CONFORMED COPY
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COMBINATION AGREEMENT
between
PHILIPS INDUSTRIAL ELECTRONICS INTERNATIONAL B.V.
and
FEI COMPANY
Dated as of November 15, 1996
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions.......................................... 2
Section 1.2 Other Terms................................................... 12
Section 1.3 Other Definitional Provisions................................. 12
ARTICLE II
PURCHASE OF COMMON STOCK
Section 2.1 Purchase and Sale of Common Stock............................. 12
Section 2.2 Closing; Delivery and Payment................................. 13
Section 2.3 Net Operating Capital......................................... 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FEI
Section 3.1 Organization, Good Standing and
Qualification.............................................. 15
Section 3.2 Corporate Authority; Approval and
Fairness................................................... 15
Section 3.3 Governmental Filings; No
Violations................................................. 16
Section 3.4 Capital Structure............................................. 17
Section 3.5 FEI Reports; Financial Statements............................. 18
Section 3.6 Employee Benefits............................................. 18
Section 3.7 Absence of Certain Changes.................................... 20
Section 3.8 Litigation and Liabilities.................................... 21
Section 3.9 Compliance with Laws; Permits................................. 21
Section 3.10 Environmental Matters......................................... 22
Section 3.11 Labor Matters................................................. 22
Section 3.12 Insurance..................................................... 23
Section 3.13 Takeover Statutes............................................. 23
Section 3.14 Taxes......................................................... 23
Section 3.15 Intellectual Property......................................... 24
Section 3.16 Contracts..................................................... 26
Section 3.17 Brokers and Finders........................................... 26
Section 3.18 Customers and Suppliers....................................... 26
Section 3.19 Voting Agreement.............................................. 26
Section 3.20 Press Releases................................................ 27
Section 3.21 Industrial Security Clearances................................ 27
Section 3.22 Other Information............................................. 27
Section 3.23 No Other Representations or
Warranties................................................. 27
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Page
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PIE
Section 4.1 Organization, Good Standing and
Qualification.............................................. 27
Section 4.2 Corporate Authority and Approval.............................. 28
Section 4.3 Governmental Filings; No
Violations................................................. 28
Section 4.4 Capital Stock................................................. 29
Section 4.5 PEO Financial Statements...................................... 30
Section 4.6 Employee Benefits............................................. 30
Section 4.7 Absence of Certain Changes.................................... 32
Section 4.8 Litigation and PEO Liabilities................................ 32
Section 4.9 Compliance with Laws; Permits................................. 32
Section 4.10 Environmental Matters......................................... 33
Section 4.11 Labor Matters................................................. 34
Section 4.12 Insurance..................................................... 34
Section 4.13 Takeover Statutes............................................. 34
Section 4.14 Taxes......................................................... 34
Section 4.15 Intellectual Property......................................... 35
Section 4.16 Contracts..................................................... 36
Section 4.17 Brokers and Finders........................................... 37
Section 4.18 Customers and Suppliers....................................... 37
Section 4.19 PEO Assets and PEO Liabilities................................ 37
Section 4.20 Shared Assets; Title to and
Condition of Property...................................... 37
Section 4.21 Securities Act................................................ 39
Section 4.22 Press Releases................................................ 39
Section 4.23 Industrial Security Clearances................................ 39
Section 4.24 Other Information............................................. 40
Section 4.25 No Other Representations or
Warranties................................................. 40
ARTICLE V
COVENANTS
Section 5.1 Interim Operations............................................ 40
Section 5.2 Acquisition Proposals......................................... 42
Section 5.3 Information Supplied.......................................... 43
Section 5.4 Shareholders Meeting.......................................... 44
Section 5.5 Filings; Other Actions;
Notification............................................... 45
Section 5.6 Access........................................................ 46
Section 5.7 Publicity..................................................... 47
Section 5.8 U.S. Transferred Employees.................................... 47
Section 5.9 Other Employees............................................... 49
Section 5.10 Expenses...................................................... 50
Section 5.11 Takeover Statute.............................................. 50
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Page
Section 5.12 Insurance of PEO Business..................................... 50
Section 5.13 Distribution and Other Agreements............................. 51
Section 5.14 Secondary Offering............................................ 52
Section 5.15 Acht Property................................................. 52
Section 5.16 Intellectual Property......................................... 53
Section 5.17 Right to Maintain Percentage
Interest................................................... 56
Section 5.18 Issuance of Additional Shares................................. 56
Section 5.19 Independent Directors......................................... 57
Section 5.20 List of PEO Assets............................................ 57
Section 5.21 Notice of Deconsolidation..................................... 57
Section 5.22 Limitation on Equity Position................................. 57
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations
of FEI and PIE............................................. 58
Section 6.2 Conditions to the Obligations
of PIE..................................................... 59
Section 6.3 Conditions to the Obligations
of FEI..................................................... 60
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival...................................................... 61
Section 7.2 Indemnification by PIE........................................ 61
Section 7.3 Indemnification by FEI........................................ 62
Section 7.4 Indemnification Procedures.................................... 62
Section 7.5 Indemnification Net of Taxes.................................. 64
ARTICLE VIII
TERMINATION
Section 8.1 Termination................................................... 65
Section 8.2 Effect of Termination......................................... 66
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices....................................................... 67
Section 9.2 Amendment; Waiver............................................. 68
Section 9.3 Assignment.................................................... 68
Section 9.4 Entire Agreement.............................................. 68
Section 9.5 Fulfillment of Obligations.................................... 69
Section 9.6 Parties in Interest........................................... 69
Section 9.7 Public Disclosure............................................. 69
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Page
Section 9.8 Expenses...................................................... 69
Section 9.9 Disclosure Schedules.......................................... 69
Section 9.10 Governing Law; Mediation and
Arbitration................................................ 70
Section 9.11 Counterparts.................................................. 70
Section 9.12 Headings...................................................... 71
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ANNEXES
Annex 1.1a - Knowledge of FEI
Annex 1.1b - Knowledge of PIE
Annex 3.19(a) - Certain Shareholders of FEI
Annex 3.19(b) - Form of Voting Agreement
Annex 5.2 - Confidentiality Agreement
Annex 5.13(a) - Form of Distribution Agreement
Annex 5.13(d) - Form of Services Agreement
Annex 5.14 - Selling Shareholders
Annex 6.2(c) - Opinion of Stoel Rives LLP
Annex 6.2(f)(i) - Directors of FEI
Annex 6.2(f)(ii) - Officers of FEI
Annex 6.3(c) - Opinions of PIE's Counsel
Annex 6.3(e) - Form of Employment Agreement
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COMBINATION AGREEMENT, dated as of November 15, 1996, between FEI COMPANY,
an Oregon corporation ("FEI") and PHILIPS INDUSTRIAL ELECTRONICS INTERNATIONAL
B.V., a Netherlands corporation ("PIE").
W I T N E S S E T H :
WHEREAS, PIE desires to acquire common stock (the "Common Stock"), of FEI,
constituting 55% of the Outstanding Common Stock (as defined herein), upon the
terms and conditions set forth herein;
WHEREAS, FEI desires that PIE transfer to FEI in payment for such Common
Stock, among other things, 100% of the issued and outstanding capital stock of
PEO Holdings (as defined herein) and PEO-US (as defined herein);
WHEREAS, Philips, the parent corporation of PIE, is willing to make certain
representations and warranties and to agree to certain covenants for the benefit
of FEI;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
contained herein, and subject to and on the terms and conditions herein set
forth, the parties hereto agree as follows:
ARTICLE I
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DEFINITIONS AND TERMS
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Section 1.1 Specific Definitions. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"Acht Property" shall mean the real estate in Acht used by the PEO Business,
located at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ and the
improvements thereon, known as building AAE and registered in the register
of the municipality of Eindhoven under the entry "Woensel, Sectie A, nummer
4106 gedeeltelijk".
"Acquisition Proposal" shall have the meaning set forth in Section 5.2.
"Additional Shares" shall have the meaning set forth in Section 2.1.
"Affiliate" shall mean, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with, such
other Person at any time during the period for which the determination of
affiliation is being made.
"Agreement" shall mean this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
"Audit Date" shall have the meaning set forth in Section 3.5.
"board of directors" shall mean any board of directors or other body of persons,
including all committees thereof, performing functions equivalent or similar
to those performed by a board of directors of a corporation incorporated in
one of the states of the United States of America.
"Books and Records" shall mean all books, ledgers, files, reports, plans and
operating records of, or maintained by, the PEO Business (it being
understood that, pursuant to the Restructuring, originals of certain of such
items maintained by, but not primarily related to, the PEO Business may not
be transferred to PEO Holdings, in which case, Books and Records shall refer
to copies of such items).
"Claim" shall have the meaning set forth in Section 7.4.
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"Claim Notice" shall have the meaning set forth in Section 7.4.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall have the meaning set forth in Section 2.2(a).
"Closing Net Operating Capital" shall have the meaning set forth in Section
2.3(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall have the meaning set forth in the recitals.
"Compensation and Benefit Plans" shall have the meaning set forth in Section
3.6(a).
"Competition Laws" shall mean statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade.
"Confidentiality Agreement" shall mean the Confidentiality Agreement, dated
April 5, 1996, between FEI and Philips International B.V.
"Continuation Coverage" shall have the meaning set forth in Section 5.8(b).
"Contracts" shall mean any agreements, contracts, mortgages, bonds, notes,
indentures, leases, purchase orders, arrangements, commitments and licenses,
whether written or oral.
"Control" with respect to any Person shall mean ownership (directly or
indirectly) of a majority of total voting power of such Person's voting
securities or interests.
"CPA Firm" shall have the meaning set forth in Section 2.3(a).
"Definite Shares" shall have the meaning set forth in Section 2.1.
"Disclosure Schedule" shall mean the disclosure schedule accompanying this
Agreement. The Disclosure Schedule
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shall be deemed to include the FEI Reports filed prior to the date hereof,
which are hereby incorporated therein by reference.
"Electro-Scan Purchase Agreement" shall mean the Asset Purchase Agreement, dated
May 3, 1996, by and between Electro-Scan Corporation and PENAC and all
related agreements executed in connection with or contemplated by such Asset
Purchase Agreement.
"Employees" shall mean all current employees employed in the PEO Business and
all former employees of PIE, its predecessors and their respective
subsidiaries who, immediately prior to the time they ceased to be employees
of any such entity, were employed in the PEO Business.
"Encumbrances" shall mean liens (including any liens for Taxes), charges,
encumbrances, security interests, options, or any other restrictions or
third party rights.
"Environmental Law" shall mean any applicable law, statute, ordinance, rule,
regulation, code, order, judgment, decree or injunction (other than any Tax
Laws) relating to the protection of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface or subsurface land), or the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing,
handling, labelling, protection, release or disposal of, radioactive
materials or hazardous or toxic substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 3.6(c).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Excluded Business" shall mean (i) the sales and service organizations related
to the PEO Business in countries other than the United States, Canada,
Japan, The Netherlands, Germany, France, Italy and the United Kingdom as
listed on Section 5.13(a) of the Disclosure Schedule, (ii) the Acht
Property, (iii) the cash reserve of NLG 400,000 and any corresponding
liability relating to the Zeiss Claim and (iv) the accounts receivable
payable to PIE from the Ministry of Finance of Russia or
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any successor Governmental Entity thereto, and any associated financial
accrual related thereto.
"Exon-▇▇▇▇▇▇ Amendment" shall mean the Exon-▇▇▇▇▇▇ Amendment to the 1988 Omnibus
Trade and Competitiveness Act, 50 USCA ss. 2170.
"FEI" shall have the meaning set forth in the recitals.
"FEI Compensation and Benefit Plans" shall have the meaning set forth in Section
3.6(a).
"FEI Indemnified Parties" shall have the meaning set forth in Section 7.2.(a)
"FEI Intellectual Property" shall have the meaning set forth in Section 3.15(b).
"FEI Material Adverse Effect" means a material adverse effect on the financial
condition, properties, prospects, business or results of operations of FEI
and its Subsidiaries, taken as a whole.
"FEI Option" shall have the meaning set forth in Section 3.4.
"FEI Reports" shall have the meaning set forth in Section 3.5.
"FEI Requisite Vote" shall have the meaning set forth in Section 3.2(a).
"FEI's Business" shall mean the business of FEI as conducted or contemplated to
be conducted as of the date hereof.
"FEI's Objection" shall have the meaning set forth in Section 2.3(a).
"GAAP" shall have the meaning set forth in Section 3.5.
"Governmental Authorizations" shall mean all licenses, permits, certificates and
other authorizations and approvals required to carry on the PEO Business or,
with respect to PIE, to perform its obligations under this Agreement, as the
case may be, under the applicable laws, ordinances or regulations of any
Governmental Entity.
"Governmental Entity" shall have the meaning set forth in Section 3.3(a).
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"Hazardous Substance" means any substance that is listed, classified or
regulated as such pursuant to any Environmental Law.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended.
"Indemnified Parties" shall have the meaning set forth in Section 7.3(a).
"Indemnifying Party" shall have the meaning set forth in Section 7.4.
"Intellectual Property" shall mean trademarks, service marks, brand names,
certification marks, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction
to register, the foregoing, including any extension, modification or renewal
of any such registration or application; inventions, discoveries and ideas,
whether patentable or not in any jurisdiction; patents, applications for
patents (including, without limitation, divisions, continuations,
continuations in-part and renewal applications), and any renewals,
extensions or reissues thereof, or supplementary patent certificates derived
therefrom, in any jurisdiction; model and design rights; non-public
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any Person;
copyrights and writings and other works, whether copyrightable or not in any
jurisdiction; registrations or applications for registration of copyrights
in any jurisdiction, and any renewals or extensions thereof; maskworks; any
similar intellectual property or proprietary rights.
"ISRA" shall mean the Industrial Site Recovery Act of New Jersey, NJSA 13:1K-6
et seq.
"Knowledge of FEI" or any similar phrase means the actual or constructive
knowledge of the individuals listed on Annex 1.1(a) hereto. A person is
deemed to have constructive knowledge for the purpose of this definition
only if he or she would have actual knowledge by reason of a reasonable
investigation within the scope of his or her employment.
"Knowledge of Philips" shall mean the Knowledge of PIE plus the actual or
constructive knowledge of the senior management of Philips' Corporate
Patents and Trademarks
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department. A person is deemed to have constructive knowledge for the
purpose of this definition only if he or she would have actual knowledge by
reason of a reasonable investigation within the scope of his or her
employment.
"Knowledge of PIE" or any similar phrase means the actual or constructive
knowledge of the individuals listed on Annex 1.1(b) hereto. A person is
deemed to have constructive knowledge for the purpose of this definition
only if he or she would have actual knowledge by reason of a reasonable
investigation within the scope of his or her employment.
"Laws" shall have the meaning set forth in Section 3.9.
"Leased Real Property" shall mean all real property used in the PEO Business
leased by PIE or any of its Affiliates, including any buildings, facilities,
fixed assets, structures and improvements thereon or appurtenances thereto.
"Letter of Intent" shall mean the letter of intent, dated September 4, 1996,
between FEI and PIE.
"Losses" shall have the meaning set forth in Section 7.2(a).
"NASDAQ" shall mean the National Association of Securities Dealers Automated
Quotation System.
"Net Operating Capital" shall mean the net operating capital of the PEO Business
as of the Closing Date calculated, in accordance with Philips internal
accounting principles, by adding (a) fixed assets, (b) net inventories,
(c) trade accounts receivable, and (d) other assets and subtracting
(e) non-interest bearing liabilities.
"Non-U.S. Employees" shall have the meaning set forth in Section 5.9(a).
"Notice Period" shall have the meaning set forth in Section 7.4.
"Outstanding Common Stock" shall mean at any time the sum of (i) the number of
shares of Common Stock issued and outstanding immediately prior to the
Closing, (ii) any shares of Common Stock obtained by any Person upon
exercise or conversion of any options, warrants, convertible securities or
other rights to acquire shares of Common Stock, outstanding at Closing or
issuable without further action of FEI's board of directors
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subsequent to the Closing ("Rights Outstanding at Closing") and (iii) the
Shares (as such number is increased from time to time due the increase of
Additional Shares due to any conversions or exercise pursuant to (ii)
above).
"PENAC" shall mean Philips Electronics North America Corporation.
"Pension Plan" shall have the meaning set forth in Section 3.6(b).
"PEO Assets" shall have the meaning set forth in Section 4.19.
"PEO Business" shall mean the worldwide activities (including the intellectual
property rights (subject to Section 5.16) and the related personnel) related
to the electron optics business conducted or contemplated to be conducted by
PIE and its Affiliates as of the date hereof, other than the Excluded
Business.
"PEO Compensation and Benefit Plans" shall have the meaning set forth in Section
4.6(a).
"PEO Financial Statements" shall have the meaning set forth in Section 4.5.
"PEO Group" shall mean PEO-US, PEO Holdings and all of their Subsidiaries.
"PEO Holdings" shall mean Philips Electron Optics International B.V., a
Netherlands corporation.
"PEO Intellectual Property" shall have the meaning set forth in Section
4.15(b)(ii).
"PEO Liabilities" shall have the meaning set forth in Section 4.19.
"PEO Material Adverse Effect" shall mean a material adverse effect on the
financial condition, properties, prospects, business or results of
operations of the PEO Business, taken as a whole.
