Exhibit 2.1
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SHARE PURCHASE AGREEMENT
among
PLASMA & MATERIALS TECHNOLOGIES, INC.,
ELECTROTECH LIMITED,
ELECTROTECH EQUIPMENTS LIMITED,
XXXXXXXXXXX X. XXXXXX
and
THE OTHER SHAREHOLDERS OF ELECTROTECH LIMITED AND
ELECTROTECH EQUIPMENTS LIMITED
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Dated as of July 17, 1996
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TABLE OF CONTENTS
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Page
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ARTICLE I
PURCHASE AND SALE OF THE US SHARES AND ET SHARES.......................... 2
1.1 Purchase and Sale of Stock................................... 2
1.2 Shareholder's Warranty and Waiver............................ 2
1.3 Consideration for US Shares.................................. 2
1.4 Consideration for ET Shares.................................. 2
1.5 Agreement of Shareholders.................................... 3
ARTICLE II
CLOSING................................................................... 3
2.1 Closing Date................................................. 3
2.2 Deliveries of the Shareholders and ETE....................... 3
2.3 Deliveries of Buyer.......................................... 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH OF THE SHAREHOLDERS................ 4
3.1 Title to Shares.............................................. 4
3.2 Authority.................................................... 4
3.3 No Violation................................................. 4
3.4 Brokers...................................................... 5
3.5 No Agreements to Sell Shares................................. 5
3.6 Regulation S Representations and Covenants................... 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE MAJORITY SHAREHOLDER................ 7
4.1 Corporate Organization....................................... 7
4.2 Subsidiaries................................................. 8
4.3 Share Capital; Title to ET Shares............................ 8
4.4 Authority.................................................... 9
4.5 No Violations or Consents.................................... 9
4.6 Litigation................................................... 10
4.7 Financial Statements......................................... 10
4.8 No Liabilities............................................... 11
4.9 Absence of Certain Changes or Events......................... 11
4.10 Insurance.................................................... 12
4.11 Employee Benefits and Pension Scheme......................... 12
4.12 Material Contracts and Other Agreements...................... 14
4.13 Suppliers and Customers...................................... 14
4.14 Real Property................................................ 14
i.
TABLE OF CONTENTS (Cont'd)
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4.15 Condition of the Real Property; Rights of Use; Liabilities... 15
4.16 Compliance with Laws......................................... 15
4.17 Licenses and Permits......................................... 16
4.18 Title to Assets.............................................. 16
4.19 Inventory.................................................... 16
4.20 Backlog...................................................... 17
4.21 Taxes........................................................ 17
4.22 Environmental Matters........................................ 20
4.23 Board of Directors and Shareholder Approval.................. 21
4.24 Brokers; Certain Expenses.................................... 21
4.25 No Agreements to Sell Companies.............................. 21
4.26 Related-Party Transactions................................... 21
4.27 Employees; Labor Matters..................................... 22
4.28 Proprietary Rights........................................... 23
4.29 Disclosure................................................... 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER................................... 24
5.1 Corporate Organization....................................... 24
5.2 Subsidiaries................................................. 24
5.3 Capital Stock................................................ 25
5.4 Buyer Shares................................................. 25
5.5 Authority.................................................... 25
5.6 No Violations or Consents.................................... 26
5.7 Financial Statements and Reports............................. 26
5.8 Litigation................................................... 27
5.9 Absence of Certain Changes or Events......................... 27
5.10 Insurance.................................................... 28
5.11 Employee Benefits............................................ 28
5.12 Employees; Labor Matters..................................... 28
5.13 Material Contracts and Other Agreements...................... 29
5.14 Suppliers and Customers...................................... 30
5.15 Compliance with Laws......................................... 30
5.16 Licenses and Permits......................................... 30
5.17 Title to Assets.............................................. 31
5.18 Inventory.................................................... 31
5.19 Backlog...................................................... 31
5.20 Tax Returns and Audits....................................... 31
5.21 Environmental and Safety Laws................................ 32
ii.
TABLE OF CONTENTS (Cont'd)
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5.22 Board of Directors Approval.................................. 33
5.23 Related-Party Transactions................................... 33
5.24 Proprietary Rights........................................... 33
5.25 Real Property................................................ 34
5.26 Disclosure................................................... 34
5.27 Brokers...................................................... 34
ARTICLE VI
COVENANTS AND AGREEMENTS.................................................. 34
6.1 Conduct of Business Prior to the Closing Date................ 34
6.2 Access to Properties and Records............................. 36
6.3 Acquisition Proposals........................................ 37
6.4 Proxy Statement and Meeting of Buyer's Shareholders.......... 37
6.5 Indemnification by Buyer..................................... 38
6.6 Indemnification by the Shareholders.......................... 39
6.7 General Indemnification Provisions........................... 40
6.8 Best Efforts................................................. 40
6.9 Consents..................................................... 41
6.10 No Transfer.................................................. 41
6.11 Environmental Investigations................................. 41
6.12 Delivery of Financial Statements and Other Documents......... 41
6.13 Additional Payments at Closing............................... 42
6.14 Company Employee Benefits and Stock Options.................. 43
6.15 Use of Company Information................................... 43
ARTICLE VII
CONDITIONS PRECEDENT...................................................... 44
7.1 Conditions to Each Party's Obligations....................... 44
7.2 Conditions to the Obligations of the Shareholders............ 44
7.3 Conditions to the Obligations of Buyer....................... 45
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER......................................... 47
8.1 Termination.................................................. 47
8.2 Termination Fee; Expenses.................................... 47
8.3 Effect of Termination........................................ 48
8.4 Amendment.................................................... 48
8.5 Waiver....................................................... 48
8.6 Conduct Following Termination................................ 48
iii.
TABLE OF CONTENTS (Cont'd)
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ARTICLE IX
MISCELLANEOUS............................................................. 49
9.1 Survival..................................................... 49
9.2 Meaning of "Best Knowledge".................................. 49
9.3 Notices...................................................... 49
9.4 Headings; Agreement.......................................... 51
9.5 Publicity.................................................... 51
9.6 Entire Agreement............................................. 51
9.7 Conveyance Taxes............................................. 51
9.8 Company Pre-Closing Dividends................................ 51
9.9 Advance of Reimbursable Expenses............................. 52
9.10 Assignment................................................... 52
9.11 Counterparts................................................. 52
9.12 Governing Law................................................ 52
9.13 Third Party Beneficiaries.................................... 52
EXHIBITS
Exhibit A Schedule of Consideration
Exhibit B Xxxxx Xxxxxxx Employment Agreement
Exhibit C Form of Opinion of Xxxxxxx & XxXxxxxx
Exhibit D Form of Registration Agreement
Exhibit E Form of Noncompetition Agreement
Exhibit F Form of Opinion of Xxxxx Wasbrough
iv.
SHARE PURCHASE AGREEMENT
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SHARE PURCHASE AGREEMENT ("Agreement") dated as of July 17, 1996 among
Plasma & Materials Technologies, Inc., a California corporation ("Buyer"),
Electrotech Limited (registered no. 1373344), whose registered office is at
Thornbury Laboratories, Littleton-Upon-Severn, Thornbury, Bristol, BS12-INP,
United Kingdom ("ET"), Electrotech Equipments Limited (registered no. 939289),
whose registered office is at Thornbury Laboratories, Littleton-Upon-Severn,
Thornbury, Bristol, BS12-INP, United Kingdom ("ETE" and, together with ET,
individually, a "Company," and collectively, the "Companies"), Xxxxxxxxxxx X.
Xxxxxx (the "Majority Shareholder") and the other shareholders of the Companies
listed on Exhibit A hereto (individually, an "Other Shareholder" and
collectively, the "Other Shareholders;" the Majority Shareholder and the Other
Shareholders are sometimes herein collectively referred to as the
"Shareholders").
R E C I T A L S:
- - - - - - - -
A. The Shareholders collectively own all of the issued and
outstanding share capital of each of the Companies (collectively, the "ET
Shares").
B. ETE owns all of the issued and outstanding share capital of Energy
Transfer Systems, Inc., a Delaware corporation ("ET-US").
C. Buyer wishes to directly purchase, and ETE wishes to sell, all of
the issued and outstanding share capital of ET-US (the "US Shares").
D. Buyer wishes to purchase and the Shareholders wish to sell the ET
Shares.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE US SHARES AND ET SHARES
1.1 Purchase and Sale of Stock.
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(a) Purchase and Sale of US Shares. Subject to the terms
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and conditions of this Agreement, immediately prior to the
Closing (as defined below), ETE agrees to sell, assign, transfer
and deliver to Buyer ownership of, with full title guarantee, the
US Shares, together with all rights now or hereafter attaching
thereto, and Buyer hereby agrees to purchase the same from ETE,
for the consideration set forth in Section 1.3 below.
(b) Purchase and Sale of ET Shares. Subject to the terms
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and conditions of this Agreement, at the Closing, each of the
Shareholders agrees to sell, assign, transfer and deliver to
Buyer ownership of, with full title guarantee, all ET Shares held
of record or beneficially by each such Shareholder, as set forth
opposite each Shareholder's name on Exhibit A hereto, together
with all rights now or hereafter attaching thereto, and Buyer
agrees to purchase the same from each Shareholder for the
consideration set forth in Section 1.4 below.
1.2 Shareholder's Warranty and Waiver. Each of the Shareholders
---------------------------------
warrants to Buyer that such Shareholder is entitled to sell and transfer to
Buyer the full legal and beneficial ownership of the ET Shares held by him
subject to the terms of this Agreement and that such shares are free and clear
of any and all Encumbrances, as defined below. Each of the Shareholders hereby
waives and agrees to procure the waiver of any restrictions on transfer,
including without limitation, pre-emption rights, which may exist in relation to
the ET Shares under the existing Articles of Association (the "Articles") of
either of the Companies.
1.3 Consideration for US Shares. The consideration for the sale,
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assignment, transfer and delivery of the US Shares to Buyer by ETE shall be Two
Hundred Fifty Thousand Dollars (US$250,000), payable in cash.
1.4 Consideration for ET Shares. The consideration for the sale,
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assignment, transfer and delivery of the ET Shares to Buyer (the "Purchase
Price") shall be payable in cash and in shares of the Common Stock of Buyer, no
par value per share ("Buyer's Common Stock"), as follows:
(a) An aggregate of Seventy-Five Million Dollars
(US$75,000,000), less the sum of the Employee Bonus Amount, the
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Xxxxxx Noncompetition Fee and the Xxxxxxx Bonus (all as defined
in Section 6.13 below), shall be payable by Buyer in cash at the
Closing to each of the Shareholders in the respective individual
amounts set forth opposite each Shareholder's name on Exhibit A
hereto; and
(b) Buyer shall deliver Five Million Six Hundred Thousand
(5,600,000) shares (the "Buyer Shares") of Buyer's Common Stock.
Such shares shall be delivered to each of the Shareholders in the
respective individual amounts set forth opposite each
Shareholder's name on Exhibit A hereto.
1.5 Agreement of Shareholders. Each of the Shareholders hereby
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consents and agrees with the Companies, the other Shareholders and the Buyer to
the allocation of the Purchase Price among the Shareholders in the manner set
forth in Exhibit A hereto and each Shareholder additionally consents and agrees
with the Companies, the other Shareholders and the Buyer to the payments to be
made by or at the direction of the Buyer and the Companies pursuant to Section
6.13 hereof.
ARTICLE II
CLOSING
2.1 Closing Date. Subject to the fulfillment of the conditions
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precedent specified in Article VII (any or all of which may be waived in writing
by the respective parties whose performance is conditioned upon satisfaction of
such conditions precedent), the purchase and sale of the ET Shares and the US
Shares shall be consummated at a closing (the "Closing") to be held at the
offices of Xxxxx Wasbrough, Solicitors, Xxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxxxxxx XX0
0XX, Xxxxxx Xxxxxxx as soon as practicable, but no later than five (5) days,
following the satisfaction or waiver of all conditions precedent specified in
Article VII, or at such other time as Buyer and the Shareholders shall mutually
agree after the satisfaction or waiver of all conditions precedent specified in
Article VII, provided that in no circumstance shall the Closing occur on or
after December 31, 1996 (such date and time being herein referred to as the
"Closing Date").
2.2 Deliveries of the Shareholders and ETE. At the Closing, each
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Shareholder shall deliver to Buyer, in form reasonably satisfactory to counsel
for Buyer, (a) duly completed and signed transfers in respect of the ET Shares
in favor of Buyer or as Buyer shall direct, together with the relevant
certificates for the ET Shares, and (b) all of the agreements, documents and
instruments required to be delivered by such Shareholder. Additionally, at the
Closing, ETE shall deliver to Buyer duly completed and signed transfers in
respect of the US Shares in favor of Buyer or as Buyer shall direct, together
with the relevant certificates for the US Shares.
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2.3 Deliveries of Buyer. At the Closing, Buyer shall deliver to
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Xxxxx Wasbrough, counsel for the Shareholders, on behalf of each Shareholder
(whose receipt shall be a good discharge for the same) (a) payment of the cash
portion of the Purchase Price with respect to each Shareholder in accordance
with Section 1.4(a) hereof by wire transfer of immediately available funds in
the amount thereof, (b) certificates evidencing the Buyer Shares, registered in
the name of each Shareholder in accordance with Section 1.4(b) hereof, and (c)
all of the agreements, documents and instruments required to be delivered to
them at the Closing pursuant to this Agreement. Additionally, at the Closing,
Buyer shall deliver to ETE payment of the cash amount set forth in Section 1.3
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF EACH OF THE SHAREHOLDERS
Except as disclosed in the letter of disclosure (the "Shareholders
Disclosure Letter") delivered to Buyer in connection herewith and initialled by
the Buyer and each of the Shareholders for identification, each of the
Shareholders severally and not jointly represents and warrants to, and agrees
with, Buyer as follows:
3.1 Title to Shares. Such Shareholder has good and marketable title,
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and full beneficial ownership, in and to the ET Shares shown as being held of
record by such Shareholder on Exhibit A hereto, and such ET Shares are, and on
the Closing Date will be, free and clear of any and all liens, security
interests, mortgages, deeds of trust, pledges, claims, rights of first refusal,
options, equities, encumbrances, restrictions, preemptive or subscription rights
or other rights of third parties ("Encumbrances"). There are no voting trusts
or other agreements, arrangements or understandings with respect to the voting
of any of the ET Shares to which such Shareholder is a party. Upon the
consummation of the transactions contemplated by this Agreement, including
delivery by Buyer of the consideration set forth in Section 1.4 hereof, Buyer
will acquire good and marketable title to such ET Shares, free and clear of any
and all Encumbrances.
3.2 Authority. This Agreement has been duly executed and delivered
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by such Shareholder and constitutes the legal, valid and binding obligations of
such Shareholder, enforceable against such Shareholder in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium, reorganization
or similar laws affecting creditors' rights generally and subject to general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.3 No Violation. The execution, delivery and performance of this
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Agreement by such Shareholder and the consummation by such Shareholder of the
transactions contemplated hereby will not (a) violate any provision of law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award applicable to such
4
Shareholder, (b) require the consent, waiver, approval or authorization of or
any filing by such Shareholder with any person or governmental authority, or (c)
violate, result (with or without notice or the passage of time, or both) in a
breach of, or give rise to the right to terminate, accelerate or cancel any
obligation under, or require the payment of any fee, or constitute (with or
without notice or the passage of time, or both) a default under, any indenture,
mortgage, lien, order, judgment, ordinance, regulation, decree or other
agreement or instrument to which such Shareholder is subject or bound which, in
any such case described in clauses (a) through (c), could reasonably be expected
to materially and adversely affect or interfere in any way with such
Shareholder's ability to consummate the transactions contemplated by this
Agreement, or (d) result in the creation of any Encumbrance upon any of the ET
Shares shown as being held of record by such Shareholder on Exhibit A hereto.
There are no actions, proceedings, claims, complaints, grievances or
investigations pending or, to the knowledge of such Shareholder, threatened
against such Shareholder that could be reasonably expected to materially and
adversely affect such Shareholder's ability to consummate the transactions
contemplated by this Agreement.
3.4 Brokers. Such Shareholder has not paid or become obligated to
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pay any fee or commission to any broker, finder, investment banker or other
intermediary in connection with this Agreement.
3.5 No Agreements to Sell Shares. Except as contemplated by this
----------------------------
Agreement, such Shareholder has no legal obligation, absolute or contingent, to
any other person, firm or entity to sell, directly or indirectly, capital stock,
material assets or business of either Company or any Subsidiary or to effect any
merger, consolidation, liquidation, dissolution, recapitalization or other
reorganization of either Company or any Subsidiary or to enter into any
agreement with respect thereto.
3.6 Regulation S Representations and Covenants.
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(a) Such Shareholder understands and acknowledges that: (i) the Buyer
Shares have not been and will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), or under any state securities or blue
sky laws, and may not be offered, sold, transferred, pledged or otherwise
disposed of in the United States or to, or for the account or benefit of, any
"U.S. person" (as defined in Regulation S), unless they are registered under the
Securities Act and any applicable state securities or blue sky laws in
exemptions from such laws are available; and (ii) the Buyer Shares are being
offered and sold in a manner intended to comply with the conditions contained in
Regulation S, which permits securities to be sold in "offshore transactions" (as
defined in Regulation S), subject to certain terms and conditions. Such
Shareholder represents and warrants that he or she is not purchasing the Buyer
Shares in any transaction or series of transactions that, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the Securities Act.
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(b) Such Shareholder is not a "U.S. person" and is not acquiring the
Buyer Shares for the benefit of any "U.S. person." Such Shareholder is
knowledgeable, sophisticated and experienced in making, and qualified to make,
decisions with respect to investments in securities such as the Buyer Shares and
has requested, received, reviewed and considered all information he or she deems
relevant in making a decision to acquire the Buyer Shares.
(c) During the period of 40 days following the Closing (the
"Restricted Period"), such Shareholder will not engage in any activity for the
purpose of, or which may reasonably be expected to have the effect of,
conditioning the market in the United States for the Buyer Shares, or offer,
sell, transfer, pledge or otherwise dispose of the Buyer Shares in the United
States or to, or for the account or benefit of a "U.S. person." Any proposed
offer, sale, transfer, pledge or other disposition of any of the Buyer Shares
prior to the end of the Restricted Period will be subject to the prior delivery
by the Shareholder to the Buyer of: (i) a written certification that the Buyer
Shares have not been offered or sold in the United States or to, or for the
account or benefit of, any "U.S. person"; and (ii) a written certification of
the proposed transferee, reasonably acceptable to the Buyer, confirming that
such transferee is outside the United States, is not a "U.S. person," and that
the transfer is otherwise permissible under Regulation S. Such Shareholder will
not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose
of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) the Buyer Shares otherwise than in compliance with the Securities Act, any
applicable state securities or blue sky laws and any applicable securities laws
of jurisdictions outside the United States, and the rules and regulations
promulgated thereunder.
(d) Such Shareholder acknowledges that if he or she sells all or any
part of the Buyer Shares in the United States, he or she (and/or certain persons
who participate in any such sale) may be deemed, under certain circumstances, to
be an "underwriter," as defined in Section 2(11) of the Securities Act. Such
Shareholder understands that he or she should consult with United States legal
counsel prior to offering or selling all or any part of the Buyer Shares in the
United States.
(e) During the period that is five business days immediately prior to
the Closing, such Shareholder will not, and from the Closing and through the
expiration of the Restricted Period, such Shareholder will not, directly or
indirectly, execute or effect or cause to be executed or effected any short
sale, option or equity swap transaction in or with respect to the Common Stock
of Buyer or any other derivative security transaction, the purpose or effect of
which is to hedge or transfer to a third party all or any part of the risk of
loss associated with such Shareholder's ownership of the Buyer Shares.
(f) Such Shareholder acknowledges and agrees that the certificates
evidencing the Buyer Shares shall have a legend substantially as follows:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CONTRACTUAL RESTRICTIONS PURSUANT TO WHICH, PRIOR TO [40 DAYS
AFTER THE CLOSING] (THE "TERMINATION DATE"), NO OFFER, SALE,
TRANSFER, PLEDGE OR OTHER DISPOSITION (COLLECTIVELY, A
"DISPOSITION") OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY BE MADE UNLESS (A) THE DISPOSITION IS MADE OUTSIDE THE UNITED
STATES AND TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSON WHO
IS NOT A "U.S. PERSON," AND (B) PRIOR TO SUCH DISPOSITION, THE
BENEFICIAL OWNER OF SUCH SHARES AND THE PROPOSED TRANSFEREE
SUBMIT A CERTIFICATION AS DESCRIBED IN THAT CERTAIN SHARE
PURCHASE AGREEMENT PURSUANT TO WHICH THESE SECURITIES WERE
ISSUED. SUCH CONTRACTUAL RESTRICTIONS TERMINATE ON, AND THIS
LEGEND MAY BE REMOVED UPON PRESENTATION OF THIS STOCK CERTIFICATE
TO THE TRANSFER AGENT OR THE ISSUER AT ANY TIME AFTER THE
TERMINATION DATE."
(g) Such Shareholder will be entitled to obtain from the Buyer's
transfer agent (the "Transfer Agent") at any time from the first business day
following the Restricted Period one or more substitute stock certificates
without the restrictive legend described above upon surrender to the Transfer
Agent of the stock certificate or certificates delivered pursuant to the
preceding paragraph which, in the case of any holder subsequent to a Shareholder
must be duly endorsed for transfer or surrender and, in any event, must be
accompanied by payment of any amount necessary to be paid pursuant to any
transfer tax or similar governmental charge relating to such transaction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE MAJORITY SHAREHOLDER
Except as disclosed in the letter of disclosure (the "Company
Disclosure Letter") delivered to Buyer in connection herewith and initialled by
the Buyer and the Majority Shareholder for identification, the Majority
Shareholder represents and warrants to Buyer as follows:
4.1 Corporate Organization. Each of the Companies is a corporation
----------------------
duly organized, validly existing and in good standing under the laws of England,
with all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed could
7
reasonably be expected, individually or in the aggregate, to have a material
adverse effect upon the financial condition, prospects or results of operations
of the Companies and the Subsidiaries considered as a whole (a "Company Material
Adverse Effect"). True and complete copies of the Memorandum and Articles of
each Company have been delivered to Buyer.
