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STOCK PURCHASE AGREEMENT
DATED JUNE 6, 1996
BY AND AMONG
LOTUS TECHNOLOGIES, INC.,
XXXXX X. XXXXXX, TRUSTEE FOR THE LIPTON SEPARATE PROPERTY TRUST
DATED JANUARY 12, 1993,
XXXXXX X. XXXXX, XXXXXX XXXXXX
AND
INTEVAC, INC.
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TABLE OF CONTENTS
Page
1. Purchase and Sale of Stock.................................... 1
1.1 Purchase and Sale.................................... 1
1.2 Closing.............................................. 1
2. Representations and Warranties of the Company and the Selling
Shareholders.................................................. 1
2.1 Organization, Good Standing and Qualification........ 2
2.2 Capitalization....................................... 2
2.3 Subsidiaries......................................... 2
2.4 Authorization........................................ 2
2.5 Common Stock......................................... 2
2.6 Governmental Consents................................ 3
2.7 Returns.............................................. 3
2.8 Litigation........................................... 3
2.9 Intellectual Property................................ 3
2.10 Proprietary Information and Inventions Agreements.... 5
2.11 Compliance With Other Instruments.................... 5
2.12 Agreements; Action................................... 5
2.13 Disclosure........................................... 6
2.14 Title to Property and Assets......................... 6
2.15 Financial Statements................................. 6
2.16 Changes.............................................. 6
2.17 Employee Benefit Plans............................... 8
2.18 Taxes................................................ 8
2.19 Bank Accounts........................................ 8
2.20 Insurance............................................ 8
2.21 Minute Books......................................... 8
2.22 Labor Agreements and Actions......................... 8
2.23 Brokers' or Finders' Fees............................ 9
2.24 Accounts Receivable.................................. 9
2.25 Related Party Transactions........................... 9
2.26 Manufacturing and Marketing.......................... 9
2.27 Inventory............................................ 9
2.28 Customers and Suppliers.............................. 10
2.29 Employee Matters..................................... 10
3. Representations and Warranties of the Selling Shareholders.... 10
3.1 Authorization........................................ 10
3.2 Compliance With Other Instruments.................... 10
3.3 Governmental Consents................................ 11
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3.4 Litigation............................................... 11
3.5 Title to Stock........................................... 11
3.6 Disclosure............................................... 11
3.7 Intellectual Property of the Selling Shareholders........ 11
4. Representations and Warranties of the Purchaser................... 12
4.1 Organization, Good Standing and Qualification............ 12
4.2 Authorization............................................ 12
4.3 Purchase for Investment.................................. 12
4.4 Disclosure of Information; Due Diligence................. 12
4.5 Investment Experience; Accredited Investor Status........ 13
4.6 Governmental Consents.................................... 13
4.7 Insolvency............................................... 13
5. Conditions of the Purchaser's Obligations at the Closing.......... 13
5.1 Representations and Warranties........................... 13
5.2 Performance.............................................. 13
5.3 Compliance Certificate................................... 14
5.4 Securities Laws Qualifications........................... 14
5.5 Proceedings and Documents................................ 14
5.6 Share Certificate........................................ 15
5.7 Government and Third-Party Consents...................... 15
5.8 Company Options.......................................... 15
5.9 Company Warrants......................................... 15
5.10 Selling Shareholder Non-Competition and Non-Disclosure
Agreement................................................ 14
5.11 Opinion of Company Counsel............................... 15
5.12 Opinion of Selling Shareholder Counsel................... 15
6. Conditions of the Company's and Selling Shareholder's Obligations
at Closing........................................................ 15
6.1 Representations and Warranties........................... 15
6.2 Performance.............................................. 15
6.3 Compliance Certificate................................... 15
6.4 Securities Laws Qualification............................ 15
6.5 Proceedings and Documents................................ 15
6.6 Government Consents............................................... 15
6.7 Payment of Purchase Price................................ 15
6.8 Payment of Finder's Fee.................................. 16
6.9 Opinion of Purchaser Counsel............................. 16
7. Indemnification................................................... 16
7.1 Right to Indemnification..................................16
7.2 Limitation................................................16
7.3 Notification, Etc.........................................17
ii.
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Miscellaneous........................................................17
8.1 Survival of Warranties......................................17
8.2 Successors and Assigns......................................17
8.3 Governing Law...............................................18
8.4 Counterparts................................................18
8.5 Titles and Subtitles........................................18
8.6 Notices.....................................................18
8.7 Cost and Expense............................................18
8.8 Amendments and Waivers......................................18
8.9 Severability................................................18
8.10 Entire Agreement............................................18
8.11 California Corporate Securities Law.........................19
8.12 Publicity...................................................19
8.13 Expenses; Attorneys' Fees...................................19
SCHEDULES AND EXHIBITS
Schedules:
Schedule A Schedule of Selling Shareholders
Schedule B Schedule of Exceptions
Schedule C Schedule of Material Contracts
Exhibits:
Exhibit A Selling Shareholder Non-Competition and Non-Disclosure
Agreement
Exhibit B Opinion of Company Counsel
Exhibit C Opinion of Selling Shareholder Counsel
Exhibit D Opinion of Purchaser Counsel
iii.
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
June 6, 1996, by and among Lotus Technologies, Inc., a California corporation
(the "Company"), Xxxxx X. Xxxxxx, Trustee for the Lipton Separate Property Trust
dated January 12, 1993 ("Xx. Xxxxxx"), Xxxxxx X. Xxxxx, an individual ("Xx.
Xxxxx"), Xxxxxx Xxxxxx, an individual ("Xx. Xxxxxx") and Intevac, Inc., a
California corporation (the "Purchaser").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Purchase and Sale. Subject to the terms and conditions of
this Agreement, at the Closing (as defined below) the Purchaser shall purchase
from each of Xx. Xxxxxx, Xx. Xxxxx and Xx. Xxxxxx (collectively, the "Selling
Shareholders" and each, individually, a "Selling Shareholder") that number of
shares of Lotus Technologies, Inc. common stock, without par value (the "Common
Stock"), set forth opposite each Selling Shareholder's name on Schedule A hereto
for an aggregate price of $8,025,000 (the "Purchase Price").
1.2 Closing. The purchase and sale of the Common Stock shall
take place at the offices of Xxxxxxx, Phleger & Xxxxxxxx LLP, Two Embarcadero
Place, 0000 Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, at 11:00 a.m., on June 6,
1996 or at such other location and time as the Company, the Selling Shareholders
and the Purchaser mutually agree upon (which time and place are designated as
the "Closing"). At the Closing, each Selling Shareholder shall deliver to the
Purchaser a certificate representing the Common Stock that the Purchaser is
purchasing from such Selling Shareholder, properly endorsed in blank for
transfer and accompanied by a duly executed stock power in proper form, against
delivery to such Selling Shareholder by the Purchaser of a check or a bank wire
transfer in the amount of the purchase price therefor.
2. Representations and Warranties of the Company and the
Selling Shareholders. In this Agreement, any reference to a "Material Adverse
Effect" with respect to any entity means any event, change or effect that is
materially adverse to the condition (financial or otherwise), properties,
assets, liabilities, business, operations, results of operations or prospects of
such entity, taken as a whole. Each of the Company and the Selling Shareholders
hereby represents and warrants to the Purchaser that, except as set forth on a
Schedule of Exceptions attached hereto as Schedule B specifically identifying
the relevant Section or subsection hereof:
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2.1 Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to carry on its business as now conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure to so qualify would have a Material Adverse Effect on the
Company.