"PEO Stock" shall have the meaning set forth in Section 2.2(b).
"PEO-US" shall mean Philips Electron Optics, Inc., a Delaware corporation, which
holds the PEO Assets located in the United States.
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"PEO-US Certificates" shall have the meaning set forth in Section 2.2(b).
"Permitted Encumbrances" shall have the meaning set forth in Section 4.20(b).
"Person" shall mean an individual, a corporation, a partnership, an association,
a trust or other entity or organization.
"Philips" shall mean Philips Electronics N.V.
"Philips Group" shall mean Philips and all of its Affiliates, whether
consolidated or not.
"PIE" shall have the meaning set forth in the recitals.
"PIE Indemnified Parties" shall have the meaning set forth in Section 7.3(a).
"PIE Information" shall have the meaning set forth in Section 5.3(b).
"PIE Loan" shall mean the current account agreement, dated January 1, 1996,
between Philips Electron Optics B.V. and Nederlandse Philips Bedrijven B.V.
in such amount as shall be outstanding thereunder as of January 1, 1997.
"Proceedings" shall have the meaning set forth in Section 3.8.
"Proxy Statement" shall have the meaning set forth in Section 5.3(a).
"Representatives" shall have the meaning set forth in Section 5.6.
"Required Approvals" shall mean all authorizations, consents, orders or
approvals of, permits or licenses from, or declarations or filings with any
Governmental Entity, and all third party consents, in each case necessary to
effect the transactions contemplated by this Agreement in all material
respects and to conduct the PEO Business as previously conducted in all
material respects.
"Restructuring" shall mean the process whereby the PEO Assets and PEO
Liabilities are transferred, to the extent necessary, from certain Persons
in the Philips Group into the PEO Group and by which the assets and
liabilities of any corporation in the PEO Group that are not PEO Assets
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and PEO Liabilities, respectively, are transferred out of the PEO Group
prior to Closing.
"Rights Outstanding at Closing" shall have the meaning set forth in the
definition of Outstanding Common Stock.
"SEC" shall mean the Securities and Exchange Commission, including any successor
Governmental Entity thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Shareholders" shall have the meaning set forth in Section 5.14.
"Shareholders Meeting" shall have the meaning set forth in Section 5.4.
"Shares" shall have the meaning set forth in Section 2.1.
"Stock Option Plan" shall mean the 1984 Stock Incentive Plan, the 1995 Stock
Incentive Plan and the 1995 Supplemental Stock Incentive Plan of FEI.
"Stock Right" means any options, warrants, convertible securities or other
rights to acquire shares of Common Stock, including without limitation any
options issued under the Stock Option Plan.
"Subsidiary" means any entity, whether incorporated or unincorporated, of which
at least a majority of the securities or ownership interests having by their
terms ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions is directly or indirectly owned
or controlled by such party or by one or more of its respective Subsidiaries
or by such party and any one or more of its respective Subsidiaries, and,
with respect to FEI, includes, without limitation, FEI Asia, Inc., FEI
Europe, Ltd., a United Kingdom corporation, FEI Europe GmbH, a German
limited liability company, and FEI FSC, Ltd, a United States Virgin Islands
corporation.
"Superior Proposal" shall have the meaning set forth in Section 5.2.
"Takeover Statute" shall have the meaning set forth in Section 3.13.
"Taxes" shall mean all U.S. federal, state or local, or foreign, taxes, charges,
fees, imports and levies
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including, but not limited to, income, gross receipts, capital stock,
inventory, windfall profits, alternative minimum, ad valorem, value added,
severance, property, production, sales, use, license, excise, stamp,
occupation, franchise, payroll, social security, employment, withholding or
similar taxes, and estimated taxes, customs duties, fees, assessments and
charges of any kind whatsoever together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions
or penalties.
"Tax Law" shall mean any Law relating to Taxes.
"Tax Returns" includes all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax authority relating to Taxes.
"Third-Party Intellectual Property" shall have the meaning set forth in Section
3.15(b)(i).
"Transaction" shall mean the issuance of the Definite Shares and Additional
Shares by FEI to PIE in exchange for 100% of the outstanding capital stock
of PEO Holdings and PEO-US and the assignment to FEI of the rights currently
held by Nederlandse Philips Bedrijven B.V. under the PIE Loan upon the terms
and conditions set forth herein.
"Transitional Services" shall have the meaning set forth in Section 5.13(d).
"U.S. PEO Compensation and Benefit Plans" shall have the meaning set forth in
Section 4.6(c).
"U.S. Transferred Employees" shall have the meaning set forth in Section 5.8(a).
"Voting Debt" shall have the meaning set forth in Section 3.4.
"WARN" shall mean the Worker Adjustment and Retraining Notification Act.
"Welfare Plans" shall have the meaning set forth in Section 5.8(b).
"Zeiss Claim" shall mean any present or future claims asserted by ▇▇▇▇ Zeiss
GmbH of Oberkochen, Germany against the PEO Business relating to the alleged
infringement of U.S. Patent Number 4,713,543, European Patent Number
0180723B1 and Japanese Patent Number JP-A- 49,364/86.
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Section 1.2 Other Terms. Other terms may be defined elsewhere in the text
of this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
Section 1.3 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
(d) The terms "guilders" and "NLG" shall mean the lawful currency of The
Netherlands.
ARTICLE II
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PURCHASE OF COMMON STOCK
------------------------
Section 2.1 Purchase and Sale of Common Stock. On the terms and subject to
the conditions set forth herein, (i) at the Closing, FEI agrees to issue to PIE
such number of shares of Common Stock (the "Definite Shares") as shall
constitute, when issued, 55% of the then issued and outstanding shares of FEI's
Common Stock and (ii) FEI agrees to issue to PIE from time to time such number
of additional shares of Common Stock (the total number of such shares issued as
at any time being herein referred to as "Additional Shares", and together with
the Definite Shares, the "Shares") such that the Shares shall at all times
constitute, when issued, 55% of the Outstanding Common Stock. In consideration
therefor, at the Closing and on the terms and subject to the conditions set
forth herein (A) PIE agrees to transfer to FEI 100% of the outstanding capital
stock of PEO Holdings and to assign to FEI the rights currently held by
Nederlandse Philips Bedrijven B.V. under the PIE Loan and (B) PIE shall transfer
to FEI 100% of the outstanding capital stock of PEO-US.
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Section 2.2 Closing; Delivery and Payment.
(a) The Closing shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. New York City time, no
later than two business days after all of the conditions precedent specified in
Article VI have been satisfied or waived (or at such other time and place as the
parties hereto may mutually agree). The date on which the Closing occurs is
referred to herein as the "Closing Date".
(b) On the Closing Date, (i) FEI shall deliver to PIE certificates
representing the Definite Shares duly issued to PIE and registered in the name
of PIE or its designee, (ii) PIE shall deliver to FEI a duly executed instrument
assigning to FEI the rights currently held by Nederlandse Philips Bedrijven B.V.
under the PIE Loan, (iii) PIE shall convey to FEI all right, title and interest
in and to the shares of common stock (the "PEO Stock") representing 100% of the
outstanding capital stock of PEO Holdings and such conveyance shall be
accomplished by the due execution of a notarial deed of transfer in accordance
with Netherlands law and (iv) PIE shall deliver or have delivered to FEI
certificates representing 100% of the outstanding capital stock of PEO-US (the
"PEO-US Certificates"), duly endorsed and in form for transfer to FEI.
Section 2.3 Net Operating Capital.
(a) Within 30 days following the Closing Date, KPMG Accountants shall
determine the Net Operating Capital and provide to FEI and its accountants the
calculations and supporting evidence for such calculation of Net Operating
Capital. FEI's accountants shall have 30 days to review and respond to KPMG
Accountants' calculation. If FEI's accountants do not agree with KPMG's
calculation then FEI shall inform PIE in writing ("FEI's Objection") setting
forth a description in reasonable detail of the basis for such disagreement and
the adjustments FEI believes should be made to the Net Operating Capital, on or
before the last day of such 30-day period. PIE shall then have 30 days to review
and respond to FEI's Objection and PIE shall not be limited to addressing FEI's
Objection, but shall have the right to raise any aspects of the Net Operating
Capital calculation that PIE believes are relevant to understanding such
calculation. If FEI and PIE are unable to resolve all of their disagreements
with respect to FEI's Objection within 10 days following the completion of PIE's
review of FEI's Objection, they shall refer their remaining differences to a
"Big Six" or other internationally recognized firm of independent public
accountants as to
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which FEI and PIE mutually agree (the "CPA Firm"), who shall determine, only by
resolving the remaining differences so submitted, including any aspects of the
Net Operating Capital calculation raised by PIE in response to FEI's Objection,
the Net Operating Capital. FEI and PIE shall instruct the CPA Firm to deliver
its written determination to FEI and PIE no later than the twentieth day after
the remaining differences underlying FEI's Objection are referred to the CPA
Firm. The CPA Firm's determination shall be conclusive and binding upon FEI and
PIE. The fees and disbursements of the CPA Firm shall be shared equally by FEI
and PIE. PIE agrees to make available to the CPA Firm all relevant Books and
Records and any work papers (including those of KPMG Accountants) relating to
the Net Operating Capital and all other items reasonably requested by the CPA
Firm. The "Closing Net Operating Capital" shall be (i) the Net Operating
Capital, as calculated by KPMG Accountants, in the event that (x) no FEI's
Objection is delivered to PIE during the 30-day period specified above, or (y)
FEI and PIE so agree, (ii) the Net Operating Capital, as calculated by KPMG
Accountants, adjusted in accordance with the FEI's Objection in the event that
PIE does not respond to FEI's Objection within the 30-day period following
receipt by PIE of FEI's Objection or agrees with FEI's Objection, or (iii) the
Net Operating Capital, as calculated by KPMG Accountants, as adjusted by either
(x) the agreement of FEI and PIE or (y) the CPA Firm.
(b) If the Closing Net Operating Capital less NLG 78.1 million is greater
than zero but less than NLG 3 million, PEO Holdings shall, promptly after
determination of the Closing Net Operating Capital, execute a note, in form
acceptable to PIE, dated as of the Closing Date, payable to PIE, for a principal
amount equal to such difference which will bear simple interest at the rate of 7
3/8%, payable monthly in arrears. The full principal amount specified in the
note and all outstanding interest thereon shall be due and payable one year from
the Closing Date.
(c) If the Closing Net Operating Capital less NLG 78.1 million is greater
than NLG 3 million, PEO Holdings shall, promptly after determination of the
Closing Net Operating Capital, execute two notes, each in form acceptable to
PIE, each dated as of the Closing Date, with the full principal amount specified
in each note and all outstanding interest thereon to be due and payable to PIE
one year from the Closing Date. The first note shall be in the principal amount
of NLG 3 million and shall bear simple interest at the rate of 7 3/8%, payable
monthly in arrears. The second note shall be for a principal amount equal to the
difference between the Closing Net Operating Capital and NLG
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81.1 million and shall bear simple interest at the rate of 4%, payable monthly
in arrears; provided, however, that the principal amount of such second note
shall be no greater than NLG 3 million.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF FEI
-------------------------------------
FEI hereby represents and warrants that:
Section 3.1 Organization, Good Standing and Qualification. Each of FEI and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing, to the extent such concept or analogous concepts exist in the
applicable jurisdiction, under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing, when taken together with all
other such failures, is not reasonably likely to have an FEI Material Adverse
Effect. FEI has made available to PIE a complete and correct copy of FEI's and
its Subsidiaries' certificates of incorporation and by-laws, each as amended to
date. FEI's and its Subsidiaries' certificates of incorporation and by-laws so
delivered are in full force and effect. Section 3.1 of the Disclosure Schedule
contains a correct and complete list of each jurisdiction where FEI and each of
its Subsidiaries is organized and qualified to do business.
Section 3.2 Corporate Authority; Approval and Fairness.
(a) FEI has all requisite corporate power and authority and has taken all
corporate action necessary in order to execute, deliver and perform its
obligations under this Agreement and, subject only to approval of this Agreement
by the holders of the outstanding shares of FEI (the "FEI Requisite Vote"), to
consummate the Transaction. This Agreement is a valid and legally binding
obligation of FEI enforceable against FEI in accordance with its terms.
(b) The board of directors of FEI (i) has duly approved this Agreement and
the Transaction contemplated hereby and (ii) has received the opinion of its
financial
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advisors, ▇▇▇▇▇▇▇ & Company, Inc., to the effect that the Transaction is fair to
FEI and its shareholders from a financial standpoint.
Section 3.3 Governmental Filings; No Violations.
(a) Other than the filings and/or notices (i) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the proxy
solicitation requirements of the Exchange Act, and (iii) to comply with state
securities or "blue-sky" laws, no notices, reports or other filings are required
to be made by FEI with, nor are any consents, registrations, approvals, permits
or authorizations required to be obtained by FEI from, any governmental or
regulatory authority, agency, commission, body or other governmental entity of
any federal, state or foreign government ("Governmental Entity"), in connection
with the execution and delivery of this Agreement by FEI and the consummation by
FEI of the Transaction contemplated hereby, except those that the failure to
make or obtain are not, individually or in the aggregate, reasonably likely to
have an FEI Material Adverse Effect or prevent, materially delay or materially
impair the ability of FEI to consummate the Transaction contemplated by this
Agreement.
(b) The execution, delivery and performance of this Agreement by FEI do
not, and the consummation by FEI of the Transaction contemplated hereby will
not, constitute or result in (i) a breach or violation of, or a default under,
the certificate of incorporation or by-laws of FEI or the comparable governing
instruments of any of its Subsidiaries, (ii) a breach or violation of, or a
default under, the acceleration of any obligations or the creation of any
Encumbrance on the assets of FEI or any of its Subsidiaries (with or without
notice, lapse of time or both) pursuant to, any Contracts binding upon FEI or
any of its Subsidiaries or any Laws or governmental or non-governmental permit
or license to which FEI or any of its Subsidiaries is subject or (iii) any
change in the rights or obligations of any party under any Contracts binding
upon FEI or any of its Subsidiaries, except, in the case of clause (ii) or (iii)
above, for any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely to have a FEI
Material Adverse Effect or prevent, materially delay or materially impair the
ability of FEI to consummate the Transaction contemplated by this Agreement.
Section 3.3(b) of the Disclosure Schedule sets forth a correct and complete list
of Contracts of FEI and its Subsidiaries pursuant to which consents or waivers
are or may be required prior to consummation of the transactions contemplated by
this Agreement.
-16-
Section 3.4 Capital Structure. The authorized capital stock of FEI
consists of 500,000 shares of preferred stock, none of which have been issued at
any time, and 15,000,000 shares of Common Stock, of which 7,956,933 shares were
outstanding as of the close of business on October 31, 1996. All of the
outstanding Common Stock has been duly authorized and is validly issued, fully
paid and nonassessable. Prior to the Closing Date, upon obtaining the
shareholder approval contemplated by Section 5.4 hereof, the Definite Shares and
Additional Shares will be duly authorized and, when issued, will be validly
issued, fully paid and non-assessable. Prior to the Closing Date, FEI will have
duly authorized and reserved for issuance at least 1,580,492 shares of Common
Stock, sufficient for the issuance of the maximum number of Additional Shares
issuable to PIE pursuant to this Agreement. Other than 1,293,130 shares reserved
for issuance for the conversion or exercise of any Stock Right, and the
1,580,492 shares to be reserved prior to the Closing for the issuance of
Additional Shares, FEI has no shares of Common Stock reserved for issuance. The
Disclosure Schedule contains a correct and complete list of each outstanding
right to acquire shares of Common Stock pursuant to any Stock Right (each an
"FEI Option"), including the holder, date of grant, exercise price and period
and number of shares of Common Stock subject thereto and no additional Stock
Rights are issuable by FEI without approval of FEI's board of directors. Each of
the outstanding shares of capital stock or other securities of each of FEI's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and owned by FEI or by a direct or indirect wholly-owned subsidiary of FEI, free
and clear of all Encumbrances. Except as set forth above, there are no
preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or sell any shares of capital stock or
other securities of FEI or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire, any securities of FEI or any of its
Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. FEI does not have outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or convertible into or exercisable for securities having the right to
vote) with the shareholders of FEI on any matter ("Voting Debt"). Neither the
Transaction or any other transaction contemplated by this Agreement shall result
in any adjustment, either as a result of the exercise of the discretion of FEI's
board of directors or otherwise, to the number of shares of Common
-17-
Stock issuable pursuant to any Stock Right, including without limitation,
pursuant to Section 10 of the 1984 Stock Incentive Plan, Section 13 of the 1995
Stock Incentive Plan and Section 8 of the 1995 Supplemental Stock Incentive
Plan.
