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EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
Dated as of November 24, 1996
by and among
APPLIED MATERIALS, INC.
ORBOT INSTRUMENTS LTD.
and
THE STOCKHOLDERS OF ORBOT INSTRUMENTS LTD.
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TABLE OF CONTENTS
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ARTICLE I - CERTAIN DEFINITIONS............................................. 2
1.1 Definitions....................................................... 2
ARTICLE II - THE STOCK PURCHASE............................................. 9
2.1 The Stock Purchase................................................ 9
2.2 Closing........................................................... 9
2.3 Company Action.................................................... 9
2.4 The Offer......................................................... 10
2.5 Section 236 Action................................................ 11
2.6 Rights of Company Stockholders.................................... 12
2.7 Buyer Holdback.................................................... 12
ARTICLE III - REPRESENTATIONS AND WARRANTIES................................ 12
3.1 Representations and Warranties of the Stockholders................ 12
(a) Ownership of the Company Shares............................ 13
(b) Authorization; Validity of Agreements...................... 13
(c) Consents and Approvals; No Violations...................... 14
(d) Broker's Fees.............................................. 14
(e) Voting and Other Agreements................................ 14
(f) Related Party Transactions................................. 15
3.2 Representations and Warranties of the Company..................... 15
(a) Organization............................................... 15
(b) Capitalization............................................. 16
(c) Authorization; Validity of Agreement; Company Action....... 17
(d) Consents and Approvals; No Violations...................... 18
(e) Financial Statements; Books and Records.................... 18
(f) Absence of Certain Changes................................. 19
(g) No Undisclosed Liabilities................................. 19
(h) Litigation................................................. 20
(i) Tax Matters; Government Benefits........................... 20
(j) Title and Condition of Properties.......................... 23
(k) Intellectual Property...................................... 24
(l) Contracts.................................................. 27
(m) Powers of Attorney......................................... 29
(n) Employment Matters; Trustee................................ 29
(o) Employee Benefit Plans..................................... 30
(p) Compliance with Laws....................................... 31
(q) Inventory.................................................. 31
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(r) Suppliers and Customers.................................... 31
(s) Product Warranty........................................... 31
(t) Broker's Fees.............................................. 32
(u) Potential Conflicts of Interest............................ 32
(v) Disclosure................................................. 33
3.3 Representations and Warranties of the Buyer....................... 33
(a) Organization............................................... 33
(b) Authorization; Validity of Agreement; Necessary Action..... 33
(c) Consents and Approvals; No Violations...................... 34
(d) Buyer Common Stock......................................... 34
(e) Employee Matters........................................... 34
(f) Continuation of Operations................................. 35
(g) Limitation of Representations.............................. 35
ARTICLE IV - COVENANTS...................................................... 35
4.1 Company Options................................................... 35
4.2 Business Access................................................... 38
4.3 Conduct of Business............................................... 38
4.4 Exclusivity....................................................... 39
4.5 Non-Solicitation.................................................. 40
4.6 Company Board Resolution.......................................... 40
4.7 Estimated Company Expenses........................................ 40
4.8 Taking of Necessary Action........................................ 41
4.9 Release of Guarantees............................................. 41
4.10 Post-Closing Covenants............................................ 41
(a) Transition................................................. 41
(b) Confidentiality............................................ 42
(c) Companies Ordinance........................................ 42
(d) Indemnification of Directors and Officers.................. 42
4.11 KLA Action........................................................ 43
ARTICLE V - STOCKHOLDERS COVENANTS.......................................... 43
5.1. Voting Agreement.................................................. 43
5.2. No Inconsistent Arrangements...................................... 44
5.3. Grant of Proxy; Appointment of Proxy.............................. 44
5.4. Notification of Certain Matters................................... 45
5.5. Supplements to Disclosure Schedule................................ 45
5.6. Waiver of Claims.................................................. 45
5.7. Transfer and Similar Taxes........................................ 45
5.8. Stockholders' Agent............................................... 46
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ARTICLE VI - CONDITIONS..................................................... 47
6.1 Conditions to Obligations of Each Party........................... 47
6.2 Conditions to Obligations of the Buyer............................ 48
6.3 Conditions to Obligations of the Stockholders..................... 49
ARTICLE VII - TERMINATION AND ABANDONMENT................................... 50
7.1 Methods of Termination; Termination Date.......................... 50
7.2 Procedure Upon Termination........................................ 51
ARTICLE VIII - INDEMNIFICATION AND ESCROW................................... 51
8.1 Indemnification................................................... 51
(a) Survival................................................... 51
(b) Indemnification by the Stockholders........................ 52
(c) Limits on Indemnification.................................. 52
(d) Indemnification by the Buyer............................... 53
(e) Written Claim Requirement.................................. 53
(f) Matters Involving Third Parties............................ 54
8.2 Remedies.......................................................... 55
ARTICLE IX - MISCELLANEOUS.................................................. 55
9.1 Dispute Resolution................................................ 55
9.2 Arbitration....................................................... 55
9.3 Entire Agreement; No Third Party Beneficiaries.................... 57
9.4 Succession and Assignment......................................... 57
9.5 Counterparts...................................................... 58
9.6 Notices........................................................... 58
9.7 Governing Law; Jurisdiction and Venue............................. 59
9.8 Amendments and Waivers............................................ 59
9.9 Severability...................................................... 59
9.10 Expenses.......................................................... 60
9.11 Interpretation.................................................... 60
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of November 24, 1996 (this
"AGREEMENT"), by and among Applied Materials, Inc., Delaware corporation (the
"BUYER"), Orbot Instruments Ltd., an Israeli private company (the "COMPANY"),
and each of the stockholders of the Company listed on the signature pages hereto
that either executed this Agreement on or as of the date hereof or hereafter
accept the Offer (as defined below) and become parties to this Agreement (the
"STOCKHOLDERS"). The Buyer, the Company and the Stockholders are referred to
collectively herein as the "PARTIES".
WHEREAS, each of the Stockholders owns that number of Ordinary
Shares, par value NIS 0.02 per share, of the Company (the "COMPANY SHARES") set
forth opposite such Stockholder's name on Schedule A hereto;
WHEREAS, each of the Stockholders desires to sell to the Buyer
all Company Shares owned by such Stockholder and to consummate the other
transactions described herein upon the terms and conditions set forth herein;
WHEREAS, subject to the terms and conditions set forth in
Section 2.3, the Buyer desires to purchase all of the issued and outstanding
Company Shares as described in Article II (the "STOCK PURCHASE") and to
consummate the other transactions described herein upon the terms and conditions
set forth herein, as a result of which the Company shall become a direct or
indirect wholly-owned subsidiary of the Buyer;
WHEREAS, the Boards of Directors of the Company and the Buyer
have each approved this Agreement and the transactions contemplated hereby and
determined that such Agreement and transactions are advisable and in the best
interests of their respective corporations and stockholders;
WHEREAS, the stockholders of the Company have approved or will
approve, as provided herein, this Agreement and the transactions contemplated
hereby at a meeting of stockholders of the Company duly convened in accordance
with the Companies Ordinance (as defined below) and the Company's Articles of
Association;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:
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ARTICLE I - CERTAIN DEFINITIONS
1.1 Definitions. As used in this Agreement, the following
terms have the meanings set forth below:
"ACQUIRING PARTIES" means as set forth in Section 8.1(b).
"ACQUISITION PROPOSALS" means as set forth in Section 4.4.
"ADMINISTRATOR" means as set forth in Section 9.2(b).
"AFFILIATE" means, with respect to any particular Person, any Person
controlling, controlled by or under common control with such Person, whether by
ownership or control of voting securities, by contract or otherwise.
"AFFILIATED GROUP" means any affiliated group within the meaning of
Section 1504 of the Code.
"AGREED TRANSACTION EXPENSES" means as set forth in Section 9.10.
"BALANCE SHEET" means as set forth in Section 3.2(i)(i).
"BIRD" means the Israel-United States Binational Industrial Research
and Development Foundation.
"BUYER COMMON STOCK" means the Common Stock, par value $.01 per share,
of the Buyer.
"BUYER DISCLOSURE SCHEDULE" means as set forth in Section 3.3(c).
"BUYER INDEMNIFIABLE LOSSES" means as set forth in Section 8.1(b)(ii).
"BUYER OPTION" means an option to purchase Buyer Common Stock.
"BUYER OPTION PLAN" means the Buyer's 1995 Equity Incentive Plan, as
amended, or any other stock option plan of the Buyer adopted specifically for
employees of the Company in order to issue Buyer Options as provided in Section
4.1(a).
"BUYER REPRESENTATIONS" means the representations and warranties of the
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Buyer contained in Section 3.3, provided that for purposes of Article VIII, the
Buyer Representations shall not include the representations and warranties set
forth in Sections 3.3(e) and 3.3(f).
"CHIEF SCIENTIST" means the Office of the Chief Scientist in the
Israeli Ministry of Industry and Trade.
"CLAIM" means any claim, charge, complaint, action, cause of action,
suit, proceeding (including, without limitation, arbitration proceedings or
alternative dispute resolution proceedings), hearing, investigation or demand.
"CLOSING" means as set forth in Section 2.2.
"CLOSING DATE" means as set forth in Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANIES ORDINANCE" means the Israeli Companies Ordinance (New
Version) 1983, as amended.
"COMPANY ACTION" means as set forth in Section 2.3(b).
"COMPANY AGREEMENTS" means as set forth in Section 3.2(d).
"COMPANY DISCLOSURE SCHEDULE" means as set forth in Section 3.2.
"COMPANY'S KNOWLEDGE" means the knowledge that the directors and
officers of the Company would possess after reasonable investigation and
inquiry.
"COMPANY OPTION" means any option or other right to acquire the Compa-
ny Shares.
"COMPANY PLAN" means the Company's Employee Share Ownership and Option
Plan.
"COMPANY REPRESENTATIONS" means the representations and warranties of
the Company contained in Section 3.2.
"COMPANY SHARES" means as set forth in the recitals to this Agreement.
"COMPANY SHARES OUTSTANDING" means the sum of (i) all Company Shares
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outstanding immediately prior to the Closing and (ii) all Company Shares
issuable upon exercise of all Company Options (vested or unvested) outstanding
immediately prior to the Closing (assuming for the purpose of this calculation
that all of the Company Options identified in Section 3.2(b)(i) have been issued
and exercised).
"CONFIDENTIAL INFORMATION" means any proprietary information concerning
the businesses and affairs of a Party other than any such information that (i)
is generally available to or known by the public immediately prior to the time
of disclosure (except through the actions or inactions of the Party to whom
disclosure has been made), or (ii) has been acquired or developed independently
of any information obtained from the first referred Party.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement, dated
October 3, 1996 between the Buyer and the Company.
"DAMAGES" means with respect to any Claim for indemnification pursuant
to Article VIII hereof or any Claim under Article V hereof, any and all losses,
liabilities, damages, obligations, payments, costs and expenses (including,
without limitation, the costs and expenses of any and all Claims, demands,
assessments, judgments, settlements and compromises relating thereto and
reasonable attorneys' fees and expenses in connection therewith) suffered with
respect to such Claim but excluding any Damages resulting from a loss of an
alternative investment opportunity of the Purchase Price.
"DISCLOSED PRIOR EXPENSES" means as set forth in Section 4.7.
"DISPUTE" means as set forth in Section 9.1.
"DOLLARS" AND "$" means United States Dollars.
"D&O CLAIM" means as set forth in Section 4.10(d).
"ENCUMBRANCES" means any encumbrance, lien, claim, charge, mortgage,
pledge, security interest or other legal or equitable limitations or
restrictions or rights of any third party.
"ERISA" means the United States Employee Retirement Income Security Act
of 1974, as amended.
"ERISA AFFILIATE" means any corporation or other business, whether or
not incorporated, which together with the Company would be deemed a "single
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employer" within the meaning of Sections 414(b), 414(c) and 414(m) of the Code
or the regulations issued under Section 414(o) of the Code.
"ESCROW AGENT" means either Bank Leumi L'Israel Ltd., Bank Hapoalim
B.M. or any of their respective affiliates as agreed upon by the Buyer and the
Company.
"ESCROW AGREEMENT" means the Escrow Agreement to be entered into
between the Buyer, the Stockholders and the Escrow Agent on the Closing Date in
substantially the form attached as Exhibit A hereto.
"ESCROW AMOUNT" means as set forth in Section 2.7(a).
"ESTIMATED TRANSACTION EXPENSES" means as set forth in Section 4.7.
"EXCESS PRIOR EXPENSES" means as set forth in Section 8.1(b)(i)(D).
"EXCESS TRANSACTION EXPENSES" means as set forth in Section 9.10.
"FINANCIAL STATEMENTS" means as set forth in Section 3.2(e)(i).
"GOVERNMENTAL ENTITY" means any federal, state, local or other court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory authority or agency, in Israel, the United States or any other
foreign jurisdiction.
"INDEMNIFIED PARTY" means as set forth in Section 8.1(f)(i).
"INDEMNIFIED PERSON" means as set forth in Section 4.10(d).
"INDEMNIFYING PARTY" means as set forth in Section 8.1(f)(i).
"INTELLECTUAL PROPERTY" means all of the following: (i) U.S., Israeli
and foreign registered and unregistered trademarks, trade dress, service marks,
logos, trade names, corporate names and all registrations and applications to
register the same ("TRADEMARKS"); (ii) issued U.S., Israeli and foreign patents
and pending patent applications, patent disclosures, and any and all divisions,
continuations, continuations-in-part, reissues, reexaminations, and extensions
thereof, any counterparts claiming priority therefrom, utility models, patents
of importation/confirmation, certificates of invention and like statutory
rights ("PATENTS"); (iii) U.S., Israeli and foreign registered and unregistered
copyrights (including, but not
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limited to, those in computer software and databases) and all registrations and
applications to register the same ("COPYRIGHTS"); (iv) U.S., Israeli and foreign
rights in any semi-conductor chip product works or "mask works" as such term is
defined in 17 U.S.C. 901, et seq. and any registrations or applications therefor
("MASK WORKS"); (v) all categories of trade secrets as defined in the Uniform
Trade Secrets Act including, but not limited to, business information; and (vi)
all licenses and agreements pursuant to which the Person in question has
acquired rights in or to any of the Trademarks, Patents, Copyrights or Mask
Works, or licenses and agreements pursuant to which the Person in question has
licensed or transferred the right to use any of the foregoing ("LICENSES").
"INVENTORY" means as set forth in Section 3.2(q).
"INVESTMENTS CENTER" means the Investments Center in the Israeli
Ministry of Industry and Trade.
"IRS" means the United States Internal Revenue Service.
"ISRAELI GAAP" means Israeli generally accepted accounting principles
as promulgated by the Israeli Certified Public Accountants Council and the
Israeli Certified Public Accountants Bureau and in effect from time to time.
"KLA ACTION" means as set forth in Section 3.2(k)(ii)
"KLA COMPLAINT" means as set forth in Section 3.2(k)(ii).
"MATERIAL ADVERSE EFFECT" means, with respect to any Person (or group
taken as a whole), such event, change or effect which is materially adverse to
(i) the consolidated financial condition, business as currently conducted or as
currently contemplated to be conducted, results of operations or prospects
(without giving effect to the Stock Purchase contemplated hereby) of such Person
(or, if used with respect thereto, of such group taken as a whole), or (ii) the
ability of such Person (or group) to consummate the transactions contemplated
hereby and by the Related Agreements.
"MATERIAL AGREEMENTS" means as set forth in Section 3.2(l)(i).
"MINIMUM CONDITION" means as set forth in Section 2.3(a).
"NIS" means New Israeli Shekel, the lawful currency of the State of
Israel.
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"OFFER" means as set forth in Section 2.4(a).
"OPTION EXCHANGE RATIO" means (i) the Purchase Price Per Share divided
by (ii) the average of the closing prices of the Buyer Common Stock on the
Nasdaq National Market System on the five trading days preceding the fifth
trading day before the Closing Date (the "AVERAGE BUYER PRICE").
"OPTION HOLDER" means as set forth in Section 3.2(b)(i).
"ORBOTECH" means Orbotech Ltd.
"PARTIES" means as set forth in the recitals to this Agreement.
"PERIOD BUYER PRICE" means as set forth in Section 4.1(a).
"PERSON" means any individual, trust, corporation, company,
partnership, limited liability company or other business association, legal
entity, court or government, governmental agency or instrumentality.
"PLANS" means: (i) all employee benefit plans (as defined in Section
3(3) of ERISA); (ii) all other severance pay, deferred compensation, excess
benefit, vacation, stock, stock option and incentive plans, managers' insurance
schemes, contracts, schemes, programs, funds, commitments or arrangements,
statutory or otherwise, made with any group of employees; and (iii) all other
plans, contracts, schemes, programs, funds, commitments or arrangements
providing money, services, property or other benefits, whether written or oral,
qualified or nonqualified, funded or unfunded, and including any that have
been frozen or terminated, which pertain to any employee, former employee,
director, officer, stockholder, consultant or independent contractor of the
Company or any ERISA Affiliate to which the Company or any ERISA Affiliate may
have any liability.
"PURCHASE CONSIDERATION" means as set forth in Section 2.1(a).
"PURCHASE PRICE" means $110 million.
"PURCHASE PRICE PER SHARE" means a dollar amount equal to (i) the
Purchase Price divided by (ii) the Company Shares Outstanding.
"RELATED AGREEMENTS" means the Escrow Agreement and all other documents
and agreements entered into in connection with this Agreement or the Escrow
Agreement.
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"REQUISITE AMOUNT" shall mean that number of the Company Shares that
must be tendered to the Buyer such that the percentage obtained by dividing (i)
the Company Shares tendered to the Buyer by (ii) the Company Shares Outstanding
(excluding Company Shares issuable upon exercise of all of the outstanding
Unvested Company Options other than Unvested Company Options which are scheduled
to vest no later than January 2, 1997), equals or exceeds 90%.