2.2 Capitalization.
(a) Common Stock. The authorized capital of the
Company consists of 10,000,000 shares of Common Stock, 3,780,000 shares of which
are issued and outstanding.
(b) Rights. There are no outstanding options,
warrants, subscriptions, rights (including conversion or preemptive rights or
first refusal rights) or agreements for the purchase or acquisition from the
Company, or from any shareholder, of any shares of the Company's capital stock
or securities convertible into its capital stock. Neither the Company nor any
Selling Shareholder is a party or subject to any agreement or understanding, and
there is no agreement or understanding between any persons and/or entities, that
affects or relates to the voting or giving of written consents with respect to
any security or by a director of the Company.
(c) Holders. All holders of securities of the Company
and all persons who have a right to hold securities of the Company are set forth
by name and the type and amount of securities and/or other rights so held in
Schedule A.
2.3 Subsidiaries. The Company does not presently own or
control, and has never owned or controlled, directly or indirectly, any interest
in any other corporation, association, partnership or other business or
investment entity.
2.4 Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement and the transactions
contemplated herein, and the performance of all obligations of the Company
hereunder, has been taken or will be taken prior to the Closing. This Agreement
has been duly executed and delivered by the Company and constitutes a valid and
legally binding obligation of the Company, enforceable in accordance with its
terms, subject, as to the enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting creditors'
rights generally, to general equitable principles and to limitations on the
enforceability of indemnification provisions as applied to certain types of
claims arising hereafter, if any, under the federal securities law.
2.5 Common Stock. The outstanding shares of Common Stock are
duly and validly authorized and issued, are fully paid and nonassessable, and
were issued in compliance with all applicable federal and state securities laws.
2.
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2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, regional, state or local governmental authority on the
part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement. Based in part on the
representations of the Purchaser in Sections 4.3 and 4.5 of this Agreement, the
offer and sale of the Common Stock pursuant to the terms of this Agreement are
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended (the "Act").
2.7 Returns. The Company has not had any of its products
returned by a purchaser or user thereof, other than for minor, nonrecurring
warranty problems. The Company is not aware of any pending warranty claims other
than those that arise in the ordinary course of business and which will not
require a bulk recall or modification of products currently sold to customers.
2.8 Litigation. There are no actions, suits, proceedings and
investigations pending or, to the Company's or the Selling Shareholders'
knowledge, currently threatened against the Company. There is no action, suit,
proceeding, or investigation pending or, to the Company's or the Selling
Shareholders' knowledge, currently threatened against the Company which
questions the validity of this Agreement or the right of the Company to enter
into such Agreement, or to consummate the transactions contemplated hereby, or
which might result, either individually or in the aggregate, in a Material
Adverse Effect on the Company, or any change in the current equity ownership of
the Company. The Company is not a party to or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no legal action, lawsuit, legal proceeding or
investigation related to any of the foregoing by the Company currently pending
or which the Company intends to initiate.
2.9 Intellectual Property.
(a) The Company owns, or licenses or otherwise
possesses legally enforceable rights to use all patents, trademarks, trade
names, service marks, copyrights, and any applications therefor, schematics,
technology, know-how, trade secrets, inventory, ideas, algorithms, processes,
computer software programs or applications (in both source code and object code
form), and tangible or intangible proprietary information or material
("Intellectual Property") that are used in the business of the Company as
currently conducted, except to the extent that the failure to have such rights
have not had and would not reasonably be expected to have a Material Adverse
Effect on the Company.
(b) The Schedule of Exceptions lists (i) all patents
and patent applications and all registered and unregistered trademarks, trade
names, service marks, and copyrights, which the Company considers to be material
its business and included in the Intellectual Property, including the
jurisdictions in which each such Intellectual Property right has been issued or
registered or in which any application for such issuance and registration has
been filed, (ii) all material licenses, sublicenses and other agreements as to
which the
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Company is a party and pursuant to which any person is authorized to use any
Intellectual Property, and (iii) all material licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which the Company
is authorized to use any third party patents, trademarks or registered
copyrights, including software ("Third Party Intellectual Property Rights")
which are incorporated in, are, or form a part of any Company product that is
material to its business.
(c) To the best of the Company's knowledge, there is
no material unauthorized use, disclosure, infringement or misappropriation of
any Intellectual Property rights of the Company, any trade secret material to
the Company, or any Intellectual Property right of any third party to the extent
licensed by or through the Company, by any third party, including any employee
or former employee of the Company. The Company has not entered into any
agreement to indemnify any other person against any charge of infringement of
any Intellectual Property, other than indemnification provisions contained in
purchase orders arising in the ordinary course of business.
(d) The Company is not, nor will it as a result of
the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, be in breach of any license, sublicense or
other agreement relating to the Intellectual Property or Third Party
Intellectual Property Rights, the breach of which would have a Material Adverse
Effect on the Company.
(e) All patents and registered trademarks, service
marks and copyrights held by the Company and listed on the Schedule of
Exceptions are valid and existing. The Company (i) has not been sued in any
suit, action or proceeding which involves a claim of infringement of any
patents, trademarks, service marks, copyrights or violation of any trade secret
or other proprietary right of any third party and (ii) has not brought any
action, suit or proceeding for infringement of Intellectual Property or breach
of any license or agreement involving Intellectual Property against any third
party. To the best of the Company's knowledge, the manufacture, marketing,
licensing or sale of the Company 's products does not infringe any patent,
trademark, service xxxx, copyright, trade secret or other proprietary right of
any third party, except where such infringement would not have a Material
Adverse Effect on the Company.
(f) The Company has secured valid written assignments
from all consultants and employees who contributed to the creation or
development of Intellectual Property of the rights to such contributions that
the Company does not already own by operation of law.
(g) The Company has taken reasonable and appropriate
steps to protect and preserve the confidentiality of all Intellectual Property
not otherwise protected by patents or copyright ("Confidential Information").
All use,
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disclosure or appropriation of Confidential Information owned by the Company by
or to a third party has been pursuant to the terms of a written agreement
between the Company and such third party. All use, disclosure or appropriation
of Confidential Information not owned by the Company has been pursuant to the
terms of a written agreement between the Company and the owner of such
Confidential Information, or is otherwise lawful.
2.10 Proprietary Information and Inventions Agreements. Each
employee, officer, director and consultant of the Company has executed a
non-disclosure agreement in the form provided to counsel to the Purchaser. The
Company is not aware that any of such employees, officers, directors or
consultants are in material violation thereof, and the Company will use its best
efforts to prevent any such violation.
2.11 Compliance With Other Instruments. The Company is not in
violation of any provision of its Articles of Incorporation or Bylaws or in
violation or default of any provision of any instrument, judgment, order, writ,
decree or contract to which it is a party or by which it is bound or any
provision of any federal or state statute, rule or regulation applicable to the
Company, which violation or default would have a Material Adverse Effect on the
Company. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in any such
violation or default or require any consent under or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
violation or default under any such provision, instrument, judgment, order,
writ, decree or contract, or an event which results in the creation of any lien,
charge or encumbrance upon any assets of the Company where any such event would
have a Material Adverse Effect on the Company.