Section 3.5 FEI Reports; Financial Statements. FEI has delivered to PIE
each registration statement, report, proxy statement or information statement
prepared by it since December 31, 1995 (the "Audit Date"), including, without
limitation, (i) FEI's Annual Report on Form 10-K for the year ended December 31,
1995, (ii) FEI's Quarterly Reports on Form 10-Q for the periods ended March 31,
1996, June 30, 1996 and September 30, 1996, each in the form (including
exhibits, annexes and any amendments thereto) filed with the Securities and
Exchange Commission (the "SEC") (collectively, including any reports filed with
the SEC subsequent to the date hereof and prior to the Closing Date, the "FEI
Reports"). As of their respective dates, the FEI Reports did not, and any FEI
Reports filed with the SEC subsequent to the date hereof and prior to the
Closing Date will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the FEI Reports (including the related notes and
schedules) fairly presents, or will fairly present, the consolidated financial
position of FEI and its Subsidiaries as of its date and each of the consolidated
statements of operations, cash flows and stockholders' equity included in or
incorporated by reference into the FEI Reports (including any related notes and
schedules) fairly presents, or will fairly present, the results of operations,
changes in cash flows and stockholders' equity as the case may be, of FEI and
its Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that will
not be material in amount or effect), in each case in accordance with United
States generally accepted accounting principles and all related SEC rules and
regulations ("GAAP") consistently applied during the periods involved, except as
may be noted therein.
Section 3.6 Employee Benefits.
(a) A copy of each bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination, severance,
compensation, medical, health or other plan, agreement, policy or arrangement
("Compensation and Benefit
-18-
Plans") that covers employees, directors, former employees or former directors
of FEI and its Subsidiaries (the "FEI Compensation and Benefit Plans") and any
trust agreement or insurance contract forming a part of the FEI Compensation and
Benefit Plans has been made available to PIE prior to the date hereof. FEI
Compensation and Benefit Plans are listed in Section 3.6(a) of the Disclosure
Schedule and any "change of control" or similar provisions therein are
specifically identified in Section 3.6(a) of the Disclosure Schedule.
(b) All FEI Compensation and Benefit Plans are in substantial compliance
with all applicable law, including the Code and ERISA. Each FEI Compensation and
Benefit Plan that is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA (a "Pension Plan") and that is intended to be qualified
under Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service, and to the Knowledge of FEI, there are no
circumstances likely to result in revocation of any such favorable determination
letter. As of the date hereof, there is no pending or, to the Knowledge of FEI,
threatened material litigation relating to the FEI Compensation and Benefit
Plans. Neither FEI nor any Subsidiary has engaged in a transaction with respect
to any FEI Compensation and Benefit Plan that, assuming the taxable period of
such transaction expired as of the date hereof, would subject FEI or any of its
Subsidiaries to a material tax or penalty imposed by either Section 4975 of the
Code or Section 502 of ERISA.
(c) Neither FEI nor any entity which is considered one employer with FEI
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate")
has adopted, maintains or contributes to any "single employer" plan within the
meaning of Section 4001(a)(15) of ERISA or a "multiemployer plan" within the
meaning of Section 4001(a)(13) of ERISA or adopted, maintained or contributed to
any such plan within the last five years.
(d) All contributions required to be made under the terms of any FEI
Compensation and Benefit Plan as of the date hereof have been timely made or
have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the FEI Reports prior to the date hereof.
(e) Neither FEI nor its Subsidiaries have any obligations for retiree
health and life benefits under any FEI Compensation and Benefit Plan, except as
set forth in the Disclosure Schedule. FEI or its Subsidiaries may amend
-19-
or terminate any such plan under the terms of such plan at any time without
incurring any material liability thereunder.
(f) The consummation of the Transaction contemplated by this Agreement
will not (i) entitle any employees of FEI or its Subsidiaries to severance pay,
(ii) accelerate the time of payment or vesting or trigger any payment of
compensation or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the FEI Compensation or Benefit Plans as
in effect as of the date hereof, except as contemplated by Section 5.8(a)
hereof, or (iii) result in any breach or violation of, or a default under, any
of the FEI Compensation and Benefit Plans.
(g) All FEI Compensation and Benefit Plans covering current or former
non-U.S. employees or former employees of FEI and its Subsidiaries comply in all
material respects with applicable local law. FEI and its Subsidiaries have no
material unfunded liabilities with respect to any Pension Plan that covers such
non-U.S. employees.
Section 3.7 Absence of Certain Changes. Except as disclosed in Section 3.7
of the Disclosure Schedule, since the Audit Date FEI and its Subsidiaries have
conducted their respective businesses only in, and have not engaged in any
material transaction other than according to, the ordinary and usual course of
such businesses and there has not been (a) any change in the financial
condition, properties, prospects, business or results of operations of FEI and
its Subsidiaries or any development or combination of developments affecting
FEI, to the Knowledge of FEI, except those changes, developments or combinations
of developments that, individually or in the aggregate, are not reasonably
likely to have an FEI Material Adverse Effect and other than changes resulting
from the public announcement on September 5, 1996 of the signing of the Letter
of Intent with respect to this Transaction; (b) any material damage, destruction
or other casualty loss with respect to any material asset or property owned,
leased or otherwise used by FEI or any of its Subsidiaries, whether or not
covered by insurance; (c) any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital stock of FEI, except
for dividends or other distributions on its capital stock publicly announced
prior to the date hereof; or (d) any change by FEI in accounting principles,
practices or methods. Since the Audit Date, except as provided for herein or as
disclosed in Section 3.7 of the Disclosure Schedule, (i) there has not been any
increase in the compensation payable or that could become payable by FEI
-20-
or any of its Subsidiaries to officers or key employees or any amendment of any
of the FEI Compensation and Benefit Plans other than increases or amendments in
the ordinary course in accordance with established past practice and (ii) no
employment agreements with any employees or officers of FEI or its Subsidiaries
have been entered into by FEI or its Subsidiaries.
Section 3.8 Litigation and Liabilities. Except as disclosed in Section 3.8
of the Disclosure Schedule, there are no (a) civil, criminal or administrative
actions, suits, claims, hearings, investigations or proceedings (collectively
"Proceedings") pending or, to the Knowledge of FEI, threatened against or
affecting FEI or any of its Affiliates or (b) obligations or liabilities,
whether or not accrued, contingent or otherwise and whether or not required to
be disclosed, including those relating to matters involving any Environmental
Law, environmental and occupational safety and health matters, or any other
facts or circumstances, to the Knowledge of FEI, that could result in any claims
against, or obligations or liabilities of, FEI or any of its Affiliates, except
for those that are not, individually or in the aggregate, reasonably likely to
have an FEI Material Adverse Effect or prevent or materially burden or
materially impair the ability of FEI to consummate the Transaction contemplated
by this Agreement.
Section 3.9 Compliance with Laws; Permits. Except as disclosed in Section
3.9 of the Disclosure Schedule, the businesses of each of FEI and its
Subsidiaries have not been, and are not being, conducted in violation of any
applicable law, ordinance, regulation, judgment, order, decree, arbitration
award, license or permit of any Governmental Entity (collectively, "Laws")
except for any such violations which have not had and are not reasonably likely,
individually or in the aggregate, to have an FEI Material Adverse Effect. Except
as set forth in the FEI Reports filed prior to the date hereof, no investigation
or review by any Governmental Entity with respect to FEI or any of its
Subsidiaries is pending or, to the Knowledge of FEI, threatened, nor has any
Governmental Entity indicated an intention to conduct the same. To the Knowledge
of FEI, no material change is required in FEI's or any of its Subsidiaries'
processes, properties or procedures in connection with any such Laws, and FEI
has not received any notice or communication of any material noncompliance with
any such Laws that has not been cured as of the date hereof. FEI and its
Subsidiaries each has all material permits, licenses, trademarks, service marks,
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct its business as currently conducted.
-21-
Section 3.10 Environmental Matters. Except as disclosed in Section 3.10 of
the Disclosure Schedule and except for such matters that, alone or in the
aggregate, are not reasonably likely to have an FEI Material Adverse Effect and
except with respect to any portion of the FEI Business conducted on properties
owned by Philips or its Affiliates, excluding FEI and its Subsidiaries: (i) to
the Knowledge of FEI, FEI and its Subsidiaries have complied with all applicable
Environmental Laws; (ii) to the Knowledge of FEI, the properties currently owned
or operated by FEI (including soils, groundwater, surface water, buildings or
other structures) are not contaminated with any Hazardous Substances requiring
remediation under applicable Environmental Laws; (iii) to the Knowledge of FEI,
the properties formerly owned or operated by FEI or any of its Subsidiaries (or
former subsidiaries) were not contaminated with Hazardous Substances by FEI
during the period of ownership or operation by FEI or any of its Subsidiaries
(or former subsidiaries) requiring remediation under applicable Environmental
Laws; (iv) to the Knowledge of FEI, neither FEI nor its Subsidiaries are subject
to liability for any Hazardous Substance disposal or contamination on any third
party property; (v) neither FEI nor any of its Subsidiaries has received any
notice, demand, letter, claim or request for information alleging that FEI or
any of its Subsidiaries may be in violation of or liable under any Environmental
Law; (vi) neither FEI nor any of its Subsidiaries is subject to any orders,
decrees, injunctions or other arrangements with any Governmental Entity relating
to liability under any Environmental Law or relating to Hazardous Substances;
and (vii) to the Knowledge of FEI, there are no circumstances or conditions
involving FEI or any of its Subsidiaries that could reasonably be expected to
result in any claims, liability, investigations, costs or restrictions on the
ownership, use, or transfer of any property of FEI pursuant to any Environmental
Law.
Section 3.11 Labor Matters. Neither FEI nor any of its Subsidiaries is a
party to or otherwise bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor,
as of the date hereof, is FEI or any of its Subsidiaries the subject of any
material proceeding asserting that FEI or any of its Subsidiaries has committed
an unfair labor practice or is seeking to compel it to bargain with any labor
union or labor organization nor is there pending or, to the Knowledge of FEI,
threatened, nor has there been for the past five years, any labor strike,
-22-
dispute, walkout, work stoppage, slow-down or lockout involving FEI or any of
its Subsidiaries.
Section 3.12 Insurance. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by FEI or any of its Subsidiaries are with
reputable insurance carriers and provide a reasonable amount of coverage in
light of the normal risks incident to the business of FEI and its Subsidiaries
and their respective properties and assets.
Section 3.13 Takeover Statutes. No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation
(including Sections 60.801 to 60.816 of the Oregon Business Corporation Act)
(each a "Takeover Statute") or any applicable anti-takeover provision in FEI's
certificate of incorporation and by-laws is, or at the Closing will be,
applicable to the Transaction contemplated by this Agreement.
Section 3.14 Taxes. FEI and each of its Subsidiaries (i) have prepared in
good faith and duly and timely filed (taking into account any extension of time
within which to file) all Tax Returns required to be filed by any of them and
all such filed Tax Returns are complete and accurate in all material respects;
(ii) have paid all Taxes that are required to be paid, or that FEI or any of its
Subsidiaries are obligated to withhold from amounts owing to any employee,
creditor or third party, except with respect to matters contested in good faith;
and (iii) have not waived any statute of limitations with respect to Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.
As of the date hereof, there are not pending or, to the Knowledge of FEI
threatened in writing, any audits, examinations, investigations or other
proceedings in respect of Taxes or Tax matters. There are not, to the Knowledge
of FEI, any unresolved questions or claims concerning a material Tax liability
of FEI or any of its Subsidiaries. FEI has made available to PIE true and
correct copies of the United States federal income Tax Return filed by FEI and
its Subsidiaries for each of the fiscal years ended December 31, 1993, 1994 and
1995, together with any examination reports or statements of deficiency issued
with respect to any Tax Returns of FEI or any Subsidiary since October 15, 1992.
Neither FEI nor any of its Subsidiaries has any liability with respect to
income, franchise or similar Taxes that accrued on or before September 30, 1996
in excess of the amounts accrued in respect thereto that are reflected in the
financial statements included in the FEI Reports filed on or prior to
-23-
the date hereof. The most recent consolidated financial statements contained in
the FEI Reports reflect an adequate reserve for all taxes payable by FEI and its
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements. None of FEI or any of its Subsidiaries is a party to
or is bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to Taxes (including any advance
pricing agreement, closing agreement or other agreement relating to Taxes with
any taxing authority). There is no employment, severance or termination
agreement, other compensation arrangement or Compensation and Benefit Plan
currently in effect which provides for the payment of any amount (whether in
cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement to any employee, officer or director
of FEI or any of its affiliates who is a "disqualified individual" (as such term
is defined in Section 280G(c) of the Code), that would be characterized as an
"excess parachute payment" (as such term is defined in Section 280G(b)(1) of the
Code). FEI and each of its Subsidiaries are not currently, have not been within
the last five years, and do not anticipate becoming a "United States real
property holding company" within the meaning of Section 897(c) of the Code. None
of the assets of FEI or any Subsidiary are subject to any Encumbrances that
arose in connection with any failure or alleged failure to pay any Tax. Except
as disclosed in Section 3.14 of the Disclosure Schedule, no claim has ever been
made by an authority in a jurisdiction where FEI or any Subsidiary does not file
Tax Returns that FEI or the relevant Subsidiary is or may be subject to taxation
by that jurisdiction.
Section 3.15 Intellectual Property.
(a) To the Knowledge of FEI, FEI and/or each of its Subsidiaries owns, or
is licensed or otherwise possesses legally enforceable rights to use all
Intellectual Property and tangible or intangible proprietary information or
materials that are used in the business of FEI and its subsidiaries as currently
conducted, except for any such failures to own, be licensed or possess that,
individually or in the aggregate, are not reasonably likely to have an FEI
Material Adverse Effect. Section 3.15(a) of the Disclosure Schedule sets forth a
list of all current patents, patent applications, registered trademarks,
registered service marks, readily identifiable common law trademarks, trademark
or service ▇▇▇▇ applications, of FEI.
-24-
(b) Except as disclosed in Section 3.15(b) of the Disclosure Schedule or
as is not reasonably likely to have an FEI Material Adverse Effect:
(i) to the Knowledge of FEI, FEI is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and other
agreements as to which FEI is a party and pursuant to which FEI is authorized
to use any Intellectual Property of any third party ("Third-Party
Intellectual Property");
(ii) no claims with respect to any Intellectual Property owned by FEI or
any of its Subsidiaries (the "FEI Intellectual Property"), any trade secret
material to FEI, or Third-Party Intellectual Property to the extent arising
out of any use, reproduction, or distribution of such Third-Party
Intellectual Property by or through FEI or any of its Subsidiaries, are
currently pending or, to the Knowledge of FEI, are overtly threatened by any
person;
(iii) to the Knowledge of FEI, there are no valid grounds for any bona fide
claims (A) to the effect that the manufacture, sale, licensing or use of any
product as now used, sold or licensed or proposed for use, sale or license by
FEI or any of its Subsidiaries, infringes on any copyright, patent,
trademark, service ▇▇▇▇, or trade secret; (B) against the use by FEI or any
of its Subsidiaries, of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how, or computer software programs and
applications used in the business of FEI or any of its Subsidiaries as
currently conducted or as proposed to be conducted; (C) challenging the
ownership, validity, or effectiveness of any of the FEI Intellectual Property
or other trade secret material to FEI; or (D) challenging the license or
legally enforceable right to use of the Third-Party Intellectual Property by
FEI or any of its Subsidiaries;
(iv) to the Knowledge of FEI, all patents, registered trademarks and service
marks, and copyrights held by FEI are valid, enforceable and subsisting; and
(v) to the Knowledge of FEI, there is no material unauthorized use,
infringement or misappropriation of any of FEI Intellectual Property by any
third party, including any employee or former employee of FEI or any of its
Subsidiaries.
-25-
(iv) FEI is not a party to any agreement that would, as a result of the
Closing, obligate Philips or any of its Affiliates to cross license to any
third party any of Philips' or any of such Affiliates' Intellectual Property.
Section 3.16 Contracts. Section 3.16 of the Disclosure Schedule sets forth
a list, as of the date hereof, of each written Contract of FEI or its
Subsidiaries (other than (i) purchase orders in the ordinary and usual course of
business involving less than $1,000,000, (ii) sales orders in the ordinary and
usual course of business involving less than $2,000,000, (iii) any Contract
involving the payment of less than $500,000 in the aggregate or that is
terminable by FEI without penalty or other expense on 60 days' notice or less,
(iv) confidentiality agreements entered into in the usual course of business,
(v) employment agreements covering non-U.S. Employees (other than contracts with
key non-U.S. Employees), (vi) trademark agreements and (vii) service maintenance
agreements in the ordinary and usual course of business). Section 3.16 of the
Disclosure Schedule does not omit any Contract (written or oral) that is
material to FEI's Business. Except as set forth in Section 3.16(ii) of the
Disclosure Schedule, each Contract that is material to FEI's Business as
currently conducted is a valid and binding agreement of FEI or its Subsidiaries
and is in full force and effect. To the Knowledge of FEI, there is no material
default by the other party to or any event, occurrence or circumstance which,
upon the passage of time or the giving of notice or both, would result in a
material default under any Contract that is material to FEI's Business, which
default or potential default has not been cured or waived.
Section 3.17 Brokers and Finders. Neither FEI nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders, fees in connection
with the Transaction or the other transactions contemplated in this Agreement
except that FEI has employed ▇▇▇▇▇▇▇ & Company, Inc. as its financial advisor,
the arrangements with which have been disclosed to PIE prior to the date hereof.
Section 3.18 Customers and Suppliers. To the Knowledge of FEI, no material
customer or supplier of FEI's Business will cease or substantially reduce the
business conducted with FEI after, or as a result of, the consummation of the
Transaction contemplated hereby.