"SECTION 236 ACTION" means action pursuant to Section 236 of the
Companies Ordinance.
"SEPTEMBER 30 BALANCE SHEET" means as set forth in Section 3.2(j).
"SPIN-OFF AGREEMENT" means as set forth in Section 3.2(k)(ii).
"STOCK PURCHASE" means as set forth in the recitals to this Agreement.
"STOCKHOLDERS' AGENT" means as set forth in Section 5.8(a).
"STOCKHOLDERS' DISCLOSURE SCHEDULE" means as set forth in Section 3.1.
"STOCKHOLDERS' REPRESENTATIONS" means the representations and
warranties of the Stockholders contained in Section 3.1.
"STOCKHOLDERS' LIMITED REPRESENTATIONS" means the representations and
warranties of the Stockholders contained (i) in Sections 3.1(a) and 3.1(b), (ii)
in the first sentence of Section 3.1(f) (only with respect to Stockholders who
are identified in Schedule B, (iii) in the second sentence of Section 3.1(f) and
(iv) in any other Stockholders' Representations relating to the conveyance to
the Buyer of good and valid title to the Company Shares free of Encumbrances.
"SUBSIDIARY" means all corporations or other entities in which the
Buyer, the Company or the Stockholder, as the case may be, owns a majority of
the issued and outstanding capital stock or similar interests.
"SURVIVAL PERIOD" means as set forth in Section 8.1(a).
"TAX" or "TAXES" means all taxes, charges, fees, duties, levies,
penalties or other assessments imposed by any federal, state, local or foreign
governmental authority, including, but not limited to, income, gross receipts,
excise, property, sales, gain, use, license, customs duty, unemployment, capital
stock, transfer,
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franchise, payroll, withholding, social security, minimum estimated and other
taxes, and shall include and interest, penalties or additions attributable
thereto.
"TAX RETURN" means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TERMINATION DATE" means as set forth in Section 7.1(b).
"THIRD PARTY CLAIM" means as set forth in Section 8.1(f).
"TRUSTEE" means as set forth in Section 3.2(n)(ii).
"UNVESTED COMPANY OPTIONS" means all outstanding Company Options that
immediately prior to the Closing may not yet be exercised in accordance with the
terms of such Company Options and the Company Plan.
"VESTED COMPANY OPTIONS" means all outstanding Company Options that
immediately prior to the Closing may be exercised in accordance with the terms
of such Company Options and the Company Plan.
"VOTING DEBT" means as set forth in Section 3.2(b)(ii).
ARTICLE II - THE STOCK PURCHASE
II.1 The Stock Purchase. Upon the terms and conditions set
forth herein, at the Closing the following actions shall take place:
(a) As provided in Section 2.2, each of the Stockholders will sell,
assign, transfer and deliver to, or at the direction of, the Buyer all Company
Shares issued and outstanding immediately prior to the Closing Date and owned by
such Stockholder free and clear of all Encumbrances in exchange for an amount in
cash equal to the product of (i) the Purchase Price Per Share multiplied by (ii)
the number of the Company Shares transferred by such Stockholder (the "PURCHASE
CONSIDERATION").
(b) Each Company Option outstanding immediately prior to the Closing
Date shall be treated in accordance with the provisions of Section 4.1.
II.2 Closing. The closing of the Stock Purchase (the
"CLOSING") will
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take place on the later of (i) December 23, 1996 or (ii) the second business day
following the satisfaction or waiver of all of the closing conditions set forth
in Article VI, at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, 919
Third Avenue, New York, New York, or such other date and place as the Parties
may agree (the date of the Closing being referred to herein as the "CLOSING
DATE"). At the Closing, each Stockholder shall deliver or cause to be delivered
to, or at the direction of, the Buyer all of the share certificates, duly
endorsed in blank or accompanied by deeds of transfer duly executed in blank,
representing all Company Shares held by such Stockholder immediately prior to
the Closing and the transfer of all such Company Shares to or at the direction
of the Buyer will be entered in the Company's Register of Members, and, subject
to Section 2.7, the Buyer shall pay the Purchase Consideration payable to the
Stockholders pursuant to Section 2.1(a) pursuant to wire transfer or pursuant to
other payment instructions reasonably acceptable to the Buyer provided by the
Stockholders' Agent to the Buyer no later than five days prior to the Closing
Date. At the Closing, each of the Parties shall deliver or cause to be delivered
to the intended recipient any other documents and instruments required to be
delivered by or on behalf of such Party at or prior to the Closing pursuant to
the terms of this Agreement.
II.3 Company Action. (a) In the event that, as of the date
hereof, Company stockholders holding less than the Requisite Amount shall have
executed and delivered this Agreement and became parties hereto, all of the
Buyer's obligations under this Agreement, including the obligation to effect the
Stock Purchase, shall be conditioned upon the receipt by the Buyer, on or prior
to 5:00 p.m. Israel time, on December 1, 1996, of duly executed counterparts of
this Agreement by that number of additional Company stockholders such that, as
of such date and time, the Stockholders shall hold an aggregate of at least the
Requisite Amount of Company Shares (the "MINIMUM CONDITION"). The Minimum
Condition may be waived by the Buyer at any time prior to 5:00 p.m. Israel time,
on December 2, 1996, in the Buyer's sole discretion. Until the earlier of the
satisfaction or waiver of the Minimum Condition, this Agreement shall have no
force and effect on the Buyer and, accordingly, the Buyer shall have no
obligations hereunder, except for the Buyer's obligations under the
Confidentiality Agreement and under Section 4.5 hereto. Notwithstanding the
foregoing, this Agreement shall have full force and effect with respect to the
obligations of the Company and the Stockholders until the Agreement is duly
terminated as provided in the following sentence. In the event that the Minimum
Condition is not satisfied or waived by the Buyer on or before December 2, 1996
(in either case as provided in this Section 2.3(a)), this Agreement shall be
deemed terminated and neither the Company nor the Stockholders shall have any
further rights or obligations hereunder.
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(b) As promptly as practicable after the date on which Company
stockholders holding more than the Requisite Amount of Company Shares shall
have executed and delivered this Agreement and become parties hereto (unless all
holders of Company Shares are parties hereto), the Company shall take all
necessary action (including all required Board of Directors action) and will use
its best efforts to ensure that, no later than December 16, 1996, all
stockholder action shall be taken to accomplish the following (collectively, the
"COMPANY ACTION"):
(i) the approval by the meeting of the stockholders of the
Company of this Agreement and the Related Agreements and all the transactions
contemplated hereby and thereby, as required by the Companies Ordinance and the
Articles of Association of the Company; and
(ii) the amendment of the Company's Articles of Association to
delete and terminate all rights of first refusal or other provisions of such
Articles of Association which would confer on any person other than the Buyer
any right or option to purchase Company Shares or other Company securities,
other than as provided by the terms of the Company Options, as a result of the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
II.4 The Offer. (a) In the event that, as of December 2, 1996,
not all of the Company's stockholders shall have executed and delivered this
Agreement and became parties hereto, the Buyer shall deliver to all of the
stockholders of the Company who have not, as of such date, executed and
delivered this Agreement and have not become parties thereto, an offer to become
parties to this Agreement and to sell all of their Company Shares to the Buyer
upon the terms and conditions of this Agreement (the "OFFER"). The Offer shall
be accompanied by, among other things, a copy of this Agreement. The Company
shall cooperate with the Buyer as the Buyer may reasonably request in
disseminating the Offer to all of the Company's stockholders who are not parties
hereto and in facilitating acceptance of the Offer by such stockholders. The
Offer may be extended by the Buyer at any time by notice to the Company and to
such stockholders. In the event any of the Company Options are exercised after
the date hereof and prior to the Closing by any Option Holder that is not a
party hereto, the Buyer shall deliver the Offer to such Option Holder and allow
such Option Holder to accept the Offer and become a party to this Agreement in
accordance with the terms and conditions of the Offer and this Agreement.
(b) The Offer will provide, among other things, that the acceptance of
the Offer by a stockholder shall be effective only if such stockholder shall
have
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accepted the Offer with respect to all the Company Shares owned by such
stockholder immediately prior to the Closing and shall have delivered validly
executed copies of this Agreement to the Buyer and certificates evidencing all
such Company Shares, together with validly executed deeds of transfer and other
documents as may be determined by the Buyer in order to effect such transfer, to
the Stockholders' Agent for delivery to the Buyer at the Closing.
(c) The Offer will provide that (i) the execution and delivery of this
Agreement and related documents and the tenders made thereby shall be
irrevocable and shall not be subject to withdrawal rights, (ii) the obligation
of the Buyer to accept any tenders and to effect the Stock Purchase shall be
subject to the satisfaction or waiver of the conditions set forth in Article VI
hereof, and (iii) the Offer may be terminated and abandoned by the Buyer at any
time upon or following termination of this Agreement. The conditions in this
paragraph (c) are for the benefit of the Buyer and may be asserted by the Buyer
at any time regardless of the circumstances giving rise to any such condition or
may be waived by the Buyer in whole or in part at any time, in the Buyer's sole
discretion.
II.5 Section 236 Action. Following the execution of this
Agreement by Company stockholders holding the Requisite Amount of Company
Shares, the Buyer shall commence the Section 236 Action to acquire all of the
issued and outstanding Company Shares from Company stockholders who have not
accepted the Offer and became parties to this Agreement. Such Section 236 Action
shall include, without limitation (i) the delivery to each such Company
stockholder, with a copy to the Company, of a notice informing such Company
stockholder of the election of the Buyer to acquire all of the issued and
outstanding Company Shares as provided in Section 236 of the Companies
Ordinance, and (ii) the taking of all other action necessary in accordance with
Section 236 such that the Buyer shall become entitled to acquire all of the
issued and outstanding Company Shares. The Company and each of the Stockholders
shall cooperate with the Buyer, as the Buyer may reasonably request, in the
taking of such Section 236 Action, including, without limitation, cooperating
with the Buyer in the dissemination of such notice to all Company stockholders
who are not parties to this Agreement, and in making all filings and taking
all other reasonable action necessary or desirable to effect the Stock
Purchase with respect to all of the issued and outstanding Company Shares in
compliance with Section 236 of the Companies Ordinance.
II.6 Rights of Company Stockholders. From and after the
Closing, the Stockholders shall have no rights with respect to their Company
Shares other than to surrender the certificate(s), instruments or other
documents previously representing such securities in exchange for the Purchase
Consideration payable in
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accordance with Section 2.1(a).
II.7 Buyer Holdback. (a) It is agreed that there shall be
withheld from the cash consideration otherwise payable to Company stockholders
and Option Holders pursuant to this Agreement a cash amount equal to (i) 10% of
the Purchase Price less (ii) the amounts, if any, of the Excess Transaction
Expenses and Excess Prior Expenses (the "ESCROW AMOUNT"), and the amounts of
such Excess Transaction Expenses and Excess Prior Expenses shall be retained by
the Buyer and shall not be payable to the Company's stockholders, provided that
the Company shall be obligated to pay such Excess Prior Expenses and Excess
Transaction Expenses which have been deducted from the Escrow Amount; provided
that if the Buyer waives the condition specified in Section 6.2(a)(ii) hereto,
the Escrow Amount shall be equal to 10% of the Purchase Consideration paid to
the Stockholders. The Escrow Amount shall be held as security for the Company's
and the Stockholders' indemnification obligations under Article VIII pursuant to
the provisions of the Escrow Agreement.
(b) The Escrow Amount shall be withheld, on a pro rata basis, from all
of the stockholders receiving cash pursuant to this Agreement and pursuant to
the Section 236 Action; provided, however, that if the Closing shall occur prior
to the completion of the Section 236 Action or if the Buyer determines in good
faith that the withholding of the Escrow Amount from Company stockholders in
connection with the Section 236 Action may jeopardize the completion of or
impair the validity of the Section 236 Action or be unenforceable in any
respect, then, unless the Buyer waives the condition specified in Section
6.2(a)(ii) hereto, the full Escrow Amount set forth in Section 2.7(a) shall be
withheld on a pro rata basis only from the Stockholders.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
III.1 Representations and Warranties of the Stockholders. As a
material inducement to the Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, each Stockholder hereby severally
represents and warrants to the Buyer that all of the statements contained in
this Section 3.1 with respect to such Stockholder are true and correct as of the
date on which such Stockholder has executed this Agreement, except as set forth
in the schedule attached to this Agreement setting forth exceptions to the
Stockholders' representations and warranties set forth herein (the
"STOCKHOLDERS' DISCLOSURE SCHEDULE"). The Stockholders' Disclosure Schedule will
be arranged in sections corresponding to the sections of this Agreement to be
modified by such disclosure schedule.
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(a) Ownership of the Company Shares. Such Stockholder has good and
valid title to the Company Shares and the Company Options owned or to be owned
by such Stockholder, free and clear of all Encumbrances, except for Company
Shares which are subject to a pledge to Orbotech pursuant to the terms of the
Share Exchange Agreement and Plan of Merger, dated August 17, 1992, among
Optrotech Ltd., Orbot Systems Ltd., certain shareholders of Optrotech Ltd. and
the shareholders of Orbot Systems Ltd., a true and correct copy of which is
included in Schedule 3.1(a) of the Stockholders Disclosure Schedule. Section
3.1(a) of the Stockholders' Disclosure Schedule sets forth all of the Company
Shares, Company Options, any other securities of the Company and rights to
acquire any of the foregoing, owned beneficially or of record by such
Stockholder as of the date of this Agreement. At the Closing, such Stockholder
will transfer to the Buyer, and the Buyer will acquire, all of the title to the
Company Shares owned by such Stockholder free and clear of all Encumbrances.
(b) Authorization; Validity of Agreements. Such Stockholder has the
full right, power and authority to execute and deliver this Agreement and the
Related Agreements to which such Stockholder will be a party, and, upon
termination of the right of first refusal as provided in Section 2.3(b)(i) and
the release of the pledge of Company Shares referred to in Section 3.1(a), to
consummate the transactions contemplated hereby and thereby. If applicable, the
execution, delivery and performance by such Stockholder of this Agreement and
the Related Agreements to which such Stockholder will be a party and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by such Stockholder's board of directors and, if necessary,
stockholders and by all other necessary corporate action. Such Stockholder will
prior to the Closing deliver to the Stockholders' Agent all Company Shares in
which such Stockholder owns any record or beneficial interest and will promptly
deliver to the Stockholders' Agent all Company Shares which are issued to such
Stockholder upon exercise of Company Options between the date of this Agreement
and the Closing Date. This Agreement has been, and each of the Related
Agreements to which the Stockholder will be a party will be, duly executed and
delivered by such Stockholder and, assuming the due and valid execution by the
Buyer, constitutes or (with respect to the Related Agreements to which such
Stockholder will be a party) will constitute a valid and binding obligation of
such Stockholder enforceable against such Stockholder in accordance with their
respective terms, subject as to enforce- ability to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity.
(c) Consents and Approvals; No Violations. None of the execution and
the
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delivery of this Agreement or the Related Agreements (to the extent such
Stockholder will be party thereto) by such Stockholder, the consummation by such
Stockholder of the transactions contemplated hereby or thereby or compliance by
such Stockholder with any of the provisions hereof or thereof will (i) conflict
with or result in any breach of any provision of any organizational documents
applicable to such Stockholder, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which such Stockholder or any of its
Affiliates or, if applicable, Subsidiaries, is a party or by which any of them
or any of their properties or assets may be bound, or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to such
Stockholder, any of its Affiliates or, if applicable, Subsidiaries or any of
their properties or assets, excluding from the foregoing clauses (ii), (iii) and
(iv) such violations, breaches or defaults which would not, individually or in
the aggregate, have a Material Adverse Effect on such Stockholder. Section
3.1(c) of the Stockholders' Disclosure Schedule sets forth a list of all third
party consents and approvals required to be obtained by such Stockholder in
connection with this Agreement or the Related Agreements (to the extent such
Stockholder will be a party thereto) prior to the consummation of the
transactions contemplated hereby and thereby.
(d) Broker's Fees. Such Stockholder has no liability or obligation to
pay any fees or commissions to any broker, trader or agent with respect to the
transactions contemplated by this Agreement for which the Buyer or the Company
could become liable or otherwise obligated.
(e) Voting and Other Agreements. Except as contemplated by this
Agreement, and if applicable the voting agreement contained in the 1993
Subscription Agreement among the Company and the Company stockholders listed
therein and the Shareholders' Agreement, dated February 27, 1994, among ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, Or-Tass Ltd. and ▇▇▇▇▇▇▇
Acquisition Corp. true and correct copies of which are included as Section
3.1(e) of the Stockholders' Disclosure Schedule, such Stockholder is not a party
or otherwise subject to any voting trust, proxy or other agreement, restriction
or understanding with respect to the voting of any of the capital stock of the
Company. Except as set forth above, such Stockholder has sole voting power, sole
power of disposition and sole power to agree to all of the matters set forth in
this Agreement and in the Related Agreements (to the extent such Stockholder
will be a party thereto), in each case with respect to all of such Stockholder's
Company Shares, with no limitations,
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qualifications or restrictions on such rights.
