SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
SILICON VALLEY GROUP, INC.,
AND
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ COMPANY
Dated as of April 30, 1999
TABLE OF CONTENTS
Page
ARTICLE I THE ACQUISITION......................................................1
1.1 The Purchase and Sale........................................1
1.2 Consideration................................................2
1.3 Included Assets and Liabilities..............................2
1.4 Post-Closing Adjustment......................................3
1.5 Escrow Fund..................................................4
1.6 Environmental Package; Title Insurance and Survey............4
1.7 Closing......................................................5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇...................5
2.1 Organization of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities.........5
2.2 Capital Structure of the SEG Entities........................6
2.3 Authority....................................................6
2.4 Consents.....................................................7
2.5 Financial Statements.........................................7
2.6 No Undisclosed Liabilities...................................8
2.7 Absence of Changes...........................................8
2.8 Taxes.......................................................10
2.9 Title to Properties; Absence of Liens and Encumbrances......12
2.10 Intellectual Property.......................................13
2.11 Permits; Compliance; Restrictions...........................18
2.12 Litigation..................................................19
2.13 Brokers' and Finders' Fees..................................19
2.14 Employee Benefit Plans......................................19
2.15 Employees; Labor Matters....................................22
2.16 Environmental Matters.......................................22
2.17 Agreements, Contracts and Commitments.......................24
2.18 Customs.....................................................25
2.19 Customers and Suppliers.....................................25
2.20 Books and Records...........................................26
2.21 No Illegal Payments, Etc. ..................................26
2.22 Product Warranties; Defects; Liability......................26
2.23 Disclosure Complete.........................................27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SVG.............................27
3.1 Organization of SVG.........................................27
3.2 Authority; No Conflict......................................27
3.3 Brokers' and Finders' Fees..................................28
3.4 Financial Capability........................................28
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TABLE OF CONTENTS
(continued)
Page
ARTICLE IV CONDUCT PRIOR TO THE CLOSING DATE..................................28
4.1 Conduct of Business.........................................28
4.2 No Solicitation.............................................30
ARTICLE V ADDITIONAL AGREEMENTS...............................................31
5.1 Confidentiality; Access to Information......................31
5.2 Public Disclosure...........................................32
5.3 Legal Requirements..........................................32
5.4 Third Party Consents........................................32
5.5 Notification of Certain Matters.............................32
5.6 Best Efforts and Further Assurances.........................32
5.7 Regulatory Filings..........................................33
5.8 Covenant Not to Compete.....................................33
5.9 Employee Matters............................................33
5.10 Tax Matters.................................................34
5.11 Change of Names; License of use of "wj".....................38
5.12 Collection of Receivables...................................38
5.13 Intercompany Payables.......................................40
ARTICLE VI CONDITIONS TO THE ACQUISITION......................................40
6.1 Conditions to Obligations of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇................40
6.2 Conditions to the Obligations of SVG........................41
ARTICLE VII INDEMNIFICATION...................................................43
7.1 General Indemnification by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇..................43
7.2 General Indemnification by SVG..............................44
7.3 Limitation and Expiration...................................45
7.4 Indemnification Procedures..................................46
7.5 Escrow Fund; Appointment of Escrow Agent; Exclusive Remedy..48
7.6 Survival of Representations; Warranties and Covenants.......48
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER................................49
8.1 Termination.................................................49
8.2 Notice of Termination; Effect of Termination................49
8.3 Fees and Expenses...........................................50
8.4 Amendment...................................................50
8.5 Extension; Waiver...........................................50
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TABLE OF CONTENTS
(continued)
Page
ARTICLE IX GENERAL PROVISIONS.................................................51
9.1 Notices.....................................................51
9.2 Interpretation..............................................52
9.3 Counterparts................................................52
9.4 Entire Agreement; Third Party Beneficiaries.................52
9.5 Severability................................................52
9.6 Other Remedies..............................................53
9.7 Governing Law; Arbitration..................................53
9.8 Rules of Construction.......................................53
9.9 Assignment..................................................53
9.10 Definitions.................................................54
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INDEX OF EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Legal Opinion - WSGR
Exhibit C Form of Legal Opinion - HEWM
INDEX OF SCHEDULES
Schedule 1.3 Included Assets and Included Liabilities
Schedule 1.4 Valuation of Included Assets and Included Liabilities
Schedule 2.1 Organization
Schedule 2.2 Capital Structure
Schedule 2.4 Consents
Schedule 2.5 Financial Statements
Schedule 2.6 Undisclosed Liabilities
Schedule 2.7 Absence of Changes
Schedule 2.9 Real and Personal Property
Schedule 2.10 Intellectual Property
Schedule 2.14 Employee Benefit Plans
Schedule 2.16 Environmental Matters
Schedule 2.17 Contracts
Schedule 2.19 Customers and Suppliers
Schedule 2.22 Standard Terms and Conditions
Schedule 5.9 Employee Retention and Termination Matters
Schedule 5.11 Internet Sites of SEG Entities
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of April 30, 1999, by and between Silicon Valley Group, Inc., a
Delaware corporation ("SVG"), and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Company, a California
corporation ("▇▇▇▇▇▇▇-▇▇▇▇▇▇▇").
Except as otherwise set forth in this Agreement, capitalized terms
shall have the definitions set forth in Section 9.10.
RECITALS
A. The Board of Directors of each of SVG and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ believe it
is in the best interests of each company and their respective stockholders that
SVG, or a subsidiary or subsidiaries of SVG, acquire (the "Acquisition") the
Business by purchasing (i) all of the outstanding membership interests (the "SEG
LLC Interests") in a limited liability company (the "SEG LLC") wholly owned by
the SEG Sub (as defined below) immediately prior to the Closing, (ii) all of the
capital stock (collectively, the "International Subsidiary Capital Stock") of
the international subsidiaries of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ listed on Schedule 2.1
(collectively, the "SEG International Entities" and together with WJ
Semiconductor Equipment Group, Inc., a California corporation and wholly owned
subsidiary of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ (the "SEG Sub"), ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ International, a
California corporation and wholly owned subsidiary of SEG Sub ("▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
International"), and the SEG LLC, the "SEG Entities") and (iii) all of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ right, title and interest in and to the Scotts Valley
Property.
B. A portion of the cash otherwise payable to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ in
connection with the Acquisition shall be placed in escrow by SVG for purposes of
satisfying damages, losses, expenses and other similar charges which result from
breaches of the representations, warranties and covenants of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
contained herein.
C. In connection with the Acquisition, SVG and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ desire
to make the representations, warranties, covenants and other agreements set
forth in this Agreement.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE ACQUISITION
1.1 The Purchase and Sale. At the Closing (as defined in Section 1.7)
and subject to and upon the terms and conditions of this Agreement,
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall, and shall cause the SEG Sub to, sell and deliver to SVG
or its subsidiary (or, in the case of the Scotts Valley Property, SVG's
designated assignee), and SVG or its subsidiary (or, in the case of the Scotts
Valley Property, SVG's
designated assignee) shall purchase from the SEG Sub all of the outstanding SEG
LLC Interests, and from ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ the Scotts Valley Property and all of
the outstanding shares of the International Subsidiary Capital Stock, in each
case free and clear of all Liens (but in the case of the Scotts Valley Property,
subject to such Liens as shall not adversely impact the use, value, ability to
finance, marketability, transferability, leasing, or development of the Scotts
Valley Property). Notwithstanding the foregoing, the shares of stock in the SEG
International Entities held by nominees of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
International in accordance with applicable law shall be transferred by such
nominees to nominees of SVG for nominal consideration equal to the original
consideration each such nominee paid to first acquire such shares.
1.2 Consideration. In consideration for the sale of the SEG LLC
Interests, the Scotts Valley Property, and the SEG International Capital Stock,
SVG shall cause to be paid to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ the Adjusted Consideration (as
defined below). At the Closing, SVG shall cause to be paid to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or
SEG Sub, by check or wire transfer, a cash payment (the "Closing Cash Payment")
equal to $19,950,000. The total of the Closing Cash Payment plus the ▇▇▇▇▇▇▇
Money Payment already made by SVG to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ upon execution of the
Letter of Intent is herein referred to as the "Estimated Consideration," which
Estimated Consideration shall be subject to adjustment pursuant to Sections 1.3
and 1.4 below. The Estimated Consideration as adjusted pursuant to Sections 1.3
and 1.4 is herein referred to as the "Adjusted Consideration."
1.3 Included Assets and Liabilities.
(a) Prior to the Closing, the SEG LLC and the SEG
International Entities shall hold all of the Included Assets and Included
Liabilities, except the Scotts Valley Property which is held by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇.
Any Included Assets, except the Scotts Valley Property which will be held by
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ immediately prior to the Closing, and Included Liabilities held
by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or the SEG Sub, or any affiliate of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or SEG
Sub not constituting an SEG International Entity, as of the date of this
Agreement, shall be transferred to the SEG LLC or an SEG International Entity
effective on or prior to the Closing.
(b) As used in this Agreement, the "Included Assets" consists
of all of the assets referenced on Schedule 1.3 under the caption "Included
Assets" and explicitly excludes the "Excluded Assets," which Excluded Assets
include the assets set forth on Schedule 1.3 under the caption "Excluded
Assets." The "Included Liabilities" consists of all of the obligations and
liabilities referenced on Schedule 1.3 under the caption "Included Liabilities"
and explicitly excludes all other liabilities and obligations, including the
Excluded Liabilities as referenced on Schedule 1.3 under the caption "Excluded
Liabilities." The parties agree and acknowledge that the lists of Excluded
Assets and Excluded Liabilities on Schedule 1.3 are not intended to be, nor
shall be deemed to be, all inclusive.
(c) Notwithstanding anything in this Section 1.3 or in Section
1.4, SVG may elect not to assume certain payables (the "Unassumed Payables")
included in the Included Liabilities as of the Closing, in which case the
Included Liabilities as of the Closing shall not include such Unassumed Payables
for purposes of determining the Closing Net Assets pursuant to Section 1.4. In
such event,
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SVG shall advise ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ in writing of such Unassumed Payables on or
prior to the Closing, and shall pay to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ at Closing the dollar
amount of such Unassumed Payables, which amounts shall be added to the Closing
Cash Payment, and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall be liable to satisfy any such Unassumed
Payables.
1.4 Post-Closing Adjustment.
(a) The parties acknowledge that the Estimated Consideration
was based upon the values for the Included Assets and the Included Liabilities
as of December 31, 1998, as adjusted, as set forth on Schedule 1.4. The value of
Included Assets less the Included Liabilities as of December 31, 1998 of
$26,800,000 as set forth on Schedule 1.4, is herein referred to as the
"Preliminary Net Asset Value." Within thirty (30) days after the Closing Date,
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall deliver to SVG a certificate (the "Closing Certificate")
setting forth a schedule of and values for the Included Assets and Included
Liabilities (other than the Unassumed Payables), as of the Closing Date,
determined by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ based on GAAP, which certificate shall be signed
by the President or Vice President of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. The Closing Certificate
shall also include a determination of the consolidated net assets being acquired
by SVG hereunder (the "Closing Net Asset Value") of the Business, which shall be
equal to the value of the Included Assets minus the value of the Included
Liabilities (excluding the Unassumed Payables) as of the Closing Date, plus the
cash balances held by the SEG International Entities as of the Closing;
provided, however, that the value of the assets and liabilities, including the
equipment related to the AP Next product, set forth under the caption "Fixed
Valuation" on Schedule 1.4 as of the Closing Date shall be equal to the value of
such assets and liabilities as of December 31, 1998; and, provided, further,
that the inventory balances (net of reserves) determined in accordance with GAAP
as of the Closing Date shall be increased by $4,500,000. In addition, in order
to determine the value of the Closing Net Assets, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall,
immediately prior to the Closing or as soon as practicable thereafter, with the
reasonable assistance of SVG, perform a physical inspection and count of the
inventory and equipment included in the Included Assets to determine the value
of those assets as of the Closing Date. SVG shall observe the physical inventory
inspection and count.
(b) SVG shall have thirty (30) days from the date of receipt
of the Closing Certificate during which it may review the Closing Certificate.
Following completion of its review of the Closing Certificate, SVG shall deliver
to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ a written notice (the "SVG Closing Adjustment Notice")
stating either (i) that SVG agrees with the calculation of the Closing Net Asset
Value set forth in the Closing Certificate or (ii) that SVG does not agree with
such calculation and providing SVG's calculation of the Closing Net Asset Value.
The parties shall in good faith attempt to resolve any differences between
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ calculation of Closing Net Asset Value and SVG's calculation
of Closing Net Asset Value. If the parties do not resolve any such differences
within thirty (30) days of the delivery of the SVG Closing Adjustment Notice,
the parties shall engage the independent accounting firm of
PricewaterhouseCoopers, LLP, or if PricewaterhouseCoopers LLP is unable to
perform such services, a mutually agreed upon independent accounting firm of
national standing and reputation, to determine the Closing Net Asset Value. Such
determination by the independent accounting firm shall be final and binding on
the parties. The cost of the services of the independent accounting firm shall
be
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borne by the party whose determination of the Closing Net Asset Value is
furthest from the determination of the independent accounting firm, or if the
determination by such firm is equidistance from the parties' valuations, the
cost shall be split equally between the two parties. Each party shall cooperate
and shall use reasonable efforts to cause its officers, directors and employees
to cooperate with the other party and the independent accounting firm to
determine the Closing Net Asset Value in furnishing information, documents,
evidence and other assistance to the other party and the independent accounting
firm to facilitate the completion of the review and determination of the Closing
Net Asset Value. If the Closing Net Asset Value is less than the Preliminary Net
Asset Value, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall pay SVG the difference in cash within ten
(10) business days after the final determination (whether by mutual agreement
between the parties or by the independent accounting firm) of the Closing Net
Asset Value. If the Closing Net Asset Value is greater than the Preliminary Net
Asset Value, SVG shall pay ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ the difference in cash within ten
(10) business days after the final determination (whether by mutual agreement
between the parties or by the independent accounting firm) of the Closing Net
Assets. In no event shall any amounts owed to SVG by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ under this
Section 1.4(b) be paid out of the Escrow Fund.
1.5 Escrow Fund. At the Closing, SVG shall deliver, or shall cause to
be delivered, directly to an escrow agent to be selected prior to Closing (the
"Escrow Agent"), an amount in cash equal to $3,450,000 (the "Escrow Amount") to
be deducted from the Closing Cash Payment and held in an escrow fund pursuant to
the terms set forth herein and in an escrow agreement to be entered into by and
among SVG, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the Escrow Agent, substantially in the form
attached hereto as Exhibit A (the "Escrow Agreement"). Subject to the terms of
this Agreement, the Escrow Amount shall be available to satisfy any
indemnification obligations of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ pursuant to Article 7 for Claims
made on or prior to the Escrow Release Date and shall be paid out as provided in
Section 7.5 hereof and in the Escrow Agreement.
1.6 Environmental Package; Title Insurance and Survey. At the Closing,
for the convenience of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, SVG shall deliver, or shall cause to be
delivered, directly to the Environmental Consultant or the Environmental
Consultant's designee, an amount in cash equal to the amount required to
purchase the Environmental Package (the "Environmental Package Cost"); provided,
that the total Environmental Package Cost shall not exceed $3,200,000. The
parties hereto acknowledge that the Environmental Package Cost (subject to the
limitation set forth in the preceding sentence) is to be borne by
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and that SVG shall deduct the Environmental Package Cost from
the Closing Cash Payment. In addition, prior to the Closing, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
shall have obtained for the benefit of SVG or SVG's designee, as part of the
transfer of the Scotts Valley Property a CLTA Form 100 title insurance policy
(rev. 6/14/96) without a survey exception, insuring the Scotts Valley Property
for $14,500,000 (the "Title Policy"). The Title Policy shall remain in full
force and effect after the Closing, for the benefit of SVG or a party or parties
designated by SVG before the Closing. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall also obtain an ALTA
survey on the Scotts Valley Property. The cost of the Title Policy and a ALTA
survey on the Scotts Valley Property shall be shared equally by SVG and
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. All other costs associated with the transfer of the Scotts
Valley Property (including all closing costs and transfer taxes) shall be borne
by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. SVG agrees that any portion of the Environmental Package
Cost that is not paid to the Environmental Consultant (for example, any amounts
returned to SVG from any
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escrow established with the Environmental Consultant) shall be applied to the
completion of the tasks and services required to be completed or performed by
the Environmental Consultant or, failing that, shall be returned to
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. SVG and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall endeavor in good faith to work
out more specific arrangements regarding these matters by the Closing.
1.7 Closing. Unless this Agreement is earlier terminated pursuant to
Section 8.1, the closing of the Acquisition (the "Closing") shall take place as
promptly as practicable, but not earlier than the later of (a) five (5) Business
Days following satisfaction or waiver of the conditions set forth in Article 6
and (b) the next month-end closing for ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ to occur, at the offices
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, unless another place or time is agreed
to in writing by SVG and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. The date upon which the Closing
actually occurs is herein referred to as the "Closing Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ represents and warrants to SVG, subject to the
exceptions specifically disclosed in the disclosure schedules referencing the
appropriate section and paragraph numbers supplied by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ to SVG
dated as of the date hereof (the "▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Disclosure Schedules"), that
on the date hereof (except with respect to the SEG LLC, which representations
and warranties shall be effective as of the transfer of the Included Assets and
the Included liabilities held by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or the SEG Sub to the SEG LLC)
and as of the Closing Date as though made on the Closing Date as follows:
2.1 Organization of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities.
(a) Each of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities is a
corporation or limited liability company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation; has the
corporate or limited liability company power and authority to own, lease and
operate its assets and property and to carry on its business as now being
conducted and as proposed to be conducted; and is (or with respect to the SEG
LLC will be prior to and as of the Closing) duly qualified or licensed to do
business and is in good standing in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except where the failure to be so
qualified would not have a Material Adverse Effect on the SEG Entities and the
Business taken as a whole.
(b) Schedule 2.1 contains a true and complete list of the SEG
Entities, indicating the jurisdiction of incorporation of each SEG Entity and
the direct parent of each SEG Entity.
(c) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has delivered or made available to SVG a
true and correct copy of the organizational or charter documents or other
governing instruments of each of the SEG Entities, each as in existence and
amended to date, and each such instrument is in full force and effect.
