report to the Hadco Board. At
the meeting, the Hadco Board
36
<PAGE> 43
received Morgan Stanley's opinion that, as of that date, the consideration to be
received by Hadco's stockholders in the Merger was fair from a financial point
of view to the stockholders. Following lengthy discussion, the Hadco Board
unanimously approved the Merger Agreement and Merger and authorized senior
management to proceed with the transaction.
On April 17, 2000, the Sanmina Board held a telephonic meeting, approved
the Merger Agreement and Merger and authorized its senior management to proceed
with the transaction.
The parties executed the Merger Agreement and various related agreements on
April 17, 2000, and the transaction was announced following the close of the
market on the same day.
HADCO'S REASONS FOR THE MERGER
The Hadco Board of Directors has unanimously determined that the terms of
the Merger Agreement and Merger are fair to, and in the best interests of, Hadco
and its stockholders. Accordingly, the Hadco Board of Directors has unanimously
approved the Merger Agreement and unanimously recommends that stockholders of
Hadco 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 the Merger,
the Hadco Board of Directors consulted with:
- Its legal counsel regarding the legal terms of the transaction and the
obligations and duties of the Hadco Board of Directors in its
consideration of the proposed transaction.
- Its financial advisors regarding the financial aspects of the proposed
transaction and the fairness of the exchange ratio to Hadco's
stockholders from a financial point of view.
- The management of Hadco.
Among the information and factors considered by the Hadco Board of
Directors in its deliberations were the following:
- Historical information concerning Hadco's and Sanmina's respective
businesses, prospects, financial performance and condition, operations,
technology, management and competitive position, including public reports
concerning results of operations during the most recent fiscal year and
fiscal quarter for each company filed with the Securities and Exchange
Commission.
- The financial condition, results of operations and businesses of Hadco
and Sanmina before and after giving effect to the Merger.
- The near- and long-term prospects of Hadco as an independent company and
of Sanmina.
- Hadco's stockholders will have the opportunity to participate in the
potential for the greater growth, operational efficiencies, financial
strength and earning power of the combined company after the Merger.
- The industry trends toward consolidation and the advantages that might be
expected to accrue to the combined company in terms of the creation of a
larger customer base, a higher market profile, greater financial strength
and broader customer offerings, which could enhance the ability of the
combined company to compete in the marketplace.
- Current financial market conditions, historical market prices, volatility
and trading information with respect to Hadco Common Stock and Sanmina
Common Stock and historical price earnings ratios of Hadco and Sanmina.
- The consideration to be received by Hadco's stockholders in the Merger
(noting that if the price of Sanmina common stock declined below $40.00,
Hadco could terminate the Merger Agreement unless Sanmina increased the
exchange ratio to guarantee Hadco stockholders a minimum value of $56.00
per
37
<PAGE> 44
share) and the relationship between the market value of Sanmina Common
Stock to be issued in exchange for each share of Hadco Common Stock and
the market value of Hadco Common Stock.
- Data involving a comparison of comparable merger transactions.
- The belief that the terms of the Merger Agreement, including the parties'
representations, warranties and covenants, and the conditions to their
respective obligations, are reasonable.
- The strategic fit and compatibility of the two companies and the
expectation that the Merger would result in certain cost savings and
other synergies which, if achieved, might improve the results of Sanmina.
- The potential and/or likelihood for other third parties to enter into
strategic relationships with or to acquire Hadco; management's and Morgan
Stanley's belief that there appeared to be a limited number of parties
with which Hadco would be a good strategic fit; and management's view
that a general auction of Hadco would have significant adverse
consequences on Hadco's relationships with its employees, customers and
suppliers.
- The ability of the Hadco Board of Directors, under the Merger Agreement,
to respond to unsolicited requests for nonpublic information, to
participate in discussions and negotiations with unsolicited potential
third party acquirors under certain circumstances and to terminate the
Merger Agreement under certain circumstances in order to accept third
party offers.
- Detailed financial analysis and other information with respect to the
companies presented by Morgan Stanley & Co. Incorporated to the Hadco
Board, including its opinion that, as of the date of the opinion, the
exchange ratio in the Merger is fair to the stockholders of Hadco from a
financial point of view.
- The impact of the Merger on Hadco's customers and employees.
- Reports from management and legal, accounting and financial advisors as
to the results of their due diligence investigation of Sanmina.
- The parties' intent to treat the Merger as a tax-free reorganization
under the Internal Revenue Code.
- The intended treatment of the Merger as a "pooling of interests" for
financial reporting and accounting purposes so that no goodwill is
expected to be created on the books of the combined company as a result
of the transaction.
The Hadco Board of Directors also considered potentially negative factors
relating to the Merger, including:
- The risk that the potential benefits sought in the Merger might not be
fully realized.
- The possibility that the Merger might not be consummated and the effect
of a public announcement of the Merger or any failure to consummate the
Merger on:
-- Hadco's sales, operating results and stock price; and
-- Hadco's ability to attract and retain customers, suppliers and key
management, sales and marketing and technical personnel.
- That the termination fee of $23.87 million required to be paid by Hadco
under the Merger Agreement, and the option granted to Sanmina to acquire
19.9% of Hadco's outstanding common stock exercisable by Sanmina, under
certain circumstances might discourage a third party from seeking to
acquire Hadco.
- The substantial charges to be incurred in connection with the Merger,
including costs of integrating the businesses and transaction expenses
arising from the Merger.
- The risk that despite the efforts of the combined company, key technical,
sales and management personnel might not remain employed by the combined
company.
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<PAGE> 45
- Risks associated with fluctuations in Sanmina's Common Stock price.
- Various other risks.
The foregoing discussion of the information and factors considered by the
Hadco Board of Directors is not intended to be exhaustive but is believed to
include all material factors considered by the Hadco Board of Directors. In view
of the wide variety of information and factors, both positive and negative,
considered by the Hadco Board of Directors, the Hadco Board of Directors did not
find it practical to, and did not, quantify or otherwise assign relative or
specific weights to the foregoing factors considered. After taking into
consideration all of the above factors, the Hadco Board of Directors unanimously
determined that the Merger Agreement and the Merger were in the best interests
of Hadco and its stockholders and that Hadco should enter into the Merger
Agreement and complete the Merger.
RECOMMENDATION OF THE HADCO BOARD
THE HADCO BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE MERGER, THE MERGER
AGREEMENT AND THE RELATED TRANSACTIONS, AND HAS UNANIMOUSLY DETERMINED THAT THEY
ARE FAIR TO AND IN THE BEST INTERESTS OF HADCO AND ITS STOCKHOLDERS. AFTER
CAREFUL CONSIDERATION, THE HADCO BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS OF HADCO VOTE FOR APPROVAL OF THE MERGER AND THE MERGER AGREEMENT.
In considering the recommendation of the Hadco Board of Directors with
respect to the Merger Agreement and the Merger, you should be aware that certain
directors and officers of Hadco have certain interests in the Merger that are
different from, and in addition to, the interests of Hadco stockholders
generally. These interests are discussed in more detail in the section entitled
"The Merger -- Interests of Certain Persons in the Merger" on page 46 of this
proxy statement/prospectus.
OPINION OF HADCO'S FINANCIAL ADVISOR
Pursuant to a letter dated as of January 7, 2000, Morgan Stanley & Co.
Incorporated ("Morgan Stanley") was engaged to provide financial advisory
services and a financial opinion letter (the "Morgan Stanley Opinion") in
connection with the Merger. Morgan Stanley was selected by the Hadco Board to
act as Hadco's financial advisor based on Morgan Stanley's qualifications,
expertise and reputation and its knowledge of the business and affairs of Hadco
and the industry in general.
At the April 17, 2000 meeting of the Hadco Board, Morgan Stanley rendered
its oral opinion that, as of such date and based upon and subject to the various
considerations set forth in its opinion, the exchange ratio pursuant to the
Merger Agreement is fair from a financial point of view to holders of Hadco
Common Stock. Morgan Stanley confirmed its opinion in writing by delivery to the
Hadco Board a written opinion dated April 17, 2000.
THE FULL TEXT OF THE MORGAN STANLEY OPINION, DATED AS OF APRIL 17, 2000,
WHICH SETS FORTH, AMONG OTHER THINGS, THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS
ANNEX IV TO THIS PROXY STATEMENT/PROSPECTUS. THE MORGAN STANLEY OPINION IS
DIRECTED TO THE HADCO BOARD AND ADDRESSES ONLY THE FAIRNESS OF THE EXCHANGE
RATIO FROM A FINANCIAL POINT OF VIEW TO THE HOLDERS OF THE HADCO COMMON STOCK AS
OF THE DATE OF SUCH OPINION AND DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER,
NOR DOES IT CONSTITUTE A RECOMMENDATION TO ANY HADCO STOCKHOLDER AS TO HOW THE
STOCKHOLDER SHOULD VOTE AT THE HADCO STOCKHOLDER MEETING. THE SUMMARY OF THE
MORGAN STANLEY OPINION SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE MORGAN STANLEY OPINION
ATTACHED AS ANNEX IV HERETO. STOCKHOLDERS OF HADCO ARE URGED TO, AND SHOULD,
READ THE MORGAN STANLEY OPINION CAREFULLY AND IN ITS ENTIRETY.
In arriving at the Morgan Stanley Opinion, Morgan Stanley, among other
things:
- reviewed certain publicly available financial statements and other
information of Hadco and Sanmina;
- reviewed certain internal financial statements and other financial and
operating data concerning Hadco prepared by the management of Hadco;
39
<PAGE> 46
- reviewed certain financial projections of Hadco prepared by the
management of Hadco;
- discussed the past and current operations and financial condition and the
prospects of Hadco and Sanmina, including certain financial projections,
with senior executives of Hadco and Sanmina, respectively;
- reviewed the pro forma impact of the Merger on Sanmina's earnings per
share;
- discussed potential strategic and operational benefits of the Merger with
senior executives of Hadco and Sanmina;
- reviewed the reported prices and trading activity for the Hadco Common
Stock and the Sanmina Common Stock;
- compared the financial performance of Hadco and Sanmina and the prices
and trading activity of the Hadco Common Stock and the Sanmina Common
Stock with that of certain other comparable publicly-traded companies and
their securities;
- reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
- participated in discussions and negotiations among representatives of
Hadco and Sanmina and their financial and legal advisors;
- reviewed the Merger Agreement and certain related documents; and
- considered such other factors as Morgan Stanley has deemed appropriate.
In arriving at the Morgan Stanley Opinion, Morgan Stanley assumed and
relied upon without independent verification the accuracy and completeness of
the information reviewed by it for the purposes of its opinion. With respect to
the financial projections, Morgan Stanley assumed that they were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the future financial performance and prospects of Hadco and
Sanmina. Morgan Stanley relied upon the assessment by the managements of Hadco
and Sanmina of their ability to retain key employees of Hadco. Morgan Stanley
also relied upon, without independent verification, the assessment by the
management of Hadco of Hadco's technologies and products, the timing and risks
associated with the integration of Hadco with Sanmina and the validity of, and
risks associated with, Hadco's existing and future products and technologies.
In addition, Morgan Stanley assumed that the Merger will be consummated in
accordance with the terms set forth in the Merger Agreement, including, among
other things, that the Merger will be accounted for as a "pooling-of-interests"
business combination in accordance with U.S. Generally Accepted Accounting
Principles ("GAAP") and the Merger will be treated as a tax-free reorganization
and/or exchange, each pursuant to the Internal Revenue Code of 1986. Morgan
Stanley has not made any independent valuation or appraisal of the assets or
liabilities of Hadco or Sanmina, nor has it been furnished with any such
appraisals. The Morgan Stanley Opinion was necessarily based on financial,
economic, market and other conditions as in effect on, and the information made
available to Morgan Stanley as of, the date of the Morgan Stanley Opinion.
The following is a brief summary of certain analyses performed by Morgan
Stanley in connection with its oral opinion and the Morgan Stanley Opinion.
Certain of these summaries of financial analyses include information presented
in tabular format. In order to fully understand the financial analyses used by
Morgan Stanley, the tables must be read together with the text of each summary.
The tables alone do not constitute a complete description of the financial
analyses.
Historical Common Stock Performance. Morgan Stanley's analysis of Hadco's
Common Stock performance consisted of an historical analysis of closing prices
and trading volumes over the period from April 14, 1999 to April 14, 2000.
During that period, based on closing prices on the New York Stock Exchange,
Hadco Common Stock achieved a high closing price per share of $68.63 on March
28, 2000 and a low closing price of $25.81 per share on April 20, 1999.
Additionally, Morgan Stanley noted that Hadco Common Stock closed at a price of
$59.63 per share on April 14, 2000.
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<PAGE> 47
Morgan Stanley's analysis of Sanmina's Common Stock performance consisted
of an historical analysis of closing prices and trading volumes over the period
from April 14, 1999 to April 14, 2000. During that period, based on closing
prices on the Nasdaq National Market, Sanmina Common Stock achieved a high
closing price per share of $67.56 on March 31, 2000 and a low closing price of
$28.66 per share on April 20, 1999. Additionally, Morgan Stanley noted that
Sanmina Common Stock closed at a price of $49.31 per share on April 14, 2000.
Based on the closing stock prices of Hadco Common Stock and Sanmina Common Stock
as of April 14, 2000, and the exchange ratio, the implied consideration for the
Hadco Common Stock was approximately $69 per share.
Comparative Stock Price Performance. Morgan Stanley performed historical
analyses of closing prices of Hadco Common Stock, Sanmina Common Stock, the S&P
500 Index and an equally weighted index of electronics manufacturing services
("EMS") companies consisting of Celestica Inc., Flextronics International Ltd.,
Jabil Circuits, Inc., SCI Systems, Inc., and Solectron Corporation. Morgan
Stanley compared the performance of such companies and indices to the
performance of Hadco's Common Stock and Sanmina's Common Stock during such
period. Morgan Stanley observed that over the period from April 14, 1999 to
April 14, 2000, the EMS company index increased 110.1%, Sanmina's Common Stock
increased 44.5%, the S&P 500 increased 2.1%, and Hadco's Common Stock increased
116.8%. Morgan Stanley also observed that over the period from April 14, 1998 to
April 14, 2000, the EMS company index increased 314.8%, Sanmina's Common Stock
increased 145.8%, the S&P 500 increased 21.6%, and Hadco's Common Stock
increased 64.5%.
Comparable Public Company Analysis. As part of its analysis, Morgan
Stanley compared certain publicly available financial information of certain EMS
companies and certain printed circuit board ("PCB") companies as listed below:
<TABLE>
<CAPTION>
COMPARABLE EMS COMPANIES COMPARABLE PCB COMPANIES
------------------------ ------------------------
<S> <C>
- - Celestica Inc. - Merix Corporation
- - Flextronics International Ltd. - Tyco International Ltd.
- - Jabil Circuit, Inc.
- - SCI Systems, Inc.
- - Solectron Corporation
- - Viasystems Group, Inc.
</TABLE>
While noting that none of the comparable public companies listed above is
exactly identical to Hadco or Sanmina, Morgan Stanley compared the financial
information of those companies to the financial performance of Hadco and
Sanmina. Such information included the stock trading price divided by the 2001
earnings per share ("EPS") estimate adjusted for a calendar year end ("the 2001E
price/earnings multiple"). Morgan Stanley also analyzed the 2001E price/earnings
multiple divided by the expected long-term EPS growth rate. Both estimates were
derived from I/B/E/S International median EPS and long-term growth rate
forecasts. The following table presents, as of April 14, 2000, the 2001E
price/earnings and 2001E price/earnings/growth multiples for the comparable EMS
companies and the comparable PCB companies ranked by decreasing value of 2001E
price/earnings multiples:
<TABLE>
<CAPTION>
2001E PRICE/EARNINGS 2001E PRICE/EARNINGS/
COMPANIES MULTIPLE GROWTH MULTIPLE
- --------- -------------------- ---------------------
<S> <C> <C>
- - Solectron Corporation 32.3x 1.1x
- - Celestica Inc. 30.4x 1.0x
- - Jabil Circuit, Inc. 27.9x 0.9x
- - Sanmina Corporation 27.3x 0.9x
- - Flextronics International Ltd. 26.4x 0.9x
- - SCI Systems, Inc. 21.9x 1.1x
- - Merix Corporation 16.3x 1.6x
- - Hadco Corporation 16.3x 0.8x
- - Tyco International Ltd. 16.1x 0.8x
- - Viasystems Group, Inc. 15.3x 0.8x
</TABLE>
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<PAGE> 48
Analysis of Selected Precedent Transactions. Morgan Stanley reviewed a
number of related transactions in the EMS and PCB industries that consisted of
the following:
<TABLE>
<CAPTION>
ANNOUNCEMENT
DATE ACQUIROR ACQUIREE
- ------------ -------- --------
<C> <S> <C>
11/22/99 - Flextronics International Ltd. - The DII Group, Inc.
10/27/99 - Tyco International Ltd. - Praegitzer Industries, Inc.
09/13/99 - Solectron Corporation - SMART Modular Technologies, Inc.
08/03/99 - Viasystems Group, Inc. - Termbray Industries International
Holdings
06/01/99 - Tyco International Ltd. - Sigma Circuits, Inc.
05/12/99 - Dyson-Kissner-Moran Corporation - Optek Technology, Inc.
02/23/99 - First Technology PLC - Control Devices, Inc.
11/02/98 - Celestica Inc. - International Manufacturing Services,
Inc.
09/02/98 - Sanmina Corporation - Altron Incorporated
05/19/98 - CACI International, Inc. - QuesTech Inc.
07/22/97 - Sanmina Corporation - Elexsys International, Inc.
</TABLE>
The information analyzed by Morgan Stanley for the precedent transactions
included price to estimated next-twelve-months earnings per share multiples, the
aggregate value to next-twelve-months earnings before interest, tax,
depreciation and amortization ("EBITDA") multiple and the aggregate value to
next-twelve-months revenues, based on research analysts' estimates of forward
operating performances. The following table represents the mean and median
implied multiples and exchange ratio premiums for the selected precedent
transactions:
<TABLE>
<CAPTION>
IMPLIED
OFFER PRICE IMPLIED AGGREGATE
PER SHARE VALUE /
TO NEXT ----------------- AVERAGE IMPLIED EXCHANGE RATIO PREMIUMS
TWELVE NEXT NEXT ------------------------------------------------------
MONTHS TWELVE TWELVE 30 TRADING DAY 60 TRADING DAY 90 TRADING DAY
EARNINGS MONTHS MONTHS AVERAGE PRIOR TO AVERAGE PRIOR TO AVERAGE PRIOR TO
PER SHARE REVENUES EBITDA ANNOUNCEMENT ANNOUNCEMENT ANNOUNCEMENT
----------- -------- ------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Precedent Transactions
Mean.................... 19.3x 1.4x 10.4x 51.0% 50.5% 44.6%
Median.................. 18.2x 1.6x 8.4x 57.0% 55.5% 40.1%
Implied Hadco
Transaction............. 22.6x 1.1x 7.2x 41.3% 54.3% 55.1%
</TABLE>
No transaction utilized as a comparison in the precedent transactions
analysis is identical to the Merger. In evaluating the precedent transactions,
Morgan Stanley made judgments and assumptions regarding industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of Hadco or Sanmina, such as the impact of
competition on Hadco or Sanmina and the industry generally, industry growth and
the absence of any material adverse change in the financial condition and
prospects of Hadco or Sanmina or the industry or in the financial markets in
general. Mathematical analysis such as determining the average or median is not
in itself a meaningful method of using comparable transaction data.
Exchange Ratio Analysis. Morgan Stanley analyzed the ratios of the closing
prices of Hadco Common Stock divided by the corresponding prices of Sanmina
Common Stock over various periods during the period
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<PAGE> 49
from April 14, 1999 to April 14, 2000. Morgan Stanley observed the following
implied exchange ratios over various periods ending on April 14, 2000 and as of
April 14, 2000:
<TABLE>
<CAPTION>
AVERAGE IMPLIED
PERIOD ENDING APRIL 14, 2000 EXCHANGE RATIO
- ---------------------------- ---------------
<S> <C>
Prior 1 Year................................................ 0.96x
Prior 90 Days............................................... 0.90x
Prior 60 Days............................................... 0.91x
Prior 30 Days............................................... 0.99x
As of 04/14/00.............................................. 1.21x
</TABLE>
Discounted Cash Flow Analysis. Morgan Stanley performed discounted cash
flow analysis of Hadco to determine a range of present values for the Hadco
Common Stock based on financial projections prepared by the management of Hadco.
Morgan Stanley calculated the unlevered free cash flow which represents the
after-tax operating income of Hadco, excluding any interest income and interest
expense, plus depreciation and amortization, plus deferred taxes, plus (or
minus) net changes in non-cash working capital and minus capital expenditures.
Morgan Stanley calculated terminal values by applying a range of multiples from
6.5 times to 8.5 times EBITDA. The unlevered free cash flows and terminal values
were then discounted to present values using a weighted average cost of capital
range of 14.5% to 15.5%. Based on this analysis and the assumptions set forth
above and using the midpoint of the weighted average cost of capital range,
Morgan Stanley calculated per share equity value estimates ranging from
approximately $59 to $74, excluding any potential operational benefits to be
realized from the Merger.
Leveraged Buyout Analysis. Morgan Stanley also performed a leveraged
buyout analysis of Hadco to determine a range of equity rates of returns for the
Hadco Common Stock assuming an acquisition of Hadco Common Stock in a leveraged
buyout scenario. Morgan Stanley used financial projections prepared by the
management of Hadco for this analysis. Morgan Stanley analyzed the 5-year equity
internal rate of return implied by purchasing Hadco Common Stock at a price
range of $50 to $65 per share and assuming a total debt to 1999 EBITDA ratio of
4.0 times. An equity internal rate of return of 15% was assumed to be the
minimum rate of return required by a potential purchaser. Based on this analysis
and the assumptions set forth above, Morgan Stanley calculated, under a
leveraged buyout scenario, a Hadco Common Stock per share equity value estimates
ranging from approximately $50 to $65, excluding any potential operational
benefits to be realized from the Merger.
Pro Forma Contribution Analysis. Morgan Stanley analyzed the pro forma
contribution of each of Sanmina and Hadco to the combined company. Such analysis
included relative contributions, adjusted for leverage, of net revenue, EBITDA,
and net income at various projected time periods. The following table presents
the implied equity ownership of Hadco based on research analysts' estimates of
the calendar years 2000 and 2001 relative contribution of revenues, EBITDA, and
net income of Sanmina and Hadco. Morgan Stanley noted that, pro forma for the
Merger, Hadco shareholders will own approximately 14% of the combined company.
<TABLE>
<CAPTION>
IMPLIED HADCO
ADJUSTED
CONTRIBUTION
TO COMBINED
COMPANY
--------------
2000E 2001E
----- -----
<S> <C> <C>
Revenues.................................................... 33% 31%
EBITDA...................................................... 34% 31%
Net Income.................................................. 18% 17%
</TABLE>
These contribution percentages did not take into account any estimates by
the managements of Sanmina or Hadco of the synergies or cost savings anticipated
from the Merger, nor did they take into account any accounting adjustments or
potential changes in capital structure as a result of the Merger.
43
<PAGE> 50
Morgan Stanley also analyzed the pro forma contribution analysis adjusted
for the expected long-term earnings growth of Hadco and Sanmina. Morgan Stanley
analyzed the implied pro forma Hadco and Sanmina ownership splits in 2001, 2003
and 2005 assuming expected earnings per share growth rate ranges of 15% to 20%
and 30% to 40% for Hadco and Sanmina, respectively, based on research analysts'
estimates for the earnings per share growth of both companies, as shown in the
following summary table:
<TABLE>
<CAPTION>
HADCO PRO FORMA OWNERSHIP SPLIT 2001E 2003E 2005E
- ------------------------------- ----- ----- -----
<S> <C> <C> <C>
Range
High...................................................... 17.2% 15.0% 13.1%
Low....................................................... 16.8% 12.0% 8.4%
</TABLE>
Pro Forma Analysis of the Merger. Morgan Stanley analyzed the pro forma
impact of the Merger on EPS for Sanmina for the estimated fiscal years 2000 and
2001. The pro forma results were calculated as if the Merger had closed at the
beginning of Sanmina's fiscal 2000-year end, and were based on estimated
earnings derived from First Call estimates for Hadco and Sanmina. The pro forma
analysis also assumed pooling-of-interests accounting treatment and followed
U.S. GAAP in deriving EPS estimates. Morgan Stanley noted that, without
including synergies, on a U.S. GAAP basis, the Merger would be accretive to
Sanmina's earnings per share in fiscal 2000 and fiscal 2001.
------------------------
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all of its
analyses as a whole and did not attribute any particular weight to any
particular analysis or factor considered by it. Furthermore, Morgan Stanley
believes that selecting any portion of Morgan Stanley's analyses, without
considering all its analyses, would create an incomplete view of the process
underlying the Morgan Stanley Opinion. In addition, Morgan Stanley may have
deemed various assumptions more or less probable than other assumptions, so that
the ranges of valuations resulting from any particular analysis described above
should not be taken to be Morgan Stanley's view of the actual value of Hadco or
Sanmina.
In performing its analysis, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Hadco or Sanmina. Any
estimates contained in the analyses performed by Morgan Stanley are not
necessarily indicative of actual values, which may be significantly more or less
favorable than those suggested by such analyses. Such analyses were prepared
solely as a part of Morgan Stanley's analysis of the fairness from a financial
point of view of the exchange ratio pursuant to the Merger Agreement and were
provided to the Hadco Board of Directors in connection with the delivery of the
Morgan Stanley Opinion. The analyses do not purport to be appraisals of value or
to reflect the prices at which Hadco or Sanmina might actually be sold. In
addition, as described above, the Morgan Stanley Opinion was one of the many
factors taken into consideration by the Hadco Board of Directors in making its
determination to approve the Merger. The exchange ratio pursuant to the Merger
Agreement was determined through arm's-length negotiations between Hadco and
Sanmina and was approved by the Hadco Board of Directors. Consequently, the
Morgan Stanley analyses as described above should not be viewed as determinative
of the opinion of the Hadco Board of Directors with respect to the value of
Hadco or of whether the Hadco Board of Directors would have been willing to
agree to different consideration.
Morgan Stanley is an internationally recognized investment banking and
advisory firm. Morgan Stanley, 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, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for corporate, estate and other purposes. Morgan
Stanley may continue to provide investment banking services to the combined
entity in the future. In the ordinary course of its trading, brokerage and
financing activities, Morgan Stanley and its affiliates may, at any time, have a
long or short position in, and buy and sell the debt or equity securities and
senior loans of Hadco or Sanmina for its account or the account of its
customers. Morgan Stanley and its affiliates have in the past provided financial
advisory and financing services to Hadco and Sanmina and their affiliates and
have received fees for the rendering of such services.
44
<PAGE> 51
Pursuant to an engagement letter dated January 7, 2000, Morgan Stanley
provided financial advisory services and a financial fairness opinion in
connection with the Merger, and Hadco agreed to pay Morgan Stanley a fee of
0.70% of the aggregate value of the transaction if the Merger is completed.
Hadco also agreed to reimburse Morgan Stanley for expenses incurred by Morgan
Stanley in performing its services. In addition, Hadco has also agreed to
indemnify Morgan Stanley and its affiliates, their respective directors,
officers, agents and employees and each person, if any, controlling Morgan
Stanley or any of its affiliates against certain liabilities and expenses,
including liabilities under the federal securities laws, related to or arising
out of Morgan Stanley's engagement and any related transactions.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal income tax
considerations relevant to the exchange of shares of Hadco Common Stock for
Sanmina Common Stock pursuant to the Merger that are generally applicable to
holders of Hadco Common Stock. This discussion is based on the Internal Revenue
Code of 1986, as amended (the "Code"), applicable Treasury Regulations
thereunder and current administrative rulings and court decisions, all as of the
date hereof. Future legislative, judicial or administrative changes, or
interpretations could adversely affect the accuracy of the statements and
conclusions set forth herein. Any such changes could be applied retroactively
and could affect the tax consequences of the Merger to Sanmina, Merger Sub,
Hadco and/or their respective stockholders.
Hadco stockholders should be aware that this discussion does not deal with
all federal income tax considerations that may be relevant to particular Hadco
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 Hadco
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 effected 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 Hadco Common Stock are acquired or shares of
Sanmina Common Stock are disposed of. ACCORDINGLY, HADCO 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, AND TAX REPORTING REQUIREMENTS WITH RESPECT THERETO.