(f) Related Party Transactions. With respect to each of the
Stockholders identified on Schedule B to this Agreement, such Stockholder,
except for indirect interests which arise due to an interest that such
Stockholder has in Orbotech, and except for passive investments in shares of
capital stock or other equity interests of less than 5% in any Person other than
the Company, does not own, directly or indirectly, in whole or in part, any
Intellectual Property or other assets, real or personal, which the Company or
any of its Subsidiaries is using or the use of which is necessary for the
business of the Company as currently conducted or as currently contemplated to
be conducted by the Company. With respect to each of the Stockholders, such
Stockholder (i) does not have any Claim against the Company or any of its
Subsidiaries, except, in the case of a Stockholder that is an employee of the
Company on the date of this Agreement, for Claims for accrued vacation pay,
accrued benefits under Plans and for the current month's salary and similar
matters and agreements existing on the date hereof; (ii) has not made, on behalf
of the Company or any of its Subsidiaries, except in the capacity as an officer
or employee of the Company or any of its Subsidiaries, any payment or commitment
to pay any commission, fee or other amount to, or to purchase or obtain or
otherwise contract to purchase or obtain any goods or services from, any other
Person; (iii) is not a party, except in the capacity as an employee, officer or
director of the Company, to any transaction, agreement or arrangement with the
Company or any of its Subsidiaries , or with any officer, director or employee
of the Company or any of its Subsidiaries with respect to Company business; (iv)
does not owe any money to the Company or any of its Subsidiaries; and (v) is not
owed any money by the Company or any of its Subsidiaries other than as referred
to in clause (i) hereto.
III.2 Representations and Warranties of the Company. As a
material inducement to the Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, the Company hereby represents and warrants
to the Buyer that all of the statements contained in this Section 3.2 are true
and correct as of the date of this Agreement (or, if made as of a specified
date, as of such date), except as set forth in the schedule attached to this
Agreement setting forth exceptions to the Company's representations and
warranties set forth herein (the "COMPANY DISCLOSURE SCHEDULE"). The Company
Disclosure Schedule will be arranged in sections corresponding to the sections
of this Agreement to be modified by such disclosure schedule.
(a) Organization. Each of the Company and its Subsidiaries is a corpo-
ration duly organized and validly existing under the laws of the jurisdiction of
its incorporation or organization and has all requisite corporate power and
authority
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and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to be so organized and existing or to have such power, authority, and
governmental approvals would not have a Material Adverse Effect on the Company
and its Subsidiaries, taken as a whole. The Company and each of its Subsidiaries
is duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole. Section 3.2(a) of
the Company Disclosure Schedule sets forth a complete list of all of the
Company's Subsidiaries. Except as set forth in Section 3.2(a) of the Company
Disclosure Schedule, the Company does not own (i) any equity interest in any
corporation or other entity or (ii) marketable securities where the Company's
equity interest in any entity exceeds five (5) percent of the outstanding equity
of such entity on the date hereof.
(b) Capitalization. (i) The authorized capital stock of the Company
consists of 10,000,000 Company Shares. As of the date hereof, (A) 6,038,625
Company Shares are issued and outstanding, and (B) 394,000 Company Shares are
reserved for issuance upon exercise of outstanding Company Options granted under
the Company Plan or under other arrangements previously disclosed to the Buyer
in writing. Set forth in Section 3.2(b)(i) of the Company Disclosure Schedule is
a true and correct description of (A) the full translation of the legal name and
current address as it appears on the books and records of the Company of each of
the Company's stockholders, (B) the name and address as it appears on the books
and records of the Company of each of the holders of Company Options ("OPTION
HOLDERS"), (C) the number of the Company Shares owned of record by each Company
stockholder and the certificate numbers of the stock certificates representing
such shares, (D) the number of the Company Options owned by each Option Holder
and the number of the Company Shares subject to each such Company Option, and
(E) the exercise price, expiration dates and vesting schedule for each Company
Option.
(ii) All of the outstanding Company Shares are, and all
Company Shares which may be issued pursuant to the exercise of outstanding
Company Options will be, when issued in accordance with the respective terms
thereof, duly authorized, validly issued, fully paid and non-assessable. There
are no bonds, debentures, notes or other indebtedness having general voting
rights (or convertible into securities having such rights) ("VOTING DEBT") of
the Company or any of its Subsidiaries issued and outstanding. Except as set
forth above and except for the
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transactions contemplated by this Agreement, as of the date hereof, (A) there
are no shares of capital stock of the Company authorized, issued or outstanding,
(B) there are no existing options, warrants, calls, pre-emptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of the Company or
any of its Subsidiaries, obligating the Company or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of its Subsidiaries
to grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment, and (C) there are no
outstanding contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of the capital stock of the
Company or any Subsidiary of the Company as a result of the transactions
contemplated hereby or otherwise or to provide funds to make any investment (in
the form of a loan, capital contribution or other- wise) in any Subsidiary or
any other entity other than investments in J.M.G. S.A. or J.M.G. Instruments
S.A. on terms described in Section 3.2(a) of the Company Disclosure Schedule.
(iii) All of the outstanding shares of capital stock of each
of the Company's Subsidiaries are beneficially owned by the Company, directly or
indirectly, and all such shares have been validly issued and are fully paid and
nonassessable and are owned by either the Company or one of its Subsidiaries
free and clear of all Encumbrances.
(iv) Except as provided in the 1993 Subscription Agreement
referred to in Section 3.1(e), there are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of its
Subsidiaries.
(c) Authorization; Validity of Agreement; Company Action. The Company
has full corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
transactions contemplated hereby, have been duly authorized by the Company's
Board of Directors and, upon completion of the Company Action as provided in
Section 2.3(b), by the meeting of stockholders of the Company as required by the
Companies Ordinance and the Company's Articles of Association, and no other
corporate action on the part of the Company is necessary to authorize the
execution and delivery by the Company of this Agreement and the consummation by
it of the transactions contemplated hereby. This Agreement has been duly
executed and
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delivered by the Company and, assuming due and valid authorization, execution
and delivery hereof by the Buyer, is a valid and binding obligation of the
Company enforceable against the Company subject to and in accordance with its
terms, subject as to enforceability to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general principles of equity.
(d) Consents and Approvals; No Violations. Except for the filings,
permits and consents set forth on Section 3.2(d) of the Company Disclosure
Schedule, none of the execution, delivery or performance of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or compliance by the Company with any of the provisions hereof will (i)
upon completion of the Company Action as provided in Section 2.3(b), conflict
with or result in any breach of any provision of the Memorandum of Association
or Articles of Association or similar organizational documents of the Company or
of any of its Subsidiaries, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which any of them or any of their properties or assets may be
bound (the "COMPANY AGREEMENTS"), or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (ii), (iii) and (iv) such violations, breaches or defaults which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole. Section 3.2(d) of the Company
Disclosure Schedule sets forth a list of all third party consents and approvals
required to be obtained by the Company in connection with this Agreement prior
to the consummation of the transactions contemplated by this Agreement.
(e) Financial Statements; Books and Records. (i) The Company has
provided the Buyer with the following financial statements, correct and complete
copies of which are set forth on Section 3.2(e)(i) of the Company Disclosure
Schedule (collectively, the "FINANCIAL STATEMENTS"): (A) audited consolidated
balance sheets and statements of income, changes in stockholders' equity and
cash flows for the Company as of and for the fiscal years ended December 31,
1993, 1994 and 1995; and (B) unaudited consolidated balance sheets and
statements of income, changes in stockholders' equity and cash flows for the
Company as of and for each
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of the fiscal quarters ended March 31, 1996, June 30, 1996 and September 30,
1996. The Financial Statements have been prepared from, and are in accordance
with, the books and records of the Company and its Subsidiaries, have been
prepared in accordance with Israeli GAAP applied on a consistent basis
throughout the periods covered thereby and fairly present the consolidated
financial condition and the consolidated results of operations of the Company
and its Subsidiaries as of the times and for the periods referred to therein.
(ii) The consolidated sales of the Company and its
Subsidiaries in or into the United States (without giving effect to intercompany
sales of products which are subsequently sold at a price which is higher than
the price at which such intercompany sales are made) in the fiscal year ended
December 31, 1995 were less than $25 million and the total assets of the Company
and its Subsidiaries located in the United States as of September 30, 1996 had
an aggregate book value of less than $15 million.
(iii) The books and records of the Company and its
Subsidiaries are and have been properly prepared and maintained in form and
substance adequate for preparing audited financial statements in accordance with
Israeli GAAP, and fairly and accurately reflect in all material respects the
assets and liabilities of the Company and its Subsidiaries and all contracts and
transactions to which the Company and its Subsidiaries are or were a party or by
which the Company and its Subsidiaries or any of their business or assets is or
was affected. The corporate minute books of the Company and its Subsidiaries,
copies of which have been made available to the Buyer, correctly reflect all
resolutions adopted and all other material corporate actions taken at all
meetings or through consent of the directors (including committees thereof) and
the stockholders of the Company and its Subsidiaries. The stock transfer books
and stock ledgers of the Company and its Subsidiaries are complete and correctly
reflect all issuances and transfers of the capital stock and other securities
issued by the Company and its Subsidiaries.
(f) Absence of Certain Changes. Except as disclosed in Section 3.2(f)
of the Company Disclosure Schedule, since December 31, 1995, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course and (i) there has not occurred any events or changes (including the
incurrence of any liabilities of any nature, whether or not accrued, contingent
or otherwise) having or reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company and its Subsidiaries, taken
as a whole, and (ii) the Company and its Subsidiaries have not taken any action
which would have been prohibited under Section 4.3 hereof.
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(g) No Undisclosed Liabilities. Except (i) as disclosed in the
Financial Statements, and (ii) for liabilities and obligations (u) relating to
Taxes (as to which the representations and warranties set forth in Section
3.2(i) shall apply), (v) incurred in the ordinary course of business and
consistent with past practice, (w) pursuant to the terms of this Agreement, (x)
any unbilled legal fees and expenses in an amount not to exceed the amount
previously disclosed in writing to the Buyer in accordance with Section 4.7, (y)
as set forth in Section 3.2(g) of the Company Disclosure Schedule or (z) in
relation to future obligations under existing agreements set forth on Section
3.2(l) of the Company Disclosure Schedule or in relation to immaterial future
obligations under existing agreements which are not required to be described
pursuant to Section 3.2(l), since December 31, 1995, neither the Company nor any
of its Subsidiaries has incurred any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that have, or would be
reasonably likely to have, a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole, or would be required by Israeli GAAP to be
reflected on a consolidated balance sheet of the Company and its Subsidiaries
(including the notes thereto).
(h) Litigation. Except as set forth in Section 3.2(h) of the Company
Disclosure Schedule, as of the date hereof, there are no Claims or
investigations pending or, to the Company's Knowledge, threatened against the
Company or any of its Subsidiaries before any Governmental Entity. Except as
disclosed in Section 3.2(h) of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries is subject to any outstanding order, writ,
injunction or decree.
(i) Tax Matters; Government Benefits. (i) The Company and each of its
Subsidiaries have filed all Tax Returns that are required to be filed and have
paid or caused to be paid all Taxes that are either shown on such Tax Returns as
due and payable or otherwise claimed to be due by any taxing authority. All such
Tax Returns were correct and complete in all material respects and accurately
reflect all liability for Taxes for the periods covered thereby. All Taxes owed
and due by the Company and each of its Subsidiaries for results of operations
through December 31, 1995 (whether or not shown on any Tax Return) have been
paid or have been adequately reflected on the Company's balance sheet as of
December 31, 1995 included in the Financial Statements (the "BALANCE SHEET").
Since December 31, 1995, the Company has not incurred liability for any Taxes
other than in the ordinary course of business. Neither the Company nor any of
its Subsidiaries has received notice of any claim made by an authority in a
jurisdiction where the Company or its Subsidiaries do not file Tax Returns that
the Company or any of its Subsidiaries is or may be subject to taxation by that
jurisdiction.
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(ii) Neither the Company nor any of its Subsidiaries has
violated any applicable law of any jurisdiction relating to the payment and
withholding of Taxes, including, without limitation, (x) withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code or similar provisions under
non-U.S. law and (y) withholding of Taxes in respect of amounts paid or owing to
any employee, creditor, independent contractor, or other third party, excluding
violations unknown to the Company which are not material. The Company and its
Subsidiaries have, in the manner prescribed by law, withheld and paid when due
all Taxes required to have been withheld and paid under all applicable laws.
(iii) There are no Encumbrances upon the Company Shares or any
of the assets or properties of the Company or any of its Subsidiaries that arose
in connection with any failure (or alleged failure) by the Company or any of its
Subsidiaries to pay any Tax when due.
(iv) The Company and its Subsidiaries have not waived any
statute of limitations in any jurisdiction in respect of Taxes or Tax Returns or
agreed to any extension of time with respect to a Tax assessment or deficiency,
other than as set forth in Section 3.2(i)(iv) of the Company Disclosure
Schedule.
(v) Neither the Company nor any of its Subsidiaries have
received any notice that any federal, state, local or foreign audits,
examinations or other administrative proceedings have been commenced or are
pending with regard to any Taxes or Tax Returns of the Company or any of its
Subsidiaries. No notification has been received by the Company or by its
Subsidiaries that such an audit, examination or other proceeding is pending or
threatened with respect to any Taxes due from or with respect to or attributable
to the Company or any of its Subsidiaries or any Tax Return filed by or with
respect to the Company or any of its Subsidiaries. To the Company's Knowledge,
there is no reasonable basis on which any taxing authority could assess any
additional Taxes for any period for which Tax Returns have been filed. To the
Company's Knowledge, there is no dispute or Claim concerning any Tax liability
of the Company or any of its Subsidiaries either claimed or raised by any taxing
authority.
(vi) During their most recent five taxable years, neither the
Company nor any of its Subsidiaries has made a change in accounting methods,
received a ruling from any taxing authority or signed an agreement with any
taxing authority which could have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole. Neither the Company nor any of its
Subsidiaries is required to include in income any adjustment pursuant to Section
481(a) of the Code or any similar provision of Israeli, foreign, state or local
law, by reason of the
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voluntary change in accounting method (nor has any taxing authority proposed in
writing any such adjustment or change of accounting method).
(vii) Neither the Company nor any of its Subsidiaries is a
party to, is bound by or has an obligation under any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement. Neither the
Company nor any of its Subsidiaries is aware of any potential liability or
obligation to any Person as a result of, or pursuant to, any such agreement,
contract or arrangement. Neither the Company nor any of its Subsidiaries has any
liability for Taxes of another Person by contract or otherwise.
(viii) No power of attorney with respect to any matter
relating to Taxes or Tax Returns has been granted by or with respect to the
Company or any of its Subsidiaries.
(ix) Neither the Company nor any of its Subsidiaries is a
party to any agreement, plan, contract or arrangement that could result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(x) During the Company's most recent five taxable years, no
closing agreement pursuant to Section 7121 of the Code (or any predecessor
provision, or any similar provision of any state, local, Israeli or foreign law)
has been entered into by or with respect to the Company or any of its
Subsidiaries.
(xi) Neither the Company nor any of its Subsidiaries has filed
a consent pursuant to Section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries.
(xii) The Company's United States Subsidiary has never been a
member of an Affiliated Group. The Company is not a controlled foreign
corporation within the meaning of Section 957 of the Code, a foreign personal
holding company within the meaning of Section 552 of the Code or a passive
foreign investment company within the meaning of Section 1296 of the Code.
(xiii) Section 3.2(i)(xiii) of the Company Disclosure Schedule
lists all Israeli, United States federal, state and local, and other foreign Tax
Returns in respect of which an audit is in progress or is pending, filed by, on
behalf of or with respect to the Company and its Subsidiaries. The Company has
delivered to Buyer
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complete and accurate copies of each of: (A) all audit, examination and similar
reports and all letter rulings and technical advice memoranda relating to
Israeli, United States federal, state and local, and any other foreign Taxes due
from or with respect to the Company and its Subsidiaries; (B) all Israeli,
United States federal, state and local, and any other foreign Tax Returns, Tax
examination reports and similar documents filed by the Company and its
Subsidiaries; and (C) all closing agreements entered into by the Company and its
Subsidiaries with any taxing authority and all statements of Tax deficiencies
assessed against or agreed to by the Company and its Subsidiaries. The Company
will deliver to the Buyer all materials with respect to the foregoing for all
matters arising after the date hereof and prior to the Closing.
(xiv) Section 3.2(i)(xiv) of the Company Disclosure Schedule
lists each tax incentive, other than incentives generally available by operation
of law without application or material governmental action, given to the Company
under the laws of the State of Israel, the period for which such tax incentive
applies, and the nature of such tax incentive. The Company has complied in all
material respects with all requirements of Israeli law to be entitled to claim
each such tax incentive. Subject to (x) the receipt of the approvals listed in
Section 3.2(d) of the Company Disclosure Schedule, (y) the terms and conditions
for all governmental approvals and consents required for the consummation of the
Stock Purchase and (z) the manner in which the Company is operated after the
Closing, the consummation of the transactions contemplated hereby will not
adversely affect the ability of the Company to claim the benefit of any tax
incentive for the remaining duration of the incentive or require any recapture
of any previously claimed incentive, and, except as set forth in Section
3.2(i)(xiv) of the Company Disclosure Schedule, no consent or approval of any
Governmental Entity is required in order to preserve the entitlement of the
Company to any such incentive and, to the Company's Knowledge, there is no
intention to change the terms of such tax incentives, except as may result from
generally applicable changes in the relevant laws or the regulations thereunder.
(xv) Section 3.2(i)(xv) of the Company Disclosure Schedule
lists with respect to each grant that the Company or any of its Subsidiaries
received or is entitled to receive from the Chief Scientist, BIRD or any other
Governmental Entity the following information: (A) the total amount of the grant
received and the amount available for future use by the Company and its
Subsidiaries; (B) the time period in which the Company and its Subsidiaries
received, or will be entitled to receive, each grant; (C) a general description
of the research and development program or other program for which such grant
was approved; (D) the royalty repayment schedule or other repayment mechanism
applicable to such grant and the total
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repayment due; (E) the type of revenues from which royalty payments should be
made; and (F) the total amount of royalties paid as of a recent date and the
total royalty obligations accrued as of such date.