▇▇▇▇▇▇▇-
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▇▇▇▇▇▇▇ shall deliver to SVG any and all additional organizational or charter
documents or other governing instruments of any SEG Entity that may become
effective prior to the Closing, or any amendments, supplements or restatements
of any organizational or charter documents or other governing instruments of any
SEG Entity in effect at any time prior to or as of the Closing. None of the SEG
Entities is in violation of any of the provisions of its organizational or
charter documents or other governing instruments.
2.2 Capital Structure of the SEG Entities. Schedule 2.2 sets forth the
capital structure of each of the SEG Entities. Immediately prior to Closing, all
of the outstanding SEG LLC Interests will be held by the SEG Sub. All of the
outstanding shares of SEG Sub are held directly by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. All the
outstanding shares of International Subsidiary Capital Stock are held directly
by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ International and, immediately prior to the Closing, will be
held by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. All the outstanding SEG LLC Interests and all the
outstanding shares of International Subsidiary Capital Stock are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, the organizational or charter documents or
other governing documents of such SEG Entity or any agreement or document to
which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity is a party or by which any of them is
bound. There are no options, warrants, equity securities, partnership interests
or similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any of
its subsidiaries is a party or by which it is or will be bound obligating any
SEG Entity to issue, deliver or sell, or cause to be issued, delivered or sold,
or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption
or acquisition, of any shares of capital stock, partnership interests or similar
ownership interests of any SEG Entity or obligating any SEG Entity to grant, or
enter into any such option, warrant, equity security, call, right, commitment or
agreement, except as contemplated hereunder. There are no voting trusts, proxies
or other agreements or understandings with respect to any equity security or
ownership interest of any class of any SEG Entity.
2.3 Authority.
(a) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has all requisite corporate power and
authority to enter into this Agreement and the Related Agreements to be entered
into by it pursuant hereto and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement or any Related
Agreement to be entered into by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ pursuant hereto and the
consummation of the transactions contemplated hereby or thereby, have been duly
authorized by all necessary corporate action on the part of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇,
pursuant to applicable laws. Each of this Agreement and the Related Agreements
to be entered into by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ pursuant hereto have been (or by the
Closing will be) duly executed and delivered by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and, assuming
the due authorization, execution and delivery by SVG, constitutes (or as of the
Closing will constitute) a valid and binding obligation of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇,
enforceable in accordance with its terms, except as enforceability may be
limited by laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. The execution and delivery of
this Agreement or any Related Agreement to be entered into by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
pursuant hereto does not, and the performance of this Agreement or any Related
Agreement to be entered into by
-6-
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ pursuant hereto will not, (i) Conflict with the Articles of
Incorporation or Bylaws of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or the equivalent organizational
documents of any of its subsidiaries, including the SEG Entities, (ii) subject
to the need to obtain the consents referenced in Schedule 2.4, Conflict with any
law, rule, regulation, order, judgment or decree applicable to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
or any of its subsidiaries, including the SEG Entities, or by which its or any
of their respective properties is bound or affected, or (iii) subject to the
need to obtain the consents referenced in Schedule 2.4, Conflict with or impair
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any of the properties or
assets of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any of its subsidiaries, including the SEG
Entities, pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any of its subsidiaries, including the SEG Entities, is a
party or by which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any of its subsidiaries, including the SEG
Entities, or its or any of their respective properties is bound or affected.
2.4 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality, foreign or
domestic ("Governmental Entity") or any third party (so as not to trigger a
Conflict), is required by or with respect to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity
in connection with the execution and delivery of this Agreement or any Related
Agreement or the consummation of the Acquisition by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, except for
such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the antitrust laws of
any foreign country, and such other consents, approvals, orders, authorizations,
registrations, declarations and filings which if not obtained or made would not
be material to the ability of the parties to consummate the Acquisition.
Schedule 2.4 sets forth all consents, waiver and approvals under any Contracts
or Leases to which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity is a party or by which such
entity is bound required to be obtained in connection with the consummation of
the Acquisition. Schedule 2.4 also identifies the Required Consents (as referred
to in Section 6.1(f) and 6.2(d)) (the "Required Consents") under the caption
"Required Consents."
2.5 Financial Statements. Schedule 2.5 sets forth the unaudited
consolidated balance sheet of the Business (the "SEG Balance Sheet") as of
December 31, 1998 (the "SEG Balance Sheet Date") and the related unaudited
statements of income and cash flows for the 12-month period then ended
(collectively, the "SEG Year-End Financials"). Schedule 2.5 also sets forth the
unaudited consolidated balance sheet of the Business as of March 26, 1999 and
the related unaudited statements of income for the three (3) month period then
ended (collectively, the "SEG Interim Financials" and together with the SEG
Year-End Financials, the "SEG Financials"). The SEG Financials are fairly stated
and have been prepared in accordance with GAAP applied on a basis consistent
throughout the periods indicated and consistent with each other except as
specifically stated therein. The SEG Financials present fairly the consolidated
financial condition and operating results of SEG Sub as of the dates and during
the periods indicated therein, subject to normal year-end adjustments, which
will not be material in amount or significance.
-7-
2.6 No Undisclosed Liabilities. Except for the Included Liabilities,
none of the SEG Entities has any liability, indebtedness, obligation, expense,
claim, deficiency, guaranty or endorsement of any type, whether accrued,
absolute, contingent, matured, unmatured or other (whether or not required to be
reflected in financial statements in accordance with generally accepted
accounting principles) (a "Liability"), and, to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge,
there is no reasonable Basis for any present or future action, suit or
proceeding, hearing, investigation, charge, complaint or demand against the
Business or any SEG Entity giving rise to any Liability, which individually or
in the aggregate, (i) has not been reflected in the SEG Balance Sheet, or (ii)
has not arisen in the ordinary course of the Business since the SEG Balance
Sheet Date consistent with past practices, or (iii) could result in a Material
Adverse Effect on the SEG Entities and the Business taken as a whole.
2.7 Absence of Changes. Except as otherwise contemplated herein, since
the SEG Balance Sheet Date, there has not been, occurred or arisen with respect
to any SEG Entity or the Business any:
(a) transaction except in the ordinary course of business as
currently conducted and consistent with past practices;
(b) amendments or changes to the organizational documents or
other charter documents of any SEG Entity;
(c) capital expenditures or commitments in the aggregate
exceeding $100,000;
(d) destruction of, damage to or loss of any Included Assets
or the Business (whether or not covered by insurance);
(e) labor trouble or claim of wrongful discharge or other
unlawful labor practice or action;
(f) change in accounting methods or practices (including any
change in depreciation or amortization policies or rates);
(g) revaluation of any of the Included Assets or the Excluded
Assets;
(h) inbound license agreement with respect to the Intellectual
Property of any third party or any assignment, sale or other transfer of, or
outbound license agreement with respect to, the SEG Intellectual Property with
any third party, except for nonexclusive outbound license agreements entered
into in the ordinary course of business consistent with past practice and in
substantially the form set forth on Schedule 2.7(i);
(i) agreement with any Person, other than SVG, providing for
the possible acquisition, transfer or disposition (whether by way of merger,
purchase of capital stock, purchase of assets or otherwise) of any material
portion of the capital stock or assets of another entity;
-8-
(j) sale, lease or other disposition of any of the Included
Assets or any creation of any Lien or other security interest in such Included
Assets;
(k) amendment or termination of any Contract, Lease, SEG
Permit, SEG Environmental Permit or license to which any SEG Entity is a party
or by which it or any of the Included Assets or Included Liabilities is bound;
(l) loan by any SEG Entity to any Person or entity, incurring
by any SEG Entity of any indebtedness, guaranteeing by any SEG Entity of any
indebtedness, issuance or sale of any debt securities of any SEG Entity or
guaranteeing of any debt securities of others;
(m) failure to pay when due any amounts owed to a creditor;
(n) except in the ordinary course of business consistent with
past practice, discharge or release of any Lien, or any payment or discharge of
any liability, other than current liabilities incurred in the ordinary course of
business consistent with past practice;
(o) commencement or notice or known threat of commencement of
any lawsuit or reasonable basis therefor, or proceeding against or investigation
of any SEG Entity, any officer or director of any SEG Entity (by reason of such
person's status as an officer or director of such SEG Entity) or any of their
Affiliates with respect to the Business;
(p) notice of any claim or potential claim of ownership by any
third party of the SEG Intellectual Property owned by or developed or created by
any SEG Entity or used in the Business or of infringement by any SEG Entity of
any third party's Intellectual Property;
(q) issuance or sale or contract to issue or sell, by any SEG
Entity of any of its shares of capital stock, or securities exchangeable,
convertible or exercisable therefor, or of any other of its securities;
(r) material change in the customary methods of operations of
any SEG Entity (including practices and policies relating to selling, purchasing
and marketing), or any material change in pricing or royalties set or charged by
any SEG Entity to its customers or licensees or, to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge,
in pricing or royalties set or charged by Persons who have licensed Intellectual
Property to any SEG Entity;
(s) any event or condition of any character that has had a
Material Adverse Effect on the SEG Entities and the Business, taken as a whole;
or
(t) negotiation or agreement by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG
Entity or any director, officer or employee thereof to do any of the things
described in the preceding clauses (a) through (s) (other than negotiations with
the SVG and its representatives regarding the transactions contemplated by this
Agreement).
-9-
2.8 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement,
"Tax" or, collectively, "Taxes," means (i) any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts; (ii) any liability for the payment of any amounts of
the type described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period; and (iii) any liability
for the payment of any amounts of the type described in clause (i) or (ii) as a
result of any express or implied obligation to indemnify any other person or as
a result of any obligations under any agreements or arrangements with any other
person with respect to such amounts and including any liability for taxes of a
predecessor entity.
(b) Tax Returns and Audits.
(i) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities as of the
Closing will have prepared and timely filed all required federal, state, local
and foreign returns, estimates, information statements and reports ("Returns")
relating to any and all Taxes concerning or attributable to the Included Assets,
the Business or the SEG Entities or their operations and such Returns are or
will be true and correct and completed in accordance with applicable law.
(ii) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities as of the
Closing (A) will have paid all Taxes required to be paid with respect to the SEG
Entities and will have withheld with respect to the employees of the Business or
the SEG Entities all federal, state and foreign income taxes, Federal Insurance
Contribution Act ("FICA"), Federal Unemployment Tax Act ("FUTA") and other Taxes
required to be withheld, and (B) will have accrued on the SEG Financials all
Taxes attributable to the periods covered by the SEG Financials and will not
have incurred any liability for Taxes for the period prior to the Closing other
than in the ordinary course of business.
(iii) The SEG Entities have not been, and will not be
prior to the Closing, delinquent in the payment of any Tax, nor is there any Tax
deficiency outstanding, assessed or proposed against the SEG Entities, nor have
the SEG Entities executed, nor will they execute prior to Closing, any waiver of
any statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of
the SEG Entities is presently in progress, nor have any of the SEG Entities been
notified of any request for such an audit or other examination.
(v) The SEG Entities had no liabilities as of March
26, 1999 for unpaid federal, state, local and foreign Taxes which have not been
accrued or reserved against in accordance
-10-
with GAAP on the SEG Interim Financials, whether asserted or unasserted,
contingent or otherwise, and the SEG Entities have not incurred any liability
for Taxes since that date other than in the ordinary course of business.
(vi) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and/or the SEG Entities have
made available to SVG or its legal counsel, copies of all foreign, federal,
state and local income and all state and local sales and use Returns that the
SEG Entities (or that are related to the Included Assets or the Business) have
filed for all periods since their inception.
(vii) There are (and immediately following the
Closing there will be) no Liens on the Included Assets relating to or
attributable to Taxes, other than Liens for Taxes not yet due and payable.
(viii) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has no knowledge of any Basis
for the assertion of any deficiency or claim for additional Taxes relating or
attributable to Taxes which, if adversely determined, would result in any Lien
on the Included Assets.
(ix) None of the Included Assets is treated as
"tax-exempt use property," within the meaning of Section 168(h) of the Code.
(x) None of the SEG Entities are, nor will any be on
or prior to the Closing, a party to any tax sharing, indemnification or
allocation agreement, nor does any SEG Entity owe any amount under any such
agreement.
(xi) No adjustment relating to any Return of the SEG
Entities (or related to the Included Assets or the Business) has been proposed
formally or informally by any tax authority to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity
or any representative thereof.
(xii) SEG LLC will, prior to and as of the Closing,
constitute a limited liability company formed under Delaware law, SEG Sub has
been (and will be) the sole owner of SEG LLC at all times following its
formation, and neither ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ nor SEG Sub has taken (nor will take) any
action inconsistent with the treatment of SEG LLC as a "disregarded entity"
under Treas. Reg. Section 301.7701-3(b)(1)(ii).
(xiii) The Included Assets transferred to SEG LLC by
SEG Sub constitute more than 80 percent of the tangible personal property held
or used in the course of the activities of SEG Sub requiring the SEG Sub to hold
a seller's permit for California sales tax purposes.
(c) Executive Compensation Tax. There is no contract,
agreement, plan or arrangement to which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or the SEG Entities are
a party as of the dates hereof, including but not limited to the provisions of
this Agreement, covering any employee or former employee of the SEG Entities (or
any SEG employees retained by SVG or an Affiliate of SVG following the Closing),
which, individually or collectively, could give rise to the payment of any
amount that if paid by SVG
-11-
would not be deductible by SVG following the Closing (or would be subject to an
excise tax following the Closing) pursuant to Sections 280G, 404 or 162(m) of
the Code.
2.9 Title to Properties; Absence of Liens and Encumbrances.
(a) Schedule 2.9 sets forth: (i) a list of all real property
currently owned, leased, subleased or otherwise occupied by any SEG Entity in
connection with the Business or included in the Included Assets (collectively,
"SEG Business Facilities"); and (ii) a list of all other leases, subleases or
other occupancy agreements between any SEG Entity as lessor and any third
parties with respect to any SEG Business Facilities, including (for both
subsection (i) and (ii)) the name of the lessee or sublessee, the name of the
lessor, the date of the lease, sublease or other occupancy agreement (each a
"Lease"), and each amendment thereto. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall have delivered SVG
correct and complete copies of the Leases listed on Schedule 2.9. With respect
to each property listed on Schedule 2.9:
(i) as to property subject to a Lease, the Lease
(and, as to a sublease or other similar occupancy agreement, the master Lease)
is in full force and effect, is valid and effective in accordance with its
terms, and there is not, under such Lease or master Lease, any existing default
or event of default (or event which with notice or lapse of time, or both, would
constitute a default) by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity, or to
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, any other party thereto;
(ii) as to property held subject to a Lease, upon
obtaining any required consents of the landlord, the Lease will continue to be
legal, valid, binding and enforceable against the SEG Entity that is a party
thereto and against the other party thereto, and will be in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby;
(iii) as to property subject to a Lease, to
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, no third party to the Lease has repudiated any
provisions thereof;
(iv) none of the SEG Entities has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in
any SEG Business Facilities, except as contemplated herein;
(v) the SEG Business Facilities have received all
material approvals of Governmental Entities (including licenses and permits)
required in connection with the operation thereof as conducted by any SEG Entity
and have been operated and maintained in accordance with applicable laws, rules,
codes, ordinances, covenants, conditions and restrictions and regulations in all
material respects, except to the extent that any such violation would neither
have a Material Adverse Effect on the SEG Entities and the Business taken as a
whole, the Included Assets or the Included Liabilities, nor prevent the
consummation of the transactions contemplated hereunder; and
(vi) all SEG Business Facilities are supplied with
utilities and other services necessary for the operation of said facilities.
-12-
(b) The SEG Entities have good, valid and marketable title to,
or, in the case of leased properties and assets, valid leasehold interests in,
all of the tangible properties and assets, real, personal and mixed, used in the
Business, including the Included Assets, free and clear of any Lien, except for
the Japanese Loans and any Lien which would not have an adverse impact on the
use, value, ability to finance, transferability, leasing, development or
marketability of such assets. The Included Assets are all those assets necessary
and sufficient for the operation of the Business as presently conducted.
(c) All material items of equipment owned or leased by any SEG
Entity used in the Business (the "Equipment") are in good operating condition,
regularly and properly maintained, subject to normal wear and tear.
(d) (i) there are no structural, electrical, mechanical,
plumbing, roof, paving or other defects in any improvements located on any SEG
Business Facilities as could, either individually or in the aggregate, have a
Material Adverse Effect on any SEG Entity and the Business taken as a whole,
(ii) there are no natural or artificial conditions upon any SEG Business
Facilities or any other facts or conditions which could, in the aggregate,
materially and adversely effect the transferability, ability to finance,
ownership, leasing, use, development, occupancy or operation of any such real
property, (iii) neither ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ nor the SEG Entities have received any
notice from any insurance company of any defects or inadequacies in any SEG
Business Facility or any part thereof which could materially and adversely
affect the insurability of such property or the premiums for the insurance
thereof, nor has any notice been given by any insurer of any such property
requesting the performance of any repairs, alterations or other work with which
compliance has not been made, (iv) there are no parties in possession of any
portion of any SEG Business Facilities, whether as tenants, trespassers or
otherwise, except the SEG Entities, (v) there currently exists water, sewer,
gas, electrical, telephone and telecommunication lines and surface drainage
systems serving each SEG Business Facility which have been licensed, permitted,
completed, installed and paid for and which are sufficient as licensed and
permitted to service the operations of each such property when fully occupied
and operational, and all such lines and systems serving each such property are
located in the right-of-way of public roadways to the boundary of the land on
which each such property is situated, and (vi) on the Closing Date there will be
no outstanding written or oral contracts made by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG
Entity for any alterations or improvements on or to any SEG Business Facility,
which have not been fully paid, and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall cause to be discharged
all mechanics' and materialmen's liens arising from any labor or materials
provided to, for, or at the request of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity and
furnished to such facility or facilities prior to the Closing Date.
2.10 Intellectual Property.
(a) Schedule 2.10(a) lists all Registered Intellectual
Property owned by, filed in the name of, assigned to or applied for by each SEG
Entity or ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and related to the Business (the "SEG Registered
Intellectual Property") and lists any proceedings or actions before any court or
tribunal (including the PTO or equivalent authority anywhere in the world)
related to any of the SEG Registered Intellectual Property or SEG Intellectual
Property and to which any SEG Entity or ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ is a party or of which
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has knowledge.
