-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JwQyIUiZkRo8Ju7HORT8aEYpcEiSj1bNpLyT9d2ZN2BNUdU+ZLfN1Fi6HkfPNWll 7J63+lTRljdpjLs/mbQHdA== /in/edgar/work/0000891618-00-005197/0000891618-00-005197.txt : 20001122 0000891618-00-005197.hdr.sgml : 20001122 ACCESSION NUMBER: 0000891618-00-005197 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20001121 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOLECTRON CORP CENTRAL INDEX KEY: 0000835541 STANDARD INDUSTRIAL CLASSIFICATION: [3672 ] IRS NUMBER: 942447045 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11098 FILM NUMBER: 774480 BUSINESS ADDRESS: STREET 1: 777 GIBRALTAR DR CITY: MILPITAS STATE: CA ZIP: 95035 BUSINESS PHONE: 4089578500 MAIL ADDRESS: STREET 1: 777 GIBRALTAR DR CITY: MILPITAS STATE: CA ZIP: 95035 8-K 1 f67517e8-k.txt FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) November 21, 2000 SOLECTRON CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) DELAWARE 1-11098 94-2447045 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 777 GIBRALTAR DRIVE, MILPITAS, CALIFORNIA 95035 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (408) 957-8500 -------------- NOT APPLICABLE - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) 2 ITEM 5 OTHER EVENTS On November 20, 2000, Solectron Corporation (the "Registrant") completed its sale of $2,900,000,000 aggregate principal amount of maturity of Liquid Yield Option (TM) Notes (Zero Coupon-Senior) due 2020 under an effective registration statement filed with the Securities and Exchange Commission. This current report on Form 8-K is being filed for the purpose of filing as exhibits certain documents relating to such sale. ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits in accordance with the provisions of item 601 of Regulation S-K
EXHIBIT NO. EXHIBIT DESCRIPTION ----------- ------------------- 1.1 Purchase Agreement dated November 14, 2000 between the Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated. 1.2 Purchase Agreement dated November 14, 2000 between the Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated. 4.1 Supplemental Indenture dated November 20, 2000 between the Registrant and State Street Bank and Trust Company of California, N.A. as Trustee.
Solectron and the Solectron logo are registered trademarks of Solectron Corporation. All other names are trademarks and/or registered trademarks of their respective owners. (TM) Trademark of Merrill Lynch & Co., Inc. -2- 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: November 21, 2000 SOLECTRON CORPORATION /s/ SUSAN S. WANG -------------------------------------------- Susan S. Wang Senior Vice President, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) -3- EX-1.1 2 f67517ex1-1.txt EXHIBIT 1.1 1 EXHIBIT 1.1 PURCHASE AGREEMENT between SOLECTRON CORPORATION and MERRILL LYNCH & CO. November 14, 2000 2 TABLE OF CONTENTS SECTION 1. Representations and Warranties................................................3 (a) Representations and Warranties by the Company.................................3 (1) Compliance with Registration Requirements..............................3 (2) Incorporated Documents.................................................4 (3) Independent Accountants................................................4 (4) Financial Statements...................................................4 (5) No Material Adverse Change in Business.................................4 (6) Good Standing of the Company...........................................5 (7) Good Standing of Subsidiaries..........................................5 (8) Capitalization.........................................................5 (9) Authorization of this Underwriting Agreement...........................6 (10) Authorization of the Securities........................................6 (11) Description of the Securities and the Indenture........................6 (12) Authorization and Description of Common Stock..........................6 (13) Authorization of the Indenture.........................................7 (14) Absence of Defaults and Conflicts......................................7 (15) Absence of Labor Dispute...............................................8 (16) Absence of Proceedings.................................................8 (17) Accuracy of Exhibits...................................................8 (18) Absence of Further Requirements........................................8 (19) Possession of Intellectual Property....................................8 (20) Possession of Licenses and Permits.....................................9 (21) Title to Property......................................................9 (22) Investment Company Act.................................................9 (23) Environmental Laws....................................................10 (24) Florida Laws..........................................................10 (b) Officers' Certificates.......................................................10 SECTION 2. Sale and Delivery to the Underwriter; Closing................................10 (a) Initial Securities...........................................................10 (b) Option Securities............................................................11 (c) Payment......................................................................11 (d) Denominations; Registration..................................................11 SECTION 3. Covenants of the Company.....................................................12 (a) Compliance with Securities Regulations and Commission Requests...............12 (b) Filing of Amendments.........................................................12 (c) Delivery of Registration Statements..........................................12 (d) Delivery of Prospectuses.....................................................13 (e) Continued Compliance with Securities Laws....................................13 (f) Blue Sky Qualifications......................................................13 (g) Earnings Statement...........................................................14 (h) Reservation of Securities....................................................14 (i) Use of Proceeds..............................................................14 (j) Restriction on Sale of Common Stock..........................................14
i 3 (k) Reporting Requirements.......................................................15 SECTION 4. Payment of Expenses..........................................................15 (a) Expenses.....................................................................15 (b) Termination of Agreement.....................................................15 SECTION 5. Conditions of the Underwriter's Obligations..................................16 (a) Effectiveness of Registration Statement......................................16 (b) Opinion of Counsel for Company...............................................16 (c) Opinion of Counsel for the Underwriter.......................................16 (d) Officers' Certificate........................................................17 (e) Accountant's Comfort Letter..................................................17 (f) Bring-down Comfort Letter....................................................17 (g) Ratings......................................................................17 (h) Lock-up Agreements...........................................................17 (i) No Objection.................................................................18 (j) Amendment of Agreements......................................................18 (k) Listing Application..........................................................18 (l) Over-Allotment Option........................................................18 (m) Additional Documents.........................................................19 (n) Termination of Agreement.....................................................19 SECTION 6. Indemnification..............................................................19 (a) Indemnification of Underwriter...............................................19 (b) Indemnification of Company, Directors and Officers...........................20 (c) Actions against Parties; Notification........................................21 (d) Settlement without Consent if Failure to Reimburse...........................21 SECTION 7. Contribution.................................................................22 SECTION 8. Representations, Warranties and Agreements to Survive Delivery...............23 SECTION 9. Termination..................................................................23 (a) Termination of Agreement.....................................................23 (b) Liabilities..................................................................24 SECTION 10. Notices......................................................................24 SECTION 11. Parties......................................................................24 SECTION 12. GOVERNING LAW AND TIME.......................................................24 SECTION 13. Effect of Headings...........................................................25
ii 4 SOLECTRON CORPORATION (a Delaware corporation) $2,900,000,000 Liquid Yield Option (TM) Notes due 2020 (Zero Coupon - Senior) PURCHASE AGREEMENT MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281-1209 Ladies and Gentlemen: Solectron Corporation, a Delaware corporation (the "Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch" or the "Underwriter"), with respect to the issue and sale by the Company and the purchase by the Underwriter, of $2,900,000,000 aggregate principal amount at maturity of the Company's Liquid Yield Option (TM) Notes due 2020 (Zero Coupon - Senior) (the "LYONs"), and with respect to the grant by the Company to the Underwriter of the option described in Section 2(b) hereof to purchase all or any part of an additional $435,000,000 principal amount at maturity of LYONs to cover over-allotments, if any. The aforesaid $2,900,000,000 principal amount at maturity of LYONs (the "Initial Securities") to be purchased by the Underwriter and all or any part of the $435,000,000 principal amount of LYONs subject to the option described in Section 2(b) hereof (the "Option Securities") are hereinafter called, collectively, the "Securities." The Securities are to be issued pursuant to a senior indenture (the "Senior Indenture") between the Company and State Street Bank and Trust Company of California, N.A., as trustee (the "Trustee"), as to be supplemented by a supplemental indenture to be executed at the Closing Time (as defined below) between the Company and the Trustee (the "Supplemental Indenture," and the Senior Indenture, as supplemented by the Supplemental Indenture, the "Indenture"). The Securities are convertible at any time on or prior to maturity, unless previously redeemed or otherwise purchased, into shares of common stock, par value $0.001 per share, of the Company (the "Common Stock") in accordance with the terms of the Securities and the Indenture, at the initial conversion rate of 11.7862 shares per LYON. 5 The Company understands that the Underwriter proposes to make a public offering of the Securities as soon as the Underwriter deems advisable after this Agreement has been executed and delivered and the Indenture has been qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 333-34494) and pre-effective amendment no. 1 thereto, covering the registration of the Securities under the Securities Act of 1933, as amended (the "1933 Act"), including the related preliminary prospectus or prospectuses. Such registration statement has been declared effective by the Commission and the Indenture is duly qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). Promptly after execution and delivery of this Agreement, the Company will either (i) prepare and file a prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations") and/or paragraph (b) of Rule 424 ("Rule 424 (b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The information included in such prospectus or in such Term Sheet, as the case may be, that was omitted from such registration statement at the time it became effective but that is deemed to be part of such registration statement at the time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus used before such registration statement became effective, and any prospectus that omitted, as applicable, the Rule 430A Information or the Rule 434 Information, that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called a "preliminary prospectus." Such registration statement, including the exhibits thereto, schedules thereto, if any, and the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it became effective and including the Rule 430A Information and the Rule 434 Information, as applicable, is herein called the "Registration Statement." Any registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b) Registration Statement," and after such filing the term "Registration Statement" shall include the Rule 462(b) Registration Statement. The final prospectus, including the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the form first furnished to the Underwriter for use in connection with the offering of the Securities is herein called the "Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to the preliminary prospectus dated November 1, 2000 together with the Term Sheet and all references in this Agreement to the date of the Prospectus shall mean the date of the Term Sheet. For purposes of this Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any Term Sheet or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"). All references in this Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" in the Registration Statement, any preliminary prospectus or the Prospectus (or other references of like import) shall be deemed to 2 6 mean and include all such financial statements and schedules and other information which is incorporated by reference in the Registration Statement, any preliminary prospectus or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is incorporated by reference in the Registration Statement, such preliminary Prospectus, as the case may be. SECTION 1. REPRESENTATIONS AND WARRANTIES (a) Representations and Warranties by the Company. The Company represents and warrants to the Underwriter, as of the date hereof, as of the Closing Time and as of the Date of Delivery (as defined below) (in each case, a "Representation Date"), as follows: (1) Compliance with Registration Requirements. The Company meets the requirements for use of Form S-3 under the 1933 Act. The Registration Statement (including any Rule 462(b) Registration Statement) has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement (or such Rule 462(b) Registration Statement) has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with. In addition, the Indenture has been duly qualified under the 1939 Act. At the respective times the Registration Statement (including any Rule 462(b) Registration Statement) and any post-effective amendments thereto became effective and at each Representation Date, the Registration Statement (including any Rule 462(b) Registration Statement) and any amendments thereto complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the Commission under the 1939 Act (the "1939 Act Regulations") and did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. At the date of the Prospectus, at the Closing Time and at the Date of Delivery, neither the Prospectus nor any amendments and supplements thereto included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If the Company elects to rely upon Rule 434 of the 1933 Act Regulations, the Company will comply with the requirements of Rule 434. Notwithstanding the foregoing, the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by the Underwriter expressly for use in the Registration Statement or the Prospectus or any amendments or supplements thereto. Each preliminary prospectus and prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all material respects with the 1933 Act Regulations and each preliminary prospectus and the Prospectus delivered to the Underwriter for 3 7 use in connection with the offering of the Securities will, at the time of such delivery, be identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (2) Incorporated Documents. The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations") and, when read together with the other information in the Prospectus, at the date of the Prospectus, at the Closing Time and at the Date of Delivery did not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (3) Independent Accountants. The accountants who certified the financial statements and any supporting schedules thereto included in the Registration Statement and the Prospectus are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. (4) Financial Statements. The financial statements of the Company included in the Registration Statement and the Prospectus, together with the related schedules and notes, as well as those financial statements, schedules and notes of any other entity included therein, present fairly the financial position of the Company and its consolidated subsidiaries, or such other entity, as the case may be, at the dates indicated and the statement of operations, stockholders' equity and cash flows of the Company and its consolidated subsidiaries, or such other entity, as the case may be, for the periods specified. Such financial statements have been prepared in conformity with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved except to the extent that the interim audited financial statements are subject to normal year-end adjustments, lack of footnotes and other presentation items. The supporting schedules, if any, included in the Registration Statement and the Prospectus present fairly in accordance with GAAP the information required to be stated therein. The selected financial data and the summary financial information included in the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Registration Statement and the Prospectus. (5) No Material Adverse Change in Business. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein, (a) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a "Material Adverse Effect"), (b) there have been no transactions entered into by the Company or any of its subsidiaries, other than those arising in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise and (c) except for dividends on the Company's preferred stock that may be outstanding from time to time, in amounts per share that are consistent with the applicable charter document or 4 8 supplement thereto, respectively, no dividend or distribution of any kind has been declared, paid or made by the Company on any class of its capital stock. (6) Good Standing of the Company. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under, or as contemplated under, this Agreement. The Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not result in a Material Adverse Effect. (7) Good Standing of Subsidiaries. Each Subsidiary of the Company has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not result in a Material Adverse Effect. The Company does not have any "significant subsidiaries" (as such term is defined in Rule 1-02 of Regulation S-X promulgated under the 1933 Act) other than Solectron Texas, Inc., Solectron California Corporation and Solectron Technology Sdn. Bhd. Except as otherwise stated in the Registration Statement and the Prospectus, all of the issued and outstanding capital stock of each Subsidiary has been duly authorized and is validly issued, fully paid and non-assessable and is owned by the Company (except for directors qualifying shares), directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. None of the outstanding shares of capital stock of any subsidiary was issued in violation of preemptive or other similar rights of any securityholder of such subsidiary. (8) Capitalization. The authorized, issued and outstanding shares of capital stock of the Company is as set forth in the column entitled "Actual" under the "Capitalization" section of the Prospectus section (except for subsequent issuances thereof pursuant to this Agreement, pursuant to reservations, agreements or employee benefit plans referred to in the Prospectus or pursuant to the exercise of convertible securities or options referred to in the Prospectus). Such shares of capital stock have been duly authorized and validly issued by the Company and are fully paid and non-assessable, and none of such shares of capital stock was issued in violation of preemptive or other similar rights of any securityholder of the Company. (9) Authorization of this Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by the Company. (10) Authorization of the Securities. The Securities have been duly authorized and, at the Closing Time, will have been duly executed by the Company and, when authenticated, issued and delivered in the manner provided for in the Indenture and delivered 5 9 against payment of the purchase price therefor as provided in this Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture. (11) Description of the Securities and the Indenture. The Securities and the Indenture will conform in all material respects to the respective statements relating thereto contained in the Prospectus and will be in substantially the respective forms filed or incorporated by reference, as the case may be, as exhibits to the Registration Statement. (12) Authorization and Description of Common Stock. The Common Stock conforms to all statements relating thereto contained or incorporated by reference in the Prospectus and such description conforms to the rights set forth in the instruments defining the same. Four million (4,000,000) shares of Common Stock have been reserved for issuance upon conversion of the Securities as of the date hereof. Upon issuance and delivery of the Securities in accordance with this Agreement and the Indenture, the Securities will be convertible at the option of the holder thereof for shares of Common Stock in accordance with the terms of the Securities and the Indenture, subject to adequate shares being authorized and reserved as provided in the Indenture; the shares of Common Stock issuable upon conversion of the Securities, to the extent reserved as of the date hereof, have been, and to the extent reserved hereafter as provided in the Indenture will be, duly authorized and reserved for issuance upon such conversion by all necessary corporate action; and such shares, when issued upon such conversion, will be validly issued and will be fully paid and non-assessable; no holder of such shares will be subject to personal liability by reason of being such a holder; and the issuance of such shares upon such conversion will not be subject to the preemptive or other similar rights of any securityholder of the Company. (13) Authorization of the Indenture. The Senior Indenture has been duly authorized by the Company and duly qualified under the 1939 Act and, when the Supplemental Indenture has been duly executed and delivered by the Company and the Trustee, the Indenture will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). (14) Absence of Defaults and Conflicts. Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of 6 10 them may be bound, or to which any of the assets, properties or operations of the Company or any of its subsidiaries is subject (collectively, "Agreements and Instruments"), except for such defaults that would not result in a Material Adverse Effect. The execution, delivery and performance of this Agreement, the Indenture and any other agreement or instrument entered into or issued or to be entered into or issued by the Company in connection with the transactions contemplated hereby or thereby or in the Registration Statement and the Prospectus and the consummation of the transactions contemplated herein and in the Registration Statement and the Prospectus (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described under the caption "Use of Proceeds" as well as the issuance of the shares of Common Stock issuable upon conversion of the Securities) and compliance by the Company with its obligations hereunder and thereunder have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any assets, properties or operations of the Company or any of its subsidiaries pursuant to, any Agreements and Instruments except as disclosed in the Prospectus and except for such other conflicts, defaults or breaches that would not result in a Material Adverse Effect, or violate any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their assets, properties or operations, except where such violation would not result in a Material Adverse Effect, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any of its subsidiaries. As used herein, a "Repayment Event" means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries. (15) Absence of Labor Dispute. No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or any subsidiary's principal suppliers, manufacturers, customers or contractors, which, in either case, may reasonably be expected to result in a Material Adverse Effect. (16) Absence of Proceedings. There is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or to the knowledge of the Company threatened, against or affecting the Company or any of its subsidiaries which is required to be disclosed in the Registration Statement and the Prospectus, or which might reasonably be expected to result in a Material Adverse Effect, or which might reasonably be expected to materially and adversely affect the assets, properties or operations thereof or the consummation of the transactions contemplated under the Prospectus, this Agreement or the Indenture, or the performance by the Company of its obligations hereunder and thereunder. The aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or of which any of their respective assets, properties or operations is the subject which are not described in the Registration Statement and the Prospectus, including ordinary routine litigation incidental to the business, could not reasonably be expected to result in a Material Adverse Effect. 7 11 (17) Accuracy of Exhibits. There are no contracts or documents which are required to be described in the Registration Statement, the Prospectus or the documents incorporated by reference therein or to be filed as exhibits thereto which have not been so described and filed as required. (18) Absence of Further Requirements. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency, domestic or foreign, is necessary or required for the due authorization, execution and delivery by the Company of this Agreement or for the performance by the Company of the transactions contemplated under the Prospectus, this Agreement, or the Indenture, except such as have been already made, obtained or rendered, as applicable. (19) Possession of Intellectual Property. The Company and its subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, "Intellectual Property") necessary to carry on the business now operated by them, and, other than as described in the Prospectus, neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect. (20) Possession of Licenses and Permits. The Company and its subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, "Governmental Licenses") issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them. The Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, result in a Material Adverse Effect. All of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not result in a Material Adverse Effect. Neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect. (21) Title to Property. The Company and its subsidiaries have good and marketable title to all real property owned by the Company and its subsidiaries and good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind, except (a) as otherwise stated in the Registration Statement and the Prospectus or (b) for any of the foregoing, which, either singly or in the aggregate, would not result in a Material Adverse Effect. All of the leases and subleases material to the business of the Company and its subsidiaries considered as one 8 12 enterprise, and under which the Company or any of its subsidiaries holds properties described in the Prospectus, are in full force and effect, and neither the Company nor any of its subsidiaries has received any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any of its subsidiaries under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such subsidiary of the continued possession of the leased or subleased premises under any such lease or sublease, except for any such claim, which, either singly or in the aggregate, would not result in a Material Adverse Effect. (22) Investment Company Act. The Company is not, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus will not be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). (23) Environmental Laws. Except as otherwise stated in the Registration Statement and the Prospectus and except as would not, singly or in the aggregate, result in a Material Adverse Effect, (a) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, "Hazardous Materials") or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, "Environmental Laws"), (b) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (c) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries and (d) there are no events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws. (24) Florida Laws. The Company has complied with, and is and will be in compliance with, the provisions of that certain Florida act relating to disclosure of doing business with Cuba, codified as Section 517.075 of the Florida statutes, and the rules and regulations thereunder or is exempt therefrom. (b) Officers' Certificates. Any certificate signed by any officer of the Company or any of its subsidiaries and delivered the Underwriter or to counsel for the Underwriter in connection with the offering of the Securities shall be deemed a representation and warranty by the Company to the Underwriter as to the matters covered thereby on the date of such certificate 9 13 and, unless subsequently amended or supplemented, at each Representation Date subsequent thereto. SECTION 2. SALE AND DELIVERY TO THE UNDERWRITER; CLOSING (a) Initial Securities. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company agrees to sell to the Underwriter, and the Underwriter agrees to purchase from the Company, at the price set forth in Schedule A, $2,900,000,000 in the aggregate principal amount at maturity of Initial Securities. (b) Option Securities. In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriter to purchase up to an additional $435,000,000 principal amount at maturity of Securities at the same price per Security set forth in Schedule A for the Initial Securities, plus accreted interest, if any, from the Closing Date to the date of Delivery (as defined below). The option hereby granted will expire thirty (30) days after the date hereof and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Initial Securities upon notice by the Underwriter to the Company setting forth the number of Option Securities as to which the Underwriter is then exercising the option and the time and date of payment and delivery for such Option Securities. Any such time and date of delivery (a "Date of Delivery") shall be determined by the Underwriter, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time or two days after the date of the notice if after the Closing Time, unless otherwise agreed upon by the Underwriter and the Company. If the option is exercised as to all or any portion of the Option Securities, the Underwriter will purchase that number of Option Securities. (c) Payment. Payment of the purchase price for, and delivery of, the Initial Securities shall be made at the offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304, or at such other place as shall be agreed upon by Merrill Lynch and the Company, at 10:00 a.m. (California time) on the third (fourth, if the pricing occurs after 4:30 p.m. (Eastern time) on any given day) business day after the date hereof or such other time not later than ten business days after such date as shall be agreed upon by Merrill Lynch and the Company (such time and date of payment and delivery being herein called "Closing Time"). In addition, in the event that the Underwriter has exercised its option to purchase any or all of the Option Securities, payment of the purchase price for, and delivery of such Option Securities, shall be made at the above-mentioned offices of Wilson Sonsini Goodrich & Rosati, or at such other place as shall be agreed upon by Merrill Lynch and the Company, on the relevant Date of Delivery as specified in the notice from Merrill Lynch to the Company. Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to Merrill Lynch for the account of the Underwriter of the Securities to be purchased by it. (d) Denominations; Registration. The certificates for the Securities, shall be in such denominations and registered in such names as Merrill Lynch may request in writing at least one full business day prior to the Closing Time or the relevant Date of Delivery, as the case may be. 10 14 The certificates for the Securities will be made available for examination and packaging by Merrill Lynch in the City of New York not later than 10:00 a.m. (Eastern time) on the business day prior to the Closing Time or the relevant Date of Delivery, as the case may be. SECTION 3. COVENANTS OF THE COMPANY The Company covenants with the Underwriter, as follows: (a) Compliance with Securities Regulations and Commission Requests. The Company, subject to Section 3(b), will comply with the requirements of Rule 430A of the 1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations, as applicable, and will notify the Underwriter immediately, and confirm the notice in writing, of (i) the effectiveness of any post-effective amendment to the Registration Statement or the filing of any supplement or amendment to the Prospectus, (ii) the receipt of any comments from the Commission, (iii) any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (iv) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes. The Company will promptly effect the filings necessary pursuant to Rule 424 and will take such steps as it deems necessary to ascertain promptly whether the Prospectus transmitted for filing under Rule 424 was received for filing by the Commission and, in the event that it was not, it will promptly file the Prospectus. The Company will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) Filing of Amendments. The Company will give the Underwriter notice of its intention to file or prepare any amendment to the Registration Statement (including any filing under Rule 462(b) of the 1933 Act Regulations), any Term Sheet or any amendment, supplement or revision to either the prospectus included in the Registration Statement at the time it became effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the Underwriter with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Underwriter or counsel for the Underwriter shall reasonably object. (c) Delivery of Registration Statements. The Company has furnished or will deliver to the Underwriter and counsel for the Underwriter, without charge, one signed copy of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and signed copies of all consents and certificates of experts. The Registration Statement and each amendment thereto furnished to the Underwriter will be identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (d) Delivery of Prospectuses. The Company will deliver to the Underwriter, without charge, as many copies of each preliminary prospectus as the Underwriter may reasonably request, and the Company hereby consents to the use of such copies for purposes permitted by 11 15 the 1933 Act. The Company will furnish to the Underwriter, without charge, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such number of copies of the Prospectus as the Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriter will be identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (e) Continued Compliance with Securities Laws. The Company will comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Registration Statement and the Prospectus. If at any time when the Prospectus is required by the 1933 Act or the 1934 Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriter or for the Company, to amend the Registration Statement in order that the Registration Statement will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or to amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and file with the Commission, subject to Section 3(b), such amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement or the Prospectus comply with such requirements, and the Company will furnish to the Underwriter, without charge, such number of copies of such amendment or supplement as the Underwriter may reasonably request. (f) Blue Sky Qualifications. The Company will use its best efforts, in cooperation with the Underwriter, to qualify the Securities and the shares of Common Stock issuable upon conversion of Securities for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Underwriter may designate and to maintain such qualifications in effect for a period of not less than one year from the date hereof; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. In each jurisdiction in which the Securities or the shares of Common Stock issuable upon conversion of Securities have been so qualified, the Company will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the date hereof. (g) Earnings Statement. The Company will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings statement for the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act. 12 16 (h) Reservation of Securities. As of the Closing Time, the Company will have reserved and keep available thereafter four million (4,000,000) shares of Common Stock, free of preemptive or other similar rights, for issuance upon conversion of the Securities. To the extent required by the Indenture, the Company will reserve and keep available at all times, free of preemptive or other similar rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to satisfy any obligations to issue the shares of Common Stock issuable upon conversion of Securities. (i) Use of Proceeds. The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Prospectus under "Use of Proceeds." (j) Restriction on Sale of Common Stock. During a period of 90 days from the Closing Time, the Company will not, without the prior written consent of the Underwriter, (i) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any share of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or file any registration statement under the 1933 Act with respect to any of the foregoing or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Stock, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (A) the Securities to be sold hereunder, the shares of the Company's Common Stock, $0.001 par value, to be sold under the Purchase Agreement dated the date hereof between the Company and Merrill Lynch, the Company's LYONs due 2019, the Company's LYONs due 2020 and shares issued upon conversion of any of the foregoing LYONs, (B) any shares of Common Stock issued by the Company upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof and referred to in the Prospectus, (C) any shares of Common Stock issued or options to purchase Common Stock granted pursuant to existing employee benefit plans of the Company referred to in the Prospectus, (D) any shares of Common Stock issued pursuant to any non-employee director stock plan or dividend reinvestment plan and (E) any shares of Common Stock issued pursuant to any acquisition consummated pursuant to an agreement executed by the Company prior to the Closing Time. (k) Reporting Requirements. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations. SECTION 4. PAYMENT OF EXPENSES (a) Expenses. The Company will pay all expenses incidental to the performance of its obligations under this Agreement, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and of each amendment thereto, (ii) the preparation, printing and delivery to the Underwriter of this Agreement, the Indenture and such other documents as may be required in connection with the 13 17 offering, purchase, sale, issuance or delivery of the Securities or the issuance or delivery of the Common Stock issuable upon conversion thereof, (iii) the preparation, issuance and delivery of the Securities and the issuance or delivery of the Common Stock issuable upon conversion thereof, any certificates for the Securities or such Common Stock issuable upon conversion thereof, including any transfer taxes and any stamp or other duties payable upon the sale, issuance or delivery of the Securities to the Underwriter, (iv) the fees and disbursements of the Company's counsel, accountants and other advisors or agents (including transfer agents and registrars), as well as the fees and disbursements of the Trustee and its counsel, (v) the qualification of the Securities and Common Stock issuable upon conversion thereof under state securities laws in accordance with the provisions of Section 3(f) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriter in connection therewith and in connection with the preparation, printing and delivery of the Blue Sky Survey, and any amendment thereto, (vi) the printing and delivery to the Underwriter of copies of each preliminary prospectus, any Term Sheet, and the Prospectus and any amendments or supplements thereto, (vii) the fees charged by nationally recognized statistical rating organizations for the rating of the Securities, (viii) the fees and expenses incurred with respect to the listing of the Common Stock issuable upon conversion of the Securities, and (ix) the filing fees incident to, and the reasonable fees and disbursements of counsel to the Underwriter in connection with, the review, if any, by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Securities. (b) Termination of Agreement. If this Agreement is terminated by the Underwriter in accordance with the provisions of Section 5 or Section 9(b)(i) hereof, the Company shall reimburse the Underwriter for all of its accountable out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriter. SECTION 5. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS The obligations of the Underwriter to purchase and pay for the Securities pursuant to this Agreement are subject to the accuracy of the representations and warranties of the Company contained in Section 1 hereof or in certificates of any officer of the Company or any of its subsidiaries delivered pursuant to the provisions hereof, to the performance by the Company of its covenants and other obligations hereunder, and to the following further conditions: (a) Effectiveness of Registration Statement. The Registration Statement, including any Rule 462(b) Registration Statement, has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act and no proceedings for that purpose shall have been instituted or be pending or threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of counsel to the Underwriter. A prospectus containing information relating to the description of the Securities and the Common Stock, the specific method of distribution and similar matters shall have been filed with the Commission in accordance with Rule 424(b)(1), (b)(2), (b)(3), (b)(4) or (b)(5), as applicable (or any required post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A), or, if the Company has elected to rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet including 14 18 the Rule 434 Information shall have been filed with the Commission in accordance with Rule 424(b)(7). (b) Opinion of Counsel for Company. At Closing Time, the Underwriter shall have received the favorable opinions, dated as of Closing Time, of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the Company, and Malaysian counsel for the Company reasonably acceptable to the Representative, in form and substance reasonably satisfactory to counsel for the Underwriter, to the effect set forth in Exhibit B hereto and to such further effect as counsel to the Underwriter shall reasonably request. (c) Opinion of Counsel for the Underwriter. At Closing Time, the Underwriter shall have received the favorable opinion, dated as of Closing Time, of Latham & Watkins, counsel for the Underwriter. In giving such opinion, such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York, the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to the Underwriter. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and its subsidiaries and certificates of public officials. (d) Officers' Certificate. At Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Prospectus, any Material Adverse Effect, and the Underwriter shall have received a certificate of the President or a Vice President of the Company and of the chief financial officer or chief accounting officer of the Company, dated as of Closing Time, to the effect that (i) there has been no such Material Adverse Effect, (ii) the representations and warranties in Section 1(a) are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted, are pending or, to the best of such officer's knowledge, are threatened by the Commission. (e) Accountant's Comfort Letter. At the time of the execution of this Agreement, the Underwriter shall have received from KPMG LLP a letter dated such date, in form and substance satisfactory to the Underwriter, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus. (f) Bring-down Comfort Letter. At Closing Time, the Underwriter shall have received from KPMG LLP a letter, dated as of Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to Section 5(e), except that the specified date referred to shall be a date not more than three business days prior to the Closing Time. (g) Ratings. At Closing Time, the Securities shall be rated at least Baa3 by Moody's Investor's Service Inc. and BBB by Standard & Poor's and the Company shall have delivered to the Underwriter a letter dated the Closing Time, from each such rating agency, or other evidence satisfactory to the Underwriter, confirming that the Securities have such ratings; and since the 15 19 date of this Agreement, there shall not have occurred a downgrading in the rating assigned to the Securities or any of the Company's other debt securities by any "nationally recognized statistical rating agency," as that term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such organization shall have publicly announced that it has under surveillance or review its rating of the Securities or any of the Company's other debt securities. (h) Lock-up Agreements. On the date hereof, the Underwriter shall have received a lock-up agreement substantially in the form attached hereto as Exhibit A signed by the persons listed on Schedule B hereto. (i) No Objection. If the Registration Statement or an offering of the Securities is required to be filed with the NASD for review, the NASD shall not have raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements. (j) Amendment of Agreements. Prior to Closing Time, either (i) each of the agreements listed on Schedule C shall have been amended (or consent thereunder obtained) to permit the offering of the Securities without resulting in a default thereunder and at Closing Time shall be in form and substance satisfactory to the Underwriter and counsel for the Underwriter, or (ii) to the extent that any such agreement shall not be so amended (or consent thereunder obtained), sufficient funds shall be set aside by the Company, in the case of the agreement described in item 1 of Schedule C, to repay all indebtedness thereunder in a manner sufficient to eliminate such default, or, in the case of the agreements referred to in the other items in Schedule C, to purchase the property subject to such agreements in a manner sufficient to eliminate any such default. The Company hereby covenants that, to the extent that the Company takes action under clause (ii) of the preceding sentence, it will, as promptly as practicable, but in no event later than the later of thirty (30) days following the Closing Time and the earliest time it is permitted to do so under the applicable agreement, apply such funds to eliminate such default as described therein or otherwise take necessary action to cure or obtain a waiver of such default. (k) Listing Application. Prior to Closing Time, the Company shall have filed an application with the New York Stock Exchange to list the Securities thereon. (l) Over-Allotment Option. In the event that the Underwriter exercises its option to purchase all or any portion of the Option Securities, the representations and warranties of the Company contained herein and the statements in any certificates furnished by the Company or any of its subsidiaries hereunder shall be true and correct as of the Date of Delivery, and, at the relevant Date of Delivery, the Underwriter shall have received: (1) A certificate, dated such Date of Delivery, of the President or a Vice President of the Company and the chief financial officer or chief accounting officer of the Company, confirming that the certificate delivered at the Closing Time pursuant to Section 5(d) hereof remains true and correct as of such Date of Delivery. (2) The favorable opinions of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the Company, and Malaysian counsel to the Company, in form and substance reasonably satisfactory to counsel for the Underwriter, dated such Date of 16 20 Delivery, relating to the Option Securities and otherwise to the same effect as the opinion required by Section 5(b) hereof. (3) The favorable opinion of Latham & Watkins, counsel for the Underwriter, dated such Date of Delivery, relating to the Option Securities and otherwise to the same effect as the opinion required by Section 5(c) hereof. (4) A letter from KPMG LLP, in form and substance satisfactory to the Underwriter and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Underwriter pursuant to Section 5(f) hereof, except that the "specified date" on the letter furnished pursuant to this paragraph shall be a date not more than three business days prior to such Date of Delivery. (5) Since the time of execution of this Agreement, there shall not have occurred a downgrading in, or withdrawal of, the rating assigned to the Securities or any of the Company's other securities by any such rating organization, and no such rating organization shall have publicly announced that it has under surveillance or review its rating of the Securities or any of the Company's other securities. (m) Additional Documents. At Closing Time and at the Date of Delivery, counsel for the Underwriter shall have been furnished with such documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Securities as herein contemplated shall be satisfactory in form and substance to the Underwriter and counsel for the Underwriter. (n) Termination of Agreement. If any condition specified in this Section 5 shall not have been fulfilled when and as required to be fulfilled, this Agreement (or, with respect to the Underwriter's exercise of any over-allotment option for the purchase of Option Securities on a Date of Delivery after the Closing Time, the obligations of the Underwriter to purchase the Option Securities on such Date of Delivery) may be terminated by the Underwriter by notice to the Company at any time at or prior to the Closing Time (or such Date of Delivery, as applicable), and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and remain in full force and effect. SECTION 6. INDEMNIFICATION (a) Indemnification of Underwriter. The Company agrees to indemnify and hold harmless the Underwriter and each person, if any, who controls the Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: (1) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or the 17 21 omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (2) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Company; and (3) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Underwriter), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by the Underwriter expressly for use in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto). The foregoing indemnity with respect to any untrue statement contained in or omission from a preliminary prospectus shall not inure to the benefit of the Underwriter (or any person controlling the Underwriter) from whom the person asserting any such loss, liability, claim, damage or expense purchased any of the Securities which are the subject thereof, if the Company shall sustain the burden of proving that such person was not sent or given a copy of the Prospectus at or prior to the written confirmation of the sale of such Securities to such person and the untrue statement contained in or omission from such preliminary prospectus was corrected in the Prospectus. (b) Indemnification of Company, Directors and Officers. The Underwriter agrees to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement 18 22 thereto) in reliance upon and in conformity with written information furnished to the Company by the Underwriter expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (c) Actions against Parties; Notification. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 6(a) above, counsel to the indemnified parties shall be selected by the Underwriter, and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by the Company. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Settlement without Consent if Failure to Reimburse. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(ii) effected without its written consent if (i) such settlement is entered into more than forty-five (45) days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least thirty (30) days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. SECTION 7. CONTRIBUTION If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such 19 23 indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriter, on the other hand, from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Underwriter, on the other hand, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriter, on the other hand, in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of such Securities (before deducting expenses) received by the Company and the total underwriting discount received by the Underwriter, in each case as set forth on the cover of the Prospectus, or, if Rule 434 is used, the corresponding location on the Term Sheet bear to the aggregate initial public offering price of such Securities as set forth on such cover. The relative fault of the Company, on the one hand, and the Underwriter, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriter and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriter agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 7, the Underwriter shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which the Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person, if any, who controls the Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Underwriter, and each director of the Company, each officer of the 20 24 Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company or any of its subsidiaries submitted pursuant hereto or thereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Underwriter or controlling person, or by or on behalf of the Company, and shall survive delivery of and payment for the Securities. SECTION 9. TERMINATION (a) Termination of Agreement. The Underwriter may terminate this Agreement, by notice to the Company, at any time at or prior to the Closing Time or any relevant Date of Delivery, if (i) there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Prospectus, any Material Adverse Effect, or (ii) there has occurred any material adverse change in the financial markets in the United States, or any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Underwriter, impracticable to market the Securities or to enforce contracts for the sale of the Securities, or (iii) trading in any securities of the Company has been suspended or materially limited by the Commission or the New York Stock Exchange, or if trading generally on the New York Stock Exchange or the American Stock Exchange or in the Nasdaq National Market has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by either of said exchanges or by such system or by order of the Commission, the NASD or any other governmental authority, or (iv) a banking moratorium has been declared by either Federal or New York authorities. (b) Liabilities. If this Agreement is terminated pursuant to this Section 9, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such termination and remain in full force and effect. SECTION 10. NOTICES All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriter shall be directed to Merrill Lynch at 10900 Wilshire Boulevard, Suite 900, Los Angeles, California 90024, Attn: Harold McMahon; and notices to the Company shall be directed to it at 777 Gibraltar Drive, Milpitas, California 95035, Attn: Susan Wang, Senior Vice President and Chief Financial Officer. 21 25 SECTION 11. PARTIES This Agreement shall inure to the benefit of and be binding upon the Company and Underwriter and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriter and the Company and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from the Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 12. GOVERNING LAW AND TIME THIS UNDERWRITING AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. SECTION 13. EFFECT OF HEADINGS The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. [Signature Page Follows] 22 26 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this Agreement, along with all counterparts, will become a binding agreement between the Underwriter and the Company in accordance with its terms and as of the date first set forth above. Very truly yours, SOLECTRON CORPORATION By: /s/ Susan Wang -------------------------------- Name: Susan Wang ------------------------------ Title: Senior Vice President, Chief Financial Officer and Secretary ----------------------------- CONFIRMED AND ACCEPTED, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ H.T. McMahon -------------------------------- Name: H.T. McMahon ------------------------------ Title: Managing Director ----------------------------- S-1 27 EXHIBIT A FORM OF LOCK-UP AGREEMENT MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281-1209 Re: Proposed Public Offering by Solectron Corporation Dear Sirs: The undersigned, a stockholder and/or an officer of Solectron Corporation, a Delaware corporation (the "Company"), understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") proposes to enter into a Purchase Agreement (the "Purchase Agreement") with the Company providing for the public offering of $2,900,000,000 aggregate principal amount at maturity of the Company's Liquid Yield Option (TM) Notes due 2020 (Zero Coupon - Senior) (the "Securities"). In recognition of the benefit that such an offering will confer upon the undersigned as a stockholder and an officer of the Company, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with Merrill Lynch that, during a period of 45 days from the date of the Purchase Agreement, the undersigned will not, without the prior written consent of Merrill Lynch, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any shares of the Company's Common Stock, par value $0.001 per share (the "Common Stock"), or any securities convertible into or exchangeable or exercisable for Common Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of Common Stock or any securities convertible into or exchangeable for Common Stock, whether any such swap or transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise. Very truly yours, Signature: ------------------------ Print Name: ------------------------ A-1 28 EXHIBIT B FORM OF OPINIONS OF COMPANY'S COUNSEL TO BE DELIVERED PURSUANT TO SECTION 5(b) Opinion of Wilson, Sonsini, Goodrich & Rosati: (i) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware. (ii) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under, or as contemplated by, the Purchase Agreement. (iii) The Company is in good standing as a foreign corporation duly qualified to transact business in California and Georgia. (iv) The Company has the authorized capitalization as set forth in the Prospectus under the caption "Capitalization." (v) Each of Solectron Texas, Inc. and Solectron California Corporation ("U.S. Significant Subsidiaries") is duly incorporated and is an existing corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is in good standing as a foreign corporation duly qualified to transact business in each jurisdiction in which such qualification is required, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. All of the issued and outstanding capital stock of each U.S. Significant Subsidiary has been duly authorized and is validly issued, fully paid and non-assessable and, to our knowledge, is owned by the Company, directly or through subsidiaries, free of any adverse claim. None of the outstanding shares of capital stock of any U.S. Significant Subsidiary was issued in violation of any statutory preemptive or similar rights of any security holder of such U.S. Significant Subsidiary contained in such corporation's charter, by-law or any Reviewed Agreement. (vi) The Purchase Agreement has been duly authorized, executed and delivered by the Company. (vii) The documents incorporated by reference in the Registration Statement and the Prospectus (other than the financial statements and supporting schedules and other financial information derived from accounting records, included therein or omitted therefrom, as to which we need express no opinion), when they were filed with the Commission complied as to form in B-1 29 all material respects with the requirements of the 1934 Act and the rules and regulations of Commission thereunder. (viii) To our knowledge, except as disclosed in the Prospectus, there is not pending or threatened any action, suit, proceeding, inquiry or investigation, to which the Company or any of its subsidiaries is a party, or to which the assets, properties or operations of the Company or any subsidiary is subject, before or brought by any court or governmental agency or body which such counsel believes will have a Material Adverse Effect or materially or adversely affect the Company's ability to consummate transactions contemplated by the Purchase Agreement or the performance by the Company of its obligations thereunder. (ix) The information in the Prospectus under the captions "Description of LYONs," "Description of Capital Stock" and in the Registration Statement under Item 15, insofar as it purports to summarize the documents or laws referred to therein, fairly summarize in all material respects the matter referred to therein. (x) We confirm our opinion as set forth in the fifth full paragraph under the caption "Federal Income Tax Considerations" in the Prospectus. The information in the Prospectus under the caption "Federal Income Tax Considerations," while not purporting to discuss all tax matters relating to the Securities, based upon the Securities being treated as indebtedness, sets forth the material federal income tax consequences of the Securities, subject to the qualifications set forth therein. (xi) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any U.S. federal or California, or under the General Corporation Law of Delaware, Delaware court or governmental authority or agency is necessary or required by the Company in connection with the due authorization, execution or delivery by the Company of the Purchase Agreement or the Indenture or for the performance by the Company of the transactions contemplated under the Prospectus or the Indenture, other than under the 1933 Act and the 1939 Act, which has already been made, obtained or rendered, as applicable, and other than as may be required under state or non-U.S. securities laws as to which no opinion need be rendered. (xii) The Registration Statement has been declared effective under the 1933 Act. The Additional Registration Statement was effective upon filing pursuant to Rule 462(b) promulgated under the 1933 Act. The required filings of the Prospectus pursuant to Rule 424(b) have been made in the manner and within the time periods required by Rule 424(b). To our knowledge, no stop order suspending the effectiveness of the Registration Statement (or such Rule 462(b) Registration Statement) has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or threatened by the Commission. (xiii) The Registration Statement (including any Rule 462(b) Registration Statement) and the Prospectus, excluding the documents incorporated by reference therein, and each amendment or supplement to the Registration Statement and Prospectus, excluding the B-2 30 documents incorporated by reference therein, as of their respective effective or issue dates (other than the financial statements and supporting schedules and other financial information derived from accounting records, included therein or omitted therefrom, and the Trustee's Statement of Eligibility on Form T-1, as to which we need express no opinion) complied as to form in all material respects with the requirements of the 1933 Act and the rules and regulations of the Commission thereunder. (xiv) The Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (xv) To our knowledge, the execution, delivery and performance by the Company of its obligations under the Purchase Agreement, the Indenture