2.12 Agreements; Action.
(a) Any agreements, understandings, instruments,
contracts or proposed transactions to which the Company is a party or by which
it is bound which involve obligations of or payments to the Company in excess of
$5,000 are listed on Schedule C hereto.
(b) No defaults exist with respect to the Company
(or, to the Company's knowledge, any other party) under any contract or
agreement to which the Company is a party that would have a Material Adverse
Effect on the Company, either individually or in the aggregate.
(c) Since May 17, 1996, dividends and distributions
made by the Company to its shareholders and bonuses paid by the Company to its
employees have not exceeded, in the aggregate $350,000.
(d) The Company has no obligation and is not a party
to a contract, oral or written, which would result in the payment of a bonus to
any employee or shareholder subsequent to the date hereof.
5.
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2.13 Disclosure. The Company has fully provided the Purchaser
and the Purchaser's legal counsel with all the information in the Company's
possession that the Purchaser has requested in determining whether to purchase
the Common Stock offered by the Selling Shareholders. Neither Section 2 of this
Agreement nor any schedule or exhibit attached to this Agreement nor any
certificate delivered pursuant hereto that, in any such case, has been or will
be provided by or on behalf of the Company contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
made herein or therein not misleading in light of the circumstances under which
they were made.
2.14 Title to Property and Assets. The Company owns its
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Company's ownership or use
of such property or assets. With respect to the property and assets it leases,
the Company is in compliance with such leases in all material respects and holds
a valid leasehold interest free of any material liens, claims or encumbrances.
The property and assets of the Company that are used in the operation of its
business are in good operating condition and repair.
2.15 Financial Statements. The Company has delivered to
Purchaser its audited financial statements for the fiscal year ended January 31,
1996, and its unaudited financial statements (balance sheet, statement of
operations and statement of cash flows) at, and for the two-month period ended
March 31, 1996 (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles (except that the unaudited financial statements do not have notes
thereto) applied on a consistent basis throughout the periods indicated and with
each other. The Financial Statements are complete and correct in all material
respects and accurately set out and describe the financial condition and
operating results of the Company as of the dates, and for the periods, indicated
therein, subject to normal year-end audit adjustments. The Company's net book
value (total assets minus total liabilities) as of the date hereof is not less
than $0.
2.16 Changes. Since March 31, 1996, except as permitted by
Section 2.12(c), there has not been:
(a) any change in the financial condition or
operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business which have not
been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not
covered by insurance, which would have a Material Adverse Effect on the Company
(as its business is currently conducted);
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(c) any sale, exchange, or other disposition of the
Company's assets or rights, other than in the ordinary course of business, or
any waiver by the Company of a valuable right or of a material debt owed to it,
or any material change or amendment to or default under a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;
(d) any declaration, authorization or payment of any
dividend or other distribution of the assets of the Company, or any agreement to
declare, authorize or pay any such dividend or distribution;
(e) any satisfaction or discharge of any lien, claim
or encumbrance or payment of any obligation by the Company, except in the
ordinary course of business and which is not material to the assets, properties,
financial condition, operating results or business of the Company;
(f) any commitments entered into by the Company
involving capital expenditures in excess of $5,000, or any debt obligation or
liability (whether absolute or contingent), incurred by the Company in excess of
$5,000 or that would be required under generally accepted accounting principles
to be reflected in the Company's financial statements (whether or not presently
outstanding) except current liabilities incurred, and obligations under
agreements entered into, in the ordinary course of business;
(g) any increase in the compensation or rate of
compensation or commissions payable or to become payable by the Company to any
of its directors or officers, or any payment of any bonus, profit-sharing amount
or other extraordinary compensation to any such person or any change in any then
existing bonus, profit-sharing, retirement or other similar plan, agreement or
arrangement or any adoption of or entry into any new bonus, profit-sharing,
group life or health insurance, or other similar plan, agreement or arrangement;
(h) any loans made by the Company to any of the
Company's directors, officers or employees, or any of their affiliates, other
than travel advances made in the ordinary course of business;
(i) to the Company's and the Selling Shareholders'
knowledge, any other event or condition internal to the Company (e.g., other
than external events or conditions, including without limitation, market
conditions and trends, competitive product announcements, etc.) of any character
which might have a Material Adverse Effect on the Company (as its business is
currently conducted);
(j) any material increase in the returns or rates of
returns by consumers or distributors of any products of the Company, any
termination or failure to renew by a distributor of any material contract or
arrangement for the sale or distribution of
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the Company's products or any material and adverse change in the terms of any
such contracts or arrangements; or
(k) any termination or failure to renew by a supplier
of any material contract or arrangement for the sale or supply of parts
necessary for the manufacture of the Company's products or any material and
adverse change in the terms of any such contract.
2.17 Employee Benefit Plans. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974, as amended.
2.18 Taxes. The Company has filed all income tax returns
(federal, state, foreign and local) required to be filed by it, and all income
taxes shown to be due and payable on such returns or on any assessments received
by the Company and all other taxes (federal, state, foreign and local) due and
payable by the Company on or before the date hereof have been paid. The income
tax returns filed by the Company are true and correct in all material respects.
There are no agreements, waivers or other arrangements providing for an
extension of time with respect to the assessment of any tax or deficiency
against the Company, nor are there any actions, suits, proceedings,
investigations or claims now pending against the Company in respect of any tax
or assessment, or, to the Company's knowledge, any matters under discussion with
any federal, state, foreign or local authority relating to any taxes or
assessments, or any claims for additional taxes or assessments asserted by any
such authority. The provisions made for income taxes on the Financial Statements
are expected to be sufficient for the payment of all unpaid federal, state,
foreign and local income taxes of the Company for all periods prior to such
date.
2.19 Bank Accounts. The Schedule of Exceptions sets forth the
names and locations of all banks, trust companies, savings and loan associations
and other financial institutions at which the Company maintains accounts of any
nature and the names of all persons authorized to draw thereon or make
withdrawals therefrom.
2.20 Insurance. The Company has in full force and effect fire
and casualty insurance policies as listed in the Schedule of Exceptions. The
Company has in full force and effect products liability and errors and omissions
insurance in amounts set forth in the Schedule of Exceptions.
2.21 Minute Books. The minute books of the Company contain a
record of all meetings of directors and shareholders since the time of
incorporation and reflect all material transactions referred to in such minutes
accurately in all material respects.
2.22 Labor Agreements and Actions. The Company is not bound by
or subject to any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or has sought
to represent any of the employees, representatives or agents of the Company.
8.
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2.23 Brokers' or Finders' Fees. The Company has not incurred
and will not incur, directly or indirectly, any liability for brokers' or
finders' fees, agents' commissions or other similar charges in connection with
this Agreement or the transactions contemplated hereby other than the fee to be
paid by the Purchaser to Broadview Associates, L.P. ("Broadview") in connection
with the transactions contemplated by this Agreement.
2.24 Accounts Receivable. Subject to any reserves set forth in
the Financial Statements, the accounts receivable shown on the Financial
Statements represent and will represent bona fide claims against debtors for
sales and other charges, and are not subject to discount except for normal cash
and immaterial trade discounts. The amount carried for doubtful accounts and
allowances disclosed in the Financial Statements is sufficient to provide for
any losses which may be sustained on realization of the receivables.