Neither Sanmina nor Hadco has requested a ruling from the Internal Revenue
Service (the "IRS") with respect to the tax consequences of the Merger. Instead,
Hadco has received an opinion from its tax counsel, Testa, Hurwitz & Thibeault,
LLP, and Sanmina has received an opinion from its tax counsel, Wilson Sonsini
Goodrich & Rosati, Professional Corporation, to the effect that, for federal
income tax purposes, the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code (a "Reorganization"). These 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 Hadco.
If the Merger qualifies as a Reorganization, then:
- No gain or loss will be recognized by holders of Hadco Common Stock
solely as a result of the exchange of their shares of Hadco Common Stock
for shares of Sanmina Common Stock in the Merger (except with respect to
cash received instead of fractional shares of Sanmina Common Stock).
- The aggregate tax basis of Sanmina Common Stock received by Hadco
stockholders in the Merger will be the same as the aggregate tax basis of
Hadco Common Stock exchanged pursuant to the Merger reduced by the amount
of tax basis allocable to fractional shares of Sanmina Common Stock.
45
<PAGE> 52
- Cash payments instead of fractional shares will be treated as if a
fractional share of Sanmina Common Stock had been actually received in
the Merger and then subsequently redeemed by Sanmina. A Hadco stockholder
receiving this cash will generally recognize gain or loss upon the
payment equal to the difference (if any) between the stockholder's basis
in the fractional share and the amount of cash received.
- The holding period of Sanmina Common Stock received by each Hadco
stockholder in the Merger will include the holding period of the Hadco
Common Stock surrendered in exchange therefor, provided that the Hadco
Common Stock so surrendered is held as a capital asset at the time of the
Merger.
- Hadco stockholders who exercise appraisal rights and receive payment for
Hadco Common Stock in cash should generally recognize gain or loss for
federal income tax purposes, measured by the difference, if any, between
the amount of cash received and their basis in the shares, provided that
the payment is not treated as a dividend distribution for tax purposes.
An appraisal rights payment to a Hadco stockholder should not be treated
as a dividend distribution if, after the payment, the Hadco stockholder
owns no shares of Sanmina Common Stock or Hadco Common Stock, actually or
constructively.
- None of Sanmina, Merger Sub or Hadco will recognize any gain or loss
solely as a result of the Merger.
A successful IRS challenge to the reorganization status of the Merger would
result in Hadco stockholders recognizing taxable gain or loss with respect to
each share of Hadco Common Stock surrendered equal to the difference between the
stockholder's basis in the share and the fair market value, as of the Effective
Time, of Sanmina Common Stock and any other consideration received in exchange
therefor. In this 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 the stock would begin the day after the Merger.
Certain noncorporate stockholders may be subject to backup withholding at a
rate of 31% on cash payments received instead of a fractional share interest in
Sanmina Common Stock. Backup withholding will not apply, however, to a
stockholder who furnishes a correct taxpayer identification number ("TIN") and
certifies that he or she 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 stockholder who fails to provide the correct TIN on Form W-9 may be subject to
a $50 penalty imposed by the IRS.
ANTICIPATED ACCOUNTING TREATMENT
Sanmina intends to treat the Merger as a pooling of interests for
accounting and financial reporting purposes.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of Hadco's Board of Directors for the
approval of the Merger Agreement and Merger, you should be aware that some
members of Hadco's management and the Hadco Board may have interests in the
Merger that are different from, and in addition to, your interests as
stockholders of Hadco generally.
These include:
- accelerated vesting of stock options;
- employment arrangements and severance agreements; and
- indemnification and directors' and officers' liability insurance.
Other than the Merger Agreement, the transactions contemplated by the
Merger Agreement, Sanmina's relationship as a customer of and supplier to Hadco
and the agreements and arrangements described below, there are no past, present
or proposed contracts, arrangements, understandings, relationships or
transactions between Hadco and its affiliates and Sanmina and its affiliates.
However, in discussing the fairness of the
46
<PAGE> 53
Merger to the stockholders of Hadco, the Hadco Board took into account the above
interests, which are summarized below.
Ownership and Voting Stock. Hadco will be the surviving corporation in the
Merger, and following the Merger, will be a wholly owned subsidiary of Sanmina.
As of the record date for the Hadco special meeting of stockholders to approve
the Merger and the Merger Agreement, directors and executive officers of Hadco
beneficially owned (i) 938,312 shares of Hadco Common Stock, or approximately
6.8% of the outstanding shares of Hadco Common Stock (excluding any shares
issuable upon the exercise of options), for which they will receive the same
consideration in connection with the Merger as the other Hadco stockholders, and
(ii) 1,692,462 shares, or approximately 11.6% of the outstanding shares of Hadco
Common Stock (including shares issuable upon the exercise of options). As of the
record date for the Hadco special meeting, directors and executive officers of
Hadco had unvested options for 443,650 shares, the vesting of which will be
fully accelerated and all these options will become immediately exercisable as a
result of the Merger. The accelerated vesting of options held by directors and
executive officers of Hadco will be the same as for Hadco options held by other
employees of Hadco. All of Hadco's option and stock plans and all outstanding
options to purchase Hadco Common Stock, including options held by directors and
executive officers of Hadco, will be assumed by Sanmina. See "The Merger
Agreement, the Stockholders Agreement and the Stock Option Agreement -- Merger
Consideration -- Stock Options" on page 50. Each of the directors and certain of
the executive officers, collectively holders of 860,663 shares of Hadco Common
Stock, or approximately 6.2% of the outstanding shares of Hadco Common Stock as
of the record date for the Hadco special meeting, has entered into a
Stockholders Agreement dated as of April 17, 2000 with Sanmina, the form of
which is attached to this proxy statement/prospectus as Annex II. In that
agreement, the directors and certain executive officers agreed to vote all
shares over which they exercise voting control in favor of approving the Merger
and the Merger Agreement.
Severance Agreements. Mr. Lietz has a Select Executive Agreement with
Hadco which provides for the payment of three years of salary and target
bonuses, three years of health, life and disability insurance, reimbursement of
the cost of tax or financial planning assistance up to a maximum of $1,200 per
year and outplacement assistance if his employment is terminated without cause
six months prior to or 24 months after the Merger or if Mr. Lietz leaves for
Good Reason (as defined in the agreement) during that time. Each of the other
executive officers and certain vice presidents of Hadco has an Executive
Agreement with Hadco for payment of salary and provision of health, life and
disability insurance, each for a period of one year plus one month for each full
year of service with Hadco, plus reimbursement of the cost of tax or financial
planning assistance up to a maximum of $1,200 per year and outplacement
services, if his or her employment is terminated without cause six months prior
to or 24 months following the Merger or if the executive leaves for Good Reason
(as defined in the agreements) during that time.
New Severance Agreement. Mr. Lietz has entered into an agreement with
Sanmina which provides that following the Effective Time of the Merger, he will
be deemed to terminate his employment by reason of his retirement (as such term
is used in various option agreements of Mr. Lietz) and with consent and for good
reason (as such term is used in Mr. Lietz's Select Executive Agreement).
Pursuant to this agreement, Mr. Lietz will receive in a lump sum payment the
severance benefits consisting of three years of salary and target bonus to which
he is entitled under his Select Executive Agreement, totaling in the aggregate
approximately $2.7 million, and the other benefits to which he is entitled under
the Select Executive Agreement, and will be able to exercise the majority of his
stock options until the ten year anniversary of the date of the grant of each
such option and the remainder within 90 days after his employment terminates, in
accordance with the terms of his various stock option agreements.
Executive Employment Agreements. F. Gordon Bitter, Senior Vice President,
Chief Financial Officer and Treasurer, Frederick G. McNamee, III, Senior Vice
President -- Corporate Development and Strategy, and Patricia Randall, Vice
President and General Counsel, of Hadco have each entered into a six-month
employment agreement with Sanmina, which provides that the employee will be paid
his or her pro-rated incentive amount attributable to Hadco's fiscal year
through the Effective Time of the Merger. Each employee will also be paid his or
her salary and target bonus, be provided with health, life and disability
insurance, and
47
<PAGE> 54
be entitled to reimbursement for the cost of tax and financial planning
assistance up to a maximum of $1,200 per year for the period of his or her
employment and 18 months thereafter.
Bonuses. Sanmina has agreed to pay amounts accrued through the closing
date of the Merger under Hadco's Fiscal 2000 Management Bonus Plan on the
earlier of December 15, 2000 or the date an individual ceases to be an employee
of Sanmina. The executive officers of Hadco will be treated no differently than
other individuals entitled to a bonus pursuant to the Bonus Plan.
Indemnification and Insurance. Sanmina has agreed to continue for six
years following the Merger all rights to indemnification now existing in favor
of any employee, agent, director, officer or fiduciary of Hadco as provided in
Hadco's articles of organization, by-laws and any agreements. The Merger
Agreement also provides that the articles of organization and bylaws of the
surviving corporation will contain the provisions with respect to exculpation
from liability contained in the articles of organization and bylaws of Hadco 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 of the
Merger in any manner that would adversely affect the rights thereunder of any
indemnified party.
In addition, during the period ending six years after the Effective Time of
the Merger, 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, officer, employee, agent or fiduciary of Hadco or
any of its subsidiaries (regardless of whether such action or omission, or
alleged action or omission, occurred prior to, on or after the Effective Time),
or (b) the Merger Agreement or any of the transactions contemplated by the
Merger Agreement.
Subject to certain limitations, Sanmina also agreed to obtain (but not to
the extent the cost exceeds 150% of current premium costs) directors' and
officers' liability insurance coverage at substantially equivalent levels of
coverage as currently in effect under Hadco's existing directors' and officers'
liability insurance as to any claims made during such six year period following
the Effective Time.
RESALE OF SANMINA COMMON STOCK
The Sanmina Common Stock issued in connection with the Merger will be
transferable under the Securities Act of 1933, as amended (the "Securities Act")
except for shares issued to any Hadco stockholder who may be deemed to be an
affiliate of Hadco (an "Affiliate") for purposes of Rule 145 under the
Securities Act. An Affiliate is defined generally as including directors and
executive officers of, and certain other persons who control, a company. Hadco
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 restrictions imposed by pooling of
interests accounting, and the Merger Agreement provides that Sanmina's
obligation to consummate the Merger is subject to Sanmina receiving such
Affiliate Agreements from the Affiliates.
48
<PAGE> 55
THE MERGER AGREEMENT, THE STOCKHOLDERS AGREEMENT
AND THE STOCK OPTION AGREEMENT
The following description summarizes the material provisions of the Merger
Agreement, the Stockholders Agreement and the Stock Option Agreement and is
qualified in its entirety by reference to these documents. Stockholders should
carefully read the Merger Agreement, the Stockholders Agreement, and the Stock
Option Agreement which are attached, respectively, as Annexes I, II and III to
this proxy statement/prospectus.
THE MERGER AGREEMENT
EFFECT OF MERGER. Following the approval of the Merger Agreement and
Merger by the stockholders of Hadco and the satisfaction or waiver of the other
conditions to the Merger, Merger Sub will be merged with and into Hadco (with
Hadco being the surviving corporation). The Merger will 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 Hadco and Sanmina shall
agree should be specified in the articles of merger. 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 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 "Hadco Corporation" in such articles of organization. The
Merger Agreement also 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 directors of Merger Sub immediately prior to the completion
of the Merger 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 Hadco immediately prior to the
completion of the Merger 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.
MERGER CONSIDERATION
Common Stock. At the Effective Time, each issued and outstanding share
of Hadco Common Stock, other than shares owned by Sanmina, Merger Sub, any of
their subsidiaries or Hadco, and other than dissenting shares, will be converted
into 1.40 shares of Sanmina Common Stock. If the average last reported sale
price of Sanmina Common Stock on the Nasdaq National Market during the 20
trading days ending on the third trading day prior to the date of the special
meeting is, however, less than $40.00, then Hadco will have the right to
terminate the Merger Agreement. In that event, however, Sanmina has the right,
but not the obligation, to complete the Merger by increasing the exchange ratio
to equal $56.00 divided by the average last reported sale price of Sanmina
Common Stock on the Nasdaq National Market during the 20 trading days ending on
the third trading day prior to the date of the special meeting, assuming all
other closing conditions have been satisfied. At the Effective Time, all shares
of Hadco Common Stock will no longer be outstanding and will automatically be
canceled and retired and will cease to exist, and each holder of a certificate
which immediately prior to the Effective Time represented any shares of Hadco
Common Stock will cease to have any rights as to these shares, except the right
to receive shares of Sanmina Common Stock and any cash instead of fractional
shares of Sanmina Common Stock. Any shares of Hadco Common Stock owned by
Sanmina, Merger Sub, any of their subsidiaries or Hadco will automatically be
canceled and retired and will cease to exist, and no consideration will be
delivered in exchange therefor.
Shares of Hadco 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 these shares of Hadco 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 "Other Matters -- Rights of Dissenting
Stockholders" on page 58.
49
<PAGE> 56
As of May 19, 2000, an aggregate of 13,836,718 shares of Hadco Common Stock
and options to purchase an aggregate of 1,660,760 shares of Hadco Common Stock
were outstanding. Based upon the number of shares of Sanmina Common Stock issued
and outstanding on May 19, 2000, and after giving effect to the Sanmina Common
Stock that is expected to be issued in the Merger, assuming an Exchange Ratio of
1.40, the former holders of Hadco Common Stock would hold and have voting power
with respect to approximately 13.1% of Sanmina's issued and outstanding shares.
These numbers of shares and percentages are subject to change to reflect any
changes in the capitalization of either Sanmina or Hadco subsequent to May 19,
2000 and prior to the Effective Time, and there can be no assurance as to the
actual capitalization of Sanmina or Hadco at the Effective Time or of Sanmina at
any time following the Effective Time.
Stock Options. Hadco's stock option and stock plans (the "Stock Option
Plans") provide for the acceleration of each unvested option to purchase shares
of Hadco Common Stock ("Hadco Options") and the lapse of all restrictions on
restricted shares of Hadco Common Stock issued under the Stock Option Plans upon
a change of control such as the Merger. At the Effective Time, the Stock Option
Plans and Hadco's obligations with respect to each Hadco Option under the Stock
Option Plans will be assumed by Sanmina. Accordingly, each Hadco Option assumed
by Sanmina will remain fully vested and continue to have and will be subject to
the same terms and conditions set forth in the Stock Option Plans and the
documents governing the outstanding Hadco Option as in effect immediately prior
to the Effective Time. Further, each Hadco Option outstanding at the Effective
Time will, by virtue of the Merger, become an option to acquire, on
substantially the same terms and conditions as were applicable under the Hadco
Option, the same number of shares of Sanmina Common Stock as the holder of each
Hadco Option would have been entitled to receive pursuant to the Merger had the
holder exercised the Hadco Option in full immediately prior to the Effective
Time. The exercise price per share of the new Sanmina option will be equal to
the exercise price of the Hadco Option at which the Hadco Option was exercisable
immediately prior to the Effective Time divided by the exchange ratio.
Employee Stock Purchase Plan and Retirement Plan. Hadco has agreed to
take the actions necessary to cause the Purchase Date (as that term is used in
Hadco's Employee Stock Purchase Plan of November 17, 1997 (the "Employee Stock
Purchase Plan")) applicable to the then current Offering (as that term is used
in the Employee Stock Purchase Plan) to be the last trading day on which the
shares of Hadco Common Stock are traded on the New York Stock Exchange
immediately prior to the Effective Time (the "Final Hadco Purchase Date"). On
the Final Hadco Purchase Date, Hadco will apply the funds credited as of that
date under the Employee Stock Purchase Plan within each participant's payroll
withholding account to the purchase of whole shares of Hadco Common Stock in
accordance with the terms of the Employee Stock Purchase Plan. Employees of
Hadco as of the Effective Time will be permitted to participate in the employee
stock purchase plan of Sanmina commencing on the first enrollment date following
the Effective Time, subject to compliance with the eligibility provisions of the
plan (with employees of Hadco receiving credit, for purposes of such eligibility
provisions, for service with Hadco). Following the Effective Time, Sanmina will
assume the obligations under Hadco's Retirement Plan, as amended to date.
Benefit Plans. Sanmina has agreed to assume and honor Hadco's
obligations under all disclosed employment, severance, consulting and other
compensation contracts, arrangements and understandings, and will ensure that
all Hadco employees are allowed to participate in Sanmina's employee benefit
plans following the Merger, with credit given for each employee's prior service
with Hadco. Sanmina has also agreed to pay amounts accrued through the closing
date of the Merger under Hadco's Fiscal 2000 Management Bonus Plan on the
earlier of December 15, 2000 or the date an individual ceases to be an employee
of Sanmina.
EXCHANGE AGENT AND EXCHANGE PROCEDURES. The Merger Agreement requires
Sanmina to deposit as of the Effective Time, with Norwest Bank Minnesota, N.A.
(the "Exchange Agent"), for the benefit of the holders of shares of Hadco Common
Stock, certificates representing the shares of Sanmina Common Stock issuable in
exchange for Hadco Common Stock. After the Effective Time, the Exchange Agent
will mail to each Hadco stockholder (i) a letter of transmittal and (ii)
instructions for surrendering the Hadco stock certificates in exchange for
Sanmina stock certificates and cash instead of any fractional shares. Upon
surrender of a Hadco stock certificate for cancellation to the Exchange Agent,
together with the letter of transmittal, and any other documents as may
reasonably be required, the holder of each Hadco stock
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certificate will be entitled to receive a certificate representing that number
of whole shares of Sanmina Common Stock which the holder has the right to
receive pursuant to the Merger Agreement and cash instead of fractional shares
of Sanmina Common Stock to which the holder is entitled.
HADCO STOCKHOLDERS SHOULD NOT FORWARD HADCO STOCK CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED FORMS OF LETTERS OF TRANSMITTAL. HADCO
STOCKHOLDERS SHOULD NOT RETURN HADCO STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
No certificates or scrip representing fractional shares of Sanmina Common
Stock will be issued upon the surrender for exchange of Hadco stock
certificates. Each holder of shares of Hadco 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 instead receive cash in an amount equal to
that fraction of a share of Sanmina Common Stock multiplied by the per share
closing price of Sanmina Common Stock at the Effective Time.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains customary
representations and warranties, including those relating to:
- corporate organization and related corporate matters of Sanmina and
Hadco;
- subsidiaries of Sanmina and Hadco;
- the capital structure of Sanmina and Hadco;
- authorization of the Merger Agreement, the Stock Option Agreement and
related matters by Sanmina and Hadco, and the Stockholders Agreement by
Sanmina;
- the accuracy of information contained in documents filed by each of
Sanmina and Hadco with the SEC and the absence of undisclosed
liabilities;
- the accuracy of information supplied by each of Sanmina and Hadco in
connection with this proxy statement/prospectus and the related
registration statement;
- absence of material changes or events concerning Sanmina or Hadco not
previously disclosed in documents filed by Sanmina or Hadco with the SEC;
- litigation of Sanmina and Hadco;
- contracts of Sanmina and Hadco;
- compliance with applicable laws, including environmental laws, by Sanmina
and Hadco;
- compliance with applicable labor laws by Sanmina and Hadco and other
matters relating to labor relations;
- existing benefit plans of Sanmina and Hadco;
- matters relating to compliance with the Employee Retirement Income
Security Act by Sanmina and Hadco;
- filing of tax returns and payment of taxes by Sanmina and Hadco;
- the absence of "excess parachute payments;"
- title to properties of Sanmina and Hadco;
- intellectual property matters of Sanmina and Hadco;
- required stockholder vote of Hadco;
- satisfaction or inapplicability of requirements of certain state takeover
statutes as to Hadco;
- engagement and payment of fees of brokers, investment bankers, finders
and financial advisors by Sanmina and Hadco;
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- receipt of a fairness opinion by Hadco from its financial advisor;
- the treatment of the Merger as a pooling of interests and a tax-free
reorganization;
- the inapplicability of Hadco's rights agreement or "poison pill" to the
Merger; and
- interim operations of the Merger Sub.
The representations and warranties in the Merger Agreement are complicated
and not easily summarized. You are urged to carefully read Article III of the
Merger Agreement entitled "Representations and Warranties."
CONDUCT OF BUSINESS PENDING THE MERGER. Under the Merger Agreement,
Sanmina and Hadco have agreed that, prior to the Effective Time of the Merger,
each will use commercially reasonable efforts to preserve in all material
respects its business organization and will conduct its operations in the
ordinary and usual course of business consistent with past practice. In
addition, Sanmina and Hadco have agreed that until the completion of the Merger
or unless the other party consents, Sanmina and Hadco will each conduct their
business in accordance with specific restrictions relating to the following:
- the issuance of dividends and other distributions;
- the issuance and redemption of securities;
- amendment of the bylaws of Sanmina or Hadco, or certificate of
incorporation of Sanmina, or articles of organization of Hadco;
- the acquisition of assets or other entities;
- the disposition of properties or assets;
- the incurrence of indebtedness, in the case of Hadco;
- capital expenditures, in the case of Hadco;
- settlement of litigation, claims or disputes;
- modification or termination of significant contracts or agreements, in
the case of Hadco;
- entering into agreements relating to the distribution, sale, license or
marketing by third parties of Hadco's products;
- various labor issues and employee benefits, in the case of Hadco;
- the formation of a subsidiary of Hadco;
- accounting principles or practices, in the case of Hadco; and
- allowing Sanmina or any of its subsidiaries to be acquired.
NO SOLICITATION. The Merger Agreement provides that Hadco will not, nor
will it authorize or permit any of its directors, officers or employees or any
investment banker, attorney, or other representative or agent of it or any of
its subsidiaries to, directly or indirectly:
- solicit, initiate or knowingly encourage any Takeover Proposals, as
described below; or
- participate in any discussions or negotiations, or furnish any nonpublic
information, or take any other action to knowingly facilitate the making
of any Takeover Proposal.
However, if the Hadco Board determines in good faith, after consultation
with its outside legal advisors, that the action is necessary in order to comply
with its fiduciary duties under applicable law, Hadco may, in response to a
Superior Proposal, as described below, which was not solicited by it, subject to
providing prior oral and written notice to Sanmina of any request for nonpublic
information or of any Takeover Proposal:
- furnish information about Hadco under a customary and reasonable
confidentiality agreement to any person making a Superior Proposal;
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- participate in negotiations regarding such Superior Proposal; and
- take any other actions that are consistent with the Hadco Board's
fiduciary duties.
The Merger Agreement provides that:
- the term "Takeover Proposal" means any inquiry, proposal, solicitation of
interest or offer relating to any direct or indirect acquisition or
purchase of a substantial amount of assets of Hadco or at least a 20%
interest in Hadco's total voting securities or any tender offer or
exchange offer that if completed would result in any person beneficially
owning 20% or more of any class of equity securities of Hadco or any
merger, consolidation, business combination, sale of substantially all
assets, recapitalization, liquidation, dissolution or similar transaction
involving Hadco; and
- the term "Superior Proposal" means any bona fide proposal made by a third
party to acquire (whether by merger, consolidation, tender offer or
otherwise), directly or indirectly, more than 50% of the voting power of
the Hadco Common Stock or all or substantially all of Hadco's assets and
otherwise on terms which the Hadco Board determines, in good faith, after
consultation with a financial advisor of nationally recognized
reputation, to be more favorable to Hadco stockholders than the Merger
and for which financing, to the extent required, is then committed, or
which in the good faith judgment of the Hadco Board is capable of being
obtained.
Except as expressly permitted by the Merger Agreement, neither the Hadco
Board nor any committee of the Board will:
- withdraw or modify, or propose to withdraw or modify, in a manner adverse
to Sanmina, the approval or recommendation by the Hadco Board or such
committee of the Merger or the Merger Agreement;
- approve or recommend, or propose to approve or recommend, any Takeover
Proposal; or
- cause Hadco to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Takeover
Proposal.
However, the Hadco Board of Directors may withdraw or modify its approval
or recommendation of the Merger Agreement or the Merger, approve or recommend
any Superior Proposal, and/or terminate the Merger Agreement, but only if:
- the Hadco Board determines in good faith, after consultation with its
outside legal advisors, that it is necessary to comply with its fiduciary
duties to its stockholders; and
- Hadco has given to Sanmina three business days prior written notice
advising Sanmina that Hadco has received a Superior Proposal and
specifying the identity of the person making the Superior Proposal and
the material terms of the Superior Proposal.
Under the Merger Agreement, Hadco has also agreed to promptly advise
Sanmina orally and in writing of any request for nonpublic information which
Hadco reasonably believes could lead to a Takeover Proposal, of any Takeover
Proposal submitted to Hadco or any inquiry with respect to or which Hadco
reasonably believes could lead to any Takeover Proposal, and the material terms
and conditions of such request, Takeover Proposal or inquiry.
EXPENSES AND TERMINATION FEES. Whether or not the Merger is completed, all
fees and expenses incurred in connection with the Merger and the Merger
Agreement will be paid by the party incurring the fees or expenses, except that
Sanmina and Hadco will share equally the expenses incurred in connection with
printing and mailing this proxy statement/prospectus and the registration
statement of which it is a part.
Hadco will pay Sanmina a termination fee of $23.87 million if Hadco
terminates the Merger Agreement because the Hadco Board determines that as a
result of the receipt of a Superior Proposal, it is necessary for
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the Hadco Board to terminate the Merger Agreement to comply with its fiduciary
duties. In addition, if at the time the Merger Agreement is terminated by any
party due to:
- the failure of the Merger to be completed by September 30, 2000, or
November 15, 2000 due to a legal restraint or prohibition or upon a
failure to attain regulatory approval, if Hadco has failed to hold the
special meeting in breach of its obligations under the Merger Agreement;
- the failure to obtain approval from Hadco's stockholders; or
- the withdrawal or modification in a manner adverse to Sanmina of the
approval or recommendation of the Merger or Merger Agreement by the Hadco
Board, or the Hadco Board's failure to reconfirm its recommendation after
a request by Sanmina following a Takeover Proposal, or the Hadco Board's
approval or recommendation of a Takeover Proposal,
and in each such case a Takeover Proposal has been publicly announced and not
publicly withdrawn, and during the 12 month period following the termination of
the Merger Agreement, Hadco either completes a Company Acquisition or enters
into a written acquisition agreement providing for a Company Acquisition (that
is later completed during or after the 12 month period), as described below,
then Hadco will pay Sanmina a $23.87 million termination fee upon the completion
of that Company Acquisition.
A "Company Acquisition" is defined as any transaction or series of related
transactions involving:
- a merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Hadco pursuant
to which the stockholders of Hadco immediately preceding such transaction
or series of related transactions hold less than 60% of the equity
interests in the surviving entity;
- a sale by Hadco of assets representing in excess of 40% of the fair
market value of Hadco's business immediately prior to such sale; or
- the acquisition by any person or group, 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 Hadco.
In addition, if the Merger is not completed due to the willful and
intentional acts of Sanmina which are in contravention of the Merger Agreement,
Sanmina will pay a termination fee of $23.87 million to Hadco no later than two
days after termination of the Merger Agreement.
CONDITIONS TO COMPLETION OF THE MERGER. The closing of the Merger will
take place no later than the second business day following satisfaction or
waiver of the conditions described in the Merger Agreement or such other date as
is agreed to in writing by the parties. Each party's obligation to complete the
Merger is subject to the satisfaction or waiver of various conditions which
include, in addition to other customary closing conditions, the following:
- the approval of the Merger Agreement by the holders of two-thirds of all
outstanding shares of Hadco Common Stock;
- approval of the shares of Sanmina Common Stock issuable to Hadco
stockholders in the Merger and under the Stock Option Plans and Employee
Stock Purchase Plan for listing on the Nasdaq National Market, subject to
official notice of issuance;
- the expiration or termination of the waiting period (or any extension)
required under the Hart-Scott-Rodino Act;
- no temporary restraining order, injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
shall be in effect that would prevent the completion of the Merger;
- Hadco having received from Arthur Andersen LLP, independent public
accountants for Hadco, a letter to the effect that Arthur Andersen LLP
concurs with Hadco management's conclusion that Hadco meets the
applicable specific criteria for a pooling of interests in accordance
with generally accepted accounting principles, as such criteria relate
only to Hadco (and not to Sanmina) and Sanmina having received from
Arthur Andersen LLP, independent public accountants for Sanmina, a letter
to the
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effect that Arthur Andersen LLP concurs with Sanmina management's
conclusion that Sanmina meets the applicable specific criteria for a
pooling of interests in accordance with generally accepted accounting
principles, as such criteria relate only to Sanmina (and not to Hadco);
and
- the effectiveness of the registration statement on Form S-4 under the
Securities Act.