-13-
(b) As of the Closing, one or more of the SEG Entities: (i)
will be the exclusive owners of all Trademarks used in connection with the
operation or conduct of the Business, and (ii) will own exclusively, and have
good title to, all copyrighted works that are software or other products of the
SEG Entities or other works of authorship that any of the SEG Entities otherwise
purport to own.
(c) Each item of SEG Intellectual Property, including all SEG
Registered Intellectual Property listed in Schedule 2.10(a), and, to
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge all Intellectual Property licensed to an SEG Entity
by another Person, are free and clear of any Liens. As of the Closing, all SEG
Intellectual Property will be owned exclusively by an SEG Entity and none of the
SEG Entities will have (i) transferred ownership of, or (ii) authorized the
retention of any exclusive rights to use or joint ownership of, or (iii) except
pursuant to the licenses described in Schedule 2.10(j), granted any license or
right to use, any Intellectual Property that is or was SEG Intellectual
Property, to any Person other than an SEG Entity. The Included Assets include
all SEG Intellectual Property.
(d) The consummation of the transactions contemplated by this
Agreement will not cause or obligate SVG or any SEG Entity (i) to grant to any
third party any rights or licenses with respect to any Intellectual Property, or
(ii) pay any royalties or other amounts in excess of those being paid by any SEG
Entity prior to the Closing.
(e) The consummation of the transactions contemplated by this
Agreement will not result in the loss of, or otherwise adversely affect, any
ownership rights of any SEG Entity in any SEG Intellectual Property or result in
the breach or termination of any license, contract or agreement required to be
disclosed on Schedule 2.10(i) or Schedule 2.10(j).
(f) To the extent that any Intellectual Property has been
developed or created independently or jointly by any Person other than an SEG
Entity for which such SEG Entity has, directly or indirectly, paid, an SEG
Entity has a written agreement with such Person with respect thereto, and
thereby has irrevocably obtained worldwide, perpetual ownership of, and is the
exclusive owner of, all such Intellectual Property and all Intellectual Property
associated therewith, including the right to seek past and future damages with
respect thereto by operation of law or by valid assignment; and has received the
waiver of all such Persons with respect thereto of all non-assignable rights
including but not limited to all author or moral rights. All such agreements are
listed on Schedule 2.10(f) hereto.
(g) None of the SEG Intellectual Property was developed by or
on behalf of or using grants of any Governmental Entity.
(h) At Closing, the SEG LLC will own all Intellectual Property
of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities related to the Field. The SEG
Intellectual Property and the Intellectual Property licensed to the SEG Entities
pursuant to the licenses described on Schedule 2.10(j) will constitute as of the
Closing all the Intellectual Property used in and/or necessary to the conduct of
the Business as it was conducted during the one (1) year period prior to the
date of this Agreement, or as it currently is being conducted, or, to the
knowledge of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ with respect to the products, processes and
components of the SEG Entities which are currently under development and are
listed on
-14-
Schedule 2.10(h), as they are planned or contemplated to be conducted in the one
(1) year period commencing on the Closing Date, including (i) the making, using,
selling, marketing, or importing of any product or device, (ii) the practice of
any process, (iii) the offering or performance of any service, or (iv) the
copying, display, performance, distribution, creation of derivative works of, or
the exploitation of any device or work (collectively, the "Business
Activities"). All Intellectual Property used by the SEG Entities in connection
with the Business which was (i) developed by or is owned by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, or
(ii) which is directly licensed to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ by any Person other than an
SEG Entity and which is not licensed directly by such Person to an SEG Entity,
is the subject of a written license or sublicense agreement with an SEG Entity
disclosed on Schedule 2.10(j) that grants an SEG Entity the right to use any
such Intellectual Property.
(i) The contracts, licenses and agreements listed in Schedule
2.10(i) include all contracts, licenses and agreements pursuant to which any SEG
Entity has licensed any Intellectual Property to any Person. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has
provided true and correct copies of all such agreements, as amended, to SVG. No
SEG Entity is in breach of, nor has any SEG Entity failed to perform under any
of the foregoing contracts, licenses and agreements and, to the knowledge of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, no other party to any such contract, license or agreement is in
breach of or has failed to perform thereunder.
(j) Other than inbound "shrink-wrap" and similar publicly
available commercial binary code end-user licenses, the contracts, licenses and
agreements listed in Schedule 2.10(j) include all contracts, licenses and
agreements pursuant to which any Person has licensed any Intellectual Property
to any SEG Entity. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has provided true and correct copies of all
such agreements, as amended, to SVG. No SEG Entity is in breach of, nor has any
SEG Entity failed to perform under any of the foregoing contracts, licenses and
agreements and, to the knowledge of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, no other party to any such
contract, license or agreement is in breach of or has failed to perform
thereunder. No Person who has licensed Intellectual Property to any SEG Entity
has ownership rights or license rights to improvements made by such SEG Entity
in such Intellectual Property.
(k) Schedule 2.10(k) lists all currently effective contracts,
licenses and agreements pursuant to which any SEG Entity has agreed to, or
assumed, any obligation or duty to warrant, indemnify, reimburse, hold harmless,
guaranty or otherwise assume or incur any obligation or liability for any
losses, costs, or damages of any Person with respect to any Intellectual
Property or product or service of any SEG Entity.
(l) None of the SEG Entities has infringed or misappropriated
any Intellectual Property of any other Person or taken any action that would
constitute unfair competition or trade practices under the laws of any
jurisdiction. Following the Closing, none of the activities of the Business when
conducted by SVG or the SEG Entities in substantially the same manner as it
currently is conducted or is contemplated to be conducted, including but not
limited to all Business Activities of the SEG Entities, will infringe or
misappropriate any Intellectual Property of any Person (including but not
limited to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇), or constitute unfair competition or trade practices
under the laws of any jurisdiction. None of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ nor any SEG Entity
has received written notice from any Person
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claiming that any SEG Entity has infringed or misappropriated or is infringing
or misappropriating any Intellectual Property of any Person or has taken any act
that constitutes unfair competition or trade practices under the laws of any
jurisdiction (nor does ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity have knowledge of any
Basis therefor).
(m) Each item of SEG Registered Intellectual Property is valid
and subsisting (it being understood that the reference to validity is not
intended to constitute a representation relating to whether or not the
Intellectual Property in question infringes another Person's Intellectual
Property), and all necessary registration, maintenance and renewal fees in
connection with each such item have been paid and all necessary documents and
certificates in connection with such SEG Registered Intellectual Property have
been filed with the relevant patent, copyright, trademark or other authorities
in the United States and the foreign jurisdiction in which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or an
SEG Entity has chosen to file, for the purposes of maintaining such Registered
Intellectual Property. There are no actions that must be taken by
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity within ninety (90) days of the Closing Date,
including the payment of any registration, maintenance or renewal fees or the
filing of any responses to PTO office actions, documents, applications or
certificates for the purposes of maintaining, perfecting or preserving or
renewing any SEG Registered Intellectual Property. For any SEG Intellectual
Property and each product or service of any SEG Entity that constitutes or
includes a copyrightable work or Mask Work, such SEG Entity has registered the
copyright in the latest version of such work with relevant Governmental
Entities, including the U.S. Copyright Office. In each case in which an SEG
Entity has acquired any Intellectual Property from any Person, such SEG Entity
has obtained a valid and enforceable assignment sufficient to irrevocably
transfer all rights in such Intellectual Property (including the right to seek
past and future damages with respect thereto) to such SEG Entity and, to the
maximum extent provided for by, and in accordance with, applicable laws and
regulations, such SEG Entity has filed each such assignment with the relevant
Governmental Entity, including the PTO, the U.S. Copyright Office, or their
respective equivalents in any relevant foreign jurisdiction, as the case may be.
No SEG Entity has claimed "Small Entity" status or other particular status in
the application for registration of any Intellectual Property, which claim of
status was not at the time made, or which has since become, inaccurate or false
or that will no longer be true and accurate as a result of the transactions
contemplated hereunder.
(n) There are no contracts, licenses or agreements between any
SEG Entity and any other Person or between ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and any other Person
with respect to SEG Intellectual Property under which any SEG Entity or
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has given or received any written notice of any dispute
regarding the scope of such agreement, or performance under such agreement
including with respect to any payments to be made or received by any SEG Entity
thereunder.
(o) To ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, no Person is infringing or
misappropriating any SEG Intellectual Property. None of the SEG Entities or
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has made or asserted, or to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, has at
any time in the past had any Basis for asserting, any claim of violation or
infringement of any SEG Intellectual Property.
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(p) Each SEG Entity has taken all steps reasonable under the
circumstances to protect the confidentiality and trade secret status of any
material confidential information of such SEG Entity and knows of no Basis on
which it could be claimed that an SEG Entity has failed to protect the
confidentiality of its material confidential information or failed to protect
any confidential information of any Person other than an SEG Entity to the
fullest extent required by any agreement or other arrangement by which such SEG
Entity is or was bound and which relates to such information.
(q) All current and former employees, consultants and
contractors of the SEG Entities have entered into a valid and binding written
agreement with an SEG Entity sufficient to vest title in such SEG Entity of all
Intellectual Property created by such employee, consultant or contractor in the
scope of his, her or its employment or relationship with such SEG Entity.
(r) No SEG Intellectual Property or product, service or
Business Activity of any SEG Entity is subject to any proceeding or outstanding
decree, order, judgment or settlement agreement or stipulation to which
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity is a party or of which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any
SEG Entity has knowledge that restricts in any manner the use, transfer or
licensing thereof by any SEG Entity or may affect the validity, use or
enforceability of such SEG Intellectual Property.
(s) No (i) product, service or publication of an SEG Entity,
(ii) material published or distributed by an SEG Entity, or (iii) conduct or
statement of an SEG Entity constitutes obscene material, a defamatory statement
or false advertising or otherwise violates any similar applicable law or
regulation.
(t) To the extent used in accordance with their intended
purpose as set forth in any manuals or materials (as amended or supplemented)
delivered in connection therewith, all of the products, as upgraded, of the SEG
Entities (including products currently under development) will accurately
record, store, process, calculate and present calendar dates falling on and
after (and if applicable, spans of time including) January 1, 2000, and will
accurately calculate any information dependent on or relating to such dates in
the same manner, and with the same functionality, data integrity and
performance, as such products record, store, process, calculate and present
calendar dates on or before December 31, 1999, or calculate any information
dependent on or relating to such dates (collectively, "Year 2000 Compliant").
All of the products of each SEG Entity (i) will lose no functionality with
respect to the introduction of records containing dates falling on or after
January 1, 2000 and (ii) will be operable without error with other products used
and distributed by SVG that may deliver records to the products of such SEG
Entity or receive records from the products of each SEG Entity, or interact with
the products, including but not limited to back-up and archived data, provided
that such other products are also Year 2000 Compliant. Set forth on Schedule
2.10(t) is a true and correct statement of the extent to which the internal
computer and technology products and systems of each SEG Entity are Year 2000
Compliant. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has taken all actions represented in such statement
to have been taken by it.
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(u) All SEG Intellectual Property will be fully transferable,
alienable or licensable by the SEG Entity owning such Intellectual Property or
SVG after Closing without restriction and without payment of any kind to any
third party.
(v) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has no knowledge of any facts or
circumstances that would render any SEG Intellectual Property invalid or
unenforceable. Without limiting the foregoing, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ does not know of
any information, materials, facts, or circumstances, including any information
or fact that would constitute prior art, that would render any of the SEG
Registered Intellectual Property invalid or unenforceable, or would adversely
affect any pending application for any SEG Registered Intellectual Property and
none of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ nor any SEG Entity has misrepresented, or failed to
disclose, or has any knowledge of any misrepresentation or failure to disclose,
any fact or circumstance in any application for any SEG Registered Intellectual
Property that would constitute fraud or a misrepresentation with respect to such
application or that would otherwise affect the validity or enforceability of any
SEG Intellectual Property.
(w) None of the Intellectual Property sold to Applied
Materials, Inc. by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or the SEG Sub is necessary to, or would be
infringed by any operations of the SEG Entities in the Field.
(x) At the Closing, as between ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG
LLC, all Intellectual Property related to the Field will be owned by the SEG
LLC.
(y) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has not entered into any "Additional
Agreements" with Semiconductor Leading Edge Technologies, Inc. (as such term is
defined in the agreements between ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and such company which are
disclosed in ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ Disclosure Schedules).
(z) Except for the licenses granted by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ in the
"Applied Transaction Agreements" (as such term is defined in Schedule 1.3),
neither ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ nor any SEG Entity has granted to Applied Materials,
Inc. any licenses to or any other rights to or under any of the agreements
described in Schedules 2.10(i) and 2.10(j).
2.11 Permits; Compliance; Restrictions.
(a) The SEG Entities hold all material permits, licenses,
variances, exemptions, orders and approvals from Governmental Entities required
for the operation of the Business (collectively, the "SEG Permits"). The SEG
Entities are in material compliance with the terms of the SEG Permits.
(b) None of the SEG Entities is in conflict with, or in
default or violation of (i) any law, rule, regulation, order, judgment or decree
applicable to any SEG Entity or by which any SEG Entity or any of their
respective properties is bound or affected, or (ii) any material note, bond,
mortgage, indenture, contract, agreement, lease, license, SEG Permit, franchise
or other instrument or obligation to which any SEG Entity is a party or by which
any SEG Entity or its or any of their respective properties is bound or
affected. No investigation or review by any Governmental Entity is pending or,
to
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▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, threatened against any SEG Entity, nor has any
Governmental Entity indicated an intention to conduct the same.
(c) There is no agreement (noncompete or otherwise),
commitment, judgment, injunction, order or decree to which any SEG Entity is a
party or otherwise binding upon any SEG Entity which has or may have the effect
of prohibiting or impairing any business practice of the SEG Entities, any
acquisition of property (tangible or intangible) by any SEG Entity or the
conduct of the Business. No SEG Entity has entered into any agreement under
which any SEG Entity is restricted from selling, licensing, distributing or
otherwise exploiting any of the SEG Intellectual Property or products to or
providing services to, customers or potential customers or any class of
customers, in any geographic area during any period of time or in any segment of
the market.
2.12 Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation pending against any SEG Entity or with respect to
the Business, or as to which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity has received any
notice of assertion nor, to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, is there a threatened
action, suit, proceeding, claim, arbitration or investigation against any SEG
Entity or with respect to the Business. None of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG
Entity is aware of any Basis for any action, suit, proceeding, claim,
arbitration or proceeding of the type described in the preceding sentence, nor
do any of them have any knowledge of any unasserted claim, the assertion of
which is likely, and which, if asserted, will seek damages, an injunction or
other legal, equitable, monetary or nonmonetary relief against any SEG Entity.
To ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, no Governmental Entity has at any time
challenged or questioned the legal right of the SEG Entities to manufacture,
offer or sell any of their products in the present manner or style thereof.
2.13 Brokers' and Finders' Fees. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
2.14 Employee Benefit Plans.
(a) The Schedule 2.14 contains an accurate and complete list
of each material plan, program, policy, practice, contract, agreement or other
arrangement providing for compensation (including consulting fees), severance,
termination pay, performance awards, stock or stock-related awards, fringe
benefits or other employee benefits or remuneration of any kind, whether formal
or informal, written or otherwise, funded or unfunded and whether or not legally
binding, including without limitation, each "employee benefit plan" within the
meaning of Section 3(3) of ERISA, which is or has been maintained, contributed
to, or required to be contributed to (i) by any SEG Entity, (ii) by
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ for the benefit of any SEG Entity, (iii) by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or
(iv) any trade or business which is under common control with ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
within the meaning of Section 414 of the Code (an "ERISA Affiliate") for the
benefit of any current, former, or retired employee, officer, or director of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any ERISA Affiliate whose principal responsibilities are to
provide services to any SEG Entity (the "SEG Employee Plans"), together with a
schedule of all liabilities, whether or not accrued, under each such SEG
Employee Plan. None of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ nor any SEG Entity has a plan
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or commitment, whether legally binding or not, to establish any new SEG Employee
Plan, to modify any SEG Employee Plan (except to the extent required by law or
to conform any such SEG Employee Plan to the requirements of any applicable law,
in each case as previously disclosed to SVG in writing, or as required by this
Agreement), or to enter into any SEG Employee Plan, nor does it have any
intention or commitment to do any of the foregoing.
(b) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has provided to SVG (i) correct and
complete copies of all material documents embodying or relating to each SEG
Employee Plan including without limitation all amendments thereto, written
interpretations thereof and corporate actions relating thereto; (ii) the most
recent annual actuarial valuations, if any, prepared for each SEG Employee Plan;
(iii) the three most recent annual reports (Series 5500 and all schedules
thereto), if any, required under ERISA or the Code in connection with each SEG
Employee Plan or related trust; (iv) if the SEG Employee Plan is funded, the
most recent annual and periodic accounting of SEG Employee Plan assets; (v) the
most recent summary plan description together with a summary of material
modifications thereto, if any, required under ERISA with respect to each SEG
Employee Plan; (vi) all IRS determination letters, prior notification letters
and rulings relating to SEG Employee Plans and copies of all applications and
correspondence to or from the IRS or the Department of Labor (the "DOL") with
respect to any SEG Employee Plan; (vii) all material agreements and contracts
relating to each SEG Employee Plan, including but not limited to, trust
agreements, administration service agreements, group annuity contracts and group
insurance contracts; (viii) all communications material to any Employees
relating to any SEG Employee Plan and any proposed SEG Employee Plans, in each
case, relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any material liability to any SEG Entity; and (ix)
all registration statements and prospectuses prepared in connection with each
SEG Employee Plan.