2.25 Related Party Transactions. No employee, officer or
director of the Company or member of his or her immediate family is indebted to
the Company, nor is the Company indebted (or committed to make loans or extend
or guarantee credit) to any of such persons. None of such persons has any direct
or indirect ownership interest in any firm or corporation with which the Company
is affiliated or with which the Company has a business relationship, or any firm
or corporation that competes with the Company, except that the employees,
officers or directors of the Company and members of their immediate families may
own stock in publicly traded companies that may compete with the Company. No
member of the immediate family of any officer or director of the Company is
directly interested in any material contract with the Company.
2.26 Manufacturing and Marketing. The Company has not granted
rights to manufacture, produce, assemble, license, market or to sell its
products to any other person and is not bound by any agreement that affects the
Company's exclusive right to develop, manufacture, assemble, distribute, market
or sell its products.
2.27 Inventory. The inventories shown on the Financial
Statements or thereafter acquired by the Company consisted of items of a
quantity and quality usable or salable in the ordinary course of business. Since
March 31, 1996, the Company has continued to replenish inventories in a normal
and customary manner consistent with past practices. The Company has not
received written or oral notice that it will experience in the foreseeable
future any difficulty in obtaining, in the desired quantity and quality and at a
reasonable price and upon reasonable terms and conditions, the raw materials,
supplies or component products required for the manufacture, assembly or
production of its products. The values at which inventories are carried reflect
the inventory valuation policy of the Company, which is consistent with its past
practice and in accordance with generally accepted accounting principles applied
on a consistent basis. Since March 31, 1996, due provision was made on the books
of the Company in the ordinary course of business consistent with past practices
to provide for all slow-moving, obsolete, or unusable inventories to their
estimated useful or scrap values and such inventory reserves are adequate to
provide for such slow-moving, obsolete or unusable inventory and inventory
shrinkage.
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2.28 Customers and Suppliers. As of the date hereof, no
customer which individually accounted for more than 5% of the Company's gross
revenues during the 12 month period preceding the date hereof, and no supplier
of the Company, has canceled or otherwise terminated, or made any written threat
to the Company to cancel or otherwise terminate its relationship with the
Company, or has at any time on or after March 31, 1996 decreased materially its
services or supplies to the Company in the case of any such supplier, or its
usage of the services or products of the Company in the case of such customer,
and to the Company's knowledge, no such supplier or customer intends to cancel
or otherwise terminate its relationship with the Company or to decrease
materially its services or supplies to the Company or its usage of the services
or products of the Company, as the case may be. The Company has not engaged in
any fraudulent conduct with respect to any customer or supplier of the Company.
2.29 Employee Matters. There are no claims pending, or to the
Company's or Selling Shareholder's knowledge, currently threatened, resulting
from the Company's violation of any employment, labor or wage laws. All payments
due from the Company on account of employee health and welfare insurance have
been paid and all severance, sick or vacation payments by the Company which are
or were due under the terms of any agreement or otherwise have been paid. All
employees of the Company have been hired on an "at will" basis.
3. Representations and Warranties of the Selling Shareholders.
Each of the Selling Shareholders hereby represents and warrants to the Purchaser
for himself and not for the other Selling Shareholders, that:
3.1 Authorization. All acts and conditions required by law on
the part of the Selling Shareholder to authorize the execution and delivery of
this Agreement by such Selling Shareholder and the transactions contemplated
herein and the performance of all obligations of such Selling Shareholder
hereunder have been duly performed and obtained, and this Agreement constitutes
a valid and legally binding obligation of the Selling Shareholder, enforceable
in accordance with its terms, subject, as to the enforcement of remedies, to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally, to general equitable principles and to
limitations on the enforceability of indemnification provisions as applied to
certain types of claims arising hereafter, if any, under the federal securities
laws.
3.2 Compliance With Other Instruments. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any violation or default of any provision
of any instrument, judgment, order, writ, decree or contract to which such
Selling Shareholder is a party or by which he or she is bound, or require any
consent under or be in conflict with or constitute, with or without the passage
of time and giving of notice, either a violation or default under any such
provision.
10.
15
3.3 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, regional, state or local governmental authority of the
United States on the part of such Selling Shareholder is required in connection
with the consummation of the transactions contemplated by this Agreement, except
for filings, if any, required pursuant to applicable federal and state
securities laws, which filings will be made within the required statutory
period.
3.4 Litigation. There is no action, suit, proceeding, or
investigation pending or, to such Selling Shareholders' knowledge, currently
threatened against such Selling Shareholder which questions the validity of this
Agreement or the right of such Selling Shareholder to enter into this Agreement
or to consummate the transactions contemplated hereby.
3.5 Title to Stock. Such Selling Shareholder has good title to
the Common Stock to be transferred by such Selling Shareholder to the Purchaser
under this Agreement, free and clear of any lien, pledge, security interest or
other encumbrance (other than restrictions on transfer arising under applicable
securities laws) and, upon delivery of the shares of Common Stock at the Closing
as provided for in this Agreement, and assuming the Purchaser is acquiring the
Common Stock in good faith and without notice of any adverse claim, the
Purchaser will acquire good title thereto, free and clear of any lien, pledge,
security interest or encumbrance (other than restrictions on transfer arising
under applicable securities laws).
3.6 Disclosure. Such Selling Shareholder has fully provided
the Purchaser and the Purchaser's legal counsel with all the information in such
Selling Shareholders' possession that the Purchaser has requested in determining
whether to purchase the Common Stock offered by such Selling Shareholder.
Neither Section 3 of this Agreement nor any schedule or exhibit attached to this
Agreement nor any certificate delivered pursuant hereto that, in any such case,
has been or will be provided by or on behalf of such Selling Shareholder
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements made herein or therein not misleading in
light of the circumstances under which they were made.
3.7 Intellectual Property of the Selling Shareholders. Each of
the Selling Shareholders individually represents and warrants to the Purchaser
as follows:
(a) The conduct of the Company's business as now
conducted and as now proposed to be conducted does not violate, conflict with or
infringe any Intellectual Property of the Selling Shareholder or any affiliate
of the Selling Shareholder.
(b) The Selling Shareholder does not now conduct any
business that violates, conflicts with or infringes any Intellectual Property of
the Company and does not now propose to conduct any such business, directly or
through an affiliate.
11.
16
(c) Neither the Selling Shareholder nor any affiliate
of the Selling Shareholder (other than the Company) is a party to or otherwise
bound by any option, license or agreement of any kind (whether formal or
informal) to which the Company is a party or by which the Company is bound,
which, in any such case (i) conflicts with the Company's representation in
Section 2.9 hereof or (ii) would give the Selling Shareholder any continuing
interest in, or would give the Company any continuing payment obligation to the
Selling Shareholder with respect to, any Intellectual Property formerly owned by
the Selling Shareholder and currently used by the Company.
(d) The non-disclosure agreement between the Selling
Shareholder and the Company is in full force and effect, has not been amended or
modified in any respect and no provision of such agreement has been waived.
4. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Company and the Selling
Shareholders that:
4.1 Organization, Good Standing and Qualification. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of California and has all requisite corporate power
and authority to carry on its business as now conducted. The Purchaser is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure to so qualify would have a Material Adverse Effect on the
Purchaser.