In addition, each party's obligation to complete the Merger is further
subject to the satisfaction or waiver of the following additional conditions:
- the representations and warranties of the other party set forth in the
Merger Agreement being true and correct as of the closing date of the
Merger except where the failure to be true and correct would not have a
material adverse effect;
- the other party to the Merger Agreement having performed in all material
respects all obligations required to be performed by it under the Merger
Agreement on or before the closing date of the Merger;
- the receipt of executed Affiliate Agreements from affiliates of the other
party for purposes of qualifying the Merger for pooling of interests
accounting treatment;
- in the case of Hadco, Sanmina having received from Wilson Sonsini
Goodrich & Rosati, its counsel, and Hadco having received from Testa,
Hurwitz & Thibeault, LLP, its counsel, an opinion in form and substance
satisfactory to the other party;
- in the case of Sanmina, the absence of any pending suit or proceeding by
a governmental entity seeking to prohibit or materially limit Sanmina's
ownership, control or operation of Hadco, or any material portion of any
business or assets of Hadco, or to compel Hadco or Sanmina to dispose of
any material portion of any business or assets of Hadco or Sanmina as a
result of the Merger;
- in the case of Hadco, the average last reported sale price of Sanmina
Common Stock for the 20 trading days ending on the third trading day
prior to the special meeting being not less than $40.00, or if less than
$40.00, Sanmina has not increased the exchange ratio to an amount equal
to $56.00 divided by the average last reported sale price of Sanmina
Common Stock over the 20 trading days ending on the third trading day
prior to the special meeting; and
- the absence of any material adverse change in the other party from April
17, 2000 until the date on which the Merger is completed or, if one has
occurred, it having been cured.
Neither Hadco nor Sanmina can assure you that all of the conditions
precedent to the Merger will be satisfied or waived by the party permitted to do
so. Hadco cannot now determine whether it would resolicit proxies if it decides
to waive any of the conditions to closing the Merger listed above. This decision
would depend upon the facts and circumstances leading to Hadco's decision to
complete the Merger and whether Hadco believes there has been a material change
in the terms of the Merger and its effect on Hadco stockholders. In making its
determination, Hadco would consider, among other factors, the reasons for the
waiver, the effect of the waiver on the terms of the Merger, whether the
requirement being waived was necessary in order to make the deal fair to the
stockholders from a financial point of view, the availability of alternative
transactions and the prospects of Hadco as an independent entity. If Hadco
determines that a waiver of a closing condition would materially change the
terms of the Merger, including the expected qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, it will resolicit proxies.
TERMINATION. The Merger Agreement may be terminated at any time prior to
the Effective Time of the Merger, whether before or after approval of the Merger
Agreement and Merger by the stockholders of Hadco as follows:
- Sanmina, Hadco and the Merger Sub may jointly agree to terminate the
Merger Agreement at any time without completing the Merger.
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- Either Sanmina or Hadco may terminate the Merger Agreement if:
-- Sanmina and Hadco do not complete the Merger by September 30, 2000,
or November 15, 2000 if the principal reason the Merger cannot be
completed is a result of a legal restraint or prohibition or an
inability to obtain governmental regulatory clearance;
-- a temporary restraining order, injunction or other order issued by
any court of competent jurisdiction or other legal restraint or
prohibition is in effect which prevents the completion of the Merger;
-- the holders of a two-thirds of the outstanding shares of Hadco Common
Stock do not approve the Merger Agreement and Merger;
-- the Hadco Board receives a Superior Proposal, and it in good faith
determines, after consultation with its outside legal advisors, that
failure to accept that Superior Proposal would not be in compliance
with, or would create a substantial risk of liability for breach of,
its fiduciary duties to its stockholders; or
-- the other party breached in any material respect any of its
representations, warranties or obligations under the Merger Agreement
and has not cured the breach within 45 days of delivery of notice.
- Sanmina may also terminate the Merger Agreement if the Hadco Board
withdraws or modifies its approval or recommendation of the Merger or
Merger Agreement in a manner adverse to Sanmina, or fails to reconfirm
its recommendation upon request by Sanmina following a Takeover Proposal,
or approves or recommends any Takeover Proposal; or
- Hadco may also terminate the Merger Agreement if the average last
reported sale price of Sanmina for the 20 trading days ending on the
third trading day prior to the special meeting is less than $40.00 and
Sanmina has not increased the exchange ratio to an amount equal to $56.00
divided by the average last reported sale price of Sanmina Common Stock
over the 20 trading days ending on the third trading day prior to the
special meeting;
AMENDMENT, EXTENSION AND WAIVER. The Merger Agreement may, by mutual
agreement, be amended by the parties in writing at any time, except that after
the Merger Agreement has been approved by the stockholders of Hadco, no
amendment may be entered into which requires further approval by the
stockholders without the consent of the stockholders. In addition, at any time
prior to the completion of the Merger, a party may, by written instrument signed
on behalf of such party, extend the time for performance of the obligations of
any other party to the Merger Agreement, waive inaccuracies in representations
and warranties of any other party contained in the Merger Agreement or in any
related document and, except as provided in the preceding sentence, waive
compliance by any other party with any agreements or conditions in the Merger
Agreement.
THE STOCKHOLDERS AGREEMENT
Sanmina entered into the Stockholders Agreement dated as of April 17, 2000
with all the directors and certain executive officers of Hadco (in their
capacities as stockholders) (the "Stockholder Parties"). Together, the
Stockholder Parties held as of the record date 860,663 shares of Hadco Common
Stock (approximately 6.2% of the outstanding shares). The general effect of the
Stockholders Agreement is to increase the likelihood that stockholder approval
will be obtained and may discourage third parties who are interested in
acquiring a significant ownership interest in Hadco.
Pursuant to the terms of the Stockholders Agreement, each Stockholder Party
has agreed to vote, at the special meeting or any adjournment of the meeting,
his shares of Hadco Common Stock (together, the "Subject Shares") in favor of
approval of the Merger Agreement.
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Under the Stockholders Agreement, each Stockholder Party has agreed not to:
- deposit any of the Subject Shares in a voting trust or subject any of the
Subject Shares to a voting agreement inconsistent with the Stockholders
Agreement; or
- sell, assign, pledge, transfer or otherwise dispose of or grant any
proxies with respect to any of the Subject Shares.
The Stockholders Agreement will terminate on the earlier of:
- the completion of the Merger;
- the date upon which the Merger Agreement is terminated in accordance with
its terms; or
- September 30, 2000, or November 15, 2000 if the principal reason the
Merger cannot be completed is a legal restraint or prohibition or an
inability to obtain governmental regulatory clearance.
THE STOCK OPTION AGREEMENT
Hadco entered into a Stock Option Agreement with Sanmina as of April 17,
2000. The Stock Option Agreement grants Sanmina the option to buy 2,752,351
shares of Hadco Common Stock at an exercise price of $69.0375 per share. The
number of shares issuable upon exercise of the option and the exercise price of
the option are subject to adjustment for changes in capitalization. Based on the
number of shares of Hadco Common Stock outstanding on April 17, 2000, the option
would be exercisable for approximately 19.9% of the outstanding shares of Hadco
Common Stock.
The option is intended to increase the likelihood that the Merger will be
completed. If the option becomes exercisable, Hadco would not be able to account
for future mergers or acquisition transactions under the pooling of interests
accounting method for up to two years. Consequently, this may have the effect of
discouraging persons who might now or at any time be interested in acquiring all
or a significant interest in Hadco or its assets before the completion of the
Merger.
Sanmina may exercise the option at any time after the date on which Sanmina
first has the right to receive the termination fee.
The option will terminate and no longer be exercisable upon the earliest to
occur of any of the following:
- the Effective Time;
- twelve months after the date on which Sanmina first has the right to
receive the termination fee; or
- the termination of the Merger Agreement in accordance with its terms
prior to the date on which Sanmina first has the right to receive the
termination fee.
Upon the occurrence of events set forth in the Stock Option Agreement,
Hadco has the right to repurchase the option or the shares issued upon exercise
of the option for Sanmina's purchase price. Pursuant to the terms of the Stock
Option Agreement, if Hadco calls a stockholder meeting to vote on an acquisition
agreement or a merger for a Superior Proposal, Sanmina will vote all the shares
of Hadco Common Stock that it acquired pursuant to the option and still holds as
of the record date for the stockholder meeting in the same proportions as the
votes cast on the acquisition agreement or merger by all other Hadco
stockholders. In addition, the Stock Option Agreement grants registration rights
to Sanmina with respect to the shares of Hadco Common Stock represented by the
option.
Under the Stock Option Agreement, Sanmina is required to refund to Hadco
profits made on the sale of the shares issued to Sanmina upon exercise of the
option.
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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 Hadco each filed with the Antitrust Division and the FTC
a Notification and Report Form with respect to the Merger on April 28, 2000. At
any time before or after the Effective Time, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the Merger or
seeking the divestiture of Hadco by Sanmina, in whole or in part, or the
divestiture of substantial assets of Sanmina, Hadco 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 Hadco relating to the
businesses in which Sanmina, Hadco and their respective subsidiaries are
engaged, Sanmina and Hadco believe that the consummation of the Merger will not
violate the antitrust laws. However, a challenge to the Merger on antitrust
grounds may be made, and if made, we cannot assure you what the result will be.
Sanmina and Hadco do not believe that any other material U.S. governmental
approvals or actions will be required for consummation of the Merger, although
certain foreign governmental approvals are required. See "The Merger Agreement,
The Stockholders Agreement And The Stock Option Agreement -- The Merger
Agreement -- Conditions to Completion of the Merger" on page 54.
RIGHTS OF DISSENTING STOCKHOLDERS
If the Merger becomes effective, a stockholder of Hadco who does not vote
in favor of the Merger and who follows the procedures prescribed under the MBCL
may require Hadco (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 the stockholder. The following is a summary of
certain features of the relevant Massachusetts law, the statutory provisions of
which are set forth in full and attached to this proxy statement/prospectus as
Annex V. In order to exercise these 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 these provisions. The
following summary is qualified in its entirety by reference to the applicable
Sections of Chapter 156B of the MBCL.
A dissenting stockholder of Hadco who desires to pursue appraisal rights
must adhere to the following procedures: (i) file a written objection to the
Merger with Hadco before the taking of the stockholders' vote on approval of the
Merger Agreement and the Merger, stating the intention of the stockholder to
demand payment for shares owned by the stockholder if the Merger Agreement and
the Merger is approved and the Merger is consummated; (ii) shares owned by the
stockholder must not be voted in favor of the Merger Agreement and the Merger;
and (iii) within twenty days of the date of mailing of a notice by Hadco (as it
exists after the Effective Time) to objecting stockholders that the Merger has
become effective, make written demand to Hadco (as it exists after the Effective
Time) for payment for the stockholder's shares. The written objection should be
delivered for said stockholder's shares to Hadco Corporation, 12A Manor Parkway,
Salem, New Hampshire 03079, Attention: Chief Financial Officer. It is
recommended that this objection and this demand be sent by registered or
certified mail, return receipt requested.
A dissenting stockholder who files the required written objection with
Hadco prior to the stockholder vote need not vote against the Merger Agreement
and the Merger. However, a vote in favor of the Merger Agreement and the Merger
will constitute a waiver of the stockholder's statutory appraisal rights.
Stockholders should note that returning a properly signed proxy card that
abstains or does not indicate a vote on approval of the Merger Agreement and the
Merger will constitute a vote in favor of the Merger Agreement and the Merger. A
vote against the Merger Agreement and the Merger does not, alone, constitute a
written objection. Under the applicable
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statutory provisions, notice that the Merger has become effective will be sent
to each objecting stockholder of Hadco within ten days after the date on which
the Merger becomes effective.
The value of the Hadco Common Stock will be determined initially by Hadco
(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 demand for payment may be made, Hadco (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 Suffolk County, Massachusetts
asking that the court determine the value of the Hadco Common Stock of all
objecting stockholders. The bill in equity must be filed within four months
after the date of expiration of the above thirty-day period. After a hearing,
the court will enter a decree determining the fair value of the Hadco Common
Stock and will order Hadco (as it exists after the Effective Time) to make
payment of that value, with interest, if any, to the stockholders entitled to
said payment, upon transfer by them to Hadco (as it exists after the Effective
Time) of the certificate or certificates representing the Hadco Common Stock
held by those stockholders. Hadco 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 does not, any dissenting stockholder
with whom agreement has not been reached will likely be required to incur the
expense of initiating the proceeding.
For appraisal proceeding purposes, value is determined as of the day before
the approval of the Merger Agreement by Hadco 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, the 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 the 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 V.
COMPARISON OF RIGHTS OF STOCKHOLDERS OF HADCO AND SANMINA
General. At the Effective Time, the stockholders of Hadco 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 Hadco'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 Hadco and the Certificate
and Bylaws of Sanmina.
Authorized Capital. Hadco's authorized capital stock consists of
50,000,000 shares of common stock, par value $0.05 per share. At May 19, 2000
there were 13,836,718 shares of common stock issued, of which no shares were
held in the treasury. Holders of Hadco Common Stock are entitled to one vote for
each share and to receive such dividends as may from time to time be declared by
the Hadco Board out of funds legally available for this purpose. Upon
dissolution of Hadco or any distribution of its assets, and in accordance with
the relevant provisions of the MBCL, the holders of Hadco Common Stock are
entitled to all assets of Hadco available for distribution to stockholders after
the satisfaction of all known creditors' claims against Hadco.
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The holders of Hadco Common Stock have no preemptive rights to purchase shares
of Hadco. The authorized capital stock of Sanmina is set forth under
"Description of Sanmina Capital Stock" on page 63.
Stockholder Rights Plan. On August 22, 1995, the Hadco Board adopted a
Stockholder Rights Plan (the "Rights Plan") under which common stock purchase
rights (the "Rights") were distributed as a Rights dividend on September 11,
1995 at the rate of one Right for each share of Hadco Common Stock held as of
the close of business on that date.
The Rights Plan is designed to prevent an acquiror from gaining control of
Hadco without offering a fair price to all of Hadco's stockholders. The Rights
Plan was not adopted by the Hadco Board in response to any specific offer or
threat, but rather was intended to protect the interests of stockholders if
Hadco was confronted with hostile takeover activities in the future.
The Hadco Board has amended the Rights Plan to make it inapplicable to the
Merger. Sanmina does not have a stockholder rights plan.
Directors. Hadco does not have a classified board of directors, and the
entire Hadco Board is elected at each year's annual meeting of stockholders.
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.
Massachusetts law similarly permits indemnification of directors, officers,
employees and agents of a corporation, except that no indemnification can be
provided for any person for any matter as to which he or she shall have been
adjudicated not to have acted in good faith in the reasonable belief that his or
her 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 the person undertakes to
repay those 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 regardless of any
provision of law imposing that liability. Both the Hadco Articles and the
Sanmina Certificate include those provisions.
The Hadco Bylaws provide for indemnification to its directors and officers
as permissible under the MBCL. 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" on page 46
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for a description of indemnification of directors and officers of Hadco to 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. The Hadco Bylaws provide that a special
meeting of stockholders of Hadco may be called by the holders of shares entitled
to cast not less than 10% of the votes at the meeting. The Sanmina Bylaws
provide that 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 outstanding
and entitled to vote of each class of stock or which would be 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 Hadco Articles do not provide for a lesser
proportion, so that the approval of any such merger or sale, including the
Merger, requires the vote of two-thirds of the shares of each class outstanding
and 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. See "The Special Meeting -- Record Date;
Shares Entitled to Vote; Vote Required" on page 28.
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 does not apply to Sanmina. See "Description of Sanmina Capital
Stock" on page 63. Massachusetts law contains an analogous anti-takeover law set
forth in Chapter 110F of the General Laws of Massachusetts. Chapter 110F does
not apply to the Merger because the Hadco Board has approved the Merger
Agreement and Merger.
The MBCL contains another anti-takeover law, 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
any stock of the corporation acquired within 90 days of triggering the 20%
threshold, including the stock acquired in the transaction, which crossed the
threshold, 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. As of April 17, 2000, Hadco's Bylaws
include a provision opting out of the provisions of Chapter 110D, as permitted
under Massachusetts law.
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Chapter 156B s. 50A of the Massachusetts General Laws requires, in general,
that publicly held Massachusetts corporations have a classified board of
directors consisting of three classes as nearly equal in size as possible. Once
a corporation is subject to the classified board provisions of this statute,
directors may be removed by a majority vote of the stockholders only for cause.
By vote of the Hadco Board, Hadco has elected to be exempt from the classified
board provisions of this statute.
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" on page
58. 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
fractional 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, to 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 that 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 those directors. Under Massachusetts law, any director may be
removed for cause by a majority vote of the directors then in office.
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 as is the case for Hadco, by vote of a majority of directors. The Hadco
Bylaws fix the number of directors 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 Hadco 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 has 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.
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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. The Hadco Bylaws provide that vacancies may be filled
by action of the stockholders, or instead of this action, 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 if these actions are taken while the
corporation is solvent. 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 500,000,000 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
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
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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 Sanmina's Certificate
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.
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.
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EXPERTS
The audited consolidated financial statements and schedule 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 and schedule of Hadco
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 public accountants for
Hadco 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,
Secretary of Sanmina, are members of Wilson Sonsini Goodrich & Rosati. As of the
date of this proxy statement/prospectus, investment partnerships composed of
individuals associated with Wilson Sonsini Goodrich & Rosati, and attorneys who
are members of or are employed by Wilson Sonsini Goodrich & Rosati beneficially
own an aggregate of 25,750 shares of Sanmina Common Stock.
Wilson Sonsini Goodrich & Rosati, counsel for Sanmina, and Testa, Hurwitz &
Thibeault, LLP, Boston, Massachusetts, counsel for Hadco, have delivered
opinions concerning certain federal income tax consequences of the Merger.
Certain members of Testa, Hurwitz & Thibeault, LLP are the beneficial owners of
an aggregate of 600 shares of Hadco Common Stock. See "The Merger -- Material
Federal Income Tax Consequences" and "The Merger Agreement, The Stockholders
Agreement And The Stock Option Agreement -- The Merger Agreement -- Conditions
to Completion of the Merger on pages 45 and 54."
STOCKHOLDER PROPOSALS
If the Merger is not completed, proposals of stockholders intended for
inclusion in the proxy statement to be furnished to all stockholders entitled to
vote at the annual meeting of stockholders of Hadco in 2001 must be received at
Hadco's principal executive offices not later than October 2, 2000. The deadline
for providing timely notice to Hadco of matters that stockholders otherwise
desire to introduce at the annual meeting of stockholders of Hadco in 2001 is
December 14, 2000. To curtail controversy as to the date on which a proposal was
received by Hadco, it is suggested that all notices of proposals by stockholders
should be sent certified mail -- return receipt requested to the attention of:
F. Gordon Bitter, Chief Financial Officer, Hadco Corporation, 12A Manor Parkway,
Salem, New Hampshire 03079. If the Merger is completed, no annual meeting will
be held in 2001.
NOTICE OF BYLAW AMENDMENT
On April 17, 2000, the Hadco Board amended Hadco's Bylaws to opt out of the
provisions of Chapter 110D of the Massachusetts General Laws, as permitted under
Massachusetts law. See "Other Matters -- Comparison of Rights of Stockholders of
Hadco and Sanmina -- Anti-Takeover Legislation" on page 61.
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WHERE YOU CAN FIND MORE INFORMATION
Sanmina and Hadco file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information that Sanmina and Hadco file with the
SEC at the SEC's public reference rooms at the following locations:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
</TABLE>
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. These SEC filings are also available to the public from
commercial document retrieval services and at the internet world wide web site
maintained by the SEC at "http://www.sec.gov." Reports, proxy statements and
other information concerning Sanmina may also be inspected at the offices of the
Nasdaq Stock Market, which is located at 1735 K Street, N.W., Washington, D.C.
20006. Reports, proxy statements and other information pertaining to Hadco are
available for inspection at the offices of the New York Stock Exchange at 20
Broad Street, New York, New York 10005. Reports, proxy statements and other
information pertaining to Hadco are also available for inspection at the offices
of the Pacific Stock Exchange at 301 Pine Street, San Francisco, California
94104 and the Chicago Stock Exchange at One Financial Place, 440 S. LaSalle
Street, Chicago, Illinois 60605.
Sanmina filed a registration statement on Form S-4 on May 22, 2000 to
register with the SEC the Sanmina Common Stock to be issued to Hadco
stockholders in the Merger. This proxy statement/prospectus is a part of that
registration statement and constitutes a prospectus of Sanmina in addition to
being a proxy statement of Hadco. As allowed by SEC rules, this proxy
statement/prospectus does not contain all the information you can find in
Sanmina's registration statement or the exhibits to the registration statement.
The SEC allows Sanmina and Hadco to "incorporate by reference" information
into this proxy statement/prospectus, which means that the companies can
disclose important information to you by referring you to other documents filed
separately with the SEC. The information incorporated by reference is considered
part of this proxy statement/prospectus, except for any information superseded
by information contained directly in this proxy statement/prospectus or in later
filed documents incorporated by reference in this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents set
forth below that Sanmina and Hadco have previously filed with the SEC. These
documents contain important business and financial information about Sanmina and
Hadco that is not included in or delivered with this proxy statement/
prospectus.
SANMINA FILINGS (FILE NO. 0-21272):
1. Annual Report on Form 10-K for the fiscal year ended October 2, 1999;
2. Quarterly Report on Form 10-Q for the quarter ended January 1, 2000;
3. Quarterly Report on Form 10-Q/A for the period ended January 1, 2000;
4. Quarterly Report on Form 10-Q for the quarter ended April 1, 2000; and
5. The description of Sanmina Common Stock contained in Sanmina's
Registration Statement on Form 8-A on February 18, 1993.
HADCO FILINGS (FILE NO. 0-12102):
1. Annual Report on Form 10-K for the fiscal year ended October 30, 1999;
2. Quarterly Report on Form 10-Q for the quarter ended January 29, 2000;
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3. Quarterly Report on Form 10-Q for the quarter ended April 29, 2000;
4. Current Report on Form 8-K filed on March 20, 2000;
5. Current Report on Form 8-K filed on March 30, 2000;
6. Current Report on Form 8-K filed on April 18, 2000;
7. Current Report on Form 8-K filed on May 3, 2000;
8. Current Report on Form 8-K filed on May 16, 2000; and
9. The description of Hadco Common Stock contained in Hadco's Registration
Statement on Form 8-A filed on August 23, 1995, as amended by Hadco's
Registration Statement on Form 8-A filed on September 28, 1999, Form 8-A
filed on March 20, 2000, Form 8-A filed on March 29, 2000, and Form 8-A
filed on April 18, 2000.
Sanmina and Hadco also incorporate by reference additional documents that
may be filed with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act between the date of this proxy statement/prospectus and the date of
the special meeting. These include periodic reports, such as Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements.
Sanmina has supplied all information contained or incorporated by reference
in this proxy statement/ prospectus relating to Sanmina, and Hadco has supplied
all such information contained or incorporated by reference in this proxy
statement/prospectus relating to Hadco.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through the companies,
the SEC or the SEC's internet web site as described above. Documents
incorporated by reference are available from the companies without charge,
excluding all exhibits, except that if the companies have specifically
incorporated by reference an exhibit in this proxy statement/ prospectus, the
exhibit will also be provided without charge. Stockholders may obtain documents
incorporated by reference in this proxy statement/prospectus by requesting them
in writing or by telephone from the appropriate company at the following
addresses:
<TABLE>
<S> <C>
Sanmina Corporation Hadco Corporation
2700 North First Street 12A Manor Parkway
San Jose, California 95134 Salem, New Hampshire 03079
Attention: Investor Relations Attention: Chief Financial Officer
Telephone: (408) 964-3500 Telephone: (603) 898-8000
</TABLE>
You should rely only on the information contained or incorporated by
reference in this proxy statement/ prospectus. We have not authorized anyone to
provide you with information that is different from what is contained in this
proxy statement/prospectus. You should not assume that the information contained
in this proxy statement/prospectus is accurate as of any date other than the
date set forth on the cover page. Neither the mailing of this proxy
statement/prospectus to stockholders nor the issuance of Sanmina Common Stock in
the Merger creates any implication to the contrary.
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UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
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 Time). No adjustments to
the unaudited pro forma combined condensed financial statements have been made
to account for different possible results in connection with these statements,
as management believes that the impact on such information of the varying
outcomes, individually or in the aggregate, would not be materially different.
Sanmina and Hadco estimate that they will incur direct transaction costs of
approximately $32 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 condensed balance sheet but have not been
included in the unaudited pro forma combined condensed statements of operations.
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 statements are
presented for illustrative purposes only and are 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 condensed financial statements
are based upon the respective historical consolidated financial statements and
related notes of Sanmina and Hadco incorporated by reference 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. These
unaudited pro forma combined condensed financial statements should be read
together with the historical financial statements and related notes of Sanmina
and Hadco, which are incorporated into this document by reference.
F-1
<PAGE> 75
SANMINA AND HADCO
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 1, 2000
<TABLE>
<CAPTION>
SANMINA HADCO ADJUSTMENTS PRO FORMA
---------- -------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................. $1,014,997 $520,165 $ (649)(A) $1,534,513
Cost of sales............................. 849,670 429,622 (649)(A) 1,278,643
---------- -------- ------ ----------
Gross profit.............................. 165,327 90,543 -- 255,870
Selling, general and administrative
expenses................................ 42,372 44,006 -- 86,378
Amortization of goodwill.................. 3,893 6,103 -- 9,996
---------- -------- ------ ----------
Operating income.......................... 119,062 40,434 -- 159,496
Other income (expense), net............... 6,092 (11,992) -- (5,900)
---------- -------- ------ ----------
Income before provision for income
taxes................................... 125,154 28,442 -- 153,596
Provision for income taxes................ 45,056 10,808 -- 55,864
---------- -------- ------ ----------
Net income................................ $ 80,098 $ 17,634 -- $ 97,732
========== ======== ====== ==========
Basic earnings per share.................. $ 0.66 $ 1.28 -- $ 0.70
Diluted earnings per share................ $ 0.62 $ 1.26 -- $ 0.66
Shares used in computing per share amounts
Basic................................... 121,219 13,733 5,493 140,445
Diluted................................. 128,672 14,038 5,615 148,325
</TABLE>
SANMINA AND HADCO
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 3, 1999
<TABLE>
<CAPTION>
SANMINA HADCO ADJUSTMENTS PRO FORMA
-------- -------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................. $556,673 $491,565 $(1,768)(A) $1,046,470
Cost of sales.............................. 442,774 420,755 (1,768)(A) 861,761
-------- -------- ------- ----------
Gross profit............................... 113,899 70,810 -- 184,709
Selling, general and administrative
expenses................................. 37,387 37,978 -- 75,365
Amortization of goodwill................... 1,555 6,126 -- 7,681
Provision for plant closing and relocation
costs.................................... 16,875 -- -- 16,875
Write down of long-lived assets............ 11,400 -- -- 11,400
Merger costs............................... 5,479 -- -- 5,479
-------- -------- ------- ----------
Operating income........................... 41,203 26,706 -- 67,909
Other income (expense), net................ 3,547 (15,692) -- (12,145)
-------- -------- ------- ----------
Income before provision for income taxes... 44,750 11,014 -- 55,764
Provision for income taxes................. 16,540 4,378 -- 20,918
-------- -------- ------- ----------
Net income................................. $ 28,210 $ 6,636 -- $ 34,846
======== ======== ======= ==========
Basic earnings per share................... $ 0.25 $ 0.49 -- $ 0.26
Diluted earnings per share................. $ 0.23 $ 0.49 -- $ 0.25
Shares used in computing per share amounts
Basic.................................... 115,136 13,470 5,388 133,994
Diluted.................................. 122,509 13,678 5,471 141,658
</TABLE>
F-2
<PAGE> 76
SANMINA AND HADCO
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 2, 1999
<TABLE>
<CAPTION>
SANMINA HADCO ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................... $1,214,744 $1,005,970 $(3,140)(A) $2,217,574
Cost of sales............................... 962,595 849,100 (3,140)(A) 1,808,555
---------- ---------- ------- ----------
Gross profit................................ 252,149 156,870 -- 409,019
Selling, general and administrative
expenses.................................. 74,796 78,678 -- 153,474
Amortization of goodwill.................... 3,269 12,226 -- 15,495
Provision for plant closing and relocation
costs..................................... 16,875 -- -- 16,875
Write down of long-lived assets............. 11,400 -- -- 11,400
Merger costs................................ 5,479 -- -- 5,479
---------- ---------- ------- ----------
Operating income............................ 140,330 65,966 -- 206,296
Other income (expense), net................. 7,549 (29,511) -- (21,962)
---------- ---------- ------- ----------
Income before provision for income taxes.... 147,879 36,455 -- 184,334
Provision for income taxes.................. 54,182 14,491 -- 68,673
---------- ---------- ------- ----------
Net income.................................. $ 93,697 $ 21,964 -- $ 115,661
========== ========== ======= ==========
Basic earnings per share.................... $ 0.81 $ 1.62 -- $ 0.86
Diluted earnings per share.................. $ 0.76 $ 1.60 -- $ 0.81
Shares used in computing per share amounts
Basic..................................... 115,948 13,533 5,413 134,894
Diluted................................... 123,324 13,751 5,500 142,575
</TABLE>
SANMINA AND HADCO
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SANMINA HADCO ADJUSTMENTS PRO FORMA
-------- -------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................... $991,821 $826,359 $(1,411)(A) $1,816,769
Cost of sales................................ 783,949 702,669 (1,411)(A) 1,485,207
-------- -------- ------- ----------
Gross profit................................. 207,872 123,690 -- 331,562
Selling, general and administrative
expenses................................... 67,165 71,877 -- 139,042
Restructuring and other non-recurring
charges.................................... -- 7,053 -- 7,053
Amortization of goodwill..................... 3,127 9,750 -- 12,877
Write-off of acquired in-process R&D......... -- 63,050 -- 63,050
Merger costs................................. 3,945 -- -- 3,945
-------- -------- ------- ----------
Operating income (loss)...................... 133,635 (28,040) -- 105,595
Other expense, net........................... (272) (20,173) -- (20,445)
-------- -------- ------- ----------
Income (loss) before provision for income
taxes...................................... 133,363 (48,213) -- 85,150
Provision for income taxes................... 47,734 5,897 -- 53,631
-------- -------- ------- ----------
Net income (loss)............................ $ 85,629 $(54,110) -- $ 31,519
======== ======== ======= ==========
Basic earnings (loss) per share.............. $ 0.85 $ (4.09) -- $ 0.26
Diluted earnings (loss) per share............ $ 0.76 $ (4.09) -- $ 0.25
Shares used in computing per share amounts
Basic...................................... 100,602 13,216 5,286 119,104
Diluted(1)................................. 117,194 13,216 5,286 124,844
</TABLE>
- ---------------
(1) 1998 Pro Forma diluted shares were adjusted to account for anti-dilutive
effects of the Sanmina convertible subordinated debt.