(c) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and each SEG Entity has performed in all
material respects all obligations required to be performed by it under, is not
in default or violation of, and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has no knowledge of any default
or violation by any other party to each SEG Employee Plan, and each SEG Employee
Plan has been established and maintained in all material respects in accordance
with its terms and in compliance with all applicable laws, statutes, orders,
rules and regulations (including any applicable exemptions thereto), including
but not limited to ERISA or the Code; (ii) each SEG Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code has either received a favorable determination
letter with respect to each such Plan from the IRS or has remaining a period of
time under applicable Treasury regulations or IRS pronouncements in which to
apply for such a determination letter and make any amendments necessary to
obtain a favorable determination, and nothing has occurred since the date of
such letter that could reasonably be expected to affect the qualified status of
such plan; (iii) no "prohibited transaction", within the meaning of Section 4975
of the Code or Section 406 or 407 of ERISA, and not otherwise exempt under
Section 408 of ERISA, or Section 4975 of the Code has occurred with respect to
any SEG Employee Plan for which any SEG Entity may be liable; (iv) there are no
actions, suits or claims pending, or, to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, threatened
or anticipated (other than routine claims for benefits) against any SEG Employee
Plan or against the assets of any SEG Employee Plan; and (v) each SEG Employee
Plan can be amended, terminated or otherwise discontinued after the Closing Date
in
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accordance with its terms, without liability to any SEG Entity, SVG or any ERISA
Affiliate (other than ordinary administration expenses typically incurred in a
termination event); (vi) there are no audits, inquiries or proceedings pending
or, to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, threatened by the IRS or DOL with respect to
any SEG Employee Plan; and (vii) none of the SEG Entities is subject to any
penalty or tax with respect to any SEG Employee Plan under Section 402(i) of
ERISA or Sections 4975 through 4980 of the Code.
(d) As of the Closing Date, no SEG Entity has ever maintained,
established, sponsored, participated in, or contributed to, any employee benefit
pension plan (as defined in Section 3(2) of ERISA) which is subject to Title IV
of ERISA or Section 412 of the Code and no SEG Entity has or will have any
liability to any person for any actions taken prior to the Closing Date with
respect to any employee benefit pension plan which is subject to Title IV of
ERISA or Section 412 of the Code.
(e) At no time has any SEG Entity contributed to or been
obligated to contribute to any multiemployer plan (as defined in Section 3(37)
of ERISA) and no SEG Entity has or will have any liability to any person for any
actions taken prior to the Closing Date with respect to any such multiemployer
plan.
(f) No SEG Employee Plan provides, or has any liability to
provide, life insurance, medical or other employee welfare benefits to any
employee upon his or her retirement or termination of employment for any reason,
except as may be required by the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended ("COBRA"), or other applicable statute, and none of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity has ever represented, promised or contracted
(whether in oral or written form) to any employee of any SEG Entity (either
individually or to employees as a group) that such employee(s) would be provided
with life insurance, medical or other employee welfare benefits upon their
retirement or termination of employment, except to the extent required by
statute.
(g) Neither ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, any SEG Entity nor any ERISA
Affiliate has violated any of the health care continuation requirements of COBRA
or any similar provisions of state law applicable to its current, former or
retired employees or other "qualified beneficiaries" (as that term is defined
pursuant to COBRA) of any SEG Entity.
(h) The execution of this Agreement and the consummation of
the transactions contemplated hereby will not (either alone or together with the
occurrence of any additional or subsequent events contemplated by this
Agreement) constitute an event under any SEG Employee Plan, trust or loan that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any current, former or
retired employee of any SEG Entity.
(i) No payment or benefit which will or may be made by
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, any SEG Entity or SVG or any of their respective Affiliates
with respect to any employee of any SEG Entity as a result of the transactions
contemplated by this Agreement will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code.
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(j) No SEG Entity has granted (i) any stock options for shares
of such SEG Entity or (ii) any stock in such SEG Entity for compensatory
purposes.
2.15 Employees; Labor Matters. To ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, no
employee of any SEG Entity (i) is in violation of any term of any employment
contract, patent disclosure agreement, non-competition agreement, or any
restrictive covenant to a former employer relating to the right of any such
employee to be employed by such SEG Entity because of the nature of the business
conducted or presently proposed to be conducted by such SEG Entity or to the use
of trade secrets or proprietary information of others and (ii) has given written
notice of his or her intention to not provide services to any SEG Entity after
the Closing Date. To ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, there are no activities or
proceedings of any labor union to organize any employees of any SEG Entity and
there are no strikes, or material slowdowns, work stoppages or lockouts, or
threats thereof by or with respect to any employees of any SEG Entity or any of
its subsidiaries. No SEG Entity is, nor has it ever been, a party to any
collective bargaining agreement. Each SEG Entity is and has been in material
compliance with all applicable laws regarding employment practices, terms and
conditions of employment, and wages and hours (including, without limitation,
ERISA, WARN or any similar state or local law).
2.16 Environmental Matters.
(a) (i) Hazardous Material. No amount of any substance
that has been designated by any Governmental Entity or by applicable federal,
state, foreign or local law to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment, including, without limitation, PCBs,
asbestos, petroleum, products or any fraction thereof urea-formaldehyde and all
substances listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, or
defined as a hazardous waste pursuant to the Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to said laws
(a "Hazardous Material"), but excluding office and janitorial supplies, are
present, as a result of the actions of any SEG Entity or any Affiliate of any
SEG Entity, or, to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, as a result of any actions of
any third party or otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water thereof, that any SEG
Entity has at any time owned, operated, occupied or leased ("Historic SEG
Business Facilities") except as would not be a violation of any Environmental
Laws. All of the Historic SEG Business Facilities are accurately described in
Schedule 2.16.
(ii) Environmental Liabilities. No action,
proceeding, revocation proceeding, amendment procedure, writ, injunction or
Claim is pending, or, to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, threatened concerning any
SEG Environmental Permit, Hazardous Material or any Hazardous Materials Activity
of any SEG Entity. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ is not aware of any fact or circumstance
which could involve any SEG Entity in any environmental litigation or impose
upon any SEG Entity any material environmental liability.
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(iii) USTs, Asbestos and PCBs. To ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇
knowledge, there are no underground storage tanks, asbestos which is friable or
likely to become friable or PCBs present on any SEG Business Facility.
(iv) Hazardous Materials Activities. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
and the SEG Entities have conducted all Hazardous Material Activities relating
to the Business in compliance in all material respects with all applicable
Environmental Laws. To ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, the Hazardous Materials
Activities of the ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities with respect to the
Business prior to the Closing have not resulted in the exposure of any person to
a Hazardous Material in a manner which has caused or could reasonably be
expected to cause an adverse health effect to any such person.
(b) Permits: Schedule 2.16 accurately describes all of the
environmental permits currently held by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity for
the Business or the operation of the SEG Business Facilities ("SEG Environmental
Permits") and the listed SEG Environmental Permits are all of the environmental
permits necessary for the continued conduct of any Hazardous Material Activity
of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities relating to the Business as such
activities are currently being conducted. All such SEG Environmental Permits are
valid and in full force and effect. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities have
complied in all material respects with all covenants and conditions of any SEG
Environmental Permit which is or has been in force with respect to the Hazardous
Materials Activities of the Business. No circumstances exist which could cause
any SEG Environmental Permit to be revoked, modified, or rendered non-renewable
upon payment of the permit fee. All SEG Environmental Permits and all other
consents and clearances required by any Environmental Law or any agreement to
which either ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity is bound as a condition to the
performance and enforcement of this Agreement have been obtained or will be
obtained prior to the Closing at no cost to SVG.
(c) Offsite Hazardous Material Disposal. With respect to the
operation of the Business, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities have transferred
or released Hazardous Materials only to those Disposal Sites set forth in
Schedule 2.16; and, to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, no action, proceeding,
liability or claim exists or is threatened against any Disposal Site or against
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entities with respect to any transfer or release of
Hazardous Materials relating to the Business to a Disposal Site which could
reasonably be expected to subject any SEG Entity to liability.
(d) Reports and Records. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities
have delivered to SVG or made available for inspection by SVG and its agents,
representatives and employees all records in ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ and any SEG
Entity's possession concerning the Hazardous Materials Activities relating to
the Business and all environmental audits and environmental assessments of any
Historic SEG Business Facility conducted at the request of, or otherwise in the
possession of the ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG
Entities have complied with all environmental disclosure obligations imposed by
applicable law with respect to this transaction.
-23-
2.17 Agreements, Contracts and Commitments. None of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ (to
the extent related to the Business) nor any of the SEG Entities is a party to or
is bound by:
(a) any agreement (or group of related agreements) for the
lease of personal property to or from any person or entity;
(b) any agreement (or group of related agreements) for the
purchase of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services;
(c) any agreement concerning a partnership or joint venture;
(d) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money or extension of credit, or any capitalized lease obligation;
(e) any agreement concerning confidentiality (except for
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ standard employee confidentiality agreements) or any
agreement, contract or commitment containing any covenant limiting the freedom
of any SEG Entity to engage in any line of business or to compete with any
person or entity;
(f) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees;
(g) any collective bargaining agreement;
(h) any employment or consulting agreement, contract or
commitment with an employee or individual consultant or salesperson or
consulting or sales agreement, contract or commitment with a firm or other
organization;
(i) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees other than business
travel advances in the ordinary course of business consistent with past
practice;
(j) any agreement pursuant to which any SEG Entity has an
obligation to pay royalties or make other payments in connection with the sale
of products or services by an SEG Entity in the ordinary course of business
(Schedule 2.17 lists the parties to any such agreement and the duration of and
amount of such royalties or other payment);
(k) any contract, agreement or license involving the SEG
Intellectual Property or the Intellectual Property of any other Person;
(l) any fidelity or surety bond or completion bond;
-24-
(m) any agreement, contract or commitment relating to capital
expenditures;
(n) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any business enterprise
outside the ordinary course of business consistent with past practice;
(o) any purchase order or contract for the purchase of
materials;
(p) any construction contracts;
(q) any distribution, joint marketing or development
agreement; or
(r) any other agreement, contract or commitment that involves
in excess of $50,000 or is not cancelable without penalty within thirty (30)
days.
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has delivered to SVG a correct and complete copy of
each written contract listed on Schedule 2.17 and Schedule 2.10 and a written
summary setting forth the terms and conditions of each oral agreement referred
to on Schedule 2.17. The SEG Entity that is a party thereto is in compliance
with and has not breached, violated or defaulted under, or received notice that
it has breached, violated or defaulted under, any of the terms or conditions of
any agreement, contract, covenant, instrument, lease, license or commitment to
which it is a party or by which it is bound (each a "Contract"), nor is
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ aware of any event that would constitute such a breach,
violation or default with the lapse of time, giving of notice or both. Each
Contract is in full force and effect and, to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge, is not
subject to any default thereunder by any third party obligated pursuant thereto.
Following the Closing, subject to the need to obtain the consents and approvals
referenced in Schedule 2.4, SVG or an SEG Entity will be permitted to exercise
all or any SEG Entity's rights under the Contracts without the payment of any
additional amounts or consideration other than ongoing fees, royalties or
payments which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ would otherwise be required to pay had the
transaction contemplated by this Agreement not occurred.
2.18 Customs. All goods imported into the United States or any other
country by any SEG Entity ("Imported Goods") have been properly valued and
classified in accordance with applicable tariff laws, rules and regulations, and
all proper duties, tariffs or excise taxes have been paid with respect to the
Imported Goods. No penalties have been assessed, asserted or claimed with
respect to any Imported Goods. All Imported Goods have been properly marked as
to country of origin, content and material.
2.19 Customers and Suppliers.
(a) Schedule 2.19(a)(i) sets forth a complete and accurate
list of the customers of the Business who have purchased product from the SEG
Entities or ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ during the prior fiscal year or any interim period
from the end of the prior fiscal year to the date hereof. To ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇
knowledge, there exists no actual or threatened termination, cancellation or
material limitation of, or any material modification or material change to the
configuration of, orders contained in outstanding backlog
-25-
for the Business as of April 19, 1999, as set forth in Schedule 2.19(a)(ii).
Each of customers listed on Schedule 2.19(a)(ii) have purchased products and
services in the Business pursuant to a standard purchase order, a form of which
is attached to Schedule 2.19(a)(ii).
(b) Schedule 2.19(b) sets forth a complete and accurate list
of all suppliers of significant materials or services to the SEG Entities or
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ in connection with the Business. To ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge,
there exists no actual or threatened termination, cancellation or limitation of,
or any modification or change in the business relationship of any SEG Entity
with any supplier or group of suppliers listed on Schedule 2.19(b).
2.20 Books and Records. The minutes of each of the SEG Entities have
been made available to SVG and are the only minutes of the SEG Entities and
contain a reasonably accurate summary of all meetings of the Board of Directors
(or committees thereof) of each of the SEG Entities and their stockholders, or
actions by written consent, since the time of incorporation or formation of each
such SEG Entity, as the case may be, and have been maintained in accordance with
applicable sound business practices, laws and other requirements. Prior to the
Closing, the stock ledger (if any) of each of the SEG Entities shall have been
made available to SVG and shall be complete and reflects all issuances,
transfers, repurchases and cancellations of equity securities of such SEG
Entity.
2.21 No Illegal Payments, Etc. None of the SEG Entities (nor any of its
officers, employees, agents or Affiliates) has: (a) directly or indirectly given
or agreed to give any illegal gift, contribution, payment or similar benefit to
any supplier, customer, governmental official or employee or other person who
was or is in a position to help or hinder its business (or assist in connection
with any actual transaction) or made or agreed to make any illegal contribution,
or reimbursed any illegal political gift or contribution made by any other
person, to any candidate for federal, state, local or foreign public office (i)
which may subject any SEG Entity to any damage or penalty in any civil, criminal
or governmental litigation or proceeding or (ii) the noncontinuation of which
has had or might have, individually or in the aggregate, an adverse impact on
any SEG Entity, or (b) established or maintained any unrecorded fund or asset or
made any false entries on any books or records for any purpose.
2.22 Product Warranties; Defects; Liability. Each product manufactured,
sold, leased, or delivered by the SEG Entities has been in conformity with all
applicable contractual commitments and all express and implied warranties, and
none of the SEG Entities has any Liability (and, to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ knowledge,
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
Liability) for replacement or repair thereof or other damages in connection
therewith, subject in all respects to, and only to, the reserve for product
warranty claims set forth on the face of the SEG Balance Sheet subject to
changes in the ordinary course of business consistent with past practices from
the date of the SEG Balance Sheet. The provision for warranties as of December
31, 1998, as shown on Schedule 1.4 was, and such provision as shown on the
Closing Certificate will be as of the Closing, determined in accordance with
GAAP. No product manufactured, sold, leased, or delivered by any SEG Entity is
subject to any guaranty, warranty, or other indemnity beyond the applicable
standard terms and conditions of sale or
-26-
lease or beyond that implied or imposed by applicable law. Schedule 2.22
includes copies of each SEG Entity's standard terms and conditions of sale or
lease.
2.23 Disclosure Complete. None of the representations or warranties
made by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ in or pursuant to this Agreement (as modified by the
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Disclosure Schedules), nor any statement made in the
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Disclosure Schedules or certificate furnished by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
at the Closing pursuant to this Agreement, contains or will contain, any untrue
statement of a material fact, or omits or will omit to state any material fact
necessary in order to make the statements contained herein or therein, in the
light of the circumstances under which made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SVG
SVG represents and warrants to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, as follows:
3.1 Organization of SVG. SVG is a corporation duly organized, validly
existing and in good standing under the laws of Delaware; has the corporate
power and authority to own, lease and operate its assets and property and to
carry on its business as now being conducted and as proposed to be conducted;
and is duly qualified or licensed to do business and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect on SVG.
3.2 Authority; No Conflict.
(a) SVG has all requisite corporate power and authority to
enter into this Agreement and the Related Agreements to be entered into by SVG
pursuant hereto and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Related Agreements to be
entered into by SVG pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved and
authorized by the Board of Directors of SVG, and all other necessary corporate
action on the part of SVG has been taken. Each of this Agreement and the Related
Agreements to be entered into by SVG pursuant hereto have been (or by the
Closing will be) duly executed and delivered by SVG and constitutes (or then
will constitute) the valid and binding obligation of SVG, enforceable in
accordance with its terms, except as such enforceability may be limited by laws
of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies.
(b) The execution and delivery of this Agreement and any
Related Agreement to which it is party by SVG and the consummation of the
transactions contemplated hereby and thereby do not result in any Conflict with:
(i) any provision of the Certificate of Incorporation or Bylaws of SVG; (ii) any
material mortgage, indenture, lease, contract or other agreement or instrument,
permit,
-27-
concession, franchise, or license to which SVG is a party or by which any of its
properties or assets are bound; or (iii) any law applicable to SVG or any of its
properties or assets; except such Conflicts which would not result in a Material
Adverse Effect on SVG or on SVG's ability to consummate the Acquisition.
(c) No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity or third
party (so as not to trigger a Conflict), is required by or with respect to SVG
or in connection with the execution and delivery of this Agreement or the
Related Agreements or the consummation of the transactions contemplated hereby
or thereby, except for such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the HSR Act and
such consents, approvals, orders, authorizations, registrations, declarations
and filings which would not materially and adversely affect the ability of SVG
to consummate the Acquisition.
3.3 Brokers' and Finders' Fees. SVG has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
3.4 Financial Capability. SVG has as of the date hereof, and will have
as of the Closing, unrestricted cash sufficient in amount to pay the Closing
Cash Payment.
