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EXHIBIT 2
ASSET PURCHASE AGREEMENT
Between
FSI INTERNATIONAL, INC.
and
THE BOC GROUP, INC.
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TABLE OF CONTENTS
PAGE
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RECITALS......................................................................1
ARTICLE 1 Purchase and Sale of Division Assets and Liabilities and
Covenant Not to Compete........................................2
1.1 Division Assets................................................2
1.2 Excluded Assets................................................9
1.3 Liabilities Assumed...........................................11
1.4 Closing.......................................................16
1.5 Purchase Price................................................17
1.6 Adjustment of Purchase Price..................................18
1.7 Use of Names..................................................22
1.8 Covenant Not to Compete.......................................23
1.9 Agreement Regarding Chemical Delivery Systems.................29
1.10 Taxes and Fees................................................29
ARTICLE 2 Representations and Warranties of Seller...........................31
2.1 Corporate Status and Good Standing............................31
2.2 Corporate Action..............................................32
2.3 No Defaults...................................................32
2.4 Financial Statements..........................................33
2.5 Adverse Changes...............................................34
2.6 Licenses......................................................37
2.7 Title to Property; Security Interests.........................37
2.8 Employees and Employee Benefits...............................38
2.9 Litigation....................................................41
2.10 Brokers.......................................................42
2.11 Intellectual Property.........................................42
2.12 Environmental Matters.........................................43
2.13 Insurance.....................................................45
2.14 Contracts.....................................................45
2.15 Taxes.........................................................50
2.16 Compliance with Laws..........................................53
2.17 No Undisclosed Liabilities....................................54
2.18 Inventories...................................................54
2.19 All Necessary Assets..........................................55
2.20 Assumptions or Guarantees of Indebtedness.....................55
2.21 Labor Matters.................................................56
2.22 Accounts Receivable...........................................56
2.23 Principal Customers...........................................56
2.24 No Third Party Options........................................57
2.25 Full Disclosure...............................................57
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2.26 Millennium Compliance.........................................57
2.27 Real Property.................................................58
2.28 Exclusivity of Representations................................59
ARTICLE 3 Representations and Warranties of Buyer............................60
3.1 Corporate Status..............................................60
3.2 Corporate Action..............................................60
3.3 No Defaults...................................................61
3.4 Litigation....................................................61
3.5 Brokers.......................................................61
3.6 Approvals and Consents........................................62
3.7 Funds Available...............................................62
3.8 Exclusivity of Representations................................62
ARTICLE 4 Covenants of Seller Pending Closing................................63
4.1 Operation of the Business.....................................63
4.2 Access to Facilities, Files and Records.......................67
4.3 Consents......................................................67
4.4 Consummation of Agreement.....................................68
4.5 Notice of Proceedings.........................................68
4.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.........................................69
4.7 Korean Approvals..............................................69
ARTICLE 5 Covenants of Buyer Pending Closing.................................70
5.1 Consents......................................................70
5.2 Consummation of Agreement.....................................70
5.3 Notice of Proceedings.........................................70
5.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.........................................71
ARTICLE 6 Conditions to the Obligations of Seller............................71
6.1 Representations, Warranties, Covenants........................71
6.2 Proceedings...................................................72
6.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Waiting Period..............................72
6.4 Deliveries....................................................73
6.5 Opinion of Counsel to Buyer...................................73
ARTICLE 7 Conditions to the Obligations of Buyer.............................73
7.1 Representations, Warranties, Covenants........................73
7.2 Proceedings...................................................74
7.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Waiting Period..............................75
7.4 Consents......................................................75
7.5 Deliveries....................................................75
7.6 Opinion of Counsel to Seller..................................75
7.7 Certain Environmental Matters.................................75
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ARTICLE 8 Items to be Delivered at Closing...................................75
8.1 Deliveries by Seller..........................................75
8.2 Deliveries by Buyer...........................................76
8.3 Delivery by Seller and Buyer..................................77
ARTICLE 9 Survival; Indemnification..........................................77
9.1 Survival of Representations and Warranties....................77
9.2 Indemnification...............................................78
9.3 Survival of Indemnification Obligations.......................87
ARTICLE 10 Certain Employee Matters..........................................88
10.1 Definition....................................................88
10.2 Offers of Employment..........................................88
10.3 Compensation..................................................90
10.4 Continued Benefit Plans.......................................90
10.5 401(k) and Pension Plans......................................92
10.6 Recognition of Prior Service..................................93
10.7 Severance Payments to Employees...............................93
10.8 Accrued Paid Time-Off.........................................95
10.9 Termination of Participation in Plans.........................95
10.10 Cooperation...................................................95
10.11 Management Agreements.........................................95
ARTICLE 11 Miscellaneous.....................................................96
11.1 Termination of Agreement......................................96
11.2 Liabilities Upon Termination..................................96
11.3 Expenses......................................................97
11.4 Bulk Sales Laws...............................................97
11.5 Further Assurances............................................97
11.6 Cooperation - Tax Returns.....................................98
11.7 Public Announcement...........................................98
11.8 Access to Books and Records...................................98
11.9 Cooperation...................................................99
11.10 Substitution of Insurance; Directors' and Officers'
Indemnification or Liability Insurance................100
11.11 Restricted Contracts.........................................100
11.12 Exhibits, Disclosure Schedule and Amendments.................101
11.13 Confidentiality..............................................102
11.14 Notices......................................................102
11.15 Captions.....................................................103
11.16 Definition of Knowledge......................................103
11.17 Law Governing................................................104
11.18 Waiver of Provisions.........................................104
11.19 Counterparts.................................................104
11.20 Entire Agreement.............................................104
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11.21 Severability of Provisions..............................104
11.22 No Third Party Beneficiaries............................105
EXHIBITS
Exhibit 1.1(a) Acquired Subsidiaries
Exhibit 1.1(c) Machinery, Equipment, Etc. Included in Division Assets
Exhibit 1.1(e) Contracts
Exhibit 1.1(f) Patents, Etc.
Exhibit 1.1(m) Acquired Subsidiary Bank Accounts
Exhibit 1.1 (n) Split Dollar Life Insurance Policies
Exhibit 1.1(o) Allocated Shared Assets
Exhibit 1.2(a) Retained Personal Property and Contract Rights
Exhibit 1.2(b) Retained Receivables
Exhibit 1.2(d) Retained Prepaid Items
Exhibit 1.8(a) Chemical Management Products
Exhibit 2.3 Certain Consents and Approvals Related to Seller
Exhibit 6.1(c) Form of Buyer's Closing Certificate
Exhibit 6.5 BOC Opinion of Counsel
Exhibit 7.1(c) Form of Seller's Closing Certificate
Exhibit 7.4 Required Consents
Exhibit 7.6 FSI Opinion of Counsel
Exhibit 8.1(a) Form of ▇▇▇▇ of Sale and Assignment
Exhibit 8.2(b) Form of Assumption of Liabilities
Exhibit 8.3(a) Technology License Agreement
Exhibit 8.3(b) Shared Services Matrix
Exhibit 8.3(c) Facilities and Sublease Matrix
DISCLOSURE SCHEDULE
Section 2.1 Corporate Status
Section 2.2 Corporate Action
Section 2.3 No Defaults
Section 2.4 Financial Statements
Section 2.5 Adverse Changes
Section 2.6 Licenses
Section 2.7 Liens, Security Interests, Etc.
Section 2.8 Employees and Employee Benefits
Section 2.9 Litigation, Proceedings, Etc.
Section 2.10 Brokers
Section 2.11 Patents, etc.
Section 2.12 Environmental Matters
Section 2.13 Insurance
Section 2.14 Contracts
Section 2.15 Taxes
Section 2.16 Compliance with Laws
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Section 2.17 Undisclosed Liabilities
Section 2.18 Inventories
Section 2.19 Necessary Assets
Section 2.20 Guarantees
Section 2.21 Labor Matters
Section 2.22 Accounts Receivable
Section 2.23 Principal Customers
Section 2.24 Third Party Options
Section 2.25 Full Disclosure
Section 2.26 Millennium Compliance
Section 2.27 Real Property
Section 10.1(b) Shared Service Positions
Defined Terms
Defined Term Section
401(k) Pension Plan Participant 10.5
401(k) Plan 10.5
Acquired Subsidiaries 1.1(a)
Acquired Subsidiary Assets 1.1
Affiliate 1.8(a)
Allocated Shared Assets 1.1(o)
Assumed Obligations 1.3(a)
Benefit Plan 2.7(d)
Benefit Plans 2.7(d)
Buyer Opening paragraph
Buyer Commercial Confidential Information 1.8(b)
Buyer Confidential Information 1.8(b)
Buyer Technical Confidential Information 1.8(b)
CDS 1.9
Chaska Facility 1.1
Chemical Management Products 1.8(a)
Closing 1.4
Closing Date 1.4
Closing Statement of Net Assets 1.6
Cluster tool 1.9
CME 1.1
CMK 1.1
COBRA 10.4(b)
Code 1.5(b)(ii)
Consumed Property 1.2(e)
Contract 1.1(e)
Deductible Amount 9.2(a)(vii)
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Defined Term Section
Disclosure Schedule Article 2
Division Recitals, par. 1
Division Assets 1.1
Division Profit Contribution Statements 2.4
Employee 10.1
employee benefit plan 2.7(d)
Environmental Laws 2.12
Environmental Reports 2.12
Exceptions 1.8(b)
Excluded Assets 1.2
Extraordinary Event 9.2(a)(vii)
Financial Statements 2.4
Fixed Assets 1.1(c)
FSI Names 1.7
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act 4.6
IBM 1.9
Indemnified Party 9.2(c)
Indemnifying Party 9.2(c)
Intellectual Property 1.1(f)
Inventories 1.1(a)
Knowledge 11.17
Leased Real Property 2.27(b)
moFSI 1.8(a)
Material Adverse Effect 7.1(c)
Metron 1.8(a)
Microelectronics 1.8(a)
Millennium Compliant 2.26
Millennium Device 2.26
Net Working Capital 1.6
Not Actively Employed 10.2
Pension Plan 10.5
Pension Plan Participant 10.5
Pension Scheme 2.7(g)
Permitted Security Interests 2.7
Processing Tool 1.8(a)
Purchase Price 1.5
Purchase Price Adjustment Date 1.6(b)
Purchased Receivables 1.1(h)
Real Property Leases 2.27(b)
Remaining Divisions 1.1
Restricted Contract 4.3
Retained Prepaid Items 1.2(d)
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Defined Term Section
Retained Receivables 1.2(b)
Security Interests 2.7
Seller Opening paragraph
Seller Management Agreement 10.7(a)
Seller Severance Plan 10.7(a)
Shared Assets 1.1(o)
Shared Services Employees 1.1
Shares 2.7
Statement of Net Assets Date 2.4
Subsequent Contract 4.1(e)
Subsidiaries 1.8
Tax 2.15
Tax Claims 1.2(i)
Tax Returns 1.5(b)(iv)
Taxes 2.15
Tax-exempt use property 2.15(b)(v)
Transferred Assets 1.1
WARN Act 9.2(a)(v)
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is dated as of June __, 1999 between FSI
International, Inc., a Minnesota corporation having its principal place of
business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ("Seller"), and The BOC
Group, Inc., a Delaware corporation having its principal place of business at
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ("Buyer").
RECITALS:
1. Seller owns and operates the Chemical Management Division which
includes the Acquired Subsidiaries (as hereinafter defined) and the assets and
liabilities described in this Agreement (the "Division"); the results of the
operations of the Division are reflected in the Division Profit Contribution
Statements (as hereinafter defined). The Division designs and manufactures
chemical management systems that generate, blend and dispense high purity
chemicals, and blend and deliver slurries, to points of use in a manufacturing
facility, as well as related controls and support products.
2. Seller desires to sell, assign and transfer the Division to Buyer,
and Buyer desires to purchase the Division from Seller, all on the terms set
forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE 1
Purchase and Sale of Division Assets and Liabilities and Covenant Not to
Compete
The various exhibits to Article I of this Agreement set forth certain
assets and liabilities of the Division held by Seller to be acquired or assumed
by Buyer. Except as otherwise expressly stated in Article I, the exhibits to
Article I do not reflect those assets and
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liabilities of the Division held by the Acquired Subsidiaries (as hereinafter
defined) to be indirectly acquired or assumed by Buyer by virtue of Buyer's
acquisition of all the outstanding capital stock of the Acquired Subsidiaries.
1.1 Division Assets. Subject to and in reliance upon the representations,
warranties and agreements herein set forth, and subject to the terms and
conditions herein contained, Seller agrees to sell, convey, assign, transfer and
deliver to Buyer (for itself or Buyer as agent for one or more affiliates of
Buyer designated by Buyer prior to Closing) on the Closing Date (as hereinafter
defined), and Buyer agrees to purchase and accept on the Closing Date, all
properties, assets, privileges, rights and interests, real and personal,
tangible and intangible, of every type and description, wherever located (except
as otherwise indicated herein), including shares of capital stock of
subsidiaries and business goodwill (except for the Acquired Subsidiary Assets
(which shall be indirectly acquired by Buyer by virtue of Buyer's acquisition of
all the outstanding capital stock of the Acquired Subsidiaries) and the Excluded
Assets, in each case as hereinafter defined), that are owned by Seller directly
or indirectly, and/or (where so indicated herein) used or held for use, in each
case primarily or solely (where so indicated herein) in connection with the
business and operations of the Division, together with the Allocated Shared
Assets (as hereinafter defined) (collectively, the "Transferred Assets"). The
Transferred Assets, together with the properties, assets, privileges, rights and
interests, real and personal, tangible and intangible, of every type and
description, of the Acquired Subsidiaries (the "Acquired Subsidiary Assets"),
are collectively referred to in this Agreement as the "Division Assets." Except
for the Allocated Shared Assets and the license by Seller to Buyer set forth in
Section 1.1(f), the Transferred Assets shall not include any properties, assets,
privileges, rights or interests, real or personal,
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tangible or intangible, of any type or description, wherever located, including
shares of capital stock of subsidiaries and business goodwill, that are owned by
Seller, directly or indirectly, or used or held for use, in each case primarily
in connection with the business and operations of the remaining divisions of
Seller, namely the Microlithography Division, the Surface Conditioning Division
and the Shared Services Division (which provides legal, finance, treasury, human
resources, facilities, information services, marketing, fabrication, corporate
materials and other administrative services to more than one of Seller's
divisions) (the "Remaining Divisions"). Without limiting the foregoing, the
Transferred Assets shall include the following (except to the extent that any of
the following are Excluded Assets or Acquired Subsidiary Assets):
(a) Shares of Capital Stock of Subsidiaries. All issued and
outstanding shares of capital stock of the subsidiaries of the Seller listed on
Exhibit 1.1(a) (collectively, the "Acquired Subsidiaries");
(b) Inventories. All inventories and supplies, wherever
located (including but not limited to (i) pumps, pressure vacuum vessels,
cabinetry, valves, tubing, centrifugal pumps, stainless steel stirrers, chemical
analyzers, autotritrators, PLC components, interface panels and software, all in
the form of finished products, work-in-process, subassemblies, raw materials or
purchased parts, and (ii) office supplies and building service and mechanical
supplies) owned by Seller, directly or indirectly, or used or held for use, as
of the close of business on the day preceding the Closing Date, in each case
solely in connection with the business and operations of the Division
(collectively, "Transferred Inventories" and, together with such inventories of
the Acquired Subsidiaries, "Inventories"), and any rights to the
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warranties received from suppliers and any related claims, credits, rights of
recovery and set off with respect to such Transferred Inventories;
(c) Machinery, Equipment and Other Fixed Assets. All
machinery, equipment, computers, vehicles, furniture, fixtures, supplies,
warehouse equipment and leasehold improvements, as well as any assignable
warranties with respect thereto, (i) owned by Seller, directly or indirectly, or
used or held for use, as of the date of this Agreement, in each case primarily
in connection with the business and operations of the Division, and located in
the areas indicated as "CMD" on the site plan of Seller's facility at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (the "Chaska Facility") attached hereto as
part of Exhibit 1.1(c)(i), (ii) located at a facility of Seller other than the
Chaska Facility and specifically identified in Exhibit 1.1(c)(ii), (iii) solely
used, or held for use, by the Employees (as defined in Section 10.1) to be
listed on Exhibit 10.1 whom Buyer employs immediately following Closing (the
"Shared Services Employees") and specifically identified in Exhibit 1.1(c)(iii),
or (iv) included in the Allocated Shared Assets, (collectively, the "Transferred
Fixed Assets" and, together with the fixed assets of the Acquired Subsidiaries,
the "Fixed Assets"), and any additions, improvements, replacements and
alterations to the Transferred Fixed Assets made between the date of this
Agreement and the Closing Date, but excluding any Consumed Property (as
hereinafter defined);
(d) Assets Relating to Intellectual Property. All customer and
prospect lists and all other lists relating to or concerning distribution,
delivery and sale of products and services, together with all records, files,
sales programs and promotional materials related thereto, computer programs,
designs and designs in progress, prototypes, art work, advertising materials,
brochures and literature, drawings, blueprints and specifications and
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object and source code contained within products used or sold by the Division,
wherever located, owned by Seller, and used or held for use, in each case
primarily in connection with the business and operations of the Division;
(e) Contracts. All Contracts (as hereinafter defined) wherever
located, including without limitation those listed on Exhibit 1.1(e), together
with all such Contracts entered into, renewed or extended in the ordinary course
of business of the Division between the date of this Agreement and the Closing
Date. Notwithstanding the immediately preceding sentence, however, the
Transferred Assets shall not include (i) any Contract which expires or is
terminated prior to the Closing Date and with respect to which no obligations or
benefits survive on the Closing Date, (ii) any Restricted Contract (as
hereinafter defined) which is excluded from the Transferred Assets because
Seller is unable before Closing to obtain the requisite consent or approval to
assign or otherwise transfer such Restricted Contract to Buyer, or Buyer's
waiver of such consent or approval, provided that upon such consent or approval
being received or waived subsequent to Closing, such Restricted Contract shall
be included in the Transferred Assets; or (iii) Contracts of the Acquired
Subsidiaries. As used in this Agreement, "Contract" means any agreement,
arrangement, commitment or understanding, written or oral, expressed or implied
(i) of Seller, solely related to the business and operations of the Division,
(ii) of the Acquired Subsidiaries, or (iii) which is included in the Allocated
Shared Assets, or (iv) such portions of any agreement, arrangement, commitment
or understanding, written or oral, expressed or implied, which relate in part to
the business and operations of the Division, which require performance to a
customer by the Division, and including only those real property leases set
forth in Section
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2.27 of the Disclosure Schedule (except for Item 1 of Section 2.27 of the
Disclosure Schedule), but the term "Contract" does not include any of the
Excluded Assets;
(f) Intellectual Property. Subject to the Technology License
Agreement (as hereinafter defined) and Section 1.2(j) (relating to Names), all
trademarks, service marks, trade names, know-how, inventions, trade secrets,
patents, patent applications and licenses thereof, and copyrights, including
those fixed in all art work, designs, designs in progress, prototypes,
advertising materials, brochures and literature, manuals, drawings, blueprints
and specifications, object and source code of the Division's products, and other
intangible rights, wherever located, owned by Seller, and used or held for use,
as of the date hereof primarily in connection with the business and operations
of the Division or included in the Allocated Shared Assets, including without
limitation the patents, patent applications and trademarks listed on Exhibit
1.1(f) (the "Transferred Intellectual Property" and, together with such
intellectual property of the Acquired Subsidiaries, the "Intellectual
Property"), and any Transferred Intellectual Property acquired or developed for
use between the date hereof and the Closing Date. In addition, Seller grants to
Buyer, from and after the Closing Date, a license under any item of intangible
property that (i) would otherwise be classified as Transferred Intellectual
Property but is not primarily used or held for use by the business and
operations of the Division or is not an Allocated Shared Asset and (ii) is used
in the business and operations of the Division and/or the Acquired Subsidiaries
prior to the Closing Date, to the extent necessary to make, have made, use, sell
or import any current or future products or parts thereof of the Division and
the Acquired Subsidiaries or to allow Buyer to service such products or parts
thereof, but limited to the use of such item of intangible property in
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substantially the same manner as it is currently being used by the Division.