Section 3.19 Voting Agreement. The shareholders of FEI listed on Annex
3.19(a) have duly executed voting
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agreements in substantially the form attached hereto as Annex 3.19(b), pursuant
to which such shareholders have agreed to vote their shares at the Shareholders
Meeting to approve and adopt this Agreement, including the Transaction and the
issuance of Shares contemplated hereby, and to approve an increase in the number
of shares of Common Stock authorized for issuance from 15 million to 21.5
million.
Section 3.20 Press Releases. FEI has provided to PIE a copy of each press
release distributed by FEI or its Subsidiaries since the Audit Date.
Section 3.21 Industrial Security Clearances. Neither FEI, its Subsidiaries
nor any of its employees has or is required to have any industrial security
clearance relating to classified information and none is needed for purposes of
any Contract with any United States government department, agency or
instrumentality or, any subcontract under such a Contract.
Section 3.22 Other Information. The information furnished by FEI in this
Agreement, the Annexes hereto, the Disclosure Schedule and in any certificate
executed or delivered pursuant hereto by or on behalf of FEI is not materially
false or misleading and does not contain a misstatement of a material fact or
omit to state any material fact required to be stated in order to make the
statements herein and therein not misleading.
Section 3.23 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article III, neither FEI nor
any other Person makes any other express or implied representation or warranty
on behalf of FEI.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF PIE
-------------------------------------
PIE hereby represents and warrants, and Philips hereby represents and
warrants with respect to Sections 4.1, 4.2, 4.3, 4.6 and 4.15 only, that:
Section 4.1 Organization, Good Standing and Qualification. Each of Philips
and PIE, and the PEO Group is or, with regard to the PEO Group, will be at
Closing, a corporation duly organized, validly existing and in good standing, to
the extent such concept or analogous concepts exist in the applicable
jurisdiction, under the laws of its respective jurisdiction of organization and
has, or will
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have at Closing, all requisite corporate or similar power and authority to own
and operate its properties and assets and to carry on its business as presently
conducted and is, or will be at Closing, qualified to do business and in good
standing as a foreign corporation in each jurisdiction where the ownership or
operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing,
when taken together with all other such failures, is not reasonably likely to
have a PEO Material Adverse Effect. PIE has made available to FEI a complete and
correct copy of PIE's Articles of Association, as amended to date. Prior to the
Closing, PIE will have made available to FEI a complete and correct copy of the
Certificate of Incorporation of PEO-US, the Articles of Association of PEO
Holdings and, with respect to its Subsidiaries, their equivalents, and such
Articles of Association and such equivalents, so delivered are in full force and
effect. Section 4.1 of the Disclosure Schedule contains a correct and complete
list of each jurisdiction where any corporation in the PEO Group is organized.
At Closing, PEO-US and PEO Holdings, to the extent a concept equivalent to due
qualification exists in jurisdictions in which it operates, will be duly
qualified to transact business in each jurisdiction in which failure to so
qualify would result in a PEO Material Adverse Effect.
Section 4.2 Corporate Authority and Approval.
(a) Philips and PIE have all requisite corporate power and authority and
have taken all corporate action necessary in order to execute, deliver and
perform their obligations under this Agreement and to consummate the
Transaction. The obligations of Philips and PIE contained in this Agreement are
valid and legally binding obligations of Philips and PIE enforceable against
Philips and PIE, respectively, in accordance with its terms.
(b) The board of management of PIE has duly approved this Agreement and
the Transaction and the board of management of Philips has duly approved the
Restructuring and Transaction.
Section 4.3 Governmental Filings; No Violations.
(a) Except as set forth on Schedule 4.3 and other than the filings and/or
notices (i) under the HSR Act, (ii) pursuant to the Exon-▇▇▇▇▇▇ Amendment, (iii)
pursuant to ISRA, and (iv) any filings, consents, registrations, approvals,
permits or authorizations required in connection with the Restructuring all of
which have been or will be timely made or obtained, no notices, reports or other
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filings are required to be made by Philips or PIE with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
Philips or PIE from any Governmental Entity, in connection with the execution
and delivery of this Agreement by Philips and PIE and the consummation by
Philips and PIE of the Transaction contemplated hereby, except those that the
failure to make or obtain are not, individually or in the aggregate, reasonably
likely to have a PEO Material Adverse Effect or prevent, materially delay or
materially impair the ability of Philips or PIE to consummate the Transaction or
the Restructuring contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement by Philips
and PIE do not, and the consummation by Philips and PIE of the Restructuring and
the Transaction contemplated hereby will not, constitute or result in (i) a
breach or violation of, or a default under, the Certificate of Incorporation of
PEO-US or Articles of Association of Philips, PIE or PEO Holdings or their
equivalents in the case of PEO Holdings' Subsidiaries or (ii) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of any Encumbrance on any of the assets used in the PEO Business of
PIE, or the PEO Group (with or without notice, lapse of time or both) pursuant
to, any Contracts binding upon PIE or any corporation in the PEO Group or any
Law or governmental or non-governmental permit or license to which PIE or any
corporation in the PEO Group is subject except, in the case of clause (ii)
above, for any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely to prevent,
materially delay or materially impair the ability of PIE to consummate the
Restructuring and the Transaction contemplated by this Agreement.
Section 4.4 Capital Stock. Prior to Closing, PIE will directly own all of
the outstanding capital stock of PEO Holdings and PEO-US, in each case, free and
clear of all Encumbrances. There are no preemptive or other outstanding rights,
options, warrants, conversion rights or agreements or commitments to issue or
sell any shares of capital stock or other equity interest of any such entity or
any securities or obligations convertible into or exchangeable for, or giving
any Person a right to subscribe for or acquire, any shares of capital stock or
other equity interest of PEO Holdings or PEO-US, and no securities or
obligations evidencing such rights are outstanding. Prior to Closing each of the
outstanding shares of capital stock or other securities of each of PEO Holdings'
Subsidiaries and of PEO-US will be duly authorized, validly issued, fully paid
and nonassessable and all of the securities of PEO
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Holdings' Subsidiaries are owned, directly or indirectly, by PEO Holdings, free
and clear of all Encumbrances.
Section 4.5 PEO Financial Statements. Each of the consolidated balance
sheets included in or incorporated by reference into the PEO financial
statements for the PEO Business for the years ended December 31, 1993, 1994 and
1995 and the nine months ended September 30, 1996 (including the related notes
and schedules) (the "PEO Financial Statements") was audited by KPMG Accountants
and fairly presents the consolidated financial position of the PEO Business as
of its date and each of the consolidated statements of operations, cash flows
and stockholders' equity included in or incorporated by reference into the PEO
Financial Statements fairly presents the results of operations, changes in cash
flows and stockholders' equity, as the case may be, of the PEO Business for the
periods set forth therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in amount
or effect), in each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein. The PEO Financial Statements
were made available to FEI prior to the date hereof.
Section 4.6 Employee Benefits.
(a) Compensation and Benefit Plans. A copy of each Compensation and
Benefit Plan that covers Employees (the "PEO Compensation and Benefit Plans")
and any trust agreement or insurance contract forming a part of the PEO
Compensation and Benefit Plans has been made available for inspection locally by
FEI prior to the date hereof. All pension arrangements Philips and PIE have in
place covering current or former Non-U.S. Employees are set forth in Section
4.6(a) of the Disclosure Schedule. Philips and PIE have complied with the terms
and conditions of these arrangements.
(b) Acceleration and Vesting. Except as set forth in Section 4.6(b) of the
Disclosure Schedule, the consummation of the Transaction contemplated by this
Agreement will not (i) entitle any Employees to severance pay, (ii) accelerate
the time of payment or vesting or trigger any payment of compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of PEO Compensation or Benefit Plans as in effect as
of the date hereof or (iii) result in any breach or violation of, or a default
under, any of the PEO Compensation and Benefit Plans.
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(c) U.S. Employee Benefits. (i) All PEO Compensation and Benefit Plans
covering U.S. Transferred Employees ("U.S. PEO Compensation and Benefit Plans")
are in substantial compliance with all applicable law, including the Code and
ERISA. Each U.S. PEO Compensation and Benefit Plan that is a Pension Plan and
that is intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service, and to the
Knowledge of PEO, there are no circumstances likely to result in revocation of
any such favorable determination letter.
(ii) As of the date hereof, no liability under Subtitle C or D of Title IV
of ERISA has been or is expected to be incurred by the PEO Business or any
corporation in the PEO Group with respect to any U.S. PEO Compensation and
Benefit Plan which is an ongoing, frozen or terminated "single-employer plan",
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of an ERISA Affiliate. No
corporation in the PEO Group has incurred and none expect to incur any
withdrawal liability under Subtitle E to Title IV of ERISA with respect to a
multiemployer plan contributed to by them or by an ERISA Affiliate. No notice of
a "reportable event", within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has not been waived, has been required to be filed
for any U.S. PEO Compensation and Benefits Plan which is a Pension Plan within
the 12-month period ending on the date hereof or will be required to be filed in
connection with the transaction contemplated by this Agreement.
(iii) Except as set forth in Section 4.6(c)(iii) of the Disclosure
Schedule, all contributions required to be made under the terms of any U.S. PEO
Compensation and Benefit Plan as of the date hereof have been timely made or
have been reflected on the PEO Financial Statements. No U.S. PEO Compensation
and Benefit Plan which is a Pension Plan has an "accumulated funding deficiency"
(whether or not waived) with respect to the PEO Business within the meaning of
Section 412 of the Code or Section 302 of ERISA. No member of the Philips Group
has provided, or is required to provide security, in respect of the U.S. PEO
Compensation and Benefit Plans pursuant to Section 401(a)(29) of the Code.
(iv) Except as set forth in Section 4.6(c)(iv) of the Disclosure Schedule,
no corporation in the PEO Group will have at Closing any obligations for retiree
health and life benefits under any U.S. PEO Compensation and Benefit Plan in
-31-
respect of the Employees that would be material to the PEO Business.
(d) Non-U.S. Employee Benefits. (i) All PEO Compensation and Benefit Plans
covering current or former Non-U.S. Employees comply in all material respects
with applicable local law.
(ii) Neither Philips nor PIE have ever received any letter or other
communication from an industry wide pension fund claiming compulsory
participation of current or former Non-U.S. Employees in any of its pension
arrangements, and Philips and PIE each represent and warrant that each of them
have no reason to believe that either of them will receive such a letter,
communication or claim as a result of the Restructuring or the Transaction.
Section 4.7 Absence of Certain Changes. Except as set forth in Section 4.7
of the Disclosure Schedule and other than as has been or shall be required or
contemplated in connection with the Restructuring, since September 30, 1996 the
PEO Business has been conducted in, and no material transaction has been engaged
in other than according to, the ordinary and usual course of such business and
there has not been (i) any change in the financial condition, properties,
prospects, business or results of operations of the PEO Business or any
development or combination of developments affecting the PEO Business to the
Knowledge of PIE, except those changes, developments or combinations of
developments that, individually or in the aggregate, are not reasonably likely
to have a PEO Material Adverse Effect or (ii) any material damage, destruction
or other casualty loss with respect to any material asset or property owned,
leased or otherwise used by the PEO Business, whether or not covered by
insurance.
Section 4.8 Litigation and PEO Liabilities. Except as disclosed in Section
4.8 of the Disclosure Schedule, there are no (i) Proceedings pending or, to the
Knowledge of PIE, threatened against or affecting the PEO Business or any
corporation in the PEO Group or (ii) obligations or liabilities, whether or not
accrued, contingent or otherwise and whether or not required to be disclosed,
including those relating to matters involving any Environmental Law
environmental and occupational safety and health matters, or any other facts or
circumstances to the Knowledge of PIE that could result in any claims against,
or obligations or liabilities of, the PEO Business, the PEO Assets, or any
corporation in the PEO Group, except for those that are not, individually or in
the aggregate, reasonably likely to have a PEO Material Adverse Effect.
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Section 4.9 Compliance with Laws; Permits. Except as disclosed in Section
4.9(a) of the Disclosure Schedule, the PEO Business has not been, and is not
being, conducted in violation of any applicable Laws except for any such
violations which have not had or are not reasonably likely, individually or in
the aggregate, to have a PEO Material Adverse Effect. No investigation or review
by any Governmental Entity with respect to the PEO Business, or any corporation
in the PEO Group is pending or, to the Knowledge of PIE, threatened, nor has any
Governmental Entity indicated an intention to conduct the same other than
routine investigations occurring in the ordinary course of business. To the
Knowledge of PIE, no material change is required in the processes, properties or
procedures of the PEO Business or any corporation in the PEO Group in connection
with any such Laws, and PIE has not received any notice or communication of any
material noncompliance with any such Laws that has not been cured as of the date
hereof. Except as set forth in Section 4.9(b) of the Disclosure Schedule, the
PEO Business has, and, prior to Closing, the PEO Group will have, all material
permits, licenses, trademarks, service marks, franchises, variances, exemptions,
orders and other Governmental Authorizations, consents and approvals necessary
to conduct its business as currently conducted.
Section 4.10 Environmental Matters. Except as disclosed in the Section
4.10 of the Disclosure Schedule and except for such matters that, alone or in
the aggregate, are not reasonably likely to have a PEO Material Adverse Effect:
(i) to the Knowledge of PIE, the PEO Business and the PEO Group have complied
with all applicable Environmental Laws; (ii) to the Knowledge of PIE, the
properties currently owned by or operated for the PEO Business and the PEO Group
(including soils, groundwater, surface water, buildings or other structures) are
not contaminated with any Hazardous Substances requiring remediation under
applicable Environmental Laws; (iii) to the Knowledge of PIE, the properties
formerly owned or operated for the PEO Business were not contaminated by the PEO
Business with Hazardous Substances during the period of ownership or operation
by the PEO Business requiring remediation under applicable Environmental Laws;
(iv) to the Knowledge of PIE, the PEO Group is not subject to liability for any
Hazardous Substance disposal or contamination on any third party property; (v)
the PEO Business and the PEO Group have not received any notice, demand, letter,
claim or request for information alleging that the PEO Business or the PEO Group
may be in violation of or liable under any Environmental Law; (vi) the PEO
Business and the PEO Group are not subject to any orders, decrees, injunctions
or other arrangements
-33-
with any Governmental Entity relating to liability under any Environmental Law
or relating to Hazardous Substances; and (vii) to the Knowledge of PIE, there
are no circumstances or conditions involving the PEO Business, the PEO Assets or
the PEO Group that could reasonably be expected to result in any claims,
liability, investigations, costs or restrictions on the ownership, use, or
transfer of any property used in the PEO Business or by the PEO Group.
Section 4.11 Labor Matters. All material collective bargaining agreements,
contracts, and other agreements and understandings with a labor union or
organization are set forth in Section 4.11 of the Disclosure Schedule. As of the
date hereof neither the PEO Business nor any corporation in the PEO Group is the
subject of any material proceeding asserting that either the PEO Business or any
corporation in the PEO Group has committed an unfair labor practice nor is there
pending or, to the Knowledge of PIE, threatened, nor has there been for the past
five years, any labor strike, dispute, walkout, work stoppage, slow-down or
lockout involving the PEO Business and the PEO Group.
Section 4.12 Insurance. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained for the PEO Business and the PEO Group are with
reputable insurance carriers and provide reasonable coverage for all normal
risks incident to the PEO Business and the PEO Group and their respective
properties and assets and will continue in effect at and subsequent to Closing
at FEI's cost.
Section 4.13 Takeover Statutes. No Takeover Statute is, or at the Closing
will be, applicable to PEO Holdings or PEO-US.
Section 4.14 Taxes. No corporation in the PEO Group will have at Closing
any liability with respect to income or similar Taxes or, in the case of the PEO
Business in the U.S., franchise Taxes that accrued on or before December 31,
1995 in excess of the amounts accrued in respect thereto that are reflected in
the PEO Financial Statements. The PEO Financial Statements reflect an adequate
reserve for all taxes payable by the PEO Group for all taxable periods and
portions thereof through the date of such financial statements. No corporation
in the PEO Group will have at Closing or thereafter any income tax liability
resulting from the Restructuring. No corporation in the PEO Group will be at
Closing a party to or be bound by any tax sharing agreement, tax indemnity
obligation or similar agreement, arrangement or practice with respect to Taxes
(including any
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advance pricing agreement, closing agreement or other agreement relating to
Taxes with any taxing authority). No corporation in the PEO Group will have any
legal liability for any Tax imposed on any entity not in the PEO Group, except
for customs duties and value added taxes incurred in the ordinary course of
business by the PEO Business and paid for their account by Nederlandse Philips
Bedrijven B.V. None of the assets of the PEO Group are subject to any
Encumbrances that arose in connection with any failure or alleged failure to pay
any Tax.
Section 4.15 Intellectual Property.
(a) To the Knowledge of Philips, the Philips Group owns, or is licensed or
otherwise possesses legally enforceable rights to use all Intellectual Property
and tangible or intangible proprietary information or materials that are used in
the PEO Business as currently conducted, except for any such failures to own, be
licensed or possess that, individually or in the aggregate, are not reasonably
likely to have a PEO Material Adverse Effect, all of which, upon closing of the
Transaction, may be used and exploited in the PEO Business. Section 4.15(a) of
the Disclosure Schedule sets forth a list of all current patents, patent
applications, registered trademarks, registered service marks, readily
identifiable common law trademarks, trademark or service ▇▇▇▇ applications,
originated in and having their principal commercial use within the PEO Business.