F-3
<PAGE> 77
SANMINA AND HADCO
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SANMINA HADCO ADJUSTMENTS PRO FORMA
-------- -------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................. $803,064 $648,705 $(1,083)(A) $1,450,686
Cost of sales.............................. 640,644 507,313 (1,083)(A) 1,146,874
-------- -------- ------- ----------
Gross profit............................... 162,420 141,392 -- 303,812
Selling, general and administrative
expenses................................. 63,856 59,371 -- 123,227
Amortization of goodwill................... 2,283 5,215 -- 7,498
Provision for plant closing and relocation
costs.................................... 8,876 -- -- 8,876
Write-off of acquired in-process R&D....... -- 78,000 -- 78,000
-------- -------- ------- ----------
Operating income (loss).................... 87,405 (1,194) -- 86,211
Other expense, net......................... (1,691) (7,627) -- (9,318)
-------- -------- ------- ----------
Income (loss) before provision for income
taxes.................................... 85,714 (8,821) -- 76,893
Provision for income taxes................. 36,358 27,672 -- 64,030
-------- -------- ------- ----------
Net income (loss).......................... $ 49,356 $(36,493) -- $ 12,863
======== ======== ======= ==========
Basic earnings (loss) per share............ $ 0.51 $ (3.18) -- $ 0.11
Diluted earnings (loss) per share.......... $ 0.46 $ (3.18) -- $ 0.11
Shares used in computing per share amounts
Basic.................................... 96,602 11,458 4,583 112,643
Diluted(1)............................... 115,231 11,458 4,583 119,034
</TABLE>
- ---------------
(1) 1997 Pro Forma diluted shares were adjusted to account for anti-dilutive
effects of the Sanmina convertible subordinated debt.
F-4
<PAGE> 78
SANMINA AND HADCO
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
APRIL 1, 2000
<TABLE>
<CAPTION>
SANMINA HADCO ADJUSTMENTS PRO FORMA
---------- -------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............... $ 504,159 $ 112 $ -- $ 504,271
Short-term investments.................. 352,127 -- (274,079)(B) 78,048
Accounts receivable, net................ 332,172 139,709 -- 471,881
Inventories............................. 309,272 65,823 -- 375,095
Other current assets.................... 36,203 25,203 -- 61,406
---------- -------- --------- ----------
Total Current Assets................. 1,533,933 230,847 (274,079) 1,490,701
Property, plant and equipment, net........ 262,464 318,144 -- 580,608
Long-term investments..................... 52,850 -- -- 52,850
Goodwill.................................. 74,477 173,216 -- 247,693
Deposits and other........................ 10,211 9,027 (6,709) 12,529
---------- -------- --------- ----------
Total Assets......................... $1,933,935 $731,234 $(280,788) $2,384,381
========== ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable........................ $ 232,886 $ 94,306 $ 22,388(D) $ 349,580
Accrued liabilities and other........... 83,251 55,950 (7,623)(B) 131,578
---------- -------- --------- ----------
Total Current Liabilities............ 316,137 150,256 14,765 481,158
---------- -------- --------- ----------
LONG TERM LIABILITIES
Convertible subordinated notes.......... 355,020 -- -- 355,020
Senior subordinated notes............... -- 199,456 (199,456)(B) --
Other liabilities....................... 2,249 138,859 (65,000)(C) 76,108
---------- -------- --------- ----------
Total Long-term Liabilities.......... 357,269 338,315 (264,456) 431,128
---------- -------- --------- ----------
STOCKHOLDERS' EQUITY
Common stock and additional paid-in
capital................................. 848,042 186,977 -- 1,035,019
Accumulated other comprehensive loss...... (2,983) -- -- (2,983)
Retained earnings......................... 415,470 56,616 (32,027)(D) 440,059
Deferred compensation..................... -- (930) 930(D) --
---------- -------- --------- ----------
Total Stockholders' Equity................ 1,260,529 242,663 (31,097) 1,472,095
---------- -------- --------- ----------
Total Liabilities and Stockholders'
Equity.................................. $1,933,935 $731,234 $(280,788) $2,384,381
========== ======== ========= ==========
</TABLE>
F-5
<PAGE> 79
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS OF SANMINA AND HADCO
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma combined condensed balance sheet as of April 1,
2000 gives effect to the Merger as if it had occurred on April 1, 2000, and
combines the unaudited consolidated balance sheet of Sanmina as of April 1, 2000
and the unaudited consolidated balance sheet of Hadco as of April 29, 2000. The
unaudited pro forma combined condensed statements of operations for all periods
presented give effect to the Merger as if it had occurred on October 1, 1996.
Hadco has a fiscal year that ends on the last Saturday in October of each year.
For purposes of the unaudited pro forma combined condensed statements of
operations, Hadco's consolidated statements of operations for the years ended
October 25, 1997, October 31, 1998 and October 30, 1999, and for the six-month
periods ended May 1, 1999 and April 29, 2000, have been combined with Sanmina's
consolidated statements of operations for the years ended September 30, 1997,
September 30, 1998 and October 2, 1999, and the six-month periods ended April 3,
1999 and April 1, 2000. No adjustments were necessary to conform the accounting
policies of the combining companies. No pro forma adjustments have been made in
the pro forma combined condensed financial statements to reflect any potential
effects of (i) the efficiencies which may be obtained by combining Sanmina and
Hadco operations, (ii) merger related costs or (iii) the costs of restructuring,
integrating or consolidating these operations.
These unaudited pro forma combined condensed financial statements reflect
the issuance of 19,371,405 shares of Sanmina Common Stock in exchange for an
aggregate of 13,836,718 shares of Hadco Common Stock (outstanding as of May 19,
2000) in connection with the Merger, using the exchange ratio of 1.4 shares of
Sanmina Common Stock for each share of Hadco Common Stock.
NOTE 2. PRO FORMA EARNINGS 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 Hadco using an exchange ratio of 1.4 shares of Sanmina Common Stock
for each share of Hadco Common Stock.
NOTE 3. PRO FORMA ADJUSTMENTS
(A) These unaudited pro forma combined condensed financial statements
reflect the elimination of sales from Hadco to Sanmina for the periods
presented. No adjustments have been made to eliminate accounts payable, accounts
receivable and profits because these amounts did not have a material impact on
the pro forma combined condensed financial statements.
(B) Upon completion of the Merger, the combined company will be required to
make an offer to purchase the Hadco senior subordinated notes at a price equal
to 101% of the principal amount on the date of purchase, plus accrued interest.
As a result, an adjustment was made to the pro forma combined condensed
financial statements to reflect the repayment of Hadco senior subordinated notes
with a carrying value of $199 million plus the discount and accrued interest of
$544,000 and $7,079,000, respectively, and the required premium of $2 million.
(C) An adjustment was made to the pro forma combined condensed financial
statements to reflect the repayment of the Hadco line-of-credit borrowings of
$65 million.
(D) Sanmina and Hadco estimate that they will incur merger-related
expenses, consisting primarily of transaction costs for investment banker fees,
attorneys, accountants, financial printing, severance costs and other related
charges, of approximately $32 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 completed. The pro forma
combined condensed balance sheet gives effect to such expenses as if they had
been incurred as of April 1, 2000, but the pro forma combined condensed
statements of operations do not give effect to these expenses as these expenses
are non-recurring.
F-6
<PAGE> 80
ANNEX I
AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 17, 2000
AMONG
SANMINA CORPORATION
SANM ACQUISITION SUBSIDIARY, INC.
AND
HADCO CORPORATION
I-1
<PAGE> 81
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I THE MERGER........................................ I-4
SECTION 1.1 The Merger.................................... I-4
SECTION 1.2 Closing....................................... I-4
SECTION 1.3 Effective Time................................ I-4
SECTION 1.4 Effects of the Merger......................... I-5
SECTION 1.5 Articles of Organization and Bylaws........... I-5
SECTION 1.6 Directors..................................... I-5
SECTION 1.7 Officers...................................... I-5
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES........ I-5
SECTION 2.1 Effect on Capital Stock....................... I-5
SECTION 2.2 Exchange of Certificates...................... I-6
SECTION 2.3 Dissenting Shares............................. I-8
ARTICLE III................................................. I-8
SECTION 3.1 Representations and Warranties of the
Company................................................ I-8
SECTION 3.2 Representations and Warranties of Parent and
Sub.................................................... I-18
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS........ I-26
SECTION 4.1 Conduct of Business........................... I-26
SECTION 4.2 No Solicitation............................... I-29
ARTICLE V ADDITIONAL AGREEMENTS............................. I-31
SECTION 5.1 Preparation of the Form S-4 and the Proxy
Statement; Stockholders Meeting........................ I-31
SECTION 5.2 Letters of the Company's Accountants.......... I-31
SECTION 5.3 Letters of Parent's Accountants............... I-31
SECTION 5.4 Access to Information; Confidentiality........ I-32
SECTION 5.5 Commercially Reasonable Efforts;
Notification........................................... I-32
SECTION 5.6 Stock Options and Restricted Stock............ I-33
SECTION 5.7 Indemnification and Insurance................. I-34
SECTION 5.8 Fees and Expenses............................. I-35
SECTION 5.9 Public Announcements.......................... I-36
SECTION 5.10 Affiliates................................... I-36
SECTION 5.11 Nasdaq Listing............................... I-36
SECTION 5.12 Pooling of Interests......................... I-36
SECTION 5.13 Tax Treatment................................ I-36
SECTION 5.14 Parent Benefit Plans......................... I-36
SECTION 5.15 Senior Notes................................. I-37
SECTION 5.16 Form S-8..................................... I-37
SECTION 5.17 Employee Stock Purchase Plan................. I-37
SECTION 5.18 Retirement Plan.............................. I-37
ARTICLE VI CONDITIONS PRECEDENT............................. I-38
SECTION 6.1 Conditions to Each Party's Obligation to
Effect the Merger...................................... I-38
SECTION 6.2 Conditions to Obligations of Parent and Sub... I-38
SECTION 6.3 Conditions to Obligation of the Company....... I-39
SECTION 6.4 Frustration of Closing Conditions............. I-39
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............... I-40
SECTION 7.1 Termination................................... I-40
</TABLE>
I-2
<PAGE> 82
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 7.2 Effect of Termination......................... I-41
SECTION 7.3 Amendment..................................... I-41
SECTION 7.4 Extension; Waiver............................. I-41
ARTICLE VIII GENERAL PROVISIONS............................. I-41
SECTION 8.1 Nonsurvival of Representations and
Warranties............................................. I-41
SECTION 8.2 Notices....................................... I-42
SECTION 8.3 Definitions................................... I-42
SECTION 8.4 Interpretation................................ I-43
SECTION 8.5 Counterparts.................................. I-43
SECTION 8.6 Entire Agreement; No Third-Party
Beneficiaries.......................................... I-43
SECTION 8.7 Governing Law................................. I-43
SECTION 8.8 Assignment.................................... I-43
SECTION 8.9 Enforcement................................... I-43
SECTION 8.10 Severability................................. I-43
</TABLE>
I-3
<PAGE> 83
AGREEMENT AND PLAN OF MERGER dated as of April 17, 2000, among SANMINA
CORPORATION, a Delaware corporation ("Parent"), SANM ACQUISITION SUBSIDIARY,
INC., a Massachusetts corporation and a wholly owned subsidiary of Parent
("Sub"), and HADCO CORPORATION, a Massachusetts corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the Company,
and Parent, acting as the sole stockholder 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 $0.05 per share, of the Company, together with
the associated right (a "Right") to purchase, pursuant to the Company's August
22, 1995 Rights Agreement, as amended to date (the "Rights Agreement"), one
share of the Company's Common Stock, par value $0.05 per share (such common
stock, together with the Rights, "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 $0.01 per share, of Parent ("Parent
Common Stock");
WHEREAS, substantially concurrently herewith and as a condition and
inducement to Parent's willingness to enter into this Agreement, Parent and
certain affiliate stockholders of the Company have entered into a Stockholders
Agreement (the "Stockholders Agreement");
WHEREAS, substantially concurrently herewith and as a condition and
inducement to Parent's willingness to enter into this Agreement, Parent and the
Company have entered into a Stock Option Agreement (the "Stock Option
Agreement") substantially in the form attached hereto as Exhibit B.
WHEREAS, 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;
WHEREAS, 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"); and
WHEREAS, for financial accounting purposes, it is intended that the Merger
will be accounted for as a pooling of interests transaction; and
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.
SECTION 1.2 Closing. Unless this Agreement shall have been terminated
pursuant to Section 7.1 and subject to the satisfaction or waiver of each of the
conditions set forth in Article VI, 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
Testa, Hurwitz & Thibeault, LLP, High Street Tower, 125 High Street, Boston, MA
02110, 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
I-4
<PAGE> 84
time as the Articles of Merger are duly filed with the Massachusetts Secretary
of State, or at such other time 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 "Target Corp."
(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.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1 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, no par value, 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 or any direct or
indirect wholly owned subsidiary of 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 2.2(b),
each issued and outstanding share of Company Common Stock (other than
shares to be canceled in accordance with Section 2.1(b) and other than as
provided in Section 2.3) shall be converted into the right to receive 1.40
(the "Exchange Ratio") duly authorized, validly issued, fully paid and
nonassessable shares of Parent Common Stock (the "Share Consideration"). If
the average last reported sale price of the Parent Common Stock on the
Nasdaq National Market during the 20 trading days ending on the third
trading day prior to the date of the Shareholder Meeting shall be less than
$40.00 (the "Target Price"), the Company shall have the right to terminate
this Agreement pursuant to Section 7.1(f) subject to Parent's right to
increase the Exchange Ratio to $56.00 divided by the average last reported
sale price of the Parent Common Stock on the Nasdaq National Market during
the 20 trading days ending on the third trading day prior to the date of
the Shareholder Meeting (the "Adjusted Ratio"). 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
I-5
<PAGE> 85
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 2.2(e), 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, reclassification,
recapitalization, split, combination or exchange of shares or if Parent
pays an extraordinary dividend, the Exchange Ratio, the Target Price and
the Adjusted 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 granted under
the Company's stock option plans (such stock option plans collectively with
the deferred stock plans of the Company, the "Stock Option Plans") and the
Stock Option Plans shall be assumed by Parent in accordance with Section
5.6. At the Effective Time, in accordance with the terms of the Company's
Employee Stock Purchase Plan of November 17, 1997 (the "Employee Stock
Purchase Plan"), all rights to purchase shares of Company Common Stock
under the Employee Stock Purchase Plan shall be treated in the manner set
forth in Section 5.17 hereof.
SECTION 2.2 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 2.1 in exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time but in any event within 10 business days thereafter, 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 2.1(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 and cash in
lieu of any fractional shares. 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 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 this
Article II 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 2.2(e) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.2(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 reasonable satisfaction of Parent that such tax has been paid
or is not applicable. Until surrendered as contemplated by this Section 2.2(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
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of Parent Common Stock, cash in lieu of any fractional shares of Parent Common
Stock as contemplated by Section 2.2(e) and any dividends or other distributions
to which such holder is entitled pursuant to Section 2.2(c). No interest will be
paid or will accrue on any cash payable pursuant to Sections 2.2(c) or 2.2(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 2.2(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 2.2(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 2.2(c) or 2.2(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 terms 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 Article II.
(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.
(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 at the
Effective Time, as such price is reported on the Nasdaq 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, and Parent shall remain liable 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.
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(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 the
Surviving Corporation, 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.
SECTION 2.3 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 2.1(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 $100,000 in any case or $1,000,000 in the aggregate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 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):
(a) 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 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
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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 or made available to Parent complete and correct copies of the
Articles of Organization and Bylaws or such other charter documents, in
each case as amended to the date hereof, of the Company and of each of its
subsidiaries.
(b) Subsidiaries. Except as set forth in Section 3.1(b) of the
Company Disclosure Schedule or in the Filed Company SEC Documents (as
hereinafter defined), 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.
(c) Capital Structure. The authorized capital stock of the Company
consists of 50,000,000 shares of Company Common Stock, par value $0.05 per
share, and no shares of preferred stock. At the close of business on March
25, 2000, (a) 13,826,268 shares of Company Common Stock were issued and
outstanding, (b) no shares of Company Common Stock were held by the Company
in its treasury, (c) 2,530,474 shares of Company Common Stock were reserved
for issuance pursuant to outstanding Stock Option Plans and (d) 252,260
shares of Company Common Stock were reserved for issuance pursuant to the
Employee Stock Purchase Plan. Except as set forth above or in the Filed
Company SEC Documents, at the close of business on March 25, 2000, 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 or as contemplated herein, 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. Except for the Stockholders Agreement contemplated hereby, 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 (other than directors' qualifying shares), directly or
indirectly, free and clear of any pledge, claim, lien, charge, encumbrance
or security interest of any kind or nature whatsoever (each a "Lien" and
collectively, the "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.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and the Option
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 and the Option Agreement by the Company and
the consummation by the Company of the transactions contemplated by this
Agreement and the Option Agreement have been duly authorized by all
necessary
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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 and the
Option 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 and the Option Agreement do not,
and the consummation of the transactions contemplated by this Agreement and
the Option Agreement and compliance with the provisions of this Agreement
and the Option 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 the
Company under any provision of (a) subject to obtaining the approval of the
stockholders of the Company, the Articles of Organization or Bylaws of the
Company, (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 its 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 its 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 and the Option Agreement, or
(z) prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement and the Option Agreement. Except with
respect to Environmental Permits held by the Company (the Company's
principal Environmental Permits are identified in the Company Disclosure
Schedule), 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 in
connection with the execution and delivery of this Agreement and the Option
Agreement by the Company or the consummation by the Company of the
transactions contemplated by this Agreement and the Option 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 Registration Statement on Form S>-4 and 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 Option Agreement and the transactions contemplated by
this Agreement and the Option 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 the Company or prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
(e) SEC Documents. The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since October
27, 1996 (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 at the
time they were filed, 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
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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
as of their respective dates 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 the SEC on Form
10-Q) 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 fiscal year ended October 30, 1999, the
Company 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 Company.
(f) Information Supplied. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by
reference in (i) 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 (ii) 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.
(g) 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:
(i) any material adverse change (as defined in Section 8.3) in the
Company or any of its subsidiaries;
(ii) 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;
(iii) 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;
(iv) (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 1999 annual meeting of stockholders)
of any increase in compensation, except in the ordinary course of
business
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consistent with prior practice or as was required under employment
agreements in effect as 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;
(v) 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;
(vi) 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
(vii) any agreement, whether in writing or otherwise, to take any
action described in this Section 3.1(g).
(h) Litigation. There is no suit, action or proceeding pending or,
to the knowledge of the Company, threatened in writing since October 30,
1999 against or directly affecting the Company or any of 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, other than
routine administrative agency actions before the United States Patent and
Trademark Office or corresponding patent authorities of other countries, or
that individually or in the aggregate would have a material adverse effect
on the Company.
(i) 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") that has not been so
filed, except those whose failure to be so filed would not be materially
inconsistent with the SEC's filing requirements for material contracts.
Neither the Company nor any of its subsidiaries is in violation of or in
default under (nor, to the knowledge of the Company, 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.
(j) Compliance with Laws.
Except as disclosed in the Filed Company SEC Documents:
(i) 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. Since
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October 30, 1999, the Company has not received any written 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.
(ii) 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 Parent, as the case may
be, or any of their respective 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 or release of any 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 Company or Parent, as the case
may be, or any of their respective subsidiaries.
(iii) 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 liability which could reasonably be expected to have
a material adverse effect on the Company, no Hazardous Materials are
present on any Business Facility and, to the knowledge of the Company,
no Hazardous Materials are present on any Business Facility currently
owned, operated, occupied, controlled or leased by the Company or any of
its subsidiaries or were present on any other Business Facility at the
time it ceased to be owned, operated, occupied, controlled or leased by
the Company or any of its subsidiaries, except for any such presence
that could not reasonably be expected to have a material adverse effect
on the Company.
(iv) The Company and each of its subsidiaries have conducted all
Hazardous Material Activities in compliance in all material respects
with all applicable Environmental Laws, except for such failures as
would not have a material adverse effect on the Company. 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 resulted or
will result in liability having a material adverse effect on the
Company.
(v) The Company has all of the 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 Environmental 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 such invalidity or failure to be in full
force and effect would not have a material adverse effect on the
Company.
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(vi) No action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending, or to the knowledge of
the Company, overtly threatened, 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, which would have a material adverse effect on the Company.
(vii) To the knowledge of the Company, no action, proceeding,
liability or claim exists or is overtly 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 liability
having a material adverse effect on the Company.
(k) 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 in all material respects 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, overtly
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, overtly
threatened against or involving the Company or any of its subsidiaries. To
the 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 material labor difficulty.
(l) 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 contemplated herein or as disclosed in the Company
Disclosure Schedule 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 required
to be disclosed in the Filed Company SEC Documents and which is either
currently effective or will become effective at the Closing Date.
(m) ERISA Compliance.
(i) Schedule 3.1(m)(i) to the Company Disclosure Schedule contains
a list and brief description of all material "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 material
benefit plans (collectively, "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
material Benefit Plan (or, in the case of any unwritten Benefit Plans,
descriptions
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thereof), (ii) the most recent summary plan description for each
material Benefit Plan for which such summary plan description is
required and (iii) each trust agreement and group annuity contract
relating to any material 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.
(ii) All Pension Plans may rely on an opinion letter issued by the
Internal Revenue Service for a prototype plan or have been the subject
of determination letters from the Internal Revenue Service to the effect
that such Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, and,
to the Company's knowledge, no such determination letter has been
revoked nor has any event occurred since the date of its most recent
determination letter or application therefor that would adversely affect
its qualification or materially increase its costs or the Company has a
period of time remaining under Applicable Treasury Regulations or
Pronouncements in which to apply for and obtain such a letter.
(iii) Within the last six years, 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.
(iv) With respect to any Benefit Plan that is an employee welfare
benefit plan, there are no understandings, agreements or undertakings,
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.
(v) 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
(A) a pension plan subject to Section 412 of the Code, (B) a
multiemployer pension plan, as defined in Section 3(37) of ERISA or (C)
an employee welfare benefit plan. Neither the Company nor any of its
subsidiaries maintains an employee welfare benefit plan that is not
funded through insurance.
(vi) 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 as required by Section
4980B of the Code and Sections 601-607 of ERISA ("COBRA") or similar
applicable state law ("mini-COBRA"). With respect to any Benefit Plan
which is subject to COBRA or mini-COBRA, the Company warrants that in
all "qualified events" 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 health coverage to
the extent required by COBRA or mini-COBRA and will provide that
coverage, if elected at such expense which will have no material adverse
effect on Parent.
(vii) Except as disclosed in the Filed Company SEC Documents,
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.
(viii) 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 material 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.
(ix) 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 the
Company's knowledge, no employee of
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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, to the Company's
knowledge, no litigation is pending or overtly threatened with regard
thereto.
(x) Schedule 3.1(m)(x) to the Company Disclosure Schedule lists
all outstanding Stock Options as of January 29, 2000, 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.
(xi) Except as disclosed in the Filed Company SEC Documents or
under Section 3.1(o) of the Company Disclosure Schedule, or as the
result of employee terminations causing a partial termination in any
Pension Plan, 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.
(n) 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 from the dates covered by such Filed Company SEC Documents
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 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, which have not been resolved. The
Company has not executed or filed with any taxing authority any agreements
extending the period for assessment or collection of any taxes which are
still outstanding. 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 six fiscal years through October
30, 1999. 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 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.
(o) No Excess Parachute Payments. 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.
(p) 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 Liens, defects in title,
easements, reservations, restrictive covenants and other encumbrances that
are identified in the Filed Company SEC Documents, the Company Disclosure
Schedule or in documents, plans, title insurance policies and other
instruments identified in the Company Disclosure Schedule or made available
to Parent, that individually or in the aggregate would not materially
interfere with the ability of the Company and its subsidiaries taken as a
whole to conduct their business as currently conducted. All such material
properties and assets, other than properties and assets
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in which the Company or any of its subsidiaries has a leasehold interest,
are free and clear of all Liens, 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 Filed
Company SEC Documents or the exhibits thereto, or are reflected in the
Company's financial statements included in the Filed Company SEC Documents,
(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, or (E) would not materially
and adversely impact the transferability, financability, ownership,
leasing, use, development or occupancy of any such properties or assets
("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, except where such failure to comply or be in
full force and effect would not materially and adversely impact the
leasing, use, or occupancy of any such leased properties or assets. 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.
(q) 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
exclusive 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.
(r) 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.
(s) State Takeover Statutes. The Board of Directors of the Company
have approved the Merger, this Agreement, the Option Agreement and the
Stockholders Agreement, and such approval is sufficient to render
inapplicable to the Merger, this Agreement, the Option Agreement, the
Stockholders Agreement and the transactions contemplated by this Agreement,
the Option Agreement and the Stockholders Agreement, the provisions of
Section 110F of the MBCL to the extent, if any, such Section is applicable
to the Merger, this Agreement, the Option Agreement, the Stockholders
Agreement and the transactions contemplated by this Agreement, the Option
Agreement and the Stockholders 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 Option Agreement, the
Stockholders Agreement or the transactions contemplated by this Agreement,
the Option Agreement or the Stockholders Agreement.
(t) Brokers. No broker, investment banker, financial advisor or
other person, other than Morgan Stanley & Co. Incorporated, 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.
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(u) Opinion of Financial Advisor. The Company has received the
opinion of Morgan Stanley & Co. Incorporated, 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 signed copy of which opinion has been
delivered to Parent for informational purposes only.
(v) Accounting Matters. To the knowledge of the Company, based on
consultation with its independent accountants, 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.
(w) Rights Agreement. The Rights Agreement has been or will be prior
to the Effective Time amended to (i) render the Rights Agreement
inapplicable to the Merger and the other transactions contemplated by this
Agreement, the Option Agreement and the Stockholders Agreement, (ii) ensure
that (y) none of Parent or its subsidiaries is an Acquiring Person (as
defined in the Rights Agreement) pursuant to the Rights Agreement solely by
virtue of the execution of this Agreement, the Option Agreement, the
Stockholders Agreement or the consummation of the Merger or the other
transactions contemplated by the Option Agreement and the Stockholders
Agreement and (z) a Distribution Date or a Stock Acquisition Date (as such
terms are defined in the Rights Agreement) does not occur solely by reason
of the execution of this Agreement, the Option Agreement and the
Stockholders Agreement, the consummation of the Merger, or the consummation
of the other transactions, contemplated by the Option Agreement and the
Stockholders Agreement and (iii) provide that the Final Expiration Date (as
defined in the Rights Agreement) shall occur immediately prior to the
Effective Time, and such amendment may not be further amended by the
Company without the prior written consent of Parent.