This license is a worldwide, royalty-free perpetual non-exclusive license;
(g) Books and Records. All other files and records used or
held for use primarily in connection with the business and operations of the
Division and books of account (or copies thereof) to the extent related to the
Division, the Division Assets or the Assumed Liabilities and all historical
payroll records of each transferred Employee in possession of Seller, and to the
extent permitted by law for each Employee hired by Buyer the following personnel
records: employment applications, I-9s, formal disciplinary records (i.e., oral
or written warnings or suspensions), benefits documentation and other factual
employment information, but expressly excluding performance appraisals or
evaluations (any of which Seller may deliver to Buyer in either written or
electronic form, wherever located);
(h) Accounts Receivable. All accounts receivable relating
solely to the business and operations of the Division as of the close of
business on the day preceding the Closing Date ("Purchased Receivables"). The
Statement of Net Assets reflects the Division's portions of accounts receivable
from customers that relate in part to the Division and in part to one or more of
the Remaining Divisions. The collection of such shared accounts receivable shall
be governed by the Shared Services Agreement (as hereinafter defined);
(i) Goodwill. All of Seller's goodwill in, and going concern
value of, the Division, except for any goodwill relating to the FSI Names (as
hereinafter defined) or any variation thereof.
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(j) Prepaid Items. All items of prepaid expense of Seller
relating solely to the business and operations of the Division as of the close
of business on the day preceding the Closing Date, except Retained Prepaid Items
(as hereinafter defined).
(k) Claims against Third Parties.
(i) All causes of action, claims and demands of
Seller against third parties solely related to
the Division;
(ii) those portions of any amounts recovered from
causes of action, claims and demands of Seller
against third parties that relate to the Division
or the Division Assets; and
(iii) those portions of insurance proceeds with respect
to Fixed Assets that relate to the Division or
the Division Assets.
(l) Permits. All permits, licenses, approvals and
authorizations by governmental authorities or third parties which are
transferable by Seller and which are solely used or held for use in the
Division;
(m) Acquired Subsidiary Bank Accounts. Exhibit 1.1(m) lists
the bank accounts of the Acquired Subsidiaries (which shall not form part of the
Transferred Assets);
(n) Split Dollar Life Insurance. Split dollar life insurance
policies associated with the Employees hired by Buyer immediately following
Closing who are listed on Exhibit 1.1(n) hereto;
(o) Allocated Shared Assets. Any assets, tangible or
intangible, shared by the Division with one or more of the Remaining Divisions
(the "Shared Assets"), or portions of such assets, specifically designated on
Exhibit 1.1(o) for inclusion in the Transferred Assets (the "Allocated Shared
Assets"). Except for Shared Assets (i) specifically designated
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on Exhibit 1.1(o), (ii) in the case of Shared Assets referred to in Sections
1.1(c)(i), d), (f), (g) and (p), that are owned and/or (as indicated therein)
used or held for use by Seller primarily in connection with the business and
operations of the Division, (iii) referred to in Sections 1.1(c)(ii) and (iii)
and (n), (iv) Contracts within the meaning of clause (iv) of the definition of
Contract set forth in Section 1.1(e), or (v) in the case of Shared Assets
referred to in Section 1.1(k), those portions of which relate to the Division or
the Division Assets, all Shared Assets shall remain the sole and exclusive
property of Seller; and
(p) Other. All other assets reflected on the Closing Statement
of Net Assets (as hereinafter defined).
1.2 Excluded Assets. There shall be excluded from the Transferred
Assets (as defined above) and retained by Seller all of the following
(collectively, the "Excluded Assets"); provided, however, that the Excluded
Assets shall not include any Acquired Subsidiary Assets:
(a) Retained Personal Property and Contract Rights. All items
of personal property and all contract rights of Seller set forth in Exhibit
1.2(a);
(b) Retained Receivables. All notes, accounts receivable and
other receivables of Seller set forth in Exhibit 1.2(b) (collectively, the
"Retained Receivables");
(c) Cash and Investments. All cash on hand or in bank
accounts, and all other cash items, securities, instruments and financial
investments, of Seller (other than shares of capital stock of the Acquired
Subsidiaries and cash on hand or in bank accounts, and other cash items,
securities, instruments and financial investments, of the Acquired
Subsidiaries);
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(d) Retained Prepaid Items. All items of prepaid expense of
Seller listed on Exhibit 1.2(d) (the "Retained Prepaid Items");
(e) Consumed Personal Property. All tangible personal property
transferred, disposed of or consumed in the ordinary course of the business of
the Division between the date hereof and the Closing Date (collectively,
"Consumed Property");
(f) Insurance. Insurance proceeds to Seller other than those
portions of insurance proceeds with respect to Fixed Assets that relate to the
Division or Division Assets and all policies and contracts of insurance of
Seller (other than policies and contracts of insurance of the Acquired
Subsidiaries and the split dollar life insurance policies described in Section
1.1(n));
(g) Certain Benefit Plans. All pension, profit sharing,
savings and benefit plans and trusts of Seller (other than pension, profit
sharing, savings and benefit plans and trusts maintained by an Acquired
Subsidiary solely for its own employees) and any assets thereof including,
without limitation, the Benefit Plans (as defined in Section 2.8(b)) of Seller
(as opposed to the Acquired Subsidiaries) described in the Disclosure Schedule,
except as provided by Article 10 hereof;
(h) Tax Claims. Any claim of Seller (as opposed to the
Acquired Subsidiaries) for tax refunds relating to any period prior to the
Closing ("Tax Claims");
(i) Names. Subject to Section 1.7, all rights to use the FSI
Names (as hereinafter defined) or any variation thereof; and
(j) Duplicate Records. All duplicate lists, records, files,
materials, contracts and documents of any and all kinds, whether written,
electronic or otherwise.
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1.3 Liabilities Assumed.
(a) Assumption of Liabilities. Subject to Buyer's rights to
indemnification pursuant to Section 9.2, at the Closing, Buyer will assume and
will thereafter pay and perform all liabilities and obligations of the Division
except the Retained Liabilities (as hereinafter defined) (collectively, the
"Assumed Obligations"). The Assumed Obligations shall include, without
limitation, the following liabilities and obligations:
(i) all liabilities and obligations of the
Acquired Subsidiaries;
(ii) all liabilities and obligations of Seller
arising in the ordinary course of business
from all Contracts included within the
Division Assets (except management
agreements that are not assumed by Buyer
pursuant to provisions of Sections 10.7(c)
and 10.11), including without limitation
contracts with and purchase orders from
customers, meeting installation and
performance specifications and acceptance
criteria for ordered products, service
contracts and commitments (including
commitments to make available spare parts
following a sale of equipment), support of
evaluation equipment at customers, all
warranty obligations relating to Division
products and services, pricing guarantees
and volume purchase discounts relating to
Division products and services, honoring
outstanding quotations (typically 60 days)
(including terms of sale), confidential
non-disclosure agreements, outstanding
purchase orders to third parties (including
vendors, subcontractors, and outside
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engineering services), consulting
agreements, licensing agreements, software
upgrade commitments, software and hardware
hold harmless agreements and Year 2000
compliance obligations with respect to
Division products and services (to the
extent such Year 2000 compliance obligations
are not completed by the Closing Date);
(iii) all liabilities and obligations of the
Division shown on the Closing Statement of
Net Assets and all liabilities and
obligations incurred by the Division in the
ordinary course of business prior to the
Closing Date, including without limitation,
all accounts payable and accrued expenses of
Seller arising from operations of the
Division, including without limitation, all
trade accounts payable, all accrued payroll
and amounts withheld from payroll,
reimbursement of third party employers with
respect to contract employees, reimbursement
of expatriate employees for income and
payroll taxes, sales incentive compensation
payable to Employees, charges for
maintaining letters of credit and worker's
compensation insurance;
(iv) all costs, expenses, severance payments, and
other obligations of any nature arising from
any actual or deemed termination of
employment of any Employee as of and after
the Closing Date, including without
limitation those obligations referred to in
Article 10 hereof;
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(v) all liabilities and obligations with respect
to patent indemnification obligations
arising from the sale of products or
services by the Division; and
(vi) all costs, expenses, liabilities and
obligations of any nature arising from
operations of the Division or ownership or
use of the Division Assets on or after the
Closing Date, including those arising from
any act or failure to act (where there is a
duty or obligation to so act) by Buyer or
its affiliates on or after the Closing Date
(including in connection with the servicing
on or after the Closing Date of any products
sold by the Division prior to the Closing
Date), but only to the extent that any such
cost, expense, liability or obligation is
not a Retained Liability (as hereinafter
defined).
(b) No Assumption of Retained Liabilities. Buyer shall not
assume nor be responsible for paying, performing or discharging any of the
liabilities or obligations of the Division listed below, and Seller shall retain
the responsibility for such liabilities and obligations (the "Retained
Liabilities"). The Retained Liabilities for which Seller shall remain
responsible are limited to the following (but shall in no event include any
liabilities or obligations of the Acquired Subsidiaries, provided that certain
of such liabilities and obligations of the Acquired Subsidiaries are subject to
indemnification by Seller pursuant to Section 9.2(a)(iv)):
(i) liabilities or obligations with respect to
legal, brokerage, finder's or accounting
fees or similar charges which may arise
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by reason of or with respect to (A) this
Agreement, (B) any of the transactions
contemplated hereunder, or (C) as a result
of Seller's actions under this Agreement;
(ii) except for the accrued expenses or
liabilities specifically provided for in the
Closing Statement of Net Assets and (other
than as contemplated by Section 10),
liabilities or obligations arising out of
the operation of the Division which pertain
to or arise out of (A) any agreement,
obligation or commitment of Seller to any
employees or former employees of Seller
including, without limitation, any employee
benefit plans, pension payments, paid time
off, severance payments, long-term or
short-term disability payments, medical
payments, COBRA, workers' compensation, due
or payable salary or wages, incentive
payments under Seller's current or former
incentive plans, sales commissions and other
incentive payments under Seller's sales
incentive plans payable to persons other
than Employees (i.e., former employees of
Seller or employees of Seller who remain in
its employ following the Closing Date) with
respect to sales booked prior to the Closing
Date, or other compensation or benefits
incurred by Seller prior to the Closing Date
or in connection with the sale of the
Division, or (B) any grievance, arbitration,
charge or other proceeding arising from
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employee complaints solely to the extent
they are based on events or incidents
occurring prior to the Closing Date;
(iii) except for the accrued expenses or
liabilities specifically provided for in the
Closing Statement of Net Assets, liabilities
or obligations arising out of the operation
of the Division prior to the Closing Date
for any Taxes;
(iv) except as set forth on the Closing Statement
of Net Assets, liabilities or obligations of
Seller arising out of the operation of the
Division for any indebtedness for borrowed
money or in respect of letters of credit
(other than the ▇▇▇▇▇▇ letter of credit),
guarantees or surety bonds;
(v) liabilities of Seller for all premium,
premium adjustments, policy loadings, policy
taxes or any other costs incurred under any
retrospectively rated insurance program, or
any self insurance arrangement related to
any Retained Liability;
(vi) liabilities or obligations of Seller arising
out of the operation of the Division in
respect of any action, suit, proceeding or
claim brought or asserted, or any
governmental proceeding or investigation
instituted prior to the Closing Date;
(vii) liabilities or obligations of Seller in
connection with personal injury or tort
claims (x) arising from products sold prior
to the Closing Date (excluding any
Inventories of the Division as of the
Closing Date, whether in the form of
finished products,
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work-in-process, subassemblies, raw
materials or purchased parts), (y) arising
from services performed by the Division
prior to the Closing Date, or (z) otherwise
based on events or incidents occurring prior
to the Closing Date; provided, however, that
Seller shall not be responsible under this
Section 1.3(b)(vii) to the extent that any
such liability or obligation results from
any act or failure to act (where there is a
duty or obligation to so act) of Buyer or
its affiliates on or after the Closing Date
(including in connection with the servicing
on or after the Closing Date of any products
sold by the Division prior to the Closing
Date); and
(viii) any liabilities or obligations of Seller
solely to the extent such liabilities or
obligations relate to Excluded Assets.
1.4 Closing. The consummation of the transactions provided for in this
Agreement (the "Closing") shall take place at the offices of Faegre & ▇▇▇▇▇▇
LLP, 2200 Norwest Center, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
at 10:00 A.M. on (a) such date which is designated by the parties and is not
more than 10 business days after the satisfaction or waiver of the last of the
conditions required to be satisfied or waived pursuant to Article 6 and Article
7 hereof (other than those requiring delivery of a document, or the taking of
other action, at the Closing, but subject to the satisfaction thereof), or (b)
such other place, time or date as Buyer and Seller may agree in writing. The
date on which the Closing in fact occurs is referred to herein as the "Closing
Date."
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1.5 Purchase Price.
(a) Amount. In consideration of the sale of the Division
Assets and the covenants set forth in Section 1.8 (relating to Covenant Not to
Compete), Buyer will (in addition to assuming liabilities pursuant to Section
1.3) pay to Seller at Closing a total purchase price of $37,647,000 (the
"Purchase Price").
(b) Allocation.
(i) $1.5 million of the Purchase Price is hereby
allocated to the covenant not to compete set
forth in Section 1.8 hereof; $4.0 million of
the Purchase Price is hereby allocated to
the outstanding capital stock of CME; and
$1.4 million of the Purchase Price is hereby
allocated to the outstanding capital stock
of CMK.
(ii) Prior to the Closing Date, Buyer and Seller
shall negotiate in good faith regarding
allocation of the balance of the Purchase
Price (and other consideration, including
assumed liabilities) among the Division
Assets. Each party agrees that any such
allocation shall be arrived at by arm's
length negotiation and be consistent with
the requirements of Section 1060 of the
Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations
thereunder.
(iii) If Buyer and Seller do not agree in writing
on such allocation prior to the Closing
Date, Buyer and Seller shall proceed to
Closing as provided herein, and Buyer and
Seller shall jointly
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select and engage an appraiser to allocate
the balance of the Purchase Price and other
consideration after Closing consistent with
the requirements of Section 1060 of the Code
and the regulations thereunder. All fees and
expenses of such appraiser shall be borne
equally by Seller and Buyer.
(iv) Buyer and Seller shall file all their
respective federal, state, local and foreign
returns, estimates, information statements
and reports ("Tax Returns") in accordance
with and based upon the allocations
determined pursuant to this Agreement, and
shall take no position in any such Tax
Return that would be inconsistent with such
allocations.
(c) Payment. Buyer will pay the Purchase Price to Seller
in cash on the Closing Date by wire transfer of the full amount of the Purchase
Price (in immediately available United States funds) to an account specified by
Seller.
1.6 Adjustment of Purchase Price.
(a) Buyer and Seller acknowledge and agree that the
Purchase Price has been established in part by reference to the assumption that
the value of the Net Working Capital (as hereinafter defined) of the Division,
based on the Statement of Net Assets of the Division as of the close of business
on the day preceding the Closing Date, which shall include the related footnotes
(the "Closing Statement of Net Assets"), shall be $6,735,000. "Net Working
Capital" shall mean Total Current Assets (consisting of cash, accounts
receivable (less allowance for doubtful accounts), inventory (less obsolescence
and excess reserve), prepaid expenses/other current assets, refundable income
taxes and deferred income
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tax) minus Total Current Liabilities (consisting of accounts payable, accrued
expenses, warranty reserves, customer deposits, deferred revenue and other
current liabilities).
(b) Within 30 days after the Closing Date, Seller will furnish
to Buyer the Closing Statement of Net Assets. The Closing Statement of Net
Assets shall in all respects be prepared consistently (i) with the historic
accounting methods, policies and procedures applied to the Division that were
used in the preparation of the Statement of Net Assets and the other Financial
Statements (as hereinafter defined), and (ii) in accordance with U.S. generally
accepted accounting principles ("GAAP") subject to the exceptions set forth in
Section 2.4 of the Disclosure Schedule; provided, however, that the book value
of Inventories included in the Closing Statement of Net Assets, except to the
extent that Buyer and Seller agree otherwise, shall be based on a physical count
of Inventories conducted by Seller, and observed by Buyer to the extent it
elects to do so, as soon as practicable prior to Closing; and further provided,
that the entries in the books of account of the Division in respect of the HSE
contract shall remain in the Closing Statement of Net Assets exactly as it was
in the Statement of Net Assets notwithstanding any physical disposition of the
goods involved but only so long as the contract of sale with HSE remains valid
and enforceable. Without limiting the generality of the foregoing, the Closing
Statement of Net Assets shall be prepared, in all material respects, in
accordance with the books and records regularly maintained with respect to the
Division and consistent with previously applied accounting policies and
procedures (subject, however, with respect to each of the foregoing, to the
exceptions set forth in Section 2.4 or Section 2.4 of the Disclosure Schedule).