ARTICLE IV
CONDUCT PRIOR TO THE CLOSING DATE
4.1 Conduct of Business. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Closing, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ (which for the purposes of
this Article 4 shall include ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities) shall, except
to the extent that SVG shall otherwise consent in writing, which consent shall
not be unreasonably withheld, carry on the Business diligently and in accordance
with good commercial practice and in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and in compliance with all
applicable laws and regulations, pay its debts and Taxes related to the Business
when due subject to good faith disputes over such debts or Taxes, pay or perform
other material obligations when due, and use its commercially reasonable efforts
consistent with past practices and policies to preserve intact the present
business organization, assets and properties of the SEG Entities, keep available
the services of its present officers and employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others with which it has business dealings. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will promptly notify
SVG of any material event involving the Business or the SEG Entities'
operations. In addition and without limiting the generality of the foregoing,
except as permitted by the terms of this Agreement, without the prior written
consent of SVG, which consent shall not be unreasonably withheld,
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall not (with respect to SEG Entities) do any of the following
and shall not permit any SEG Entity to do any of the following with respect to
any SEG Entity or the Business:
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(a) Grant any stock options, stock purchase rights or stock in
any SEG Entity;
(b) Grant any severance or termination pay to any officer or
employee except payments in amounts consistent with policies and past practices
or pursuant to written agreements outstanding, or policies existing, on the date
hereof and as previously disclosed in writing to SVG, or adopt any new severance
plan or arrangement, except that ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ may adopt any such new plan or
arrangement as long as, to the extent provided in Section 5.9, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
remains wholly liable for all liabilities and obligations thereunder;
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the SEG
Intellectual Property, or enter into grants to future patent rights, other than
non-exclusive licenses in the ordinary course of business and consistent with
past practice;
(d) Issue, deliver, sell, authorize or propose the issuance,
delivery or sale of, any shares of capital stock or LLC interests or any
securities convertible into shares of capital stock or LLC interests, or
subscriptions, rights, warrants or options to acquire any shares of capital
stock or any securities convertible into shares of capital stock, or LLC
interests, or enter into other agreements or commitments of any character
obligating it to issue any such shares, LLC interests or convertible securities;
(e) Cause, permit or propose any amendments to any charter
document of any SEG Entity;
(f) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or a material portion of the
assets of, or by any other manner, any business or any corporation, partnership
interest, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the Business or enter into any material
joint ventures, strategic partnerships or alliances;
(g) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the Business except in the ordinary course of business consistent with past
practice;
(h) Incur any indebtedness for borrowed money (other than
ordinary course trade payables or pursuant to existing credit facilities in the
ordinary course of business) or guarantee any such indebtedness or issue or sell
any debt securities or warrants or rights to acquire debt securities of any SEG
Entity or guarantee any debt securities of others;
(i) Adopt or amend any employee benefit or employee stock (or
LLC interests) purchase or employee option plan, or enter into any employment
contract, pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates of its officers or
-29-
employees (except for such increases in the ordinary course of business
consistent with past practices), or change in any material respect any
management policies or procedures;
(j) Pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business or the payment of any intercompany debt to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ Affiliates;
(k) Make any grant of exclusive rights to any third party with
respect to any Intellectual Property;
(l) Enter into any material agreement not in the ordinary
course of business; or
(m) Alter, amend, modify or terminate any material SEG Permit
or SEG Environmental Permit other than in the ordinary course of business,
consistent with past practice; or
(n) Agree in writing or otherwise to take any of the actions
described in Section 4.1 (a) through (m) above.
4.2 No Solicitation.
(a) From and after the date of this Agreement until the
earlier of the Closing or termination of this Agreement pursuant to its terms,
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and its subsidiaries shall not (nor will it permit any of its
officers, directors, members, shareholders, agents, representatives or
Affiliates to), directly or indirectly, take any of the following actions with
any party other than SVG and its designees: (i) solicit, encourage, initiate or
participate in any negotiations or discussions with respect to any offer or
proposal to acquire all or any portion of the Business, or any portion of the
capital stock of any SEG Entity whether by merger, purchase of assets, tender
offer or otherwise, or effect any such transaction, (ii) disclose any
information not customarily disclosed to any Person concerning the Business or
afford to any Person access to its properties, books or records as they pertain
to the Business, (iii) assist or cooperate with any Person to make any proposal
to purchase all or any part of capital stock of any SEG Entity or any assets of
the Business, other than inventory in the ordinary course of business, or (iv)
enter into any agreement with any Person providing for the acquisition of the
Business (whether by way of merger, purchase of assets, or otherwise). In the
event ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall receive any offer or proposal, directly or
indirectly, of the type referred to in clause (i) or (iii) above, or any request
for disclosure or access pursuant to clause (ii) above, it shall immediately
inform SVG as to any such offer or proposal and will cooperate with SVG by
furnishing any information about the offer or proposal it may reasonably
request. However, if that offer or proposal would also include the acquisition,
whether directly or indirectly, of any part of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ business or
assets in addition to the Business, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall inform the Chairman
and Chief Executive Officer of SVG, and SVG shall cause that officer not to
disclose the fact of that offer or proposal to any other Person (whether within
or without SVG) and not to use the fact of that offer or proposal or any
information communicated regarding that offer or proposal for any purpose other
than in connection with the acquisition of the
-30-
Business (and only the Business) by SVG. During the period referenced in the
first sentence of this Section 4.2(a), any proposal or offer that
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ makes regarding the acquisition of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ itself shall
clarify that ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ has entered into any agreement to sell the Business
and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ is bound by the exclusivity provision set forth in this
Section 4.2, and shall specifically exclude the Business from any discussions
with third parties concerning such offer or proposal. Notwithstanding anything
to the contrary in this Agreement, nothing in this Agreement shall restrict the
ability of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ to conduct any of the aforementioned actions with
respect to the acquisition or possible acquisition of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ (whether
by way or merger, purchase of capital stock, purchase of assets, tender offer or
otherwise) unless such acquisition or possible acquisition will prevent
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ from consummating the transactions contemplated hereby;
provided, however, that if ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ is acquired by a third party, such
acquiror shall agree and acknowledge without exception that such acquisition
shall in no manner diminish or otherwise affect the obligations of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ hereunder or under the Escrow Agreement.
(b) Notwithstanding anything to the contrary in this Section
4.2, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will not provide any non-public information to a third
party unless: (i) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ provides such non-public information about the
Business or the SEG Entities pursuant to a nondisclosure agreement with terms
regarding the protection of confidential information at least as restrictive as
such terms in the Confidentiality Agreement; and (ii) such non-public
information has been or is delivered to SVG.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Confidentiality; Access to Information.
(a) Confidentiality Agreement. The parties acknowledge that
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and SVG have previously executed a Confidentiality Agreement
dated as of July 29, 1998 (the "Confidentiality Agreement"), which
Confidentiality Agreement will continue in full force and effect in accordance
with its terms.
(b) Access to Information. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will afford SVG and
its accountants, counsel and other representatives reasonable access during
normal business hours to the properties, books, records and personnel of the SEG
Entities during the period prior to the Closing Date, and shall assist SVG, in
obtaining all information concerning the Business, including the status of
product development efforts, properties, results of operations and personnel of
the SEG Entities, as SVG may reasonably request. SVG shall be permitted
reasonable access to SEG Business Facilities for the purpose of performing such
investigations of the condition of such facilities as SVG deems necessary,
including investigation of the condition of the subsurface soils and groundwater
thereof. No information or knowledge obtained by SVG in any investigation
pursuant to this Section 5.1 will affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Acquisition.
-31-
5.2 Public Disclosure. Until the earlier to occur of the Closing or the
termination of this Agreement pursuant to Section 8.1, neither SVG nor
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will issue any written statement or communication to any third
party (other than their respective agents) regarding the Acquisition without
first consulting with the other party and giving the other party an opportunity
to review the proposed written statement or communication, except for any such
written statements or communications as may be required by applicable law or any
listing agreement with a national securities exchange.
5.3 Legal Requirements. Each of SVG, and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will take all
reasonable actions necessary or desirable to comply promptly with all legal
requirements which may be imposed on them with respect to the consummation of
the transactions contemplated by this Agreement (including furnishing all
information required in connection with approvals by or filings with any
Governmental Entity, and prompt resolution of any litigation prompted hereby)
and will promptly cooperate with and furnish information to any party hereto
necessary in connection with any such filings with or investigations by any
Governmental Entity, and any other such requirements imposed upon any of them or
their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement.
5.4 Third Party Consents. As soon as practicable following the date
hereof, SVG and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will each use its commercially reasonable
efforts to obtain all consents, waivers and approvals under any of its or an SEG
Entity's Contracts or Leases required to be obtained in connection with the
consummation of the transactions contemplated hereby, as set forth on Schedule
2.4. The parties agree that any monetary or other consideration paid to any
third party in order to procure any such consents, waivers or approvals shall be
split equally between the parties; provided that neither SVG nor ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
shall be required to pay in excess of $5,000 under this Section 5.4. SVG shall
use commercially reasonable efforts to have ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ released fully from
all of its obligations under the Japanese Loans.
5.5 Notification of Certain Matters. SVG and will give prompt notice to
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will give prompt notice to SVG, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be reasonably likely to cause (a) any representation or warranty
contained in this Agreement and made by it to be untrue or inaccurate in any
material respect at any time from the date of this Agreement to the Closing Date
such that the conditions set forth in Section 6.1(a) or 6.2(a), as the case may
be, would not be satisfied as a result thereof or (b) any material failure of
SVG or ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, as the case may be, or of any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement.
Notwithstanding the above, the delivery of any notice pursuant to this section
will not limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
5.6 Best Efforts and Further Assurances. Subject to the respective
rights and obligations of SVG and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ under this Agreement, each of
the parties to this Agreement will use its reasonable best efforts to effectuate
the Acquisition and the other transactions contemplated hereby and
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to fulfill and cause to be fulfilled the conditions to Closing under this
Agreement; provided that neither SVG, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, any SEG Entity nor any
subsidiary or Affiliate thereof will be required to agree to any divestiture by
itself or any of its Affiliates of shares of capital stock or of any business,
assets or property, or the imposition of any material limitation on the ability
of any of them to conduct their businesses or to own or exercise control of such
assets, properties and stock. Subject to the foregoing, each party hereto, at
the reasonable request of another party hereto, will execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby.
5.7 Regulatory Filings. As soon as may be reasonably practicable,
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and SVG each shall file with the United States Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "DOJ") Notification and Report Forms relating to the
transactions contemplated herein as required by the HSR Act, as well as
comparable pre-acquisition notification forms required by the acquisition
notification or control laws and regulations of any applicable jurisdiction, as
agreed to by the parties. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and SVG each shall promptly (a) supply
the other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or acquisition control
authorities of any other jurisdiction and which the parties may reasonably deem
appropriate.
5.8 Covenant Not to Compete. For a period of three (3) years from the
Closing Date, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will not directly or indirectly (i) manage or
control any entity engaged in a business competitive with the Business or
conduct any business competitive with the Business in any territory worldwide,
(ii) solicit any of the employees of the Business for purposes of obtaining
their services or hire any such employee unless such employee is not at the
time, and has not been for a period of three months prior to the date of hire,
an employee of the Business, or (iii) solicit any customers of SVG for any
direct or indirect purpose related to the Business. Notwithstanding the
restrictions set forth in clause (ii) above, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ may place
advertisements in general circulation publications for employment opportunities,
which shall not be deemed a direct or indirect solicitation of SVG employees. If
the final judgment of a court of competent jurisdiction declares that any term
or provision of this Section 5.8 is invalid or unenforceable, the parties hereto
agree that the court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration or area of the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Section 5.8 shall be enforceable as so
modified.
5.9 Employee Matters. Prior to the Closing, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall use
its reasonable commercial efforts to assist SVG in hiring the services of those
employees and consultants of the Business identified by SVG; provided, however,
that ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall not be required to offer employees additional
monetary or other inducements to achieve that end beyond those in place on the
date of this Agreement. All severance policies and employment arrangements with
respect to the employees, including their annual salaries or hourly rates, start
dates, and title or position, and the
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maximum dollar cost of each such employee severance and the maximum period of
company paid medical benefits (to the extent not prohibited by applicable law),
who work solely or primarily for the Business on the date of this Agreement (the
"SEG Employees") will be identified on a schedule to be delivered by
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ to SVG prior to the Closing (which schedule may be delivered in
portions by country or SEG Entity). SVG shall determine the SEG Employees who
will be retained within six months after the date of the final portion of the
schedule is received by SVG (if delivered in sections) or the complete schedule
referred to in the preceding sentence. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall pay all severance
costs (to the extent such costs do not exceed ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ standard company
policies which policies may vary from country to country) for up to but not more
than the first 15% of the SEG Employees employed on the date of this Agreement
who are not retained beyond that six-month period, provided that the total
amount of such costs that ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall be obligated to pay shall not
exceed $2,500,000. In addition, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall be responsible for all
severance costs payable under all special severance benefit arrangements between
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or an SEG Entity and an SEG Employee entered into before the
Closing (whether before or after the date of this Agreement) to the extent that
such benefits exceed the amounts payable to that SEG Employee under the standard
company policies referenced previously. The amounts payable to such SEG
Employees that do not exceed the amounts payable under those standard company
policies shall be governed by the 15% and $2,500,000 rules stated above. Nothing
in this Section 5.9 shall require ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ to pay any SEG Employee any
severance benefits (or to reimburse SVG or any other entity for any severance
benefits) for which, before the Closing, neither ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ nor any SEG
Entity would have been obligated to pay to that SEG Employee had that employee's
employment been terminated prior to the Closing.
5.10 Tax Matters. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and SVG hereby covenant and agree
with respect to certain tax matters as follows:
(a) Asset Purchase.
(i) The parties shall treat the purchase of the SEG
LLC Interests as a purchase of the assets held by the SEG LLC for all federal
and state income tax purposes.
(ii) Within ninety (90) days after Closing, SVG shall
provide to ▇▇▇▇▇▇▇- ▇▇▇▇▇▇▇ a schedule which sets forth the proposed allocation
(the "Allocation Schedule") of the Adjusted Consideration (including any
Included Liabilities owed by SEG LLC) to and among the Included Assets
(including the assets held by SEG LLC and deemed purchased in accordance with
Section 5.10(a)(i)) and to and among the International Subsidiary Capital Stock.
Such allocations shall be made in accordance with Section 1060 of the Code and
any applicable Treasury Regulations. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall be deemed to have
accepted the Allocation Schedule, and it shall be deemed final, unless
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ provides written notice of disagreement to SVG within thirty
(30) days of receipt of the Allocation Schedule (the "Disagreement Notice"). If
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ provides a Disagreement Notice, the parties shall negotiate in
good faith to resolve the differences. If the disagreements are not resolved
within thirty (30) days of SVG's receipt of the Disagreement Notice, SVG shall
engage a national independent accounting firm (the "Accountant"), acceptable to
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, to resolve
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the differences. The Accountant will be requested to resolve the dispute and
determine the correct allocation in accord with Section 1060 of the Code, and
issue its report within 30 days of engagement, in writing to SVG and
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ (the "Accountant Report"). One-half of the fees of the
Accountant shall be borne by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, and one-half of such fees shall be
borne by SVG. No party will take a position on any Tax Return, before any
governmental Tax agency or in a judicial proceeding that is inconsistent with
the Allocation Notice, if final, or the Accountant Report, except as required by
law.
(b) Returns; Indemnification; Liability for Taxes.
(i) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall prepare and file (or cause
to be prepared and filed) on a timely basis all Tax Returns with respect to each
of the SEG Entities for all taxable periods ending on or before the Closing Date
("SEG Tax Returns") and shall pay to the extent modified by Section 5.10(c) of
this Agreement and, subject to Article V, shall indemnify and hold SVG harmless
against and from (i) all Taxes of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, SEG Sub or any other domestic
or foreign Affiliate of such entities including all such Taxes attributable to
the Included Assets or the operation of the Business for all taxable periods (or
any portion thereof) which end on or before the Closing Date (except to the
extent such Taxes have been shown as an Included Liability for purposes of
determining the Closing Net Asset Value); (ii) all Taxes of the SEG Entities for
all taxable years or periods which end on or before the Closing Date (except to
the extent such Taxes have been shown as an Included Liability for purposes of
determining the Closing Net Asset Value); (iii) all Taxes for all taxable years
or periods of all members of any affiliated, consolidated, combined or unitary
group of which the SEG Entities are or have been a member prior to the Closing
Date; and (iv) with respect to any taxable period of the SEG Entities (other
than the SEG Sub) commencing before the Closing Date and ending after the
Closing Date (a "Straddle Period") all Taxes of the SEG Entities attributable to
the portion of the Straddle Period prior to and including the Closing Date (the
"Pre-Closing Period") (except to the extent such Taxes have been shown as an
Included Liability for purposes of determining the Closing Net Asset Value). For
purposes of this Agreement, the portion of any Tax that is attributable to the
Pre-Closing Period shall be (i) in the case of a Tax (including any property or
ad valorem Tax) that is not based on net income, gross income, premiums or gross
receipts, the total amount of such Tax for the period in question multiplied by
a fraction, the numerator of which is the number of days in the Pre-Closing
Period, and the denominator of which is the total number of days in such
Straddle Period, and (ii) in the case of a Tax that is based on any of net
income, gross income, premiums or gross receipts, the Tax that would be due with
respect to the Pre-Closing Period if such Pre-Closing Period were a separate
taxable period, except that exemptions, allowances, deductions or credits that
are calculated on an annual basis (such as the deduction for depreciation or
capital allowances) shall be apportioned on a per diem basis. For purposes
hereof, all Taxes which are the subject of this Section 5.10 arising from the
Acquisition, except as set forth in Section 5.10(f), shall be deemed to be Taxes
attributable to the Pre-Closing Period and shall be the responsibility of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇.
(ii) SVG shall prepare and file (or cause to be
prepared and filed) on a timely basis all Tax Returns of the SEG Entities
relating to periods ending after the Closing Date and shall pay, to the extent
modified by Section 5.10(c) of this Agreement, and, subject to Article VII,
shall indemnify
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and hold ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ harmless against and from (i) all Taxes of the SEG
Entities (other than the SEG Sub) for any taxable year or period commencing
after the Closing Date; and (ii) all Taxes of the SEG Entities (other than the
SEG Sub) for any Straddle Period other than Taxes attributable to the
Pre-Closing Period.
(c) Cooperation; Refunds and Credits.
(i) All refunds or credits of Taxes for or
attributable to taxable years or periods of the SEG Entities ending on or before
the Closing Date (or the Pre-Closing Period, in the case of a Straddle Period)
shall be for the account of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, except to the extent such refund or
credit was reflected as an Included Asset in the determination of the Closing
Net Asset Value; all other refunds or credits of Taxes, for or attributable to
the SEG Entities shall be for the account of SVG. Following the Closing, SVG
shall cause the SEG Entities to forward to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ any such refunds or
credits due ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ pursuant to this section within thirty (30) days
after receipt or realization thereof by SVG, and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall forward
(or cause to be forwarded) to SVG any refunds or credits due to SVG pursuant to
this section after receipt or actual realization thereof by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, in
each case in accordance with the provisions of subsection (iv) below.
(ii) If an audit examination of any Tax Return of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or its subsidiaries for any taxable period ending on or before
the Closing Date shall result (by settlement or otherwise) in any adjustment the
effect of which is to increase deductions, losses or tax credits or decrease
income, gains, premiums, revenues or recapture of tax credits ("Changes")
reflected on a Tax Return of SVG or the SEG Entities for any taxable period
ending after the Closing Date, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will notify SVG and provide it
with all necessary information so that it can reflect on the appropriate Tax
Return any appropriate Changes. If as a result of such Changes, SVG or its
subsidiaries enjoy a net Tax benefit from an increase in deductions, losses or
tax credits and/or a decrease in income, gains, premiums, revenues or recapture
of tax credits ("SVG Benefits") for taxable periods ending after the Closing
Date, SVG shall pay to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ the amount of such SVG Benefit, within
thirty (30) days of when such SVG Benefits are actually realized by SVG in
accordance with subsection (iv) below.