4.2 Subsidiaries. A true and complete list of all direct and
------------
indirect subsidiaries other than the Dormant Subsidiaries (each, a "Subsidiary"
and collectively, the "Subsidiaries") of each of the Companies is set forth in
the Company Disclosure Letter. The Company Disclosure Letter also identifies
the inactive subsidiaries of the Companies (the "Dormant Subsidiaries"). None
of the Dormant Subsidiaries has any material assets or liabilities (contingent
or absolute) and none presently engages in any business activity. Since March
31, 1996 no Company or Subsidiary has paid any amounts to any of the Dormant
Subsidiaries, no amounts will be so paid at any time hereafter, and any net
intercompany payables of the Company and its Subsidiaries to the Dormant
Subsidiaries shall be forgiven or cancelled at the closing. As used in this
Article IV, references to a "Company" or the "Companies" shall, if appropriate
given the context of the representations being made, include each relevant
Subsidiary, even though no specific reference to any Subsidiary is so made.
Each Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, except that with
respect to the U.K. Subsidiaries, such Subsidiaries have been duly registered in
England and Wales under the Companies Xxx 0000. In each case such Subsidiaries
have all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed could
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect. All of the issued shares of capital stock of each such
Subsidiary have been duly and validly authorized and issued, are fully paid and
non-assessable, and are owned directly or indirectly by one of the Companies,
free and clear of any and all Encumbrances. Except with respect to the
ownership of the Subsidiaries by the Companies, neither Company nor any
Subsidiary owns, directly or indirectly, any stock, partnership interest, joint
venture interest or other security, investment or interest in any other
corporation, organization, partnership, limited liability company or entity.
4.3 Share Capital; Title to ET Shares.
---------------------------------
(a) Capital Stock. As of the date hereof, the authorized share
-------------
capital of (i) ET consists in its entirety of five hundred seventy five (575)
shares of (Pounds)1 each, of which five hundred seventy (570) are issued and
outstanding, and (ii) ETE consists in its entirety of ten thousand (10,000)
shares of (Pounds)1 each, eighty-two (82) of which are Class A Shares and nine
thousand nine hundred and eighteen (9,918) of which are Class B shares, all of
which are issued and outstanding. All of the issued shares of each of the
Companies have been duly authorized and validly issued and are fully paid and
non-assessable and except as set forth in the Company Disclosure Letter, free of
preemptive rights with respect thereto
8
and were issued in compliance with all applicable securities laws and
regulations. There are no voting trusts or other agreements, arrangements or
understandings with respect to the voting of the shares of the Companies to
which either Company or, to the best knowledge (as defined in Section 9.2
hereof) of the Companies, any other person is a party. There are no
registration rights, subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of any character relating to the
issued or unissued share capital or other securities of either of the Companies
and there are no outstanding contractual obligations of either of the Companies
to repurchase, redeem or otherwise acquire or sell, issue or otherwise transfer
any of the share capital thereof.
(b) Title to Shares. Exhibit A hereto sets forth the record ownership
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of the ET Shares. To the best knowledge of the Companies, (i) each Shareholder
has good and marketable title in and to the respective ET Shares set forth
opposite such Shareholder's name on Exhibit A hereto, (ii) the ET Shares are,
and on the Closing Date will be, free and clear of any and all Encumbrances, and
(iii) on the Closing, upon consummation of the transactions contemplated by this
Agreement, including delivery by Buyer of the consideration set forth in
Sections 1.3 and 1.4 hereof, Buyer will acquire good and marketable title to all
of the ET Shares and the US Shares, free and clear of any and all Encumbrances.
4.4 Authority. Each Company has the full corporate power and
---------
authority to execute and deliver this Agreement and each other agreement
contemplated hereby, to carry out its obligations hereunder and thereunder and
to consummate the transactions contemplated on its part hereby and thereby. The
execution, delivery and performance by each Company of this Agreement and the
consummation of the transactions contemplated on its part hereby have been duly
authorized by its Board of Directors and by the shareholders thereof, and no
other corporate proceedings on the part of either Company are necessary to
authorize the execution and delivery of this Agreement by such Company to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by each Company and constitutes the legal, valid and
binding obligations of each Company, enforceable against each Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors' rights generally
and subject to general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Each other
agreement to be executed in connection with this Agreement on or prior to the
Closing Date will be duly executed and delivered by each Company, and will
constitute a legal, valid and binding obligation of each Company, enforceable
against each Company in accordance with its respective terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization, or similar laws
affecting creditors' rights generally and subject to general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
4.5 No Violations or Consents. The execution, delivery and
-------------------------
performance of this Agreement by the Companies and the consummation by them of
the transactions contemplated hereby will not (a) violate or conflict with any
provision of any law specifically
9
applicable to their business or by which any property or asset of theirs is
bound, (b) require the consent, waiver, approval, license or authorization of or
any filing by them with any public authority (other than (i) if necessary, the
filing of a pre-merger notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and applicable U.K./EEC
antitrust statutes, and (ii) any other filings and approvals expressly
contemplated by this Agreement), (c) violate, conflict with, result in a breach
of or the acceleration of any obligation under, or constitute a default (or an
event which with notice or the lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on any property or
asset of theirs pursuant to any provision of any charter or by-law, indenture,
mortgage, lien, lease, agreement, contract, instrument, order, judgment,
ordinance, regulation or decree to which either of the Companies are subject or
by which either Company or its respective properties or assets are bound, or (d)
result in a loss or adverse modification of any license, permit, certificate,
franchise or contract granted to or otherwise held by either of the Companies
which, in any such case described in clauses (a) through (d), could reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
4.6 Litigation. There are no actions, proceedings, claims,
----------
complaints, grievances, investigations or unfair labor practice complaints or
grievances or investigations (collectively, "Actions") pending or, to the best
knowledge of the Companies, threatened against either Company, any Subsidiary or
any of their assets or properties before any court or governmental or regulatory
authority or body or arbitrator (an "Authority") which could reasonably be
expected to have a Company Material Adverse Effect. There are no Actions
pending or, to the knowledge of the Companies, threatened against either Company
or any Subsidiary that could be reasonably expected to materially and adversely
affect on their part the consummation of the transactions contemplated by this
Agreement. None of the assets or property of either Company or any Subsidiary
is subject to any order, judgment, injunction, writ or decree, which could
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
4.7 Financial Statements. Each Company has previously delivered to
--------------------
Buyer its financial statements for the years ended June 30, 1991, 1992, 1993,
1994 and 1995, as audited by Xxxxx Xxxxxxx & Xxxxxx, which financial statements
included (a) a consolidated profit and loss account for the year then ended, (b)
a consolidated balance sheet as at such date, (c) a company balance sheet as at
such date, (d) a consolidated cash flow statement for the year then ended, (e) a
consolidated schedule of tangible fixed assets as at such date, (f) a company
schedule of tangible fixed assets as at such date and (g) notes to the accounts
for the year then ended (collectively, the "Audited Financial Statements").
Each Company has also previously delivered to Buyer its unaudited management
accounts at March 31, 1996 (the "Unaudited Financial Statements," and
collectively with the Audited Financial Statements, the "Financial Statements").
The Audited Financial Statements give a true and fair view of the Companies as
at the date (the "Accounting Date") on which such accounts were made up and of
the profits of each of the Companies for the accounting
10
reference period ending on that date, comply with all current SSAP's applicable
to a United Kingdom company and with the requirements of the Companies Xxx 0000
and with all other applicable legislation, and each of the said Audited
Financial Statements properly reflect the financial position of each of the
Companies as at the relevant Accounting Date and were prepared in accordance
with the historical cost convention. "SSAP" for this purpose means a Statement
of Standard Accounting Practice in force at the relevant Accounting Date as
issued by the Institute of Chartered Accountants in England and Wales. The
Unaudited Financial Statements have been prepared in accordance with the books
and records of the Companies, contain no material inaccuracies, and follow the
same principles as consistently applied to the Audited Financial Statements.
4.8 No Liabilities. Neither Company nor any Subsidiary has any
--------------
material liabilities, obligations or commitments of any nature (whether
absolute, accrued, contingent or otherwise and whether matured or unmatured),
including without limitation, any liabilities due or to become due to any taxing
authority having jurisdiction over such entities, except (a) liabilities
reflected in, reserved against, or disclosed in the footnotes of, the balance
sheet of such Company or Subsidiary at March 31, 1996 included in the Unaudited
Financial Statements, and (b) liabilities, obligations or commitments incurred
since March 31, 1996 in the ordinary course of such Company's or Subsidiary's
business or that are not material to the business of the Companies and the
Subsidiaries, taken as a whole.
4.9 Absence of Certain Changes or Events. Since March 31, 1996, each
------------------------------------
of the Companies and the Subsidiaries have conducted their respective businesses
in the ordinary course and, except pursuant to this Agreement and the
transactions contemplated hereby, there has not been any:
(a) material adverse change in the financial condition, assets,
liabilities, business, operations, results of operations or prospects of either
Company or any Subsidiary or any other event or condition which in any one case
or in the aggregate has materially and adversely affected either Company or any
Subsidiary or any event or condition which it is reasonable to expect will
individually or in the aggregate materially adversely affect the Companies and
the Subsidiaries taken as a whole (any such event being herein referred to as a
"Company Material Adverse Change");
(b) declaration, waiver or payment of any dividend or other
distribution or payment (whether in cash, shares or property) with respect to
the share capital of either Company or any Subsidiary, or any redemption,
purchase or other acquisition of any of the securities of any Company or
Subsidiary, or any other payment to any shareholder of any Company or Subsidiary
in its capacity as a shareholder;
(c) issuance by either Company or any Subsidiary of, or commitment by
any of them to issue, any share capital or obligations or any securities
convertible into or exchangeable or exercisable for shares or other securities;
or
11
(d) indebtedness for borrowed money incurred by either Company or any
Subsidiary or any commitment to incur indebtedness for borrowed money entered
into by such Company or Subsidiary, or any loans made or agreed to be made to
such Company or Subsidiary other than pursuant to commitments or credit
facilities existing on March 31, 1996 and described in the Unaudited Financial
Statements (or replacements thereof described in the Company Disclosure Letter).
4.10 Insurance. Each Company and Subsidiary has in full force
---------
policies of insurance issued by insurers of good repute insuring it and its
properties and business against such losses and risks, and in such amounts, as
in its best judgment, after advice from its insurance broker, are acceptable for
the nature and extent of such business and its resources. No Company or
Subsidiary is in default with respect to any material provision contained in any
insurance policy, and none has failed to give any notice or present any existing
claims it has under its insurance policies in a timely fashion.
4.11 Employee Benefits and Pension Scheme.
------------------------------------
(a) Except as set forth in the Company Disclosure Letter, there are no
agreements, arrangements, customs or practice (whether legally enforceable or
not) in operation for the provision of, or payment or contributions towards, and
no Company or Subsidiary has any liability or obligation to pay, any "relevant
benefits" (as defined in Section 612 of the United Kingdom Income and
Corporation Taxes Act 1988 (the "Taxes Act of 1988")), pensions, gratuities,
allowances, lump sums or other like benefits on or after retirement or death or
during periods of sickness, accident, incapacity or disablement for the benefit
of any employee or former employee of either Company or of any Subsidiary (each,
an "Employee") or such Employee's dependents, nor has any proposal been
announced or promise made to establish any such agreement, arrangement or
practice.
(b) There have been disclosed to Buyer true and correct copies of (i)
the current trust deed and rules governing the Companies' Retirement Benefit
Scheme (the "Company's Scheme"), including deeds of alteration, (ii) the current
explanatory booklet issued to members of the Company's Scheme, (iii) all
announcements to members of the Company's Scheme (or to Employees concerning the
Company's Scheme) other than announcements to members of the Company's Scheme
generally which have been fully incorporated into the documents referred to in
paragraph (d)(i) and (ii), (iv) the latest trustee's report and the latest
financial statements of the Company's Scheme (the "Accounts"), (v) the most
recent schedule of member benefits, indicating the number of Employees who are
members of the Company's Scheme, category of membership, pensionable salary,
prospective pension and death in service benefits and pension paid, (vi)
schedules of Employees, indicating name, sex, date of birth, date of joining the
Companies or a Subsidiary, and current salary and (vii) schedules of benefit
structures indicating the relevant benefits provided or to be provided for
Employees under the Company's Scheme in respect of all different categories of
membership.
12
(c) To the best knowledge of the Companies, the pension arrangements
of each Company and Subsidiary, including without limitation, the Company's
Scheme (collectively, the "Pension Arrangements"), have, at all times, been
administered in all material respects in accordance with all applicable laws,
rules and regulations.
(d) To the best knowledge of the Companies, no discretion or power has
been exercised under the Company's Scheme in respect of the Employees to at any
time provide benefits in excess of those specifically provided for in the
Company's Scheme.
(e) No undertaking or assurance (whether or not constituting a legal
binding commitment) has been given to any Employee about the continuation of the
Company's Scheme or any alteration to or exception from its terms or the
increase or improvement of benefits.
(f) There are not, at the date of this Agreement, any outstanding
contributions due to or under any Pension Arrangement, or that may become due to
or under any Pension Arrangement with respect to any period prior to the
Closing, from any Company or Subsidiary or any Employee or former Employee,
except with respect to any such outstanding contributions that have been
reserved against in the Financial Statements or that have occurred in the
ordinary course of business since April 1, 1996.
(g) The Company's Scheme is exempt approved (within the meaning of
Section 592(1) of the Taxes Act of 1988) and is contracted out (for the purposes
of the Pension Schemes Act 1993) and, to the best knowledge of the Companies,
there are not facts or circumstances which may cause the withdrawal of approval
by the Inland Revenue or cancellation of the contracted out status by the
Occupational Pensions Board.
(h) In respect of any of the Employees: there are no Actions in
progress, pending or, to the best knowledge of the Companies, threatened against
the Company's Scheme, any of the Companies or Subsidiaries or any of their
trustees; and, to the best knowledge of the Companies, there are no
investigations, inquiries, complaints or disciplinary proceedings by or before
any government body or the Pensions Ombudsman concerning the Company's Scheme
and none are pending or threatened.
(i) To the best knowledge of the Companies, the Company's Scheme has
and the Companies and Subsidiaries and the trustee to the Company's Scheme and
the Employees have in relation to the each Pension Arrangement in all material
respects performed, observed and complied with, and each such Pension
Arrangement has been administered in all material respects in accordance with,
all requirements of all applicable laws, including without limitation, all
relevant statutes and subordinate legislation of the United Kingdom and all
relevant provisions of the law of the European Union, all applicable laws in
relation to the trusts, powers and provisions of each such Pension Arrangement
and all regulations, orders, contracts, agreements, licenses or obligations of
whatsoever nature,
13
including without limitation, requirements of the United Kingdom Inland Revenue
or the Occupational Pensions Board and of trust law, which affect each such
Pension Arrangement or its operation; and all exercises or purported exercises
of powers or discretions in relation to each such Pension Arrangement, including
without limitation, the power of amendment, have been in all material respects
proper and valid exercises of those powers or discretions.
4.12 Material Contracts and Other Agreements. The Company Disclosure
---------------------------------------
Letter discloses (a) all agreements or contracts whether or not fully performed
pursuant to which either Company or any Subsidiary has since July 1, 1995
acquired or disposed of any business or assets exceeding (Pounds)75,000 in
value, other than sales of inventory or contracts with suppliers, each in the
ordinary course of business; (b) all agreements containing covenants not to
compete on the part of either Company or any Subsidiary or otherwise restricting
the ability of such Company or Subsidiary in any material way to engage in its
business; (c) all material notes, mortgages, indentures, letters of credit,
guarantees, performance bonds and other obligations and agreements and other
instruments for or relating to any lending or borrowing (including assumed debt)
entered into by either Company or any Subsidiary or pursuant to which any
properties or assets of any Company or Subsidiary are pledged or mortgaged as
collateral; and (d) all agreements to which any of the Companies or Subsidiaries
is a party containing provisions restricting or providing exclusive rights with
respect to the development, manufacture or marketing of products which, after
the Closing, would be applicable to the business or products of the Buyer or
Buyer's Subsidiary (as defined in Section 5.2) by reason of the transactions
contemplated by this Agreement.
4.13 Suppliers and Customers. The Companies have delivered to Buyer
-----------------------
a list which accurately sets forth (a) the ten (10) largest suppliers of the
Companies and the Subsidiaries (considered as a whole) for the nine months ended
March 31, 1996 (the "Large Suppliers"), (b) the amount of all payments made to
each Large Supplier for such fiscal period, (c) the ten (10) largest customers
or groups of related customers of the Companies and the Subsidiaries (considered
as a whole) for the nine months ended March 31, 1996 (the "Large Customers") and
(d) the amount of all payments made by such Large Customers for such fiscal
period. No supplier is a sole source of supply of any good or service used by
the Companies or by any Subsidiary. None of the Large Suppliers or Large
Customers has canceled or otherwise terminated, or threatened in writing, by
notice to any Company or Subsidiary, to cancel or otherwise terminate, its
relationship with either Company or with any Subsidiary or, since March 31,
1996, decreased materially, or threatened to decrease or limit materially, its
services, supplies or materials to either Company or any Subsidiary or its usage
or purchase of the products or services of such Company or Subsidiary, which, in
any case, would result in a Company Material Adverse Change.
4.14 Real Property. The Company Disclosure Letter sets forth all
-------------
freehold and leasehold real property of the Companies. All such freehold and
leasehold real property is collectively referred to herein as the "Real
Property." The Real Property comprises all land and premises owned, occupied or
used by, or in the possession of, the Companies and Subsidiaries. The Companies
have good and marketable title to the freehold Real Property,
14
and true and correct copies of all leases concerning the leasehold Real Property
have been delivered to the Buyer. There is appurtenant to the Real Property
each right and easement necessary in all material respects for its existing and
continued use.
4.15 Condition of the Real Property; Rights of Use; Liabilities.
----------------------------------------------------------
(a) Neither the Real Property nor any of its title deeds is subject to
an encumbrance, agreement, obligation, condition, right, easement, exception,
reservation, overriding interest (as defined in sub-section 70(1) of the Land
Registration Act 1925) or other interest. There is no person in possession or
occupation of, or who has or claims a right or interest of any kind in, the Real
Property adversely to any Company's or Subsidiary's interest.
(b) No Action concerning any Real Property is pending or, to the best
knowledge of any Company or Subsidiary, threatened. To the best knowledge of
each Company and Subsidiary, no matter exists which may give rise to a
proceeding of that type. To the best knowledge of the Companies, there is no
outstanding notice affecting the Real Property.
(c) To the best knowledge of each Company and Subsidiary, there is no
resolution or proposal for compulsory acquisition of the Real Property by a
local or other authority.
(d) Subject to the terms and conditions of the applicable leasehold
agreements, where any Company or Subsidiary holds Real Property under a lease,
tenancy or license, no person, including without limitation, the landlord or
licensor, may bring the term to an end before the expiry of the lease, tenancy
or license by effluxion of time (except by forfeiture). Subject to the terms
and conditions of the applicable leasehold agreements, to the best knowledge of
the Companies there is no matter which could (i) entitle or require a person,
including without limitation, a landlord or licensor, to forfeit or enter on, or
take possession of, or occupy, the Real Property, (ii) restrict or terminate the
Company's or Subsidiary's continued and uninterrupted possession or occupation
of the Real Property or (iii) prevent or restrict the Real Property's
development for which planning permission has been or is expected to be
obtained. No rent or fee payable in respect of any of the Real Property is, as
of the date hereof, being reviewed except where such reviews could not
reasonably be expected to result in rent increases exceeding (Pounds)150,000
annually, in the aggregate. No person, including without limitation, a landlord
or licensor, has elected to waive an exemption from payment by any Company or
Subsidiary of value added tax in respect of a payment made under the lease,
tenancy or license.
4.16 Compliance with Laws. The Companies and the Subsidiaries are in
--------------------
compliance with applicable laws, statutes, ordinances, rules and regulations,
orders or other requirements, including without limitation, applicable
franchise, building, planning, health, environmental, sanitation, safety,
employment relations and other laws, ordinances or
15
regulations, other than violations, if any, which, individually or in the
aggregate, could not reasonably be expected to have a Company Material Adverse
Effect. Neither Company nor any Subsidiary has received any notice from any
person asserting a present or past failure by either Company or any Subsidiary
to comply in any material respect with such laws, statutes, ordinances, rules,
regulations, orders or other requirements.
4.17 Licenses and Permits. Each Company and Subsidiary has all
--------------------
material governmental or regulatory licenses, permits and authorizations (all of
which are in full force and effect) reasonably necessary to conduct its business
as it is now being conducted, except for such governmental or regulatory
licenses, permits and authorizations the absence of which could not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, and none of such governmental or regulatory licenses, permits
and authorizations will be impaired as a result of the transactions contemplated
by this Agreement, except in any case that could not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. No
Company or Subsidiary has received any notice to the effect that, or otherwise
been advised that, it is not in compliance with, or that it is in violation of,
any such governmental or regulatory licenses, permits and authorizations in a
manner that could reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, and, to the best knowledge of each
Company and Subsidiary, there are no currently existing circumstances that are
likely to result in a failure of any Company or Subsidiary to comply with, or in
a violation by any Company or Subsidiary of, any such governmental or regulatory
licenses, permits or authorizations that could reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
4.18 Title to Assets. The Companies and the Subsidiaries have good
---------------
and marketable title to all of the owned tangible personal property used in the
conduct of their businesses, free and clear of all Encumbrances, except for
assets disposed of in the ordinary course of business. Each Company and each
Subsidiary has good and valid leasehold title to all leased tangible personal
property leased by it from third parties, free and clear of all Encumbrances,
except for imperfections which individually or in the aggregate could not
reasonably be expected to cause a Company Material Adverse Effect, and subject
to the rights of the lessor in and to such tangible personal property as is
subject to hire, leasing or rental agreements.