SECTION 3.2 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:
(a) Organization, Standing and Corporate Power. Parent and each of
its subsidiaries is a corporation duly organized, validly existing and in
good 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. Parent 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 such jurisdictions where the failure to be so qualified or licensed
individually or in the aggregate would not have a material adverse effect
(as defined in Section 8.3) on Parent. Parent has delivered or made
available to the Company complete and correct copies of its Certificate of
Incorporation and Bylaws of Parent and the Articles of Incorporation and
Bylaws or such other charter documents, in each case as amended to the date
hereof, of each of its subsidiaries.
(b) Subsidiaries. Except as set forth in Section 3.2(b) of the
Parent/Sub Disclosure Schedule or in the Filed Parent SEC Documents, Parent
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.
(c) Capital Structure. The authorized capital stock of Parent
consists of 500,000,000 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 April 1, 2000, (a)
128,601,855 shares of Parent Common Stock were issued and outstanding, (b)
no shares of Parent Common Stock were held by the Parent in its treasury,
and (c) 14,754,919 shares of Parent Common Stock were reserved for issuance
pursuant to Parent's stock option and employee stock purchase plans
("Parent Equity Incentive Plans"). Parent has outstanding $350,000,000 in
convertible subordinated debentures due May 2004, which are convertible
into common stock at a conversion price of $44.334 per share (the
"Convertible Notes"). Except as set forth above or in the Parent SEC
Documents, at the close of business on April 1, 2000, no shares of capital
stock or other voting securities of Parent were issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of Parent
are, and all shares which may be issued
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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. Except as set
forth above, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
the Parent is a party, or by which it is bound, obligating the Parent to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the Parent
or obligating the Parent to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. Except for the convertible notes, there are not any
outstanding contractual obligations of the Parent to repurchase, redeem or
otherwise acquire any shares of capital stock or other securities of the
Parent. Except for the Stockholders Agreement contemplated hereby, there
are no shareholder agreements, voting trusts or other agreements or
understandings to which Parent is a party or by which it is bound relating
to the voting of any shares of capital stock of Parent. The shares of
Parent Common Stock 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 or other Liens.
All of the outstanding capital stock of Parent's subsidiaries is owned
by Parent (other than directors' qualifying shares), directly or
indirectly, free and clear of any Lien 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 Parent or its subsidiaries convertible into or exchangeable
for, no options or other rights to acquire from Parent 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 Parent. There are no outstanding
contractual obligations of Parent or its subsidiaries to repurchase, redeem
or otherwise acquire any outstanding shares of capital stock or other
ownership interests in any subsidiary of Parent.
(d) Authority; Noncontravention. Parent and Sub have all requisite
corporate power and authority to enter into this Agreement (and, in the
case of Parent, the Option Agreement and the Stockholders Agreement), and
to consummate the transactions contemplated by this Agreement (and, in the
case of Parent, those contemplated by the Option Agreement and the
Stockholders Agreement). The execution and delivery of this Agreement (and,
in the case of Parent, the Option Agreement and the Stockholders
Agreement), and the consummation of the transactions contemplated by this
Agreement (and, in the case of Parent, those contemplated by the Option
Agreement and the Stockholders 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 Option Agreement and the Stockholders
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. The execution and
delivery of this Agreement, the Option Agreement and the Stockholders
Agreement do not, and the consummation of the transactions contemplated by
this Agreement, the Option Agreement and the Stockholders Agreement and
compliance with the provisions of this Agreement, the Option Agreement and
the Stockholders 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 Incorporation 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 hereunder (and, in the case of
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Parent, under the Option Agreement and the Stockholders Agreement) or (z)
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement, the Option Agreement or the Stockholders
Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any third party or 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 Option Agreement and the
Stockholders 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 Option Agreement and the Stockholders
Agreement), except for (1) the filing of a Premerger Notification and
report form by Parent under the HSR Act, (2) the 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, the Option Agreement or the Stockholders
Agreement and the transactions contemplated by this Agreement, the Option
Agreement or the Stockholders 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 Parent and Sub are
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.
(e) SEC Documents. Parent has filed all required reports, schedules,
forms, statements and other documents with the SEC since October 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, 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 at the time they were filed 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 Parent included in the Parent SEC Documents as
of their respective dates 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 the SEC on Form 10-Q) 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 Parent SEC Documents filed and publicly available
prior to the date of this Agreement ("Filed Parent SEC Documents"), since
the completion of the audit of Parent's financial statements at and for the
fiscal year ended October 2, 1999, Parent has not incurred any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) which, individually or in the aggregate, would, in the exercise
of reasonable business judgment, be expected to have a material adverse
effect on Parent.
(f) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) 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 (ii) 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
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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 in this Agreement 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.
(g) Absence of Certain Changes or Events. Except as disclosed in the
Filed Parent SEC Documents, since the date of the most recent audited
financial statements included in the Filed Parent SEC Documents, the Parent
has conducted its business only in the ordinary course consistent with past
practice, and there has not been:
(i) any material adverse change (as defined in Section 8.3) in the
Parent or any of its subsidiaries;
(ii) 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, other than Parent's announced
two-for-one stock split in the form of a stock dividend effected as of
March 22, 2000;
(iii) other than Parent's announced two-for-one stock split in the
form of a stock dividend effected as of March 22, 2000, any split,
combination or reclassification of any of the 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
the Parent's capital stock;
(iv) (x) any granting by the Parent or any of its subsidiaries to
any Named Executive Officer of the Parent (as identified in the Parent's
proxy statement for its 2000 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 as of the date of the most recent audited financial
statements included in the Filed Parent SEC Documents, (y) any granting
by the Parent 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 Parent SEC Documents or (z) any entry by the Parent or any of
its subsidiaries into any employment, severance or termination agreement
with any Named Executive Officer;
(v) any change in accounting methods, principles or practices by
the Parent materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in generally
accepted accounting principles;
(vi) any tax election that individually or in the aggregate would
have a material adverse effect on the Parent or any of its tax
attributes or any settlement or compromise of any material income tax
liability; or
(vii) any agreement, whether in writing or otherwise, to take any
action described in this Section 3.2(g).
(h) Litigation. There is no suit, action or proceeding pending or,
to the knowledge of the Parent, threatened in writing since October 1, 1999
against or directly affecting the Parent or any of its subsidiaries that
individually or in the aggregate would have a material adverse effect on
the Parent, nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against, or, to the
knowledge of the Parent, investigation by any Governmental Entity pending
that involves, the Parent or any of its subsidiaries, other than routine
administrative agency actions before the United States Patent and Trademark
Office or corresponding patent authorities of other countries, or that
individually or in the aggregate would have a material adverse effect on
the Parent.
(i) Contracts. Except as disclosed in the Filed Parent 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
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to be filed by Parent 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") that has not been so
filed, except those whose failure to be so filed would not be materially
inconsistent with the SEC's filing requirements for material contracts.
Neither Parent nor any of its subsidiaries is in violation of or in default
under (nor, to the knowledge of Parent, 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.
(j) Labor Matters. There are no collective bargaining agreements or
other labor union agreements to which the Parent or any of its subsidiaries
is a party, or by which it is bound. The Parent and each of its
subsidiaries is in material 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 Parent. There is no unfair labor practice
complaint against the Parent or any of its subsidiaries pending or, to the
knowledge of the Parent, overtly 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 Parent, overtly threatened against or involving the 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 the Parent or any of its subsidiaries from relocating, closing or
terminating any of its operations or facilities. Neither the Parent nor any
of its subsidiaries has, in the past three years, experienced any labor
strike, dispute, slowdown, stoppage or other material labor difficulty.
(k) Absence of Changes in Benefit Plans. Except as disclosed in the
Filed Parent SEC 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 the 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 the Parent (collectively, "Benefit
Plans"). Except as contemplated herein or as disclosed in the Parent/Sub
Disclosure Schedule or in the Filed Parent SEC Documents, there exist no
employment, consulting, severance, termination or indemnification
agreements, arrangements or understandings between the Parent, any current
or former employee, officer or director of the Parent, which is required to
be disclosed in the Filed Parent SEC Documents and which is either
currently effective or will become effective at the Closing Date.
(l) ERISA Compliance.
(i) Schedule 3.1(m)(i) to the Parent/Sub Disclosure Schedule
contains a list and brief description of all material "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 material
benefit plans (collectively, "Benefit Plans") maintained, or contributed
to, by Parent or any person or entity that, together with Parent, is
treated as a single employer under Section 414(b), (c), (m) or (o) of
the Code (Parent and each such other person or entity, a "Commonly
Controlled Entity") for the benefit of any current or former employees,
officers or directors of Parent. Parent has made available to the
Company true, complete and correct copies of (i) each material Benefit
Plan (or, in the case of any unwritten Benefit Plans, descriptions
thereof), (ii) the most recent summary plan description for each
material Benefit Plan for which such summary plan description is
required and (iii) each trust agreement and group annuity contract
relating to any material Benefit Plan. Each
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Benefit Plan has been administered in all material respects in
accordance with its terms. Parent and all the Benefit Plans are all in
compliance in all material respects with applicable provisions of ERISA
and the Code.
(ii) All Pension Plans may rely on an opinion letter issued by the
Internal Revenue Service for a prototype plan or have been the subject
of determination letters from the Internal Revenue Service to the effect
that such Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, and,
to Parent's knowledge, no such determination letter has been revoked nor
has any event occurred since the date of its most recent determination
letter or application therefor that would adversely affect its
qualification or materially increase its costs, or Parent has a period
of time remaining under Applicable Treasury Regulations or
Pronouncements in which to apply for and obtain such a letter.
(iii) Neither Parent 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.
(iv) With respect to any Benefit Plan that is an employee welfare
benefit plan, there are no understandings, agreements or undertakings,
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 Parent on or at any time after
the Effective Time.
(v) Neither Parent 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 (A) a
pension plan subject to Section 412 of the Code, (B) a multiemployer
pension plan, as defined in Section 3(37) of ERISA or (C) an employee
welfare benefit plan that is not funded through insurance.
(vi) No employee welfare benefit plan of Parent or any of its
subsidiaries provides for continuing benefits or coverage after
termination or retirement from employment, except as required by Section
4980B of the Code and Sections 601-607 of ERISA ("COBRA") or similar
applicable state law ("mini-COBRA"). With respect to any Benefit Plan
which is a "group health plan," as so defined, Parent warrants that in
all "qualified events" occurring prior to or on the Closing Date, Parent
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 such expense which will
have no material adverse effect on the Company.
(vii) Except as disclosed in the Filed Parent SEC Documents, there
is no Benefit Plan covering any employee or former employee of Parent 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.
(viii) Neither Parent 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 Parent nor any of its subsidiaries has incurred or
owes any material 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.
(ix) To Parent's knowledge, no employee of Parent 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 Parent or would conflict with Parent's business
as conducted or proposed to be conducted. To Parent's knowledge, no
employee of the Parent 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, to Parent's
knowledge, no litigation is pending or overtly threatened with regard
thereto.
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(m) 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
from the dates covered by such Filed Parent SEC Documents 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 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, which have not been resolved. Parent has not executed or filed with
any taxing authority any agreements extending the period for assessment or
collection of any taxes which are still outstanding. 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. None of the Federal income tax returns of Parent have been
examined by the United States Internal Revenue Service for the six fiscal
years through October 2, 1999. Parent 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 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.
(n) Title to Properties. The 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 Liens, defects in title,
easements, reservations, restrictive covenants and other encumbrances that
are identified in the Filed Parent SEC Documents, the Parent/Sub Disclosure
Schedule or in documents, plans, title insurance policies and other
instruments identified in the Parent/Sub Disclosure Schedule or made
available to the Company that individually or in the aggregate would not
materially interfere with the ability of the Parent and its subsidiaries
taken as a whole to conduct their business as currently conducted. All such
material properties and assets, other than assets and properties in which
the Parent or any of its subsidiaries has a leasehold interest, are free
and clear of all Liens 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 Parent Disclosure Schedule or in the Filed Parent SEC
Documents or the exhibits thereto, or are reflected in Parent's financial
statements included in the Filed Parent SEC Documents, (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 Parent and each of its subsidiaries to conduct their
business as currently conducted and (E) would not materially and adversely
impact the transferability, financability, ownership, leasing, use,
development or occupancy of any such properties or assets ("Parent
Permitted Liens"). The Parent and each of its subsidiaries has complied in
all material respects with and is not in default under 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, except where such failure
to comply or be in full force and effect would not materially and adversely
impact the leasing, use, or occupancy of any such leased properties or
assets. To the knowledge of the Parent, no party to any material lease is
in default of such lease and there exists no event or circumstance with
respect to such lease which with the giving of notice or the passage of
time, or both, would constitute a default by any party to such lease. The
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 the Parent.
(o) Compliance with Laws. Except as disclosed in the Filed Parent
SEC Documents:
(i) The Parent and each of its subsidiaries is in compliance with
all 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 Parent or
prevent or
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materially delay the consummation of the Merger. The Parent and each of
its subsidiaries has in effect all 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 Parent. Since October 1, 1999, the Parent has not received
any written notice or other communication from any Governmental Entity
alleging any violation of any Legal Provision by the Parent, 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 Parent or relating to any actual or alleged violation that
has since the receipt of such notice been cured by the Parent within the
time frame, if any, specified for cure in such notice.
(ii) The Parent and each of its subsidiaries have conducted all
Hazardous Material Activities in compliance in all material respects
with all applicable Environmental Laws, except for such failures as
would not have a material adverse effect on Parent. To the knowledge of
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 liability
having a material adverse effect on Parent.
(iii) 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 liability which could reasonably be expected to have
a material adverse effect on the Parent, no Hazardous Materials are
present on any Business Facility and, to the knowledge of the Parent, no
Hazardous Materials are present on any Business Facility currently
owned, operated, occupied, controlled or leased by the Parent or any of
its subsidiaries or were present on any other Business Facility at the
time it ceased to be owned, operated, occupied, controlled or leased by
the Parent or any of its subsidiaries, except for any such presence that
could not reasonably be expected to have a material adverse effect on
the Parent.
(iv) Parent has all of the Environmental Permits necessary for the
continued conduct of any Hazardous Materials Activity of Parent and each
of its subsidiaries as such activities are currently being conducted,
except for those Environmental Permits the absence of which could not
reasonably be expected to result in a material adverse effect on Parent.
All such Environmental Permits are valid and in full force and effect,
except where such invalidity or failure to be in full force and effect
would not have a material adverse effect on Parent.
(v) No action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending, or to the knowledge of
Parent, overtly threatened, concerning or relating to any Environmental
Permit or any Hazardous Materials Activity of Parent or any of its
subsidiaries, or to any Business Facility currently owned, operated,
occupied, controlled or leased by Parent or any of its subsidiaries.
(vi) To the knowledge of Parent, no action, proceeding, liability
or claim exists or is overtly threatened against 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 Parent or any of its subsidiaries to liability having a material
adverse effect on Parent.
(p) Intellectual Property. Parent owns, or is validly licensed or
otherwise has the right to use, all Intellectual Property Rights which are
material to the conduct of the business of Parent and its subsidiaries
taken as a whole. No claims are pending or, to the knowledge of Parent
threatened in writing that Parent 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 Parent, 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 where such infringement has not had, and could not reasonably be
expected to have, a material adverse effect on Parent. Neither Parent nor
any of its subsidiaries has licensed, or otherwise granted, to any third
party,
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any exclusive rights in or to any Intellectual Property Rights which are
material to the conduct of the business of Parent and its subsidiaries
taken as a whole.
(q) 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, the
Option Agreement, the Stockholders Agreement or the consummation by Parent
of the transactions contemplated by this Agreement.
(r) Brokers. No broker, investment banker, financial advisor or
other person, other than Donaldson Lufkin & Jenrette Securities
Corporation, the fees and expenses of which will be paid by Parent, is
entitled to any broker's, finder's, financial advisor's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent.
(s) Accounting Matters. To the knowledge of Parent, based on
consultation with its independent auditors, 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.
(t) 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, has no liabilities of any kind whatsoever (whether
accrued, absolute, contingent or otherwise) and as of the Closing, will not
have engaged in any other business activities or have any liabilities
whatsoever (whether accrued, absolute, contingent or otherwise).
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 Conduct of Business
(a) Conduct of Business by the Company. During the period from the date
of this Agreement to the earlier of the termination of this Agreement pursuant
to its terms or 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 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. Without limiting the generality of the foregoing,
other than as set forth in Section 4.1 of the Company Disclosure Schedule or
with respect to the amendment of the Rights Agreement (as described in Section
3.1(u)) or as specifically contemplated by this Agreement, during the period
from the date of this Agreement to the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, the Company shall not
without Parent's consent:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property), in respect of, any of
its capital stock, (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 shares of Company Common Stock upon the exercise of
Stock Options outstanding on the date of this Agreement, pursuant to the
Outside Directors Compensation Plan of 2000 or pursuant to the Employee
Stock Purchase Plan and in accordance with their respective present terms,
or as contemplated by Section 5.6) or (z) 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;
(ii) 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
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 or as contemplated by Section 5.6 or pursuant to the
Outside Directors
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Compensation Plan of 2000 and the Employee Stock Purchase Plan in
accordance with their respective present terms);
(iii) amend its Articles of Organization, By-Laws or other comparable
charter or organizational documents;
(iv) 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
asset or assets which, individually, is in excess of $1,000,000 or, in the
aggregate, are in excess of $2,000,000, except purchases of inventory in
the ordinary course of business and except for capital expenditures (which
are covered in clause (vii) below);
(v) sell, lease, license, mortgage or otherwise encumber or otherwise
dispose of any material portion of its properties or assets, except sales
made in the ordinary course of business consistent with past practice,
dispositions of obsolete or worthless assets and except for subjecting any
of its properties to Company Permitted Liens;
(vi) (y) incur any additional indebtedness for borrowed money or
guarantee any such indebtedness of another person (other than guarantees of
bank debt of its subsidiaries), 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 additional short-term borrowings incurred in the
ordinary course of business consistent with past practice or (z) make any
additional loans, advances or capital contributions to, or investments in,
any other person, other than extensions of credit to customers and advances
to employees, in each case in the ordinary course of business consistent
with past practice;
(vii) except for the items listed on Schedule 4.1(a)(vii) to the
Company Disclosure Schedule or amounts set forth in the Company's fiscal
2000 operating and capital budgets (copies of which have been provided to
Parent), make or agree to make any new capital expenditure or expenditures
which, individually, is in excess of $1,000,000 or, in the aggregate, are
in excess of $2,000,000;
(viii) except in the ordinary course of business, discharge, settle
or satisfy any claims, whether or not pending before a Governmental Entity,
that individually or in the aggregate have a material adverse effect on the
Company other than claims or liabilities adequately reflected or reserved
against in the financial statements included in the Filed Company SEC
Documents, or waive any material benefits of, or agree to modify in any
materially adverse respect any confidentiality, standstill or similar
agreements to which the Company is a party;
(ix) except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which the Company is a
party or waive, release or assign any material rights or claims thereunder,
in any such case in a manner adverse to the Company;
(x) enter into any contracts, agreements, binding arrangements or
binding understandings relating to the distribution, sale, license or
marketing by third parties of the Company's products, except in the
ordinary course of business and other than pursuant to any such agreements
currently in place in accordance with their terms as of the date hereof;
(xi) except as required to comply with applicable law or as expressly
contemplated by this Agreement or set forth in the Company Disclosure
Statement and except in the ordinary course of business, (A) adopt, enter
into, terminate or amend any collective bargaining agreement or Benefit
Plan 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 or any other benefit plan or
arrangement of the Company, (D) increase in any manner the severance or
termination
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pay of any officer, (E) enter any employment, consulting, severance,
termination or indemnification agreement, arrangement or understanding with
any current or former employee, officer or director, (F) except as
permitted in clause (B) and clause 4.1(a)(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 (G) 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;
(xii) form any subsidiary to the Company;
(xiii) except as required by GAAP, make any change in accounting
methods, principles or practices; or
(xiv) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Certain Tax Matters. From the date hereof until the earlier of the
termination of this Agreement pursuant to its terms or the Effective Time, (i)
the Company will file all tax returns and reports ("Post-Signing Returns")
required to be filed by it (after taking into account any extensions); (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 accrue a reserve
in its books and records and financial statements in accordance with past
practice 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 except to the extent the amount of
any such settlement has been reserved for in the financial statements included
in the Filed Company SEC Documents without Parent's consent; and (v) the Company
will not make any material tax election inconsistent with past practice without
Parent's consent.
(c) Conduct of Business by Parent. During the period from the date of
this Agreement to the earlier of the termination of this Agreement pursuant to
its terms or 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 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. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the earlier of the
termination of this Agreement pursuant to its terms or the Effective Time,
Parent shall not without the Company's consent:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of
its capital stock, (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 set forth in Section 3.2(c) 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;
(ii) amend its Certificate of Incorporation, Bylaws or other
comparable charter or organization documents; or
(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
this Section 4.1(c)(iii) 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 would materially delay
Parent's ability to, complete the transactions contemplated by this
Agreement; (B) such acquisition would involve the issuance by Parent of
equity securities and, when considered together with all other acquisitions
effected by Parent during
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the period between the date hereof and the Effective Time, would not
involve the issuance of more than 10,000,000 shares of Parent's capital
stock or securities convertible into or exercisable for more than
10,000,000 shares of Parent's capital stock; (C) such acquisition does not
require the filing by Parent of a registration statement under the
Securities Act, other than a resale or similar registration statement on
Form S-3 which Parent will not file until the SEC has either declared the
Form S-4 registration statement to be filed pursuant to Section 5.1(a)
effective or advised Parent that such registration statement will not be
reviewed by the SEC's staff; and (D) such acquisition does not require
approval of the stockholders of Parent;
(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 and convertible
indebtedness in effect as of the date of this Agreement, or pursuant to
acquisitions of businesses involving the issuance by Parent of less than
10,000,000 shares in the aggregate for all such acquisitions under the
terms set forth above);
(v) 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 consistent with past practice and
except for subjecting any of its properties to Parent Permitted Liens;
(vi) make any material payments outside the ordinary course of
business for purposes of settling any dispute;
(vii) 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
(viii) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 4.2 No Solicitation. During the period from the date of this
Agreement until the earlier of termination of this Agreement pursuant to its
terms or the Effective Time, the Company agrees that:
(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) that
has advised the Company that it may be considering making, or that has
made, a Takeover Proposal, any nonpublic information with respect to, or
take any other action to knowingly 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 the Effective Time the Board
of Directors of the Company determines in good faith, after consultation
with outside counsel, (i) that complying with the provisions of the
preceding sentence would not be in compliance with, or would create a
substantial risk of liability for breach of, its fiduciary duties to the
Company's stockholders under applicable law and (ii) that such Takeover
Proposal constitutes a Superior Proposal (as hereinafter defined), the
Company may, in response to a Takeover Proposal that was unsolicited or
that did not otherwise result from a breach of this Section 4.2(a), and
subject to compliance with Section 4.2(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 and (z) take such other actions as are consistent
with the fiduciary duties of the Company's Board of Directors, and such
actions shall not be considered a breach of this Section 4.2 or any other
provisions of this Agreement. 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 4.2(a) by the Company. For purposes of this Agreement,
"Takeover Proposal" means any inquiry, proposal, solicitation of interest
or offer from any person (other than Parent) relating to any
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direct or indirect acquisition or purchase of a substantial amount of
assets of the Company (other than products of the Company) or at least 20%
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 20% 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, the Option Agreement or the Stockholders
Agreement.
(b) Except as expressly permitted by this Section 4.2, 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 the Effective Time, the Board of
Directors of the Company, to the extent it determines in good faith, after
consultation with outside legal counsel, that complying with any of the
provisions of the preceding sentence would not be in compliance with, or
would create a substantial risk of liability for breach of, its fiduciary
duties to the Company's stockholders 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 identity of the person making the Takeover
Proposal and the material terms and conditions of the 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 the Effective Time,
the Board of Directors of the Company, to the extent it determines in good
faith, after consultation with outside legal counsel, that failure to do so
would not be in compliance with, or would create a substantial risk of
liability for breach of, its fiduciary duties to the Company's stockholders
under applicable law, may cause the Company to terminate this Agreement in
accordance with Section 7.1(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), and such
actions shall not constitute a breach of this Section 4.2 or any other
provision of this Agreement, provided that the Company pays the Termination
Fee pursuant to Section 5.8(b). For purposes of this Agreement, a "Superior
Proposal" means any bona fide proposal made by a third party to acquire
(whether by merger, consolidation, tender offer or otherwise), directly or
indirectly, for consideration consisting of cash and/or equities, 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 stockholders 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 4.2, 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 and the Company will keep Parent promptly informed in all material
respects of the status and details (including amendments or proposed
amendments) of any such Takeover Proposal or inquiry.
(d) Nothing contained in this Section 4.2 or elsewhere in this
Agreement shall prohibit the Company from (i) taking and disclosing to its
stockholders a position contemplated by Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act or (ii) making any disclosure to the
Company's
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stockholders if, in the good faith judgment of the Board of Directors of
the Company, after consultation with outside counsel, failure to so take
and disclose would not be in compliance with, or would create a substantial
risk of liability for breach of, its fiduciary duties to the Company's
stockholders under applicable laws; provided that the Company shall not,
except in accordance with the provisions of Section 4.2(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.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of the Form S-4 and the Proxy Statement;
Stockholders Meeting.
(a) Unless this Agreement is earlier terminated pursuant to its terms, 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. The Company will
use its reasonable efforts to cause the Proxy Statement to be mailed to the
Company's stockholders 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.
(b) Unless this Agreement is earlier terminated pursuant to its terms, 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 stockholders (the "Stockholders Meeting") for the purpose of obtaining the
approval and adoption of this Agreement ("Stockholder Approval"). The Company
will, through its Board of Directors, recommend to its stockholders approval and
adoption of this Agreement, except to the extent that the Board of Directors of
the Company shall have withdrawn or modified its approval or recommendation of
this Agreement or the Merger as permitted by Section 4.2(b).
SECTION 5.2 Letters of the Company's Accountants.
(a) The Company shall use its reasonable efforts to cause to be delivered
to Parent two comfort 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 reasonably 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 a letter from Arthur Andersen LLP, addressed to Parent and the
Company, dated as of the Closing Date, stating that (i) Arthur Andersen LLP
concurs with management's conclusion that, as of such date, no conditions exist
with respect to the Company which would preclude accounting for the Merger as a
pooling of interests transaction under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations and (ii) the basis for such a
concurrence is Arthur Andersen LLP's belief that the criteria (as such criteria
relate to the Company and not Parent) for such accounting treatment have been
met.
SECTION 5.3 Letters of Parent's Accountants.
(a) Parent shall use reasonable efforts to cause to be delivered to the
Company two comfort 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
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days before the Closing Date, each addressed to the Company, in form and
substance reasonably 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 a letter from Arthur Andersen LLP, addressed to the Company and
Parent, dated as of the Closing Date, stating that (i) Arthur Andersen LLP
concurs with management's conclusion that, as of such a date, no conditions
exist which would preclude accounting for the Merger as a pooling of interests
transaction under Opinion 16 of the Accounting Principles Board and applicable
SEC rules and regulations and (ii) the basis for such a concurrence is Arthur
Andersen LLP's belief that the criteria (as such criteria relates to the Parent
and not to the Company) for such accounting treatment have been met.
SECTION 5.4 Access to Information; Confidentiality. Upon reasonable prior
notice, 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 make available to Parent to the full extent and in the manner
permitted by law (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 Parent may reasonably request, unless
terms of an agreement prohibit disclosure to third parties; 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, Vice
President and General Counsel or Chief Financial Officer, and (ii) Parent shall
take all reasonable action to ensure that none of its employees, accountants,
counsel, financial advisors and other representatives interferes with or
otherwise disrupts the business or operations of the Company while exercising
the rights provided under this Section 5.4. 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 make available 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, unless terms of
an agreement prohibit disclosure to third parties; 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 5.4. Parent and the Company will each hold,
and will cause each of its 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 Confidentiality Agreement dated as of April
3, 2000 between Parent and the Company (as it may be amended from time to time,
the "Confidentiality Agreement").