and the Securities and the consummation by the Company of the transactions contemplated by the Purchase Agreement (including the issuance of the shares of Common Stock issuable upon conversion of the Securities) do not and will not, whether with or without the giving of notice or lapse of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined in Section 1(a)(14) of the Purchase Agreement) under or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any subsidiary pursuant to any Reviewed Agreement (except as set forth in the Prospectus, except for such other conflicts, breaches or defaults or liens, charges or encumbrances that would not have a Material Adverse Effect, and except, to the extent that the condition set forth in Section 5(i) of the Purchase Agreement is satisfied under clause (ii) of the first sentence thereof with respect to any agreement described in Schedule C to the Purchase Agreement, for the default under such agreement resulting from the offering of the Securities), nor will such action result in any violation of the provisions of the charter or by-laws of the Company, or any applicable U.S. federal or California law, statute, rule, regulation, judgment, order, writ or decree, known to us, of any U.S. federal or California government, government instrumentality or court having jurisdiction over the Company or any of their respective properties, assets or operations. For purposes of this opinion, "Reviewed Agreements" are the agreements specified on an exhibit to such counsel's opinion. (xvi) Each of the Senior Indenture and the Supplemental Indenture (collectively, the "Indenture") has been duly authorized, executed and delivered by the Company and, assuming the due authorization, execution and delivery thereof by the Trustee, constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms. (xvii) The Securities are in the form contemplated by the Indenture, have been duly authorized by the Company and, assuming that the Securities have been duly authenticated by the Trustee in the manner described in its certificate delivered to you today (which fact such counsel need not determine by an inspection of the Securities), the Securities have been duly executed, issued and delivered by the Company and, assuming due payment by you in accordance with the terms of the Purchase Agreement, constitute valid and binding obligations of B-3 31 the Company, enforceable against the Company in accordance with their terms, and will be entitled to benefits of the Indenture. (xviii) Four million (4,000,000) shares of Common Stock have been duly reserved for issuance upon conversion of the Securities as of the date hereof. The shares of Common Stock issuable upon conversion of the Securities, to the extent reserved on the date hereof, have been duly authorized and reserved for issuance upon such conversion by all necessary corporate action; such shares, when issued upon such conversion, will be validly issued and will be fully paid and non-assessable, and no holder of such Common Stock is or will be subject to personal liability solely by reason of being such a holder. (xix) The issuance of the shares of Common Stock upon conversion of the Securities is not subject to any statutory preemptive or other similar rights of any security holder of the Company contained in the Company's charter, by-laws or any Reviewed Agreement. (xx) The Senior Indenture has been duly qualified under the 1939 Act. (xxi) The form of certificate to be used to evidence the Common Stock issuable upon conversion of the Securities complies in all material respects with all applicable statutory requirements, with any applicable requirements of the charter and by-laws of the Company and the requirements of the New York Stock Exchange. (xxii).To our knowledge, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be filed or incorporated by reference as exhibits to the Registration Statement other than those filed or incorporated by reference as exhibits thereto, and the descriptions thereof or references thereto are correct in all material respects. Such counsel shall also have furnished to you a written statement (included in such written opinion or in a separate letter) to the effect that, although such counsel has not verified, and is not passing upon and does not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement and the Prospectus and any further amendments and supplements thereto made by the Company prior to the Closing Time, except as set forth in paragraphs (ix) and (x) above, such counsel has acted as counsel to the Company in connection with the preparation of the Registration Statement and Prospectus and any such further amendments or supplements and such counsel has reviewed and discussed the contents of the Registration Statement and the Prospectus and any such further amendments and supplements with representatives of the Company, its auditors, you and your counsel, and on the basis of the information that such counsel gained in the course of this review and discussion, but without independent check or verification, no facts have come to such counsel's attention that caused it to believe (i) that, as of its effective date, the Registration Statement (including any Rule 462(b) Registration Statement) or any further amendment thereto made by the Company prior to such Closing Time contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not B-4 32 misleading or that, as of its date or such Closing Time, the Prospectus or any further amendment or supplement thereto made by the Company prior to such Closing Time contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Such counsel need not express any opinion to make any statement as to the financial statements and related schedules or other financial data derived from accounting records included in or omitted from the Registration Statement or the Prospectus or any amendment or supplement thereto or with respect to the Statement of Eligibility and Qualification of the Trustee under the 1939 Act filed as an exhibit to the Registration Statement. Such counsel's opinions with respect to any documents being valid, binding or enforceable according to its terms may be qualified as to: (i) limitations imposed by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium or other similar laws relating to or affecting the rights and remedies of creditors generally; (ii) rights to indemnification and contribution which may be limited by applicable law or equitable principles; and (iii) general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, and the possible unavailability of specific performance or injunctive relief, and limitations or rights of acceleration, regardless of whether such validity and binding effect are considered in a proceeding in equity or at law. Moreover, such counsel need express no opinion as to the validity, binding effect or enforceability of any provisions of the Indenture purporting to impose penalties or any increase in interest rate to the extent they constitute a penalty or are otherwise contrary to public policy. In rendering such opinion, such counsel may rely as to matters of fact on documents, certificates, corporate records, opinions and instruments as such counsel has deemed necessary or appropriate for purposes of this opinion. In addition, such counsel may state their opinion is limited to matters governed by the laws of the State of California, the General Corporation Law of the State of Delaware and the Federal law of the United States, and, as to the valid and binding nature of the Indenture and the Securities and the enforceability thereof as set forth in paragraphs (xvi) and (xvii), the laws of the State of New York. With respect to matters other than the laws of the State of California, the General Corporation Law of the State of Delaware and the Federal law of the U.S., and, as set forth in the preceding paragraph, the laws of the State of New York, such counsel may omit such opinions, provided that such opinions are provided by other counsel reasonably acceptable to the Underwriter. B-5 33 Opinion of Malaysian counsel: (i) Solectron Technology Sdn. Bhd. (the "Malaysian Subsidiary") has been duly incorporated under the Companies Act 1965 and is validly existing and in good standing, having complied with all the statutory requirements and has the powers to conduct its business as authorised under its Memorandum and Articles of Association. It is also qualified to carry on its business in every state of Malaysia. (ii) The Malaysian Subsidiary has corporate power and authority to own, lease and operate its properties and to conduct its business as described in its Memorandum and Articles of Association. (iii) All of the issued and outstanding capital stock of the Subsidiary has been duly authorized and validly issued, is fully paid and, to the best of our knowledge and information, is owned directly by Solectron Corporation, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. B-6 34 SCHEDULE A PURCHASE PRICE $1,487,613,000.00 PURCHASE PRICE PER SECURITY $512.97 35 SCHEDULE B PARTIES TO LOCK-UP AGREEMENT David Kynaston Ko Nishimura Daniel Perez Ajay Shah Ken Tsai Susan Wang Saeed Zohouri 36 SCHEDULE C AGREEMENTS TO BE AMENDED 1. Credit Agreement, dated as of April 30, 1997, among the Company and the banks party thereto, as amended. 2. Amended and Restated Lease Agreement, dated as of July 1, 1998, among the Company, Solectron Washington, Inc. and BNP Leasing Corporation ("BNP") and Amended and Restated Guaranty, dated as of July 1, 1998, by the Company in favor of BNP, in each case as amended. 3. Lease Agreement, dated as of October 20, 1998, among the Company, Solectron Georgia Corporation and BNP, as amended. 4. Participation Agreement, dated as of June 4, 1999, among the Company, Solectron South Carolina Corporation, Solectron California Corporation, SMART Modular Technologies, Inc., First Security Bank, National Association, as trustee, the lenders party thereto from time to time, and First Union National Bank, as agent for such lenders, and certain agreements among such parties related thereto, in each case as amended. 5. Amended and Restated Lease Agreement, dated as of July 16, 1998, between BNP and Force Computers, Inc. and Amended and Restated Guaranty, dated as of July 16, 1998, by the Company in favor of BNP, in each case as amended. 6. Lease Agreement, dated as of September 6, 1994, between BNP and the Company, as amended. EX-1.2 3 f67517ex1-2.txt EXHIBIT 1.2 1 EXHIBIT 1.2 PURCHASE AGREEMENT between SOLECTRON CORPORATION and MERRILL LYNCH & CO. November 14, 2000 2 TABLE OF CONTENTS SECTION 1. Representations and Warranties................................................2 (a) Representations and Warranties by the Company.................................3 (1) Compliance with Registration Requirements..............................3 (2) Incorporated Documents.................................................3 (3) Independent Accountants................................................4 (4) Financial Statements...................................................4 (5) No Material Adverse Change in Business.................................4 (6) Good Standing of the Company...........................................4 (7) Good Standing of Subsidiaries..........................................5 (8) Capitalization.........................................................5 (9) Authorization of this Underwriting Agreement...........................5 (10) Authorization of the Securities........................................5 (11) Description of the Securities..........................................6 (12) [Reserved.]............................................................6 (13) [Reserved.]............................................................6 (14) Absence of Defaults and Conflicts......................................6 (15) Absence of Labor Dispute...............................................7 (16) Absence of Proceedings.................................................7 (17) Accuracy of Exhibits...................................................7 (18) Absence of Further Requirements........................................7 (19) Possession of Intellectual Property....................................7 (20) Possession of Licenses and Permits.....................................8 (21) Title to Property......................................................8 (22) Investment Company Act.................................................8 (23) Environmental Laws.....................................................9 (24) Florida Laws...........................................................9 (b) Officers' Certificates........................................................9 SECTION 2. Sale and Delivery to the Underwriters; Closing................................9 (a) Initial Securities............................................................9 (b) Option Securities............................................................10 (c) Payment......................................................................10 (d) Denominations; Registration..................................................11 SECTION 3. Covenants of the Company.....................................................11 (a) Compliance with Securities Regulations and Commission Requests...............11 (b) Filing of Amendments.........................................................11 (c) Delivery of Registration Statements..........................................12 (d) Delivery of Prospectuses.....................................................12 (e) Continued Compliance with Securities Laws....................................12 (f) Blue Sky Qualifications......................................................13 (g) Earnings Statement...........................................................13 (h) Reservation of Securities....................................................13 (i) Use of Proceeds..............................................................13 (j) Listing......................................................................13
i 3 (k) Restriction on Sale of Common Stock..........................................13 (l) Reporting Requirements.......................................................14 SECTION 4. Payment of Expenses..........................................................14 (a) Expenses.....................................................................14 (b) Termination of Agreement.....................................................15 SECTION 5. Conditions of the Underwriters' Obligations..................................15 (a) Effectiveness of Registration Statement......................................15 (b) Opinion of Counsel for Company...............................................15 (c) Opinion of Counsel for the Underwriters......................................16 (d) Officers' Certificate........................................................16 (e) Accountant's Comfort Letter..................................................16 (f) Bring-down Comfort Letter....................................................16 (g) Lock-up Agreements...........................................................17 (h) No Objection.................................................................17 (i) Amendment of Agreements......................................................17 (j) Approval of Listing..........................................................17 (k) Over-Allotment Option........................................................17 (l) Additional Documents.........................................................18 (m) Termination of Agreement.....................................................18 SECTION 6. Indemnification..............................................................18 (a) Indemnification of the Underwriters..........................................18 (b) Indemnification of Company, Directors and Officers...........................19 (c) Actions against Parties; Notification........................................20 (d) Settlement without Consent if Failure to Reimburse...........................20 SECTION 7. Contribution.................................................................21 SECTION 8. Representations, Warranties and Agreements to Survive Delivery...............22 SECTION 9. Termination..................................................................22 (a) Termination of Agreement.....................................................22 (b) Liabilities..................................................................23 SECTION 10. Default by One or More of the Underwriters...................................23 SECTION 11. Notices......................................................................23 SECTION 12. Parties......................................................................24 SECTION 13. GOVERNING LAW AND TIME.......................................................24 SECTION 14. Effect of Headings...........................................................24
ii 4 SOLECTRON CORPORATION (a Delaware corporation) 35,000,000 Shares of Common Stock (Par Value $0.001 Per Share) PURCHASE AGREEMENT MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281-1209 Ladies and Gentlemen: Solectron Corporation, a Delaware corporation (the "Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other Underwriters named in Schedule A hereto (collectively, the "Underwriters", which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom Merrill Lynch is acting as representative (in such capacity, the "Representative"), with respect to the issue and sale by the Company and the purchase by the Underwriters, acting severally and not jointly, of 35,000,000 shares of Common Stock, par value $0.001 per share, of the Company ("Common Stock") and the grant by the Company to the Underwriters, acting severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of 5,250,000 additional shares of Common Stock to cover over-allotments, if any. The aforesaid 35,000,000 shares of Common Stock (the "Initial Securities") to be purchased by the Underwriters and all or any part of the 5,250,000 shares of Common Stock subject to the option described in Section 2(b) hereof (the "Option Securities") are hereinafter called, collectively, the "Securities". The Company understands that the Underwriters propose to make a public offering of the Securities as soon as the Representative deems advisable after this Agreement has been executed and delivered. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 333-34494) and pre-effective amendment no. 1 thereto, covering the registration of the Securities under the Securities Act of 1933, as amended (the "1933 Act"), including the related preliminary prospectus or 5 prospectuses. Such registration statement has been declared effective by the Commission. Promptly after execution and delivery of this Agreement, the Company will either (i) prepare and file a prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations") and/or paragraph (b) of Rule 424 ("Rule 424 (b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The information included in such prospectus or in such Term Sheet, as the case may be, that was omitted from such registration statement at the time it became effective but that is deemed to be part of such registration statement at the time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus used before such registration statement became effective, and any prospectus that omitted, as applicable, the Rule 430A Information or the Rule 434 Information, that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called a "preliminary prospectus." Such registration statement, including the exhibits thereto, schedules thereto, if any, and the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it became effective and including the Rule 430A Information and the Rule 434 Information, as applicable, is herein called the "Registration Statement." Any registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b) Registration Statement," and after such filing the term "Registration Statement" shall include the Rule 462(b) Registration Statement. The final prospectus, including the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for use in connection with the offering of the Securities is herein called the "Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to the preliminary prospectus dated November 1, 2000 together with the Term Sheet and all references in this Agreement to the date of the Prospectus shall mean the date of the Term Sheet. For purposes of this Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any Term Sheet or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"). All references in this Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" in the Registration Statement, any preliminary prospectus or the Prospectus (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated by reference in the Registration Statement, any preliminary prospectus or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is incorporated by reference in the Registration Statement, such preliminary Prospectus, as the case may be. 2 6 SECTION 1. REPRESENTATIONS AND WARRANTIES (a) Representations and Warranties by the Company. The Company represents and warrants to each Underwriter, as of the date hereof, as of the Closing Time and as of the Date of Delivery (as defined below) (in each case, a "Representation Date"), as follows: (1) Compliance with Registration Requirements. The Company meets the requirements for use of Form S-3 under the 1933 Act. The Registration Statement (including any Rule 462(b) Registration Statement) has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement (or such Rule 462(b) Registration Statement) has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with. At the respective times the Registration Statement (including any Rule 462(b) Registration Statement) and any post-effective amendments thereto became effective and at each Representation Date, the Registration Statement (including any Rule 462(b) Registration Statement) and any amendments thereto complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. At the date of the Prospectus, at the Closing Time and at the Date of Delivery, neither the Prospectus nor any amendments and supplements thereto included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If the Company elects to rely upon Rule 434 of the 1933 Act Regulations, the Company will comply with the requirements of Rule 434. Notwithstanding the foregoing, the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by any Underwriter through Merrill Lynch expressly for use in the Registration Statement or the Prospectus or any amendments or supplements thereto. Each preliminary prospectus and prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all material respects with the 1933 Act Regulations and each preliminary prospectus and the Prospectus delivered to the Underwriters for use in connection with the offering of the Securities will, at the time of such delivery, be identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (2) Incorporated Documents. The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations") and, when read together with the other information in 3 7 the Prospectus, at the date of the Prospectus, at the Closing Time and at the Date of Delivery did not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (3) Independent Accountants. The accountants who certified the financial statements and any supporting schedules thereto included in the Registration Statement and the Prospectus are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. (4) Financial Statements. The financial statements of the Company included in the Registration Statement and the Prospectus, together with the related schedules and notes, as well as those financial statements, schedules and notes of any other entity included therein, present fairly the financial position of the Company and its consolidated subsidiaries, or such other entity, as the case may be, at the dates indicated and the statement of operations, stockholders' equity and cash flows of the Company and its consolidated subsidiaries, or such other entity, as the case may be, for the periods specified. Such financial statements have been prepared in conformity with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved except to the extent that the interim audited financial statements are subject to normal year-end adjustments, lack of footnotes and other presentation items. The supporting schedules, if any, included in the Registration Statement and the Prospectus present fairly in accordance with GAAP the information required to be stated therein. The selected financial data and the summary financial information included in the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Registration Statement and the Prospectus. (5) No Material Adverse Change in Business. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein, (a) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a "Material Adverse Effect"), (b) there have been no transactions entered into by the Company or any of its subsidiaries, other than those arising in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise and (c) except for dividends on the Company's preferred stock that may be outstanding from time to time, in amounts per share that are consistent with the applicable charter document or supplement thereto, respectively, no dividend or distribution of any kind has been declared, paid or made by the Company on any class of its capital stock. (6) Good Standing of the Company. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under, or as contemplated under, this Agreement. The Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is 4 8 required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not result in a Material Adverse Effect. (7) Good Standing of Subsidiaries. Each Subsidiary of the Company has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not result in a Material Adverse Effect. The Company does not have any "significant subsidiaries" (as such term is defined in Rule 1-02 of Regulation S-X promulgated under the 1933 Act) other than Solectron Texas, Inc., Solectron California Corporation and Solectron Technology Sdn. Bhd. Except as otherwise stated in the Registration Statement and the Prospectus, all of the issued and outstanding capital stock of each Subsidiary has been duly authorized and is validly issued, fully paid and non-assessable and is owned by the Company (except for directors qualifying shares), directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. None of the outstanding shares of capital stock of any subsidiary was issued in violation of preemptive or other similar rights of any securityholder of such subsidiary. (8) Capitalization. The authorized, issued and outstanding shares of capital stock of the Company is as set forth in the column entitled "Actual" under the "Capitalization" section of the Prospectus section (except for subsequent issuances thereof pursuant to this Agreement, pursuant to reservations, agreements or employee benefit plans referred to in the Prospectus or pursuant to the exercise of convertible securities or options referred to in the Prospectus). Such shares of capital stock have been duly authorized and validly issued by the Company and are fully paid and non-assessable, and none of such shares of capital stock was issued in violation of preemptive or other similar rights of any securityholder of the Company. (9) Authorization of this Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by the Company. (10) Authorization of the Securities. The Securities to be purchased by the Underwriters from the Company have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and, when issued and delivered by the Company pursuant to this Agreement against payment of the consideration set forth herein, will be validly issued and fully paid and non-assessable. (11) Description of the Securities. The Common Stock conforms to all statements relating thereto contained in the Prospectus and such description conforms to the rights set forth in the instruments defining the same; no holder of the Securities will be subject to personal liability by reason of being such a holder; and the issuance of the Securities is not subject to the preemptive or other similar rights of any securityholder of the Company. (12) [Reserved.] 5 9 (13) [Reserved.] (14) Absence of Defaults and Conflicts. Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the assets, properties or operations of the Company or any of its subsidiaries is subject (collectively, "Agreements and Instruments"), except for such defaults that would not result in a Material Adverse Effect. The execution, delivery and performance of this Agreement and any other agreement or instrument entered into or issued or to be entered into or issued by the Company in connection with the transactions contemplated hereby or thereby or in the Registration Statement and the Prospectus and the consummation of the transactions contemplated herein and in the Registration Statement and the Prospectus (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described under the caption "Use of Proceeds") and compliance by the Company with its obligations hereunder and thereunder have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any assets, properties or operations of the Company or any of its subsidiaries pursuant to, any Agreements and Instruments except as disclosed in the Prospectus and except for other such conflicts, defaults or breaches that would not result in a Material Adverse Effect, or violate any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their assets, properties or operations, except where such violation would not result in a Material Adverse Effect, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any of its subsidiaries. As used herein, a "Repayment Event" means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries. (15) Absence of Labor Dispute. No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or any subsidiary's principal suppliers, manufacturers, customers or contractors, which, in either case, may reasonably be expected to result in a Material Adverse Effect. (16) Absence of Proceedings. There is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or to the knowledge of the Company threatened, against or affecting the Company or any of its subsidiaries which is required to be disclosed in the Registration Statement and the Prospectus, or which might reasonably be expected to result in a Material Adverse Effect, or which might reasonably be expected to materially and adversely affect the assets, properties or operations thereof or the consummation of the transactions contemplated 6 10 under the Prospectus, this Agreement, or the performance by the Company of its obligations hereunder and thereunder. The aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or of which any of their respective assets, properties or operations is the subject which are not described in the Registration Statement and the Prospectus, including ordinary routine litigation incidental to the business, could not reasonably be expected to result in a Material Adverse Effect. (17) Accuracy of Exhibits. There are no contracts or documents which are required to be described in the Registration Statement, the Prospectus or the documents incorporated by reference therein or to be filed as exhibits thereto which have not been so described and filed as required. (18) Absence of Further Requirements. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency, domestic or foreign, is necessary or required for the due authorization, execution and delivery by the Company of this Agreement or for the performance by the Company of the transactions contemplated under the Prospectus or this Agreement, except such as have been already made, obtained or rendered, as applicable. (19) Possession of Intellectual Property. The Company and its subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, "Intellectual Property") necessary to carry on the business now operated by them, and, other than as described in the Prospectus, neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect. (20) Possession of Licenses and Permits. The Company and its subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, "Governmental Licenses") issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them. The Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, result in a Material Adverse Effect. All of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not result in a Material Adverse Effect. Neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect. 7 11 (21) Title to Property. The Company and its subsidiaries have good and marketable title to all real property owned by the Company and its subsidiaries and good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind, except (a) as otherwise stated in the Registration Statement and the Prospectus or (b) for any of the foregoing, which, either singly or in the aggregate, would not result in a Material Adverse Effect. All of the leases and subleases material to the business of the Company and its subsidiaries considered as one enterprise, and under which the Company or any of its subsidiaries holds properties described in the Prospectus, are in full force and effect, and neither the Company nor any of its subsidiaries has received any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any of its subsidiaries under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such subsidiary of the continued possession of the leased or subleased premises under any such lease or sublease, except for any such claim, which, either singly or in the aggregate, would not result in a Material Adverse Effect. (22) Investment Company Act. The Company is not, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus will not be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). (23) Environmental Laws. Except as otherwise stated in the Registration Statement and the Prospectus and except as would not, singly or in the aggregate, result in a Material Adverse Effect, (a) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, "Hazardous Materials") or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, "Environmental Laws"), (b) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (c) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries and (d) there are no events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws. (24) Florida Laws. The Company has complied with, and is and will be in compliance with, the provisions of that certain Florida act relating to disclosure of doing 8 12 business with Cuba, codified as Section 517.075 of the Florida statutes, and the rules and regulations thereunder or is exempt therefrom. (b) Officers' Certificates. Any certificate signed by any officer of the Company or any of its subsidiaries and delivered the Representative or to counsel for the Underwriters in connection with the offering of the Securities shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby on the date of such certificate and, unless subsequently amended or supplemented, at each Representation Date subsequent thereto. SECTION 2. SALE AND DELIVERY TO THE UNDERWRITERS; CLOSING (a) Initial Securities. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company agrees to sell to each Underwriter, and each Underwriter, severally and not jointly, agrees to purchase from the Company, at the price per share set forth in Schedule B, the number of Initial Securities set forth in Schedule A opposite the name of such Underwriter, plus any additional number of Initial Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof, bears to the total number of Initial Securities, subject, in each case, to such adjustments among the Underwriters as the Representative in its sole discretion shall make to eliminate any sales or purchases of fractional securities. (b) Option Securities. In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriters, severally and not jointly, to purchase up to an additional 5,250,000 shares of Common Stock, at a price per share set forth in Schedule B, less an amount per share equal to any dividends or distributions declared by the Company and payable on the Initial Securities but not payable on the Option Securities. The option hereby granted will expire thirty (30) days after the date hereof and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Initial Securities upon notice by the Representative to the Company setting forth the number of Option Securities as to which the several Underwriters are then exercising the option and the time and date of payment and delivery for such Option Securities. Any such time and date of delivery (a "Date of Delivery") shall be determined by the Underwriter, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time or two days after the date of the notice if after the Closing Time, unless otherwise agreed upon by the Underwriter and the Company. If the option is exercised as to all or any portion of the Option Securities, each of the Underwriters, acting severally and not jointly, will purchase that proportion of the total number of Option Securities then being purchased which the number of Initial Securities set forth in Schedule A opposite the name of such Underwriter bears to the total number of Initial Securities, subject in each case to such adjustments as the Representative in its discretion shall make to eliminate any sales or purchases of fractional shares. (c) Payment. Payment of the purchase price for, and delivery of, the Initial Securities shall be made at the offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo 9 13 Alto, California 94304, or at such other place as shall be agreed upon by Merrill Lynch and the Company, at 10:00 a.m. (California time) on the third (fourth, if the pricing occurs after 4:30 p.m. (Eastern time) on any given day) business day after the date hereof or such other time not later than ten business days after such date as shall be agreed upon by Merrill Lynch and the Company (such time and date of payment and delivery being herein called "Closing Time"). In addition, in the event that the Underwriter has exercised its option to purchase any or all of the Option Securities, payment of the purchase price for, and delivery of such Option Securities, shall be made at the above-mentioned offices of Wilson Sonsini Goodrich & Rosati, or at such other place as shall be agreed upon by Merrill Lynch and the Company, on the relevant Date of Delivery as specified in the notice from Merrill Lynch to the Company. Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to Merrill Lynch for the account of the Underwriter of the Securities to be purchased by it. (d) Denominations; Registration. The certificates for the Securities, shall be in such denominations and registered in such names as Merrill Lynch may request in writing at least one full business day prior to the Closing Time or the relevant Date of Delivery, as the case may be. The certificates for the Securities will be made available for examination and packaging by Merrill Lynch in the City of New York not later than 10:00 a.m. (Eastern time) on the business day prior to the Closing Time or the relevant Date of Delivery, as the case may be. SECTION 3. COVENANTS OF THE COMPANY The Company covenants with each Underwriter, as follows: (a) Compliance with Securities Regulations and Commission Requests. The Company, subject to Section 3(b), will comply with the requirements of Rule 430A of the 1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations, as applicable, and will notify the Representative immediately, and confirm the notice in writing, of (i) the effectiveness of any post-effective amendment to the Registration Statement or the filing of any supplement or amendment to the Prospectus, (ii) the receipt of any comments from the Commission, (iii) any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (iv) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes. The Company will promptly effect the filings necessary pursuant to Rule 424 and will take such steps as it deems necessary to ascertain promptly whether the Prospectus transmitted for filing under Rule 424 was received for filing by the Commission and, in the event that it was not, it will promptly file the Prospectus. The Company will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) Filing of Amendments. The Company will give the Representative notice of its intention to file or prepare any amendment to the Registration Statement (including any filing under Rule 462(b) of the 1933 Act Regulations), any Term Sheet or any amendment, supplement 10 14 or revision to either the prospectus included in the Registration Statement at the time it became effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the Representative with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representative or counsel for the Underwriters shall reasonably object. (c) Delivery of Registration Statements. The Company has furnished or will deliver to the Representative and counsel for the Underwriter, without charge, one signed copy of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and signed copies of all consents and certificates of experts. The Registration Statement and each amendment thereto furnished to the Representative will be identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (d) Delivery of Prospectuses. The Company will deliver to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter may reasonably request, and the Company hereby consents to the use of such copies for purposes permitted by the 1933 Act. The Company will furnish to each Underwriter, without charge, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such number of copies of the Prospectus as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (e) Continued Compliance with Securities Laws. The Company will comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Registration Statement and the Prospectus. If at any time when the Prospectus is required by the 1933 Act or the 1934 Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to amend the Registration Statement in order that the Registration Statement will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or to amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and file with the Commission, subject to Section 3(b), such amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement or the Prospectus comply with such requirements, and the Company will furnish to the Underwriters, without charge, such number of copies of such amendment or supplement as the Underwriters may reasonably request. 11 15 (f) Blue Sky Qualifications. The Company will use its best efforts, in cooperation with the Underwriters, to qualify the Securities and the shares of Common Stock issuable upon conversion of Securities for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Representative may designate and to maintain such qualifications in effect for a period of not less than one year from the date hereof; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. In each jurisdiction in which the Securities or the shares of Common Stock issuable upon conversion of Securities have been so qualified, the Company will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the date hereof. (g) Earnings Statement. The Company will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings statement for the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act. (h) Reservation of Securities. The Company will reserve and keep available at all times, free of preemptive or other similar rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to satisfy any obligations to issue the shares of Common Stock issuable upon conversion of Securities. (i) Use of Proceeds. The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Prospectus under "Use of Proceeds." (j) Listing. The Company will use its best efforts to effect the listing of the Securities on the New York Stock Exchange. (k) Restriction on Sale of Common Stock. During a period of 90 days from the Closing Time, the Company will not, without the prior written consent of Merrill Lynch, (i) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any share of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or file any registration statement under the 1933 Act with respect to any of the foregoing or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Stock, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (A) the Securities to be sold hereunder, the Company's Liquid Yield Option (TM) Notes due 2020 (Zero Coupon - Senior) to be sold under the Purchase Agreement dated the date hereof between the Company and Merrill Lynch, the Company's LYONs due 2019, the Company's LYONs due 2020 and shares issued upon conversion of the foregoing LYONs, (B) any shares of Common Stock issued by the Company upon the exercise of an option or warrant or the conversion of a security 12 16 outstanding on the date hereof and referred to in the Prospectus, (C) any shares of Common Stock issued or options to purchase Common Stock granted pursuant to existing employee benefit plans of the Company referred to in the Prospectus, (D) any shares of Common Stock issued pursuant to any non-employee director stock plan or dividend reinvestment plan and (E) any shares of Common Stock issued pursuant to any acquisition consummated pursuant to an agreement executed by the Company prior to the Closing Time. (l) Reporting Requirements. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations. SECTION 4. PAYMENT OF EXPENSES (a) Expenses. The Company will pay all expenses incidental to the performance of its obligations under this Agreement, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and of each amendment thereto, (ii) the preparation, printing and delivery to the Underwriters of this Agreement, the Agreement among Underwriters, and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Securities or the issuance or delivery of the Common Stock issuable upon conversion thereof, (iii) the preparation, issuance and delivery of the certificates for the Securities to the Underwriters, including any transfer taxes and any stamp or other duties payable upon the sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees and disbursements of the Company's counsel, accountants and other advisors or agents (including transfer agents and registrars), (v) the qualification of the Securities under state securities laws in accordance with the provisions of Section 3(f) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation, printing and delivery of the Blue Sky Survey, and any amendment thereto, (vi) the printing and delivery to the Underwriters of copies of each preliminary prospectus, any Term Sheet, and the Prospectus and any amendments or supplements thereto, (vii) the fees and expenses incurred with respect to the listing of the Common Stock on the New York Stock Exchange, (viii) the fees and expenses of any transfer agent or registrar for the Securities, and (ix) the filing fees incident to, and the reasonable fees and disbursements of counsel to the Underwriters in connection with, the review, if any, by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Securities. (b) Termination of Agreement. If this Agreement is terminated by the Underwriter in accordance with the provisions of Section 5 or Section 9(b)(i) hereof, the Company shall reimburse the Underwriter for all of its accountable out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriter. SECTION 5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS The obligations of the several Underwriters to purchase and pay for the Securities pursuant to this Agreement are subject to the accuracy of the representations and warranties of the Company contained in Section 1 hereof or in certificates of any officer of the Company or 13 17 any of its subsidiaries delivered pursuant to the provisions hereof, to the performance by the Company of its covenants and other obligations hereunder, and to the following further conditions: (a) Effectiveness of Registration Statement. The Registration Statement, including any Rule 462(b) Registration Statement, has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act and no proceedings for that purpose shall have been instituted or be pending or threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of counsel to the Underwriters. A prospectus containing information relating to the description of the Securities and the Common Stock, the specific method of distribution and similar matters shall have been filed with the Commission in accordance with Rule 424(b)(1), (b)(2), (b)(3), (b)(4) or (b)(5), as applicable (or any required post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A), or, if the Company has elected to rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet including the Rule 434 Information shall have been filed with the Commission in accordance with Rule 424(b)(7). (b) Opinion of Counsel for Company. At Closing Time, the Representative shall have received the favorable opinions, dated as of Closing Time, of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the Company, and Malaysian counsel for the Company reasonably acceptable to the Representative, in form and substance reasonably satisfactory to counsel for the Underwriters, to the effect set forth in Exhibit B hereto and to such further effect as counsel to the Underwriters shall reasonably request. (c) Opinion of Counsel for the Underwriters. At Closing Time, the Representative shall have received the favorable opinion, dated as of Closing Time, of Latham & Watkins, counsel for the Underwriters. In giving such opinion, such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York, the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to the Underwriters. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and its subsidiaries and certificates of public officials. (d) Officers' Certificate. At Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Prospectus, any Material Adverse Effect, and the Representative shall have received a certificate of the President or a Vice President of the Company and of the chief financial officer or chief accounting officer of the Company, dated as of Closing Time, to the effect that (i) there has been no such Material Adverse Effect, (ii) the representations and warranties in Section 1(a) are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose 14 18 have been instituted, are pending or, to the best of such officer's knowledge, are threatened by the Commission. (e) Accountant's Comfort Letter. At the time of the execution of this Agreement, the Representative shall have received from KPMG LLP a letter dated such date, in form and substance satisfactory to the Representative, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus. (f) Bring-down Comfort Letter. At Closing Time, the Representative shall have received from KPMG LLP a letter, dated as of Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to Section 5(e), except that the specified date referred to shall be a date not more than three business days prior to the Closing Time. (g) Lock-up Agreements. On the date hereof, the Underwriter shall have received a lock-up agreement substantially in the form attached hereto as Exhibit A signed by the persons listed on Schedule C hereto. (h) No Objection. If the Registration Statement or an offering of the Securities is required to be filed with the NASD for review, the NASD shall not have raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements. (i) Amendment of Agreements. In the event of the closing of the concurrent LYONs offering, prior to Closing Time, either (i) each of the agreements listed on Schedule D shall have been amended (or consent thereunder obtained) to permit the offering of the LYONs without resulting in a default thereunder and at Closing Time shall be in form and substance satisfactory to the Representative and counsel for the Underwriters or, (ii) to the extent that any such agreement shall not be so amended (or consent thereunder obtained), sufficient funds shall be set aside by the Company, in the case of the agreement described in item 1 of Schedule D, to repay all indebtedness thereunder in a manner sufficient to eliminate such default, or, in the case of the agreements referred to in the other items in Schedule D, to purchase the property subject to such agreements in a manner sufficient to eliminate any such default. The Company hereby covenants that, to the extent that the Company takes action under clause (ii) of the preceding sentence, it will, as promptly as practicable, but in no event later than the later of thirty (30) days following the Closing Time and the earliest time it is permitted to do so under the applicable agreement, apply such funds to eliminate such default as described therein or otherwise take necessary action to cure or obtain a waiver of such default. (j) Approval of Listing. At Closing Time, the Securities shall have been approved for listing on the New York Stock Exchange, subject only to official notice of issuance. (k) Over-Allotment Option. In the event that the Underwriters exercise their option to purchase all or any portion of the Option Securities, the representations and warranties of the Company contained herein and the statements in any certificates furnished by the Company or any of its subsidiaries hereunder shall be true and correct as of the Date of Delivery, and, at the relevant Date of Delivery, the Representative shall have received: 15 19 (1) A certificate, dated such Date of Delivery, of the President or a Vice President of the Company and the chief financial officer or chief accounting officer of the Company, confirming that the certificate delivered at the Closing Time pursuant to Section 5(d) hereof remains true and correct as of such Date of Delivery. (2) The favorable opinions of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the Company, and Malaysian counsel to the Company, in form and substance reasonably satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities and otherwise to the same effect as the opinion required by Section 5(b) hereof. (3) The favorable opinion of Latham & Watkins, counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities and otherwise to the same effect as the opinion required by Section 5(c) hereof. (4) A letter from KPMG LLP, in form and substance satisfactory to the Representative and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representative pursuant to Section 5(f) hereof, except that the "specified date" on the letter furnished pursuant to this paragraph shall be a date not more than three business days prior to such Date of Delivery. (l) Additional Documents. At Closing Time and at the Date of Delivery, counsel for the Underwriters shall have been furnished with such documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Securities as herein contemplated shall be satisfactory in form and substance to the Representative and counsel for the Underwriters. (m) Termination of Agreement. If any condition specified in this Section 5 shall not have been fulfilled when and as required to be fulfilled, this Agreement (or, with respect to the Underwriters' exercise of any over-allotment option for the purchase of Option Securities on a Date of Delivery after the Closing Time, the obligations of the Underwriters to purchase the Option Securities on such Date of Delivery) may be terminated by the Representative by notice to the Company at any time at or prior to the Closing Time (or such Date of Delivery, as applicable), and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and remain in full force and effect. SECTION 6. INDEMNIFICATION (a) Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: 16 20 (1) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (2) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Company; and (3) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by Merrill Lynch), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by the Underwriter expressly for use in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto). The foregoing indemnity with respect to any untrue statement contained in or omission from a preliminary prospectus shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) from whom the person asserting any such loss, liability, claim, damage or expense purchased any of the Securities which are the subject thereof, if the Company shall sustain the burden of proving that such person was not sent or given a copy of the Prospectus at or prior to the written confirmation of the sale of such Securities to such person and the untrue statement contained in or omission from such preliminary prospectus was corrected in the Prospectus. (b) Indemnification of Company, Directors and Officers. Each Underwriter severally agrees to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of 17 21 this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriter through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (c) Actions against Parties; Notification. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 6(a) above, counsel to the indemnified parties shall be selected by Merrill Lynch, and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by the Company. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Settlement without Consent if Failure to Reimburse. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(ii) effected without its written consent if (i) such settlement is entered into more than forty-five (45) days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least thirty (30) days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. SECTION 7. CONTRIBUTION 18 22 If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Underwriters, on the other hand, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of such Securities (before deducting expenses) received by the Company and the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus, or, if Rule 434 is used, the corresponding location on the Term Sheet bear to the aggregate initial public offering price of such Securities as set forth on such cover. The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission. 19 23 No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company or any of its subsidiaries submitted pursuant hereto or thereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Company, and shall survive delivery of and payment for the Securities. SECTION 9. TERMINATION (a) Termination of Agreement. The Representative may terminate this Agreement, by notice to the Company, at any time at or prior to the Closing Time or any relevant Date of Delivery, if (i) there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Prospectus, any Material Adverse Effect, or (ii) there has occurred any material adverse change in the financial markets in the United States, or any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representative, impracticable to market the Securities or to enforce contracts for the sale of the Securities, or (iii) trading in any securities of the Company has been suspended or materially limited by the Commission or the New York Stock Exchange, or if trading generally on the New York Stock Exchange or the American Stock Exchange or in the Nasdaq National Market has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by either of said exchanges or by such system or by order of the Commission, the NASD or any other governmental authority, or (iv) a banking moratorium has been declared by either Federal or New York authorities. (b) Liabilities. If this Agreement is terminated pursuant to this Section 9, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such termination and remain in full force and effect. SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS 20 24 (a) If one or more of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase the Securities which it or they are obligated to purchase under this Agreement (the "Defaulted Securities"), the Representative shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representative shall not have completed such arrangements within such 24-hour period, then: (1) if the number of Defaulted Securities does not exceed 10% of the number of Securities to be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or (2) if the number of Defaulted Securities exceeds 10% of the number of Securities to be purchased on such date, this Agreement or, with respect to any Date of Delivery which occurs after the Closing Time, the obligation of the Underwriters to purchase and of the Company to sell the Option Securities to be purchased and sold on such Date of Delivery shall terminate without liability on the part of any non-defaulting Underwriter. (b) No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default. (c) In the event of any such default which does not result in a termination of this Agreement or, in the case of a Date of Delivery which is after the Closing Time, which does not result in a termination of the obligation of the Underwriters to purchase and the Company to sell the relevant Option Securities, as the case may be, either (i) the Representative or (ii) the Company shall have the right to postpone Closing Time or the relevant Date of Delivery, as the case may be, for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. As used herein, the term "Underwriter" includes any person substituted for an Underwriter under this Section 10. SECTION 11. NOTICES All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to Merrill Lynch at 10900 Wilshire Boulevard, Suite 900, Los Angeles, California 90024, Attn: Harold McMahon; and notices to the Company shall be directed to it at 777 Gibraltar Drive, Milpitas, California 95035, Attn: Susan Wang, Senior Vice President and Chief Financial Officer. SECTION 12. PARTIES This Agreement shall inure to the benefit of and be binding upon the Company and Underwriters and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than 21 25 the Underwriters and the Company and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 13. GOVERNING LAW AND TIME THIS UNDERWRITING AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. SECTION 14. EFFECT OF HEADINGS The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. [Signature Page Follows] 22 26 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this Agreement, along with all counterparts, will become a binding agreement among the Underwriters and the Company in accordance with its terms and as of the date first set forth above. Very truly yours, SOLECTRON CORPORATION By: /s/ Susan Wang -------------------------------- Name: Susan Wang ------------------------------ Title: Senior Vice President, Chief Financial Officer and Secretary ----------------------------- CONFIRMED AND ACCEPTED, MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED For itself and as Representative on behalf of the other Underwriters named in Schedule A hereto. By: /s/ H.T. McMahon -------------------------------- Name: H.T. McMahon ------------------------------ Title: Managing Director ----------------------------- S-1 27 EXHIBIT A FORM OF LOCK-UP AGREEMENT MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281-1209 Re: Proposed Public Offering by Solectron Corporation Dear Sirs: The undersigned, a stockholder and/or an officer of Solectron Corporation, a Delaware corporation (the "Company"), understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), as the representative for the several underwriters thereunder, proposes to enter into a Purchase Agreement (the "Purchase Agreement") with the Company providing for the public offering of 35,000,000 shares of the Company's Common Stock, $0.001 par value (the "Common Stock"). In recognition of the benefit that such an offering will confer upon the undersigned as a stockholder and an officer of the Company, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with Merrill Lynch that, during a period of 45 days from the date of the Purchase Agreement, the undersigned will not, without the prior written consent of Merrill Lynch, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any Common Stock, or any securities convertible into or exchangeable or exercisable for Common Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of Common Stock or any securities convertible into or exchangeable for Common Stock, whether any such swap or transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise. Very truly yours, Signature: ------------------------ Print Name: ------------------------ A-1 28 EXHIBIT B FORM OF OPINIONS OF COMPANY'S COUNSEL TO BE DELIVERED PURSUANT TO SECTION 5(b) Opinion of Wilson, Sonsini, Goodrich & Rosati: (i) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware. (ii) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under, or as contemplated by, the Purchase Agreement. (iii) The Company is in good standing as a foreign corporation duly qualified to transact business in California and Georgia. (iv) The Company has the authorized capitalization as set forth in the Prospectus under the caption "Capitalization." (v) Each of Solectron Texas, Inc. and Solectron California Corporation ("U.S. Significant Subsidiaries") is duly incorporated and is an existing corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is in good standing as a foreign corporation duly qualified to transact business in each jurisdiction in which such qualification is required, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. All of the issued and outstanding capital stock of each U.S. Significant Subsidiary has been duly authorized and is validly issued, fully paid and non-assessable and, to