(b) Except as disclosed in Section 4.15(b) of the Disclosure Schedule or
as is not reasonably likely to have a PEO Material Adverse Effect:
(i) to the Knowledge of Philips, the PEO Business and the PEO Group are
not, nor will be as a result of the execution and delivery of this Agreement
or the performance of its obligations hereunder, in violation of any
licenses, sublicenses and other agreements as to which the PEO Business or
any corporation in the PEO Group is a party and pursuant to which the PEO
Business or any corporation in the PEO Group is authorized to use any
Third-Party Intellectual Property;
(ii) no claims with respect to any Intellectual Property used by the PEO
Business or any corporation in the PEO Group (the "PEO Intellectual
Property"), any trade secret material to the PEO Business or any corporation
in the PEO Group, or Third-Party Intellectual Property to the extent arising
out of any use, reproduction, or distribution of such Third-Party
Intellectual Property by or through the PEO Business or the PEO Group, are
currently
-35-
pending or, to the Knowledge of Philips, are overtly threatened by any
person;
(iii) to the Knowledge of Philips there are no valid grounds for any bona
fide claims (A) to the effect that the manufacture, sale, licensing or use of
any product as now used, sold or licensed or proposed for use, sale or
license by the PEO Business or the PEO Group, infringes on any copyright,
patent, trademark, service ▇▇▇▇, or trade secret; (B) against the use by the
PEO Business or the PEO Group of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how, or computer software programs and
applications used in the PEO Business or the PEO Group as currently conducted
or as proposed to be conducted; (C) challenging the ownership, validity, or
effectiveness of any of the PEO Intellectual Property or other trade secret
material to the PEO Business; or (D) challenging the license or legally
enforceable right to use of the Third-Party Intellectual Property by the PEO
Business or the PEO Group;
(iv) to the Knowledge of Philips, all patents, registered trademarks and
service marks, and copyrights originated in and having their principal
commercial use within the PEO Business, are valid, enforceable and
subsisting; and
(v) to the Knowledge of Philips, there is no material unauthorized use,
infringement or misappropriation of any of the PEO Intellectual Property by
any third party, including any employee or former employee of the PEO
Business.
Section 4.16 Contracts. Section 4.16 of the Disclosure Schedule sets forth
a list, as of the date hereof, of each written Contract that, to the Knowledge
of PIE, is related to the PEO Business (other than (i) purchase orders in the
ordinary and usual course of business involving less than $1,000,000, (ii) sales
orders in the ordinary and usual course of business involving less than
$2,000,000, (iii) any Contract involving the payment of less than $500,000 in
the aggregate or that is terminable by the PEO Business without penalty or other
expense on 60 days' notice or less, (iv) confidentiality agreements entered into
in the usual course of business, (v) employment agreements covering Non-U.S.
Employees (other than contracts with key Non-U.S. Employees), (vi) trademark
agreements and (vii) service maintenance agreements in the ordinary and usual
course of business). Except for patent licenses, Section 4.16 of the Disclosure
Schedule does not omit any Contract
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(written or oral) that is material to the PEO Business. Except as set forth in
Section 4.16(ii) of the Disclosure Schedule, each Contract that is material to
the PEO Business as currently conducted is a valid and binding agreement of the
Philips Affiliate which is a party thereto and is in full force and effect. To
the Knowledge of PIE, there is no material default by the other party to or any
event, occurrence or circumstance which, upon the passage of time or the giving
of notice or both, would result in a material default under any Contract that is
material to the PEO Business as currently conducted, which default or potential
default has not been cured or waived.
Section 4.17 Brokers and Finders. Neither PIE nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection with
the Transaction or the other transactions contemplated in this Agreement.
Section 4.18 Customers and Suppliers. To the Knowledge of PIE, no material
customer or supplier of the PEO Business will cease or substantially reduce the
business conducted with the PEO Business after, or as a result of, the
consummation of the Transaction contemplated hereby.
Section 4.19 PEO Assets and PEO Liabilities.
(a) Except as set forth in Section 4.19(a) of the Disclosure Schedule, PIE
will duly transfer to the PEO Group, and as of the Closing Date, the PEO Group
will own, directly or indirectly, all right, title and interest in and to all of
the assets (the "PEO Assets") and will assume all of the liabilities of the PEO
Business (the "PEO Liabilities") prior to the Closing Date.
(b) Except for the Excluded Business and as set forth in Section 4.19(a)
of the Disclosure Schedule, the PEO Assets, together with any Transitional
Services contemplated hereby, comprise all of the assets necessary to conduct
the PEO Business as currently conducted and at Closing will include, without
limitation, all of the assets purchased pursuant to the Electro-Scan Purchase
Agreement. Section 4.19(b) of the Disclosure Schedule contains a list of
substantially all of the Employees to be transferred pursuant to this Agreement.
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Section 4.20 Shared Assets; Title to and Condition of Property.
(a) Section 4.20(a) of the Disclosure Schedule sets forth a list of (i)
shared facilities that are used in connection with the PEO Business and with
other operations of PIE or PIE's other Affiliates or (ii) services provided to
the PEO Business by PIE or any of PIE's other Affiliates.
(b) Section 4.20(b) of the Disclosure Schedule sets forth a list of the
Leased Real Property as of the date hereof. PIE or its Affiliates have, and at
Closing PEO Holdings will have, good title to, or with respect to the Leased
Real Property a valid and binding leasehold interest in, the property used in
the PEO Business, free and clear of all Encumbrances, except (i) as set forth in
Section 4.20(b) of the Disclosure Schedule, (ii) liens for Taxes, assessments
and other governmental charges not yet due and payable or due but not delinquent
or being contested in good faith by appropriate proceedings, (iii) original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the ordinary course of business, (iv) other liens
incurred in the ordinary course of business which, individually or in the
aggregate, do not secure liabilities of $250,000 or more, (v) with respect to
real property, easements, quasi-easements, licenses, covenants, rights-of-way,
zoning, building and other similar restrictions that are not material to the PEO
Business or to the operations or condition of the property so encumbered (all
items included in (i) through (v), together with any matter set forth in Section
4.20(b) of the Disclosure Schedule, are referred to collectively herein as the
"Permitted Encumbrances").
(c) The leases described on Section 4.20(b) of the Disclosure Schedule
constitute all of the leases under which PIE or its Affiliates holds a leasehold
interest in real estate that is used in the PEO Business. Except as set forth on
Section 4.20(b) of the Disclosure Schedule, the leases described thereon are in
full force and effect. PIE has made available for inspection locally by FEI
complete and accurate copies of each of the leases described on Section 4.20(b)
of the Disclosure Schedule and none of such leases has been modified in any
material respect, except to the extent that such modifications are disclosed by
the copies made available to FEI.
(d) Except as set forth on Section 4.20(d) of the Disclosure Schedule, the
uses for which the Leased Real Property are zoned do not restrict, or in any
manner impair, the use thereof for purposes of the PEO Business, as
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currently conducted, other than restrictions which, individually or in the
aggregate, would not materially impair the use of the Leased Real Property in
the PEO Business as currently conducted.
(e) All of the material machinery, equipment and other tangible personal
property and assets at or upon any Leased Real Property are in satisfactory
condition for use in the ordinary course of the PEO Business consistent with the
past practice of the PEO Business, and PIE or its Affiliates have performed
regular maintenance on such machinery, equipment and other tangible personal
property in accordance with their past practice (giving due account to the age
and length of use of the same, ordinary wear and tear excepted).
(f) PIE and its Affiliates have not received any notice of any violation
of any applicable zoning, building code or subdivision ordinance or other Laws,
or requirements relating to the operation of the Leased Real Property or any of
the other PEO Assets (including, without limitation, applicable occupational
health and safety laws and regulations) or any condemnation, eminent domain or
any other Proceedings with respect to or any of the PEO Assets, other than
violations or requirements which, individually or in the aggregate, would not
have a PEO Material Adverse Effect.
Section 4.21 Securities Act. PIE is acquiring the Shares for its own
account and not with a view to their distribution within the meaning of Section
2(11) of the Securities Act in any manner that would be in violation of the
Securities Act. PIE understands each certificate representing the Shares shall
bear legends in the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
Section 4.22 Press Releases. PIE has provided to FEI a copy of each press
release with respect to the PEO Business distributed by PIE or its Affiliates
since December 31, 1995.
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Section 4.23 Industrial Security Clearances. The PEO Business is not
required to have, and does not have, and at Closing the PEO Group will not be
required to have, any industrial security clearance relating to classified
information and none is needed for purposes of any Contract with any United
States government department, agency or instrumentality or, any subcontract
under such a Contract.
Section 4.24 Other Information. The information furnished by PIE in this
Agreement, the Annexes hereto, the Disclosure Schedule and in any certificate
executed or delivered pursuant hereto by or on behalf of PIE is not materially
false or misleading and does not contain a misstatement of a material fact or
omit to state any material fact required to be stated in order to make the
statements herein and therein not misleading.
Section 4.25 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, none of Philips,
PIE, any corporation in the PEO Group nor any other Person makes any other
express or implied representation or warranty on behalf of PIE or any
corporation in the Philips Group or the PEO Group.
ARTICLE V
---------
COVENANTS
---------
Section 5.1 Interim Operations. FEI covenants and agrees as to itself and
its Subsidiaries, and PIE covenants and agrees as to the PEO Group and the PEO
Business that after the date hereof and prior to the Closing (unless the other
party shall otherwise approve in writing, which approval shall not be
unreasonably withheld or delayed), except as otherwise expressly contemplated by
this Agreement or in connection with the Restructuring:
(a) its business and that of its Subsidiaries shall be conducted in the
ordinary and usual course and they and their Subsidiaries shall use their
respective best efforts to preserve their business organizations intact and
maintain their existing relations and goodwill with customers, suppliers,
distributors, creditors, lessors, employees and business associates;
(b) they shall not (i) issue, sell, pledge, dispose of or encumber any
capital stock owned by them in any of their Subsidiaries; (ii) amend their
Articles of Association, certificate of incorporation or by-laws; (iii) split,
combine or reclassify their outstanding shares
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of capital stock; (iv) declare, set aside or pay any dividend or make any
distribution payable in cash, stock or property in respect of any capital stock
other than dividends from its direct or indirect wholly-owned Subsidiaries; or
(v) repurchase, redeem or otherwise acquire, or permit any of their Subsidiaries
to purchase or otherwise acquire, any shares of their capital stock or any
securities convertible into or exchangeable or exercisable for any shares of its
capital stock;
(c) neither they nor any of their Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of their capital stock of any class or
any Voting Debt or any other property or assets (other than, in the case of FEI,
shares of Common Stock issuable without further action of FEI's board of
directors pursuant to options outstanding on the date hereof under the Stock
Option Plan); (ii) other than in the ordinary and usual course of business,
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other property or assets (including capital stock of any of their
Subsidiaries) or incur or modify any material indebtedness or other liability;
(iii) except as disclosed in budgets provided to the other party hereto prior to
the date hereof, make any commitments for, make or authorize any capital
expenditures other than in the ordinary and usual course of business and in
amounts less than $50,000 individually and $250,000 in the aggregate or, by any
means, make any acquisition of, or investment in, assets or stock of any other
Person or entity; or (iv) enter into any joint venture, merger or other similar
agreement with any Person;
(d) except for grants of options, consistent with FEI's past practice,
pursuant to its Stock Option Plan to purchase no greater than 5,000 shares of
Common Stock, neither they nor any of their Subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards under, amend or
otherwise modify, any Compensation and Benefit Plans, or increase the salary,
wage, bonus or other compensation of any employees except increases occurring in
the ordinary and usual course of business in accordance with established past
practice (which shall include normal periodic performance reviews and related
compensation and benefit increases);
(e) neither they nor any of their Subsidiaries shall settle or compromise
any material claims or litigation or, except in the ordinary and usual course of
business modify,
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amend or terminate any of their material Contracts or waive, release or assign
any material rights or claims;
(f) neither they nor any of their Subsidiaries shall make any Tax election
or permit any insurance policy naming it as a beneficiary or loss-payable payee
to be cancelled or terminated except in the ordinary and usual course of
business;
(g) neither they nor any of their Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
Section 5.2 Acquisition Proposals. Each of FEI and PIE agrees that neither
it nor any of its Affiliates nor any of the officers and directors of it or its
Affiliates shall, and that it shall direct and use its best efforts to cause its
and its Affiliates' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) with knowledge of the transactions contemplated hereby not to,
directly or indirectly, initiate, solicit, encourage or otherwise facilitate any
inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving,
or any purchase of all or any significant portion of the assets or any equity
securities of, it or any of its Subsidiaries that are the subject of this
Transaction (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal"). FEI and PIE each further agrees that neither it nor any
of its Affiliates nor any of the officers and directors of it or its Affiliates
shall, and that it shall direct and use its best efforts to cause its and its
Affiliates' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Affiliates) not to,
directly or indirectly, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any Person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent either FEI or PIE or their
respective boards of directors from, as applicable, (A) complying with Rule
14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal;
(B) providing information in response to a request therefor by a Person who has
made an unsolicited bona fide written Acquisition Proposal if the board of
directors receives from the Person so requesting such information an executed
confidentiality agreement on terms no less protective of the confidential
information of
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FEI or the PEO Business than those contained in the Confidentiality Agreement
(attached as Annex 5.2); (C) engaging in any negotiations or discussions with
any Person who has made an unsolicited bona fide written Acquisition Proposal;
or (D) in the case of FEI, recommending such an Acquisition Proposal to the
shareholders of FEI or in the case of PIE, entering into an agreement with
respect to such an Acquisition Proposal if and only to the extent that, in each
such case referred to in clause (B), (C) or (D) above, (i) the board of
directors of FEI or PIE, as the case may be, determines in good faith after
consultation with outside legal counsel that such action is necessary in order
for its directors to comply with their respective fiduciary duties under
applicable law and (ii) in each case referred to in clause (C) or (D) above, the
board of directors of FEI or PIE, as the case may be, believes in good faith
(after consultation with its financial advisor) that such Acquisition Proposal
is reasonably likely to be consummated, taking into account all legal, financial
and regulatory aspects of the proposal and the Person making the proposal and
would, if consummated, result in a transaction more favorable to FEI's
shareholders or to PIE and, as applicable, its Affiliates from a financial point
of view than the Transaction contemplated by this Agreement (any such more
favorable Acquisition Proposal being referred to in this Agreement as a
"Superior Proposal"). FEI and PIE each agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing. FEI and
PIE each agrees that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence of this Section 5.2 of
the obligations undertaken in this Section 5.2. FEI and PIE each agrees that it
will notify the other immediately if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers and
thereafter shall keep PIE or FEI, as the case may be, informed, on a current
basis, on the status and terms of any such proposals or offers and the status of
any such negotiations or discussions. FEI and PIE each also agrees that it will
promptly request each Person that has heretofore executed a confidentiality
agreement in connection with such Person's consideration of acquiring it or any
of its Subsidiaries that are the subject of this Transaction to return all
confidential information heretofore furnished to such Person by or on behalf of
FEI or PIE, as the case may be, or any Subsidiaries of either of them that are
the subject of this Transaction.
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Section 5.3 Information Supplied.
(a) FEI agrees, as to itself and its Subsidiaries that (i) none of the
information, except for such information to be provided by PIE pursuant to
Section 5.3(b) below, to be included or incorporated by reference in the proxy
statement (including any amendments or supplements thereto, the "Proxy
Statement") used in connection with the Shareholder's Meeting will, at the time
the Proxy Statement is published and mailed to FEI's Shareholders, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (ii) the Proxy
Statement will not, at the date of mailing to shareholders and at the times of
the Shareholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except to the extent any such untrue statement
is provided by PIE pursuant to Section 5.3(b) below or such omission is directly
caused by PIE's breach of its covenant in Section 5.3(b) below.
(b) PIE agrees to provide to FEI in writing all material information
required by Law to be included in the Proxy Statement that cannot reasonably be
provided by FEI or its Subsidiaries because such information is exclusively
within the control and Knowledge of PIE or its Affiliates (such information, the
"PIE Information"). PIE agrees, as to itself and its Affiliates, that none of
the PIE Information supplied by it for inclusion in the Proxy Statement will, at
the time the Proxy Statement is published and mailed to FEI's shareholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. PIE
further agrees to supply such additional PIE Information to FEI for inclusion in
the Proxy Statement if, in light of circumstances occurring subsequent to the
time the Proxy Statement is published and mailed, such additional PIE
Information is necessary in order that the PIE Information in the Proxy
Statement will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
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Section 5.4 Shareholders Meeting. Subject to fiduciary obligations under
applicable law, FEI will take, in accordance with applicable law and its
certificate and by-laws, all action necessary to convene a meeting of holders of
its Common Stock (the "Shareholders Meeting") as promptly as practicable to
consider and vote upon the approval and adoption of this Agreement, including
the Transaction and the issuance of Shares contemplated thereby and to approve
an increase in the number of shares of Common Stock authorized for issuance from
15 million to 21.5 million. Subject to fiduciary obligations under applicable
law, FEI's board of directors shall recommend such approval and shall take all
lawful action to solicit such approval.
Section 5.5 Filings; Other Actions; Notification.