4.2 Authorization. All corporate action on the part of the
Purchaser, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement and the transactions
contemplated herein, and the performance of all obligations of the Purchaser
hereunder, has been taken or will be taken prior to the Closing. This Agreement
has been duly executed and delivered by the Purchaser and constitutes a valid
and legally binding obligation of the Purchaser, enforceable in accordance with
its terms, subject, as to the enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting creditors'
rights generally, to general equitable principles and to limitations on the
enforceability of indemnification provisions as applied to certain types of
claims arising hereafter, if any, under the federal securities law.
4.3 Purchase for Investment. This Agreement is made with the
Purchaser in reliance upon the Purchaser's representation which, by the
Purchaser's execution of this Agreement, the Purchaser hereby confirms, that the
Common Stock to be received by the Purchaser will be acquired for investment and
not with a view to the distribution of any part thereof, and that the Purchaser
has no present intention of selling, granting any participation in, or otherwise
distributing the same in a manner contrary to the Act or applicable state
securities laws.
4.4 Disclosure of Information; Due Diligence. The Purchaser
represents that it has made an independent investigation and has had an
opportunity to ask questions of
12.
17
and receive answers from the Company and the Selling Shareholders regarding the
Company and the terms and conditions of the offering of the Common Stock offered
hereby and to obtain additional information necessary to verify the accuracy of
the information supplied or to which it had access. The foregoing, however, does
not limit or modify the representations and warranties of the Company or the
Selling Shareholders contained herein.
4.5 Investment Experience; Accredited Investor Status. The
Purchaser is able to fend for itself in the transactions contemplated by this
Agreement, can bear the economic risk of its investment (including possible
complete loss of such investment) for an indefinite period of time and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Common Stock. The
Purchaser represents it has not been organized for the purpose of acquiring the
Common Stock. The Purchaser understands that the Common Stock has not been
registered under the Act, or under the securities laws of any jurisdiction by
reason of reliance upon certain exemptions, and that the reliance of the Company
and the Selling Shareholders on such exemptions is predicated upon the accuracy
of the Purchaser's representations and warranties in this Section 4. The
Purchaser is an "accredited investor" as defined in Rule 501(a) of Regulation D.
The Purchaser acknowledges that the certificates representing the stock to be
received by Purchaser will bear legends repeating the restrictions on resale
contained in applicable securities laws.
4.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, regional, state or local governmental authority on the
part of the Purchaser is required in connection with the consummation of the
transactions contemplated by this Agreement.
4.7 Insolvency. The consummation of the transactions
contemplated by this Agreement will not render the Purchaser insolvent or
bankrupt under any federal or state insolvency or bankruptcy law.
5. Conditions of the Purchaser's Obligations at the Closing.
The obligations of the Purchaser under Section 1.1 of this Agreement are subject
to the fulfillment at or before the Closing of each of the following conditions,
unless waived by the Purchaser.
5.1 Representations and Warranties. The representations and
warranties of (i) the Company and the Selling Shareholders contained in Section
2 hereof and (ii) each of the Selling Shareholders contained in Section 3
hereof, shall be true and correct on and as of the Closing with the same effect
as though such representations and warranties had been made as of the date of
the Closing.
5.2 Performance. The Company and the Selling Shareholders
shall have performed and complied with all agreements, obligations and
conditions contained in this
13.
18
Agreement that are required to be performed or complied with by them on or
before the Closing.
5.3 Compliance Certificate. The President of the Company shall
have delivered to the Purchaser at the Closing a certificate certifying that the
conditions specified in Sections 5.1 and 5.2, as those conditions relate to the
Company, have been fulfilled and stating that there has been no material adverse
change in the assets, condition, prospects or business of the Company, financial
or otherwise, since March 31, 1996. Each of the Selling Shareholders shall have
delivered to the Purchaser at the Closing a certificate certifying that the
conditions specified in Sections 5.1 and 5.2, as those conditions relate to the
Selling Shareholders, respectively, have been fulfilled.
5.4 Securities Laws Qualifications. The offer and sale of the
Common Stock to the Purchaser pursuant to this Agreement shall be registered or
qualified or exempt from registration or qualification under all applicable
securities laws.
5.5 Proceedings and Documents. All corporate and other
proceedings of the Company in connection with the transactions contemplated at
the Closing and all documents incident thereto, shall be reasonably satisfactory
in form and substance to the Purchaser's counsel, and the Purchaser and its
counsel shall have received all such counterpart original and certified or other
copies of such documents as they may reasonably request.
5.6 Share Certificates. The Selling Shareholders shall have
delivered to the Purchaser share certificates representing the shares of Common
Stock to be purchased hereunder by the Purchaser, properly endorsed in blank for
transfer and accompanied by a duly executed stock power in proper form.
5.7 Government and Third-Party Consents. The Company shall
deliver to the Purchaser at or prior to the Closing all government and
third-party consents, releases, authorizations and approvals necessary for the
consummation of the transactions contemplated by this Agreement.
5.8 Company Options. As of the date of the Closing, there will
not be outstanding any options to purchase shares of the Company's stock.
5.9 Company Warrants. As of the date of the Closing, there
will not be outstanding any warrants to purchase shares of the Company's stock.
5.10 Selling Shareholder Non-Competition and Non-Disclosure
Agreement. Xx. Xxxxxx, Xx. Xxxxx and Xx. Xxxxxx shall have entered into a non-
competition and non-disclosure agreement with Purchaser in the form attached
hereto as of Exhibit A.
14.
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5.11 Opinion of Company Counsel. The Purchaser shall have
received from Xxxxxx & Xxxxx LLP, counsel for the Company, an opinion, dated as
of the date of the Closing, substantially in the form attached hereto as Exhibit
B.
5.12 Opinion of Selling Shareholder Counsel. The Purchaser
shall have received from Xxxxxx & Xxxxx LLP, counsel to the Selling
Shareholders, an opinion, dated as of the date of the Closing, substantially in
the form attached hereto as Exhibit C.
6. Conditions of the Company's and Selling Shareholder's
Obligations at Closing. The obligations of the Company and the Selling
Shareholders under this Agreement are subject to the fulfillment on or before
the Closing of each of the following conditions:
6.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in Section 4 hereof, shall be true and
correct on and as of the Closing with the same effect as though such
representations and warranties had been made as of the date of the Closing.
6.2 Performance. The Purchaser shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
6.3 Compliance Certificate. The President or Chief Financial
Officer of the Purchaser shall have delivered to the Company at the Closing a
certificate stating that the conditions specified in Sections 6.1 and 6.2 have
been fulfilled.
6.4 Securities Laws Qualification. The offer and sale to the
Purchaser of the Common Stock shall be registered, qualified or exempt from
registration or qualification under all applicable securities laws.
6.5 Proceedings and Documents. All corporate and other
proceedings of the Purchaser in connection with the transactions contemplated at
the Closing and all documents incident thereto, shall be reasonably satisfactory
in form and substance to the Company's and Selling Shareholders' counsel, and
the Company, the Selling Shareholders and their counsel shall have received all
such counterpart original and certified or other copies of such documents as
they may reasonably request.
6.6 Government Consents. The Purchaser shall deliver to the
Company and the Selling Shareholders at or prior to the Closing all government
consents, releases, authorizations and approvals necessary for the consummation
of the transactions contemplated by this Agreement.