our knowledge, is owned by the Company, directly or through subsidiaries, free of any adverse claim. None of the outstanding shares of capital stock of any U.S. Significant Subsidiary was issued in violation of any statutory preemptive or similar rights of any security holder of such U.S. Significant Subsidiary contained in such corporation's charter, by-law or any Reviewed Agreement. (vi) The Purchase Agreement has been duly authorized, executed and delivered by the Company. (vii) The documents incorporated by reference in the Registration Statement and the Prospectus (other than the financial statements and supporting schedules and other financial information derived from accounting records, included therein or omitted therefrom, as to which we need express no opinion), when they were filed with the Commission complied as to form in B-1 29 all material respects with the requirements of the 1934 Act and the rules and regulations of Commission thereunder. (viii) To our knowledge, except as disclosed in the Prospectus, there is not pending or threatened any action, suit, proceeding, inquiry or investigation, to which the Company or any of its subsidiaries is a party, or to which the assets, properties or operations of the Company or any subsidiary is subject, before or brought by any court or governmental agency or body which such counsel believes will have a Material Adverse Effect or materially or adversely affect the Company's ability to consummate transactions contemplated by the Purchase Agreement or the performance by the Company of its obligations thereunder. (ix) The information in the Prospectus under the caption "Description of Capital Stock" and in the Registration Statement under Item 15, insofar as it purports to summarize the documents or laws referred to therein, fairly summarizes in all material respects the matter referred to therein. (x) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any U.S. federal or California, or under the General Corporation Law of Delaware, Delaware court or governmental authority or agency is necessary or required by the Company in connection with the due authorization, execution or delivery by the Company of the Purchase Agreement or for the performance by the Company of the transactions contemplated under the Prospectus, other than under the 1933 Act, which has already been made, obtained or rendered, as applicable, and other than as may be required under state or non-U.S. securities laws as to which no opinion need be rendered. (xi) The Registration Statement has been declared effective under the 1933 Act. The Additional Registration Statement was effective upon filing pursuant to Rule 462(b) promulgated under the 1933 Act. The required filings of the Prospectus pursuant to Rule 424(b) have been made in the manner and within the time periods required by Rule 424(b). To our knowledge, no stop order suspending the effectiveness of the Registration Statement (or such Rule 462(b) Registration Statement) has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or threatened by the Commission. (xii) The Registration Statement (including any Rule 462(b) Registration Statement) and the Prospectus, excluding the documents incorporated by reference therein, and each amendment or supplement to the Registration Statement and Prospectus, excluding the documents incorporated by reference therein, as of their respective effective or issue dates (other than the financial statements and supporting schedules and other financial information derived from accounting records, included therein or omitted therefrom, as to which we need express no opinion) complied as to form in all material respects with the requirements of the 1933 Act and the rules and regulations of the Commission thereunder. (xiii) The Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. B-2 30 (xiv) To our knowledge, the execution, delivery and performance by the Company of its obligations under the Purchase Agreement and the consummation by the Company of the transactions contemplated by the Purchase Agreement do not and will not, whether with or without the giving of notice or lapse of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined in Section 1(a)(14) of the Purchase Agreement) under or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any subsidiary pursuant to any Reviewed Agreement (except as set forth in the Prospectus, except for such other conflicts, breaches or defaults or liens, charges or encumbrances that would not have a Material Adverse Effect, and except, to the extent that the condition set forth in Section 5(i) of the Purchase Agreement is satisfied under clause (ii) of the first sentence thereof with respect to any agreement described in Schedule D to the Purchase Agreement, for the default under such agreement resulting from the concurrent offering of LYONs), nor will such action result in any violation of the provisions of the charter or by-laws of the Company, or any applicable U.S. federal or California law, statute, rule, regulation, judgment, order, writ or decree, known to us, of any U.S. federal or California government, government instrumentality or court having jurisdiction over the Company or any of their respective properties, assets or operations. For purposes of this opinion, "Reviewed Agreements" are the agreements specified on an exhibit to such counsel's opinion. (xv) The form of certificate used to evidence the Common Stock complies in all material respects with all applicable statutory requirements, with any applicable requirements of the charter and by-laws of the Company and the requirements of the New York Stock Exchange. (xvi) The Securities to be purchased by the Underwriters from the Company have been duly authorized for issuance and sale to the Underwriters pursuant to the Purchase Agreement and, when issued and delivered by the Company pursuant to the Purchase Agreement against payment of the consideration set forth in the Purchase Agreement, will be validly issued and fully paid and non-assessable and no holder of the Securities is or will be subject to personal liability by reason of being such a holder. (xvii) The issuance and sale of the Securities by the Company is not subject to any statutory preemptive or other similar rights of any security holder of the Company contained in the Company's charter, by-laws or any Reviewed Agreement. (xviii) To our knowledge, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be filed or incorporated by reference as exhibits to the Registration Statement other than those filed or incorporated by reference as exhibits thereto, and the descriptions thereof or references thereto are correct in all material respects. Such counsel shall also have furnished to you a written statement (included in such written opinion or in a separate letter) to the effect that, although such counsel has not verified, and is not passing upon and does not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement and the Prospectus and any B-3 31 further amendments and supplements thereto made by the Company prior to the Closing Time, except as set forth in paragraph (ix) above, such counsel has acted as counsel to the Company in connection with the preparation of the Registration Statement and Prospectus and any such further amendments or supplements and such counsel has reviewed and discussed the contents of the Registration Statement and the Prospectus and any such further amendments and supplements with representatives of the Company, its auditors, you and your counsel, and on the basis of the information that such counsel gained in the course of this review and discussion, but without independent check or verification, no facts have come to such counsel's attention that caused it to believe that, as of its effective date, the Registration Statement (including any Rule 462(b) Registration Statement) or any further amendment thereto made by the Company prior to such Closing Time contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of its date or such Closing Time, the Prospectus or any further amendment or supplement thereto made by the Company prior to such Closing Time contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Such counsel need not express any opinion to make any statement as to the financial statements and related schedules or other financial data derived from accounting records included in or omitted from the Registration Statement or the Prospectus or any amendment or supplement thereto. Such counsel's opinions with respect to any documents being valid, binding or enforceable according to its terms may be qualified as to: (i) limitations imposed by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium or other similar laws relating to or affecting the rights and remedies of creditors generally; (ii) rights to indemnification and contribution which may be limited by applicable law or equitable principles; and (iii) general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, and the possible unavailability of specific performance or injunctive relief, and limitations or rights of acceleration, regardless of whether such validity and binding effect are considered in a proceeding in equity or at law. In rendering such opinion, such counsel may rely as to matters of fact on documents, certificates, corporate records, opinions and instruments as such counsel has deemed necessary or appropriate for purposes of this opinion. In addition, such counsel may state their opinion is limited to matters governed by the laws of the State of California, the General Corporation Law of the State of Delaware and the Federal law of the United States. With respect to matters other than the laws of the State of California, the General Corporation Law of the State of Delaware and the Federal law of the U.S., such counsel may B-4 32 omit such opinions, provided that such opinions are provided by other counsel reasonably acceptable to the Representative. Opinion of Malaysian counsel: (i) Solectron Technology Sdn. Bhd. (the "Malaysian Subsidiary") has been duly incorporated under the Companies Act 1965 and is validly existing and in good standing, having complied with all the statutory requirements and has the powers to conduct its business as authorised under its Memorandum and Articles of Association. It is also qualified to carry on its business in every state of Malaysia. (ii) The Malaysian Subsidiary has corporate power and authority to own, lease and operate its properties and to conduct its business as described in its Memorandum and Articles of Association. (iii) All of the issued and outstanding capital stock of the Subsidiary has been duly authorized and validly issued, is fully paid and, to the best of our knowledge and information, is owned directly by Solectron Corporation, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. B-5 33 SCHEDULE A
Number of Initial Name of Underwriter Securities ------------------- ---------- Merrill Lynch, Pierce, Fenner & Smith Incorporated ............................. 11,725,000 Chase H&Q ................................................ 7,262,500 Credit Suisse First Boston Corporation ................... 7,262,500 Banc of America Securities LLC ........................... 3,500,000 Salomon Smith Barney Inc. ................................ 3,500,000 Thomas Weisel Partners LLC ............................... 1,750,000 ---------- Total .................................................... 35,000,000 ==========
34 SCHEDULE B PURCHASE PRICE SOLECTRON CORPORATION 35,000,000 Shares of Common Stock (Par Value $0.001 Per Share) 1. The public offering price per share for the Securities, determined as provided in Section 2, shall be $34.25. 2. The purchase price per share for the Securities to be paid by the several Underwriters shall be $33.27, being an amount equal to the initial public offering price set forth above less $0.98 per share; provided that the purchase price per share for any Option Securities purchased upon the exercise of the over-allotment option described in Section 2(b) shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Initial Securities but not payable on the Option Securities. 35 SCHEDULE C PARTIES TO LOCK-UP AGREEMENT David Kynaston Ko Nishimura Daniel Perez Ajay Shah Ken Tsai Susan Wang Saeed Zohouri 36 SCHEDULE D AGREEMENTS TO BE AMENDED 1. Credit Agreement, dated as of April 30, 1997, among the Company and the banks party thereto, as amended. 2. Amended and Restated Lease Agreement, dated as of July 1, 1998, among the Company, Solectron Washington, Inc. and BNP Leasing Corporation ("BNP") and Amended and Restated Guaranty, dated as of July 1, 1998, by the Company in favor of BNP, in each case as amended. 3. Lease Agreement, dated as of October 20, 1998, among the Company, Solectron Georgia Corporation and BNP, as amended. 4. Participation Agreement, dated as of June 4, 1999, among the Company, Solectron South Carolina Corporation, Solectron California Corporation, SMART Modular Technologies, Inc., First Security Bank, National Association, as trustee, the lenders party thereto from time to time, and First Union National Bank, as agent for such lenders, and certain agreements among such parties related thereto, in each case as amended. 5. Amended and Restated Lease Agreement, dated as of July 16, 1998, between BNP and Force Computers, Inc. and Amended and Restated Guaranty, dated as of July 16, 1998, by the Company in favor of BNP, in each case as amended. 6. Lease Agreement, dated as of September 6, 1994, between BNP and the Company, as amended. EX-4.1 4 f67517ex4-1.txt EXHIBIT 4.1 1 EXHIBIT 4.1 - -------------------------------------------------------------------------------- SOLECTRON CORPORATION Liquid Yield Option(TM) Notes due 2020 (Zero Coupon-Senior) ---------------------------------------- Supplemental Indenture Dated as of November 20, 2000 Supplementing that certain Indenture Dated as of May 8, 2000 ---------------------------------------- STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., TRUSTEE - -------------------------------------------------------------------------------- (TM)Trademark of Merrill Lynch & Co., Inc. 2 TABLE OF CONTENTS
PAGE ---- ARTICLE ONE ISSUANCE OF LYONS....................................................................2 Section 101 Issuance of LYONs; Principal Amount; Maturity .............................2 Section 102 No Interest on the LYONs; Accrual of Original Issue Discount ..............3 ARTICLE TWO CERTAIN DEFINITIONS..................................................................3 Section 201 Certain Definitions .......................................................3 Section 202 Other Definitions .........................................................5 ARTICLE THREE CERTAIN COVENANTS..................................................................6 Section 301 Registration and Listing ..................................................6 ARTICLE FOUR.....................................................................................7 Section 401 Right of Redemption .......................................................7 Section 402 Conversion Arrangement on Call for Redemption .............................8 ARTICLE FIVE.....................................................................................9 Section 501 Conversion Privilege ......................................................9 Section 502 Conversion Procedure .....................................................10 Section 503 Adjustment for Change in Capital Stock ...................................12 Section 504 Adjustment for Rights Issue ..............................................13 Section 505 Adjustment for Other Distributions .......................................14 Section 506 When Adjustment May Be Deferred ..........................................16 Section 507 When No Adjustment Required ..............................................16 Section 508 Notice of Adjustment .....................................................17 Section 509 Voluntary Increase .......................................................17 Section 5010 Reorganization of Company; Special Distributions .........................17 Section 5011 Simultaneous Adjustments .................................................18 Section 5012 Successive Adjustments ...................................................18 Section 5013 Rights Issued in Respect of Common Stock Issued Upon Conversion ..........18 Section 5014 The Provisions of Section 14 .............................................19 ARTICLE SIX.....................................................................................19 Section 601 Purchase of LYONs at Option of the Holder ................................19 Section 602 Purchase of LYONs at Option of the Holder upon Change in Control .........26 Section 603 Effect of Purchase Notice or Change in Control Purchase Notice ...........29 Section 604 Deposit of Purchase Price or Change in Control Purchase Price ............30 Section 605 LYONs Purchased in Part ..................................................30 Section 606 Covenant to Comply with Securities Laws Upon Purchase of LYONs ...........30 Section 607 Repayment to the Company .................................................31
-i- 3 TABLE OF CONTENTS (CONTINUED)
PAGE ---- ARTICLE SEVEN...................................................................................31 Section 701 Optional Conversion to Semiannual Coupon LYON Upon Tax Event .............31 Section 702 Payment of Interest; Interest Rights Preserved ...........................32 ARTICLE EIGHT...................................................................................33 Section 801 Events of Default ........................................................33 Section 802 Acceleration of the LYONs ................................................35 ARTICLE NINE....................................................................................35 Section 901 Consent of Holders Required ..............................................35 Section 902 Applicability of Defeasance Provisions ...................................36 Section 903 Restrictive Covenants Not Applicable .....................................36 Section 904 Reference to and Effect on the Indenture .................................36 Section 905 Waiver of Certain Covenants ..............................................36 Section 906 Supplemental Indenture May be Executed In Counterparts ...................36 Section 907 Effect of Headings .......................................................36
-ii- 4 This Supplemental Indenture, dated as of November 20, 2000 (the "Supplemental Indenture"), between Solectron Corporation, a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), and State Street Bank and Trust Company of California, N.A., a national banking association organized and existing under the laws of the United States of America, as Trustee (the "Trustee"), supplementing that certain Indenture, dated as of May 8, 2000, between the Company and the Trustee (the "Indenture"). RECITALS A. The Company has duly authorized the execution and delivery of the Indenture to provide for the issuance from time to time of its unsecured debentures, notes, or other evidences of indebtedness to be issued in one or more series as provided for in the Indenture. B. The Indenture provides that the Securities of each series shall be in substantially the form set forth in the Indenture, or in such other form as may be established by or pursuant to a Board Resolution or in one or more supplemental indentures thereto, in each case with such appropriate insertions, omissions, substitutions, and other variations as are required or permitted by the Indenture, and may have such letters, numbers, or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined to be required by the officers executing such securities, as evidenced by their execution thereof. C. The Company and the Trustee have agreed that the Company shall issue and deliver, and the Trustee shall authenticate, Securities denominated "Liquid Yield Option(TM) Notes due 2020 (Zero Coupon-Senior)" (the "LYONs") pursuant to the terms of this Supplemental Indenture and substantially in the form set forth in Exhibit A below, in each case with such appropriate insertions, omissions, substitutions, and other variations as are required or permitted by the Indenture and this Supplemental Indenture, and with such letters, numbers, or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of such Securities. ARTICLE ONE ISSUANCE OF LYONS SECTION 101 ISSUANCE OF LYONS; PRINCIPAL AMOUNT; MATURITY. (a) On November 20, 2000, the Company shall issue and deliver to the Trustee, and the Trustee shall authenticate, LYONs substantially in the form set forth in Exhibit A below, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Indenture and this Supplemental Indenture, and with such letters, numbers, or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any LYONs exchange or as may, -2- 5 consistently herewith, be determined by the officers executing such LYONs, as evidenced by their execution of such LYONs. (b) The LYONs shall be issued in the aggregate Principal Amount at Maturity of $2,900,000,000 (or such greater amount not to exceed $3,335,000,000 as required by the exercise of the over-allotment option set forth in Section 2(b) of the Purchase Agreement and shall mature on November 20, 2020. The LYONs shall be issued only in denominations of $1,000 Principal Amount at Maturity and any integral multiple thereof. SECTION 102 NO INTEREST ON THE LYONS; ACCRUAL OF ORIGINAL ISSUE DISCOUNT. (a) The LYONs shall not bear interest except as specified in paragraphs 1 or 10 of the LYONs. Original Issue Discount (the difference between the Issue Price and the Principal Amount at Maturity of the LYONs), in the period during which a LYON remains outstanding, shall accrue at 3.25% per annum, on a semiannual bond equivalent basis using a 360-day year composed of twelve 30-day months, from the Issue Date. (b) The Company shall promptly make all payments in respect of the LYONs on the dates and in the manner provided in the LYONs and pursuant to this Indenture and Supplemental Indenture. Principal Amount at Maturity, Restated Principal Amount, Issue Price Plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price and interest, if any, shall be considered paid on the applicable date due if on such date (or in the case of a Purchase Price or Change in Control Purchase Price, on the Business Day following the applicable Purchase Date or Change in Control Purchase Date, as the case may be) the Trustee or the Paying Agent holds, in accordance with this Indenture and Supplemental Indenture, money or securities, if permitted hereunder, sufficient to pay all such amounts then due. (c) The Company shall, to the extent permitted by law, pay interest on overdue amounts at the rate per annum set forth in paragraph 1 of the LYONs, compounded semiannually, which interest shall accrue from the date such overdue amount was originally due to the date payment of such amount, including interest thereon, has been made or duly provided for. All such interest shall be payable on demand. The accrual for such interest on overdue amounts shall be in lieu of, and not in addition to, the continued accrual of Original Issue Discount. ARTICLE TWO CERTAIN DEFINITIONS SECTION 201 CERTAIN DEFINITIONS. The terms defined in this Section 201 (except as herein otherwise expressly provided or unless the context of this Supplemental Indenture otherwise requires) for all purposes of this Supplemental Indenture and of any indenture supplemental hereto have the respective meanings -3- 6 specified in this Section 201. All other terms used in this Supplemental Indenture that are defined in the Indenture or the Trust Indenture Act, either directly or by reference therein (except as herein otherwise expressly provided or unless the context of this Supplemental Indenture otherwise requires), have the respective meanings assigned to such terms in the Indenture or the Trust Indenture Act, as the case may be, as in force at the date of this Supplemental Indenture as originally executed. "Capital Stock" for any corporation means any and all shares, interest, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that corporation. "Conversion Agent" means State Street Bank and Trust Company of California, N.A., or any successor entity thereto. "Debt" means with respect to the Company at any date, without duplication, obligations (other than nonrecourse obligations) for borrowed money or evidenced by bonds, debentures, notes or similar instruments. "Issue Date" of any LYON means November 20, 2000. "Issue Price" of any LYON means, in connection with the original issuance of such LYON, the initial issue price at which the LYON is sold as set forth on the face of the LYON. "Original Issue Discount" of any LYON means the difference between the Issue Price and the Principal Amount at Maturity of the LYON as set forth on the face of the LYON. "Principal Amount at Maturity" of a LYON means the Principal Amount at Maturity as set forth on the face of the LYON. "Purchase Agreement" means the Purchase Agreement dated November 14, 2000 by and between Merrill Lynch & Co. Inc. and the Company, as amended from time to time by the parties thereto. "Redemption Date" or "redemption date" means the date specified for redemption of the LYONs in accordance with the terms of the LYONs and this Indenture. "Redemption Price" or "redemption price" has the meaning set forth in paragraph 5 of the LYONs. "SEC" means the Securities and Exchange Commission. "Special Record Date" means for the payment of any Defaulted Interest, the date fixed by the Trustee pursuant to Section 702(b). -4- 7 "Stated Maturity", when used with respect to any LYON, means the date specified in such LYON as the fixed date on which an amount equal to the Principal Amount at Maturity of such LYON is due and payable. "Supplemental Indenture" means this Supplemental Indenture, as amended or supplemented from time to time in accordance with the terms hereof, including the provisions of the Trust Indenture Act that are deemed to be part hereof, supplementing that certain Indenture, dated as of May 8, 2000 between the Company and the Trustee. "Tax Event" means that the Company shall have received an opinion from independent tax counsel experienced in such matters to the effect that, on or after November 20, 2000, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an interpretation or application of such laws or regulations by any legislative body, court, governmental agency or regulatory authority, in each case which amendment or change is enacted, promulgated, issued or announced or which interpretation is issued or announced or which action is taken, on or after November 20, 2000, there is more than an insubstantial risk that interest (including Original Issue Discount) payable on the LYONs either (i) would not be deductible on a current accrual basis or (ii) would not be deductible under any other method, in either case in whole or in part, by the Company (by reason of deferral, disallowance, or otherwise) for United States Federal income tax purposes. "Trading Day" means a day during which trading in securities generally occurs on the New York Stock Exchange or, if the Common Stock is not listed on the New York Stock Exchange, on the principal other national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a national or regional securities exchange, on the National Association of Securities Dealers Automated Quotation System or, if the Common Stock is not quoted on the National Association of Securities Dealers Automated Quotation System, on the principal other market on which the Common Stock is then traded. SECTION 202 OTHER DEFINITIONS.
Defined in Term Section ---- ---------- "Associate".................................................... 602(a) "Average Quoted Price"......................................... 501 "Bankruptcy Law"............................................... 801 "beneficial owner"............................................. 602(a) "cash"......................................................... 601(b) "Cash Amount" ................................................. 501 "Change Event" ................................................ 5010 "Change in Control"............................................ 602(a) "Change in Control Purchase Date".............................. 602(a) "Change in Control Purchase Notice"............................ 602(c)
-5- 8
Defined in Term Section ---- ---------- "Change in Control Purchase Price"............................. 602(a) "Company Notice"............................................... 601(e) "Company Notice Date".......................................... 601(c) "Conversion Date".............................................. 502 "Conversion Rate".............................................. 501 "Custodian".................................................... 801 "Defaulted Interest"........................................... 702(b) "Ex-Dividend Time"............................................. 501 "Extraordinary Cash Dividend".................................. 505 "Interest Payment Date"........................................ 701 "Legal Holiday"................................................ 502 "Market Price"................................................. 601(d) "Option Exercise Date"......................................... 701 "Purchase Date"................................................ 601(a) "Purchase Notice".............................................. 601(a)(1) "Purchase Price"............................................... 601(a) "Quoted Price"................................................. 501 "Regular Record Date".......................................... 701 "Restated Principal Amount".................................... 701 "Rights"....................................................... 513 "Rights Agreement"............................................. 513 "Sale Price"................................................... 601(d) "Tax Event Date"............................................... 701 "Time of Determination"........................................ 501
ARTICLE THREE CERTAIN COVENANTS The following covenant shall be applicable to the Company for so long as any of the LYONs are outstanding. Nothing in this paragraph will, however, affect the Company's obligations under any provision of the Indenture or, except for Article Three hereof, this Supplemental Indenture. SECTION 301 REGISTRATION AND LISTING. The Company (i) will effect all registrations with, and obtain all approvals by, all governmental authorities that may be necessary under any United States Federal or state law (including the Securities Act, the Exchange Act and state securities and Blue Sky laws) before the shares of Common Stock issuable upon conversion of LYONs may be lawfully issued and delivered, and thereafter publicly traded, and qualified or listed as contemplated by clause (ii); and (ii) will list the shares of Common Stock required to be issued and delivered upon conversion of the LYONs prior to such issuance or delivery on The New York Stock Exchange, -6- 9 The Nasdaq National Market or such other exchange or automated quotation, to the extent so quoted or listed, as the Common Stock is then so quoted or listed at such date of conversion. ARTICLE FOUR REDEMPTION OF LYONS SECTION 401 RIGHT OF REDEMPTION. The LYONs will not be subject to redemption prior to May 20, 2004 and will be redeemable on and after such date at the option of the Company, in whole or in part, upon not less than 15 nor more than 60 days' notice to the Holders; provided, however, that during the period commencing on May 20, 2004 and ending on November 20, 2005, the LYONs shall be redeemable by the Company pursuant to the terms of this Section 401 if and only if the product of the Sale Price of the shares of Common Stock into which the LYONs to be redeemed are then convertible multiplied by the Conversion Rate applicable to such shares has exceeded 150% of the sum of the Issue Price plus the accrued Original Issue Discount per such LYONs plus the accrued interest, if any, per such LYONs (as determined based on the then applicable amounts) for at least 20 Trading Days within a period of 30 consecutive Trading Days prior to the date of the mailing of the notice of redemption. The table below shows redemption prices of a LYON on May 20, 2004, at each November 20 thereafter prior to maturity and at maturity on November 20, 2020. These prices reflect the accrued Original Issue Discount calculated to each such date. The redemption price of a LYON redeemed between such dates would include an additional amount reflecting the additional Original Issue Discount accrued since the next preceding date in the table.