(a) FEI shall promptly prepare and file with the SEC the Proxy Statement,
shall promptly respond to any SEC comments thereon and shall, as soon as
practicable thereafter, mail the Proxy Statement to the shareholders of FEI.
Subsequent to mailing the Proxy Statement, FEI shall promptly amend or
supplement the Proxy Statement, if the information in it is required by law to
be amended or supplemented or if such an amendment or supplement is otherwise
necessary, proper or advisable in light of the terms hereof. FEI shall use its
reasonable efforts to obtain all necessary state securities law or "blue sky"
permits and approvals required in connection with the Transaction contemplated
by this Agreement and will pay all expenses incident thereto. FEI shall also use
its best efforts to comply with all NASDAQ rules applicable to the Transaction
and shall use its best efforts to obtain the approvals necessary for the Shares
to be quoted on the NASDAQ National Market System.
(b) FEI and PIE shall cooperate with each other and use (and shall cause
their respective Affiliates to use) their respective reasonable efforts to take
or cause to be taken all actions, and do or cause to be done all things,
necessary, proper or advisable under this Agreement and applicable Laws to
consummate and make effective the Restructuring and the Transaction contemplated
by this Agreement as soon as practicable, including preparing and filing as
promptly as practicable all documentation to effect all necessary applications,
notices, petitions, filings and other documents and to obtain as promptly as
practicable all permits, consents, approvals and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental Entity in
order to consummate the Restructuring and the Transaction as contemplated by
this Agreement. Subject to applicable laws
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relating to the exchange of information, FEI and PIE shall have the right to
review in advance all the information relating to PIE or FEI, as the case may
be, and any of their respective Affiliates, that appear in any filing made with,
or written materials submitted to, any third party and/or any Governmental
Entity in connection with the Transaction and the other transactions
contemplated by this Agreement. In exercising the foregoing right, each of FEI
and PIE shall act reasonably and as promptly as practicable.
(c) FEI and PIE each shall, upon request by the other, furnish the other
with all information concerning itself and as applicable, its Affiliates,
directors, officers and, shareholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy Statement or any
other statement, filing, notice or application made by or on behalf of PIE, FEI
or any of their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Transaction and the transactions
contemplated by this Agreement.
(d) FEI and PIE each shall keep the other apprised of the status of
matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notices or other
communications received by PIE or FEI, as the case may be, or any of its
Subsidiaries, from any third party and/or any Governmental Entity with respect
to the Transaction contemplated by this Agreement. FEI and PIE each shall give
prompt notice to the other of any change that is reasonably likely to result in
an FEI Material Adverse Effect or PEO Material Adverse Effect, respectively.
Section 5.6 Access. Upon reasonable notice, and except as may otherwise be
required by applicable law, each of FEI and PIE shall (and shall cause its
Affiliates to) afford the other's officers, employees, counsel, accountants and
other authorized representatives ("Representatives") access, during normal
business hours throughout the period prior to the Closing, to the properties,
books, contracts and records of FEI and of the PEO Business and the PEO Group,
respectively, and, during such period, each shall (and shall cause its
Affiliates to) furnish promptly to the other all information concerning the
business, properties and personnel of FEI and the PEO Business, respectively, as
may reasonably be requested, provided that no investigation pursuant to this
Section shall affect or be deemed to modify any representation or warranty made
by FEI, PIE or the PEO Group, and provided, further, that the foregoing shall
not require FEI or PIE to permit any inspection, or to disclose any information,
that in the reasonable judgment of FEI or
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PIE, as the case may be, would result in the disclosure of any trade secrets of
third parties or violate any of its obligations with respect to confidentiality
if FEI or PIE, as the case may be, shall have used reasonable efforts to obtain
the consent of such third party to such inspection or disclosure. All requests
for information made pursuant to this Section shall be directed to a designated
officer of FEI or PIE, as the case may be, or such Person as may be designated
by such officer. All such information shall be governed by the terms of the
Confidentiality Agreement.
Section 5.7 Publicity. FEI and PIE shall consult with each other prior to
issuing any press releases or otherwise making public announcements with respect
to the Transaction contemplated by this Agreement and prior to making any
filings with any third party and/or any Governmental Entity (including any
interdealer quotation service) with respect thereto, except as may be required
by law or by obligations pursuant to any listing agreement with or rules of any
interdealer quotation service.
Section 5.8 U.S. Transferred Employees.
(a) Effective as of the Closing Date, FEI shall, or shall cause PEO-US to,
continue to employ all employees of the PEO Business on the U.S. payroll,
excluding expatriate employees (the "U.S. Transferred Employees"), in comparable
positions, and as of the Closing Date, FEI shall provide the U.S. Transferred
Employees with the same Compensation and Benefit Plans, programs and policies
and fringe benefits (including post-employment welfare benefits) provided from
time to time by FEI to its similarly situated employees, it being understood,
that notwithstanding the foregoing, FEI will maintain a severance plan for the
U.S. Transferred Employees that is no less favorable than the severance plan
provided to the employees of the PEO Business immediately prior to the Closing
Date. U.S. Transferred Employees shall be given credit for all service with the
PEO Business (or service credited by PENAC, PIE or its Subsidiaries) under (i)
all employee benefit plans, programs and policies, and fringe benefits of FEI or
its Subsidiaries in which they become participants for purposes of eligibility,
vesting, waiting periods and benefit accrual and (ii) severance plans and
vacation plans for purposes of calculating the amount of each U.S. Transferred
Employee's severance benefits or vacation entitlement.
(b) Effective as of the Closing Date, all U.S. Transferred Employees shall
cease to be covered by the employee welfare benefit plans covering them prior to
Closing, including plans, programs, policies and
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arrangements which provide medical and dental coverage, life and accident
insurance, disability coverage, and vacation and severance pay (collectively,
"Welfare Plans") except to the extent otherwise provided by the applicable
Welfare Plan. PIE or its Affiliates, excluding FEI and its Subsidiaries, shall
retain responsibility for providing employees of the PEO Business in the U.S.,
who terminated employment prior to the Closing Date, and who elected group
health coverage required by Section 4980B of the Code ("Continuation Coverage")
under the terms of the health plan covering such employees with such
Continuation Coverage. Effective as of the Closing Date, FEI shall perform the
duties required of a successor employer with respect to Continuation Coverage,
including, but not limited to, making such coverage available to the U.S.
Transferred Employees on and after the Closing Date upon their termination of
employment subsequent to the Closing Date to the extent required by law.
(c) PIE or its Affiliates, excluding FEI and its Subsidiaries, shall
retain responsibility for all Welfare Plan claims incurred by U.S. Transferred
Employees prior to the Closing Date (i) under any medical, dental or health
plans for treatment or service rendered prior to the Closing Date; (ii) under
any life insurance plans with respect to deaths occurring prior to the Closing
Date; and (iii) for any other payments or benefits owing prior to the Closing
Date under any other Welfare Plans. For purposes of this paragraph, a claim
shall be deemed to have been incurred on the date on which medical or other
treatment or service was rendered and not the date of the inception of the
related illness to injury or the date of submission of a claim related thereto.
(d) FEI shall include the U.S. Transferred Employees and their dependents
and beneficiaries in FEI's medical, dental or health plans as of the Closing
Date and FEI shall use its best efforts to cause such plans to waive any
preexisting condition limitations and to honor any deductible and out-of-pocket
expenses incurred by such U.S. Transferred Employees and their dependents and
beneficiaries under PIE's or its Affiliates' medical, dental or health plans
during the portion of the calendar year preceding the Closing Date, such
deductible and out-of-pocket expenses to be credited by FEI as though such
amounts had been paid under FEI Compensation and Benefit Plans, as soon as
practicable following the Closing Date.
(e) FEI and PIE agree to consult with each other in order to comply with
any applicable notice requirements under WARN or other similar Law of any
jurisdiction relating
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to any plant closing or mass layoffs or as otherwise required by any such Law.
Section 5.9 Other Employees.
(a) Philips shall as of Closing, to the extent permitted under country or
local law and regulations, provide for, at the expense of FEI, the continued
coverage of all employees of the PEO Business other than the U.S. Transferred
Employees (the "Non-U.S. Employees") under the applicable Compensation and
Benefit Plans of the Philips Group subsequent to Closing; provided, however, it
is expressly understood that (a) such local law and regulations, including any
laws and regulations directly governing any PEO Compensation and Benefit Plans
may change from time to time, (b) the PEO Compensation and Benefit Plans,
including the funding requirements and funding structure thereof and the
eligibility requirements for participation therein, may change or be changed by
Philips from time to time without prior consultation with, or consent of, the
participating corporations in the Philips Group, FEI or the PEO Group (it being
understood that no such change shall be made by Philips which would have an
adverse effect solely with respect to the Non-U.S. Employees) and (c) no
representation is made that any such changes will not occur or that any such
change will not require FEI to establish alternative Compensation and Benefit
Plans to cover the Non-U.S. Employees. FEI may discontinue participation in the
PEO Compensation and Benefit Plans, at any time, to the extent allowable under
local law and regulations. If any Non-U.S. Employees should cease to be covered
by the Pension Plan within the PEO Compensation and Benefit Plans, then the
pension reserves required for the accrued pension rights of the Employees
concerned, calculated in accordance with the then applicable valuation formulas
for such purposes for the plans concerned, will be transferred by the Philips
pension fund to the pension fund or insurance company indicated by FEI, provided
that all then applicable approvals have been obtained. Unless otherwise agreed
in writing, Non-U.S. Employees will not be eligible to continue their
affiliation with the PEO Compensation and Benefit Plans after Philips ceases to
Control FEI.
(b) FEI and PIE agree that PIE's only obligation with regard to Pension
Plans covering Non-U.S. Employees is that PIE shall fund, in accordance with the
valuation rules for such purposes for the plans concerned, at such times, prior
to or after the Closing Date, and in such amounts as are required in respect of
such employees' employment prior to the Closing Date. FEI and PIE agree that FEI
shall, prior
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to Closing, have reasonable access to the actuarial assumptions (including
relevant historical assumptions and contribution information) used to determine
the funded status of the Pension Plans within the PEO Compensation and Benefit
Plans.
(c) FEI and PIE agree that FEI's employees shall continue as employees of
FEI following the Closing Date with Compensation and Benefit Plans in the
aggregate that are not materially less favorable than FEI Compensation and
Benefit Plans in effect on the date hereof and that FEI's employees and
employees of PEO Holdings, its Subsidiaries and PEO-US, including in all cases
management employees, will, upon Closing, be eligible to participate in the
Stock Option Plan or an equivalent incentive compensation plan of FEI in
accordance with the terms of any such plan.
(d) FEI and PIE agree that all employees of the PEO Business in Japan
shall remain employees of the Philips entity that currently employs such
employees and, upon Closing and thereafter, shall be seconded by contract to
FEI.
Section 5.10 Expenses. FEI shall pay all charges and expenses incurred by
it, and PIE shall pay all charges and expenses incurred by it or its Affiliates,
in connection with the Transaction and any other transactions contemplated by
this Agreement, including without limitation the establishment of PEO Holdings
and the Restructuring.
Section 5.11 Takeover Statute. If any Takeover Statute is or may become
applicable to the Transaction or the other transactions contemplated by this
Agreement, each of FEI and PIE and its board of directors shall grant such
approvals and take such actions as are necessary so that such transactions may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise act to eliminate the effects of such statute or
regulation on such transactions.
Section 5.12 Insurance of PEO Business. To the extent that insurance
policies of the PEO Business will not survive the Closing, FEI and PIE shall
cooperate to procure effective upon the Closing, insurance policies with respect
to all material risks of the PEO Business, including, without limitation, fire
and casualty, general liability, business interruption, product liability, and
sprinkler and water damage insurance policies. Such insurance policies shall be
from reputable insurance carriers, shall provide full and adequate coverage for
all normal risks incident to the PEO Business and the properties and assets used
thereby,
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and shall be in character and amount at least equivalent to that carried by
Persons engaged in similar businesses and subject to the same or similar perils
or hazards.
Section 5.13 Distribution and Other Agreements.
(a) FEI and PIE agree that any distribution/agency agreements between the
PEO Business and Affiliates of PIE that are a part of the Excluded Business
shall be reduced to writing and entered into substantially in the form of the
Distribution Agreement attached as Annex 5.13(a) hereto. Section 5.13(a) of the
Disclosure Schedule contains a complete list of all countries where distribution
agreements will need to be entered into with respect to the Excluded Business.
(b) In any case where both the PEO Business and FEI are represented by
separate third party distributor/agents in the same country and it is legally
impossible to continue with those separate distributor/agents after the Closing
Date because of exclusivity obligations existing as of September 4, 1996 or a
non-cancelable agreement is in place, FEI and PIE agree to work out a practical
solution prior to the Closing Date.
(c) Immediately after the date of this Agreement, FEI and PIE will
approach all of the customers and distributors/agents whose contracts will be
assigned to FEI and other third parties who are party to an agreement with the
PEO Business, and whom FEI and PIE deem it appropriate to so approach, in order
to, where applicable, secure their consent to assignment of their agreements
insofar as they relate to the PEO Business. Should one or more of those
customers, distributors, agents or other third parties disagree with such
assignment or should they continue to hold any company belonging to the Philips
Group liable for the performance of such agreements, then FEI and PIE will enter
into specific arrangements for each particular case pursuant to which the
performance of such agreements after the Closing Date shall be for the risk and
account of FEI.
(d) FEI and PIE agree that Affiliates of Philips shall enter into
agreements, on customary terms, with the PEO Group to provide for the provision
of services necessary to the PEO Business, whether previously provided by such
Affiliates to the PEO Business or otherwise deemed necessary or desirable by
each of the parties hereto ("Transitional Services"). Section 5.13(d)(i) of the
Disclosure Schedule sets forth a representative list of the Transitional
Services. FEI and PIE agree that they shall enter into agreements substantially
in the form attached as Annex 5.13(d) hereto prior to Closing for those
Transitional Services listed in Section 5.13(d)(i) of the Disclosure Schedule
that FEI wishes to continue.
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Section 5.14 Secondary Offering. FEI and PIE hereby agree that within six
months after the Closing FEI and PIE shall cooperate with the shareholders of
FEI listed in Annex 5.14 (the "Selling Shareholders") in their sale to third
parties of up to 1 million shares of Common Stock in such a manner as will
effectively result in such Selling Shareholders receiving a reasonable price for
the shares sold without undue market discount. If, on the basis of information
from or presentations by the Selling Stockholders, the Board of Directors of FEI
is satisfied that registration under the Securities Act of the shares to be sold
is necessary or will meaningfully improve the marketability of the shares, FEI
will use all reasonable efforts to effect such registration in a timely manner.
In connection with any such secondary offering (i) the Selling Shareholders
shall pay their counsel fees and expenses and all underwriting commissions and
discounts for such secondary offering, (ii) the Selling Shareholders (pro rata
in proportion to the number of shares sold) and FEI shall split equally any
other out-of-pocket expenses of the secondary offering, (iii) no more than two
of FEI's officers shall be involved in any road show and related preparations
and each such officer need only participate in such road show and related
preparations for one week or less, and (iv) neither FEI nor the Selling
Shareholders shall request any form of indemnification from FEI, PIE or any
member of the Philips Group in connection with such secondary offering.
Section 5.15 Acht Property.
(a) Prior to Closing, FEI and PIE or, as appropriate, one of its
Affiliates, shall enter into a 10 year lease agreement with respect to the Acht
Property on terms (i) substantially equivalent to those reflected in the general
conditions of the model lease agreement approved by the Council of Real Property
of the real estate brokers association of The Netherlands or in any other form
agreed to by FEI and (ii) including the specific terms set forth in Section
5.15(a) of the Disclosure Schedule.
(b) FEI and PIE hereby agree that prior to the Closing Date, FEI shall
have the right to conduct a Phase I environmental audit of the Acht Property to
update the most recent environmental survey concerning the Acht Property,
provided, however, such environmental audit shall not include any soil sampling
or other invasive procedures.
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(c) FEI and PIE hereby agree that subsequent to Closing PIE shall use
reasonable efforts to assist FEI to obtain in FEI's name, or the name of any
corporation in the PEO Group, any use permits required for the operation of the
PEO Business on the Acht Property.
Section 5.16 Intellectual Property. FEI and PIE hereby agree to enter
into, or to cause their respective Affiliates to enter into, the following
arrangements with respect to Intellectual Property:
(a) Patents. (i) In respect of patents and patent applications owned or
controlled by Philips, Philips shall grant, subject to all prior commitments,
including those set forth in Section 5.16(a)(i) of the Disclosure Schedule, to
FEI, PEO-US, PEO Holdings and their then respective direct or indirect wholly
owned Subsidiaries a paid-up, royalty-free, non-exclusive, non-transferable
right and license, for so long as Philips shall Control FEI, to make, have made,
use, sell or otherwise dispose of any products now or hereafter manufactured by
or for FEI within the scope of the PEO Business or FEI's Business; provided,
however, that the licenses granted in this Section 5.16(a)(i) to any
Subsidiaries of FEI shall terminate when such Subsidiary shall cease to be a
wholly owned Subsidiary of FEI.