SECTION 5.5 Commercially 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 commercially 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 commercially reasonable steps as may be
necessary to avoid an action or proceeding by any Governmental
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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 need not take any action under this Agreement if the Company's Board of
Directors determines, in consultation with outside counsel, that to do so would
not be in compliance 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 Option Agreement, the Stockholders Agreement
or any other transactions contemplated by this Agreement, the Option Agreement
or the Stockholders 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 terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger, this Agreement, the Option Agreement, the Stockholders Agreement and
the other transactions contemplated by this Agreement, the Option Agreement or
the Stockholders Agreement. Nothing in this Agreement shall be deemed to require
Parent or the Company or their respective subsidiaries to dispose of any
significant asset or collection of assets or to take or agree to take any action
or agree to any limitation that could reasonably be expected to have a material
adverse effect on Parent or the Company.
(b) The Company shall give prompt notice to Parent, when and if it has
knowledge, of (i) any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate such that the condition set forth in
Section 6.2(a) would not be satisfied; 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) Parent shall give prompt notice to the Company, when and if it has
knowledge, of (i) any representation or warranty made by it or Sub contained in
this Agreement becoming untrue or inaccurate such that the condition set forth
in Section 6.3 (a) would not be satisfied; 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.
SECTION 5.6 Stock Options and Restricted Stock.
(a) It is acknowledged that, in connection with the Merger, the Company's
Stock Option Plans provide for the acceleration prior to the Effective Time of
each unvested option to purchase shares of Company Common Stock ("Company
Options") granted thereunder and the lapse prior to the Effective Time of all
restrictions on restricted shares of Company Common Stock issued thereunder. At
the Effective Time, the Stock Option Plans and the Company's obligations with
respect to each Company Option under the Stock Option Plans will be assumed by
Parent. Each Company Option so assumed by Parent under this Agreement shall
continue to have, and be subject to, the same terms and conditions set forth in
the Stock Option Plan and the documents governing the outstanding Company Option
under such Stock Option Plan pursuant to which such Company Option was issued,
as in effect immediately prior to the Effective Time, except that (i) such
Company Option will be exercisable for that number of whole shares of Parent
Common Stock equal to the product of the number of shares of Company Common
Stock that were issuable upon exercise of such Company Option immediately prior
to the Effective Time multiplied by the Exchange Ratio, rounded down to the
nearest whole number of shares of Parent Common Stock, and (ii) the per share
exercise price for the shares of Parent Common Stock issuable upon exercise of
such assumed Company Option will be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock at which such Company
Option was exercisable immediately prior to the Effective Time by the Exchange
Ratio, and rounding the resulting exercise price up to the nearest whole cent.
(b) After the Effective Time, Parent will issue to each person who,
immediately prior to the Effective Time, was a holder of an outstanding Company
Option, a document evidencing the foregoing assumption of such Company Option
and Stock Option Plans by Parent.
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(c) Parent will reserve sufficient shares of Parent Common Stock for
issuance under this Section 5.6 hereof.
SECTION 5.7 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, officer, employee, agent or
fiduciary of the Company or any of its subsidiaries at or prior to the Effective
Time and (ii) any indemnification provision under the Company's 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 5.7(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 or effect of Section 5.7(a), after the
Effective Time Parent will, to the fullest extent permitted under applicable
law, 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 arising out of
or pertaining to any action or omission or alleged action or omission in his or
her capacity as a director, officer, employee, agent or fiduciary 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 Effective Time)
or arising out of or pertaining to this Agreement or the transactions
contemplated by this Agreement (collectively, "Losses") for a period of six
years after the Effective Time; provided, however, that if, at any time prior to
the sixth anniversary of the Effective Time, any Indemnified Party delivers to
Parent a written notice asserting a claim for indemnification under this Section
5.7(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. If any such claim, action, suit, proceeding or investigation
shall have been brought against an Indemnified Party and if Parent shall have
acknowledged in writing to the Indemnified Party that Parent will indemnify the
Indemnified Party pursuant to this Section 5.7(b) for all Losses arising out of
such claim, action, suit, proceeding or investigation, then Parent shall be
entitled to participate therein, and to assume the defense thereof, and to
settle and compromise any such claim, action, suit, proceeding or investigation
(so long as the Indemnified Party is completely and unconditionally released and
has no continuing obligations or prohibitions imposed on him or her by contract,
by judicial or administrative order or decree or otherwise). If Parent does not
acknowledge its obligation to indemnify for all such Losses or does not elect to
assume the defense, settlement or compromise thereof, in each case pursuant to
the preceding sentence, then Parent shall nevertheless have the right to
participate in the defense of any such claim, action, suit, proceeding or
investigation and to consent in writing (not to be unreasonably withheld or
delayed) to any settlement or compromise thereof, but such defense and any
settlement or compromise thereof shall at all times be under the direction of
the Indemnified Person. In the event of any such claim, action, suit, proceeding
or investigation (i) any counsel retained by the Indemnified Parties must be
reasonably satisfactory to Parent, and (ii) after the Effective Time, Parent
will pay the reasonable fees and expenses of one such counsel for all
Indemnified Parties (it being agreed that more than one such counsel may be
retained and paid for by Parent if counsel for one of the Indemnified Parties
reasonably concludes under applicable standards of professional conduct that a
conflict of interest may exist), promptly after statements therefor are
received.
(c) For six years after the Effective Time, Parent shall maintain in
effect the current level and scope of the Company's directors' and officers'
liability insurance covering those persons (currently or formerly connected with
the Company) who are currently covered by the Company's directors' and officers'
liability insurance policy; 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
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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 5.7.
(e) This Section 5.7 shall survive the consummation of the Merger at 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.
This Section 5.7 may not be amended, altered or repealed without the prior
written consent of the affected Indemnified Party.
SECTION 5.8 Fees and Expenses.
(a) Except as set forth in Section 5.8(b), 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.
(b) 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 $23.87 million in immediately available funds by wire transfer (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 Stockholders Meeting in breach of its obligations
under Section 5.1), 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 5.8(b) 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 5.8(b), 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 5.8(b), 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 5.8(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. "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.
(c) 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 $23.87
million in cash in immediately available funds (the "Parent Fee"). The Parent
acknowledges that the agreements contained in
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this Section 5.8(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 5.8(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 5.8(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 Section 5.8(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.
SECTION 5.9 Public Announcements. Parent and Sub, on the one hand, and
the Company, on the other hand, will, to the extent reasonably practicable,
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 heretofore
agreed to by the parties.
SECTION 5.10 Affiliates.
(a) Section 5.10(a) of the Company Disclosure Schedule identifies a list
of all persons who are, in the Company's reasonable judgment, at the time this
Agreement is submitted for approval to the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act 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 as Exhibit A hereto.
(b) Section 5.10(b) of the Parent/Sub Disclosure Schedule identifies a
list of all persons who are, in Parent's reasonable judgment at the time this
Agreement is submitted for approval to the stockholders 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
Closing Date a written agreement to comply with Section 3 of Exhibit A hereto.
SECTION 5.11 Nasdaq Listing. Parent shall 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 5.12 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 (to its knowledge after consultation with its
independent public accountants) such accounting treatment not to be obtained.
SECTION 5.13 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 Section 6.3(c).
SECTION 5.14 Parent Benefit Plans.
(a) 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 and Parent shall amend such
employee benefit
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plans as necessary to accomplish this. 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 (or as may be permitted after amendment of such
employee benefit plan by 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.
(b) The Company will, immediately prior to the Closing, determine the
amounts accrued through the Closing Date under the Company's Fiscal 2000
Management Bonus Plan (the "Company Bonus Plan") and such amounts and the
identity of the persons eligible to receive such amounts shall be set forth in a
letter to Parent within five (5) days prior to the Effective Time. Parent will
cause such amounts accrued under the Company Bonus Plan through the Closing Date
as set forth in such letter to be paid to each individual on or prior to the
earlier of the close of business, Pacific Time, on December 15, 2000 or the date
an individual ceases to be an employee of Parent, the Company or any of their
subsidiaries.
(c) Parent shall assume and honor the obligations of the Company and its
subsidiaries under all employment, severance, consulting and other compensation
contracts, arrangements, commitments or understandings disclosed in the Filed
Company SEC Documents or the Company Disclosure Schedule, each as amended to the
date hereof, or as contemplated hereby. Parent hereby acknowledges that the
Merger will constitute a "Change in Control" for purposes of all Stock Option
Plans.
SECTION 5.15 Senior Notes. Parent shall take such action (if any) as may
be required by the indenture relating to the Company's 9 1/2% Senior
Subordinated Notes (the "Company Senior Notes") in connection with the
consummation of the Merger. Promptly after the Effective Time, Parent shall make
an offer to purchase the Company Senior Notes in accordance with the redemption
provisions of the indenture relating thereto and shall redeem all Company Senior
Notes so tendered for redemption.
SECTION 5.16 Form S-8. Parent agrees to file a registration statement on
Form S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Options at the Effective Time and shall maintain the effectiveness of
such registration statement thereafter for so long as any of such Company
Options remain outstanding. The Company shall cooperate and assist Parent in the
preparation of such Registration Statement.
SECTION 5.17 Employee Stock Purchase Plan. The Company shall take such
actions as are necessary to cause the Purchase Date (as such term is used in the
Employee Stock Purchase Plan) applicable to the then current Offering (as such
term is used in the Employee Stock Purchase Plan) to be the last trading day on
which the shares of Company Common Stock are traded on The New York Stock
Exchange immediately prior to the Effective Time (the "Final Company Purchase
Date"); provided, that such change in the Purchase Date shall be conditioned
upon the consummation of the Merger. On the Final Company Purchase Date, the
Company shall apply the funds credited as of such date under the Employee Stock
Purchase Plan within each participant's payroll withholding account to the
purchase of whole shares of Company Common Stock in accordance with the terms of
the Employee Stock Purchase Plan. Employees of the Company as of the Effective
Time shall be permitted to participate in the employee stock purchase plan of
Parent commencing on the first enrollment date following the Effective Time,
subject to compliance with the eligibility provisions of such plan (with
employees of the Company receiving credit, for purposes of such eligibility
provisions, for service with the Company).
SECTION 5.18 Retirement Plan. Parent shall assume and honor the
obligations of the Company under its Retirement Plan, as amended to date.
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ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Party's Obligation 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) Stockholder Approval. This Agreement shall have been approved
and adopted by the affirmative vote of the holders of two thirds (2/3) of
the outstanding shares of Company Common Stock.
(b) Nasdaq Listing. The shares of Parent Company Stock issuable to
the Company's stockholders pursuant to this Agreement and under the Stock
Option Plans and the Employee Stock Purchase Plan shall have been approved
for listing on the Nasdaq 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
(collectively, "Restraints") preventing the consummation of the Merger
shall be in effect.
(e) Pooling Letters. Parent and the Company shall have received
letters, respectively, from Arthur Andersen LLP dated as of the date of
this Agreement and the Closing Date, addressed to Parent and the Company,
stating in substance the matters to be stated by Arthur Andersen LLP
pursuant to Sections 5.3(b) and 5.2(b), respectively.
(f) 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.
SECTION 6.2 Conditions to Obligations of Parent and Sub. The obligations
of Parent and Sub to effect the Merger are further subject to the satisfaction
or waiver on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and
correct (other than the representations in Sections 3.1(c) and 3.1(d),
which shall be true and correct in all material respects) on and as of the
Closing Date except for changes contemplated by this Agreement and except
for those representations and warranties which address matters only as of a
particular date, which shall remain true and correct (other than the
representations in Sections 3.1(c) and 3.1(d), which shall be true and
correct in all material respects) as of such particular date, with the same
force and effect as if made on and as of the Closing Date, except in such
cases (other than the representations in Sections 3.1(c) and 3.1(d)) where
the failure to be so true and correct would not have a material adverse
effect on the Company.
(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 Company Disclosure Schedule an executed copy of an
agreement substantially in the form of Exhibit A hereto.
(d) No Governmental Litigation. There shall not be pending any suit
by, action by or proceeding by any Governmental Entity, (i) 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 materially
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
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of or hold separate any material portion of any business or of any assets
of the Company, Parent or any of Parent's subsidiaries, as 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
(e) 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 Company (or, if one shall have occurred, it shall have been cured).
SECTION 6.3 Conditions to Obligation of the Company. The obligation of
the Company to effect the Merger is further subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub contained in this Agreement shall be true and
correct (other than the representations in Sections 3.2(c) and 3.2(d),
which shall be true and correct in all material respects) on and as of the
Closing Date except for changes contemplated by this Agreement and except
for those representations and warranties which address matters only as of a
particular date, which shall remain true and correct (other than the
representations in Sections 3.2(c) and 3.2(d), which shall be true and
correct in all material respects) as of such particular date, with the same
force and effect as if made on and as of the Closing Date, except in such
cases (other than the representations in Sections 3.2(c) and 3.2(d)) where
the failure to be so true and correct would not have a material adverse
effect on Parent.
(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 Opinions. The opinions of Testa Hurwitz & Thibeault, LLP,
counsel to the Company, and Wilson Sonsini Goodrich & Rosati, counsel to
Parent, shall be delivered to the Company and Parent, respectively, in form
and substance reasonably satisfactory to the Company and Parent; provided,
however, that if either Testa, Hurwitz & Thibeault, LLP or Wilson Sonsini
Goodrich & Rosati is unwilling to give the opinion required in this Section
6.3(c), this condition may be satisfied by the other firm delivering such
opinion to both the Company and Parent. In rendering each such opinion,
counsel shall be entitled to rely upon (and Parent, Sub and the Company
shall make) customary representations reasonably requested by counsel. The
opinions shall be dated on the date that is two business days prior to the
date the Proxy Statement is first mailed to stockholders of the Company and
shall not have been withdrawn or modified in any material respect.
(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 Parent (or, if one shall have occurred, it shall have been cured).
(e) Parent Common Stock Price. The average last reported sale price
of the Parent Common Stock on the Nasdaq National Market during the 20
trading days ending on the third trading day prior to the date of the
Stockholder Meeting shall be not less than $40.00 per share (subject to
adjustment for any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares effected by
Parent); provided, however, that this closing condition shall be subject to
Parent's right to adjust the Exchange Ratio as set forth in Section 2.1(c).
(f) Letters from Parents Affiliates. The Company shall have received
from each person named in the Parent/Sub Disclosure Schedule an executed
copy of an agreement to comply with Section 3 of Exhibit A hereto.
SECTION 6.4 Frustration of Closing Conditions. None of the Company,
Parent or Sub may rely on the failure of any condition set forth in Section 6.1,
6.2 or 6.3, as the case may be, to be satisfied if such failure was caused by
such party's failure to use commercially reasonable efforts to consummate the
Merger and the other transactions contemplated by this Agreement, as required by
and subject to Section 5.5.
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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 stockholders 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 September 30,
2000 for any reason; provided, however, that if the principal cause of
the parties' inability to consummate the Merger by September 30, 2000 is
a Restraint, an inability to obtain clearance under the HSR Act or
another United States, state, local or foreign governmental regulatory
matter, such date shall automatically (and without further action by the
parties) be extended to November 15, 2000; provided, further, 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
willful and material breach of 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 Stockholder Approval shall not have been obtained at
the Stockholders Meeting duly convened therefor or at any adjournment or
postponement thereof; or
(iv) if prior to the Effective Time, the Board of Directors of the
Company has determined under Section 4 hereof that as a result of the
receipt of a Superior Proposal, it is necessary for the Board to
terminate this Agreement; provided, however, that the Company may not
terminate this Agreement pursuant to this Section 7.1(b)(iv) unless no
later than two days thereafter the Company pays to Parent the amounts
specified under Section 5.8(b) pursuant to the terms of such Section
5.8(b).
(c) by Parent if the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to
Parent its approval or recommendation of the Merger or this Agreement or
failed to reconfirm its recommendation within 15 business days after a
written request by Parent following a Takeover Proposal to do so, or
approved or recommended any Takeover Proposal;
(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 of Parent 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 if such inaccuracy in Parent's
representations and warranties or breach by Parent is curable by Parent
through the exercise of its commercially reasonable efforts, then (i) the
Company may not terminate this Agreement under this Section 7.1(d) with
respect to a particular breach or inaccuracy prior to or during the 45-day
period commencing upon delivery by the Company of written notice to Parent
describing such breach or inaccuracy, provided Parent continues to exercise
commercially reasonable efforts to cure such breach or inaccuracy and (ii)
the Company may not, in any event, terminate this Agreement under this
Section 7.1(d) if such inaccuracy or breach shall have been cured in all
material respects during such 45-day period; and, provided further that the
Company may not terminate this Agreement pursuant to this Section 7.1(d) if
it shall have willfully and materially breached this Agreement;
(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 6.2(a) or Section
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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 if such inaccuracy in the Company's
representations and warranties or breach by the Company is curable by the
Company through the exercise of its commercially reasonable efforts, then
(i) Parent may not terminate this Agreement under this Section 7.1(e) with
respect to a particular breach or inaccuracy prior to or during the 45-day
period commencing upon delivery by Parent of written notice to the Company
describing such breach or inaccuracy, provided the Company continues to
exercise commercially reasonable efforts to cure such breach or inaccuracy
and (ii) Parent may not, in any event, terminate this Agreement under this
Section 7.1(e) if such inaccuracy or breach shall have been cured in all
material respects during such 45-day period; and, provided further that
Parent may not terminate this Agreement pursuant to this Section 7.1(e) if
it shall have willfully and materially breached this Agreement; or
(f) by the Company if the average last reported sale price of Parent
Common Stock on the Nasdaq National Market during the 20 trading days
ending on the third trading day prior to the date of the Stockholder
Meeting shall be less than $40.00 per share (subject to adjustments for any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares effected by Parent); provided, however,
that the Company's right to terminate this Agreement shall be subject to
Parent's right to adjust the Exchange Ratio as set forth in Section 2.1(c).
SECTION 7.2 Effect of Termination. Any termination of this Agreement
under Section 7.1 above will be effective immediately upon the delivery of
written notice of the terminating party to the other parties hereto. 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 or any of their respective affiliates, directors, officers or
stockholders, other than the provisions of the Confidentiality Agreement, the
last sentence of Section 5.4, Section 5.8, this Section 7.2 and Article VIII and
except to the extent that such termination results from the willful and material
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement. Notwithstanding the foregoing, Company
or Parent, as the case may be, shall have no additional liability following the
payment by it of the Termination Fee pursuant to Section 5.8(b) or the Parent
Fee pursuant to Section 5.8(c), as the case may be, other than pursuant to the
Confidentiality Agreement and the Sections of this Agreement that survive
termination of this Agreement pursuant to this Section and Section 8.1 hereof.
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 stockholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such stockholders without the further approval
of such stockholders. 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 provisions 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 in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the
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Effective Time or the termination of this Agreement pursuant to Section 7.1.
This Section 8.1 shall not limit any covenant or agreement of the parties which
by its terms contemplates performance after the Effective Time. The
Confidentiality Agreement shall remain in full force and effect and shall
survive the Effective Time or termination of this Agreement to the extent
provided therein.
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 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
2700 North First Street
San Jose, CA 95134
Attention: President
with a copy to:
Wilson Sonsini Goodrich & Rosati Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
Attention: Christopher D. Mitchell, Esq. if to the Company, to:
Hadco Corporation
12A Manor Parkway
Salem, NH 03079
Attention: President and General Counsel
with a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Stephen A. Hurwitz, Esq.
SECTION 8.3 Definitions. For purposes of this Agreement:
(a) 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;
(b) as it relates to the Company, "knowledge" means, with respect to
any matter in question, that any of the Chief Executive Officer or Chief
Financial Officer of the Company has actual knowledge of such matter, and
as it relates to Parent, the term "knowledge" means, with respect to any
matter in question, that any of the Chief Executive Officer, Chief
Operating Officer or Chief Financial Officer of Parent has actual knowledge
of such matter;
(c) "material adverse change" or "material adverse effect" means,
when used in connection with the Company or Parent, any change or effect
that is, or is almost certainly to be within three months, materially
adverse to the business, properties, assets or financial condition of
either the Company and its subsidiaries taken as a whole, or Parent and its
subsidiaries taken as a whole, as the case may be; provided, however, that
any adverse change or effect, including for purposes of this clause any
such adverse change or effect that results in a change in the market price
or trading volume of the Company's or Parent's common stock, that is
proximately caused by (i) the announcement of the execution of this
Agreement and the transactions contemplated hereby, (ii) conditions
affecting the economy, the Company's or Parent's industry (as the case may
be) or the electronics manufacturing services industry, or (iii) conditions
affecting the securities markets generally shall not be taken into account
in
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determining whether there has been or would be a "material adverse change"
or a "material adverse effect" on or with respect to such entity;
(d) "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
(e) 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 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 one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries. This
Agreement including the Exhibits and Schedules hereto, the Option Agreement, the
agreements of affiliates pursuant hereto, 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, the Option Agreement and the Confidentiality
Agreement and (b) except for the provisions of Article II, Sections 5.6, 5.11,
5.14, 5.16, 5.17 and 5.18 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 State of Delaware, 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.
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 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 any 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 (a) consents to submit itself to the
personal jurisdiction of any court of the United States located in the State of
Delaware or of any Delaware 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 State of Delaware or a Delaware 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 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
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<PAGE> 123
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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: CEO
-----------------------------------
SANM ACQUISITION SUBSIDIARY, INC.,
by: /s/ JURE SOLA
------------------------------------
Name: Jure Sola
----------------------------------
Title: President
-----------------------------------
by: /s/ ELIZABETH JORDAN
------------------------------------
Name: Elizabeth Jordan
----------------------------------
Title: Treasurer
-----------------------------------
HADCO CORPORATION
by: /s/ ANDREW E. LIETZ
------------------------------------
Name: Andrew E. Lietz
----------------------------------
Title: President
-----------------------------------
by: /s/ F. GORDON BITTER
------------------------------------
Name: F. Gordon Bitter
----------------------------------
Title: Treasurer
-----------------------------------
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<PAGE> 124
AMENDMENT NO. 1
Amendment No. 1 dated as of May 3, 2000 (the "Amendment") to the Agreement
and Plan of Merger among Sanmina Corporation, a Delaware corporation ("Parent"),
SANM Acquisition Subsidiary, Inc., a Massachusetts corporation and a wholly
owned subsidiary of Parent ("Sub") and Hadco Corporation, a Massachusetts
corporation (the "Company") dated as of April 17, 2000 (the "Merger Agreement").
WHEREAS, Parent, Sub and the Company want to amend the Merger Agreement;
and
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Section 1.5(a) shall be amended to add the following sentence at the end
of the section:
"Accordingly, the purposes set forth in the Articles of Organization of Sub
as in effect immediately prior to the Effective Time, which permit Sub to do all
things lawful under Massachusetts law, shall become the purposes of the
Surviving Corporation."
2. The other provisions of the Merger Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment No. 1 as of the date first above written.
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<PAGE> 125
SANMINA CORPORATION
By: /s/ RANDY FURR
------------------------------------
Name: Randy Furr
Title: President
SANM ACQUISITION SUBSIDIARY, INC.
By: /s/ RANDY FURR
------------------------------------
Name: Randy Furr
Title: Vice President
By: /s/ BETSY JORDAN
------------------------------------
Name: Betsy Jordan
Title: Treasurer
HADCO CORPORATION
By: /s/ ANDREW E. LIETZ
------------------------------------
Name: Andrew E. Lietz
Title: President
By: /s/ F. GORDON BITTER
------------------------------------
Name: F. Gordon Bitter
Title: Treasurer
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<PAGE> 126
ANNEX II
STOCKHOLDERS AGREEMENT
Stockholders Agreement (this "Agreement"), dated as of April 17, 2000,
among Sanmina Corporation, a Delaware corporation ("Parent"), and the
stockholders of Hadco Corporation, a Massachusetts corporation (the "Company"),
listed on Schedule A hereto (the "Stockholders").
WHEREAS, concurrently with the execution of this Agreement, Parent, SANM
Acquisition Subsidiary, Inc., a Massachusetts corporation and a wholly owned
subsidiary of Parent ("Sub"), and the Company have entered into an Agreement and
Plan of Merger (as the same may be further amended from time to time, the
"Merger Agreement"), providing for the merger (the "Merger") of Sub with and
into the Company pursuant to the terms and conditions of the Merger Agreement;
and
WHEREAS, the Stockholders own of record and beneficially the shares (the
"Shares") of the common stock, $0.05 par value, of the Company (the "Company
Common Stock") set forth opposite their respective names on Schedule A hereto
and wish to enter into this Agreement with respect to the Shares; and
WHEREAS, in order to induce Parent and Sub to enter into the Merger
Agreement, the Stockholders have agreed, upon the terms and subject to the
conditions set forth herein, to vote the Shares at a meeting of the Company's
stockholders in favor of approval of the Merger.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Agreement To Vote Shares.
(a) Subject to Section 1(b) hereof, each of the Stockholders
agrees during the term of this Agreement to vote the Shares as to which
it has voting power or control, in person or by proxy, in favor of
approval of the Merger at the meeting of the stockholders of the Company
at which such matter is considered and at any adjournment thereof (the
"Stockholder Meeting"); provided, however, that for purposes of Section
1 hereof, Shares shall not include any shares of Company Common Stock
that a Stockholder may acquire upon the exercise of any stock option
unless such option has been exercised and such shares of Company Common
Stock have been issued to the Stockholder and are held by the
Stockholder as of the relevant record date.
(b) Notwithstanding anything to the contrary contained herein, the
obligations of the Stockholders pursuant to Section 1(a) hereof with
respect to such matter to be considered at the Stockholder Meeting are
subject to the following conditions:
(i) Parent shall have performed in all material respects all of
its material obligations under the Merger Agreement to have been
performed at or prior to the date of such Stockholder Meeting;
(ii) there shall not be in effect on the date of such
Stockholder Meeting any statute, rule, regulation, order or
injunction of a court of competent jurisdiction or governmental
authority directing that the transactions contemplated by the Merger
Agreement not be consummated; and
(iii) the Form S-4 (as defined in the Merger Agreement) to be
filed with the Securities and Exchange Commission (the "Commission")
by Parent under the Securities Act of 1933, as amended (the "Act"),
to register the common shares, $0.01 par value, of Parent to be
issued in the Merger shall have become effective under the Act and
shall not be the subject of any stop order or proceeding by the
Commission seeking a stop order.
2. No Voting Trusts. Except for such agreements or arrangements in
effect as of the date hereof, each of the Stockholders agrees that such
Stockholder shall not, nor shall such Stockholder permit any entity under
such Stockholder's control to, deposit any of such Stockholder's Shares in
a voting trust or
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<PAGE> 127
subject any of its Shares to any arrangement with respect to the voting of
the Shares inconsistent with this Agreement.
3. Limitation On Dispositions And Proxies. During the term of this
Agreement, each of the Stockholders agrees not to sell, assign, pledge,
transfer or otherwise dispose of (each a "Transfer"), or grant any proxies
with respect to (except for a proxy which is not inconsistent with the
terms of this Agreement) any of such Stockholder's Shares; provided,
however, a Stockholder may transfer any or all of the Shares (or any
interest therein) to one or more members of the Stockholder's family, any
trust for the benefit of the Stockholder's family or any entity controlled
by the Stockholder so long as the transferee of such Shares agrees in
writing to be bound by the applicable provisions of this Agreement.
4. Specific Performance. Each party hereto acknowledges that it
shall be impossible to measure in money the damage to the other party if a
party hereto fails to comply with the obligations imposed by this
Agreement, and that, in the event of any such failure, the other party
shall not have an adequate remedy at law or in damages. Accordingly, each
party hereto agrees that injunctive relief or other equitable remedy, in
addition to remedies at law or damages, is the appropriate remedy for any
such failure and shall not oppose the granting of such relief on the basis
that the other party has an adequate remedy at law. Each party hereto
agrees that it shall not seek, and agrees to waive any requirement for, the
securing or posting of a bond in connection with any other party's seeking
or obtaining such equitable relief.
5. Term Of Agreement; Termination. The term of this Agreement shall
commence on the date hereof, and such term and this Agreement shall
terminate upon the earliest to occur of (i) the Effective Time; (ii) the
date on which the Merger Agreement is terminated in accordance with its
terms; and (iii) September 30, 2000, provided however that such date shall
be automatically extended to November 15, 2000 in the event that such date
is automatically extended pursuant to Section 7.1(b)(i) of the Merger
Agreement. Upon such termination, no party shall have any further
obligations or liabilities hereunder; provided, however, that such
termination shall not relieve any party from liability for any breach of
this Agreement prior to such termination.
6. Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject
matter hereof and contains the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or
waived, except by an instrument in writing signed by all parties hereto. No
waiver of any provisions hereof by any party shall be deemed a waiver of
any other provisions hereof by any such party, nor shall any such waiver be
deemed a continuing waiver of any provision hereof by such party.
7. Notices. All notices, consents, requests, instructions, approvals
and other communications provided for herein shall be in writing and shall
be deemed to have been duly given if mailed, by first class or registered
mail, three (3) business days after deposit in the United States mail, or
if telexed or
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<PAGE> 128
telecopied, sent by telegram, or delivered by hand or reputable overnight
courier, when confirmation is received, in each case as follows:
If to the Stockholders, to the addresses listed on Schedule A hereto.
With a copy to:
Hadco Corporation
12A Manor Parkway
Salem, NH 03079
Attention: General Counsel
and
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Stephen A. Hurwitz, Esq.
If to Parent:
Sanmina Corporation
2700 North First Street
San Jose, CA 95134
Attention: President
With a copy to:
Wilson Sonsini Goodrich & Rosati Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
Attention: Christopher D. Mitchell, Esq.
or to such other persons or addresses as may be designated in writing by
the party to receive such notice. Nothing in this Section 7 shall be deemed
to constitute consent to the manner and address for service of process in
connection with any legal proceeding (including litigation arising out of
or in connection with this Agreement), which service shall be effected as
required by applicable law.
8. Miscellaneous. This Agreement shall be deemed a contract made
under, and for all purposes shall be construed in accordance with, the laws
of the State of Delaware, without reference to its conflicts of law
principles.
(a) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or
unenforceable by a court of competent jurisdiction, such provision or
application shall be unenforceable only to the extent of such invalidity
or unenforceability, and the remainder of the provision held invalid or
unenforceable and the application of such provision to persons or
circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
(b) This Agreement may be executed (including by facsimile
transmission) in one or more counterparts, each of which shall be deemed
to be an original but all of which together shall constitute one and the
same instrument.
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<PAGE> 129
(c) All Section headings herein are for convenience of reference
only and are not part of this Agreement, and no construction or
reference shall be derived therefrom.
(d) The obligations of the Stockholders set forth in this
Agreement shall not be effective or binding upon the Stockholders until
after such time as the Merger Agreement is executed and delivered by the
Company, Parent and Sub.
(e) Nothing in this Agreement shall, and nothing in this Agreement
shall be deemed to, limit or restrict a Stockholder from acting in
accordance with his or her duties as a director or officer of the
Company or otherwise limit the ability of the Stockholder to take any
action in his or her capacity as a director or officer of the Company.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
PARENT:
Sanmina Corporation
By: /s/ JURE SOLA
------------------------------------
Jure Sola, Chief Executive Officer
STOCKHOLDERS:
/s/ HORACE H. IRVINE II
--------------------------------------
Horace H. Irvine II
/s/ ANDREW E. LIETZ
--------------------------------------
Andrew E. Lietz
/s/ OLIVER O. WARD
--------------------------------------
Oliver O. Ward
/s/ JOHN F. SMITH
--------------------------------------
John F. Smith
/s/ JOHN E. POMEROY
--------------------------------------
John E. Pomeroy
/s/ JAMES C. TAYLOR
--------------------------------------
James C. Taylor
/s/ MAURO J. WALKER
--------------------------------------
Mauro J. Walker
/s/ GILBERT M. RODDY, JR.
--------------------------------------
Gilbert M. Roddy, Jr.
/s/ F. GORDON BITTER
--------------------------------------
F. Gordon Bitter
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<PAGE> 130
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF SHARES SHARES NUMBER OF UNEXERCISED
NAME AND ADDRESS OWNED AS OF STOCKHOLDER HAS OPTIONS AS OF
OF STOCKHOLDER APRIL 17, 2000(1) RIGHT TO VOTE APRIL 17, 2000
- ---------------- ----------------- --------------- ---------------------
<S> <C> <C> <C>
Horace H. Irvine, II..................... 670,407 19,355(2) 0
27 Gordon Mountain Road Windham, NH
03087
Andrew E. Lietz.......................... 83,601 0 289,000
47 Spring Road Rye, NH 03870
Oliver O. Ward........................... 1,387 0 12,000
Garnet Hill Road Sunapee, NH 03782
John F. Smith............................ 26,887 0 3,000
11 Samuel Parlin Drive Acton, MA 01720
John E. Pomeroy.......................... 4,387 0 15,000
416 Murray Hill Road Vestal, NY 13850
James C. Taylor.......................... 6,387 0 15,000
14 Lawrence Road Chestnut Hill, MA
02167
Mauro J. Walker.......................... 1,329 0 15,000
108 Dolphin Drive
Ocean Ridge, FL 33435
Gilbert M. Roddy, Jr. ................... 745 42,605(3) 15,000
101 Barnes Hill Road Concord, MA 01742
F. Gordon Bitter......................... 3,573 0 28,500
17 Cotton Farm Lane No. Hampton, NH
03862
</TABLE>
- ---------------
(1) Includes shares deferred under the Outside Directors' Compensation Plans of
1998 and 2000.
(2) Shares of Andrea Irvine, held in a voting trust for her benefit. (See the
Company's Proxy Statement dated January 14, 2000).
(3) Mr. Roddy is co-trustee of certain irrevocable trusts for the benefit of
certain of Mr. Irvine's family. (See the Company's Proxy Statement dated
January 14, 2000).
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<PAGE> 131
ANNEX III
STOCK OPTION AGREEMENT dated as of April 17, 2000 (the "Agreement"), by and
between HADCO CORPORATION, a Massachusetts corporation ("Issuer"), and SANMINA
CORPORATION, a Delaware corporation ("Grantee").
RECITALS
A. Issuer, Grantee and SANM Acquisition Subsidiary, Inc., a Massachusetts
corporation and a wholly owned subsidiary of Grantee ("Sub"), have entered into
an Agreement and Plan of Merger, dated as of the date hereof (as it may be
amended from time to time, the "Merger Agreement"; defined terms used but not
defined herein have the meanings set forth in the Merger Agreement), providing
for, among other things, the merger of Sub with and into Issuer, with Issuer
becoming the surviving corporation in the Merger and a wholly owned subsidiary
of Grantee; and
B. As a condition and inducement to Grantee's willingness to enter into
the Merger Agreement, Grantee has requested that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 2,752,351 (as adjusted as set forth herein)
shares (the "Option Shares") (provided that the amount of the Option Shares
shall upon timely issuance be adjusted to equal 19.9% of the then issued
and outstanding shares) of Common Stock, par value $.05 per share ("Issuer
Common Stock"), of Issuer at a purchase price of $69.0375 (subject to
adjustment as set forth herein) per Option Share (the "Purchase Price");
provided, however, that, notwithstanding anything herein to the contrary,
if Grantee receives in the aggregate an amount equal to the excess, if any,
of (i) the sum of the proceeds (net of any commissions or similar costs)
received by Grantee in connection with any sales or other dispositions of
Option Shares and any dividends received by Grantee on Option Shares over
(ii) the product of the Purchase Price times the number of Option Shares
acquired by Grantee pursuant to the Option, then an amount equal to such
excess shall be promptly paid by Grantee to Issuer.
2. Exercise of Option. (a) Grantee may exercise the Option, with
respect to all (but not less than all) of the Option Shares at any one
time, subject to the provisions of Section 2(c), after the occurrence of
any event as a result of which the Grantee is entitled to receive the
Termination Fee pursuant to Section 5.8(b) of the Merger Agreement (a
"Purchase Event"); provided, however, that the Option will terminate and be
of no further force and effect upon the earliest to occur of (A) the
Effective Time, (B) 12 months after the first occurrence of a Purchase
Event and (C) termination of the Merger Agreement in accordance with its
terms prior to the occurrence of a Purchase Event, unless, in the case of
clause (C), Grantee has or may have the right to receive a Termination Fee
following such termination upon the occurrence of certain events, in which
case the Option will not terminate until the later of (x) six months
following the time such Termination Fee becomes payable and (y) the
expiration of the period in which the Grantee has or may have such right to
receive a Termination Fee, and (ii) any purchase of Option Shares upon
exercise of the Option will be subject to compliance with the HSR Act and
the obtaining or making of any consents, approvals, orders, notifications
or authorizations, the failure of which to have obtained or made would have
the effect of making the issuance of Option Shares illegal (the "Regulatory
Approvals").
(b) In the event that Grantee wishes to exercise the Option, it will
send to Issuer a written notice (an "Exercise Notice"; the date of which
being herein referred to as the "Notice Date") to that effect which
Exercise Notice also specifies the number of Option Shares, if any, Grantee
wishes to purchase pursuant to this Section 2(b), the denominations of the
certificate or certificates evidencing the Option Shares which Grantee
wishes to purchase pursuant to this Section 2(b) and a date not earlier
than three
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<PAGE> 132
business days nor later than 20 business days from the Notice Date for the
closing of such purchase (an "Option Closing Date"). Any Option Closing
will be at an agreed location and time in Boston, Massachusetts on the
applicable Option Closing Date or at such later date as may be necessary so
as to comply with clause (ii) of Section 2(a).
(c) Notwithstanding anything to the contrary contained herein, any
exercise of the Option and purchase of Option Shares shall be subject to
compliance with applicable laws and regulations, which may prohibit the
purchase of all the Option Shares specified in the Exercise Notice without
first obtaining or making certain Regulatory Approvals. In such event, if
the Option is otherwise exercisable and Grantee wishes to exercise the
Option, the Option may be exercised in accordance with Section 2(b) and
Grantee shall acquire the maximum number of Option Shares specified in the
Exercise Notice that Grantee is then permitted to acquire under the
applicable laws and regulations, and if Grantee thereafter obtains the
Regulatory Approvals to acquire the remaining balance of the Option Shares
specified in the Exercise Notice, then Grantee shall be entitled to acquire
such remaining balance.
3. Payment and Delivery of Certificates.
(a) At any Option Closing, Grantee will pay to Issuer in immediately
available funds by wire transfer to a bank account designated in writing by
Issuer an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased at such Option Closing.
(b) At any Option Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer will
deliver to Grantee a certificate or certificates representing the Option
Shares to be purchased at such Option Closing, which Option Shares will be
free and clear of all liens, claims, charges and encumbrances of any kind
whatsoever.
(c) Certificates for the Option Shares delivered at an Option Closing
will have typed or printed thereon a restrictive legend which will read
substantially as follows: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT, DATED
AS OF APRIL 17, 2000, AS IT MAY BE AMENDED FROM TIME TO TIME A COPY OF
WHICH MAY BE OBTAINED FROM THE CLERK OF HADCO CORPORATION AT ITS PRINCIPAL
EXECUTIVE OFFICES." It is understood and agreed that (i) the reference to
restrictions arising under the Securities Act in the above legend will be
removed by delivery of substitute certificate(s) without such reference if
such Option Shares have been registered pursuant to the Securities Act,
such Option Shares have been sold in reliance on and in accordance with
Rule 144 under the Securities Act or Grantee has delivered to Issuer a copy
of a letter from the staff of the SEC, or an opinion of counsel in form and
substance reasonably satisfactory to Issuer and its counsel, to the effect
that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend will be removed by delivery of substitute certificate(s) without
such reference if the Option Shares evidenced by certificate(s) containing
such reference have been sold or transferred in compliance with the
provisions of this Agreement under circumstances that do not require the
retention of such reference.
4. Repurchase Right; Voting Matters.
(a) Within 30 days following the occurrence of a Repurchase Event (as
defined herein), the Issuer shall have the right to repurchase all (but not
less than all) of the Option Shares from Grantee at a price (the "Option
Share Repurchase Price") equal to the Purchase Price times the number of
Option Shares acquired by Grantee pursuant to the Option plus, to the
extent such amounts have not been previously paid by Issuer pursuant to the
Merger Agreement, the amount (in full satisfaction of such amount) of the
Termination Fee (as defined in the Merger Agreement) (the "Repurchase
Price").
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<PAGE> 133
(b) As promptly as practicable, and in any event within five (5)
business days after receipt of notice pursuant to Section 4(a), Grantee
shall surrender to Issuer certificates for Option Shares, Issuer shall
deliver or cause to be delivered to Grantee by wire transfer the Option
Share Repurchase Price.
(c) The Issuer hereby undertakes to use its commercially reasonable
efforts to obtain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to accomplish any
repurchase contemplated by this Section 4. Nonetheless, to the extent that
the Issuer is prohibited under applicable Law from repurchasing the Option
Shares in full, the Issuer shall immediately so notify Grantee and
thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Option Share Repurchase Price that it is required to
deliver pursuant hereto and that it is no longer prohibited from
delivering, within five (5) business days after the date on which the
Issuer is no longer so prohibited; provided, however, that if the Issuer at
any time after delivery of a notice of repurchase pursuant to Section 4(a)
hereof is prohibited under applicable Law for a period of 30 consecutive
days, from delivering to Grantee the Option Share Repurchase Price in full,
the repurchase shall be deemed to be revoked either in whole or in part
whereupon, in the case of a revocation in part, the Issuer shall promptly
(i) deliver to Grantee that portion of the Option Share Repurchase Price
that the Issuer is not prohibited from delivering after taking into account
any such revocation and (ii) deliver, as appropriate, to Grantee either (A)
a new Agreement evidencing the right of Grantee to purchase that number of
shares of Issuer Common Stock equal to the number of shares of Company
Common Stock purchasable immediately prior to the delivery of the notice of
repurchase less the number of shares of Company Common Stock covered by the
portion of the Option Shares repurchased or (B) a certificate for the
number of Option Shares covered by the revocation.
(d) The term "Repurchase Event" shall mean a Purchase Event followed
or preceded by Issuer's entering into an Acquisition Agreement (as defined
in the Merger Agreement) for a Superior Proposal (as defined in the Merger
Agreement).
(e) In connection with any purchase/sale of the Option Shares pursuant
to this Section 4, the Grantee shall be required to represent and warrant
to the Issuer that it is the owner of the Option Shares being purchased,
free and clear of all adverse claims and that it shall deliver good title
to such Option Shares to the Issuer, free and clear of all adverse claims,
upon consummation of any purchase/sale pursuant to this Section 4.
(f) In the event that Issuer calls a meeting of its stockholders to
vote on an Acquisition Agreement and/or merger for a Superior Proposal and,
as of the record date established for such meeting, Issuer continues to
hold any of the Option Shares, Issuer shall vote all such Option Shares
with respect to such Acquisition Agreement in the same proportions as the
votes cast on such Acquisition Agreement and/or merger by all other
stockholders of Issuer.
5. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Authorized Stock. Issuer has taken all necessary corporate
and other action to authorize and reserve and, subject to the expiration
or termination of any required waiting period under the HSR Act, to
permit it to issue, and, at all times from the date hereof until the
obligation to deliver Option Shares upon the exercise of the Option
terminates, shall have reserved for issuance, upon exercise of the
Option, shares of Issuer Common Stock necessary for Grantee to exercise
the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer
Common Stock or other securities which may be issued pursuant to Section
6 upon exercise of the Option. The shares of Issuer Common Stock to be
issued upon due exercise of the Option, including all additional shares
of Issuer Common Stock or other securities which may be issuable upon
exercise of the Option or any other securities which may be issued
pursuant to Section 6, upon issuance pursuant hereto, will be duly and
validly issued, fully paid and nonassessable, and will be delivered free
and clear of all liens, claims, charges and encumbrances of any kind or
nature whatsoever, including without limitation any preemptive rights of
any stockholder of Issuer.
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<PAGE> 134
6. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that:
(a) Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be
transferred or otherwise disposed of except in a transaction registered,
or exempt from registration, under the Securities Act.
7. Adjustment upon Changes in Capitalization, Etc.
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, split-up, merger, recapitalization, combination, exchange
of shares, or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price thereof, will be
adjusted appropriately, and proper provision will be made in the agreements
governing such transaction, so that Grantee will receive upon exercise of
the Option the number and class of shares or other securities or property
that Grantee would have received in respect of Issuer Common Stock if the
Option had been exercised immediately prior to such event or the record
date therefor, as applicable.
(b) Without limiting the parties' relative rights and obligations
under the Merger Agreement, if prior to or concurrently with the
termination of the Option Issuer enters into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and Issuer will not be the continuing or surviving
corporation in such consolidation or merger, (ii) to permit any person,
other than Grantee or one of its subsidiaries, to merge into Issuer and
Issuer will be the continuing or surviving corporation, but in connection
with such merger, the shares of Issuer Common Stock outstanding immediately
prior to the consummation of such merger will be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property, or the shares of Issuer Common Stock outstanding
immediately prior to the consummation of such merger will, after such
merger, represent less than 50% of the outstanding voting securities of the
merged company, or (iii) to sell or otherwise transfer all or substantially
all of its assets to any person, other than Grantee or one of its
subsidiaries, then, and in each such case, the agreement governing such
transaction will make proper provision so that the Option will, upon the
consummation of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option with identical
terms appropriately adjusted to acquire the number and class of shares or
other securities or property that Grantee would have received in respect of
Issuer Common Stock if the Option had been exercised immediately prior to
such consolidation, merger, sale, or transfer, or the record date therefor,
as applicable and make any other necessary adjustments.
8. Registration Rights. Issuer will, if requested by Grantee at any
time and from time to time within two years of the exercise of the Option,
use commercially reasonable efforts to prepare and file up to three
registration statements under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any or all
shares of securities that have been acquired by or are issuable to Grantee
upon exercise of the Option in accordance with the intended method of sale
or other disposition stated by Grantee, including a "shelf " registration
statement under Rule 415 under the Securities Act or any successor
provision, and Issuer will use its reasonable efforts to qualify such
shares or other securities under any applicable state securities laws.
Grantee agrees to use reasonable efforts to cause, and to cause any
underwriters of any sale or other disposition to cause, any sale or other
disposition pursuant to such registration statement or otherwise to be
effected on a widely distributed basis so that upon consummation thereof no
purchaser or transferee will own beneficially more than 4.9% of the then-
outstanding voting power of Issuer. Issuer will use reasonable efforts to
cause each such registration statement to become effective, to obtain all
consents or waivers of other parties which are required therefor, and to
keep such registration statement effective for such period not in excess of
180 calendar days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale or other
disposition. The obligations of Issuer hereunder to file a registration
statement and to maintain its effectiveness may be suspended for up to 90
calendar days in the aggregate if the Board of Directors of Issuer shall
have determined that the filing of such registration statement or the
maintenance of its effectiveness would require premature disclosure of
material nonpublic information
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<PAGE> 135
that would materially and adversely affect Issuer or otherwise interfere
with or adversely affect any pending or proposed offering of securities of
Issuer or any other material transaction involving Issuer. Any registration
statement prepared and filed under this Section 7, and any sale covered
thereby, will be at Issuer's expense except for underwriting discounts or
commissions, brokers' fees and the fees and disbursements of Grantee's
counsel related thereto. Grantee will provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If, during the time periods referred to in the first sentence of
this Section 7, Issuer effects an underwritten registration under the
Securities Act of Issuer Common Stock for its own account or for any other
stockholders of Issuer (other than on Form S-4 or Form S-8, or any
successor form), it will allow Grantee the right to participate in such
registration, and such participation will not affect the obligation of
Issuer to effect demand registration statements for Grantee under this
Section 7; provided that, if the managing underwriters of such offering
advise Issuer in writing that in their opinion the number of shares of
Issuer Common Stock requested to be included in such registration exceeds
the number which can be sold in such offering at a price acceptable to
Issuer's Board of Directors, Issuer will first reduce the shares requested
to be included therein by Grantee before reducing any other shares intended
to be included therein. In connection with any registration pursuant to
this Section 7, Issuer and Grantee will provide each other and any
underwriter of the offering with customary representations, warranties,
covenants, indemnification, and contribution in connection with such
registration. Any rights to require registration hereunder shall terminate
with respect to any shares that may be sold pursuant to Rule 144(k) of the
Securities Act.
9. Transfers. The Option Shares may not be sold, assigned,
transferred, or otherwise disposed of except (i) in an underwritten public
offering as provided in Section 7 or (ii) to any purchaser or transferee
who would not, to the knowledge of the Grantee after reasonable inquiry,
immediately following such sale, assignment, transfer or disposal
beneficially own more than 4.9% of the then-outstanding voting power of the
Issuer; provided, however, that Grantee shall be permitted to sell any
Option Shares if such sale is made pursuant to a tender or exchange offer
that has been approved or recommended by a majority of the members of the
Board of Directors of Issuer (which majority shall include a majority of
directors who were directors as of the date hereof). The Option may not be
sold, assigned, transferred or otherwise disposed of by Grantee, and any
sale, assignment, transfer or disposal shall be null and void.
10. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then traded on the New York Stock
Exchange ("NYSE") (or any other national securities exchange or national
securities quotation system), Issuer, upon the request of Grantee, will
promptly file an application to have the shares of Issuer Common Stock or
other securities to be acquired upon exercise of the Option approved for
trading on the NYSE (and any such other national securities exchange or
national securities quotation system) and will use reasonable efforts to
obtain approval of such application as promptly as practicable.
11. Loss or Mutilation. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation
of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancelation
of this Agreement, if mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in the Merger Agreement,
each of the parties hereto will bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants, and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
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<PAGE> 136
(c) Extension; Waiver. Any agreement on the part of a party to waive
any provision of this Agreement, or to extend the time for performance,
will 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 will not constitute a
waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This Agreement,
the Merger Agreement (including the documents and instruments attached
thereto as exhibits or schedules or delivered in connection therewith) and
the Confidentiality Agreement dated April 3, 2000 (i) 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, the Merger Agreement and the Confidentiality Agreement, and
(ii) except as provided in Section 8.6 of the Merger Agreement, are not
intended to confer upon any person other than the parties any rights or
remedies.
(e) Governing Law. This Agreement will 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 conflict of
laws thereof.
(f) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and will be deemed
given if delivered personally, telecopied (which is confirmed), or sent by
overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
If to Issuer to:
Hadco Corporation
12A Manor Parkway
Salem, NH 03079
Attention: President
with a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attn: Stephen A. Hurwitz, Esq.
If to Grantee to:
Sanmina Corporation
2700 North First Street
San Jose, CA 95134
Attention: President
with a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attention: Christopher D. Mitchell, Esq.
(g) Assignment. Neither this Agreement, the Option nor any of the
rights, interests, or obligations under this Agreement may be assigned or
delegated, in whole or in part, by Issuer or Grantee without the prior
written consent of the other. Any assignment or delegation in violation of
the preceding sentence will be void. Subject to the first and second
sentences of this Section 11(g), this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
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<PAGE> 137
(h) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee will execute and deliver all other documents
and instruments and take all other actions that may be reasonably necessary
in order to consummate the transactions provided for by such exercise.
(i) 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 parties will 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 itself 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 the
transactions contemplated by this Agreement, (ii) 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 (iii) 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 State of Delaware or a Delaware state court.
(j) 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.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
HADCO CORPORATION
By: /s/ ANDREW E. LIETZ
------------------------------------
Andrew E. Lietz
Title: President
SANMINA CORPORATION
By: /s/ JURE SOLA
------------------------------------
Jure Sola
Title: Chief Executive Officer
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<PAGE> 138
ANNEX IV
April 17, 2000
Board of Directors
Hadco Corporation
12A Manor Parkway
Salem, NH 03079
Members of the Board:
We understand that Hadco Corporation ("Hadco" or the "Company"), Sanmina
Corporation ("Sanmina") and SANM Acquisition Subsidiary, Inc., a wholly-owned
subsidiary of Sanmina ("Acquisition Sub"), propose to enter into an Agreement
and Plan of Merger, dated April 17, 2000 (the "Merger Agreement"), which
provides, among other things, for the merger (the "Merger") of Acquisition Sub
with and into Hadco. Pursuant to the Merger, Hadco will become a wholly-owned
subsidiary of Sanmina, and each outstanding share of common stock, par value
$.05 per share, of Hadco (the "Hadco Common Stock") together with the associated
Rights (as defined in the Merger Agreement), other than shares held in treasury
or held by Sanmina or any affiliate of Sanmina or as to which dissenters' rights
have been perfected, will be converted into the right to receive 1.40 shares
(the "Exchange Ratio") of common stock, par value $.01 per share, of Sanmina
(the "Sanmina Common Stock"), subject to adjustment in certain circumstances.
The terms and conditions of the Merger are more fully set forth in the Merger
Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to holders of shares
of the Hadco Common Stock.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly-available financial statements and other
information of the Company and Sanmina;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning the Company prepared by the
management of the Company;
(iii) reviewed certain financial projections of the Company prepared
by the management of the Company;
(iv) discussed the past and current operations and financial condition
and the prospects of the Company and Sanmina, including certain financial
projections, with senior executives of the Company and Sanmina,
respectively;
(v) reviewed the pro forma impact of the Merger on Sanmina's earnings
per share;
(vi) discussed potential strategic and operational benefits of the
Merger with senior executives of the Company and Sanmina;
(vii) reviewed the reported prices and trading activity for the Hadco
Common Stock and the Sanmina Common Stock;
(viii) compared the financial performance of the Company and Sanmina
and the prices and trading activity of the Hadco Common Stock and the
Sanmina Common Stock with that of certain other comparable publicly-traded
companies and their securities;
(ix) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;
(x) participated in discussions and negotiations among representatives
of the Company and Sanmina and their legal and financial advisors;
(xi) reviewed the Merger Agreement and certain related documents;
(xii) considered such other factors as we have deemed appropriate.
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<PAGE> 139
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance and
prospects of the Company and Sanmina. We have relied upon the assessment by the
managements of Hadco and Sanmina of their ability to retain key employees of
Hadco. We have also relied upon, without independent verification, the
assessment by the management of Hadco of the Company's technologies and
products, the timing and risks associated with the integration of Hadco with
Sanmina and the validity of, and risks associated with, the Company's existing
and future products and technologies.
In addition, we have assumed that the Merger will be consummated in
accordance with the terms set forth in the Merger Agreement, including, among
other things, that the Merger will be accounted for as a "pooling-of-interests"
business combination in accordance with U.S. Generally Accepted Accounting
Principles and the Merger will be treated as a tax-free reorganization and/or
exchange, each pursuant to the Internal Revenue Code of 1986. We have not made
any independent valuation or appraisal of the assets or liabilities of the
Company or Sanmina, nor have we been furnished with any such appraisals. Our
opinion is necessarily based on financial, economic, market and other conditions
as in effect on, and the information made available to us as of, the date
hereof.
We have acted as financial advisor to the Board of Directors of the Company
in connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Company and Sanmina and have
received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any filing made by the Company in respect of the transaction with the
Securities and Exchange Commission. In addition, this opinion does not in any
manner address the prices at which the Sanmina Common Stock will trade following
consummation of the Merger, and Morgan Stanley expresses no opinion or
recommendation as to how the shareholders of the Company should vote at the
shareholders' meetings held in connection with the Merger.
Based on the foregoing, we are of the opinion on the date hereof that the
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to holders of shares of the Hadco Common Stock.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ ROBERT L. EATROFF
------------------------------------
Robert L. Eatroff
Principal
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<PAGE> 140
ANNEX V
MASSACHUSETTS GENERAL LAWS ANNOTATED
PART I.
ADMINISTRATION OF THE GOVERNMENT
TITLE XXII.
CORPORATIONS
CHAPTER 156B.
CERTAIN BUSINESS CORPORATIONS
APPRAISAL
SEC. 85. PAYMENT FOR STOCK OF DISSERTING STOCKHOLDER
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. RIGHT OF APPRAISAL
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. NOTICE OF STOCKHOLDERS MEETING TO CONTAIN STATEMENT AS TO APPRAISAL
RIGHTS
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
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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 TO OBJECTING STOCKHOLDER THAT CORPORATE ACTION HAS BECOME
EFFECTIVE
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 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 BY OBJECTING STOCKHOLDER
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. DETERMINATION OF VALUE OF STOCK BY SUPERIOR COURT
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. BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS OR
FAILURE TO AGREE ON VALUE THEREOF ETC.; PARTIES TO BILL ETC.; SERVICE
OF BILL ON CORPORATION; NOTICE TO STOCKHOLDER PARTIES ETC.
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.
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<PAGE> 142
SEC. 92. BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF, ETC.; ENTRY OF DECREE DETERMINING
VALUE OF STOCK; DATE ON WHICH VALUE IS TO BE DETERMINED
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. BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF, ETC.; COURT MAY REFER BILL, ETC., TO
SPECIAL MASTER TO HEAR PARTIES, ETC.
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.