(2) Accrued (3) (1) Original Redemption LYON Issue Discount Price Redemption Date Issue Price at 3.25% (1)+(2) --------------- ----------- --------------- ----------- May 20, 2004 ......................... $ 524.78 $ 62.68 $ 587.46 November 20, 2004 .................... 524.78 72.23 597.01 November 20, 2005 .................... 524.78 91.79 616.57 November 20, 2006 .................... 524.78 111.99 636.77 November 20, 2007 .................... 524.78 132.86 657.64 November 20, 2008 .................... 524.78 154.40 679.18 November 20, 2009 .................... 524.78 176.66 701.44 November 20, 2010 .................... 524.78 199.64 724.42 November 20, 2011 .................... 524.78 223.37 748.15 November 20, 2012 .................... 524.78 247.88 772.66 November 20, 2013 .................... 524.78 273.20 797.98 November 20, 2014 .................... 524.78 299.35 824.13 November 20, 2015 .................... 524.78 326.35 851.13
-7- 10 November 20, 2016 .................... 524.78 354.23 879.01 November 20, 2017 .................... 524.78 383.03 907.81 November 20, 2018 .................... 524.78 412.78 937.56 November 20, 2019 .................... 524.78 443.50 968.28 At Stated Maturity ................... $ 524.78 $ 475.22 $1,000.00
If converted to semiannual coupon LYONs following the occurrence of a Tax Event, the LYONs would be redeemable at the option of the Company at the restated principal amount plus accrued and unpaid interest from the date of such conversion to, but not including, the redemption date. However, in no event may the LYONs be redeemed prior to May 20, 2004. SECTION 402 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In connection with any redemption of LYONs, the Company may arrange for the purchase and conversion of any LYONs called for redemption by an agreement with one or more investment bankers or other purchasers to purchase such LYONs by paying to the Trustee in trust for the Holders, on or before the close of business on the Redemption Date, an amount that, together with any amounts deposited with the Trustee by the Company for the redemption of such LYONs, is not less than the Redemption Price of such LYONs. Notwithstanding anything to the contrary contained in this Article Three, the obligation of the Company to pay the Redemption Price of such LYONs shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers. If such an agreement is entered into, any LYONs not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything to the contrary contained in Article 11 of the Indenture) surrendered by such purchasers for conversion, all as of immediately prior to the close of business on the Redemption Date, subject to payment of the above amount as aforesaid. The Trustee shall hold and pay to the Holders whose LYONs are selected for redemption any such amount paid to it for purchase and conversion in the same manner as it would moneys deposited with it by the Company for the redemption of LYONs. Without the Trustee's prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any LYONs shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee as set forth in this Indenture, and the Company agrees to indemnify the Trustee from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any LYONs between the Company and such purchasers, including the costs and expenses incurred by the Trustee in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture. -8- 11 ARTICLE FIVE CONVERSION OF LYONS SECTION 501 CONVERSION PRIVILEGE. A Holder of a LYON may convert such LYON into Common Stock at any time during the period stated in paragraph 8 of the LYONs. The number of shares of Common Stock issuable upon conversion of a LYON per $1,000 of Principal Amount at Maturity thereof (the "Conversion Rate") shall be that set forth in paragraph 8 in the LYONs, subject to adjustment as herein set forth. A Holder may convert a portion of the Principal Amount at Maturity of a LYON if the portion is $1,000 or an integral multiple of $1,000. Provisions of this Supplemental Indenture that apply to conversion of all of a LYON also apply to conversion of a portion of a LYON. The Holders' right to convert Securities into shares of Common Stock is subject to the Company's right to elect instead to deliver to such Holder the Cash Amount (as defined below), in lieu of delivering all or a portion of such shares of Common Stock. Such right will terminate upon the reservation, if permitted, of authorized shares of Common Stock by the Company in a number sufficient to enable all of the LYONs to be converted into Common Stock following the stockholders meeting referred to in Section 5014. The amount of cash to be delivered for each $1,000 Principal Amount of a Security upon conversion shall be equal to the average of the Sale Prices of a share of Common Stock for the five consecutive Trading Days commencing on the date that is one day after the date of the election notice delivered by the Company referred to in Section 502 multiplied by the Conversion Rate (less the number of shares to be delivered as part of such conversion) in effect on the Conversion Date (the "Cash Amount"). "Quoted Price" means, for any given day, the last reported per share sale price (or, if no sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such day of the Common Stock on the New York Stock Exchange Composite Tape or, in the event shares of Common Stock are not listed on the New York Stock Exchange, in the composite transactions for such other national or regional securities exchange upon which the Common Stock is listed, or, if the shares of Common Stock are not listed on a national or regional securities exchange, as quoted on the National Association of Securities Dealers Automated Quotation System or by the National Quotation Bureau Incorporated. In the absence of such quotations, the Company shall be entitled to determine the Quoted Price on the basis of such quotations as it considers appropriate. "Average Quoted Price" means the average of the Quoted Prices of the Common Stock for the shorter of -9- 12 (i) 30 consecutive Trading Days ending on the last full Trading Day prior to the Time of Determination with respect to the rights, warrants or options or distribution in respect of which the Average Quoted Price is being calculated, or (ii) the period (x) commencing on the date next succeeding the first public announcement of (a) the issuance of rights, warrants or options or (b) the distribution, in each case, in respect of which the Average Quoted Price is being calculated and (y) proceeding through the last full Trading Day prior to the Time of Determination with respect to the rights, warrants or options or distribution in respect of which the Average Quoted Price is being calculated (excluding days within such period, if any, which are not Trading Days), or (iii) the period, if any, (x) commencing on the date next succeeding the Ex-Dividend Time with respect to the next preceding (a) issuance of rights, warrants or options or (b) distribution, in each case, for which an adjustment is required by the provisions of Section 503(4), 504 or 505 and (y) proceeding through the last full Trading Day prior to the Time of Determination with respect to the rights, warrants or options or distribution in respect of which the Average Quoted Price is being calculated (excluding days within such period, if any, which are not Trading Days). In the event that the Ex-Dividend Time (or in the case of a subdivision, combination or reclassification, the effective date with respect thereto) with respect to a dividend, subdivision, combination or reclassification to which Section 503(1), (2), (3) or (5) applies occurs during the period applicable for calculating "Average Quoted Price" pursuant to the definition in the preceding sentence, "Average Quoted Price" shall be calculated for such period in a manner determined by the Board of Directors to reflect the impact of such dividend, subdivision, combination or reclassification on the Quoted Price of the Common Stock during such period. "Time of Determination" means the time and date of the earlier of (i) the determination of stockholders entitled to receive rights, warrants or options or a distribution, in each case, to which Section 504 or 505 applies and (ii) the time ("Ex-Dividend Time") immediately prior to the commencement of "ex-dividend" trading for such rights, warrants or options or distribution on the New York Stock Exchange or such other national or regional exchange or market on which the Common Stock is then listed or quoted. SECTION 502 CONVERSION PROCEDURE. To convert a LYON a Holder must satisfy the requirements in paragraph 8 of the LYONs. The date on which the Holder satisfies all those requirements is the conversion date (the "Conversion Date"). Subject to Section 501, within two Business Days following the Conversion Date, the Company shall deliver to the Holder, through the Conversion Agent, written notice of whether such Security shall be converted into shares of Common Stock or paid in cash. If the Company shall fail to deliver such notice, the Company shall be required to satisfy such conversion soly with shares of Common Stock. If the Company shall have notified the Holder that such Security shall be converted into shares of Common Stock, as soon as practicable -10- 13 after the Conversion Date, the Company shall deliver to the Holder, through the Conversion Agent, a certificate for the number of full shares of Common Stock issuable upon the conversion and cash in lieu of any fractional share determined pursuant to Section 14.3 of the Indenture. The Company shall determine such full number of shares and the amounts of the required cash with respect to any fractional share, and shall set forth such information in a certificate delivered to the Conversion Agent. If the Company shall have notified the Holder that such Security shall be paid in cash (if permitted under Section 501), the Company shall deliver to the Holder surrendering such Security the amount of cash payable with respect to such Security promptly following the determination of the Cash Amount. The Person in whose name the certificate is registered shall be treated as a stockholder of record on and after the Conversion Date; provided, however, that no surrender of a LYON on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the Person or Persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders of such shares of Common Stock on such date, but such surrender shall be effective to constitute the Person or Persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; such conversion shall be at the Conversion Rate in effect on the date that such LYON shall have been surrendered for conversion, as if the stock transfer books of the Company had not been closed. Upon conversion of a LYON, such Person shall no longer be a Holder of such LYON. No payment or adjustment will be made for dividends on, or other distributions with respect to, any Common Stock except as provided in this Article Five. On conversion of a LYON, that portion of accrued Original Issue Discount (or interest, if the Company has exercised its option provided for in Section 701) attributable to the period from the Issue Date (or, if the Company has exercised the option provided for in Section 701, the later of (x) the date of such exercise and (y) the date on which interest was last paid) of the LYON through the Conversion Date with respect to the converted LYON shall not be cancelled, extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof through delivery of the Common Stock (together with the cash payment, if any, in lieu of fractional shares) or cash in lieu thereof in exchange for the LYON being converted pursuant to the provisions hereof; and the fair market value of such shares of Common Stock (together with any such cash payment in lieu of fractional shares) or cash in lieu thereof shall be treated as delivered, to the extent thereof, first in exchange for Original Issue Discount (or interest, if the Company has exercised its option provided for in Section 701) accrued through the Conversion Date, and the balance, if any, of such fair market value of such Common Stock (and any such cash payment) shall be treated as issued in exchange for the Issue Price of the LYON being converted pursuant to the provisions hereof. If the Holder converts more than one LYON at the same time, the number of shares of Common Stock issuable upon the conversion or cash in lieu thereof shall be based on the total Principal Amount at Maturity of the LYONs converted. -11- 14 If the last day on which a LYON may be converted is a day other than a Business Day (a "Legal Holiday"), the LYON may be surrendered on the next succeeding day that is not a Legal Holiday. Upon surrender of a LYON that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new LYON in an authorized denomination equal in Principal Amount at Maturity to the unconverted portion of the LYON surrendered. All shares of Common Stock delivered upon conversion of the LYONs shall be newly issued shares or treasury shares, shall be duly and validly issued and fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim. SECTION 503 ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If, after the Issue Date of the LYONs, the Company: (1) pays a dividend or makes a distribution on its Common Stock in shares of its Common Stock; (2) subdivides its outstanding shares of Common Stock into a greater number of shares; (3) combines its outstanding shares of Common Stock into a smaller number of shares; (4) pays a dividend or makes a distribution on its Common Stock in shares of its Capital Stock (other than Common Stock or rights, warrants or options for its Capital Stock); or (5) issues by reclassification of its Common Stock any shares of its Capital Stock (other than rights, warrants or options for its Capital Stock), then the conversion privilege and the Conversion Rate in effect immediately prior to such action shall be adjusted so that the Holder of a LYON thereafter converted may receive the number of shares of Capital Stock of the Company which such Holder would have owned immediately following such action if such Holder had converted the LYON immediately prior to such action. The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification. If after an adjustment a Holder of a LYON upon conversion of such LYON may receive shares of two or more classes of Capital Stock of the Company, the Conversion Rate shall thereafter be subject to adjustment upon the occurrence of an action taken with respect to any -12- 15 such class of Capital Stock as is contemplated by this Article Five with respect to the Common Stock, on terms comparable to those applicable to Common Stock in this Article Five. SECTION 504 ADJUSTMENT FOR RIGHTS ISSUE. If after the Issue Date of the LYONs, the Company distributes any rights, warrants or options to all holders of its Common Stock entitling them, for a period expiring within 60 days after the record date for such distribution, to purchase shares of Common Stock at a price per share less than the Quoted Price as of the Time of Determination, the Conversion Rate shall be adjusted in accordance with the formula: R' = R x (O + N) ----------------- (O + (N x P)/M) where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. O = the number of shares of Common Stock outstanding on the record date for the distribution to which this Section 504 is being applied. N = the number of additional shares of Common Stock offered pursuant to the distribution. P = the offering price per share of the additional shares. M = the Average Quoted Price, minus, in the case of (i) a distribution to which Section 503(4) applies or (ii) a distribution to which Section 505 applies, for which, in each case, (x) the record date shall occur on or before the record date for the distribution to which this Section 504 applies and (y) the Ex-Dividend Time shall occur on or after the date of the Time of Determination for the distribution to which this Section 504 applies, the fair market value (on the record date for the distribution to which this Section 504 applies) of the (1) Capital Stock of the Company distributed in respect of each share of Common Stock in such Section 503(4) distribution and (2) assets of the Company or debt securities or any rights, warrants or options to purchase securities of the Company distributed in respect of each share of Common Stock in such Section 505 distribution. -13- 16 The Board of Directors shall determine fair market values for the purposes of this Section 504. The adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive the rights, warrants or options to which this Section 504 applies. If all of the shares of Common Stock subject to such rights, warrants or options have not been issued when such rights, warrants or options expire, then the Conversion Rate shall promptly be readjusted to the Conversion Rate which would then be in effect had the adjustment upon the issuance of such rights, warrants or options been made on the basis of the actual number of shares of Common Stock issued upon the exercise of such rights, warrants or options. No adjustment shall be made under this Section 504 if the application of the formula stated above in this Section 504 would result in a value of R' that is equal to or less than the value of R. SECTION 505 ADJUSTMENT FOR OTHER DISTRIBUTIONS. If, after the Issue Date of the LYONs, the Company distributes to all holders of its Common Stock any of its assets, or debt securities or any rights, warrants or options to purchase securities of the Company (including securities or cash, but excluding (x) distributions of Capital Stock referred to in Section 503 and distributions of rights, warrants or options referred to in Section 504 and (y) cash dividends or other cash distributions that are paid out of consolidated current net earnings or earnings retained in the business as shown on the books of the Company unless such cash dividends or other cash distributions are Extraordinary Cash Dividends) the Conversion Rate shall be adjusted, subject to the provisions of the last paragraph of this Section 505, in accordance with the formula: R' = R x M --------- M - F where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. M = the Average Quoted Price, minus, in the case of a distribution to which Section 503(4) applies, for which (i) the record date shall occur on or before the record date for the distribution to which this Section 505 applies and (ii) the Ex-Dividend Time shall occur on or after the date of the Time of Determination for the distribution to which this Section 505 applies, the fair market value (on the record date for the distribution to which this Section 505 applies) of any Capital Stock of the Company distributed in respect of each share of Common Stock in such Section 503(4) distribution. -14- 17 F = the fair market value (on the record date for the distribution to which this Section 505 applies) of the assets, securities, rights, warrants or options to be distributed in respect of each share of Common Stock in the distribution to which this Section 505 is being applied (including, in the case of cash dividends or other cash distributions giving rise to an adjustment, all such cash distributed concurrently). The Board of Directors shall determine fair market values for the purposes of this Section 505. The adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive the distribution to which this Section 505 applies. For purposes of this Section 505, the term "Extraordinary Cash Dividend" shall mean any cash dividend with respect to the Common Stock the amount of which, together with the aggregate amount of cash dividends on the Common Stock to be aggregated with such cash dividend in accordance with the provisions of this paragraph, equals or exceeds the threshold percentages set forth in item (i) or (ii) below: (i) If, upon the date prior to the Ex-Dividend Time with respect to a cash dividend on the Common Stock, the aggregate amount of such cash dividend together with the amounts of all cash dividends on the Common Stock with Ex-Dividend Times occurring in the 85 consecutive day period ending on the date prior to the Ex-Dividend Time with respect to the cash dividend to which this provision is being applied equals or exceeds on a per share basis 12.5% of the average of the Quoted Prices during the period beginning on the date after the first such Ex-Dividend Time in such period and ending on the date prior to the Ex-Dividend Time with respect to the cash dividend to which this provision is being applied (except that if no other cash dividend has had an Ex-Dividend Time occurring in such period, the period for calculating the average of the Quoted Prices shall be the period commencing 85 days prior to the date prior to the Ex-Dividend Time with respect to the cash dividend to which this provision is being applied), such cash dividend together with each other cash dividend with an Ex-Dividend Time occurring in such 85 day period shall be deemed to be an Extraordinary Cash Dividend and for purposes of applying the formula set forth above in this Section 505, the value of "F" shall be equal to (w) the aggregate amount of such cash dividend together with the amounts of the other cash dividends with Ex-Dividend Times occurring in such period minus (x) the aggregate amount of such other cash dividends with Ex-Dividend Times occurring in such period for which a prior adjustment in the Conversion Rate was previously made under this Section 505. (ii) If, upon the date prior to the Ex-Dividend Time with respect to a cash dividend on the Common Stock, the aggregate amount of such cash dividend together with the amounts of all cash dividends on the Common Stock with Ex-Dividend Times occurring in the 365 consecutive day period ending on the date prior to the Ex-Dividend Time with respect to the cash dividend to which this provision is being applied equals or exceeds on a per share basis -15- 18 25% of the average of the Quoted Prices during the period beginning on the date after the first such Ex-Dividend Time in such period and ending on the date prior to the Ex-Dividend Time with respect to the cash dividend to which this provision is being applied (except that if no other cash dividend has had an Ex-Dividend Time occurring in such period, the period for calculating the average of the Quoted Prices shall be the period commencing 365 days prior to the date prior to the Ex-Dividend Time with respect to the cash dividend to which this provision is being applied), such cash dividend together with each other cash dividend with an Ex-Dividend Time occurring in such 365 day period shall be deemed to be an Extraordinary Cash Dividend and for purposes of applying the formula set forth above in this Section 505, the value of "F" shall be equal to (y) the aggregate amount of such cash dividend together with the amounts of the other cash dividends with Ex-Dividend Times occurring in such period minus (z) the aggregate amount of such other cash dividends with Ex-Dividend Times occurring in such period for which a prior adjustment in the Conversion Rate was previously made under this Section 505. In making the determinations required by items (i) and (ii) above, the amount of cash dividends paid on a per share basis and the average of the Quoted Prices, in each case during the period specified in item (i) or (ii) above, as applicable, shall be appropriately adjusted to reflect the occurrence during such period of any event described in Section 503. In the event that, with respect to any distribution to which this Section 505 would otherwise apply, the difference "M-F" as defined in the above formula is less than $1.00 or "F" is equal to or greater than "M," then the adjustment provided by this Section 505 shall not be made and in lieu thereof the provisions of Section 5010 shall apply to such distribution. SECTION 506 WHEN ADJUSTMENT MAY BE DEFERRED. No adjustment in the Conversion Rate need be made unless the adjustment would require an increase or decrease of at least 1% in the Conversion Rate. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article Five shall be made to the nearest cent or to the nearest 1/1,000th of a share, as the case may be. SECTION 507 WHEN NO ADJUSTMENT REQUIRED. No adjustment need be made for a transaction referred to in Section 503, 504, 505 or 5011 if Holders are to participate in the transaction on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction. Such participation by Holders may include participation upon conversion provided that an adjustment shall be made at such time as the Holders are no longer entitled to participate. No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest. -16- 19 No adjustment need be made for a change in the par value or no par value of the Common Stock. To the extent the LYONs become convertible pursuant to this Article Five into cash, no adjustment need be made thereafter as to the cash. Interest will not accrue on the cash. SECTION 508 NOTICE OF ADJUSTMENT. Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Holders a notice of the adjustment. The Company shall file with the Trustee and the Conversion Agent such notice and a certificate from the Company's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. The certificate shall be conclusive evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate except to exhibit the same to any Holder desiring inspection thereof. Unless and until the Trustee shall receive such notice and certificate with respect to an adjustment of the Conversion Rate or a notice of a voluntary increase pursuant to Section 509, the Trustee may assume without inquiry that the Conversion Rate has not been adjusted. SECTION 509 VOLUNTARY INCREASE. The Company from time to time may increase the Conversion Rate by any amount for any period of time. Whenever the Conversion Rate is increased, the Company shall mail to Holders and file with the Trustee and the Conversion Agent a notice of the increase. The Company shall mail the notice at least 15 days before the date the increased Conversion Rate takes effect. The notice shall state the increased Conversion Rate and the period it will be in effect. A voluntary increase of the Conversion Rate does not change or adjust the Conversion Rate otherwise in effect for purposes of Section 503, 504 or 505. SECTION 5010 REORGANIZATION OF COMPANY; SPECIAL DISTRIBUTIONS. The provisions of Section 14.9 of the Indenture shall not be applicable to the LYONs. If the Company is a party to a transaction subject to Article 8 of the Indenture (other than a sale of all or substantially all of the assets of the Company in a transaction in which the holders of Common Stock immediately prior to such transaction do not receive securities, cash or other assets of the Company or any other Person) or a merger or binding share exchange which reclassifies or changes its outstanding Common Stock (a "Change Event"), the Person obligated to deliver securities, cash or other assets upon conversion of the LYONs shall enter into a supplemental indenture. If the issuer of securities deliverable upon conversion of LYONs is an Affiliate of the successor Company, that issuer shall join in the supplemental indenture. -17- 20 The supplemental indenture referred to in the preceding paragraph shall provide that the Holder of a LYON may convert it into the kind and amount of securities, cash or other assets which such Holder would have received by virtue of the consolidation, merger, binding share exchange or transfer if such Holder had converted the LYON immediately before the effective date of the transaction, assuming (to the extent applicable) that such Holder (i) was not a constituent Person or an Affiliate of a constituent Person to such transaction; (ii) made no election with respect thereto; and (iii) was treated alike with the plurality of non-electing Holders. The supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided for in this Article Five. The successor Company shall mail to Holders a notice briefly describing the supplemental indenture. The right of the Company to satisfy the conversion privilege described in Section 501 for cash (as described in the third paragraph of Section 501) shall terminate upon the occurrence of a Change Event. If this Section applies, neither Section 503 nor 504 applies. If the Company makes a distribution to all holders of its Common Stock of any of its assets, or debt securities or any rights, warrants or options to purchase securities of the Company that, but for the provisions of the last paragraph of Section 505, would otherwise result in an adjustment in the Conversion Rate pursuant to the provisions of Section 505, then, from and after the record date for determining the holders of Common Stock entitled to receive the distribution, a Holder of a LYON that converts such LYON in accordance with the provisions of this Indenture shall upon such conversion be entitled to receive, in addition to the shares of Common Stock into which the LYON is convertible (or cash in lieu thereof), the kind and amount of securities, cash or other assets comprising the distribution that such Holder would have received if such Holder had converted the LYON immediately prior to the record date for determining the holders of Common Stock entitled to receive the distribution. SECTION 5011 SIMULTANEOUS ADJUSTMENTS. In the event that this Article Five requires adjustments to the Conversion Rate under more than one of Sections 503(4), 504 or 505, and the record dates for the distributions giving rise to such adjustments shall occur on the same date, then such adjustments shall be made by applying, first, the provisions of Section 503, second, the provisions of Section 505 and, third, the provisions of Section 504. SECTION 5012 SUCCESSIVE ADJUSTMENTS. After an adjustment to the Conversion Rate under this Article Five, any subsequent event requiring an adjustment under this Article Five shall cause an adjustment to the Conversion Rate as so adjusted. SECTION 5013 RIGHTS ISSUED IN RESPECT OF COMMON STOCK ISSUED UPON CONVERSION. -18- 21 Each share of Common Stock issued upon conversion of LYONs pursuant to this Article Five shall be entitled to receive the appropriate number of common stock or preferred stock purchase rights, as the case may be (the "Rights"), if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any shareholder rights agreement adopted by the Company, as the same may be amended from time to time (in each case, a "Rights Agreement"). Provided that such Rights Agreement requires that each share of Common Stock issued upon conversion of LYONs (or Holder receiving cash in lieu thereof) at any time prior to the distribution of separate certificates representing the Rights be entitled to receive such Rights, then, notwithstanding anything else to the contrary in this Article Five, there shall not be any adjustment to the conversion privilege or Conversion Rate as a result of the issuance of Rights, the distribution of separate certificates representing the Rights, the exercise or redemption of such Rights in accordance with any such Rights Agreement, or the termination or invalidation of such Rights. SECTION 5014 RESERVATION OF SHARES OF COMMON STOCK. The provisions of Section 14.6 of the Indenture shall not be applicable to the LYONs. The Company shall initially reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for purposes of effecting the conversion of the LYONs, four million shares of Common Stock of the Company. The Company shall seek from its stockholders at the next scheduled annual meeting of stockholders after the date hereof, an approval of an amendment to the Company's charter to increase the number of authorized shares of Common Stock in an amount at least great enough to enable the Company to reserve a sufficient number of such shares to permit the conversion of all of the LYONs into Common Stock. In addition, the Company shall, from and after the effectiveness of such amendment, if forthcoming, at all times cause to be reserved and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for purposes of effecting the conversion of the LYONs, the full number of shares of Common Stock of the Company then issuable upon the conversion of all outstanding LYONs. ARTICLE SIX PURCHASE OF LYONS AT OPTION OF HOLDER SECTION 601 PURCHASE OF LYONS AT OPTION OF THE HOLDER. (a) General. LYONs shall be purchased by the Company pursuant to paragraph 6 of the LYONs as of May 20, 2004, November 20, 2005, and November 20, 2010 (each, a "Purchase Date"), at the purchase price specified therein (each, a "Purchase Price"), at the option of the Holder thereof, upon: (1) delivery to the Paying Agent, by the Holder of a written notice of purchase (a "Purchase Notice") at any time from the opening of business -19- 22 on the date that is 20 Business Days prior to a Purchase Date until the close of business on such Purchase Date stating: (A) the certificate number of the LYON which the Holder will deliver to be purchased, (B) the portion of the Principal Amount at Maturity of the LYON which the Holder will deliver to be purchased, which portion must be $1,000 or an integral multiple thereof, (C) that such LYON shall be purchased as of the Purchase Date pursuant to the terms and conditions specified in paragraph 6 of the LYONs and in this Supplemental Indenture, and (D) in the event the Company elects, pursuant to Section 601(b), to pay the Purchase Price to be paid as of such Purchase Date, in whole or in part, in shares of Common Stock but such portion of the Purchase Price shall ultimately be payable to such Holder entirely in cash because any of the conditions to payment of the Purchase Price in Common Stock is not satisfied prior to the close of business on such Purchase Date, as set forth in Section 601(d), whether such Holder elects (i) to withdraw such Purchase Notice as to some or all of the LYONs to which such Purchase Notice relates (stating the Principal Amount at Maturity and certificate numbers of the LYONs as to which such withdrawal shall relate), or (ii) to receive cash in respect of the entire Purchase Price for all LYONs (or portions thereof) to which such Purchase Notice relates; and (2) delivery of such LYON to the Paying Agent prior to, on or after the Purchase Date (together with all necessary endorsements) at the offices of the Paying Agent, such delivery being a condition to receipt by the Holder of the Purchase Price therefor; provided, however, that such Purchase Price shall be so paid pursuant to this Section 601 only if the LYON so delivered to the Paying Agent shall conform in all respects to the description thereof in the related Purchase Notice. If a Holder, in such Holder's Purchase Notice and in any written notice of withdrawal delivered by such Holder pursuant to the terms of Section 603, fails to indicate such Holder's choice with respect to the election set forth in clause (D) of Section 601(a)(1), such Holder shall be deemed to have elected to receive cash in respect of the Purchase Price for all LYONs subject to such Purchase Notice in the circumstances set forth in such clause (D). The Company shall purchase from the Holder thereof, pursuant to this Section 601, a portion of a LYON if the Principal Amount at Maturity of such portion is $1,000 or an integral -20- 23 multiple of $1,000. Provisions of this Supplemental Indenture that apply to the purchase of all of a LYON also apply to the purchase of such portion of such LYON. Any purchase by the Company contemplated pursuant to the provisions of this Section 601 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Purchase Date and the time of delivery of the LYON. Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Purchase Notice contemplated by this Section 601(a) shall have the right to withdraw such Purchase Notice at any time prior to the close of business on the Purchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 603. The Paying Agent shall promptly notify the Company of the receipt by it of any Purchase Notice or written notice of withdrawal thereof. (b) Company's Right to Elect Manner of Payment of Purchase Price. The LYONs to be purchased pursuant to Section 601(a) may be paid for, at the election of the Company, in U.S. legal tender ("cash") or Common Stock, or in any combination of cash and Common Stock, subject to the conditions set forth in Sections 601(c) and (d). The Company shall designate, in the Company Notice delivered pursuant to Section 601(e), whether the Company will purchase the LYONs for cash or Common Stock, or, if a combination thereof, the percentages of the Purchase Price of LYONs in respect of which it will pay in cash or Common Stock; provided that the Company will pay cash for fractional interests in Common Stock. For purposes of determining the existence of potential fractional interests, all LYONs subject to purchase by the Company held by a Holder shall be considered together (no matter how many separate certificates are to be presented). Each Holder whose LYONs are purchased pursuant to this Section 601 shall receive the same percentage of cash or Common Stock in payment of the Purchase Price for such LYONs, except (i) as provided in Section 601(d) with regard to the payment of cash in lieu of fractional shares of Common Stock and (ii) in the event that the Company is unable to purchase the LYONs of a Holder or Holders for Common Stock because any necessary qualifications or registrations of the Common Stock under applicable state securities laws cannot be obtained, the Company may purchase the LYONs of such Holder or Holders for cash. The Company may not change its election with respect to the consideration (or components or percentages of components thereof) to be paid once the Company has given its Company Notice to Holders except pursuant to this Section 601(b) or pursuant to Section 601(d) in the event of a failure to satisfy, prior to the close of business on the Purchase Date, any condition to the payment of the Purchase Price, in whole or in part, in Common Stock. At least three Business Days before the Company Notice Date, the Company shall deliver an Officers' Certificate to the Trustee specifying: (i) the manner of payment selected by the Company, (ii) the information required by Section 601(e), -21- 24 (iii) if the Company elects to pay the Purchase Price, or a specified percentage thereof, in Common Stock, that the conditions to such manner of payment set forth in Section 601(d) have been or will be complied with, and (iv) whether the Company desires the Trustee to give the Company Notice required by Section 601(e). (c) Purchase with Cash. On each Purchase Date, at the option of the Company, the Purchase Price of LYONs in respect of which a Purchase Notice pursuant to Section 601(a) has been given, or a specified percentage thereof, may be paid by the Company with cash equal to the aggregate Purchase Price of such LYONs. If the Company elects to purchase LYONs with cash, the Company Notice, as provided in Section 601(e), shall be sent to Holders (and to beneficial owners as required by applicable law) not less than 20 Business Days prior to such Purchase Date (the "Company Notice Date"). (d) Payment by Issuance of Common Stock. On each Purchase Date, at the option of the Company, the Purchase Price of LYONs in respect of which a Purchase Notice pursuant to Section 601(a) has been given, or a specified percentage thereof, may be paid by the Company by the issuance of a number of shares of Common Stock equal to the quotient obtained by dividing (i) the amount of cash to which the Holders would have been entitled had the Company elected to pay all or such specified percentage, as the case may be, of the Purchase Price of such LYONs in cash by (ii) the Market Price of a share of Common Stock, subject to the next succeeding paragraph. The Company will not issue a fractional share of Common Stock in payment of the Purchase Price. Instead the Company will pay cash for the current market value of the fractional share. The current market value of a fraction of a share shall be determined by multiplying the Market Price by such fraction and rounding the product to the nearest whole cent. It is understood that if a Holder elects to have more than one LYON purchased, the number of shares of Common Stock shall be based on the aggregate amount of LYONs to be purchased. If the Company elects to purchase the LYONs by the issuance of shares of Common Stock, the Company Notice, as provided in Section 601(e), shall be sent to the Holders (and to beneficial owners as required by applicable law) not later than the Company Notice Date. The Company's right to exercise its election to purchase the LYONs pursuant to Section 601 through the issuance of shares of Common Stock shall be conditioned upon: (i) the Company's not having given its Company Notice of an election to pay entirely in cash and its giving of timely Company Notice of election to purchase all or a specified percentage of the LYONs with Common Stock as provided herein; -22- 25 (ii) the registration of the shares of Common Stock to be issued in respect of the payment of the Purchase Price under the Securities Act or the Exchange Act, in each case, if required; (iii) any necessary qualification or registration under applicable state securities laws or the availability of an exemption from such qualification and registration; and (iv) the receipt by the Trustee of an Officers' Certificate and an Opinion of Counsel each stating that (A) the terms of the issuance of the Common Stock are in conformity with this Supplemental Indenture and (B) the shares of Common Stock to be issued by the Company in payment of the Purchase Price in respect of LYONs have been duly authorized and, when issued and delivered pursuant to the terms of this Supplemental Indenture in payment of the Purchase Price in respect of the LYONs, will be validly issued, fully paid and non-assessable and, to the best of such counsel's knowledge, free from preemptive rights, and, in the case of such Officer's Certificate, stating that conditions (i), (ii) and (iii) above and the condition set forth in the second succeeding sentence have been satisfied and, in the case of such Opinion of Counsel, stating that conditions (ii) and (iii) above has been satisfied. Such Officers' Certificate shall also set forth the number of shares of Common Stock to be issued for each $1,000 Principal Amount at Maturity of LYONs and the Sale Price of a share of Common Stock on each Trading Day during the period commencing on the first Trading Day of the period during which the Market Price is calculated and ending on the applicable Purchase Date. The Company may pay the Purchase Price (or any portion thereof) in Common Stock only if the information necessary to calculate the Market Price is published in a daily newspaper of national circulation. If the foregoing conditions are not satisfied with respect to a Holder or Holders prior to the close of business on the Purchase Date and the Company has elected to purchase the LYONs pursuant to this Section 601 through the issuance of shares of Common Stock, the Company shall pay the entire Purchase Price of the LYONs of such Holder or Holders in cash. The "Market Price" means the average of the Sale Prices of the Common Stock for the five Trading Day period ending on (if the third Business Day prior to the applicable Purchase Date is a Trading Day, or if not, then on the last Trading Day prior to) the third Business Day prior to the applicable Purchase Date, appropriately adjusted to take into account the occurrence, during the period commencing on the first of such Trading Days during such five Trading Day period and ending on such Purchase Date, of any event described in Section 503, 504 or 505; subject, however, to the conditions set forth in Sections 506 and 507. The "Sale Price" of the Common Stock on any date means the closing per share sale price (or, if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such date as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers -23- 26 Automated Quotation System, or, if not so listed or quoted, as determined in good faith by the Board of Directors of the Company. (e) Notice of Election. The Company's notice of election to purchase with cash or Common Stock or any combination thereof shall be sent to the Holders (and to beneficial owners as required by applicable law) in the manner provided in Sections 1.5 and 1.6 of the Indenture at the time specified in Section 601(c) or (d), as applicable (the "Company Notice"). Such Company Notice shall state the manner of payment elected and shall contain the following information: In the event the Company has elected to pay the Purchase Price (or a specified percentage thereof) with Common Stock, the Company Notice shall: (1) state that each Holder will receive Common Stock with a Market Price determined as of a specified date prior to the Purchase Date equal to such specified percentage of the Purchase Price of the LYONs held by such Holder (except any cash amount to be paid in lieu of fractional shares); (2) set forth the method of calculating the Market Price of the Common Stock; and (3) state that because the Market Price of Common Stock will be determined prior to the Purchase Date, Holders will bear the market risk with respect to the value of the Common Stock to be received from the date such Market Price is determined to the Purchase Date. In any case, each Company Notice shall include a form of Purchase Notice to be completed by a Holder and shall state: (i) the Purchase Price and the Conversion Rate; (ii) the name and address of the Paying Agent and the Conversion Agent; (iii) that LYONs as to which a Purchase Notice has been given may be converted pursuant to Article Five hereof only if the applicable Purchase Notice has been withdrawn in accordance with the terms of this Indenture; (iv) that LYONs must be surrendered to the Paying Agent to collect payment; (v) that the Purchase Price for any security as to which a Purchase Notice has been given and not withdrawn will be paid promptly -24- 27 following the later of the Purchase Date and the time of surrender of such LYON as described in (iv); (vi) the procedures the Holder must follow to exercise rights under Section 601 and a brief description of those rights; (vii) briefly, the conversion rights of the LYONs; (viii) the procedures for withdrawing a Purchase Notice (including, without limitation, for a conditional withdrawal pursuant to the terms of Section 601(a)(1)(D) or Section 603); and (ix) the CUSIP number or numbers of the LYONs being purchased. At the Company's request, the Trustee shall give such Company Notice in the Company's name and at the Company's expense; provided, however, that, in all cases, the text of such Company Notice shall be prepared by the Company. Upon determination of the actual number of shares of Common Stock to be issued for each $1,000 Principal Amount at Maturity of LYONs, the Company will publish such determination on the Company's Web site on the World Wide Web. (f) Covenants of the Company. All shares of Common Stock delivered upon purchase of the LYONs shall be newly issued shares or treasury shares, shall be duly authorized, validly issued, fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim. The Company shall use its best efforts to list or cause to have quoted any shares of Common Stock to be issued to purchase LYONs on each national securities exchange or over-the-counter or other domestic market on which the Common Stock is then listed or quoted. (g) Procedure upon Purchase. The Company shall deposit cash (in respect of a cash purchase under Section 601(c) or for fractional interests, as applicable) or shares of Common Stock, or a combination thereof, as applicable, at the time and in the manner Section 604 sufficient to pay the aggregate Purchase Price of all LYONs to be purchased pursuant to this Section 601. As soon as practicable after the Purchase Date, the Company shall deliver to each Holder entitled to receive Common Stock through the Paying Agent, a certificate for the number of full shares of Common Stock issuable in payment of the Purchase Price and cash in lieu of any fractional interests. The Person in whose name the certificate for Common Stock is registered shall be treated as a holder of record of shares of Common Stock on the Business Day following the Purchase Date. Subject to Section 601(d), no payment or adjustment will be made for dividends on the Common Stock the record date for which occurred on or prior to the Purchase Date. -25- 28 (h) Taxes. If a Holder of a LYON is paid in Common Stock, the Company shall pay any documentary, stamp or similar issue or transfer tax due on such issue of shares of Common Stock. However, the Holder shall pay any such tax which is due because the Holder requests the shares of Common Stock to be issued in a name other than the Holder's name. The Paying Agent may refuse to deliver the certificates representing the Common Stock being issued in a name other than the Holder's name until the Paying Agent receives a sum sufficient to pay any tax which will be due because the shares of Common Stock are to be issued in a name other than the Holder's name. Nothing herein shall preclude any income tax withholding required by law or regulations. SECTION 602 PURCHASE OF LYONS AT OPTION OF THE HOLDER UPON CHANGE IN CONTROL. (a) If on or prior to May 20, 2004 there shall have occurred a Change in Control, LYONs shall be purchased by the Company, at the option of the Holder thereof, at the purchase price specified in paragraph 6 of the LYONs (the "Change in Control Purchase Price"), as of the date that is 35 Business Days after the occurrence of the Change in Control (the "Change in Control Purchase Date"), subject to satisfaction by or on behalf of the Holder of the requirements set forth in Section 602(c). A "Change in Control" shall be deemed to have occurred at such time as either of the following events shall occur: (i) There shall be consummated any consolidation or merger of the Company pursuant to which the Common Stock would be converted into cash, securities or other property, in each case other than a consolidation or merger of the Company in which the holders of the Common Stock immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the total voting power in the aggregate of all classes of capital stock of the continuing or surviving corporation immediately after such consolidation or merger; or (ii) There is a report filed on Schedule 13D or 14D-1 (or any successor schedule, form or report) pursuant to the Exchange Act, disclosing that any person (for the purposes of this Section 602 only, as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of 50% or more of the voting power of the Common Stock then outstanding; provided, however, that a person shall not be deemed beneficial owner of, or to own beneficially, (A) any securities tendered pursuant to a tender or exchange offer made by or on behalf of such person or any of such person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange thereunder, or (B) any securities if such beneficial ownership (1) arises solely as a result of a revocable proxy delivered in response to a proxy or consent solicitation made pursuant to the applicable rules and regulations under the Exchange Act, and (2) is not also then reportable on Schedule 13D (or any successor schedule) under the Exchange Act. -26- 29 Notwithstanding the foregoing provisions of this Section 602, a Change in Control shall not be deemed to have occurred by virtue of the Company, any Subsidiary, any employee stock ownership plan or any other employee benefit plan of the Company or any Subsidiary, or any person holding Common Stock for or pursuant to the terms of any such employee benefit plan, filing or becoming obligated to file a report under or in response to Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report) under the Exchange Act disclosing beneficial ownership by it of shares of Common Stock, whether in excess of 50% or otherwise. "Associate" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date hereof. (b) Within 15 Business Days after the occurrence of a Change in Control, the Company shall mail a written notice of Change in Control by first-class mail to the Trustee and to each Holder (and to beneficial owners as required by applicable law). The notice shall include a form of Change in Control Purchase Notice to be completed by the Holder and shall state: (1) briefly, the events causing a Change in Control and the date of such Change in Control; (2) the date by which the Change in Control Purchase Notice pursuant to this Section 602 must be given; (3) the Change in Control Purchase Date; (4) the Change in Control Purchase Price; (5) the name and address of the Paying Agent and the Conversion Agent; (6) the Conversion Rate and any adjustments thereto; (7) that LYONs as to which a Change in Control Purchase Notice has been given may be converted pursuant to Article Five hereof only if the Change in Control Purchase Notice has been withdrawn in accordance with the terms of this Indenture; (8) that LYONs must be surrendered to the Paying Agent to collect payment; (9) that the Change in Control Purchase Price for any LYON as to which a Change in Control Purchase Notice has been duly given and not withdrawn will be paid promptly following the later of the Change in Control Purchase Date and the time of surrender of such LYON as described in (8); -27- 30 (10) briefly, the procedures the Holder must follow to exercise rights under this Section 602; (11) briefly, the conversion rights of the LYONs; (12) the procedures for withdrawing a Change in Control Purchase Notice; and (13) the CUSIP number or numbers of the LYONs being purchased. (c) A Holder may exercise its rights specified in Section 602(a) upon delivery of a written notice of purchase (a "Change in Control Purchase Notice") to the Paying Agent at any time prior to the close of business on the Change in Control Purchase Date, stating: (1) the certificate number of the LYON which the Holder will deliver to be purchased; (2) the portion of the Principal Amount at Maturity of the LYON which the Holder will deliver to be purchased, which portion must be $1,000 or an integral multiple thereof; and (3) that such LYON shall be purchased pursuant to the terms and conditions specified in paragraph 6 of the LYONs. The delivery of such LYON to the Paying Agent prior to, on or after the Change in Control Purchase Date (together with all necessary endorsements) at the offices of the Paying Agent shall be a condition to the receipt by the Holder of the Change in Control Purchase Price therefor; provided, however, that such Change in Control Purchase Price shall be so paid pursuant to this Section 602 only if the LYON so delivered to the Paying Agent shall conform in all respects to the description thereof set forth in the related Change in Control Purchase Notice. The Company shall purchase from the Holder thereof, pursuant to this Section 602, a portion of a LYON if the Principal Amount at Maturity of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Supplemental Indenture that apply to the purchase of all of a LYON also apply to the purchase of such portion of such LYON. Any purchase by the Company contemplated pursuant to the provisions of this Section 602 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Change in Control Purchase Date and the time of delivery of the LYON to the Paying Agent in accordance with this Section 602. Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Change in Control Purchase Notice contemplated by this Section 602(c) shall have the right to withdraw such Change in Control Purchase Notice at any time prior to the close of -28- 31 business on the Change in Control Purchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 603. The Paying Agent shall promptly notify the Company of the receipt by it of any Change in Control Purchase Notice or written withdrawal thereof. SECTION 603 EFFECT OF PURCHASE NOTICE OR CHANGE IN CONTROL PURCHASE NOTICE. Upon receipt by the Paying Agent of the Purchase Notice or Change in Control Purchase Notice specified in Section 601(a) or Section 602(c), as applicable, the Holder of the LYON in respect of which such Purchase Notice or Change in Control Purchase Notice, as the case may be, was given shall (unless such Purchase Notice or Change in Control Purchase Notice is withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely the Purchase Price or Change in Control Purchase Price, as the case may be, with respect to such LYON. Such Purchase Price or Change in Control Purchase Price shall be paid to such Holder, subject to receipts of funds and/or securities by the Paying Agent, promptly following the later of (x) the Purchase Date or the Change in Control Purchase Date, as the case may be, with respect to such LYON (provided the conditions in Section 601(a) or Section 602(c), as applicable, have been satisfied) and (y) the time of delivery of such LYON to the Paying Agent by the Holder thereof in the manner required by Section 601(a) or Section 602(c), as applicable. LYONs in respect of which a Purchase Notice or Change in Control Purchase Notice, as the case may be, has been given by the Holder thereof may not be converted pursuant to Article Five hereof on or after the date of the delivery of such Purchase Notice or Change in Control Purchase Notice, as the case may be, unless such Purchase Notice or Change in Control Purchase Notice, as the case may be, has first been validly withdrawn as specified in the following two paragraphs. A Purchase Notice or Change in Control Purchase Notice, as the case may be, may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Purchase Notice or Change in Control Purchase Notice, as the case may be, at any time prior to the close of business on the Purchase Date or the Change in Control Purchase Date, as the case may be, specifying: (1) the certificate number of the LYON in respect of which such notice of withdrawal is being submitted, (2) the Principal Amount at Maturity of the LYON with respect to which such notice of withdrawal is being submitted, and (3) the Principal Amount at Maturity, if any, of such LYON which remains subject to the original Purchase Notice or Change in Control Purchase Notice, as the case may be, and which has been or will be delivered for purchase by the Company. -29- 32 A written notice of withdrawal of a Purchase Notice may be in the form set forth in the preceding paragraph or may be in the form of (i) a conditional withdrawal contained in a Purchase Notice pursuant to the terms of Section 601(a)(1)(D) or (ii) a conditional withdrawal containing the information set forth in Section 601(a)(1)(D) and the preceding paragraph and contained in a written notice of withdrawal delivered to the Paying Agent as set forth in the preceding paragraph. There shall be no purchase of any LYONs pursuant to Section 601 (other than through the issuance of Common Stock in payment of the Purchase Price, including cash in lieu of fractional shares) or 602 if there has occurred (prior to, on or after, as the case may be, the giving, by the Holders of such LYONs, of the required Purchase Notice or Change in Control Purchase Notice, as the case may be) and is continuing an Event of Default (other than a default in the payment of the Purchase Price or Change in Control Purchase Price, as the case may be, with respect to such LYONs). The Paying Agent will promptly return to the respective Holders thereof any LYONs (x) with respect to which a Purchase Notice or Change in Control Purchase Notice, as the case may be, has been withdrawn in compliance with this Supplemental Indenture, or (y) held by it during the continuance of an Event of Default (other than a default in the payment of the Purchase Price or Change in Control Purchase Price, as the case may be, with respect to such LYONs) in which case, upon such return, the Purchase Notice or Change in Control Purchase Notice with respect thereto shall be deemed to have been withdrawn. SECTION 604 DEPOSIT OF PURCHASE PRICE OR CHANGE IN CONTROL PURCHASE PRICE. Prior to Noon (local time in The City of New York) on the Business Day following the Purchase Date or the Change in Control Purchase, as the case may be, the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust an amount of money (in immediately available funds if deposited on such Business Day) or Common Stock, if permitted hereunder, sufficient to pay the aggregate Purchase Price or Change in Control Purchase Price, as the case may be, of all the LYONs or portions thereof which are to be purchased as of the Purchase Date or Change in Control Purchase Date, as the case may be. SECTION 605 LYONS PURCHASED IN PART. Any LYON which is to be purchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such LYON, without service charge, a new LYON or LYONs, of any authorized denomination as requested by such Holder in aggregate Principal Amount at Maturity equal to, and in exchange for, the portion of the Principal Amount at Maturity of the LYON so surrendered which is not purchased. SECTION 606 COVENANT TO COMPLY WITH SECURITIES LAWS UPON PURCHASE OF LYONS. -30- 33 In connection with any offer to purchase or purchase of LYONs under Section 601 or 602 hereof (provided that such offer or purchase constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein, includes any successor provision thereto) under the Exchange Act at the time of such offer or purchase), the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 under the Exchange Act, (ii) file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act, and (iii) otherwise comply with all Federal and state securities laws so as to permit the rights and obligations under Sections 601 and 602 to be exercised in the time and in the manner specified in Sections 601 and 602. SECTION 607 REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent shall return to the Company any cash or shares of Common Stock that remain as provided in the Indenture, together with interest or dividends, if any, thereon, held by them for the payment of the Purchase Price or Change in Control Purchase Price, as the case may be; provided, however, that to the extent that the aggregate amount of cash or shares of Common Stock deposited by the Company pursuant to Section 604 exceeds the aggregate Purchase Price or Change in Control Purchase Price, as the case may be, of LYONs or portions thereof which the Company is obligated to purchase as of the Purchase Date or Change in Control Purchase Date, as the case may be, then promptly after the Business Day following the Purchase Date or Change in Control Purchase Date, as the case may be, the Trustee shall return any such excess to the Company together with interest or dividends, if any, thereon. ARTICLE SEVEN SPECIAL TAX EVENT CONVERSION SECTION 701 OPTIONAL CONVERSION TO SEMIANNUAL COUPON LYON UPON TAX EVENT. From and after (i) the date (the "Tax Event Date") of the occurrence of a Tax Event and (ii) the date the Company exercises such option, whichever is later (the "Option Exercise Date"), at the option of the Company, interest in lieu of future Original Issue Discount shall accrue at the rate of 3.25% per annum on a restated principal amount per $1,000 original Principal Amount at Maturity (the "Restated Principal Amount") equal to the Issue Price plus Original Issue Discount accrued through the Option Exercise Date and shall be payable semiannually on May 20 and November 20 of each year (each an "Interest Payment Date") to holders of record at the close of business on May 5 or November 5 (each a "Regular Record Date") immediately preceding such Interest Payment Date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months and will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from the Option Exercise Date. Within 15 days of the occurrence of a Tax Event, the Company shall mail a written notice of such Tax Event by first-class mail to the Trustee and within 15 days of its exercise of such option the Company shall mail a written notice of the Option Exercise Date by first-class mail to the Trustee and Holders of the LYONs. From and after the Option Exercise Date, (i) the Company shall be obligated to pay at Stated Maturity, in lieu of the Principal Amount at Maturity of a LYON, the Restated Principal Amount thereof and (ii) "Issue Price and accrued Original Issue Discount," "Issue Price plus Original -31- 34 Issue Discount" or similar words, as used herein, shall mean Restated Principal Amount plus accrued and unpaid interest with respect to any LYON. LYONs authenticated and delivered after the Option Exercise Date may, and shall if required by the Trustee, bear a notation in a form approved by the Trustee as to the conversion of the LYONs to semiannual coupon notes. SECTION 702 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. (a) Interest on any LYON that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that LYON is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose. Each installment of interest on any LYON shall be paid in same-day funds by transfer to an account maintained by the payee located inside the United States. In the case of a permanent Global LYON, interest payable on any Interest Payment Date will be paid to the Depositary, with respect to that portion of such permanent Global LYON held for its account by Cede & Co. for the purpose of permitting such party to credit the interest received by it in respect of such permanent Global LYON to the accounts of the beneficial owners thereof. (b) Except as otherwise specified with respect to the LYONs, any interest on any LYON that is payable, but is not punctually paid or duly provided for, within 30 days following on any Interest Payment Date (herein called "Defaulted Interest," which term shall include any accrued and unpaid interest that has accrued on such defaulted amount in accordance with paragraph 1 of the LYONs), shall forthwith cease to be payable to the registered Holder thereof on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, as its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the LYONs are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each LYON and the date of the proposed payment (which shall not be less than 20 days after such notice is received by the Trustee), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. -32- 35 The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of LYONs at his address as it appears on the list of Holders maintained pursuant to Section 3.5 of the Indenture not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the LYONs are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest on the LYONs in any other lawful manner not inconsistent with the requirements of any securities exchange on which such LYONs may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section and Section 3.5 of the Indenture, each LYON delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other LYON shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other LYON. ARTICLE EIGHT EVENTS OF DEFAULT SECTION 801 EVENTS OF DEFAULT. The following will be Events of Default under the Supplemental Indenture: (a) after exercise of its option pursuant to Section 701 of this Supplemental Indenture following a Tax Event, the Company defaults in the payment of interest upon any LYON when such interest becomes due and payable, and such default continues for a period of 30 days; (b) the Company defaults in the payment of the Principal Amount at Maturity (or, if the LYONs have been converted to semiannual coupon notes following a Tax Event pursuant to Article Seven, the Restated Principal Amount), Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price or Change in Control Purchase Price on any -33- 36 LYON when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration, when due for purchase by the Company or otherwise; (c) the Company fails to comply with any of its agreements in the LYONs or this Indenture or Supplemental Indenture (other than those referred to in clauses (a) and (b) above) and such failure continues for 60 days after receipt by the Company of a Notice of Default; (d) (1) failure of the Company to make any payment by the end of any applicable grace period after maturity of Debt in an amount in excess of $100,000,000 and continuance of such failure, or (2) the acceleration of Debt in an amount in excess of $100,000,000 because of a default with respect to such Debt without such Debt having been discharged or such acceleration having been cured, waived, rescinded or annulled, in the case of (1) or (2) above, for a period of 30 days after receipt by the Company of a Notice of Default; provided, however, that if any such failure or acceleration referred to in (1) or (2) above shall cease or be cured, waived, rescinded or annulled, then the Event of Default by reason thereof shall be deemed not to have occurred; or (e) the Company pursuant to or under or within the meaning of any Bankruptcy Law: (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against it in an involuntary case or proceeding or the commencement of any case against it; (iii) consents to the appointment of a Custodian of it or for any substantial part of its property; (iv) makes a general assignment for the benefit of its creditors; (v) files a petition in bankruptcy or answer or consent seeking reorganization or relief; or (vi) consents to the filing of such petition or the appointment of or taking possession by a Custodian; or (f) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company in an involuntary case or proceeding, or adjudicates the Company insolvent or bankrupt; (ii) appoints a Custodian of the Company or for any substantial part of its property; or -34- 37 (iii) orders the winding up or liquidation of the Company; and the order or decree remains unstayed and in effect for 60 days. "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. A Default under clause (c) or clause (d) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate Principal Amount at Maturity of the LYONs at the time outstanding notify the Company and the Trustee, of the default and the Company does not cure such default (and such default is not waived) within the time specified in clause (c) or clause (d) above after actual receipt of such notice. Any such notice must specify the default, demand that it be remedied and state that such notice is a "Notice of Default." Section 5.1 of the Indenture shall not be applicable to the LYONs. SECTION 802 ACCELERATION OF THE LYONS. In the event of acceleration of the LYONs pursuant to Article Five of the Indenture (other than in the event that the LYONs have been converted to semiannual coupon notes following a Tax Event pursuant to Article Seven), the Issue Price plus accrued Original Issue Discount on the LYONs shall be due and payable upon the occurrence of those specified events resulting in such acceleration as provided in Article Five of the Indenture. ARTICLE NINE MISCELLANEOUS SECTION 901 CONSENT OF HOLDERS REQUIRED. In addition to those modifications or amendments requiring the consent of the Holder of each Outstanding LYON effected thereby specified in Section 9.2 of the Indenture, no such Supplemental Indenture shall, without the consent of the Holder of each outstanding LYON affected thereby: (1) make any change in the manner or rate of accrual in connection with Original Issue Discount, reduce the rate of interest referred to in paragraph 1 of the LYONs, reduce the rate of interest referred to in Section 701 upon the occurrence of a Tax Event, or extend the time for payment of Original Issue Discount or interest, if any, on any LYON; (2) make any LYON payable in money or securities other than that stated in the LYON; -35- 38 (3) make any change that adversely affects the right to require the Company to purchase the LYONs in accordance with the terms thereof and this Indenture and Supplemental Indenture. (4) impair the right to institute suit for the enforcement of any payment with respect to, or conversion of, the LYONs. SECTION 902 APPLICABILITY OF DEFEASANCE PROVISIONS. Each of the defeasance and covenant defeasance provisions of Article Thirteen of the Indenture shall apply to the LYONs. SECTION 903 RESTRICTIVE COVENANTS NOT APPLICABLE. The covenants set forth in Section 10.8 and Section 10.9 of the Indenture shall not apply to the LYONs. SECTION 904 REFERENCE TO AND EFFECT ON THE INDENTURE. This Supplemental Indenture shall be construed as supplemental to the Indenture and all the terms and conditions of this Supplemental Indenture shall be deemed to be part of the terms and conditions of the Indenture. Except as set forth herein, the Indenture heretofore executed and delivered is hereby (i) incorporated by reference in this Supplemental Indenture and (ii) ratified, approved and confirmed. SECTION 905 WAIVER OF CERTAIN COVENANTS. The Company may omit in any particular instance to comply with any term, provision, or condition set forth in Article Three hereof if the Holders of a majority in principal amount of the outstanding LYONs shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision, or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision, or condition shall remain in full force and effect. SECTION 906 SUPPLEMENTAL INDENTURE MAY BE EXECUTED IN COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 907 EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. -36- 39 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed all as of the day and year first above written. Solectron Corporation By: /s/ Susan Wang ------------------------------------- Name: Susan Wang Title: Senior Vice President, Chief Financial Officer and Secretary State Street Bank and Trust Company of California, N.A., as Trustee By: /s/ Stephen Rivero ------------------------------------- Name: Stephen Rivero Title: Vice President -37- 40 EXHIBIT A-1 [FORM OF FACE OF GLOBAL SECURITY] FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT WITH RESPECT TO EACH $1,000 OF PRINCIPAL AMOUNT AT MATURITY OF THIS SECURITY IS $475.22, THE ISSUE DATE IS NOVEMBER 20, 2000, THE YIELD TO MATURITY IS 3.25%. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. A-1 41 SOLECTRON CORPORATION Liquid Yield Option(TM) Note due 2020 [(Zero Coupon-Senior)] No. CUSIP:__________ Issue Date: November 20, 2000 Original Issue Discount: $475.22 Issue Price: $524.78 (for each $1,000 Principal (for each $1,000 Principal Amount at Maturity) Amount at Maturity) SOLECTRON CORPORATION, a Delaware corporation, promises to pay to _____________________________ or registered assigns, the Principal Amount at Maturity of _____________________________ Dollars on November 20, 2020. This Security shall not bear interest except as specified on the other side of this Security. Original Issue Discount will accrue as specified on the other side of this Security. This Security is convertible as specified on the other side of this Security. A-2 42 Additional provisions of this Security are set forth on the other side of this Security. SOLECTRON CORPORATION By: --------------------------------- Title: Attest: ------------------------------ Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A. as Trustee, certifies that this is one of the Securities referred to in the within-mentioned Indenture. By: -------------------------- Authorized Signatory Dated: ------------------------ A-3 43 [FORM OF REVERSE SIDE OF SECURITY] Liquid Yield Option(TM) Note Due 2020 (Zero Coupon-Senior) 1. Interest. This Security shall not bear interest, except as specified in this paragraph or in paragraph 10 hereof. If the Principal Amount at Maturity hereof or any portion of such Principal Amount at Maturity is not paid when due (whether upon acceleration pursuant to Section 5.2 of the Indenture, upon the date set for payment of the Redemption Price pursuant to paragraph 5 hereof, upon the date set for payment of the Purchase Price or Change in Control Purchase Price pursuant to paragraph 6 hereof or upon the Stated Maturity of this Security) or if interest due hereon or any portion of such interest is not paid when due in accordance with paragraph 10 hereof, then in each such case the overdue amount shall, to the extent permitted by law, bear interest at the rate of 3.25% per annum, compounded semi-annually, which interest shall accrue from the date such overdue amount was originally due to the date payment of such amount, including interest thereon, has been made or duly provided for. All such interest shall be payable on demand. The accrual of such interest on overdue amounts shall be in lieu of, and not in addition to, the continued accrual of Original Issue Discount. Original Issue Discount (the difference between the Issue Price and the Principal Amount at Maturity of the Security), in the period during which a Security remains outstanding, shall accrue at 3.25% per annum, on a semiannual bond equivalent basis using a 360-day year composed of twelve 30-day months, from the Issue Date of this Security. 2. Method of Payment. Subject to the terms and conditions of the Indenture, the Company will make payments in respect of Redemption Prices, Purchase Prices, Change in Control Purchase Prices and at Stated Maturity to Holders who surrender Securities to a Paying Agent to collect such payments in respect of the Securities. The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may make such cash payments by check payable in such money. 3. Paying Agent, Conversion Agent and Registrar. Initially, State Street Bank and Trust Company of California, N.A., a national banking association organized under the laws of the United States (the "Trustee"), will act as Paying Agent, Conversion Agent and Security Registrar. The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Security Registrar or co-registrar. A-4 44 4. Indenture. The Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of May 8, 2000 (herein called the "Indenture," which term shall have the meaning assigned to it in such instrument), between the Company and State Street Bank and Trust Company of California, N.A., as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture and all indentures supplemental thereto for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, and the Holders of Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, limited in aggregate Principal Amount at Maturity to $2,900,000,000, subject to Section 101(b) of the Supplemental Indenture, and is issued pursuant to a Supplemental Trust Indenture supplementing the Indenture, dated as of November 20, 2000, from the Company to Trustee relating to the issuance of the Liquid Yield Option(TM) Notes due 2020 (Zero Coupon-Senior) of this series (the "Supplemental Indenture"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture and the Supplemental Indenture. The Securities are subject to all such terms, and Holders are referred to the Indenture, the Supplemental Indenture and the Trust Indenture Act for a statement of those terms. The Securities are general unsecured obligations of the Company. The Indenture does not limit other indebtedness of the Company, secured or unsecured. 5. Redemption at the Option of the Company. No sinking fund is provided for the Securities. The Securities are redeemable as a whole, or from time to time in part, at any time at the option of the Company at the Redemption Prices set forth below; provided that the Securities are not redeemable prior to May 20, 2004; provided, further, that during the period commencing on May 20, 2004 and ending on November 20, 2005, the Securities shall be redeemable by the Company pursuant to the terms of Section 401 of the Supplemental Indenture if and only if the product of the Sale Price of the shares of Common Stock into which the Securities to be redeemed are then convertible multiplied by the Conversion Rate applicable to such shares has exceeded 150% of the sum of the Issue Price plue the accrued Original Discount per such Securities plus the accrued interest, if any, per such Securities (as determined based on the then applicable amounts) for at least 20 Trading Days within the period of 30 consecutive Trading Days ending on the Trading Day prior to the date of the mailing of the notice of redemption. The table below shows Redemption Prices of a Security per $1,000 Principal Amount at Maturity on the dates shown below and at Stated Maturity, which prices reflect accrued Original Issue Discount calculated to each such date. The Redemption Price of a Security redeemed between such dates shall include an additional amount reflecting the additional Original Issue Discount accrued since the next preceding date in the table. - ---------- (TM) Trademark of Merrill Lynch & Co., Inc. A-5 45
(2) (1) Accrued Original (3) LYON Issue Discount Redemption Price Redemption Date Issue Price at 3.25% (1) + (2) --------------- ----------- ---------------- ---------------- May 20, 2004 ......................... $ 524.78 $ 62.68 $ 587.46 November 20, 2004 .................... 524.78 72.23 597.01 November 20, 2005 .................... 524.78 91.79 616.57 November 20, 2006 .................... 524.78 111.99 636.77 November 20, 2007 .................... 524.78 132.86 657.64 November 20, 2008 .................... 524.78 154.40 679.18 November 20, 2009 .................... 524.78 176.66 701.44 November 20, 2010 .................... 524.78 199.64 724.42 November 20, 2011 .................... 524.78 223.37 748.15 November 20, 2012 .................... 524.78 247.88 772.66 November 20, 2013 .................... 524.78 273.20 797.98 November 20, 2014 .................... 524.78 299.35 824.13 November 20, 2015 .................... 524.78 326.35 851.13 November 20, 2016 .................... 524.78 354.23 879.01 November 20, 2017 .................... 524.78 383.03 907.81 November , 2018 ...................... 524.78 412.78 937.56 November 20, 2019 .................... 524.78 443.50 968.28 At Stated Maturity ................... $ 524.78 $ 475.22 $1,000.00
If converted to a semiannual coupon note following the occurrence of a Tax Event, this Security will be redeemable at the Restated Principal Amount plus accrued and unpaid interest from the date of such conversion through the Redemption Date; but in no event will this Security be redeemable before May 20, 2004; and the Company may not redeem this Security during the period commencing on May 20, 2004 and ending on November 20, 2005, the Securities shall be redeemable by the Company pursuant to the terms of Section 401 of the Supplemental Indenture if and only if the product of the Sale Price of the shares of Common Stock into which the Securities to be redeemed are then convertible multiplied by the Conversion Rate applicable to such shares has exceeded 150% of the sum of the Issue Price plus the accrued Original Discount per such Securities plus the accrued interest, if any, per such Securities (as determined based on the then applicable amounts) for at least 20 Trading Days within the period of 30 consecutive Trading Days ending on the Trading Day prior to the date of the mailing of the notice of redemption. A-6 46 6. Purchase By the Company at the Option of the Holder. Subject to the terms and conditions of the Supplemental Indenture, the Company shall become obligated to purchase, at the option of the Holder, the Securities held by such Holder on the following Purchase Dates and at the following Purchase Prices per $1,000 Principal Amount at Maturity, upon delivery of a Purchase Notice containing the information set forth in the Supplemental Indenture, at any time from the opening of business on the date that is 20 Business Days prior to such Purchase Date until the close of business on such Purchase Date and upon delivery of the Securities to the Paying Agent by the Holder as set forth in the Indenture.
Purchase Date Purchase Price ------------- -------------- May 20, 2004........................ $ 587.46 November 20, 2005................... $ 616.57 November 20, 2010................... $ 724.42
The Purchase Price (equal to the Issue Price plus accrued Original Issue Discount to the Purchase Date) may be paid, at the option of the Company, in cash or by the issuance and delivery of shares of Common Stock of the Company, or in any combination thereof. If prior to a Purchase Date this Security has been converted to a semiannual coupon note following the occurrence of a Tax Event, the Purchase Price will be equal to the Restated Principal Amount plus accrued and unpaid interest from the date of conversion to the Purchase Date. At the option of the Holder and subject to the terms and conditions of the Supplemental Indenture, the Company shall become obligated to purchase the Securities held by such Holder 35 Business Days after the occurrence of a Change in Control of the Company occurring on or prior to May 20, 2004 for a Change in Control Purchase Price equal to the Issue Price plus accrued Original Issue Discount to the Change in Control Purchase Date, which Change in Control Purchase Price shall be paid in cash. If prior to a Change in Control Purchase Date this Security has been converted to a semiannual coupon note following the occurrence of a Tax Event, the Change in Control Purchase Price shall be equal to the Restated Principal Amount plus accrued and unpaid interest from the date of conversion to the Change in Control Purchase Date. Holders have the right to withdraw any Purchase Notice or Change in Control Purchase Notice, as the case may be, by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture. If cash (and/or securities if permitted under the Supplemental Indenture) sufficient to pay the Purchase Price or Change in Control Purchase Price, as the case may be, of all Securities or portions thereof to be purchased as of the Purchase Date or the Change in Control Purchase Date, as the case may be, is deposited with the Paying Agent on the Business Day following the Purchase Date or the Change in Control Purchase Date, as the case may be, Original Issue Discount ceases to accrue on such Securities (or portions thereof) immediately after such Purchase Date or Change in Control Purchase Date, as the case may be, and the Holder thereof shall have no other rights as such A-7 47 (other than the right to receive the Purchase Price or Change in Control Purchase Price, as the case may be, upon surrender of such Security). 7. Notice of Redemption. Notice of redemption will be mailed at least 15 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at the Holder's registered address. If money sufficient to pay the Redemption Price of all Securities (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent prior to or on the Redemption Date, immediately after such Redemption Date Original Issue Discount ceases to accrue on such Securities or portions thereof. Securities in denominations larger than $1,000 of Principal Amount at Maturity may be redeemed in part but only in integral multiples of $1,000 of Principal Amount at Maturity. 8. Conversion. Subject to the next three succeeding sentences, a Holder of a Security may convert it into Common Stock of the Company at any time on or after December 15, 2000 and before the close of business on November 20, 2020. If the Security is called for redemption, the Holder may convert it at any time before the close of business on the Redemption Date. A Security in respect of which a Holder has delivered a Purchase Notice or Change in Control Purchase Notice exercising the option of such Holder to require the Company to purchase such Security may be converted only if such notice of exercise is withdrawn in accordance with the terms of the Indenture and the Supplemental Indenture. The Holders' right to convert Securities into shares of Common Stock is subject to the Company's right to elect instead to deliver to such Holder the Cash Amount. Such right will terminate upon the reservation, if permitted, of authorized shares of Common Stock by the Company in a number sufficient to enable all of the Securities to be converted into Common Stock following the stockholders meeting referred to in Section 5014 of the Supplemental Indenture. The initial Conversion Rate is 11.7862 shares of Common Stock per $1,000 Principal Amount at Maturity, subject to adjustment in certain events described in the Indenture. The Company will deliver cash or a check in lieu of any fractional share of Common Stock. In the event the Company exercises its option pursuant to Section 701 of the Supplemental Indenture to have interest in lieu of Original Issue Discount accrue on the Security following a Tax Event, the Holder will be entitled on conversion to receive the same number of shares of Common Stock such Holder would have received if the Company had not exercised such option. If the Company exercises such option, Securities surrendered for conversion during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the opening of business of such Interest Payment Date (except Securities to be redeemed on a date within such period) must be accompanied by payment of an amount equal to the interest thereon that the registered Holder is to receive. Except where Securities surrendered for conversion must be accompanied by payment as described above, no interest on converted Securities will be payable by the Company on any Interest Payment Date subsequent to the date of conversion. A-8 48 To convert a Security, a Holder must (1) complete and manually sign the conversion notice below (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (2) surrender the Security to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee and (4) pay any transfer or similar tax, if required. A Holder may convert a portion of a Security if the Principal Amount at Maturity of such portion is $1,000 or an integral multiple of $1,000. No payment or adjustment will be made for dividends on the Common Stock except as provided in the Indenture. On conversion of a Security, that portion of accrued Original Issue Discount (or interest if the Company has exercised its option provided for in paragraph 10 hereof) attributable to the period from the Issue Date (or, if the Company has exercised the option referred to in paragraph 10 hereof, the later of (x) the date of such exercise and (y) the date on which interest was last paid) through the Conversion Date with respect to the converted Security shall not be cancelled, extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof through the delivery of the Common Stock (together with the cash payment, if any, in lieu of fractional shares) in exchange for the Security being converted pursuant to the terms hereof; and the fair market value of such shares of Common Stock (together with any such cash payment in lieu of fractional shares) shall be treated as issued, to the extent thereof, first in exchange for Original Issue Discount (or interest, if the Company has exercised its option provided for in paragraph 10 hereof) accrued through the Conversion Date, and the balance, if any, of such fair market value of such Common Stock (and any such cash payment) shall be treated as issued in exchange for the Issue Price of the Security being converted pursuant to the provisions hereof. The Conversion Rate will be adjusted for dividends or distributions on Common Stock payable in Common Stock or other Capital Stock; subdivisions, combinations or certain reclassifications of Common Stock; distributions to all holders of Common Stock of certain rights to purchase Common Stock for a period expiring within 60 days at less than the Quoted Price at the Time of Determination; and distributions to such holders of assets or debt securities of the Company or certain rights to purchase securities of the Company (excluding certain cash dividends or distributions). However, no adjustment need be made if Holders may participate in the transaction or in certain other cases. The Company from time to time may voluntarily increase the Conversion Rate. If the Company is a party to a consolidation, merger or binding share exchange or a transfer of all or substantially all of its assets, or upon certain distributions described in the Indenture, the right to convert a Security into Common Stock may be changed into a right to convert it into securities, cash or other assets of the Company or another Person. 9. Conversion Arrangement on Call for Redemption. Any Securities called for redemption, unless surrendered for conversion before the close of business on the Redemption Date, may be deemed to be purchased from the Holders of such Securities at an amount not less than the Redemption Price, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Securities from the Holders, to A-9 49 convert them into Common Stock of the Company and to make payment for such Securities to the Trustee in trust for such Holders. 10. Tax Event (a) From and after (i) the date (the "Tax Event Date") of the occurrence of a Tax Event and (ii) the date the Company exercises such option, whichever is later (the "Option Exercise Date"), at the option of the Company, interest in lieu of future Original Issue Discount shall accrue at the rate of 3.25% per annum on a principal amount per Security (the "Restated Principal Amount") equal to the Issue Price plus Original Issue Discount accrued through the Option Exercise Date and shall be payable semiannually on May 20 and November 20 of each year (each an "Interest Payment Date") to holders of record at the close of business on May 5 and November 5 (each a "Regular Record Date") or immediately preceding such Interest Payment Date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months and will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Option Exercise Date. (b) Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose. Each installment of interest on any Security shall be paid in same-day funds by transfer to an account maintained by the payee located inside the United States. (c) Except as otherwise specified with respect to the Securities, any Defaulted Interest on any Security shall forthwith cease to be payable to the registered Holder thereof on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company as provided for in Section 702(b) of the Supplemental Indenture. 11. Denominations; Transfer; Exchange. The Securities are in fully registered form, without coupons, in denominations of $1,000 of Principal Amount at Maturity and integral multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Security Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Security Registrar need not transfer or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities in respect of which a Purchase Notice or Change in Control Purchase Notice has been given and not withdrawn (except, in the case of a Security to be purchased in part, the portion of the Security not to be purchased) or any Securities for a period of 15 days before a selection of Securities to be redeemed. 12. Persons Deemed Owners. The registered Holder of this Security may be treated as the owner of this Security for all purposes. A-10 50 13. Amendment; Waiver. Subject to certain exceptions set forth in the Indenture and the Supplemental Indenture, (i) the Indenture, the Supplemental Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding and (ii) certain defaults may be waived with the written consent of the Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company and the Trustee may amend the Indenture, the Supplemental Indenture or the Securities as set forth in the Indenture. 14. Defaults. Events of Default include (i) if the Securities have been converted to semiannual coupon notes following a Tax Event, default in the payment of interest which default continues for a period of 30 days; (ii) default in payment of the Principal Amount at Maturity (or, if the Securities have been converted to semiannual coupon notes following a Tax Event, the Restated Principal Amount), Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price or Change in Control Purchase Price, as the case may be, in respect of the Securities when the same becomes due and payable; (iii) failure by the Company to comply with other agreements in the Indenture, the Supplemental Indenture or the Securities, subject to notice and lapse of time; (iv) failure of the Company to make any payment by the end of any applicable grace period after maturity of Debt in an amount in excess of $100,000,000, or (b) the acceleration of Debt in an amount in excess of $100,000,000 because of a default with respect to such Debt without such Debt having been discharged or such acceleration having been cured, waived, rescinded or annulled, subject to notice and lapse of time; provided, however, that if any such failure or acceleration referred to in (a) or (b) above shall cease or be cured, waived, rescinded or annulled, then the Event of Default by reason thereof shall be deemed not to have occurred; and (v) certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee, or the Holders of at least 25% in aggregate Principal Amount at Maturity of the Securities at the time outstanding, may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities becoming due and payable immediately upon the occurrence of such Events of Default. 15. Trustee Dealings with the Company. Subject to certain limitations imposed by the Trust Indenture Act, the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 16. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or the Supplemental Indenture or for any claim based on, in respect of or by reason of such obligations or A-11 51 their creation. By accepting a Security, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 17. Authentication. This Security shall not be valid until an authorized officer of the Trustee manually signs the Trustee's Certificate of Authentication on the other side of this Security. 18. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 19. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE, THE SUPPLEMENTAL INDENTURE AND THIS SECURITY WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. --------------- The Company will furnish to any Holder upon written request and without charge a copy of the Supplemental Indenture which has in it the text of this Security in larger type. Requests may be made to: Solectron Corporation 777 Gibraltar Drive Milpitas, California 95035 Attention: Chief Financial Officer A-12 52 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to ------------------------------------------- ------------------------------------------- (Insert assignee's soc. sec. or tax ID no.) ------------------------------------------- ------------------------------------------- ------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ____________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date: ------------------ Your Signature: --------------------------------------------------------- ------------------------------------------------------------------------ (Sign exactly as your name appears on the other side of this Security) Signature(s) must be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Securities and Exchange Commission Rule 17Ad-15. A-13 53 CONVERSION NOTICE To convert this Security into Common Stock of the Company, check the box: [ ] To convert only part of this Security, state the Principal Amount at Maturity to be converted (which must be $1,000 or an integral multiple of $1,000) $__________________________ If you want the stock certificate made out in another Person's name, fill in the form below: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert other Person's soc. sec. or tax ID no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) Date: ---------------------- Your Signature: --------------------------------------------------------- ------------------------------------------------------------------------ (Sign exactly as your name appears on the other side of this Security) Signature(s) must be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Securities and Exchange Commission Rule 17Ad-15. 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