4.19 Inventory. The value at which the inventory of each Company and
---------
Subsidiary is carried on each Company's consolidated balance sheet for the
fiscal year ended June 30, 1995 (the "Consolidated Balance Sheet") and each
Company's consolidated balance sheet for the quarter ended March 31, 1996 (the
"March Balance Sheet"), as included in the Financial Statements, reflects the
customary inventory valuation policy of each Company and its Subsidiaries and is
in accordance with SSAP and the Companies Xxx 0000. Since March 31, 1996, the
Companies and the Subsidiaries have in all material respects continued to
replenish their inventory in the ordinary course of business consistent with
past practice, and have not made any material change in their inventory policies
or procedures.
16
4.20 Backlog. The Companies have delivered to Buyer a description of
-------
each Company's and, to the extent applicable, each Subsidiary's backlog of
orders believed firm at March 31, 1996, indicating each applicable customer,
purchase order, type of product(s), scheduled shipment date(s), dollar amount(s)
of scheduled shipment(s) and customer deposits or payments, if any, made with
respect thereto.
4.21 Taxes.
-----
(a) The Audited Financial Statements and, based upon information then
available and reasonably believed to be adequate, the Unaudited Financial
Statements, make full provision for all taxation for which each Company and
Subsidiary was at each applicable Accounting Date or thereafter became or may
hereafter become liable or accountable in respect of or by reference to any
income, profit, receipt, gain, transaction, agreement, distribution or event
which was earned, accrued, received, realized, entered into, paid, made or
accrued on or occurred before such Accounting Date and proper provision was made
therein for deferred taxation in accordance with SSAP, and each Company and
Subsidiary has promptly paid or fully provided in its books of account for all
taxation for which it has or may hereafter become liable or accountable in the
period from the Accounting Date to closing.
(b) All returns, computations and payments which should be or should
have been made by each Company and Subsidiary for any taxation purpose have been
made within the requisite periods and are up-to-date, correct and on a proper
basis.
(c) Since the relevant Accounting Date no further liability or
contingent liability for taxation on any Company or Subsidiary has arisen or is
likely to or will arise otherwise than as a result of transactions (not
including distributions) entered into by such Company or Subsidiary in the
ordinary course of trading after the relevant Accounting Date.
(d) No Company or Subsidiary is aware of any circumstance which will
or may, whether by lapse of time or the issue of any notice of assessment or
otherwise, give rise to any dispute with any relevant taxation authority in
relation to its liability or accountability for taxation, any claim made by it,
any relief, deduction or allowance afforded to it, or in relation to the status
or character of each Company and Subsidiary (whether as to its status as an
unquoted trading private close company or as a member of any group) under or for
the purpose of any provision of any legislation relating to taxation.
(e) Each Company and Subsidiary has in all material respects duly
deducted and accounted for all amounts which it has been obliged to deduct or
withhold in respect of taxation and, in particular, has properly operated the
PAYE system, by deducting tax, as required by applicable law, from all payments
made, or treated as made, to its employees or former employees, and in all
material respects accounted to the Inland Revenue
17
for all tax so deducted and for all tax chargeable on benefits provided for its
Employees or former Employees.
(f) Each Company and Subsidiary is not nor will it become liable in
any material respect to pay or make reimbursement or indemnity in respect of any
taxation (or amounts corresponding thereto) in consequence of the failure by any
person (other than either Company or any Subsidiary (the "Group")) to discharge
that taxation within any specified period or otherwise, where such taxation
relates to a profit, income or gain, transaction, event, omission or
circumstance arising, occurring or deemed to arise or occur (whether wholly or
party) prior to closing.
(g) Each Company and Subsidiary has not since the relevant Accounting
Date incurred nor has it become liable to incur after that date any material
expenditure which will not be wholly deductible in computing its taxable
profits, except for expenditure on the acquisition of an asset to be held
otherwise than as stock-in-trade.
(h) If any Company or Subsidiary is or any time during the six (6)
years ended on March 31, 1996 has been a close company within the meaning of
Sections 414 and 415 of the Taxes Act of 1988, no apportionment within Sections
423-430 of the Taxes Act of 1988 and Schedule 19 to the Taxes Act of 1988 has
ever been made or threatened against any Company or Subsidiary nor are there
circumstances under which any apportionment could be made; no loan or advance
within Sections 419, 420 or 422 of the Taxes Act of 1988 has ever been made by
any Company or Subsidiary; and each Company and Subsidiary has at all times been
a "trading company" or a "member of a trading group" within paragraph 7 of
Schedule 19 to the Taxes Act of 1988.
(i) Each Company and Subsidiary has not since March 31, 1996 made or
received or agreed to make or receive any material surrender relating to group
relief or the benefit of advance corporation tax otherwise than to or from
another company in the Group.
(j) Except solely with respect to profit or gain accruing to ETE by
reason of the sale of the US Shares hereunder, the execution or completion of
this Agreement will not result in any profit or gain being deemed to accrue to
any Company or Subsidiary for taxation purposes.
(k) Each Company and Subsidiary has not in the six (6) years ended on
the date of this Agreement carried out or been engaged in any material
transaction or arrangement in respect of which there may be substituted for the
actual consideration given or received by any Company or Subsidiary a different
consideration for any taxation purposes.
18
(l) No Company or Subsidiary nor any other person has made any claim
for roll-over relief or any other claim which affects or could affect the amount
of the chargeable gains or allowable losses which would, but for such claim,
arise on a disposal by the relevant Company of any of its assets.
(m) Each Company and Subsidiary has duly registered and is a taxable
person for the purposes of value added tax. Each Company and Subsidiary is not
and has not been, for such purposes, a member of any group of companies (other
than the Group), and no act or transaction has been effected in consequence
whereof the Company is or may be held liable for any material value added tax
chargeable against some other company except where that other company is a
company in the Group.
(n) No Company or Subsidiary has obtained any exemption or relief from
United Kingdom stamp duty or capital duty which has become liable to forfeiture
or obtained such exemption or relief in respect of a transaction carried out
within the period in which it may become liable to forfeiture.
(o) No Company or Subsidiary has given or been required to give any
security for taxation.
(p) No Company or Subsidiary has been or is now a party to any
material transaction or arrangement containing steps inserted without any
commercial or business purpose nor has it or any of its associates applied to
the United Kingdom Inland Revenue or any other taxation authority for any
clearance for taxation purposes in relation to any transaction or arrangement
involving the relevant Company or Subsidiary.
(q) In this subsection 4.21, "taxation" shall mean all forms of
taxation, dues, duties, imposts, levies and rates of the United Kingdom or any
other jurisdiction whenever and wheresoever charged, imposed or deducted
together with all costs, charges, interests, penalties, fines relating to or
arising in connection with any and all such taxes, dues, duties, imposts, levies
and rates or any actual claim in respect thereof, including without limitation,
income tax, PAYE, national insurance contributions, corporation tax, advance
corporation tax, capital gains tax, value added tax, customs and other import
duties, stamp duty, stamp duty reserve tax, withholding tax, capital duty,
capital transfer tax and inheritance tax and any liability arising under Section
601 of the Taxes Act of 1988.
(r) Notwithstanding anything contained herein to the contrary, each of
the representations and warranties contained in this Section 4.21 shall only
relate to those events, facts, conditions or circumstances that have or could
reasonably be expected to have, either individually or in the aggregate, a
Company Material Adverse Effect.
19
4.22 Environmental Matters.
---------------------
(a) To the best knowledge of each Company and Subsidiary, no land or
other asset owned occupied, possessed or used by any Company or Subsidiary on or
at any time before the date of this Agreement (i) contains or has contained (in
the case of land, above or below ground) a hazardous substance or article, waste
or other pollutant or contaminant, (ii) is or has been used for the deposit,
storage, treatment or disposal or waste or sewage or (iii) is referred to or
listed in a register of polluted or contaminated land, and no matter exists
which might give rise to an entry in such a register.
(b) To the best knowledge of each Company and Subsidiary, each Company
and Subsidiary has obtained and received no notice of breach of the terms and
conditions of each governmental or regulatory license, permit or authorization
(collectively, the "Environmental Permits"), and all applicable legal and
administrative requirements, concerned with the pollution or protection of the
environment (including the disposal of waste) or harm to or the protection of
the health of humans, animals or plants. No Company or Subsidiary is aware of
any expenditure or work which is or will be necessary to comply with, maintain
or obtain any such Environmental Permit. To the best knowledge of each Company
and Subsidiary, no release or discharge or a hazardous substance or article,
waste, sewage or other pollutant or contaminant has exceeded an allowed quota or
limit prescribed or specified under any applicable legal or administrative
requirement or in a condition to an Environmental Permit.
(c) No Company or Subsidiary and, to the best knowledge of each
Company and Subsidiary, no person for whose acts or defaults the relevant
Company or Subsidiary may be vicariously liable is involved, or has during the
five (5) years ending on the date of this Agreement been involved, in a civil,
criminal, arbitration, administrative or other proceeding concerned with the
pollution or protection of the environment, or harm to or the protection of the
health of humans, animals or plants in any relevant jurisdiction. No civil,
criminal, arbitration, administrative or other proceeding of that type is
pending or, to the best knowledge of any Company or Subsidiary, threatened by
or against any Company or Subsidiary or a person for whose acts or defaults any
Company or Subsidiary may be vicariously liable. To the best knowledge of each
Company and Subsidiary, no matter exists which might reasonably be expected to
give rise to a proceeding of that type.
(d) There is and has been no governmental or other investigation,
enquiry or disciplinary proceeding relating to the pollution or protection of
the environment, or harm to or the production of the health of humans, animals
or plants, concerning any Company or Subsidiary and none is pending or, to the
best knowledge of any Company or Subsidiary, threatened. To the best knowledge
of each Company and Subsidiary, no matter exists which might give rise to an
investigation, enquiry or proceeding of that type.
(e) To the best knowledge of each Company and Subsidiary, no Company
or Subsidiary has a liability (actual or contingent, or which might hereafter
arise)
20
to make good, repair, re-instate or clean up land or any other asset on or
before the date of this Agreement owned, occupied, possessed or used by the
relevant Company or Subsidiary.
(f) Notwithstanding the foregoing, each of the representations or
warranties contained in clauses (a) through (e) above shall only relate to those
events, facts, conditions or circumstances that have or could be reasonably
expected to have, either individually or in the aggregate, a Company Material
Adverse Effect.
4.23 Board of Directors and Shareholder Approval. The Board of
-------------------------------------------
Directors of each Company has unanimously approved the transactions contemplated
by this Agreement. Such actions of the Board of Directors remain in full force
and effect and no other action on the part of the Board of Directors or
shareholders of any Company or Subsidiary shall be necessary to consummate the
transactions contemplated by this Agreement.
4.24 Brokers; Certain Expenses. Except with respect to investment
-------------------------
banking fees payable to Xxxxxxxxx & Xxxxx (in the amount previously disclosed to
the Buyer by the Companies which will be paid by Buyer at the Closing) and the
payment to be made by the Company referred to in Section 6.13(iii), no Company
or Subsidiary has paid or become obligated to pay any fee or commission to any
broker, finder, investment banker or other intermediary in connection with this
Agreement.
4.25 No Agreements to Sell Companies. Except as contemplated by this
-------------------------------
Agreement, no Company or Subsidiary has any legal obligation, absolute or
contingent, to any other person, firm or entity to sell, directly or indirectly,
capital stock, material assets (other than inventory in the ordinary course of
business) or business of either Company or any Subsidiary or to effect any
merger, consolidation, liquidation, dissolution, recapitalization or other
reorganization of either Company or any Subsidiary or to enter into any
agreement with respect thereto.
4.26 Related-Party Transactions. Except as described in the Company
--------------------------
Disclosure Letter, since July 1, 1993 no director or executive officer of any
Company or Subsidiary, nor any security holder owning more than 5% of the
outstanding shares of either Company, nor any Associate or member of the
immediate family of the foregoing persons (a) has engaged in any transaction, or
series of similar transactions, to which either Company or any Subsidiary was or
is to be a party, in which the amount involved exceeded or exceeds US$60,000,
except in respect of compensation for services rendered as an employee in the
ordinary course of business, (b) has owned, of record or beneficially, in excess
of a 10% equity interest in, any business or professional entity that has made
payments to, or received payments from, either Company or any Subsidiary in the
aggregate exceeding US$60,000 in any full fiscal year, or (c) is or has been
indebted to either Company or any Subsidiary at any time in an amount in excess
of US$60,000. "Associate" shall mean, in relation to any person, a person who
is connected with that person. Whether a person is so connected shall be
determined in accordance with Section 839 of the Taxes Act of 1988 save that in
21
construing Section 839 the term "control" shall have the meaning given by
Section 840 or Section 416 of the said Taxes Act of 1988 so that there shall be
control wherever either of the said sections would so require.
4.27 Employees; Labor Matters.
------------------------
(a) There is no employment or other contract of engagement (written or
otherwise) between any Company or Subsidiary and any of its directors or
officers, other than at-will employment agreements equivalent in all material
respects (except only as to position and compensation) to the forms previously
delivered by the Companies to the Buyer. No Company or Subsidiary is a party to
a consultancy contract with any such persons.
(b) There is no employment contract between any Company or Subsidiary
and any of its Employees which cannot be terminated by three months' notice or
less without giving rise to a claim for damage or compensation (other than a
statutory redundancy payment or statutory compensation for unfair dismissal).
(c) The Company Disclosure Letter includes true and complete copies of
the employment contract of each director, other officer and Employee of each
Company and Subsidiary entitled to remuneration at an annual rate, or an average
annual rate over the last three financial years, of more than Forty Thousand
Pounds Sterling ((Pounds)40,000).
(d) The basis of the remuneration payable to each Company's directors,
other officers and Employees is the same as that in force at March 31, 1996. No
Company or Subsidiary is obligated to increase, nor has it made provision to
increase, the total annual remuneration payable to its directors, other officers
and Employees by more than five percent (5%) or to increase the rate of
remuneration of a director, other officer or Employee entitled to annual
remuneration of more than Forty Thousand Pounds Sterling ((Pounds)40,000).
(e) No Company or Subsidiary owes any amount to a present or former
director, other officer or Employee (or his or her dependent) other than for
accrued remuneration or reimbursement of business expenses.
(f) Each Company and Subsidiary has in all material respects complied
with (i) each legally binding obligation imposed on it by, and each order and
award made under, statute, regulation, code or conduct and practice, collective
agreement, custom and practice relevant to the relations between it and its
Employees or a trade union or the terms of employment or its employees and (ii)
each recommendation made by the Advisory Conciliation and Arbitration Service
and each award and declaration made by the Central Arbitration Committee.
22
(g) Within the year ending on the date of this Agreement no Company or
Subsidiary has (i) given notice or redundancies to the relevant Secretary of
State or started consultations with a trade union under Part IV of the
Employment Protection Act 1975 or failed to comply with its obligations under
Part IV of that Act or (ii) been a transferor or transferee in respect of a
relevant transfer (as defined in the Transfer of Undertakings (Protection of
Employment) Regulations 1981) or failed to comply with a duty to inform and
consult a trade union under those Regulations.
(h) No Company or Subsidiary has any agreement or arrangement with,
and does not recognize, a trade union, works council, staff association or other
body representing any of its Employees. No Company or Subsidiary is involved in
a dispute with a trade union, works council, staff association or other body
representing any of its Employees.
(i) No Company or Subsidiary has nor is proposing to introduce a share
incentive, share option, profit sharing, bonus or other incentive scheme for any
of its directors, officers or other Employees.
(j) There is and has been no training scheme, arrangement or proposal
in relation to any Company or Subsidiary in respect of which a levy may become
payable by it under the Industrial Training Xxx 0000.
4.28 Proprietary Rights. Each Company and Subsidiary (a) owns or has
------------------
the right to use, free and clear of all Encumbrances, all patents, patent
applications, trademarks, service marks, trade names, copyrights, trade secrets,
licenses and similar rights with respect to the foregoing, necessary for and
used in the conduct of its business as now conducted, to its best knowledge,
without infringing upon or otherwise acting adversely to the right or claimed
right of any person under or with respect to any of the foregoing, (b) is not
contractually or, to its best knowledge, otherwise obligated to make any
material payments by way of royalties, fees or otherwise to any owner of,
licensor of, or other claimant to, any patent, trade secret, trademark, trade
name, copyright or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise, (c) has not received
any notice of conflict with the asserted rights of others with respect to such
matters, (d) owns or has the unrestricted right to use all trade secrets,
including know-how, customer lists, inventions, designs, processes, computer
programs and technical data used by it in the development, operation and sale of
all products and services sold by it, to its best knowledge free and clear of
any rights, liens or claims of others, and (e) to its best knowledge is not
using any confidential information or trade secrets of others. A list of all
patent, patent applications, trademarks, trademark applications, licenses and
trade names which any Company or Subsidiary has taken action to obtain, perfect
or protect by filings with any governmental agency are contained in the Company
Disclosure Letter.
4.29 Disclosure. No representation or warranty by the Majority
----------
Shareholder in this Agreement contains any untrue statement of a material fact
or omits to state any
23
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER
Except as disclosed in the Letter of Disclosure delivered to the
Companies and the Shareholders in connection herewith and initialled by the
Buyer and the Majority Shareholder for identification (the "Buyer's Disclosure
Letter"), Buyer represents and warrants to the Shareholders as follows:
5.1 Corporate Organization. Buyer is a corporation duly organized,
----------------------
validly existing and in good standing under the laws of the State of California,
with all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed could
reasonably be expected, individually or in the aggregate, to have a material and
adverse effect upon the financial condition, prospects or results of operations
of Buyer or Buyer's Subsidiary (as defined below), considered as a whole (a
"Buyer Material Adverse Effect"). True and complete copies of the Certificate
of Incorporation and the By-Laws of Buyer have been delivered to the
Shareholders.
5.2 Subsidiaries. Buyer has one (1) wholly-owned subsidiary, PMT
------------
Korea, a corporation organized under the laws of the Republic of South Korea
("Buyer's Subsidiary"). Buyer's Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, with all requisite corporate power and authority to own, operate
and lease its properties and to carry on its business as it is now being
conducted, and is qualified or licensed to do business and is in good standing
in each jurisdiction in which the failure to be so qualified or licensed could
reasonably be expected to have, individually or in the aggregate, a Buyer
Material Adverse Effect. All of the issued shares of capital stock of such
Subsidiary have been duly and validly authorized and issued, are fully paid and
non-assessable, and are owned directly by Buyer, free and clear of any and all
Encumbrances. Except with respect to its ownership of Buyer's Subsidiary, its
ownership of the capital stock of PMT CVD Partners, Inc. and its limited
partnership interest in PMT CVD Partners, L.P., Buyer does not own, directly or
indirectly, any stock, partnership interest, joint venture interest or other
security, investment or interest in any other corporation, organization,
partnership, limited liability company or entity. As used in this Article V,
references to "Buyer" shall include Buyer's Subsidiary, except to the extent the
context requires otherwise.
24
5.3 Capital Stock. The authorized capital stock of Buyer consists in
-------------
its entirety of Fifty Million (50,000,000) shares of Buyer's Common Stock, of
which, as of the date hereof, 8,692,065 are issued and outstanding, and Twenty
Million (20,000,000) shares of Preferred Stock, no par value, of which, as of
the date hereof, no shares were outstanding. All of the outstanding shares of
Common Stock have been duly and validly authorized and issued, are fully paid
and nonassessable and were issued in compliance with all applicable federal and
state securities laws. To the best of Buyer's knowledge, there are no voting
trusts or other agreements, arrangements or understandings with respect to the
voting of the capital stock of Buyer. Except as set forth in the Buyer
Disclosure Letter, there are no preemptive rights, registration rights,
subscriptions, options, warrants, rights, convertible securities or other
agreements or commitments of any character relating to the issued or unissued
capital stock or other securities of Buyer and there are no outstanding
contractual obligations of Buyer to repurchase, redeem or otherwise acquire or
sell, issue or otherwise transfer any shares of capital stock thereof.
5.4 Buyer Shares. The Buyer Shares have been duly authorized and,
------------
when issued as contemplated hereby at the Closing, will be validly issued, fully
paid and non-assessable, will not be subject to any preemptive or other similar
rights and will be delivered to each Shareholder free and clear of all
Encumbrances, and each Shareholder will acquire good and marketable title to the
Buyer Shares acquired by such Shareholder, subject to any transfer restrictions
pursuant to applicable securities laws. The Buyer Shares are being issued
pursuant to an available exemption from registration under the Securities Act of
1933, as amended, provided by Regulation S promulgated thereunder.
5.5 Authority. Buyer has the full corporate power and authority to
---------
execute and deliver this Agreement and each other agreement contemplated hereby,
to carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated on its part hereby and thereby. The execution,
delivery and performance by Buyer of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by its Board of
Directors. Upon approval by Buyer's shareholders of the issuance of the Buyer
Shares to the Shareholders pursuant hereto, no other action on the part of Buyer
will be necessary to authorize the execution and delivery of this Agreement by
Buyer or the performance by Buyer of its obligations hereunder. This Agreement
has been duly executed and delivered by Buyer, and is a legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting creditors' rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Each other
agreement to be executed in connection with this Agreement on or prior to the
Closing Date will be duly executed and delivered by Buyer, and will constitute a
legal, valid and binding obligation of Buyer, enforceable against it in
accordance with its respective terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization, or similar laws affecting creditors'
rights generally and subject to general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
25
5.6 No Violations or Consents. The execution, delivery and
-------------------------
performance of this Agreement by Buyer and the consummation by it of the
transactions contemplated hereby will not (a) violate or conflict with any
provision of any law specifically applicable to Buyer or by which any property
or asset of it is bound, (b) require the consent, waiver, approval, license or
authorization of or any filing by Buyer with any public authority (other than
(i) if necessary, the filing of a pre-merger notification report under the HSR
Act and under applicable U.K./EEC antitrust statutes, (ii) in connection with or
in compliance with the provisions of each of the Securities Act, and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including
without limitation, the filing of the Proxy Statement (as defined in Section
6.4(b), and (iii) any other filings and approvals expressly contemplated by this
Agreement), (c) violate, conflict with, result in a breach of or the
acceleration of any obligation under, or constitute a default (or an event which
with notice or the lapse of time or both would become a default) under, or give
to others any right of termination, amendment, acceleration or cancellation of,
or result in the creation of any Encumbrance on any property or asset of Buyer
pursuant to any provision of any charter or by-law, indenture, mortgage, lien,
lease, agreement, contract, instrument, order, judgment, ordinance, regulation
or decree to which Buyer is subject or by which Buyer or any of its property or
assets is bound, or (d) result in a loss or adverse modification of any license,
permit, certificate, franchise or contract granted to or otherwise held by Buyer
which, in any such case described in clauses (a) through (d), could reasonably
be expected to have, individually or in the aggregate, a Buyer Material Adverse
Effect.