(xvi) The Company and its Subsidiaries have complied in all
material respects with all applicable laws and regulations, agreements, letters
of commitments and any other requirements with respect to the terms and
conditions of each of the grants listed in Section 3.2(i)(xv) of the Company
Disclosure Schedule and no claim was made by the Chief Scientist, BIRD or any
other Governmental Entity or other Person with respect to the Company's
compliance with such terms and conditions or for any repayment in excess of the
amounts specified in Section 3.2(i)(xv) of the Company Disclosure Schedule and,
to the Company's Knowledge, there is no threatened claim for any breach of such
terms and conditions or any intention to change such terms and conditions,
except as may result from generally applicable changes in the relevant laws or
the regulations thereunder.
(j) Title and Condition of Properties. Neither the Company nor any of
its Subsidiaries own any real property. The Company and its Subsidiaries own
good and marketable title, free and clear of all Encumbrances, to all of the
personal property and assets shown on the balance sheet of the Company as of
September 30, 1996 (the "SEPTEMBER 30 BALANCE SHEET") or acquired after
September 30, 1996, except for (A) assets which have been disposed of to
nonaffiliated third parties since September 30, 1996 in the ordinary course of
business, (B) Encumbrances reflected in the September 30 Balance Sheet, (C)
Encumbrances under the floating charges specified in Section 3.2(l)(C) of the
Company Disclosure Schedule, (D) Encumbrances or imperfections of title which
are not, individually or in the aggregate, material in character, amount or
extent and which do not materially detract from the value or materially
interfere with the present or presently contemplated use of the assets subject
thereto or affected thereby, and (E) Encumbrances for current Taxes not yet due
and payable and for Taxes contested in good faith for which adequate reserves
have been made on the September 30 Balance Sheet. Substantially all of the
machinery, equipment and other tangible personal property and assets owned or
used by the Company and its Subsidiaries are in good condition and repair,
except for ordinary wear and tear not caused by neglect, and are useable in the
ordinary course of business as currently conducted or as currently contemplated
to be conducted by the Company. The personal property and assets reflected on
the September 30 Balance Sheet or acquired after September 30, 1996, the Company
Agreements and the Intellectual Property owned or used by the Company under
valid Licenses, collectively include all assets necessary to provide, produce,
sell and license the services and products currently provided, produced, sold
and licensed by the Company and its Subsidiaries and to conduct the business of
the Company and
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its Subsidiaries as presently conducted.
(k) Intellectual Property. (i) Section 3.2(k)(i) of the Company
Disclosure Schedule contains an accurate and complete listing setting forth (x)
all Trademarks, Patents, registered Copyrights and Mask Works which are owned by
the Company or any of its Subsidiaries and (y) all Licenses to which the Company
or any of its Subsidiaries is a party (other than software and databases
licensed to the Company or to any of its Subsidiaries under non-exclusive
software licenses granted to end-user customers by third parties in the ordinary
course of business of such third parties' businesses), such schedule indicating,
as to each such License, whether the Company or any of its Subsidiaries is the
licensee or licensor, whether it is royalty bearing, the territory, whether it
is exclusive or non-exclusive, and the nature of the licensed property.
(ii) Except (x) as set forth in Section 3.2(k)(ii) of the
Company Disclosure Schedule, (y) for the cross-licenses included in the Spin-Off
and License Agreement, dated August 17, 1992, between Orbot Systems Ltd.
(currently known as Orbotech) and the Company (the "SPIN-OFF AGREEMENT"), a true
and correct copy of which is included in Section 3.2(k )(ii) of the Company
Disclosure Schedule, and (z) for the software and databases licensed to the
Company or to any of its Subsidiaries under non-exclusive software licenses
granted to end-user customers by third parties in the ordinary course of
business of such third parties' businesses, neither the Company nor any of its
Subsidiaries is under any obligation to pay any royalty or other compensation to
any third party or to obtain any approval or consent for the use of any
Intellectual Property used in or necessary for its business as currently
conducted or as currently contemplated to be conducted by the Company,
including, without limitation, reticle inspection equipment, wafer inspection
equipment and related technologies and components. None of the Intellectual
Property owned by the Company or any of its Subsidiaries or, to the Company's
Knowledge, licensed to the Company or any of its Subsidiaries, is subject to any
outstanding judgment, order, decree, stipulation, injunction or charge. Other
than the complaint contained in KLA Instruments Corporation, v. Orbot
Instruments, Inc., civil action no. 93-CV-20886 (the "KLA ACTION") filed in the
District Court in the Northern District of California (the "KLA COMPLAINT"),
there is no Claim pending or, to the Company's Knowledge, threatened, which
challenges the legality, validity, enforceability, or the Company's and its
Subsidiaries' use or ownership of any of the Intellectual Property owned by the
Company and its Subsidiaries or, to the Company's Knowledge, licensed to the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has agreed to indemnify any Person for or against any interference,
infringement, misappropriation or other conflict with respect to any
Intellectual Property, except as may be con-
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tained within the Licenses or sales agreements set forth in Section 3.2(k)(i)
of the Company Disclosure Schedule.
(iii) No breach or default (or event which with notice or
lapse of time or both would result in an event of default) by the Company or any
of its Subsidiaries exists or has occurred under any License or other agreement
pursuant to which the Company or any of its Subsidiaries uses any Intellectual
Property owned by a third party or has granted any third party the right to use
its Intellectual Property, and, subject to the consent of Nikon Corporation
required under the Supply Agreement, dated December 1, 1994, between the Company
and Nikon Corporation, the consummation of the transactions contemplated by this
Agreement will not violate or conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
or result in a forfeiture under, or constitute a basis for termination of any
such License or other agreement.
(iv) The Company and its Subsidiaries own all items of
Intellectual Property set forth on Section 3.2(k)(i)(x) of the Company
Disclosure Schedule and own or have the right to use all items of Intellectual
Property necessary to provide, produce, sell and license the services and
products currently provided, produced, sold and licensed by the Company and its
Subsidiaries and to conduct the business of the Company and its Subsidiaries as
currently conducted or as currently contemplated to be conducted by the Company,
including, without limitation, reticle inspection equipment, wafer inspection
equipment and related technologies and components free and clear of all
Encumbrances.
(v) To the Company's Knowledge, except as set forth in Section
3.2(k)(v) of the Company Disclosure Schedule, the conduct of the Company's and
its Subsidiaries' business, the Intellectual Property owned or used by the
Company and its Subsidiaries, and the products or services produced, sold or
licensed by or under development by the Company and its Subsidiaries do not
infringe any Intellectual Property rights or any other proprietary right of any
person or give rise to any obligations to any person as a result of
co-authorship, co-inventorship, or an express or implied contract for any use or
transfer. Other than as alleged in the KLA Complaint, neither the Company nor
any of its Subsidiaries has received any notice of any allegations or threats
that the Company's or its Subsidiaries' use of any of the Intellectual Property
infringes upon or is in conflict with any Intellectual Property or proprietary
rights of any other Person, and to the Company's Knowledge, no reasonable basis
exists for any such allegations or threats.
(vi) Except as set forth on Section 3.2(k)(vi) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has sent or
other-
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32
wise communicated to any other Person any Claim of any present, impending
or threatened infringement by any other Person of any Intellectual Property of
the Company and its Subsidiaries.
(vii) None of the Company's products or services incorporate,
are based upon or are derived or adapted from, any Intellectual Property of any
other Person in violation of any statutory or other legal obligation or any
agreement to which the Company or any of its Subsidiaries is a party or by which
it is bound.
(viii) All of the Company's and its Subsidiaries' Patents,
Trademarks and Copyrights issued by, registered with or filed with the United
States Patent and Trademark Office or Register of Copyrights or the
corresponding offices of other countries have been duly registered, filed in or
issued, as the case may be, have been properly maintained and renewed in
accordance with all applicable provisions of law and administrative regulations,
and the Company and its Subsidiaries, as the case may be, are the record owners
thereof. The Company and its Subsidiaries have maintained the confidentiality of
their trade secrets and other confidential Intellectual Property, and, to the
Company's Knowledge, there have been no acts or omissions by the Company or any
of its Subsidiaries, the result of which would be to compromise the rights of
the Company or any of its Subsidiaries to apply for, obtain or enforce
appropriate legal protection of such Intellectual Property.
(ix) Each of the Company's and its Subsidiaries' current and
former employees, officers and agents and each independent contractor that has
had access or any right to any of the Intellectual Property of the Company and
its Subsidiaries retained by the Company or any of its Subsidiaries has entered
into a written agreement with the Company or its Subsidiaries (x) providing that
all of the Intellectual Property of the Company and its Subsidiaries is
confidential and proprietary to the Company and (y) obligating the disclosure
and transfer to the Company, in consideration for no more than normal salary and
continued employment or consultant fees, as the case may be, of all inventions,
developments and work product which during the period of his or her employment
or consultancy with the Company or any of its Subsidiaries, as the case may be,
such employee, officer, agent or independent contractor made or makes that
related or relate to any subject matter with which such employee's, officer's,
agent's or independent contractor's work for the Company or any of its
Subsidiaries was concerned, and in the case of employees and officers, are made
during such person's period of employment (or contractual relationship) and in
connection therewith, or in the case of agents, during the course of such
agency. No current or former employees, officers or independent contractors of
the Company or any of its Subsidiaries have asserted any Claim, or have any
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33
valid Claim or valid right, to any of the Intellectual Property used in or
necessary for the conduct of business by the Company and its Subsidiaries as
currently conducted or as currently contemplated to be conducted by the Company,
including, without limitation, reticle inspection equipment, wafer inspection
equipment and related technologies and components. To the Company's Knowledge,
no employee, officer or agent of the Company is a party to or otherwise bound by
any agreement with or obligated to any other Person (including, any former
employer) which conflicts with any obligation or commitment of such employee to
the Company or any of its Subsidiaries under any agreement to which he or she is
a party or otherwise.
(x) Section 3.2(k)(x) of the Company Disclosure Schedule
identifies each Person to whom the Company or any of its Subsidiaries has sold
or otherwise transferred any interest or rights to any Intellectual Property or
purchased rights in any Intellectual Property (except for non-exclusive Licenses
of Intellectual Property by the Company or any of its Subsidiaries pursuant to
agreements with customers in the ordinary course of business) , and the date, if
applicable, of each such sale, transfer or purchase.
(l) Contracts. (i) Section 3.2(l)(i) of the Company Disclosure Schedule
lists the ten largest customers of the Company and its Subsidiaries and each of
the Company Agreements of the type specified below (collectively, the "MATERIAL
AGREEMENTS"):
(A) any written arrangement for the lease of (1) personal
property from or to third parties with annual payments exceeding
$50,000 or with a term exceeding two years, or (2) real property;
(B) any written arrangement concerning a partnership or joint
venture with the Company or any of its Subsidiaries;
(C) any written arrangement under which the Company or any of
its Subsidiaries has created, incurred, assumed or guaranteed (or may
create, incur, assume or guarantee) indebtedness in excess of $50,000
or imposed (or may impose) an Encumbrance on any of its assets,
tangible or intangible;
(D) any written arrangement concerning confidentiality or
non-competition, other than standard forms of agreements between the
Company or any of its Subsidiaries and their employees and consultants,
copies of which forms have previously been delivered to the Buyer, or
confidentiality or non-disclosure agreements with any prior interested
purchaser of Company Shares;
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34
(E) any collective bargaining agreement or any contract with
any labor union or employment, severance or change of control contract
with any officer, individual employee or other Person;
(F) any agreement or commitment with respect to the lending or
investing of funds to or in other Persons;
(G) any contract for or relating to the purchase or sale of
products or services, including all distribution and supply agreements,
which is not terminable by the Company on less than sixty (60) days
notice under which the undelivered balance of such products and
services has a selling price in excess of $50,000;
(H) any other contract requiring payments after the date
hereof to or by the Company or any of its Subsidiaries of more than
$50,000 or not terminable by the Company or any of its Subsidiaries on
less than sixty (60) days notice;
(I) any grant, incentive or subsidy (including applications
therefor) from, or other agreement with (including letters of approval
from), the Government of Israel or any agency or instrumentality
thereof, except as set forth in Sections 3.2(i)(xiv) and 3.2(i)(xv) of
the Company Disclosure Schedule; and
(J) any written arrangement not otherwise disclosed in Section
3.2(l)(i) of the Company Disclosure Schedule under which the
consequences of a default or termination could have a Material Adverse
Effect on the Company or which was not entered into in the ordinary
course of business.
(ii) The Company has delivered or otherwise made available to
the Buyer a correct and complete copy of each written Material Agreement
(including all amendments thereto) listed in Section 3.2(l)(i) of the Company
Disclosure Schedule. With respect to each Material Agreement: (A) such Material
Agreement is legal, valid, binding, enforceable and in full force and effect
subject to and in accordance with its terms, subject as to enforceability to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general principles of equity;
(B) such Material Agreement will continue to be legal, valid, binding and
enforceable and in full force and effect on identical terms immediately after
the Closing; (C) none of the Company or any of its Subsidiaries is or, to the
Company's Knowledge, any other party is in
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35
material breach or default (including with respect to any express or implied
warranty), and no event has occurred which with notice or lapse of time or both
would constitute a material breach or default or permit termination,
modification or acceleration thereunder, except for any breaches, defaults,
terminations, modifications or accelerations which have been cured or waived;
and (D) no party has repudiated any provision of any such Material Agreement.
Neither the Company nor any of its Subsidiaries is a party to any unwritten
agreement which, if reduced to written form, would be required to be listed by
Section 3.2(l)(i) of the Company Disclosure Schedule.
(m) Powers of Attorney. Except as set forth in Section 3.2(m) of the
Company Disclosure Schedule, there are no outstanding powers of attorney
executed by or on behalf of the Company or any of its Subsidiaries.
(n) Employment Matters; Trustee. (i) To the Company's Knowledge, except
as described in Section 3.2(n)(i) of the Company Disclosure Schedule in writing
to the Buyer, no key employee or group of employees has any plans to terminate
their employment with the Company or any of its Subsidiaries as a result of the
transactions contemplated hereby or otherwise. Neither the Company nor any of
its Subsidiaries has experienced any strikes, grievances, other collective
bargaining disputes or Claims of unfair labor practices. None of the employees
of the Company or any of its Subsidiaries are represented by or on behalf of any
labor union and, to the Company's Knowledge, there is no organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company and its Subsidiaries.
(ii) The trustee under the Company Plan that holds Company
Shares and Company Options on behalf of employees of the Company and its
Subsidiaries and on behalf of other persons not currently employed by the
Company (the "TRUSTEE") has been duly authorized and empowered by all such
beneficial holders to sign this Agreement and all other documents required
hereunder and has the power and authority to transfer title to the Company
Shares and Company Options held of record by such Trustee and to effect all the
other transactions contemplated by this Agreement and the Related Agreements,
including, without limitation, the transactions contemplated in Section 4.1.
(o) Employee Benefit Plans. (i) Section 3.2(o)(i) of the Company
Disclosure Schedule sets forth a true and complete list (or in the case of an
unwritten Plan, a description) of all the Plans established or maintained by the
Company and its Subsidiaries or covering employees or former employees of the
Company and its Subsidiaries, whether or not any of such Plans are covered by
ERISA. With
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36
respect to each Plan, the Company has previously delivered or made
available to the Buyer true and complete copies of (A) all Plan documents,
including amendments thereto, (B) the most recent determination letter, if any,
received from the IRS relating to the two most recent Plan years, (C) any trust
documents or other documents relating to the funding of the Plan, (D) the latest
actuarial valuations, if applicable, and (D) all summary Plan descriptions and
summaries of material modifications and material communications with employees
with respect to any Plan.
(ii) Each Plan listed on Section 3.2(o)(i) of the Company
Disclosure Schedule is in material compliance with its terms and the
requirements provided by any and all applicable U.S. federal, state or local,
Israeli and foreign statutes, orders or governmental rules or regulations,
including but not limited to ERISA and the Code, and no condition exists that
would be expected to affect such material compliance. To the Company's
Knowledge, no notice has been issued by any Governmental Entity questioning or
challenging such compliance. The Company and its Subsidiaries have no Plans
which require a favorable determination letter under Section 401(a) of the Code
or such letter has been obtained. No material violation of ERISA has at any time
occurred in connection with the administration of any of the Plans which are
governed by ERISA. There are no Claims (other than routine, non-contested Claims
for benefits) pending or, to the Company's Knowledge, threatened against the
Plans, or any administrator or fiduciary thereof, which could result in any
material liability to the Company and its Subsidiaries, taken as a whole. With
respect to all such Plans, all required contributions due for all periods ending
before the Closing Date have been made in full or have been accrued on the
Company's most recent balance sheet. Neither the Company nor any of its
Subsidiaries maintains or contributes to, or has any liability (fixed,
contingent or otherwise) for, medical, health or life insurance benefits for
terminated or retired employees of the Company or any of its Subsidiaries after
termination of their employment, except as required by law.
(iii) Neither the Company nor any of its Subsidiaries nor any
ERISA Affiliate nor any of their employees, stockholders or directors have
engaged in any transaction in connection with which any of them will be subject
either to a civil penalty assessed pursuant to Section 502 of ERISA or a tax
imposed by Section 4975 of the Code. The execution and performance of this
Agreement will not involve any prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code.
(iv) The execution and performance of this Agreement will not
constitute a stated triggering event under any Plan or employment agreement that
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37
will result in any payment (whether of severance pay or otherwise) becoming due
to any employee of the Company, any of its Subsidiaries or any ERISA Affiliate.
(v) The Company Plan is qualified under Section 102 of the
Israeli Income Tax Ordinance and all steps necessary to maintain such
qualification have been taken.
(p) Compliance with Laws. The Company and its Subsidiaries are in
substantial compliance with, and have not violated, any applicable law, rule or
regulation of any Israeli or United States federal, state, local or foreign
government or agency thereof which materially affects the business, properties
or assets of the Company and its Subsidiaries, taken as a whole, and no Claim
has been received by the Company or any of its Subsidiaries or has been filed,
commenced or, to the Company's Knowledge, threatened against the Company or any
of its Subsidiaries alleging any such violation. All material licenses, permits
and approvals required under such laws, rules and regulations are in full force
and effect in all material respects.