6.7 Payment of Purchase Price. The Purchaser shall have
delivered to each Selling Shareholder the purchase price with respect to the
Common Stock to be purchased
15.
20
from such Selling Shareholder in the form of a check or bank wire transfer of
immediately available funds.
6.8 Payment of Finder's Fee. As soon as practicable following
the Closing, Purchaser shall pay to Broadview a finder's fee of $295,000 in
connection with the transactions contemplated pursuant to this Agreement.
6.9 Opinion of Purchaser Counsel. The Company and the Selling
Shareholders shall have received from Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel
to the Purchaser, an opinion dated as of the Closing, substantially in the form
attached hereto as Exhibit D.
7. Indemnification.
7.1 Right to Indemnification. Each of the Selling
Shareholders, jointly and severally, agrees to indemnify and hold harmless the
Purchaser (for purposes of Sections 7.1, 7.2 and 7.3 hereof, the "Indemnified
Party") from the date of the Closing until the date three (3) months after the
date of the Closing and each of the Selling Shareholders, severally, agrees to
indemnify and hold harmless the Indemified Party from the date three (3) months
after the date of the Closing until the first anniversary of the date of the
Closing from and against and shall reimburse the Indemnified Party against and
in respect of any and all losses, claims, damages, costs, expenses, obligations,
liabilities, remedies or penalties (collectively, "Losses") that the Indemnified
Party shall suffer or incur relating to, arising out of or in connection with
any breach or inaccuracy of the representations and warranties made by the
Company and Selling Shareholders in Sections 2 and 3 of this Agreement;
including any expenses reasonably incurred by the Indemnified Party in
connection with defending any such action or claim (including, without
limitation, reasonable fees and disbursements of counsel) in litigation to which
the Indemnified Party is a party. With respect to the foregoing, the Selling
Shareholders will not, however, be responsible for any Losses that are finally
judicially determined to have resulted from the bad faith or gross negligence of
the Indemnified Party.
7.2 Limitation. The liability of each Selling Shareholder
under this Section 7 and for any other Losses relating to, arising out of or in
connection with this Agreement or other transactions contemplated hereby shall
be limited to the Purchase Price set forth opposite each Selling Shareholder's
name on Schedule A hereto and no claim for indemnification hereunder shall be
asserted until Losses exceed $100,000 in the aggregate and such Losses exceed
$100,000, a claim by the Indemnified Party may be made for all additional Losses
above $100,000. A written notice specifying the specific basis for such claim
must be delivered to the Selling Shareholders before the first anniversary of
the date of the Closing. Section 7 is the exclusive remedy of the Purchaser with
respect to any Losses incurred as a result of the matters specified in Section
7.1, provided, however, nothing in this Section 7 shall limit, in any manner,
any remedy at law or in equity to which the
16.
21
Purchaser shall be entitled against the Selling Shareholders as a result of
wilful fraud or intentional misrepresentation by any Selling Shareholders.
In any case in which claims have been asserted as and when
required hereunder, the Selling Shareholders and the Indemnified Party agree
that the indemnity obligations of the Selling Shareholders with respect to such
matters shall continue in full force and effect until such matters have been
settled by agreement of the Selling Shareholders and the Indemnified Party.
7.3 Notification, Etc. In case any proceeding (including any
governmental investigation) shall be instituted involving the Indemnified Party,
the Indemnified Party shall promptly notify the Selling Shareholders in writing
and the Selling Shareholders, upon request of the Indemnified Party, shall
retain counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any others the Selling Shareholders may designate in such
proceeding and the fees and disbursements of such counsel related to such
proceeding shall be paid by the Selling Shareholders which shall thereupon
reduce the obligations of the Selling Shareholders in Section 7.2 hereof. In any
such proceeding, the Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Party. It is understood that the Selling Shareholders shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to any local counsel) for the Indemnified Party. The
Selling Shareholders shall not be liable for any settlement of any proceeding
effected without the written consent of all of them, but if settled with such
consent or if there be a final judgment for the plaintiff, the Selling
Shareholders agree to indemnify the Indemnified Party from and against any loss
or liability by reason of such settlement or judgment. The rights of the
Indemnified Party to indemnification under this Section 7 are exclusive;
provided, however, that any rights or remedies asserted against the Selling
Shareholder shall be subject to the limitation set forth in Section 7.2 hereof.
8. Miscellaneous.
8.1 Survival of Warranties. The warranties, representations
and covenants contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing until the first
anniversary of the date of the Closing, notwithstanding any investigation by the
Purchaser.
8.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
17.
22
8.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within the
State of California.
8.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.5 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.6 Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon (i) personal delivery to the party to be notified, or
(ii) upon deposit with the United States Post Office, postage prepaid,
registered or certified with return receipt requested and addressed to the party
to be notified at the address indicated for such party on the signature page
hereof, or (iii) upon confirmation of facsimile transmission at the facsimile
number indicated for such party on the signature page hereof, or (iv) at such
other address as such party may designate by 10 days' advance written notice to
the other parties given in the foregoing manner.
8.7 Cost and Expense. Each of the Purchaser, Company and
Selling Shareholders will be responsible for its own costs and expenses in
connection with the negotiation and consummation of the transactions
contemplated hereby. All legal expenses of the Company in excess of $15,000
related to the transactions contemplated pursuant to this Agreement will be the
responsibility of the Selling Shareholders.
8.8 Amendments and Waivers. After the Closing, any term of
this Agreement may be amended and the observance of any term may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of a majority in interest of the
Selling Shareholders and the Purchaser, provided that no such amendment would
affect any Shareholder in a manner different than the other Shareholders will be
treated.
8.9 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement, and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
8.10 Entire Agreement. This Agreement and the other documents
delivered at the Closing constitute the full and entire understanding and
agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements with respect to
18.
23
the subject matter hereof,including without limitation the letter of intent
dated May 16, 1996 among the Purchaser, the Company and the Selling
Shareholders.
8.11 California Corporate Securities Law. THE SALE OF THE
SECURITIES THAT IS THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND IN THE ABSENCE OF
AN EXEMPTION FROM SUCH QUALIFICATION REQUIREMENT, THE SALE OF SUCH SECURITIES OR
THE PAYMENT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH EXEMPTION BEING APPLICABLE.
8.12 Publicity. Purchaser and the Company will not make any
press release or other public announcement concerning this Agreement or the
transactions contemplated hereby except with the prior approval of the other,
except for such disclosures as may be required by applicable law or securities
exchange rules and regulations. A Selling Shareholder will not make any press
release or other public announcement concerning this Agreement or the
transactions contemplated hereby except with the prior approval of the
Purchaser.
8.13 Expenses; Attorneys' Fees. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
19.
24
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
COMPANY
LOTUS TECHNOLOGIES, INC.
-----------------------------------------
Xxxxx X. Xxxxxx, President
Address: 000-X Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
SELLING SHAREHOLDERS
-------------------------------------------------
Xxxxx X. Xxxxxx, Trustee for the Lipton Separate
Property Trust dated January 12, 1993
Address: 00000 Xxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
-------------------------------------------------
Xxxxxx X. Xxxxx
Address: #5 No Name Road
Los Gatos, CA 95030
-------------------------------------------------
Xxxxxx Xxxxxx
Address: 000 Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
25
PURCHASER
INTEVAC, INC.