The Closing Statement of Net Assets shall reflect the Division Assets and
Assumed Obligations, in accordance with U.S. GAAP, and shall not reflect the
Excluded Assets or Retained
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Liabilities. Buyer and Seller hereby agree that all management estimates
required by Division policies in connection with the Closing Statement of Net
Assets shall be made in the same way and on the same basis as the corresponding
estimates made in connection with the Statement of Net Assets. Following the
Closing, Buyer shall give Seller and any independent auditors of Seller access
at all reasonable times to the properties, books and records and personnel of
the Division relating to periods prior to the Closing Date for purposes of
preparing and reviewing the Closing Statement of Net Assets. Unless Buyer gives
written notice to Seller of a good-faith objection to a material aspect of the
Closing Statement of Net Assets before the close of business on the 30th day
after Buyer's receipt thereof, the Closing Statement of Net Assets shall then
become binding upon Buyer and Seller and such 30th day shall be the "Purchase
Price Adjustment Date". If Buyer (by written notice to Seller before the close
of business on such 30th day) objects in good faith to any material aspect of
the Closing Statement of Net Assets, then only those aspects as to which such
good-faith objection was made shall not become binding; all other aspects of the
Closing Statement of Net Assets shall become binding. Buyer and Seller shall
discuss any objections and, if they reach written agreement amending the Closing
Statement of Net Assets, then the Closing Statement of Net Assets (as amended by
such written agreement) shall become binding and the date of such written
agreement shall be the Purchase Price Adjustment Date. If Buyer and Seller do
not reach written agreement on all objections within 30 days after Buyer gives
such notice of objection, then the matters objected to (and only such matters)
shall be submitted to Ernst & Young LLP, certified public accountants (whose
fees shall be divided equally between Buyer and Seller), who shall resolve the
dispute with respect to the matters objected to (and only such matters) and
submit a written
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statement of such resolution, which statement, when delivered to Buyer and to
Seller, shall become binding. The Closing Statement of Net Assets shall be
revised in accordance with such written statement. The date on which Ernst &
Young LLP submits such statement to Buyer and Seller shall be the Purchase Price
Adjustment Date. Seller and Buyer hereby agree to provide Ernst & Young LLP such
reasonable indemnification in connection with its services performed hereunder
as it may reasonably request.
(c) If the value of the Net Working Capital of the Division as
set forth in the Closing Statement of Net Assets exceeds $6,735,000, then Buyer
shall pay the excess to Seller and, if the value of the Net Working Capital of
the Division as set forth in the Closing Statement of Net Assets is less than
$6,735,000, then Seller shall pay the shortfall to Buyer; provided, however,
that no such excess or shortfall shall be payable by either party to the other
unless such excess or shortfall shall exceed $100,000, in which event such
excess or shortfall shall be payable in full. Buyer or Seller, as the case may
be, shall within five (5) business days after the Purchase Price Adjustment Date
make payment by wire transfer in immediately available funds of the amount of
such difference as determined pursuant to the preceding sentence, together with
interest thereon at a rate equal to 5% per annum from the Closing Date to the
date of payment.
(d) Buyer's and Seller's rights to indemnification pursuant to
Article 9 (and any limitations on such rights) shall not be deemed to limit,
supersede or otherwise affect Buyer's or Seller's rights to a full purchase
price adjustment pursuant to this Section 1.6, provided that no indemnification
claim may be made with respect to any item that is fully compensated by a
post-Closing adjustment.
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1.7 Use of Names. The Division Assets may include items which are
marked with the names "FSI," "FSI International" or "FSI International, Inc." or
any abbreviation, extension or other variation thereof (collectively the "FSI
Names"), including without limitation, promotional materials, packaging
materials, stationery, signs and business cards. Buyer acknowledges and agrees
that it has no right to use (and will not use) any of the FSI Names, except as
provided in this Section 1.7. From and after the Closing, Buyer shall completely
and permanently remove or cover up all FSI Names prior to using any such item,
or clearly label any such item to indicate that the item does not belong to, or
is not issued by, Seller or any of its Subsidiaries or Affiliates (in each case
as hereinafter defined). In the event that all FSI Names cannot be completely
and permanently removed or covered up from any such item, or any such item
cannot be clearly labeled as contemplated by this Section 1.7, Buyer shall
promptly destroy such item, except that Buyer shall not be prohibited from
selling or using existing inventories of products (including spare parts) as of
the Closing which are prelabeled in a manner such that the removal or cover up
of the FSI Name would be impractical. Subject to the foregoing, Buyer may use
any such items for up to one year following the Closing Date. In addition, Buyer
may use or reprint, to the extent Seller or its Subsidiaries (as hereinafter
defined) has the right to do so, any articles, abstracts, customer or service
bulletins or reports, technical papers, bulletins, presentations, or reports
within the Division Assets which use or contain the FSI Names, so long as Buyer
clearly labels any such items as belonging to or issued by Buyer or its
Subsidiaries or Affiliates. Notwithstanding the foregoing, Buyer may use the FSI
Names (but not any logos thereof) on products of the Division delivered to
customers, but only in conjunction with names of Buyer
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or its Subsidiaries or Affiliates, for up to one year following the Closing Date
pursuant to a Trademark License Agreement to be mutually agreed upon by Buyer
and Seller.
1.8 Covenant Not to Compete.
(a) For a period of five (5) years from and after the Closing
Date, Seller and its majority-owned subsidiaries ("Subsidiaries") (by themselves
or in partnership or jointly or in conjunction with or as manager or agent of
any person, firm or corporation (including any Affiliate (as defined below))
either directly or indirectly) will not on a world-wide basis (i) undertake,
carry on or be engaged in the design, development, manufacture, installation,
lease, marketing, distribution, service, maintenance or sale of any Chemical
Management Product (as defined below) (whether an individual product or an
entire system) or (ii) undertake, carry on, engage in or have any financial or
equity interest in a Chemical Management Business (as defined below), except as
provided below. In addition, for a period of five (5) years from and after the
Closing Date, Seller and its Subsidiaries shall not directly assist Metron
Technology B.V. ("Metron") or m-FSI Ltd. ("m-FSI") or another third party in
engaging in a Chemical Management Business; provided, however, that this shall
in no way limit Sellers', its Subsidiaries' or Affiliates' ability to design,
develop, manufacture, install, lease, market, distribute, service, maintain,
sell, or provide training or spare parts with respect to a Processing Tool (as
defined below). Other than the agreement referred to in Section 1.9, nothing in
the express terms of this Asset Purchase Agreement shall be construed as
granting any license to Seller under any items of Intellectual Property
transferred to Buyer pursuant to this Agreement or owned by an Acquired
Subsidiary transferred to Buyer as a result of this Agreement.
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"Chemical Management Products" shall mean devices and
processes involved in the distribution, transport, mixing or blending of
chemicals and slurries to a Processing Tool such as, but not limited to, those
chemical management products listed in Exhibit 1.8(a) attached hereto and made a
part hereof or their market equivalents (i.e., products performing similar
functions and sold for similar prices). "Chemical Management Business" means
project management, construction, installation, design, service, or maintenance
of a bulk chemical distribution system for a facility or site management of such
a bulk chemical distribution system (including the procurement of chemicals and
the servicing and maintenance of the bulk chemical distribution system) for a
facility. "Processing Tool" means a system, machine or component thereof which
is used to perform or directly support processes integral to the manufacture of
Microelectronics (as hereinafter defined), including but not limited to wafer
reclamation, photolithography, metrology, spin-on-dielectric applications or
surface cleaning or preparation of such Microelectronics. An "Affiliate" of a
person means an entity in which such person owns 20% to 50% of the outstanding
voting securities of such entity. "Microelectronics" means any or all
semiconductor devices, thin film heads, multichip modules, flat panel displays,
compact discs, microelectronic masks, magnetic memory heads, or printed circuit
boards. "FSI Processing Tool" shall mean a Processing Tool designed,
manufactured, leased, installed, marketed, distributed, serviced, maintained or
sold by Seller, its Subsidiaries or Affiliates.
The provisions of this Section 1.8 shall not apply to any
Chemical Management Product designed, developed, manufactured, leased,
installed, distributed, serviced, maintained or sold by or for Seller, its
Subsidiaries or Affiliates, or by any third party where (i) the sole and express
purpose of such is to be used with and integrated into a
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single FSI Processing Tool or (ii) is designed, developed, manufactured, leased,
serviced, maintained or sold to provide or dispense chemicals to only one FSI
Processing Tool.
Notwithstanding the above, nothing in this Section 1.8 shall
prohibit Seller from (i) the purchase or lease of a Chemical Management Product
from Buyer, its Subsidiaries or Affiliates; (ii) continuing the ownership
interest, of Seller in each of Metron and m-FSI, recognizing that, following the
Closing Date, either or both of m-FSI or Metron may (A) continue to sell,
support and service Chemical Management Products on behalf of Buyer or any of
its Subsidiaries or Affiliates (or any successor in interest to Buyer or any of
its Subsidiaries or Affiliates), or (B) in the case of Metron, subject to the
expiration of the non-compete provisions contained in the Share Purchase
Agreement (CME) between Seller and Metron effective February 27, 1999 and in the
Share Purchase Agreement (CMK) between Seller and Metron effective February 27,
1999, or in the case of both Metron and m-FSI, subject to any non-compete
provisions that may be agreed to by either with Buyer, become distributors of
products or services of one or more entities (other than Seller or its
Subsidiaries) which may fall within the definition of a Chemical Management
Business or whose products or services may fall within the definition of a
Chemical Management Business or whose products or services may be market
equivalents to a Chemical Management Product, or (iii) owning, directly or
indirectly, any interest in any entity that represents 3% or less of the
outstanding class of securities of the issuer thereof.
Notwithstanding the above, this Section 1.8(a) shall not apply
(i) in the event of a Change in Control of Seller, (ii) to the acquiror of a
Subsidiary of Seller or of a business unit of Seller or (iii) to the acquiror of
all or substantially all of the assets of such business
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unit or Subsidiary, which acquiror, in the case of each of clauses (ii) and
(iii) of this paragraph, is in the Chemical Management Business or the Chemical
Management Products business immediately prior to such acquisition as evidenced
by sales in excess of $10 million of competitive products and/or services in
such acquiror's fiscal year prior to such acquisition or such acquiror's current
fiscal year. For purposes of this Section 1.8(a), Change in Control shall mean
the sale of all or substantially all of the assets of Seller, or the acquisition
of a majority of the outstanding voting securities of Seller, whether by merger,
acquisition or otherwise, to or by a party which is already in the Chemical
Management Business or the Chemical Management Products business immediately
prior to the event resulting in the Change of Control as evidenced by sales in
excess of $10 million of competitive products and/or services in the third
party's fiscal year prior to the Change in Control or the third party's current
fiscal year.
(b) Seller acknowledges that it has information in respect of
the Division and its dealings, transactions, affairs, plans and proposals, some
of which information is confidential to the Division. Such confidential
information is called "Buyer Commercial Confidential Information" and includes,
without limitation, confidential or secret information relating to the business
methods, finances, prices, business plans, marketing plans, development plans,
manpower plans, sales targets, sales statistics, customer lists, and customer
relationships, of the Division. Seller further acknowledges that it has
confidential information in respect of the Division and its technology relating
to unpublished research and development information, unpatented inventions,
know-how, trade secrets and technical data ("Buyer Technical Confidential
Information"). Seller acknowledges that the disclosure of Buyer Commercial and
Technical Confidential Information (hereinafter collectively referred
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to as "Buyer Confidential Information") (whether directly or indirectly) to
actual or potential competitors of the Division could place Buyer at a
competitive disadvantage and could do damage (whether financial or otherwise) to
Buyer's business. Seller shall not, subject to the exceptions below, (i)
disclose to any person except to those authorized by the Buyer to know any Buyer
Confidential Information; or (ii) through failure to exercise reasonable care
and diligence consistent with the care and diligence that Seller uses to protect
its own confidential information, cause or permit any unauthorized disclosure of
any Buyer Confidential Information; provided, however, that these restrictions
shall cease to apply to Buyer Confidential Information which becomes available
to the public generally (other than through the default of Seller); is in the
public domain; is rightfully received by Seller, its Subsidiaries, their
employees or agents from a third party without a duty of confidentiality; is
disclosed by Buyer, its Subsidiaries or Affiliates to a third party without an
obligation of confidentiality; or which Seller is required to disclose by order
of a court of competent jurisdiction or a government agency or is otherwise
required to disclose by law. However, in the event that Seller is required to
disclose the same by order of a court, Seller shall give the Buyer notice
sufficiently in advance so as to enable Buyer to appear as necessary in such
court and obtain any necessary protective order.
The obligations of confidentiality with respect to Buyer
Commercial Confidential Information shall expire three (3) years after the
Closing Date and the obligations of confidentiality with respect to Buyer
Technical Confidential Information shall expire ten (10) years after the Closing
Date.
(c) During the one (1) year period following the Closing Date
neither Seller nor any subsidiary or affiliate shall, without Buyer's prior
written consent, employ or
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retain the services of (whether as an employee, consultant or otherwise), or
call on or solicit for the purposes of offering to employ or to retain the
services of, any person who was an Employee of the Division on the day prior to
the Closing Date and who was employed by Buyer at any time during the six (6)
month period preceding the commencement of such re-employment by Seller or any
subsidiary or affiliate, or in any manner seek to induce any such person to
leave employment with Buyer. The provisions of this Section 1.8(c) shall not
apply to any Employees of the Division who become employed by Buyer on the
Closing Date and are subsequently terminated by Buyer.
(d) During the one (1) year period following the Closing Date
neither Buyer nor any subsidiary or affiliate shall, without Seller's prior
written consent, employ or retain the services of (whether as an employee,
consultant or otherwise), or call on or solicit for the purposes of offering to
employ or to retain the services of, any person who was an employee of Seller or
any of its affiliates (other than any person who was an Employee of the Division
on the day prior to the Closing Date and who was employed by Buyer), or in any
manner seek to induce any such person to leave employment with Seller or any of
its affiliates. The provisions of this Section 1.8(d) shall not apply to any
employees of Seller or any of its affiliates who are subsequently terminated by
Seller or any of its affiliates.
(e) Seller and Buyer each acknowledge that, in the event of
its violation of the covenants contained in this Section 1.8, the non-breaching
party's damages will be difficult to ascertain and such party's remedy at law
may be inadequate. Accordingly, the parties agree that the non-breaching party
shall be entitled to specific performance of such covenants and to an injunction
to prevent any continuing violation of such covenants. In the event that any of
the provisions of this Section 1.8 should ever be deemed to exceed
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limitations permitted by applicable law, then the parties agree that such
provisions shall be reformed to set forth the maximum limitations permitted.
1.9 Agreement Regarding Chemical Delivery Systems. Notwithstanding
any other provisions of this Agreement, Buyer hereby agrees to supply to Seller
chemical delivery systems as set forth in the agreement dated the date hereof
between Seller and Buyer.
1.10 Taxes and Fees.
(a) Buyer and Seller will share equally any sales, use,
transfer, documentary and other applicable taxes (other than Seller's income
taxes) and recording and filing fees applicable to the transactions arising
under this Agreement, but Buyer shall be solely responsible for any taxes
applicable to the transfer of the Transferred Assets by Buyer to any affiliate
of Buyer.
(b) Seller shall prepare and file, or cause to be prepared and
filed, any Tax Return, relating to an Acquired Subsidiary, for Tax Returns due
before the Closing Date. Seller shall also prepare and file, or cause to be
prepared and filed, any Tax Return, relating to an Acquired Subsidiary, for Tax
Returns due after the Closing Date which relate to a tax period ending on or
prior to the Closing Date (a "Pre-Closing Tax Period"). Buyer agrees that if the
signature of an officer of an Acquired Subsidiary is required as a precondition
to the filing of any such Tax Return, then Buyer will timely cause the Acquired
Subsidiary to supply the required signature.
(c) Buyer shall cause the Acquired Subsidiaries to prepare and
timely file all Tax Returns required to be filed after the Closing Date which
relate to a tax period that includes and ends on or after the Closing Date (a
"Straddle Period"), in a manner consistent
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38
in all material respects with the Tax Returns previously filed in the relevant
jurisdiction. Buyer shall cause a copy of any such Tax Return to be delivered to
Seller at least twenty calendar days prior to the due date (including
extensions) of such Tax Return, and shall make any revisions to such Tax Returns
as are reasonably requested by Seller. Buyer shall not, with respect to any
Pre-Closing Tax Period or Straddle Period, file any amended Tax Return with
respect to the Acquired Subsidiaries, or take or advocate any position with
respect to any Tax of the Acquired Subsidiaries for any Tax period that could
reasonably be expected to adversely affect Seller with respect to any
Pre-Closing Tax Period or Straddle Tax Period, unless, in each case, the Seller
shall have consented in writing to such action.
(d) Subject to the Closing Statement of Net Assets, all real
and personal property Taxes attributable to each Division Asset for a taxable
period that begins before the Closing Date and ends on or after the Closing
Date, shall be the responsibility of Seller in an amount equal to the Tax for
the entire taxable period multiplied by a fraction, the numerator of which is
the number of days in the period ending on the day immediately preceding the
Closing Date and the denominator of which is the number of days in the entire
period. The remainder of the Tax shall be the responsibility of Buyer, including
any such Tax that is provided for in the Closing Statement of Net Assets.
(e) Seller and Buyer agree to cooperate with and to provide
each other with all information for any Pre-Closing Tax Period or Straddle
Period that is relevant in preparing Tax Returns pertaining to the Division or
the Acquired Subsidiaries.
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39
ARTICLE 2
Representations and Warranties of Seller
Except as otherwise set forth in the corresponding section of the
disclosure schedule delivered by Seller to Buyer concurrently with the execution
of this Agreement (the "Disclosure Schedule"), Seller represents and warrants to
Buyer as set forth in this Section 2. The Disclosure Schedule shall be numbered
to correspond to this Section 2.
2.1 Corporate Status and Good Standing. Seller is a duly organized and
validly existing corporation in good standing under the laws of the State of
Minnesota and each Acquired Subsidiary is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction in which it is
incorporated. Seller has the requisite corporate power and authority to carry on
the business of the Division as now conducted, to own, lease and operate the
properties used in the business of the Division, and to enter into and complete
the transactions contemplated by this Agreement. Each of the Acquired
Subsidiaries has the requisite corporate power and authority to carry on its
business as now conducted and to own, lease and operate the properties used in
its business. Seller and each of the Acquired Subsidiaries is duly qualified or
licensed to do business as a foreign corporation and in good standing in each
jurisdiction in which the property owned, leased or operated by it in connection
with the business of the Division makes such qualification necessary. Seller has
heretofore made available to Buyer complete and correct copies of the charter
documents and by-laws of each of the Acquired Subsidiaries.
2.2 Corporate Action. All corporate actions and proceedings necessary
to be taken by Seller or any Subsidiary of Seller in connection with the
transactions contemplated by this Agreement have been duly and validly taken,
and this Agreement and the transactions and
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40
other agreements contemplated hereby have been duly and validly authorized,
executed and delivered by Seller and constitute the legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with and subject
to their respective terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws from time to time in effect affecting creditors' rights generally or by
principles governing the availability of equitable remedies. The execution,
delivery and performance of this Agreement and the other agreements contemplated
hereby have been duly and validly authorized by the Board of Directors of Seller
and no additional shareholder or corporate proceedings of Seller or the Acquired
Subsidiaries are necessary to authorize such execution, delivery and
performance.
2.3 No Defaults. Neither the execution and delivery by Seller of this
Agreement nor the consummation by Seller of the transactions contemplated hereby
is an event that, of itself or with the giving of notice or the passage of time
or both, (a) will conflict with the Articles of Incorporation or By-Laws of
Seller or the charter documents of any Acquired Subsidiary, (b) assuming that
the consents and approvals referred to in the Disclosure Schedule are obtained,
will constitute a violation of, or will conflict with or result in any breach of
or any default under, any mortgage, indenture, agreement or instrument to which
Seller or any Acquired Subsidiary is a party or by which it is bound, (c)
violate any judgment, decree, order, statute, rule or regulation applicable to
Seller or any Acquired Subsidiary or (d) will require any permit, authorization
filing, consent or approval of any governmental authority except for filings
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act (as hereinafter defined) and the filings, if
any, required to be made with the Office of Fair Trading. Neither Seller nor any
Acquired Subsidiary is in default (nor, to Seller's Knowledge, is any other
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41
party in default) under any Contract to be assumed or otherwise acquired by
Buyer under this Agreement.