5.7 Financial Statements and Reports. Buyer heretofore has delivered
--------------------------------
to each Company true and complete copies of (a) the Company's Registration
Statement on Form S-1 (the "Registration Statement") as declared effective by
the Commission on August 23, 1995, (b) its Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, as filed with the Commission, (c) its
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, as filed
with the Commission, and (d) all other reports, statements and registration
statements (including Current Reports on Form 8-K) filed by it with the
Commission subsequent to the filing of the Registration Statement, if any. The
reports, statements and registration statements referred to in the immediately
preceding sentence, including without limitation, any financial statements or
schedules or other information incorporated by reference therein, are referred
to in this Agreement as the "SEC Filings." As of the respective times such
documents were filed with the Commission, the SEC Filings complied as to form
and content, in all material respects, with the requirements of the Securities
Act and the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder, and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Buyer
included in the SEC Filings ("Buyer's Financial Statements") were prepared in
accordance with generally accepted accounting principles ("GAAP"), consistently
applied, and (except as may be indicated therein or in the notes thereto)
present fairly the consolidated financial position, results of operations and
cash flows of Buyer as of the dates and for the periods indicated (subject, in
the case of unaudited interim consolidated
26
financial statements, to normal recurring year-end adjustments and any other
adjustments described therein). Except as set forth in Buyer's Financial
Statements, Buyer has no liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to Xxxxx 00,
0000, (xx) obligations under real and personal property leases disclosed in
Buyer's Financial Statements, and (iii) obligations incurred in the ordinary
course of business and not required under GAAP to be reflected in Buyer's
Financial Statements, which, individually or in the aggregate, are not material
to the financial condition or operating results of Buyer. Buyer is in full
compliance with the revenue recognition policies adopted and approved by its
Board of Directors on January 17, 1996.
5.8 Litigation. There are no Actions pending or, to the best
----------
knowledge of Buyer, threatened against Buyer or any of the assets or properties
thereof before any Authority which could reasonably be expected to have a Buyer
Material Adverse Effect. There are no Actions pending or, to the knowledge of
Buyer, threatened against Buyer that could be reasonably expected to materially
and adversely affect Buyer's consummation of the transactions contemplated by
this Agreement. None of the assets or property of Buyer is subject to any
order, judgment, injunction, writ or decree, which could reasonably be expected
to have, individually or in the aggregate, a Buyer Material Adverse Effect.
5.9 Absence of Certain Changes or Events. Since March 31, 1996, the
------------------------------------
Buyer has conducted its business in the ordinary course and, except pursuant to
this Agreement and the transactions contemplated hereby, there has not been any:
(a) material adverse change in the financial condition, assets,
liabilities, business, operations, results of operations or prospects of the
Buyer or any other event or condition which in any one case or in the aggregate
has materially and adversely affected the Buyer or any event or condition which
it is reasonable to expect will individually or in the aggregate materially
adversely affect the Buyer (any such event being herein referred to as a "Buyer
Material Adverse Change");
(b) declaration, waiver or payment of any dividend or other
distribution or payment (whether in cash, shares or property) with respect to
the share capital of the Buyer, or any redemption, purchase or other acquisition
of any of the securities of the Buyer, or any other payment to any shareholder
of the Buyer in its capacity as a shareholder;
(c) issuance by the Buyer of, or commitment by it to issue, any share
capital or obligations or any securities convertible into or exchangeable or
exercisable for shares or other securities other than pursuant to its 1991 Stock
Option Plan and as contemplated by Section 7.3(g) hereof; or
(d) indebtedness for borrowed money incurred by the Buyer or any
commitment to incur indebtedness for borrowed money entered into by the Buyer,
or any loans made or agreed to be made by the Buyer other than pursuant to
commitments or credit facilities existing on March 31, 1996 and described in the
Buyer Disclosure Letter.
27
5.10 Insurance. Buyer has in full force policies of insurance issued
---------
by insurers of recognized responsibility insuring Buyer and its properties and
business against such losses and risks, and in such amounts, as in Buyer's best
judgment, after advice from its insurance broker, are acceptable for the nature
and extent of such business and its resources. Buyer is not in default with
respect to any material provision contained in any insurance policy, and has not
failed to give any notice or present any existing claims it has under its
insurance policies in a timely fashion.
5.11 Employee Benefits. Buyer does not have any agreements,
-----------------
arrangements, customs or practice (whether legally enforceable or not) relating
to or providing for employee benefits, including pensions, gratuities,
allowances, lump sums or other like benefits on or after severance, retirement
or death, during periods of sickness, incapacity or disablement or otherwise for
the benefit of any present or former employee of Buyer (a "Buyer Employee") or
dependent or beneficiary of a Buyer Employee, including any retirement plan in
which any Buyer Employee participates that is subject to any provision of the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
thereof, nor has any proposal been announced or promise made to establish any
such agreement, arrangement or practice.
5.12 Employees; Labor Matters.
------------------------
(a) There is no employment or other contract of engagement (written or
otherwise) between the Buyer and any of its directors or officers, other than
at-will employment agreements equivalent in all material respects (except only
as to position and compensation) to the form previously delivered by the Buyer
to the Companies. The Buyer is not a party to a consultancy contract with any
such persons.
(b) There is no employment contract between the Buyer and any Buyer
Employee which cannot be terminated by three months' notice or less without
giving rise to a claim for damage or compensation (other than a statutory
redundancy payment or statutory compensation for unfair dismissal).
(c) The Buyer Disclosure Letter contains details of the terms of the
employment contract of each director, officer and Buyer Employee entitled to
remuneration at an annual rate, or an average annual rate over the last three
financial years, of more than US$60,000.
(d) The basis of the remuneration payable to the Buyer's directors,
officers and Buyer Employees is the same as that in force at March 31, 1996.
The Buyer is not obligated to increase, nor has it made provision to increase,
the total annual remuneration payable to its directors, officers and Buyer
Employees by more than five percent (5%) or to increase the rate of remuneration
of a director other officer or employee entitled to annual remuneration of more
than US$60,000.
28
(e) The Buyer does not owe any amount to any present or former
director or officer of Buyer or Buyer Employee (or his or her dependent) other
than for accrued remuneration or reimbursement of business expenses.
(f) There is no agreement or arrangement between the Buyer and any
Buyer Employee with respect to his or her ceasing to be employed or his or her
retirement which is not included in the written terms of his or her employment
or previous employment. The Buyer has not provided, or agreed to provide, a
gratuitous payment or benefit to a director, officer or Buyer Employee or to any
of their dependents.
(g) The Buyer has not (i) incurred a liability for breach of
termination of an employment contract, including without limitation, a
redundancy payment, protective award and compensation or wrongful dismissal,
unfair dismissal and failure to comply with an order for the reinstatement or
re-engagement of an Employee, (ii) incurred a liability for breach or
termination of a consultancy agreement or (iii) made or agreed to make a payment
or provided or agreed to provide a benefit to a present or former director,
officer or Employee or to any of their dependents in connection with the actual
or proposed termination or suspension of employment or variation of an
employment contract.
(h) The Buyer has in all material respects complied with (i) each
obligation imposed on it by, and each order and award made under, any statute,
regulation, code or conduct and practice, custom and practice relevant to the
relations between it and its Employees.
(i) The Buyer has no agreement or arrangement with, and does not
recognize, a trade union, works council, staff association or other body
representing any of its Employees. The Buyer is not involved in, and to the
best knowledge of the Buyer, no matter exists which might give rise to, a
dispute with a trade union, works council, staff association or other body
representing any of its Employees.
5.13 Material Contracts and Other Agreements. The Buyer Disclosure
---------------------------------------
Letter discloses (a) all agreements or contracts whether or not fully performed
pursuant to which the Buyer has since December 31, 1990 acquired or disposed of
a material portion of its business or assets, other than sales of inventory or
contracts with suppliers, each in the ordinary course of business; (b) all
agreements containing covenants not to compete on the part of the Buyer or
otherwise restricting the ability of the Buyer in any material way to engage in
its business; (c) all material notes, mortgages, indentures, letters of credit,
guarantees, performance bonds and other obligations and agreements and other
instruments for or relating to any lending or borrowing (including assumed debt)
entered into by the Buyer or pursuant to which any properties or assets of the
Buyer are pledged or mortgaged as collateral; and (d) all agreements to which
either Buyer or Buyer's Subsidiary is a party containing provisions restricting
or providing exclusive rights with respect to the development, manufacture or
marketing of products which, after the Closing, would be
29
applicable to the business or products of any of the Companies or the
Subsidiaries by reason of the transactions contemplated by this Agreement.
5.14 Suppliers and Customers. The Buyer has delivered to the Company
-----------------------
a list which accurately sets forth (a) the ten largest suppliers of Buyer for
the fiscal year ended December 31, 1995 ("Buyer's Large Suppliers"), (b) the
amount of all payments made to each Buyer's Large Supplier for such fiscal
period, (c) the ten largest customers or groups of related customers for the
fiscal year ended December 31, 1995 (the "Buyer's Large Customers") and (d) the
amount of all payments made by Buyer's Large Customers for such fiscal period.
No supplier is a sole source of supply of any good or service used by Buyer.
None of Buyer's Large Suppliers or Buyer's Large Customers has canceled or
otherwise terminated, or threatened in writing, by notice to the Buyer, to
cancel or otherwise terminate, its relationship with Buyer or, since March 31,
1996, decreased materially, or threatened to decrease or limit materially, its
services, supplies or materials to Buyer or its usage or purchase of the
products or services of Buyer which, in any case, would result in a Buyer
Material Adverse Change.
5.15 Compliance with Laws. Buyer is in compliance with applicable
--------------------
laws, statutes, ordinances, rules and regulations, orders or other requirements,
including without limitation, applicable franchise, building, zoning, health,
environmental, sanitation, safety, labor relations and other laws, ordinances or
regulations, other than violations, if any, which, individually or in the
aggregate, could not reasonably be expected to have, a Buyer Material Adverse
Effect. Buyer has not received any notice from any person asserting a present
or past failure by Buyer to comply in any material respect with such laws,
statutes, ordinances, rules, regulations, orders or other requirements.
5.16 Licenses and Permits. Buyer has all material governmental or
--------------------
regulatory licenses, permits and authorizations (all of which are in full force
and effect) reasonably necessary to conduct their business as it is now being
conducted, except for such governmental or regulatory licenses, permits and
authorizations the absence of which could not reasonably be expected to have,
individually or in the aggregate, a Buyer Material Adverse Effect, and none of
such governmental or regulatory licenses, permits and authorizations will be
impaired as a result of the transactions contemplated by this Agreement, except
in any case that could not reasonably be expected to have, individually or in
the aggregate, a Buyer Material Adverse Effect. Buyer has not received any
notice to the effect that, or otherwise been advised that, it is not in
compliance with, or that it is in violation of, any such governmental or
regulatory licenses, permits and authorizations in a manner that could
reasonably be expected to have, individually or in the aggregate, a Buyer
Material Adverse Effect, and there are not currently existing circumstances that
are likely to result in a failure of Buyer to comply with, or in a violation by
Buyer of, any such governmental or regulatory licenses, permits or
authorizations that could reasonably be expected to have, individually or in the
aggregate, a Buyer Material Adverse Effect.
30
5.17 Title to Assets. Buyer has good and marketable title to all of
---------------
the owned tangible personal property used in the conduct of its business free
and clear of all Encumbrances, except for assets disposed of in the ordinary
course of business. Buyer has good and valid leasehold title to all leased
tangible personal property leased by it from third parties, free and clear of
all Encumbrances, except for imperfections individually or in the aggregate as
could not reasonably be expected to cause a Buyer Material Adverse Effect, and
subject to the rights of the lessor in and to such leased tangible personal
property as is subject to hire, leasing or rental agreements.
5.18 Inventory. The value at which the inventory of Buyer is carried
---------
on the Buyer's consolidated balance sheet for the fiscal year ended December 31,
1995 and Buyer's consolidated balance sheet for the quarter ended March 31, 1996
reflects the customary inventory valuation policy of Buyer and is in accordance
with GAAP. Since March 31, 1996, the Buyer has in all material respects
continued to replenish its inventory in the ordinary course of business
consistent with past practice, and has not made any material change in its
inventory policies or procedures.
5.19 Backlog. The Buyer has delivered to the Companies a description
-------
of the Buyer's backlog of orders believed firm at March 31, 1996, indicating
each applicable customer, purchase order, type of product(s), scheduled shipment
date(s), dollar amount(s) of scheduled shipment(s) and customer deposits or
payments, if any, made with respect thereto.
5.20 Tax Returns and Audits.
----------------------
(a) Buyer has prepared and timely filed all federal, state and other
tax returns required by law to be filed by it, has paid or made provision for
the payment of all taxes shown to be due and all additional assessments, and
adequate provisions have been made and are reflected in Buyer's Financial
Statements to the extent required by GAAP for all current taxes and other
charges to which Buyer is subject and which are not currently due and payable.
None of the federal income tax returns of Buyer have been audited by the
Internal Revenue Service in such a manner to bring such audit to the attention
of Buyer. There are no additional assessments or adjustments pending or, to the
best knowledge of Buyer, threatened against Buyer for any period, nor is Buyer
aware of any basis for any such assessment or adjustment.
(b) Since March 31, 1996, no further material liability or contingent
material liability for taxation of Buyer has arisen or is likely to arise
otherwise than as a result of transactions entered into by Buyer in the ordinary
course of business.
(c) Buyer is not aware of any circumstance which will or may, whether
by lapse of time or by notice of assessment or otherwise, give rise to any
material dispute with any relevant taxation authority in relation to its
liability or accountability for taxation, any material claim made by it,
material relief, deduction or allowance afforded to
31
it, or in any material respect in relation to the status or character of Buyer
under or for the purpose of any provision of any legislation relating to
taxation.
5.21 Environmental and Safety Laws.
-----------------------------
(a) To the best knowledge of Buyer, no land or other asset owned
occupied, possessed or used by Buyer on or at any time before the date of this
Agreement (i) contains or has contained (in the case of land, above or below
ground) a hazardous substance or article, waste or other pollutant or
contaminant, (ii) is or has been used for the deposit, storage, treatment or
disposal or waste or sewage or (iii) is referred to or listed in a register of
polluted or contaminated land, and no matter exists which might give rise to an
entry in such a register.
(b) To the best knowledge of Buyer, Buyer has obtained and complied
with the terms and conditions of each governmental or regulatory license, permit
or authorization (collectively, the "Environmental Permits"), and all applicable
legal and administrative requirements, concerned with the pollution or
protection of the environment (including the disposal of waste) or harm to or
the protection of the health of humans, animals or plants. Buyer is not aware
of any expenditure or work which is or will be necessary to comply with,
maintain or obtain any such Environmental Permit. No release or discharge of a
hazardous substance or article, waste, sewage or other pollutant or contaminant
has exceeded an allowed quota or limit prescribed or specified under any
applicable legal or administrative requirement or in a condition to an
Environmental Permit.
(c) Neither Buyer nor any person for whose acts or defaults Buyer may
be vicariously liable is involved, or has during the five (5) years ending on
the date of this Agreement been involved, in a civil, criminal, arbitration,
administrative or other proceeding concerned with the pollution or protection of
the environment, or harm to or the protection of the health of humans, animals
or plants in any jurisdiction. No civil, criminal, arbitration, administrative
or other proceeding of that type is pending or, to the best knowledge of Buyer,
threatened by or against Buyer or a person for whose acts or defaults Buyer may
be vicariously liable. To the best knowledge of Buyer, no matter exists which
might give rise to a proceeding of that type.
(d) There is and has been no governmental or other investigation,
enquiry or disciplinary proceeding relating to the pollution or protection of
the environment, or harm to or the production of the health of humans, animals
or plants, concerning Buyer and none is pending or, to the best knowledge of
Buyer, threatened. To the best knowledge of Buyer, no matter exists which might
give rise to an investigation, enquiry or proceeding of that type.
(e) To the best knowledge of Buyer, Buyer has no liability (actual or
contingent, or which might hereafter arise) to make good, repair, re-instate or
clean up
32
land or any other asset on or before the date of this Agreement owned, occupied,
possessed or used by Buyer.
(f) Notwithstanding the foregoing, each of the representations or
warranties contained in clauses (a) through (e) above shall only relate to those
events, facts, conditions or circumstances that have or could be reasonably
expected to have, either individually or in the aggregate, a Buyer Material
Adverse Effect.
5.22 Board of Directors Approval. The Board of Directors of Buyer
---------------------------
has unanimously approved the transactions contemplated by this Agreement and has
unanimously determined that such transactions are fair to and in the best
interests of Buyer and its shareholders. Such action of the Board of Directors
remains in full force and effect.
5.23 Related-Party Transactions. Except as described in the Buyer's
--------------------------
Disclosure Letter, since December 31, 1992 no director or executive officer of
Buyer, nor any security holder owning more than 5% of the outstanding shares of
Buyer, nor any Associate or member of the immediate family of the foregoing
persons (a) has engaged in any transaction, or series of similar transactions,
to which the Buyer was or is to be a party, in which the amount involved
exceeded or exceeds US$60,000, except in respect of compensation for services
rendered as an employee in the ordinary course of business, (b) has owned, of
record or beneficially, in excess of a 10% equity interest in, any business or
professional entity that has made payments to, or received payments from, the
Buyer in the aggregate exceeding US$60,000 in any full fiscal year, or (c) been
indebted to the Buyer at any time in an amount in excess of US$60,000.
5.24 Proprietary Rights. Buyer (a) owns or has the right to use,
------------------
free and clear of all Encumbrances, all patents, patent applications,
trademarks, service marks, trade names, copyrights, trade secrets, licenses and
similar rights with respect to the foregoing, necessary for and used in the
conduct of its business as now conducted, to Buyer's best knowledge, without
infringing upon or otherwise acting adversely to the right or claimed right of
any person under or with respect to any of the foregoing, (b) is not
contractually or, to Buyer's best knowledge, otherwise obligated to make any
material payments by way of royalties, fees or otherwise to any owner of,
licensor of, or other claimant to, any patent, trade secret, trademark, trade
name, copyright or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise, (c) has not received
any notice of conflict with the asserted rights of others with respect to such
matters, (d) owns or has the unrestricted right to use all trade secrets,
including know-how, customer lists, inventions, designs, processes, computer
programs and technical data used by Buyer in the development, operation and sale
of all products and services sold by it, to its best knowledge free and clear of
any rights, liens or claims of others, and (e) to its best knowledge, is not
using any confidential information or trade secrets of others. A list of all
patent, patent applications, trademarks and service marks, trademark and service
xxxx applications, licenses and trade names which the Buyer has taken action to
obtain perfect or
33
protect by filings with any governmental agency are contained in the Buyer
Disclosure Letter.
5.25 Real Property. All real property owned, occupied, used by or in
-------------
the possession of the Buyer is listed in the Buyer Disclosure Letter (the "Buyer
Real Property"). Except as set forth in the Buyer Disclosure Letter, Buyer has
good and marketable title to all Buyer Real Property owned by it in fee, and
Buyer leases free and clear of all Encumbrances all Buyer Real Property not
owned by it in fee.
5.26 Disclosure. No representation or warranty by Buyer in this
----------
Agreement contains any untrue statement of a material fact or omits to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein not misleading.