------------------------------------------------
Xxxxxx X. Xxxx, President
Address: 0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
26
SCHEDULE A
SCHEDULE OF SELLING SHAREHOLDERS
Number of Shares
Selling Shareholder of Common Stock Purchase Price
------------------- ---------------- --------------
Xxxxx X. Xxxxxx, Trustee for
the Lipton Separate Property
Trust dated January 12, 1993 1,260,000 $2,675,000.00
Xxxxxx X. Xxxxx 1,260,000 $2,675,000.00
Xxxxxx Xxxxxx 1,260,000 $2,675,000.00
Total 3,780,000 $8,025,000.00
========= =============
27
SCHEDULE B
SCHEDULE OF EXCEPTIONS
28
SCHEDULE C
SCHEDULE OF MATERIAL CONTRACTS
29
EXHIBIT A
SELLING SHAREHOLDER
NON-COMPETITION AND NON-DISCLOSURE AGREEMENT
This SELLING SHAREHOLDER NON-COMPETITION AND NON-DISCLOSURE
AGREEMENT (this "Agreement"), is entered into as of this 6th day of June, 1996
("Effective Date") by and among Intevac, Inc., a California corporation
("Intevac"), and 1~.
WHEREAS, Intevac, Mr. 2~ and certain other parties have
entered into that certain Stock Purchase Agreement dated as of June 6, 1996 (the
"Purchase Agreement"), pursuant to which Intevac is acquiring all of the
outstanding stock of Lotus Technologies, Inc. (the "Stock Purchase");
WHEREAS, in order to induce Intevac to enter into the
Purchase Agreement, the parties hereto have agreed that this Agreement shall
govern their respective rights with respect to the matters set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Non-Competition:
1.1 Covenant Not to Compete. The parties understand and agree
that this Agreement is entered into in connection with the acquisition by
Intevac of all of the issued and outstanding capital stock of Lotus
Technologies, Inc. ("LTI") from the shareholders of LTI. The parties further
understand and agree that Mr. 2~ was a key and significant shareholder of LTI.
Commencing upon the Effective Date and continuing for a period up to and
including the date that is three (3) years after the Effective Date, in
consideration of the performance by Intevac of its respective obligations under
the Purchase Agreement, Mr. 2~ agrees that he shall not engage in any of the
following activities outside of his employment with Intevac:
(a) Enter into or engage in the business of designing,
developing, manufacturing, marketing and selling of equipment for contact
stop/start ("CSS") testing, including stiction, friction, torque and lifetime
aspects related to those characteristics, and track average amplitude and pulse
width 50 measurements as done on hard disks, heads used in hard disk drives and
completed hard disk drives; or
30
(b) In any way interfere or compete with Intevac in its
operation of the present business of LTI, including projects currently under
development that relate to CSS testing, track average amplitude and pulse width
50 measurements done on hard disks, heads used in hard disk drives and completed
hard disk drives; or
(c) Enter into or engage in any business or activity
which would use LTI technology, trade secrets or know-how; or
(d) Assist any person or entity, in any manner, in the
use of LTI patented technology, trade secrets or know-how.
However, Section 1.1 of this Agreement in no way shall
restrict Mr. 2~ from working for any entity that does not commercially compete
with Intevac.
1.2 Covenant Not to Solicit. Commencing upon the Effective
Date and continuing for a period that is three (3) years after the Effective
Date, Mr. 2~ agrees (i) not to solicit any employee, consultant or other service
provider of Intevac or any of its respective affiliates to terminate his, her or
its employment, consulting or other service arrangement with Intevac or such
affiliate and (ii) not to solicit any business partner of Intevac or any of its
respective affiliates to terminate its relationship with Intevac or such
affiliate or otherwise interfere with such relationship.
1.3 Covenants Not Unduly Restrictive. Mr. 2~ acknowledges,
represents and warrants to Intevac that the covenants of Mr. 2~ in Sections 1.1
and 1.2 hereof are reasonably necessary for the protection of Intevac's
interests under this Agreement and are not unduly restrictive upon Mr. 2~. In
any event, if any restriction set forth in Sections 1.1 and 1.2 hereof is held
to be unreasonable, then Mr. 2~ agrees, and hereby submits, to the reduction and
limitation of such prohibition to such area or period as shall be deemed
reasonable.
2. Non-Disclosure.
2.1 Proprietary Information. Mr. 2~ has in his possession or
may come into his possession in the future information relating to LTI's
business (including, without limitation, trade secrets, computer programs, names
and expertise of employees and consultants, designs, technology, know-how,
ideas, compositions, data, techniques, improvements, inventions (whether
patentable or not), schematics and other technical, business, financial,
customer and product development plans, forecasts, strategies and information),
which to the extent previously, presently or subsequently disclosed to Mr. 2~ is
hereinafter referred to as "Proprietary Information."
2.2 Non-Disclosure of Proprietary Information. Mr. 2~ hereby
agrees, except as Intevac may otherwise consent in writing, (i) to hold the
Proprietary Information in strict confidence and to take all reasonable
precautions to protect such Proprietary
31
Information, (ii) not to divulge any such Proprietary Information or
any information derived therefrom to any third person, (iii) not to make any use
whatsoever at any time of such Proprietary Information, except when providing
services to Intevac, and (iv) not to copy any such Proprietary Information
except in the performance of his duties to Intevac and its affiliates. Without
granting any right or license, Intevac agrees that the foregoing clauses (i),
(ii), (iii) and (iv) shall not apply with respect to any Proprietary Information
after three (3) years from the date hereof or any information that Mr. 2~ can
document is, through no improper action or inaction by Mr. 2~ or any affiliate,
agent, consultant or employee of Mr. 2~, generally available to the public. Mr.
2~ may make disclosures required by court order, provided Mr. 2~ uses reasonable
efforts to limit such disclosure and to obtain confidential treatment or a
protective order, and has allowed Intevac to participate in the proceeding.
3. REMEDIES.
3.1 Injunctive Relief. The parties hereto further agree that
the covenants and obligations contained in this Agreement relate to special,
unique and extraordinary matters and that a violation of any of such covenants
or obligations may cause Intevac irreparable injury for which adequate remedy at
law will not be available; and, therefore, that upon any such breach of any such
covenant or obligation, or any threat thereof, Intevac shall be entitled to the
immediate remedy of a temporary restraining order, preliminary injunction or
such other form of injunctive or equitable relief in addition to whatever
remedies they might have at law.
3.2 Remedies Cumulative. Intevac's rights and remedies under
this Agreement are cumulative and are in addition to any other rights and
remedies Intevac may have at law or in equity.
4. MISCELLANEOUS.
4.1 Notices. All notices and other communications required or
permitted under this Agreement shall be delivered to the parties at the address
set forth below their respective signature blocks, or at such other address that
they designate by notice to the other party in accordance with this Section 4.1.