(iii) If an audit examination of any Tax Return of
SVG or its subsidiaries for taxable periods ending after the Closing Date shall
result (by settlement or otherwise) in any Change reflected on a Tax Return of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or its subsidiaries for any taxable periods ending on or before
the Closing Date, SVG will notify ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and provide it with all
necessary information so that ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ can reflect any appropriate
Changes on its Tax Return. If as a result of such Changes, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or
its subsidiaries enjoy a net Tax benefit from an increase in deductions, losses
or tax credits and/or a decrease in the income, gains, premiums, revenues or
recapture of tax credits ("▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Benefits") for taxable periods ending
on or before the Closing Date, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall pay to SVG the amount of
such ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Benefits within thirty (30) days of when such
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Benefits are actually realized by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, in accordance
with subsection (iv) below.
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(iv) Any payments of refunds or credits for Taxes, or
any payment of SVG Benefits or ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Benefits, that are required to be
paid under this Agreement shall be made within ten (10) Business Days of the
receipt of any refund or thirty (30) Business Days of the actual realization of
any tax benefit, as the case may be.
(d) Termination of Tax Sharing Agreements. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
hereby agrees that, except for this Agreement, there are no, and as of the
Closing there will be no, obligations of or to the SEG Entities pursuant to any
tax sharing agreement or any similar arrangement, and any further obligations
that might otherwise have existed thereunder shall be extinguished as of the
Closing.
(e) Conduct of Audits and Other Procedural Matters. Each party
shall, at its own expense, control any audit or examination by any taxing
authority, and have the right to initiate any claim for refund or amended
return, and contest, resolve and defend against any assessment, notice of
deficiency or other adjustment or proposed adjustment of Taxes ("Proceedings")
for any taxable period for which that party is charged with payment or
indemnification responsibility under this Agreement. Each party shall promptly
forward to the other all written notifications and other written communications,
including if available the original envelope showing any postmark, from any
taxing authority received by such party or its affiliates relating to any
liability for Taxes for any taxable period for which such other party or any of
its affiliates is charged with sole payment or indemnification responsibility
under this Agreement and each indemnifying party shall promptly notify, and
consult with, each indemnified party as to any action it proposes to take with
respect to any liability for Taxes for which it is required to indemnify another
party and shall not enter into any closing agreement or final settlement with
any taxing authority with respect to any such liability without the written
consent of the indemnified parties, which consent shall not be unreasonably
withheld. In the case of any Proceedings relating to any Straddle Period, SVG
shall control such Proceedings and shall consult in good faith with
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ as to the conduct of such Proceedings. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall
reimburse SVG for such portion of the costs, including legal costs, of
conducting such Proceedings as is represented by the portion of the Tax with
respect to such Straddle Period for which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ is liable pursuant to
this Agreement. Each party shall, at the expense of the requesting party,
execute or cause to be executed any powers of attorney or other documents
reasonably requested by such requesting party to enable it to take any and all
actions such party reasonably requests with respect to any Proceedings which the
requesting party controls. The failure by a party to provide timely notice under
this subsection shall relieve the other party from its obligations under this
Section 5.10 with respect to the subject matter of any notification not timely
forwarded, but only to the extent the other party has suffered a loss or other
economic detriment because of such failure to provide notification in a timely
fashion.
(f) Transfer Taxes. Notwithstanding anything to the contrary
in this Agreement, including this Section 5.10, except as set forth in Section
1.6 all transfer, documentary, sales, use, stamp, registration and other such
taxes and fees (including any penalties and interest) incurred in connection
with the transactions contemplated by this Agreement (other than (i) any such
taxes incurred in connection with the transfer to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ (or the
acquisition by SVG) of the SEG International Subsidiary Capital Stock, which
taxes shall be borne by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, or (ii) any such transfer taxes
incurred in connection with the transfer of any assets by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ to the
SEG Sub, which Taxes
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shall be borne by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇) shall be paid by SVG when due. The parties
hereto agree to treat the transfer of assets by the SEG Sub to SEG LLC and the
sale of the SEG LLC Interests as exempt from any transfer taxes and
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall not take any position inconsistent with such
understanding. SVG and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall cooperate in the filing of all
necessary Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other taxes and fees.
(g) Section 338 Election. SVG shall give ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
thirty (30) days prior written notice of any intention to file an election under
Section 338(g) of the Code with respect to any of the SEG International
Entities.
5.11 Change of Names; License of use of "wj". As promptly as
practicable after the Closing, SVG shall (a) cause each of the SEG International
Entities to amend its charter and take any and all other actions necessary to
remove the "▇▇▇▇▇▇▇-▇▇▇▇▇▇▇" name from each of the SEG International Entities'
corporate names; (b) remove, or cause to be removed, all references to "wj" in
the URL's for the SEG Entities' Internet sites as listed on Schedule 5.11
hereto; and (c) cease (and cause each of the SEG Entities to cease) using that
name, the "WJ" initials and any similar name or initials in its operations or
otherwise. Effective as of the Closing, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ hereby grants SVG and
its Affiliates a royalty free worldwide perpetual license to use the initials
"wj" in the names of the products and related services and manuals currently
being commercialized in the Business. SVG acknowledges that the sole ownership
of the initials "wj" remains with ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. SVG agrees that it will do
nothing inconsistent with such ownership. SVG will comply with all reasonable
requests of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ in connection with SVG's use of the initials "wj."
SVG's use of the initials "wj" shall reasonably conform with the standards
practiced by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities in the past.
5.12 Collection of Receivables.
(a) In General. After the Closing, SVG and the SEG Entities
shall seek to collect all accounts receivable outstanding as of the Closing Date
for products and services shipped or rendered by any SEG Entity or the Business
before the Closing. In doing so, SVG and the SEG Entities shall use reasonable
commercial efforts to collect such receivables. SVG and the SEG Entities shall
incur the costs and expenses of such collection procedures, except that
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall pay all out-of-pocket costs and expenses incurred in
connection with any extraordinary collection efforts, such as any litigation
with customers, in excess of the normal collection procedures SVG uses to
collect its own receivables. Within fifteen (15) days after the Closing,
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall deliver to SVG an aging of all accounts receivable of the
Business, which aging shall be reconciled to the general ledger accounts of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and shall be true and accurate. SVG shall have fifteen (15) days
from the date of receipt of the accounts receivable aging to review such aging,
and if it disagrees with anything in the accounts receivable aging, SVG and
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall in good faith attempt to resolve any disputes or
discrepancies in the accounts receivable aging. The final accounts receivable
aging as of the Closing Date agreed to by the parties (or as determined by the
independent accounting firm, as provided in the following paragraph, as the case
may be) is herein referred to as the "Closing Date Receivables." ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
and SVG shall also mutually agree on certain Closing Date Receivables (the
"Special
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Receivables") (i) that have deferred payment plans or long-term payment plans
that become due after the Closing, (ii) that are at least 45 days overdue as of
the date of the aging, or (iii) that are subject to a dispute with a customer,
which receivables shall be excluded from the calculations described in Section
5.12(c) below. Notwithstanding the preceding sentence, if any Special
Receivables (x) that have deferred or long-term payment plans are paid on a
timely basis, (y) that were overdue at least 45 days as of the date of the aging
are paid within the time periods set forth in Section 5.12(c), or (z) that had
been subject to a dispute for which the dispute has been subsequently resolved,
will be removed from the Special Receivables for purposes of the calculations
set forth in Section 5.12(c).
If the parties do not agree on the Closing Date Receivables or the
Special Receivables within such fifteen (15) day period, the parties shall
engage PricewaterhouseCoopers LLP, or if PricewaterhouseCoopers LLP is unable to
perform such services, a mutually agreed upon independent accounting firm of
national standing and reputation, to determine the Closing Date Receivables and
the Special Receivables. Such determination by the independent accounting firm
shall be final and binding on the parties. The cost of the services of the
independent accounting firm shall be borne by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇.
(b) Procedures. The parties shall cooperate in good faith to
achieve the purposes of this Section 5.12. Each month, SVG shall furnish a
report to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ that shows the collected Closing Date Receivables as
of the end of SVG's accounting month, itemized by invoice for each foreign
entity and for domestic operations. The report shall be submitted by the
twentieth (20th) day after the end of SVG's accounting month. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
shall submit a report to SVG within twenty (20) days after receiving each of
SVG's report that shows the collections on Closing Date Receivables received by
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ that SVG will be able to remove from the list of outstanding
Closing Date Receivables. SVG shall remit or cause to be remitted to
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ all Closing Date Receivables collected by SVG or any SEG Entity
that are payable to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ by the twentieth (20th) day after the end of
SVG's accounting month during which the payments were received. If
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ receives payments on Closing Date Receivables (or any other
receivables) that belong to SVG, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall likewise remit those
payments to SVG by the twentieth (20th) day after the end of the ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
accounting month during which the payments were received. Upon reasonable
notice, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and its representatives shall have access to all
information and documents in the custody or control of SVG or any SEG Entity
that bear on the matters addressed in this Section 5.12. Likewise, upon
reasonable notice, SVG and its representatives shall have access to all
information and documents in the custody or control of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any of
its subsidiaries that bear on the matters addressed in this Section 5.12.
(c) Application to Receivables. Amounts collected on Closing
Date Receivables shall be applied to such receivables of that customer or group
on an identified invoice basis; provided, however, that if SVG has not collected
at least the percentage of Closing Date Receivables (excluding for purposes of
the numerator and denominator the Special Receivables and any Closing Date
Receivables subject to a dispute through no fault of SVG or any SEG Entity after
the Closing) set forth in the following table within the time periods set forth
opposite such percentages, SVG shall purchase from ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ all remaining
outstanding Closing Date Receivables (excluding the Special
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Receivables and any Closing Date Receivables subject to a dispute through no
fault of SVG or any SEG Entity after the Closing, and net of uncollectible
account reserves) within twenty (20) days of the end of the relevant period:
Cumulative Percentage of Net Closing Time Period for
Date Receivables Collected Collecting Stated Percentage
-------------------------- ----------------------------
50% 120 days after the Closing Date
84% 180 days after the Closing Date
97% 210 days after the Closing Date
(d) Currency Issues. The open receivables list for the foreign
subsidiaries will be maintained in each subsidiary's country's currency and all
receivables paid shall be remitted in the currency in which the related
receivable was denominated.
(e) Collection Issues. For receivables that are or become
delinquent, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will be permitted to contact the customer directly
for the purpose of pursuing collection. SVG will cooperate with ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
in that effort, if ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ so requests.
5.13 Intercompany Payables. All intercompany payables on the books of
any SEG Entity prior to the Closing shall prior to the Closing be paid,
cancelled or contributed to the capital of the obligor SEG Entity.
ARTICLE VI
CONDITIONS TO THE ACQUISITION
6.1 Conditions to Obligations of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. The obligation of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ to consummate and effect the Acquisition shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇:
(a) Representations and Warranties. The representations and
warranties of SVG contained in this Agreement shall have been true and correct
in all material respects on and as of the Closing Date except for those
representations and warranties which address matters only as of a particular
date (which shall remain true and correct as of such particular date), with the
same force and effect as if made on and as of the Closing Date.
(b) Agreements and Covenants. SVG shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.
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(c) No Order; HSR Act. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Acquisition illegal or otherwise prohibiting consummation of the
Acquisition. All waiting periods, if any, under the HSR Act relating to the
transactions contemplated hereby will have expired or terminated early.
(d) Escrow Agreement. The Escrow Agent and SVG shall have
executed and delivered the Escrow Agreement.
(e) Legal Opinion. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall have received the
legal opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation,
legal counsel to SVG, substantially in the form attached hereto as Exhibit B.
(f) Consents. All Required Consents shall have been obtained.
(g) No Claims. There shall not have occurred any claims
(whether or not asserted in litigation) which may materially and adversely
affect the consummation of the transactions contemplated hereby or may have a
Material Adverse Effect on the SEG Entities and the Business taken as a whole.
There shall be no action, suit, claim or proceeding of any nature pending or, to
the knowledge of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, threatened against ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, SVG or any
SEG Entity, their respective properties or any of their officers or directors of
the Business, arising out of, or in any way connected with, the Acquisition or
the other transactions contemplated by the terms of this Agreement.
(h) Guaranty of Japanese Debt. The holders of the loans on the
Japanese Property shall have released ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ in writing from its
guarantees regarding such loans.
(i) Title Insurance. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall have obtained for
the benefit of SVG or SVG's designee, as part of such transfer, the Title Policy
pursuant to Section 1.6 hereof.
(j) Certificate of SVG. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall have been
provided with a certificate executed on behalf of SVG by an officer of SVG, as
of the Closing Date, that the provisions set forth in Sections 6.1(a), (b) and
(g) (with respect to SVG only) have been satisfied.
6.2 Conditions to the Obligations of SVG. The obligations of SVG to
consummate and effect the Acquisition shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, exclusively by SVG:
(a) Representations and Warranties. The representations and
warranties of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date, with the same
force and effect as if made on and as of the Closing Date.
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(b) Agreements and Covenants. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Closing Date.
(c) Material Adverse Effect. No Material Adverse Effect with
respect to the SEG Entity and the Business taken as a whole shall have occurred
since the SEG Balance Sheet Date that is not disclosed in the ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
Disclosure Schedules.
(d) Consents. All Required Consents shall have been obtained.
(e) No Order; HSR Act. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Acquisition illegal or otherwise prohibiting consummation of the
Acquisition. All waiting periods, if any, under the HSR Act relating to the
transactions contemplated hereby will have expired or terminated early.
(f) No Claims. There shall not have occurred any claims
(whether or not asserted in litigation) which may materially and adversely
affect the consummation of the transactions contemplated hereby or may have a
Material Adverse Effect on the SEG Entities and the Business taken as a whole.
There shall be no action, suit, claim or proceeding of any nature pending or, to
SVG's knowledge, threatened against ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, SVG or any SEG Entity,
their respective properties or any of their officers or directors or the
Business, arising out of, or in any way connected with, the Acquisition or the
other transactions contemplated by the terms of this Agreement.
(g) Escrow Agreement. The Escrow Agent and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
shall have executed and delivered the Escrow Agreement.
(h) Legal Opinion. SVG shall have received the legal opinion
from ▇▇▇▇▇▇, ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇, legal counsel to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇,
substantially in the form attached hereto as Exhibit C.
(i) Japanese Property. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall have caused the
ownership of the property located at Block No. M2-5 in the Land Readjustment
Project Area No. 2, Kurigi, Asao-ku, Kawasaki City, Kanagawa Prefecture, Japan
to be registered in the real property register of the government of Japan in the
name of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ International Japan K.K.
(j) Environmental Obligations. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall have
purchased (in accordance with the terms of Section 1.6 hereof) the Environmental
Package.
(k) Included Assets and Liabilities; Transfer of Property.
Except for the Scotts Valley Property, all of the Included Assets shall be held
by the SEG LLC or an SEG International Subsidiary as of the Closing. As of the
Closing, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall transfer the Scotts Valley Property by grant
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deed, directly to SVG or its assignee. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall have obtained for
the benefit of SVG or SVG's designee, as part of such transfer, the Title
Policy, with such endorsements as may be reasonably required by SVG, pursuant to
Section 1.6 hereof.
(l) Certificate of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. SVG shall have been
provided with a certificate executed on behalf of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ by an officer
of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, as of the Closing Date, that the provisions set forth in
Sections 6.2(a), (b), (c), (e) and (f) (with respect to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the
SEG Entities only) have been satisfied.
(m) Assignments of Registered Intellectual Property. Prior to
the Closing, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and each SEG Entity, as applicable, shall have
filed, in accordance with and to the maximum extent permitted by applicable law,
transfers to the SEG LLC of all SEG Registered Intellectual Property in all
jurisdictions in which such Intellectual Property is registered, including,
without limitation, assignments of all registered Patents and Trademarks with
the U.S. Patent and Trademark Office and assignments of all registered
Copyrights with the U.S. Copyright Office.
(n) Intercompany Payables; International Accounts Receivable.
Prior to the Closing, all intercompany payables on the books of any SEG Entity
shall have been paid, cancelled, or contributed to the capital of the obligor.
In addition, all accounts receivable in the SEG International Entities shall
have been transferred to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or an Affiliate of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ that
is not an SEG Entity.
ARTICLE VII
INDEMNIFICATION
7.1 General Indemnification by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
covenants and agrees to indemnify, defend, protect and hold harmless SVG and its
respective officers, directors, employees, assigns, successors and Affiliates
(individually, a "SVG Indemnified Party" and collectively, "SVG Indemnified
Parties") from, against and in respect of all liabilities, losses, claims,
damages, business disruption, consequential damages, punitive damages, causes of
action, lawsuits, administrative proceedings (including informal proceedings),
investigations, audits, demands, assessments, judgments, settlement payments,
deficiencies, penalties, fines, interest payable to third persons, and
reasonable costs and expenses (including without limitation reasonable
attorneys' fees and other disbursements) (collectively, "Damages") suffered,
sustained, incurred or paid by the SVG Indemnified Parties in connection with,
resulting from or arising out of, directly or indirectly:
(a) any inaccuracy or breach of any representation or warranty
of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ set forth in this Agreement (as modified by the
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Disclosure Schedules) or in any certificate delivered by or on
behalf of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ at the Closing; or
(b) any nonfulfillment of any covenant or agreement by
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ under this Agreement; or
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(c) any Excluded Liabilities; or
(d) any liabilities of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entities
that are not Included Liabilities; or
(e) failure to obtain any Required Consents; or
(f) without in any way limiting the scope of Section 7.1(a),
any inaccuracy or breach of any representation or warranty of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
set forth in the second sentence of Section 2.3(a) (Authority); or
(g) any claims of infringement of the United States patent no.
5688359 directed to the muffle etch apparatus but only to the extent that
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ liability under this Section 7.1(g) is limited to $200,000; or
(h) asbestos and lead abatement at the Scotts Valley Property,
but only to the extent: (i) that such costs are incurred during the performance
of any improvements by SVG at the Scotts Valley Property occurring at any time
during the first year following the Closing Date; (ii) that ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
shall only be responsible for one-half of any such abatement costs; and (iii)
that ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ maximum liability for such costs is limited to $440,000.