5.27 Brokers. Except with respect to any investment banking fee due
-------
to Salomon Brothers and Unterberg Harris, Buyer has not paid or become obligated
to pay any fee or commission to any broker, finder, investment banker or other
intermediary in connection with this Agreement.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 Conduct of Business Prior to the Closing Date. Each Company and
---------------------------------------------
Subsidiary, on the one hand, and Buyer and Buyer's Subsidiary, on the other
hand, agrees with the other that, from the date hereof, and prior to the Closing
Date, except as otherwise consented to or approved in writing by the other or
expressly permitted by this Agreement:
(a) its business shall be conducted only in the ordinary course and
consistent with past practice and it shall not take any action inconsistent
therewith or with the transactions contemplated hereby;
(b) it shall not (i) amend its Articles of Association or Articles or
Certificates of Incorporation, as the case may be, Memorandum or Bylaws, as the
case may be, or other charter documents, (ii) change the number of issued or
outstanding shares of its capital stock, or issue any debt or equity securities,
or any options, warrants or other rights to acquire or subscribe for such
securities (except, in the case of the Buyer, for the grant of stock options,
not exceeding options covering 400,000 shares of Buyer's Common Stock, plus the
amount of options contemplated by Section 6.14(b), under its Stock Option Plan,
and the issuance of shares of Buyer's Common Stock pursuant to the exercise of
outstanding stock options and warrants and the issuance of subordinate
convertible debentures as contemplated by Section 7.3(g) hereof), (iii) declare,
set aside or pay any dividend or other distribution or payment in cash, stock or
property in respect of shares of its capital stock
34
(except, in the case of the Companies, as contemplated by and in accordance with
Section 9.8 hereof), (iv) make any direct or indirect redemption, retirement,
purchase or other acquisition of any of its capital stock, or (v) split, combine
or reclassify its outstanding shares of capital stock;
(c) it shall not, directly or indirectly, (i) other than in the
ordinary course of business and consistent with past practice, and except in the
case of Buyer for the subordinated debt financing referred to in Section 7.3(g),
incur any indebtedness for borrowed money, except indebtedness for borrowed
money incurred under credit facilities existing as of the date hereof (or
replacements thereof), inter-group borrowings or which otherwise does not
exceed, at the date of each incurrence, the equivalent of US$250,000 in
principal amount, (ii) waive, release, grant or transfer any rights of material
value, except in the ordinary course of business, (iii) sell, transfer, lease,
license, sell, mortgage, pledge, dispose of or encumber any of its assets with a
value exceeding, as of the date of such event, the equivalent of US$250,000 in
the aggregate, other than inventory sold in the ordinary course of business and
consistent with past practice or any pledge or other encumbrance pursuant to
credit facilities in existence on the date hereof (or replacements of facilities
in existence on the date hereof), (iv) purchase or acquire any business or any
securities or assets of a business, (v) enter into any joint venture or
partnership, (vi) settle any material litigation or waive or relinquish any
material right or benefit or (vii) accelerate payments on any indebtedness;
(d) it will use its reasonable best efforts to preserve intact its
business organization, to keep available the services of its operating personnel
and to preserve the goodwill of those having business relationships with it,
provided that the loss of any personnel as a result of the announcement of the
transactions contemplated by this Agreement shall not be deemed to be a breach
of this Section 6.1(d);
(e) it will not, directly or indirectly, (i) increase the compensation
payable or to become payable by it to any of its employees, officers or
directors, except in the ordinary course of business consistent with prior
practice, (ii) make any payment or provision to, or otherwise amend, other than
as required by the Company's Scheme or as permitted by the Buyer's Stock Option
Plan, in each case in the ordinary course of business and consistent with prior
practice, any stock option, bonus, profit sharing, pension, group insurance,
severance pay, deferred compensation or other payment or employee compensation
plan for the benefit of its employees, (iii) grant any stock options or stock
appreciation rights, except as permitted by paragraph (b) above, (iv) enter into
any new, or alter or amend any, employment, severance, consulting or other
compensation agreement with any director, officer, Employee or Associate of it,
except in the ordinary course of business consistent with prior practice, (v)
make any loan or advance to, or enter into any written contract, lease or
commitment with, any officer, Employee or director of it except in the case of
travel, entertainment or other similar advances in the ordinary course of
business consistent with prior practice, or (vi) enter into any other material
transactions with any Associate of it or any of its shareholders, directors or
executive officers;
35
(f) it will not, directly or indirectly, assume, guarantee, endorse or
otherwise become responsible for the obligations of any other individual, firm
or corporation, or make any loans or advances to any other individual, firm or
corporation except in the ordinary course of business and consistent with past
practices;
(g) it will not incur capital expenditures (or commitments to make
such expenditures which are not terminable at its option) which in the aggregate
would exceed 110% of the amount forecasted therefor as of the date hereof with
respect to any calendar month including or following the date hereof, nor shall
it make any investment of a capital nature either by purchase of stock or
securities, contributions to capital, property transfers or otherwise or by the
purchase of any property or assets of any other individual, firm or corporation;
(h) it will not alter any practice with respect to accounting policies
or procedures or make any reclassification of assets or liabilities, except,
with respect to the Companies, for changes required by changes in SSAP or in the
Companies Xxx 0000 or changes required to conform their financial statements to
U.S. GAAP;
(i) it will not close any office, plant, facility or warehouse, except
as required by applicable law or in the event of a material casualty;
(j) it will not enter into, with respect to any office, plant,
facility and warehouse, any new lease, lease termination agreement or amendment
of any agreement to lease real property, including without limitation, any
amendments to any such agreement with respect to rent or additional rent, term
assignment, subletting, "keep-open" clauses, non-competition clauses and
required trade name clause, except, in the case of the Companies and the
Subsidiaries, for lease modifications reflecting the resolution of currently
pending rent reviews which would not in the aggregate reasonably be expected to
result in rent increases exceeding (Pounds)150,000 annually;
(k) it will not sell, assign or sublease any office, plant, facility
or warehouse;
(l) it will not enter into an agreement to do any of the things
described in clauses (a) through (k) immediately above; and
(m) it will promptly advise the other in writing of any event or
occurrence that could be reasonably expected to have a Company Material Adverse
Effect (in the case of notices by the Company) or a Buyer Material Adverse
Effect (in the case of notices by the Buyer) or of any breach of any of its
representations or warranties contained in Article IV or Article V, as
applicable, or any breach by it of a covenant contained herein.
6.2 Access to Properties and Records. Each Company and Subsidiary,
--------------------------------
on the one hand, and the Buyer, on the other hand, shall afford to the other and
its investment
36
bankers, accountants, legal counsel and other representatives (including without
limitation the Buyer's environmental experts, for the purpose of conducting the
investigation referred to in Section 7.3(j) hereof), on reasonable notice, full
access during normal business hours from the date hereof to the Closing Date to
all of its properties, books, accounts, agreements, personnel, facilities,
proprietary information, contracts, commitments and records and shall make
reasonably available its officers, employees and accounting professionals to
answer fully and promptly questions put to them thereby. No investigation
pursuant to this Section 6.2 will affect or be deemed to modify any
representation or warranty made herein. All such corporate books, accounts and
records shall remain the property of the Companies and the Subsidiaries on and
after the Closing and shall not be removed from the facilities where they are
presently maintained prior to the Closing.
6.3 Acquisition Proposals. Following the execution of this Agreement
---------------------
and prior to the termination of this Agreement under Section 8.1, each Company
and each Shareholder agrees that it shall not, nor shall any of the Companies'
directors, officers, Employees or other representatives or agents, directly or
indirectly, communicate, solicit, initiate, encourage or participate (including
furnishing non-public information concerning the business, properties or assets
of any Company or Subsidiary) in any discussions or negotiations with regard to
any proposal to acquire, directly or indirectly, any of the share capital of any
Company or Subsidiary, to invest any funds in any Company or Subsidiary, whether
such proposal, acquisition, investment or other transaction involves a stock
sale, a tender offer, exchange offer, merger, consolidation or other business
combination, or for the acquisition of a substantial portion of the assets of
any Company or Subsidiary (an "Acquisition Proposal"). The Company and each
Shareholder agree to immediately communicate to the Buyer the identity of such
other party and the initial terms of any proposal it may receive from any other
person or entity in respect of an Acquisition Proposal.
6.4 Proxy Statement and Meeting of Buyer's Shareholders.
---------------------------------------------------
(a) As soon as reasonably practicable following the date hereof, Buyer
shall prepare and file with the Commission, and, within ten (10) business days
following clearance with the Commission, mail to its shareholders the Proxy
Statement with respect to a meeting of Buyer's shareholders to consider and
vote, among other things, upon this Agreement and the transactions contemplated
hereby, including without limitation, Buyer's purchase of the US Shares and ET
Shares and the issuance of the Buyer Shares in connection therewith. Each
Company, Subsidiary and Shareholder agrees to assist and cooperate with the
Buyer in the preparation of the Proxy Statement with respect to information
therein concerning any such Company, Subsidiary or Shareholder.
(b) The Buyer, on the one hand, and each Company and Subsidiary and
the Majority Shareholder, on the other hand, hereby represents, warrants and
agrees with the other that the Proxy Statement will not, at the time the Proxy
Statement is mailed, and at the date of the meeting of the shareholders of the
Buyer held to approve the matters
37
described therein, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading, or to correct any statement made in any earlier communication with
respect to the solicitation of any proxy or approval of the transactions
contemplated by this Agreement in connection with which the Proxy Statement
shall be mailed, except that no representation or warranty is being made by
either with respect to information supplied by the other for inclusion in the
Proxy Statement. The Buyer further represents, warrants and agrees that the
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act. The letter to shareholders, notice of meeting,
proxy statement and form of proxy, or any information statement filed under the
Exchange Act, as the case may be, that may be provided to shareholders of the
Buyer in connection with the transactions contemplated by this Agreement
(including any supplements), and any schedules required to be filed with the
Commission in connection therewith, as from time to time amended or
supplemented, are collectively referred to as the "Proxy Statement."
(c) Buyer shall take all actions necessary in accordance with the
California Corporations Code and the bylaws of Buyer to duly call, give notice
of, convene and hold a meeting of its shareholders within forty-five (45)
calendar days after the mailing of the Proxy Statement to approve the
transactions contemplated by this Agreement.
6.5 Indemnification by Buyer.
------------------------
(a) Buyer agrees, upon and subject to the occurrence of the Closing,
to indemnify the Companies and the Shareholders against and hold the Companies
and each Shareholder harmless from any and all claims, obligations, costs and
expenses, including without limitation, reasonable attorneys' fees and expenses,
and liabilities of and damages thereto arising out of the material breach of any
representation, warranty, covenant or agreement of Buyer contained in Sections
5.3 (Capital Stock), 5.4 (Buyer Shares), 5.5 (Authority) and 6.4(b) (Proxy
Statement matters) hereof (the "Surviving Buyer Warranties"). Buyer agrees to
similarly indemnify the Majority Shareholder and Xxxxx Xxxxxxx against and hold
them harmless from any such claims, obligations, costs and expenses arising by
reason that either such person becomes an officer and/or director of Buyer upon
or after the Closing and based upon any alleged act, omission or misconduct of
Buyer, or its officers, directors or other agents, prior to the Closing to the
same extent as all other officers and directors of Buyer.
(b) The indemnified parties agree to give Buyer prompt written notice
of any claim, assertion, event or proceeding by or in respect of a third party
of which they have knowledge concerning any liability or damage as to which they
may request indemnification hereunder, provided that the failure to give such
notice shall not impair the rights of the indemnified parties hereunder or
otherwise if and to the extent that the Buyer is not prejudiced thereby. Buyer
shall have the right to direct, through counsel of its own choosing, the defense
or settlement of any such claim or proceeding (provided that Buyer
38
shall have first acknowledged its indemnification obligations hereunder
specifically in respect of such claim or proceeding) at its own expense, which
counsel shall be reasonably satisfactory to the indemnified party or parties.
If Buyer elects to assume the defense of any such claim or proceeding, the
indemnified party or parties may participate in such defense, but in such case
the expenses of the indemnified party or parties incurred in connection with
such participation shall be paid by the indemnified party or parties, unless (i)
the indemnified party or parties have legal defenses available to them which are
different than those available to the indemnifying party such that
representation by counsel of Buyer's choosing would be inappropriate, or (ii)
the indemnifying party agrees to pay such expenses, then in either such case
such expenses shall be paid by the indemnifying party. Such expenses shall be
paid as and when incurred. The indemnified party or parties shall cooperate
with Buyer in the defense or settlement of any such claim, assertion, event or
proceeding. If Buyer elects to direct the defense of any such claim or
proceeding, the indemnified party or parties shall not pay, or permit to be
paid, any part of any claim or demand arising from such asserted liability,
unless Buyer consents in writing to such payment or unless Buyer withdraws from
the defense of such asserted liability, or unless a final judgment from which no
appeal may be taken by or on behalf of Buyer is entered against such indemnified
party for such liability. If Buyer shall fail to defend, or if, after
commencing or undertaking any such defense, Buyer fails to prosecute or
withdraws from such defense, the indemnified party or parties shall have the
right to undertake the defense or settlement thereof at Buyer's expense.
6.6 Indemnification by the Shareholders.
-----------------------------------
(a) Each Shareholder agrees, severally and not jointly, upon and
subject to the occurrence of the Closing, to indemnify Buyer against and hold
Buyer harmless from any and all claims, obligations, costs and expenses,
including without limitation, reasonable attorneys' fees and expenses and
liabilities of and damages thereto arising out of any material breach of any
representation, warranty, covenant or agreement of such Shareholder contained in
Article III hereof and, with respect solely to the Majority Shareholder,
Sections 4.3 (Share Capital; Title to ET Shares), 4.4 (Authority), and 6.4(b)
(Proxy Statement matters) hereof (the "Shareholder Surviving Warranties").
(b) Buyer agrees to give the Shareholders prompt written notice of any
claim, assertion, event or proceeding by or in respect of a third party of which
it has knowledge concerning any Loss as to which it may request indemnification
hereunder, provided that the failure to give such notice shall not impair the
rights of the Buyer hereunder or otherwise to the extent that the Shareholders
are not prejudiced thereby. The Shareholders shall have the right to direct,
through counsel of their own choosing, the defense or settlement of any such
claim or proceeding (provided that the Shareholders shall have first
acknowledged their indemnification obligations hereunder specifically in respect
of such claim or proceeding) at their own expense, which counsel shall be
reasonably satisfactory to Buyer. If the Shareholders elect to assume the
defense of any such claim or proceeding, Buyer may participate in such defense,
but in such case the expenses of Buyer incurred in connection with such
participation shall be paid by Buyer, unless (i) the
39
indemnified party or parties have legal defenses available to them which are
different than those available to the indemnifying party such that
representation by counsel of Buyer's choosing would be inappropriate, or (ii)
the indemnifying party agrees to pay such expenses, then in either such case
such expenses shall be paid by the indemnifying party. Such expenses shall be
paid as and when incurred. Buyer shall cooperate with the Shareholders in the
defense or settlement of any such claim, assertion, event or proceeding. If the
Shareholders elect to direct the defense of any such claim or proceeding, Buyer
shall not pay, or permit to be paid, any part of any claim or demand arising
from such asserted Loss, unless the Shareholders consent in writing to such
payment or unless the Shareholders withdraw from the defense of such asserted
Loss, or unless a final judgment from which no appeal may be taken by or on
behalf of the Shareholders is entered against Buyer for such Loss. If the
Shareholders shall fail to defend, or if, after commencing or undertaking any
such defense, the Shareholders fail to prosecute or withdraws from such defense,
Buyer shall have the right to undertake the defense or settlement thereof at the
Shareholders' expense.
6.7 General Indemnification Provisions. If the indemnifying party is
----------------------------------
controlling the defense of a claim, the indemnifying party will not, without the
prior written consent of the indemnified party or parties, enter into any
settlement of such claim which could reasonably be expected to lead to liability
or create any financial or other obligation on the part of the indemnified party
or parties. If the indemnified party or parties are controlling the defense of
a claim, the indemnified party or parties will not enter into any settlement of
such claim without the consent of the indemnifying party, which consent shall
not be unreasonably withheld. The indemnifying party shall advance amounts to
the indemnified party or parties then payable by the indemnifying party upon
notice to the indemnifying party and upon the indemnified party or parties
entering into an agreement to repay amounts advanced that it is ultimately
determined not to be entitled to. The controlling party shall deliver, or cause
to be delivered, to the other party or parties copies of all correspondence,
pleadings, motions, briefs, appeals or other written statements relating to or
submitted in connection with the defense of any such claim and timely notices
of, and the right to participate in (as observer), any hearing or other court
proceeding relating to such claim.
6.8 Best Efforts. Upon the terms and subject to the conditions
------------
herein provided, Buyer, each Company and each Shareholder agrees to use its
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement including (a) to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby and (b) to
fulfill all conditions on its part to be fulfilled under this Agreement. In
case at any time after the Closing Date any further action is reasonably
necessary or desirable to carry out the purposes of this Agreement, the proper
officers or directors of each party or the proper persons to this Agreement
shall take all such reasonably necessary action, including without limitation,
the delivery by each Shareholder to Buyer of a proxy to vote the ET Shares in
favor of this Agreement and the transactions contemplated hereby, if so
requested
40
by Buyer. No party hereto will take any action for the purpose of delaying,
impairing or impeding the receipt of any required consent, authorization, order
or approval or the making of any required filing. Each Company and Shareholder,
on the one hand, and the Buyer, on the other hand, shall give prompt notice to
the other of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any of its representations or
warranties contained in this Agreement to be untrue or inaccurate in any
material respect any time from the date hereof to the Closing Date and (ii) any
material failure by it to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder, and each shall use
all reasonable efforts to remedy such failure. In addition, each shall give
prompt notice to the other of any material developments involving its operations
or activities.
6.9 Consents. The Buyer, each Company and each Shareholder will use
--------
its reasonable best efforts to obtain all necessary waivers, consents and
approvals of all third parties and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement.
6.10 No Transfer. Each Shareholder agrees that such Shareholder will
-----------
not, directly or indirectly, transfer, sell, assign, pledge, hypothecate,
encumber or otherwise dispose of any shares of either Company's share capital
which such Shareholder owns on and after the date hereof; provided, however,
-------- -------
that any Shareholder may transfer a portion of such shares (subject to his
rights and obligations hereunder with respect to such shares) to one or more
trusts established for the benefit of members of his family or established for
charitable purposes, provided that such trusts become a party hereto and become
otherwise bound hereby with respect to such transferred shares. ETE agrees that
it will not, directly or indirectly, transfer, sell, assign, pledge,
hypothecate, encumber or otherwise dispose of any of the US Shares.
6.11 Environmental Investigations. Buyer shall conduct such
----------------------------
environmental investigations and reviews with respect to the Real Properties of
the Companies, including without limitation, Phase I investigations, as it shall
deem appropriate, in its sole discretion.
6.12 Delivery of Financial Statements and Other Documents. Until the
----------------------------------------------------
Closing Date, each Company, on the one hand, and the Buyer, on the other hand,
shall deliver to the other:
(a) as soon as practicable, but in any event within thirty (30) days
after the end of each month, and within forty-five (45) days after the end of
each quarter (with respect to the first three quarters of the applicable fiscal
year) and within 60 days after the end of the last fiscal quarter, its unaudited
consolidated profit and loss account, consolidated balance sheet and
consolidated cash flow statement for such month or quarter, as the case may be,
and for the fiscal year-to-date. Buyer's independent accountants, Ernst &
Young, shall have reviewed all quarterly financial statements submitted by Buyer
in compliance with the foregoing covenant;
41
(b) as soon as practicable, but in any event within five (5) days of
its receipt thereof, copies of any management letters and other correspondence
of its independent auditors;
(c) prompt notice of any material defaults under any material
contracts and of any litigation;
(d) monthly updates to the backlog descriptions described in Section
4.20 and 5.19, as applicable. Each such update shall serve to supersede and
replace in its entirety all previous backlog descriptions, provided that such
updated descriptions shall, thereafter, be subject to the representations and
warranties set forth in Sections 4.20 and 5.19, as applicable;
(e) as soon as practicable, all other information requested by the
other, where such information is readily available and may be reduced to written
form.
6.13 Additional Payments at Closing. The Buyer agrees that, upon the
------------------------------
Closing and the purchase of the ET Shares and US Shares by Buyer hereunder, the
Buyer shall pay to Xxxxxxxxxxx X. Xxxxxx the cash amount of US$7,500,000
pursuant to the Noncompetition Agreement (the "Xxxxxx Noncompetition Fee") and
shall deliver to the Companies (in such respective amounts as the Majority
Shareholder shall direct) the following aggregate amounts and property as
contributions to capital:
(a) at the discretion of the Board of Directors of ET and ETE, the
cash sum of approximately US$1,500,000, the precise amount of which shall be
specified by the Majority Shareholder prior to the Closing as the amount which,
when added to the cash amount paid by Buyer for the US Shares, as specified in
Section 1.3, represents the U.S. Dollar equivalent (the "Employee Bonus Amount")
of One Pound Sterling for each day that all employees of the Companies and the
Subsidiaries as of the Closing shall have been continuously employed by such
Company or Subsidiary, as applicable, as of the Closing (such that the price
paid for the US Shares, together with the capital contribution pursuant to this
clause (a), shall be equal to the Employee Bonus Amount); and
(b) a cash amount, the precise amount of which shall be specified by
the Majority Shareholder prior to the Closing, calculated to result in an after-
tax bonus payment (assuming the highest marginal income tax rates) to Xxxxx
Xxxxxxx of approximately Six Hundred Thousand Dollars (US$600,000) (such full
pre-tax amount being referred to as the "Xxxxxxx Bonus"), it being understood
and agreed that Xx. Xxxxxxx will take all appropriate action to minimize his
actual income tax obligations in respect of the Xxxxxxx Bonus and that the
actual after-tax portion of such bonus may accordingly exceed US$600,000.
42
The Companies agree to pay or deliver, or cause the Subsidiaries to
pay or deliver, the following aggregate sums or consideration (subject to any
applicable withholdings required by law) to the indicated persons at the
indicated times.
(i) to each employee of any Company or Subsidiary as of the Closing,
a bonus for past services rendered in an amount equal to One Pound Sterling for
each day that such employee shall have been continuously employed by such
Company or Subsidiary, as applicable, as of the Closing, to be paid as soon as
practicable after the Closing; and
(ii) to Xxxxx Xxxxxxx for past services rendered, the Xxxxxxx Bonus,
to be paid at the Closing.
6.14 Company Employee Benefits and Stock Options.
-------------------------------------------
(a) At and following the Closing, the Buyer shall cause the Companies
and Subsidiaries to, from and after the Closing, honor in accordance with their
terms all existing employment arrangements with their respective directors,
other officers and Employees, provided that such arrangements have been
disclosed in accordance with the terms of this Agreement. Furthermore, the
Buyer represents and warrants that it presently intends to cause the Companies
and Subsidiaries to continue indefinitely to provide pension and welfare
benefits to their Employees (considered as a group) which benefits are intended
to be in the aggregate no less favorable than those currently provided by the
Companies and Subsidiaries in the aggregate to such Employees. Nothing set
forth above in this Section shall be deemed to constitute an amendment of any
existing employee benefit plan, program or arrangement or to prevent the Buyer
or any Company or any Subsidiary from making any change in any plan, program or
arrangement, including any change required by law or deemed necessary or
appropriate to comply with applicable law or regulation.
(b) Sufficiently prior to the Closing to facilitate the satisfaction
of the condition to Closing set forth in Section 7.2(f), the Buyer shall
recommend to its Board of Directors and Compensation Committee thereof the
grant, under the Buyer's Stock Option Plan, of options covering an aggregate of
approximately 800,000 shares of Buyer's Common Stock to such employees of the
Companies and Subsidiaries, and in such respective individual amounts, as shall
be jointly determined by the Buyer and the Majority Shareholder prior to the
Closing. Such recommended option grants shall otherwise be at prices and upon
such terms as are customarily contained in options generally granted under the
Stock Option Plan.
6.15 Use of Company Information. Buyer agrees that it shall not file
--------------------------
with the Securities and Exchange Commission of the United States any disclosure
document, including but not limited to the Proxy Statement, any document
relating to the financing referred to in Section 7.3(g), any report or other
document filed by the Buyer under the Exchange Act or otherwise made public,
that includes the names of either of the Companies,
43
the Shareholders or any Affiliate or Associate thereof, without the prior
written consent of the Majority Shareholder, except solely as and to the extent
that the Buyer is advised by its legal counsel that the same is required by law
to be so filed (in which case the Buyer shall use its best efforts to provide to
the Majority Shareholder, as early as possible prior to such filing, a copy of
the document proposed to be so filed, and shall give the Majority Shareholder,
as and to the extent practicable, reasonable opportunity to review and
reasonably modify such proposed filing).