2.4 Financial Statements. Seller has previously delivered to Buyer the
unaudited statement of net assets of the Division as of April 3, 1999, including
the related footnotes (the "Statement of Net Assets"), and the unaudited
division profit contribution statements of the Division for the fiscal years
ended August 31, 1996, August 30, 1997 and August 29, 1998 and for the fiscal
period of seven months ended April 3, 1999, including the related footnotes (the
"Division Profit Contribution Statements" and, together with the Statement of
Net Assets, including all of the related footnotes, the "Financial Statements").
Copies of the Statement of Net Assets and the Division Profit Contribution
Statement and related footnotes for the seven months ended April 3, 1999 are
included in Section 2.4 of the Disclosure Schedule. The Financial Statements
are, in all material respects, in accordance with the books and records
regularly maintained with respect to the Division, which books and records
accurately and fairly reflect in reasonable detail the transactions and the
assets and liabilities of the Division. The Financial Statements have been
prepared consistently (i) with the historic accounting methods, policies and
procedures applied to the Division and (ii) in accordance with U.S. GAAP except
as noted in Section 2.4 of the Disclosure Schedule, (iii) include all revenue,
expenses, assets or liabilities material to the operation and conduct of the
Division or its business, and (iv) present fairly the financial position of the
Division as of April 3, 1999 and the results of operations of the Division for
the fiscal years ended August 31, 1996, August 30, 1997 and August 29, 1998 and
for the fiscal period of seven months ended April 3, 1999 (except that the
Statement of Net Assets excludes any allocation of Seller's common spare parts
inventory to the Division and except that certain shared
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42
services expenses attributable to the Division are not included in the Division
Profit Contribution Statements, as more fully detailed in the notes to the
Financial Statements and as noted in Section 2.4 of the Disclosure Schedule).
2.5 Adverse Changes. From the Statement of Net Assets Date to the date
of this Agreement, the business of the Division has been conducted in all
material respects in the ordinary course of business and in substantially the
same manner as it was immediately before the Statement of Net Assets Date and
without limiting the generality of the foregoing, there has not been any
transaction or occurrence with respect to the Division, except as set forth in
Section 2.5 of the Disclosure Schedule:
(a) that resulted in a material adverse change in the
condition (financial or otherwise) operations, business, assets, or earnings of
the Division. For purposes of this Agreement, no change shall be considered "a
material adverse change" if such change is caused primarily by, and is of
similar magnitude to, general changes in the industry or industries in which the
Division operates or changes in general economic conditions;
(b) that resulted in Fixed Assets used by the Division, having
a net book value as reflected on the Statement of Net Assets in excess of $7,500
for any individual Fixed Asset or $50,000 for all such Fixed Assets in the
aggregate, having been sold or disposed of or lost or destroyed;
(c) whereby the Division incurred any obligations or
liabilities of any nature other than items incurred in the ordinary course of
business, or increased (or experienced any change in the assumptions underlying
or the methods of calculating) any bad debt, contingency or other reserve, other
than in the ordinary course of business consistent with past practice;
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43
(d) whereby Seller or any Acquired Subsidiary permitted,
allowed, or suffered any of the Division Assets to be subjected to any mortgage,
pledge, lien, or other encumbrance, other than Permitted Security Interests (as
hereinafter defined) or otherwise incurred in the ordinary course of the
business consistent with past practice;
(e) that resulted in any write down or write up in the value
of any inventories (including write-downs by reason of shrinkage or markdowns),
or in any determination of collectibility of any accounts receivable or any
portion thereof which were previously considered uncollectible, or in any write
off as uncollectible of any accounts receivable or any portion thereof, except
for write downs, write ups, and write offs in the ordinary course of the
business;
(f) whereby Seller or any Acquired Subsidiary disposed of or
permitted to lapse any right to the use of any patent, trademark, assumed name,
service ▇▇▇▇, trade name, copyright, license, or application therefor that is
material to the operation of the Division, including without limitation any
patent or trademark or application therefor listed in Exhibit 1.1(f) or Section
2.11 of the Disclosure Schedule, or disposed of or disclosed to any person not
authorized to have such information or not subject to a confidentiality
agreement with respect thereto with Seller or an Acquired Subsidiary any trade
secret, proprietary information, formula, process, or know-how that is material
to the operation of the Division and that was not previously a matter of public
knowledge or existing in the public domain;
(g) whereby Seller or any Acquired Subsidiary has, except for
the capital expenditure budget described on Section 2.5(g) of the Disclosure
Schedule and except for capital expenditures of less than $50,000.00 in the
aggregate made in the ordinary course of business consistent with past practice,
made any significant capital expenditure or
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44
commitment for additions to the property, plant, equipment, intangible, or
capital assets of the Division, other than for emergency repairs or replacement;
(h) whereby Seller or any Acquired Subsidiary has, except in
the ordinary course of business consistent with past practice, paid, loaned,
distributed, or advanced any amounts to, sold, transferred, or leased any
Division Assets to, purchased, leased, licensed, or otherwise acquired any
Division Assets from, or entered into any other agreement or arrangement
relating to Division Assets with (i) any officer, director, Employee or 5% or
greater stockholder of Seller, or (ii) any Subsidiary or Affiliate of Seller;
(i) whereby Seller or any Acquired Subsidiary has granted or
incurred any obligation for any increase in the compensation of any officer or
employee of the Division or any Acquired Subsidiary (including, without
limitation, any increase pursuant to any bonus, pension, profit-sharing,
retirement, or other plan or commitment) except for raises to employees in the
ordinary course of business, consistent with past practice or increases or
changes made pursuant to the terms of existing plans or agreements;
(j) whereby Seller or any Acquired Subsidiary has made any
change in any method of accounting or accounting principle, or policy with
respect to the Division, which change would result in an aggregate impact in
excess of $20,000 on the unaudited division profit contribution statement of the
Division for the fiscal period commencing on April 4, 1999 and ending on the day
immediately preceding the Closing Date;
(k) that resulted in Seller or any Acquired Subsidiary making
any commitments to take any of the actions described above in this Section 2.5.
2.6 Licenses. No licenses, permits or authorizations of any
governmental department or agency are required for the operation of the Division
which have not been duly
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45
obtained and the absence of which would be detrimental to the operations of the
Division. All material governmental licenses, permits, authorizations and
approvals possessed by any of Seller or the Acquired Subsidiaries and used in
the operation of the business of the Division are listed in the Disclosure
Schedule.
2.7 Title to Property; Security Interests. Seller or the Acquired
Subsidiaries own and have good and valid title to all of the Division Assets,
free and clear of all mortgages, liens, security interests, and encumbrances
(collectively, "Security Interests") except for (i) exceptions listed in Section
2.7 of the Disclosure Schedule, (ii) liens for taxes and special assessments not
yet due and payable, and (iii) any restriction on assignment of any Contract, or
change of control of any party to a Contract, which is stated therein. The
Security Interests referred to in the foregoing clauses (i) through (iii) are
collectively referred to herein as "Permitted Security Interests." All of the
issued and outstanding capital stock of the Acquired Subsidiaries of all classes
and series is listed in Section 2.7 of the Disclosure Schedule. Seller is, or
will be at or prior to Closing, the record and beneficial owner of (and has, or
will have at or prior to Closing, the right to transfer to Buyer) all of the
issued and outstanding shares of capital stock of the Acquired Subsidiaries (the
"Shares"), free and clear of all pledges, claims, liens, encumbrances, security
interests, options, charges, rights of third parties and restrictions
whatsoever, except for restrictions that would apply upon transfer of the Shares
other than in compliance with the requirements of the Securities Act of 1933, as
amended, and state blue sky laws and similar foreign laws, and except for rights
of Buyer under this Agreement and liens created by Buyer. At Closing, the Shares
will not be subject to any voting trust agreement or other contract, agreement,
arrangement, commitment or
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46
understanding, including any such contract, agreement, arrangement, commitment
or understanding restricting or otherwise relating to the voting, dividend
rights or disposition of the Shares, other than this Agreement.
2.8 Employees and Employee Benefits. Section 2.8 of the Disclosure
Schedule contains a true and correct and complete list of all employees of the
Division as of the date of this Agreement, their date of hire, title, salary or
hourly rate of pay, work location and other compensation to the extent such
compensation is not generally provided to all such employees (e.g., stock
options, incentive plan participation, Seller's sales incentive plan
participation).
(a) Neither Seller nor any Acquired Subsidiary is as of the
date hereof, nor will be as of the Closing Date, delinquent in any respect in
payments to which any of its employees or former employees of the Division is
entitled, for any wages, salaries, commissions, bonuses, severance pay, paid
time off, vacation pay, sick pay or other direct compensation for any services
performed by them to the date hereof or amounts required to be reimbursed to
such employees;
(b) To Seller's Knowledge, Seller and each Acquired Subsidiary
is in compliance with all federal, state and local laws and regulations of any
relevant jurisdiction respecting labor, workplace conditions, employment and
employment practices, terms and conditions of employment and wages and hours
with respect to the Division and there are no claims pending or threatened
against Seller or any Acquired Subsidiary alleging the violation of any such
laws and regulations with respect to the Division;
(c) Except as listed in the Disclosure Schedule and except for
confidentiality, invention assignment and non-compete agreements entered into
with employees and obligations imposed by law, neither Seller nor any Acquired
Subsidiary has a
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written or oral contract of employment or severance agreement with any Employee
nor is a party to or subject to any collective bargaining agreement with respect
to the Division.
(d) Neither Seller nor any Acquired Subsidiary maintains, and
no Acquired Subsidiary has maintained, with respect to employees of the
Division, and is not required with respect to employees of the Division to make
contributions to, any "employee benefit plan" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) relating solely to U.S. employees, or any material benefit plan
maintained by any Acquired Subsidiary solely for employees located outside the
United States, except for the plans listed in the Disclosure Schedule (each a
"Benefit Plan" and collectively the "Benefit Plans"). Seller has provided Buyer
with a true and correct copy of each Benefit Plan.
(e) No Employee of the Division employed in the United States
are participants in any Benefit Plans provided or sponsored by an Acquired
Subsidiary solely for its employees.
(f) Except as otherwise provided in Article 10, neither Buyer
nor any Acquired Subsidiary shall have any liability with respect to any Benefit
Plan (other than Benefits Plans maintained by an Acquired Subsidiary solely for
its own employees).
(g) Apart from the retirement benefits scheme known as Norwich
Union Group Pension Scheme, Scottish Mutual Executive Pension Plan and Skandia
Life Assurance Executive Pension Scheme and established by deeds dated August
12, 1988, July 8, 1997, and October 1, 1996, respectively ("the Pension
Schemes"), CME is not under a legal obligation to pay pensions or otherwise to
provide `relevant benefits' within the meaning of Section 6.12 of the Income and
Corporation Taxes Act, to or for any of its past or present
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48
officers or employees or their dependants and there are no retirement, pension
disability or death benefit schemes (whether funded or unfunded) in relation to,
or binding on, CME or to which CME contributes, except as disclosed pursuant to
Section 2.8(d).
(h) CME is not making, or has not regularly made since June 1,
1996, any ex gratia payments to any of the Employees or to any spouse, child or
dependant of any of them.
(i) The Pension Scheme is an exempt approved scheme (within
the meaning of Chapter 1 of Part XIV or the Income and Corporation Taxes Act
1988).
(j) All contributions (including insurance premiums) to the
Pension Scheme have at all times been made in accordance with the provisions of
the Pension Scheme or as otherwise required by law and all contributions to the
Pension Scheme falling due for payment prior to Closing have been paid.
(k) No legally binding undertaking or assurance has been given
to any Employee of CME as to the continuance or introduction or increase or
improvements of any pension rights or entitlements which the Buyer or any of its
affiliates would be required to implement in accordance with good industrial
relations practice whether or not there is any legal obligation to do so.
(l) Buyer has been supplied with full, complete, accurate
and up to date copies of:
(i) the definitive trust deed and rules and
members booklet for the Pension Scheme;
(ii) the identity of every former pension scheme
has been disclosed to the Buyer in the
Disclosure Schedule.
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(m) CME and the Pension Scheme has complied in all material
respects with all equal pay, equal entitlement, sex and other discrimination
legislation including Article 119 of the Treaty of Rome, and all UK statutes and
regulations and statutory instruments in respect of the Pension Scheme. No
eligible employee of CME or any person claiming benefits through or in respect
of such a person has been improperly excluded from access to the Pension Scheme
or any other arrangement providing relevant benefits (as defined in Section 612
of the Income and Corporation Taxes Act 1988) on the grounds of sex, race,
disability, religion or gender. There are not in respect of the Pension Scheme
or the benefits thereunder any actions, suits or claims pending or threatened.
2.9 Litigation. Except as disclosed in Section 2.9 of the
Disclosure Schedule, as of the date of this Agreement there is no litigation,
proceeding, claim or investigation formally instituted and pending or, to
Seller's Knowledge, threatened against Seller or any Acquired Subsidiary related
to the Division or its operations, assets or business. Neither Seller nor any
Acquired Subsidiary is operating under, subject to, or in default with respect
to, any order, injunction or decree of any court or any federal, state,
municipal, foreign or other governmental agency or instrumentality.
2.10 Brokers. Except as set forth in Section 2.10 of the Disclosure
Schedule, no broker, finder or other person has or will have, as a result of any
agreement of or action taken by Seller or an Acquired Subsidiary, any valid
claim against Buyer, any affiliate of Buyer or the Division for any commission
or brokerage fee in connection with this Agreement or the transactions
contemplated hereby.
2.11 Intellectual Property Exhibit 1.1(f) and Section 2.11 of the
Disclosure Schedule sets forth a true and correct list of all trademarks,
service marks, trade names,
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patents and patent applications owned, used or held for use by Seller or an
Acquired Subsidiary primarily in connection with the business or operation of
the Division. Except as set forth in Section 2.11 of the Disclosure Schedule,
Seller owns or has the right to use, without payment to any other party the
Intellectual Property. To Seller's Knowledge, (i) no claims have been made in
writing by any person challenging or questioning either the right of Seller to
use, or the validity of, any Intellectual Property; (ii) no person or entity has
claimed in writing the right to use any Intellectual Property, other than under
a license listed in Section 2.11 of the Disclosure Schedule; and (iii) there
have been no written claims of patent, trademark, trade name, service ▇▇▇▇, or
copyright infringement asserted by a third party with respect to the right of
Seller to use the Intellectual Property without payment of a royalty or license
fee (other than payments that are currently subject to a license listed in
Section 2.11 of the Disclosure Schedule). Seller has not received any written
notice that any Intellectual Property has been declared unenforceable or
otherwise invalid by any court or governmental authority.
To Seller's Knowledge, the manufacture, use or sale of any product sold
by the Division or the attendant sales activities thereof do not presently
infringe any United States patent, trademark, service ▇▇▇▇, copyright or trade
secret. Except as set forth in Section 2.11 of the Disclosure Schedule and
subject to the Technology License Agreement, upon consummation of this
Agreement, Buyer or the Acquired Subsidiaries will have sole ownership of, and
good and valid title to, the Intellectual Property, free and clear of any liens
and encumbrances (except for any liens or encumbrances created by Buyer),
including claims of taxes due or creditors of Seller. Following execution of
this Agreement, Seller and its Subsidiaries will not enter into any agreement or
other obligation which would in any way
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51
limit the rights of Buyer to the Intellectual Property other than sales or
leases of Division products in the ordinary course of business. Except as
provided in Section 2.11 of the Disclosure Schedule, to Seller's Knowledge, no
person or entity is infringing or has threatened to infringe any of the
Intellectual Property. To Seller's Knowledge, Seller has not requested any
person or entity to cease or modify any activity or product or to take out a
license for such activity or product by reason of past, present or prospective
infringement of the Intellectual Property.
2.12 Environmental Matters. Seller has heretofore provided to Buyer the
reports listed in the Disclosure Schedule concerning certain real property
leased by Seller relating to the Division or by an Acquired Subsidiary, and
Buyer has obtained from ENSR certain reports concerning such real property
(copies of which have been provided by Buyer to Seller) (collectively, the
"Environmental Reports"). Except for matters referred to in the Environmental
Reports or as set forth in Section 2.12 of the Disclosure Schedule, Seller and
each Acquired Subsidiary has operated and is currently operating the Division in
compliance with all applicable federal, state, local and foreign laws and
regulations relating to the generation, storage, release, discharge,
transportation, treatment, disposal and emission of solid wastes and hazardous
substances ("Environmental Laws"). Except for matters referred to in the
Environmental Reports or as set forth on Section 2.12 of the Disclosure
Schedule, there are no locations or premises owned or operated by Seller or the
Acquired Subsidiaries related to the Division where (i) Seller, the Acquired
Subsidiaries or the Division have released, disposed of or emitted any solid
wastes, hazardous wastes or hazardous materials or substances on, under or into
the soil or into groundwater in violation of Environmental Laws, or (ii) to
Seller's Knowledge, where another party has released, disposed of or emitted any
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52
solid wastes, hazardous wastes or hazardous materials or substances on, under or
into the soil or into groundwater in violation of Environmental Laws.
Specifically, and not in limitation of the foregoing statements, except for
matters referred to in the Environmental Reports or as set forth on Section 2.12
of the Disclosure Schedule, neither Seller with respect to the Division nor the
Acquired Subsidiaries has operated, used, added to or deposited toxic substances
or other wastes or materials on any real property currently or previously used,
owned or operated by the Division in any manner so as to create any liability or
obligation for Buyer under any Environmental Law. Seller, the Acquired
Subsidiaries and the Division have been granted and hold, and have made, all
governmental actions and filings which are currently required in connection with
the operation of the Division under applicable federal, state and local laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances, materials
or wastes into the environment, and the generation, treatment, storage,
disposal, transportation or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances, materials or wastes. Except for
matters referred to in the Environmental Reports, or as set forth on Section
2.12 of the Disclosure Statement, neither Seller nor the Acquired Subsidiaries
has received written notice from any governmental or regulatory authority of any
non-compliance (or any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which will
interfere with or prevent continued substantial compliance) with the terms and
conditions of such permits, licenses and other similar authorizations. Except
for matters referred to in the Environmental Reports, or as set forth on Section
2.12 of the Disclosure Statement, neither Seller nor the Acquired
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53
Subsidiaries has received written notice of any civil, criminal or
administrative action, suit, claim or proceeding against Seller or the Acquired
Subsidiaries involving any property used or business used in connection with the
operation of the Division relating in any way to Environmental Laws nor, to
Seller's Knowledge, is there any such threatened action, suit, claim or
proceeding.