7.2 General Indemnification by SVG. SVG covenants and agrees to
indemnify, defend, protect and hold harmless ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and its respective
officers, directors, employees, assigns, successors and Affiliates
(individually, a "▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Indemnified Party" and collectively, the
"▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Indemnified Parties") from, against and in respect of all
Damages suffered, sustained, incurred or paid by the ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Indemnified
Parties in connection with, resulting from or arising out of, directly or
indirectly:
(a) any inaccuracy or breach of any representation or warranty
of SVG set forth in this Agreement or in any certificate delivered by or on
behalf of SVG at the Closing; or
(b) any nonfulfillment of any covenant or agreement by SVG
under this Agreement; or
(c) any Included Liability; or
(d) any liabilities of any SEG Entity attributable to any act,
omission or event occurring after the Closing; or
(e) any liabilities of SVG that are not Excluded Liabilities.
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7.3 Limitation and Expiration. Notwithstanding the above:
(a) the aggregate amount for which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ is required
to indemnify the SVG Indemnified Parties under this Article 7 shall not exceed
the Escrow Amount; provided, however, that this limitation shall not apply to,
and the SVG Indemnified Parties shall not be obligated to apply any claims
against the Escrow Amount with respect to, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ liability for (i)
Damages arising out of any liabilities referenced in Sections 7.1(c), (d) or
(f); (ii) Damages arising out of any breaches of the representations and
warranties made in Section 2.8 (Taxation) or the covenants of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
set forth in Section 5.10 (Tax Matters); (iii) Damages based on fraud or willful
breaches by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, or any of its Affiliates or agents on behalf of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, of any of its representations or warranties contained in this
Agreement (as modified by the ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Disclosure Schedules); or in any
certificate delivered by or on behalf of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ at the Closing or (iv)
any adjustment to the Estimated Consideration under Sections 1.3 or 1.4 (it
being understood that any matter with respect to which any such adjustment is
made under Sections 1.3 and 1.4 shall not also be considered a breach of any
representation or warranty of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ contained in this Agreement) and,
provided, further that ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ sole liability for asbestos and lead
abatement of the Scotts Valley Property occurring after the Closing Date shall
be limited to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ indemnification obligations in Section 7.1(h).
(b) the indemnification obligations of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ under
this Article 7, shall terminate at the date that is the later of clause (i) or
(ii) of this Section 7.3(b):
(i) (1) except as to representations, warranties
and covenants specified in clauses (i)(2) and (i)(3) of this Section 7.3(b),
nine (9) months from the Closing Date; provided, however, that SVG, in its
reasonable discretion may extend the nine (9) month period set forth in this
clause (1) to twelve (12) months (as it may be so modified, the "Escrow Release
Date") that, notwithstanding any other provision of this Agreement, no claim for
indemnification with respect to any of the matters referenced in this clause (1)
shall be effective unless SVG gives ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ a written Claim Notice on or
prior to the Escrow Release Date; or
(2) with respect to representations and
warranties contained in Section 2.16 (Environmental Matters) and Section 2.8
(Taxes), the covenants of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ set forth in Section 5.10 (Tax
Matters), and indemnification obligations of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ set forth in
Sections 7.1(c) and (d), the expiration of the relevant federal, state or
foreign statute of limitation (including extensions thereof); or
(3) with respect to the representations and
warranties contained in the second sentence of Section 2.3(a) (Authority) and
the indemnification obligations of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ set forth in Section 7.1(f),
the indemnification of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall survive forever; or
(ii) the final resolution of claims or demands for
which Claim Notice has been delivered to the Indemnifying Party as of the
relevant dates described in clause (i) of this Section 7.3(b) (such claims
referred to as "Pending Claims").
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(c) the indemnification obligations of SVG shall terminate at
the date that is the later of (i) the Escrow Release Date, except that the
indemnification obligations of SVG to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ set forth in Sections
7.2(c), (d) and (e) and with respect to the covenants of SVG set forth in
Section 5.10 (Tax Matters) shall terminate upon the expiration of the relevant
federal, state or foreign statute of limitations (including extensions thereof),
and (ii) the resolution of all Pending Claims under Section 7.2.
(d) Notwithstanding anything to the contrary in this
Agreement, no SVG Indemnified Party shall be entitled to indemnification under
this Agreement unless and until the sum of all otherwise indemnifiable amounts
payable to all the SVG Indemnified Parties together exceeds $100,000, in which
case, subject to the other provisions of this Agreement, the amount
indemnifiable shall be the amount in excess of $100,000. Notwithstanding
anything to the contrary in this Agreement, no ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Indemnified Party
shall be entitled to indemnification under this Agreement unless and until the
sum of all otherwise indemnifiable amounts payable to all the ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
Indemnified Parties together exceeds $100,000, in which case, subject to the
other provisions of this Agreement, the amount indemnifiable shall be the amount
in excess of $100,000. The foregoing limitation shall not apply to the
indemnification obligations with respect to the covenants set forth in Section
5.10 (Tax Matters) and the indemnification obligations of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ set
forth in Section 7.1(f).
(e) Notwithstanding anything to the contrary in this
Agreement, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall only be responsible for lead and asbestos
abatement at the Scotts Valley Property to the extent set forth in Section
7.1(h).
7.4 Indemnification Procedures. All claims or demands for
indemnification under this Article 8 ("Claims") shall be asserted and resolved
as follows:
(a) In the event that any ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Indemnified Party or
SVG Indemnified Party (an "Indemnified Party") has a Claim against any party
obligated to provide indemnification pursuant to Section 7.1 or 7.2 hereof (an
"Indemnifying Party") which does not involve a Claim being asserted against or
sought to be collected by a third party, the Indemnified Party shall with
reasonable promptness notify the Indemnifying Party of such Claim, with a copy
to the Escrow Agent, if applicable, specifying the nature of such Claim and the
amount or the estimated amount thereof to the extent then feasible (the "Claim
Notice"). If the Indemnifying Party does not notify in writing the Indemnified
Party within thirty (30) days after the date of delivery of the Claim Notice
that the Indemnifying Party disputes such Claim, with a statement in reasonable
detail (to enable the Indemnified Party to understand the nature of the dispute)
of the basis of such position (a "Notice of Objection"), a copy of which is
delivered to the Escrow Agent, if applicable, the amount of such Claim shall be
conclusively deemed a liability of the Indemnifying Party hereunder. In case a
Notice of Objection is delivered to the Indemnified Party in accordance with
this Section 7.4(a), the Indemnified Party shall respond in a written statement
to the Notice of Objection within thirty (30) days and, for sixty (60) days
thereafter, the parties shall attempt in good faith to resolve such dispute
(and, if the parties should so agree, a memorandum setting forth such agreement
shall be prepared and signed by both parties). If the parties do not resolve the
dispute within such sixty (60) day period, either party may demand arbitration
of the matter unless
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the amount of the Damages is at issue in pending litigation with a third party,
in which event arbitration shall not be commenced until such amount is
ascertained or both parties agree to arbitration. Any arbitration under this
Section 7.4 shall be conducted in accordance with Section 9.7.
(b) (i) In the event that any Claim for which the
Indemnifying Party would be liable to an Indemnified Party hereunder is asserted
against an Indemnified Party by a third party (a "Third Party Claim"), the
Indemnified Party shall promptly deliver a Claim Notice to the Indemnifying
Party. The Indemnifying Party shall have thirty (30) days from date of delivery
of the Claim Notice to notify the Indemnified Party (A) whether the Indemnifying
Party disputes liability to the Indemnified Party hereunder with respect to the
Third Party Claim, and, if so, the basis for such a dispute, and (B) whether or
not the Indemnifying Party desires, at the sole cost and expense of the
Indemnifying Party, to defend against the Third Party Claim, provided that the
Indemnified Party, at its sole cost and expense, is hereby authorized (but not
obligated) to file any motion, answer or other pleading and to take any other
reasonable action which the Indemnified Party shall deem necessary or
appropriate to protect the Indemnified Party's interests.
(ii) If the Indemnifying Party elects to defend the
Indemnified Party against such Third Party Claim by appropriate proceedings,
then, unless the Indemnified Party otherwise agrees in writing, the Indemnifying
Party may not settle any Third Party Claim (in whole or in part) if such
settlement does not include a complete and unconditional release of the
Indemnified Party. If the Indemnified Party desires to participate in, but not
control, any such defense or settlement the Indemnified Party may do so at its
sole cost and expense. If the Indemnifying Party elects not to defend the
Indemnified Party against a Third Party Claim, whether by failure of such party
to give the Indemnified Party timely notice as provided herein or otherwise,
then the Indemnified Party, without waiving any rights against such party, may
settle or defend against such Third Party Claim in the Indemnified Party's
reasonable discretion and the Indemnified Party shall be entitled to recover
from the Indemnifying Party or the Escrow Amount, as provided in Section 7.5,
the amount of any settlement or judgment and, on an ongoing basis, all
indemnifiable costs and expenses of the Indemnified Party with respect thereto.
(iii) If at any time, in the reasonable opinion of
the Indemnified Party, notice of which shall be given in writing to the
Indemnifying Party, any Third Party Claim seeks material prospective relief
which could have an adverse effect on any Indemnified Party or the SEG Entities
or the Business, the Indemnified Party shall have the right to control or assume
(as the case may be) the defense of any such Third Party Claim and the amount of
any judgment or settlement and the reasonable costs and expenses of defense
shall be included as part of the indemnification obligations of the Indemnifying
Party hereunder. If the Indemnified Party elects to exercise such right, the
Indemnifying Party shall have the right to participate in, but not control, the
defense of such Third Party Claim at the sole cost and expense of the
Indemnifying Party.
(c) The Indemnified Party shall cooperate fully with the
Indemnifying Party to defend Third Party Claims as reasonably requested by the
Indemnifying Party by, for example, making relevant
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employees reasonably available and providing reasonable access to documents and
information during normal business hours and with prior notification.
(d) Subject to Section 7.3, nothing herein shall be deemed to
prevent the Indemnified Party from making a Claim, and an Indemnified Party may
make a Claim hereunder, for potential or contingent Damages provided, however,
that within thirty (30) days of notifying the Indemnifying Party of such
potential or contingent claim, the Indemnified Party delivers to the
Indemnifying Party a Claim Notice that sets forth the specific basis for any
such Claim.
(e) Subject to the provisions of Section 7.3, the Indemnified
Party's failure to give reasonably prompt notice as required by this Section 7.4
of any actual, threatened or possible claim or demand which may give rise to a
right of indemnification hereunder shall not relieve the Indemnifying Party of
any liability which the Indemnifying Party may have to the Indemnified Party
unless the failure to give such notice materially and adversely prejudiced the
Indemnifying Party.
(f) In the event of any inconsistency between the procedures
set forth in this Section 7.4 and the procedures set forth in Section 5.10
(relating to Taxes), Section 5.10 shall control.
7.5 Escrow Fund; Appointment of Escrow Agent; Exclusive Remedy.
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and SVG hereby agree to the creation of an escrow fund to
satisfy ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ indemnification obligations to the SVG Indemnified
Parties pursuant to the terms of this Article 7. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will be deemed
to have received and deposited with the Escrow Agent the Escrow Amount and all
interest and earnings accruing on the Escrow Amount shall accrue to (and be
taxable currently to) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇. The Escrow Amount, and all interest and
earnings thereon (collectively, the "Escrow Fund") and all claims or demands for
payment out of the Escrow Fund shall be governed by the terms of the Escrow
Agreement in substantially the form attached hereto as Exhibit ▇.
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and SVG hereby appoint an Escrow Agent to administer the Escrow
Fund. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and SVG shall each bear one-half of the fees and expenses
of the Escrow Agent incurred in connection with the establishment and
maintenance of the Escrow Fund. The parties agree and acknowledge that the
Escrow Fund (but no more than $3,450,000) shall be the SVG Indemnified Parties'
sole and exclusive remedy for Damages for which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall be liable
under Section 7.1, except as set forth in Section 7.3(a).
7.6 Survival of Representations; Warranties and Covenants. The
representations of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ will survive the Closing and will remain in
effect until, and will expire in accordance with Section 7.3. The
representations of SVG will survive the Closing and will remain in effect until,
and will expire in accordance with Section 7.3.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written consent duly authorized by the Boards of
Directors of SVG and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇;
(b) by either ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or SVG if the Acquisition shall
not have been consummated by June 30, 1999 for any reason; provided, however,
that the right to terminate this Agreement under this Section 8.1(b) shall not
be available to any party whose action or failure to act has been a principal
cause of or resulted in the failure of the Acquisition to occur on or before
such date and such action or failure to act constitutes a breach of this
Agreement;
(c) by either ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or SVG if a Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Acquisition, which order, decree, ruling or other action is
final and nonappealable;
(d) by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, upon a material breach of any
representation, warranty, covenant or agreement on the part of SVG set forth in
this Agreement, or if any representation or warranty of SVG shall have become
materially untrue, in either case such that the conditions set forth in Section
6.1(a) or Section 6.1(b) would not be satisfied as of the time of such breach or
as of the time such representation or warranty shall have become untrue,
provided that if such inaccuracy in SVG's representations and warranties or
breach by SVG is curable by SVG through the exercise of its commercially
reasonable efforts, then ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ may not terminate this Agreement under
this Section 8.1(d) for thirty (30) days after notice from ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ of
such breach has been delivered to SVG, provided SVG continues to exercise such
commercially reasonable efforts to cure such breach; or
(e) by SVG, upon a material breach of any representation,
warranty, covenant or agreement on the part of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ set forth in this
Agreement, or if any representation or warranty of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall have
become materially untrue, in either case such that the conditions set forth in
Section 6.2(a) or Section 6.2(b) would not be satisfied as of the time of such
breach or as of the time such representation or warranty shall have become
untrue, provided, that if such inaccuracy in ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ representations
and warranties or breach by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ is curable by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
through the exercise of its commercially reasonable efforts, then SVG may not
terminate this Agreement under this Section 8.1(e) for thirty (30) days after
notice from SVG of such breach has been delivered to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, provided
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ continues to exercise such commercially reasonable efforts to
cure such breach.
8.2 Notice of Termination; Effect of Termination. Any termination of
this Agreement under Section 8.1 above will be effective immediately upon the
delivery (subject to the cure periods set forth
-49-
in Section 8.1(d) and (e)), of written notice of the terminating party to the
other parties hereto. In the event of the termination of this Agreement as
provided in Section 8.1, this Agreement shall be of no further force or effect,
except (i) as set forth in this Section 8.2, Section 8.3 and Article 9, each of
which shall survive the termination of this Agreement, and (ii) nothing herein
shall relieve any party from liability for any breach of this Agreement. In
addition, subject to the next sentence, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall return the ▇▇▇▇▇▇▇
Money Payment to SVG in immediately available funds within three (3) Business
Days of any termination of this Agreement pursuant to Section 8.1 and, before or
at the time of such termination SVG has notified ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ in writing that
(i) SVG, as a result of its customer due diligence, determines, in its sole
reasonable discretion, that the value of the Business is materially and
adversely different from that previously represented to SVG by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇,
(ii) SVG determines, in its sole reasonable discretion, that the financial
condition or prospects of the Business are materially and adversely different
from that previously represented to SVG by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, including any
material reduction in the value or utility of the real property assets of the
SEG Entities, (iii) there is any governmental action pending or threatened with
respect to the Acquisition or the other transactions contemplated hereby that
would seek to block or alter the terms of such transactions as set forth herein,
including actions based on federal antitrust laws, (iv) there has been a
material adverse change in the Business or the desirability of the Business to
SVG that causes the value of the Business to be materially and adversely
different than previously represented to SVG by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, in SVG's
reasonable discretion, including a material difference in the appraised value of
the Included Assets and the Included Liabilities identified, (v) SVG determines,
in its reasonable discretion, that other transactions or corporate governance
matters in which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ is or may be involved will materially affect
the timing or the ability to consummate the Acquisition and other transactions
contemplated hereby, or (vi) the parties are unable to agree on the tax
treatment of the Acquisition or the other transactions contemplated hereby. In
order to invoke its rights under the previous sentence, SVG must base its
decision to terminate this Agreement either on an event or development that took
place after the date of this Agreement or information or analysis of which SVG
first became aware after the date of this Agreement. If this Agreement is
terminated in accordance with Section 8.1 and the preceding sentence does not
apply, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ shall retain the ▇▇▇▇▇▇▇ Money Payment. No termination of
this Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.
8.3 Fees and Expenses. All fees and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses whether or not the Acquisition is consummated.
8.4 Amendment. Subject to applicable law, this Agreement may only be
amended hereto by execution of an instrument in writing signed on behalf of each
of the parties hereto.
8.5 Extension; Waiver. At any time prior to the Closing Date any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
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party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party, provided that, if the Acquisition
closes, any unsatisfied conditions set forth in Section 6.1 or 6.2 of this
Agreement shall be deemed waived even without such an instrument. Delay in
exercising any right under this Agreement shall not constitute a waiver of such
right.
ARTICLE IX
GENERAL PROVISIONS
9.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to SVG to:
Silicon Valley Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(i) if to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, to:
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Stanford Research Park
Palo Alto, California 94304-1223
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
9.2 Interpretation. When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Reference to the subsidiaries of an entity
shall be deemed to include all direct and indirect subsidiaries of such entity.
9.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
9.4 Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Disclosure
Schedules (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and , except as otherwise provided herein, supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder.
9.5 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision
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to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of such void or unenforceable provision.
9.6 Other Remedies. Except as otherwise provided herein including
Sections 7.3 and 7.5, any and all remedies herein expressly conferred upon a
party will be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other remedy.