(ii) Upon termination of Philips' Control of FEI, the patents and patent
applications owned and controlled by Philips and originated from and having,
within the Philips Group, their principal commercial use in the PEO Business,
which are set forth in Section 5.16(a)(ii) of the Disclosure Schedule, shall be
transferred by or at the direction of Philips to FEI at FEI's expense subject to
(a) prior commitments, and (b) ordinary patent and patent application management
from the date hereof to the date of such transfer (which may include withdrawal,
cancellation or modification of patents and patent applications) and (c) the
Philips Group retaining a free right and license, including the right to
sublicense not within the scope of FEI's Business or the PEO Business, to make,
have made, use, sell or otherwise dispose of any products not in the scope of
FEI's Business or the PEO Business. Upon such termination, the Philips Group
will, subject to all prior commitments, also grant to FEI, PEO-US, PEO Holdings
and their then respective direct or indirect wholly owned Subsidiaries, on
commercially reasonable terms, a non-exclusive non-transferable license without
right to sublicense, under all other patents owned or controlled by Philips to
make, have made, use, sell or otherwise dispose of any products manufactured at
the date of termination, or for which a serious development is going on at the
date of termination,
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by or for FEI or by or for the PEO Group within the scope of FEI's Business or
the PEO Business; provided, however, that the licenses granted in this Section
5.16(a)(ii) to any Subsidiaries of FEI shall terminate when such Subsidiary
shall cease to be a wholly owned Subsidiary of FEI.
(iii) Philips and PIE shall not make and shall cause their Affiliates
not to make any commitments nor take any other action after the Closing Date
that would prevent Philips from fully performing the undertakings described in
clause (ii) above insofar as they relate to transfers or licensing of or under
patents or patent applications originated from and having within the Philips
Group their principal commercial use in the PEO Business.
(b) Wordmarks and Tradenames. (i) In respect of the wordmark "Philips" and
the Philips shield emblem, it is agreed between the parties that for as long as
Philips shall Control FEI, FEI shall be entitled to apply such wordmark and
emblem on its products and in any advertising of such products, but not in
combination with any other trademark. 60 days after FEI gains knowledge that
Philips no longer Controls or will Control FEI, FEI shall cease applying such
wordmark and emblem to any products and in any advertising and 120 days after
FEI gains knowledge that Philips no longer Controls or will Control FEI, FEI
shall not sell any products or distribute any advertising that utilizes such
wordmark and emblem; provided, however, that if within 60 days after FEI gains
knowledge that Philips no longer Controls or will Control FEI, FEI demonstrates
to PIE that ceasing to sell any products and distribute any advertising that
utilize such wordmark and emblem within the 120 days described above will cause
significant financial detriment to FEI, then FEI and PIE shall agree upon a
reasonable extension of such 120 day period taking into account such financial
detriment and Philips' corporate policy with respect to such wordmark and
emblem. For these purposes trademark license agreements shall be entered into at
Closing with FEI and each of the legal entities applying the trademarks to the
products. Should at any time Philips not Control the entity operating under any
such license, then such license agreement shall forthwith terminate with respect
to such entity.
(ii) Other trademarks and tradenames owned by Philips, insofar as only
used for products within the PEO Business, shall be transferred to the PEO Group
with the PEO Business, subject to prior commitments listed on Section
5.16(b)(ii) of the Disclosure Schedule.
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(c) Know-how. Subject to all prior commitments, which will not materially
affect the PEO Business as it is now conducted, the PEO Group shall have full
rights to all know-how generated within the PEO Business. The PEO Group shall
have the same rights as previously held by the PEO Business with respect to all
know-how generated by Philips or any of its Affiliates under written contract
expressly for the benefit of the PEO Business. The Philips Group will also have
the free right to continue to use all such know-how for its purposes, to the
extent such know-how is available within the Philips Group at the Closing Date
of the Transaction. For know-how utilized within the PEO Business but generated
within other parts of the Philips Group, FEI shall be granted, subject to all
prior commitments, a paid up royalty free non-exclusive non-transferable license
to use such know-how within the scope of FEI's Business and the PEO Business.
(d) Software. In cases where the PEO Business uses software either itself
or as product to be distributed (whether or not embedded in such product), and
such software is owned or co-owned by any company within the Philips Group,
other than any company transferred to PEO Holdings as part of the PEO Business,
Philips will grant to FEI a license in order to enable it to continue to use
such software. The license will be paid-up for the current use of the software
in its current release to the extent the PEO Business is not already paying a
license fee (by way of royalty or otherwise) for such use.
(e) Cross Licensing. After the Closing Date, FEI shall not be required,
without the approval of FEI's board of directors, to participate in any specific
cross licensing, pooling or other patent sharing or licensing agreement or
arrangement entered into by Philips covering patents and patent applications
generated in FEI's Business before the Closing Date or by FEI thereafter which
includes in the field of use to which such agreement or arrangement relates
FEI's Business or the PEO Business; provided, however, that FEI hereby agrees to
participate in broad scope cross license agreements, which are license
agreements that apply to several fields of activity of the parties thereto, of
which FEI's Business and the PEO Business are beneficiaries without requiring
that any field of use exclusion be included with respect to FEI's Business and
the PEO Business. FEI and PIE hereby agree that FEI's patents and patent
applications will be subject to the existing cross licensing, pooling and other
patent sharing or licensing agreements or arrangements of Philips which by their
terms would apply to FEI and that in respect of all of its and PEO Group's
patents and patent applications FEI will
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on the Closing Date and thereafter grant to Philips a fully paid up, royalty
free non-exclusive right and license, with right to sublicense not within the
scope of FEI's Business or the PEO Business, to make, have made, use, sell or
otherwise dispose of any product not in the scope of FEI's Business or the PEO
Business; provided, however, that with respect to broad scope license agreements
of which FEI's Business and the PEO Business are beneficiaries, Philips' right
to sublicense shall not be limited to fields of use outside the scope of FEI's
Business or the PEO Business.
(f) Zeiss Claim. FEI and PIE hereby agree that PIE shall not enter into
any agreement in respect of the Zeiss Claim that would prevent in any material
way FEI or any corporation in the PEO Group from engaging in FEI's Business or
the PEO Business.
Section 5.17 Right to Maintain Percentage Interest. FEI and PIE hereby
agree that PIE shall have the right to maintain its percentage interest of the
voting securities of FEI in accordance with the terms of this Section 5.17.
Until the first instance when Philips' ownership, whether direct or indirect, of
the outstanding voting securities of FEI drops below 40%, whenever FEI offers,
or has cumulatively offered since the last offer to PIE pursuant to this Section
5.17, more than 0.5% of the then outstanding voting securities to any Person,
FEI shall also offer PIE a reasonable opportunity to purchase from FEI at the
then market price such number of such voting securities as would enable Philips
to maintain its percentage of FEI's voting securities at up to 55% or such lower
percentage as is calculated by subtracting from 55 the product of (x) 100 and
(y) the number determined by dividing (a) the number of shares of FEI common
stock sold by PIE subsequent to the date hereof (less such number of shares of
FEI common stock bought subsequent to the date hereof other than pursuant to
this Section 5.17) by (b) the outstanding shares of FEI on the date of any sale
of shares by FEI that triggers Philips' right under this Section 5.17.
Section 5.18 Issuance of Additional Shares.
(a) FEI and PIE hereby agree that, subject to Section 5.18(b) below, upon
the issuance of any shares of Common Stock upon the exercise or conversion of
any Right Outstanding at Closing, FEI shall promptly issue to PIE such
additional shares of Common Stock (constituting Additional Shares) such that the
Shares constitute 55% of the Outstanding Common Stock.
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(b) FEI and PIE agree that FEI shall not be obligated to issue fractional
shares of Common Stock pursuant to Section 5.18(a) above. Any fractional shares
of Common Stock required to be issued under Section 5.18(a), without regard to
this Section 5.18(b), shall be added to all other fractional shares of Common
Stock previously not issued to PIE due to this Section 5.18(b) until the sum of
such fractional shares equals at least one share of Common Stock, at which time
such share of Common Stock shall be issued to PIE.
Section 5.19 Independent Directors. For a period ending two years after
the date of this Agreement, PIE shall, in any election of directors of FEI, vote
all shares of voting stock of FEI as to which PIE has voting discretion so as to
cause, to the extent possible, FEI's board of directors to have not less than
two directors who qualify as "Independent Directors" as that term is defined by
Section 6(a) of Part III to Schedule D of the By-laws of the National
Association of Securities Dealers, Inc. and PIE hereby agrees that it shall, in
the election of directors to occur at the annual meeting of FEI shareholders in
April 1997, vote all shares of voting stock of FEI as to which PIE has voting
discretion so as to cause, to the extent possible, two persons who shall not be
present or prior employees of any Affiliate of Philips other than FEI to be
elected directors of FEI.
Section 5.20 List of PEO Assets. FEI and PIE hereby agree that prior to
Closing, PIE shall provide FEI with the asset ledgers of the PEO Business,
referred to by the PEO Business as the "MAVA lists", as of a date no less recent
than September 30, 1996.
Section 5.21 Notice of Deconsolidation. FEI and PIE hereby agree that if
PIE should ever cease to have the benefit of the financial guarantee issued by
Philips to PIE pursuant to Section 403 of Book 2 of the Dutch Civil Code, PIE
shall promptly provide FEI notice of such event and, if PIE ceases to have the
benefit of such financial guarantee within 18 months following the Closing Date,
Philips shall take such action to provide a substitute financial guarantee to
the reasonable satisfaction of FEI, including, without limitation, by assigning
PIE's obligations under this Agreement to an Affiliate of Philips that is a
beneficiary of such financial guarantee pursuant to Section 403 of Book 2.
Section 5.22 Limitation on Equity Position. For one year following the
Closing, PIE agrees not to own, together with other members of the Philips
Group, more than 70% of
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the outstanding Common Stock, except with the consent of FEI as approved by a
majority of the directors of FEI who are not affiliates of Philips, or as
results from actions by FEI approved by such a majority.
ARTICLE VI
----------
CONDITIONS TO CLOSING
---------------------
Section 6.1 Conditions to the Obligations of FEI and PIE. The obligations
of the parties hereto to effect the Closing are subject to the satisfaction (or
waiver) prior to the Closing of the following conditions:
(a) Shareholders Approval. At the Shareholders Meeting, the shareholders
of FEI shall have voted to approve and adopt this Agreement, including the
Transaction and the issuance of Shares contemplated hereby and to approve an
increase in the number of shares of Common Stock authorized for issuance from 15
million to 21.5 million;
(b) HSR and Other Antitrust Laws. All required filings under the HSR Act
and other applicable Competition Laws shall have been made, all necessary
approvals have been obtained and any required waiting period under the laws
applicable to the transactions contemplated hereby shall have expired or been
earlier terminated. In the case of each country or territory (including, for
this purpose the Member States of the European Union) in which FEI or any of its
Affiliates or PIE or any of its Affiliates carries on business and in which the
implementation of the transactions contemplated by this Agreement will or might
give rise to any investigation or other proceeding under the Competition Laws of
that country or territory, neither this Agreement nor any of the material
transactions contemplated hereby nor any actual or potential consequences
thereof shall have been referred to any Governmental Entity having jurisdiction
under the Competition Laws of that country or territory for investigation or
review pursuant to those Competition Laws and no proceedings with respect
thereto shall have been initiated before any such Governmental Entity and be
continuing;
(c) No Injunctions. There shall not (i) be in effect any statute,
regulation, order, decree or judgment of any Governmental Entity which makes
illegal or which enjoins, prevents in any material respect or imposes any
burdensome condition or restriction as a consequence of the consummation of the
transactions contemplated by this Agreement or (ii) have been commenced or
threatened in
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writing, and shall be continuing, any action or proceeding by any Governmental
Entity which seeks to prevent, enjoin in any material respect or imposes any
burdensome condition or restriction as a consequence of the transactions
contemplated by this Agreement;
(d) Consents and Approvals. All Required Approvals shall have been made or
obtained and shall not have expired or been rescinded;
(e) Workers Council. All required employee consultation procedures shall
have been pursued to the extent that they can no longer lead to a substantial
change or delay in the transactions contemplated hereby;
(f) NASDAQ Listing. The Shares shall have been approved for quotation on
the NASDAQ National Market System; and
(g) Agreements. Agreements covering the Transitional Services listed in
Section 5.13(d)(i) of the Disclosure Schedule that FEI wishes to continue shall
have been executed and delivered by the parties thereto.
Section 6.2 Conditions to the Obligations of PIE. The obligation of PIE to
effect the Closing is subject to the satisfaction (or waiver by PIE) prior to
the Closing, of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of FEI contained herein that is qualified by materiality shall be
true and correct, and each of the representations and warranties of FEI that is
not so qualified shall be true and correct in all material respects, in each
case as if made as of the Closing (except that representations and warranties
that are made as of a specific date need be true or true in all material
respects, as the case may be, only as of such date), and PIE shall have received
a certificate to such effect dated the Closing Date and executed by a duly
authorized officer of FEI;
(b) Covenants. The covenants and agreements of FEI to be performed on or
prior to the Closing shall have been duly performed in all material respects,
and PIE shall have received a certificate to such effect dated the Closing Date
and executed by a duly authorized officer of FEI;
(c) Legal Opinions. PIE shall have received the opinion of Stoel Rives
L.L.P., dated as of the Closing Date, addressed to PIE substantially to the
effect set forth in Annex 6.2(c) hereto;
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(d) No Material Adverse Effect. Since December 31, 1995, FEI shall not
have suffered an FEI Material Adverse Effect and PIE shall have received a
certificate to such effect dated the Closing Date and executed by a duly
authorized officer of FEI;
(e) Duly Executed Proxy and Required Approval. FEI, shall have duly
obtained the necessary shareholder approval under the relevant Laws;
(f) FEI's Board of Directors and Officers. FEI shall have taken such
actions so that upon Closing, FEI's board of directors shall be composed of the
nine persons listed on Annex 6.2(f)(i) and, the officer positions at FEI shall
be held by the persons listed opposite such positions on Annex 6.2(f)(ii); and
(g) Receipt of Shares. PIE shall have received from FEI a certificate
evidencing the Definite Shares.
Section 6.3 Conditions to the Obligations of FEI. The obligation of FEI to
effect the Closing is subject to the satisfaction (or waiver) prior to the
Closing of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of PIE contained herein that is qualified by materiality shall be
true and correct, and each of the representations and warranties of PIE that is
not so qualified shall be true and correct in all material respects, in each
case as if made as of the Closing (except that representations and warranties
that are made as of a specific date need be true or true in all material
respects, as the case may be, only as of such date), and FEI shall have received
a certificate to such effect dated the Closing Date and executed by a duly
authorized officer of PIE;
(b) Covenants. The covenants and agreements of PIE to be performed on or
prior to the Closing shall have been duly performed in all material respects,
and FEI shall have received a certificate to such effect dated the Closing Date
and executed by a duly authorized officer of PIE;
(c) Legal Opinions. FEI shall have received the opinion, dated as of the
Closing Date, of each of a member of the law department of Philips and, as to
the binding and enforceable nature of this Agreement, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
addressed to FEI substantially to the effect set forth in Annex 6.3(c) hereto;
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(d) No Material Adverse Effect. Since June 30, 1996, the PEO Business
shall not have suffered a PEO Material Adverse Effect and FEI shall have
received a certificate to such effect dated the Closing Date and executed by a
duly authorized officer of PIE;
(e) Employment Agreements. Employment agreements in substantially the form
attached hereto as Annex 6.3(e) shall have been entered into with up to seven
key employees and management representatives of FEI;
(f) Cash Contribution to the PEO Assets. The PEO Assets shall include a
total of $8,000,000 in cash; and
(g) PEO Stock. FEI shall have received from PIE or its Affiliates the
conveyance of all right, title and interest in and to the PEO Stock by the due
execution of a notarial deed of transfer in accordance with Netherlands law and
shall have received the PEO-US Certificates.
ARTICLE VII
-----------
SURVIVAL; INDEMNIFICATION
-------------------------
Section 7.1 Survival. All of the representations and warranties of FEI and
PIE contained in this Agreement and all claims and causes of action with respect
thereto shall survive the Closing and shall terminate upon expiration of 18
months after the Closing Date, except that (i) the representations and
warranties of FEI and PIE contained in sections 3.10 and 4.10 of this Agreement
and all claims and causes of action with respect thereto shall survive the
Closing and terminate upon the expiration of five years after the Closing Date
and (ii) the representations and warranties of FEI and PIE contained in sections
3.14 and 4.14 of this Agreement and all claims and causes of action with respect
thereto shall survive the Closing and terminate upon the expiration of the
applicable statute of limitations, including any extensions or waivers thereof.
Section 7.2 Indemnification by PIE.
(a) PIE and Philips (only to the extent it expressly makes any
representations and warranties or covenants) hereby agrees that it shall
indemnify, defend and hold harmless FEI, its Affiliates, and, if applicable,
their respective directors, officers, shareholders, partners, attorneys,
accountants, agents and employees and their heirs, successors and assigns (the
"FEI Indemnified Parties") from, against and in respect of any damages,
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claims, losses, charges, actions, suits, Proceedings, deficiencies, Taxes,
interest, penalties, and reasonable costs and expenses (including without
limitation reasonable attorneys' fees, removal costs, remediation costs, closure
costs, fines, penalties and expenses of investigation and ongoing monitoring)
(collectively, the "Losses") imposed on, sustained, incurred or suffered by or
asserted against any of FEI Indemnified Parties, directly or indirectly relating
to or arising out of (i) subject to Section 7.2(b), any breach of any
representation or warranty made by PIE or Philips contained in this Agreement
and (ii) the breach of any covenant or agreement of PIE or Philips contained in
this Agreement.