(q) Inventory. The inventory of the Company and its Subsidiaries
reflected on the Company's balance sheet as of September 30, 1996 included in
the Financial Statements (the "INVENTORY") consists of software, supplies, goods
in process and finished goods in a quantity and quality useable and saleable or
licensable in the ordinary course of business and fit for the purpose for which
it was procured, developed or manufactured, and none of which is slow-moving,
obsolete, damaged or defective, subject only to the reserve for inventory
write-down reflected on such balance sheet. The current product mix of the
Inventory is consistent with the Company's existing customer orders. Since
September 30, 1996, there has not been a material change in the level of the
Inventory other than in the ordinary course of business.
(r) Suppliers and Customers. Since December 31, 1995, no material
licensor, vendor, supplier, licensee or customer of the Company or any of its
Subsidiaries has cancelled or otherwise materially adversely modified its
relationship with the Company or its Subsidiaries and, to the Company's
Knowledge, without having made any inquiries of customers as to these matters,
(i) no such Person has any intention to do so, and (ii) the consummation of the
transactions contemplated hereby will not adversely affect any of such
relationships.
(s) Product Warranty. Each product manufactured, sold, leased or
delivered by the Company and its Subsidiaries has been in material conformity
with all applicable contractual commitments and all express and implied warran-
ties, if
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38
any, and neither the Company nor any of its Subsidiaries has any liability (and,
to the Company's Knowledge, there is no basis for any present or future Claim
giving rise to any liability that could reasonably be expected to result in a
Material Adverse Effect on the Company and its Subsidiaries, taken as a whole)
for replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product installation and warranty claims, if
any, reflected on the Balance Sheet as such reserve may have been increased or
decreased for the passage of time through the Closing Date in accordance with
the past practice of the Company. No product manufactured, sold, leased,
licensed or delivered by the Company or any of its Subsidiaries is subject to
any guaranty, warranty or other indemnity beyond the applicable standard terms
and conditions, if any, of license and sale and such other indemnities and
warranties disclosed on Section 3.2(s) of the Company Disclosure Schedule.
(t) Broker's Fees. The Company has no liability or obligation to pay
any fees or commissions to any broker, trader or agent with respect to the
transactions contemplated by this Agreement.
(u) Potential Conflicts of Interest. Except for passive investments of
not more than 5% of the capital stock or other equity interests in any Person
other than the Company and as set forth in Section 3.2(u)(i) of the Company
Disclosure Schedule, no officer or director of the Company owns, directly or
indirectly, any interest in or is an officer, director, employee or consultant
of any Person which is a competitor, lessor, lessee, customer or supplier of the
Company or any of its Subsidiaries; and no officer or director of the Company or
any of its Subsidiaries (i) except for any indirect interest of any such officer
or director arising under the Spin -Off Agreement, owns, directly or indirectly,
in whole or in part, any Intellectual Property which the Company or any of its
Subsidiaries is currently using and except for any indirect interests which
arise as a result of an interest that any such officer or director has in
Orbotech, owns, directly or indirectly, in whole or in part, any Intellectual
Property the use of which is necessary for the business of the Company and its
Subsidiaries as currently conducted or as currently contemplated to be conducted
by the Company; (ii) has any Claim against the Company or any of its
Subsidiaries, except for Claims for accrued vacation pay, accrued benefits under
Plans and similar matters and agreements existing on the date hereof; (iii) has
made, on behalf of the Company or any of its Subsidiaries, any payment or
commitment to pay any commission, fee or other amount to, or to purchase or
obtain or otherwise contract to purchase or obtain any goods or services from,
any other Person of which any officer or director of the Company or any of its
Subsidiaries, or, to the Company's Knowledge, a relative of any of the
foregoing, is a partner or stockholder (except for passive investments of not
more than 5% of the capital stock
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39
or other equity interests in any Person other than the Company); (iv) owes any
money to the Company or any of its Subsidiaries, or (v) is owed any money by the
Company or any of its Subsidiaries. Except as set forth in Section 3.2(u)(ii) of
the Company Disclosure Schedule, the Company is not a party to any contract with
an "interested party" or any contract in which an "officer" has a "personal
interest" (as each of such terms is defined in Chapter 4A of the Companies
Ordinance).
(v) Disclosure. Neither this Agreement nor the Company Disclosure
Schedule contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading.
III.3 Representations and Warranties of the Buyer. As a
material inducement to the Company and the Stockholders to enter into this
Agreement and consummate the transactions contemplated hereby, the Buyer hereby
represents and warrants to the Company and the Stockholders that the statements
contained in this Section 3.3 are true and correct as of the date of this
Agreement.
(a) Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has all requisite
corporate or other power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power, authority, and governmental approvals would
not have a Material Adverse Effect on the Buyer and its Subsidiaries, taken as a
whole. The Buyer and each of its Subsidiaries is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not, individually or in
the aggregate, have a Material Adverse Effect on the Buyer and its Subsidiaries,
taken as a whole.
(b) Authorization; Validity of Agreement; Necessary Action. The Buyer
has full corporate power and authority to execute and deliver this Agreement and
the Related Agreements to which it will be a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Buyer of this Agreement and the Related Agreements to which
it will be a party, and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by the Board of Directors of the Buyer and
no other corporate action on the part of the Buyer is necessary to authorize the
execution and delivery by the Buyer of this Agreement and the Related Agreements
to which it
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will be a Party and the consummation of the transactions contemplated hereby and
thereby. This Agreement has been, and each of the Related Agreements to which
the Buyer will be a party will be, duly executed and delivered by the Buyer and,
assuming due and valid authorization, execution and delivery hereof by the
Company, constitutes or (with respect to the Related Agreements to which the
Buyer will be a party) will constitute a valid and binding obligation of the
Buyer enforceable against it in accordance with and subject to their respective
terms, subject as to enforceability to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general principles of equity.
(c) Consents and Approvals; No Violations. Except as set forth in
Section 3.3(c) of the schedule attached to this Agreement setting forth
exceptions to the Buyer's representations and warranties set forth herein (the
"BUYER DISCLOSURE SCHEDULE"), none of the execution, delivery or performance of
this Agreement or the Related Agreements (to the extent the Buyer will be a
party thereto) by the Buyer, the consummation by the Buyer of the transactions
contemplated hereby or compliance by the Buyer with any of the provisions hereof
or thereof will (i) conflict with or result in any breach of any provision of
the Certificate of Incorporation or By-Laws of the Buyer, (ii) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (iii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Buyer or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Buyer, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (ii),(iii) and (iv) such violations, breaches or defaults which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Buyer and its Subsidiaries, taken as a whole.
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(d) Buyer Common Stock. The Buyer shall cause all shares of Buyer
Common Stock issuable upon exercise of Buyer Options granted under Section
4.1(a) to be registered under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, on a Registration Statement on Form S-8 and
the Buyer shall use its best efforts to cause such Registration Statement to be
declared effective at or prior to the Closing Date and maintain such
effectiveness for so long as shares of Buyer Common Stock may be issuable under
Buyer Options issued pursuant to Section 4.1. The Buyer shall take all action
necessary to reserve a sufficient number of shares of Buyer Common Stock which
will be issuable to holders of Buyer Options issued pursuant to Section 4.1(a)
and to authorize and approve the issuance of the shares of Buyer Common Stock
issuable upon the exercise of the Buyer Options.
(e) Employee Matters. The Buyer intends to enter into employment
agreements with each of ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ as of the date hereof,
which employment agreements shall become effective as of the Closing Date. In
addition, the Buyer intends to make an incentive bonus program available to
members of the Company's senior management and individual key contributors on
terms to be agreed between the Buyer and such individuals.
(f) Continuation of Operations. The Buyer intends to continue the
operations of the Company in Israel and to comply with the applicable
requirements of the research and development grants provided to the Company by
the Chief Scientist and BIRD.
(g) Limitation of Representations. The Buyer acknowledges that neither
the Company nor any of the Stockholders has made any legally binding
representation or warranty, express or implied, with respect to the levels of
revenues or profitability of the operation of the Company after the Closing.
ARTICLE IV - COVENANTS
IV.1 Company Options. (a) Except as provided in Section 4.1(c), the
Buyer shall, at the Closing, cause each Unvested Company Option, except for
Unvested Company Options which by their terms are scheduled to vest on January
1, 1997, to be assumed by the Buyer and converted to a Buyer Option (or a new
substitute option shall be granted), issued under and pursuant to the terms and
conditions of the Buyer Option Plan. The Parties agree that (i) the number of
shares of Buyer Common Stock subject to such Buyer Option will be determined by
multiplying the number of the Company Shares subject to the Unvested Company
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Option to be cancelled by the Option Exchange Ratio, rounding any fractional
share up to the nearest whole share, and (ii) the exercise price per share of
such Buyer Option will be $0.01 per share. Except as provided above, the
converted or substituted Buyer Options shall be subject to the same terms and
conditions (including, without limitation, expiration date, vesting and exercise
provisions) as were applicable to the Unvested Company Options to be cancelled
under this Section 4.1(a) immediately prior to the Closing Date. The issuance of
Buyer Options as provided herein shall be subject to, and conditioned upon,
obtaining an exemption by the Israeli Securities Authority from the registration
and prospectus delivery requirements of the Israeli Securities laws. In the
event such exemption is not obtained prior to the Closing, unless the Buyer
elects to comply with the requirements of the Israeli Securities laws, all
Unvested Company Options to be cancelled under this Section 4.1(a) held by the
30 persons holding the greatest aggregate amount of such Unvested Company
Options (other than the persons holding the Unvested Company Options described
in Section 4.1(c)) shall be treated as provided in this Section 4.1(a) and
exchanged for Buyer Options and the remaining Unvested Company Options shall be
treated in the same manner as the Vested Company Options pursuant to Section
4.1(d). The Company, the Trustee, the Stockholders (to the extent they are
holders of Company Options) and the Buyer shall take all necessary action to
facilitate and effect the substitution described in this Section 4.1(a). Based
upon and subject to the accuracy of the Company's representation and warranty
set forth in Section 3.2(o)(v), the Buyer will apply to qualify such Buyer
Options issued to employees of the Company who are residents of Israel
(including Buyer Options issued under Section 4.1(c)) under Section 102 or
another similar provision of the Israeli Income Tax Ordinance and to obtain
confirmation from the Israeli tax authorities that tacking of the holding period
shall be allowed with respect to the two-year holding period required under
Section 102 for such periods in which Unvested Company Options were held before
the Closing Date; provided, that the Buyer shall not be required to agree to any
change in any of the economic terms of such options as established by this
Section 4.1(a) (including, without limitation, identity of employer, number of
shares, exercise price and vesting provisions) in order to obtain such
qualification. In the event such qualification is not obtained, the Buyer agrees
to loan to each holder of an Unvested Company Option that is converted into a
Buyer Option pursuant to paragraphs (a) and (c) of this Section 4.1 an amount of
cash equal to the amount of taxes such holder is required to pay directly as a
result of such conversion contemplated in Section 4.1(a). Such loans shall (i)
be made in NIS, (ii) be linked to the Israeli consumer price index and (iii) be
payable upon the earlier of the sale of shares of Buyer Common Stock issued upon
exercise of the Buyer Options or the transfer of such shares from the Trustee to
the Option Holder, provided that in any event such repayment will be due no
later than two years after the date on which the Buyer
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Options are scheduled to vest, provided further, that with respect to Buyer
Options which are scheduled to vest on January 1, 2000, repayment will be due no
later than January 1, 2001. Notwithstanding the foregoing, in the event that
such loan is granted and, at any time during the period commencing on the
applicable vesting date of the Buyer Option in respect of which the loan was
made and ending on the date on which the shares of Buyer Common Stock issued
upon exercise of such Buyer Option are sold, the highest closing price of the
Buyer Common Stock on the Nasdaq National Market System during such period (the
"PERIOD BUYER PRICE") is less than the Average Buyer Price, the amount due to be
repaid to the Buyer for such loan shall be reduced by an amount equal to the
difference between the amount of tax paid in respect of the shares of Buyer
Common Stock so sold as a result of the conversion contemplated in Section 4.1
and the amount of tax that would have been required to be paid as a result of a
sale of such shares of Buyer Common Stock at such Period Buyer Price.
(b) Each Unvested Company Option which has been assumed and converted
into a Buyer Option pursuant to Section 4.1(a) and which subsequent to the
Closing shall expire without having been exercised by the beneficiary thereof
for any reason other than due to (x) the voluntary termination by such
beneficiary of his or her employment with the Company or (y) the termination of
such beneficiary's employment with the Company for cause, following the Closing
shall, in the case of such expiration, be deemed to have been vested in and
exercised by the Stockholders immediately prior to the Closing in accordance
with their proportionate holdings in the Company as of the Closing.
(c) Notwithstanding anything to the contrary contained in Section
4.1(a), the Buyer shall, at the Closing, cause each Unvested Company Option
described in Section 4.1(c) of the Company Disclosure Schedule to be assumed by
the Buyer and converted to a Buyer Option (or a new substitute option shall be
granted), issued under and pursuant to the terms and conditions of the Buyer
Option Plan. The Parties agree that (i) the number of shares of Buyer Common
Stock subject to such Buyer Option will be determined by multiplying the number
of the Company Shares subject to the Unvested Company Option to be cancelled by
the Option Exchange Ratio, rounding any fractional share up to the nearest whole
share, and (ii) the exercise price per share of such Buyer Option will be $0.01
per share. Each of the Unvested Company Options converted into Buyer Options
pursuant to this Section 4.1(c) shall become fully vested and exercisable on the
earlier of (x) January 1, 1998 or (y) the termination of the Option Holder's
employment with the Company other than for cause. Except as provided above, the
converted or substituted Buyer Options shall be subject to the same terms and
conditions (including, without limitation, expiration date and exercise
provisions) as were applicable to the Unvested
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Company Options immediately prior to the Closing Date. Notwithstanding the
foregoing, the Buyer agrees that, if the average of the closing prices of the
Buyer Common Stock on the Nasdaq National Market System on the five trading days
preceding January 1, 1998 is less than the Average Buyer Price (subject to
adjustment in the case of stock splits, combinations and similar events), the
Buyer shall make a cash payment to each of the Option Holders identified in
Section 4.1(c) of the Company Disclosure Schedule equal to such difference
multiplied by the aggregate number of Unvested Company Options identified in
such Section (as similarly adjusted).
(d) At the Closing, each Vested Company Option and each Unvested
Company Option which by its terms is scheduled to vest on January 1, 1997 shall
be surrendered to the Buyer and shall be forthwith cancelled and the Buyer shall
pay to the Trustee, on behalf of the holders of the Vested Company Options, by
wire transfer, an amount equal to (i) the product of the number of the Company
Shares which are issuable upon exercise of all the Vested Company Options and
such Unvested Company Options, multiplied by the Purchase Price Per Share, less
(ii) the aggregate exercise price of all such Vested Company Options and such
Unvested Company Options. The Company, the Trustee and the Stockholders (to the
extent they are holders of Company Options) shall take all necessary action to
facilitate the surrender, cancellation and payment in consideration for the
Vested Company Options and the Unvested Company Options described in this
Section 4.1(d). The Trustee shall withhold all Israeli income or other taxes as
required under applicable Israeli law prior to distribution of the cash amount
received under this Section 4.1(d) to the holders of Vested Company Options and
such Unvested Company Options.
IV.2 Business Access. The Company agrees, subject to prior
arrangements, to give the Buyer and its counsel, accountants, consultants and
representatives reasonable further access during normal business hours to all of
the Company's and its Subsidiaries' premises and all of their files, records,
contracts and other documents and properties as the Buyer or its counsel,
accountants, consultants or representatives may reasonably request. The Buyer
shall act in such a manner as to minimize any disruption of the day to day
operations of the Company and shall obtain the prior consent of the Company
before contacting any Person other than employees of the Company and its
Subsidiaries, which consent shall not be unreasonably withheld. The Buyer's
further access pursuant to this Section 4.2 shall be governed by the
Confidentiality Agreement.
IV.3 Conduct of Business. From the date hereof until the Closing
Date, the Company and its Subsidiaries will carry on their business and
operations
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in the usual, regular and ordinary manner and, absent the prior written consent
of the Buyer, which will not be unreasonably withheld, neither the Company nor
any of its Subsidiaries will:
(a) change or alter in any material respect or enter into any
employment contracts or arrangements with any of its management personnel or
make, adopt, alter, revise or amend any Plan;
(b) declare or pay any dividend or make any other distribution with
respect to its capital stock;
(c) issue, sell or become contractually committed to issue or sell any
Company Shares or other securities of the Company or any of its Subsidiaries
(except as a result of the proper exercise by employees of the Company Options
outstanding on the date hereof and described in Section 3.2(b)(i) of the Company
Disclosure Schedule, according to their respective terms;
(d) split, combine, reclassify or redeem any of its capital stock;
(e) sell, create, assume or acquire property subject to any
Encumbrance, except in the ordinary course of business;
(f) make any capital investment in any Person, other than in relation
to JMG Instruments as disclosed to the Buyer prior to the date hereof and other
than purchases of equipment, supplies and materials in the ordinary course of
business consistent with past practice;
(g) compromise or settle any debt or Claim except for adjustments made
with respect to contracts for the purchase of equipment, supplies and materials
or for the sale of products or services in the ordinary course of business,
which in the aggregate are not material;
(h) incur any debt or, other than in the ordinary course of business,
incur any trade payables or other obligations or enter into any transaction to
sell any assets or make any payment in respect of any material liabilities or
obligations;
(i) except for the payment of normal salaries, fees or commissions in
the ordinary course of business, enter into or engage in any transaction with
any stockholder of the Company, except as contemplated by this Agreement;
(j) alter or amend in any manner its Memorandum and Articles of
Associa-
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tion or similar organizational documents, except as contemplated by Section
2.3(b)(ii);
(k) alter, amend or enter into any licensing or contractual
arrangements with respect to any Intellectual Property of the Company or its
Subsidiaries, other than in the ordinary course of business;
(l) enter into any agreement with a third-party manufacturer regarding
the manufacture or assembly of its products;
(m) enter into, or modify any existing grant from, or other agreement
with, the Chief Scientist, BIRD, the Investments Center or any other
Governmental Entity, except as provided by this Agreement; or
(n) disclose any of its proprietary information to third parties,
except pursuant to standard non-disclosure agreements the form of which has been
provided to the Buyer or as required under other existing agreements with
parties listed in Section 3.2(l)(i) of the Company Disclosure Schedule.