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of each party to effect the transactions contemplated by the
Agreement shall be subject to the conditions that (a) no governmental authority
or other agency or commission or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other order (whether temporary, preliminary, or permanent) which
is in effect and has the effect of prohibiting consummation of the transactions
contemplated by this Agreement, and (b) the sum of all cash and cash equivalent
assets plus amounts immediately available for additional borrowing under credit
arrangements, of Buyer and the Companies on a consolidated, proforma basis
immediately after and giving effect to the Closing, shall be not less than
US$35,000,000.
7.2 Conditions to the Obligations of the Shareholders. The
-------------------------------------------------
obligations of each Shareholder to effect the transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
the following additional conditions:
(a) Buyer shall have performed in all material respects the
obligations under this Agreement required to be performed by it on or prior to
the Closing Date pursuant to the terms hereof.
(b) The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date as if made at and as of such date, except to the extent that any
such representation or warranty is made as of a specified date in which case
such representation or warranty shall have been true and correct as of such
date.
(c) Buyer shall have delivered to the Shareholders a certificate to
the effect set forth in paragraphs (a) and (b) above in this Section.
(d) Xxxxxxxxxxx X. Xxxxxx and Xxxxx Xxxxxxx shall each have been
elected as members of the Board of Directors of the Buyer and additionally shall
have been
44
elected as the Vice Chairman of the Board and the Chief Operating Officer,
respectively, of the Buyer.
(e) The Buyer and Xxxxx Xxxxxxx shall have entered into an Employment
Agreement substantially in the form of Exhibit B hereto.
(f) The Buyer shall have granted the stock options referred to in
Section 6.14(b).
(g) The Companies and the Majority Shareholder shall have received
such other duly and validly executed documents and instruments from the Buyer in
connection with the Closing as have been reasonably requested by them and are
customary for transactions of this type.
(h) All necessary waivers, consents and approvals to or of the
transactions contemplated by this Agreement of any third parties or governmental
entities with respect to the Buyer, shall have been obtained and delivered to
the Companies and the Majority Shareholder except where the failure to obtain
any such waiver, consent or approval could not be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect or Buyer
Material Adverse Effect.
(i) The Shareholders shall have received the favorable opinion of
Xxxxxxx & XxXxxxxx, counsel to Buyer, substantially in the form of Exhibit C
hereto, and otherwise in form and substance reasonably satisfactory to the
Shareholders.
(j) The Reimbursable Expenses (as defined in Section 8.2) shall have
been paid at the Closing by the Buyer.
(k) The Buyer and Xxxxxxxxxxx X. Xxxxxx shall have entered into a
Registration Agreement substantially in the form of Exhibit D hereto.
(l) The Shareholders shall have obtained tax clearance to confirm that
the exchange of securities pursuant to this Agreement is covered by Sections
135-137 of the Taxation of Chargeable Gains Act of 1992, by way of clearance
under Section 38 of such Act.
7.3 Conditions to the Obligations of Buyer. The obligations of Buyer
--------------------------------------
to effect the transactions contemplated by this Agreement shall be subject to
the fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) Each Company and each Shareholder shall have performed in all
material respects its obligations under this Agreement required to be performed
by it on or prior to the Closing Date pursuant to the terms hereof.
45
(b) The representations and warranties of each Shareholder contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing Date as if made at and as of such date, except to the extent that
any such representation or warranty is made as of a specified date in which case
such representation or warranty shall have been true and correct as of such
date.
(c) The Companies and the Majority Shareholder shall have delivered to
Buyer a certificate to the effect set forth in paragraphs (a) and (b) above in
this Section.
(d) Buyer shall have received a fully executed original of the
Noncompetition Agreement from the Majority Shareholder substantially in the form
of Exhibit E hereto.
(e) Buyer shall have received the favorable opinion of Xxxxx
Wasbrough, counsel to the Companies and each Shareholder, substantially in the
form of Exhibit F hereto and otherwise in form and substance reasonably
satisfactory to Buyer.
(f) Buyer shall have received such other duly and validly executed
documents and instruments from the Companies, the Subsidiaries and the
Shareholders in connection with the Closing as have been reasonably requested by
it and are customary for transactions of this type.
(g) Buyer shall have issued and sold to qualified institutional buyers
subordinate convertible debentures pursuant to Rule 144A (or other available
exemption) under the Securities Act in an amount at least equal to Fifty Million
Dollars (US$50,000,000), on terms and conditions acceptable to Buyer, in its
sole discretion, after consultation with the Majority Shareholder, including
the Majority Shareholder's participation in the meeting of Buyer's pricing
committee held to consider such terms and conditions.
(h) All necessary waivers, consents and approvals to or of the
transactions contemplated by this Agreement of any third parties or governmental
entities with respect to any Company, Subsidiary or Shareholder shall have been
obtained and delivered to Buyer except where the failure to obtain any such
waiver, consent or approval could not be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect or a Buyer
Material Adverse Effect.
(i) A majority of the outstanding shares of Buyer's Common Stock shall
have been voted in favor of this Agreement and the transactions contemplated
hereby.
(j) Buyer shall have completed the environmental investigations and
reviews of the Real Properties referred to in Section 6.11, and shall not have
reasonably concluded that any environmental conditions at any of the Real
Properties could reasonably be expected, individually or in the aggregate, to
have a Company Material Adverse Effect.
46
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated herein may be abandoned at any time prior to the
Closing Date:
(a) by the mutual written consent of Buyer and the Majority
Shareholder;
(b) by any party, if by December 31, 1996 the Closing shall not have
been consummated, provided that no party may terminate this Agreement under this
Section 8.1(b) if such failure has been caused by that party's breach of this
Agreement;
(c) by Buyer, if there is a material breach of any of the
representations and warranties of any Company or Shareholder, or if any Company
or Shareholder fails to comply in any material respect with any of its
respective covenants or agreements contained herein; or
(d) by the Shareholders, if there is a material breach of any of the
representations and warranties of Buyer, or if Buyer fails to comply in any
material respect with any of its covenants or agreements contained herein.
8.2 Termination Fee; Expenses. Upon a termination of this Agreement
-------------------------
(except solely a No-Fee Termination, as defined below) the Buyer shall pay to
the Companies (in such respective amounts as they jointly instruct the Buyer) an
aggregate fee of US$1,000,000 (the "Termination Fee"), and the Buyer shall
additionally pay to them all reasonable fees and expenses actually incurred by
them in connection with the transactions contemplated hereby, including all
reasonable legal, investment banking, accounting and other fees and expenses
(the "Reimbursable Expenses"). The Termination Fee shall be payable in
immediately available funds on the second business day following any termination
giving rise to the obligation to pay such Termination Fee, and the Reimbursable
Expenses shall be payable within ten business days following the submission to
Buyer of a statement and accounting therefor.
"No-Fee Termination" shall mean the following:
(a) Any termination by Buyer or the Shareholders by reason of the non-
occurrence of the condition to Closing set forth in clause (a) of Section 7.1
(limited to United Kingdom matters in the case of a termination by Buyer, and
limited to United States matters in the case of a termination by the
Shareholders) or by the Shareholders by reason of the non-occurrence of the
condition to Closing set forth in Section 7.2(l);
47
(b) Any termination by Buyer by reason of the non-occurrence of any
condition to Closing set forth in clause (a), (b), (c), (d), (e), (f) or (h) of
Section 7.3; provided that any such termination by Buyer shall not constitute a
No-Fee Termination if such non-occurrence is the result of a Company Material
Adverse Change after the date of this Agreement; or
(c) Any termination by the Shareholders by reason of the non-
occurrence of any condition to Closing set forth in Section 7.2 if such non-
occurrence is the result of a Buyer Material Adverse Change after the date of
this Agreement.
8.3 Effect of Termination. Except as otherwise provided in Section
---------------------
8.2, in the event of the termination of this Agreement as provided in Section
8.1 above, this Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto, provided that nothing in this Section
8.3 shall relieve any party of liability for any intentional breach of the
purchase and sale covenants herein, or the covenant to use reasonable efforts to
satisfy all conditions to Closing, which breach results in a termination of this
Agreement. Notwithstanding the foregoing, the covenant set forth in Section 8.6
shall survive any termination of this Agreement for a period of one year.
8.4 Amendment. This Agreement may not be amended except by an
---------
instrument in writing signed on behalf of each of the parties hereto.
8.5 Waiver. At any time prior to the Closing Date, the parties
------
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions herein, provided that any such waiver of or failure to insist on
strict compliance with any such representation, warranty, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
8.6 Conduct Following Termination. Following any termination of this
-----------------------------
Agreement, neither Buyer nor its representatives, on the one hand, nor any
Company or Subsidiary nor any of their respective representatives nor the
Shareholders, on the other hand, shall publicly state any disparaging or similar
remark regarding the other.
48
ARTICLE IX
MISCELLANEOUS
9.1 Survival. The Surviving Shareholder Warranties and the Surviving
--------
Buyer Warranties shall survive after the Closing until the applicable statute of
limitations provided by applicable law. All other representations and
warranties herein shall terminate and be extinguished upon the Closing.
9.2 Meaning of "Best Knowledge". Whenever the term "best knowledge"
---------------------------
or "to the best of its knowledge" or any substantially equivalent phrase is used
in this Agreement with respect to the representations and warranties of any
Company, Subsidiary or Shareholder, on the one hand, or the Buyer, on the other
hand, it shall mean both the actual knowledge of any such individual person and,
in the case of a corporation, the actual knowledge of each executive officer
thereof (including specifically the Majority Shareholder with respect to each
Company), and such knowledge as any such person, director or officer could
reasonably be expected to acquire in the course of reasonable inquiry and
investigation of the matters with respect to which such representation and
warranty is made.
9.3 Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been given or
made if in writing and (a) delivered personally, as of the date of such
delivery, (b) sent by registered or certified mail (postage prepaid, return
receipt requested), three (3) days after the mailing thereof, (c) by prepaid
overnight carrier, one (1) day after delivery thereof, or (d) transmitted by
facsimile, as of the date of receipt of a confirmation of transmission, to the
parties at the following addresses and numbers:
(i) If to Buyer, to:
Plasma & Materials Technologies, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx XxXxxxx, Chief Financial Officer
Facsimile No.: (000) 000-0000
49
(ii) If to ET, to:
Electrotech Limited
Thornbury Laboratories
Littleton-Upon-Severn
Thornbury
Bristol, BS12-INP, U.K.
Attention: Xxxxx Xxxxxxx, CEO
Facsimile No.: 011-44-1-454-411824
(iii) If to ETE, to:
Electrotech Equipments Limited
Thornbury Laboratories
Littleton-Upon-Severn
Thornbury
Bristol, BS12-INP, U.K.
Attention: Xxxxx Xxxxxxx, CEO
Facsimile No.: 011-44-1-454-411824
(iv) If to the Shareholders, to:
Xxxxxxxxxxx Xxxxx Xxxxxx
Xxx Xxxxx Xxxxxx
Elberton Manor
Elberton, Bristol
Avon B512-3AA, U.K.
Facsimile No.: 011-44-1-454-418655
Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxx Xxx Xxxxxx
Whistlers
Kingston Seymour, Clevedon
Avon B321-EXS, U.K.
Facsimile No.: 0033 4182 6322
Xxxxxxx Xxxx Xxxxxx Xxxxxxxx
Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxx Xxxx Knight Willmott
6 Parc-y-Fro
Creigian, Cardiff, U.K.
Facsimile No.: 01222 345626
50
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made as
of the date actually received.
9.4 Headings; Agreement. The headings contained in this Agreement
-------------------
are inserted for convenience only and do not constitute a part of this
Agreement. The term "Agreement" for purposes of representations and warranties
hereunder shall be deemed to include the Schedules and Exhibits hereto to be
executed and delivered by a party.
9.5 Publicity. So long as this Agreement is in effect, the parties
---------
hereto shall not, and shall cause their affiliates not to, issue or cause the
publication of any press release or other announcement with respect to the
transactions contemplated by this Agreement or this Agreement without the
consent of the other parties, which consent shall not be unreasonably withheld
or delayed.
9.6 Entire Agreement. This Agreement, the Letter Agreement dated May
----------------
2, 1996 and the Mutual Non-Disclosure Agreement dated December 19, 1995, as
amended by that certain letter dated May 22, 1996 to ET's counsel from counsel
to the Buyer, constitute the entire agreement among the parties and supersede
all other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof or thereof.
9.7 Conveyance Taxes. The Buyer agrees to assume liability for and
----------------
to hold the Shareholders harmless against any sales, use, transfer, stamp, stock
transfer, real property transfer or gains, and value added taxes, any transfer,
registration, recording or other fees (including without limitation, any stamp
duties), and any similar taxes incurred as a result of the transactions
contemplated hereby, other than capital gains taxes imposed upon the
Shareholders by virtue of the disposal of the ET Shares or with respect to a
higher rate of taxes due on any pre-Closing dividends due by reason of the
transactions permitted by Section 9.8 hereof, as to which the Shareholders agree
severally and not jointly to assume liability for and to hold Buyer and the
Companies harmless against.
9.8 Company Pre-Closing Dividends. The Companies may, prior to the
-----------------------------
Closing, declare and pay cash dividends to the Shareholders up to an amount
permitted by law but not exceeding the net cash payment specified in Section
1.4(a) hereof, in which case the parties agree that:
(a) Buyer shall, immediately prior to the Closing, loan to the
Companies an amount equal to the sum of such dividends, plus all taxes required
to be paid by the Companies in connection with the payment of such dividends
(the "Dividend Taxes"), in order to fund the payment of such dividends
immediately prior to the Closing and the payment of the Dividend Taxes;
51
(b) The cash portion of the Purchase Price payable to the Shareholders
at the Closing pursuant to Section 1.4 shall be reduced, prorata as to each
Shareholder, by an aggregate amount equal to such loan by the Buyer;
(c) Immediately after the Closing, the indebtedness of the Companies
to the Buyer in respect of the loan referred to in clause (a) shall be forgiven
by the Buyer as a contribution to the capital of the Companies but subject to
the contingent obligation of the Companies to make the payments described in
clause (d) below; and
(d) From time to time if and when the Companies are entitled to a
credit for the Dividend Taxes against other amounts due and payable for income
taxes of the Companies, then the Companies shall pay to the Shareholders
(promptly after such time as the Companies would have otherwise been required to
pay to the taxing authorities the amounts so reduced by such credit), prorata to
each Shareholder in the same proportion that the cash portion of the Purchase
Price was reduced under clause (b) above, the aggregate amount of such credit.
9.9 Advance of Reimbursable Expenses. Within seven (7) days after
--------------------------------
presentation to the Buyer by the Companies of invoices or other reasonable
evidence thereof, the Buyer shall advance to the Companies a sum equal to all
Reimbursable Expenses incurred by the Companies prior to the execution of this
Agreement in respect of amounts payable to third parties other than Xxxxxxxxx &
Xxxxx, and excluding any internal charges or expenses of the Companies or any
Subsidiary. Such payments shall be considered an advance in respect of any
amounts ultimately owed by the Buyer to the Companies pursuant to Section 8.2
hereof and, if no amounts are ever owed by the Buyer to the Companies pursuant
to Section 8.2 hereof by reason of the occurrence of a No-Fee Termination of
this Agreement, the Companies shall, within seven (7) days following the
occurrence of such No-Fee Termination, refund to the Buyer all amounts advanced
to the Companies pursuant to this Section 9.9.
9.10 Assignment. This Agreement and all of the provisions hereof
----------
shall be binding upon and inure to the benefits of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations shall be assigned by any of the parties
hereto without the prior written consent of the other parties, except as
permitted by Section 6.10 hereof.
9.11 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
9.12 Governing Law. The validity and interpretation of this
-------------
Agreement shall be governed by English law, without reference to the conflict of
laws principles thereof.
9.13 Third Party Beneficiaries. This Agreement is not intended to
-------------------------
confer upon any other person any rights or remedies hereunder.
52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by an individual thereunto duly authorized, all as of the date first
written above.
BUYER: PLASMA & MATERIALS TECHNOLOGIES, INC.
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
Chief Executive Officer
ET: ELECTROTECH LIMITED
an English corporation
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Chief Executive Officer
ETE: ELECTROTECH EQUIPMENTS LIMITED
an English corporation
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Chief Executive Officer
SHAREHOLDERS: /s/ Xxxxxxxxxxx Xxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxxxxxx Xxxxx Xxxxxx
/s/ Xxxxx Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx Xxxxxx
/s/ Xxxxxxx Xxxx Knight Willmott
-------------------------------------
Name: Xxxxxxx Xxxx Xxxxxx Xxxxxxxx
53
/s/ Xxxxx Xxxx Knight Willmott
-------------------------------------
Name: Xxxxx Xxxx Xxxxxx Xxxxxxxx
/s/ Xxx Xxxxx Xxxxxx
-------------------------------------
Name: Xxx Xxxxx Xxxxxx
/s/ Xxxxxxxx Xxx Xxxxxx
-------------------------------------
Name: Xxxxxxxx Xxx Xxxxxx
/s/ Xxxxx Xxxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx Xxxxxxxx
54
EXHIBIT A
SCHEDULE OF THE CONSIDERATION
Shareholders Shares Cash (US$) Common Stock
distribution
ratio
Xxxxxxxxxxx Xxxxx Xxxxxx 58 ordinary `a' shares 4,853,334
Elberton Manor of (Pound)1 each of ETE )
Elberton 4942 ordinary `b' shares )
Bristol of (Pound)1 each of ETE )
Avon 324 ordinary shares of )
XX00 0XX (Pound)1 each of ET )
)35*
Xxx Xxxxx Xxxxxx 6 ordinary shares of )
Xxxxxxxx Xxxxx (Xxxxx)0 each of ET )
Elberton )
Bristol )
Avon )
XX00 0XX )
Xxxxx Xxxxxxx Xxxxxx 12 ordinary `a' shares 373,333
Whistlers of (Pound)1 each of ETE )
Kingston Seymour 2488 ordinary `b' shares )
Clevedon of (Pound)1 of each of ETE)
Avon 114 ordinary shares of )
XX00 (Xxxxx)0 each of ET )
)
)15*
Xxxxxxxx Xxx Xxxxxx 6 ordinary shares of )
Whistlers (Pound)1 each of ET )
Kingston Seymour )
Clevedon )
Avon )
BS21 )
Xxxxxxx Xxxx Xxxxxx 12 ordinary `a' shares 15* 373,333
Xxxxxxxx, Xxxxx Xxxxxxxx of (Pound)1 each of ETE
Willmott and Xxxxx Xxxx 2488 ordinary `b' shares
Knight Willmott of (Pound)1 each of ETE
c/o 6 Parc-y-Fro 120 ordinary shares of
Creigian (Pound)1 each of ET
Cardiff
* cash payable will be the sum of seventy five million dollars
(US$75,000,000) adjusted in accordance with the following clauses of the Share
Sale and Purchase Agreement:
6.13 the aggregate cash amounts to be contributed by the Buyer to the
Companies at closing in relation to the Employee Bonus Amount, the Xxxxxxx
Bonus and the Xxxxxx Fee.
9.8 amount of loan made to the Companies to enable them to pay pre-closing
dividends to the Shareholders.
and the balance will be distributed between Mr. and Xxx. Xxxxxx, Mr. and Xxx.
Xxxxxx and Messrs. Willmott in the ratio 35:15:15 respectively.
EXHIBIT B
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated ____________ ___, 1996,
is entered into by and between Xxxxx Xxxxxxx ("Executive") and Plasma &
Materials Technologies, Inc., a California corporation ("Employer").
WITNESSETH:
WHEREAS, concurrently herewith, Employer will acquire all of the
outstanding shares of Electrotech Limited and Electrotech Equipments Limited,
companies organized under the laws of England and in the business of
manufacturing and selling semiconductor capital equipment (the "Business");
WHEREAS, Executive has been employed as the Chief Executive Officer of
Electrotech Limited and Electrotech Equipments Limited and has skills and
experience in the Business and the technology associated therewith; and
WHEREAS, Employer desires to obtain Executive's services for the conduct of
its Business, and Executive desires to be employed in such Business by and for
Employer.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
-----------
meanings set forth below.
(a) "Affiliate" means any corporation, partnership, limited liability
---------
company or other person or entity that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, the person or entity specified. For the purposes hereof, "control" means
both the right to direct or cause the direction of the management and policies
of an entity, whether through ownership of voting rights, by contract or
otherwise, including without limitation the right to sell or cause the sale of
all or substantially all of the assets of such entity.
(b) "Board" means the Board of Directors of Employer.
-----
(c) "Disability" or "Disabled" has the meaning set forth in Section 10(b)
---------- --------
hereof.
(d) "Effective Date of Termination" has the meaning set forth in Section
-----------------------------
10(f) hereof.
(e) "Termination For Cause" means the termination by Employer of
---------------------
Executive's employment because he has been convicted of a felony or been
adjudged by a court
1
of competent jurisdiction to have defrauded Employer, any Affiliate of Employer
or any customer of Employer.
(f) "Termination For Good Reason" means a termination by Executive of his
---------------------------
employment with Employer based on (i) a material diminution of Executive's
duties as President and Chief Operating Officer, (ii) the imposition by the
Board of a requirement that Executive report to persons other than the Board,
the Chairman or the Chief Executive Officer, (iii) the breach by Employer of any
of its material obligations under this Agreement or (iv) Employer ceasing to be
engaged in the Business or in any business that is substantially similar to the
Business.
(g) "Termination Without Cause" means a termination by Employer of
-------------------------
Executive's employment that is not a Termination For Cause or a termination
resulting from Executive's death or Disability.
(h) "Termination Without Good Reason" means a termination by Executive of
-------------------------------
his employment with Employer that is not a Termination For Good Reason or a
termination resulting from Executive's death or Disability.
2. Employment. Employer hereby employs Executive as an executive officer and
----------
Executive hereby accepts such employment upon the terms and conditions
hereinafter set forth.