(b) Except for any Losses with regard to the Excluded Business, PIE and
Philips shall not be liable to FEI Indemnified Parties for any Losses with
respect to the matters contained in Section 7.2(a)(i) except to the extent (and
then only to the extent) the Losses therefrom exceed $1 million.
Section 7.3 Indemnification by FEI.
(a) FEI hereby agrees that it shall indemnify, defend and hold harmless
PIE, its Affiliates and, if applicable, their respective directors, officers,
shareholders, partners, attorneys, accountants, agents and employees and their
heirs, successors and assigns (the "PIE Indemnified Parties" and, collectively
with FEI Indemnified Parties, the "Indemnified Parties") from, against and in
respect of any Losses imposed on, sustained, incurred or suffered by or asserted
against any of the PIE Indemnified Parties, directly or indirectly relating to
or arising out of (i) subject to Section 7.3(b), any breach of any
representation or warranty made by FEI contained in this Agreement and (ii) the
breach of any covenant or agreement of FEI contained in this Agreement.
(b) FEI shall not be liable to the PIE Indemnified Parties for any Losses
with respect to the matters contained in Section 7.3(a)(i) except to the extent
(and then only to the extent) the Losses therefrom exceed $1 million.
Section 7.4 Indemnification Procedures. With respect to third party
claims, all claims for indemnification by any Indemnified Party hereunder shall
be asserted and resolved as set forth in this Section 7.4. In the event that any
claim or demand ("Claim") for which FEI, PIE or Philips as the case may be (each
an "Indemnifying Party"), may be liable to any Indemnified Party hereunder is
asserted against or sought to be collected from any Indemnified Party
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by a third party, such Indemnified Party shall promptly, but in no event more
than 30 days following such Indemnified Party's receipt of written notice of
such Claim, notify the Indemnifying Party in writing of such Claim and the
amount or the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such Claim) (the "Claim
Notice"). The failure on the part of the Indemnified Party to give any such
Claim Notice within such 30 day period shall not relieve the Indemnifying Party
of any indemnification obligation hereunder unless, and only to the extent that,
the Indemnifying Party is materially prejudiced thereby. The Indemnifying Party
shall have 60 days from the personal delivery or mailing of the Claim Notice
(the "Notice Period") to notify the Indemnified Party (a) whether or not the
Indemnifying Party disputes the liability of the Indemnifying Party to the
Indemnified Party hereunder with respect to such Claim and (b) whether or not it
desires to defend the Indemnified Party against such Claim. Except as
hereinafter provided, in the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such Claim, the Indemnifying Party shall, at its sole
cost and expense, have the right to defend the Indemnified Party by appropriate
proceedings and shall have the sole power to direct and control such defense;
provided, that the Indemnifying Party shall not take any action which would
result in the creation, and shall promptly seek the removal, of any Encumbrance
on the property or assets of the Indemnified Party resulting from such Claim or
the litigation thereof. If any Indemnified Party desires to participate in any
such defense it may do so at its sole cost and expense. The Indemnified Party
shall not settle a Claim for which it is indemnified by the Indemnifying Party
without the written consent of the Indemnifying Party unless the Indemnifying
Party elects not to defend the Indemnified Party against such Claim. The
Indemnifying Party may, with the consent of the Indemnified Party (which consent
shall not be unreasonably withheld), settle or compromise any action or consent
to the entry of any judgment which (i) includes as a term thereof the delivery
by the claimant or plaintiff to the Indemnified Party of a duly executed written
unconditional release of the Indemnified Party from all liability in respect of
such action, which release shall be reasonably satisfactory in form and
substance to counsel for the Indemnified Party and (ii) would not adversely
affect the right of the Indemnified Party and its Affiliates to own, hold and
use their respective assets or operate businesses. Notwithstanding the
foregoing, (i) the Indemnified Party shall have the sole right to defend, settle
or compromise any Claim with respect to which it has waived its right to
indemnification pursuant to this
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Agreement and (ii) the Indemnified Party, during the period the Indemnifying
Party is determining whether to elect to assume the defense of a matter covered
by this section, may take such reasonable actions as it deems necessary to
preserve any and all rights with respect to the matter, without such actions
being construed as a waiver of the Indemnified Party's rights to defense and
indemnification pursuant to this Agreement. If the Indemnifying Party elects not
to defend the Indemnified Party against such Claim, whether by not giving the
Indemnified Party timely notice as provided above or otherwise, then the amount
of any such Claim, or, if the same be contested by the Indemnified Party, then
that portion thereof as to which such defense is unsuccessful (and the
reasonable costs and expenses pertaining to such defense) shall be the liability
of the Indemnifying Party hereunder, subject to the limitations set forth in
Section 7.2(b) or 7.3(b) hereof. To the extent the Indemnifying Party shall
direct, control or participate in the defense or settlement of any third party
claim or demand, the Indemnified Party will give the Indemnifying Party and its
counsel access to, during normal business hours, the relevant business records
and other documents, and shall permit them to consult with the employees and
counsel of the Indemnified Party. The Indemnified Party shall use its reasonable
efforts in the defense of all such claims.
Section 7.5 Indemnification Net of Taxes. (a) If the Indemnified Party
realizes during any year a reduction in Taxes which is attributable to any Loss
having occurred and the Indemnified Party shall have been indemnified for such
Loss, the Indemnified Party shall pay to the Indemnifying Party the actual
amount of such aggregate reduction in Taxes. Any payment due to the Indemnifying
Party pursuant to this Section 7.5(a) shall be paid within 30 days after the
earlier of the filing of any tax return or the making of any tax payment
reflecting the utilization by the Indemnified Party of a tax deduction or other
tax benefit attributable to any Loss.
(b) The amount of each Loss being indemnified for shall be increased by
any net Tax costs actually incurred by the Indemnified Party as a result of the
receipt of such amount, so that the Indemnifying Party shall pay to the
Indemnified Party, in addition to the amounts due with respect to such Loss, (i)
an amount equal to the net Taxes payable by the Indemnified Party as a
consequence of the receipt or accrual of the amount payable pursuant to Section
7.2 or 7.3 and (ii) an amount that reflects the net Tax consequences of the
receipt of the amount payable under Section 7.5(b)(i) and 7.5(b)(ii).
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ARTICLE VIII
------------
TERMINATION
-----------
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by agreement of FEI and PIE;
(b) by either FEI or PIE, by giving written notice of such termination to
the other party, if Closing shall not have occurred on or prior to March 31,
1997 (unless the failure to consummate the Closing by such date shall be due to
the failure of the party seeking to terminate this Agreement to have fulfilled
any of its obligations under this Agreement);
(c) by either FEI or PIE in writing, if there shall have occurred any
failure of any condition precedent to the obligations of the terminating party
and such failure is either not capable of being cured prior to the Closing or if
such failure is capable of being cured, is not cured within a reasonable amount
of time; provided, however, that the right to terminate this Agreement pursuant
to this Section 8.1(c) shall not be available to any party that has failed to
fully comply with its obligations hereunder in any manner that shall have
proximately caused such failure to satisfy any condition precedent;
(d) by PIE if FEI has materially breached any representation, warranty,
covenant or agreement contained in this Agreement and such breach is either not
capable of being cured prior to the Closing or if such breach is capable of
being cured, is not so cured within a reasonable amount of time; provided,
however, that termination pursuant to this Section 8.1(d) shall not relieve FEI
of liability for such breach or otherwise;
(e) by FEI if PIE or Philips has materially breached any representation,
warranty, covenant or agreement made by it in this Agreement and such breach is
either not capable of being cured prior to the Closing or if such breach is
capable of being cured, is not so cured within a reasonable amount of time;
provided, however, that termination pursuant to this Section 8.1(e) shall not
relieve PIE or Philips of liability for such breach or otherwise;
(f) by PIE if FEI's Common Stock is no longer quoted on the NASDAQ
National Market System;
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(g) (i) by FEI or PIE if the board of directors of FEI shall have
recommended to the shareholders of FEI, or agreed to enter into, a Superior
Proposal or (ii) by FEI or PIE if the board of management of PIE shall have
agreed to enter into a Superior Proposal;
(h) by FEI or PIE if the other party or any of the other Persons described
in Section 5.2 as affiliates, representatives or agents of the other party shall
take any of the actions that would be proscribed by Section 5.2 but for the
proviso therein allowing certain actions to be taken pursuant to clause (B), (C)
or (D) of the proviso under the conditions set forth therein.
(i) by PIE if the board of directors of FEI shall have withdrawn or
adversely modified its approval or recommendation of this Agreement or failed to
reconfirm its recommendation of this Agreement within five business days after a
written request by PIE to do so.
Section 8.2 Effect of Termination.
(a) Except as set forth in paragraph (b) below, in the event of the
termination of this Agreement in accordance with Section 8.1 hereof, this
Agreement shall thereafter become void and have no effect, and no party hereto
shall have any liability to the other party hereto or their respective
Affiliates, directors, officers or employees, except for the obligations of the
parties hereto contained in this Section 8.2 and in Sections 9.1, 9.7, 9.8, 9.9
and 9.11 hereof, the obligations contained in the Confidentiality Agreement and
except that nothing herein will relieve any party from liability for any breach
of this Agreement prior to such termination.
(b) In the event this Agreement is terminated by FEI or PIE pursuant to
Section 8.1(g)(i), FEI shall promptly pay to PIE all of the expenses of the
Philips Group incurred in connection with this Agreement, the Transaction, the
Restructuring (other than the contemplated sale and leaseback expenses
associated with the Acht Property) and any other transactions contemplated by
this Agreement. In the event this Agreement is terminated by FEI or PIE pursuant
to Section 8.1(g)(ii), PIE shall promptly pay to FEI all of the expenses of FEI
incurred in connection with this Agreement, the Transaction and any other
transactions contemplated by this Agreement.
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ARTICLE IX
----------
MISCELLANEOUS
-------------
Section 9.1 Notices. All notices or other communications hereunder shall
be deemed to have been duly given and made if in writing and if served by
personal delivery upon the party for whom it is intended, if delivered by
registered or certified mail, return receipt requested, or by a national courier
service, or if sent by telecopier, provided that the telecopy is promptly
confirmed by telephone confirmation thereof, to the person at the address set
forth below, or such other address as may be designated in writing hereafter, in
the same manner, by such person:
To PIE:
PHILIPS INTERNATIONAL B.V.
Building VP-1, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telephone: ▇▇-▇▇-▇▇▇▇▇▇▇
Telecopy: ▇▇-▇▇-▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇. ▇▇▇▇▇▇ Landau
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To FEI:
FEI COMPANY
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
With a copy to:
STOEL RIVES LLP
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Section 9.2 Amendment; Waiver. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by FEI and PIE, or in the case of a waiver,
by the party against whom the waiver is to be effective. No failure or delay by
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and,
except as otherwise provided herein, shall not be exclusive of any rights or
remedies provided by law.
Section 9.3 Assignment. (a) No party to this Agreement may assign any of
its rights or obligations under this Agreement without the prior written consent
of the other party hereto but PIE may assign all or any portion of its rights
and obligations pursuant to this Agreement to any other Person in the Philips
Group; provided, however, that from the date hereof until 18 months after the
Closing Date PIE shall not assign its rights and obligations hereunder to any
Person within the Philips Group that does not have a financial guarantee by
Philips pursuant to Netherlands law.
Section 9.4 Entire Agreement. This Agreement (including the Disclosure
Schedule and all Annexes hereto) contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral or written, with respect to such
matters, including the Letter of Intent, but excepting the Confidentiality
Agreement which will remain in
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full force and effect for the term provided for therein and other than any
written agreement of the parties that expressly provides that it is not
superseded by this Agreement.
Section 9.5 Fulfillment of Obligations. Any obligation of any party to any
other party under this Agreement, which obligation is performed, satisfied or
fulfilled by an Affiliate of such party, shall be deemed to have been performed,
satisfied or fulfilled by such party.
Section 9.6 Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than Philips, PIE, FEI, or their successors or
permitted assigns, any rights or remedies under or by reason of this Agreement.
Section 9.7 Public Disclosure. Notwithstanding anything herein to the
contrary, each of the parties to this Agreement hereby agrees with the other
party hereto that, except as may be required to comply with the requirements of
any applicable Laws, and the rules and regulations of each stock exchange or
interdealer quotation system upon which the securities of one of the parties or
an Affiliate thereof is listed or quoted, no press release or similar public
announcement or communication shall, if prior to the Closing, be made or caused
to be made concerning the execution or performance of this Agreement unless the
parties shall have consulted in advance with respect thereto.
Section 9.8 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby by FEI and its Subsidiaries and by PIE
and its Affiliates and Subsidiaries shall be borne by FEI and PIE, respectively.
Section 9.9 Disclosure Schedules. The disclosure of any matter in the
Disclosure Schedule, including any FEI Reports incorporated by reference
therein, pursuant to this Agreement shall be deemed to be a disclosure for all
purposes of this Agreement to which such matter could reasonably be expected to
be pertinent, but shall expressly not be deemed to constitute an admission by
FEI or PIE, or to otherwise imply, that any such matter is material for the
purposes of this Agreement.
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Section 9.10 Governing Law; Mediation and Arbitration.
(a) The Agreement shall be governed by the laws of the state of New York,
without giving effect to principles of conflicts of laws thereof.
(b) If a dispute arises out or relates to this contract, or the breach
thereof, and if that dispute cannot be settled through direct discussions, the
parties agree to first endeavor to settle the dispute in an amicable manner by
mediation administered by the American Arbitration Association under its
Commercial Mediation Rules, before resorting to arbitration. Thereafter, any
unresolved controversy or claim arising out of or relating to this contract, or
breach thereof, shall be settled by arbitration administered by the American
Arbitration Association in accordance with its International Arbitration Rules
and Title 9 of the U.S. Code and Philips hereby consents to the jurisdiction of
such arbitration to the extent required. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
(c) The number of arbitrators shall be three, one of whom shall be
appointed by each of Philips and FEI and the third of whom shall be selected by
mutual agreement, if possible, within 30 days of the selection of the second
arbitrator and thereafter by the administering authority and the place of
arbitration shall be New York, New York. The language of the arbitration shall
be English, but documents or testimony may be submitted in Dutch if a
translation is provided.
(d) The arbitrators will have no authority to award punitive damages or
any other damages not measured by the prevailing party's actual damages, and may
not, in any event, make any ruling, finding or award that does not conform to
the terms and conditions of the Agreement.
(e) Either party may make an application to the arbitrators seeking
injunctive relief to maintain the status quo until such time as the arbitration
award is rendered or the controversy is otherwise resolved. Either party may
apply to any court having jurisdiction hereof and seek injunctive relief in
order to maintain the status quo until such time as the arbitration award is
rendered or the controversy is otherwise resolved.
Section 9.11 Counterparts. This Agreement may be executed by the parties
on separate counterparts which, when taken together with counterparts signed by
each of the other
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parties, shall constitute a single fully executed Agreement which shall be as
fully binding and effective as if each party had executed a single signature
page.
Section 9.12 Headings. The heading references herein and the table of
contents hereto are for convenience purposes only, do not constitute a part of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
IN WITNESS WHEREOF, the parties have executed or caused this Agreement to
be executed as of the date first written above.
PHILIPS INDUSTRIAL ELECTRONICS
INTERNATIONAL B.V.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: Chief Executive Officer
By: /s/ Theo Sonnemanns
Name: Theo Sonnemanns
Title: Chief Financial Officer
FEI COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
For purposes of Sections 4.1, 4.2, 4.3,
4.6(d)(ii), 4.15, 5.8(b), 5.8(c), 5.9(a),
5.13(a),5.13(d), 5.16, 7.2 and 9.10 only:
PHILIPS ELECTRONICS N.V.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: General Secretary
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Annex 1.1(a)
Knowledge of FEI
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ A.M. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Annex 1.1(b)
Knowledge of PIE
▇▇▇▇▇▇▇ ▇. Whitward
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ van der Mast
Jan Vinkesteijn
▇▇. ▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ Voorn
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ van Oirschot
Annex 3.19(a)
Certain Shareholders of FEI
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (without the restrictions on transfer set forth in Section 5
of the Form of Voting Agreement with respect to 5000 shares to be obtained
pursuant to exercise of an option)
▇▇▇▇▇▇▇/▇▇▇▇▇▇ ▇▇▇▇▇▇ (without the restrictions on transfer set forth in
Section 5 of the Form of Voting Agreement)
Annex 5.14
Selling Shareholders
▇▇▇▇ ▇▇▇▇▇▇▇/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇/Children's Trust of the ▇▇▇▇▇▇▇ Irrevocable Trust
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇./▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Capital Consultants, Inc. and certain shareholders for whom Capital Consultants
has investment power.
Annex 6.2(f)(i)
Directors of FEI
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. Whitward
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ van der Mast
Annex 6.2(f)(ii)
Officers of FEI
Name Position
▇▇▇▇▇▇▇ ▇. Whitward Chief Executive Officer and President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Chairman of the Board of Directors
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Chief Financial Officer
Karel van der Mast