IV.4 Exclusivity. Recognizing that the Buyer's investigations of
the Company and its business, and the negotiation and drafting of this Agreement
and the Related Agreements, have to date required and will continue to require
the Buyer to expend significant time, effort and money, and to induce the Buyer
to execute and deliver this Agreement and proceed with the transactions
contemplated hereby, none of the Company, any of its Subsidiaries, any director
or officer of the Company or any of its Subsidiaries, the Stockholders or any of
their respective representatives or other agents, will encourage any offers
from, solicit, encourage, initiate, respond to (other than by a bare statement,
without further detail or explanation, that they are not permitted to respond)
or continue any discussions with, engage in negotiations with or provide any
information to, or enter into any agreements or understandings with, any Person,
other than the Buyer and its officers, employees and agents, concerning any
merger, consolidation, transfer of substantial assets, issuance, sale or
exchange of shares or similar transaction involving or affecting the ownership
of the Company or any of its Subsidiaries (all such transactions being referred
to herein as "ACQUISITION PROPOSALS"). The Company agrees to advise the Buyer
immediately if it receives an Acquisition Proposal from another Person, and to
promptly provide to the Buyer a copy of any Acquisition Proposal received in
writing or a written summary of any other Acquisition Proposal made orally.
IV.5 Non-Solicitation. Each of the Buyer and the Company agrees
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that it will not, without the prior written consent of the other party, for a
period of fifteen months following any termination of this Agreement in
accordance with its terms, solicit the employment of any key management or other
employee of the other party. Each of the Stockholders agrees that it will not,
without the prior written consent of the Buyer, for a period of fifteen months
following the Closing Date solicit the employment of any key management or other
employee of the Company.
IV.6 Company Board Resolution. Prior to the Closing Date and
subject to the provisions of this Agreement, the Board of Directors of the
Company will duly adopt a resolution in accordance with the Company's Articles
of Association and the Companies Ordinance (i) approving and authorizing the
transfer, at the Closing, of all Company Shares held by the Stockholders to or
at the direction of the Buyer and authorizing the entry of such transfer in the
Company's Register of Members, and (ii) approving and authorizing the exchange
and cancellation of all the Company Options as provided in Section 4.1.
IV.7 Estimated Company Expenses. The Company (i) has previously
disclosed in writing to the Buyer the amount of costs and expenses (including
fees and expenses of legal counsel, investment bankers, brokers or other
representatives or consultants), not previously paid for or provided for,
incurred by the Company in connection with its contemplated initial public
offering of Company Shares and other matters identified in such writing (the
"DISCLOSED PRIOR EXPENSES"), (ii) shall prior to the Closing cause the full
amount of Disclosed Prior Expenses to be reflected on the Company's financial
statements, (iii) shall prior to the Closing record in its financial statements
all charges and expenses which are required to be recorded under Israeli GAAP
and United States generally accepted accounting principles as a result of the
grant of Company Options and shall within five business days prior to the
Closing Date deliver to the Buyer a certificate of the Company's independent
accountants as to the compliance of such recordation with Israeli GAAP and
United States generally accepted accounting principles and (iv) shall within
five business days prior to the Closing Date, deliver to the Buyer a certificate
signed by the Chief Financial Officer of the Company with an estimate of the
costs and expenses (including fees and expenses of legal counsel, investment
bankers, brokers or other representatives or consultants) incurred or to be
incurred by the Company through the Closing Date in connection with the
negotiation, preparation and execution of this Agreement, the Related Agreements
and the transactions contemplated hereby and thereby ("ESTIMATED TRANSACTION
EXPENSES").
IV.8 Taking of Necessary Action. The Buyer on the one hand, and
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the Company and the Stockholders, on the other hand, shall use all reasonable
efforts to take all such actions and provide all reasonable information
(including action to cause the satisfaction of the conditions of the other to
effect the Stock Purchase) as may be necessary or appropriate in order to
effectuate the Stock Purchase, the Section 236 Action and the other transactions
contemplated by this Agreement and the Related Agreements as promptly as
possible, including obtaining all consents and approvals required for the
consummation of the transactions contemplated by this Agreement; provided, that
the Buyer shall not be obligated to (and without the prior written consent of
the Buyer the Company shall not) agree to any condition, limitation or
requirement or take any action that in the good faith judgment of the Buyer is
or may be unreasonably burdensome to the business of the Company as currently
conducted or as currently contemplated to be conducted by the Company. If, at
any time prior to or after the Closing, any further action is necessary or
desirable to vest the Buyer with full ownership, benefit and possession of, and
control over, all the securities of the Company, or to otherwise carry out the
purposes of this Agreement and the Related Agreements, the Stockholders agree to
take such actions and to execute and deliver such documents and instruments as
the Buyer may reasonably request for such purposes.
IV.9 Release of Guarantees. Each of the Company and the Buyer
shall, prior to the Closing, use its respective reasonable commercial efforts to
procure the discharge and release of the guarantees of Orbotech to the Company's
bank loans in the aggregate amount of $2.5 million and, if required, the Buyer
shall substitute its own guarantee in place of Orbotech.
IV.10 Post-Closing Covenants. The Parties agree as follows, with
respect to the period following the Closing:
(a) Transition. For a period ending on the third anniversary of the
Closing, none of the Stockholders will take any action that primarily is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier or other business associate of the Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company prior to the Closing. For a period ending on the
third anniversary of the Closing, the Stockholders will refer to the Company all
inquiries by current or former customers (as of the Closing) of the Company
relating to the Company's wafer and reticle inspection business.
(b) Confidentiality. Each of the Stockholders will treat and hold as
confidential all of the Confidential Information of the Company, refrain from
using any of the Confidential Information of the Company except in connection
with this
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Agreement, and deliver promptly to the Company or destroy, at the request and
option of the Company, all tangible embodiments (and all copies) of the
Confidential Information of the Company which are in such Stockholder's
possession. In the event that any of the Stockholders is requested or required
(by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information of the Company, such
Stockholder will notify the Company promptly of the request or requirement so
that the Company may seek an appropriate protective order or waive compliance
with the provisions of this Section 4.10(b). If, in the absence of a protective
order or the receipt of a waiver hereunder, the Stockholders are, on the advice
of counsel, compelled to disclose any Confidential Information of the Company to
any tribunal or else stand liable for contempt, the Stockholders may disclose
the Confidential Information of the Company compelled to be so disclosed to the
tribunal; provided, that the disclosing Stockholder shall use its reasonable
efforts to obtain, at the reasonable request of the Company, an order or other
assurance that confidential treatment will be accorded to such portion of the
Confidential Information of the Company required to be disclosed as the Company
shall designate.
(c) Companies Ordinance. Within five days after the Closing Date, the
Company shall, at the direction of the Buyer, give written notice of transfer to
the Buyer of the Company Shares to the Israeli Registrar of Companies in
accordance with the Companies Ordinance.
(d) Indemnification of Directors and Officers. (i) The Buyer agrees for
a period of seven years after the Closing to preserve the assets of the Company
or otherwise to provide sufficient assets to the Company to enable the Company
to adequately indemnify its former officers and directors in accordance with the
Company's Articles of Association as in effect as of the date hereof and agrees
that all rights to indemnification, including, without limitation, provisions
relating to advances of expenses incurred in defense of any action or suit,
existing in favor of the present or former directors and officers of the Company
(collectively, the "INDEMNIFIED PERSONS"), as provided in the Company's Articles
of Association, or the articles of incorporation or by-laws or similar documents
of any of the Company's Subsidiaries, as in effect as of the date hereof, with
respect to such matters occurring through the Closing Date, shall survive the
Closing and this Agreement and shall continue in full force and effect for a
period of seven years from the Closing Date; provided however, that all rights
to indemnification in respect of any claim (a "D&O CLAIM") asserted or made
within such period shall continue until the disposition of such D&O Claim.
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(ii) The Buyer shall maintain in effect for not less than seven years
after the Closing Date the policies of directors' and officers' liability
insurance and fiduciary liability insurance maintained by the Company and its
Subsidiaries as of the Closing Date with respect to the matters occurring prior
to the Closing Date, provided that the Company shall not purchase such policies
without prior consultation with and approval by the Buyer, which shall not be
unreasonably withheld; provided further, that (x) Buyer may substitute therefor
policies of substantially the same or better coverage containing terms and
conditions which are not less advantageous, in any material respect, to the
Indemnified Persons and (y) Buyer shall not be required to pay an annual premium
for such insurance in excess of 150% of the premium in effect immediately prior
to the Closing Date, but in such case shall purchase as much coverage as
possible for such amount.
(iii) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated hereby is commenced, whether
before or after the Closing, the Parties hereto agree to cooperate and use their
respective best efforts to vigorously defend against and respond thereto.
(iv) This Section 4.10(d) is intended to benefit the Indemnified
Persons and shall be binding on all successors and assigns of the Buyer and the
Company.
IV.11 KLA Action. The Company agrees that, prior to the Closing Date,
it shall and it shall cause its representatives or agents to, cooperate with the
Buyer with respect to all decisions and other matters in respect of the KLA
Action and neither the Company nor any of its representatives shall take any
action in respect of the KLA Action without prior consultation with the Buyer
and after giving due consideration to the Buyer's suggestions in connection
therewith subject to compliance with applicable court procedures.
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ARTICLE V - STOCKHOLDERS COVENANTS
V.1. Voting Agreement. Each of the Stockholders hereby agrees that,
until the earlier of the Closing or the termination of this Agreement in
accordance with its terms, at any meeting of the stockholders of the Company or
any adjournment thereof, including the meeting contemplated in Section 2.3,
however called, or in any other circumstances upon which its vote, consent or
other approval is sought, it shall vote or cause to be voted such Stockholder's
Company Shares in favor of this Agreement and the various transactions
contemplated by this Agreement, including the matters contemplated in Section
2.3, and against any Acquisition Proposal or any other action or agreement that
would in any manner impede, frustrate, prevent or nullify this Agreement, or
result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company or the Stockholders under this Agreement
or which would result in any of the closing conditions set forth in Article VI
or the Company's obligations under this Agreement not being fulfilled.
V.2. No Inconsistent Arrangements. Each of the Stockholders hereby
covenants and agrees that, until the earlier of the Closing or the termination
of this Agreement in accordance with its terms, except as contemplated by this
Agreement, it shall not (a) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of such Stockholder's Company Shares, Company Options or
any interest therein, (b) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Company Shares,
Company Options or any interest therein, (c) grant any proxy, power-of-attorney
or other authorization in or with respect to such Company Shares or Company
Options, (d) deposit such Company Shares or Company Options into a voting trust
or enter into a voting agreement or arrangement with respect to such Company
Shares or Company Options, or (e) take any other action that would in any way
restrict, limit or interfere with the performance of its obligations hereunder
or the transactions contemplated hereby.
V.3. Grant of Proxy; Appointment of Proxy. (a) Until the earlier of
the Closing or the termination of this Agreement in accordance with its terms,
each Stockholder hereby irrevocably grants to, and appoints, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
such Stockholder's proxy and attorney-in-fact (with full power of substitution),
for and in the name, place and stead of such Stockholder, to vote such
Stockholder's Company Shares, or grant a consent or approval in respect of such
Company Shares in favor of this Agreement and the various transactions
contemplated hereby,
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including the matters set forth in Section 2.3(b), and against any Acquisition
Proposal. The Stockholders shall have no Claim against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as
proxy and attorney-in-fact, for any action taken, decision made or instruction
given by him in accordance with this Agreement.
(b) Such Stockholder understands and acknowledges that the Buyer is
entering into this Agreement in reliance upon such irrevocable proxy. Such
Stockholder hereby affirms that the irrevocable proxy set forth in this Section
5.3 is given to secure the performance of the duties of the Stockholder under
this Agreement. Such Stockholder hereby further affirms that the irrevocable
proxy is coupled with an interest and may under no circumstances be revoked.
Such Stockholder hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof.
.1. Notification of Certain Matters. The Company or the relevant
Stockholders, as the case may be, shall give prompt notice to the Buyer and the
Buyer shall give prompt notice to the Company and the Stockholders, in each case
after discovery thereof, of (a) the occurrence or non-occurrence of any event
the occurrence or non-occurrence of which would cause any of its representations
or warranties contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Closing Date, and (b) any material failure
of the Company, such Stockholders or the Buyer, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.4 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
.2. Supplements to Disclosure Schedule. From time to time prior to
the Closing, the Stockholders and the Company shall promptly supplement or amend
the Stockholders' Disclosure Schedule and the Company Disclosure Schedule,
respectively, with respect to any matter, condition or occurrence hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in the respective disclosure
schedule. No supplement or amendment shall be deemed to cure any breach of any
representation or warranty made in this Agreement or have any effect for the
purpose of determining satisfaction of the conditions set forth in Section
6.2(b) hereof or the compliance by the Stockholders and the Company with the
covenant set forth in Section 4.8 hereof.
.3. Waiver of Claims. Without waiving any right to indemnification
referred to in Section 4.10(d) that may be available to any Stockholder in his
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capacity as an officer or director of the Company, each Stockholder hereby
waives any and all Claims and Damages against the Company, its Subsidiaries and
their respective stockholders, officers, directors, employees, legal advisors or
agents connected with or arising out of any act or omission of the Company, any
of its Subsidiaries or their respective officers, directors, employees, legal
advisors or agents, in such capacity, at or prior to the Closing Date,
including, without limitation, with respect to the negotiation of the terms of
this Agreement and the Related Agreements. In the event that any Claim waived
hereby is pursued by any Stockholder, such Stockholder shall indemnify and hold
harmless the Company and its Subsidiaries and their respective stockholders,
officers, directors, employees, legal advisors and agents for any Damages
resulting therefrom.
.4. Transfer and Similar Taxes. Notwithstanding any other
provision of this Agreement to the contrary, the Stockholders and the Buyer
shall each pay 50% of all applicable stamp, duties, recording and similar Taxes
and fees (including any penalties, interest and additions to such fees) imposed
upon any party and incurred in connection with any of the transactions
contemplated by this Agreement .
.5. Stockholders' Agent. (a) The Stockholders hereby designate
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. as their agent and representative (the
"STOCKHOLDERS' AGENT"). Upon the execution hereof, each of the Stockholders
has delivered to the Stockholders' Agent all Company Shares in which such
Stockholder owns any record or beneficial interest and will promptly deliver to
the Stockholders' Agent all Company Shares which are issued to such Stockholder
upon exercise of Company Options between the date of this Agreement and the
Closing Date for delivery to the Buyer at the Closing.
(b) The Stockholders hereby authorize the Stockholders' Agent (i) to
take all action necessary in the Stockholders' Agent's discretion in connection
with the defense and/or settlement of any Claims for which the Stockholders may
be required to indemnify the Buyer pursuant to Article VIII hereof, (ii) to give
and receive all notices required to be given and take all action required or
permitted to be taken under this Agreement and the Related Agreements,
including, without limitation, under the Escrow Agreement, (iii) to enter into
amendments to this Agreement and the Escrow Agreement which do not adversely
affect the rights or increase the obligations of the Stockholders and (iv) to
take any and all additional action as is contemplated to be taken by or on
behalf of the Stockholders by the terms of this Agreement and the Related
Agreements (including, without limitation, the execution of the Escrow Agreement
and all investment directions under the Escrow Agreement with respect to the
Escrow Amount).
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(c) Upon receiving notice of the death or incapacity or resignation of
the Stockholders' Agent, the Stockholders agree to appoint such person that the
majority of Stockholders approve (based on their pro rata interests in the
Escrow Amount) to fill the vacancy. In addition, at the Closing, the
Stockholders agree that a successor Stockholders' Agent reasonably acceptable to
the Buyer shall be appointed by the Company, to act on behalf of the
Stockholders as provided in this Section 5.8 following the Closing.
(d) By their execution and delivery of this Agreement, the Stockholders
agree that: (i) notwithstanding any other provision herein to the contrary, the
Buyer shall be able to rely conclusively on the instructions and decisions of
the Stockholders' Agent as to the settlement of any Claims for indemnification
by the Buyer, the Company or the Stockholders pursuant to Article VIII hereof or
any other actions required to be taken by the Stockholders' Agent hereunder, and
no Party hereunder shall have any Claim against the Buyer or the Company for any
action taken by the Buyer or the Company in good faith reliance upon the
instructions or decisions of the Stockholders' Agent; and (ii) all actions,
decisions and instructions of the Stockholders' Agent, including, without
limitation, any action taken in relation to the Closing or the defense or
settlement of any Claims for which the Stockholders may be required to indemnify
the Buyer or the Company pursuant to Article VIII hereof, shall be conclusive
and binding upon all of the Stockholders and no Stockholder shall have any right
to object, dissent, protest or otherwise contest the same or have any Claim
against the Stockholders' Agent for any action taken, decision made or
instruction given by the Stockholders' Agent under this Agreement, acting in
good faith in what he or she reasonably believes to be necessary or beneficial
for the carrying out of the Stockholders' Agent's obligations. The Stockholders'
Agent shall be indemnified and held harmless jointly and severally by the
Stockholders against any claim made against the Stockholders' Agent by reason of
an act or omission in connection with any of the transactions contemplated
hereby and against any loss, liability or expense he or she may sustain in
carrying out its functions hereunder, except for acts in bad faith. The
Stockholders shall pay the Stockholders' Agent's fees as agreed upon between the
Company and the Stockholders' Agent prior to the Closing. The Stockholders shall
reimburse the Stockholders' Agent for any expenses and costs incurred by the
Stockholders' Agent in connection with the carrying out of his or her functions
hereunder.