All notices and communications must be sent by one of the methods specified
below and shall be deemed to have been received unless otherwise set forth
herein: (i) in the case of personal delivery, on the date of such delivery; (ii)
in the case of telex or facsimile transmission, on the date on which the sender
receives confirmation by telex or facsimile transmission that such notice was
received by the addressee, provided that a copy of such transmission is
additionally sent by mail as set forth in (iv) below; (iii) in the case of
overnight air courier, on the second business day following the day sent, with
receipt confirmed by the courier; and (iv) in the case of mailing by first class
certified or registered mail, postage prepaid, return receipt requested, on the
fifth business day following such mailing. All notices in (i), (ii) and (iii)
must be followed by certified mail, return receipt requested within five (5)
days.
32
4.2 Assignment. This Agreement shall be binding on, and shall
inure to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors and assigns; provided, however, that Mr. 2~ may not
assign, transfer or delegate his rights or obligations hereunder and any attempt
to do so shall be null and void.
4.3 Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof, and all
prior agreements, written or oral, are merged herein and are of no further force
or effect.
4.4 Amendment. This Agreement may be modified or amended only
by a written agreement signed by the President of Intevac and Mr. 2~.
4.5 Waivers. No waiver of any term or provision of this
Agreement will be valid unless such waiver is in writing signed by the party
against whom enforcement of the waiver is sought. The waiver of any term or
provision of this Agreement shall not apply to any subsequent breach of this
Agreement.
4.6 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
4.7 Severability. The provisions of this Agreement shall be
deemed severable, and if any part of any provision is held illegal, void or
invalid under applicable law, such provision may be changed to the extent
reasonably necessary to make the provision, as so changed, legal, valid and
binding. If any provision of this Agreement is held illegal, void or invalid in
its entirety, the remaining provisions of this Agreement shall not in any way be
affected or impaired but shall remain binding in accordance with their terms.
4.8 Governing Law. The terms of this Agreement shall be
governed by the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within the State
of California.
4.9 Attorneys' Fees. In the event of any proceeding, claim or
action being filed or instituted between the parties with respect to this
Agreement, the prevailing party will be entitled to receive from the other party
all costs, damages and expenses, including reasonable attorneys' fees, incurred
by the prevailing party in connection with that action or proceeding whether or
not the controversy is reduced to judgment or award. The prevailing party will
be that party who may be fairly said by the trier of fact to have prevailed on
the major disputed issues.
33
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
INTEVAC, INC.
-------------------------------------------------
Xxxxxx X. Xxxx, President
Address: 0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
-------------------------------------------------
1~
Address:
--------------------------------------------------
--------------------------------------------------
34
EXHIBIT B
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL
TO LOTUS TECHNOLOGIES, INC.
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, and the
Company has the requisite corporate power and authority to own its properties
and to conduct its business as presently conducted.
2. The Company is qualified to do business as a foreign
corporation in each jurisdiction of the United States where its failure to do so
would have a material adverse effect on its business or properties.
3. The Company has the requisite corporate power and
authority to execute, deliver and perform the Stock Purchase Agreement. The
foregoing has been duly and validly authorized by the Company, duly executed and
delivered by an authorized officer of the Company and constitutes a legal, valid
and binding obligation of the Company, enforceable against the Company according
to its terms.
4. To our knowledge, the capitalization of the Company
immediately prior to the Closing is as follows:
a. Common Stock. 10,000,000 shares of common stock
("Common Stock"), no par value, 3,780,000 shares of which have been duly
authorized and validly issued, are nonassessable, and to our knowledge, fully
paid.
b. There are no preemptive rights or options, warrants,
conversion privileges or other rights (or agreements for any such rights)
outstanding to purchase or otherwise obtain from the Company any of the
Company's securities.
5. The execution, delivery, performance and compliance with
the terms of the Stock Purchase Agreement do not violate any provision of any
applicable federal or California corporate law or any provision of the Company's
Articles of Incorporation or Bylaws and, to our knowledge, do not conflict with
or constitute a default under the provisions of any judgment, writ, decree or
order or the material provisions of any material agreement to which the Company
is a party or by which it is bound.
6. All consents, approvals, permits, orders or authorizations
of, and all qualifications, registrations, designations, declarations or filings
with, any federal, or California state governmental authority on the part of the
Company required in connection with the execution, delivery and performance of
the Stock Purchase Agreement have been
35
obtained, and are effective, and we are not aware of any proceedings, or threat
thereof, which question the validity thereof.
7. Based in part upon the representations of Purchaser in the
Stock Purchase Agreement, the offer and sale of the Common Stock to Purchaser
pursuant to the terms of the Stock Purchase Agreement are exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended.
8. We are not aware that there is any action, proceeding or
governmental investigation pending against the Company, which questions the
validity of the Stock Purchase Agreement or the right of the Company or its
officers, directors and employees to enter into the Stock Purchase Agreement, or
which is not referred to in the Schedule of Exceptions.
36
EXHIBIT C
MATTERS TO BE COVERED IN THE OPINION OF
COUNSEL FOR EACH OF THE SELLING SHAREHOLDERS
(i) The Stock Purchase Agreement has been duly executed and delivered on
behalf of the Selling Shareholder.
(ii) The Selling Shareholder has full power and authority, and any approval
required by law (other than as required by State securities and blue
sky laws as to which such counsel need express no opinion), to sell,
assign, transfer and deliver the portion of the Stock to be sold by
such Selling Shareholder.
(iii) The stock power executed and delivered by the Selling Shareholder is a
valid and binding instrument.
(iv) Upon payment for and delivery of the Common Stock with all necessary
endorsements in accordance with the terms of the Agreement, and
assuming the Purchaser is acquiring the shares of Common Stock in good
faith without notice of any adverse claim, the Purchaser will be the
owner of the shares of Common Stock, free and clear of any adverse
claim.
In rendering such opinion such counsel for the Selling
Shareholders may rely, as to matters governed other than by the laws of the
State of California or Federal law on local counsel in such jurisdictions and,
as to the matters set forth in subparagraphs (ii), (iii) and (iv), on other
counsel representing the respective Selling Shareholder provided that in each
case counsel for the Selling Shareholder shall state that they believe that they
and Intevac, Inc. are justified in relying on such other counsel.
37
EXHIBIT D
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL
TO INTEVAC, INC. (THE "PURCHASER")
1. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, and the
Purchaser has the requisite corporate power and authority to own its properties
and to conduct its business as presently conducted.
2. The Purchaser has the requisite corporate power and
authority to execute, deliver and perform the Stock Purchase Agreement. The
Stock Purchase Agreement has been duly and validly authorized by the Purchaser,
duly executed and delivered by an authorized officer of the Purchaser and
constitutes a legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser according to its terms.
3. The execution, delivery, performance and compliance with
the terms of the Stock Purchase Agreement do not violate any provision of any
applicable federal or California corporate law or any provision of the Articles
of Incorporation or Bylaws and, to our knowledge, do not conflict with or
constitute a default under the provisions of any judgment, writ, decree or
order.
4. All consents, approvals, permits, orders or authorizations
of, and all qualifications, registrations, designations, declarations or filings
with any federal or California state governmental authority on the part of the
Purchaser required in connection with the execution, delivery and performance of
the Stock Purchase Agreement have been obtained, and are effective, and we are
not aware of any proceedings, or threat thereof, which question the validity
thereof.
5. We are not aware that there is any action, proceeding or
governmental investigation pending against the Purchaser, which questions the
validity of the Stock Purchase Agreement or the right of the Purchaser or its
officers, directors and employees to enter into the Stock Purchase Agreement.