2.13 Insurance. Section 2.13 of the Disclosure Schedule sets forth all
contracts and policies of insurance maintained by Seller and the Acquired
Subsidiaries which relate, in whole or in part, to the Division Assets.
2.14 Contracts. The Disclosure Schedule lists, and Seller has made
available to Buyer, true and complete copies of, and if oral, a description of,
each of the following Contracts in effect as of the date of this Agreement to
which Seller or any Acquired Subsidiary is bound:
(i) any contract of employment or severance
agreement (other than any agreement the
nondisclosure of which does not constitute a
misrepresentation under Section 2.8(c)
above);
(ii) any contract containing covenants (other
than covenants regarding the protection and
use of confidential information and
covenants or limitations regarding use
contained in license agreements)
specifically limiting the freedom of the
Division to engage in any line of business
or to compete with any person or entity and
any contract containing covenants (other
than covenants regarding the protection and
use of confidential information and
covenants or limitations regarding use
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54
contained in license agreements)
specifically limiting the freedom of the
Acquired Subsidiaries from engaging in any
line of business or competing with any
person or entity;
(iii) any agreement or contract between Seller or
any Subsidiary or Affiliate of Seller and
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
Sand, ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, an Acquired Subsidiary or other
Subsidiary or Affiliate of Seller, other
than in the ordinary course of business (and
other than agreements the nondisclosure of
which does not constitute a
misrepresentation under Section 2.8(c) above
or Benefit Plans);
(iv) other than leases of real property, any
operating lease (as lessor or lessee) of any
Division Assets or any tangible personal
property (except any lease calling for
payments of less than $50,000 per year) and
any vehicle leases;
(v) any license (as licensor or licensee) of any
Intellectual Property (other than
non-negotiated licenses of commercially
available computer software and licenses
embedded in products sold or purchased by
the Division);
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(vi) any management, service, consulting, or
other similar contract with an unaffiliated
third party under which there exists future
liability for payments by Seller or an
Acquired Subsidiary in excess of $100,000
per contract ($50,000 in the case of
consulting contracts) and which is not
terminable by Seller or an Acquired
Subsidiary within 30 days without penalty;
(vii) any written agreement for the purchase by
Seller or an Acquired Subsidiary of raw
materials, supplies, or products that calls
for aggregate future payments by Seller or
an Acquired Subsidiary in excess of $200,000
(related to the Division) per agreement;
(viii) any agreement or contract under which any
money has been borrowed or loaned or any
note, bond, indenture, or other evidence of
indebtedness has been issued, directly or
indirectly guaranteed or assumed (other than
endorsements for the purpose of collection
in the ordinary course of business) or under
which Seller or the Acquired Subsidiaries
have granted a security interest or lien on
any of the Division Assets, whether tangible
or intangible, to secure indebtedness;
(ix) any mortgage, deed of trust, guaranty by
Seller or an Acquired Subsidiary, pledge
agreement, security agreement, purchase
money agreement, or capital lease (other
than (A) any purchase money agreement, or
capital lease evidencing liens only on
tangible personal property under which there
exists an aggregate
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future liability not in excess of $50,000
per contract or lease; and (B) protective
filings of financing statements under the
Uniform Commercial Code or similar statute);
(x) any contract or agreement establishing any
partnership, joint venture, strategic
alliance or other material collaboration
relating to the Division;
(xi) any contract or agreement granting any
person or entity any right to market or
distribute any of the Division's products,
or to represent the Division with respect to
such products, or act as agent for the
Division in connection with the marketing,
distribution or sale of any such product;
(xii) any sole source supply contract for the
purchase of a material raw material or
component that is otherwise not generally
available and that is used in the
manufacture of any of the Division's
products;
(xiii) any lease relating to real property to which
Seller or an Acquired Subsidiary is a party;
(xiv) other than customer purchase orders, all
contracts, agreements or understandings
providing for pricing guarantees and volume
purchase discounts relating to Division
products and services;
(xv) all contracts or agreements containing
express Year 2000 compliance obligations
with respect to Division products or
services (to the extent not completed as of
the date hereof); and
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(xvi) other agreement, contract, understanding, or
arrangement calling for payments of more
than $50,000 per year, other than in the
ordinary course of business.
Each Contract is valid, binding, and in full force and effect, and
enforceable by Seller or an Acquired Subsidiary in accordance with its terms
and, subject to the consents and approvals listed in Section 2.3 of the
Disclosure Schedule being obtained, will not, as a result of the transactions
contemplated hereby, cease to be a valid agreement, arrangement or commitment of
each party thereto, enforceable in all material respects against each such party
in accordance with its terms, except in each case as such enforceability may be
limited by bankruptcy, insolvency, moratorium, and other similar laws affecting
creditors' rights generally and by general principles of equity. None of Seller
or any Acquired Subsidiary is (with or without the lapse of time or the giving
of notice, or both) in breach of, or in default under, any of the Contracts,
and, to Seller's Knowledge, no other party to any of the Contracts is (with or
without the lapse of time or the giving of notice, or both) in breach of, or in
default under, any of the Contracts.
2.15 Taxes.
(a) For the purposes of this Agreement, a "Tax" or,
collectively, "Taxes," means 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, relating to the Division, together with all interest, penalties and
additions imposed with respect to such
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amounts and 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) Except as set forth in the Disclosure Schedule:
(i) Seller and the Acquired Subsidiaries have
accurately prepared and timely filed all
required material Tax Returns relating to
any and all Taxes concerning or attributable
to Seller and the Acquired Subsidiaries,
respectively, and their operations, and such
Tax Returns including the federal
consolidated tax return are true and correct
and have been completed in accordance with
applicable law. Seller has delivered or made
available to Buyer all Tax Returns of the
Acquired Subsidiaries and all VAT and
expatriate payroll and income tax Tax
Returns relating to the Division (and any
examination reports, notices of deficiency,
or similar document pertaining to such Tax
Returns) required to be filed (taking into
account any extensions) on or before the
date hereof, for all taxable periods for
which the applicable statute of limitations
on assessments has not expired.
(ii) Seller and the Acquired Subsidiaries as of
the Closing Date: (A) will have paid all
Taxes each is required to pay as of such
time and (B) will have withheld with respect
to its employees, shareholders or others all
Taxes required to be withheld.
(iii) There is no Tax deficiency outstanding, or
assessed against Seller or the Acquired
Subsidiaries. Further, Seller and the
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Acquired Subsidiaries have not received any
written notice of a proposed assessment of
taxes, or executed any waiver of any statute
of limitations on or extending the period
for the assessment or collection of any Tax
which is still in effect.
(iv) No audit or other examination of any Tax
Return of Seller or the Acquired
Subsidiaries is presently in progress, nor
have Seller or the Acquired Subsidiaries
been notified of any request for such an
audit or other examination.
(v) None of the assets of Seller or the Acquired
Subsidiaries is treated as "tax-exempt use
property" within the meaning of Section
168(h) of the Code.
(vi) There is no contract, agreement, plan or
arrangement covering any employee or former
employee of Seller or the Acquired
Subsidiaries that, individually or
collectively, could give rise to the payment
of any amount that would not be deductible
pursuant to Section 280G or 162 of the Code.
(vii) Seller and the Acquired Subsidiaries have
not filed any consent agreement under
Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code)
owned by Seller.
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(viii) Seller and the Acquired Subsidiaries are not
now, and have not ever been, "United States
real property holding corporations" within
the meaning of Section 897(c)(2) of the
Code.
(ix) There are no liens for Taxes (other than for
current Taxes not yet due and payable) upon
the Division Assets.
(x) Seller and the Acquired Subsidiaries are not
a party to any tax allocation or sharing
agreement. Further, none of Seller and the
Acquired Subsidiaries (A) has been a member
of an affiliated group filing a consolidated
United States federal income tax return
(other than a group the common parent of
which is the Seller), or (B) has any
liability for the Taxes of a person other
than the Seller or the Acquired Subsidiaries
under Treasury Regulation ss. 1.1502-6 or
similar provision of state or foreign law.
(xi) CME is and has at all times been resident in
the United Kingdom for tax purposes and is
not and has not been treated as resident or
as having a permanent establishment in any
other jurisdiction for any tax purpose.
(xii) CME is registered for the purposes of "VAT"
(which means UK value added tax or any
similar sales or turnover tax of any
relevant jurisdiction), has been so
registered at all times that it has been
required to be registered by VAT legislation
and has
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complied with such legislation and all
orders, provisions, directions or other
conditions made or imposed thereunder. CME
obtains credit for all input tax paid or
suffered by it in any relevant jurisdiction.
(xiii) CME has trading losses of (pound)604,356 for
the accounting period ended May 31, 1998, of
which (pound)588,786 has been carried back
under section 393A Income and Corporation
Taxes Act 1988 against profits for the
accounting period ended May 31, 1997, giving
rise to a repayment from the Inland Revenue
of (pound)158,612 in respect of which a
claim has been submitted.
(xiv) CMK has a net operating loss for the 1998
financial year of 214,347,235 Korean Won.
2.16 Compliance with Laws. Each of Seller and the Acquired Subsidiaries
is and has been in compliance with all statutes, laws, ordinances, rules,
orders, and regulations of any governmental authority or instrumentality,
domestic or foreign applicable to the Division (collectively, "Applicable
Laws"). Except as set forth in Section 2.16 of the Disclosure Schedule, no
written notice with respect to the operations of the Division (the reason for
which has not been corrected) has been served upon Seller or any of the Acquired
Subsidiaries since January 1, 1998 by any governmental body alleging any
violation of any Applicable Laws. This Section 2.16 shall not apply to
compliance with, or written notices alleging any violation of, Applicable Laws
relating to the specific matters expressly covered by Sections 2.3 (relating to
No Defaults), 2.6 (relating to Licenses), 2.8 (relating to Employees and
Employee Benefits), 2.12 (relating to Environmental Matters), 2.15 (relating
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to Taxes) and 2.27 (relating to Real Property), which instead shall be governed
by the express terms of such Sections.
2.17 No Undisclosed Liabilities. Except as reflected, reserved against,
or otherwise disclosed in the Statement of Net Assets (or incurred in the
ordinary course of business since the Statement of Net Assets Date) or disclosed
in this Agreement or the Exhibits hereto or the Disclosure Schedule (including
obligations set forth under the terms of Contracts so disclosed), or the
nondisclosure of which in response to a representation under this Article 2 does
not constitute a breach of such representation, there are no liabilities or
obligations of the Division, whether accrued, absolute, contingent or otherwise
and whether or not required to be disclosed on the Statement of Net Assets or
the Closing Statement of Net Assets.
2.18 Inventories. All inventories reflected on the Statement of Net
Assets (including finished products, work-in-process, subassemblies, raw
materials, purchased parts and supplies) were as of the Statement of Net Assets
Date, and all inventories existing on the Closing Date will be, properly valued
at the lower of cost or market value in accordance with prior practices of the
Division. The value of inventories (net of reserves) reflected on the Statement
of Net Assets, as of the Statement of Net Assets Date and as of the close of
business on the day immediately preceding the Closing Date, respectively,
represented or will represent Inventories of the stated value that were or will
be of such quantity, quality and condition as to be usable or saleable in the
ordinary course of business.
2.19 All Necessary Assets. The Division Assets, including assets
subject to leases under Contracts, constitute all of the assets which are
reasonably necessary to operate the business of the Division in a similar manner
to that in which it is presently conducted; provided, however, that the Division
Assets do not include the PBX telephone system or the
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server hardware, network, or server application software used by the Division to
support its business activities through enterprise resource planning,
manufacturing and financial reporting. Section 2.19 of the Disclosure Schedule
sets forth all Shared Assets, or categories of Shared Assets, that are material
to the operation of the business of the Division but are not included in the
Division Assets.
2.20 Assumptions or Guarantees of Indebtedness. Seller, the Acquired
Subsidiaries and the Division are not directly or contingently liable on any
indebtedness of any customer, supplier, former employee or employee of the
Acquired Subsidiaries or the Division (including without limitation liability by
way of agreement, contingent or otherwise, to provide funds for payment, to
supply funds or to otherwise invest in or otherwise to assure any person or
entity against loss) whether as a result of the assumption, guarantee or
endorsement of any debt or otherwise, except as set forth in Section 2.20 to the
Disclosure Schedule.
2.21 Labor Matters. There is no unfair labor practice complaint against
Seller or any Acquired Subsidiary pending before the National Labor Relations
Board or any other labor dispute (except disputes with individual employees),
slowdown or stoppage actually pending, or to the Knowledge of Seller, threatened
against Seller or any Acquired Subsidiary with respect to the Division. There is
no collective bargaining agent representing any of the Division's employees, no
petition has been filed and is pending with the National Labor Relations Board
by any labor organization or any group of employees for an election or
certification regarding the representation of any group of the Division's
employees by a labor organization and, to Seller's Knowledge, there is not at
present any solicitation or campaign
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by any labor organization or employee for the representation of the Division's
employees by a labor organization.
2.22 Accounts Receivable. Net of reserves, each account receivable
reflected on the Statement of Net Assets as of the Closing Date constitutes a
receivable resulting from a bona fide sale or lease to a customer in the
ordinary course of business, the amount of which was actually owed to Seller or
an Acquired Subsidiary on the date thereof. All such receivables (in terms of
dollar amount) are consistent with Seller's or such Acquired Subsidiary's
historically agreed upon payment terms. The books and records of Seller, the
Acquired Subsidiaries and the Division state the correct amount, subject to
acceptance where applicable, of each account receivable of the Division and the
balance due thereon.
2.23 Principal Customers. Set forth in Section 2.23 of the Disclosure
Schedule is a list of each customer of the Division as of the date hereof, which
accounted for more than five percent (5%) of the revenues of the Division, for
the fiscal year ended August 29, 1998. To Seller's Knowledge, no relationship
with any such customer of the Division has been canceled or terminated, nor to
Seller's Knowledge, has any such customer threatened any such cancellation or
termination.
2.24 No Third Party Options. There are no existing agreements, options,
commitments or rights with, of or to any person to acquire any of the rights of
Seller or the Acquired Subsidiaries in the Division Assets or any interest
therein, except in the ordinary course of business.
2.25 Full Disclosure. The representations and warranties of Seller
contained in this Agreement (including the Exhibits hereto) and the Disclosure
Statement, and any document executed and delivered by Seller at Closing pursuant
hereto, when taken as a whole, do not
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contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
2.26 Millennium Compliance. Except as set forth in Section 2.26 of
the Disclosure Schedule, to Seller's Knowledge, the Division Assets are
Millennium Compliant (as defined below). Neither Seller nor any Acquired
Subsidiary has received written notice from any customer or supplier indicating
that such customer or supplier will not be Millennium Compliant and will
experience problems relating thereto that would be likely to have a Material
Adverse Effect. "Millennium Compliant" means that software, hardware, and
associated devices included in the Division Assets (a "Millennium Device") which
are intended to process date data and which are material to conducting the
Division's business will not be materially adversely affected as a result of the
date change from 1999 to 2000 including leap year calculations, provided (i)
that all products used with a Millennium Device function properly, including
without limitation exchanging accurate date data with the Millennium Device, and
(ii) to the extent applicable to the Millennium Device's normal operating
specifications, the Millennium Device will accept, store, retrieve, compare, and
otherwise process dates before, as of, and after January 1, 2000.
2.27 Real Property.
(a) Seller does not own any real property that is used in the
Division and the Acquired Subsidiaries do not own any real property.
(b) Schedule 2.27 contains a true and correct list of each
parcel of real estate leased by Seller with respect to the Division or by an
Acquired Subsidiary (the "Leased Real Property"). Seller has previously
furnished to Buyer a true and correct copy of
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each lease pursuant to which Seller or an Acquired Subsidiary leases any Leased
Real Property and any amendments, extensions, and renewals thereof (the "Real
Property Leases").
(c) The Leased Real Properties are adequate for the conduct of
the business operations of the Division as currently conducted. All improvements
used by Seller with respect to the Division on the Leased Real Property,
including without limitation the building, roof and mechanical, security, fire
alarm and sprinkler systems, are in good working order and, to Seller's
Knowledge, do not violate applicable state and local laws, use restrictions
(including zoning), building ordinances, and health and safety ordinances in
effect with respect thereto.
(d) Seller has not received in the 12 month period immediately
prior to the date hereof any written notice of any pending or threatened
condemnations, planned public improvements, annexation, special assessments,
zoning or subdivision changes, or other adverse claims affecting the Leased Real
Property leased by Seller or an Acquired Subsidiary.
(e) Neither Seller nor any Acquired Subsidiary has in its
possession any studies or reports which state that there is any material defect
in the design or construction of any of the improvements on the Leased Real
Property.
(f) Neither Seller nor any Acquired Subsidiary has failed to
pay as required by the applicable Real Property Leases any currently due taxes,
assessments, or other charges the consequences of nonpayment of which might
adversely effect the present use of the Leased Real Property purported to be
leased by Seller.
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2.28 Exclusivity of Representations. Buyer and Seller acknowledge and
agree that (a) the representations and warranties made by Seller in this
Agreement, including the exhibits and schedules attached hereto or other
instruments specifically identified herein and delivered pursuant hereto, are in
lieu of (and are exclusive of) any other representations and warranties, express
or implied (including without limitation any implied or express warranties of
merchantability or fitness for a particular purpose) and (b) neither Seller nor
anyone representing Seller has made any other representation or warranty. Seller
hereby disclaims any such other or implied representations or warranties,
notwithstanding the delivery or disclosure to Buyer or its officers, directors,
employees, agents or representatives of any documentation or other information
(including, without limitation, the Confidential Descriptive Memorandum relating
to the Division dated October 1998 and any other material prepared by ▇▇▇▇▇▇
Brothers Inc.) by Seller or any other person.
ARTICLE 3
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
3.1 Corporate Status. Buyer is a duly organized and validly existing
corporation in good standing under the laws of the state of Delaware. On the
Closing Date, Buyer will if so required by applicable law be duly qualified to
do business and will be in good standing as a foreign corporation in the State
of Minnesota. Buyer has the requisite corporate power and authority to carry on
its business as now being conducted, to own, lease and operate the properties
used in its business, and to enter into and complete the transactions
contemplated by this Agreement.
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3.2 Corporate Action. All corporate actions and proceedings necessary
to be taken by Buyer or any parent or subsidiary of Buyer in connection with the
transactions contemplated by this Agreement have been duly and validly taken,
and this Agreement and the transactions and other agreements contemplated hereby
have been duly and validly authorized, executed and delivered by Buyer and
constitute the legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with and subject to their respective terms, except
as such enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws from time to time in effect
affecting creditors' rights generally or by principles governing the
availability of equitable remedies. The execution, delivery and performance of
this Agreement and the other agreements contemplated hereby have been duly and
validly authorized by the Board of Directors of Buyer and no additional
shareholder or corporate proceedings of Buyer or any affiliate to be designated
by Buyer prior to Closing pursuant to Section 1.1 are necessary to authorize
such execution, delivery and performance.