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ARTICLE VI - CONDITIONS
VI.1 Conditions to Obligations of Each Party. The respective
obligations of each Party to effect the Stock Purchase shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
and all of which may be waived in whole or in part by any Party to the extent
permitted by applicable law:
(a) No law, statute, rule, order, decree or regulation shall have been
enacted or promulgated by any Government Entity of competent jurisdiction which
declares this Agreement invalid or unenforceable in any material respect or
which permanently restrains, enjoins or otherwise prohibits consummation of the
Stock Purchase and all other material transactions contemplated by this
Agreement and the Related Agreements;
(b) All government consents, orders and approvals required for the
consummation of the Stock Purchase and the other transactions contemplated by
this Agreement and the Related Agreements as specified in Section 3.2(d) of the
Company Disclosure Schedule, Section 3.1(c) of the Stockholders' Disclosure
Schedule or Section 3.3(c) of the Buyer Disclosure Schedule, shall have been
obtained, shall not impose upon the Company or the Buyer any terms or conditions
which are unreasonably burdensome to the Buyer or to the business of the Company
as currently conducted or as currently contemplated to be conducted by the
Company and shall be in effect on the Closing Date;
(c) No action, suit or proceeding before any Governmental Entity shall
have been instituted or threatened which seeks to prevent or delay the
consummation of the Stock Purchase and the other material transactions
contemplated by this Agreement and the Related Agreements or which challenges
the validity or enforceability of this Agreement, which actions or proceedings
are reasonably likely to result in an adverse judgment in the reasonable opinion
of counsel to the Buyer; and
(d) the amendment to the Company's Articles of Association as provided
in Section 2.3(b)(ii) shall have been duly effected.
VI.2 Conditions to Obligations of the Buyer. The obligations of the
Buyer to effect the Stock Purchase are further subject to satisfaction on or
prior to the Closing Date of each of the following conditions, any and all of
which may be waived in whole or in part by the Buyer:
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(a) Either (i) all of the Company stockholders shall have duly executed
and delivered this Agreement and the Related Agreements and become parties
thereto or (ii) the Buyer shall have completed the Section 236 Action to its
satisfaction;
(b) All of the Company Representations and the Stockholders
Representations shall have been true and correct in all material respects when
made and shall be true and correct in all material respects on and as of the
Closing Date (except for representations and warranties that relate to a
specific date) as though made on the Closing Date, except that if the failure of
a representation or warranty to be true and correct in all material respects is
due to an event which occurs after the date of this Agreement, this condition
will be deemed satisfied notwithstanding such failure unless it has resulted in
or may reasonably be expected to result in a fundamental impairment of the
business or prospects of the Company, and the Buyer shall have received a
certificate dated the Closing Date and signed by the Chairman of the Board of
Directors, President and the Chief Financial Officer of the Company to such
effect with respect to the Company Representations;
(c) The Company and the Stockholders shall have performed in all
material respects all obligations required under this Agreement to be performed
by them, respectively, on or before the Closing Date, and the Buyer shall have
received a certificate dated the Closing Date and signed by the Chairman of the
Board of Directors, the President and the Chief Financial Officer of the Company
to such effect with respect to the obligations of the Company;
(d) All of the third party consents and approvals required to be
procured in order to effect the Stock Purchase and the other transactions
contemplated by this Agreement and the Related Agreements as set forth in
Section 3.2(d) of the Company Disclosure Schedule, shall have been procured, in
substance and form that are not unreasonably burdensome to the Buyer or to the
business of the Company as currently conducted or as currently contemplated to
be conducted by the Company;
(e) There shall not be any change in, or effect on, the Company's
assets, financial condition, operating results, customer and employee relations,
or business prospects or the financial statements theretofore supplied by the
Company to the Buyer which has, or may reasonably be expected to have, a
Material Adverse Effect on the Company and its Subsidiaries, taken as a whole,
which has resulted in, or may reasonably be expected to result in, a fundamental
impairment of the business or prospects of the Company;
(f) The Buyer shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Israeli
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counsel to the Company, an opinion substantially in the form set forth in
Exhibit B attached hereto and otherwise reasonably satisfactory in form and
substance to the Buyer, addressed to the Buyer and dated as of the Closing Date;
(g) All directors and officers of the Company and its Subsidiaries
shall have executed and delivered to the Buyer the Waiver in the form attached
hereto as Exhibit C and all directors of the Company and its Subsidiaries shall
have executed and delivered to the Buyer resignations as directors, provided
that such waiver shall not affect or derogate from any rights to indemnification
pursuant to the provisions of Section 4.10(d);
(h) The Buyer shall have received from the Trustee his written consent,
on behalf of all of the Option Holders, to the treatment of the Company Options
in accordance with the provisions of Section 4.1;
(i) The Buyer shall have entered into employment agreements with each
of ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ on terms reasonably satisfactory to the parties
thereto; and
(j) The Buyer shall either have received a legal opinion reasonably
satisfactory to the Buyer or have become reasonably satisfied with respect to
certain intellectual property matters relating to the Company and its
Subsidiaries.
VI.3 Conditions to Obligations of the Stockholders. The obligations
of the Stockholders to effect the Stock Purchase are further subject to
satisfaction on or prior to the Closing Date of each of the following
conditions, any and all of which may be waived in whole or in part by the
Stockholders' Agent (on behalf of the Stockholders):
(a) All of the Buyer Representations shall have been true and correct
when made and shall be true and correct in all material respects on and as of
the Closing Date as though made on the Closing Date, and the Stockholders shall
have received a certificate dated the Closing Date and signed by the Chairman of
the Board or President and by the Chief Financial Officer of the Buyer to such
effect;
(b) The Buyer shall have performed in all material respects all
obligations required under this Agreement to be performed by it on or before the
Closing Date, and the Stockholders shall have received a certificate dated the
Closing Date and signed by the Chairman of the Board or President and by the
Chief Financial Officer of the Buyer to that effect;
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(c) The release of all of the guarantor's obligations under the
guarantees listed on Section 6.3(c) of the Company Disclosure Schedule shall
have been obtained, including without limitation the guarantee of Orbotech for
the Company's bank loans previously disclosed to the Buyer in the aggregate
amount of $2.5 million; and
(d) The Company shall have received from Skadden, Arps, Slate, ▇▇▇▇▇▇▇
& ▇▇▇▇ LLP, United States counsel to the Buyer, an opinion substantially in the
form set forth in Exhibit D attached hereto and otherwise satisfactory in form
and substance to the Company, addressed to the Company and dated as of the
Closing Date.
ARTICLE VII - TERMINATION AND ABANDONMENT
VII.1 Methods of Termination; Termination Date. This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time before the Closing:
(a) By the mutual written consent of the Stockholders' Agent (on behalf
of the Stockholders) and the Buyer;
(b) By the Buyer, if all the conditions set forth in Section 6.1 or
Section 6.2 of this Agreement shall not have been satisfied or waived on or
before March 31, 1997, except that if on such date the only condition which
shall not have been satisfied or waived by the Buyer is the condition set forth
in Section 6.2(a), such date shall be June 30, 1997 (the applicable date being
referred to as the "TERMINATION DATE"), unless, in each case, such failure shall
be due to the action or failure to act of the Buyer, which action or failure to
act constitutes a breach of this Agreement;
(c) By the Stockholders' Agent (on behalf of the Stockholders), if all
the conditions set forth in Section 6.1 or Section 6.3 of this Agreement shall
not have been satisfied or waived on or before the Termination Date, unless such
failure shall be due to the action or failure to act of the Stockholders or the
Company, which action or failure to act constitutes a breach of this Agreement;
(d) By the Stockholders' Agent (on behalf of the Stockholders) or the
Buyer if the other fails to comply in all material respects with any of its
covenants or agreements contained herein, or breaches its representations and
warranties in any material way, such that, in any such case, any of the
conditions to the Closing set
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forth in Article VI could not be satisfied on or prior to the Termination Date;
(e) By the Stockholders' Agent (on behalf of the Stockholders) or the
Buyer if a Governmental Entity shall have issued an order, decree or ruling or
taken any other action (which order, decree or ruling the parties hereto shall
use their best efforts to lift), which declares this Agreement invalid or
unenforceable in any material respect or which permanently restrains, enjoins or
otherwise prohibits the consummation of the Stock Purchase and all other
material transactions contemplated by this Agreement and the Related Agreements
and such order, decree, ruling or other action shall have become final and
non-appealable; or
(f) By the Buyer if the Company Action has not been completed to the
satisfaction of the Buyer on or prior to December 23, 1996.
VII.2 Procedure Upon Termination. In the event of termination and
abandonment of this Agreement pursuant to Section 7.1, written notice thereof
shall forthwith be given to the other Parties and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned, without further
action by the Stockholders, the Company or the Buyer. If this Agreement is
terminated as provided herein, no party to this Agreement shall have any
liability or further obligation to any other party to this Agreement except as
provided in Section 9.10; provided, however, that no termination of this
Agreement pursuant to this Article VII shall relieve any party of liability for
a breach of any provision of this Agreement occurring before such termination.
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ARTICLE VIII - INDEMNIFICATION AND ESCROW
VIII.1 Indemnification. (a) Survival. All of the Stockholders
Representations, the Company Representations and the Buyer Representations shall
survive the Closing and shall continue in full force and effect for a period of
fifteen months thereafter, after which such representations and warranties shall
terminate and have no further force or effect; provided that (i) the
Stockholders Limited Representations and (ii) the Company Representations
contained in Section 3.2(b) hereof shall survive indefinitely; provided further,
that the Buyer Representations set forth in Sections 3.3(e) and 3.3(f) shall not
survive the Closing. The period during which any such representation or warranty
survives is the "SURVIVAL PERIOD" for such representation or warranty.
Notwithstanding the foregoing, any representation that would otherwise terminate
shall survive with respect to Damages asserted in any Claim of which notice is
given pursuant to this Agreement prior to the end of the applicable Survival
Period, until such Claim is finally resolved and any related Damages are paid.
All covenants of the Parties in this Agreement shall survive the Closing and
shall continue in full force thereafter in accordance with their terms.
(b) Indemnification by the Stockholders. (i) Subject to Section 8.1(c)
and Section 8.1(e), and regardless of any investigation at any time made by or
on behalf of the Buyer or of any knowledge or information that the Buyer may
have, each of the Stockholders shall, on a pro rata basis, in accordance with
its proportionate shareholding in the Company, indemnify, defend and hold the
Buyer, and, following the Closing, the Company (collectively, the "ACQUIRING
PARTIES") harmless, from and against any Damages any of the Acquiring Parties
may suffer, sustain or become subject to, resulting from or relating to: (A) any
breach as of the date hereof discovered prior to or during the applicable
Survival Period of any of the Company Representations, (B) any breach on or
prior to the Closing Date of any covenant or agreement on the part of the
Company set forth in this Agreement, (C) any Excess Transaction Expenses not
otherwise deducted at the Closing from the Escrow Amount pursuant to Section
2.7, or (D) (x) any Disclosed Prior Expenses not otherwise deducted at the
Closing from the Escrow Amount pursuant to Section 2.7 in excess of an aggregate
amount of $400,000 which are not expensed in the Company's statements of income
for the periods ended September 30, 1996 (y) any additional costs and expenses
(including fees and expenses of legal counsel, investment bankers, brokers or
other representatives or consultants) incurred by the Company in connection with
its contemplated initial public offering of Company Shares and other matters
identified in the calculation of the Disclosed Prior Expenses, in excess of the
Disclosed Prior Expenses (paragraphs (x) and (y)
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collectively, the "EXCESS PRIOR EXPENSES").
(ii) In addition, subject to Section 8.1(c) and Section 8.1(e), and
regardless of any investigation at any time made by or on behalf of the Buyer or
of any knowledge or information that the Buyer may have, each Stockholder shall,
severally and not jointly, indemnify, defend and hold the Acquiring Parties
harmless, from and against any Damages any of the Acquiring Parties may suffer,
sustain or become subject to, resulting from or relating to: (A) any breach as
of the date hereof discovered prior to or during the applicable Survival Period
of any of the Stockholders Limited Representations, or (B) any breach of any
covenant or agreement on the part of such Stockholder in this Agreement
(together with Section 8.1(b)(i), the "BUYER INDEMNIFIABLE LOSSES").
(c) Limits on Indemnification. (i) The Escrow Amount held under the
Escrow Agreement will be applied against and shall be the sole source for
indemnification for any Buyer Indemnifiable Losses and no Stockholder shall
otherwise be liable to the Buyer or the Company for the breach of any
representation or warranty of any Stockholder or the Company hereunder or in
connection with the transactions contemplated hereby; provided that
notwithstanding anything to the contrary in this Agreement, the Escrow Amount
shall not be the sole source for indemnification for (A) any Buyer Indemnifiable
Losses arising out of breaches by a Stockholder of the Stockholders' Limited
Representations, (B) breaches of the covenants or agreements on the part of any
Stockholder in this Agreement or (C) any Buyer Indemnifiable Losses arising out
of any breach of the Company Representations contained in section 3.2(b) hereof;
provided, further, that no Escrow Amount deposited into escrow by or on behalf
of any Stockholder may be applied against Buyer Indemnifiable Losses arising out
of any breach of the Stockholder Representations or breaches of the covenants or
agreements on the part of any Stockholder in this Agreement by any Stockholder
other than the Stockholder who made such deposit or on whose behalf such deposit
was made.
(ii) Notwithstanding anything to the contrary contained in Section
8.1(b)(i)(A), the Stockholders shall have no liability for Damages in respect of
Buyer Indemnifiable Losses pursuant to such Section until the aggregate amount
of such Damages exceeds $750,000, and then only for such Damages in excess of
$250,000. The foregoing limitation shall not apply to the Stockholders'
liability for Damages in respect of Buyer Indemnifiable Losses relating to (w)
breaches as provided in Section 8.1(b)(ii)(A), (x) breaches of the covenants or
agreements on the part of the Company and any Stockholder in this Agreement, (y)
any Excess Transaction Expenses and Excess Prior Expenses, or (z) breaches of
the Company Representations contained in Section 3.2(b).
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(d) Indemnification by the Buyer. Subject to Section 8.1(e), and
regardless of any investigation at any time made by or on behalf of the
Stockholders or of any knowledge or information that the Stockholders may have,
the Buyer shall indemnify, defend and hold the Stockholders harmless from and
against any Damages the Stockholders may suffer, sustain or become subject to,
resulting from or relating to: (i) any breach as of the date hereof discovered
prior to or during the applicable Survival Period of any of the Buyer
Representations, or (ii) any breach of any covenant or agreement on the part of
the Buyer set forth in this Agreement.
(e) Written Claim Requirement. Each Indemnifying Party (as defined
below) shall have no obligation to indemnify the Indemnified Party (as defined
below) from and against any indemnifiable losses unless the Indemnified Party
makes a written claim, which shall contain reasonable detail, to the extent
available to the Indemnified Party, with regard to the basis of the claim and
the amount thereof, within the Survival Period with respect to the breach which
gives rise to such Indemnifiable Losses.
(f) Matters Involving Third Parties. (i) If any third party shall
notify any Party (the "INDEMNIFIED PARTY") with respect to any matter (a "THIRD
PARTY CLAIM") which may give rise to a claim by such Indemnified Party for
indemnification against any other Party (the "INDEMNIFYING PARTY") under this
Agreement, then the Indemnified Party shall notify each Indemnifying Party
thereof promptly; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any liability or obligation hereunder unless (and then
solely to the extent that) the Indemnifying Party is disadvantaged or damaged
thereby.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against a Third Party Claim with counsel of the Indemnifying
Party's choice, reasonably satisfactory to the Indemnified Party, so long as (A)
the Indemnifying Party notifies the Indemnified Party, within thirty (30)
business days after the Indemnified Party has given notice of the Third Party
Claim to the Indemnifying Party that the Indemnifying Party is assuming the
defense of such Third Party Claim and will indemnify the Indemnified Party
against such Third Party Claim in accordance with the terms and limitations of
this Section 8.1, and (B) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
(iii) So long as the conditions set forth in Section
8.1(f)(ii) are and remain satisfied, then (A) the Indemnifying Party may conduct
the defense of the
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Third-Party Claim, (B) the Indemnified Party may retain one separate local
co-counsel in each relevant jurisdiction at its sole cost and expense, (C) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be unreasonably withheld), (D) the
Indemnifying Party will not consent to the entry of any judgment with respect to
the matter, or enter into any settlement which (x) requires a payment by the
Indemnified Party other than from the Escrow Amount, (y) imposes an injunction
or other equitable relief upon the Indemnified Party or does not include a
provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, or (z) in the case of
a Third Party Claim initiated by any taxing authority with respect to Taxes,
which would increase the liability for Taxes of the Indemnified Party, without
the prior written consent of the Indemnified Party, which consent shall not be
unreasonably withheld, and (E) the Indemnified Party shall, at the Indemnifying
Party's reasonable request and at the Indemnifying Party's expense, cooperate in
the defense of the matter. In the event that the conditions in Section
8.1(f)(ii) are or become unsatisfied in the case of any Third Party Claim, then
the Indemnified Party may assume control of the defense of such claim, subject
to the requirement that it not enter into any settlement or consent to the entry
of any judgment with respect to the matter without the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
(g) The amount of any Damages for which indemnification is provided
under this Section 8.1 shall be net of any amounts that the Indemnified Party
recovers under insurance or indemnification policies or agreements with respect
to such Damages, after deducting the Indemnified Party's costs and expenses of
procuring such recovery; provided that such Indemnified Party shall be required
to pursue, in accordance with its customary business practice, all applicable
good faith claims.