3. Duties.
------
(a) Executive shall perform his services as President and Chief Operating
Officer, under the supervision of the Chairman and the Chief Executive Officer
of Employer and within the framework of the policies and objectives of Employer.
In such capacity, Executive (i) shall exercise general day-to-day supervisory
responsibility and operational and management authority over Employer and its
officers and executives and all of its Affiliates and their respective officers
and executives, (ii) shall provide advice and input to members of Employer's
Board and shall, at their request, attend all meetings of the Board for that
purpose, and (iii) shall perform such other duties as may be assigned to him
from time to time by the Board.
(b) Executive shall devote his entire business time, attention and
energies to the performance of his duties and functions under this Agreement and
shall not during the term of his employment hereunder be engaged in any other
substantial business activity for gain, profit or other pecuniary advantage.
Executive shall faithfully, loyally and diligently perform his assigned duties
and functions and shall not engage in any activities whatsoever which conflict
with the objectives of Employer's Business during the term of his employment
hereunder.
(c) Employer shall furnish Executive with such facilities at the corporate
offices of Electrotech Limited and services as are suitable to his position and
adequate for the performance of his duties and functions hereunder. It is
understood that Executive's "home base" location shall be at Xxxxxxxx Xxx,
Xxxxxxx, Xxxxx XX00XX.
2
4. Director. During the term of this Agreement, Executive shall be nominated
--------
to serve as a director of the Board of Employer.
5. Term. The term of this Agreement shall commence on the date hereof and
----
shall continue until ____ __, 1999 (the "Initial Term"), and thereafter shall
continue for additional one-year periods unless and until such time as either
party hereto provides written notice to the other thirty (30) days prior to the
end of the third year of the Initial Term or prior to the end of any such
additional one-year period (such additional one-year periods, together with the
Initial Term, the "Employment Term"). Upon any termination of Executive's
employment hereunder (other than a Termination Without Good Reason or a
Termination for Cause), Executive shall be retained as a consultant to Employer
until all of the stock options described in Section 6(c), and any other stock
options which may have been granted to Executive, have fully vested, upon
acceleration or otherwise.
6. Compensation. Employer shall pay to Executive, as compensation for the
------------
services agreed to be rendered by Executive hereunder, the following:
(a) Base Salary. During the Employment Term, Employer shall pay to
-----------
Executive a salary of $250,000 per annum payable in British pounds sterling;
provided, that the amount of such base salary shall be reviewed and may be
--------
adjusted by Employer annually during the Employment Term in light of the
conditions then existing and the services then being rendered by Executive, in
which case Executive's base salary shall be such higher amount as may be
determined by Employer (such annual base salary, as in effect from time to time,
being referred to herein as the "Base Salary"). The Base Salary shall be
payable monthly at the exchange rate prevailing at the date of each monthly
payment, less appropriate deductions for federal, state and local income taxes,
FICA contributions and any other deductions required by law or authorized by
Executive.
(b) Annual Performance Bonus. In addition to the Base Salary, Executive
------------------------
shall be eligible to receive an annual performance bonus (the "Annual Bonus")
for each year of service (or any part thereof in the event of termination of
Executive's employment hereunder (other than a Termination Without Good Reason
or a Termination for Cause), in which case any Annual Bonus shall be prorated
for such partial year) during the Employment Term (each such year or any partial
such year being referred to as an "Annual Bonus Period"), to the maximum extent
of eligibility permitted to executive officers, or if no such bonus is
permitted, in such amount, if any, as may be determined by the Board in its
discretion. Each Annual Bonus shall be payable in British pounds sterling at
the exchange rate prevailing at the date of payment which shall be in accordance
with Employer's normal annual bonus payment schedule, less appropriate
deductions for federal, state, and local income taxes, FICA contributions and
any other deductions required by law or authorized by Executive.
(c) Options. Concurrently herewith, the Compensation Committee of the
-------
Board of Employer shall grant to Executive, pursuant to Employer's 1991 Stock
Option Plan, options to acquire 200,000 shares of Employer's common stock at an
exercise price equal to the fair market value of the underlying shares of common
stock on the date of such grant, 25% of
3
which shall vest on each anniversary of the date of grant over a period of four
years (the "Options"), subject to Executive's continuous employment or
consultancy with Employer pursuant hereto.
(d) Payment of Additional Amounts. Employer shall pay to Executive, for
-----------------------------
so long as Executive is not a resident of the United States, as additional
payments, such amounts as may be necessary in order that every net payment of
Executive's salary, bonus or other payment, after deducting or withholding for
or on account of any present or future tax, assessment or other governmental
charge imposed upon, or as a result of, such payment by the government of the
United States or any state thereof or any political subdivision or taxing
authority of or in the United States, will not be less than (x) the gross amount
provided for herein, as may be adjusted by the Board of Directors pursuant
hereto, then due and payable minus (y) the amount of income taxes payable by
Executive or required to be deducted or withheld for or on account of any
present or future tax, assessment or other governmental charge.
7. Benefits. During the Employment Term, Executive shall receive benefits, in
--------
England, including, but not limited to, (a) life insurance equal to four times
Executive's Base Salary, (b) medical insurance for Executive and his family, (c)
home telephone for business and private use, (d) company car for business and
private use, including fuel, (e) continuation of pension plan benefits,
including employer contributions based on actuarials, (f) business class travel,
and (g) all other benefits offered to other executive officers of the Employer
to the maximum extent so offered.
8. Expenses. During the Employment Term, Employer shall reimburse Executive
--------
for all reasonable travel, entertainment and other business expenses incurred or
paid by Executive in performing his duties and functions hereunder, upon
Executive's submission of reasonable documentation thereof.
9. Vacations. In addition to such holidays, sick leave and personal time off
---------
as is allowed under the policies of Employer to management generally, Executive
shall be entitled during each twelve-month period during the Employment Term to
twenty-four (24) days of vacation and all statutory bank holidays of England,
with full pay. The duration of such vacations and the time or times when they
shall be taken will be determined by Executive in consultation with Employer.
10. Termination.
-----------
(a) Death. The Employment Term will terminate automatically in the event
-----
of Executive's death. Upon such termination, Executive will be entitled to
receive the payments prescribed by subsection 10(e)(iii).
(b) Disability. If Executive becomes Disabled, Employer may elect to
----------
give written notice of termination to Executive, which notice will specify the
date of termination. Upon such termination, Executive will be released from any
duties and obligations hereunder (except as set forth in Section 11) and
Executive will be entitled to receive the payments prescribed by subsection
10(e)(i). "Disabled" as used in this Agreement means the inability of
4
Executive substantially to perform his duties for a period of 180 consecutive
days or for a total of 180 days or more in any 360-day period as a result of a
physical or mental illness, all as determined in good faith and on a reasonable
basis by the Board. The Board will be deemed to have acted in good faith only if
it acts in reliance on the advice of at least two physicians reasonably believed
by the Board to be competent in such matters.
(c) Termination For Cause or Without Good Reason. The Employment Term may
--------------------------------------------
be terminated by a Termination For Cause or a Termination Without Good Reason.
Upon either such termination, Executive will be released from any duties and
obligations under this Agreement (except as set forth in Section 11) and
Executive will be entitled to receive the payments prescribed by subsection
10(e)(ii). Executive will not be entitled to any other payment in the event of
a Termination For Cause or a Termination Without Good Reason other than any
payment prescribed by Section 10(e)(ii) relating to the period before the
Effective Date of Termination.
(d) Termination Without Cause or For Good Reason. The Employment Term
--------------------------------------------
will be terminated by a Termination Without Cause or a Termination For Good
Reason. Upon either such termination, Executive will be released from any
duties under this Agreement (except as set forth in Section 11) and Executive
will be entitled to receive the payments prescribed by subsection 10(e)(i).
(e) Payment Upon Termination. If the Employment Term is terminated before
------------------------
the third anniversary of the date of this Agreement, in addition to any rights
Executive may have with respect to payments, if any, pursuant to Section 6,
Employer will pay to Executive the following compensation which when paid will
be deemed to be paid in final settlement of any claims in connection with such
termination Executive may have against Employer or any Affiliate of Employer,
and after such payments are made, Employer and its Affiliates will have no
liability or obligation of any kind to Executive in connection with such
termination:
(i) Payment Upon Termination Without Cause or For Good Reason. If a
---------------------------------------------------------
Termination Without Cause or a Termination For Good Reason has occurred, or
if Executive becomes Disabled, Executive will be entitled to receive his
Base Salary (at the rate in effect at the Effective Date of Termination)
through the remainder of the Employment Term (which, for purposes of this
Section 10(e)(i), shall not be less than one year), without setoff or
reduction in respect of such amounts, if any, earned by Executive from
other employment after the Effective Date of Termination either, at
Executive's election, in a lump sum payment or in the same manner as paid
prior to the Effective Date of Termination and Executive shall receive all
the benefits to which he is entitled pursuant to clauses (a), (b) and (e)
of Section 7 through the remainder of the Employment Term.
(ii) Payment Upon Termination For Cause or Without Good Reason. If a
---------------------------------------------------------
Termination For Cause or a Termination Without Good Reason has occurred,
Employer will pay to Executive his Base Salary (as in effect on the
Effective Date of
5
Termination) and other benefits, including accrued vacation pay, (without
setoff or reduction in respect of such amounts) to which Executive is
entitled pursuant to this Agreement through the Effective Date of
Termination.
(iii) Payment Upon Termination in the Event of Death. In the
----------------------------------------------
case of a termination of this Agreement upon Executive's death, Executive's
estate shall be entitled to receive his Base Salary (a rate in effect on
the date of death) through the end of the month in which the Effective Date
of Termination occurs and other benefits including those specified in
Section 7 hereof through the end of the month in which the Effective Date
of Termination occurs and accrued vacation pay (all without setoff or
reduction in respect of such amounts).
(f) Effective Date of Termination. The "Effective Date of Termination" of
-----------------------------
Executive's employment will be: (i) in the case of a Termination Without Cause,
on the date specified in a notice given by Employer to Executive or, if no date
is specified, on the date such notice is given; (ii) in the case of a
Termination Without Good Reason, on the date specified in a notice given by
Executive to Employer or, if no date is specified, on the date such notice is
given; (iii) in the case of a Termination For Good Reason, the date notice of
termination is given by Executive; or (iv) in the case of a Termination For
Cause, the date notice of termination is given by Employer; (v) in the case of
Executive's death, the date of death; and (vi) in case Executive is determined
to be Disabled, the date the Board determines that Executive is Disabled.
11. Confidentiality. During the Employment Term, Executive will not use for
---------------
his own advantage or disclose any proprietary or confidential information
relating to the business operations or properties of Employer, any Affiliate of
Employer or any of their respective customers, suppliers, landlords, licensors
or licensees. Upon the expiration or termination of the Employment Term,
Executive will surrender and deliver to Employer all documents and information
of every kind relating to or connected with Employer and its Affiliates and
their respective businesses, customers, suppliers, landlord, licensors and
licensees. The foregoing confidential information provisions shall not apply to
information which: (i) is or becomes publicly known through no wrongful act of
the Executive; (ii) is rightfully received from any third party without
restriction and without breach by Executive of this Employment Agreement; or
(iii) is independently developed by Executive after the term of his employment
hereunder or is independently developed by a competitor of Employer at any time.
The provisions of this Section 11 shall survive the expiration and/or
termination of this Employment Agreement for a period of two years from the
Effective Date of Termination.
12. Non-Compete. During the Noncompetition Term (as defined below) Executive
-----------
will not directly or indirectly engage in competition with Employer by being
associated in any capacity (whether as employee, owner, consultant, agent or
otherwise) with any person or entity that sells or offers to sell any products
or services which are in the same line of business as the Business and which
directly compete in any area in the world where the Employer's products or
services are offered or sold by Employer. The foregoing sentence shall not
preclude the ownership by Executive of 10% or less of any class of security of
any issuer which is registered
6
pursuant to the Securities Exchange Act of 1934, as amended, or which is listed
on the London Stock Exchange. As used herein, "Noncompetition Term" means the
period of Executive's employment with Employer and for such period after an
Effective Date of Termination during which Executive continues to receive any
payments equal to his Base Salary pursuant to subsection 10(e)(i) above.
13. Arbitration. Any dispute or controversy arising out of or relating to this
-----------
Agreement or any claimed breach hereof shall be settled, at the request of
either party, by an arbitration proceeding conducted in accordance with the
rules of the American Arbitration Association ("AAA"), with the award determined
to be appropriate by the arbitrator therein to be final, non-appealable and
binding on the parties hereto, and with judgment upon such award as is rendered
in any such arbitration proceeding available for entry and enforcement in any
court having jurisdiction of the parties hereto. The arbitrator shall be an
impartial arbitrator qualified to serve in accordance with the rules of the AAA
and shall be reasonably acceptable to each of the Employer and the Executive.
If no such acceptable arbitrator is so appointed within fifteen (15) days after
the initial request for arbitration of such disputed matter, each of the parties
promptly shall designate a person qualified to serve as an arbitrator in
accordance with the rules of the AAA, and the two persons so designated promptly
shall select the arbitrator from among those persons qualified to serve in
accordance with the rules of the AAA. The arbitration shall be held in the
State of California in the United States at the time of the initiation of any
such proceedings, or in such other place as may be agreed upon at the time by
the parties. The expenses of the arbitration proceeding shall be borne by
Employer.
14. Indemnification.
---------------
(a) Employer shall indemnify Executive to the fullest extent permitted by
the Articles of Incorporation and Bylaws of Employer as in effect on the date
hereof (or if such Articles of Incorporation or Bylaws are amended to broaden
such indemnification, then such broadened indemnification terms shall apply)
against all costs, expenses, liabilities and losses (including, without
limitation, attorneys' fees, judgments, penalties and amounts paid in
settlement) reasonably incurred by Executive in connection with any action, suit
or proceeding, whether civil, criminal, administrative or investigative in which
Executive is made, or is threatened to be made, a party to or a witness in such
action, suit or proceeding by reason of the fact that he is or was an officer,
director, consultant, agent or Executive of the Employer or of any of Employer's
Affiliates or is or was serving as an officer, consultant, director, member,
Executive, trustee, agent or fiduciary of any other entity at the request of the
Employer (a "Proceeding"). Employer shall maintain policies for insurance
coverage of Executive to the fullest extent available to any other director or
officer of Employer, which shall include director and officer insurance and
insurance coverage relating to acts of Employer prior to the commencement of
Executive's employment hereunder. Employer shall enter into an indemnification
agreement with Executive to the same extent Employer has entered into such
agreements with other executive officers of Employer.
(b) The indemnification provided to Executive hereunder is in addition to,
and not in lieu of, any additional indemnification to which he may be entitled
pursuant to Employer's
7
Articles of Incorporation or Bylaws, any insurance maintained by Employer from
time to time providing coverage to Executive and other officers and directors of
Employer, or any separate written agreement with Executive. The provisions of
this Section 14 shall survive any termination of this Agreement.
15. Amendment and Modification. This Agreement contains the entire agreement
--------------------------
between the parties with respect to the subject matter hereof. Subject to
applicable law and upon the consent of the Board of Employer, this Agreement may
be amended, modified and supplemented by written agreement of Employer and
Executive with respect to any of the terms contained herein.
16. Waiver of Compliance. Any failure of either party to comply with any
--------------------
obligation, covenant, agreement or condition on its part contained herein may be
expressly waived in writing by the other party, but such waiver or failure to
insist upon strict compliance shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires
or permits consent by or on behalf of any party, such consent shall be given in
writing.
17. Notices. All notices, requests, demands and other communications required
-------
or permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered by hand, sent by registered or certified U.S. Mail, postage
prepaid, commercial overnight courier service or transmitted by facsimile and
shall be deemed served or delivered to the addressee at the address for such
notice specified below when hand delivered, upon confirmation of sending when
sent by facsimile, on the second day after being sent when sent by overnight
delivery or ten (10) days after having been mailed, certified or registered mail
with postage prepaid:
If to Employer: If to Executive:
-------------- ---------------
Plasma & Materials Technologies, Inc. Xxxxx Xxxxxxx
0000 Xxxxxxx Xxxxxx Xxxxxxxx Xxx
Xxxxxxxxxx, XX 00000 Xxxxxxx, Xxxxx XX00XX
Attention: Chief Executive Officer Facsimile: 011-44-1-633-414-040
Facsimile: (000) 000-0000
or, in the case of either such party, to such substitute address as such party
may designate from time to time for purposes of notices to be given to such
party hereunder, which substitute address shall be designated as such in a
written notice given to the other party addressed as aforesaid.
18. Assignment. This Agreement shall inure to the benefit of Executive and
----------
Employer and be binding upon the successors and general assigns of Employer.
This Agreement shall not be assignable without the written consent of the
parties hereto which consent may be given or withheld in the sole discretion of
the parties hereto.
19. Enforceability. In the event it is determined that this Agreement is
--------------
unenforceable in any respect, it is the mutual intent of the parties that it be
construed to apply and be enforceable to the maximum extent permitted by
applicable law.
8
20. Applicable Law. This Agreement shall be construed and enforced in
--------------
accordance with the laws applicable to contracts executed, delivered and fully
to be performed in the State of California.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective on and as of the day and year first above written.
EMPLOYER:
PLASMA & MATERIALS TECHNOLOGIES, INC.
By:
----------------------------------
Name:
Title:
EXECUTIVE:
-------------------------------------
Xxxxx Xxxxxxx
9
EXHIBIT C
[FORM OF OPINION OF XXXXXXX & XXXXXXXX]
________, 1996
The Shareholders parties to that
certain Share Purchase Agreement
dated July ___, 1996
Re: Share Purchase Agreement
------------------------
Ladies and Gentlemen:
This firm has acted as counsel to Plasma & Materials Technologies, Inc., a
California corporation ("Buyer"), in connection with that certain Share Purchase
Agreement dated as of July ___, 1996 (the "Share Purchase Agreement") among
Buyer, Electrotech Ltd., a corporation organized under the laws of England
("ET"), Electrotech Equipments Ltd., a corporation organized under the laws of
England ("ETE," and sometimes collectively with ET, the "Companies"),
Xxxxxxxxxxx X. Xxxxxx, an individual, X.X. Xxxxxx, an individual, and K.N.K.
Willmott, as Managing Trustee of the Willmott Settlements (collectively, the
"Shareholders"). This opinion is delivered to you in compliance with Section
7.2(i) of the Share Purchase Agreement. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings given to them in the Share
Purchase Agreement.
In rendering this opinion, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of such corporate records,
certificates of public officials, documents and other instruments as we have
deemed necessary or appropriate to enable us to express the opinions set forth
below. In our examination, we have assumed the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies. In
rendering this opinion, when the facts were not independently established or
verified by us, we have relied upon certificates, statements, representations
and opinions of officers, other representatives of the Buyer, public officials
and others.
The Shareholders parties to that
certain Share Purchase Agreement
dated July ___, 1996
______________, 1996
Page 2
This Opinion is subject to all matters contained or referred to in the
Buyer Disclosure Letter.
We have investigated such questions of law as we have deemed relevant and
necessary in connection with rendering this opinion. We are attorneys duly
admitted and qualified to practice only in the State of California, and, except
as noted below in this paragraph, we are opining herein only as to the effect on
the subject transactions of United States federal law and the laws of the State
of California. With respect to all matters of the laws of England addressed by
the last sentence of paragraph 2 and by paragraphs 3 and 4, we are, with your
consent, opining in reliance on the opinion of Xxxxxxxx Xxxxxx Xxxxxxxxxxx, a
copy of which is attached hereto. We are not opining on, and assume no
responsibility as to the applicability of, or the effect on any of the matters
covered herein of, the laws of any other jurisdiction.
Based on the foregoing and subject to the qualifications, exceptions and
limitations set forth herein, we are of the opinion that:
1. To our best knowledge, the Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
has all corporate power and authority and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and is duly qualified to do business as a foreign entity and is in
good standing within such states of the United States of America where the
character of the property owned or leased by it, or the nature of its
activities, makes such qualification necessary, except where the failure to be
so qualified could not reasonably be expected to have a Buyer Material Adverse
Effect.
2. The execution and delivery of the Share Purchase Agreement by the Buyer
and the consummation of the transactions contemplated thereby have been duly
authorized by the Board of Directors and shareholders of the Buyer. The Share
Purchase Agreement has been duly executed and delivered by the Buyer and
constitutes the valid and binding obligations of the Buyer, enforceable against
it in accordance with its terms.
The Shareholders parties to that
certain Share Purchase Agreement
dated July ___, 1996
______________, 1996
Page 3
3. The Buyer Shares issued to the Shareholders pursuant to the Share
Purchase Agreement have been duly authorized, validly issued and are fully paid
and non-assessable and were not issued in violation of any preemptive rights.
4. To our best knowledge, the execution, delivery and performance of the
Share Purchase Agreement and the consummation by the Buyer of the transactions
contemplated thereby will not (a) contravene or constitute a default under or
give rise to a right of termination, cancellation or acceleration or any right
or obligation of the Buyer or to a loss of any benefit to which the Buyer is
entitled under any provision of (i) applicable law or regulation, (ii) the
Articles of Incorporation or Bylaws of the Buyer, or (iii) to the best of our
knowledge, any agreement, contract, instrument, plan, lease, judgment,
injunction, order, decree, award or other instrument binding upon the Buyer or
(b) to our best knowledge, result in the creation or imposition of any
Encumbrances on any asset of the Buyer, except for any such contravention,
default, termination, cancellation, acceleration, loss or Encumbrance that could
not reasonably be expected, individually or in the aggregate, to have a Buyer
Material Adverse Effect.
5. To our best knowledge, there are no claims, actions, proceedings or
investigations pending or threatened involving or affecting the Buyer or any of
its properties or assets before any court or governmental or regulatory
authority or body in which an adverse determination could reasonably be expected
to have a Buyer Material Adverse Effect or that in any manner challenges or
seeks to prevent, enjoin, alter or materially delay any of the transactions
contemplated by the Share Purchase Agreement. To our best knowledge, neither
the Buyer nor any of its property or assets is subject to any order, judgment,
injunction or decree that could reasonably be expected to have a Buyer Material
Adverse Effect.