3.3 No Defaults. Neither the execution and delivery by Buyer of this
Agreement nor the consummation by Buyer of the transactions contemplated hereby
is an event that, of itself or with the giving of notice or the passage of time
or both, (a) will conflict with the Certificate of Incorporation or By-Laws of
Buyer, (b) will constitute a violation of, or conflict with or result in any
breach of or any default under, any mortgage, indenture, agreement or instrument
to which Buyer is a party or by which it is bound, (c) will violate any
judgment, decree, order, statute, rule or regulation applicable to Buyer, or (d)
will require any permit, authorization, filing, consent or approval or any
governmental authority
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except for filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and the filings, if any,
required to be made with the Office of Fair Trading.
3.4 Litigation. There is no litigation, proceeding or investigation of
any nature pending or, to Buyer's knowledge, threatened against or affecting
Buyer that would affect Buyer's ability to carry out fully the transactions
contemplated by this Agreement.
3.5 Brokers. No broker, finder or other person has or will have, as a
result of any agreement of or action taken by Buyer or any affiliate of Buyer,
any valid claim against Seller, any affiliate of Seller or any proceeds of the
sale contemplated hereby for any commission or brokerage fee in connection with
this Agreement or the transactions contemplated hereby.
3.6 Approvals and Consents. The only approval or consent of persons or
entities not a party to this Agreement that is legally or contractually required
to be obtained by Buyer in connection with the consummation of the transactions
contemplated by this Agreement is approval pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act
and the filings, if any, required to be made with the Office of Fair Trading.
3.7 Funds Available. Buyer currently has (and on the Closing Date will
have) sufficient funds to pay the Purchase Price, in full and in accordance with
this Agreement, and Buyer's obligations to purchase the Division Assets
hereunder are not subject to any condition or contingency involving financing,
availability of funds or any similar matter.
3.8 Exclusivity of Representations. Buyer and Seller acknowledge and
agree that (a) the representations and warranties made by Buyer in this
Agreement, or other instruments specifically identified herein and delivered
pursuant hereto, are in lieu of (and are exclusive of) any other representations
and warranties, express or implied and (b) neither Buyer nor
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anyone representing Buyer has made any other representation or warranty. Buyer
hereby disclaims any such other or implied representations or warranties,
notwithstanding the delivery or disclosure to Seller or its officers, directors,
employees, agents or representatives of any documentation or other information
by Buyer or any other person.
ARTICLE 4
Covenants of Seller Pending Closing
Seller covenants and agrees, that from the date hereof until completion
of the Closing:
4.1 Operation of the Business.
(a) Seller and the Acquired Subsidiaries will continue to
conduct the business of the Division substantially as heretofore conducted and
will keep its books, accounts, records and files in the ordinary course of
business consistent with past practice.
(b) Seller will provide to Buyer a copy of the regular
monthly unaudited Division profit contribution statement of the Division for
each monthly accounting period ending between the date hereof and the Closing
Date, in each case within 30 days of the end of such accounting period.
(c) Except as otherwise specifically permitted pursuant
to the terms of this Agreement, Seller and the Acquired Subsidiaries shall:
(i) use all reasonable efforts to maintain all
Fixed Assets and all Leased Real Property
included in the Division Assets in as good
working order and condition as at present,
except for ordinary wear and tear;
(ii) perform all their material obligations under
all Contracts;
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(iii) keep in full force and effect current
insurance policies and contracts, or other
substantially similar insurance coverage,
affecting the Division Assets;
(iv) use all reasonable efforts to preserve its
relationships with employees of the
Division, customers, suppliers and
distributors; and
(v) notify Buyer of any material adverse change
in its business, operations or financial
condition.
(d) Seller and the Acquired Subsidiaries will not,
without the prior written consent of Buyer:
(i) except for (y) equipment financings or
assets included in the calculation of Net
Working Capital within the meaning of
Section 1.6, in each case in the ordinary
course of business, or (z) Fixed Assets
having a net book value of $7,500 or less
for any individual Fixed Asset or $50,000 or
less for all such Fixed Assets in the
aggregate, sell, lease or transfer, or agree
to sell, lease or transfer, any Division
Assets which are material to the operation
of the Division, without replacement thereof
with a substantially equivalent asset of
substantially equivalent kind, condition,
and value;
(ii) except for any confidentiality, invention
assignment or non-compete agreement with any
employee of the Division, enter into any
contract of employment (other than contracts
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terminable by Buyer without penalty
immediately following the Closing) with any
employee or employees of the Division;
(iii) enter into, renew or amend any (A) customer
Contract with respect to which the Division
will be bound as of the Closing, except in
the ordinary course of business, or (B)
other Contract with respect to which the
Division will be bound as of the Closing and
which was or would have been required to be
disclosed pursuant to Section 2.14,
provided, however, that Buyer shall be
deemed to have consented to Seller entering
into, renewing or amending any Contract with
respect to which such consent is required by
this Section 4.1(d)(iii) if Buyer does not
object to Seller's request for such consent
within one business day;
(iv) except for (A) any non-recurring separation
or severance payment made by Seller or any
Acquired Subsidiary to any employee of the
Division in respect of the transactions
contemplated hereby, and (B) accrued amounts
payable prior to Closing to management
employees in accordance with past practices
of Seller (C) discretionary bonuses to
employees paid prior to Closing which in the
aggregate do not exceed $20,000, increase
the compensation payable or to become
payable to any officer, employee or agent of
the Division, or make any bonus
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payment to any such person other than in the
ordinary course of business;
(v) in the case of the Acquired Subsidiaries,
make any payment of any kind to Seller,
other than in the ordinary course of
business, or declare any dividend;
(vi) in the case of the Acquired Subsidiaries,
issue any shares or rights to acquire shares
of its capital stock; or
(vii) borrow funds in excess of $250,000 in the
aggregate; guarantee the obligations of any
other person or entity, other than Seller's
Subsidiaries and Affiliates in the ordinary
course of business; or use the Division
Assets to make loans to any other person or
entity;
(viii) make any commitment to take any action set
forth in this Section 4.1(d).
(e) From the date of this Agreement to the Closing Date,
Seller agrees to use its reasonable efforts (which shall not require Seller to
make any payment to any party) to include in each Contract relating to the
Division (except Contracts entered into by Acquired Subsidiaries) entered into
subsequent to the date of this Agreement (a "Subsequent Contract") a provision
permitting the assignment of any such Subsequent Contract to Buyer and providing
that, upon such assignment, Buyer shall succeed to all of Seller's rights, title
and interests thereunder subject only to Buyer's express assumption of all
Seller's duties, powers and obligations under such Subsequent Contract and the
provision of written notice of such assumption by Buyer to the other party
thereto.
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(f) From the date hereof through the Closing Date, Seller will
make available to Buyer true and correct copies of all internal management and
control reports (including aging of accounts receivable and reports of Division
metrics) and financial statements related to the business and furnished to
management of Seller.
4.2 Access to Facilities, Files and Records. At the reasonable request
of Buyer and upon reasonable advance notice, Seller will give or cause to be
given to the officers, management employees, accountants and counsel of Buyer
(a) access during normal business hours to all of the Division Assets and
operations of the Division, including access to the customers and suppliers of
the Division, and (b) all such information primarily concerning the affairs of
the Division as Buyer may reasonably request; provided, however, that Buyer
shall not utilize such access in any manner that disrupts the operations of the
Division, including Seller's and the Acquired Subsidiaries' relationships with
employees, customers and suppliers. Buyer shall coordinate all such efforts
through Seller's senior management.
4.3 Consents. Reference is hereby made to each Contract set forth in
the Disclosure Schedule which requires the consent or approval of any person
other than Seller, an Acquired Subsidiary or Buyer in order to assign or
otherwise transfer such Contract to Buyer (a "Restricted Contract"). Seller and
the Acquired Subsidiaries will make reasonable efforts (but shall not be obliged
to make any payment, except as otherwise provided in the letter dated the date
of this Agreement between Seller and Buyer) to obtain such consent or approval
with respect to such Restricted Contract, recognizing that in the case of
certain material Contracts reasonable efforts may require customer visits, but
Seller shall have no obligation to obtain such consent or approval other than
the undertaking to make such reasonable efforts. Subject to Section 7.4, if
Seller or any Acquired Subsidiary has made
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such reasonable efforts, Buyer shall have no right to terminate this Agreement
as a result of any failure by Seller or any Acquired Subsidiary to obtain any
such consent or approval. If any such consent or approval is not obtained prior
to Closing, and Buyer does not waive such consent or approval, such Restricted
Contract shall (at Seller's or such Acquired Subsidiary's option) be excluded
from the Division Assets and shall not be assigned or otherwise transferred to
Buyer at Closing, provided that Seller shall continue to use reasonable efforts
(which shall not require Seller to make any payment to any party) to obtain such
consent or approval after the Closing. In the event such consent has not been
obtained prior to Closing, the provisions of Section 11.11 (relating to
Restricted Contracts) shall apply.
4.4 Consummation of Agreement. Subject to the provisions of Section
11.1 of this Agreement, Seller and the Acquired Subsidiaries shall use all
reasonable efforts to fulfill and perform all conditions and obligations to be
fulfilled and performed by Seller and the Acquired Subsidiaries under this
Agreement, and to cause the transactions contemplated by this Agreement to be
fully carried out. Seller shall give prompt notice to Buyer of (i) the
occurrence, or failure to occur, of any event that would be reasonably likely to
cause any of its representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date of this
Agreement to the Closing Date and (ii) any failure on its part to comply with or
satisfy, in any material respect, any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement.
4.5 Notice of Proceedings. Seller will promptly notify Buyer in writing
upon (a) becoming aware of any order or decree or any complaint praying for an
order or decree restraining or enjoining the consummation of this Agreement the
transactions contemplated hereunder, or (b) receiving any notice from any court
or governmental agency of its intention
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to (i) commence an investigation into, or commence a suit or proceeding to
restrain or enjoin, the consummation of this Agreement or such transactions, or
(ii) nullify or render ineffective this Agreement or such transactions if
consummated.
4.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. As soon as practicable (but in no event
later than 21 days) after the date hereof, Seller shall prepare and file all
documents with the Federal Trade Commission and the United States Department of
Justice as are required to comply with Seller's obligations under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act") and shall promptly furnish all materials thereafter
requested by any regulatory agency having jurisdiction over such filings.
4.7 Korean Approvals. Seller, as a foreign seller, shall report the
sale of the stock of CMK to the relevant Korean foreign exchange bank within 30
days of the date hereof and, promptly upon receipt of acceptance of such report,
shall provide a copy thereof to Buyer. If Buyer so requests, Seller shall
cooperate with Buyer to make a voluntary filing of a business combination report
with the Korea Fair Trade Commission, such filing to be at Buyer's expense.
ARTICLE 5
Covenants of Buyer Pending Closing
Buyer covenants and agrees that, from the date hereof until completion
of the Closing:
5.1 Consents. Buyer will use its reasonable efforts (which shall not
require Buyer to make any payment to any party) to assist Seller and the
Acquired Subsidiaries in obtaining any consents or approvals with respect to
Restricted Contracts and, to the extent requested by
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Seller, in obtaining releases of Seller from all obligations arising or due
after the Closing under Contracts assigned or otherwise transferred to Buyer
pursuant to this Agreement.
5.2 Consummation of Agreement. Subject to the provisions of Section
11.1 of this Agreement, Buyer shall use all reasonable efforts to fulfill and
perform all conditions and obligations to be fulfilled and performed by Buyer
under this Agreement, and to cause the transactions contemplated by this
Agreement to be fully carried out. Buyer shall give prompt notice to Seller of
(i) the occurrence, or failure to occur, of any event that would be likely to
cause any of its representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date of this
Agreement to the Closing Date and (ii) any failure on its part to comply with or
satisfy, in any material respect, any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement.
5.3 Notice of Proceedings. Buyer will promptly notify Seller in writing
upon (a) becoming aware of any order or decree or any complaint praying for an
order or decree restraining or enjoining the consummation of this Agreement or
the transactions contemplated hereunder, or (b) receiving any notice from any
court or governmental agency of its intention to (i) commence an investigation
into, or commence a suit or proceeding to restrain or enjoin, the consummation
of this Agreement or such transactions, or (ii) nullify or render ineffective
this Agreement or such transactions if consummated.
5.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. As soon as practicable (but in no event
later than 21 days) after the date hereof, Buyer shall prepare and file all
documents with the Federal Trade Commission and the United States Department of
Justice as are required to comply with
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Buyer's obligations under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and shall promptly furnish
all materials thereafter requested by any regulatory agency having jurisdiction
over such filings.
ARTICLE 6
Conditions to the Obligations of Seller
The obligations of Seller to consummate the transactions contemplated
by this Agreement are, at Seller's option (but only to the extent such
conditions may be waived as a matter of law), subject to the fulfillment of the
following conditions prior to or on the Closing Date:
6.1 Representations, Warranties, Covenants.
(a) Each of the representations and warranties of Buyer
contained in this Agreement shall have been true and correct in all material
respects as of the date hereof (except to the extent they expressly specify an
earlier date) and shall be deemed to be made again on and as of the Closing Date
and shall then be true and correct in all material respects as of the Closing
Date (except to the extent they expressly specify an earlier date) except to the
extent changes are permitted or contemplated under this Agreement; provided,
however, that any inaccuracies in such representations and warranties which, in
the aggregate, are not material to the financial or legal capability of Buyer to
fulfill its obligations hereunder shall not be a violation of this condition;
(b) Buyer shall have performed and complied in all material
respects with each and every covenant and agreement required by this Agreement
to be performed or complied with by it prior to or on the Closing Date; and
(c) Buyer shall have furnished to Seller a certificate in
substantially the form of Exhibit 6.1(c) hereto, dated the Closing Date and duly
executed by an executive
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officer of Buyer authorized to give such a certificate on behalf of Buyer, to
the effect that the conditions set forth in Sections 6.1, 6.2 and 6.3 have been
satisfied.
6.2 Proceedings. None of Seller, any Acquired Subsidiary or Buyer shall
be subject to any restraining order or injunction restraining or prohibiting the
consummation of the transactions contemplated hereby and no action or proceeding
shall have been instituted by any governmental agency to restrain or prohibit
the consummation of such transactions.
6.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Waiting Period. All applicable waiting periods or
approvals (and any extensions thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall
have expired or shall have been obtained, as the case may be.
6.4 Deliveries. Buyer shall have complied with each and every one of
its obligations set forth in Section 8.2, and Buyer shall have executed and
delivered those documents listed in Section 8.3.
6.5 Opinion of Counsel to Buyer. Seller shall have received an opinion
of counsel to Buyer, dated the Closing Date, covering the matters set forth in
Exhibit 6.5.
ARTICLE 7
Conditions to the Obligations of Buyer
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are, at Buyer's option (but only to the extent such conditions
may be waived as a matter of law), subject to the fulfillment of the following
conditions prior to or on the Closing Date:
7.1 Representations, Warranties, Covenants.
(a) Each of the representations and warranties of Seller
contained in this Agreement shall have been true and correct in all respects as
of the date hereof (except to the
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extent they expressly specify an earlier date) and shall be deemed to be made
again on and as of the Closing Date and shall then be true and correct in all
respects as of the Closing Date (except to the extent they expressly specify an
earlier date) except to the extent changes are permitted or contemplated under
this Agreement; provided, however, that any inaccuracies in such representations
and warranties which, in the aggregate, would not have a Material Adverse Effect
(as defined below) on the Division as a whole shall not be a violation of this
condition;
(b) Seller shall have performed and complied in all material
respects with each and every covenant and agreement required by this Agreement
to be performed or complied with by it prior to or on the Closing Date; and
(c) Seller shall have furnished to Buyer a certificate in
substantially the form of Exhibit 7.1(c) hereto, dated the Closing Date and duly
executed by an executive officer of Seller authorized to give such a certificate
on behalf of Seller, to the effect that the conditions set forth in Sections
7.1, 7.2, 7.3 and 7.4 have been satisfied.
(d) "Material Adverse Effect" means any change or effect
(other than those disclosed in the Disclosure Schedule) that is reasonably
likely to have a material adverse effect on the business, operations, results of
operations, properties, or financial condition of the Division taken as a whole
(other than incidents, occurrences, events, or conditions generally applicable
to the industry or industries in which the Division operates or changes in
general economic conditions) or materially impairs the ability of Seller to
consummate this Agreement.
7.2 Proceedings. None of Seller, any Acquired Subsidiary or Buyer
shall be subject to any restraining order or injunction restraining or
prohibiting the consummation of
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the transactions contemplated hereby and no action or proceeding shall have been
instituted by any governmental agency to restrain or prohibit the consummation
of such transactions.
7.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Waiting Period. All applicable waiting periods or
approvals (and any extensions thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall
have expired or shall have been obtained, as the case may be.
7.4 Consents. Seller shall have obtained all required consents
or approvals in order to assign or otherwise transfer to Buyer the Restricted
Contracts set forth on Exhibit 7.4 hereto, which consents or approvals shall not
require Buyer to make any payment to any party.
7.5 Deliveries. Seller shall have complied with each and every one of
its obligations set forth in Section 8.1 and Seller shall have executed and
delivered those documents listed in Section 8.3.
7.6 Opinion of Counsel to Seller. Buyer shall have received an opinion
or opinions of counsel to Seller, dated the Closing Date, covering the matters
set forth in Exhibit 7.6.
7.7 Certain Environmental Matters. Seller shall have completed a SPCC
plan for the Chaska Facility, which plan shall be signed by a professional
engineer, and Seller shall, if required by applicable laws and regulations
currently in effect, register the above ground storage tank located at the
Chaska Facility with the Minnesota Pollution Control Agency.
ARTICLE 8
Items to be Delivered at Closing
8.1 Deliveries by Seller. At the Closing, Seller shall deliver to
Buyer:
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(a) a ▇▇▇▇ of sale and assignment in substantially the form of
Exhibit 8.1(a) hereto and such other documents as Buyer may reasonably request
to transfer the Division Assets to Buyer or Buyer's designee;
(b) certificates representing all the issued and outstanding
shares of capital stock of the Acquired Subsidiaries, duly endorsed by Seller
for transfer to Buyer or Buyer's designee or accompanied by stock powers duly
executed by Seller in proper form for transfer to Buyer or Buyer's designee;
(c) a certificate duly executed by the Secretary of Seller and
dated the Closing Date, with respect to resolutions adopted by the Board of
Directors of Seller (which resolutions shall be in full force and effect at the
time of Closing) and the incumbency of each officer of Seller executing this
Agreement and any other document required to be delivered by Seller at Closing;
(d) assignments of all of Seller's rights in the patents and
trademarks included in the Division Assets;
(e) all executed consents and approvals to the assignment of
Contracts obtained by Seller or the Acquired Subsidiaries prior to Closing; and
(f) the written resignations of all directors of the Acquired
Subsidiaries, except as otherwise specified by Buyer in writing.
8.2 Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller:
(a) the Purchase Price in accordance with Section 1.5;
(b) an assumption of liabilities in substantially the form of
Exhibit 8.2(b) hereto;
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(c) a certificate duly executed by the Secretary of Buyer and
dated the Closing Date, with respect to resolutions adopted by the Board of
Directors of Buyer (which resolutions shall be in full force and effect at the
time of the Closing) and the incumbency of each officer of Buyer executing this
Agreement and any other document required to be delivered by Buyer at Closing.