SEC. 94. BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF, ETC.; STOCKHOLDER PARTIES MAY BE
REQUIRED TO SUBMIT THEIR STOCK CERTIFICATES FOR NOTATION THEREON OF
PENDENCY OF BILL, ETC.
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. BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF, ETC.; TAXATION OF COSTS, ETC.;
INTEREST ON AWARD, ETC.
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. STOCKHOLDERS DEMANDING PAYMENT FOR STOCK NOT ENTITLED TO NOTICE OF
STOCKHOLDERS' MEETINGS OR TO VOTE STOCK OR TO RECEIVE DIVIDENDS, ETC.;
EXCEPTIONS
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
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(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. CERTAIN SHARES PAID FOR BY CORPORATION TO HAVE STATUS OF TREASURY
STOCK, ETC.
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. ENFORCEMENT BY STOCKHOLDER OF RIGHT TO RECEIVE PAYMENT FOR HIS SHARES
TO BE 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.
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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
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
------- --------
<S> <C>
2.1 Agreement and Plan of Merger dated as of April 17, 2000
among the Registrant, Hadco Corporation and SANM Acquisition
Subsidiary, Inc., as amended (included as Annex I to the
Proxy Statement/Prospectus which is a part of this
Registration Statement on Form S-4).
2.2 Stockholders Agreement dated as of April 17, 2000 among the
Registrant and certain stockholders of Hadco Corporation
listed therein (included as Annex II to the Proxy
Statement/Prospectus which is a part of this Registration
Statement on Form S-4).
2.3 Stock Option Agreement dated as of April 17, 2000 between
the Registrant and Hadco Corporation (included as Annex III
to the Proxy Statement/Prospectus which is a part of this
Registration Statement on Form S-4).
3.2(8) Restated Certificate of Incorporation of Registrant.
3.3(1) Bylaws of Registrant, as amended.
4.2(1) Specimen Stock Certificate.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati ("WSGR")
relating to validity of shares registered hereby.
8.1 Form of tax opinion of WSGR.
8.2 Form of tax opinion of Testa, Hurwitz & Thibeault, LLP
("Testa").
10.2(4) Amended 1990 Incentive Stock Plan.
10.3(1) 1993 Employee Stock Purchase Plan.
</TABLE>
II-1
<PAGE> 145
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
------- --------
<S> <C>
10.10(1) Lease for premises at 2109 O'Toole Avenue, Suites A-E, San
Jose, California (Portion of Plant I).
10.11(1) Lease for premises at 2101 O'Toole Avenue, San Jose,
California (Portion of Plant I).
10.12(1) Lease for premises at 2539 Scott Boulevard, Santa Clara,
California (Plant III).
10.14(1) Lease for premises at 2060-2068 Bering Drive, San Jose,
California (Plant II).
10.15(1) Lease for premises at 4220 Business Center Drive, Fremont,
California (Plant V).
10.16(1) Lease for premises at McCarthy Boulevard, Milpitas,
California (Plant VI).
10.17(1) Lease for premises at 2121 O'Toole Avenue, San Jose,
California (Corporate Headquarters).
10.19(2) Lease for premises at 1250 American Parkway, Richards, Texas
(Plant VII).
10.20(2) Lease for premises at 6453 Kaiser Drive, Fremont, California
(Plant VIII).
10.21(3) Asset Purchase Agreement dated September 28, 1994 between
Registrant and Comptronix Corporation.
10.22(4) Lease for premises at 355 East Trimble Road, San Jose,
California.
10.23(5) Stock Purchase Agreement dated May 31, 1995 between Sanmina
Corporation, Assembly Solutions, Inc. and the principal
stockholders of Assembly Solutions, Inc.
10.24(6) Indenture dated August 15, 1995 between Registrant and
Norwest Bank Minnesota, N.A. as Trustee.
10.25(7) Asset Purchase Agreement dated September 20, 1996 between
Registrant and Comptronix Corporation.
10.26(9) Agreement and Plan of Merger dated July 22, 1997 among
Registrant, SANM Acquisition Subsidiary, Inc. and Elexsys
International, Inc.
10.26(10) Agreement and Plan of Merger dated September 2, 1998 among
Registrant, SANM Acquisition Subsidiary, Inc. and Altron,
Inc.
10.27(11) Synthetic Lease Agreement.
10.28(12) Agreement and Plan of Merger dated March 30, 1999 among
Registrant, SANM Acquisition Subsidiary, Inc. and
Manu-Tronics, Inc.
10.29(14) 1999 Stock Plan and form of agreement thereunder.
13(13) Annual Report.
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 Testa (included in Exhibit 8.2).
24.1 Power of Attorney (see page II-5 of this Registration
Statement on Form S-4).
27.1 Financial Data Schedule (filed previously as an exhibit to
Sanmina's Quarterly Report on Form 10-Q for the quarter
ended April 1, 2000).
99.1 Consent of Morgan Stanley & Co. Incorporated.
99.2 Form of Hadco Proxy.
</TABLE>
- ---------------
(1) 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 Securities and Exchange Commission ("SEC") on February 19, 1993.
(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 October 22, 1993.
(3) Incorporated by reference to exhibit 2 previously filed with Registrant's
Report on Form 8-K filed with the SEC on October 28, 1994.
(4) 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.
II-2
<PAGE> 146
(5) Incorporated by reference to the like-numbered exhibits previously filed
with Registrant's Report on Form 10-Q filed with the SEC on July 31, 1995.
(6) 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.
(7) 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.
(8) 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, 1997.
(9) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on November 21, 1997.
(10) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on September 4, 1998.
(11) 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, 1998.
(12) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on April 29, 1999.
(13) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-K filed with the SEC on December 15,
1999.
(14) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form S-8 filed with the SEC on May 25, 1999.
(B) FINANCIAL STATEMENT SCHEDULES
None.
(C) ITEM 4(B) INFORMATION
The opinion of Morgan Stanley & Co. Incorporated is included as Annex IV to
the Proxy Statement/ Prospectus included in this Registration Statement.
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;
II-3
<PAGE> 147
(b) that, for the purpose 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;
(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 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;
(f) that every prospectus (i) that is filed pursuant to paragraph (e)
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.
II-4
<PAGE> 148
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 22nd day
of May 2000.
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 Elizabeth Jordan, 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JURE SOLA Chairman, Chief Executive Officer, May 22, 2000
- ------------------------------------------------ and Director (Principal Executive
JURE SOLA Officer)
/s/ RANDY FURR President, Chief Operating Officer May 22, 2000
- ------------------------------------------------ and Director
RANDY FURR
/s/ ELIZABETH JORDAN Executive Vice President and Chief May 22, 2000
- ------------------------------------------------ Financial Officer (Principal
ELIZABETH JORDAN Financial and Accounting Officer)
/s/ MARIO ROSATI Director May 22, 2000
- ------------------------------------------------
MARIO ROSATI
/s/ BERNARD VONDERSCHMITT Director May 22, 2000
- ------------------------------------------------
BERNARD VONDERSCHMITT
/s/ NEIL BONKE Director May 22, 2000
- ------------------------------------------------
NEIL BONKE
/s/ JOHN BOLGER Director May 22, 2000
- ------------------------------------------------
JOHN BOLGER
/s/ JOSEPH SCHELL Director May 22, 2000
- ------------------------------------------------
JOSEPH SCHELL
</TABLE>
II-5
<PAGE> 149
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
------- --------
<S> <C>
2.1 Agreement and Plan of Merger dated as of April 17, 2000
among the Registrant, Hadco Corporation and SANM Acquisition
Subsidiary, Inc., as amended (included as Annex I to the
Proxy Statement/Prospectus which is a part of this
Registration Statement on Form S-4).
2.2 Stockholders Agreement dated as of April 17, 2000 among the
Registrant and certain stockholders of Hadco Corporation
listed therein (included as Annex II to the Proxy
Statement/Prospectus which is a part of this Registration
Statement on Form S-4).
2.3 Stock Option Agreement dated as of April 17, 2000 between
the Registrant and Hadco Corporation (included as Annex III
to the Proxy Statement/Prospectus which is a part of this
Registration Statement on Form S-4).
3.2(8) Restated Certificate of Incorporation of Registrant.
3.3(1) Bylaws of Registrant, as amended.
4.2(1) Specimen Stock Certificate.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati ("WSGR")
relating to validity of shares registered hereby.
8.1 Form of tax opinion of WSGR.
8.2 Form of tax opinion of Testa, Hurwitz & Thibeault, LLP
("Testa").
10.2(4) Amended 1990 Incentive Stock Plan.
10.3(1) 1993 Employee Stock Purchase Plan.
10.10(1) Lease for premises at 2109 O'Toole Avenue, Suites A-E, San
Jose, California (Portion of Plant I).
10.11(1) Lease for premises at 2101 O'Toole Avenue, San Jose,
California (Portion of Plant I).
10.12(1) Lease for premises at 2539 Scott Boulevard, Santa Clara,
California (Plant III).
10.14(1) Lease for premises at 2060-2068 Bering Drive, San Jose,
California (Plant II).
10.15(1) Lease for premises at 4220 Business Center Drive, Fremont,
California (Plant V).
10.16(1) Lease for premises at McCarthy Boulevard, Milpitas,
California (Plant VI).
10.17(1) Lease for premises at 2121 O'Toole Avenue, San Jose,
California (Corporate Headquarters).
10.19(2) Lease for premises at 1250 American Parkway, Richards, Texas
(Plant VII).
10.20(2) Lease for premises at 6453 Kaiser Drive, Fremont, California
(Plant VIII).
10.21(3) Asset Purchase Agreement dated September 28, 1994 between
Registrant and Comptronix Corporation.
10.22(4) Lease for premises at 355 East Trimble Road, San Jose,
California.
10.23(5) Stock Purchase Agreement dated May 31, 1995 between Sanmina
Corporation, Assembly Solutions, Inc. and the principal
stockholders of Assembly Solutions, Inc.
10.24(6) Indenture dated August 15, 1995 between Registrant and
Norwest Bank Minnesota, N.A. as Trustee.
10.25(7) Asset Purchase Agreement dated September 20, 1996 between
Registrant and Comptronix Corporation.
10.26(9) Agreement and Plan of Merger dated July 22, 1997 among
Registrant, SANM Acquisition Subsidiary, Inc. and Elexsys
International, Inc.
10.26(10) Agreement and Plan of Merger dated September 2, 1998 among
Registrant, SANM Acquisition Subsidiary, Inc. and Altron,
Inc.
10.27(11) Synthetic Lease Agreement.
10.28(12) Agreement and Plan of Merger dated March 30, 1999 among
Registrant, SANM Acquisition Subsidiary, Inc. and
Manu-Tronics, Inc.
10.29(14) 1999 Stock Plan and form of agreement thereunder.
</TABLE>
<PAGE> 150
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
------- --------
<S> <C>
13(13) Annual Report.
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 Testa (included in Exhibit 8.2).
24.1 Power of Attorney (see page II-5 of this Registration
Statement on Form S-4).
27.1 Financial Data Schedule (filed previously as an exhibit to
Sanmina's Quarterly Report on Form 10-Q for the quarter
ended April 1, 2000).
99.1 Consent of Morgan Stanley & Co. Incorporated.
99.2 Form of Hadco Proxy.
</TABLE>
- ---------------
(1) 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 Securities and Exchange Commission ("SEC") on February 19, 1993.
(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 October 22, 1993.
(3) Incorporated by reference to exhibit 2 previously filed with Registrant's
Report on Form 8-K filed with the SEC on October 28, 1994.
(4) 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.
(5) Incorporated by reference to the like-numbered exhibits previously filed
with Registrant's Report on Form 10-Q filed with the SEC on July 31, 1995.
(6) 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.
(7) 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.
(8) 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, 1997.
(9) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on November 21, 1997.
(10) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on September 4, 1998.
(11) 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, 1998.
(12) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on April 29, 1999.
(13) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-K filed with the SEC on December 15,
1999.
(14) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form S-8 filed with the SEC on May 25, 1999.
<PAGE> 1
Exhibit 5.1
May 22, 2000
Sanmina Corporation
2700 North First street
San Jose, CA 95134
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 21,696,469 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 April 17, 2000, 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
Hadco Corporation, a Massachusetts corporation ("Hadco").
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 Hadco 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.
<PAGE> 2
Sanmina Corporation
May 22, 2000
Page 2
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
[WSGR TAX OPINION]
[Dated as of the effective date of the S-4]
Sanmina Corporation
2700 North First Street
San Jose, CA 95134
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the Form S-4
Registration Statement filed with the Securities and Exchange Commission (which
contains a Prospectus and joint Proxy Statement ("Proxy Statement/Prospectus"))
(the "Registration Statement") filed pursuant to the Agreement and Plan of
Merger dated as of April 17, 2000 (the "Merger Agreement") among Hadco
Corporation, a Massachusetts corporation ("Hadco"), Sanmina Corporation, a
Delaware corporation ("Sanmina"), and SANM Acquisition Subsidiary, Inc., a
Massachusetts corporation and a wholly owned subsidiary of Sanmina ("Sub").
Pursuant to the Merger Agreement, Sub will merge with and into Hadco, and Hadco
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 (or will
examine on or prior to the Effective Time), and are relying (or will rely) upon
(without any independent investigation or review thereof) the truth and
accuracy, at all relevant times, of the facts, statements, covenants,
descriptions, representations, and warranties contained in the following
documents (including all exhibits and schedules attached thereto):
1. The Merger Agreement;
2. The Proxy Statement/Prospectus;
3. Certificates of officers of Hadco, Sanmina and Sub,
respectively (the "Officers' Tax Certificates"); and
4. Such other instruments and documents related to the formation,
organization, and operation of Hadco, Sanmina and Sub, and
related to the Merger, as we have deemed necessary or
appropriate.
<PAGE> 2
[WSGR TAX OPINION]
Sanmina Corporation
[Dated as of the effective date of the S-4]
Page 2
In connection with rendering this opinion, we also have assumed or
obtained representations (and are relying thereon, without any independent
investigation or review thereof) that:
1. Original documents (including signatures thereto) submitted to
us 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 Time) duly and validly
executed and delivered where due execution and delivery are
prerequisites to effectiveness thereof;
2. All representations, warranties, and statements made or agreed
to by Hadco, Sanmina, Sub, 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
Officers' Tax Certificates are true and accurate at all
relevant times and no actions have been (or will be) taken
which are inconsistent with such representations;
3. All covenants contained in the Merger Agreement (including
exhibits thereto) and the Officers' Tax Certificates are
performed without waiver or breach of any material provision
thereof;
4. The Merger will be reported by Hadco and Sanmina on their
respective federal income tax returns in a manner consistent
with the opinion set forth below; and
5. Any representation or statement made in any of the documents
referred to herein "to the best of knowledge" of any person or
party or similarly qualified is correct without such
qualification.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we are
of the opinion that, if the Merger is consummated in accordance with the
provisions of the Merger Agreement and the statements set forth in the Officers'
Tax Certificates are true and correct as of the Effective Time, then, for United
States federal income tax purposes, the Merger constitutes a "reorganization"
within the meaning of Section 368(a) of the Code. In addition, the discussion
contained in the Registration Statement under the caption "THE MERGER - Material
Federal Income Tax Consequences," subject to the limitations and qualifications
described therein, sets forth the material federal income tax considerations
generally applicable to 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 consequences of the Merger or any 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
<PAGE> 3
[WSGR TAX OPINION]
Sanmina Corporation
[Dated as of the effective date of the S-4]
Page 3
herein. No opinion is expressed as to the federal income tax treatment that may
be relevant to a particular investor in light of personal circumstances or to
certain types of investors subject to special treatment under the federal income
tax laws (for example, life insurance companies, dealers in securities,
taxpayers subject to the alternative minimum tax, banks, tax-exempt
organizations, non-U.S. persons, and stockholders who acquired their shares of
Hadco stock pursuant to the exercise of options or otherwise as compensation).
No opinion is expressed as to any transaction other than the Merger as
described in the Merger Agreement or to any transaction whatsoever, including
the Merger, if all the transactions described in the Merger Agreement are not
consummated in accordance with the terms of such Merger Agreement and without
waiver or breach of any material provision thereof or if all of the
representations, warranties, statements and assumptions upon which we relied are
not true and accurate through the Effective Time and at all relevant times
thereafter. In the event any one of the statements, representations, warranties
or assumptions upon which we have relied to issue this opinion is incorrect, our
opinion might be adversely affected and may not be relied upon.
This opinion only represents and is based upon our best judgment
regarding the application of United States federal income tax laws arising under
the Code, existing judicial decisions, administrative regulations and published
rulings and procedures. Our opinion is not binding upon the Internal Revenue
Service or the courts, and there is no assurance that the Internal Revenue
Service will not successfully assert a contrary position. Furthermore, no
assurance can be given that future legislative, judicial or administrative
changes, on either a prospective or retroactive basis, will 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 United States federal income tax laws.
We hereby consent to the reference to our firm under the caption
"Material Federal Income Tax Consequences" in the Proxy Statement/Prospectus
included in the Registration Statement and to the filing of this opinion as an
exhibit to the Registration Statement. We also consent to the reference to our
firm name wherever appearing in the Registration Statement with respect to the
discussion of the material federal income tax consequences of the Merger,
including the Proxy Statement/Prospectus constituting a part thereof, and any
amendment thereto. In giving this consent, we do not thereby admit that we are
in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or 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
thereunder.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE> 1
Exhibit 8.2
__________ __, 2000
Hadco Corporation
12A Manor Parkway
Salem, NH 03079
Ladies and Gentlemen:
This opinion is being delivered to you in connection with (i) the
Agreement and Plan of Merger, dated as of April 17, 2000 (the "Agreement"), by
and among Hadco Corporation ("TARGET"), a Massachusetts corporation, Sanmina
Corporation ("ACQUIROR"), a Delaware corporation, and SANM Acquisition
Subsidiary, Inc. ("Merger Sub"), a Massachusetts corporation wholly-owned by
ACQUIROR, and (ii) the preparation and filing with the Securities and Exchange
Commission of a Form S-4 Registration Statement relating to the Merger (the
"Registration Statement"). Pursuant to the Agreement, Merger Sub will merge with
and into TARGET (the "Merger"), and TARGET will become a wholly-owned subsidiary
of ACQUIROR. Unless otherwise defined, capitalized terms referred to herein have
the meanings set forth in the Agreement. All section references, unless
otherwise indicated, are to the Internal Revenue Code of 1986, as amended (the
"Code").
We have acted as legal counsel to TARGET in connection with the Merger.
As such, and for purposes of rendering this opinion, we have reviewed and are
relying upon (without any independent investigation or examination thereof) the
truth and accuracy, at all relevant times, of the facts, statements,
descriptions, covenants, representations and warranties set forth in the
Registration Statement, the Agreement (including exhibits), representations by
TARGET, ACQUIROR and Merger Sub, respectively (the "Corporate Representations")
and such other instruments and documents pertaining to TARGET, ACQUIROR, Merger
Sub and the Merger as we have deemed necessary or appropriate.
In connection with rendering this opinion, we have also assumed or
obtained representations (and are relying thereon, without any independent
investigation or examination thereof) that at all relevant times:
1. Original documents (including signatures) are authentic,
documents submitted to us as copies conform to the original documents, and there
has been due execution and delivery of all documents where due execution and
delivery are prerequisites to effectiveness thereof.
2. Any statement made in any of the documents referred to herein
"to the knowledge of" or "to the best of the knowledge of" any person or party
or similarly qualified is correct without such qualification.
<PAGE> 2
Hadco Corporation
________ __, 2000
Page 2
3. All facts, statements, descriptions, covenants,
representations and warranties contained in any of the documents referred to
herein or otherwise made to us (including, without limitation, the
aforementioned Corporate Representations) are true and correct in all respects
and no actions have been (or will be) taken which are inconsistent with such
facts, statements, descriptions, covenants, representations and warranties.
4. As to all matters for which a person or entity has represented
that such person or entity is not a party to, does not have or is not aware of
any plan, intention, understanding or agreement to take an action, there is in
fact no such plan, intention, understanding or agreement and such action will
not be taken.
5. The Merger will be consummated in accordance with the terms of
the Agreement and without any waiver, breach or amendment of any provision
thereof, and the Merger will be effective under applicable state laws.
6. At all relevant times: (i) no outstanding indebtedness of
ACQUIROR or TARGET has represented or will represent equity for federal income
tax purposes; and (ii) no outstanding equity of ACQUIROR or TARGET has
represented or will represent indebtedness for federal income tax purposes.
7. The Merger will be reported by ACQUIROR and TARGET on their
respective federal income tax returns in a manner consistent with the opinion
set forth below.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we are
of the opinion that (i) for federal income tax purposes, the Merger constitutes
a "reorganization" within the meaning of Section 368(a) of the Code, and (ii)
under current law, the statements regarding United States federal income tax
considerations set forth under the heading "The Merger - Material Federal Income
Tax Consequences" in the Registration Statement, insofar as they constitute
statements of law or legal conclusions, although general in nature, are correct
in all material respects. The United States federal income tax consequences of
the Merger to a holder of TARGET common stock will, however, depend upon that
holder's particular situation and we express no opinion as to the completeness
of the discussion set forth in "The Merger - Material Federal Income Tax
Consequences" as applied to any particular holder.
This opinion represents and is based upon our judgment regarding the
application of current federal income tax laws including the Code, existing
judicial decisions, administrative regulations and published rulings and
procedures. Our opinion is not binding upon the Internal Revenue Service or the
courts, and there is no assurance that the Internal Revenue Service will not
successfully assert a contrary position. Furthermore, we can give no assurance
that future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, will not adversely affect the accuracy of the
conclusions stated herein. Nevertheless, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
federal income tax laws.
<PAGE> 3
Hadco Corporation
________ __, 2000
Page 3
This opinion addresses only the matters set forth above, and does not
address any other federal, state, local or foreign tax consequences that may
result from the Merger or any other transaction (including any transaction
undertaken in connection with or in contemplation of the Merger). In particular,
we express no opinion regarding (i) whether and the extent to which any TARGET
stockholder who has provided or will provide services to TARGET, ACQUIROR or
Merger Sub will have compensation income under any provision of the Code; (ii)
the effects of any such compensation income, including but not limited to the
effect upon the basis and holding period of the ACQUIROR common stock received
by any such stockholder; (iii) the potential application of the "golden
parachute" provisions (Sections 280G, 3121(v)(2) and 4999) of the Code, the
alternative minimum tax provisions (Sections 55, 56 and 57) of the Code or
Sections 305, 306, 357, 424, and 708 of the Code, or the Treasury regulations
promulgated thereunder; (iv) the corporate level tax consequences of the Merger
to ACQUIROR, Merger Sub or TARGET, including without limitation the survival
and/or availability, after the Merger, of any of the federal income tax
attributes or elections of TARGET; (v) the tax consequences of the Merger as
applied to specific shareholders of TARGET or that may be relevant to particular
classes of TARGET shareholders such as dealers in securities, foreign persons
and holders of shares acquired upon exercise of stock options or in other
compensatory transactions; (vi) the basis of any equity interest in TARGET
acquired by ACQUIROR in the Merger; (vii) the tax consequences of any
transaction in which a right to acquire TARGET stock or ACQUIROR stock was
received, or the effect of the Merger upon such tax consequences; (viii) the tax
consequences of the Merger to holders of options, warrants or other rights to
acquire TARGET stock; or (ix) any state, local or foreign tax consequences of
the merger.
This opinion has been delivered to you solely for the purpose of
satisfying the closing condition set forth in Section 6.3(c) of the Agreement
and is intended solely for your benefit; it may not be relied upon for any other
purpose or by any other person or entity and may not be made available to any
other person or entity without our prior written consent. We hereby consent to
the filing of this opinion as an exhibit to the Registration Statement, and to
the reference to our firm name under the headings "THE MERGER - Material Federal
Income Tax Consequences" and "LEGAL MATTERS" in the Registration Statement. In
giving this consent, however, we do not admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act, as
amended.
Very truly yours,
TESTA, HURWITZ & THIBEAULT, LLP
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
LIST OF SUBSIDIARIES
SUBSIDIARY JURISDICTION OF INCORPORATION
---------- -----------------------------
Sanmina Cable Systems Texas
Elexsys International Delaware
Neutronic Stamping & Plating subsidiary of Elexsys International
Symtron Corporation subsidiary of Elexsys International
Anetec Technology, Inc. subsidiary of Elexsys International
Pritec Corporation subsidiary of Elexsys International
Symtron Systems, Inc. subsidiary of Elexsys International
Elxi Acquisition, Inc. subsidiary of Elexsys International
Elexsys International UK subsidiary of Elexsys International
TELO Electronics, Inc. California
Manu-Tronics, Inc. Wisconsin
Sanmina B.V. Netherlands
Sanmina Canada Holding Co. Canada
Sanmina Canada(1) Canada
Sanmina Ireland Ltd(2) Ireland
Sanmina United Kingdom United Kingdom
Altron Systems Corporation(3) Massachusetts
Altron Securities Corporation(3) Massachusetts
Sanmina Foreign Sales Corporation Barbados
Sanmina Canada ULC Canada
Sanmina International AG Switzerland
Sanmina LP Texas
(1) A subsidiary of Sanmina Canada Holding Company.
(2) A subsidiary of Sanmina B.V.
(3) A subsidiary of Altron Incorporated.
<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 report dated October 22, 1999
included in Sanmina Corporation's Form 10-K for the year ended October 2, 1999
and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
------------------------
ARTHUR ANDERSEN LLP
San Jose, California
May 19, 2000
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
included in this registration statement and to the incorporation by reference
in this registration statement of our report dated November 18, 1999 included
in Hadco Corporation's Form 10-K for the year ended October 30, 1999 and to all
references to our Firm included in this registration statement.
Arthur Andersen LLP
/s/ Arthur Andersen LLP
Boston, Massachusetts
May 19, 2000
<PAGE> 1
Exhibit 99.1
MORGAN STANLEY DEAN WITTER
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-4000
We hereby consent to the use in the Registration Statement of Sanmina
Corporation on Form S-4 and in the Proxy Statement/Prospectus of Sanmina
Corporation and Hadco Corporation, which is part of the Registration Statement,
of our opinion dated April 17, 2000 appearing as Annex IV to such Proxy
Statement/Prospectus, to the description therein of such opinion and to the
references therein to our name. In giving the foregoing 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, as amended (the "Securities
Act"), or the rules and regulations promulgated thereunder, nor do we 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 or the
rules and regulations promulgated thereunder.
MORGAN STANLEY & CO.
INCORPORATED
By: /s/ Robert L. Eatroff
-----------------------------------
Robert L. Eatroff
Principal
New York, New York
May 18, 2000
<PAGE> 1
EXHIBIT 99.2
PROXY
HADCO CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS, JUNE 23, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Horace H. Irvine II, Andrew E. Lietz and F. Gordon
Bitter, and each of them, proxies, with full power of substitution, to vote all
shares of the stock of the Corporation which the undersigned is entitled to vote
at the Special Meeting of Stockholders of Hadco Corporation to be held on June
23, 2000 at 10:00 a.m. at Testa, Hurwitz & Thibeault, LLP, Conference Center,
20th Floor, High Street Tower, 125 High Street, Boston, Massachusetts, and at
any adjournments or postponements thereof, upon matters set forth in the Notice
of Special Meeting of Stockholders and Proxy Statement dated May 22, 2000, a
copy of which has been received by the undersigned. The proxies are further
authorized to vote, in their discretion, upon such other business as may
properly come before the meeting or any adjournments or postponements thereof
including, without limitation, potential adjournments or postponements for the
purpose of soliciting additional proxies in order to approve the proposal on the
reverse side.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR APPROVING THE AGREEMENT AND PLAN OF MERGER
AMONG SANMINA CORPORATION, SANM ACQUISITION SUBSIDIARY, INC. AND HADCO
CORPORATION DATED AS OF APRIL 17, 2000, AS AMENDED, AND THE MERGER.
SEE REVERSE SIDE SEE REVERSE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
(CONTINUED FROM OTHER SIDE)
1. To approve the Agreement and Plan of Merger dated as of April 17, 2000 among
Sanmina Corporation, SANM Acquisition Subsidiary, Inc. ("Merger Sub") and
Hadco Corporation, as amended (the "Merger Agreement") and the Merger,
pursuant to which Merger Sub will merge with and into Hadco on and subject
to the terms contained in the Merger Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
MARK HERE FOR ADDRESS CHANGE
AND NOTE AT LEFT [ ]
If signing as attorney,
executor, trustee or guardian,
please give your full title as
such.
Signature:
------------------------------
Date:
------------------------------
Signature:
------------------------------
Date:
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