The opinion expressed in paragraph 2 above is qualified to the extent that
the validity, binding nature or enforceability of any term of the Share Purchase
Agreement may be limited or otherwise affected by (a) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
affecting creditors' rights generally, and (b) general principles of equity,
including (without limitation) concepts of materiality, reasonableness, good
faith and fair dealing, and the possible unavailability of specific
The Shareholders parties to that
certain Share Purchase Agreement
dated July ___, 1996
______________, 1996
Page 4
performance or injunctive relief (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Furthermore, such opinion is
limited with respect to any indemnity provisions contained in the Share Purchase
Agreement to the extent that the enforcement thereof may be limited by public
policy considerations.
This opinion letter is intended solely for your benefit in connection with
the transactions contemplated by the Share Purchase Agreement and may not be
relied upon by you for any other purpose, or relied upon by any other person for
any purpose without our prior written consent.
Our liability in respect of the above opinion shall not in any event exceed
the sum of Fifteen Million Pounds Sterling (Pounds 15,000,000) inclusive of all
costs, demands, expenses, consequential damages and interest, and any such
liability shall cease on the expiration of one year from the date of Closing.
Very truly yours,
EXHIBIT D
---------
REGISTRATION AGREEMENT
THIS REGISTRATION AGREEMENT (this "Agreement") is made and entered
into as of _____, 1996 by and between Plasma & Materials Technologies,
Inc., a California corporation (the "Company"), and Xxxxxxxxxxx X. Xxxxxx, an
individual (the "Investor"). This Agreement is entered into pursuant to that
certain Share Purchase Agreement dated as of July 17, 1996 (the "Share Purchase
Agreement") by and among the Company, Electrotech Limited, Electrotech
Equipments Limited, the Investor and certain other parties.
1. Definitions. For purposes of this Agreement:
-----------
(a) The term "register," "registered," and "registration"
refer to a registration effected by preparing and filing with the Securities and
Exchange Commission (the "SEC") a registration statement or similar document in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
and the declaration or ordering of effectiveness of such registration statement
or document; and
(b) The term "Registrable Securities" means the ___________
shares of the Company's Common Stock issued to the Investor pursuant to the
Share Purchase Agreement, and any Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, such Common Stock.
2. Request for Registration.
------------------------
(a) If the Company shall receive at any time after the first
anniversary of this Agreement, a written request from the Investor that the
Company file a registration statement under the Securities Act covering the
registration of any Registrable Securities (provided that the aggregate amount
of such Registrable Securities would exceed the amount specified in paragraph
(e) of Rule 144 under the Securities Act), then the Company shall file as soon
as practicable, and in any event within 90 days of the receipt of such request,
a registration statement under the Securities Act covering all Registrable
Securities which the Investor so requests to be registered.
(b) The Company is obligated to effect only three such
registrations pursuant to this Section 2; provided, however, that the Company
---------
shall not be obligated to effect any such registration if the Company has,
within the six months preceding the date of receipt of the request for such
registration, already effected one such registration.
(c) Notwithstanding the foregoing, if the Company shall
furnish to the Investor a certificate signed by the President or Chief Executive
Officer of the Company stating that, in the good faith judgment of the Board of
Directors of the Company, it would
be seriously detrimental to the Company and its shareholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
such filing for a period of not more than an additional 120 days after receipt
of the request of the Investor referred to in Section 2(a) above; provided,
------------
however, that the Company may not utilize this right more than once in any 12-
month period.
3. Company Registration. If (but without any obligation to do so)
--------------------
the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Investor) any of its
stock or other securities under the Securities Act in connection with the public
offering, on or after the first anniversary of this Agreement, of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock option, purchase or
similar benefit plan or an SEC Rule 145 transaction), the Company shall, at such
time, promptly give the Investor written notice of such registration. Upon the
written request of the Investor given within 30 days after the effectiveness of
such notice by the Company, the Company shall, subject to the provisions of
Section 8, cause to be registered under the Securities Act all of the
---------
Registrable Securities that the Investor has requested to be registered. In the
event the Investor determines not to include any or all of the Registrable
Securities held by the Investor in any such registration, the Investor shall
continue to have the right to include such Registrable Securities in any
subsequent registration, pursuant to the terms of this Section 3.
---------
4. Obligations of the Company. Whenever required under this
--------------------------
Agreement to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the
Investor, keep such registration statement effective for up to 120 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Investor such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as he may
reasonably request in order to facilitate the disposition of his Registrable
Securities.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Investor,
provided that the Company
2.
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. The Investor
shall also enter into and perform its obligations under such an agreement.
(f) Notify the Investor at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
(g) Furnish, at the request of the Investor, on the date that
such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Investor, and (ii) a
letter dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Investor.
5. Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to this Agreement that
the Investor shall furnish to the Company such information regarding himself,
the Registrable Securities held by him, and the intended method of disposition
of such securities as shall be required to effect the registration of the
Registrable Securities.
6. Expenses of Demand Registrations. All expenses other than
--------------------------------
underwriting discounts and commissions incurred by the Company in connection
with registrations, filings or qualifications pursuant to Section 2, including
---------
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, and fees and disbursements of counsel for the Company,
shall be borne by the Company.
7. Expenses of Company Registration. The Company shall bear and pay
--------------------------------
all expenses incurred by the Company in connection with any registration, filing
or qualification of Registrable Securities with respect to the registrations
pursuant to Section 3, including (without limitation) all registration, filing
---------
and qualification fees, printers' and
3.
accounting fees and fees and disbursements of counsel for the Company, but
excluding underwriting discounts and commissions relating to Registrable
Securities.
8. Underwriting Requirements. In connection with any offering
-------------------------
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 3 to include any of the Investor's
---------
securities in such underwriting unless the Investor accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
the Company, and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company. If the
total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters believe will not jeopardize the
success of the offering (the securities so included to be apportioned pro rata
among the selling shareholders according to the total amount of securities
entitled to be included therein owned by each selling shareholder or in such
other proportions as shall mutually be agreed to by such selling shareholders),
provided that any shares being sold by the Investor in exercising a demand
registration right granted in Section 2, or by any other shareholder exercising
---------
a demand registration right similar to that granted in Section 2, shall not be
---------
excluded from such offering.
9. Delay of Registration. The Investor shall not have any right to
---------------------
obtain or seek an injunction restraining or otherwise delaying any registration
as the result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
10. Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless the Investor, any underwriter (as defined in the
Securities Act) for the Investor and each person, if any, who controls such
Investor or underwriter within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act") against any
losses, claims, damages or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any Rule or
4.
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law; and, within 30 days after the Company receives a written request
containing a description in reasonable detail of the expenses incurred, the
Company will advance to the Investor and each underwriter or controlling person
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
whether prior to or after final disposition of any claim or action (unless there
has been a final determination that such Investor, underwriter or controlling
person is not entitled to be indemnified for such expenses); provided, that at
the time of such advance, such Investor, underwriter or controlling person shall
agree to repay the amounts advanced if it is ultimately determined that he or
she is not entitled to be indemnified pursuant to the terms of this Agreement;
provided, however, that the indemnity agreement contained in this Section 10(a)
-------------
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Investor,
underwriter or controlling person.
(b) To the extent permitted by law, the Investor will indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, and any underwriter, against
any losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, or underwriter may
become subject, under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any violation, in each case to
the extent (and only to the extent) that such violation occurs in reliance upon
and in conformity with written information furnished by the Investor expressly
for use in connection with such registration; and the Investor will reimburse as
incurred any legal or other expenses reasonably incurred by the Company or any
such director, officer, controlling person or underwriter in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 10(b)
-------------
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Investor, which consent shall not be unreasonably withheld; provided, that, in
no event shall any indemnity under this Section 10(b) exceed the net proceeds
-------------
from the offering received by the Investor.
(c) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action (including any
----------
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 10, deliver to
----------
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying
5.
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 10, but the omission
----------
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 10.
----------
(d) The obligations of the Company and the Investor under this
Section 10 shall survive the completion of any offering of Registrable
----------
Securities in a registration statement under this Agreement, and otherwise.
(e) If the indemnification provided for in this Section 10 is
----------
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
11. Termination of Registration Rights. The Company's obligations
----------------------------------
pursuant to this Agreement shall terminate when the Investor can sell all of the
Registrable Securities pursuant to Rule 144 under the Securities Act during any
90-day period.
12. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same Agreement and
each of which shall be deemed an original.
6.
13. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of California, without regard to
principles of conflicts of laws.
14. Entire Agreement. This Agreement is intended by the parties
----------------
hereto as a final expression of their agreement and intended to be a complete
and exclusive statement of the parties hereto in respect of the subject matter
contained herein.
15. Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effective when given upon personal delivery to the party to be notified or, if
sent by telex or telecopier, upon receipt of the correct answer back, or three
business days after deposit with the United States Post Office, by registered or
certified mail, or upon delivery by Federal Express, DHL or similar courier, in
each case postage and delivery charges prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten days' advance
written notice to the other parties.
IN WITNESS WHEREOF, the Company, each of the Investors and the Founder
have caused this Agreement to be signed by an officer or partner thereunto duly
authorized, all as of the date first written above.
PLASMA & MATERIALS TECHNOLOGIES, INC.
By:________________________________________
Name: _________________________
Title: _________________________
Address: ________________________________
________________________________
________________________________
___________________________________________
XXXXXXXXXXX X. XXXXXX
Address: ________________________________
________________________________
________________________________
7.
EXHIBIT E
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT ("Agreement") is made as of this ____ day of
______________, 1996 between Plasma & Materials Technologies, Inc., a California
corporation ("Buyer"), and Xxxxxxxxxxx X. Xxxxxx ("Shareholder").
R E C I T A L S:
- - - - - - - -
A. Pursuant to a Share Purchase Agreement dated as of July ___, 1996
(the "Acquisition Agreement") among Buyer, Shareholder, Electrotech Limited, a
corporation organized and existing under the laws of England ("ET"), Electrotech
Equipments Limited, a corporation organized and existing under the laws of
England ("ETE"; and sometimes collectively with ET, the "Companies") and the
other shareholders of the Companies, Buyer will be acquiring all of the
outstanding capital stock of the Companies and one subsidiary of ETE (the
"Acquisition").
B. The Acquisition Agreement requires that Shareholder enter into a
noncompetition agreement upon the effectiveness of the Acquisition and that the
obligation of Buyer to consummate the Acquisition is conditioned upon the
Shareholder entering into such noncompetition agreement.
C. The parties therefore desire to enter into this Agreement in
order to implement the requirements of the Acquisition Agreement and to confirm
in Buyer the good will of the business of the Companies and all of the benefits
to be derived therefrom.
A G R E E M E N T:
- - - - - - - - -
THEREFORE, in consideration of the Acquisition, the consideration to
be received by Shareholder as a result of the Acquisition, the Noncompetition
Fee set forth in Section 1 hereof and the mutual covenants herein contained and
other consideration (the receipt and adequacy of which are hereby acknowledged
by Shareholder), the parties hereby agree as follows:
1. In consideration of the noncompetition covenant of Shareholder
hereunder, the Buyer has paid to Shareholder the cash amount of Seven Million
Five Hundred Thousand Dollars (US$7,500,000) (the "Noncompetition Fee")
concurrent with the execution of this Agreement.
2. (a) During the term hereof, Shareholder shall not directly or
indirectly carry on or participate in any business in competition with the
Business (as hereinafter defined) as long as the Business is carried on by the
Companies (or Buyer, any subsidiary or controlled affiliate of Buyer or of the
Companies or any person, corporation, partnership, trust or other organization
or entity deriving title from Buyer or the Companies to the good will of the
Business, all of whom together with Buyer and the Companies are
sometimes collectively called the "Protected Entities"). "Business" means the
semiconductor manufacturing equipment development, production and marketing
business of the Companies as the same exists immediately prior to the
Acquisition and as the same is to be carried on by the Companies immediately
after the Acquisition.
This covenant shall extend throughout the following geographic areas:
(i) The United Kingdom;
(ii) The countries of the United States of America, France,
Germany and Japan; and
(iii) Each and every country and territory throughout the world
in which either of the Companies or any of their subsidiaries does business
immediately prior to the Acquisition.
(b) The term "directly or indirectly carry on or participate in a
business in competition with the Business" shall include Shareholder, directly
or indirectly, doing any of the following listed acts:
(i) carrying on or engaging in any such business as a
principal, or on his own account, or solely or jointly with others as a
director, officer, agent, employee, consultant or partner, or stockholder or
limited partner owning (of record or beneficially, through a nominee or
otherwise) more than ten percent (10%) of the stock of or equity interest
in, or securities convertible into more than ten percent (10%) of the stock
of or equity interest in, any corporation or limited partnership; or
(ii) as agent or principal carrying on or engaging in any
activities or negotiations with respect to the acquisition or the
disposition of any such business; or
(iii) lending credit or money for the purpose of establishing
or operating any such business; or
(iv) giving advice to any other person, firm, association or
corporation engaging in any such business; or
(v) lending or allowing his name or reputation to be used in
any such business; or
(vi) allowing his skill, knowledge or experience to be used
in any such business.
2.
(c) The term of this covenant shall extend for a period of
three (3) years commencing upon the effectiveness of the Acquisition.
(d) It is the desired intent of the parties that the provisions
of this Section 2 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, to the extent that the covenant hereunder shall be
adjudicated to be invalid or unenforceable in any one such jurisdiction, this
Section 2 shall be deemed amended to delete therefrom or reform the portion thus
adjudicated to be invalid or unenforceable, such deletion or reformation to
apply only with respect to the operation of this Section in the particular
jurisdiction in which such adjudication is made.
3. Upon breach of the covenant contained in Section 2, the Protected
Entities shall be entitled to injunctive relief, both pending litigation and
permanently, as a remedy at law would be inadequate and insufficient.
4. The covenants of Shareholder hereunder shall be construed as and
shall be independent of the covenants, representations, warranties and
obligations of the Shareholder under the Acquisition Agreement or under any
agreement or instrument delivered pursuant to the Acquisition.
5. (a) All notices required or desired to be given hereunder shall
be in writing and signed by the party so giving notice, and shall be effective
when personally delivered or deposited in the United States mail, as certified
or registered mail, return receipt requested, first class postage and fees
prepaid, addressed as set forth below. Any party may from time to time change
such party's address for giving notice by giving notice thereof in the manner
outlined above:
Plasma & Materials Technologies, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: _____________________
Xxxxxxxxxxx X. Xxxxxx
Elberton Manor
Elberton, Bristol
Avon B512-3AA, U.K.
(b) Should any party hereto retain counsel for the purpose of
enforcing, or preventing the breach of, any provision hereof, including, but not
limited to, by instituting any action or proceeding in court to enforce any
provision hereof or to enjoin a breach of any provision hereof, or for a
declaration of such party's rights or obligations hereunder, or for any other
judicial remedy, then the prevailing party shall be entitled to be
3.
reimbursed by the losing party for all costs and expenses incurred thereby,
including, but not limited to, attorneys' fees (including costs of appeal).
(c) This Agreement shall inure to the benefit of Buyer, the
Companies and their successors and assigns.
(d) The failure by a Protected Entity to enforce any of its
rights hereunder shall not be deemed to be a waiver of such rights, unless such
waiver is in writing and signed by the waiving party, and in the case of any
corporation, approved by its Board of Directors. Waiver of any one breach shall
not be deemed to be a waiver of any other breach of the same or any other
provision hereof. This Agreement can be amended only by a written agreement
executed by each party hereto.
(e) The validity of this Agreement, the construction of its terms
and the determination of the rights and duties of the parties hereto shall be
governed by the internal substantive laws of California.
(f) All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural as the identity of
the person, persons, entity or entities may require.
(g) This Agreement contains the sole and entire agreement and
understanding of the parties with respect to the entire subject matter hereof
and any and all prior discussions, negotiations, commitments, letters of intent,
memoranda, writings and understandings related hereto are hereby superseded.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PLASMA & MATERIALS TECHNOLOGIES,
INC.
By: _______________________________________
Its: ______________________________________
____________________________________________
XXXXXXXXXXX X. XXXXXX
4.
EXHIBIT F
[FORM OF OPINION OF XXXXX WASBROUGH]
_______________, 1996
Plasma & Materials Technologies, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Re: Share Purchase Agreement
------------------------
Ladies and Gentlemen:
This firm has acted as solicitors to Electrotech Ltd., a corporation
organized under the laws of England ("ET"), Electrotech Equipments Ltd., a
corporation organized under the laws of England ("ETE," and sometimes
collectively with ET, the "Companies"), Xxxxxxxxxxx X. Xxxxxx, an individual,
X.X. Xxxxxx, an individual, and K.N.K. Willmott, as Managing Trustee of the
Willmott Settlements (collectively, the "Shareholders"), in connection with that
certain Share Purchase Agreement dated as of July __, 1996 (the "Share Purchase
Agreement") among Plasma & Materials Technologies, Inc., a California
corporation ("Buyer"), the Companies and the Shareholders. This opinion is
delivered to you in compliance with Section 7.3(e) of the Share Purchase
Agreement. Unless otherwise defined herein, capitalized terms used herein shall
have the meanings given to them in the Share Purchase Agreement.
In rendering this opinion, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of such corporate records,
certificates of public officials, documents and other instruments as we have
deemed necessary or appropriate to enable us to express the opinions set forth
below. In our examination, we have assumed the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies. In
rendering this opinion, when the facts were not independently established or
verified by us, we have relied upon certificates, statements, representations
and opinions of officers, other representatives of the Company, public officials
and others.
Plasma & Materials Technologies, Inc.
_______________, 1996
Page 2
This Opinion is subject to all matters contained or referred to in the
Shareholder Disclosure Letter and the Company Disclosure Letter.
Based on the foregoing and subject to the qualifications, exceptions and
limitations set forth herein, we are of the opinion that:
1. To our best knowledge, each Company and each Subsidiary thereof
incorporated in the United Kingdom (a "U.K. Subsidiary") is a corporation duly
organized, validly existing and in good standing under the laws of England and
Wales, has all corporate power and authority and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and is duly qualified to do business and is in good
standing within the United Kingdom, except where the failure to be so qualified
could not reasonably be expected to have a Company Material Adverse Effect.
2. Save as specified in the Company Disclosure Letter and to our best
knowledge, the shares of each of the Companies' outstanding capital stock have
been duly authorized, validly issued and are fully paid and non-assessable and
were not issued in violation of any preemptive rights. Such shares are owned of
record and, to the best of our knowledge, beneficially and free of all
Encumbrances, by the Shareholders and in the respective amounts set forth on
Exhibit A to the Share Purchase Agreement. To the best of our knowledge, there
are no outstanding subscriptions, options, warrants, rights, convertible or
exchangeable securities or other agreements, commitments or contingent
liabilities on the part of either Company to issue any additional shares of
capital stock or any other equity securities.
3. The execution and delivery of the Share Purchase Agreement by each
Company and the consummation of the transactions contemplated thereby have been
duly authorized by the Board of Directors of each Company. The Share Purchase
Agreement has been duly executed and delivered by each Company and each
Shareholder and so far as we are aware constitutes the valid and binding
obligations of each Company and each Shareholder, enforceable so far as we are
aware against each Company and each Shareholder in accordance with its terms.
4. Pursuant to the Share Purchase Agreement and to our best knowledge,
the Shareholders have transferred to the Buyer good and marketable title to all
the issued
Plasma & Materials Technologies, Inc.
_______________, 1996
Page 3
share capital of the Companies, and ETE has transferred to the Buyer good and
marketable title to all the issued share capital of ET-US, free and clear of all
Encumbrances, assuming that Buyer purchased the same in good faith and without
notice of any adverse claims.
5. So far as we are aware, the execution, delivery and performance of
the Share Purchase Agreement and the consummation by each Company and by each
Shareholder of the transactions contemplated thereby will not (a) contravene or
constitute a default under or give rise to a right of termination, cancellation
or acceleration of any right or obligation of either Company or any U.K.
Subsidiary or to a loss of any benefit to which such Company or such Subsidiary
is entitled under any provision of (i) applicable law or regulation, (ii) the
Memorandum and Articles of either Company or any U.K. Subsidiary or (iii) to the
best of our knowledge, any agreement, contract, instrument, plan, lease,
judgment, injunction, order, decree, award or other instrument binding upon
either Company or any U.K. Subsidiary or (b) to the best of our knowledge,
result in the creation or imposition of any Encumbrances on any asset of either
Company or any U.K. Subsidiary, except for any such contravention, default,
termination, cancellation, acceleration, loss or Encumbrance that could not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect.
6. To the best of our knowledge, there are no claims, actions,
proceedings or investigations pending or threatened involving or affecting
either Company or any U.K. Subsidiary or any of their properties or assets, or
any Shareholder, before any court or governmental or regulatory authority or
body in which an adverse determination could reasonably be expected to have a
Company Material Adverse Effect or that in any manner challenges or seeks to
prevent, enjoin, alter or materially delay any of the transactions contemplated
by the Share Purchase Agreement. To the best of our knowledge, neither Company
nor any U.K. Subsidiary nor any property or assets or any of them nor any
Shareholder is subject to any order, judgment, injunction or decree that could
reasonably be expected to have a Company Material Adverse Effect.
The opinion expressed in paragraph 3 above is qualified to the extent
that the validity, binding nature or enforceability of any term of the Share
Purchase Agreement may be limited or otherwise affected by (a) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws affecting creditors' rights generally, and (b) general principles
of equity, including (without limitation) concepts of materiality,
Plasma & Materials Technologies, Inc.
_______________, 1996
Page 4
reasonableness, good faith and fair dealing, and the possible unavailability of
specific performance or injunctive relief (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Furthermore,
such opinion is limited with respect to any indemnity provisions contained in
the Share Purchase Agreement to the extent that the enforcement thereof may be
limited by public policy considerations.
This opinion letter is intended solely for your benefit in connection
with the transactions contemplated by the Share Purchase Agreement and may not
be relied upon by you for any other purpose, or relied upon by any other person
for any purpose without our prior written consent.
Our liability in respect of the above opinion shall not in any event
exceed the sum of Fifteen Million Pounds Sterling ((Pounds)15,000,000) inclusive
of all costs, demands, expenses, consequential damages and interest, and any
such liability shall cease on the expiration of one year from the date of
Closing.
Very truly yours,