8.3 Delivery by Seller and Buyer. At the Closing, Seller and Buyer
shall deliver to each other:
(a) a Technology License Agreement, substantially in the form
of Exhibit 8.3(a);
(b) a Shared Services Agreement, reflecting substantially the
terms set forth in Exhibit 8.3(b), in form reasonably satisfactory to Seller and
Buyer; and
(c) a Sublease Agreement, reflecting substantially the terms
set forth in Exhibit 8.3(c), in form reasonably satisfactory to Seller and
Buyer.
ARTICLE 9
Survival; Indemnification
9.1 Survival of Representations and Warranties. All
representations and warranties of Seller and of Buyer contained in this
Agreement or in any exhibit, schedule, certificate or other instrument
specifically identified herein and delivered pursuant hereto shall survive the
Closing, any investigation conducted by any party hereto and any information
which any party may receive, until the second anniversary of the Closing Date,
whereupon all such representations and warranties shall expire and terminate and
shall be of no further force or effect, except that
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(a) the representations and warranties set forth in Section
2.2 (relating to Corporate Action), Section 2.7 (relating to Title to Property)
(but in the case of Section 2.7 only with respect to tangible property) and
Section 3.2 (relating to Corporate Action) shall survive without time limit;
(b) the representations and warranties set forth in Section
2.15 (relating to Taxes) shall survive until the seventh anniversary of the
Closing Date;
(c) the representations and warranties set forth in Section
2.8 (relating to Employees and Employee Benefits) and Section 2.12 (relating to
Environmental Matters) shall survive until the sixth anniversary of the Closing
Date; and
(d) the representations and warranties set forth in Section
2.16 (relating to Compliance with Laws), Section 2.17 (relating to Undisclosed
Liabilities) and Section 2.7 (relating to title to U.S. Patent 5,148,945 and its
reissue B1 5,148,945 and all foreign counterparts, U.S. Patent 5,330,072 and
U.S. Patent 5,417,346) shall survive until the third anniversary of the Closing
Date.
9.2 Indemnification. Buyer and Seller shall indemnify each other
as set forth below:
(a) Seller shall indemnify and hold harmless Buyer and its
directors, officers, employees and all persons which directly or indirectly
control, are controlled by, or are under common control with Buyer, including
but not limited to, the Acquired Subsidiaries, from (on a net after-tax basis,
in accordance with Section 9.2(f)) any and all losses, damages, liabilities and
claims, and all fees, costs and expenses of any kind related thereto (including,
without limitation, reasonable legal fees) arising out of, based upon or
resulting from
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(i) the failure of any representation or
warranty of Seller to be true as of the date
hereof or as of the Closing Date (except, in
either case, to the extent it expressly
specifies an earlier date and except to the
extent changes are permitted or contemplated
under this Agreement),
(ii) the breach of or failure by Seller to
perform any of its obligations contained in
this Agreement,
(iii) any failure by Seller to pay, perform,
satisfy or discharge any of the Retained
Liabilities,
(iv) except as set forth on the Closing Statement
of Net Assets, any liabilities or
obligations of the Acquired Subsidiaries
that, had such liabilities or obligations
been incurred directly by Seller, would have
been Retained Liabilities pursuant to
Section 1.3,
(v) any failure of Seller to comply with the
Worker Adjustment and Retraining
Notification Act, 29 U.S.C. ▇▇.▇▇. 2101 et
seq. (the "WARN Act") with respect to any
employee of the Division whose employment is
terminated by Seller prior to the Closing
Date,
(vi) accounts payable that were required pursuant
to Section 1.6 to be, but were not,
reflected on the Closing Statement of Net
Assets, and
(vii) any "Extraordinary Event," which shall mean
(A) any failure prior to the Closing Date by
Seller or an Acquired Subsidiary to
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perform its obligations under any Contract,
or (B) any systemic design problem or other
systemic defect in any product sold by the
Division prior to the Closing Date, but only
if Buyer's liability in connection with any
failure under a particular Contract as
contemplated by clause (A), net of
recoveries from third parties, is at least
$250,000, or if Buyer's liability in
connection with any incident or series of
incidents arising out of the same or
substantially the same design problem or
systemic default as contemplated by clause
(B), net of recoveries from third parties,
is at least $250,000 in the aggregate;
provided, however, that Seller's
indemnification obligations pursuant to this
paragraph (vii) shall terminate and be of no
further force or effect from and after the
second anniversary of the Closing Date;
(viii) liabilities or obligations arising from the
violation of Environmental Laws or the
release or disposal of any substance
regulated under any Environmental Laws that
occurred in connection with the ownership or
use of any real property site by the
Division or operations by the Division at
any real property site prior to Closing
other than the following real property
sites: the Chaska Facility, the Division
facility located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and the
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Division facilities located at ▇▇▇▇▇ ▇ ▇▇▇
▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇;
(ix) liabilities and obligations with respect to
patent infringement claims (whether direct
infringement actions against Seller or the
Acquired Subsidiaries or customer claims for
indemnity) arising from the sale of products
or services by the Division prior to the
Closing Date;
(x) from and after the Closing Date, all Taxes
(unless provided for on the Closing
Statement of Net Assets) that are (a)
imposed on any corporation (other than
Acquired Subsidiaries) affiliated at any
time prior to the Closing with the Acquired
Subsidiaries under Treasury
Regulation ss.1.1502-6(a) (or similar
provision of state, local or foreign tax law
or regulation), (b) imposed on any Acquired
Subsidiary with respect to any Pre-Closing
Tax Period, and (c) imposed on any Acquired
Subsidiary with respect to any Straddle
Period to the extent attributable to the
portion of the Straddle Period that ends on
the day immediately preceding the Closing
Date. For purposes of the preceding clause
(c), in the case of any tax that is imposed
on a periodic basis and is payable for a
Straddle Period, the portion of such taxes
payable for the period ending on the day
immediately preceding the Closing Date shall
be (i) in the case of any Tax other than a
Tax based upon or measured by income, the
amount
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of such tax for the entire period (or in the
case of such taxes determined on an arrears
basis, the amount of such Taxes for the
immediately preceding period) multiplied by
a fraction, the numerator of which is the
number of days in the period ending on the
day immediately preceding the Closing Date
and the denominator which is the number of
days in the entire period and (ii) in the
case of any Tax based upon or measured by
income, the amount which would be payable if
the taxable year ended on the day
immediately preceding the Closing Date;
provided, however, that (A) Seller shall not be responsible for any such losses,
damages, liabilities and claims arising pursuant to Section 9.2(a)(i) (except
for any such losses, damages, liabilities and claims arising out of, based upon
or resulting from the breach of the representations and warranties of Seller
identified in Sections 9.1(a), 9.1(b) and 9.1(c), which shall not be used in the
calculation of the Deductible Amount (as defined below) and which shall be
subject to indemnification without any deductible amount) until the cumulative
aggregate amount of such losses, damages, liabilities and claims exceeds
$500,000 (the "Deductible Amount"), in which case Seller shall then be liable
for all such losses, damages, liabilities and claims in excess of the Deductible
Amount; and (B) the cumulative aggregate indemnity obligation of Seller pursuant
to Sections 9.2(a)(i) and 9.2(a)(vii) shall in no event exceed $10 million (the
"Indemnity Cap"). Notwithstanding the foregoing, the Indemnity Cap shall not
apply to losses, damages, liabilities and claims arising out of, based on or
resulting from the breach of the representations of Seller set forth in Section
2.7 (relating to Title to Property) (but in the case of Section 2.7 only with
respect to tangible property),
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Section 2.12 (relating to Environmental Matters) and Section 2.15 (relating to
Taxes), and such losses, damages, liabilities and claims shall not be included
in the calculation as to whether the Indemnity Cap has been exceeded. Seller and
Buyer agree that the Deductible Amount shall not be deemed an indication,
definition or expression of materiality in any other context in which such term
or concept may be used or applicable.
(b) Buyer shall indemnify and hold harmless Seller and its
directors, officers, employees and all persons which directly or indirectly
control, are controlled by, or are under common control with Seller from (on a
net after-tax basis, in accordance with Section 9.2(f)) any and all losses,
damages, liabilities and claims and all fees, costs and expenses of any kind
related thereto (including, without limitation, reasonable legal fees) arising
out of, based upon or resulting from
(i) the breach of any representation or warranty
of Buyer contained in this Agreement,
(ii) the breach of or failure by Buyer to perform
any of its obligations contained in this
Agreement,
(iii) any failure by Buyer to pay or discharge any
liability or obligation, including without
limitation the Assumed Obligations, assumed
by it pursuant to this Agreement,
(iv) any failure of Buyer at any time to comply
with the WARN Act with respect to any
employee of the Division, or any person who
is listed on Exhibit 10.1 and who, as of the
Closing Date, is an employee of Seller,
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(v) any litigation, proceeding or claim by any
person or entity not a party to this
Agreement, to the extent arising out of the
business or operations of the Division on or
after the Closing Date, but only to the
extent such litigation, proceeding or claim
is not subject to indemnification by Seller
pursuant to Section 9.2.
(c) As promptly as practicable after obtaining knowledge
of any breach, failure, claim or other matter with respect to which one party
hereunder is (or claims to be) entitled to indemnification hereunder (but in any
event after receipt of any notice of the commencement or assertion of any
third-party action, suit, claim or proceeding and as long as practicable before
the date for answer or other response therein), the party seeking
indemnification (an "Indemnified Party") shall give written notice to each party
from which indemnification is sought (an "Indemnifying Party") describing in
reasonable detail the basis of such claim for indemnification. If the
Indemnified Party does not so notify the Indemnifying Party in accordance with
the immediately preceding sentence, the Indemnifying Party shall be relieved of
liability hereunder with respect to such claim, but only to the extent that the
Indemnifying Party is materially prejudiced by any failure to so notify it. If
such claim involves the claim of any third party, the Indemnifying Party shall
be entitled to participate in, and assume sole control over, the defense or
settlement of such claim; provided, however, that:
(i) the Indemnified Party shall be entitled to
participate in the defense of such claim and
to employ counsel at its own expense to
assist in the defense of such claim; and
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(ii) the Indemnifying Party shall obtain the
prior written approval of the Indemnified
Party (which shall not be unreasonably
withheld or delayed) before settling or
ceasing to defend such claim, if as a result
of such settlement or cessation, injunctive
or other equitable relief would be imposed
against the Indemnified Party.
If, by written notice to the Indemnified Party, the Indemnifying Party assumes
the defense and sole control of any such claim, the Indemnifying Party shall not
be liable to the Indemnified Party for any legal fees or other costs of defense
incurred by such Indemnified Party in connection with such claim. If the
Indemnifying Party does not assume the defense and sole control of such claim,
the Indemnified Party shall have the right to defend and settle the claim in
such manner as it may deem appropriate at the cost and expense of the
Indemnifying Party, provided, however, that whether or not the Indemnifying
Party shall have assumed the defense of the claim, the Indemnified Party shall
not admit any liability with respect to, or settle, compromise or discharge, the
claim without the Indemnifying Party's prior written consent, which shall not be
unreasonably withheld or delayed.
(d) In connection with any claim of any third party, the
Indemnified Party shall cooperate fully with the Indemnifying Party in the
defense thereof under this Section 9.2. Without limiting the generality of the
foregoing, the Indemnified Party shall furnish to the Indemnifying Party such
documentary or other evidence as is then in its possession or available to it as
may reasonably be requested by the Indemnifying Party for the purpose of
defending any such claim.
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(e) With respect to any claim against which the Indemnifying
Party is obligated to indemnify the Indemnified Party, the Indemnifying Party
shall be subrogated to all rights of the Indemnified Party with respect to such
claim. The rights and remedies of an Indemnified Party under this Article 9 are
and shall be the exclusive remedies for the breach of any representation or
warranty under Article 2 or Article 3 of this Agreement; provided, however, that
such limitations shall not apply to any claim or liability based upon
intentional misrepresentation or fraud. Except as specifically provided in the
preceding sentence, the rights and remedies of a party under this Article 9 are
independent of and in addition to such rights and remedies as the party may have
in equity for any failure to fulfill any agreement or covenant hereunder on the
part of the other party, including without limitation the right to seek specific
performance.
(f) The amount for which indemnification is provided under
this Agreement shall be reduced to take account of any net Tax benefit realized
by the indemnified party arising from incurring or paying such loss or other
liability. In computing the amount of any such Tax benefit, the indemnified
party shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt or
accrual of any indemnification payment hereunder or incurring or paying any
indemnified loss. Any indemnification payment hereunder shall initially be made
without regard to this Section 9.2(f) and shall be reduced to reflect any such
net Tax benefit only after the indemnified party has actually realized such
benefit. For purposes of this Agreement, an indemnified party shall be deemed to
have "actually realized" a net Tax benefit to the extent that, and at such time
as, the amount of Taxes payable by such indemnified party as reflected in any
Tax Return is reduced below the amount of Taxes that
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such indemnified party would be required to pay but for the receipt or accrual
of the indemnification payment or the incurrence or payment of such loss, as the
case may be. The amount of any such net tax benefit shall be remitted to the
indemnifying party as promptly as practicable after actually realized. The
amount of any reduction hereunder shall be adjusted to reflect any final
determination with respect to the indemnified party's liability for Taxes, and
payments between such indemnified parties to reflect such adjustment shall be
made if necessary.
9.3 Survival of Indemnification Obligations. The indemnification
obligations of Seller and Buyer set forth in Section 9.2 shall survive for the
periods expressly set forth below:
(a) the obligations of Seller to indemnify pursuant to Section
9.2(a)(i) shall survive for the applicable survival periods of the
representations and warranties set forth in Section 9.1;
(b) The obligations of Seller to indemnify pursuant to
Sections 9.2(a)(ii), (iii), (iv), (vi) and (viii) shall survive without time
limit;
(c) the obligations of Seller to indemnify pursuant to Section
9.2(a)(v) and (vii) shall survive until the second anniversary of the Closing
Date;
(d) the obligations of Seller to indemnify pursuant to Section
9.2(a)(ix) shall survive until the third anniversary of the Closing Date.
(e) the obligations of Seller to indemnify pursuant to Section
9.2(a)(x) shall survive until the seventh anniversary of the Closing Date.
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(f) the obligations of Buyer to indemnify pursuant to Section
9.2(b)(i) shall survive for the applicable survival periods for the
representations and warranties set forth in Section 9.1;
(g) the obligations of Buyer to indemnify pursuant to Sections
9.2(b)(ii), (iii) and (v) shall survive without time limit; and
(h) the obligations of Buyer to indemnify pursuant to Section
9.2(b)(iv) shall survive until the second anniversary of the Closing Date.
ARTICLE 10
Certain Employee Matters
10.1 Definition. The term "Employee" means:
(a) each person employed by Seller solely or primarily in
connection with the business and operations of the Division and assigned to the
Division, or employed by an Acquired Subsidiary, immediately prior to Closing;
and
(b) each of the Shared Services Employees listed on Section
10.1(b) of the Disclosure Schedule.
10.2 Offers of Employment. Provided that Seller delivers to Buyer a
list of the then current Employees, at least 28 days prior to Closing, including
the information required by the first paragraph of Section 2.8, Buyer shall make
an offer of employment at least 14 days prior to Closing to each Employee who is
not an employee of an Acquired Subsidiary, effective immediately following the
Closing. In addition, Buyer shall cause each Acquired Subsidiary to continue the
employment of each Employee who is an employee of such Acquired Subsidiary;
provided, however, that Buyer and Seller recognize that the five (5)
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individuals listed on the CME organization chart and included in the Division
headcount are in fact employees of Metron with respect to whose services CME
reimburses Metron or its subsidiaries and that, to the extent appropriate, Buyer
and CME will use reasonable efforts to hire these employees as Buyer or CME
employees as soon as practicable prior to Closing on the same terms and
conditions as similarly situated employees of the hiring entity. Except as
otherwise provided below, any such offer or continuation of employment may be on
such reasonable terms and conditions as shall be determined by Buyer.
Notwithstanding the foregoing, Buyer is not obligated to make offers of
employment to Employees (other than Employees employed by an Acquired
Subsidiary) who are "Not Actively Employed" by Seller on the day immediately
preceding the Closing Date for any reason whatsoever, including but not limited
to a leave of absence due to maternity leave, workers' compensation leave,
Family Medical Leave Act of 1993 leave or leave under a similar state statute,
and any other medical leave, other than Employees who within 180 days of the
date they first became Not Actively Employed present themselves for work (with a
written physician's statement acceptable to Buyer (which acceptance shall not be
unreasonably withheld) that the individual is fit to perform his or her job, if
applicable) who will thereupon be offered employment by the Buyer consistent
with the above provisions of this Section 10. For purposes of the previous
sentence, an Employee shall be considered "Not Actively Employed" if the
Employee did not report to work with Seller for a period of at least six (6)
consecutive business days which includes the day immediately preceding the
Closing Date (excluding vacation time).
10.3 Compensation. Buyer shall pay or shall cause each Acquired
Subsidiary to pay, to each Employee who is hired by Buyer or whose employment is
continued by such
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Acquired Subsidiary, a base salary or an hourly rate of pay which is at least
equal to the rate last paid to such Employee prior to the Closing Date until the
first anniversary of the Closing Date (or, if earlier, the last day of such
Employee's employment by Buyer or such Acquired Subsidiary); provided, however,
that this Section 10.3 shall not apply to the extent that Buyer or such Acquired
Subsidiary reduces the compensation payable to such Employee as part of a
general reduction in the compensation payable to all employees of Buyer and its
affiliates in the Buyer's business with which the Division is integrated.
10.4 Continued Benefit Plans.
(a) Buyer shall provide or shall cause the appropriate
Acquired Subsidiary to provide, to each Employee who is hired by Buyer or whose
employment is continued by such Acquired Subsidiary, a package of health and
dental coverage, life and disability insurance and vacation and sick leave,
401(k) and pension benefits which (i) provides benefits which are in the
aggregate comparable to such benefits which are currently provided by Seller or
such Acquired Subsidiary, (ii) becomes effective not later than the first day on
which such Employee is hired by Buyer or such Employee's employment is continued
by such Acquired Subsidiary as of the Closing Date (or in the case of the
Buyer's Savings Investment Plan not later than 30 days thereafter), (iii) does
not impose any pre-existing condition limits or exclusions not imposed by
Seller's or such Acquired Subsidiary's plans immediately prior to the Closing
Date, (iv) recognizes all amounts incurred under Seller's or such Acquired
Subsidiary's health and dental plans during the portion of the plan year prior
to the Closing Date for purposes of determining deductibles and copayments and
annual or lifetime limits under Buyer's plans, and (v) subject to any changes
for similarly situated employees of Buyer, remains in effect until the first
anniversary of the Closing Date (or, if
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earlier, the last day of such Employee's employment by Buyer or such Acquired
Subsidiary). To assist Buyer in meeting its obligations hereunder, Seller shall
at least 21 days prior to Closing provide Buyer's personnel with access during
normal business hours to Seller's and the Acquired Subsidiaries' facilities for
the purpose of enrolling such Employees in the benefits to be provided by this
Section 10.4(a).