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VIII.2 Remedies. Each of the Parties acknowledges and agrees
that each other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
each other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity. Notwithstanding the foregoing, the Parties agree
that the indemnities provided for in this Article VIII shall be exclusive other
than in the case of actual fraud and no party shall be entitled to any
duplicative recovery or remedy against the other party. None of the Stockholders
shall have any right of contribution against the Company with respect to any
Buyer Indemnifiable Losses.
ARTICLE IX - MISCELLANEOUS
IX.1 Dispute Resolution. In the event of any dispute,
controversy or claim arising out of or relating to this Agreement, including any
and all schedules and exhibits hereto (a "DISPUTE"), the Parties to such Dispute
(which in the case of the Stockholders shall be represented by the Stockholders'
Agent unless the Dispute relates to a matter in which not all of the
Stockholders have a common interest) shall first use their best efforts to
resolve such Dispute among themselves. If the Parties to such Dispute are unable
to resolve the Dispute within 30 calendar days after the notification by one
Party to another of the existence of a Dispute, at the request of any Party, the
Dispute will be submitted to arbitration in accordance with Section 9.2 hereof.
IX.2 Arbitration. (a) Any Dispute not resolved as described in
Section 9.1 shall, at the written request of any Party to the Dispute, be
submitted to final and binding arbitration in New York, New York in accordance
with the International Arbitration Rules of the American Arbitration
Association, except as otherwise provided in this Section 9.2. The arbitration
proceedings shall be conducted, and the award rendered, in the English language.
(b) In any arbitration pursuant to this Article IX, the Stockholders
shall be treated as one Party for all purposes, including the selection of the
sole arbitrator by the Stockholders' Agent on behalf of the Stockholders (unless
the Dispute relates to a matter in which not all of the Stockholders have a
common interest). There shall
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be one arbitrator who shall be selected by mutual agreement of the Parties prior
to the Closing. If such arbitrator is unable or unwilling to serve, a mutually
agreed replacement arbitrator shall be selected by the parties within 15 days
following commencement of an arbitration proceeding pursuant to this Article IX;
provided that, in the event that the Parties are unable to so agree, such
arbitrator shall be appointed by the administrator of the American Arbitration
Association within 10 days following the request of any of the Parties that such
administrator do so.
(c) The arbitrator shall not be an employee, consultant, officer,
director or stockholder of any Party hereto or any Affiliate of any Party to
this Agreement.
(d) The arbitrator shall decide the matters in dispute in accordance
with the laws of the State of New York, without reference to the conflict of
laws rules thereof. The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. Sections 1-16, 201-08. The arbitrator shall have the
power to rule on his own jurisdiction.
(e) The hearing shall be commenced no later than sixty (60) days and
the award shall be rendered no later than ninety five (95) days following the
appointment of the Dispute to the arbitrator. All discovery shall be allowed,
only with the approval of the arbitrator, and shall be completed no later than
twenty (20) days prior to the commencement of the hearing. The Parties and the
arbitrator shall treat the proceedings, any related discovery, and the decisions
of the arbitral tribunal as confidential, except in connection with a judicial
challenge to, or enforcement of, an award, and unless otherwise required by law.
(f) The award of the arbitrator shall be final and binding and shall be
the sole and exclusive remedy between the Parties regarding any Claims,
counterclaims, issues or accountings presented to the tribunal. The arbitrator
shall have full authority to grant provisional remedies and to award damages for
the failure of any party to respect the arbitrator's orders to that effect. The
arbitrator's award shall state the reasons on which the award is based, and may
not include punitive damages. Any monetary award shall be made and payable in
Dollars, free of any tax or other deduction, and shall include interest from the
date of any breach or other violation of this Agreement to the date on which the
award is paid, at a rate to be determined by the arbitrator.
(g) Judgment upon the award rendered by the arbitrator may be entered
by any court having jurisdiction thereof, including the courts of the United
States and Israel. Each of the Parties hereby consents to service of process by
registered mail, by receipted Federal Express or other courier delivery, or by
personal delivery at
61
66
its address set forth below and agrees that its submission to jurisdiction and
its consent to service of process by mail is made for the express benefit of the
other party.
(h) The prevailing Party shall be awarded reasonable costs and expenses
incurred in connection with the arbitration, including attorneys' fees and the
costs and fees of the arbitrator and the arbitration, unless the arbitrator for
good cause determines otherwise.
(i) This agreement to arbitrate shall be binding upon the heirs,
successors, and assigns and any trustee, receiver, or executor of each Party.
IX.3 Entire Agreement; No Third Party Beneficiaries. This
Agreement, the Confidentiality Agreement, the Escrow Agreement and the Related
Agreements (including the documents and other agreements referred to herein or
therein) (a) constitute the entire agreement between the Parties and supersede
any prior understandings, agreements or representations by or between the
Parties, written or oral, with respect to the subject matter hereof, and (b) is
not intended to confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns, except that (i)
Option Holders shall be deemed to be beneficiaries of the provisions of Section
4.1 hereof (ii) the appointed proxy pursuant to Section 5.3 shall be deemed to
be a beneficiary of the provisions of Section 5.3, (iii) the Stockholders' Agent
shall be deemed to be a beneficiary of the provisions of Section 5.8 and (iv)
the Persons for whom a waiver is given under Section 5.6 shall be deemed to be
beneficiaries of Section 5.6.
IX.4 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Company, the Stockholders and the
Buyer and their respective successors and permitted assigns. None of the Parties
may assign or delegate either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the other Parties,
except that the Buyer may assign or delegate either this Agreement or any of its
rights, interests or obligations hereunder to any direct or indirect wholly
owned Subsidiary of the Buyer, but in such event the Buyer shall remain liable
for the performance of all of such obligations. Any references in this Agreement
to a Stockholder or the Stockholders shall mean and include the successors to
the Stockholders' rights hereunder, whether pursuant to assignment, testamentary
disposition, the laws of descent and distribution or otherwise.
IX.5 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
62
67
together will constitute one and the same instrument.
IX.6 Notices. All notices, requests, demands, Claims and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given (i) on the next
business day following the date on which it is sent by facsimile, (ii) on the
second business day following the date on which it is sent by a recognized
international courier service, and (iii) on the seventh business day following
the date on which it is sent by registered or certified mail in the country of
receipt, return receipt requested, postage prepaid, and in each case addressed
to the intended recipient as set forth below:
If to the Company:
Orbot Instruments Ltd
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Fax: (▇▇▇) ▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
Chairman of the Board of Directors
With a Copy To:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Fax:(▇▇▇) ▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
If to the Stockholders:
To the Stockholders' Agent, at:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Phone: (▇▇▇) ▇-▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
If to the Buyer:
Applied Materials, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
63
68
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President-Legal Affairs
With a Copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇
Any Party may give any notice, request, demand, Claim or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telex, ordinary mail, or electronic mail),
but no such notice, request, demand, Claim or other communication shall be
deemed to have been duly given unless and until it actually is received by the
Person for whom it is intended; provided that if the Person is a corporation
such receipt shall be by an officer or authorized agent of such Person.
IX.7 Governing Law; Jurisdiction and Venue. This Agreement
shall be governed by and construed in accordance with the domestic laws of the
United States of America and the State of New York, without giving effect to any
choice of law or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of New York,
except with respect to the mechanics and procedures of the Company Action, which
shall be governed and construed in accordance with the domestic laws of the
State of Israel.
IX.8 Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer, the Company and the Stockholders' Agent on behalf of the Stockholders
who by signing this Agreement have duly appointed such Stockholders' Agent. No
waiver by any Party of any default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
IX.9 Severability. Any term or provision of this Agreement
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforce-
64
69
ability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction. If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof is
invalid, void or unenforceable, the Parties agree that the court making such
determination shall have the power to reduce the scope, duration, area or
applicability of the term or provision, to delete specific words or phrases, or
to replace any invalid, void or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
IX.10 Expenses. Each of the Buyer, on the one hand, and the
Company and the Stockholders on the other hand will bear his, her or its own
direct and indirect costs and expenses (including fees and expenses of legal
counsel, investment bankers, brokers or other representatives or consultants)
incurred in connection with the negotiation, preparation and execution of this
Agreement, the Related Agreements and the transactions contemplated hereby and
thereby, whether or not such transactions are consummated; provided, that the
Company will bear and pay (i) up to an aggregate of $200,000 of any costs and
expenses (including fees and expenses of legal counsel, investment bankers,
brokers or other representatives or consultants) incurred by the Company in
connection with the negotiation, preparation and execution of this Agreement,
the Related Agreements and the transactions contemplated hereby and thereby (the
"AGREED TRANSACTION EXPENSES"), (ii) any Disclosed Prior Expenses up to an
aggregate amount of $400,000 and (iii) any additional Disclosed Prior Expenses
expensed in the Company's statements of income for the periods ended September
30, 1996, and the Stockholders will bear (i) any amount of such transaction
expenses in excess of the Agreed Transaction Expenses (the "EXCESS TRANSACTION
EXPENSES") and (ii) any Excess Prior Expenses. Notwithstanding the foregoing,
the 1% fee payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. with respect to employee options of
the Company shall not be considered Excess Transaction Expenses for purposes of
this Section 9.10 and Sections 2.7 and 8.1. Any Estimated Transaction Expenses
which are disclosed to the Buyer in writing pursuant to Section 4.7(iv) in
excess of the Agreed Transaction Expenses and any Excess Prior Expenses
disclosed to the Buyer in writing pursuant to Section 4.7(i) shall be deducted
at the Closing from the Escrow Amount and the Company shall be obligated to pay
such expenses. Any other Excess Transaction Expenses and Excess Prior Expenses
shall be subject to indemnification under Section 8.1.
IX.11 Interpretation. Each defined term used in this Agreement
has a comparable meaning when used in its plural or singular form. The term
"include" and its derivatives shall have the same construction as the phrase
"include, without limitation," and its derivatives. The section headings
contained in this Agreement
65
70
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement. All references in this Agreement to
"applicable laws", and other references of similar import, include the laws of
the United States, the State of Israel or other states and their respective
political subdivisions.
66
71
IN WITNESS WHEREOF, each of the Buyer, the Company and the Stockholders
have caused this Agreement to be duly executed as of the day and year first
above written.
APPLIED MATERIALS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
ORBOT INSTRUMENTS LTD.
By: /s/ Zvi Lapidat /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: Zvi Lapidat ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman President
ADNIR HOLDINGS LTD.
Exhibit By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
2.2 Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title:
▇▇▇▇▇▇▇ ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
CHARANA HOLDING
By: /s/ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇. ▇▇▇▇▇▇, by its attorney,
pursuant to power of attorney
dated November 22, 1996
Title:
DAFNA PROVIDENT FUND FOR TEACHERS'
72
COMPENSATION AND PROVIDENT LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇
Title:
DANAN INVESTMENTS
By: /s/ Kuti Gavish
-----------------------------------
Name: Kuti Gavish
Title:
ELDAR PROVIDENT FUND FOR INDEPENDENT LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇
Title:
FELINE INVESTMENTS INC.
By: /s/ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇. ▇▇▇▇▇▇, by its attorney,
pursuant to power of attorney
dated November 20, 1996
Title:
FURTHER EDUCATION FUND FOR ACADEMICS
IN LIBERAL ARTS AND SOCIAL SCIENCES
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
73
GADISH PROVIDENT FUNDS LTD.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇
Title:
GALRAN ASSETS LTD.
By: /s/ Kuti Gavish
-----------------------------------
Name: Kuti Gavish
Title:
GMOOL INVESTMENTS COMPANY LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇
Title:
HAGMUL PROVIDENT FUND FOR SCHOOL AND
NURSERY TEACHERS LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇
Title:
KATZIR PROVIDENT AND COMPENSATION
FUND LTD.
By: /s/ ▇▇▇▇▇▇▇▇ Zutu /s/ ▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ Zutu and ▇▇▇▇ ▇▇▇▇
Title:
74
KEREN OR PROVIDENT FUND
By: /s/ ▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: CPA Managing Director
▇▇▇▇▇ ▇▇▇▇▇ & SON, INC.
By: /s/ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇. ▇▇▇▇▇▇, by its attorney,
pursuant to power of attorney
dated November, 20 1996
Title:
OR-TASS LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
TAGMULIM CENTRAL PROVIDENT FUND
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇
Title:
THE AIRCRAFT INDUSTRIES WORKERS'
PROVIDENT FUND
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇ /s/ Eligahu Ashery
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇ Eligahu Ashery
Title: Chairman of General Manager
the Board
75
THE HEBREW UNIVERSITY EMPLOYEES'
PROVIDENT FUND LTD.
By: /s/ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇. ▇▇▇▇▇▇ by its attorney,
under power of
attorney dated
November 21, 1996
Title:
THE PROVIDENT FUND FOR EL AL
EMPLOYEES
By: /s/ ▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ Kutchisky
-----------------------------------
Name: Dov ▇▇▇▇▇▇ ▇▇▇▇▇▇ Kutchisky
Title: Chairman Director
▇▇▇ HOLDINGS AND ASSETS (1993) LTD.
By: /s/ Kuti Gavish
-----------------------------------
Name: Kuti Gavish
Title:
UBERSEBANK AG
By: /s/ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇. ▇▇▇▇▇▇ by its attorney,
pursuant to power
of attorney dated
November 21, 1996
Title:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ D. Alumoth
---------------------------------------
▇▇▇▇▇ Alumoth
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, by his attorney, ▇▇▇▇▇▇
▇▇▇▇▇, pursuant to power
of attorney dated November
20, 1996
76
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, by his attorney, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, pursuant to power
of attorney dated November
17, 1996
/s/ Yhakov Moreshet
---------------------------------------
▇▇▇▇▇ ▇▇▇▇, by her attorney, Yhakov
Moreshet, pursuant to power
of attorney dated November
20, 1996
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, by his attorney, ▇▇▇ ▇▇▇▇▇▇▇,
pursuant to power of attorney
dated November 19, 1996
/s/ Ya'akov ▇▇▇▇▇▇▇
---------------------------------------
Ya'akov ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ Uziahu and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Uziahu and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
77
/s/ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
78
SCHEDULE A
SHAREHOLDERS OF ORBOT INSTRUMENTS LTD.
Name Number of Shares Percentage %
Or-tass Ltd. 899,800 14.9007
▇▇▇▇▇▇▇ Acquisition Corp. 735,050 12.1725
▇▇▇▇▇▇ ▇▇▇▇▇▇ 450,200 7.2437
▇▇▇ ▇▇▇▇▇▇▇ 411,050 6.8070
Ya'akov ▇▇▇▇▇▇▇ 411,050 6.8070
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 411,050 6.8070
▇▇▇▇▇▇ ▇▇▇▇▇▇ 411,050 6.8070
▇▇▇▇▇ ▇▇▇▇▇ & Son, Inc. 212,450 3.5182
▇▇▇▇▇▇ ▇▇▇▇▇ 205,550 3.4039
▇▇▇▇▇▇ ▇▇▇▇▇ 205,500 3.4030
Uziahu and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 195,000 3.2292
Gmool Investments Company Ltd. 185,250 3.0678
Gadish Provident Funds Ltd. 175,500 2.9063
▇▇▇▇▇ ▇▇▇▇▇▇ 154,150 2.5527
Further Education Fund for Academics 97,500 1.6146
in Liberal Arts and Social Sciences
▇▇▇▇▇ Alumoth 90,000 1.4904
▇▇▇▇ ▇▇▇▇▇▇ 90,000 1.4904
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 75,100 1.2437
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 72,000 1.1923
Tagmulim Central Provident Fund 58,500 0.9688
The Aircraft Industries Worker's 58,500 0.9688
Provident Fund
Charana Holding 48,750 0.8073
Uberseebank AG 48,750 0.8073
Feline Investments Inc. 48,750 0.8073
79
Dafna Provident Fund for Teachers' 39,000 0.6458
Compensation and Provident Ltd.
Hagmul Provident Fund for School and 39,000 0.6458
Nursery Teachers Ltd.
Katzir Provident and Compensation 29,250 0.4844
Fund Ltd.
Keren Or Provident Fund 29,250 0.4844
The Hebrew University Employees' 29,250 0.4844
Provident Fund Ltd.
Adnir Holdings Ltd. 19,500 0.3229
Eldar Provident Fund for Independent 19,500 0.3229
Ltd.
Galran Assets Ltd. 19,500 0.3229
The Provident Fund for El Al 19,500 0.3229
Employees
▇▇▇ Holdings and Assets (1993) Ltd. 19,500 0.3229
▇▇▇▇▇ ▇▇▇▇ 9,750 0.1615
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 7,700 0.1275
Danan Investments 4,875 0.0807
▇▇▇▇▇ ▇▇▇▇▇ 2,550 0.0422
2
80
SCHEDULE B
Name
Or-tass Ltd.
▇▇▇▇▇▇▇ Acquisition Corp.
▇▇▇▇▇▇ ▇▇▇▇▇▇ (on behalf of the beneficial holders of Company Shares held of
record by ▇▇. ▇▇▇▇▇▇)
Ya'akov ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
Uziahu and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Hanan ▇▇▇▇▇▇
▇▇▇▇▇ Alumoth
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
81
BUYER DISCLOSURE SCHEDULE
Section 3.3(c)
1. Exemption of the Israeli Securities Authority from the registration and
prospectus delivery requirements under Israeli Securities laws with
respect to the issuance of Buyer Options as provided in Section 4.1(a),
provided that obtaining such exemption shall not be a condition to the
Stock Purchase as set forth in Section 6.1 and in the event such
exemption is not obtained, the provision of Section 4.1(a) will apply.
2. No-action or approval by the Comptroller of Restrictive Trade Practices
under the Restrictive Trade Practices Law of 1988.
2