9.7 Governing Law; Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof; provided that issues involving the corporate governance of any of
the parties hereto shall be governed by their respective jurisdictions of
incorporation. Except as otherwise provided in this Agreement, any claim or
dispute arising out of or related to this Agreement, or the interpretation,
making, performance, breach or termination thereof, shall be finally settled by
binding arbitration in Santa ▇▇▇▇▇ County, California under the rules of the
American Arbitration Association then in effect by a single arbitrator mutually
agreeable to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and SVG. In the event that within thirty (30) days
after the submission of any dispute to arbitration, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and SVG do
not mutually agree on a single arbitrator, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, on the one hand, and
SVG, on the other hand, shall each select one arbitrator and the AAA shall
select a third arbitrator. The arbitrator(s) shall have the authority to grant
any equitable and legal remedies that would be available in any judicial
proceeding instituted to resolve a dispute. Judgment on the award rendered by
the arbitrators may be entered in any court having jurisdiction thereof. The
arbitrator(s) may award to the prevailing party, if any, as determined by the
arbitrator(s), all of its costs and fees, including AAA administrative fees,
arbitrator fees, attorney's fees, expert fees, witness fees, travel expenses and
out-of-pocket expenses (including such expenses as copying, telephone,
facsimile, postage and courier fees). The parties to the arbitration may apply
to any court of competent jurisdiction for a temporary restraining order,
preliminary injunction or other interim or conservatory relief, as necessary,
without breach of this arbitration provision and without any abridgement of the
powers of the arbitrator(s). The parties agree that, any provision of applicable
law notwithstanding, they will not request and the arbitrator(s) shall have no
authority to award punitive or exemplary damages against any party.
9.8 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
9.9 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other party, except that: (a) SVG may assign its rights to acquire the
International Subsidiary Capital Stock to one or more of its subsidiaries and
(b) SVG may assign its rights to acquire the Scotts Valley Property to a
subsidiary of SVG or a
-53-
lender or lessor to SVG. Subject to the preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
9.10 Definitions. In this Agreement, the following terms have the
meanings specified or referred to in this Section 9.10:
"AAA" means the American Arbitration Association.
"Accountant" has the meaning set forth in Section 5.10(a).
"Accountant Report" has the meaning set forth in Section
5.10(a).
"Acquisition" has the meaning set forth in the Recitals.
"Adjusted Consideration" has the meaning set forth in Section
1.2.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended,
of the United States.
"Allocation Schedule" has the meaning set forth is Section
5.10(a).
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction known to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ that
forms or could reasonably form the basis for any specified consequence.
"Business" means all assets, real and intangible, including
Intellectual Property assets, and activities, conduct and rights of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and the SEG Entities necessary to or related to the Field.
"Business Activities" has the meaning set forth in Section
2.10(h).
"Business Day" means any day that is not a Saturday or Sunday
or a day on which banks are required or permitted by law or executive order to
be closed in the City of New York.
"Changes" has the meaning set forth in Section 5.10(c).
"Claims" has the meaning set forth in Section 7.4.
"Claim Notice" has the meaning set forth in Section 7.4(a).
"Closing" has the meaning set forth in Section 1.7.
"Closing Cash Payment" has the meaning set forth in Section
1.2.
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"Closing Certificate" has the meaning set forth in Section
1.4(a).
"Closing Date" has the meaning set forth in Section 1.7.
"Closing Date Receivables" has the meaning set forth in
Section 5.12(a).
"Closing Net Asset Value" has the meaning set forth in Section
1.4(a).
"COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.
"Code" means the Internal Revenue Code of 1986, as amended, of
the United States.
"Confidentiality Agreement" has the meaning set forth in
Section 5.1(a).
"Conflict" means with respect to any instrument or action that
such instrument or action may result in a conflict with, violation of, default
under, or a right of termination, cancellation, forfeiture or acceleration of
any obligation or material loss of any benefit (with or without notice or lapse
of time, or both).
"Consent Decree" means that certain Order Granting Entry of
Consent Decree filed November 1, 1991 and that certain Consent Decree filed July
16, 1991 in U.S. ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Company, Civil Action No. C91-20423 in the
United States District Court for the Northern District of California which Order
and Consent Decree were recorded in Volume 4944 page 300 of the official records
of the Santa ▇▇▇▇ County Recorder's office on December 18, 1991.
"Contract" has the meaning set forth in Section 2.17.
"Damages" has the meaning set forth in Section 7.1.
"Disagreement Notice" has the meaning set forth in Section
5.10(a)
"Disposal Site" is any real property (other than Historic SEG
Business Facilities) used for the treatment, storage, transfer or disposal of
any Hazardous Materials used in connection with the Business.
"DOJ" means the United States Department of Justice.
"DOL" means the United States Department of Labor.
"▇▇▇▇▇▇▇ Money Payment" means the payment of $1,000,000 cash
made to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ by SVG at the time of the execution and delivery of the
Letter of Intent.
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"Employee" means any current, former, or retired employee,
consultant, officer or director of any SEG Entity or any Affiliate who works or
worked primarily in the Business.
"Environmental Consultant" means ARCADIS ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Inc. or another reputable and equally creditworthy environmental service firm
acceptable to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and SVG in the reasonable exercise of their
discretion.
"Environmental Laws" means all federal, state, local and
foreign laws, ordinances, consent decrees, orders or requirements of any
Governmental Entity, codes and regulations relating to the protection of human
health or the environment (including ambient air, surface water, ground water,
land surface or subsurface strata) including laws and regulations relating to
the Release of Hazardous Materials, or otherwise relating to the importation,
registration, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"Environmental Package" means the rights and protections that
would be afforded to SVG under the form of Guaranteed Fixed Price Remediation
Agreement (a "Remediation Agreement") among ARCADIS ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc., SVG
and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, as well as the rights and protections afforded to SVG under
performance bonds and insurance policies to be obtained pursuant to the
Remediation Agreement, or substantially similar rights and protections under an
agreement with a different Environmental Consultant which package shall be
acceptable to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and SVG in their reasonable discretion.
"Environmental Package Cost" has the meaning set forth in
Section 1.6.
"Equipment" has the meaning set forth in Section 2.9(c).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section
2.14(a).
"Escrow Agent" has the meaning set forth in Section 1.5.
"Escrow Agreement" has the meaning set forth in Section 1.5.
"Escrow Amount" has the meaning set forth in Section 1.5.
"Escrow Fund" has the meaning set forth in Section 7.5.
"Escrow Release Date" has the meaning set forth in Section
7.3(b).
"Estimated Consideration" has the meaning set forth in Section
1.2.
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"Excluded Assets" means any asset that is not an Included
Asset, including those assets and contract rights referenced under the caption
"Excluded Assets" on Schedule 1.3.
"Excluded Liabilities" means any liability and obligation that
is not an Included Liability, including the liabilities and obligations
referenced under the caption "Excluded Liabilities" on Schedule 1.3.
"Field" means the design, development, manufacture, marketing,
production, distribution, licensing and sale of semiconductor and other related
equipment, other than chemical vapor deposition ▇▇▇▇▇▇▇▇ that use a plasma
having an ion density of greater than 1011 ions/cm3 and operate or is designed
to operate at a pressure of less than 10 mTorr.
"FICA" has the meaning set forth in Section 2.8(b).
"FMLA" means the Family Medical Leave Act of 1993, as amended.
"FTC" has the meaning set forth in Section 5.7.
"FUTA" has the meaning set forth in Section 2.8(b).
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States applied consistently with the
manner in which ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ applied them in the past.
"Governmental Entity" has the meaning set forth in Section
2.4.
"Hazardous Material" has the meaning set forth in Section
2.16(a).
"Hazardous Materials Activity" is the transportation,
transfer, recycling, storage, use, treatment, manufacture, removal, remediation,
Release, exposure of others to, sale, registration or distribution of any
Hazardous Material or any product containing a Hazardous Material.
"HDPP License" means the irrevocable, worldwide royalty-fee
license granted to the SEG Sub under Section 4 of the License Agreement among
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, SEG Sub and Applied Materials, Inc. dated as of March 29, 1999.
"Historic SEG Business Facilities" has the meaning set forth
in Section 2.16(a).
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement
Act of 1976, as amended.
"Imported Goods" has the meaning set forth in Section 2.18.
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"Included Assets" means those assets referenced under the
caption "Included Assets" in Schedule 1.3.
"Included Liabilities" means those liabilities and obligations
referenced under the caption "Included Liabilities" in Schedule 1.3.
"Indemnified Party" has the meaning set forth in Section
7.4(a).
"Indemnifying Party" has the meaning set forth in Section
7.4(a).
"Intellectual Property" means any or all of the following and
all rights in, arising out of, or associated therewith: (i) all United States
and foreign patents and utility models and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations,
continuations-in-part, reexaminations and extensions thereof, and equivalent or
similar rights anywhere in the world in inventions and discoveries ("Patents");
(ii) all inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, confidential information,
know how, technology, technical and other data and customer and supplier lists,
and all documentation embodying or evidencing any of the foregoing; (iii) all
copyrights, copyright registrations and applications therefor and all other
rights corresponding thereto throughout the world ("Copyrights"); (iv) all mask
works, mask work registrations and applications therefor, and any equivalent or
similar rights in semiconductor masks, layouts, architectures or topology ("Mask
Works"); (v) all industrial designs and any registrations and applications
therefor throughout the world; (vi) all trade names, logos, trade dress,
corporate names, common law trademarks and service marks, trademark and service
▇▇▇▇ registrations and applications therefor, together with all translations,
adaptations, derivations and combinations thereof, and including all goodwill
associated with all of the foregoing throughout the world ("Trademarks"); (vii)
all databases and data collections and all rights therein throughout the world;
(viii) all computer software including all source code, object code, firmware,
development tools, files, records and data, and all media on which any of the
foregoing is recorded; (ix) all World Wide Web addresses, sites and domain
names; and (x) any similar, corresponding or equivalent rights to any of the
foregoing anywhere in the world.
"International Subsidiary Capital Stock" has the meaning set
forth in the Recitals.
"IRS" means the Internal Revenue Service of the United States.
"Japanese Loans" means those certain loans by and between the
Japanese Development Bank and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ International Japan K.K. dated
June 12, 1996 in the principal amount of 1,350,000,000 Japanese yen and dated
December 26, 1997 in the principal amount of 200,000,000 Japanese yen, and that
certain loan by and between Bank of Yokohama Ltd. and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
International Japan K.K. dated January 31, 1996 in the principal amount of
1,000,000,000 Japanese yen.
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"Japanese Property" means all of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ or any SEG
Entity's right, title and interest in and to any real property located in
Kawasaki City, Kanagawa Prefecture, Japan (including, without limitation, that
certain real property located at Block No. M2-5 in the Land Readjustment Project
Area, ▇▇. ▇, ▇▇▇▇▇▇, ▇▇▇▇-▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇) and all
other improvements and fixtures located thereon, and the easements, rights and
appurtenances relating thereto.
"Lease" has the meaning set forth in Section 2.9(a).
"Letter of Intent" means that letter of intent dated March
3,1999 between SVG and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ related to the Acquisition.
"Liability" has the meaning set forth in Section 2.6.
"Lien" means any mortgage, pledge, lien, security interest,
charge, claim, equity, encumbrance, restriction on transfer, conditional sale or
other title retention device or arrangement (including a capital lease),
transfer for the purpose of subjection to the payment of any indebtedness, or
restriction on the creation of any of the foregoing, whether relating to any
property or right or the income or profits therefrom (excluding, however, in the
case of the Scotts Valley Property, the Lien arising out of the recordation of
the Consent Decree).
"Material Adverse Effect" means a material adverse effect or
change on the business, assets (including intangible assets), condition
(financial or otherwise), or results of operations or of the entity or entities
and/or business referenced in conjunction with that phrase.
"Notice of Objection" has the meaning set forth in Section
7.4(a).
"Pending Claims" has the meaning set forth in Section 7.3(b).
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Pre-Closing Period" has the meaning set forth in Section
5.10(b).
"Preliminary Net Asset Value" has the meaning set forth in
Section 1.4(a).
"Proceedings" has the meaning set forth in Section 5.10(e).
"PTO" means the United States Patent and Trademark Office.
"Registered Intellectual Property" means all United States,
international and foreign SEG Intellectual Property consisting of: (i) Patents,
Patent applications (including provisional applications); (ii) registered
Trademarks, applications to register Trademarks, including intent-to-use
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applications, or other registrations or applications related to Trademarks;
(iii) registered Copyrights and applications for Copyright registration; (iv)
Mask Work registrations and applications to register Mask Works; (v) URLs, Web
site addresses and domain names and (vi) any other SEG Intellectual Property
that is the subject of an application, certificate, filing, registration or
other document issued by, filed with, or recorded by, any state, government or
other public legal authority.
"Related Agreements" means all such ancillary agreements
required in this Agreement to be executed and delivered in connection with the
transactions contemplated hereby, including the Escrow Agreement.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
groundwater, wetlands, land or subsurface strata.
"Required Consents" has the meaning set forth in Section 2.4.
"Returns" has the meaning set forth in Section 2.8(b).
"Scotts Valley Property" means all of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ or any
SEG Entity's right, title and interest in and to any real property located in
Scotts Valley, California (including, without limitation, those certain
properties designated as tax parcel numbers ▇▇▇-▇▇▇-▇▇, ▇▇▇-▇▇▇-▇▇, ▇▇▇-▇▇▇-▇▇,
▇▇▇-▇▇▇-▇▇, ▇▇▇-▇▇▇-▇▇, ▇▇▇-▇▇▇-▇▇, ▇▇▇-▇▇▇-▇▇, ▇▇▇-▇▇▇-▇▇ and 022-221-05) and
all other improvements and fixtures located thereon, and the easements, rights
and appurtenances relating thereto.
"SEG Balance Sheet" has the meaning set forth in Section 2.5.
"SEG Balance Sheet Date" has the meaning set forth in Section
2.5.
"SEG Business Facilities" has the meaning set forth in Section
2.9(a).
"SEG Employee Plans" has the meaning set forth in Section
2.14(a).
"SEG Employees" has the meaning set forth in Section 5.9.
"SEG Entities" has the meaning set forth in the Recitals.
"SEG Environmental Permits" has the meaning set forth in
Section 2.16(b).
"SEG Financials" has the meaning set forth in Section 2.5.
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"SEG Intellectual Property" means all Intellectual Property
that is owned by any SEG Entity or by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ and related to the
Business, including not limited to all Intellectual Property owned exclusively
or jointly by ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or any SEG Entity pursuant to the terms of the
agreements disclosed on Schedules 2.10(i) and 2.10(j).
"SEG Interim Financials" has the meaning set forth in Section
2.5.
"SEG International Entities" has the meaning set forth in the
Recitals.
"SEG LLC" has the meaning set forth in the Recitals.
"SEG LLC Interests" has the meaning set forth in the Recitals.
"SEG Permits" has the meaning set forth in Section 2.11(a).
"SEG Registered Intellectual Property" has the meaning set
forth in Section 2.10(a).
"SEG Sub" has the mean set forth in the Recitals.
"SEG Tax Returns" has the meaning set forth in Section
5.10(b).
"SEG Year-End Financials" has the meaning set forth in Section
2.5.
"Special Receivables" has the meaning set forth in Section
5.12(a).
"Straddle Period" has the meaning set forth in Section
5.10(b).
"SVG Benefits" has the meaning set forth in Section 5.10(c).
"SVG Closing Adjustment Notice" has the meaning set forth in
Section 1.4(b).
"SVG Indemnified Party" has the meaning set forth in Section
7.1.
"Tax or Taxes" has the meaning set forth in Section 2.8(a).
"Third Party Claim" has the meaning set forth in Section
7.4(b).
"Title Policy" has the meaning set forth in Section 6.2(k).
"Unassumed Payables" has the meaning set forth in Section
1.3(c).
"▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Benefits" has the meaning set forth in
Section 5.10(c).
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"▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Disclosure Schedules" has the meaning set
forth in the preamble of Article 2.
"▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Indemnified Party" has the meaning set forth
in Section 7.2.
"▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ Knowledge" (and similar terms such as
"know," "aware" and "knowledge of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇"), means the knowledge of at
least one officer or director of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or the SEG Sub, including facts
of which such officers and directors, in the reasonably prudent exercise of
their duties, should be aware.
"▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ Retained Environmental Liabilities" shall
mean any liability, obligation, judgment, penalty, fine, cost or expense, of any
kind or nature, or the duty to indemnify, defend or reimburse any Person,
arising at any time ("Environmental Claims"), with respect to: (i) the presence
on or before the Closing Date of any Hazardous Materials in the soil,
groundwater, surface water, air or building materials of any Historic SEG
Business Facilities ("Pre-Existing Contamination"); (ii) the migration at any
time prior to or after the Closing Date of Pre-Existing Contamination to any
other real property, or the soil, groundwater, surface water, air or building
materials thereof; (iii) any transportation, transfer, recycling, storage, use,
handling, treatment, manufacture, removal, investigation, remediation, release,
emission, sale, disposal or distribution of any Hazardous Materials, or any
product or waste containing Hazardous Materials conducted on any Historic SEG
Business Facilities prior to the Closing Date or otherwise occurring prior to
the Closing Date in connection with or to benefit the Business ("Pre-Closing
Hazardous Materials Activities"); (iv) the exposure of any person to
Pre-Existing Contamination or to Hazardous Materials in the course of or as a
consequence of any Pre-Closing Hazardous Materials Activities, without regard to
whether any health effect of the exposure has been manifested as of the Closing
Date; (v) the violation of any Environmental Laws by the ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or its
agents, employees, predecessors in interest, contractors, invitees or licensees
prior to the Closing Date or in connection with any Pre-Closing Hazardous
Materials Activities prior to the Closing Date; (vi) any actions or proceedings
brought or threatened by any third party with respect to any of the foregoing;
and (vii) with respect to subsections (i) and (ii) of this definition, the
extent to which such Pre-Existing Contamination continues to exist or migrate
after the Closing Date; and (viii) with respect to subsections (iv) and (v) of
this definition, the extent to which such exposures or violations continue to
occur for a period of six (6) months following the Closing Date. Notwithstanding
anything to the contrary contained in this Agreement, the definition of
"▇▇▇▇▇▇▇-▇▇▇▇▇▇▇'▇ Retained Environmental Liabilities" shall not include (x)
Environmental Claims to the extent actually covered by the Environmental Package
or any environmental insurance policies obtained by SVG, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ or the
Environmental Consultant in connection with the Environmental Package; and (y)
abatement costs with respect to any lead and asbestos containing materials found
in the buildings and improvements of the Scotts Valley Property, which costs
shall be solely covered by Section 7.1(h) hereof.
"Year 2000 Compliant" has the meaning set forth in Section
2.10(t).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
SILICON VALLEY GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President of Finance,
Chief Financial Officer
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President,
Chief Financial Officer
**** SECURITIES PURCHASE AGREEMENT ****