(b) Compliance with the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") or similar state law remains the
responsibility of Seller for qualifying events occurring prior to the Closing
Date and with respect to Employees who decline Buyer's offer of employment and
such Employees' spouses and dependents. Buyer assumes responsibility with
respect to each Employee hired by Buyer or continuing in the employment of an
Acquired Subsidiary from and after the Closing Date, and such Employee's spouse
or dependents who, as a result of a qualifying event which occurs from and after
the Closing Date, has COBRA rights, and will make continuation coverage
available to such persons in accordance with such law. Seller is responsible for
all other COBRA compliance with respect to qualifying events, whether occurring
prior to, on or after the Closing Date, for employees and former employees of
Seller and Acquired Subsidiaries and their spouses and dependents (other than
Employees hired by Buyer or continuing in the employment of an Acquired
Subsidiary from and after the Closing Date and their spouses and dependents).
10.5 401(k) and Pension Plans. "401(k) Plan" means The FSI Employee
401(k) Retirement Plan, a defined-contribution plan in which certain Employees
are participants (each a "401(k) Plan Participant"). "Pension Plan" means The
FSI Pension Plan, a single-employer defined-contribution money purchase pension
plan in which certain
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Employees are participants (each a "Pension Plan Participant"). Seller shall
take such actions (if any) as are necessary to cause each 401(k) Plan
Participant to be 100% vested in his or her 401(k) Plan account balance, and
each Pension Plan Participant to be 100% vested in his or her Pension Plan
account balance, as of the Closing Date. Following the Closing Date, if a
Participant so elects, Seller shall cause the account balances of each 401(k)
Plan Participant and each Pension Plan Participant who is employed by Buyer or
an Acquired Subsidiary immediately after Closing to be transferred to Buyer's
Savings Investment Plan in the form of a direct rollover to that Plan, and Buyer
shall cause its Savings Investment Plan to accept such direct rollovers. Seller
hereby represents and warrants to Buyer that each of the 401(k) Plan and the
Pension Plan is a qualified plan under Section 401(a) of the Code. Buyer hereby
represents and warrants to Seller that Buyer's Savings Investment Plan is a
qualified plan under Section 401(a) of the Code. If a 401(k) Plan Participant
has a Plan loan outstanding on the Closing Date and elects a direct rollover to
the Buyer's Saving Investment Plan, Buyer will provide to the Participant an
unsecured bridge loan in such amount and at such time as will permit the
Participant to pay off the entire outstanding principal and accrued interest on
such loan prior to such rollover. It is understood that 401(k) Plan Participants
who avail themselves of a loan from Buyer, for the purpose as stated above, will
be required to repay the loan within 30 days of the direct rollover of their
account balances from Seller's Plans to Buyer's Savings Investment Plan. Such
Participants may utilize a plan loan from their account balance in Buyer's
Savings Investment Plan to repay the loans received from Buyer. Such plan loans
will not be subject to the restrictions in Buyer's Savings Investment Plan on
minimum loan amounts and maximum monthly loan payments.
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10.6 Recognition of Prior Service. Buyer shall recognize service
prior to the Closing Date by each Employee with both Seller and the Acquired
Subsidiaries (including service by such Employee with any Acquired Subsidiary
prior to such Acquired Subsidiary becoming an affiliate of Seller to the extent
Seller or any Acquired Subsidiary has recognized such service for purposes of
their respective Benefit Plans) in determining eligibility to participate in,
vesting of benefits under, and benefit levels based on years of service under
all Buyer employee benefit plans, including without limitation vacation and sick
leave entitlement and Buyer's Severance Plan, except that such periods of
service shall not be required to be recognized for purposes of (i) prior service
benefit accrual under Buyer's Cash Balance Retirement Plan and Savings
Investment Plan and (ii) Buyer's retiree medical plan and life insurance.
10.7 Severance Payments to Employees.
(a) Buyer shall pay or cause the applicable Acquired
Subsidiary to pay the Severance Amount (as hereinafter defined) to each Employee
who is hired by Buyer or whose employment is continued by such Acquired
Subsidiary and thereafter terminated by Buyer or such Acquired Subsidiary,
within one year and a day of the Closing Date, in circumstances that would have
entitled such Employee to a severance payment pursuant to Section 10.11, the FSI
Severance Plan (the "Seller Severance Plan"), the past severance practices of
CME or the requirements of applicable law had such Employee still been an
employee of Seller or an Acquired Subsidiary still under Seller's control and
been terminated by Seller or such Acquired Subsidiary in the same circumstances.
Seller has disclosed the Seller Severance Plan, the agreements addressed
pursuant to Section 10.11 and the past severance practices of CME. In addition,
Buyer will promptly (and in any event within 60
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days following the Closing Date) reimburse Seller for all severance payments
which Seller makes to each Employee who declines to accept an offer of
employment made by Buyer pursuant to Section 10.2, unless Buyer and Seller agree
that such declined offer (A) includes employment in the Division or shared
services operations in substantially the same position and in the same
geographic location last held by such Employee, and (B) is consistent with the
express provisions of Sections 10.2, 10.3, 10.4 and 10.6. The Severance Amount
shall be equal to the greater of the severance payment to which Employee would
have been entitled under the Seller Severance Plan based upon such Employee's
years of service, the past practices of CME or the requirements of applicable
law, had such Employee still been an Employee of Seller or such Acquired
Subsidiary still under Seller's control and been terminated by Seller or such
Acquired Subsidiary and otherwise eligible for severance under Seller's
Severance Plan, taking into account service with both Seller and the Acquired
Subsidiaries (including service with any Acquired Subsidiary prior to such
Acquired Subsidiary becoming an affiliate of Seller to the extent Seller or any
acquired Subsidiary has recognized such service for purposes of their respective
Benefit Plans) and Buyer and its affiliates. The Severance Amount shall be paid
in a lump sum cash payment as soon as possible following the date the Employee's
employment terminates, allowing for any applicable consideration (including a
release of potential claims by such Employee against Buyer) and rescission
periods required by law, but in no event later than the time that it would have
been payable under the Seller Severance Plan, the past practices of CME or the
requirements of applicable law.
(b) Buyer shall continue the Seller Severance Plan (or create
a new plan with the same terms and conditions as the Seller Severance Plan and
shall continue such
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plan) for a period commencing on the Closing Date and ending one year and one
day after the Closing Date.
(c) Notwithstanding the foregoing, Buyer shall reimburse
Seller, in the manner and in the amount specified in that letter between the two
parties dated the date hereof, in connection with the termination of the
employee specified in such letter.
10.8 Accrued Paid Time-Off. Seller shall immediately upon Closing
pay out to each Employee all accrued paid time-off up to the Closing Date
pursuant to Seller's and the Acquired Subsidiaries' paid-time off policies.
10.9 Termination of Participation in Plans. Seller agrees to
terminate, effective upon Closing, the participation of the Acquired
Subsidiaries in all Benefit Plans of Seller (but not Benefit Plans maintained by
an Acquired Subsidiary solely for its own employees).
10.10 Cooperation. Subject to applicable law, Seller and Buyer agree
to fully cooperate with respect to any filings and information necessary to
effect the transactions contemplated by this Article 10, including the transfer
of employment records.
10.11 Management Agreements. Buyer hereby agrees to and shall assume
Seller's Management Agreements as provided in the Agreement Regarding Management
Agreements between Seller or its Subsidiaries and Certain of their Employees
dated as the date hereof.
ARTICLE 11
Miscellaneous
11.1 Termination of Agreement. This Agreement may be terminated by
Seller or Buyer at any time prior to Closing (a) by the mutual written consent
of Seller and Buyer; or (b) by written notice from Buyer or Seller to the other
if the Closing has not taken place by September 30, 1999, provided, however,
that the failure to consummate the transactions
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contemplated by this Agreement on or before September 30, 1999 did not result
from the breach in any material respect by the party seeking termination under
this clause (b) of any of its representations, warranties, covenants or
agreements.
11.2 Liabilities Upon Termination. Except for the obligations stated in
Sections 11.1 (relating to termination of this Agreement), this Section 11.2
(relating to liabilities upon termination), 11.3 (relating to expenses), 11.7
(relating to public announcements) and 11.13 (relating to confidentiality)
hereof, which shall survive any termination of this Agreement, upon termination
of this Agreement pursuant to Section 11.1 hereof, this Agreement shall
forthwith become null and void, and neither Buyer or Seller nor any officer,
director, employee, agent, consultant, shareholder or principal of either shall
have any rights, liabilities or obligations hereunder or with respect hereto;
provided, however, that nothing contained herein shall relieve any party from
liability for any willful and material breach by such party of any
representation, warranty, covenant or agreement contained herein.
11.3 Expenses. Except as otherwise specifically provided herein, each
party hereto shall pay all expenses incurred by such party in connection with
the transactions contemplated by this Agreement, including without limitation,
all taxes (except as provided in Section 1.10) and all accounting, investment
banking and legal fees.
11.4 Bulk Sales Laws. Buyer hereby waives compliance with the
provisions of any applicable bulk sales law, and Seller agrees to indemnify and
hold Buyer harmless from all claims made by creditors of Seller with respect to
non-compliance with any bulk sales law, except to the extent that such claims
result from liabilities assumed by Buyer hereunder or liabilities arising from
operations or activities after Closing.
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11.5 Further Assurances. From time to time prior to, at and after the
Closing, each party hereto will execute all such instruments and take all such
actions as any other party shall reasonably request in connection with carrying
out and effectuating the intent and purpose hereof and all transactions and
things contemplated by this Agreement, including, without limitation, the
execution and delivery of any and all confirmatory and other instruments in
addition to those to be delivered on the Closing Date, and any and all actions
which may reasonably be necessary or desirable to complete the transactions
contemplated hereby. Without limiting the generality of the foregoing, Seller
agrees that it will grant a license to any intellectual property owned by Seller
that constitutes a Shared Asset and that is used by and necessary for the
operation of the Division immediately prior to the Closing Date, and which is
not transferred to Buyer as an Allocated Shared Asset. Such license shall be
perpetual, worldwide and royalty free, and contain such other terms as mutually
agreed by Buyer and Seller.
11.6 Cooperation - Tax Returns. Buyer and Seller agree to cooperate and
to provide each other with all information that is relevant in preparing any Tax
Return. Buyer, on the one hand, and Seller, on the other, agree to furnish or
cause to be furnished to each other upon request, as promptly as practicable,
such information (including books, records and Tax Returns) in their possession
pertinent to the Division. Buyer and Seller shall use reasonable efforts not to
destroy or allow the destruction of any such books, records and Tax Returns
without first offering in writing to deliver them to the other party.
11.7 Public Announcement. Neither Buyer nor Seller shall, without the
approval of the other, make any press release, communication to the employees,
customers or suppliers of Seller or any Acquired Subsidiary or other public
announcement concerning the
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transactions contemplated by this Agreement until Closing (except to the extent
required by law, in which case the party required to do so shall give advance
notice to the other party and the parties shall use their best efforts to cause
a mutually agreeable release or announcement to be issued).
11.8 Access to Books and Records. After the Closing Date, each party
shall upon request of the other party in connection with the preparation by each
party of financial statements and Tax Returns and for such other purposes as the
other party shall reasonably request, including for purposes of litigation
defense or prosecution, (a) provide to the requesting party full access, during
normal business hours, to any and all premises, properties, files, books,
records, documents and other information of the Division (and, at requesting
party's expense, complete copies thereof), (b) cause its officers and personnel
and the Division to furnish to the requesting party any and all financial and
operating data and other information pertaining to the Division, (c) make
available, for consultation with the requesting party, personnel of the other
party having access to such information and documents. In exercising its rights
under the foregoing provisions of this Section 11.8, the requesting party and
its representatives shall not interfere with the other party's normal
operations. Each party shall retain the files, books, records and documents
relating to the Division in its possession, and comply with the above-mentioned
provisions, for at least six years after the Closing Date.
11.9 Cooperation. From and after the Closing Date, each party will
cooperate with the other party in the investigation, defense or prosecution of
any action, suit, proceeding or other litigation, at law or in equity, which is
pending or threatened against the other party and which relates to the Division.
Without limiting the generality of the foregoing, each party
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will make available employees of the Division to give depositions or testimony
and will furnish all documentary or other evidence, in each case as either party
may reasonably request. The requesting party shall reimburse the other party for
all reasonable and necessary expenses (including without limitation salaries of
employees of a party who are required to devote substantial amounts of time in
satisfaction of that party's obligations under this Section 11.9) incurred in
connection with the performance of its obligations under this Section 11.9. The
covenants in this Section 11.9 shall survive without any time limit.
11.10 Substitution of Insurance; Directors' and Officers'
Indemnification or Liability Insurance. Buyer hereby covenants with Seller that
it will (a) cooperate with Seller and use reasonable commercial efforts to
secure the removal of parties to Contracts as additional named insured parties
on insurance policies or contracts of Seller (b) and to cause such parties to
Contracts to be added as additional named insured parties on insurance policies
or contracts of Buyer or its affiliates, (c) cooperate with Seller and use
reasonable commercial efforts to secure the release of any performance or surety
bonds, security deposits, guarantees or other similar arrangements to which
Seller or any of its affiliates is a party or by which it is bound, and (d)
cause Buyer or its affiliates to enter into substitute performance or surety
bonds, security deposits, guarantees or other similar arrangements. In addition,
Seller hereby agrees that it shall indemnify its directors and officers and/or
provide directors' and officers' liability insurance for any claim made against
the directors and officers of Seller, the Division or the Acquired Subsidiaries
solely in connection with the decision to enter into this Agreement.
11.11 Restricted Contracts. To the extent that Seller or an Acquired
Subsidiary, acting pursuant to Section 4.3, elects not to assign or otherwise
transfer any Restricted
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Contract, nothing in this Agreement shall constitute an agreement by Seller or
such Acquired Subsidiary to assign or otherwise transfer such Restricted
Contract. Instead, Seller, such Acquired Subsidiary and Buyer shall cooperate
with each other to put in place a commercially reasonable arrangement designed
to (i) secure the performance (whether by Seller, Buyer, an Acquired Subsidiary
or otherwise) or release of Seller's obligations (if any) pursuant to such
Restricted Contract and to secure for Buyer the benefits (if any) of such
Restricted Contract and (ii) to the extent that any Restricted Contract is not
assumed by Buyer, including any Restricted Contracts involving Intellectual
Property, Seller at Buyer's option and complete discretion, and at Buyer's
expense, shall enforce any provision of such Contract, including commencing an
action for breach of such Contracts. Any such arrangement shall seek to place
Seller, Buyer and any Acquired Subsidiary, as nearly as is practicable in the
circumstances, in the same economic position as such parties would have been in
had the required consent to assignment or other transfer of the Restricted
Contract been obtained and the Restricted Contract assigned or otherwise
transferred to Buyer.
11.12 Exhibits, Disclosure Schedule and Amendments. At or prior to the
Closing, Seller shall have the right to deliver amended Exhibits and an amended
Disclosure Schedule for review and either approval thereof or rejection thereof
by Buyer, which approval shall not be unreasonably withheld or delayed by Buyer;
provided however, that Buyer shall be deemed not to have unreasonably withheld
or delayed approval if any individual amendment would be reasonably likely to
result in Buyer not being able to assert an otherwise indemnifiable claim
(without applicability of the Deductible Amount) in excess of $7,500 or the
aggregate amount of all such amendments would be reasonably likely to result in
Buyer not being able to assert otherwise indemnifiable claims (without
applicability of the
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Deductible Amount) in excess of $100,000. To the extent that Buyer approves any
amendment to any Exhibit or the Disclosure Schedule, such amendment shall be
deemed included in such Exhibit or the Disclosure Schedule, as applicable, for
all purposes hereof and the indemnification provisions of Section 9.2(a) hereof
shall not apply to any loss, damage, liability, claim, fee, cost or expense
arising out of, based upon or resulting from any matters that have been
disclosed in such amended Exhibit or amended Disclosure Schedule.
11.13 Confidentiality. All information provided to Buyer or its
representatives at any time by or on behalf of Seller or any of its affiliates
concerning the business, assets, liabilities and operations of Seller or the
Division shall be governed by the confidentiality agreement dated as of October
28, 1998, heretofore executed by an affiliate of Buyer and by ▇▇▇▇▇▇ Brothers
Inc., on behalf of Seller.
11.14 Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered or mailed (first-class postage
prepaid, return receipt requested) or transmitted by facsimile (confirmed by
first-class postage prepaid, return receipt requested), to the addresses or
facsimile numbers set forth below:
If to Seller:
FSI International, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Counsel
with a copy to:
Faegre & ▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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If to Buyer:
BOC ▇▇▇▇▇▇▇
Chemical Manager Division
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, President
with a copy to:
The BOC Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
or to such other address as a party may from time to time designate in writing
in accordance with this Section. All notices and other communications given
shall be deemed to have been given on the date of receipt.
11.15 Captions. The captions of Articles and Sections of this Agreement
are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
11.16 Definition of Knowledge. All references in this Agreement to the
"Knowledge" of Seller shall be deemed to mean the actual knowledge, as of the
relevant date, of the following officers and employees of the Division: ▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ (until June
3, 1999), ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. Sand, ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
11.17 Law Governing. This Agreement shall be governed by, construed
under, and enforced in accordance with the laws of the State of Minnesota.
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11.18 Waiver of Provisions. Compliance with any term, covenant,
representation, warranty, or condition of this Agreement by a party may be
waived by the other party only by a written instrument executed by the party
waiving compliance. No waiver by any party of any condition or any breach of any
provision, term, covenant, representation, or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed to be or construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation, or warranty.
11.19 Counterparts. This Agreement may be executed in several identical
counterparts, and all counterparts so executed shall constitute one agreement,
binding on the parties hereto, notwithstanding that the parties are not
signatory to the same counterpart.
11.20 Entire Agreement. This Agreement, together with all Exhibits
hereto, the Disclosure Schedule and the other agreements referred to herein,
constitutes the entire agreement between the parties relating to the subject
matter hereof and supersedes and cancels any and all prior agreements between
them relating to the subject matter hereof, and may not be amended or modified
except in a writing signed by the party to be bound.
11.21 Severability of Provisions. If any provision of this Agreement is
held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect any other provision and the unlawful or
unenforceable provision shall be construed to the maximum extent permitted by
law.
11.22 No Third Party Beneficiaries. Except as provided in Article 9,
this Agreement is for the sole benefit of the parties hereby, their affiliates
and their successors and assigns and nothing herein, express or implied, is
intended to confer upon any other person, any legal
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or equitable right, benefit or remedy of any nature whatsoever under or by
reason of the Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized officers, all as of the day and year first
above written.
FSI INTERNATIONAL, INC.
By:
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Its:
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THE BOC GROUP, INC.
By:
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Its:
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